On Thursday, Sept. 11, 2008, the U.S. Court of Appeals for the 9th Circuit explicitly reversed its 2001 decision in City of Auburn v. Qwest Corp., a leading case supporting the deregulatory, pro-deployment goals of the 1996 Telecommunications Act. After this new decision, Sprint Telephony PCS, LP v. San Diego County, 2008 WL 4166657 (9th Cir. Sept. 11, 2008), a telecommunications provider that challenges the requirements of a municipal ordinance in the 9th Circuit on grounds that the ordinance violates Section 253 of the federal Communications Act will face a higher burden, and specifically “must show actual or effective prohibition, rather than the mere possibility of prohibition.”
Section 253(a) of the federal Communications Act, 47 U.S.C. § 253, declares that no state or local law “may prohibit or have the effect of prohibiting the ability of any entity to provide any” telecommunications service. For wireless services, Section 332(b)(7) of the Act similarly declares that local regulation of wireless service facilities “shall not prohibit or have the effect of prohibiting the provision of any personal wireless services” and provides an expedited, detailed procedure for appeal of local denials of wireless siting applications.
Wireless service providers thus are able to challenge local impediments to service under either, and sometimes both, of these statutes. While several lower courts have addressed the application of Section 253 to wireless zoning ordinances, the 2007 decision by a three-judge panel of the 9th Circuit in Sprint was the first time it was addressed in a federal appeals court.
In its 2001 Auburn decision, the 9th Circuit had established the standard for evaluating municipal ordinances under Section 253, holding that Section 253(a) is a “virtually absolute” preemption on municipal franchise requirements, and that Section 253's “purpose is clear—certain aspects of telecommunications regulation are uniquely the province of the federal government and Congress has narrowly circumscribed the role of state and local governments in this arena.” The court in Auburn found that under the savings clause in Section 253(c), only those municipal requirements that are “directly related to management of the rights of way” survive preemption.
In Auburn and subsequent decisions, the 9th Circuit had applied Section 253(a) so that a provider did not need to demonstrate an actual inability to enter the market to succeed in challenging local regulation under Section 253: regulations were preempted if it was shown that they “may have the effect of prohibiting the provision of telecommunication services.” Applying those standards, the 9th Circuit had identified certain elements of municipal telecommunications ordinances that lead to preemption: (1) a complicated application process and high fees; (2) a public hearing on the application; (3) imposition of criminal or civil sanctions for violations; and (4) unfettered discretion to approve or deny the application, or revoke a permit once issued. The reservation to the city of unfettered discretion over entry was identified as the most important issue.
Prior decisions in Sprint
As reported in our earlier advisory, on March 13, 2007, the three-judge panel of the 9th Circuit in Sprint Telephony PCS, L.P. v. County of San Diego, 490 F.3d 700, held that the County of San Diego's wireless zoning ordinance was an unlawful barrier to entry in violation of Section 253(a).
Sprint had challenged the County of San Diego's wireless telecommunications ordinance (WTO) on the ground that, on its face (i.e., without regard to the manner in which the city enforced it), the WTO prohibited or had the effect of prohibiting the provision of telecommunications services and thus violated Section
The district court focused on the WTO's burdensome application process (which is typical of wireless zoning ordinances), the reservation of discretion to the county (particularly over aesthetic matters), and the multi-layered decision making process, which included various appeals and public hearings, all of which left deployment of telecommunications equipment subject to county discretion. The district court held that the WTO had the effect of prohibiting the provision of telecommunications services in violation of Section 253.
On appeal, a panel of the 9th Circuit initially affirmed the district court, observing that the provisions in San Diego “are almost identical” to those in Auburn. Like the district court, the 9th Circuit panel focused on the burdensome process and the “open-ended discretion” left to the county by the WTO. The court emphasized the provisions that gave the county discretion to determine if a facility is “appropriately ‘camouflaged,' ‘consistent with community character,' and designed to have minimum ‘visual impact.'” Driven by the potentially sweeping import of the panel's decision, municipal interests, together with San Diego County, successfully petitioned the 9th Circuit to rehear the case en banc (with a panel of eleven judges, rather than a three-judge panel).
The 9th Circuit's rehearing en banc
On Sept.11, 2008, the 9th Circuit reversed its prior decision in Auburn, rejecting its earlier view that a local ordinance violates Section 253(a) if it may have the effect of prohibiting service. Instead, the court stated that it was aligning its interpretation of Section 253(a)'s “prohibit or have the effect of prohibiting” language with the court's decisions interpreting the similar language in Section 332(c)(7). In applying Section 332(b)(7), the court has focused on the actual effects of a city's requirements, not the effects an ordinance might possibly allow. Thus, the Sprint en banc court held that the standard for determining when local regulation prohibits the provision of service is the same under both Sections 253 and 332(c)(7), stating that “A plaintiff must establish either an outright prohibition or an effective prohibition on the provision of telecommunications services.”
Although the decision is generally stated in broad terms, the court did provide some indication of facts that might demonstrate an “effective prohibition” on service. For example, the court noted that an effective prohibition could be demonstrated by an “excessively long waiting period” or use of procedural rules to create an unreasonable delay. The court did not discuss what would constitute an unreasonable delay. It also gave the example that a requirement that all facilities be underground would be a facial “effective prohibition” if the provider could establish that wireless facilities must be above ground.
Impact of the 9th Circuit's Sprint decision
The immediate impact of the en banc decision in Sprint is uncertain, both legally and practically. Regulations invalidated under the earlier Auburn standard could well have failed the standard applied in Sprint, had it been the law of the 9th Circuit. Nonetheless, the decision may embolden municipalities located in the 9th Circuit (California, Oregon, Washington, Alaska, Hawaii, Arizona, Nevada, Idaho and Montana) to place greater restrictions and more control on telecommunications deployment.
However, the court's decision cannot and should not be read to mean that cities are now free to regulate telecommunications without restriction. Service providers will simply be required to give more concrete examples (either in market conditions or in the text of local regulations) showing how a city's regulations and/or processes impede their ability to provide telecommunications services.
Ultimately, the decision will likely lead to more litigation. At a minimum, the standard set forth in the en banc decision purporting to equate the legal standard for Section 253 to the standard under Section 332(c)(7) is unworkable for wireline and right of way telecommunications installations. For example, the 9th Circuit's Section 332(c)(7) standard involves analysis of “significant gaps in coverage” and “least intrusive means,” which are meaningless in the context of a service provider deploying facilities in the public right of way. Moreover, if the decision emboldens cities to adopt a new wave of overreaching ordinances that allow them to micromanage the telecommunications industry, clarification will be needed—either by litigation up to the 9th Circuit or through legislative and regulatory bodies.