Yesterday the Sixth Circuit granted two petitions for review in The State of Tennessee et al. v. FCC and issued its opinion reversing the FCC’s order that preempted the laws of Tennessee and North Carolina that limited the ability of municipalities in those states to provide broadband service. The opening pages extoll the virtue of the FCC’s efforts: “We do not question the public benefits that the FCC identifies in permitting municipalities to expand Gigabit Internet coverage.” The Court nonetheless found that Section 706 was not specific enough to be the “clear statement” required for the FCC to preempt state laws, at least those that regulate the traditional relationship between a state and its municipal subdivisions.
"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. . . Because § 706 cannot be read to limit a state’s ability to trump a municipality’s exercise of discretion otherwise permitted by FCC regulations, § 706 cannot be read to authorize such preemption."
The concurrence argued that at least one of the North Carolina laws was an “expression of [North Carolina’s] telecommunications policy” as opposed to the “core sovereign power to order its government.” In that judge’s view, “North Carolina’s requirement that municipalities impute the costs of private providers when pricing municipal services, including telecommunication services, has little to do with the State’s core sovereign power to order its government. Rather, it is an expression of its telecommunications policy that private providers must be protected from a municipal provider’s unfair advantage.” That type of law as “exclusively regulatory and commercial” the concurring judge suggested could be preempted under Section 706. Chairman Wheeler released a statement that he would “consider all our legal and policy options to remove barriers to broadband deployment.”