NTIA Faces 'Hot Potato' on State Muni Broadband Limits
NTIA can refuse infrastructure funding to states that insist on enforcing municipal broadband limits, and it’s not a question of preemption, said NATOA General Counsel Nancy Werner in an interview last week. She responded to the Free State Foundation's claims NTIA lacks authority to override some states' restrictions. NTIA should seek to empower localities, but denying funding to certain states could be bad politics for the Biden administration, said Institute for Local Self-Reliance Director-Community Broadband Networks Christopher Mitchell.
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NATOA urged NTIA to clarify that the Infrastructure Investment and Jobs Act (IIJA) imposes a condition that states may not enforce a law that restricts muni networks. If states refuse, NTIA should withhold all or part of the state's allocation so localities can directly apply for funds, NATOA said in Feb. 3 comments on the broadband, equity, access and deployment (BEAD) and other IIJA programs (see 2202070053). NTIA is expected to release a notice of funding opportunity in mid-May.
But states would likely sue if NTIA tried to restrict them from getting money due to their preexisting laws limiting muni broadband, said Free State Foundation Director-Policy Studies Seth Cooper in an interview: “It would be too much money for them to pass up without a court fight.” NTIA didn't comment.
“If Congress is going to attach strings to money it gives to states,” Supreme Court jurisprudence requires it to “state the conditions clearly,” said Cooper, who detailed his legal reasoning in a March 7 paper criticizing NATOA's comments. Congress never conditioned, at least not clearly, the money on non-enforcement of state muni-broadband laws, he said. “The need for clearly stated conditions for receiving federal dollars is especially important when it impacts areas of traditional state concern. How states set up and run … their own local governments -- and what actions they authorize them to do or prohibit them to do -- is a matter of traditional state concern.”
Federal preemption of state muni broadband limits must come from Congress, said Cooper, citing the 6th U.S. Circuit Court of Appeals 2016 decision striking down FCC preemption of state laws restricting municipal broadband networks (see 1608100049). With conditions on federal dollars, NTIA could try to claim that states “could always refuse the money,” but “jurisprudence to me suggests that it’s simply a dead end for the agency to try and create these conditions when they’re not clearly stated in the statute.”
“It would be really disappointing to see a state take legal action over this issue,” responded NATOA’s Werner. Congress set up a grant fund with parameters, she said: “If they don’t want to operate within the parameters, then don’t take the funds. Let someone else step up to do it.”
Werner agreed there’s “not an express preemption of state municipal broadband laws in this statute,” but said NATOA isn’t arguing that IIJA preempts state municipal broadband laws. “What the IIJA clearly and unambiguously does is say that NTIA must disapprove” of a state’s initial or final proposal “if it doesn’t comply with the use-of-funds provisions of the act.” Among other things, those say states can’t exclude municipalities from grant eligibility, said Werner: If state law restricts muni broadband, the state can’t comply with IIJA.
Rather than outright deny states based on their existing laws, NATOA suggests giving states a chance to agree not to enforce restrictions for the purposes of the federal funding, Werner said. There’s a “safety valve” if a state insisted upon enforcing muni broadband limits and NTIA had to deny funding, said Werner: IIJA would allow money to still flow to the area through local governments and regional consortiums. Congress anticipated that “states may not participate or may not be able to comply with the requirements, in which case municipalities can step in.”
NARUC hasn’t taken a position, but General Counsel Brad Ramsay personally doesn’t think “NTIA can do what Congress did not,” he emailed. “Sure they can put conditions on specific grants, but if Congress didn’t preempt the internal operations of State government -- then an agency … implementing the law cannot.” It would be “unwise” for NTIA “to wade into this quagmire,” added Ramsay: The potential controversy is “likely to retard the rollout and possibly awarding of funds,” while diverting “funds and resources toward litigation and away from constructive uses.”
Overriding the state restrictions seems unlikely, considering political optics, said Mitchell, a muni broadband advocate. The White House wants to ensure localities have input on how the money is spent, but “I can’t imagine that the Biden administration wants news stories about how it’s withholding money from North Carolina in an election year,” he said. Mitchell agrees with NATOA’s reasoning but thinks FSF also “has a good point in that Congress is not very clear about what level of preemption is implied,” he said. “Congress kind of threw a hot potato at NTIA.”
It's up to Congress or states themselves to lift restrictions, Mitchell said: “I don’t think the executive branch has a lot of power to get rid of these anti-competition laws in the 17 states that have them. ... I don't want to see this money delayed because of legal fighting.”