DPI Webinar: “Preemption, Policy and Politics”

DPI Webinar: “Preemption, Policy and Politics”

February 25, 2015

On the eve of the Federal Communication Commission’s (FCC) February 2015 Open Commission Meeting, the Digital Policy Institute hosted a webinar entitled, “Preemption, Policy and Politics.” The webinar featured distinguished panelists, including, Michael Santorelli from New York Law School, co-author of a foundational report on municipal broadband; Larry Spiwak, president of the Phoenix Center for Advanced Legal & Economic Public Policy Studies; Russ Hanser, partner at Wilkinson Barker Knauer, LLP; and, as per usual, Barry Umanksy, DPI senior fellow and senior policy analyst, served as moderator.

Although net neutrality was the leading item on the Commission’s agenda, the Commission also voted on two petitions filed last July by the Electric Power Board (EBP), a community broadband provider in Chattanooga, Tennessee and the City of Wilson, North Carolina, that sought federal preemption on state bans against municipal broadband networks.

New York Law School’s Michael Santorelli noted that as more advanced services have arisen, both public and private sector parties have shown more deference towards the FCC in terms of how to implement its policy. However, the issue at hand is matter of so-called ‘constitutional federalism’, i.e. the relationship between the federal government and states. Santorelli suggested that the federal government should find a way to move forward with broadband deployment in general by removing legal and political barriers and supporting public-private partnerships to foster investment.

Wilkinson Barker Knauer partner Russ Hanser explained that, under Section 253 of the 1996 Telecommunications Act, the FCC has the ability to preempt states and localities from directly or indirectly prohibiting a provider from offering a telecommunications service.

President of the Phoenix Center Larry Spiwak discussed the FCC’s preemptive authority under 253, but also under section 706 and section 10. He noted that section 706 never mentions the word ‘preemption’, and Congress must be explicit if an agency seeks preemption authority. The D.C. Circuits have repeatedly held authority under 706 is “unbounded” and must be tied to direct subject jurisdiction in the Act. Spiwak continued by noting that 706 provides coequal jurisdiction, where the state has as much authority to preempt as the FCC. Spiwak sees “no clear legal path” for the FCC to use 706 or 253 that will be upheld.

After much speculation, on March 12th the FCC released the long-awaited municipal broadband order. As expected, the order preempts certain provisions of Tennessee and North Carolina law that restricts municipal provision of broadband services because “they are barriers to broadband infrastructure investment and thwart competition.”

In a statement, FCC Chairman Wheeler explained why he supports FCC preemption. “The issue is simple: these communities want to determine their own path. Their elected local officials want to be able to take action to meet their communities’ needs for high-speed broadband. But the laws at issue today raise barriers to the deployment of and investment in new broadband networks and infrastructure. That is why I support granting these petitions.”

FCC Commissioners Pai and O’Rielly sharply criticized the agency’s decision.

“This order highlights the unprecedented lengths that the Commission is willing to go in undermining the free market system, the Federal statute, the U.S. Constitution, and common sense in order to try to dictate when, where, and how broadband is provided in this country,” O’Rielly wrote in his dissenting statement.

Commissioner Pai called the FCC’s move “unlawful.” He continued, “Supreme Court precedent makes evident that the FCC simply does not have the power to do what it claims to be doing. In taking this step, the FCC usurps fundamental aspects of state sovereignty. And it disrupts the balance of power between the federal government and state governments that lies at the core of our constitutional system of government.”

The webinar panelists concluded that FCC preemption will likely be challenged in court, with the high probability of the agency’s action being overturned. Pai and O’Rielly’s dissenting statements contain all of the points that are likely to form the basis of any legal challenge to the order.

View the webinar in its entirety here: http://dvisweb1.bsu.edu/media/BSU/DPI/2015/Feb_25th/