Due to the proliferation of advanced mobile devices, such as smartphones and tablets, wireless service providers anticipate a significant increase in data traffic over their networks in the next few years.  As a result, mobile operators have been compelled to find new ways to increase their network capacity, provide better coverage and reduce network congestion. One solution has been to create a new small cell network consisting of a series of small low-powered antennas – sometimes called nodes – that are typically attached to existing utility poles or streetlights located in the public right of way. In many municipalities, however, service providers and their contractors are facing strong opposition from elected officials and residents who have expressed concerns about the impacts from this new equipment.

One of the more recent battles is currently taking place in the Westchester County community of Rye, where an application by Crown Castle NG East LLC (“Crown Castle”) has already been the subject of two lawsuits, one which resulted in a ruling that delays associated with environmental review pursuant to the State Environmental Quality Review Act (“SEQRA”) do not violate the Telecommunications Act of 1996 (“TCA”).

The City of Rye (“City”) entered into a right of way use agreement (“RUA”) with NextG Networks of NY, Inc. (“NextG”) on February 17, 2011. Pursuant to the RUA, NextG was authorized to install and operate a form of small cell technology, known as distributed antennae systems (“DAS”), to expand existing wireless telephone services and coverage by installing its equipment within the public right of way (“ROW”), mostly on pre-existing utility poles. Between 2011 and 2015, NextG installed nine nodes within the public ROW on existing utility poles.

The RUA precluded NextG from assigning or transferring its rights under the agreement, except in limited circumstances and only with prior written notice of its intent to make such a transfer. Thereafter, on April 10, 2012, NextG became a wholly owned indirect subsidiary of Crown Castle International Corp., but NextG did not notify the City of its transfer of rights under the RUA until May 25, 2012.

In December of 2015, in some unspecified manner, Crown Castle advised the City of its intent to install equipment cabinets within the public ROW that are dimensionally larger than the pre-existing cabinets. The request was memorialized in a letter from Crown Castle to the City Council on April 8, 2016. In a subsequent letter, dated June 24, 2016, Crown Castle requested that the City Council adopt a resolution confirming that its application to install larger equipment cabinets was a Type II action under SEQRA or, alternatively, adopt a SEQRA “negative declaration” at its next public meeting.

Public hearings were held on Crown Castle’s application in July, August, and October of 2016 and in April of 2017. At the October 5, 2016 public hearing, the City Council declared its intention to as serve as lead agency for purposes of reviewing Crown Castle’s application under SEQRA. During the April 22, 2017 public hearing, the City Council issued a “positive declaration” for the proposed project under SEQRA. It also indicated that, in the event that the application is determined to be exempt from SEQRA, the application should be denied.

A positive declaration is a determination that an action may result in one or more significant environmental impacts and requires a comprehensive environmental review of the action, including the preparation and review of an environmental impact statement (“EIS”), before an agency decision may be made regarding the action. The SEQRA regulations contain mandatory minimum and maximum time periods associated with the processing of EISs that necessarily postpones a lead agency’s final decision until after the SEQRA process has been completed. A negative declaration is a determination by the lead agency that an action will not result in a significant adverse environmental impact and consequently no EIS will be prepared.

Following the City Council’s adoption of a positive declaration, Crown Castle commenced an action in the United States District Court for the Southern District of New York, entitled Crown Castle NG East LLC v. The City of Rye, et al., 17 CV 3535 (E.D.N.Y., December 8, 2017), alleging that the City and City Council violated the RUA and the TCA.  Crown Castle also alleged claims under Article 78 of the CPLR and the New York State Transportation Corporations Law (“TCL”). The City moved to dismiss the complaint on the basis that Crown Castle failed to state a TCA claim.

Section 253(a) of the TCA provides that “no State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.” Section 253(c) further provides that “nothing in this section affects the authority of a . . . local government to manage the public rights-of-way . . . on a competitively neutral and nondiscriminatory basis.” Section 332(c)(7)(B)(iii) states that “any decision by a State or local government or instrumentality thereof to deny a request to place, construct, or modify personal wireless service facilities shall be in writing and supported by substantial evidence in a written record.”

With respect Crown Castle’s claim that the City’s 18-month delay in providing a decision on its application amounted to a prohibition of telecommunications services under TCA § 253(a), the Court disagreed and held that the City’s review process, including the associated SEQRA review, was not a “legal requirement” prohibited under TCA § 253(a). It also noted that the TCA does not render a SEQRA review or any delays associated with that review a violation of federal law.

In support of its holding, the Court cited the District Court’s decision in New York SMSA Ltd. P’Ship v. Town of Riverhead Town Board, 118 F.Supp.2d 333 (E.D.N.Y. 2000), aff’d, 45 Fed App’x. 24 (2d Cir. 2002), where the court noted that “a positive SEQRA declaration necessarily delays a final decision” and that “this court will not hold that a local government’s invocation of that statute is precluded because of the existence of the TCA.” The Court also held that municipal review alone cannot be a proscribed barrier to entry under Section 253(a) because the TCA § 332 requirement for “substantial evidence” necessitates a thorough review in order to justify the denial of a request to place, construct, or modify wireless facilities.

The Court also rejected Crown’s other TCA claims. It found that TCA § 253(c) does not create a stand-alone violation of the TCA because it is a safe harbor for municipalities or a “savings clause” that carves out liability rather than imposes it. The Court also found that because the City’s “denial” was hypothetical, it was neither a “regulation” nor a “decision” for purposes of stating a TCA § 332(c)(7)(B) claim. Moreover, the Court noted that the purported “denial” was not a final decision for Section 332 because a SEQRA positive declaration is not a final agency decision that is reviewable under New York law. Accordingly, the City’s motion to dismiss was granted.

The dispute continued in the Westchester County Supreme Court in Crown Castle NG East LLC v. The City of Rye, et al., 50310/18 (Sup. Ct., Westchester Co., August 20, 2018), wherein Crown Castle sought to have its state law claims adjudicated. However, the Court never addressed the merits of the state law claims because it concluded that Crown Castle was not a proper assignee or transferee under the RUA and, therefore, did not have standing to maintain the proceeding.

While these two decisions represent significant victories for the City of Rye and its residents, both decisions were made on procedural grounds, and neither addressed the merits of Crown Castle’s federal and state law claims. Communities throughout New York and elsewhere that have been presented with applications for the installation of small cell nodes will undoubtedly be watching closely to see how Crown Castle’s battle with the City of Rye ultimately plays out.

If you have any questions concerning the subject matter of this post, please contact Anthony at aguardino@farrellfritz.com.

 

On September 26, 2018, the Federal Communications Commission (FCC) adopted its Declaratory Ruling and Third Report and Order (“Declaratory Ruling and Order”) enacting significant regulatory changes that will impact local control over the deployment of wireless infrastructure. Aimed at streamlining the nationwide deployment of 5G wireless—the next generation of wireless technology—the Declaratory Ruling and Order contains several features that will have a direct impact on the validity of certain local code provisions and on the processes used by local boards when hearing and deciding small cell wireless applications. The following are some of the key provisions of the Declaratory Ruling and Order:

Fees.  Small cell wireless systems, including Distributed Antenna Systems (DAS), are a form of wireless equipment commonly deployed on utility and light poles along streets and other public right-of-ways. These are the boxes (cabinets), cylinders and antennae that can often be seen at or near the top of host poles.

In order to access the right-of-way to install, operate and maintain small cell systems, service providers and wireless infrastructure developers typically offer municipalities annualized compensation pursuant to certain terms and conditions laid out in a written right-of-way use agreement. Some providers have offered a flat annual fee per location, while others have offered a set percentage of annual profits based on a specified formula. Some have offered both. In some respects, these right-of-way use agreements have operated as rental arrangements.

Under the Declaratory Ruling and Order, the fees municipalities charge for access to their right-of-ways must bear a direct relationship to the “actual and reasonable cost” to the municipality in: (a) maintaining the right-of-way; (b) maintaining the host structure(s) in the right-of-way; or (c) processing an application or permit seeking to deploy in the right-of-way. (¶72).* Fee arrangements which seek to simply maximize a municipality’s profit without any correlation to a demonstrable cost could be deemed illegal barriers to access. (¶73).  The Declaratory Ruling and Order goes one step further on this subject by providing a set of fees and rates the FCC views as presumptively consistent with the Federal Telecommunications Act. (¶79).

Aesthetics.  The proliferation of small cell systems in public right-of-ways has resulted in frequent complaints from local officials and residents about negative impacts on community character and aesthetics. In response, many municipalities have enacted local zoning code provisions that include aesthetic standards for small cell installations. Examples of such standards include the requirement that small cell installations be placed within “stealth” poles or camouflaged, and that equipment be installed in underground vaults whenever possible (a/k/a undergrounding).

The Declaratory Ruling and Order states that, going forward, aesthetic standards affecting small cell deployments are permissible only 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. (¶86). The Declaratory Ruling and Order expounds on its meaning of “reasonable” as “technically feasible and reasonably directed to avoiding or remedying the intangible public harm of unsightly or out-of-character deployments”. (¶87). Its use of “objective” describes standards that are “clearly-defined and ascertainable” and “applied in a principled manner”. (¶88). What is meant by the second criterion—that aesthetic requirements be “no more burdensome than those applied to other types of infrastructure deployments”—is somewhat unclear, particularly so if one attempts to compare the characteristics of small cell wireless installations to those of traditional “utilities”, such as water, sewer, electric, and even cable.

What is clear from this newly minted test is that locally-enacted aesthetic standards will be facing heightened legal scrutiny, and standards that would render a deployment cost-prohibitive or ineffective are most likely to be viewed as an effective prohibition on service. The Declaratory Ruling and Order calls out, specifically, overly specific design and camouflaging requirements, excessive spacing requirements, and mandatory undergrounding requirements as potentially impermissible aesthetic standards. (¶¶84, 90-91).

Shot Clocks.  The Declaratory Ruling and Order takes two notable actions with respect to the shot clocks that apply to local decisions on telecommunications projects. First, it purports to codify the existing 90-day and 150-day shot clocks established in 2009 for non-small cell telecommunications projects. Second, it establishes two new shot clocks which apply to local decisions on small cell wireless applications. Under the new shot clocks, a government agency considering a small cell wireless application has 60 days to take action on a complete application for an installation on an existing structure and 90 days to take action on a complete application for an installation on a new structure. (¶105). A batched application (i.e. a single application covering multiple sites on both existing and new structures) is subject to the longer 90-day shot clock. (¶114).

Remedies for Providers.  The Declaratory Ruling and Order provides teeth for the new shot clocks by articulating a new theory for legal recourse in the event a government agency fails to act on a small cell wireless application in a timely manner. Under existing FCC regulations, a wireless applicant may seek legal remedy in court if the government agency considering its application fails to act within the time prescribed under the shot clocks. Under the Declaratory Ruling and Order, such a failure is not only a “failure to act” but is also presumptively an “unlawful prohibition on service” by the government agency.  (¶¶116-120). The addition of this presumption places a new burden on the defending agency to demonstrate that its failure to act within the time allowed under the applicable shot clock was reasonable and that it did not materially limit or inhibit the applicant from introducing or improving service.

The full Declaratory Ruling and Third Report and Order contains in depth explanations and the reasoning behind each of the regulatory changes briefly addressed above. It further contains clarifications on when shot clocks start, pause, and restart, and when certain applications qualify as “collocations” for purposes of determining which shot clock applies to a given application.

A summary of the Declaratory Ruling and Order was published in the Federal Register on October 15, 2018. The new rules will therefore take effect on January 14, 2019 (90 days after publication).

The full Declaratory Ruling and Third Report and Order can be viewed on the FCC website at: https://www.fcc.gov/document/cellular-reform-third-report-and-order. The summary published in the Federal Register can be viewed on the Federal Register’s website at https://www.federalregister.gov/documents/2018/10/15/2018-22234/accelerating-wireless-and-wireline-broadband-deployment-by-removing-barriers-to-infrastructure.

If you have any questions concerning the subject of this post, please feel free to contact Philip at pbutler@farrellfritz.com.

*The ¶ symbol followed by a number refers to the paragraph with the same number in the full Declaratory Ruling and Third Report and Order.