FCC Seen Facing Contentious Debate Over Muni Broadband Pre-emption Petitions

The Chattanooga and Wilson proceedings are likely to be “very contentious” and FCC Chairman Tom Wheeler is “going to have a hard time” getting pre-emption to stick, said Squire Patton lawyer Jack Nadler, who has represented public sector clients and international governments on telecom issues. Berry’s speech also shows it’s “highly unlikely” that Pai and fellow Republican FCC Commissioner Mike O'Rielly will vote for the Chattanooga and Wilson petitions, given the partisan split on municipal broadband and creeping partisanship within the FCC, said Andrew Schwartzman, senior counselor at Georgetown Law’s Institute for Public Representation. Recent House-passed legislation that would bar funding to the FCC for municipal broadband law pre-emption (CD July 17 p3) shows the issue has become a “litmus test” for Republicans, who view the issue as a fundamental states’ rights matter, Nadler said.

The Chattanooga and Wilson petitions address how Nixon doesn’t apply to their cases, but differences in their states’ legal frameworks mean there will be “nuances” in their petitions that may make pre-emption more or less likely depending on individual circumstances, Schwartzman said. Both cities went forward with their petitions because they present “very strong” cases, he said. Baller Herbst lawyer Jim Baller, who represents both cities in their pre-emption petitions and represented the Missouri Municipal League in Nixon, declined to comment.

Berry’s bases for opposition aren’t a surprise, given the larger debate over Section 706 authority within the FCC, Schwartzman said. “I could have more or less written Matthew Berry’s speech for him months ago.” If a court’s interpretation of Section 706 is broad and “gives the commission the authority to take regulatory steps including pre-emption of state laws, then the FCC wins,” Schwartzman said. “If Section 706 is narrower, the FCC loses.” The commission will “undoubtedly” rely on D.C. Circuit Court of Appeals Judge Laurence Silberman’s dissenting opinion in Verizon v. FCC, in which he “all but said” the FCC could use Section 706 to pre-empt state municipal broadband laws, Schwartzman said.

Section 706 Stand?

The FCC’s municipal broadband proceedings and net neutrality rulemaking are “inextricably linked” by their common reliance on Section 706, which makes the pre-emption issue a “very big gamble” for Wheeler, Nadler said. A worst-case scenario would involve a defeat at the D.C. Circuit on municipal broadband pre-emption and a possible Supreme Court review in which the court could also strike down the D.C. Circuit’s interpretation of Section 706, which could “jeopardize the FCC’s ability to adopt net neutrality rules,” he said. “The D.C. Circuit is bound by its Verizon precedent, but the Supreme Court isn’t.” Wheeler’s decision not to appeal Verizon to the Supreme Court shows he was concerned the high court might not read Section 706 as “expansively” as the D.C. Circuit, Nadler said.

TechFreedom President Berin Szoka said he was less certain that a federal court case on the municipal broadband proceedings would jeopardize the FCC’s Section 706 authorities on other matters. Federal courts generally attempt to resolve cases on the narrowest possible grounds, so the likeliest outcome would be a court ruling that settles the question of whether the FCC has pre-emption authority on Section 706 but “leaves unresolved” questions about what the commission’s Section 706 authority is on net neutrality, cybersecurity and other issues, Szoka said.

There’s “not a lot of downside” for Wheeler to continue to pursue the municipal broadband petitions other than the potential for further politicization of the FCC, Szoka said. That politicization may itself make Section 706 a “ticking time bomb,” he said, noting that Berry had said in his speech that the Republicans could use an expansive interpretation of that statute to achieve its own policy goals the next time they have a majority on the FCC. “I think staffers for the commissioners will understand that,” Szoka said.

Gig.U Executive Director Blair Levin, FCC chief of staff under Chairman Reed Hundt, said he hopes the commission “will always keep in mind ‘what are we trying to do for the country?’ What Reed used to tell us was ’study the economics, follow the law, do the right thing.'"

Wiley Rein lawyer Bennett Ross said he agrees with Berry’s analysis of the issues with interpreting Section 706 as providing pre-emption authority. Those issues mean Chattanooga and Wilson “are going to have a hard time” proving Section 706 authorizes pre-emption, he said. The cities are relying on Section 706 because the Supreme Court had previously struck down the FCC’s pre-emption authority under Communications Act Section 253 in Nixon, said Ross, whose clients include major broadband providers. “I don’t think they're going to be able to get around the Supreme Court simply by relying on a different statute.” FCC’s reliance on Silberman’s Verizon dissent for its Section 706 interpretation is problematic because the dissent doesn’t definitively outline whether there’s clear legislative intent from Congress to allow pre-emption in the statute, Ross said. The FCC should try to pre-empt other state laws that impeded broadband deployment, such as “excessive” right-of-way fees and “onerous” permitting processes, he said.