TR Daily Court Largely Hands FCC Victory in Small Cell OTMR Dispute
Wednesday, August 12, 2020

Court Largely Hands FCC Victory in Small Cell OTMR Dispute

The FCC largely won a victory today in the U.S. Court of Appeals for the Ninth Circuit (San Francisco) when a three-judge panel upheld the agency’s 2018 moratoria and one-touch make-ready (OTMR) decisions and largely affirmed its 2018 small cell item, with the exception of a provision concerning aesthetics.

In a third report and order and declaratory ruling in WC docket 17-84 and WT docket 17-79 adopted in August 2018, the FCC approved an OTMR policy for attaching telecom and cable facilities to utility poles in the states that don’t regulate attachments themselves, and ruled that “blanket” state and local moratoria on telecom services and facilities deployment are barred by section 253(a) of the 1996 Telecommunications Act (TR Daily, Aug. 2, 2018).

In a declaratory ruling and third report and order adopted the following month in the same dockets, the Commission barred states and localities from adopting rules that prohibit the deployment of wireless infrastructure, curbed fees that municipalities can charge for reviewing small cell deployments, set shot clocks for acting on small cell applications, and permitted reasonable aesthetics rules (TR Daily, Sept. 26, 2018).

The items drew challenges in a number of circuits from nearly 100 localities and municipal groups, wireless carriers, and government- and investor-owned utilities. The cases were consolidated in the Ninth Circuit. The oral argument in “City of Portland v. USA” (cases beginning with 18-72689) was held in February in Pasadena, Calif. (TR Daily, Feb. 10).

“We conclude that, given the deference owed to the agency in interpreting and enforcing this important legislation, the Small Cell and Moratoria Orders are, with the exception of one provision, in accord with the congressional directive in the Act, and not otherwise arbitrary, capricious, or contrary to law,” said the majority opinion, which was written by Senior Circuit Judge Mary Murphy Schroeder. “The exception is the Small Cell Order provision dealing with the authority of local governments in the area of aesthetic regulations. We hold that to the extent that provision requires small cell facilities to be treated in the same manner as other types of communications services, the regulation is contrary to the congressional directive that allows different regulatory treatment among types of providers, so long as such treatment does not ‘unreasonably discriminate among providers of functionally equivalent services.’ 47 U.S.C § 332(c)(7)(B)(i)(I). We also hold that the FCC’s requirement that all aesthetic criteria must be ‘objective’ lacks a reasoned explanation.”

The court vacated the aesthetic portions of the rule and remanded them to the FCC. It also dismissed as moot a petition from Montgomery County, Md., concerning RF issues.

“The third FCC order before us is intended to prevent owners and operators of utility poles from discriminatorily denying or delaying 5G and broadband service providers access to the poles,” the court noted. “Several utilities object to discrete aspects of the One-Touch Make-Ready Order. We uphold the Order, concluding that the FCC reasonably interpreted Section 224 as a matter of law, and the Order is not otherwise arbitrary or capricious.”

The majority opinion was joined by Senior Circuit Judge Jay S. Bybee. Circuit Judge Daniel Aaron Bress joined the majority, except in a partial dissent over the majority’s upholding of the FCC’s decision to preempt any fees charged to providers that exceed the costs of localities.

“As a threshold issue, Local Government Petitioners argue that the FCC must demonstrate that an ‘actual prohibition’ of services is occurring before preempting any municipal regulations, and that anything less than that showing is contrary to Section 253(a) and our decision in Sprint. We must reject this argument,” the court said. “The FCC’s application of its standard in the Small Cell and Moratoria Orders is consistent with Sprint, which endorsed the material inhibition standard as a method of determining whether there has been an effective prohibition. The FCC here made factual findings, on the basis of the record before it, that certain municipal practices are materially inhibiting the deployment of 5G services. Nothing more is required of the FCC under Sprint.”

The court said that “[t]he provisions of the Small Cell Order dealing with aesthetics are among the most problematic. The Order says, ‘aesthetics requirements are not preempted if they are (1) reasonable, (2) no more burdensome than those applied to other types of infrastructure deployments, and (3) objective and published in advance.’”

“Local Government Petitioners point out that the FCC’s standard amounts to requiring similar treatment and does not take into account the differences among technologies,” the court noted. “The FCC’s own justification for its provision bears this out. The FCC asserts that any application of different aesthetic standards to 5G small cells necessarily ‘evidences that the requirements are not, in fact, reasonable and directed at remedying the impact of the wireless infrastructure deployment.” … Thus, in the FCC’s view, when a state or local government imposes different aesthetic requirements on 5G technology, those requirements are pretextual, unrelated to legitimate aesthetic goals, and must be preempted.”

“In sum, the requirement that aesthetic regulations be ‘no more burdensome’ than those imposed on other technologies is not consistent with the more lenient statutory standard that regulations not ‘unreasonably discriminate,’” the court said. “The requirement that local aesthetic regulations be ‘objective’ is neither adequately defined nor its purpose adequately explained. On its face, it preempts too broadly. We therefore hold those provisions of Paragraph 86 of the Small Cell Order must be vacated.”

In his dissenting opinion on fees, Judge Bress said, “No one doubts that exorbitant fees can impede the deployment of communications infrastructure. … But fees are prohibitive because of their financial effect on service providers, not because they happen to exceed a state or local government’s costs.”

“On this record, the FCC has not adequately explained its basis for concluding, contra our precedent, that there is an intrinsic relationship between a fee’s approximation of costs and its prohibitive effect on service providers,” Judge Bress added. “The FCC’s reliance on individual fees it considers ‘excessive’ tells us that fees can work effective prohibitions. But this does not on its own justify a blanket prohibition on all above-cost fees.”

“I would have vacated and remanded the Small Cell Order’s prohibition on above-cost fees,” the judge said. “While the FCC’s objective of advancing 5G service is undoubtedly an important one, Congress set limits on when local actions can be preempted. While a prohibition on all above-cost fees may well be justifiable, I do not believe the FCC has sufficiently justified it on the present record. With the exception to its references to legislative history, I otherwise join the court’s opinion in full.”

“Today’s decision is a massive victory for U.S. leadership in 5G, our nation’s economy, and American consumers,” said FCC Chairman Ajit Pai. “The court rightly affirmed the FCC’s efforts to ensure that infrastructure deployment critical to 5G—a key part of our 5G FAST Plan—is not impeded by exorbitant fees imposed by state and local governments, undue delays in local permitting, and unreasonable barriers to pole access. The wind is at our backs: With the FCC’s infrastructure policies now ratified by the court, along with pathbreaking spectrum auctions concluded, ongoing, and to come, America is well-positioned to extend its global lead in 5G and American consumers will benefit from the next generation of wireless technologies and services.”

“I am pleased that the Ninth Circuit affirmed the wireless infrastructure reforms we adopted in September 2018,” said Commissioner Brendan Carr, the point person on wireless infrastructure issues at the Commission.

“Small cells that power 5G were threatened by exorbitant fees and unnecessary delays—red tape that was tolerated when building macro towers but would have brought small cell deployment to a halt. The Commission wisely right-sized review to reflect new technology, and I’m proud that over the last two years our reforms have resulted in more small cell investment than ever before,” Mr. Carr added. “Ultimately, the wireless infrastructure docket I’ve led is about 5G jobs, education, and healthcare—opportunities and services that we’ve valued all the more through the pandemic. Our sensible fee limits, shot clocks, and guardrails on approval already are making America home to the strongest 5G platform in the world. I’m glad that with today’s decision, the litigation is settled, and we can continue our pursuit of next-gen opportunities for all Americans.”

The FCC also faces litigation from localities (TR Daily, Aug. 11) seeking to overturn the declaratory ruling adopted by the FCC on a 3-2 vote in June to clarify rules adopted in 2014 implementing section 6409(a) of the Spectrum Act, which was designed to make it easier to upgrade equipment on existing towers (TR Daily, June 9).

Also, last year a three-judge panel of the D.C. Circuit vacated a portion of an FCC order that exempted small cells from environmental and historic preservation reviews, while affirming provisions dealing with tribal review under the National Historic Preservation Act and the promulgation of the order itself (TR Daily, Aug. 9, 2018).

Telecom industry entities welcomed today’s decision.

“This is an extremely important victory for American consumers and the nation’s economy. The court got it right, correctly affirming the FCC’s authority to establish reasonable guardrails to guide both the wireless industry and local governments in their shared goals of speeding the deployment of next-generation wireless networks and maintaining U.S. leadership in the emerging 5G economy,” said, Meredith Attwell Baker, president and chief executive officer of CTIA.

However, the court rejected petitions filed by wireless carriers challenging the FCC’s decision not to impose a “deemed granted” remedy in cases of locality violations of shot clocks.

“Today's decision from the U.S. 9th Circuit Court of Appeals upholding the FCC's infrastructure reforms is a big win for consumers and for 5G,” said Will Johnson, senior vice president-federal regulatory and legal affairs and associate general counsel for Verizon Communications, Inc., which had challenged the small cell item on the deemed granted provision along with AT&T, Inc., Sprint Corp. (now part of T-Mobile US, Inc.), and Puerto Telephone Company, Inc., while otherwise supporting the small cell item. “The FCC's common-sense reforms tackled existing roadblocks that slowed or stopped 5G deployment in communities around the country. There is a tremendous appetite for next-generation technology, and the FCC's reforms have been instrumental in facilitating aggressive broadband deployment – helping to bring the benefits of 5G more quickly to consumers.”

“Today’s decision is a win for wireless consumers & carriers alike,” tweeted Kathleen Ham, SVP-government affairs for T-Mobile. “@FCC’s reforms streamlining infrastructure deployment will enable @TMobile to continue rapid deployment of #5G infrastructure nationwide, & advances US leadership in 5G!”

“This decision is a grand slam for promoting 5G deployment across the country. It removes obstacles to broadband deployment and eliminates unnecessary delays,” said WIA President and CEO Jonathan Adelstein. “WIA applauds the 9th Circuit for basing its decision on the law and the facts and for affirming the FCC’s authority so that broadband infrastructure is not unreasonably impeded. WIA also applauds the FCC for its focus and diligence in promoting 5G deployment so that America can benefit from next-generation wireless services. The 2018 Orders and now this decision will provide a clearer path to 5G deployment across the country and boost America’s efforts to win the race to 5G.”

“Today’s Ninth Circuit decision is a win for the wireless industry, and more importantly, a win for consumers, who will benefit from more streamlined and efficient deployment of 5G networks,” said Steve Berry, president and CEO of the Competitive Carriers Association. “Infrastructure is the backbone of wireless networks, and today’s opinion correctly recognizes that 5G networks will require denser architecture to deliver the services that consumers demand and need. The Court’s decision allows wireless carriers to continue to work with state and local governments to deploy next-generation networks and close the digital divide, while importantly ensuring that outlier regulations do not inhibit deployment.”

Incompas CEO Chip Pickering said, “Now more than ever, local communities need faster, better, and more affordable internet. The Ninth Circuit’s decision today takes millions of neighborhoods one big step closer to bringing more competition to town. By upholding the ‘one-touch, make-ready’ deployment policies that our association has long championed, the court is giving the green light to new builders and helping to clear the deck of potential anti-competitive roadblocks that hold back 5G. We wish to congratulate the FCC, including Chairman Ajit Pai and Commissioner Brendan Carr, who helped lead this fight. We hope today’s victory leads to a new era of competition and partnership with cities, towns and local communities that want to move their communities into a better broadband future.”

“Today’s decision by the U.S. Court of Appeals for the 9th Circuit, upholding critical aspects of the FCC’s 2018 Pole Attachment order, is good news for anyone that wants to see broadband providers accelerate their network deployments in all areas of the country,” said Matthew Polka, president and CEO of ACA. “As ACA Connects demonstrated to the FCC, far too often investor-owned utilities hold up or seek to impose excessive fees on new attachers, which can result in the new attacher deciding to walk away from a build.”

“The FCC’s order seeks to draw clear lines preventing such behavior by utilities. ACA Connects members want to work cooperatively with utilities to expedite pole attachments and obtain access to conduit at reasonable cost, and they want utilities to reciprocate. With the court endorsing the FCC’s order, we hope that our aim becomes reality. In the end, we all should keep our eye on the prize -- bringing high-performance broadband service to all Americans as quickly as possible.”

David Hirschmann, president of the U.S. Chamber of Commerce’s Technology Engagement Center, said, “Today’s decision affirms the FCC’s approach to remove barriers to game-changing technologies such as 5G. As Americans rely on connectivity now more than ever to shop online, go to school, work from home, and conduct telehealth visits, permit streamlining efforts like those of the FCC and Commissioner Carr will speed deployment of broadband without federal spending. The Chamber calls on Congress to make permanent permit streamlining reforms for all forms of internet connectivity so that the 18 million Americans currently without access are on a level playing field.”

“The FCC was largely victorious today in the Ninth Circuit’s decision rebuffing arguments by local governments and utility companies asserting that the exercise of the Commission’s preemption authority should be curtailed,” said Free State Foundation President Randolph May. “While the Ninth Circuit often has been a perilous venue for federal agencies, today’s decision is a strong reaffirmation of the broad preemption authority that Congress delegated to the FCC to ensure that states and localities cannot impede the provision of communications services. Significantly, throughout the decision, the court recognized the importance of 5G deployment to advancing the nation’s communications infrastructure and technological capabilities.”

Some local government representatives saw the ruling as a mix bag.

“While we are glad that the court agreed with our assessment that the FCC’s restrictions on local aesthetic oversight of wireless structures were invalid, we would have liked to see the court apply that same standard to other portions of the order,” said Angelina Panettieri, legislative manager-information technology and communications for the National League of Cities. “Cities’ concerns about restrictive shot clocks and fee structures remain, and further highlight the need for Congress to pass the legislation introduced by Representative [Anna] Eshoo [D., Calif.] and Senator [Dianne] Feinstein [D., Calif.] to settle the matter.”

The lawmakers have introduced legislation (HR 530 and S 2012) that would rescind the OTMR, moratoria, and small cell orders (TR Daily, Jan. 15 and June 27, 2019).

“Counties are glad to see the Ninth Circuit recognized the roles and responsibilities of local governments in preserving the integrity, safety and welfare of public property with regards to the aesthetic components of the cellular industry’s telecommunication infrastructure on public rights of way,” said Arthur Scott, associate legislative director and political outreach manager for the National Association of Counties. “We are disappointed to see that the method to reach that part of the decision was not also applied in the shot clock component of the ruling. By limiting the ability of local governments to conduct the necessary processes such as environmental and historical preservation reviews and public comment periods, the FCC is effectively preventing residents from having input on the infrastructure being placed on their street corners. These limitations on local governments are even more burdensome with our public health and economic recovery duties during an unprecedented global pandemic.”

“We are pleased with some aspects of the decision, and disappointed in others,” said Joseph Van Eaton, a partner at Best Best & Krieger LLP who represented local governments. “We are still in the process of analyzing the decision, and assessing its impacts. That analysis is complicated by the fact that the decision cabins the FCC Small Cell Order in several ways that should be helpful to local governments. … The big issue was whether the same rules had to apply to wireless as to other infrastructure (public or private).”

Robert (Tripp) May III, a partner at the Telecom Law Firm PC who also represented localities, said that he hasn’t “had a chance to talk to all my clients about the decision today and what, if anything, they may want to do in response. Speaking for myself, I was very pleased that the court invalidated the key aesthetic restrictions. This is a critical issue for probably every municipal government and the court’s analysis will make it very difficult for the FCC to try and re-impose the same restrictions in a subsequent rulemaking.”

“We’re very happy with the win on the aesthetic regulations – arguably our most critically important issue,” said Ken Fellman, an attorney with Kissinger & Fellman P.C. who also represented localities. “We’re going to need more time to review it in its entirety, discuss implications and possible next steps with our clients and local government colleagues, and I suspect we’ll have a better idea next week.”

“We are still reviewing the decision and conferring with our members on this,” said Tobias Sellier, director-media relations and communications for the American Public Power Association.

The Utilities Technology Council also had no immediate comment, while the Edison Electric Institute did not respond to a request for comment. —Paul Kirby, [email protected]

MainStory: Courts FCC FederalNews WirelessDeployment BroadbandDeployment

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