FCC’s O’Rielly sees risk in ruling letting states set net neutrality rules

A court decision upholding the scrapping of net neutrality rules could lead to more litigation and a patchwork of U.S. laws

Congressional Democrats hold a news conference in the Capitol in March 2019, announcing legislation restoring net neutrality protections after the FCC scrapped the Obama-era rules. The bill passed in the House but Senate Majority Leader Mitch McConnell said it would not advance in the Senate. A court Tuesday upheld the FCC's right to overturn the rules. (Photo By Bill Clark/CQ Roll Call)

A federal appeals court decision upholding the Federal Communications Commission’s scrapping of net neutrality rules in 2017 and allowing states to set their own could lead to state-by-state regulations and more litigation, Commissioner Michael O’Rielly said in a C-SPAN interview taped Tuesday for later broadcast.

The D.C. Circuit Court of Appeals said Tuesday that the commission and Chairman Ajit Pai were right to overturn Obama administration rules that prohibited internet providers like AT&T and Verizon from giving favorable treatment such as higher-speed delivery to specific content creators — including those they may own or have a stake in. It would also prohibit access providers from charging more for specific content creators such as Netflix.

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“I’m generally pleased ... they seem to have found the right landing spots on a number” of issues, O’Rielly, referring to the court, said on C-SPAN’s “The Communicators” program that will air on Friday.

But the court also blocked the FCC from stopping states that want to pass open internet laws, which O’Rielly said could lead to a complex system of state-by-state rules, some favoring and others opposing net neutrality.

“Having 50 different states trying to pull us in different directions is not how the structure should be,” O’Rielly said. States should be regulating matters that fall within state boundaries, he said. “There’s no intrastate traffic on the internet,” he said, referring to the lack of state boundaries for internet traffic.

If states enact rules that go against the FCC’s goal of allowing different actors to be charged differently on the internet, then “we’ll likely have to go forward and challenge that activity under our authority,” O’Rielly said.

California adopted its own net neutrality law last year and was challenged by the Justice Department, which cited the FCC’s decision to overturn the rules.

Plaintiffs in the case said the court’s ruling regarding states could result in a flurry of action around the country. Like California, Oregon, and Washington have also passed net neutrality laws, and governors in six others have taken executive action.

“We expect more and more states to take up net neutrality,” said Lisa A. Hayes, interim chief executive at the Center for Democracy & Technology, which took part in the lawsuit against the FCC.

‘Impede innovation’

Supporters of the FCC’s position say action by the states would create an uneven regulatory landscape that could discourage investment in innovation.

“Open internet rules that lack uniformity will only impede innovation, as the internet does not stop at any state line,” said the Internet Innovation Alliance, an industry group, in a statement. “Both regulatory uncertainty and irregularity will stifle broadband investment at the very time when the nation is slated to make its largest investments ever in 5G technology.”

Democrats welcomed the court’s decision to let states set their own rules.

“Today’s court decision vacates the FCC’s unlawful effort to block states and localities from protecting an open internet for their citizens,” Commissioner Jessica Rosenworcel said in a statement. “From small towns to big cities, from state houses to governors’ executive actions, states and localities have been stepping in because the FCC shirked its duties.”

Montana’s Democratic Gov. Steve Bullock, a presidential contender, said that the very nature of the internet was at stake.

“I stand with the people, not corporations seeking control and profit,” Bullock said. He promised to restore net neutrality at the federal level if elected president, citing his record as the first state governor to order such protections.

Congressional Democrats have tried to restore net neutrality, betting that it would be a significant issue in the 2020 elections, but Republicans in the Senate have stopped any measure from advancing.

In April, after the House passed legislation by a vote of 232-190, Senate Majority Leader Mitch McConnell said it would not advance in the Senate.

After Tuesday’s court decision, Senate Minority Leader Charles E. Schumer, D-N.Y., said McConnell had essentially given “huge cable companies and internet providers a green light to raise prices on middle-class Americans to use the internet.”

Rep. Frank Pallone Jr., D-N.J., chairman of the House Energy and Commerce committee, said in a statement that the court decision to let states set rules means that the Senate must follow the House in passing legislation restoring net neutrality.

Republicans have left open the possibility of a compromise as long as Democrats drop their Title II demands, which would classify broadband as a utility under the Communications Act of 1934, because it would hurt small businesses and consumers. But that seems unlikely.

For their part, Democrats are content to use the issue, which they say is a winner with voters in both parties, in next year’s elections.

“This issue illustrates that political change doesn’t start in Washington, D.C. and then trickle down,” Sen. Ron Wyden, D-Ore., said after the House vote in April, applauding freshman House Democrats who have sought to highlight the issue. “You make a good showing in the House and I think people will pay attention.”

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