California has agreed to delay enforcement of its net neutrality law until after litigation that will determine whether states can implement their own net neutrality rules.

California's net neutrality law was slated to take effect on January 1, 2019. But the Trump administration's Department of Justice and broadband industry sued to block the law and were seeking a preliminary injunction that would halt enforcement until litigation is over.

The DOJ and broadband industry had a good chance of winning a preliminary injunction because the Federal Communications Commission had declared that all state net neutrality rules are preempted. As the DOJ argued, the US District Court for the Eastern District of California must presume that the FCC preemption of state laws is valid since that preemption has not been overturned by any court.

The core question of whether the FCC can preempt state net neutrality laws is expected to be decided by the US Court of Appeals for the District of Columbia Circuit. In that case, 22 state attorneys general and other parties sued the FCC to overturn its net neutrality repeal and preemption of state laws. Oral arguments are scheduled for February 1, 2019.

In a US District Court filing today, California agreed to take no action to enforce the state net neutrality law until after the US Court of Appeals case is decided and all appeals have been exhausted.

The DOJ and broadband industry lobby groups agreed to withdraw their motions for a preliminary injunction until after the US Court of Appeals case is decided. Once the major case is decided, the US District Court case would resume and the DOJ and broadband industry would have 30 days to re-file their motions for a preliminary injunction that would block the California law. California agreed not to enforce the net neutrality law until "a decision has been rendered on any renewed motion for preliminary injunctive relief that Plaintiffs may file."

Pai and Wiener react to agreement

California State Sen. Scott Wiener (D-San Francisco), author of the net neutrality law, supported California Attorney General Xavier Becerra's decision. Wiener said:

Of course, I very much want to see California's net neutrality law go into effect immediately, in order to protect access to the Internet. Yet, I also understand and support the Attorney General's rationale for allowing the DC Circuit appeal to be resolved before we move forward to defend our net neutrality law in court. After the DC Circuit appeal is resolved, the litigation relating to California's net neutrality law will then move forward.

Becerra said in a statement that "Every step we take, every action we launch is intended to put us in the best position to preserve net neutrality for the 40 million people of our state," and that he "will vigorously defend California’s own net neutrality law" in court.

FCC Chairman Ajit Pai celebrated the agreement. Pai said:

I am pleased that California has agreed not to enforce its onerous Internet regulations. This substantial concession reflects the strength of the case made by the United States earlier this month. It also demonstrates, contrary to the claims of the law's supporters, that there is no urgent problem that these regulations are needed to address. Indeed, California's agreement not to enforce these regulations will allow Californians to continue to enjoy free-data plans that have proven to be popular among consumers.

As Pai mentioned, the California law's ban on ISPs charging online services for zero-rating would force AT&T and Verizon to stop charging companies for data cap exemptions. The California law also prohibits zero-rating some applications in a content category but not others. That means AT&T's zero-rating of its DirecTV streaming service would violate the California law because AT&T doesn't provide the same data cap exemptions to competitors unless they pay up.

Pai further argued that California's law is illegal because "The Internet is inherently an interstate information service."

"I am confident that the FCC's authority to preempt such state laws will be upheld, along with our proven market-based framework for protecting Internet openness, investment, and innovation nationwide," Pai said.

Wiener predicted that California will come out on top.

"Net neutrality ensures open access to the Internet and guarantees that each of us can decide for ourselves where to go on the Internet, as opposed to Internet service providers making that decision for us," Wiener said. "I look forward to successful litigation on this issue and to the restoration of strong net neutrality protections in our state."

The broadband lobby groups that sued California issued a joint statement calling the agreement "a win for consumers that will allow continued innovation and investment while these deliberations continue." The groups are cable lobby NCTA, wireless lobby CTIA, USTelecom, and the American Cable Association. The lobby groups have repeatedly fought against both federal and state net neutrality rules, yet claimed today that the broadband providers they represent "support an open Internet."

"[W]e urge Congress to resolve this issue by passing a national framework to protect that principle for all Americans," the lobby groups said.