DOJ Drops Challenge to California Net Neutrality Law; Trade Associations’ Case Now Takes Center Stage

In a significant development for the years-long net neutrality debate, yesterday the U.S. Department of Justice dropped its suit to enjoin California’s net neutrality law (SB 822) (No. 2:18-cv-0660, E.D. Cal.).  The California law reimposes on broadband Internet Service Providers several requirements the Federal Communications Commission (FCC) rescinded in its 2018 Restoring Internet Freedom Order, 33 FCC Rcd 311.  For example, the California law prohibits blocking of lawful content, apps, and services; throttling of Internet traffic; and paid prioritization of traffic, and also contains a general prohibition on unreasonable practices.  The DOJ sued to enjoin the California statute as being conflict-preempted.  Several amici, including groups of scholars and many state Attorneys General, weighed in on both sides, and briefing on the preliminary injunction was complete.  With the new federal administration in place that may have a different view on net neutrality regulation, however, the DOJ elected to bow out of the fight.  But this is not the end.  Several telecommunications/internet trade associations have a separate pending case before the same judge, challenging the statute on preemption and Dormant Commerce Clause grounds, and are to report to the court on Feb. 16 how they wish to proceed in light of the DOJ’s action (No. 2:18-cv-02864, E.D. Cal.).  That case remains especially important as a bellwether, because at least some other states have looked to the California statute as a template for net-neutrality laws.

The other major pending case on a state net neutrality law is in Vermont district court, where major trade associations have challenged a Vermont law and executive order that tie eligibility for state contracts to meeting specified net neutrality requirements (No. 18-00167, D. Vt.).  This type of law, tying net neutrality to eligibility for state contracts rather than imposing duties on all internet providers, is different from California’s and represents the other major flavor of state net neutrality efforts, whether pursued by statute or executive order.  The DOJ did not join the Vermont case.  That case had been stayed pending a ruling on the preliminary injunction request in California, but now should go forward.  The first order of business presumably will be to complete briefing on and decide the State’s pending motion to dismiss for lack of standing, which alleges the plaintiffs have suffered no injury from the state requirements.