It’s Time for the FCC to Call Off Its Convoluted Power Grab | Commentary

Posted September 18, 2014 at 1:42pm

A potential heavy-handed federal power grab is threatening the fabric of constitutional federalism, and Congress is divided on whether to interfere.

The Federal Communications Commission is considering proposals that will result in unprecedented bureaucratic powers over the states, as Chairman Tom Wheeler has publicly declared his intent to pre-empt state law restrictions on municipal broadband projects. Unfortunately, the view from the states has been overlooked.

Pre-empting state restrictions on municipal broadband is unsound in principle. Government’s role as a neutral enforcer of equal laws is undermined when government enters into direct competition with the private sector. If the FCC pre-empts state laws that guard against such municipal conflicts of interest, it will encourage more local governments to enter the broadband business against the competitors they regulate.

Fiscally unsound municipal broadband projects put taxpayers at risk. Many muni broadband projects have turned into notorious boondoggles, such as Utah’s UTOPIA project. At the end of fiscal 2013, UTOPIA had accumulated more than $500 million in debt. Similarly, Lafayette, Louisiana’s LUS Fiber debt totaled more than $160 million in just six years, while revenues fell short of projections by 30 percent. Earlier this year, Burlington, Vt., forked over $10.5 million to settle a $33 million lawsuit from creditors of Burlington Telecom, which reduced the city’s credit to junk ratings.

When muni broadband projects run deep in the red, taxpayers are routinely forced to bail them out. Some local governments have hit taxpayers with rate hikes on local services, such as water or electricity, to make up for muni broadband project losses.

Many states have adopted safeguards to protect taxpayers. North Carolina requires voter approval before local governments can incur public debts to fund muni broadband projects, and the state’s law also prohibits local governments from raiding general budgets or other public services to prop up faltering muni broadband projects. But the FCC is now weighing a petition seeking federal pre-emption of those taxpayer protections.

FCC pre-emption would eviscerate states’ governmental integrity and accountability. State constitutions and legislatures create and define the basic purposes of local governments. They delegate certain municipal powers, withhold others and select institutional structures. States impose limits on local governments’ means for carrying out assigned responsibilities, set geographic borders and so on. States can even abolish municipal governments and adopt new political subdivisions in their places.

Pre-emption by the FCC would result in an unelected federal bureaucracy wrestling away states’ control over their local governments. Will the FCC set a precedent for federal agencies to make local governments unaccountable to the states to which they owe their existence?

Congress is now divided over this issue. Earlier this year, Rep. Marsha Blackburn, R-Tenn., introduced a bill to block funding of FCC pre-emption of muni broadband laws. On the other hand, Sen. Edward J. Markey, D-Mass., and Rep. Mike Doyle, D-Pa., urged the FCC to pre-empt state muni broadband laws.

But Congress never voted to allow the FCC to pre-empt states on municipal broadband. Also, in Nixon v. Missouri Municipal League (2004), the Supreme Court soundly rejected claims that Section 253 of the Communications Act pre-empted state restrictions on municipal telecommunications projects. In the court’s words: “Pre-emption would come only by interposing federal authority between a State and its municipal subdivisions, which our precedents teach, ‘are created as convenient agencies for exercising such of the governmental powers of the State as may be entrusted to them in its absolute discretion.’”

For that matter, the Constitution prohibits the type of federal pre-emption now contemplated by the FCC. Our constitutional system is uniquely premised on the idea of dual sovereignties. In the words of Lincoln Supreme Court appointee Chief Justice Salmon Chase, we are “an indestructible union, composed of indestructible states.” Structurally, our Constitution implies limits on the federal government’s power to regulate states as states. The 10th Amendment provides that “[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Nowhere does the Constitution give federal bureaucrats the power they now seek to entangle themselves in state legislative judgments about the specific purposes, geographic limits and electoral accountability of local governments.

It is time for the Federal Communications Commission to call off its convoluted and unconstitutional pre-emption plans.

Yvette Herrell is a New Mexico state representative and the American Legislative Exchange Council New Mexico public sector state chairwoman.