In ACA Connects v. Bonta, a Ninth Circuit panel held that, as a result of the FCC's decision to classify broadband Internet access service as an "information service," the agency did not decline to exercise its authority to regulate broadband; instead, the agency lacked authority to regulate broadband. In other words, Ninth Circuit determined that the Restoring Internet Freedom Order resulted in a withdrawal of FCC jurisdiction over broadband Internet access services. And the court held that because the FCC lacks jurisdiction over broadband, it can't preempt state laws. The full Ninth Circuit declined to review this decision en banc and the ISPs will not ask for Supreme Court review.
But the end of the ACA Connects litigation over California's net neutrality law does not definitively resolve the issue about the preemptive effect of the RIF Order. The Ninth Circuit's interpretation of the law is at odds with the June 2021 decision by the U.S. District Court in New York Telecommunications Association v. James. That case involves a legal challenge to New York's broadband price control law. The District Court in James determined that the New York law was preempted by the RIF Order. It recognized that the FCC has some, though limited, regulatory jurisdiction over information services under Title I of the Communications Act and can thus preempt state law on that ground. Free State Foundation Director of Policy Studies Seth Cooper explained and endorsed the District Court's reasoning in a June 2021 Perspectives from FSF Scholars.
The District Court's decision in James is now on appeal and the same preemption issue involving the Restoring Internet Freedom Order is pending before the Second Circuit. A prospective decision by the Second Circuit that recognizes the preemptive force of the RIF Order could create a circuit split with the Ninth Circuit.
Indeed, Free State Foundation President Randolph May believes the ISPs' termination of the ACA Connects litigation may be a strategic decision to prioritize the Second Circuit case. As quoted in the May 6 edition of Communications Daily:
ISPs might "think they have much better odds" in the 2nd Circuit case, emailed Free State Foundation President Randolph May. "The ISPs prevailed in the trial court on their claim that the New York law is preempted by the FCC's deregulatory policy established in the Restoring Internet Freedom Order," and have a good chance to win on appeal, he said. The New York law clearly involves setting rates, which "makes it an even easier preemption case for a court to understand than one" about net neutrality, said May: The possible circuit split would increase the odds of Supreme Court review. The continued litigation "highlights why it would be preferable for Congress finally to adopt a law setting forth an appropriate framework for broadband regulation," he added.
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