The Federal Government Declares War on California Over Net Neutrality

On September 30, the federal government filed suit against California mere hours after the state passed what has been called the “toughest net neutrality law ever enacted in the United States.” The new law was enacted to restore net neutrality rules in California after Obama-era federal protections were repealed by the FCC in December 2017. Although the repeal did not become effective until June of this year, the federal government has been battling the states over net neutrality since January.

This is not the first time that California in particular has clashed with Trump administration policies. In fact, this is just the latest battle in an ongoing war. The federal government filed another lawsuit against California in March of this year over state policies aimed at blocking deportations of illegal immigrants, at which point California Governor Jerry Brown accused the Justice Department of “declaring war” on the state.

Even if small tech companies and consumers do not become major casualties of the war over net neutrality (and this is yet to be determined), it is clear that at least one state is not ready to surrender.

California Attorney General Xavier Becerra and Attorney General Jeff Sessions both issued public statements on the day this latest lawsuit was filed, engaging in a war of words well before the suit sees the inside of a courtroom. Sessions did not hold back in his criticism of the state action: “Once again, the California legislature has enacted an extreme and illegal state law attempting to frustrate federal policy.”

Sessions also made clear the government’s constitutional grounds for bringing the suit by adding that “states do not regulate interstate commerce – the federal government does.” Furthermore, the DOJ has pointed out that the power to regulate the Internet has been delegated exclusively to the FCC by Congress.

Becerra, on the other hand, approached the issue from a consumer protection standpoint, stating that California is “home to countless startups, tech giants and nearly 40 million consumers” and “will not allow a handful of power brokers to dictate sources for information or the speed at which websites load.”

However, Ajit Pai, the Chairman of the FCC who championed the repeal of the Obama-era net neutrality rules argued, in yet another statement released on September 30, that California’s new law “hurts consumers” by prohibiting many popular “free-data plans.” Pai also argues that the repeal of the Obama-era rules will eventually lead to faster and cheaper Internet as competition increases among service providers.

The DOJ is seeking a preliminary injunction to prevent the new law from taking effect on the scheduled date of January 1, 2019. The government is concerned about the effect this new law could have in California and beyond. Practically speaking, it will be difficult for internet companies to comply with one set of rules in California and operate under entirely different standards everywhere else in the nation. States “setting their own rules governing Internet accessis the very dilemma the FCC thought it was preempting when the previous rules were repealed last year.

When the FCC repealed the net neutrality rules, it cited the regulatory burden on large telecom companies to comply with the Obama-era standards. The telecom industry strongly opposes net neutrality laws like the one California just passed. However, smaller tech companies that do not provide Internet services stand to benefit from these types of rules that require the “AT&T, Comcast, and Verizon[s]” in the game to “treat all web traffic equally.”

There is a large push across the nation to restore the previous net neutrality rules and the U.S. Senate voted to do so in May of this year. However, that measure has yet to pass the House of Representatives and would certainly be vetoed by Trump in the event that it did.

The regulatory moves as well as the surrounding rhetoric have been especially partisan. First, the vote of FCC to repeal the former net neutrality rules was 3-2 along party lines.

Next, after the repeal was announced, 21 states as well as the District of Columbia brought suit against the federal government to prevent the FCC deregulation from becoming effective. Not surprisingly, “[a]ll 22 attorneys general listed in the lawsuit [were] Democrats.”

Now, the Trump Administration is again going to battle against the bluest of blue states. Some have suggested that net neutrality is just another excuse for a Republicans versus Democrats showdown, simply “[p]artisan passions” playing out in the public forum. In a display of cooperation, Netflix (a tech company) and Comcast (a major Internet service provider) have taken matters into their own hands and made a deal to limit the effect of the FCC’s net neutrality rules, or lack thereof. This contract is oft-cited as evidence that the “FCC’s latest action may be less dramatic than widely expected.”

Even if small tech companies and consumers do not become major casualties of the war over net neutrality (and this is yet to be determined), it is clear that at least one state is not ready to surrender. If the media response is any indication, this lawsuit will likely become a “legal showdown over the future of the Internet.” One that could potentially go all the way to the Supreme Court.