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FCC Chairman Ajit Pai. (Flickr Photo / FCCDotGov)

The Federal Communications Commission’s rollback of internet regulations known as net neutrality was upheld Tuesday by a panel of federal judges. But the court struck down a key provision that would have allowed the FCC to preempt states that pass their own open internet rules, as Washington and California have.

Though the ruling lets states make their own net neutrality rules, it says the FCC can try to override local regulations on a case-by-case basis. The decision makes states the de facto regulators of net neutrality and tees up potential legal battles between the FCC and local authorities.

Despite the preemption decision, FCC Chair Ajit Pai celebrated the ruling. “Today’s decision is a victory for consumers, broadband deployment, and the free and open Internet,” he said in a statement.

The decision by the U.S. Court of Appeals for the District of Columbia upholds the FCC’s 2017 vote to undo the Obama-era rules. The regulations in question forbid internet companies from selling faster service to select websites or throttling others. Verizon, for example, couldn’t slow down service to Netflix or speed up its own video streaming competitor.

The FCC repealed those regulations in 2018 despite protests from open internet advocates, tech companies, and many consumers. A coalition of net neutrality advocates, led by Mozilla, sued the FCC over its decision to repeal net neutrality. The ruling Tuesday resolves that dispute.

“Petitioners –– an array of Internet companies, non-profits, state and local governments, and other entities –– bring a host of challenges to the 2018 Order. We find their objections unconvincing for the most part, though we vacate one portion of the 2018 Order,” the ruling says.

Rep. Drew Hansen sponsored Washington’s net neutrality bill with support from Gov. Inslee. (Photo via HouseDemocrats.WA.Gov.)

Washington state was the first to pass its own net neutrality regulations in early 2018. State Rep. Drew Hansen, the sponsor of the legislation, called the appeals court ruling a “bad day for national-level net neutrality,” but a “good day for state-level net neutrality.”

“The states traditionally have very broad consumer protection authority, which we’re exercising here, and the D.C. Circuit held that the FCC cannot create for itself broadly sweeping preemptive authority that Congress never gave it,” Hansen told GeekWire.

Dozens of states have introduced their own open internet regulations since the FCC repealed net neutrality. Some states, like California, have enacted legislation that is even tougher than the federal rules implemented in 2015.

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