A federal appeals court upheld most parts of a Republican rollback of Obama-era rules governing so-called net neutrality, but the decision gave room for states to issue tougher restrictions that run counter to the deregulatory approach.
At issue are internet traffic rules implemented last year by the Federal Communications Commission under Republican Chairman Ajit Pai. The new regime gave broadband providers leeway to block or slow internet traffic but required them to be transparent if they were doing so.
Those new guidelines wiped out rules adopted by a Democratic FCC in 2015. Those regulations were dubbed net neutrality because they prohibited internet-service providers like AT&T Inc., Comcast Corp. and Verizon Communications Inc. from blocking or slowing traffic or from offering priority service where companies could pay for their content to reach internet users at faster speeds.
The rollback’s impact so far has been muted. Backers say deregulation has led to higher internet speeds and easier internet access for millions of Americans. Critics question those claimed benefits and say the rules will eventually create different tiers of service that harm some consumers and content providers.
Tuesday’s ruling, by leaving most of the rollback in place, largely preserved the status quo. But the decision could also lead to more months or years of regulatory uncertainty as some states test their powers to place additional requirements on internet-service providers. Congress, meanwhile, has been unable to agree on a policy solution; broadband service continues to be governed by a 1996 law adopted when internet services looked far different than they do today.
The decision, by the U.S. Court of Appeals for the District of Columbia Circuit, found that most of the rollback was lawful, with a three-judge panel unanimously concluding that it was reasonable for the current FCC to change course and abandon the Obama-era approach of regulating internet-service providers like utilities.
Judges, however, were divided when they threw out part of the FCC rules that sought to preempt states from issuing tougher regulations than the federal government.
“At bottom, the commission lacked the legal authority to categorically abolish all fifty States’ statutorily conferred authority to regulate intrastate communications,” the court wrote in a portion of the decision endorsed by Judges Patricia Millett and Robert Wilkins, both Obama appointees.
Dissenting from that holding, Judge Stephen Williams, a Reagan appointee, said the ruling would leave broadband “subject to state regulation in which the most intrusive will prevail.”
The D.C. Circuit also said the FCC needed to spend additional time considering how its rules would affect public safety, such as the ability of first responders and members of the public to communicate during a crisis.
Despite the setback on preemption, Mr. Pai cheered the court’s decision, calling it “a victory for consumers, broadband deployment and the free and open Internet.”
“The court affirmed the FCC’s decision to repeal 1930s utility-style regulation of the Internet imposed by the prior administration,” Mr. Pai said. “The court also upheld our robust transparency rule so that consumers can be fully informed about their online options.”
FCC officials are reviewing the ruling but believe state regulations may be preempted on a case-by-case basis if they conflict with the commission’s approach.
The D.C. Circuit’s decision to leave the door open for state regulation is sure to lead to additional litigation.
California—the most notable state to act so far—in 2018 passed its own legislation, which resembles the Obama FCC rules by forbidding internet-service providers from blocking websites, intentionally slowing down a website or app or accepting payments to make online services go faster.
The Justice Department has sued to block the California net neutrality law, and the case is pending.
“California will continue to fight for a free and fair internet,” state Attorney General Xavier Becerra, a Democrat, said.
Consumer groups, internet companies and a coalition of Democratic-led states filed legal challenges to the Trump-era approach.
“Our fight to preserve net neutrality as a fundamental digital right is far from over,” said Amy Keating, chief legal officer at Mozilla Corp., maker of the Firefox web browser and one of the plaintiffs in the case. “We are encouraged to see the court free states to enact net neutrality rules that protect consumers.”