**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | CC Docket No. 98-122         |
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| The Missouri Municipal League;   | ) |                              |
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| The Missouri Association of      | * |                              |
| Municipal Utilities;             |   |                              |
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| City Utilities of Springfield;   | * |                              |
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| City of Columbia Water & Light;  | * |                              |
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| City of Sikeston Board of        |   |                              |
| Utilities.                       | * |                              |
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| Petition for Preemption of       | ) |                              |
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| Section 392.410(7) of the        | * |                              |
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| Revised Statutes of Missouri     | * |                              |
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+----------------------------------+---+------------------------------+

**MEMORANDUM OPINION AND ORDER**

**Adopted:** December 19, 2000 **Released:** January 12, 2001

By the Commission: Chairman Kennard and Commissioner Tristani issuing a
joint statement; Commissioner Ness issuing a separate statement.

# I. introduction {#i.-introduction .unnumbered}

1.  On July 8, 1998, the Missouri Municipal League, the Missouri
    Association of Municipal Utilities, City Utilities of Springfield,
    Columbia Water & Light, and the Sikeston Board of Utilities
    (collectively, the Missouri Municipals), on behalf of themselves and
    more than 600 municipalities and 63 municipal electric utilities
    located in Missouri, filed the above-captioned petition (Petition)
    asking the Commission to preempt Section 392.410(7) of the Revised
    Statutes of Missouri (HB 620), and declare it unlawful and
    unenforceable.[^1] Several parties filed comments and reply comments
    addressing the petition. [^2] The Missouri Municipals assert that HB
    620 violates section 253(a) of the Communications Act of 1934, as
    amended,[^3] and falls outside the scope of authority reserved to
    the states by section 253(b) of the Act,[^4] and thus satisfies the
    requirements for preemption by the Commission pursuant to section
    253(d) of the Act.[^5]

2.  For the reasons described below, we do not preempt the enforcement
    of HB 620 to the extent that it limits the ability of municipalities
    or municipally-owned utilities, acting as political subdivisions of
    the state, from providing telecommunications services or facilities.
    The Commission has found previously that political subdivisions of a
    state, such as a municipality, are not "entities" under section
    253(a) of the Act.[^6] We find that, under Missouri law,
    municipally-owned utilities are generally part of the municipality,
    itself, and are therefore not separate and apart from the state of
    Missouri, and are not entities subject to section 253(a). We do
    find, however, that if a municipally-owned utility has an
    independent corporate identity that is separate from the state, it
    can be considered an entity for which section 253 preemption is
    available.

**II. BACKGROUND**

3.  The Missouri Municipals seek preemption of HB 620 pursuant to
    section 253 of the Communications Act, which Congress enacted to
    ensure that no state or local authority could erect legal barriers
    to entry that would potentially frustrate the 1996 Act's explicit
    goal of opening local markets to competition.[^7] In assessing
    whether to preempt enforcement of HB 620 pursuant to section 253, we
    first determine whether the statute is proscribed by section 253(a),
    which states that no state or local requirement may "prohibit or
    have the effect of prohibiting the ability of any entity to provide
    any interstate or intrastate telecommunications service."[^8] If we
    find that HB 620 is proscribed by section 253(a) standing alone, we
    must then determine whether it falls within the reservation of state
    authority set forth in section 253(b), which excludes from the scope
    of the Commission's preemption powers certain defined state or local
    requirements that are "competitively neutral," "consistent with
    section 254," and "necessary" to achieve the public interest
    objectives enumerated in section 253(b).[^9] If a law, regulation or
    legal requirement otherwise impermissible under subsection (a) does
    not satisfy the requirements of subsection (b), we must preempt the
    enforcement of the requirement "to the extent necessary to correct
    the violation" in accordance with section 253(d). [^10] This is the
    approach that the Commission has taken in prior orders addressing
    section 253.[^11]

4.  On August 28, 1997, the General Assembly of Missouri enacted HB 620,
    which replaced certain provisions of Missouri's telecommunications
    statute regarding the issuance of certificates of public convenience
    and necessity for the provision of telecommunications service. With
    certain limited exceptions, it prohibits political subdivisions from
    obtaining a certificate of service authority to provide
    telecommunications services or facilities. The statute states:

No political subdivision of this state shall provide or offer for sale,
either to the public or to a telecommunications provider, a
telecommunications service or telecommunications facility used to
provide a telecommunications service for which a certificate of service
authority is required pursuant to this section. Nothing in this
subsection shall be construed to restrict a political subdivision from
allowing the nondiscriminatory use of its rights-of-way including its
poles, conduits, ducts and similar support structures by
telecommunications providers or from providing telecommunications
services or facilities:

(1) For its own use;

(2) For 911, E-911 or other emergency services;

(3) For medical or educational purposes;

(4) To students by an educational institution;

(5) Or Internet type services.

> The provisions of this subsection shall expire on August 28,
> 2002.[^12]

5.  HB 620 is similar to a Texas statute that the Commission declined to
    preempt.[^13] In the *Texas Preemption Order*, the Commission found
    that a provision of the Texas Public Utility Regulatory Act of 1995
    ("PURA95")[^14] that prohibited municipalities from providing
    telecommunications services did not violate section 253(a). Ruling
    on a petition for preemption of section 3.251(d) of PURA95 filed by
    the City of Abilene, Texas, the Commission stated that the City of
    Abilene was not an "entity" separate and apart from the state of
    Texas for the purpose of applying section 253(a) of the Act. It
    found that preempting the enforcement of the Texas statute would
    insert the Commission "into the relationship between the state of
    Texas and its political subdivisions in a manner that was not
    intended by section 253."[^15] The Commission reasoned that Texas
    retains substantial sovereign power to decide what activities to
    authorize its political subdivisions to undertake. With regard to
    such fundamental state decisions, the Commission stated that it must
    adhere to the standard in *Gregory v. Ashcroft*, in which the
    Supreme Court held that a court must not construe a federal statute
    to preempt traditional state powers unless Congress has made its
    intention to do so unmistakably clear in the language of the
    statute.[^16]

6.  In the *Texas Preemption Order*, the Commission determined that
    because section 253(a) is directed at requirements that "prohibit or
    have the effect of prohibiting the ability of any entity" to provide
    telecommunications services, it appears to prohibit restrictions on
    market entry that apply to independent entities subject to state
    regulation, not to political subdivisions of the state itself.[^17]
    The Commission found that if it construed the term "entity" in
    section 253(a) in this context to include municipalities, it would
    prevent states from prohibiting their political subdivisions from
    providing telecommunications services, despite the fact that states
    could limit the authority of their political subdivisions in all
    other respects.[^18] The Commission did not find a clear indication
    of Congressional intent in section 253 to intervene in this
    state-local relationship as it affected municipalities, but
    expressly declined to address the issue of whether section 253
    barred the state of Texas from prohibiting the provision of
    telecommunications services by a municipally-owned electric
    utility.[^19]

7.  The City of Abilene sought judicial review of the *Texas Preemption
    Order* before the Federal Court of Appeals for the D.C. Circuit. The
    D.C. Circuit upheld the Commission's interpretation of Section
    253.[^20] Citing *Gregory*, the court held that the text of section
    253 is not sufficiently clear to find that Congress intended in
    253(a) to transfer to this Commission the states' power to regulate
    the activities of their municipalities.[^21] It found, in
    particular, that because Congress left "entity" undefined in the
    Communications Act, and because the City of Abilene did not offer
    other textual evidence to support preemption, the City could not
    establish that Congress clearly intended for municipalities to be
    considered "entities." [^22] Consistent with the scope of the *Texas
    Preemption Order*, the court stated that the issue of whether
    utilities owned by municipalities are "entities" within the meaning
    of Section 253(a) was not before it.[^23]

8.  The Missouri Municipals argue that HB 620 squarely presents the
    issue of whether a state law that prohibits municipally-owned
    utilities from providing telecommunications service violates section
    253 of the Act.[^24] They maintain that this case differs from the
    *Texas Preemption Order* and *Abilene* because, in those two cases,
    the Commission and the court declined to rule on whether the term
    "any entity" in section 253 applies to utilities owned by
    municipalities. They state that even if the court and the Commission
    were correct in concluding that Congress did not clearly intend to
    include municipalities that do not own and operate electric
    utilities within the scope of section 253(a), Congress did clearly
    intend the term "any entity" to apply to power companies owned by
    municipalities.[^25] They argue that "any entity" should be
    interpreted broadly to include such municipally-owned
    utilities,[^26] and assert that the legislative history of section
    253 confirms that these entities are included within the scope of
    section 253(a).[^27]

# III. DISCUSSION {#iii.-discussion .unnumbered}

9.  We do not preempt the enforcement of HB 620 to the extent that it
    limits the ability of municipalities or municipally-owned utilities,
    acting as political subdivisions of the state of Missouri, from
    providing telecommunications services or facilities. As we found in
    the *Texas Preemption Order*, the term "any entity" in section
    253(a) of the Act was not intended to include political subdivisions
    of the state, but rather appears to prohibit restrictions on market
    entry that apply to independent entities subject to state
    regulation.[^28] Because we find that HB 620 is not proscribed by
    section 253(a), we need not determine whether it falls within the
    reservation of state authority set forth in section 253(b). We do
    find however that if a municipally-owned utility has an independent
    corporate identity that is separate from the state and seeks to
    provide telecommunications services and facilities in this context,
    then it can be considered an entity for which section 253 preemption
    is available.

10. While the legal authorities that we must look to in this case compel
    us to deny the Missouri Municipals' petition, we reiterate the
    Commission's urging in the *Texas Preemption Order* that states
    refrain from enacting absolute prohibitions on the ability of
    municipal entities to provide telecommunications service.[^29] The
    Commission has found that municipally-owned utilities and other
    utilities have the potential to become major competitors in the
    telecommunications industry.[^30] In particular, we believe that the
    entry of municipally-owned utilities can further the goal of the
    1996 Act to bring the benefits of competition to all Americans,
    particularly those who live in small or rural communities. We
    emphasized this fact in our August 2000 report on the deployment of
    advanced services.[^31] In that report, we presented a case study
    detailing advanced services deployment in Muscatine, Iowa where the
    municipal utility competes with other carriers to provide advanced
    services to residential customers.[^32] We noted that the degree of
    advanced services deployment in Muscatine, which has three
    facilities-based, high-speed service providers for residential
    customers, including the municipal utility, is due in part to Iowa's
    legal environment, which has encouraged municipal involvement in the
    deployment of advanced telecommunications services.[^33] Our case
    study is consistent with APPA's statements in the record here that
    municipally-owned utilities are well positioned to compete in rural
    areas, particularly for advanced telecommunications services,
    because they have facilities in place now that can support the
    provision of voice, video, and data services either by the
    utilities, themselves, or by other providers that can lease the
    facilities.[^34] We are also encouraged by the comments of Missouri
    River, which states that it is comprised of municipally-owned
    utilities that serve communities with populations of less than five
    thousand people in Iowa, Minnesota, North Dakota and South Dakota,
    and that its members have installed fiber optic facilities that they
    could use to provide telecommunications services in markets where
    there are currently no competitive alternatives.[^35]

11. We continue to recognize, as the Commission did in the *Texas
    Preemption Order*, that municipal entry into telecommunications
    could raise issues regarding taxpayer protection from economic risks
    of entry, as well as questions concerning possible regulatory bias
    when a municipality acts as both a regulator and a competitor.[^36]
    While some parties maintain that these types of advantages make it
    unfair to allow municipalities and municipally-owned utilities to
    compete with private carriers,[^37] we believe these issues can be
    dealt with successfully through measures that are much less
    restrictive than an outright ban on entry, such as through
    non-discrimination requirements that require the municipal entity to
    operate in a manner that is separate from the municipality, thereby
    permitting consumers to reap the benefits of increased
    competition.[^38]

## Application of HB 620 to Municipalities

12. HB 620 prohibits political subdivisions from becoming certified to
    provide telecommunications services or facilities. According to the
    Missouri Municipals, HB 620 therefore prohibits municipalities from
    providing such services themselves or from making their facilities
    available to others for use in competing with the incumbent
    providers.[^39] We are thus presented in this proceeding with the
    same issue that the Commission addressed in the *Texas Preemption
    Order* -- whether section 253 bars a state from deciding that it
    will not permit its subdivisions to compete in the provision of
    certain telecommunications services. This is a fundamental issue
    concerning the relationship between a state and its political
    subdivisions.[^40]

13. Consistent with the *Texas Preemption Order* and the court's holding
    in *Abilene*, we conclude that because municipalities, as political
    subdivisions of the state, are not "entities" within the meaning of
    section 253(a), HB 620 does not violate 253(a) to the extent that it
    prohibits them from becoming certified to provide telecommunications
    service or facilities. The Missouri Constitution authorizes cities
    with more that 5,000 inhabitants to adopt city charters allowing
    them to operate independently of the state, except that they may not
    undertake any activities which are inconsistent with the state
    constitution or limited by statute.[^41] HB 620 is a statute the
    Missouri legislature has adopted to limit the powers of its
    political subdivisions, including its municipalities. HB 620 is
    therefore like section 3.251(d) of PURA95 in Texas in that it
    prohibits Missouri's municipalities, as political subdivisions of
    the state, from providing telecommunications service. As we found in
    the *Texas Preemption Order*, preempting the enforcement of HB 620
    as it applies to municipalities would insert the Commission into the
    relationship between the state of Missouri and its political
    subdivisions in a manner that was not intended by section 253.[^42]

14. We are not persuaded by the Missouri Municipals' arguments that we
    are not bound by the findings in the *Texas Preemption Order* or the
    *Abilene* decision regarding the scope of section 253(a).[^43] The
    court found in *Abilene* that although the text of section 253(a)
    refers broadly to "any entity," such language is not clear enough to
    demonstrate, pursuant to *Gregory*, that Congress intended to
    intrude upon state-local government relationships.[^44] The Missouri
    Municipals, who filed their petition for preemption before the D.C.
    Circuit issued the January 1999 *Abilene* decision, argue in a
    supplemental filing that the Commission should not adhere to that
    decision, but should interpret the term "any" in section 253(a) in
    the same manner in which it interpreted that term in an unrelated
    proceeding issued after the *Texas Preemption Order*. Specifically,
    they point out that the Commission determined in the *Pole
    Attachment Order*[^45] that Congress' use of the term, "*any*
    telecommunications carrier" in section 224 of the Act, which
    regulates utility pole attachments, is an express indication that
    Congress intended both wireless and wireline carriers to be able to
    attach equipment to public utility poles.[^46] They argue, by
    analogy, that the Commission should similarly recognize that "any
    entity" in section 253(a) is a plain language indication that
    Congress intended to include all entities, both publicly-owned and
    privately-owned, within the scope of section 253(a).[^47] The
    Eleventh Circuit held recently in *Gulf Power Company v. FCC* that
    despite Congress' use of the term "any" in section 224, the
    Commission does not have authority to regulate pole attachments for
    wireless communications because utility poles are not bottleneck
    facilities for wireless carriers.[^48] For purposes of this case,
    *Gulf Power Company* demonstrates that the term "any" cannot be
    interpreted in its broadest sense if the statute in question is not
    intended to apply to every type of entity. Accordingly, we cannot
    interpret the term "any" in section 253(a) to include municipalities
    because, as explained in the *Texas Preemption Order* and *Abilene*,
    the statute does not apply to these entities. Indeed, the court
    stated in *Abilene* that the Act provides no evidence that Congress'
    intended that the term "any entity" would include every conceivable
    thing within the category of "entity."[^49]

15. We also disagree with APPA that the *Cowlitz River Dam* cases
    support preemption of HB 620. APPA argues that those cases establish
    that when a state grants its political subdivisions authority to
    engage in activities that are subject to federal law, state laws
    that would be preempted if applied to privately-owned providers of
    service are also preempted as applied to the same activity by
    publicly-owned providers.[^50] In the primary case, the Ninth
    Circuit found that a potential municipal licensee that was
    authorized by the Federal Power Commission to construct and operate
    hydroelectric dams could not be subjected to state licensing
    regulations, but need only show compliance with federal regulations
    governing dam construction in order to obtain a license.[^51] The
    court therefore found that the Federal Power Commission acted within
    its authority in not requiring the City to comply with the relevant
    state laws.[^52] Unlike the case before us here, the state did not
    argue that the City of Tacoma lacked legal authority to engage in
    hydroelectric activities in the first instance. In fact, the court
    stated expressly that "\[w\]e do not touch on the question as to the
    legal capacity of the City of Tacoma to initiate and act under the
    license once it is granted. There may be limitations in the City
    Charter, for instance, as to indebtedness limitations. Questions of
    this nature may be inquired into by the \[Federal Power\] Commission
    as relevant to the practicability of the plan, but the Commission
    has no power to adjudicate them."[^53] The court thus recognized,
    similar to our finding here, that questions involving the "legal
    capacity" of the municipality to undertake hydroelectric activities
    must be left to the state.[^54]

## Application of HB 620 to Municipally-Owned Utilities

16. We conclude that we cannot adopt the Missouri Municipals' argument
    that, notwithstanding the *Texas Preemption Order and Abilene*,
    section 253(a) clearly applies to municipally-owned utilities that
    seek to provide competitive telecommunications service.[^55]
    Although the Commission expressly declined in the *Texas Preemption
    Order* to decide whether section 253 barred the state of Texas from
    prohibiting the provision of telecommunications services by a
    municipally-owned electric utility, we adhere to the analysis in
    that case and in *Abilene* regarding state sovereignty when we
    address this issue.

17. As we stated above, the Commission clearly found in the *Texas
    Preemption Order* that section 253(a) does not apply to the
    political subdivisions of a state.[^56] The Missouri Municipals have
    not presented any evidence that municipally-owned utilities are not
    considered to be political subdivisions in Missouri. Although
    "political subdivision" is not defined in Missouri's public service
    commission law, of which HB 620 is part,[^57] the Supreme Court of
    Missouri has found a municipality and its municipally-owned utility
    to be political subdivisions under the Missouri Constitution's
    taxation provisions.[^58] Indeed, it appears to be the case in
    Missouri that a municipally-owned utility is part of the city,
    itself. For example, the Missouri Municipals describe the City of
    Springfield in which the city council appoints a board to manage the
    city utility.[^59] Although the board has authority to manage the
    day-to-day operations of the utility, it is clear from the board's
    charter that the utility is effectively a department of the city and
    is not an entity with a separate juridical personality. The city
    council must approve the utility's budget as well as the rates it
    charges, and like "other departments or agencies of the city," the
    utility must purchase supplies and equipment "in such a manner as to
    take advantage of the combined purchasing power of the city as a
    whole."[^60] Southwestern Bell also points out that under Missouri
    law, municipal public utility boards are not separate entities from
    the municipality, but operate as part of the city government, like
    the mayor, zoning commissions or boards of adjustment.[^61]
    Accordingly, we find that municipally-owned utilities that operate
    as political subdivisions of the state under Missouri law, rather
    than as entities with a separate juridical personality, are not
    entities subject to section 253(a).

18. We reject the Missouri Municipals' argument that even if
    municipally-owned utilities are political subdivisions of the state,
    the legislative history of section 253(a) demonstrates that Congress
    clearly intended the term, "any entity" to cover municipal electric
    utilities.[^62] The Missouri Municipals cite scattered excerpts of
    legislative history to support their argument. They explain that the
    103^rd^ Congress heard testimony about the benefits of municipal
    utility entry, and then broadly defined "telecommunications service"
    in the precursor to the 1996 Act to include service provided by "all
    entities," which the Missouri Municipals infer to include
    municipally-owned utilities.[^63] They also state that in a report
    addressing the provisions of the Act that would later become section
    253(a), Congress indicated that states or local governments that own
    and operate municipal energy utilities may make their
    telecommunications facilities available to certain
    telecommunications carriers, but not others, without violating the
    principle of non-discrimination.[^64] The Missouri Municipals also
    point out that the 104^th^ Congress, which adopted the 1996 Act,
    noted that states may not rely on section 253(b) of the Act to
    prohibit a "utility" from providing telecommunications service.[^65]
    We are not persuaded that this legislative history is enough to
    overcome the court's holding in *Abilene* that the "language of the
    federal law" must indicate that Congress intended to reach into the
    state governmental structure.[^66] Even if we were to look outside
    the language of the statute to discern Congress' intent, the
    legislative history does not help clarify whether or not it intended
    section 253(a) to govern state-local relationships regarding the
    provision of telecommunications service. Other than indicating that
    municipal energy utilities may make their facilities available to
    carriers, the legislative history that the petitioners cite does not
    distinguish between publicly-owned and privately-owned utilities.
    Its limited reference to the ability of municipal energy utilities
    to lease spare capacity on their facilities does not indicate
    clearly or at all whether Congress intended to preempt states from
    prohibiting such a practice. We therefore cannot rely on the
    legislative history to find that Congress intended to include
    municipally-owned utilities within the scope of section 253(a). We
    are aware, as the Missouri Municipals point out, that the Supreme
    Court stated in *Gregory* that Congress need not list explicitly
    each entity that would be covered by a federal statute.[^67] The
    Court did state, however, that "it must be plain" to anyone reading
    the Act that it covers the entity in question.[^68] It is not plain
    from either the language of the statute or the legislative history
    that Congress intended to include municipally-owned utilities under
    section 253(a).

19. The Missouri Municipals also ask us to consider the impact of
    Congress' explicit statement in section 224(a)(1) of the Act that
    the term "utility," for purposes of pole attachments, does not
    include entities owned by the state.[^69] They argue that Congress
    affirmatively preserved this state exemption when it amended the
    definition of "utility" in the 1996 Act, and that the fact that it
    did not similarly limit the term "entity" in section 253(a) proves
    that it intended municipalities and municipally-owned utilities to
    be included within its scope.[^70] While we acknowledge that it
    appears that Congress considered in 1996 whether section 224 of the
    Act should apply to state-owned utilities, it is not plain, as it
    needs to be under *Gregory*, that Congress also considered the
    application of section 253(a) to state or municipally-owned
    utilities and then unmistakably determined that it would apply to
    them.

20. We note that if a municipally-owned utility sought to provide
    telecommunications service or facilities as an independent corporate
    entity that is separate from the state, we could reach a different
    result under section 253(a). If the utility were not acting as a
    political subdivision of the state, then issues of state sovereignty
    would not prevent the Commission from exercising its authority under
    section 253 to preempt the enforcement of a statute that prohibited
    the ability of the utility to provide telecommunications service.

21. We agree with UTC's observation that municipal utilities may have an
    independent corporate existence and undertake non-governmental,
    proprietary functions,[^71] but under Missouri law, it is not clear
    that a utility can undertake even proprietary functions without
    authority from the state. In the *Texas Preemption Order*, the
    Commission recognized that a municipality may provide
    telecommunications service as a proprietary function, but stated
    that it did not interpret section 253 to preclude a state from
    exercising its authority to restrict the activities of its political
    subdivisions, regardless of whether such activities are governmental
    or proprietary in nature. It found that while the provision of
    telecommunications services by a municipality may be a proprietary
    function, the provisions of Texas law requiring that the actions of
    its cities be consistent with state law did not appear to
    distinguish between proprietary and governmental functions.[^72]
    Similarly, the provisions of Missouri's law requiring that the
    actions of its cities be consistent with state law does not appear
    to distinguish between proprietary and governmental functions.[^73]
    As we indicate above, the municipal entity would therefore have to
    have an identity that is fully separate from the state in order for
    the Commission to consider whether or not section 253(a) would be
    applicable.

22. We also note that HB 620 restricts a political subdivision from
    providing a telecommunication service for which a certificate of
    service authority is required, except that it may provide
    telecommunication service or facilities for "internet-type
    services." A municipally-owned utility should therefore be able to
    provide these services in Missouri whether or not it is operating as
    a political subdivision of the state.[^74]

23. Because we do not find that HB 620 violates section 253(a), as it
    applies to municipalities and municipally-owned utilities, we do not
    need to reach the issue of whether it falls within the reservation
    of state authority in section 253(b).

# IV. ORDERING CLAUSE {#iv.-ordering-clause .unnumbered}

24. Accordingly, IT IS ORDERED, pursuant to section 253 of the
    Communications Act of 1934, as amended, 47 U.S.C. § 253, that the
    Petition for Preemption filed by the Missouri Municipal League, the
    Missouri Association of Municipal Utilities, City Utilities of
    Springfield,

    Columbia Water & Light, and the Sikeston Board of Utilities on July
    8, 1998, IS DENIED.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

**SEPARATE STATEMENT OF**

**CHAIRMAN WILLIAM E. KENNARD AND**

**COMMISSIONER GLORIA TRISTANI**

*Re: The Missouri Municipal League: The Missouri Association of
Municipal Utilities; City Utilities of Springfield; City of Columbia
Water & Light; City of Sikeston Board of Utilities Petition for
Preemption of Section 392.410(7) of the Revised Statutes of Missouri*,
Memorandum Opinion and Order, CC Docket No. 98-122.

We vote reluctantly to deny the preemption petition of the Missouri
Municipals because we believe that HB 620 effectively eliminates
municipally-owned utilities as a promising class of local
telecommunications competitors in Missouri. Such a result, while legally
required, is not the right result for consumers in Missouri.
Unfortunately, the Commission is constrained in its authority to preempt
HB 620 by the D.C. Circuit's *City of Abilene* decision and the U.S.
Supreme Court's decision in *Gregory v. Ashcroft* that require Congress
to state clearly in a federal statute that the statute is intended to
address the sovereign power of a state to regulate the activities of its
municipalities. Given this precedent, Section 253(a)'s prohibition on
state or local laws that prohibit the ability of "any entity" to provide
any interstate or intrastate telecommunications service is not
sufficiently clear.

The record in this proceeding contains many letters from Members of
Congress that state unequivocally that it was the intent of Congress
when it enacted section 253 to enable any entity, regardless of the form
of ownership or control, to enter the telecommunications market and that
it intended to give the Commission authority to reject any state or
local action that prohibits such entry. We urge Congress to take these
views to heart and consider amending the language in section 253(a) to
address clearly municipally-owned entities. This would allow the
Commission to address the barriers to municipal entry that already exist
in several other states, and would further the goal of the 1996 Act to
bring the benefits of competition to all Americans, particularly those
who live in small or rural communities in which municipally-owned
utilities have great competitive potential. We also urge the states, as
the Commission has said before, to use safeguards other than an outright
ban on entry to address any unfair competitive advantage that they
believe a municipally-owned utility may have. The right policy for
consumers is to have as many providers of telecommunications from which
to choose -- barring entry by municipally-owned utilities does not give
consumers that choice.

# Separate Statement of {#separate-statement-of .unnumbered}

# Commissioner Susan Ness {#commissioner-susan-ness .unnumbered}

*Re: The Missouri Municipal League: The Missouri Association of
Municipal Utilities; City Utilities of Springfield; City of Columbia
Water & Light; City of Sikeston Board of Utilities Petition for
Preemption of Section 392.410(7) of the Revised Statutes of Missouri*,
Memorandum Opinion and Order, CC Docket No. 98-122.

I write separately to underscore that today's decision not to preempt a
Missouri statute does not indicate support for a policy that eliminates
competitors from the marketplace. In passing the Telecommunications Act
of 1996, Congress sought to promote competition for the benefit of
American consumers.

In the Telecommunications Act, Congress recognized the competitive
potential of utilities and, in section 253, sought to prevent complete
prohibitions on utility entry into telecommunications. The courts have
concluded, however, that section 253 is not sufficiently clear to permit
interference with the relationship between a state and its political
subdivisions.[^75]

Nevertheless, municipal utilities can serve as key players in the effort
to bring competition to communities across the country, especially those
in rural areas. In our recent report on the deployment of advanced
telecommunications services, we examined Muscatine, Iowa, a town in
which the municipal utility was the first to deploy broadband facilities
to residential consumers. The telephone and cable companies in Muscatine
responded to this competition by deploying their own high-speed
services, thereby offering consumers a choice of three broadband
providers. It is unfortunate that consumers in Missouri will not benefit
from the additional competition that their neighbors to the north enjoy.

I urge states to adopt less restrictive measures, such as separation or
nondiscrimination requirements, to protect utility ratepayers or address
any perceived unfair competitive advantages. Allowing the competitive
marketplace to work will facilitate the type of innovation and
investment envisioned by Congress when it enacted the Telecommunications
Act. I join with Chairman Kennard and Commissioner Tristani in urging
Congress to clarify its intention in section 253 with respect to
prohibitions on entry by municipal utilities.

[^1]: Petition at 35.

[^2]: The Commission placed the Missouri Municipals' Petition on public
    notice on July 14, 1998. *Pleading Cycle Established for Comments on
    Missouri Petition for Preemption of Section 392-410(7) of the
    Revised Statutes of Missouri*, Public Notice, CC Docket No. 98-122,
    DA 98-1399 (rel. July 14, 1998). We received comments from the
    following parties: The American Public Power Association (APPA), the
    City of O'Fallon, the City of St. Louis, GTE, MCI Telecommunications
    Corporation (MCI), the Missouri Attorney General, National Telephone
    Cooperative Association (NTCA), Southwestern Bell Telephone Company
    (Southwestern Bell), and UTC, The Telecommunications Association
    (UTC). The Missouri Municipals, APPA, Missouri River Energy Services
    (Missouri River), Southwestern Bell and UTC filed replies.

[^3]: 47 U.S.C. § 253(a). Section 253 was added to the Communications
    Act of 1934 (Communications Act or Act) by the Telecommunications
    Act of 1996 (1996 Act), Pub. L. No. 104-104, 110 Stat. 56, *codified
    at* 47 U.S.C. §§ 151 *et seq*.

[^4]: 47 U.S.C. § 253(b).

[^5]: Petition at 23-35 (citing 47 U.S.C. § 253(d)).

[^6]: *Public Utility Commission of Texas, et al. Petitions for
    Declaratory Ruling and/or Preemption of Certain Provisions of the
    Texas Public Utility Regulatory Act of 1995*, CCBPol 96-13, 96-14,
    96-16, 96-19, Memorandum Opinion and Order, 13 FCC Rcd 3460, 3546,
    para. 184 (1997) (*Texas Preemption Order)*.

[^7]: *Texas Preemption Order*, 13 FCC Rcd at 3480, para. 41.

[^8]: 47 U.S.C. § 253(a).

[^9]: 47 U.S.C. § 253(b).

[^10]: 47 U.S.C. § 253(d).

[^11]: *Texas Preemption* Order, 13 FCC Rcd at 3480, paras. 41-42;
    *Silver Star Telephone Company*, Petition for Preemption and
    Declaratory Ruling, Memorandum Opinion and Order, CCBPol 97-1, 13
    FCC Rcd 16356, 16360-61, paras. 8-11 (1998)(*Silver Star Preemption
    Order*); *AVR, L.P. d/b/a Hyperion of Tennessee, L.P. Petition for
    Preemption*, CC Docket No. 98-92, Memorandum Opinion and Order, 14
    FCC Rcd 11064, 11067-68, paras. 7-9 (1999) (*Hyperion Order*),
    *recon. pending*.

[^12]: Mo. Rev. Stat. § 392.410(7) (1998). Under section 392.410(2) of
    the Missouri Public Service Commission law, a certificate of service
    authority is required to provide intrastate interexchange
    telecommunications service and local exchange telecommunications
    service. Mo. Rev. Stat. § 392.410(2) (1998).

[^13]: *Texas Preemption Order*, 13 FCC Rcd at 3544, para. 179.

[^14]: Tex. Rev. Civ. Stat. Ann. Art. 1446c-0 (West Supp. 1996)
    (hereinafter PURA95).

[^15]: *Texas Preemption Order*, 13 FCC Rcd at 3544, para. 179.

[^16]: *Id.* at 3545, para. 181, *citing Gregory v. Ashcroft*, 501 U.S.
    452 (1991).

[^17]: *Id*. at 3546-47, para. 184.

[^18]: *Id.* at 3546-47, para. 184.

[^19]: *Id.* at 3544, para. 179. In the *Texas Preemption* proceeding,
    ICG Access Services filed and later withdrew a petition for
    declaratory ruling that addressed the ability of municipally-owned
    utilities to provide telecommunications services. The City of
    Abilene apparently did not operate an electric utility at the time
    of the filing of its petition, and did not address the ability of
    municipal utilities to provide service in Texas. *See also* UTC
    Reply Comments at 2.

[^20]: *City of Abilene, Texas, et al. v. FCC*, 164 F.3d 49 (D.C. Cir.
    1999).

[^21]: *Id.* at 51-52, *citing Gregory*, 501 U.S. at 461.

[^22]: *Id.* at 52.

[^23]: The Court stated,

    > "In a brief, one--paragraph appeal to 'legislative history'
    > consisting of a committee report and two post-enactment letters
    > from Members of Congress, Abilene fails to acknowledge that the
    > statements it quotes deal with an issue not before us -- whether
    > public utilities are entities within § 253(a)'s meaning."

    164 F.3d at 53, n.7.

[^24]: Letter from James Baller, The Baller Herbst Law Group, on behalf
    of the Missouri Municipals, to the Honorable William E. Kennard, the
    Honorable Susan Ness, the Honorable Harold Furchtgott-Roth, the
    Honorable Michael Powell, the Honorable Gloria Tristani, Cc Docket
    No. 98-122 (filed Jan. 26, 1999) at 2-4 (*Missouri Municipals Jan.
    26, 1999 Letter*).

[^25]: Letter from James Baller, The Baller Herbst Law Group, on behalf
    of the Missouri Municipals, to Magalie Roman Salas, Secretary, FCC,
    Cc Docket No. 98-122 (filed June 1, 1999*) (Missouri Municipals June
    1, 1999 Letter*) at 2. *See also* MCI Comments at 2-4; UTC Comments
    at 9-14; Missouri River Reply at 4-5.

[^26]: Petition at 17-19, *Missouri Municipals Jan. 26, 1999 Letter* at
    4-6. *See also* MCI Comments at 3-4.

[^27]: Petition at 6-15, 32-34.

[^28]: *Texas Preemption Order*, 13 FCC Rcd at 3546-47, para. 184.

[^29]: *Id.* at 3549, para. 190.

[^30]: *See* *Annual Assessment of the Status of Competition in Markets
    for the Delivery of Video Programming*, CC Docket No. 98-102, Fifth
    Annual Report, FCC 98-335 (rel. Dec. 23, 1998).

[^31]: *Inquiry Concerning the Deployment of Advanced Telecommunications
    Capability to All Americans in a Reasonable and Timely Fashion, and
    Possible Steps to Accelerate Such Deployment Pursuant to Section 706
    of the Telecommunications Act of 1996*, CC Docket No. 98-146, Second
    Report, FCC 00-290 (rel. Aug. 21, 2000) (*Section 706 Second
    Report*). Advanced services refer to "high-speed" services that
    offer a transmission speed of 200 kilobits per second in at least
    one direction, thereby allowing a customer, for example, to change
    Internet web pages "as fast as one can flip through the pages of a
    book." *Id.* at paras. 10-11.

[^32]: *Id.* at paras. 139-51.

[^33]: *Id.* at para. 140.

[^34]: APPA Comments at 3. *See* *also* Letter from James Baller, The
    Baller Herbst Law Group, on behalf of Missouri Municipals, to Jodie
    Donovan-May. Policy Division , Common Carrier Bureau, CC Docket No.
    98-122 (filed Sept. 14, 1999) (*Missouri Municipals Sept. 14, 1999
    Letter*) at Attachment F (describing the broadband services various
    municipally-owned utilities provide in small communities in
    Georgia); Letter from James Baller, The Baller Herbst Law Group, on
    behalf of Missouri Municipals, to Magalie Roman Salas, FCC
    Secretary, CC Docket No. 98-122 (filed Apr. 26, 1999) at 1 (stating
    that municipal power utilities are already using their facilities to
    provide a range of communications services in 33 states that have
    not enacted regulations prohibiting them from doing so); MCI
    Comments at 4 (stating that MCI is partnering with municipal
    electric utilities, rural electric cooperatives and other local
    government entities in a number of Midwestern states to provide
    telecommunications services to business and residential customers).
    Municipally-owned utilities also serve large cities, including Los
    Angeles, Seattle, Cleveland and San Antonio, and are also potential
    competitors in these areas.^?^ APPA Comments at 1-2. *See also*
    Missouri River Energy Services Reply at 3.

[^35]: Missouri River Comments at 3. Missouri Municipals Sept. 14, 1999
    Letter at Attachment A (listing municipally-owned cable systems
    located primarily in rural or small markets in 24 states).

[^36]: *Texas Preemption Order*, 13 FCC Rcd at 3549, para. 190.

[^37]: NTCA Comments at 6; Southwestern Bell Comments at 2-4; GTE
    Comments at 8-12. Several other commenters from Missouri expressed
    concern that municipally-owned utilities could impede competition by
    serving dual roles as regulator and competitor. *See* Letter from
    Rep. Chuck Graham, Missouri State Representative, 24^th^ District,
    to Chairman Kennard, FCC, CC Docket No. 98-122 (filed Jan. 26,
    2000); Letter from Rep. Sam D. Leake, Missouri State Representative,
    9th District, to Chairman Kennard, FCC, CC Docket No. 98-122 (filed
    Jan. 27, 2000); Letter from Rep. Carol Jean Mays, Missouri State
    Representative, 50th District, to Chairman Kennard, FCC, CC Docket
    No. 98-122 (filed Jan. 27, 2000); Letter from Rep. Larry Crawford,
    Missouri State Representative, 117th District, to Chairman Kennard,
    FCC, CC Docket No. 98-122 (filed Jan. 27, 2000); Letter from David
    A. Leezer, Economic Development Center of St. Charles County,
    Missouri, to Chairman Kennard, FCC, CC Docket No. 98-122 (filed Feb.
    7, 2000).

[^38]: *Texas Preemption Order*, 13 FCC Rcd at 3549, para. 190. We also
    note that municipalities are required under section 253(c) of the
    Act to administer compensation requirements for public rights-of-way
    in a competitively neutral and non-discriminatory manner. 47 U.S.C.
    § 253(c). They are also subject to petitions for preemption filed
    under section 253 if they unlawfully favor a municipally-owned
    utility over other competitors.

[^39]: Petition at 20-21.

[^40]: *Texas Preemption Order*, 13 FCC Rcd at 3546, para. 183.

[^41]: Missouri Constitution, Article 6, § 19(a) (1998).

[^42]: *Texas Preemption Order*, 13 FCC Rcd at 3544, para. 179.

[^43]: Petition at 4-6.

[^44]: *Abilene*, 164 F.3d at 52 (citing *Gregory*, 501 U.S. at 460).

[^45]: *Implementation of Section 703(e) of the Telecommunications Act
    of 1996*, 13 FCC Rcd 6777 (1998) (*Pole Attachment Order*), *aff'd
    in part and rev'd in part sub nom.*, *Gulf Power v. FCC*, 208 F.3d
    1263 (11^th^ Cir. 2000), *rehearing denied*, 226 F.3d 1220,
    *petition for cert. filed* (U.S. Nov. 21, 2000) (No. 00-843).

[^46]: *Missouri Municipals Jan. 26, 1999 Letter* at 5 (emphasis in
    original).

[^47]: *Id.* at 6; Petition at 15-16; 18-20. The Missouri Municipals
    also argue that the Commission includes municipalities and municipal
    electric utilities as "entities" that must make universal
    contributions under the Act. Petition at 17-18. The Commission's
    decision to require universal service contributions from municipal
    telecommunications providers was based on the statutory requirement
    that telecommunications providers that provide telecommunications
    service "for a fee" must contribute. The Commission found that "for
    a fee" does not necessarily mean "for profit," and therefore
    rejected arguments by UTC that municipal providers are not required
    to contribute. *Federal-State Joint Board on Universal Service*, CC
    Docket No. 96-45, Report and Order, 12 FCC Rcd 8776, 9171-72, 9177,
    paras. 775, 784. Unlike the current proceeding, the Commission was
    not addressing whether or not to preempt a state's authority to
    determine if its political subdivisions should be permitted to
    provide telecommunications service in the first place.

[^48]: *Gulf Power Company v. FCC*, 208 F.3d 1263, 1273-74 (11^th^ Cir.
    2000).

[^49]: *Abilene*, 164 F.3d at 52. We also reject the Missouri
    Municipals' argument that we must interpret the term "any" in the
    broadest sense based on the U.S. Supreme Court's holding in *Salinas
    v U.S.* Petition at 30 (citing *Salinas v. U.S.*, 118 S.Ct. 469
    (1997)). In that case, the Court determined that a federal bribery
    statute that forbid acceptance of a bribe by a covered official in
    connection with "any" official business or transaction must be
    interpreted broadly to include transactions that did not affect
    federal funds. *Salinas*, 118 S.Ct. at 473. It also found that the
    text of the overall statute, not just the phase containing the term,
    "any," was broad enough to clearly encompass all types of bribes.
    *Id.* at 473-74. The Court went on to state that *Gregory v.
    Ashcroft* did not apply to the case before it because the statute
    was not "susceptible of two plausible interpretations, one of which
    would alter the existing balance of federal and state powers." *Id*.
    at 474-75. Unlike in *Salinas*, section 253(a) is susceptible of
    more than one interpretation, as the D.C. Circuit already determined
    in *Abilene*. Moreover, to preempt the statute would alter the
    existing balance of power between Missouri and its municipalities in
    a way that the Commission has said was not intended by section
    253(a). *Texas Preemption Order*, 13 FCC Rcd at 3544, para. 179. We
    also disagree with the Missouri Municipals' argument that another
    case, *Alarm Industry Communications Council v. FCC*, requires us to
    interpret the term "entity" broadly so as to further Congress'
    intent to include municipalities and municipal utilities within the
    scope of section 253(a). Petition at 28-29 (citing 131 F.3d 1066
    (D.C. Cir. 1997)). As we have stated in this order, we are unable to
    discern Congress' intent clearly enough so as to meet the G*regory*
    standard, and therefore must find that "entity" does not include
    political subdivisions of the state, including municipalities and
    municipally-owned utilities.

[^50]: Letter from Richard B. Geltman, General Counsel, APPA, to Magalie
    Roman Salas, Secretary, FCC, CC Docket No. 98-122 (filed Sept. 29,
    2000), Att. at 3-4 (*citing* *State of Washington Dep't. of Game v.
    Federal Power Commission*, 207 F.2d 391 (9^th^ Cir. 1953) (*en
    banc*), *cert. denied*, 347 U.S. 936 (1954); *City of Tacoma v.
    Taxpayers of Tacoma*, 43 Was. 2d 468, 262 P.2d 214 (1953); *City of
    Tacoma v. Taxpayers of Tacoma*, 49 Wash. 2d 781, 307 P.2d 567 (1957)
    (*en banc*), *rev'd and remanded*, 357 U.S. 320 (1958) (*Cowlitz
    River Dam cases*); *First Iowa Hydro-Electric Cooperative v. Federal
    Power Commission*, 328 U.S. 152 (1946)).

[^51]: *State of Washington Dep't. of Game*, 207 F.2d at 396.

[^52]: *Id.* at 396.

[^53]: *Id.* at 396-97.

[^54]: *Id.* at 396.

[^55]: Petition at 28-32. The Missouri Municipals refer to the
    application of HB 620 to municipal electric utilities. Other
    commenters refer to its applications to municipally-owned utilities.
    *See, e.g*., Southwestern Bell Comments at 11. We do not distinguish
    between municipally-owned utilities and municipal electric utilities
    in this Order to the extent that both operate as political
    subdivisions of the state.

[^56]: *Texas Preemption Order*, 13 FCC Rcd at 3544-48, paras. 179-86.

[^57]: The Missouri Public Service Commission law defines "municipality"
    to include a city, village or town. Mo. Rev. Stat. § 386.020(33)
    (1998).

[^58]: *See* *City of Springfield Missouri v. Fredricks*, 630 S.W.2d
    574, 575 (Mo. 1982).

[^59]: Petition at 20-21, Attachment Q, Springfield City Charter, Art.
    XVI. The State of Missouri has empowered its cities and other
    municipalities to erect, maintain and operate public utilities. Mo.
    Rev. Stat. § 91.010 (1998). Southwestern Bell states that the
    utilities generally operate under the direction of a board of public
    utilities, which is accountable to the city council. Southwestern
    Bell Comments at 11 (citing *State ex rel. City of Springfield v.
    Public Serv. Comm\'n.*, 812 S.W.2d 827 (Mo. Ct. App. 1991)).

[^60]: Petition at 20-21, Attachment Q, Springfield City Charter, Art.
    XVI, §§ 16.8, 16.12, 16.13. We also note that the Missouri Public
    Service Commission granted a certificate of service authority to
    "the City of Springfield, Missouri, through its Board of Public
    Utilities," to provide the limited intrastate telecommunications
    services that it is authorized to provide under HB 620. *Application
    of the City of Springfield, Missouri, through the Board of Public
    Utilities for a Certificate of Service Authority to Provide
    Nonswitched Local Exchange and Intrastate Interexchange
    Telecommunications Services to the Public Within the State of
    Missouri and for Competitive Classification*, Case No. TA-97-313,
    Report and Order, issued July 11, 1997. *See also* *Glidewell v.
    Hughey*, 314 S.W.2d 749, 755 (Mo. 1958) (The Supreme Court of
    Missouri determined that the Board of Public Utilities of
    Springfield "(I)nstead of being set up in the nature of a separate
    municipal corporation with power to sue and be sued . . .is only an
    administrative body or department of the City Government . . ", and
    that the compensation and working conditions of the public utility's
    employees involved the exercise of legislative power and could not
    become a matter of bargaining and contract.).

[^61]: Letter from B. Jeannie Fry, Director-Federal Regulatory, SBC, to
    Magalie Roman Salas, Secretary, FCC, CC Docket No. 98-122 (filed
    Sept. 8, 1999) (Southwestern Bell Sept. 8, 1999 Letter), Attachment
    at 3 (citing *North Kansas City Hosp. Bd. of Trustees v. St. Lukes
    Northland Hosp.*, 984 S.W.2d 113, 117 and n.2 (Mo. Ct. App. 1998)).
    The Supreme Court of Missouri has also found that a municipal
    corporation that operates separate and apart from the city is still
    a political subdivision of the state because it derives its status
    as a public entity from an act of the General Assembly. *City of S.
    Louis v. Ryan*, 776 S.W.2d 13, 16 (Mo. 1989) (finding that the City
    of St. Louis does not control the manner in which the St. Louis
    Housing Authority, a political subdivision of the state, performs
    its statutorily mandated tasks).

[^62]: Missouri Municipals Jan. 26, 1999 Letter at 3.

[^63]: Petition at 7-9 (citing Testimony of William J, Ray on behalf of
    the American Public Power Association, Hearings on S.1822 Before the
    Senate Committee on Commerce, Science and Transportation, 103d
    Cong., 2d Sess. 351, 353-54 (1994); S. Rep. No. 103-367, 103d Cong.,
    2d Sess. 54-56 (1994)).

[^64]: Petition at 10-11 (citing S. Rep. No. 103-367 at 56).

[^65]: Petition at 11-13 (citing H.R. Rep. No. 104-458, 104^th^ Cong.,
    2d Sess. 127 (1996)). The record also contains several letters from
    members of Congress stating that it was the intent of the Congress
    when it enacted section 253 to enable any entity, without
    qualification, to provide communications service, and that it
    expected the Commission to exercise its authority under section 253
    to preempt state regulations that prohibited municipally-owned
    utilities from entering the telecommunications market. Petition,
    Attachment I, Letter from Congressman Dan Schaefer to FCC Chairman
    Reed Hundt, Aug. 5, 1996 (section 253 requires the Commission to
    "reject any state or local action that prohibits entry into the
    telecommunications business by any utility, regardless of the form
    of ownership or control"); Petition, Attachment M, Letter from
    Senator J. Robert Kerrey to FCC Chairman Reed Hundt, Sept. 9, 1997
    (by using the term "any entity" in section 253, "Congress intended
    to give entities of all kinds, including publicly-owned utilities,
    the opportunity to enter these markets"). [See also]{.underline}
    Missouri Municipals June 1, 1999 Letter, Attachment E, Letter from
    Congressmen Joe Moakley, Edward J. Markey, Barney Frank to FCC
    Chairman William E. Kennard, Apr. 20, 1999; Attachment F, Letter
    from Congressman Rick Boucher to FCC Chairman William E. Kennard,
    Mar. 16, 1999; Attachment G, Letter from Senators J. Robert Kerrey,
    Tom Harkin, Byron Dorgan, Paul Wellstone, John Kerrey, Mar. 26,
    1999; Attachment H, Letter from Congressman Virgil H. Goode to FCC
    Chairman William E. Kennard, Feb. 12, 1999. These letters represent
    the personal views of various legislators made after the passage of
    section 253, and are thus not entitled to probative weight. *Bread
    Political Action Committee v. FEC*, 455 U.S. 577, 582, n.3, *quoting
    Quern v. Mandley*, 436 U.S. 725, 736, n. 10 (1978).

[^66]: *Abilene*, 164 F.3d at 52. *See also* Southwestern Bell Sept. 8,
    1999 Letter, Attachment at 6 (citing *Atascadero State Hosp. v.
    Scanlon*, 473 U.S. 234, 242 (stating that legislative history
    associated with a federal act did not provide plain evidence that
    Congress intended to abrogate the Eleventh Amendment bar to suits
    against the states in federal court)).

[^67]: Missouri Municipals' Reply at 8-9 (citing *Gregory*, 501 U.S. at
    467 (citations omitted)).

[^68]: *Gregory*, 501 U.S. at 467.

[^69]: Petition at 15-16 (citing 47 U.S.C. § 224(a)(1)).

[^70]: Petition at 15.

[^71]: UTC Comments at 7. UTC refers to the Commission's decision in
    *IT&E Overseas, Inc*., in which the Commission found that the Guam
    Telephone Authority, a public corporation owned by the government of
    Guam, is separate from the government within the meaning of the
    Communications Act. 7 FCC Rcd 4023 (1992). This case did not
    implicate federal preemption of traditional state powers. It
    involved a circumstance in which Guam was attempting to assert
    jurisdiction over interstate and foreign carrier communications. To
    ensure that Guam did not usurp the Commission's exclusive authority
    to regulate such telecommunications, the Commission construed the
    term "any corporation" in the Communications Act to include public
    corporations, such as Guam's publicly-owned telephone company. The
    Commission explained that this interpretation of the Act was
    consistent with Congress' clearly expressed intent in 47 U.S.C. §
    151 to centralize authority over interstate and foreign
    communications in one federal agency. *Id*. at 4025, paras. 9-12. By
    contrast, there is no clear expression of intent in section 253 to
    authorize federal preemption of state laws governing political
    subdivisions.

[^72]: *Texas Preemption Order*, 11 FCC Rcd at 3547-48, para. 186.

[^73]: Article 6, § 19(a) of the Missouri Constitution states,

    > Any city which adopts or has adopted a charter for its own
    > government, shall have all powers which the general assembly of
    > the state of Missouri has authority to confer upon any city,
    > provided such powers are consistent with the constitution of this
    > state and are not limited or denied either by charter so adopted
    > or by statute. Such a city shall, in addition to its home rule
    > powers, have all powers conferred by law.

    Mo. Const. art. 6, § 19(a).

    > Article XI, section 5 of the Texas Constitution states,
    >
    > Cities having more than \[5000\] inhabitants may, by a majority
    > vote of the qualified voters of said city, at an election held for
    > that purpose, adopt or amend their charters, subject to such
    > limitations as may be prescribed by the Legislature, and providing
    > that no charter or any ordinance passed under said charter shall
    > contain any provision inconsistent with the Constitution of the
    > State, or of the general laws enacted by he Legislature of this
    > State.

    Tex. Const. art. XI, § 5.

[^74]: It is not clear to us whether or not a municipally-owned utility
    would be required to obtain a certificate of service authority to
    provide internet services in Missouri. A certificate of service
    authority is required to provide interexchange telecommunications
    service and local exchange telecommunications service. Mo. Stat. §
    392.410(1) and (2). The definition of "telecommunications service"
    in Missouri's public service commission law does not address
    internet services specifically. Mo. Rev. Stat. § 386.020(53).
    "Access to the internet" is not considered a telecommunications
    service for purposes of the collection of sales tax in Missouri. Mo.
    Rev. Stat. § 144.010(13)(a).

[^75]: *See City of Abilene, Texas v. FCC*, 164 F.3d 49 (D.C. Cir.
    1999).