Not a lawyer, but I found an explanation about why states can pass net neutrality laws. Communication over the internet has both interstate and intrastate components. More on the intrastate component later. The Commerce Clause gives Congress authority to pass legislation to regulate interstate commerce [1]. Congress can also delegate a portion of its authority to federal agencies such as the FCC.

What happens when the FCC chooses to abandon its authority to regulate ISPs? More specifically, what happens when the FCC chooses to deregulate the ISPs by reclassifying broadband from Title II to Title I? Then the FCC cannot preempt state laws regarding telecom unless Congress gave it an authority to do so. In Mozilla Corp. v. FCC, 940 F. 3d 1 (D.C. Cir., 2019), the FCC tried to argue that it could preempt state net neutrality laws [2].

Quoting the page 132 of the case text PDF (which you need to download to ctrl-F, since Justia's PDF viewer messes up whitespace between words) [3][3.5]:

> Third, the Commission points to 47 U.S.C. § 160(e). That provision says that “[a] State commission may not continue to apply or enforce any provision of [the Act] that the Commission has determined to forbear from applying under subsection (a).” Subsection (a), in turn, gives the Commission some flexibility to forbear from regulating technologies classified under Title II. Id. § 160(a).

> That Title II provision has no work to do here because the 2018 Order took broadband out of Title II. So the Commission is not “forbear[ing] from applying any provision” of the Act to a Title-II technology. 47 U.S.C. § 160(e). On top of that, Section 160(e)—as a part of Title I—does not itself delegate any preemption authority to the Commission. People of State of Cal., 905 F.2d at 1240 n.35.

In short, the FCC gave up its authority to preempt state net neutrality laws the moment the FCC reclassified broadband from Title II to Title I.

There's another important point which starts on page 134 and continues to page 135 [3.5]. (If you want to ctrl-F it, you'll have to select just the first few words because page breaks in the PDF obstruct paragraphs.)

> Not only is the Commission lacking in its own statutory authority to preempt, but its effort to kick the States out of intrastate broadband regulation also overlooks the Communications Act’s vision of dual federal-state authority and cooperation in this area specifically.

Meanwhile, back on page 126 [3.5]:

Section 152 of the Communications Act provides, as relevant here, that “nothing in this chapter shall be construed to apply or to give the Commission jurisdiction with respect to * * * regulations for or in connection with intrastate communication service by wire or radio of any carrier.” 47 U.S.C. § 152(b). That provision divides regulatory authority “into two separate components: interstate communications, which can be regulated by the [Commission]; and intrastate communications, which cannot.”

Therefore, states actually have Congress's blessing to regulate broadband to some degree: states have authority over communications confined within the respective states.

So what about the Dormant Commerce Clause, which prohibits states from "passing legislation that discriminates against or excessively burdens interstate commerce" [1]? I don't know whether courts have come to an answer about whether state net neutrality laws violate the Dormant Commerce Clause. So instead I'll pose food for thought: To what degree do you think state net neutrality laws burden interstate commerce? Is the burden excessive? Net neutrality means that an ISP can't restrict traffic on the grounds of content, senders, and recipients [4]. What kind of burden does that place on an ISP which offers internet in multiple states?

[1] https://www.law.cornell.edu/wex/commerce_clause

[2] https://en.wikipedia.org/wiki/Mozilla_Corp._v._FCC

[3] https://law.justia.com/cases/federal/appellate-courts/cadc/1...

[3.5] https://cases.justia.com/federal/appellate-courts/cadc/18-10...

[4] https://en.wikipedia.org/wiki/Net_neutrality