Democratic State AGs Expected to Sue if FCC Proceeds With Net Neutrality Vote

“It is essential that the Commission gets a full and accurate picture of how changes to net neutrality will affect the everyday lives of Americans before they can act on such sweeping policy changes,” the 18 AGs wrote in the Wednesday letter. Following New York AG Eric Schneiderman’s lead (see 1712080043), Pennsylvania AG Josh Shapiro Wednesday launched a website for Pennsylvanians to report comments that falsely used their names. Schneiderman mailed the FCC, saying the agency is “blithely ignoring evidence” that New York found that 2 million comments used stolen identities. That many stolen IDs, taken with the AG letters, are good reasons to delay the vote, Commissioner Jessica Rosenworcel said.

"The vote will proceed as scheduled," an FCC spokesman said Wednesday. Other news Wednesday: on the FCC's proposal (see 1712130053) and how one group said it will sue, on how Disney possibly buying Fox may affect the debate (see 1712130010) and on the issue in Europe (see 1712120001).

“We’ll know almost as soon as the vote happens where the states stand on this,” predicted State and Local Legal Center Executive Director Lisa Soronen in an interview. “I would expect a lawsuit for sure.” It’s now “de rigueur” for state AGs from the party not in power nationally “to challenge any and all major regulatory initiatives,” said Wilkinson Barker attorney Ray Gifford. It would be surprising if no state AGs appealed or intervened in a legal challenge, said NARUC General Counsel Brad Ramsay.

The FCC vote is on Democratic AGs’ radars because “fairness matters,” said Democratic Attorneys General Association Executive Director Sean Rankin. “This move by Trump’s FCC would put fairness in doubt.” Rankin said “people from all walks of life and all ages rely on an open and fair internet.” DAGA’s GOP counterpart didn’t comment.

“I am deeply concerned that the FCC intends to gut net neutrality,” said Washington AG Bob Ferguson (D) in a statement. “Allowing internet service providers to discriminate based on content undermines a free internet and could seriously impact consumers and harm innovation and small businesses.”

Tweets, Too

Democrat AGs tweeting opposition to the FCC proposal this week included Shapiro, Schneiderman, California’s Xavier Becerra and Massachusetts’ Maura Healey. Shapiro also made a YouTube video. In July, 13 Democrat AGs supported the 2015 rules. In June, 35 state AGs from both parties opposed an industry petition to stop states from enforcing false-advertising laws related to internet speeds.

“If an issue is getting a lot of attention and it’s a partisan issue, nowadays the AGs are almost inevitably going to try to get involved,” Nolette said. Pre-emption irks states, he added. Democratic AGs signaled in the July FCC comments that they would sue, the Marquette professor said. He didn’t expect most if any Republican AGs to join due to today’s political polarization, with net neutrality directly putting at odds Obama and Trump administration positions. Net neutrality likely ranks “fairly high” on AGs’ agenda “because it’s a high-profile issue” despite being technical, he said. Democratic AGs face voter pressure to stand up to President Donald Trump and they have been working together closely on a variety of issues, “almost like a nationwide law firm,” Nolette said.

“The legal system that the FCC envisions has holes bigger than Swiss cheese,” and there “absolutely” will be a state lawsuit, said Catherine Sandoval, a Santa Clara University law professor. NARUC and the California Public Utilities Commission may want to participate in legal challenges at least as intervenors, the former CPUC commissioner and FCC staffer said. NARUC fights for state rights regardless of political party, she said. “The FCC cannot pre-empt the states from addressing basic safety and welfare issues.”

NARUC supported the 2015 FCC rules but hasn’t decided how it will respond to Thursday’s vote, Ramsay said. NARUC has 60 days from Federal Register publication to decide whether to file its own appeal, intervene or sit out, he said.

State Case

States have a strong case to win against the FCC, and may at least be able to delay the rules, said Nolette: “The breadth of the pre-emption,” which could wrap in privacy and other consumer protections, “makes it pretty vulnerable.”

States may challenge under the Administrative Procedure Act to say the FCC doesn’t have adequate information to reverse the 2015 order that was upheld in court, Nolette said. Some staff attorneys at large-state commissions find the draft’s legal reasoning “suspect and may fall to an arbitrary/capricious argument,” Ramsay said. State AGs are likely to argue the order doesn’t comply with the APA, including that the FCC hasn’t adequately considered impact on vital state functions and services, Sandoval said. “The FCC has no power to pre-empt state police power,” so the agency can’t stop states from protecting safety and welfare of their people, she said. Antitrust and unfair competition laws can remedy only harm to competition, she said.

“This has got a pretty good shot of getting struck down,” Soronen said. “Just because the old rule was OK doesn’t mean another rule couldn’t be OK, but when the [new] rule completely eviscerates the old rule, that’s going to be a stretch.”

Others said precedent is on the FCC’s side. “There is no particular federalism angle here that hasn’t been litigated -- and lost -- by the states in the aftermath of the salad days of the ’96 Telecom Act litigation years,” emailed Gifford, a former Colorado Public Utilities Commission chairman. “The Democrat state AG’s will largely be left with traditional administrative law challenges no different than other litigants -- that the action is ‘arbitrary and capricious’ [and] unsupported by record evidence.”

“The real test is likely to come in a case based on a particularized allegation, not in a prima-facie challenge to the exercise of the Commission’s preemption authority,” said Free State Foundation President Randolph May. Precedent, including Computer III pre-emption decisions, supports the FCC exercising pre-emption authority when states try to apply utility-like regulation to internet providers, the ex-FCC associate general counsel said. May said a closer case might involve an action brought by an AG “that invokes a state consumer protection law based on an allegation of a deceptive or fraudulent ISP practice.”