## Facts

- Tennessee and North Carolina authorized municipalities to provide broadband services but later imposed statutory limits restricting municipal broadband expansion beyond defined service areas and subjecting expansion to additional conditions.
- Chattanooga’s Electric Power Board (EPB) and the City of Wilson, North Carolina operated municipal broadband networks and sought to expand service.
- EPB and Wilson petitioned the Federal Communications Commission (FCC), asserting the state restrictions impeded broadband deployment and competition.
- In 2015, the FCC issued an order purporting to preempt specified portions of Tennessee and North Carolina law, relying primarily on § 706 of the Telecommunications Act of 1996 (47 U.S.C. § 1302) as authority to remove barriers to infrastructure investment and encourage broadband deployment.
- Tennessee and North Carolina filed petitions for review in the Sixth Circuit, arguing the FCC lacked statutory authority to override state decisions governing the powers of their political subdivisions.

## Issues

1. Whether § 706 of the Telecommunications Act of 1996 provides a clear congressional authorization for the FCC to preempt state laws that allocate authority between a state and its municipalities concerning municipal broadband expansion.
2. Whether, given federalism limits on federal intrusion into state control of political subdivisions, general statutory language about broadband deployment and competition can support agency preemption of state restrictions on municipal powers.

## Decision

- The court granted the petitions for review and reversed the FCC’s preemption order.
- The court held that § 706 did not contain an unmistakably clear statement authorizing the FCC to preempt state laws governing the relationship between a state and its municipalities.
- The court reasoned that the FCC order effectively reallocated decision-making authority from states to their subdivisions without a clear congressional directive permitting that intrusion.
- A separate opinion concurred in part and dissented in part regarding the breadth of the reasoning, but the panel’s judgment invalidated the FCC’s order.

## Legal Principles

- Federal preemption that alters a state’s allocation of authority over its political subdivisions requires an unmistakably clear statement of congressional intent.
- Broad, policy-oriented statutory directives to encourage deployment or remove barriers do not, without more specific authorization, permit an agency to displace state laws defining municipal powers.
- An agency may not expand its own authority through interpretation where doing so would shift the federal-state balance absent clear congressional authorization.
- Federalism-based clear-statement requirements constrain agency claims of preemptive power and are not satisfied by statutory ambiguity, even where deference doctrines might otherwise apply.

## Conclusion

The Sixth Circuit concluded that Congress did not clearly authorize the FCC, through § 706, to override Tennessee’s and North Carolina’s statutory limits on municipal broadband expansion, so the FCC’s attempt to preempt those state laws exceeded its authority and was reversed.


Tennessee v. Fed. Commc’ns Comm’n, 832 F.3d 597 (6th Cir. 2016)