States threaten lawsuit over Obama's municipal broadband plan

The FCC doesn't have the authority to preempt state laws limiting municipal broadband projects, state groups say

If the U.S. Federal Communications Commission moves to preempt state laws that limit municipal broadband projects, as President Barack Obama recently asked the agency to do, it will likely end up in court.

States affected by an FCC preemption of municipal broadband laws will almost certainly file a lawsuit if the agency moves to invalidate the 20 state laws that limit municipal broadband projects in some way, said legislators from three states and from three group representing state officials.

The 10th Amendment to the U.S. Constitution, giving states all power not delegated to the federal government, should make the states' case against the FCC "slam dunk," said Brad Ramsay, general counsel of the National Association of Regulatory Utility Commissioners [NARUC]. If a case makes it to the U.S. Supreme Court, "the FCC will lose," he said during a press conference Monday.

In addition to Obama's request to the FCC, announced this month, cities in North Carolina and Tennessee filed petitions in mid-2014 asking the FCC to overturn laws there limiting municipal broadband projects.

FCC Chairman Tom Wheeler, last June, called on the agency to preempt the state laws "in the best interests of consumers and competition." The FCC is still considering the petitions by the two cities in Tennessee and North Carolina.

An FCC spokeswoman didn't immediately respond to a request for comments on a possible lawsuit.

Just last week, three Democratic U.S. senators, including Cory Booker of New Jersey, introduced the Community Broadband Act, which would prevent states from "prohibiting or substantially inhibiting" cities from financing their own broadband networks.

But states have good reasons to put limits on city broadband projects, said state Senator Thomas Alexander, a South Carolina Republican. State legislators want to protect residents from overspending on projects and want to ensure broadband "continuity" across their states, he said.

In a handful of cases, municipal broadband projects haven't worked out as expected, other legislators noted. "My question for the FCC, if they follow this course, is the FCC going to foot the bill if there are failures?" said state Representative Joe Atkins, a Minnesota Democrat.

Speakers on Monday's call, which also included representatives of the National Conference of State Legislatures and the National Governors Association, said they would be forced to file a lawsuit if the FCC preempts state law on municipal broadband. If the states don't act, that could embolden the FCC or other federal agencies to preempt state laws, they said.

A lawsuit would be "unfortunate" because of the money it would cost, but that seems to be the logical next step if the FCC preempts state law, Atkins said. "Threatening a lawyer with a lawsuit is like threatening 5-year-old with a Hershey bar," he added.

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