The Telecommunications Act of 1996 Struck the Right Federal-State Balance of Power

The Telecommunications Act of 1996 was signed into law by President Clinton twenty years ago today. Since then, aggressive activities by the Federal Communications Commission (FCC), especially in recent years, have been aimed at expanding its powers through federal preemption–at the expense of individual states. Consequently, this important legislative anniversary should be a timely reminder of the actual legislative history of that law regarding the scope of such preemption.

The U.S. Constitution establishes a system of dual sovereignty between the states and the federal government. The U.S. Supreme Court has described the constitutional foundation of dual sovereignty in this way:

[T]he people of each State compose a State, having its own government, and endowed with all the functions essential to separate and independent existence, . . . [W]ithout the States in union, there could be no such political body as the United States. Not only, therefore, can there be no loss of separate and independent autonomy to the States, through their union under the Constitution, but it may be not unreasonably said that the preservation of the States, and the maintenance of their governments, are as much within the design and care of the Constitution as the preservation of the Union and the maintenance of the National government. The Constitution, in all its provisions, looks to an indestructible Union, composed of indestructible States. 

Recognizing this bedrock principle, Congress reflected a sophisticated approach to balancing federal and state power in the Telecommunications Act.

In the House and Senate conference reports for this legislation, Congress articulated clearly that the overall purpose of the Act was “to provide for a pro-competitive, deregulatory national policy, framework designed to accelerate rapidly private sector deployment of advanced telecommunications and information technologies and services to all Americans by opening all telecommunications markets to competition.”

Congress also made clear that the FCC and the states “should ensure that universal service is available at rates that are just, reasonable and affordable.”  This is an explicit indication that one of the essential aspects of communications policy – – universal service – – was to be implemented not just by federal regulations, but rather by federal and state authorities governing their respective jurisdictional domains. This statutory specification in the 1996 Act of dual sovereignty is clear on its face.

The House and Senate conference reports also reflect agreement on the creation of a new section 10 in Title I of the Communications Act of 1934, as amended. This section requires the FCC to forbear from applying any provision of the Communications Act or from applying any of its regulations to a telecommunications carrier.

The provision applies if the Commission determines that enforcement is not necessary to: 1) ensure that charges, practices, classifications or regulations of such telecommunications carrier or service are just and reasonable, and not unjustly or unreasonably discriminatory; 2) protect consumers; and 3) protect the public interest (taking into account whether or not forbearance will promote competition).

In section 10, Congress again demonstrated its intent and ability to limit explicitly federal preemptory authority through an articulation of dual sovereignty. The House and Senate conference reports indicate that although a state may not continue to apply or enforce any provision of the [federal] Communications Act, once federal forbearance was decided by the FCC, there also was no Congressional intent “to limit or preempt State enforcement of state statutes and regulations.”

Further, in Title VI of the Telecommunications Act of 1996, Congress addressed the potential that affected parties might assert that the Act implicitly preempted other laws. Both Congressional conference reports once again clearly limit the potential reach of federal preemptory power by “stating that the bill does not have any effect on any other Federal, State, or local law unless the bill expressly so provides.”

With section 706, the House and Senate conferees adopted the Senate bill version, which “ensures that advanced telecommunications capability is promptly deployed by requiring the Commission to determine whether advanced telecommunications capability, particularly to schools and classrooms, is being deployed in a ‘reasonable and timely fashion.’ ”

Although Congress made explicit in section 706 that state commissions may be preempted by their federal regulatory counterpart – – the FCC – – it does not otherwise implement preemption for states acting as sovereign governmental authorities (i.e., through constitutional and/or legislative delegation of power), unlike section 332(b)(3) of the Act, for example. Consequently, the potential reach of any implied preemptory power, on its face, would be limited to state commissions — not states at large — under a plain language reading of this section.

Congressional clarity in knowing how to express federal preemptory intent precisely is illustrated in section 303 of the Act, which explicitly prohibits a state or local franchising authority from imposing any requirement that has the purpose or effect of prohibiting, limiting, restricting or conditioning the provision of a telecommunications service by a cable operator or an affiliate thereof.  This section is entitled, “Preemption of Franchising Authority Regulation of Telecommunications Service.”

In Title III of the 1996 Act, Congress also amended the definition of “cable service” in section 602(6) by reflecting the evolution toward interactive services. Additionally, subsection (3), which amended section 623(a), is explicitly designed “to promote the development of broadband, two-way telecommunications infrastructure.

It is important to note, however, that Congress also made clear, as reflected in both the House and Senate conference reports, that the section 602 amendment “is not intended to affect Federal or State regulation of telecommunications service offered through cable system facilities.  This is another example in the Act where Congress, in developing federal communications policy, clearly considered whether it wanted to choose federal preemption as the preferred course. It decided such preemption not to be warranted, and that dual sovereignty was to be the legislative norm.

The Telecommunications Act of 1996 was adopted with broad bipartisan support. Although much has changed in the political landscape in the two decades since its enactment, one of the Act’s enduring legacies is the legislative craftsmanship evident throughout to strike the right balance between federal and state power.

The Telecommunications Act of 1996 Struck the Right Federal-State Balance of Power