Results-Driven Federalism Part 2

            Consider the following assertion:

            “Our Constitution establishes a system of dual sovereignty between the States and the federal government, such that sovereignty rests concurrently with both the federal government and the States. Specifically, the Tenth Amendment reserves all powers not specifically delegated to the federal government by the Constitution to the States or to the people.  Thus, States are not creations of the central government. They are separate sovereigns. This distribution of sovereignty, otherwise known as federalism, is the defining feature of the relationship between the federal and state governments.

            In taking this step [preempting states from limiting the geographical reach of municipal broadband networks] the FCC usurps fundamental aspects of state sovereignty. And it disrupts the balance of power between the federal government and state governments that lies at the core of our constitutional system of government.”

            Now, compare it with the following:

“The broader problem is that California’s micromanagement poses a risk to the rest of the country.  After all, broadband is an interstate service; Internet traffic doesn’t recognize state lines.  It follows that only the federal government can set regulatory policy in this area.  For if individual states like California regulate the Internet, this will directly impact citizens in other states.

            Among other reasons, this is why efforts like California’s are illegal.” 

            Would you be surprised if I reported that the same person wrote both declarations?  Any dismay at the apparent inconsistency if I reported that the author is FCC Chairman Ajit Pai?  Compare file:///C:/Users/rmf5/Downloads/FCC-15-25A5.pdf with https://www.fcc.gov/document/chairman-pai-remarks-maine-policy-heritage-center.

            Chairman Pai is a quite knowledgeable and talented guy.  However, I believe his partisanship creates inconsistency on a fundamental principal—what he terms  “Constitutional Law 101.”

            Chairman Pai railed against the Democratic majority at the FCC which sought to preempt state governments from imposing geographical restrictions on municipal government broadband networks.  For this matter, the Chairman invoked federalism as sacrosanct: states are sovereign entities free to determine whether and how subordinate governmental units can pursue broadband service initiatives. 

            Chairman Pai had supporting case precedent including a Supreme Court case validating the right of states to prohibit any municipal telecommunications service.  See Nixon v. Missouri Mun. League, 541 U.S. 125 (2004).  The Sixth Circuit Court of Appeals validated his legal interpretation ruling that the Telecommunications Act of 1996 did not explicitly authorize the FCC to elevate the goal of ubiquitous and affordable broadband over state sovereignty, even the sovereign election to foreclose municipal efforts to rollout broadband where commercial ventures had refused to serve. See Tennessee v. FCC, 832 F.3d 597 (6^th Cir. 2016)available at: http://www.opn.ca6.uscourts.gov/opinions.pdf/16a0189p-06.pdf.

            With all this support for state’s rights, how does Chairman Pai reverse course and invoke much maligned federal preemption to thwart states like California from enacting network neutrality laws? 

            Results-driven rationales now support the view that anything and everything about broadband is interstate in nature, and fair game for FCC preemption, except of course legislated service limitations.  I cannot square this view with what Chairman Pai has previously stated. 

            California enacts a law, which I consider quite flawed, but clearly representative of a sovereign state keen on imposing consumer safeguards for the origination and termination of Internet traffic within the state.  Internet Service Providers may import content from other states, but the delivery medium surely lies within a single state.

            Note that in the case of California network neutrality legislation, a sovereign state has opted to impose safeguards that the FCC considers unnecessary and potentially harmful.  Can the FCC preempt states on grounds that they cannot lawfully act when the Commission determines that regulatory oversight is not needed?

            How did humility and respect for states’ rights evaporate?

Federalism Versus Balkanization and Muni Wi-Fi

         While most attention today focused on the FCC’s Open Internet, I was intrigued with the discussion—make that righteous indignation—presented by Commission’s Pai on the FCC’s partial preemption of state laws restricting territorial build outs by municipal Wi-Fi networks.  Commissioner Pai gave an extensive review of Constitutional law with emphasis on state sovereignty.

          Commissioner Pai never addressed the considerable body of case precedent favoring FCC preemption of state regulation, including the attempt by state public utility commissions to regulate—if not prohibit-Voice over the Internet Protocol (“VoIP”).  See Minn. PSC v. FCC, 394 F.3d 568 (8th Cir. 2004).  States’ rights notwithstanding, many courts share the FCC’s view that much in telecommunications and now the Internet involve interstate commerce. 99.9999999+ percent of the time, Internet traffic crosses a state border.  Over the years, such a crossing “contaminated” any pure intrastate link which arguably includes the wireless few feet linking a tablet and the Internet cloud.

          Not so long ago Commissioners of both parties would express concern about “balkanization” of telecommunications policy, i.e., fragmentation and proliferation of many inconsistent state policies.  That environment would generate “regulatory uncertainty” and “disincentives for investment in next generation networks.”  Now Commissioners and others earn brownie points for how well they can express fealty to the Constitution.

          An ignored but obvious issue in the debate lies in the vast increase in scrutiny and involvement in telecommunications policy by groups such as the American Legislative Exchange Council.  The real possibility exists that ALEC offered state legislators in places like North Carolina and Tennessee a template for a law few framed as pro-market/pro-state.  Might state legislators have voted for something without much analysis?

          In any event I saw a huge irony in the universal view that America needs more competition in broadband, but Commission Pai’s insistence that municipalities do not count, even when no one else seems “incentivized” to make the effort.