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FCC's next step on net neutrality: Blocking the states

The Obama administration’s net neutrality rules met their all-but certain demise Tuesday as Federal Communications Commission Chairman Ajit Pai outlined a plan to repeal them — while making sure states can’t impose their own regulations to fill the void.

Pai will release his proposal on Wednesday with broad support on the Republican-controlled FCC, leaving supporters of the 2015 policy with little recourse except fighting back in the courts.

The repeal itself will be a major win for the telecommunications industry, which has bristled at what it says are heavy-handed regulations requiring internet service providers like Charter and AT&T to treat all web traffic equally. But blocking states from acting unilaterally would help cement that victory in a policy dispute that has whipsawed for years as the White House changed hands and courts took up the issue.

Internet service providers, many of whom operate across state lines, also want to avoid a series of disparate rules from states. They want to avoid a repeat of what happened this year on broadband privacy, when nearly two-dozen states proposed legislation to replace an Obama-FCC regulation that Congress revoked.

But proponents of the current rules question whether the FCC has the authority to block states from issuing their own rules, especially when the agency is paring back its oversight over internet providers in the order.

“I certainly can think of nothing that could be more calculated to get states that are already pissed off to motivate themselves to challenge this decision,” said Harold Feld, a senior vice president at Public Knowledge, a public interest group that supports the current regulations. “Did you see what happened with privacy?”

Pai’s “Restoring Internet Freedom” order says that state and local regulations attempting to regulate broadband in ways that run counter to the federal rules would be preempted.

In practice, if a state attempts to impose its own net neutrality law and a company objects to the FCC, the agency could issue a ruling that could be used in a court battle, a senior agency official explained in a call with reporters Tuesday. The official spoke anonymously to discuss the change before it’s released.

Some states and cities could still try to impose their own versions of net neutrality — “but if someone is really hellbent on running it through the court, I think they’d have a fight on their hands,” Jessica Melugin, a policy fellow with the Competitive Enterprise Institute, said in an interview. “I think this is sending a warning shot saying we’re really serious about opening up this market and keeping regulations at any level out of the way.”

The former Democratic majority at the FCC adopted a legal foundation in 2015 for its rules that gives the federal government the power to regulate internet service providers akin to how regulators approach utilities. Supporters of the rules say that legal framework is necessary to give the FCC sufficient oversight of the sector, but critics call it a government overreach that could open the door to price regulation.

Pai is among the fiercest critics of the current rules. His plan, shared with his fellow commissioners Tuesday and expected to be posted publicly Wednesday, would scrap that legal foundation. It would also eliminate rules that prevent internet service providers from blocking or slowing web traffic or negotiating paid deals with websites for faster access to consumers.

In place of the rules, Pai’s plan would require internet service providers to be transparent about their practices, including disclosing whether they engage in blocking or throttling certain web traffic or if they reach paid deals with websites for faster access to consumers. The Federal Trade Commission and the FCC would review those public disclosures, with the FTC reviewing whether they are anti-competitive or anti-consumer.

“Under my proposal, the federal government will stop micromanaging the internet,” Pai said in a statement.

And the Republican chairman wants to make sure states don’t attempt any micromanaging of their own. The FCC’s order calls broadband an interstate information service, and any state or local law regulating the service could not subvert or undermine the federal policy of deregulation, a second FCC senior official said.

Republican FCC Commissioner Michael O’Rielly, in an op-ed with Sen. Ted Cruz (R-Texas) on the issue Tuesday, warned that replacing the net neutrality rules with a “patchwork” of state and local requirements would have an “even more detrimental effect on the internet” than the federal regulations.

“Broadband service (and the internet, more generally) does not stop at political borders and deserves a clear resolve that it is an interstate, information service,” O’Rielly told POLITICO in a written statement. “Beyond being the correct regulatory classification, it will prevent backdoor attempts to reimpose objectionable net neutrality rules or other harmful policies, including piecemeal and misguided privacy regimes.”

Comcast, AT&T and Verizon lobbied the commission ahead of the plan’s release to include language saying states can’t jump in with their own net neutrality rules.

At least 22 states proposed broadband privacy legislation this year in the wake of congressional action revoking the FCC’s online privacy rules, heightening the telecom industry’s fear that Democratically controlled state legislatures will do the same with net neutrality.

Only two states, Minnesota and Nevada, require such privacy protections for ISPs, and those measures passed many years ago. California came close to passing new legislation this year but faced tech and ISP industry opposition. New America’s Open Technology Institute unveiled model legislation state lawmakers can use for future efforts.

Several officials in the states raged against the FCC news on Tuesday. New York Attorney General Eric Schneiderman and New York City Mayor Bill de Blasio, both Democrats, slammed the news, as did former federal prosecutor Renato Mariotti, currently vying for the Democratic nomination to be Illinois attorney general.

“We are fractured enough, and it’s already hard for under-funded views to get their message out,” Mariotti tweeted in a seven-part thread.

“This is unacceptable,” tweeted California Attorney General Xavier Becerra.

Some political contenders also picked up on the uproar in what may portend a campaign message for Democrats. Randy Bryce, the Democratic challenger to House Speaker Paul Ryan’s seat and commonly known as “Iron Stache,” tweeted: “Trump’s FCC is planning to give more power to a handful of internet monopolies, allowing those monopolies to raise prices on all of us to add to their record profits.” Cathy Myers, another Democratic challenger for the seat, unveiled a video pledging to fight Pai’s plan.

Pai’s plan to repeal the net neutrality rules quickly ignited a storm of protest from Democrats and left-leaning digital activists. Democratic FCC Commissioners Mignon Clyburn and Jessica Rosenworcel sharply criticized the move, and Sen. Ed Markey (D-Mass.) called for a “firestorm of opposition.”

Pai began laying the groundwork for his proposal earlier this year, and it drew a record-breaking 22 million online comments. Republicans, telecom companies and right-leaning groups including Americans For Tax Reform praised Pai’s order.

The plan is “a bold strike turning America away from the path we were on — turning the internet into a cross between the post office and the Department of Motor Vehicles,” ATR President Grover Norquist said in a statement. “Freedom, not top-down control, is the best protector of a free and open internet worldwide.”

The long-running policy debate is likely headed for another court battle. The FCC’s last attempt at net neutrality rules was upheld by the D.C. Circuit Court of Appeals last year, despite a challenge from the telecom companies and trade groups. Advocates for the current rules have promised to take the fight to court if the FCC jettisons the regulations.

John Hendel contributed to this report.

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