On August 10, the U.S. Court of Appeals for the Sixth Circuit reversed the Federal Communications Commission's Municipal Broadband Preemption Order (2015). Among many candidates, the FCC’s order ranks as one of the most far-reaching and far-fetched attempted power grabs in the agency’s history. Thankfully, in Tennessee v. FCC (2016), the Sixth Circuit refused the agency's bold attempt to exceed its lawful bounds.
We made the case for why the FCC’s Municipal Broadband Preemption Order was legally unsupportable in an Engage article, "FCC Preemption of State Restrictions on Government-owned Broadband Networks: An Affront to Federalism." In that article for Engage (now known as The Federalist Society Review), we emphasized that the FCC lacked a clear statement of authority by Congress to preempt North Carolina and Tennessee laws concerning local municipalities' ownership and operation of broadband networks.
Certainly, the language of Section 706 of the Communications Act to remove barriers to infrastructure investment and to "promote competition in the telecommunications market" provides no clear statement of intent to authorize preemption of state laws concerning broadband networks owned by municipalities. And in our Engage article, we emphasized that the U.S. Supreme Court decision applying the clear statement rule in Nixon v. Missouri Municipal League (2004) forbade the FCC's attempted preemption of the states’ control of the operations of municipalities – which, after all, exist at the sufferance of the states.
Judge John M. Rogers authored the court’s opinion. The court’s legal reasoning in Tennessee v. FCC tracked with our emphasis on the clear statement rule and on the Supreme Court's precedent in Nixon:
- As the Supreme Court stated in Nixon, the clear statement rule applies when federal government preemption results in 'interposing federal authority between a State and its municipal subdivisions, which our precedents teach 'are created as convenient agencies for exercising such of the governmental powers of the State as may be entrusted to them in its absolute discretion.' (Slip opinion, at 17.)
- Nixon supports the conclusion that the clear statement rule applies here. This case similarly involves Tennessee's and North Carolina's arrangements for conducting their own governments: if there is a decision to make, one way for the states to conduct their own governments is to make the decision for their municipalities. Any attempt by the federal government to reorder the decision-making structure of a state and its municipalities trenches on the core sovereignty of that state. (Slip opinion, at 18.)
- [I]f the preemption in Nixon 'could operate straightforwardly to provide local choice,' then 'the liberating preemption would come only by interposing federal authority between a State and its municipal subdivision,' thus triggering the clear statement rule… The same is true here… the statutes at issue here implicate core attributes of state sovereignty. (Slip opinion, at 19.)
- The force of the clear statement rule… makes the intent of Congress clear in this case: § 706 does not authorize the preemption attempted by the FCC. (Slip opinion, at 20.)
Because the court based its decision on the clear statement rule, the Sixth Circuit declined to reach other legal issues raised in the case. One issue left on the table is whether Congress, if it chooses to make a clear statement, may constitutionally grant the FCC preemptive power the way it did in the Municipal Broadband Order.
The FCC’s Municipal Broadband Preemption Order would have turned constitutional federalism inside out by severing local political subdivisions' accountability from the states governments that created them. Had the agency’s order been upheld, the FCC surely would have preempted several other state laws restricting municipalities' ownership and operation of broadband networks. Several state governments would have been locked into an unwise policy of favoring municipal broadband business ventures with a track record of legal and proprietary conflicts of interest, expensive financial failures, and burdensome debts for local taxpayers.
Fortunately, the Sixth Circuit relied on the clear statement rule, which it acknowledged was grounded in "fundamental constitutional policy" and backed by ample precedent. In Tennessee v. FCC, the court rightly rolled back the agency's audacious overreach of its bureaucratic authority.
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Randolph J. May is President of the Free State Foundation, an independent, nonpartisan free market-oriented think tank located in Rockville, Maryland. Seth L. Cooper is a Senior Fellow of the Free State Foundation.