FCC Muni-Broadband Order Still Seen as Vulnerable; Section 706 Authority Disputed
The 6th U.S. Circuit Court of Appeals likely will reject an FCC order that pre-empted state restrictions on municipal broadband expansion efforts, despite the commission's recent net neutrality and broadband victory in the D.C. Circuit, said Tellus Venture Associates President Steve Blum, a community broadband consultant, in a Tuesday blog post. Meanwhile, echoing a debate between Tennessee and the FCC, Free State Foundation President Randolph May suggested the 6th Circuit should overturn or curb the FCC's Telecom Act Section 706 broadband authority. Public Knowledge Senior Vice President Harold Feld disagreed, saying that outcome is unlikely. At oral argument in March, one of the 6th Circuit judges seemed to be skeptical of the FCC's muni-broadband order, and afterward, TechFreedom President Berin Szoka predicted the agency would lose (see 1603170031).
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A divided D.C. Circuit panel June 14 upheld the FCC's net neutrality order that reclassified broadband under Title II of the Communications Act (USTelecom v. FCC, No. 15-1063). The panel also reaffirmed its 2014 Verizon ruling that found Section 706 gave the agency some separate broadband regulatory authority (see 1606140023). Tennessee then urged the 6th Circuit to take an independent look at its challenge to the FCC's Section 706 authority to pre-empt the state muni-broadband restrictions (Tennessee v. FCC, No. 15-3291, North Carolina v. FCC, No. 15-3555), which drew a response from the commission warning of a circuit split (see 1606160039).
Blum said the D.C. Circuit ruling did "collateral damage" to the state challenge to the FCC muni-broadband pre-emption order, "but it doesn't appear fatal, or even particularly serious." He said the 6th Circuit "never seemed likely" to nix the FCC's Section 706 broadband regulatory power altogether, though if it did "it would almost certainly trigger" Supreme Court review of both the net neutrality and muni-broadband pre-emption orders.
"Tennessee’s remaining argument is much stronger," said Blum, whose management and business development consultancy specializes in new community broadband systems. "Section 706 is broad reaching, but it is also vague and doesn’t contain anything like a 'plain statement' allowing the FCC to meddle in the relationship between state and local governments. During oral arguments in March, the judges pressed hard on that point and the FCC's attorney couldn't answer it effectively. ... I’m still betting that the FCC’s pre-emption of muni broadband restrictions will be thrown out."
May said he would "like to see the Sixth Circuit, and eventually the Supreme Court, rule on the question whether Section 706, in fact, constitutes an independent grant of authority to the FCC to enact sweeping new rules that amount to increased regulation." He noted the FCC itself previously had taken the opposite position. "It’s not an open and shut case either way," he emailed. "Because the D.C. Circuit’s interpretation of Section 706 allows the FCC to adopt just about any regulations the agency can imagine, it would be useful to have further review -- and, hopefully, a definitive decision placing some limits on the exercise of any rulemaking authority granted under that section.”
Feld disagreed, noting a 10th Circuit 2014 ruling upholding the FCC's 2011 USF and intercarrier compensation overhaul order under Section 706 (In Re: FCC 11-161, No. 11-9900). "The Tenth Circuit agreed with the D.C. Circuit that Section 706 constituted an independent source of authority," he emailed. "So we have two circuits in agreement that Section 706 provides the FCC with some authority to encourage deployment of broadband. Given that, I think the Sixth Circuit is more likely to try to avoid a direct circuit split. If they decide against the FCC, they will probably duck the question of whether Section 706 is a general grant of authority and hand the opinion on state sovereignty."
"It is an enormous distraction to have Section 706 out there as an undefined source of authority with unclear scope," Feld said. "But I think Congress, not the courts, needs to address that. Hopefully, whenever Congress sits down to rewrite the Telecom Act, it will clear up the ambiguity around FCC authority in this space."