U.S. Appeals Court Reverses FCC Order Preempting Local Muni Restrictions

Sixth Circuit court finds FCC erred in supporting muni efforts in Tennessee, North Carolina

A federal appeals court Wednesday reversed a Federal Communications Commission order in February 2015 preempting aspects of state laws in Tennessee and North Carolina in order to enable municipal broadband networks in Chattanooga, Tenn., and Wilson, N.C., to expand beyond the borders of those cities. Both states had asked the court to review the FCC's order.

A three-judge panel from the U.S. Court of Appeals for the Sixth Circuit said the FCC incorrectly determined that Section 706 of the Telecommunications Act of 1996 granted the commission the authority to partially preempt the states' laws regarding municipal broadband networks. That section of the law deals with encouraging investment in broadband. The court held that "Section 706 does not contain a clear statement authorizing preemption of Tennessee's and North Carolina's statutes that govern the decisions of their municipal subdivisions," and such a clear statement is needed because the FCC order preempted "the allocation of power between a state and its subdivisions." 

FCC chairman Tom Wheeler said in a statement the agency would continue to review the court's order and defended the FCC's actions to "champion municipal efforts" to expand broadband services seen as important to economic growth. "The FCC’s mandate is to make sure that Americans have access to the best possible broadband," Wheeler said in a statement. "We will consider all our legal and policy options to remove barriers to broadband deployment wherever they exist so that all Americans can have access to 21st Century communications."

Ajit Pai, the Republican commissioner, said in a statement he applauded the Sixth Circuit decision and called it "a big victory for the rule of law and federalism – a constitutional principle that lies at the heart of our system of government." He said the FCC, rather than trying to "intrude on the prerogatives of state governments," should "focus on implementing a broadband deployment agenda to eliminate regulatory barriers that discourage those in the private sector from deploying and upgrading next-generation networks."

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