The threat of federal government overreach seems to be the norm in the Obama administration. This time it’s the Federal Communications Commission (FCC) threatening the sovereignty of states across the country. FCC Chairman Tom Wheeler is on a mission to use the power of his federal agency to overturn laws passed by state legislatures. About 20 states have passed laws to protect taxpayers from their local governments gambling on broadband network investments –referred to as municipal broadband. The FCC’s authority to preempt state laws is highly questionable. Preemption would completely undermine the power of state legislatures and violate the principles of constitutional federalism.

Local governments that venture into broadband do so with a misguided belief: they only need to put up money for infrastructure then they can reel in profits. The truth is while funding broadband infrastructure requires a massive taxpayer investment up front; it also requires large sums of money over time for upgrades and maintenance. Such financial demands simply cannot be satisfied by local governments unless those governments impose crushing and permanent tax hikes on local residents. 


That’s why municipal networks across the country have had an abysmal track record at best. They’ve left citizens with tremendous amounts of debt and greater tax burdens. Taxpayers in Lafayette, Louisiana as well as eleven cities in Utah can attest to this as they’ve been saddled with $160 million and $500 million in debt, respectively, thanks to broadband boondoggles. These are just a few of the many examples of municipal broadband failures across the country. With that considered, it isn’t surprising that state legislatures have passed laws to protect their constituents from the tremendous financial risks that come with municipal networks.

Federal interference by Obama’s communications bureaucrats is uncalled for.  State policymakers are elected by their local constituents to, among other things, protect taxpayers from runaway government spending and debt.  And that’s exactly what they are doing.  Not only do these state officials have a better understanding of local needs and a closer connection to the people they represent, they can also be held accountable by citizens – unlike the unelected FCC bureaucrats inside the Washington, D.C. beltway.

Despite overwhelming evidence indicating government owned networks only bring trouble for taxpayers, Chairman Wheeler has been vigilant in attempts to overturn state laws protecting citizens from municipal broadband projects. The FCC recently had this issue on their docket for public comment. Now that the comment period is over, the decision is under final consideration by the FCC. FCC preemption of state law would not only be an instance of excessive federal overreach, but would also set a new precedent of FCC authority. And the Supreme Court seems to agree.

This isn’t the first attempt by the FCC to overstep its boundaries by attempting to infiltrate state sovereignty. The U.S. Supreme Court has now twice rejected FCC attempts to excessively override state law. In Gregory v. Ashcroft (1991), the court determined that federal preemption of a “sovereign entity” cannot occur without Congressional approval.

The Supreme Court reinforced the same ruling by rejecting federal preemption of state law in Nixon v. Missouri Municipal League in 2004. The court made clear that by attempting to use the Telecommunications Act of 1996 as a vehicle to override state law –which is exactly what the FCC is trying to do now but under Section 706 –the FCC was violating principles of constitutional federalism. Further, the court explicitly stated that the 96 Act cannot be used to give local governments power over state law.

Given the inherent financial risks that come with municipal networks and previous rulings by the Supreme Court, state legislatures have a right and a responsibility to protect their constituents with laws that can’t be thwarted by the federal bureaucrats. The issue of municipal broadband is a state and local issue and it should stay that way. Chairman Wheeler and the FCC should stay out of state business.

Jones is a policy analyst with Americans for Prosperity, a conservative political advocacy organization.