Judge Sees Likely ISP Success Against NY Broadband Law

New York may not start enforcing a state broadband law requiring $15 monthly low-income plans that was to go into effect Tuesday, a federal judge ruled (in Pacer) Friday. ISPs challenging the state’s Affordable Broadband Act (ABA) are likely to succeed on conflict and field preemption arguments, ruled Judge Denis Hurley of U.S. District Court in Central Islip, New York. ISPs showed imminent, irreparable harm, and the balance of equities and public interest favor keeping the status quo, he said. The decision counters recent rulings in California net neutrality and Maine ISP privacy cases where courts said states aren’t preempted.

The court granted the motion for preliminary injunction by New York State Telecommunications Association, CTIA, ACA Connects, USTelecom, NTCA and the Satellite Broadcasting and Communications Association. New York must answer ISPs’ complaint in 30 days, it ruled separately in case 21-cv-2389. Hurley grilled New York at arguments earlier this month. See our report from then and Friday's news bulletin.

“We always knew big telecom would pull out all the stops to protect their profits at the expense of the New Yorkers who need access to this vital utility the most,” said Rich Azzopardi, adviser to Gov. Andrew Cuomo (D). “We are going to continue to fight for them.” The New York attorney general's office declined to comment Friday.

“The broadband industry is committed to working with state and federal policymakers on sustainable solutions that will serve the needs of all low-income Americans,” ISP plaintiffs said. “While well-intended, the state’s law ignored the $50 monthly broadband discount Congress enacted, as well as the many commitments, programs and offerings that broadband providers have made for low-income consumers.”

The New York law is conflict-preempted by the Communications Act and the FCC 2018 order reclassifying broadband as a Title I information service, the judge said. By setting a price ceiling, New York’s law “is rate regulation, and rate regulation is a form of common carrier treatment” not allowed under Title I, he said.

The 2018 order didn’t “tender jurisdiction to the States to regulate interstate broadband providers as common carriers,” wrote Hurley. “The ABA stands as an obstacle to the accomplishment and execution of the FCC’s reasoned decision to assure interstate broadband providers that no common-carrier rate regulations await them beyond the horizon.” The U.S. Court of Appeals for the District of Columbia Circuit vacating the FCC’s preemption order in 2019's Mozilla decision “does not convince the court otherwise,” since the D.C. Circuit said it didn’t consider whether surviving portions have preemptive effect under conflict preemption, he said.

“Because the ABA regulates within the field of interstate communications, it triggers field preemption,” said the judge. The court needn’t -- and won’t now -- say all broadband services are interstate, but the ABA “clearly wanders beyond the intrastate communications line, with no provisions reasonably inferable as limiting (or even trying to limit) its reach,” he said. The 2nd Circuit said in 1968’s Ivy Broadcasting Co. v AT&T that Congress “field preempted and complete-preempted the realm of interstate communications,” the judge said.

U.S District Court in Sacramento got it “backwards” on field preemption when it denied preliminary injunction to ISPs against California’s net neutrality law, said Hurley. The Communications Act doesn’t specifically leave out interstate information services from FCC jurisdiction, he said: Rather, it “specifically leaves out certain types of jurisdiction (e.g., Title II authority to impose common carrier obligations), but not jurisdiction writ large, over interstate communications transmitted by information services.”

Plaintiffs showed “imminent irreparable injury largely due to the monetary harm they would suffer,” including due to lost income and added costs advertising the program and developing and maintaining an eligibility system, Hurley said: damages can’t be collected later because the state enjoys 11th Amendment sovereign immunity. Starting June 15, plaintiffs would "suffer unrecoverable losses increasing with time, and the enormity of the matter -- six plaintiffs with multiple member organizations attacking a statute affecting one-third of all New York households -- portends a lengthy litigation."

"This ruling comes as no surprise and is just more collateral damage from [former FCC Chairman] Ajit Pai's opposition to net neutrality,” emailed Stop the Cap Director Phillip Dampier. “The FCC needs to return to classifying broadband as a telecommunications service and regulate it as the monopoly or duopoly it is for most Americans.”

“New York's courts will ultimately follow the reasoning of their fellow courts in California and Maine and find for the State on the affordable broadband legislation,” predicted New York Public Utility Law Project Executive Director Richard Berkley. “A brief stay is a way to protect the status quo until the Court is able to address the merits in full.” The preliminary decision is “good news,” tweeted R Street Technology and Innovation Policy Fellow Jeffrey Westling in response to our bulletin. “The more interesting issue will be field preemption, but court may just ignore it and settle on conflict grounds.”