By Thomas Wood

Introduction

Net neutrality is the idea that internet service providers (ISPs) cannot intentionally slow down or speed up certain websites that they favor or disfavor. In other words, under net neutra,lity all lawful websites should be treated equally regardless of which site ISPs prefer or sponsor. The argument for net neutrality is that a neutral internet is necessary to encourage innovation and fair competition. For example, if a website that challenges Netflix comes into existence, and one of the ISPs (ex. Comcast) supports Netflix, Comcast could either slow down the new Netflix competitor or create a fast lane exclusively for Netflix to stifle any competing video streaming services.

That is the exact argument which persuaded the Obama Administration to ask the Federal Communications Commission (FCC) to enact net neutrality rules. On February 26, 2015, the FCC voted 3-2 in favor of prohibiting ISPs from offering “fast lanes” and requiring equal access to the internet for all users. The commission vote did this by placing broadband ISPs as “common carriers” under the purview of Title II of the Communications Act of 1934, meaning ISPs would be regulated like telephone companies. At the time of the vote, one of the Republican appointed commissioners, Ajit Pai, publicly stated the FCC decision was unlawful and that the democratic commissioners were caving to pressure from the Obama Administration.

After the election of Donald J. Trump as the 45th President, it was predicted that FCC’s 2015 decision to place ISPs under Title II would soon be overturned. Those suspicions were confirmed when President Trump appointed FCC Commissioner Ajit Pai, who opposed the 2015 net neutrality decision, as the next Chairman of the FCC. On December 14, 2018, the FCC, now under a Republican majority, voted to repeal the Obama administration’s net neutrality rules, giving ISPs the ability once again to create fast lanes for websites they supported or slow down lanes for competitors. The decision drew criticism from consumer advocates, and led several lawsuits against the FCC by states, advocacy groups, and websites in favor or net neutrality.

In addition to lawsuits against the FCC, several states decided to enact net neutrality legislation. These state net neutrality enactments did not provoke a response from the Trump administration until the state of California enacted SB-822 (also known as the “California Internet Consumer Protection and Net Neutrality Act of 2018”). SB-822 bans internet providers from blocking or slowing down websites and prohibits ISPs from charging websites special fees or exempting favored apps from consumer data caps. On September 30, 2018, after California Governor Jerry Brown signed SB-822 into law, former Attorney General Jeff Sessions issued a statement announcing that the Department of Justice would sue California for violation of the dormant commerce clause.

Dormant Commerce Clause

The “Dormant Commerce Clause” (also known as the “Negative Commerce Clause”) is not contained anywhere in the United States Constitution. Rather, it is an implied power, which Justice Marshall first articulated in the landmark Supreme Court case of Gibbons v. Ogden. The Dormant Commerce Clause is the negative inference that since Congress has the power to regulate interstate commerce under Article 1, Section 8, states cannot discriminate against, or place undue burdens on, interstate commerce.

When a Dormant Commerce question arises, the court will first ask whether the state act discriminates against interstate commerce, and if the answer is yes, then the state act violates dormant commerce unless there is evidence that the out of state commerce is a threat to the health and safety to others. The most well-known application of this first part of the inquiry is the case of Philadelphia v. New Jersey, where the court held that a law banning out of state trash was discriminatory against interstate commerce. However, a state actions will not violate interstate commerce if there is a valid health or welfare reason to engage in state discrimination. Second, if the state action does not overtly discriminate against interstate commerce, then the court turns to the Pike Balancing test, and asks whether the action imposes a “clearly excessive” burden on interstate commerce.

The Dormant Commerce Clause’s Application to the California’s Net Neutrality Law

California recently announced an agreement with the DOJ that California would put a hold on enforcement of the state net neutrality law until the D.C. Court of Appeals reaches an outcome in the lawsuit against the FCC over their repeal of net neutrality. If that suit were successful, then the FCC would have to enforce ISPs under Title II again, making the California law (and the dormant commerce questions attached) moot. But if that lawsuit against the FCC is unsuccessful, California’s consumer protection law would be the last line of defense for advocates of net neutrality.

The United States Supreme Court has not yet addressed whether the internet qualifies as interstate commerce, but given that the purpose of the internet is to bring together users from all over the globe, it seems likely that the internet would qualify as “interstate commerce” under the United States Constitution. Applying the 2-part inquiry commonly used by courts in Dormant Commerce questions: there is no language in the California statute expressly prohibiting out of state ISPs. Therefore, it is unlikely the California law would fit under the overt type of discrimination against out-of-state commerce frowned upon in Philadelphia v. New Jersey.

The better argument for the government would be that since California is the state with the closest relationship to ISPs, web developers, and tech companies, any regulation from California of ISPs would enact a significant, excessive burden on the ability of ISPs to deliver the internet to consumers in other states around the country. California would likely rebut this argument by challenging that premise – claiming that an internet without net neutrality, where ISPs are able to slow down individual websites, would be the excessive burden on interstate commerce. California could also argue that the decision would not have any effect on the current state of the internet because after the net neutrality rule, the ISPs issued a joint statement pledging to not throttle or block lawful websites. If that statement is truly sincere, then a state law which codifies that same principle into law would not be “clearly excessive” under the Pike balancing test.

It is unlikely that any of California’s arguments would persuade recently confirmed Justice Brett Kavanaugh, who replaced retiring Justice Anthony Kennedy this year. As a federal judge in the D.C. Circuit Court of Appeals, Justice Kavanaugh authored a dissenting opinion arguing that the 2015 FCC net neutrality rule was unconstitutional.  Justice Kavanaugh’s dissenting opinion also seemed to indicate a possible willingness to apply dormant commerce power to state net neutrality laws by stating, “Article I of the Constitution affords substantial power to regulate interstate commerce.”

Regardless of the outcome, if the California lawsuit ultimately goes forward, it would have massive implications on the ability of states to regulate the internet and protect consumers. This administration has made the choice to disregard the risks of losing a free and open internet in favor of the “market-based approach” advocated by FCC Chairman Ajit Pai. In that situation, it is incumbent on states like California to fill the void left by the federal government and prevent ISPs from placing burdens on consumers and content providers.

Student Bio: Thomas Wood is a second-year student at Suffolk University Law School and staff member of the Journal of High Technology Law (JHTL). He holds a Bachelor of Science in Criminal Justice from the University of Massachusetts Lowell, with a minor in Political Science.

Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.

 

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