North Carolina, Tennessee State Governments Seen Likely to Lead Legal Challenge to Expected FCC Pre-Emption

The North Carolina and Tennessee state governments are likely to take the lead on any legal challenge to expected FCC pre-emption of their states’ municipal broadband laws, with North Carolina Attorney General Roy Cooper and Tennessee Attorney General Herbert Slatery initiating the lawsuits, industry lawyers told us Monday. FCC officials said Monday that Chairman Tom Wheeler would circulate a draft order this week approving petitions from the Electric Power Board of Chattanooga and Wilson, North Carolina. The draft order would directly address only the Chattanooga and Wilson petitions but is likely to set a precedent for FCC handling of future petitions (see 1502020037).

“I can’t imagine a state is going to be happy with their laws being pre-empted and that their attorney general is going to sit on his thumbs,” said NARUC General Counsel Brad Ramsay. “I would be very shocked if both states don’t jump in fairly quickly.” Cooper, a Democrat, and Slatery, a Republican, didn’t comment.

North Carolina and Tennessee could choose to file lawsuits with the U.S. Court of Appeals for the D.C. Circuit or their regional circuit courts -- the Fourth Circuit for North Carolina and the Sixth Circuit for Tennessee. Neither option presents a distinct advantage for either state’s appeal of the FCC order “given the nature of the legal arguments,” Ramsay said. There’s also a possibility the lawsuits could be combined, particularly if the FCC addresses the Chattanooga and Wilson petitions in a single order as expected, he said. If both states file suits within 10 days after the order appears in the Federal Register, “there’ll be a lottery and they’ll be assigned to one of the courts where the lawsuits were filed,” Ramsay said.

The states could be better served by filing at their regional circuit courts if they decide to rely heavily on challenging FCC pre-emption authority under Communications Act Section 706, said Squire Patton lawyer Jack Nadler, who has represented public sector clients and international governments on telecom issues. The FCC is basing its authority to pre-empt state municipal broadband laws based on the D.C. Circuit’s interpretation of Section 706 in its Verizon v. FCC decision, “so that issue cannot be challenged again in the D.C. Circuit,” Nadler said. The Fourth and Sixth circuits “have never ruled on Section 706 and aren’t bound by the D.C. Circuit’s finding, so in theory the states could argue there that the FCC doesn’t have that authority at all or at least has narrower authority than the D.C. Circuit granted,” he said. “The only benefit for taking this to the D.C. Circuit would be for the FCC because the court’s already really dug into Section 706 and gave them a really expansive reading of the statute,” said Keller Heckman telecom lawyer Doug Jarrett. “Whether they would do that where state’s rights are involved is another bridge to cross.”

It’s not clear how many industry and outside groups would file amicus briefs for the FCC and state governments in a possible legal challenge to the order, but any entity that filed comments on the FCC’s dockets on the petitions -- 14-115 and 14-116 -- “is much more likely to expend the energy” to become an intervener in the case, Ramsay said. He said he would recommend that NARUC allow him to file an amicus brief on behalf of the North Carolina and Tennessee state governments. NARUC hasn’t taken a position on the merits of municipal broadband deployment. The National Conference of State Legislatures (NCSL) also actively opposed FCC pre-emption and would be likely to become an intervener on the behalf of the states, said Neal Osten, director of NCSL’s Washington office. “We would be very much involved and interested in working with the states, the National Governors Association (NGA) and the Council of State Governments (CSG) to pursue filing a brief.”

NARUC would be able to easily draft its amicus brief based on its earlier opposition of FCC pre-emption of state municipal broadband laws in the Chattanooga and Wilson dockets, Ramsay said. Other groups could easily draft their briefs based on FCC Commissioner Ajit Pai’s expected dissent on the Chattanooga and Wilson petitions, as he frequently structures his statements in a brief format, Ramsay said.