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Appeals court: State challenge to information services pre-empted by federal law


According to Market Intelligence, December 2022


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Appeals court: State challenge to information services pre-empted by federal law

A federal appeals court found that a state effort to regulate information services is pre-empted by federal law.

The Sept. 7 finding from the U.S. Court of Appeals for the Eighth Circuit held that attempts by the Minnesota Public Utilities Commission to regulate a Voice over IP service from Charter Communications Inc. called "Spectrum Voice" are pre-empted by federal law. The court determined that this is an information service rather than a telecommunications service.

The Federal Communications Commission has not classified VoIP services as either an information or telecommunications service, but a district court had classified the service as an information service. The appeals court upheld these findings.

"We agree with the district court that Spectrum Voice is an 'information service' under the [Telecommunications] Act [of 1996]," Judge Ralph Erickson wrote in the opinion for the court majority. "Pre-emption of state regulation of Spectrum Voice is therefore warranted."

FCC Chairman Ajit Pai lauded the court's judgment, which could play a role in future clashes between the commission and state efforts to impose net neutrality rules. Under the FCC's 2017 Restoring Internet Freedom Order, the commission reclassified broadband internet as an information service.

"The Eighth Circuit's decision is important for reaffirming that well-established principle: '[A]ny state regulation of an information service conflicts with the federal policy of nonregulation' and is therefore pre-empted," said Pai in a Sept. 7 statement. "That is wholly consistent with the approach the FCC has taken under Democratic and Republican Administrations over the last two decades, including in last year's Restoring Internet Freedom Order."

Three states – Washington, Oregon and Vermont – have enacted net neutrality laws. California's state Senate passed a sweeping net neutrality bill Aug. 31, which is currently awaiting final approval from Democratic Gov. Jerry Brown.