FCC can’t preempt state limits on muni broadband, appeals court rules

by Steve Blum • , , ,

Park the bulldozer.

Congress did not give the Federal Communications Commission the authority to override state government-imposed limits on expansion by municipal broadband systems. That’s the simple and – as far as it goes – unanimous opinion of three federal appeals court judges who overturned the FCC’s preemption of muni broadband restrictions in Tennessee and North Carolina.

In general, a state has complete authority to determine what cities and counties can do, within the limits of the law. Local governments “are nothing more than that state’s ‘convenient agencies,'” as this morning’s decision put it. If a federal regulatory agency, like the Federal Communications Commission, wants to interfere in that relationship, it needs a “clear statement” from congress giving it that power.

As they clearly signalled they might during oral arguments in March, the judges ruled that the FCC wasn’t exercising its regulatory powers when it threw out Tennessee’s and North Carolina’s restrictions on muni broadband system expansion. Neither the states nor Chattanooga and Wilson – the two cities involved – are required by federal law to extend broadband service beyond their boundaries. As with private broadband companies, the choice to expand or not is left up to the provider. The question was, as one judge put it, who decides?

Federal courts have said over and over: states can decide or can pass the decision along to local governments. When congress has the authority to override those decisions and it wants to delegate that power to federal agencies, it has to make its intent unmistakably clear.

The FCC claimed that a general statement in the 1996 telecommunications act – the much invoked section 706 – instructing it to “remove barriers to infrastructure investment” gave it the specific authority to preempt the state-level restrictions that Tennessee and North Carolina place on municipal broadband. The judges said made their own clear statement and said that’s wrong…

This preemption by the FCC of the allocation of power between a state and its subdivisions requires at least a clear statement in the authorizing federal legislation. The FCC relies upon [section] 706 of the Telecommunications Act of 1996 for the authority to preempt in this case, but that statute falls far short of such a clear statement. The preemption order must accordingly be reversed.

One judge disagreed with one of the conclusions in the opinion, regarding North Carolina’s muni broadband rate regulations, but her dissent re-affirmed the final ruling: the FCC doesn’t have the authority to preempt otherwise legal state decisions regarding municipal broadband.

During oral arguments, the FCC hinted that it might appeal an unfavorable result to the supreme court. It can also ask the appeals court to reconsider today’s decision. But the FCC would be on its own – it doesn’t even have the support of the U.S. attorney general’s office.

As it stands right now, state restrictions are on muni broadband systems are back in effect in Tennessee and North Carolina. There is little chance that further appeals will change that fact.

Federal appeals court opinion reversing FCC municipal broadband preemption