Plaintiffs Lay Out Case Against FCC Infrastructure Changes

Plaintiffs made initial arguments at the 9th U.S. Circuit Court of Appeals, which will hear challenges to the FCC’s wireless infrastructure changes that were aimed at speeding build out of small cells and 5G. Court watchers said what the 9th Circuit will do is difficult to predict, though it may prove unfriendly to President Donald Trump’s FCC.

Pleadings were due Monday on challenges by Sprint and others to a September order restricting local fees and reviews of small-cell siting applications consolidated under Sprint v. FCC, No. 19-70123. The case was assigned to the same panel that will review Portland, Oregon, and American Electric Power Service challenges to an August ruling/order barring local infrastructure moratoriums and revising pole-attachment processes. The latter two were also consolidated under Portland v. FCC, No. 18-72689.

The FCC orders were “arbitrary and capricious” and should be vacated, said a brief (in Pacer) by a local coalition including the National League of Cities, multiple state municipal groups and many cities including Austin, Boston, Chicago, Los Angeles, Philadelphia and Portland, Oregon. Telecom Act sections 253(a) and 332(c)(7)(b) pre-empt local laws that have an “actual,” not merely possible, prohibitory effect. The FCC depended on the assumption that an actual prohibition isn’t required, incorrectly believing it's enough “if a provider is prevented from improving existing services or deprived of extra profits that it might use to fund deployment,” the localities said. “The Moratorium Order finds prohibitions in almost any potential delay or inconvenience, no matter how slight or inconsequential.”

Federal fee limits “improperly construe ‘fair and reasonable compensation’ … as limited to cost reimbursement,” the NLC coalition said. “Congress intended to give localities a wide berth in setting compensation levels to reflect the value of their property, and it equally clearly intended to keep the FCC out of such matters.” Required shorter shot clocks for small cells “effectively exempt them from traditional land use hearings, appeals and public participation,” violating Section 332(c)(7), it said. The Fifth Amendment stops the FCC from limiting compensation to costs, and the 10th stops it from forcing "states and localities to respond to demands for access to proprietary property or require contribution of resources to a federal regulatory scheme," they said.

The FCC violated the National Environmental Policy Act and the Administrative Procedure Act by not explaining “why it ignored potential public health and safety issues related to 5G radiofrequency (“RF”) emissions and failed to confirm whether the current FCC RF standards still protect citizens from such exposures,” said (in Pacer) Montgomery County, Maryland.

Industry Challenge

A wireless industry challenge said the FCC didn’t go far enough.

It "stopped short of adopting the full remedy necessary to prevent unreasonable delays in acting upon an application: deeming the application to be granted if it is not acted upon by the end of the shot clock period,” said Sprint, Verizon, Puerto Rico Telephone Co. and AT&T Services. The FCC concludes it has authority to impose a deemed-granted remedy and already does so for violations of shot clocks under the Spectrum Act, they said (in Pacer): “Its failure to do so here -- when such action was necessary fully to address what the FCC recognized as a significant obstacle to the massive public-interest benefits of 5G -- is arbitrary, capricious, inconsistent with its own precedent, and an abuse of discretion.”

The American Public Power Association said the case “presents straightforward issues that can readily be decided as a matter of law in APPA’s favor,” though it asked the court to hold oral argument. For more than 40 years, the FCC, Congress and the courts “have repeatedly recognized that the Commission does not have regulatory authority over the rates, terms, or conditions of access to public power utility poles,” APPA argued (in Pacer). “The Commission executed an abrupt logic-defying U-turn from any and all existing laws and precedent and found that it does have such authority after all.”

“No matter what the decision is, there’s going to be an appeal,” predicted NLC Principal Associate-Technology and Communications Angelina Panettieri in an interview. NLC doesn’t get the sense that litigation has much slowed FCC Chairman Ajit Pai’s infrastructure agenda, she said. Cities worry possible upcoming FCC action on over-the-air reception device rules (see 1906050014) could be “used as a back door to pre-empt local authority over small cells in addition to the rules that came out last year,” she said.

Court Bad for FCC?

The court is thought to lean liberal.

Free State Foundation President Randolph May noted it's “blinking reality not to recognize that the court is likely to have a predisposition to rule against what it sees as the Trump administration’s FCC.” Localities' pre-emption challenge isn't frivolous, he said. "The case may well be decided by the extent to which the court defers, under Chevron or otherwise, to the FCC’s assessment of the actual impact of the local requirements that the FCC deemed barriers.”

“There are petitioners asking for both more and less from the FCC,” said Kristian Stout, associate director of the International Center for Law and Economics and a member of the agency's Broadband Deployment Advisory Committee. “It’s very difficult to demonstrate an agency has acted arbitrarily and capriciously as long as they plausibly engaged with the factual record. Wins on these types of matters are usually only on minor procedural matters that trigger a remand.”

Two-year-old industry promises that 5G would become widely available once pre-emption passed haven’t borne fruit in Florida, said Wilton Manors, Florida, Commissioner Gary Resnick.

Long Road

It may be a long road till the case is fully resolved. It will be several months before the federal case is decided, said Resnick, a municipal telecom attorney who doesn’t represent any of the case parties.

It probably will end up in the Supreme Court, which could mean about three to four years until resolution, emailed Kitch's Michael Watza, telecom attorney for the Michigan Municipal League and other local parties from that state. "If it is remanded at various points it could be much longer." Since no stay has been issued, "it will likely have little impact" on Pai's agenda, but "so long as the issue is in doubt for both sides," he said, "it may provide some opportunity to work out compromises."

Fifth-generation wireless is “probably the final stage of widespread radio deployment in U.S. cities,” said Richard Bennett, free-network network architect who served on a BDAC working group. Cities see 5G “as their last chance to collect stealth taxes from telecom to shore up their pension obligations,” Bennett said. “The cities fighting the FCC’s plan probably underestimate the value 5G brings to local economies.”

Robocalls and the high-band auctions have gotten more attention, but the FCC’s work on infrastructure is some of its most important, said Tom Struble, technology policy manager at the R Street Institute. The commission “generally got it right with its order last fall,” he said: “At a certain point endless delays in processing permit applications or outrageously high fees for those permits would [prohibit] the ability of a company to provide broadband service.”

Communications Act sections 253 and 332 “expressly” give the FCC authority to pre-empt state and local laws that prohibit broadband deployment “and I think their interpretation as applied to broadband is spot on,” Struble said. “If the FCC wins, as I expect it will, that will be great news for industry in the short term." The one “potential downside” is an FCC win would take momentum from the push in Congress “to update the Communications Act and streamline broadband deployment in other ways,” best in the long run, Struble said.

Yuma

Arizona’s Yuma joined the cities’ suit because the FCC order took away the city's right to regulate its right of way, said Yuma Director-Strategic Initiatives Ricky Rinehart in an interview with other city officials. Yuma set small-cells standards Jan. 9 after the FCC’s September order; the city had received an exemption from Arizona’s 2017 small-cells law to avoid conflict with an existing smart-city project with AnyComm, he said.

Writing Yuma’s small-cells standards took about three months with “all hands on deck,” said Yuma Assistant City Attorney Scott McCoy. “It wasn’t a particularly onerous obligation,” and was something the city needed to do even if the FCC hadn’t required it, he said. But the order constrained Yuma’s ability to customize aesthetics of small-cell facilities, including size standards, said McCoy. “We’re stuck with a large, refrigerator-sized piece of equipment that we have to find a place for.”

Rinehart worries about what happens next, including “the sheer volume of activity that will have to take place,” he said. “We really have limited say in that.” He isn’t sure there’s enough public awareness, which has become an issue in Baton Rouge (see 1906070046).

No flood of small-cell applications yet in Yuma, reported the officials. The wireless industry is performing tests, but few small cells have been deployed, said network engineer Chris Wood. For the top four carriers to cover 121-square-mile Yuma, it could take 23,000 small-cell locations to provide 5G across the community, Rinehart said.

Yuma plans to take advantage of the FCC order’s safe harbor allowing cities to prove their costs to justify rates higher than federal ceilings, said Rinehart. “We actually got down in the weeds, and we said … let’s look at this really from start to finish, every aspect, every department, everything that happens with this application process and what are actual costs are,” he said. Yuma’s “ballpark” figure “far exceeded” the FCC ceilings, said Rinehart.

Two other Arizona localities said they’ll trade some control for 5G smart cities (see 1905170033). Rinehart agreed 5G is important to his community to fuel applications including IoT and autonomous vehicles. “We in no way, shape or form do not want to provide those types of services to our community and the citizens here,” he said. “Our issue is the control of the right of way.”