A Huge Legal Loss for Crown Castle and the Wireless Industry

BREAKING NEWS: On Sept 15, 2016, the State Appellate Court in T-Mobile et al vs. San Francisco (link) released an important decision regarding municipal rights to regulate cell towers in the Public Right of Way.  The decision was a devastating loss for the wireless industry and was nothing short of a wipeout.  It affirmed the key findings of Sprint vs Palos Verdes Estates (9th Circuit, 2009 – link) under state law, and it made explicitly clear that municipalities retain police powers to regulate cell tower site placement.  It was a historic loss for an increasingly arrogant wireless industry whose importance cannot be overstated.  We’ve provided some background and commentary below.

We’ve written before about California Public Utility Code (PUC) Sections 7901 and 7901.1.  These are key aspects of state law granting “telephone corporations” Right of Way (ROW) access, while also covering a municipality’s right to regulate this access.  PUC 7901 is the cornerstone of Crown Castle’s claimed right to place highly intrusive cell towers within our Palos Verdes neighborhoods, many literally in resident’s front yards.  Further, Crown Castle also alleged the Public Utility Code severely limited a municipality’s ability to stop them.  Crown Castle has repeatedly alleged Sections 7901 and 7901.1 tie a city’s hands, thus rendering attempts to regulate or otherwise interfere with site deployment as illegal.

pve_ca_sealThe problem with Crown Castle’s argument has always been the landmark decision Sprint vs. Palos Verdes Estates (9th Circuit, 2009).  The City of Palos Verdes Estates courageously stood up to bullying tactics when Sprint demanded unfettered ROW access.  Sprint vs PVE was a huge loss for the wireless industry on multiple fronts.  Under California law, the 9th Circuit found that Section 7901 permits municipal regulation of cell towers within the ROW based on aesthetics.  Further, the 9th Circuit upheld the City’s denial of two wireless sites on aesthetic grounds.  The findings of Sprint vs. PVE were seemingly crystal clear; Section 7901 provides a limited, not absolute, ROW access grant of rights to telephone corporations.  Further, municipalities have clear police powers to regulate placement of these sites.

The Alleged Vulnerability of Sprint vs. PVE

Over the years, the wireless industry and its sympathizers thought they had chipped away and discredited Sprint vs. PVE.   In fact, some went as far as suggesting cities should act as if it was already overturned just to be safe.  They viewed it as having two major weaknesses:

  • A significant aspect of Sprint vs PVE is that it involved a federal court interpreting state law (PUC 7901 and 7901.1). Importantly, state courts are not bound by the 9th Circuit’s (a federal court) interpretation of state law.  The wireless industry insisted the 9th Circuit got it wrong and that a state court would correct this.
  • Sprint vs. PVE is seven years old. The decision’s detractors vaguely derided it as archaic and obsolete; overtaken by technological advances, a patchwork of lower court decisions and FCC rulemakings, and a generally insisted its demise was imminent.

With its decision in T-Mobile et al vs. San Francisco, the California Court of Appeals completely obliterated both of these arguments.  The court made it clear that the 9th Circuit got it exactly right and furthermore, they fully reiterated these  points in their decision.  In doing so, the court both enshrined the federal court interpretation in a state court decision and drove a stake through the notion that Sprint vs. PVE was some sort of obsolete relic.

The defeat could not have been more one-sided.  The wireless industry, led by T-Mobile, Crown Castle, and Extenet as the Plaintiffs, went for broke and they lost everything.

Key Excerpts from the Decision

On the wireless industry’s contention that state law didn’t grant municipalities regulatory powers over these sites (emphasis added):

Plaintiffs’ first argument appears to be premised on the mistaken understanding that local government has no authority to regulate Plaintiffs’ installations unless specifically authorized to do so by statute. The relevant question is not, as Plaintiffs posit, whether section 7901 or section 7901.1 “grants” the City discretionary regulatory power or the power to consider aesthetics. The question is really whether either section divests the City of its constitutional powers. Our review of the California Constitution, statutory provisions, and the relevant case law lead us to believe section 7901 is a limited grant of rights to telephone corporations, with a reservation of local police power that is broad enough to allow discretionary aesthetics-based regulation.

This is from page 10 and is probably the most important paragraph in the decision.  The court makes clear that 1) telephone corporation ROW access rights are limited and 2) that municipalities don’t need permission from the PUC to regulate them, but that they have reserved (i.e. set aside for them) police powers under state law to do so.

On the limits of telephone corporation ROW access rights (emphasis added):

But section 7901 does not grant telephone corporations unlimited rights to install their equipment within the right-of-way. Rather, section 7901 clearly states that such installations must not “incommode the public use of the road or highway or interrupt the navigation of the waters.” (§ 7901.) Furthermore, “section 7901 grants [Plaintiffs] the privilege to construct infrastructure upon public rights-of-way, subject to a municipality’s ‘right to exercise reasonable control as to the time, place, and manner in which roads, highways, and waterways are accessed.’ (§ 7901.1, subd. (a).)” (Huntington Beach, at p. 569, fn. omitted.)

This is from page 12.  It starts getting into the meaning of the word “incommode” used in PUC 7901.  It’s an interesting word that was one of the key aspects of the 9th Circuit’s interpretation of state law under Sprint vs PVE.  It that decision, the 9th Circuit determined that it included aesthetics.  As we’ll see, the court unequivocally affirms that interpretation.

On the meaning of “incommode”:

Plaintiffs contend the Legislature impliedly preempted such local regulation by giving telephone corporations the power to install telephone lines in the public right-of-way “in such manner and at such points as not to incommode the public use of the road or highway or interrupt the navigation of the waters.” (§ 7901, italics added.) Plaintiffs’ position is that “incommode” means only physical obstruction of travel in the public right-of-way. The City, on the other hand, points out that the dictionary definition of “incommode” is broader and includes “inconvenience, discomfort, and disturbance beyond mere blockage.”

Nothing in section 7901 explicitly prohibits local government from conditioning the approval of a particular siting permit on aesthetic concerns. In our view, “incommode the public use” means “to unreasonably subject the public use to inconvenience or discomfort; to unreasonably trouble, annoy, molest, embarrass, inconvenience; to unreasonably hinder, impede, or obstruct the public use.” (See Palos Verdes Estates, supra, 583 F.3d at p. 723.)

The first paragraph is from page 15 and it summarizes both sides’ arguments.  After a lengthy discussion of the existing case law, the court reaches its conclusion in the second excerpted paragraph from page 21.  The court comes down firmly on the side of the City in that “incommode” includes aesthetics.

On the 9th Circuit’s interpretation of California law (PUC 7901) in Sprint vs PVE (emphasis added):

Although California courts have not yet addressed this precise issue (Ed: regulation based on aesthetics) in any published opinion, authority from the United States Court of Appeals for the Ninth Circuit is directly on point. In Palos Verdes Estates, supra, 583 F.3d 716, the city of Palos Verdes Estates denied, for aesthetic reasons, two permits to construct wireless facilities in the public right-of-way. (Id. at p. 719.) A city ordinance authorized Palos Verdes Estates to deny such permit applications on aesthetic grounds. (Id. at pp. 720–721.)

Of course, we are not bound by the Ninth Circuit’s opinion on matters of state law. (Campbell v. Superior Court (1996) 44 Cal.App.4th 1308, 1317.) Although the Palos Verdes Estates opinion is not binding, we find it persuasive. (Adams v. Pacific Bell Directory (2003) 111 Cal.App.4th 93, 97; Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 299.) We agree with the City and the Palos Verdes Estates court that Plaintiffs’ interpretation of “incommode” is too narrow and inconsistent with the term’s plain meaning. … Plaintiffs’ argument rests on the faulty assumption that “use” of a public road means nothing beyond transportation thereon. We agree with the Palos Verdes Estates court that public use of the right-of-way is not limited to travel and that streets “may be employed to serve important social, expressive, and aesthetic functions.” (Palos Verdes Estates, supra, 583 F.3d at p. 723.)

The court couldn’t be clearer, while not being bound by Sprint vs PVE, they are fully in agreement with the 9th Circuits interpretation of state law.  By saying so here, they firmly establish these central tenants of Sprint vs. PVE in California case law.  The importance of this really can’t be understated.  The wireless industry has portrayed Sprint vs PVE as something akin to the federal court bumbling into an area where they really have no legitimate business, namely interpretation of state law.   This state Appellate Court decision utterly and decisively dismantles that talking point, much to the wireless industry’s detriment.

An Important Extension of the Law beyond Sprint vs. PVE

There’s more.  The court went even further than we were expecting in interpreting PUC 7901.1, and frankly the magnitude of it hasn’t fully sunk in.  PUC 7901.1 states:

7901.1. (a) It is the intent of the Legislature, consistent with Section 7901, that municipalities shall have the right to exercise reasonable control as to the time, place, and manner in which roads, highways, and waterways are accessed.

   (b) The control, to be reasonable, shall, at a minimum, be applied to all entities in an equivalent manner.

   (c) Nothing in this section shall add to or subtract from any existing authority with respect to the imposition of fees by municipalities.

Many observers (including us) have viewed PUC 7901.1 as a modifier of PUC 7901, i.e. that municipalities have the right to reasonably control “time, place, and manner” when regulating cell towers.  The Plaintiffs (T-Mobile et al) attempted to argue that this language somehow limited municipal rights when regulating cell towers.  The Plaintiffs were further arguing that the “equivalent manner” language of PUC 7901.1(b) constrained municipalities.  In short, if they allowed other services (“all entities”) in the ROW then they had to allow them also.

The court rejected this argument out of hand and went in a completely different direction.  It stated that PUC 7901.1 only applies to the construction of wireless facilities in the ROW, not the occupation of the ROW.

That means that “reasonable control as to time, place, and manner” has nothing to do with municipalities’ regulation of cell towers themselves but only regards their construction.

On first blush this seems really problematic, does that mean municipalities don’t have time, place, and manner control when regulating cell towers in the ROW?  No, it doesn’t mean this at all, in fact it means the exact opposite.  The court made it explicitly clear municipalities do retain these powers but that they don’t derive them from PUC 7901.1.

The court emphasized that municipalities have this right under the vested police powers granted municipalities under the California Constitution and PUC 7901’s language regarding “incommode the public use of roads”.  In fact, the court seems to be saying municipal power in regulating these sites is not limited only to “time, place, and manner” at all since this regards construction.  Wow, we’re not sure what else there is to regulate but we’ll take it.  Like we said, the full implications of this hasn’t sunk in.

So not only do municipalities have broad police powers regarding the placement of these sites, but they have further powers enumerated in PUC 7901.1 regarding construction of these sites.

(Side note: Our hat is off to the San Francisco City Attorney’s office as they seem to be the only ones who really understood this and got it right.)

What This Means for Crown Castle’s Palos Verdes Cell Tower Deployment

Those of us that have been closely following the cell tower Planning Commission hearings in Palos Verdes Estates have been baffled and frankly troubled by the legal advice given the City.  It was particularly ironic that this was happening in Palos Verdes Estates of all places, the City that won these rights in the first place.

Those advising the City had convinced decision makers that PVE could only require cosmetic changes to highly intrusive sites, but couldn’t actually deny them.  One advisor spoke of Sprint vs PVE’s obsolescence, stating publicly that it was “one decision from being overturned”.  We’ve written about this before, how it took a concerted resident effort to convince PVE decision makers that they were getting bad legal advice, and that Sprint vs PVE was still good law.  Residents stressed that the City was squandering that hard fought legal victory for no good reason other than an excessively timid legal stance.

With this court decision, the residents’ concerns have been fully vindicated.  PVE’s legal advisors owe City decision makers an explanation as to how they could have gotten it so wrong.

It appeared to us that PVE’s legal advisors were sacrificing resident’s interests and the City’s aesthetics in order to preclude any chance of a lawsuit, regardless of how ill-founded or likely to succeed.  Fortunately, city decision makers recently began to openly question what they had been told.  This decision should accelerate that process.  PVE’s legal advisors could restore their credibility by embracing the decision and altering their legal advice accordingly.

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