Broad-banned: the Fcc's Preemption of State Limits on Municipal Broadband and the Clear Statement Rule

• Citation: Vol. 68 No. 2
• Publication year: 2018

Broad-Banned: The FCC's Preemption of State Limits on Municipal Broadband and the Clear Statement Rule

John T. Cobb

BROAD-BANNED: THE FCC'S PREEMPTION OF STATE LIMITS ON MUNICIPAL BROADBAND AND THE CLEAR STATEMENT RULE

Abstract

Congress instructed the FCC in the Telecommunications Act of 1996 to take action to ensure that advanced telecommunications capabilities were being timely deployed to all Americans. In 2015, the FCC preempted statutes in North Carolina and Tennessee that limited the powers of municipally owned internet service providers to expand their networks to nearby underserved communities. The FCC had determined, pursuant to Section 706 of the 1996 Act, that these state limits on municipal broadband networks were anticompetitive barriers to infrastructure investment in contravention of the express purpose of the Act. The FCC reasoned that the municipal broadband networks were filling gaps in the broadband market, where private internet service providers were unwilling to invest in infrastructure or providing lousy service due to the lack of competition in the local markets.

North Carolina and Tennessee appealed the FCC order, arguing that the FCC did not have the authority to interpose itself between the States and their political subdivisions. Relying on the Supreme Court's earlier decision in Nixon v. Missouri Municipal League, which addressed a similar factual issue, the Sixth Circuit agreed with the States that the FCC lacked the authority to interfere with the States' management of their political subdivisions. This Comment argues that the Sixth Circuit should have applied a narrower reading of the clear statement rule, which would strike an appropriate balance between the FCC's unmistakably clear authority to regulate the deployment of broadband technology against the legitimate sovereign interests of the affected states.

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Introduction.............................................................................................409

I. Broadband Technology and the Municipal Broadband Debate.............................................................................................412

A. Broadband Basics..................................................................... 412
B. Municipal Broadband Networks............................................... 414
C. State Legislative Efforts to Restrict Municipal Broadband...... 416

II. Section 706 and the FCC's 2015 Preemption Order.................417

A. Section 706 of the Telecommunications Act of1996 ................ 418
B. FCC Order City of Wilson, North Carolina............................. 420

1. EPB, Chattanooga, Tennessee............................................ 420
2. Greenlight, City of Wilson, North Carolina ....................... 421
3. The FCC Takes Action........................................................ 422

a. Reasoning of the Order................................................ 423
b. Reasoning of the Dissent ............................................. 424

III. Adopting a Narrower Application of The Clear Statement Rule..................................................................................................426

A. The Sixth Circuit's Decision in Tennessee v. FCC................... 427

1. The Majority's Holding ...................................................... 427
2. Argument from the Partial Dissent ..................................... 430

B. Congress's Ability to Grant this Authority ............................... 431
C. The FCC's Preemption Power Under Section 706 ................... 432
D. Applying Judge White's Narrower Clear Statement Rule ........ 433

IV. Implications....................................................................................435

A. Expanding Broadband Access .................................................. 436
B. Expanded FCC Power .............................................................. 437
C. Concerns About Judicial and Legislative Economy ................. 438

Conclusion.................................................................................................439

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Introduction

Upon the signing of the Telecommunications Act of 1996, President Clinton predicted that the Act would "help connect every classroom in America to the information superhighway by the end of the decade."¹ Since the enactment of this bill, the Internet—the "information superhighway" to which President Clinton referred—has provided Americans with new opportunities in communication, education, healthcare, and the economy.² The benefits of these opportunities are particularly pronounced in rural America, where broadband empowers previously remote communities to become a part of the global community.³ Access to these opportunities has increasingly become a necessity, especially for students and professionals, as the Internet becomes more central to daily life in America.⁴ However, over two decades after the passage of the 1996 Telecommunications Act, approximately 24 million Americans still lack access to fixed broadband services.⁵

Around the country, communities that either lack access to broadband or are dissatisfied with their current service providers have banded together to launch their own municipal broadband services with the support of local governments.⁶ Nineteen states, however, have laws in force that restrict communities' ability to form municipal broadband networks.⁷ These restrictions, nominally passed to prevent government boondoggles and ensure fair competition in the

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telecommunications market,⁸ have often been the subject of intensive lobbying efforts from private internet service providers (ISPs).⁹

In 2014, two cities with existing municipal broadband networks—Wilson, North Carolina and Chattanooga, Tennessee—petitioned the Federal Communications Commission (FCC) to preempt statutes in their states that limited their ability to expand broadband services to neighboring, underserved communities.¹⁰ The FCC granted the petitions of Wilson and Chattanooga pursuant to its authority under Section 706 of the 1996 Telecommunications Act.¹¹ North Carolina and Tennessee promptly appealed the preemption, and the cases were consolidated in the Sixth Circuit.¹²

The Sixth Circuit overturned the FCC's preemption order in Tennessee v. FCC, reasoning that because this action interposed the federal government between the state and its political subdivisions, the clear statement rule enunciated by the Supreme Court in Gregory v. Ashcroft applied.¹³ When preemption would "upset the usual constitutional balance of federal and state powers," courts apply the clear statement rule, which requires that Congress's intent to preempt be "unmistakably clear" in the text of the statute.¹⁴ The Sixth Circuit relied on the Supreme Court's application of the clear statement rule in Nixon v. Missouri Municipal League, in which the Court found that a different section of the Telecommunications Act of 1996 did not grant the FCC the authority to preempt a state statute prohibiting public utilities from providing telecommunications services.¹⁵ Because the Sixth Circuit found more than one reasonable interpretation of Section 706, the three-judge panel ruled that congressional intent was not clear, and therefore the FCC lacked the power to

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preempt these statutes.¹⁶ However, in a partial dissent, Circuit Judge White argued that the clear statement rule does not apply to federal regulation of local governments that does not concern states' core sovereign powers.¹⁷

What is clear, however, is that Congress did grant the FCC the authority to ensure that broadband technology is deployed efficiently and universally. This Comment proposes that the Sixth Circuit should have adopted Judge White's narrower reading of the clear statement rule to empower the FCC to preempt those state statutes that exclusively effectuate regulatory communications policy.¹⁸ As Nixon was factually analogous to Tennessee v. FCC, the Sixth Circuit relied on it extensively to reach its decision.¹⁹ However, some of the laws that the FCC preempted that were at issue in Tennessee are plainly distinguishable from those statutes that deal solely with core issues of state sovereignty, such as the statute at issue in Nixon.²⁰ By narrowing the application of the clear statement rule in Tennessee, the Sixth Circuit would have enabled the FCC to exercise the authority granted to it by Congress to ensure the timely deployment of broadband technology to all Americans.²¹

This Comment proceeds in four Parts. Part I provides an overview of broadband technology and the municipal broadband policy debate. Part II discusses Congress's instruction to the FCC in Section 706 of the 1996 Telecommunication Act and the FCC's 2015 preemption order. Part III analyzes the Sixth Circuit opinion overturning the order, demonstrates that Congress plainly meant to grant the FCC preemption authority in Section 706, and argues that the narrower application of the clear statement rule proposed by Judge White would better reflect congressional intent and alleviate concerns that had been raised in previous clear statement cases. Finally, Part IV addresses the implications of this proposed tailoring of the clear statement rule, including expanded access to broadband technology, the increased authority of the FCC in the broadband space, and concerns for judicial and legislative economy. This narrower reading of the clear statement rule will empower the FCC to better effectuate its congressional mandate by ensuring that state communications policies accord with federal communications policy.

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I. Broadband Technology and the Municipal Broadband Debate

Broadband technology has developed rapidly over the last two decades, providing new opportunities for employment, healthcare, and education.²² But access to these opportunities has been dictated by users' proximity to high-density population centers.²³ Local, state, and...