If the FCC can preempt state laws that restrict cities from spending taxpayer dollars building government-owned broadband networks, it can use the same power to ban “muni broadband,” too.
Thus warned Matthew Berry, chief of staff for Republican FCC Commissioner Ajit Pai, in a speech before state lawmakers this morning. Berry, a former FCC General Counsel, urged the Commission to reject preemption petitions filed last month by two cities. The petitions relied on Section 706, which the Commission has also claimed as a basis for regulating net neutrality. Berry said: “Section 706 does not come close to containing the necessary clear statement that Congress intended to authorize the FCC to preempt state restrictions on municipal broadband projects.”
But, Berry continued, if Section 706 were an adequate basis for preemption, it would be a double-edged sword:
If the history of American politics teaches us anything, it is that one political party will not remain in power for perpetuity. At some point, to quote Sam Cooke, “a change is gonna come.” And that change could come a little more than two years from now. So those who are potential supporters of the current FCC interpreting Section 706 to give the Commission the authority to preempt state laws about municipal broadband should think long and hard about what a future FCC might do with that power.
For example, while today’s FCC might reach the conclusion that state laws restricting municipal broadband projects are barriers to infrastructure investment and thus should be preempted under Section 706, that’s not the only way to look at the issue. Most economists believe that municipal broadband projects deter private-sector infrastructure investment…
It’s not hard, then, to imagine a future FCC concluding that taxpayer-funded, municipal broadband projects themselves are barriers to infrastructure investment. So if the current FCC were successful in preempting state and local laws under Section 706, what would stop a future FCC from using Section 706 to forbid states and localities from constructing any future broadband projects? Nothing that I can see.
Indeed, banning muni broadband is just the beginning of what the FCC could do under Section 706.
In January, the D.C. Circuit struck down most of the FCC’s net neutrality rules but upheld the FCC’s astonishing re-interpretation of Section 706. Instead of being a Congressional command that the FCC should use its many other powers to promote broadband, the FCC in 2010 claimed that Section 706 gave it blanket authority to regulate any form of communications in any way that isn’t clearly illegal based on the claim that doing so would somehow promote broadband. Thus, as Geoffrey Manne and I noted in Wired, “the court has very nearly given the FCC — and state utility commissions, to boot — carte blanche to regulate the entire internet.”
Berry didn’t mention it, but it’s worth noting that the FCC recently formally asked for comment on how the FCC might use Section 706 authority to begin policing cybersecurity — a deeply contentious issue that has divided Congress because of its implications for privacy and censorship. The FCC could invoke the same authority to regulate privacy, copyright enforcement indecency or any number of other contentious issues.
Berry did note that, back in 2001, the FCC, under Democratic Chairman Bill Kennard, voted unanimously to reject a similar preemption request under another section of the 1996 Telecommunications Act — even though the legal argument for preemption under that section was much stronger:
The Commission is therefore confronted by a stark choice. We can respect the limits on our authority and focus together on actions that can produce real results for the American people, such as modernizing our regulations to remove barriers to private-sector infrastructure investment and broadband deployment…
Or we can reject the example set by the unanimous Kennard FCC and divert ourselves with a divisive and ultimately futile battle over trying to preempt state regulation of municipal broadband projects….
We do not have the bandwidth to waste on a symbolic, feel-good effort that appears designed to appease a political constituency that is unhappy with where the FCC is headed on other issues. At the end of the day, nothing will come of it. That’s why the Commission’s work on this issue reminds me of the lyrics of a famous Beatles song. We will be “sitting in [our] nowhere land, making all [our] nowhere plans for nobody.” The courts will see to that.
Speaking to the National Conference of State Legislators, the largest forum of state lawmakers, Berry also decried Chairman Tom Wheeler’s “my way or the highway” approach:
Over the last nine months, there have been more party-line votes at FCC meetings than had been the case over the prior eight-and-a-half years. The Commission used to go the extra mile to reach bipartisan consensus. I witnessed that firsthand under both Republican and Democratic leadership. But unfortunately, the difficult work of finding common ground has been replaced too often by a bit of simple math. Three Democrats can always outvote two Republicans.
Like the Kennard FCC back in 2001, the bipartisan NCSL has rejected preemption of state laws, not as a policy matter but simply because Section 706 doesn’t give the FCC clear authority to intrude on state sovereignty over their municipalities.
Unfortunately, as Berry noted, the FCC seems to be careening towards preemption, despite the weakness of its federalism claims. Last week, FCC Chairman Wheeler essentially refused to answer a direct question put to him by 60 Congressmen about the FCC’s legal authority.
It’s pretty clear the FCC will lose in court. The only real question is how broadly the decision is written. A court might simply say that Section 706 isn’t a sufficiently clear statement of Congressional intent for preemption. But it might also rule that Section 706 isn’t a source of power for the FCC at all.
We think it should say both, for the reasons we laid out in our comments on the FCC’s proposed net neutrality rules. But, ultimately, it may be up to Congress to clarify the FCC’s authority over net neutrality and broadband more generally. Ideally, that will indeed involve a clear statement of preemption — over the many barriers that cities and states have erected to private deployment, which have hamstrung giants like Verizon FiOS, new entrants like Google Fiber and scrappy upstarts like San Francisco’s Sonic.Net. See the bottom of this post for more details on what pro-deployment legislation would look like.