Verizon Asks FCC to Prohibit States from Protecting Privacy

By Ernesto Falcon, November 3, 2017; Link to original article.

After lobbying Congress to repeal consumer privacy protections over ISPs, Verizon wants the Federal Communications Commission (FCC) to do it a favor and preempt states from restoring their privacy rights. While Congress repealed the previous FCC’s privacy rule, it left the underlying Section 222 intact. As a result, dozens of state bills were then introduced to restore broadband privacy, mirroring Section 222 of the Communications Act.

Verizon’s two-pronged attack on privacy protections for Internet users would require the FCC to not only abandon federal privacy protections (which is part of their Title II common carrier obligations), but to also prohibit states from protecting the privacy of their residents.

The states, however, have a vital role to play in protecting Internet subscribers, particularly given the rollback of federal protections. It would be unwise for the FCC to attempt to block such protections at Verizon’s behest, and it would be on shaky legal footing if it tried to do so.

Legally, Congress has the power to override state laws that interfere with federal regulation, subject to important limits set forth in the Constitution. This power is called “preemption” – Congress can “preempt” state law. Since preemption interferes with states’ ability to govern conduct within their borders, courts do not simply assume that all action by federal regulators can overturn state laws. Contrary to Verizon’s claims that the FCC has clear authority to preempt on privacy, it would be legally unwise and potentially unlawful for the FCC to preempt the states.

Nothing in the Communications Act Prohibits States From Passing Their Own Privacy Laws that Go Beyond Federal Protections

The Communications Act does not give the FCC the express power to bar states from protecting the privacy of Internet users. The only provision in the Act that bars states from any kind of conduct with regard to privacy is Section 222, which provides that states cannot undermine federal privacy protections, but may go further than federal law requires in protecting privacy so long as it compliments the federal law.

Even the House author of the broadband privacy repeal, Congresswoman Marsha Blackburn, saw that no express statutory text exists to preempt state privacy laws. That is why she included the following language in her Browser Act legislation that seeks to impose privacy rules on ISPs and a range of Internet companies.

“No State or political subdivision of a State shall, with respect to a provider of a covered service subject to this Act, adopt, maintain, enforce, or impose or continue in effect any law, rule, regulation, duty, requirement, standard, or other provision having the force and effect of law relating to or with respect to the privacy of user information.”

That legislation has not been passed into law, meaning that Congress has not preempted the ability of states to protect online privacy.

Absent any clear preemption of state power, Verizon resorts to a series of unavailing arguments that the power is implicitly granted to the FCC by other provisions of law (Section 706, 303, 153, 230, and the Congressional Review Act repeal law). We address each in turn.

The Vague and Open-Ended Language of Section 706 Does Not Contain a Hidden Authority to Override State Laws

Section 706 states that the FCC should address barriers to broadband deployment and competition. The problem with relying on this vague and open-ended provision for substantial authority is that Congress did not explain what it meant, and courts have struggled to articulate a principled outer bound for this power. Proponents of this theory argue that the FCC can take any action it wants, override any state law, if it concludes such an action will promote broadband deployment. If Congress ever grants an agency such power, one hopes it will at least be clear that it is doing so, and not use vague language of the kind in Section 706, which made it unclear it was granting the FCC any authority to do anything, rather than urging it to use its existing powers for a particular goal.

Ironically, one very important FCC official thought Section 706 conferred no power to the FCC to block state laws. His name is Ajit Pai, the Current FCC Chairman.

“I very much doubt that section 706 gives the Commission the authority to preempt any state laws, even those governing private actors.”

*— FCC Commissioner Pai in his 2015 dissent to the FCC’s effort to preempt state laws banning municipal broadband

But let’s not just take Chairman Pai’s word for it. Even under a very aggressive reading of Section 706’s grant of authority, the FCC would have to prove that protecting user privacy is a barrier to competition and deployment and nothing indicates that is remotely true. In fact, a number of ISPs have explicitly told the FCC they had no new barriers to deployment or investment as common carriers subject to privacy rules. In essence, Verizon would need the FCC to make some unsubstantiated assumptions about privacy protections despite the Department of Commerce, Federal Trade Commission, and the FCC itself having found that privacy protections appear to improve broadband adoption as more sensitive information is passed online.

Title I’s Lack of Statutory Text Cuts Against Preemption

Title I is the alternative “classification” of broadband Internet service, and dominant ISPs like Verizon prefer it to Title II because they have successfully gutted it via a series of court challenges.

Title I was a poor basis for the FCC’s authority because of the near-complete absence of statutory text on privacy, non-discrimination, and competition. That in turn means the FCC cannot legally enforce network neutrality, privacy, and other policies that would help competitive entry. However, while this silence on privacy aided Verizon when it sought to hamstring the FCC, it undermines its current argument for wide-reaching preemption powers.

Because the statute does not govern privacy or expressly bar states from doing so, it cannot preempt state laws unless those laws interfere with federal regulation of interstate commerce. Protecting user privacy however is an intrastate activity (meaning it does not have to involve crossing borders) and states have passed numerous privacy laws historically that complement federal law.

For example, both Nevada and Minnesota have ISP privacy laws on the books today that Verizon is asking the FCC to strike down. California has the California Email Communications Privacy Act (Cal ECPA), the Student Online Personal Information Protection Act (SOPIPA), and California’s state constitution provides an affirmative right to privacy that has resulted in Comcast paying fines when it unlawfully disclosed customers’ personal information. These state laws and numerous others that impact ISPs would be impacted by Verizon’s request.

Statements of Policy are Not Authorizations Granted By Congress

The Communications Act includes policy statements favoring less regulation, rather than more, but a Federal appeals court has told us that policy statements do not amount to a legal grant of authority. For example, when the FCC attempted to uphold Network Neutrality under Title I in the past, the D.C. Circuit argued the FCC lacked the legal power to do so, rejecting the theory that policy statements confer statutory powers.

Not a Single Court Case Exists To Sustain the Argument That the Congressional Review Act Preempts State Law

The purpose of the Congressional Review Act (CRA) was to prohibit federal agencies from interpreting federal laws in a specific manner while placing a block on “substantially similar” regulations by those agencies. That has a strong impact on how federal law is applied, but only to the extent federal enforcers are allowed to apply them. It is with some irony that Verizon’s association, CTIA, has argued at the state level that the CRA has done nothing, yet at the federal level it is being argued that it is a massive and powerful block against state privacy laws.

The reach of the CRA in particular has not been litigated because only one time prior to 2017 has the CRA even been used. However, the traditional legal standards governing preemption still apply, and nowhere in the CRA law does it have express statutory language preempting any state laws. EFF has strong doubts that the CRA, with its mechanism of restricting federal agencies, would grant those same federal agencies new powers to block states from acting in their own capacity.

FCC Authority Over the Airwaves Also Does Not Directly Preempt Privacy Law

The general authority of the FCC to regulate the deployment of wireless networks and licenses under Section 303 (also referred to as Title III authority) does grant the FCC the power to preempt states, but that preemption authority has its limits. For example, the FCC can block localities when they try to regulate interference or technical standards, but they cannot preempt states from regulating what is displayed on your bill from the wireless company. The FCC is also the sole entity that can decide whether a particular frequency is used for radio, television, or mobile broadband.

It is not clear that the FCC can reach so far under its Title III authority to block states that want to regulate business practices that are unrelated to the underlying service being offered. The practice of monetizing the personal information of users with third parties is explicitly a business practice and wholly unnecessary to the provisioning of wireless broadband service. You do not need to monetize someone’s web browsing history in order to provide them a wireless network function, particularly given that Americans already pay substantial subscription fees for that service. It is also worth noting that the cellular industry has long lived under privacy rules that were intended to also apply to mobile broadband until Congress intervened.

The FCC Should Reject Verizon’s Request to Overreach on its Legal Authority

For all of the complaints lobbed at the FCC overreaching in its efforts to address the ISP market, it should not be lost on the Commission that Verizon is asking it to overreach on its behalf. The FCC should reject the request outright and not cut ISPs’ state lobbyists a break by unlawfully stepping in on state power. Not only would such a move be ill advised legally, but it would actively harm the privacy rights of all Americans and frustrate their right to seek a response from their locally elected state legislatures.