MANHATTAN (CN) — Overturning a federal judge’s injunction, the Second Circuit on Friday revived a New York state law that sought to provide discounted broadband internet to low-income families.
After former New York Governor Andrew Cuomo signed the Affordable Broadband Act into law in 2021, trade groups representing broadband and satellite internet companies sued the state, claiming the policy “intrudes into an exclusively federal field.”
Internet companies, including Verizon and AT&T, said the state law conflicts with federal communications rules, which preempt state law under the U.S. Constitution. A federal judge agreed and ordered a permanent injunction on the law.
But on closer examination, a Second Circuit panel said the internet companies’ claims fail. The appeals court found the federal Communications Act of 1934 does not exclude states from regulating the rates charged for broadband internet.
“The Communications Act contains provisions expressly prohibiting states from regulating specific types of communications services," U.S. Circuit Judge Alison Nathan, a Joe Biden appointee, wrote in the decision. "None covers all rate regulations of interstate communications services."
According to the panel, Congress was explicit in its intent to regulate aspects of interstate communications — but there is no evidence that they intended to do so for rate regulations.
“Congress intended for the states to retain their regulatory authority over many interstate communications services — and to play a role in regulating the rates charged for such services — unless it said otherwise,” the panel said.
The panel noted there are multiple examples of states regulating interstate communications services without being preempted by federal law.
“Cable television is an interstate communications service, and when it was lightly regulated under Title I — as broadband internet is today — many states enacted laws that regulated the rates cable companies could charge for their services,” the panel said.
The internet companies argued the state law also conflicts with a 2018 order from the Federal Communications Commission that classified broadband as an information service.
That order surrendered the federal commission’s statutory authority to impose any rate regulations on broadband internet service providers. Since the New York law sought to regulate rates for low-income families, internet companies claimed it was in direct conflict with that order.
But the Second Circuit found that because the order surrendered the Federal Communications Commission’s right to impose rate regulations, the agency also cannot preempt state law.
“A federal agency cannot exclude states from regulating in an area where the agency itself lacks regulatory authority,” the panel said.
U.S. Circuit Judge Richard J. Sullivan, a Donald Trump appointee, dissented. Sullivan argued that the Federal Communications Commission has exclusive authority over interstate communications, except in matters such as consumer protection where states have traditionally exercised power.
“Because rate regulation was not one of those traditional spheres of state authority, only the FCC retains the authority to regulate rates of interstate communications,” Sullivan said.
The appeals court concluded that if the internet companies have an issue with the New York state law, there are other avenues to challenge it.
“They could take it up with the New York State Legislature. They could ask Congress to change the scope of the FCC’s Title I authority under the Communications Act. They could ask the FCC to revisit its classification decision, as it has done several times before,” the panel said. “But they cannot ask this court to distort well-established principles of administrative law and federalism to strike down a state law they do not like.”
Sarah A.L. Merriam, a Joe Biden appointee, also joined in the decision. Neither party’s attorneys responded to a request for comment.
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