Overview of Legal Challenges to the FCC’s 5G Order on Small Cell Siting
Legal Sidebari
Overview of Legal Challenges to the FCC’s 5G
Order on Small Cell Siting
February 25, 2019
On September 26, 2018, the Federal Communications Commission (FCC) adopted a Declaratory Ruling
and Third Report and Order, titled “Accelerating Wireless Broadband Deployment by Removing Barriers
to Infrastructure Investment” (the Order). In the Order, the FCC clarified when the Telecommunications
Act of 1996 (P.L. 104-104) preempts state and local requirements related to the deployment of fifth-
generation (5G) wireless infrastructure. It also set time frames (or “shot clocks”) for localities to review
5G infrastructure applications. As described in a press release, the FCC issued the Order in order to
“remove regulatory barriers that inhibit the deployment of infrastructure necessary for 5G and other
advanced wireless services.” Some cities, however, have criticized the Order as federal overreach. For
instance, the CEO and Executive Director of the U.S. Conference of Mayors stated that the Order
“misapplies federal law to federalize local public property” and “needlessly introduce[s] increased risk of
right-of-way and other public safety hazards.” On the other hand, several mobile service providers have
maintained that the FCC did not go far enough, arguing that the Order should have included a “deemed
granted” provision automatically approving applications after the shot clocks expire. A number of
localities and mobile service providers have acted on these views by filing petitions challenging the Order
in various federal appellate courts. Although the Order went into effect on January 14, 2019, these
challenges remain ongoing and have been consolidated in the Ninth Circuit Court of Appeals.
This Sidebar begins by providing a brief overview of 5G networks. It then reviews the substance of the
Order, discusses the legal challenges to the Order, and, finally, offers considerations for Congress
concerning the ongoing litigation.
5G Networks
5G networks are the latest generation of mobile phone technologies. Mobile service providers are
currently in the process of deploying 5G networks throughout the country, and some providers have
already launched 5G services in certain cities. Once fully implemented, 5G will offer increased bandwidth
and faster speeds than previous generations of mobile phone technologies. In part, this increased speed
and capacity will be achieved through improvements to 4G networks and by using higher radio
frequencies (frequencies in the 30 to 300 gigahertz range), which have not been used for mobile radio
communications previously.
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The use of higher frequencies requires mobile service providers to install new infrastructure and
equipment. Previous generations of mobile technology relied on lower-frequency waves that can travel
longer distances and through buildings and other objects, and thus used tall towers spaced far apart to
provide service. In contrast, the high-frequency waves used for 5G can travel short distances and cannot
easily penetrate objects. Consequently, the 5G network employs numerous, smaller cell sites placed close
together to relay signals across longer distances and around obstacles. These are referred to as “small cell
sites” or “Small Wireless Facilities.” These small cell sites can be installed on structures such as street
lights, utility poles, or buildings. 5G networks are discussed in further detail in the CRS Report R45485,
Fifth-Generation (5G) Telecommunications Technologies: Issues for Congress, by Jill C. Gallagher and
Michael E. Devine.
The Order
Because installing small cell sites generally requires approval from state or local governmental bodies, the
FCC issued the Order to limit state and local “regulatory barriers.” The Order notes that, while many
cities have acted to “facilitate the deployment of 5G,” some “outlier conduct persists.” The Order points
to instances of cities imposing high fees and onerous zoning and other requirements, as well as situations
where cities failed to rule on installation applications for long periods of time. To that end, the Order
addresses state and local action in two main ways. First, it clarifies when the Telecommunications Act
preempts state and local regulations that may inhibit a mobile service provider’s ability to provide a
service to an area; in particular, it addresses preemption of state and local fees and other requirements,
such as aesthetic limitations. Second, it sets time frames applicable to localities’ review of small cell site
applications.
Preemption
The Order’s discussion of preemption begins by interpreting the Telecommunication Act’s two relevant
preemption provisions: Sections 253 and 332(c)(7). Subject to certain exceptions, these sections preempt
state and local requirements that “prohibit or have the effect of prohibiting the ability of any entity” to
provide “telecommunications” or “personal wireless services.” The Order interprets these provisions as
imposing a “material inhibition” standard, concluding that a law “ha[s] the effect of prohibiting” a
telecommunications entity from providing service if it “materially limits or inhibits the ability of any
competitor or potential competitor to compete in a fair and balanced legal and regulatory environment.”
The Order notes that this “material inhibition” standard was first adopted in the FCC’s 1997 California
Payphone decision and is consistent with decisions of the First, Second, and Tenth Circuit Courts of
Appeals. The Order acknowledges that some courts have read the preemption provisions as requiring
evidence of a “coverage gap” or “an existing or complete inability to offer a telecommunications service.”
However, the Order rejects these alternative interpretations, reasoning that the “‘effectively prohibit’
language must have some meaning independent of the ‘prohibit’ language.”
After establishing the “material inhibition” standard, the Order applies it to fees. The Order explains that
state or local fees charged to mobile service providers for deploying small cell sites violate Sections 253
and 332(c)(7) unless they: (1) are a reasonable approximation of the state or local government’s costs, (2)
only factor in costs that are “objectively reasonable,” and (3) are no higher than fees charged to similarly
situated competitors. Along with setting out this three-part test, the Order identifies specific fee limits that
are presumptively allowed under Sections 253 and 332(c)(7). For non-recurring fees, such as up-front
applications for small cell site installations, localities may charge up to $500, subject to certain
exceptions. For recurring fees, such as access fees, localities may charge up to $270 per year. While fees
within these limits presumptively comply with Sections 253 and 332, the Order explains that localities
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may charge fees above these amounts by showing that they nonetheless comply with the three-part test
due to local cost variances.
In addition to fees, the Order applies the “materially inhibits” standard to three types of non-fee
requirements. Specifically, it addresses state and local laws imposing aesthetic requirements,
undergrounding requirements (i.e., laws mandating that wireless infrastructure be deployed underground),
and minimum spacing requirements (i.e., laws requiring wireless facilities be a certain minimum distance
apart from each other). The Order articulates a three-part test for evaluating these restrictions. According
to the Order, such 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.” While the Order explains that this standard should be applied to all three types of requirements,
it also notes that laws requiring all wireless facilities be deployed underground would amount to an
“effective prohibition,” given the “propagation characteristics of wireless signals.”
Shot Clocks
The other main component of the Order sets time frames governing how quickly localities must review
applications for installing small cell sites. Under these shot clocks, state and local governments must
decide applications within either 60 or 90 days, depending on whether the installation will be on an
existing structure or new structure. As with past shot clocks, the Order roots the legal authority for these
shot clocks in Section 332(c)(7), which requires localities to “act on any request for authorization to
place, construct, or modify personal wireless service facilities within a reasonable time.”
The FCC declined, however, to adopt a “deemed granted” remedy, which would automatically deem an
application granted whenever the locality fails to decide it within the shot clock periods. The Order
explains that in situations where a jurisdiction missed the shot clock deadline, the applicant should, in
most cases, be able to obtain expedited relief in court under Section 332(c)(7), which directs courts to
decide suits brought by any adversely affected person on an “expedited basis.” According to the Order, in
such cases, applicants should have a “relatively low hurdle to clear in establishing a right to expedited
judicial relief,” since missing the shot clock would amount to a presumptive violation of Section
332(c)(7).
Legal Challenges
About a month after the FCC approved the Order, on October 24, a number of municipalities filed
petitions for review in the Ninth Circuit. These petitions generally allege that the Order exceeds the
FCC’s statutory authority, is arbitrary and capricious and an abuse of discretion, and is otherwise contrary
to law. Shortly thereafter, several mobile service providers (including AT&T, Verizon, and Sprint) also
filed petitions for review in various federal appellate courts, alleging that the FCC’s failure to adopt a
“deemed granted” remedy was “arbitrary and capricious.” While most of these petitions were initially
consolidated in the Tenth Circuit, they have now all been transferred to the Ninth Circuit. Before
transferring the petitions to the Ninth Circuit, however, the Tenth Circuit denied petitioners’ motion to
stay the Order’s effect pending the outcome of the litigation. Consequently, while the Ninth Circuit is still
scheduled to consider petitioners’ challenges to the validity of the Order, the Order has been effective
since January 14, 2019.
While the parties have not yet filed briefs detailing their legal theories, one source of contention may be
the validity of the FCC’s “material inhibition” standard. In particular, the FCC will likely need to grapple
with the Ninth Circuit case Sprint Telephony PCS, L.P. v. County of San Diego. In County of San Diego,
the Ninth Circuit overturned its prior decision in City of Auburn v. Qwest Corp., which held that Section
253 preempts state and local regulations whenever they “create a substantial . . . barrier” to the provision
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of services. The court reasoned that City of Auburn mistakenly read Section 253 to preempt laws that
“may” have the “effect of prohibiting” service, rather than only preempting laws that actually have the
“effect of prohibiting service.” Consequently, it adopted a narrower standard, holding that plaintiffs “must
show actual or effective prohibition, rather than the mere possibility of prohibition.” The court further
held that this conclusion “rests on the unambiguous text” of the statute. In light of this holding, a key
issue will likely be whether County of San Diego forecloses the FCC’s interpretation. Under the Chevron
doctrine (established by the Supreme Court case Chevron U.S.A., Inc. v. Natural Resources Defense
Council, Inc.), courts typically defer to an agency’s reasonable interpretation of an ambiguous statute,
even if that interpretation differs from a court’s previous interpretation. However, the Supreme Court has
held that this deference does not apply when there is “judicial precedent holding that the statute
unambiguously forecloses the agency’s interpretation.”
In addition to the preemption standard, another issue will likely be whether the FCC’s decision not to
include a “deemed granted” remedy for shot clock violations was arbitrary and capricious under Section
706 of the Administrative Procedure Act (“APA”). As the Supreme Court has explained, a federal
agency’s determination is arbitrary and capricious—and therefore invalid—if the agency “has relied on
factors which Congress has not intended it to consider, entirely failed to consider an important aspect of
the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or
is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.”
To prevail under this standard, the mobile service providers will likely need to make fact-specific
arguments showing that, for example, the FCC failed to grapple adequately with evidence in the record or
failed to address an important argument related to the “deemed granted” remedy. Ultimately, however,
arbitrary and capricious review generally favors the FCC, as the Ninth Circuit has described it as “highly
deferential.” For more background on arbitrary and capricious review, see CRS Report R44699, An
Introduction to Judicial Review of Federal Agency Action, by Jared P. Cole.
Considerations for Congress
Given the litigation surrounding the Order, Congress may be interested in addressing the extent
to which the Telecommunications Act limits state and local action affecting 5G infrastructure
deployment. At least one bill introduced in the 116th Congress would declare the Order to have
“no force or effect.” However, no legislation has been introduced in the 116th Congress that
would amend the Telecommunications Act’s preemption provisions. Should Congress consider
whether to do so in the future, it might address when state or local laws “have the effect of
prohibiting the ability of any entity” to provide service, as the interpretation of this language is
central to the FCC’s Order. In particular, future legislation might clarify whether state or local
laws are preempted whenever they “materially inhibit” the provision of service (the FCC’s
interpretation) or only when they “essentially guarantee” rejection of all wireless applications or
create an existing inability to provide service (as some courts have suggested). The former
approach would preempt a broader range of state and local laws and would give the FCC more
discretion to determine when particular laws are preempted (as it did in the Order). The latter
approach would apply to a narrower range of laws, likely only preempting laws that completely
prevent providers from offering mobile service. Future legislation might also address how the
general preemption standard applies specifically to fees or other specific types of requirements,
such as aesthetic limitations, and when the FCC should set shot clocks and adopt “deemed
granted” remedies.
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Author Information
Chris D. Linebaugh
Legislative Attorney
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