Ninth Circuit Opens Door To State-Level Regulation Of Internet Access – Litigation, Mediation & Arbitration

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Ninth Circuit Opens Door To State-Level Regulation Of Internet Access

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On January 28, 2022, the US Court of Appeals for the Ninth
Circuit issued a decision upholding a California law that applies
“network neutrality” requirements to internet service
providers in the state, affirming a decision by a federal
district court to deny a preliminary injunction requested by
industry trade associations. Network neutrality is a form of
regulation that prohibits internet service providers from adopting
practices that could impede the flow of information on the
internet. It typically includes obligations not to block traffic,
not to discriminate in transmitting different types of traffic, and
to provide customers with information about their services. This
decision allows California to continue to enforce its law,
increases the likelihood that similar state laws could be adopted
and enforced, and potentially permits other forms of regulation for
internet access services.

The central issue in the case was whether California’s
legislation was preempted by federal law. The Ninth Circuit held
that a 2018 decision from the Federal Communications Commission
eliminating federal network neutrality regulation did not prevent
states from adopting similar laws. In reaching this conclusion, the
Ninth Circuit relied on a separate case in which the US Court of
Appeals for the District of Columbia Circuit ruled that the
FCC’s broad claim that it was preempting any state network
neutrality laws could not be accepted because the FCC had
disclaimed any general authority to regulate internet
access. The court also dismissed arguments that the California
law conflicts with the federal Communications Act and that the act
precludes regulation of internet access because such access is an
interstate service.

What’s next?

The industry parties to this case can seek further review from
the full Ninth Circuit or the Supreme Court. If they do not request
review or if any requests are denied, the case goes back to the
district court.

This decision leaves California’s network neutrality
requirements in place, but it also could have wider
implications. In particular, the decision encourages other
states to adopt their own network neutrality requirements. In
addition, because the Ninth Circuit rejected broad preemption of
state internet regulation, this decision could encourage efforts to
adopt other types of regulation, such as requirements to serve
sparsely populated areas, obligations to provide inexpensive
service to low-income customers or mandatory service-quality
standards. This decision also will add urgency to efforts by the
FCC to reinstate its network neutrality rules, and could spur
Congress to consider enacting a federal network neutrality law,
although it does not appear that network neutrality is a
legislative priority at this time.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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