Wireless Telecommunications Facilities Regulation – Ninth Circuit Narrows the Preemption Standard of Section 253(a) of the Telecommunications Act of 1996, Reversing Its Prior Decisions in Sprint Telephony and Auburn

Sprint Telephony PCS, L.P. v. County of San Diego, — F.3d —, 2008 WL 4166657 (9th Cir. Sept. 11, 2008) The Telecommunications Act of 1996 (U.S.C. Titles 15, 18 and 47) (“the Act”) was enacted by Congress with the intent of lowering prices and improving the quality of service for the public by promoting competition and reducing regulation within the industry.

Section 253(a) of the Act states: “[n]o 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 telecommunications service.”  Id. at 12708.  Congress concurrently enacted SS 332(c)(7) which applies only to wireless service providers.  Section 332(c)(7) states that local regulations: “shall not prohibit or have the effect of prohibiting the provision of personal wireless services.” Id.

In 2003, the County of San Diego enacted a Wireless Telecommunications Facilities Ordinance (“Ordinance”) which established permit requirements and additional restrictions on the placement and construction of wireless telecommunication facilities.  Sprint challenged the County’s Ordinance arguing that it violated SS 253(a) of the Act because on its face the Ordinance prohibited, or had the effect of prohibiting, the provision of wireless telecommunication services.  In turn, the County argued that SS 253(a) was inapplicable because SS 332(c)(7) of the Act was the exclusive authority on wireless regulations.  Id.at  12703-04.

The district court held that a facial challenge to a local government’s wireless ordinance could be brought under either SS 253(a) or SS 332(c)(7) because the regulations are not exclusive.  Id. at 12706.  Relying on the Ninth Circuit’s decision in City of Auburn v. Qwest Corp., 260 F.3d 1160 (9th Cir. 2001) the district court held that the County’s Ordinance violated SS 253(a) of the Act.  Id. at 12704.  In Auburn, the court  interpreted SS 253(a) to preempt regulations that not only prohibited the ability of any company to provide telecommunications services, but also regulations that “may … have the effect of prohibiting” the provision of those services.  By inserting the ellipsis after the term “may,” the Ninth Circuit truncated the language of the statute which resulted in a very broad interpretation of SS 253(a).  When applying that broad standard, the Ninth Circuit held that a local regulation was preempted by SS 253(a), and therefore invalid, when it charged fees, created procedural requirements or enacted penalties.  Id. at 12709.  Because the County’s Ordinance created procedural requirements that the Ninth Circuit determined were preempted by SS 253(a), the district court held that the Ordinance violated the Act. 

The parties then cross appealed and a three judge panel of the Ninth Circuit affirmed the district court’s decision.  The Ninth Circuit granted rehearing en banc.  In a stunning opinion which takes full responsibility for misinterpreting the breadth of SS 253 of the Act in Auburn and the resulting invalidation of local regulations across the country, the Ninth Circuit’s en banc opinion reexamines the meaning and purpose of SS 253 and reverses the decision of the three judge panel.  Id. at 12706.

The threshold issue in this case was whether the Ninth Circuit should apply SS 253(a) or SS 332(c)(7) in determining the validity of the County’s Ordinance.  In making its decision, the court determined it must first examine the scope and breadth of the two sections, and looked to the legislative history of the Act.  Section 253(a) was enacted to preempt state and local regulations that maintained telecommunications monopolies in the marketplace.  However Section 332(c)(7) was enacted with a different purpose.  Initially, Congress proposed to grant the Federal Communications Commission (“FCC”)  sole authority to regulate the placement of wireless telecommunications facilities.  However, this authority was instead given to local governments, under section 332(c)(7), thereby preserving their power over zoning and land use issues, and allowing local governments to regulate the construction and placement of wireless facilities.  Id. at 12707-08. 

The Ninth Circuit has protected the right of local governments to maintain authority over land use decisions by relying on the plain meaning of SS 332(c)(7) when applying it in previous cases.  See MetroPCS, Inc. v. City of San Francisco, 400 F.3d 715 (2005); Sprint Telephony PCS, L.P. v. San Diego, 2008 WL 4166657 at 12708.  The court has held that a local government is in violation of SS 332(c)(7) only if it places a general ban on wireless services or imposes restrictions which effectively amount to a prohibition on services.  Sprint Telephony PCS, L.P. v. San Diego, 2008 WL 4166657 at 12708-12709.  However, the court has not applied the same plain meaning standard to the language of SS 253(a), which reads nearly identical in text.  Id. at 12709.  Instead, the Ninth Circuit has relied on its truncated and broader interpretation of SS 253(a) which it created in Auburn.

The Ninth Circuit’s interpretation of SS 253(a) in Auburnhas had an impact across the country.  Courts throughout the nation have invalidated numerous local telecommunication ordinances.  However, a number of district courts and the Eighth Circuit have questioned the Ninth Circuit’s method for interpreting the scope of SS 253(a), stating that the interpretation “appears to depart from the plain meaning of the statute….” Id. at 12710, citing Qwest Corp. v. City of Portland, 200 F. Supp. 2d, 1250, 1255 (2002).  The Eighth Circuit recently rejected the standard articulated by the Ninth Circuit in Auburn and held that SS 253(a) would preempt a local regulation only if the plaintiff could show “actual or effective prohibition, rather than the mere possibility of prohibition.” Level 3 Commc’ns, L.L.C. v. City of St. Louis, 477 F.3d 528, 532-33 (2007);Id. at 12711.

When reaching its decision in this case, the Ninth Circuit examined the Eighth Circuit’s and district courts’ analysis of its Auburn decision, and agreed with their conclusions, finding  that its “previous interpretation of the word “may” as meaning “might possibly” is incorrect.”  Id. at 12711.  The court also found that by inserting the ellipsis after the term “may,” it quoted SS 253(a) somewhat inaccurately, which resulted in its overly broad interpretation of the section.  Id. at 12709.

The Ninth Circuit then went on to overrule its decision in Auburn and adopt the Eighth Circuit’s holding that “a plaintiff suing a municipality under section 253(a) must show actual or effective prohibition, rather than the mere possibility of prohibition,” thereby harmonizing the interpretation of SS 253(a) and SS 332(c)(7).  Id. at 12713.  Using common rules of statutory interpretation,  the court found that when the same text is used throughout a statute, the same meaning should be applied.  Id. at 12713.  The court justifies its new position by stating that this interpretation is consistent with the FCC’s interpretation and its prior interpretation of SS 332(c)(7).  Id. at 12711-12.  The court further held that because SS 253(a) and SS 332(c)(7) are subject to the same legal standard, that it did not need to determine which section governed the suit.  The court went on to apply this effective prohibition standard to the County’s Ordinance and easily found that the Ordinance was not preempted by SS 253(a).  Id. at 12716.

This opinion is likely to have significant ramifications nationwide.  The prior 9th Circuit opinion in Sprint Telephony resulted in the invalidation of many regulations that would have been found to be proper and not preempted under the Ninth’s Circuit’s current interpretation of the Act.