Trump administration sues after Calif. passes nation’s strictest net neutrality law

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SACRAMENTO — California will soon have the country’s strictest net neutrality protections, thanks to a bill that Gov. Jerry Brown signed into law Sunday.

The law could serve as a blueprint for other states, set California up for a clash with the federal government — and possibly draw a lawsuit from major internet providers.

The bill was approved by lawmakers in early September, but it had been unclear if Brown would veto or approve the comprehensive measure, even though it had broad support from state Democrats.

Under the law, internet service providers will not be allowed to block or slow specific types of content or applications, or charge apps or companies fees for faster access to customers.

The Trump administration announced a lawsuit against the state a short time after the protections’ passage.

“The Justice Department today filed a lawsuit against the state of California alleging that Senate Bill 822, an Internet regulation bill signed into law earlier today by Governor Jerry Brown, unlawfully imposes burdens on the Federal Government’s deregulatory approach to the Internet,” the DOJ said in a release.

The lawsuit is based on the argument that only the federal government, not state government, has the power to regulate net neutrality.

“Under the Constitution, states do not regulate interstate commerce—the federal government does,” said Attorney General Jeff Sessions. “Once again the California legislature has enacted an extreme and illegal state law attempting to frustrate federal policy. The Justice Department should not have to spend valuable time and resources to file this suit today, but we have a duty to defend the prerogatives of the federal government and protect our Constitutional order.  We will do so with vigor. We are confident that we will prevail in this case—because the facts are on our side.”

Rep. Nancy Pelosi (D-Calif.) was quick to defend the law:

“California is once again proudly leading the nation to guarantee that the free and open Internet is here to stay. Thanks to the leadership of Senator Wiener, Governor Brown, the California legislature and advocates and activists across the state, California has enacted the strongest net neutrality protections in the country, defending this essential engine of innovation, job creation and free speech for all Americans.”

California is the third state to pass its own net neutrality regulations, following Washington and Oregon. However, it is the first to match the thorough level of protections that had been provided by the Obama-era federal net neutrality regulations repealed by the Federal Communications Commission in June. At least some other states are expected to model future net neutrality laws on California’s.

The original FCC rules included a two page summary and more than 300 additional pages with additional protections and clarifications on how they worked. While other states mostly replicated the two-page summary, California took longer crafting its law in order to match the details in the hundreds of supporting pages, said Barbara van Schewick, a professor at Stanford Law School.

“Most people don’t understand how hard it is to do a solid net neutrality law,” said Schewick. “What’s so special about California is that it includes not just two pages of rules, but all of the important protections from the text of the order and as a result closes the loopholes.”

Loopholes addressed in California’s new law include a prohibition on “zero rating,” which allows carriers to exempt content from certain companies (like their own streaming services) from counting against a customer’s data usage. The prohibition would not apply if a carrier wanted to exempt an entire category of content, like all streaming services. It also bans interconnection fees, which are charges a company pays when its data enters the internet provider’s network.

As the largest economy in the United States and the fifth largest economy in the world, California has significant influence over how other states regulate businesses and even federal laws and regulations. That power is being tested under the Trump administration, which is currently battling the state in court over multiple issues, including emissions standards, immigration laws and the sale of federal lands.

“It’s critically important for states to step in,” state senator Scott Wiener, who co-authored the bill, told CNNMoney. “What California does definitely impacts the national conversation. I do believe that this bill … will move us in a positive direction nationally on net neutrality.”

For that to happen, the law will likely have to survive a legal battle. Major broadband companies, including AT&T and Comcast, have lobbied heavily against the California bill. (AT&T is the parent company of CNN.) They say the new rules will result in higher prices for consumers.

“The broadband providers say they don’t want state laws, they want federal laws,” said Gigi Sohn, a fellow at the Georgetown Law Institute for Technology and a former lawyer at the FCC, in an interview. “But they were the driving force behind the federal rules being repealed … The federal solution they want is nothing, or extremely weak.”

ISPs may sue California over the bill. The FCC could also fight California over a pre-exemption clause included in its 2017 order repealing net neutrality protections. The FCC holds that it can preempt state-level laws because broadband service crosses state lines. Legal experts are split over whether or not the FCC can challenge a state net neutrality law, but Wiener believes the clause is unenforceable.

“We don’t think the FCC has the power to preempt state action,” said Wiener. “We don’t know exactly what the FCC will do, but we are prepared to defend this law. We believe that California has the power to protect the internet and to protect our residents and businesses.”

The authors of the bill did have support from consumer and labor groups, grassroots activists, and small and mid-sized tech companies including Twilio, Etsy and Sonos. Larger technology companies, like Apple, Google, and Facebook, have stayed quietly on the sidelines.

Jonathan Spalter, president of USTelecom — a trade group representing broadband providers — said while the group supports “strong and enforceable net neutrality protections for every American,” the bill was “neither the way to get there nor will it help advance the promise and potential of California’s innovation DNA.”

“Rather than 50 states stepping in with their own conflicting open internet solutions, we need Congress to step up with a national framework for the whole internet ecosystem and resolve this issue once and for all,” Spalter said.

Sohn and van Schewick believe states with legislatures controlled by Democrats are the ones most likely to pass strong net neutrality protections. Other states have already started working on similar bills, including New York and New Mexico.

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