In a unanimous decision today a federal appeals court ruled that the Federal Communications Commission (FCC) has no legal authority to regulate how private web providers manage their traffic. The Hill describes the ruling as a “major blow” to the federal government and “net neutrality” advocates.

The decision overturns the FCC’s order in 2008 that Comcast cease blocking subscribers’ peer-to-peer file sharing applications, including BitTorrent, which the company said had over-burdened its strapped broadband network and slowed users’ connections.

Previously, the FCC argued that a smattering of federal laws, policy statements and court cases endowed the agency with the implicit authority to regulate Internet service providers’ (ISP) Web practices. It invoked that authority in late 2008, when it ordered Comcast to stop blocking or “throttling” traffic to BitTorrent.

But the Federal Court of Appeals in Washington D.C. on Tuesday disagreed with the agency’s assessment and subsequently ruled on a 3-0 vote to toss the FCC’s landmark order.

Basically the federal appeals court pushed back another federal government overreaching attempt, dealing a blow to big government advocates. A small but perhaps significant victory for limited government ideology.