The blog of the Urban Institute
July 15, 2021

How the Federal Government Can Support Cities and Counties Limited by State Preemption Laws: The Case of Municipal Broadband

July 15, 2021

State preemption laws have increased over the past decade, limiting local policymaking authority in issues ranging from housing to labor, environment, and health. The COVID-19 pandemic led to more of these laws, as states prohibited city and county governments from adopting their own policy responses, including mask mandates and business closures. Advocates for local-level policymaking authority argue that the increasing use of state preemption has constrained localities’ ability to govern and innovate based on local conditions and needs.

Over the past few years, Urban Institute researchers, including myself, have examined preemption from multiple angles, from the effectiveness of often-preempted municipal policies and how state preemption affected local lawmaking during the pandemic to the validity of claims that local laws produce a harmful “patchwork” of regulations.

One way of realigning state and local policymaking priorities could be stronger action by the federal government, which has long cooperated with local governments (PDF) and provided substantial fiscal support for municipalities. More broadly, federal policymaking influences local policymaking, regulation, and enforcement. Federal policies enforce everything from local land use to labor, immigration, education, transportation, environmental regulations, and telecommunications policies.

Those interested in promoting local autonomy could think creatively about how the federal government may help realign federal, state, and local policy priorities. One way the federal role can promote local policy innovation, even in states that tend to preempt a broader range of local laws, is municipal broadband.

Broadband expansion efforts show the push and pull of local and state policymaking

Municipal broadband has long been considered a best practice (PDF) by the Federal Communications Commission (FCC) to reach communities unserved or underserved by high-speed internet. The COVID-19 pandemic highlighted the importance of internet access for supporting remote work, education, telemedicine, and civic participation and engagement, and the federal government has shown increased interest in supporting local initiatives to curb digital divides (PDF) and limit state preemption.

However, the telecom industry often leads lobbying efforts against local initiatives and promotes state preemption of local laws intended to expand broadband access. Locally led municipal broadband build-out is slow and limited by state restrictions.

The most prominent municipal broadband network in the US has been in Chattanooga, Tennessee, where the municipal power company built out a fiber-optic cable network as part of an infrastructure modernization project. But local efforts to expand access to the network led to state legislation that significantly constrains municipal broadband networks, prohibiting expansion beyond municipal boundaries.

Preemption of municipal broadband generally has been justified based on concerns about the government having an unfair cost advantage over private entities and being a less efficient approach to management and upkeep. As of 2021, 18 states have explicit restrictions prohibiting municipal broadband development, and another five states impose significant limits.

The carrot may work better than the stick in federal efforts to limit state preemption

The federal government’s first attempt to limit state broadband preemption was unsuccessful. In 2015, the FCC attempted to preempt state laws restricting municipal broadband, but the effort failed in the courts, which ruled that the FCC did not have the authority to reallocate power between states and municipalities.

In the wake of this failed “stick” approach came a “carrot” in the form of the US Department of Agriculture’s ReConnect Program, which offered grants and loans to rural communities to build out broadband deployment. By 2020, $700 million in funding had gone out to 80 projects. This approach also led to the recent relaxation of state restrictions on municipal networks so localities can apply for funding. For instance, with some of the lowest broadband availability in the US, Arkansas and Mississippi loosened restrictions in 2019, and in 2021, legislation had been introduced in five states (including additional legislation in Arkansas) to further remove restrictions, although there are ongoing efforts in other states, such as Ohio, to preempt municipal efforts.

This carrot-based approach had a few advantages:

  • It targets localities where there has been a market failure. Limiting funding to places without adequate broadband has lessened resistance from private broadband providers that had shown a lack of interest or ability to develop rural networks.
  • It restricts eligibility to rural communities with a near-total lack of broadband access. Constraints on what these local networks could implement and how they could expand have muted corporate opposition.
  • Its rural focus has had a political benefit. State preemption of local action has been most common in states where the political divide has developed a “liberal city” and “conservative state” dynamic. Focusing on rural efforts scrambles this dichotomy, as representatives of rural districts have a clear interest in obtaining funding for local programming.

The Biden administration has prioritized support for municipal broadband and highlighted the unique roles municipal and nonprofit networks could play in its expansion, given they are under “less pressure to turn profits” and have “a commitment to serving entire communities.” To this end, at least one congressional bill, the Accessible, Affordable Internet for All Act, purports (PDF) to end state preemption of municipal efforts. But opposition to this approach has also developed, leading to a counterproposal, the CONNECT (Creating Opportunities Now for Necessary and Effective Care Technologies for Health) Act, which would restrict state and municipal broadband systems to areas with limited commercial providers. As of June 2021, the status of support for municipal broadband in the proposed infrastructure packages is unclear.

Benefits of federal support for local policy priorities extend beyond broadband

Broadband is just one example of how federal support could realign state and local policy priorities. Similar approaches could support labor, housing, or environmental policies. These challenges call for creative thinking to move beyond traditional preemption approaches and develop strategies that engage local innovation and state-level buy-in.


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(Photo By Kathryn Scott Osler/The Denver Post via Getty Images)

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