FCC muni broadband decision relies on a wobbly position

by Steve Blum • , , ,

This isn’t the first time the feds have fought in Chattanooga.

There was no doubt that the FCC would vote two weeks ago to pre-empt state laws in Tennessee and North Carolina that restrict the ability of local governments – the cities of Chattanooga and Wilson respectively – to get into the broadband business. Both U.S. president Barack Obama and FCC chairman Tom Wheeler promised it was coming. And there’s no shortage of reasons to do it (or not).

The only real question that was left to be answered when the actual text of the decision was released yesterday was the FCC’s legal basis for doing so. It might have tried to slip through a possible loophole in the U.S. supreme court’s previous muni broadband ruling – Nixon v. Missouri Municipal League – and claimed the two specific utilities involved were independent corporations. That would have been a long shot though, and the FCC wisely didn’t take it.

Instead, it determined that federal telecoms law – particularly the very broad and equally vague language in section 706 – gives it preeminent authority over states in deciding broadband policy. Enough authority, it thinks, to get around the supreme court’s requirement that the FCC needs a “plain statement” by congress in “unmistakably clear” terms that it has the power to tell states how to manage the relationship with subordinate agencies, such as cities and counties…

A different question would be presented were we asked to preempt state laws that withhold authority to provide broadband altogether. But where a state has authorized municipalities to provide broadband, and then chooses to impose regulations on that municipal provider in order to effectuate the state’s preferred communications policy objectives, such as the protection of incumbent ISPs, such laws fall within our authority to preempt.

It’s a decision that’s begging to be overturned by the federal courts. The problem is that section 706 puts state telecoms regulators on an equal footing with the FCC: “the [Federal Communications] Commission and each State commission with regulatory jurisdiction over telecommunications services shall…” do all this stuff.

It’s far from clear that congress intended to give FCC absolute preemption powers. And even then, the decision is (horrors!) legally disingenuous about the Nixon decision…

We therefore find that the “clear statement rule” from Gregory does not apply here. And unlike Nixon v. Missouri Municipal League, the question here is not whether the municipal systems can provide broadband at all, but rather whether the states may dictate the manner in which interstate commerce is conducted and the nature of competition that should exist for interstate communications.

Gregory was an earlier U.S. supreme court ruling that affirmed the principle that if congress wants to “upset the usual constitutional balance of federal and state powers” then it must make that intention “unmistakably clear in the language of the statute”. It was integral to the Nixon decision. So was the question of whether the FCC has the power to tell states they can’t ban muni broadband – the answer was no, the FCC doesn’t have that power – but it wasn’t the only question. The Nixon ruling used the unmistakably clear principle to parse whether or not congress wrote into the telecoms absolute authority over state policy regarding publicly-provided Internet service. The decision the FCC released yesterday slides around that question.

There’s plenty to consider in the FCC’s muni broadband decision, and even more in its decision to regulate Internet service and infrastructure using common carrier rules – also posted yesterday. More to come.