Opposition Lawyers See Courts Overturning Eventual Challenge to FCC Pre-Emption of Municipal Broadband Laws
The Supreme Court or a federal circuit court is highly likely to overturn any FCC pre-emption of state municipal broadband restrictions, industry lawyers opposed to pre-emption said Thursday during a Phoenix Center teleconference. The FCC is to vote Feb. 26 on petitions from the Electric Power Board (EPB) of Chattanooga and the city of Wilson, North Carolina, seeking pre-emption of their states’ municipal broadband restrictions. Most industry observers expected the FCC to vote 3-2 in favor of pre-emption, even before President Barack Obama declared his support last week for ending state municipal broadband restrictions (see 1501140048).
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An eventual court fight over pre-emption has been all but certain since Chattanooga and Wilson filed their petitions with the FCC in late July (see report in the July 28 issue), with the existing Supreme Court precedent in Nixon v. Missouri Municipal League stacking the odds against the FCC winning such a challenge, said Wilkinson Barker lawyer Russell Hanser. He gave odds of between 85 and 90 percent that a court would overturn pre-emption, with the Supreme Court as being far likelier to rule against the FCC because of the federalism issues involved.
A federal court would likely rule against FCC pre-emption because it’s essentially a Dillon Rule case, said NARUC General Counsel Brad Ramsay. The Dillon Rule, named for Iowa Supreme Court Chief Justice John Dillon, says local governments have only powers specifically delineated by a state legislature. State governments reserve the right to confer powers on local government entities, so no statute in the Communications Act would outweigh the state’s powers under the 10th Amendment, Ramsay said. The Supreme Court already removed the FCC’s strongest pre-emption authority under Section 253, while the authority the FCC claims under Section 706 is far weaker apart from the states’ rights issue, he said. NARUC opposed pre-emption because of the state authority issues involved, but didn’t take a position on municipal broadband deployment. The Supreme Court based its Nixon ruling more on how pre-emption in that case clashed with the 10th Amendment than on the language in Section 253, Ramsay said.
The FCC is likely proceeding with consideration of the pre-emption petitions in the face of overwhelming legal precedent because of political considerations, Hanser said. By the time the Supreme Court reaches a decision on an eventual legal challenge, Obama will have completed his second term, so there’s likely a push to get a “political bang for the buck now,” Hanser said. The FCC general counsel’s office can advise Wheeler about the legal risks involved in proceeding with pre-emption, but “sometimes political considerations overrule” that advice, Hanser said. “If [Wheeler] thinks it’s the right thing to do, I think he’ll do it,” Ramsay said. The FCC has a “quasi-legislative” role, and “legislatures sometimes pass laws that they can’t” because of overwhelming popular opinion, said Jeff Lanning, CenturyLink vice president-federal regulatory affairs.
The market-oriented Phoenix Center released a study Tuesday questioning the economic feasibility of municipal broadband, saying Chattanooga's EPB relied on $229 million in revenue bonds, $111 million in federal Department of Energy grants and a $50 million loan from the utility’s electric division to finance construction of its gigabit network. EPB’s triple play package costs are at best on par with private companies’ service offerings, the Phoenix Center said. “Municipal broadband has a place in markets where the private sector can’t profitably serve,” said Phoenix Center Chief Economist George Ford in a news release. “But using government funds to directly compete with the private sector in developed markets is radical by any standard and a policy that deserves close and honest scrutiny.”