Local Authority at Stake in Coming 9th Circuit Argument

Local governments and the FCC are gearing up for oral argument Monday at the 9th U.S. Court of Appeals in Pasadena, California, on two commission orders the agency and industry say are needed to streamline 5G infrastructure deployment. Judges’ decision about whether the commission legally pre-empted local authority in the right of way could have broader impact for local authority in telecom, municipal attorneys and others told us.

Argument will be split into two parts (see 1912160040), covering a multitude of challenges to wireless infrastructure changes aimed at speeding buildout of small cells (see 1906100021). First, local governments and municipal utilities have 40 minutes to challenge the moratorium and small-cells orders; it includes some time for a specific challenge on RF issues by Montgomery County, Maryland. The FCC and industry, which argues the orders don’t go far enough, have 40 minutes to respond. Then, investor-owned utilities led by American Electric Power have 15 minutes to challenge the moratorium order's pole-attachment section. The commission and intervenors have the same amount of time to respond.

Commissioner Brendan Carr is “confident” in the FCC’s position, the Republican told us Thursday after the agency's C-band announcement (see 2002060057). "Since our commonsense policies were put in place, we’ve seen successful buildout in communities around the country, bringing the economic growth that next-gen connectivity enables," said Carr in a statement to us. U.S. small cells increased to 200,000 in 2019 from 60,000 in 2018, said Carr. "The law was on our side when we enacted the rules, and it remains on our side."

The infrastructure orders were “consistent with their authority” under Sections 253 and 332 of the Communications Act, said Wireless Infrastructure Association President Jonathan Adelstein in an interview. “We’re hopeful that it gets upheld.” CTIA and many other litigants declined comment.

"The Ninth Circuit has a history of being at odds with the FCC, and those orders have aspects the court might disagree with," emailed Free State Foundation Policy Studies Director Seth Cooper. Here, the orders are "based on express authority from Congress, including express federal preemption of local measures that 'prohibit or have the effect of prohibiting' interested communications services," and the FCC "backed up its orders with a lot of real-world evidence of local government stonewalling of wireless infrastructure siting," Cooper said. They don't force local governments "to grant any specific small cell siting applications," but "prohibit undue delays and other actions that the Commission reasonably determined run contrary to provisions such as Sections 253 and 332(c)(7)," he said.

Authority Questioned

Localities disagree with FCC backers on local vs. federal authority.

“Congress meant to preserve local zoning authority,” not remove public protections and subsidize an industry, said Best Best attorney Joe Van Eaton, who will argue Monday for localities except on the Montgomery County RF challenge. “Our position isn’t that wireless won’t be rolled out -- it will be rolled out.” Localities disagree with the FCC decision allowing “someone to come in and quite literally take a site owned by the city” and “rip it out and put in a 50-foot wireless facility,” he said. The agency is giving the small-cells industry “subsidized, mandatory access” to state and local property, said Spiegel McDiarmid’s Tim Lay, representing San Francisco and some other localities. “It’s a land grab of sorts.”

"The FCC has completely cut out the legs from under local cities” to negotiate with industry by setting maximum rates for right-of-way access, said San Jose Mayor Sam Liccardo (D) in a Thursday news-media call with other local officials and Communications Workers of America. “The result is a more than $1 billion subsidy that is mandated by the FCC to big telecom on the backs of local taxpayers.”

The 9th Circuit should reject “federal overreach” that will expand the digital divide, said National League of Cities CEO Clarence Anthony. "We are hopeful that the courts and Congress will agree with local leadership that this is too important to just steamroll local government officials."

Local Case

Cities will argue the FCC incorrectly interpreted the law, said Ken Fellman, a local government attorney who will attend the argument and represents Seattle and some other municipal challengers. “They had a goal that they wanted to achieve, and they interpreted the statute in a way that let them reach that goal.”

Expect disagreement Monday on what "effective prohibition" means, local attorneys said. Local governments think industry should have to prove a local requirement prohibits its ability to serve, but the FCC says “anything that raises costs or makes a provider’s life more difficult is a prohibition,” said Lay. Another critical issue is what is meant by fair and reasonable compensation, he said. Local governments say compensation should be market-based, whereas the FCC argues it should be cost-based, he said. Localities will likely argue that requiring industry pay for using the ROW doesn't prohibit service, nor does responding to applications in longer than 60 days, said NATOA General Counsel Nancy Werner on Thursday’s media call.

The circuit's case law supports localities’ view, local attorneys said. The 9th Circuit earlier “issued the most comprehensive determination of what an effective prohibition is,” ruling there must be an actual prohibition, not just the possibility of one, said Van Eaton. It may be a good sign for cities if judges drill down on how the FCC order squares with the appeals court’s precedent, said Lay.

Local governments wanted the 9th Circuit to review the case, and the FCC and industry sought different venues, but it’s no sure thing the court will favor local government’s position, said Lay. The 9th Circuit is considered more progressive, but it has lately moved closer to an evenly split circuit, the attorney said. The three judges assigned to the small-cells case were appointed by Presidents Jimmy Carter, George W. Bush and Donald Trump. Conservative judges could take a more pro-business perspective and side with the FCC and industry, or they may be wary of federal overreach and agree with localities, said Lay.

The American Public Power Association plans to address how the FCC orders hurt municipally owned utilities, while Montgomery County is arguing that the FCC should update RF standards before rolling out small cells, said local lawyers. APPA and Montgomery County didn’t comment now.

In part two of argument, American Electric Power is challenging one-touch, make-ready rules as violating the Telecom Act, which allows utilities to deny access for safety, capacity and other reasons. "The FCC’s pole attachment rules have become increasingly more dangerous to electric system safety and reliability over the past decade," an AEP spokesperson emailed. "The FCC allows third parties to enter the potentially lethal electric supply space without proper authorization from the electric utility and allows entities to proceed with attachments even where it would be unsafe. The FCC’s rules also continue to shift the cost of providing space for communications attachments to electricity customers."

Impact

It’s “one of a series of cases that will define federal, state and local roles in an information economy,” emailed New Street Research's Blair Levin. “This case relates to physical assets, such as poles and rights of ways, where the local authority is well grounded,” but the FCC argues “those assets are part of critical national infrastructure and therefore federal authorities have the right to make the rules,” he said. “While the argument involves specific statutory provisions, there are broader themes that will also impact local and state roles in establishing policies over how such networks are used, such as privacy and net neutrality policies.” Wall Street seems to disagree with the FCC that local fees impede deployment, said Levin. “I don't know of any analyst who said we can expect any wireless company to increase its capital expenditures in the wake of lower fees."

If industry and the FCC are right that “we’re going to see hundreds of thousands of these sites deployed across the country, how that happens is going to impact many, many lives,” Fellman said. If cities prevail, the local lawyer hopes the FCC will step back and work more collaboratively with state and local governments on deployment, he said. “But if the FCC is successful, they may feel empowered” to take further action pre-empting cities, he said.

Some are wrongly conflating 9th Circuit litigation with industry requests for more changes to wireless infrastructure rules, Adelstein said. The WIA president urged the FCC to act on industry petitions for declaratory rulings (see 2001150020). “Those have nothing to do with the case in the 9th Circuit because they involve separate statutes,” Adelstein said. “One of them is about making the way for small cells, which is the architecture for 5G ... but the other is making the way for collocation.” FCC authority under Section 6409 “is the most explicit and far-reaching” and could accommodate FirstNet, public safety, backup generators, small-cell hubs and edge data centers, he said.

A local victory would force Georgia to renegotiate its 2019 small-cells law due to a specific provision in that statute, said Brookhaven Mayor John Ernst on Thursday’s call. More than half the states have enacted small-cells laws that pre-empt local governments like the FCC order.

That renegotiation provision appears unique to Georgia, though some other states wrote sunsets into bills, said Werner. Even in states that have laws, removing the FCC order will help reduce local government confusion about whether inharmonious state or federal rules apply, she said.

Further appeal is possible after the 9th Circuit decides, Fellman said. “We’ve taken it this far, and we’ll have to evaluate the outcome.”