Net neutrality decision boosts FCC muni preemption case, but not enough

by Steve Blum • , ,

Still not going anywhere.

The federal appeals court ruling that upheld the Federal Communications Commission’s common carrier and network neutrality rules for broadband did collateral damage to the State of Tennessee’s attempt to overturn the FCC’s preemption of state restrictions on local municipal broadband initiatives. But it doesn’t appear fatal, or even particularly serious.

At the same 2015 meeting where it voted to regulate broadband as a common carrier service, the FCC also decided to toss out state laws in Tennessee and North Carolina that prevented two muni fiber systems from expanding into neighboring jurisdictions. The two states appealed, with Tennessee walking point, and the case was heard by three appeals court judges in Cincinnati in March.

Tennessee’s case is based on three primary arguments:

  • Congress can’t tell states how to manage and delegate authority to local governments.
  • Even if it can, congress didn’t make a “plain statement” saying the FCC could insert itself into that state-local relationship when it passed the telecommunications act of 1996.
  • More than that, the section of the telecommunications act that the FCC is relying on – section 706 – doesn’t grant any authority at all and it’s just a general mission statement.

When the appeals court in Washington upheld the FCC’s common carrier decision last week, it reaffirmed an earlier ruling that section 706 does give the FCC enough additional authority over broadband service to implement the new rules. That prompted a quick response from Tennessee, telling the Cincinnati judges that the Washington guys had it wrong and they should ignore them. An even more hurried reply from the FCC urged the judges to adopt the precedent set by the DC court.

The Cincinnati judges are free to rule as they please regarding the FCC’s muni broadband preemption, but it’s never seemed likely that they would negate section 706 altogether – although if they did it would almost certainly trigger a review of both the common carrier/net neutrality rules and the muni preemption by the supreme court. Nor will they buy the argument that congress can’t involve itself at all in matters concerning state discretion over local government – that’s already well ploughed ground.

Tennessee’s remaining argument is much stronger. Section 706 is broad reaching, but it is also vague and doesn’t contain anything like a “plain statement” allowing the FCC to meddle in the relationship between state and local governments. During oral arguments in March, the judges pressed hard on that point and the FCC’s attorney couldn’t answer it effectively.

There’s no timetable for the Cincinnati court to come to a decision. It could happen today, or sometime next fall. When it does come down, though, I’m still betting that the FCC’s preemption of muni broadband restrictions will be thrown out.