FCC's Chances of Overturning Muni Broadband Loss Seen as Slim—if It Appeals
Prospects look bleak if the FCC appeals a municipal broadband setback, many attorneys told us, several citing DOJ's decision not to join the commission's brief. A three-judge panel of the 6th U.S. Circuit Court of Appeals Wednesday reversed an FCC order that pre-empted two state laws blocking municipal broadband providers from expanding into nearby communities (State of Tennessee, State of North Carolina v. FCC, Nos. 15-3291/3555). One judge partially dissented but largely agreed with the majority (see 1608100049). FCC Chairman Tom Wheeler said Wednesday the agency was reviewing its options and a spokesman had no further comment Thursday.
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“It's going to be a substantial uphill battle to get this case heard on appeal," said Andrew Lipman, a Morgan Lewis attorney. "It's notable that the Justice Department didn't join the FCC brief" (see 1511090056). It's unclear why DOJ didn't join the brief to the 6th Circuit, but Lipman and others said its absence is a bad sign for an appeal.
“My hunch is the agency may not" even appeal, said Randolph May, Free State Foundation president. "The Justice Department doesn’t support the FCC’s view of the law," emailed May, continuing to call attention to the Supreme Court's 2004 Nixon v. Missouri Municipal League, which the 6th Circuit panel cited. "The FCC’s legal position is very weak, flying directly in the face of the Supreme Court’s Nixon precedent -- except the FCC’s position is weaker now than it was in Nixon because it is so difficult to argue that Congress has provided a clear statement to the effect the FCC can alter the federalist structure of our Constitution.”
The panel's "treatment of the Chevron issue might create an appealable issue," at first glance, said Andrew Schwartzman, Georgetown Law Institute for Public Representation senior counselor. Chevron U.S.A. Inc. v. Nat. Res. Def. Council is the 1984 Supreme Court ruling on whether courts should defer to agency decisions.
TechFreedom President Berin Szoka said the FCC could appeal for political reasons. "I suspect they'll fight on. ... It keeps the issue alive," he said, though he suggested an appeal would risk a bigger setback for the commission on its broadband authority under Telecom Act Section 706. Szoka noted the FCC could appeal en banc to the 6th Circuit or directly to the Supreme Court. "They're not going to win," he said.
The 6th Circuit "is more amenable to en banc review than some other circuits, so a petition for rehearing might make sense," said Schwartzman. Lipman said the 6th Circuit "may be modestly more amenable" to granting en banc review than other circuits, but it's "still unquestionably difficult." The court issued only four en banc opinions in 2015, he said.
Commission "prospects for further review are nil. Actually -- worse than nil," emailed Brad Ramsay, general counsel of NARUC, an intervenor in the case on the state side "The majority analysis is airtight. There’s no way they get en banc. This not that kind of case. En banc is hard to get in the best of circumstances. Here, even the dissenter concurs with the main part of the order and any other ruling is flatly inconsistent with Supreme Court precedent in Nixon." Ramsay said he believes the FCC has no grounds for a Supreme Court appeal, either.
Lipman said it's "highly unlikely" the high court would grant review, particularly without DOJ support. He said there's no circuit split and while the issues are "certainly significant in telecom circles," they're "fairly straightforward," he said. "I would be very surprised." Paul Glenchur, analyst at Hedgeye Potomac Research and also a lawyer, said he tends to doubt the Supreme Court would review the case. "The court’s preemption analysis really does not invite Supreme Court intervention," he emailed. "An appeal to the Supreme Court needs DOJ support through the Solicitor General’s office and if DOJ wasn’t aboard in the Sixth Circuit, I doubt DOJ will come to the Commission’s rescue by backing a cert petition.”
“There is very little chance that further appeals will change" the state victory, said Tellus Venture Associates President Steve Blum in a blog post. He said he expects the FCC "would be on its own" if it did appeal. Blum, a community broadband consultant, said in June the panel was likely to reject the FCC order (see 1606210036).
Meanwhile, Capitol Hill Republicans stressed what they saw as the lawlessness of the FCC’s actions. “Regulatory overreach was not only ill-conceived but illegal, and this direct rebuke should serve as yet another wake up call for the commission to heed the limits of its authority,” said House Commerce Committee Chairman Fred Upton, R-Mich., and Communications Subcommittee Chairman Greg Walden, R-Ore. Sen. Deb Fischer, R-Neb., referred to the “brazen overreach” and said “the ruling will also ensure that the FCC works with, not around, Congress as we to strive to deploy broadband across America.” The agency “completely overstepped their authority by attempting to deny states like North Carolina from setting their own laws to protect hardworking taxpayers and maintain the fairness of the free market,” said Sen. Thom Tillis, R-N.C., a former state lawmaker who introduced legislation earlier this Congress to stop the FCC.