Tennessee v. FCC.

• Author: Hamilton, Laura K.
• Position: Expansion of municipal broadband service networks

TENNESSEE V. FCC

832 F.3d 597 (6th Cir. 2016)

In Tennessee v. FCC, (1) the United States Circuit Court of Appeals for the Sixth Circuit dealt a major setback to the FCC's attempt to preempt state laws that restricted expansion of municipal broadband service networks. The Court reversed the FCC's preemption order, holding that Section 706 of the Telecommunications Act of 1996 ("the Act") did not contain the requisite clear statement of congressional intent to delegate preemption authority to the agency.

1. BACKGROUND

   Section 706(a) of the Act grants the FCC authority to encourage the deployment of advanced telecommunications capability by removing barriers to infrastructure investment. (2) Section 706(b), similarly directs the Commission to "take immediate action" to accelerate deployment of such capability by removing barriers and promoting competition if the Commission finds that the capability is not being deployed to in a reasonable and timely fashion. (3)

   In Tennessee, a Chattanooga-operated municipal broadband provider (the Electric Power Board, or EPB) petitioned the FCC to preempt a state law that barred Chattanooga from offering Internet service to any areas not served by the municipality's electric plant. (4) In North Carolina, the City of Wilson asked the FCC to preempt the entirety of Session Law 2011-84, (5) which contained a number of restrictions on municipal broadband providers. (6) In relevant part, the law (1) confined service offerings to the municipality's corporate limits; (7) (2) required municipalities to impute the costs of private providers when pricing municipal services; (8) and (3) amended the state's definition of "public utility" to include municipal broadband providers, thereby exposing them to additional regulation by the state utilities commission. (9)

   The FCC granted both petitions and preempted most of the laws at issue. (10) In the resulting Order, (11) the FCC argued that Sections 706(a) and (b) of the Act granted it implicit authority to preempt state telecommunications laws that conflict with federal communications policy. (12) Further, it concluded that Section 706 also allowed it to preempt "state laws regulating municipal subdivisions" when the laws stand as a barrier to broadband infrastructure investment or an impediment to competition. (13) The FCC, therefore, could preempt Tennessee's territorial restriction by categorizing it as a "state law communications policy regulation, as opposed to a core...