2nd Circuit: When the FCC abdicates its power over broadband, states can act

In 2021, New York adopted the Affordable Broadband Act, which requires broadband providers to offer affordable options to low-income households. 

Today, the Court of Appeals for the Second Circuit upheld New York State’s Affordable Broadband Act (ABA) against a preemption challenge by a group of ISP trade organizations. 

In 2021, the district court accepted the ISPs preemption arguments, enjoining New York from enforcing the law. New York State appealed the final judgment to the Court of Appeals for the Second Circuit; the case was argued in January 2023. 

In 2021, Professor Michael Burstein and I filed a friend-of-the-court brief with a group of internet law professors in defense of the law.

Here’s my statement:

This decision is a sweeping victory for New York State and New York consumers. It clearly establishes states’ ability to protect their residents against misbehavior by the internet service providers they pay to get online when the FCC says it has no authority. 

Today’s decision means that if a future FCC again decided to abdicate its oversight over broadband like it did in 2017, the states have strong legal precedent, across circuits, to institute their own protections or re-activate dormant ones.

The case law is now abundantly clear that if the FCC eliminates its authority over broadband by miscategorizing it as a Title I information service, then the states can step in. They can create their own net neutrality protections, like California and others do, require affordable broadband options like New York, and institute broadband privacy protections like Maine.

The ISPs had argued that New York State’s Broadband Affordability Law conflicts with the FCC’s decision that ISPs should be free of regulation, including rate regulation. According to the case law, an agency that has no power to regulate has no power to preempt the state. As the Second Circuit explained, that principle applies not only when the FCC expressly preempts the states, but also to claims that there is a conflict.

In 2015, the FCC had classified broadband as a Title II telecommunications service. The FCC has broad authority over telecommunications services, and virtually no authority over information services such as websites and apps. So when the FCC in 2018 put broadband in the “information services” bucket, it removed any authority that would allow the FCC to adopt net neutrality protections or broadband affordability laws like New York State’s.

Essentially, the 2018 Order created a regulatory vacuum, and you can’t conflict with a vacuum.

The Court also rejected ISPs’ claims that states are completely blocked (“field preempted") from regulating any communications service that falls within the scope of the Communications Act or from regulating the rates of such services. 

I was pleased to see that the Court adopted the arguments Professor Michael Burstein and I had made in a friend-of-the-court brief rejecting these field preemption claims, including my research showing that states had done similar regulation of cable TV services in the 70s. The brief was joined by Internet Law Professors Brett M. Frischmann, Chris Jay Hoofnagle, Lawrence Lessig, Pamela Samuelson, and Jason M. Schultz.

On Thursday, the FCC voted to reclassify broadband as a Title II telecommunications service and restore net neutrality protections for all Americans.

Friday’s court ruling made clear that if the FCC decides in the future to go back to Title I, giving up its power over broadband, states can step in with new laws or activate dormant ones.

From the Court’s powerful conclusion:

Several of the Plaintiffs in this action vociferously lobbied the FCC to classify broadband internet as a Title I service in order to prevent the FCC from having the authority to regulate them. At that time, Supreme Court precedent was already clear that when a federal agency lacks the power to regulate, it also lacks the power to preempt. The Plaintiffs now ask us to save them from the foreseeable legal consequences of their own strategic decisions. We cannot.  

If they believe a requirement to provide internet to low-income families at a reduced price is unfair or misguided, they have several pathways available to them. They could take it up with the New York State Legislature. They could ask Congress […] They could ask the FCC to revisit its classification decision, as it has done several times before. But they cannot ask this Court to distort well-established principles of administrative law and federalism to strike down a state law they do not like.

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