FCC sued by dozens of cities after voting to kill local fees and rules

The Federal Communications Commission faces a legal battle against dozens of cities from across the United States, which sued the FCC to stop an order that preempts local fees and regulation of cable-broadband networks.

The cities filed lawsuits in response to the FCC's August 1 vote that limits the fees municipalities can charge cable companies and prohibits cities and towns from regulating broadband services offered over cable networks.

"At least 46 cities are asking federal appeals courts to undo an FCC order they argue will force them to raise taxes or cut spending on local media services, including channels that schools, governments, and the general public can use for programming," Bloomberg Law wrote Tuesday.

Various lawsuits were filed against the FCC between August and the end of October, and Bloomberg's report said that most of the suits are being consolidated into a single case in the US Court of Appeals for the 9th Circuit. An FCC motion to transfer the case to the 6th Circuit, which has decided previous cases on the same topic, is pending.

The 9th Circuit case was initially filed by Eugene, Oregon, which said the FCC order was arbitrary and capricious and that it violated the Administrative Procedure Act, the Constitution, and the Communications Act. The cities' arguments and the FCC's defense will be fleshed out more in future briefs.

Big cities such as Los Angeles, Chicago, Philadelphia, San Antonio, San Francisco, Denver, and Boston are among those suing the FCC. Also suing are other municipalities from Maine, Pennsylvania, Delaware, Virginia, Maryland, Georgia, Indiana, Iowa, Minnesota, South Dakota, Nebraska, Oklahoma, Texas, Arizona, California, Oregon, and Washington, according to a Bloomberg graphic. The state of Hawaii is also suing the FCC, and New York City is supporting the lawsuit against the FCC as an intervening party.

FCC lost net neutrality preemption battle

Chairman Ajit Pai's FCC already lost one attempt to preempt local regulation throughout the country. When it repealed federal net neutrality rules, the FCC also preempted states from imposing net neutrality laws. While a federal appeals court upheld the repeal of the US-wide regulations, it ruled that the FCC can't preempt all state laws in one fell swoop. The state of Washington continues to enforce its net neutrality law, and other states may do so in the future.

The FCC lost its preemption battle on net neutrality largely because it had given up its primary authority to regulate broadband. "[I]n any area where the Commission lacks the authority to regulate, it equally lacks the power to preempt state law," the appeals court ruling in that case said.

When the FCC preempted local cable regulation, a consumer advocate pointed out a similarity with the net neutrality case. The cable decision "is consistent with the commission's current perplexing view that it has no statutory authority over broadband but can nevertheless preempt states and local authorities from exercising their own authority," John Bergmayer, legal director of consumer advocacy group Public Knowledge, said after the August 1 vote.

The FCC argues that states and localities cannot collect fees and impose requirements that aren't explicitly allowed by Title VI, the cable-regulation section that Congress added to communications law with the Cable Act of 1984. The FCC acted partly in response to an Oregon State Supreme Court decision that upheld a 7% "telecommunications" license fee the city of Eugene imposed on Comcast. The FCC wants to get that fee and others off the books.

The US cable law prevents local authorities from collecting more than 5% of a cable operator's gross revenue in any 12-month period. The FCC said that some local governments have been requiring in-kind contributions from cable operators to get around the 5% cap and ruled that most in-kind contributions must count toward that cap.

Pai claimed that the preemption will spur companies to expand broadband networks, but Democratic FCC Commissioner Jessica Rosenworcel pointed out that ISPs haven't actually promised to deploy more broadband in exchange for the regulatory favor from the FCC. She added that "there is no enforceable obligation to expand broadband capacity."

Five groups representing local governments detailed some of the arguments against the preemption in a filing with the FCC last month. They argued, among other things, that the FCC "has exceeded its authority, inserting itself where Congress provided no authority or direction to do so in a manner contrary to the clear and unambiguous terms of the Cable Act." The local-government groups also said the FCC order violates the 10th Amendment by overriding states' rights, specifically by "directing state and local governments to surrender their property and management rights to 'advance... federal policies' related to broadband deployment."

Local governments also say the FCC order will make it harder to provide public, educational, and government access (PEG) programming. More generally, they say the FCC has "commandeered" the municipalities' "budgets and other resources... for the purpose of compensating cable operators in violation of legitimately adopted local franchises and state laws."

Separately, the FCC is facing another lawsuit filed by cities over the federal agency's September 2018 decision to preempt about $2 billion worth of fees related to deployment of wireless equipment such as small cells used for 5G.