Getty images | Naruecha Jenthaisong
The broadband industry’s attempt to eliminate California’s net neutrality law appears to have very little chance of success in the U.S. district court, where the case is being heard.
On February 23, the industry’s motion for an injunction was denied by Judge John Mendez of the United States District Court for the Eastern District of California, as we reported at the time. We didn’t have much detail about Mendez’s reasoning last month, but since then we have obtained an unpublished public transcript of the hearing at which he issued his verbal decision against the injunction. (He did not issue a written decision, citing time constraints caused by the lack of judges in his district).
Mendez’s denial of the injunction means that California can apply its net neutrality law as the case continues, leaving open the possibility that Mendez could ultimately side with the broadband industry. But Mendez explained during the hearing why he thinks the industry is unlikely to succeed in the trial.
“I don’t think the plaintiffs have shown a likelihood of success on the merits at this stage of the litigation,” said Mendez.
California law prohibits Internet service providers from blocking or restricting legal traffic. It also prohibits the requirement of fees for websites or online services to provide or prioritize their traffic to consumers, prohibits paid data limit exemptions (called “zero rating”) and says that ISPs cannot try to escape the neutrality protections of decreasing traffic speed at network interconnection points.
AT&T stops charging for zero rating
Mendez’s decision is already taking effect, as AT&T announced on Wednesday that it will end its “sponsored data” program, in which it charges online services for data limit exemptions.
“We regret the inconvenience to customers caused by California’s new ‘net neutrality’ law,” said AT&T. “Given that the Internet does not recognize state boundaries, the new law not only undermines our ability to provide California customers with such free data services, but also impacts our customers in states beyond California.” AT&T also complained that a “patchwork of state regulations” is “impractical”, failing to mention that AT & T’s longstanding struggle against network neutrality rules in the United States helped ensure that states issued their own laws .
Ernesto Falcon, senior legislative advisor to the Electronic Frontier Foundation, wrote on Twitter that “AT & T’s zero-rating version with low data limits was a way to direct its users to content they own. That’s why low-income advocates in California wanted it to go away. Mobile users only tended to have a low income and couldn’t get the full Internet. “
The judge did not believe the ISPs’ interstate argument
Most of the hearing transcript consists of the judge asking questions for each side, and he had far more skeptical questions for lawyers in the broadband industry than for California. His skepticism moved from the audience’s argument phase to the part in which he announced and explained his decision.
The industry, represented by lobby groups from leading cable, DSL, fiber and mobile Internet providers, “stated that the Communications Act gave the FCC exclusive authority to regulate interstate communications, leaving states only able to regulate purely intra-communications -state, “Mendez said. “But the court considers that the provisions of the Act on which the plaintiffs are based do not support the arguments that have been raised.”
For example, Section 152 of the Communications Act “grants the FCC the authority to regulate interstate communications, while preventing it from regulating intra-state communications, but this grant of authority to the FCC does not indicate anything about the power of the states, “said Mendez. The fact that the US communications law “specifically excluded certain types of interstate communications from the FCC’s jurisdiction, such as information services, indicates to this court that this is not the type of generalized regulatory system that leaves no room for state law, “he said.
Under former President Ajit Pai, the FCC reclassified broadband as an information service instead of a telecommunications service, abandoning the power of Title II that the FCC has to regulate ISPs as common operators. The Pai FCC also stated that state network neutrality laws should be avoided because they would conflict with a federal policy of non-regulation.
In the case of California, ISPs “argue that state regulations for the common transportation of information services would be an obstacle to Congress’ decision to immunize those services from such regulation,” said Mendez. But Congress has clearly declared no intention to prevent state and federal regulation of intelligence services, he said. Mendez then cited a section of Congress’ 1996 update to the Communications Act that says: “This law and the amendments made by this Act should not be interpreted to modify, undermine or replace federal, state or local law, unless expressly provisions of such Law or amendment. ”
Summary cited by ISPs is not relevant
Mendez also addressed the ISPs’ argument that the Supreme Court has long held in similar contexts that, where Congress has prohibited federal regulators from imposing specific obligations, states cannot impose such regulation without conflict with the Supremacy Clause ” .
The ISPs’ argument is mainly based on a 1986 decision in a case involving federal regulation of wholesale natural gas in interstate commerce, said Mendez. But that case, in which federal law “occupied the field and prevented state regulation … was a direct application of field preemption that has no application here,” said Mendez.
The FCC of Pai decided that “lacked authority”
Mendez also criticized ISPs’ argument that California law conflicts with “the FCC’s deregulation policy for broadband Internet access” that was spelled out in Pai’s repeal of the net neutrality rules. As Mendez said, Pai FCC’s request “reinterpreted broadband Internet as an information service covered by Title I of the Communications Act, rather than a telecommunications service covered by Title II and therefore placed it outside the scope of regulatory framework of the FCC. “
Mendez continued:
The result is that [FCC’s net neutrality repeal] order is not an instance of affirmative deregulation, but, on the contrary, an FCC decision that it lacked the authority to regulate in the first place … [A]agency regulations can take precedence over state law only if the agency has delegated authority over the matter. An agency’s failure to regulate a practice it has no authority to regulate simply shows that it is respecting the limits of its powers, it is not exercising delegated authority to decide whether the matter should also be free from state regulation.
The FCC has the authority to decide whether broadband Internet access is an information service, but Mendez said that “the deregulation objectives behind this decision have no preventive effect”.
This is similar to what a federal appeals court ruled in 2019 when it upheld Pai’s repeal of federal net neutrality rules while blocking a national preemption of state regulation. “[I]n any area in which the Commission has no authority to regulate, it also does not have the power to anticipate state law, “said the decision. Despite blocking Father’s attempt at national preemption, the 2019 decision said state laws individual cases could be challenged in a case – by case, allowing the litigation against California to continue.
After Biden replaced Trump as president, the U.S. Department of Justice has given up its own lawsuit against California, so ISPs continue to struggle without federal support.
Zero-rating ban is not fee regulation
The transcript also shows that Mendez disagreed with the broadband industry about California’s ban on ISPs charging online services for “zero-rating”, the practice in which AT&T and other operators exempt specific services from counting against data limits. ISPs argued that “zero rating clauses improperly regulate the fees charged,” said Mendez. He refuted this argument, explaining:
The zero rating clause provides that, as with paid prioritization, mobile broadband providers cannot manipulate their subscribers’ Internet access experience to favor paid or affiliated content over other content on the Internet.
But, as the defendants point out, these provisions do not regulate how much providers can charge their customers because providers can charge the user how much they want for the service and, therefore, there is no conflict with the [Communications] Act.
Prevent harm to Internet users
Having exhaustively contested ISPs’ arguments, Mendez said that denying the injunction would not cause irreversible damage to the industry. “In finding that there is no likelihood of success as to the merits of the arguments raised, the court also considers that there is then no irreparable damage [to ISPs]”Said Mendez.
California and its supporters have submitted reports “describe[ing] in detail how regulations are essential for fair internet access, “said Mendez. He continued:
These are not hypothetical concerns. For example, the defendant filed a statement from Anthony Bowden, Santa Clara County Fire Chief, describing how Verizon allegedly strangled the fire department connection in the middle of its response to the Mendocino complex fire.
The defendants also sent comments from the New York attorney general, who found that major ISPs made the deliberate business decision to allow their network connections to become congested with traffic and used that congestion as a lever to extract payments from others.
It seems … that the issuing of an injunction would have a negative impact on the state of California, more than the ISP companies and on the welfare of the public. Clearly, the court considers that it is not in the public interest to issue the injunction and the balance of the shares, according to the court, weighs in favor of California.
When ISPs appeal, the judge urges Congress to act
ISP lobbying groups are appealing Mendez’s denial of the injunction to the United States Court of Appeals for the Ninth Circuit. Lobbying groups are also likely to file an appeal if Mendez decides against them after the case has been heard in full.
Mendez, who was nominated by President Bush in 2008, said that “there is an elephant in the room. There is clearly a political connotation in this case”. Mendez said that his decision against ISPs “is a legal decision and should not be viewed through any kind of political lens … it is obvious to all of us that this case raises issues that, frankly, can be better resolved by Congress than the federal courts. “