Amicus Curiae Brief — New York State Telecommunications Association, Inc., et al., Petitioners v. Letitia James, Attorney General of New York

No. 24-161

IN THE

Supreme Court of the United States

___________

NEW YORK STATE TELECOMMUNICATIONS

ASSOCIATION, I NC., ET AL.,

v.

Petitioners,

LETITIA JAMES, IN HER OFFICIAL CAPACITY AS

ATTORNEY GENERAL OF NEW YORK,

Respondent.

_________________

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Second Circuit

___________

BRIEF OF TECHFREEDOM AND

WASHINGTON LEGAL FOUNDATION AS

AMICI CURIAE IN SUPPORT OF PETITIONERS

_________________

CORY L. ANDREWS

JOHN M. MASSLON II

WASHINGTON LEGAL

FOUNDATION

2009 Mass. Ave. NW

Washington, DC 20036

CORBIN K. BARTHOLD

Counsel of Record

BERIN SZÓKA

JAMES E. DUNSTAN

TECHFREEDOM

1500 K Street NW

Washington, DC 20005

(771) 200-4997

September 13, 2024

cbarthold@techfreedom.org

QUESTION PRESENTED

Whether the Communications Act preempts New

York’s broadband rate-regulation law.

i

Table of Contents

Page

TABLE OF AUTHORITIES .................................... ii

INTEREST OF AMICI CURIAE ............................ 1

SUMMARY OF ARGUMENT ................................. 1

REASONS FOR GRANTING THE PETITION...... 5

I.

THE SECOND CIRCUIT’S RULING IS DEEPLY

WRONG ........................................................... 5

A. The Second Circuit Ignored the

Deregulatory History and Text of the

Telecommunications Act of 1996 ............ 5

B. The Second Circuit Misapplied—and

Drastically Curtailed—Conflict Preemption .................................................... 8

II. THE SECOND CIRCUIT’S RULING IMPERILS

TECHNOLOGICAL INNOVATION ...................... 12

CONCLUSION ...................................................... 14

ii

Table of Authorities

Page(s)

Cases

Arizona v. United States,

567 U.S. 387 (2012) .............................................. 3, 9

Ark. Elec. Co-op. Corp. v. Ark. Pub. Serv.

Comm’n, 461 U.S. 375 (1983) ................................ 11

In re: MCP No. 185 Open Internet Rule (FCC 24-52),

2024 WL 3650468 (6th Cir. Aug. 1, 2024) (per

curiam) ..................................................................... 2

Mozilla Corp. v. FCC,

940 F.3d 1 (D.C. Cir. 2019) ................................ 9, 10

Ray v. Atl. Richfield Co.,

435 U.S. 151 (1978) ................................................ 11

U.S. Telecom Ass’n v. FCC,

825 F.3d 674 (D.C. Cir. 2016) .................................. 8

Statutes

47 U.S.C. § 153(24) ................................................ 6, 12

47 U.S.C. § 153(50) ...................................................... 6

47 U.S.C. § 153(51) ...................................................... 8

47 U.S.C. § 160(e) .............................................. 8, 9, 13

47 U.S.C. § 230(b)(2) ................................ 1, 7, 9, 12, 14

47 U.S.C. § 230(f)(2) ...................................... 1, 7, 9, 12

iii

Other Authorities

In re Amendment of Sections 64.702 of the Comm’n’s

Rules & Regulations (Third Computer Inquiry), 2

FCC Rcd 3035 (1987) ............................................... 7

In re Petition for Declaratory Ruling (Pulver), 19 FCC

Rcd 3307 (2004) .................................................... 7, 8

Tom Struble, The FCC’s Computer Inquiries: The

Origin Story Behind Net Neutrality, Morning

Consult (May 23, 2017) ............................................ 6

INTEREST OF AMICI CURIAE*

TechFreedom is a nonprofit, nonpartisan think

tank dedicated to promoting technological progress

that improves the human condition. It seeks to

advance public policy that makes experimentation,

entrepreneurship,

and

investment

possible.

TechFreedom has been a prominent voice in all

aspects of the broadband Title I-Title II debate. In its

2018 Restoring Internet Freedom Order, for instance,

the Federal Communications Commission cited

TechFreedom’s comments 29 times. 33 FCC Rcd 311

(2018).

Washington Legal Foundation is a nonprofit,

public-interest law firm and policy center with

supporters nationwide. WLF promotes free enterprise,

individual rights, limited government, and the rule of

law. It often appears as amicus in litigation involving

the FCC’s net neutrality rules. See, e.g., Mozilla Corp.

v. FCC, 940 F.3d 1 (D.C. Cir. 2019); U.S. Telecom Ass’n

v. FCC, 825 F.3d 674 (D.C. Cir. 2016).

SUMMARY OF ARGUMENT

The Telecommunications Act of 1996 is a

deregulatory statute. It seeks “to preserve the vibrant

and competitive free market … for the Internet …

unfettered by Federal or State regulation.” 47 U.S.C.

§§ 230(b)(2), 230(f)(2). As part of this deregulatory

policy, the 1996 Act establishes a light-touch

* No party’s counsel authored any part of this brief. No

person or entity, other than amici and their counsel, helped pay

for the brief’s preparation or submission. At least ten days before

the brief was due, amici notified each party’s counsel of record of

amici’s intent to file the brief.

2

regulatory scheme for Title I information services—in

contrast to more heavily regulated Title II telecommunications services. For almost twenty years, the

Federal Communications Commission adhered to

Congress’s deregulatory directive, correctly classifying broadband as a Title I service. Then, however, over

the past ten years, the FCC lost its way. It classified

broadband as a Title II service in its 2015 Open

Internet Order; then corrected itself, returning

broadband to Title I in its 2018 Restoring Internet

Freedom Order; then strayed again, recently

re-classifying broadband as a Title II service in a new

Open Internet Order.

As the latest round of the Title I-Title II debate

played out at the FCC, something momentous

occurred in New York. While almost no one was

looking, New York enacted the Affordable Broadband

Act. The ABA declares broadband an “essential

service,” and orders broadband providers to supply it

to low-income consumers for $15 a month. As the

FCC crawled its way to revoking the Restoring

Internet Freedom Order and issuing the latest Open

Internet Order, New York went ahead and imposed ex

ante rate regulation—a measure that goes beyond

anything the FCC has ever pursued.

The FCC’s new Open Internet Order has been

challenged in court, and the Sixth Circuit recently

stayed enforcement of it. In re: MCP No. 185 Open

Internet Rule (FCC 24-52), 2024 WL 3650468 (6th Cir.

Aug. 1, 2024) (per curiam). The stay order concludes

that the FCC is likely to lose on the merits. Id. at *3*5. The Sixth Circuit is poised, therefore, to vacate the

FCC’s latest Title II gambit, thus confirming that

3

broadband is—and by rights should always have

been—a Title I service.

The upshot, for this case, is that New York was not

free to ignore the deregulatory aims Congress codified

in Title I. Under conflict preemption, a state law may

not stand “as an obstacle to the accomplishment and

execution of the full purposes and objectives of

Congress.” Arizona v. United States, 567 U.S. 387, 399

(2012). Congress wants Title I information services to

flourish under a light-touch regulatory regime. New

York’s law imposing rate regulations on broadband is

conflict-preempted, and a divided panel of the Second

Circuit erred in holding otherwise. (It erred as well in

failing to declare the law field-preempted—but that is

outside the scope of this brief.)

We write to elaborate on where the Second Circuit

went wrong, and to emphasize the catastrophic

consequences of letting the Second Circuit’s ruling

stand:

I. The Second Circuit neglected the history and

text of the Telecommunications Act of 1996. The

Title I-Title II distinction harkens back to the FCC’s

studies, beginning in the 1960s, of what the FCC

called “basic” and “enhanced” services. The “basic”

service was voice calling offered by AT&T’s Bell

System telephone monopoly. The “enhanced” services

were computer technologies that users accessed

through the basic network. The FCC concluded that

the “basic” service, provided by a monopoly, needed

heavy-handed common carrier regulation. This

position was codified into the many rules that govern

Title II “telecommunications” services. The FCC

4

concluded that the competitive interstate “enhanced”

services needed the freedom to develop and spread,

unhindered by federal or state regulation. Congress

codified this position in the light-touch regulatory

regime that governs Title I “information” services.

Only by ignoring this context could the Second Circuit

erroneously conclude that a Title I classification

invites onerous state common carrier regulation.

Having misunderstood the 1996 Act, the Second

Circuit proceeded to misread it. The FCC can forbear

from enforcing discrete Title II obligations on a Title II

service. And when the FCC does so, the Second Circuit

observed, “the states are prohibited from imposing

th[ose] same obligation[s] on the [Title II] service.”

Pet.App. 33a. That’s true enough. But the Second

Circuit then proceeded to assume that, because there

is express preemptive authority in Title II, there can

be no implied preemptive authority in Title I. That is

a non sequitur. In effect, the Second Circuit simply

refused to apply implied (conflict) preemption to a

deregulatory statute. There is no rule by which

preemption may be implied when Congress elects to

regulate, but must be express when Congress elects not

to regulate. Acting as though such a rule exists, the

Second Circuit erred.

II. In seeking to treat broadband service like

common carriage despite its Title I status, New York

seeks, in essence, permission to treat any Title I

service like common carriage. In other words, New

York’s arguments, if accepted, would allow intrusive

state regulation of all Title I information services.

Under New York’s theory, states could impose market

entry or exit requirements, rate regulations, and

5

many other onerous regulations on email, text

messaging, and much more. That would be a disaster

for the Internet, for technological progress, and for

society.

REASONS FOR GRANTING THE PETITION

I.

THE SECOND CIRCUIT’S RULING IS DEEPLY

WRONG.

The Second Circuit elided the deregulatory history

behind, as well as the deregulatory aims explicitly

written into, the Telecommunications Act of 1996.

Having thus ignored Congress’s deregulatory purpose,

the court unsurprisingly proceeded to botch its

preemption analysis. It applied a made up—and quite

pernicious—rule under which implied preemption

never applies when Congress deregulates.

The Second Circuit Ignored the

Deregulatory History and Text of

the Telecommunications Act of 1996.

To understand the deregulatory aims of the

Telecommunications Act of 1996, it’s important to

review the historical significance of the distinction

between Title II “telecommunications” services and

Title I “information” services. Only by ignoring this

history could the Second Circuit erroneously hold that

a Title I classification opens an interstate service to

state rate regulation.

From the 1960s through the 1980s, the FCC

engaged in a series of “computer inquiries.” Advances

in computing technology were enabling the creation by

6

upstart competitors of innovative new products that

could enhance basic telephone service while running

over the same wires. The FCC had become alive to this

fact, as well as to the ways that the dominant provider

of “basic” telephone service—the Bell System—could

hamper the attachment and integration of “enhanced”

services into the telephone network. One goal of the

Computer Inquiries was to ensure that the innovative

“enhanced” computer services could access the “basic”

telephone service, over much of which Bell held a

monopoly. See generally Tom Struble, The FCC’s

Computer Inquiries: The Origin Story Behind Net

Neutrality, Morning Consult, https://perma.cc/NF9DJG25 (May 23, 2017).

The Computer Inquires spotted, defined, and

analyzed this distinction between “basic” and

“enhanced” services. A “basic” service simply carries

data along, the Inquiries explained, while an

“enhanced” service processes data in some way during

data transport. This basic/enhanced distinction was

then codified into the Telecommunications Act of

1996. “Basic” service became “telecommunications”

service, which the 1996 Act defines as the

“transmission” of information “without change in the

form or content of the information as sent and

received.” 47 U.S.C. § 153(50). “Enhanced” service,

meanwhile, became “information” service, which the

1996 Act defines as a service that has the “capability”

to “generat[e],” “acquir[e],” “stor[e],” “transform[],”

“process[],” “retriev[e],” “utiliz[e],” or “mak[e]

available” information “via telecommunications.” Id.

§ 153(24).

7

In short, “telecommunications” service and

“information” service are not arbitrary labels. They

capture ideas that stretch back to the distinction

between the “dumb” carriage of the “basic” Bell

telephone monopoly (telecommunications service) and

the “smart” computer services that “enhanced” that

system (information services).

Preemption was baked into the Computer

Inquiries, as the FCC insisted that the states keep

their hands off even intrastate “enhanced” (now

“information”) services:

State public utility regulation of entry

and service terms and conditions

(including rates and feature availability),

ostensibly

applied

to

‘intrastate’

enhanced services, would have a severe

impact on, and would effectively negate,

federal policies promoting competition

and open entry in the interstate markets

for such services.

In re Amendment of Sections 64.702 of the Comm’n’s

Rules & Regulations (Third Computer Inquiry), 2 FCC

Rcd 3035 ¶ 181 n.374 (1987); see also In re Petition for

Declaratory Ruling (Pulver), 19 FCC Rcd 3307 ¶ 17

n.61 (2004) (discussing the FCC’s conclusion, in its

Computer Inquiries, that states “may not impose

common carrier tariff regulation on a carrier’s

provision of enhanced services”).

The 1996 Act adopts this light-touch, states-stayout regulatory regime, both by saying that Title I

“information services” should remain “unfettered by

… State regulation,” 47 U.S.C. §§ 230(b)(2), 230(f)(2),

8

and by saying that a firm may be “treated as a common

carrier” only “to the extent” that it “provid[es]

telecommunications services,” id. § 153(51).

As the FCC itself explains, it has for “decades”

aimed to “enable information services to function in a

freely competitive, unregulated environment.” In re

Pulver, 19 FCC Rcd 3307 at ¶ 19 n.69. And Congress

has adopted that aim as its own, “ma[king] clear

statements,” in the 1996 Act, “about leaving the

Internet”—including information services—“free of

unnecessary federal and state regulation[.]” Id. ¶ 25

(emphasis added). “Consequently,” adds the FCC,

“states have generally played a very limited role with

regard to information services.” Id. ¶ 17.

The Second Circuit Misapplied—and

Drastically Curtailed—Conflict Preemption.

The Telecommunications Act of 1996 expresses

Congress’s “deregulatory policy” toward Title I

services. U.S. Telecom Ass’n v. FCC, 855 F.3d 381, 394

(D.C. Cir. 2017) (Brown, J., dissenting from denial of

rehearing en banc). By imposing draconian rate

regulation, New York’s law stands as an obstacle to

the objectives Congress enshrined in Title I.

In holding otherwise, the Second Circuit mistook

the 1996 Act for a pro-regulatory statute. The court

assumed that the only way the FCC could obtain the

power to preempt state laws is to ratchet a service up

to heavy-handed Title II regulation. That’s backwards.

To be sure, the FCC has the express power to lessen

the burden of Title II regulation through preemption-

9

backed forbearance. Pet.App. 33a (citing 47 U.S.C.

§ 160(e)). It does not follow, however, that the FCC

needs express power to preempt state regulation when

it addresses something classified as a Title I service.

The whole point of Title I status, after all, is to head

off heavy-handed regulation, including rate

regulation, be it at the federal or state level. 47 U.S.C.

§§ 230(b)(2), 230(f)(2).

The Second Circuit wondered how Title I could

“confer implied preemptive authority when it does not

confer express preemptive authority.” Pet.App. 37a.

The answer is simple: express preemption and implied

preemption aren’t the same thing. Title I may not

contain an express preemption provision, but that

does not mean the states are free to thwart Congress’s

objectives by enacting statutes that nullify Title I’s

effect. Arizona, 567 U.S. at 399.

The Second Circuit’s theory is perverse. Title I is a

deregulatory statutory framework. See Sec. I.A.,

supra. Yet in the Second Circuit’s view, when the FCC

identifies a service as a Title I service, that drastically

expands the universe of regulations (via the states) to

which the service can be subjected. That makes no

sense.

The very authority the Second Circuit cited for

support, Mozilla Corp. v. FCC, 940 F.3d 1 (D.C. Cir.

2019)—the decision that upheld (most of) the

Restoring Internet Freedom Order—highlights the

distinction between express and implied preemption.

Mozilla rejected the FCC’s attempt to “categorically

abolish all fifty States’ … authority to regulate

intrastate communication.” Id. at 86. Meanwhile,

10

though, Mozilla did “not consider whether” the

Restoring Internet Freedom Order had “preemptive

effect under principles of conflict preemption.” Id. at

85. If a party can “explain how a state practice actually

undermines [the Restoring Internet Freedom Order],”

Mozilla concluded, “then it can invoke conflict

preemption.” Id.

By conflating express and implied preemption, the

Second Circuit reneged on Mozilla’s pledge that states

may not “actually undermine[]” light-touch Title I

regulation. In fact, the Second Circuit managed to

read Mozilla as saying that Title I has no implied

preemptive effect. Quite simply, the Second Circuit

erased the distinction between the express preemption

that was at issue in Mozilla, and the implied (conflict)

preemption that was left unaddressed in Mozilla but

that’s at issue here.

In placing information services in Title I, what did

Congress achieve? We know this much: it wanted to

reduce regulation, so that information services could

flourish. Was Congress fine with states imposing a

patchwork of price controls—and other common

carrier rules, such as market entry and exit

requirements—on information services? Obviously

not. To fulfill Congress’s deregulatory aims, must the

FCC ignore Title I (rendering it superfluous?), try to

cram services into Title II, and then fundamentally

rewrite Title II through sweeping forbearance? Again,

clearly no. Congress set up a scheme of light-touch

regulation, in Title I, and it meant what it said.

By moving broadband “outside of … Title II,” the

Second Circuit claimed, the FCC “surrendered the

11

statutory authority” to preempt state common carrier

regulations. Pet.App. 32a. The FCC’s authority to

preempt state law must, this thinking runs, be

coextensive with what the FCC itself has the

authority to do. The Second Circuit picked up this

novel “asymmetry” theory—under which federal

regulatory schemes can pack implied preemptive

power, but federal deregulatory schemes cannot—

from overbroad language in Mozilla. The asymmetry

theory says, in essence, that when it comes

to deregulation, preemption can only be express.

This is not sound preemption law; it’s just a

prejudice against deregulation. “A federal decision to

forgo regulation in a given area,” the Mozilla dissent

said, quoting this Court, “may imply an authoritative

federal determination that the area is best

left unregulated.” 940 F.3d at 83 (Williams, J.,

dissenting) (quoting Ark. Elec. Co-op. Corp. v. Ark.

Pub. Serv. Comm’n, 461 U.S. 375, 384 (1983))

(emphasis added). The dissent here agreed. The FCC’s

finding that broadband should not be subject to

Title II regulation, it wrote, quoting another of this

Court’s decisions, “takes on the character of a ruling

that no such regulation is appropriate or approved.”

Pet.App. 60a (quoting Ray v. Atl. Richfield Co., 435

U.S. 151, 178 (1978)). To demand more “statutory

authority” is to demand that, when deregulating,

and only when deregulating, Congress add: “And we

really mean it.” This amounts to an erroneous claim

that federal deregulatory efforts require express preemption. The Second Circuit upheld the ABA only by

improperly stacking the deck against Congress’s

deregulatory objectives.

12

II.

THE SECOND CIRCUIT’S RULING IMPERILS

TECHNOLOGICAL INNOVATION.

If the Communications Act does not prevent New

York from trampling on this Title I information service

(broadband), nothing in logic stops a state from

disregarding the Communications Act to trample on

any Title I information service.

Under New York’s theory, each time the FCC

identifies a cutting-edge interstate service as a Title I

information service, rather than a Title II

telecommunications service, the FCC’s identification

serves as an announcement, to the states, that it is

open season for regulating that service as common

carriage. In other words, New York believes that

Congress designed a law that predictably, efficiently,

and systemically “fetters” the Internet with state

regulation, when Congress explicitly demanded the

opposite. See 47 U.S.C. §§ 230(b)(2), 230(f)(2). This

theory obliterates the fundamental dichotomy

between interstate communications, regulated at the

federal level, and wholly intrastate communications,

regulated at the state level.

The need for the light-touch Title I regime is as

great as ever, as communications technology

continues to evolve rapidly. Email and text messaging

are Title I services. Other services that process data

while transporting it, such as business communications platforms, cloud-computing services, and videoconferencing apps, display the hallmarks of Title I

services. See 47 U.S.C. § 153(24). When one thinks of

Title I, one should think of the light-touch regulatory

13

environment necessary for all these services (and

their successors, such as the Metaverse) to thrive.

The Second Circuit’s ruling is extraordinarily

harmful. Nothing in logic enables a state to say that

interstate broadband’s Title I status opens the way to

state rate regulation, but that email’s or text

messaging’s Title I status does not open those services

to state rate regulation. Under the Second Circuit’s

ruling, in short, the Communications Act would not

prevent states from applying rate regulation to every

service that is, or that could plausibly be, a Title I

information service.

When it identified email as a Title I service, the

FCC was not giving states a green light to rateregulate email (or, when an email service is free, to

require the provider to pay users for data). Likewise,

were the FCC to identify business communications

platforms like Slack as Title I services, that would not

be a green light for states to set price controls for those

products. To assume otherwise is to assume that every

service must be subject to heavy-handed regulation by

someone. But the 1996 Act (and common sense) tells

us that that can’t be the case.

The Second Circuit concluded that the forbearance

power, under Title II, is the only preemptive power in

the FCC’s Title I-Title II arsenal. Pet.App. 33a (citing

47 U.S.C. § 160(e)). In the Second Circuit’s view, the

FCC must itself have the power to impose price caps,

as it does for services under Title II, to stop states from

imposing price caps. But when we pan out, and think

about more than broadband, that claim looks like pure

folly. Imagine that a state says it will start imposing

14

market entry and exit rules, rate regulations, or payfor-data requirements on email. Does that mean that,

for the Communications Act to bar such regulation,

email must be under Title II, with the FCC then

forbearing from treating email like a common carrier?

Why would Congress, which wants the Internet to

remain unfettered by state regulation, 47 U.S.C.

§ 230(b)(2), require such a Rube-Goldberg-esque

process to head off state regulation? Such a protocol

would make a mockery of Congress’s straightforward

conclusion that Title I is the home of services that

need light-touch regulation.

CONCLUSION

The petition should be granted.

September 13, 2024

Respectfully submitted,

CORY L. ANDREWS

JOHN M. MASSLON II

WASHINGTON LEGAL

FOUNDATION

2009 MASS. AVE. NW

WASHINGTON, DC 20036

CORBIN K. BARTHOLD

Counsel of Record

BERIN SZÓKA

JAMES E. DUNSTAN

TECHFREEDOM

1500 K STREET NW

WASHINGTON, DC 20005

(771) 200-4997

cbarthold@techfreedom.org