FCC Can Roll Back Net Neutrality Rules But Can’t Block States From Their Own Regulation, Appeals Court Says

The ongoing battle over rules of the road for the internet will go on longer – maybe even much longer – after the D.C. Circuit Court of Appeals delivered a mixed ruling that will send some of the efforts at deregulation back to the FCC.

The battle is over net neutrality, or a set of rules to prohibit internet providers from blocking or throttling web traffic, or from selling so-called “fast lanes” to content providers for speedier access to the consumer. The idea is that all web traffic – whether coming from Netflix or a local church – should be treated equally.

In a contentious vote in 2017, the Republican-controlled FCC rolled back many of those Obama-era rules.

In their decision issued on Tuesday, the D.C. Circuit basically gave its OK to much of that deregulatory action. That included the FCC’s reclassification of internet service as an “information service,” a lighter regulatory framework that is backed by major cable and telecom companies. The Obama-era FCC had classified internet service as a “telecommunications service,” a far-stronger regulatory designation.

But the judges also struck down another, significant aspect of the FCC’s 2017 actions. That was a provision that preempted state and local governments from adopting their own set of net neutrality regulations. The FCC’s deregulatory efforts triggered a backlash, in which a number of state government passed their own net neutrality rules, including the state of California.

“The Commission ignored binding precedent by failing to ground its sweeping Preemption Directive – which goes far beyond conflict preemption – in a lawful source of statutory authority. That failure is fatal,” the judges wrote in their per curiam opinion.

The court also found fault in the FCC’s analysis of the impact that deregulation would have on public safety, low-income internet service and other issues, and asked the agency to provide additional justification and review.

The judges also upheld a regulation that the FCC passed in lieu of the Obama-era regulation: A transparency rule that requires ISPs to disclose their traffic management practices. But many net neutrality activists say that such a rule is insufficient to protect the internet from devolving into a system of tiers dominated by major content players.

In a statement, FCC Chairman Ajit Pai characterized the D.C. Circuit ruling as a victory.

“The court affirmed the FCC’s decision to repeal 1930s utility-style regulation of the Internet imposed by the prior Administration,” he said.  “The court also upheld our robust transparency rule so that consumers can be fully informed about their online options.”

He said that the FCC will have to reconsider “narrow issues.”

“We look forward to addressing on remand the narrow issues that the court identified,” he added.

FCC Commissioner Jessica Rosenworcel, one of two commissioners to vote against the FCC’s 2017 deregulation, wrote on Twitter that the court’s decision sends “back to the FCC much of the mess it made with net neutrality.”

“The court has given us another chance to protect what matters most: an open internet, public safety, affordable service and broadband infrastructure,” she wrote.

An FCC official said that they were still determining the impact of the court’s decision to strike down the FCC’s effort to preempt state net neutrality actions. They will determine if the FCC could try exercise its authority over state laws on a case-by-case basis.

Gigi Sohn, who was senior counselor to Tom Wheeler, the FCC chairman during the Obama administration, said that the states “are now free to do what the FCC will not: assert authority over the broadband market and protect the open internet.

“Broadband providers will inevitably complain about having to comply with a so-called ‘patchwork’ of different state laws, but that is their own making,” she said in a statement.

In a partial dissent, Judge Stephen F. Williams argued that without the FCC’s ability to preempt state laws, the deregulatory actions will be “meaningless.”

“Despite the ample and uncontested findings of the Commission that the absence of preemption will gut the Order by leaving all broadband subject to state regulation in which the most intrusive will prevail, and despite Supreme Court authority inferring preemptive power to protect an agency’s regulatory choices, they vacate the preemption directive,” he wrote.