American Bar Association
Media Alerts
Media Alerts - Sixth Circuit says states, not FCC, control scope of telecommunications services offered by municipality-owned utilities
Decrease font size
Increase font size
October 24, 2016
  Sixth Circuit says states, not FCC, control scope of telecommunications services offered by municipality-owned utilities
Case: Tennessee v. FCC

Area of law: Telecommunications and internet services

Issue presented: Is an FCC preemption order valid when it allows a municipality-owned utility to expand telecommunications services beyond what state law permits?

Brief summary: Both Tennessee and North Carolina enacted laws permitting municipality-owned utilities to offer telecommunications services, including internet, to customers within their respective service areas. Two municipally owned utilities petitioned the Federal Communications Commission (FCC) for preemptions allowing them to offer internet services outside their service area. After the FCC granted preemptions, Tennessee and North Carolina sought judicial review of the FCC's orders. The Sixth Circuit reversed both FCC orders, holding that the FCC does not have the authority to stop states from limiting the expansion of services offered by its municipalities. Only the municipality's state has that authority.

Extended summary: Tennessee enacted a law in 1999 that permitted municipality-owned power plants (utilities) to also offer telecommunication services - cable, video, and internet services - to customers within their service areas. This law's geographic limitation, however, bars a municipality from offering telecommunication services outside its service area to surrounding areas.

Chattanooga, Tennessee, operates a power provider, the Electric Power Board (EPB), which offers high-speed broadband internet service to 170,000 residential and commercial customers in Tennessee and Georgia.

Likewise, North Carolina enacted a law in 1971 that permits its municipalities, or their utilities, to provide broadband internet services. And North Carolina also prohibits municipalities from offering these internet services to anyone beyond their municipal boundaries too. The City of Wilson, North Carolina, constructed a fiber-optic internet-backbone network connecting all City-owned facilities. City residents, businesses, as well as educational and medical facilities sought access to this network, and the City responded by expanding its network for these customers by giving them access for fees. The City's services included phone, internet, and cable, and its customers are paying less for these services when compared to the competition.

EPB and the City of Wilson sought preemptions from the FCC; they wanted to offer their services to customers outside their respective service areas. The FCC granted both petitions for preemption. In the FCC's order, the FCC required Tennessee and North Carolina to give their municipalities a choice in undertaking these discretionary actions.

Tennessee petitioned the Sixth Circuit to review the FCC's decision, and North Carolina filed a similar petition in the Fourth Circuit. The cases were consolidated in the Sixth Circuit.

After a thorough analysis of the Telecommunications Act of 1996, the Sixth Circuit reversed the FCC order. The Sixth Circuit reasoned that federal law cannot limit a state's ability "to trump a municipality's exercise of discretion [that is] otherwise permitted by FCC regulations . . . [and federal law] cannot be read to authorize such preemption." As such, the FCC did not have the authority to permit the service-area expansion being sought by EPB and the City of Wilson. The Sixth Circuit concluded that only Tennessee and North Carolina held the authority to expand services within an area.

Panel: ROGERS and WHITE, Circuit Judges; HOOD, District Judge. (The Honorable Joseph M. Hood, United States District Judge for the Eastern District of Kentucky, sitting by designation.)

Date of issued opinion: August 10, 2016

Docket numbers: 15-3291/3555

Decided: August 10, 2016

Decision: FCC order reversed.

Counsel: Joshua S. Turner, WILEY REIN LLP, Washington, D.C., for Petitioner in 15-3291. John F. Maddrey, NORTH CAROLINA DEPARTMENT OF JUSTICE, Raleigh, North Carolina, for Petitioner in 15-3555. Matthew J. Dunne, FEDERAL COMMUNICATIONS COMMISSION, Washington, D.C., for Respondents. ON BRIEF: Joshua S. Turner, Megan L. Brown, WILEY REIN LLP, Washington, D.C., for Petitioner in 15-3291. John F. Maddrey, NORTH CAROLINA DEPARTMENT OF JUSTICE, Raleigh, North Carolina, for Petitioner in 15-3555. Matthew J. Dunne, Richard K. Welch, FEDERAL COMMUNICATIONS COMMISSION, Washington, D.C., for Respondents. James Bradford Ramsay, NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS, Washington, D.C., for Intervenor National Association of Regulatory Utility Commissioners. James Baller, Sean A. Stokes, Ashley Stelfox, BALLER HERBST STOKES & LIDE, PC, Washington, D.C., James P. Cauley III, Gabriel Du Sablon, CAULEY PRIDGEN, P.A., Wilson, North Carolina, for Intervenor City of Wilson. Frederick L. Hitchcock, Willa B. Kalaidjian, CHAMBLISS, BAHNER & STOPHEL, P.C., Chattanooga, Tennessee, for Intervenor Electric Power Board of Chattanooga. William J. Kirsch, Arlington, Virginia, Andrew L. Brasher, OFFICE OF THE ALABAMA ATTORNEY GENERAL, Montgomery, Alabama, Conor B. Dugan, WARNER NORCROSS & JUDD LLP, Grand Rapids, Michigan, Richard A. Samp, WASHINGTON LEGAL FOUNDATION, Washington, D.C., David Parkhurst, NATIONAL GOVERNORS ASSOCIATION, Washington, D.C., Bartlett Cleland, Jonathan Hauenschild, AMERICAN LEGISLATIVE EXCHANGE COUNCIL, Arlington, Virginia, Ashley Stelfox, BALLER HERBST STOKES & LIDE, PC, Washington, D.C., Mark C. Del Bianco, LAW OFFICE OF MARK C. DEL BIANCO, Kensington, Maryland, Andrew Jay Schwartzman, Eric G. Null, INSTITUTE FOR PUBLIC REPRESENTATION, Washington, D.C., Lani L. Williams, LOCAL GOVERNMENT LAWYER'S ROUNDTABLE, INC., Oconomowoc, Wisconsin, Kimberly Hibbard, NORTH CAROLINA LEAGUE OF MUNICIPALITIES, Raleigh, North Carolina, Markham C. Erickson, STEPTOE & JOHNSON LLP, Washington, D.C., for Amici Curiae.

Author of opinion: ROGERS, J., delivered the opinion of the court in which HOOD, D.J., joined, and WHITE, J., joined in part. WHITE, J., delivered a separate opinion concurring in part and dissenting in part.

Case alert author: Peter J. Mancini, Western Michigan University Cooley Law School

Case alert circuit supervisor: Professor Mark Cooney

Link to the case: www.opn.ca6.uscourts.gov/opinions.pdf/16a0189p-06.pdf

    Posted By: Mark Cooney @ 10/24/2016 11:59 AM     6th Circuit  

FuseTalk Enterprise Edition - © 1999-2018 FuseTalk Inc. All rights reserved.

Discussion Board Usage Agreement

Back to Top