Conflict Preemption of State Net Neutrality Efforts After Mozilla

The D.C. Circuit issued its long-awaited decision in Mozilla v. Federal Communications Commission.  The court affirmed the Federal Communications Commission’s Restoring Internet Freedom (RIF) Order, identifying some flaws in the agency’s reasoning but finding the agency could likely correct those errors on remand without vacatur. Though largely expected given the Supreme Court’s precedent in Brand X, the decision is nonetheless a sweeping victory for the FCC and judicial validation of Chairman Ajit Pai’s light-touch regulatory framework for the broadband industry. While chastened by the ruling, some net neutrality advocates have identified a potential silver lining. The court vacated the portion of the RIF Order that expressly preempted state and local broadband regulations. The court found that the order failed to ground the express preemption provision in a lawful source of statutory authority. Advocates have latched onto this holding as permission for legislatures to reimpose at the state level the restrictions that the FCC repealed at the federal level. But these advocates are likely to be disappointed, as this reads too much into the court’s decision. Any state effort to regulate broadband providers is still subject to conflict preemption on a case-by-case basis. As the court explained, “[i]f the Commission can explain how a state practice actually undermines the 2018 Order, then it can invoke conflict preemption.” The court recognized that the Order created a “light-touch” regulatory regime that relies on transparency and disclosure requirements against a backdrop of consumer protection and antitrust law to protect consumers, an approach that the court found reasonable. State laws that disrupt this carefully balanced federal policy are likely to be preempted—not by the RIF Order itself, but by the Supremacy Clause. In other words, it is unlikely that the courts will allow the Internet—which, by definition, cannot possibly be segregated into interstate and intrastate components—to be governed by state legislators or other local officials in Sacramento, California, or Montpelier, Vermont.