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State Officials Push Back Hard on Pre-emption

Say Their Laws Will Not Go Down Without a Fight 2/02/2015 8:00 AM Eastern
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State officials are forming a united front against an FCC and White House move to preempt state statutes designed to rein in municipal broadband systems.

WASHINGTON — Cable operators have found some strong allies in their fight against federal pre-emption of state laws circumscribing municipal broadband buildouts.

 

Groups representing state legislatures — including some state legislators themselves — joined with state regulatory commissioners and governors last week to highlight the threat of Federal Communications Commission preemption of laws that put various requirements or limits on city-funded networks.

 

That pre-emption threat has come from both the FCC and the White House, which at times appear to be coordinated in their broadband initiatives.

 

FCC chairman Tom Wheeler has said that loosening “legal restrictions on the ability of cities and towns to offer broadband services to consumers in their communities” could boost competition, competition, competition — his mantra. President Obama, in a strongly worded speech before the State of the Union address, said essentially the same thing.

 

Wheeler has signaled he plans to vote Feb. 26 on petitions from two municipalities — Chattanooga, Tenn., and Wilson, N.C. — seeking federal pre-emption of state laws that would block localities from building out broadband networks or limit the types of services those networks could offer. He is widely believed to have the votes to grant those petitions, which would almost certainly trigger a court fight.

 

An FCC spokesperson confirmed the Feb. 26 vote is still on.

 

Wheeler and Obama have said they see the state laws primarily as efforts by incumbent Internet-service providers to prevent price and service competition.

 

UNITED FRONT

 

Groups representing state government — such as the National Council of State Legislators, the National Governors Association and the Council of State Governments — held a conference call last week to speak with one voice against pre-emption. They spoke of the need to protect the sovereignty of state laws over municipalities, and told the FCC in no uncertain terms of their collective will to oppose any such moves.

 

The National Council of State Legislators has told Wheeler that it was unhappy with his comments to the National Cable & Telecommunications Association and others that pre-emption might be necessary, Neal Osten, executive director of the group’s Washington, D.C., office, said.

 

The Supreme Court has signaled that there is a presumption against pre-emption, Osten added.

 

Osten suggested that Obama, himself a former Illinois state senator, should understand that “states are ultimately responsible for the fiscal wellbeing of [their] subdivisions.”

 

Legislators from South Carolina and Utah said the laws were meant to provide consistency of oversight and to ensure taxpayers aren’t on the hook for municipal broadband systems that have failed, sometimes to the tune of many millions of dollars.

 

South Carolina’s state broadband law says that government networks can’t receive a benefit not provided to nongovernment networks, can’t be cross-subsidized and must be audited. State Sen. Thomas Alexander, a Republican lawmaker from South Carolina, said he thought his state’s law should be a roadmap for success rather get being undone through preemption.

 

SAFEGUARDS IN DANGER

 

Utah requires municipalities to service the debt on their bonds as they go and to put requests for more money up for taxpayer vote, said Utah State Sen. Curt Bramble, a Republican. It also prevents municipal providers from offering content. “They can build it, but they can’t be the content provider, “which is “provided adequately by the private sector,” Bramble said.

 

House Republican leaders Fred Upton (R-Mich.) and Greg Walden (R-Ore.) who also oppose pre-emption, have said that “the history of municipal Internet access is littered with many costly failures that no one wants to repeat.”

 

State Rep. Joe Atkins of Minnesota, a Democrat, said he had a question for Wheeler if he goes down the preemption path: “Is the FCC going to foot the bill when there are failures?”

 

Atkins said Monticello, a Minnesota city of 12,000 located northwest of Minneapolis, is being sued by bondholders because its city-owned broadband effort “has gone belly up in a huge way.”

 

The groups signaled that if the FCC goes ahead with pre-emption, it can expect a tough court fight. They expressed confidenince that court precedent was in their favor.

 

Could FCC action to counter state broadband laws further the deployment of competitive high-speed broadband? The groups argued that was anything but certain, and that the story of municipal broadband included costly failures that laws in 19 states were meant to prevent through safeguards like requiring hearings, referendums and preventing cross-subsidization.

 

David Parkhust, general counsel of the National Governors Association, said federal pre-emption should be the exception, not the rule. He also said it appeared to cut against the president’s directive to agency heads in 2009 that pre-emption should only be undertaken with sufficient legal authority, with consideration for states’s legitimate prerogatives.

 

COULD STOP DEPLOYMENTS

 

Minnesota’s Atkins said that pre-emption could also work against the president’s goal of promoting broadband. He said that he thought it was “terrifically unfortunate” that the pre-emption issue would wind up in a legal tussle, in part because it would siphon off millions of federal, state or local tax dollars in legal fees. He said that in Minnesota, he was afraid that if the FCC “starts invading this space,” it could have a chilling effect on the willingness of municipalities and states to partner in broadband.

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