Court: FCC Can Dump Net Neutrality Rules, But Can't Block State Laws

WASHINGTON — The Federal Communications Commission can dump rules that keep internet providers from favoring some services over others, but it cannot bar states like California from enacting their own prohibitions, a federal court ruled on Tuesday.

While the ruling handed Trump-appointed regulators a partial victory, consumer advocates and other groups viewed the ruling as a victory for states and local governments seeking to put their own net neutrality rules in place.

The FCC's 2015 net neutrality rules had barred internet providers such as AT&T, Comcast and Verizon from blocking, slowing down or charging internet companies to favor some sites or apps over others.

After the FCC repealed those rules in 2017, phone and cable companies were permitted to slow down or block services they don't like or happen to be in competition with. Companies were also allowed to charge higher fees to rivals and make them pay for higher transmission speeds.

Such things have happened before. In 2007, for example, The Associated Press found that Comcast was blocking or throttling some file-sharing — and AT&T blocked Skype and other internet calling services on the iPhone until 2009.

The court now says that's all permissible — as long as companies disclose it.

But in Tuesday's decision, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the FCC failed to show legal authority to bar states from imposing any rules that the agency repealed or that are stricter than its own.

"This ruling empowers states to move forward in the absence of a federal approach to consumer protections," said Lisa Hayes, co-CEO of the Center for Democracy & Technology.

States have already come up with their own net neutrality laws, including one in California that was put on hold until the issue worked its way through the courts. Congressional Democrats have attempted, unsuccessfully, to reverse the FCC's repeal.

Then-California Gov. Jerry Brown signed the nation's toughest net neutrality measure in September 2018 — legislation co-authored by Democratic state Sen. Scott Wiener of San Francisco — which required internet providers to maintain a level playing field online.

The move prompted an immediate lawsuit by the Trump administration.

"While I‘m disappointed that the federal appeals court largely upheld the Trump FCC’s repeal of net neutrality, I’m thrilled that the court rejected the FCC’s effort to preempt state net neutrality laws," Wiener said in an email Tuesday. "As a result of this decision, California’s net neutrality law, SB 822, remains fully intact and the most impactful net neutrality law in the country."

Wiener added, "We will continue to fight for a free and open internet, federally and at the state level."

California's law stops internet service providers from blocking or slowing down certain websites or "classes of applications," like video.

It bans "paid prioritization," also called fast lanes, where some websites could pay internet service providers (ISPs) more for faster access. It also stops ISPs from using certain types of "zero-rating," under which they exempt certain traffic from counting against a customer's data usage.

Ernesto Falcon, senior legislative counsel for the Electronic Frontier Foundation, said he was a “glass half full person” on the ruling.

"The fact that the states will be able to fill in the void and protect consumers directly in the absence the FCC is a very good thing for internet users," Falcon said. "There was a real danger that not only could the FCC repeal net neutrality, but it also prevents states from protecting people in lieu of the FCC. And this decision was pretty clear that that will not be the case."

The federal court directed the FCC to rework its order to include the impact of its repeal on public safety. FCC Chairman Ajit Pai said the agency will address the "narrow issues" cited by the court.

"Today's decision is a victory for consumers, broadband deployment, and the free and open internet," Pai said in a statement. He maintained that speeds for consumers have increased by 40% since the agency's 2017 repeal, "and millions more Americans have gained access to the internet."

Net neutrality has evolved from a technical concept into a politically charged issue, the focus of street and online protests and a campaign issue lobbed against Republicans and the Trump administration.

The FCC has long mulled over how to enforce it. The agency had twice lost in court over net-neutrality standards before a Democrat-led commission in 2015 voted in a regime that made internet service a utility, bringing phone and cable companies under stricter oversight. An appeals court sanctioned the 2015 rules.

After the 2016 election, President Trump appointed a more industry-friendly FCC chairman. Pai repealed the net neutrality rules in 2017, saying they had undermined investment in broadband networks.

This post will be updated.

KQED's Sonja Hutson contributed to this report. Reporting from NPR was also used.