Obama Supports Pre-Emption of State Laws Against Local Broadband Networks

The FCC is considering petitions from the Electric Power Board of Chattanooga and Wilson, North Carolina, that seek commission pre-emption of their states’ municipal broadband laws. FCC Chairman Tom Wheeler plans to bring both petitions up for votes at the commission’s Feb. 26 meeting, an agency spokesman said.

Obama’s support for pre-emption won't change the expected 3-2 party line FCC vote on the Chattanooga and Wilson petitions, but it likely puts the White House on a new collision course with Congress and federal courts, industry lawyers and observers told us.

Obama’s position echoes that of Wheeler, who supported FCC pre-emption of municipal broadband laws before Chattanooga and Wilson filed their petitions in late July (see report in the July 28, 2014, issue). That contrasts with Obama’s support in November for Communications Act Title II reclassification of broadband (see 1411100035), which Wheeler “really wasn’t inclined to do” beforehand, said Squire Patton lawyer Jack Nadler, who has represented public sector clients and international governments on telecom issues. But both are examples of Obama “using the bully pulpit and executive orders to achieve his policy agenda” in areas in which he is at odds with the Republican-controlled Congress, Nadler said.

The FCC “has been working diligently to expand broadband deployment and increase consumer choice and competition nationwide, including reviewing complaints from cities that have been prohibited from providing competitive high-speed alternatives,” Wheeler said in a statement. Reaction among commissioners split along party lines, with Democrats Mignon Clyburn and Jessica Rosenworcel supporting Obama’s plan. It "will put us on a course to grow broadband opportunity in more communities by taking advantage of local know-how and putting a premium on competition,” Rosenworcel said. Clyburn said she has “long advocated removing barriers to broadband deployment."

The FCC “must make its decisions based on the law, not political convenience,” Pai said in a statement. The Supreme Court’s precedent in the Nixon v. Missouri Municipal League case “makes clear that the Commission has no authority to preempt state restrictions on municipal broadband projects," he said. "The FCC instead should focus on removing regulatory barriers to broadband deployment by the private sector.” The administration "doesn’t believe in the independent nature of the FCC,” O’Rielly said in a statement. “It is disappointing that the Commission’s leadership is without a sufficient backbone to do what is right and reject this blatant and unnecessary interference designed to further a political goal.”

The White House is now “swimming upstream against a strong legal current” in which Nixon would suggest a high likelihood that the FCC would lose a legal challenge over the Chattanooga and Wilson petitions, said NARUC General Counsel Brad Ramsay. NARUC hasn’t taken a position on the merits of municipal broadband deployment, but filed comments in the Chattanooga and Wilson petition dockets arguing that the FCC doesn’t have legal authority to pre-empt those laws. Allowing FCC pre-emption of the Tennessee and North Carolina municipal broadband laws “would open the door to all kinds of mischief” involving FCC pre-emption of the state utility regulators NARUC represents, Ramsay said.

The FCC will be relying on U.S. Court of Appeals for the D.C. Circuit Judge Laurence Silberman’s interpretation of the commission’s Section 706 authority in Verizon v. FCC if it votes in favor of the Chattanooga and Wilson petitions, an interpretation that would be in jeopardy if a federal court other than the D.C. Circuit hears a legal challenge of the FCC decision, Nadler said. Other federal circuits aren’t bound by Verizon, so a decision in one of those courts or an appeal to the Supreme Court could “substantially undermine” FCC Section 706 authority, with possible consequences for its ability to use the section as a legal basis for net neutrality rules, Nadler said.

Hill Reaction

Obama’s announcement restored pre-emption as an issue in Congress, potentially allowing Republicans to conflate pre-emption and the net neutrality debate as the FCC prepares for the Feb. 26 vote on net neutrality rules that’s expected to result in Title II reclassification, Nadler said. Senate Commerce Committee Chairman John Thune, R-S.D., and ranking member Bill Nelson, D-Fla., have been drafting a bipartisan net neutrality bill, with Thune attempting to pre-empt the FCC’s net neutrality vote by passing the bill before Feb. 26 (see 1501130057). There’s “reasonable support” on Capitol Hill for some form of bipartisan net neutrality legislation but no such support for legislation allowing FCC authority over state laws, so if the issues get “fused together” it could prevent a clean net neutrality bill from passing, Nadler said.

Capitol Hill’s reaction to Obama’s speech split along partisan lines. House Commerce Committee Chairman Fred Upton, R-Mich., and Communications Subcommittee Chairman Greg Walden, R-Ore., urged a focus on private investment. “Cedar Falls is a success story, but not all communities have seen the same results,” they said, urging the FCC to work with Congress in a telecom overhaul. “The history of municipal Internet access is littered with many costly failures that no one wants to repeat.”

House Commerce Committee Vice Chairwoman Marsha Blackburn, R-Tenn., called Obama’s endorsement of municipal broadband pre-emption tone-deaf, saying she's “offended that President Obama would repeatedly support policies that trample on states’ rights.” Blackburn led the GOP offensive against the FCC on this front last year. She introduced an amendment to an appropriations bill that would have prevented the FCC from pre-empting state laws restricting municipal broadband. It passed the House but not the Senate. Blackburn said she will “continue to work with my colleagues in the House and Senate to block any attempt by the FCC to insert themselves into our states’ sovereign economic and fiscal affairs.” Sen. Deb Fischer, R-Neb., blasted the announcement as “a new federal takeover of state laws governing broadband and the Internet.” Sen. Thom Tillis, R-N.C., was “disappointed” in Obama’s announcement, the ex-state lawmaker told us in a statement. “It is questionable whether the FCC even has this authority, and in the coming weeks, I will be working with my colleagues to prevent the federal government’s massive overreach and disregard for state laws.”

Democrats struck a different tone. “I once again urge the FCC to use its authority to lift restrictions and ensure municipalities have the power to make decisions about their broadband infrastructure,” said Sen. Ed Markey, D-Mass. Senate Judiciary Committee ranking member Patrick Leahy, D-Vt., called broadband “a necessity,” pointing to the gap between urban and rural areas. “The lack of adequate choices for consumers is also one of the main reasons why the FCC must act swiftly to protect an open Internet,” Leahy said.

Rep. Mike Doyle, D-Pa., pledged to “continue to fight for muni-broadband and for faster, cheaper, and more competitive broadband options” in the U.S. The White House initiative “will spur competition and provide communities with more choices in the broadband economy,” said Rep. Doris Matsui, D-Calif.

New Broadband Council

Obama’s endorsement of municipal broadband pre-emption was part of a larger set of White House-led plans announced Wednesday to increase access to affordable high-speed broadband. The White House formed the Broadband Opportunity Council (BOC), representing more than a dozen federal agencies, which will consider ways to eliminate unnecessary regulatory barriers to broadband deployment and report back to the White House within six months. The BOC also will seek ways to coordinate among federal agencies to speed up broadband deployment. The White House will host a community broadband summit in June that will focus on municipalities and counties that are deploying government-owned broadband networks.

Meanwhile, the Department of Commerce is launching the BroadbandUSA initiative to promote deployment through technical assistance to communities deploying networks, host regional workshops and provide information to communities on broadband deployment issues, the White House said. It said the Department of Agriculture is revamping its existing rural broadband loan program and is accepting applications for its Community Connect broadband grant program.

The overall broadband plan fulfills goals in the National Broadband Plan, said Gig.U Executive Director Blair Levin, who shepherded the plan through the FCC. The FCC’s “primary job at the moment is to make sure Americans have better, faster and cheaper broadband,” he said. The commission can do that job by pre-empting state restrictions on municipal broadband, Levin said.

Industry statements on Obama’s support for pre-emption was mixed. TIA said it supports ubiquitous broadband deployment, and a “critical step forward” in achieving that goal is “to remove regulatory barriers that prevent or discourage private sector investment in new broadband facilities. At the same time, we encourage collaboration with local governments, and additional public efforts can and should work to supplement private sector investments.” NCTA President Michael Powell said government-run networks are appropriate only in rare cases and that “rather than chase false solutions, government policies should be directed at overcoming barriers to adoption and extending the reach of broadband to places yet unserved.” USTelecom President Walter McCormick criticized Obama’s endorsement of pre-emption. When combined with Obama’s endorsement of Title II reclassification, it calls “for the federal government to regulate the Internet, and for municipal governments to own the Internet," he said. If acted upon by FCC, "they would be sweeping exercises of authority -- raising constitutional concerns related to separation-of-powers, the scope of an independent agency’s Congressionally delegated authority, and the role of the states in our federal system.”