June 11, 2021 – The U.S. District Court for the Eastern District of New York has granted a preliminary injunction which stops the enforcement of New York’s Affordable Broadband Act.[1] The law’s price ceiling requirements were set to be effective June 15, 2021. A group of trade associations that represent Internet service providers sought the injunction as part of a broader challenge to the New York law.

New York’s Affordable Broadband Act

Passed in April 2021, the New York Affordable Broadband Act (NY ABA) would require Internet service providers (ISPs) “to offer qualifying low-income costumers high-speed broadband service at or below certain price ceilings” beginning June 15, 2021. Specifically, the NY ABA would require ISPs to offer qualifying low-income households at least two service plans: (i) download speeds of at least 25 Mbps at no more than $15 per month; or (ii) download speeds of at least 200 Mbps at no more than $20 per month. These prices may be raised pursuant to a set formula (once every five years for the $15 monthly plan or every two years for the $20 monthly plan). ISPs that do not comply face civil penalties of up to $1000 per violation. Providers serving no more than 20,000 households are exempt from the requirements.

Broadband Industry Lawsuit

Shortly after passage of the law, a group of trade associations that represents ISPs – ACA Connects–America’s Communications Association; the Satellite Broadcasting & Communications Association; the New York State Telecommunications Association, Inc.; CTIA–The Wireless Association; USTelecom–The Broadband Association; and NTCA–The Rural Broadband Association – filed a lawsuit on behalf of their members to have the court declare that the state law is preempted by federal law.[2] They also sought preliminary and permanent injunctive relief to preventing New York from enforcing or giving effect to the ABA. Their motion for preliminary injunction was filed on May 6, 2021.

Preliminary Injunction Granted – NY Law Is Preempted

The Court’s order grants the motion for a preliminary injunction, finding the ISP associations have established (1) their lawsuit likely to succeed on the merits, (2) they are likely to suffer irreparable harm if the injunction is not granted, (3) that the balance of the equities tips in their favor, and (4) that the injunction serves the public interest.

Notably, the Court provided a lengthy analysis concluding the ISP associations’ have shown a likelihood of success on their argument that the NY Affordable Broadband Act is preempted by federal law based on theories of conflict preemption and field preemption.

Conflict Preemption – Court Rejects Contention That FCC Disclaimed Authority To Regulate Broadband At All

First, the Court considered whether the NY law “conflicts with federal law by standing as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” The Court noted that broadband service is currently classified as a Title I information service, which “prevents the FCC from imposing common carrier obligations on providers.”

 The ISP Plaintiffs claimed the NY ABA subjects ISPs “to a form of per se common-carrier regulation: rate regulation.”

The state of New York said the ABA is an “accessible pricing scheme,” and moreover, argued that the FCC has disclaimed authority to regulate broadband service altogether, which means state regulatory power over broadband is not limited.

The Court rejected New York’s “contention that the FCC disclaimed ‘its authority to regulate broadband at all.’” No, the Court said, the FCC did not abdicate jurisdiction over broadbands service “writ large” when it adopted the 2018 Restoring Internet Freedom Order.[3] The Court then further explained that the FCC’s purpose and objectives in that 2018 Order was to keep broadband service free of common carrier regulation, whether imposed by it or the states:

The FCC’s 2018 Order chooses Title I “information service” treatment for broadband internet and, in doing so, does not tender jurisdiction to the States to regulate interstate broadband providers as common carriers. Rather, the FCC binds itself to the confines of Title I jurisdiction, cementing its long-standing policy choice concerning the propriety of imposing common-carrier rate regulations upon broadband internet service. The ABA stands as an obstacle to the accomplishment and execution of the FCC’s reasoned decision to assure interstate broadband providers that no common-carrier rate regulations await them beyond the horizon.[4]

NY Affordable Broadband Act = Rate Regulation

After considering the price ceilings imposed by the New York Affordable Broadband Act, the Court declared that the ABA “is rate regulation, and rate regulation is a form of common carrier treatment.”[5] Therefore, the ABA conflicts with the FCC’s 2018 Order and the Communications Act, and is preempted.

Field Preemption – Broad Scheme For Regulation Of Interstate Service Shows Congress’ Intent To Occupy The Field To The Exclusion Of State Law

Second, the Court considered whether the NY law “invades a field of regulation entirely occupied by federal law, with no room left for state law.” The field at issue here is interstate communications services.

The ISPs argued federal law – The Communications Act of 1934 – preempts the field of interstate communications services because it gives the FCC regulatory jurisdiction over interstate services, while states are given power over intrastate services. They claim the state of New York, by enacting the ABA, has “impermissibly seize[d] jurisdiction outside its ‘intrastate services’ boundary.”[6]

In response, New York agreed that the dual system of regulation gives states jurisdiction over intrastate communication services, and argued it is using this power to “enact the ABA’s ‘purely intrastate affordable-pricing scheme.’”[7] New York also tried this a sleight of hand argument – “the ABA is not an interstate-communication statute but, rather, an intrastate pricing regulation.”

Obviously, the Court rejected New York’s arguments, concluding “the ABA is not confined to intrastate communications services.” Everyone who has used their broadband connection knows the service is not purely intrastate. Because the NY ABA crosses the line from intrastate to interstate regulation, field preemption is triggered. This is a no-no. Citing the Second Circuit, the Court said “the Communications Act’s ‘broad scheme for the regulation of interstate service by communications carriers indicates an intent on the part of Congress to occupy the field to the exclusion of state law.’”[8]

In one final noteworthy piece from the decision, the Court addressed the recent case – ACA Connects v. Becerra – concerning California’s net neutrality law (SB-822). Many of the same jurisdictional questions were at issue in that lawsuit, which is currently on appeal to the Ninth Circuit.

Here, the Court determined the FCC’s 2018 Restoring Internet Freedom Order “does not say broadband internet no longer reflects an interstate communication service,” and explained why an opposing interpretation by the Eastern District of California is wrong:

For that reason, this Court respectfully believes the Eastern District of California in ACA Connects v. Becerra has it backwards. The Communications Act does not “specifically le[ave] out certain types of interstate communications [e.g., those transmitted by information services] from the FCC’s jurisdiction.” Rather, the Communications Act specifically leaves out certain types of jurisdiction (e.g., Title II authority to impose common carrier obligations), but not jurisdiction writ large, over interstate communications transmitted by information services.[9]

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[1] NY State Telecom. Assoc. v. James, 2:21-cv-2389 (DRH) (AKT), Memorandum And Order, Document 25 (E.D. N.Y. June 11, 2021) (“Memorandum And Order”), https://ecf.nyed.uscourts.gov/doc1/123117827301.

[2] NY State Telecom. Assoc. v. James, 2:21-cv-2389 (DRH) (AKT), Complaint For Declaratory Judgment And Preliminary And Permanent Injunctive Relief,  (E.D. N.Y. Apr. 30, 2021), https://storage.courtlistener.com/recap/gov.uscourts.nyed.463483/gov.uscourts.nyed.463483.1.0.pdf.

[3] Restoring Internet Freedom, WC Docket No. 17-108, Declaratory Ruling, Report And Order, And Order, FCC 17-166, 33 FCC Rcd 311 (rel. Jan. 4, 2018), https://www.fcc.gov/document/fcc-releases-restoring-internet-freedom-order.

[4] Memorandum And Order at page 19.

[5] Id. at page 19. In response to the state of New York’s semantic argument describing the ABA’s requirements as price ceilings, the Court said “’[p]rice ceilings’ regulate rates.” Id. at page 20.

[6] Id. at page 24.

[7] Id. at page 25.

[8] Id. at page 27. The Court also explained that “the Ivy Broadcasting Court held Congress both field-preempted and complete-preempted the realm of interstate communications.” Id. at page 29 (citing Ivy Broadcasting Co. v. AT&T Co., 391 F.2d 486 (2d Cir. 1968)).

[9] Id. at page 31.