U.S. Appeals Court Reverses FCC Order Preempting Local Muni Restrictions

Sixth Circuit court finds FCC erred in supporting muni efforts in Tennessee, North Carolina

A federal appeals court today (Aug. 10) reversed a Federal Communications Commission order in February 2015 preempting aspects of state laws in Tennessee and North Carolina in order to enable municipal broadband networks in Chattanooga, Tenn., and Wilson, N.C., to expand beyond the borders of those cities. Both states had asked the court to review the FCC's order.

A three-judge panel from the U.S. Court of Appeals for the Sixth Circuitsaid the FCC incorrectly determined that Section 706 of the Telecommunications Act of 1996 granted the commission the authority to partially preempt the states' laws regarding municipal broadband networks. That section of the law deals with encouraging investment in broadband. The court held that "Section 706 does not contain a clear statement authorizing preemption of Tennessee's and North Carolina's statutes that govern the decisions of their municipal subdivisions," and such a clear statement is needed because the FCC order preempted "the allocation of power between a state and its subdivisions." 

FCC chairman Tom Wheeler said in a statement the agency would continue to review the court's order and defended the FCC's actions to "champion municipal efforts" to expand broadband services seen as important to economic growth. "The FCC’s mandate is to make sure that Americans have access to the best possible broadband," Wheeler said in a statement. "We will consider all our legal and policy options to remove barriers to broadband deployment wherever they exist so that all Americans can have access to 21st Century communications."

Ajit Pai, the Republican commissioner, said in a statement he applauded the Sixth Circuit decision and called it "a big victory for the rule of law and federalism -- a constitutional principle that lies at the heart of our system of government." He said the FCC, rather than trying to "intrude on the prerogatives of state governments," should "focus on implementing a broadband deployment agenda to eliminate regulatory barriers that discourage those in the private sector from deploying and upgrading next-generation networks."

The FCC order in February 2015 was approved by 3-2, along party lines.  

Common Cause, a Washington, D.C., think tank, said via special adviser Michael Copps (a former FCC commissioner) the court's decision was a setback for the public interest. "This decision does not benefit our broadband nation. Nor is it a good reading of the law," Copps said. "But if the FCC cannot set aside these bad laws, then the people must. We will redouble our state-by-state efforts to repeal these odious policies.”

Contrarily, Tech Freedom, another think thank, which filed an amicus brief in the case, called the court ruling "a well-deserved rebuke for an agency run amuck," in a statement attributed to group president Berin Szóka. 

"The greatest irony here is that the real barriers to deployment come from local governments themselves," Szóka's statement said. "And this is where the FCC could actually help: identifying and suggesting ways to cut red tape, lower fees, and build smarter infrastructure that can facilitate deployment. Such reforms would encourage both upgrades from incumbents and new entry from companies like Google Fiber. But in the end, government-run broadband should be a last resort, not a go-to solution.”

The Sixth Circuit court pointedly did not address legal issues raised by parties in the case, including whether or not Section 706 provides the FCC any preemptive power at all. Szóka of TechFreedom, who led an amicus brief in the case focused on that question, said in his statement "it’s not surprising that the Sixth Circuit didn’t address this, since the Federalism argument here was so easy and courts aren’t supposed to address questions not necessary to their holding. But that leaves the Internet in grave danger of even greater FCC overreach in the future. It could be years before the courts finally address this question, so Congress must act to rein in the agency.”

Circuit Judge Rogers delivered the court's opinion in Tennessee v. FCC. His opinion was joined by District Judge Hood and in part by Circuit Judge White.