Montana governor is ready for lawsuits over attempt to protect net neutrality.

The Montana governor's office has a message for the Federal Communications Commission and Internet service providers: the state can't be stopped from protecting net neutrality, and ISPs that don't like it don't have to do business with state agencies.

Governor Steve Bullock signed an executive order to protect net neutrality on Monday, as we reported at the time. But with questions raised about whether Bullock is exceeding his authority, the governor's legal office prepared a fact sheet that it's distributing to anyone curious about potential legal challenges to the executive order.

ISPs are free to violate net neutrality if they only serve non-government customers—they just can't do so and expect to receive state contracts. "Companies that don't like it don't have to do business with the State—nothing stops ISPs from selling dumpy Internet plans in Montana if they insist," the fact sheet says.

The FCC's repeal of net neutrality rules attempts to preempt states and localities from issuing their own similar rules. But Bullock's executive order doesn't directly require ISPs to follow net neutrality rules. Instead, ISPs that accept contracts to provide Internet service to any state agency must agree to abide by net neutrality principles throughout the state.

Bullock's fact sheet is titled, "Why Isn't Montana's Executive Order Preempted?" and it offers numerous answers to that question.

"Through the order, the State of Montana acts as a consumer—not a regulator," the fact sheet says. "Because there's no mandate, and no new regulations, there's certainly no federal preemption. Companies that don't like Montana's proposed contract terms don't have to do business with the State."

FCC relinquished authority, Montana says
Montana further argues that it would be on solid ground even if it did enforce net neutrality via a law instead of the executive order. When the FCC repealed its own net neutrality rules, it also deregulated broadband providers by renouncing its authority to regulate them as common carriers under Title II of the Communications Act.

"The FCC felt it needed to reclassify broadband under Title II to protect net neutrality principles [in 2015]," Montana says. "So when the FCC retreated back to Title I in December [2017], it's unclear how the FCC can simultaneously claim that it doesn't have the power to impose net neutrality principles under Title I yet preempt states from doing the same."

The Montana fact sheet continues:

The ISPs are trying to have it both ways, too. During the previous administration, ISPs argued that the FCC lacked the power under Title II to preempt certain state laws that ISPs favored. Now, under Title I, ISPs are claiming broad, preemptive authority by the FCC. Both can't be true.

Montana also took aim at the argument, made by the FCC and broadband companies, that ISPs shouldn't have to face a "patchwork" of inconsistent state regulations.

"ISPs have always faced 50 sets of tort laws, consumer protection laws, property laws, tax laws," Montana said. "This is nothing new, and it's not onerous to implement. The Communications Act says that the Commission doesn't get to regulate state affairs. States do."

A spokesperson for Chairman Pai declined to comment when contacted by Ars today.

The Montana governor's executive order says that ISPs doing business with the state "must not block lawful content, throttle, impair, or degrade lawful Internet traffic on the basis of Internet content, engage in paid prioritization, or unreasonably interfere or disadvantage the users' ability to select, access, and use broadband Internet access service."

Legal questions
One legal question raised by Montana's executive order relates to how it attempts to extend the net neutrality protections to residents and private businesses in Montana. To qualify for state contracts, ISPs must not violate net neutrality principles "with respect to any consumer in the State of Montana (including, but not limited to, the State itself)," the order says.

New York Governor Andrew Cuomo signed a similar executive order this week, but it did not explicitly try to extend the net neutrality protections to non-government users.

ISPs could argue that Montana has the right to dictate terms of its own contracts with ISPs but that the state can't extend those terms to non-government customers.

"Whatever you think about Net Neutrality, nothing gives Montana's governor the unilateral authority to regulate the commercial relationship between broadband providers and all Montana consumers under the guise of state procurement," Montana Public Service Commission Vice Chairman Travis Kavulla wrote on Twitter.

States retain consumer protection authority
But that question would be moot if it turns out that the FCC can't preempt state net neutrality rules at all.

The FCC argued in its repeal order that it can preempt state net neutrality laws because broadband is an interstate service. "We conclude that regulation of broadband Internet access service should be governed principally by a uniform set of federal regulations, rather than by a patchwork that includes separate state and local requirements," the order said.

But states do have authority to protect broadband customers with consumer protection rules. Even the FCC's Republican majority acknowledged that when arguing that the net neutrality repeal won't leave Internet users without government protection.

"State consumer protection laws will apply and state attorneys general can bring actions against ISPs," FCC Commissioner Brendan Carr said on the day of the repeal vote. "These authorities will provide another strong set of legal protections against unfair business practices by ISPs."

Still, the FCC repeal order claims to limit state consumer protection powers to "such matters as fraud, taxation, and general commercial dealings, so long as the administration of such general state laws does not interfere with federal regulatory objectives." Courts have recognized that the FCC can preempt state law when "it is impossible or impracticable to regulate the intrastate aspects of a service without affecting interstate communications," the FCC said.

A previous FCC decision to preempt state laws that restrict the expansion of municipal broadband was struck down by a federal appeals court in 2016.

Besides the question of the FCC's preemption authority, it's not clear that the FCC followed the correct process for preempting state laws. The FCC has to ask the public for comment in a Notice of Proposed Rulemaking (NPRM), and it did so prior to the net neutrality repeal. But while the NPRM asked for comment on the repeal of federal regulations, the document did not suggest a preemption of state laws or ask for public comment on preemption. The idea of preemption was only raised months after the NPRM was issued, when broadband companies started pressuring the FCC to prevent states from protecting net neutrality.

Attorneys general representing twenty-one states and the District of Columbia are suing the FCC to reverse the net neutrality repeal, and the preemption questions will undoubtedly play a significant role in the lawsuit.