O’Rielly Criticizes States on Net Neutrality Laws, 911 Fee Use

In a speech today before the Philadelphia Lawyers Chapter of the Federalist Society, FCC Commissioner Mike O’Rielly once again took states to task on 911 fee diversion and efforts to enact net neutrality protection.

 The FCC’s restoring Internet freedom order (TR Daily, Dec. 14, 2017), which took effect yesterday (TR Daily, June 11) “acknowledged an extremely limited state role in enforcing traditional police powers, any requirements akin to common carrier regulation are barred. Moreover, states may not adopt their own transparency requirements, whether labeled as such or under the guise of ‘consumer protection.’ In short, because the FCC order restored a light-touch approach through deregulation, any action by states to increase regulatory burdens on broadband providers would run directly counter to our efforts,” Commissioner O’Rielly said in the text of his remarks.

“Nonetheless, some states have been pursuing a range of net neutrality laws. And, the manner in which they are choosing to address the issue varies greatly across borders. Some are attempting to embed net neutrality into procurement law, which might only impact certain companies, while others are pursuing laws applicable to all broadband providers operating in the state. Furthermore, the scope of these efforts differs substantially. Some focus on the old ‘bright line’ rules of no blocking, no throttling, and no paid prioritization. Others throw in the general conduct standard as a catch all for policing conduct that someone in the state might find objectionable. Another goes so far as to address the interconnection of broadband networks,” he continued.

The Commissioner criticized these efforts as violating “the Commerce Clause, the Communications Act, and clear FCC preemption” as well as creating different rules in different states and thus imposing “even greater compliance costs and liability risk for providers, which will be passed onto consumers in one form or another.”

“In sum, state efforts to enact net neutrality rules are legally flawed and would impose substantial and unnecessary compliance burdens on providers. The rules and the costs they impose could chill innovation and curtail the broadband deployment we’ve all been working so hard to promote. Expect to hear more about this in the coming months,” Mr. O’Rielly said.

He also reiterated his criticism of states that use revenues from 911 fees on consumers’ bill for purposes other than supporting emergency calling services.  “[U]nfortunately, some states have viewed these fees as a part of a slush fund to redistribute for other purposes. This is a disgraceful practice that must end,” he said.

“Take New York, New Jersey, Rhode Island, and Puerto Rico, for example. Each of these states has passed laws requiring the state to divert a certain amount of their 9-1-1 fees to other purposes, such as for the state’s general fund. New York law requires at least 41 percent be diverted,” Commissioner O’Rielly said.

“There are more positive stories to tell in Rhode Island and Puerto Rico. In Rhode Island, corrective legislation has been submitted by the legislature and appears to be supported on a bipartisan basis, including by the Governor. Further, in Puerto Rico, we were able to get a commitment that the territory would fully end its diversion practices by the end of 2018. Of course, as the saying goes, progress is neither automatic nor inevitable, and we must continue the pressure to see this to the end. Other states the Commission found to be diverters in 2016 included West Virginia, New Mexico, and Illinois. However, this data is based on information provided to the Commission by the states themselves. The problem is likely to be far more pervasive than what is actually being reported to the Commission,” he said.

“Why is this all so important? Isn’t there a Federalism point or Libertarian perspective that if the people of those states want to prevent politicians from stealing 9-1-1 fees for whatever devilish reason, then their recourse is the ballot box? I think that is correct to some degree to the extent that they even know this practice exists. But, where this viewpoint breaks down is when individual states agree to participate in a national network — by utilizing the 9-1-1 number and apparatus — but then fail to live within the totality of its requirements. If a state wants to live in the public safety wilderness by divorcing itself of the 9-1-1 system, then I suspect we could have a more complex debate. But, it is unacceptable to take all the benefits and then slack off on the responsibilities,” Commissioner O’Rielly said.

“Moreover, I have reached out to stakeholders in each of the 2016 diverting states, to begin a dialogue explaining why this practice is harmful. What has been interesting is each time the public learns about this issue in their state, they tend to immediately agree that such practices must end,” he added.

“With the responsibility for funding and operating 9-1-1 chiefly being a state-level responsibility, a concerted effort is going to be required against recalcitrant states and territories. For now, naming and shaming is one of my best tools against this practice but I could certainly use more voices in utilizing this to its fullest potential. Of course, the other recourse is official action taken by the Commission or a new federal law passed by Congress, either in the form of limiting grants to only those states that do not engage in fee diversion, or in a federal prohibition against fee diversion altogether. Legislation, of course, is a heavier lift, but may need to be considered, especially when states like New York completely refuse to even consider ending their fee diversion practices,” he said. —Lynn Stanton, lynn.stanton@wolterskluwer.com

Courtesy TRDaily