On July 14, the U.S. Court of Appeals for the Third Circuit issued its decision in Cellco Partnership v. White Deer Township Zoning Hearing Board. The court held that the Zoning Board's denial of Verizon's application to build a cell tower had "the effect of prohibiting the provision of personal wireless services" contrary to the Telecommunications Act of 1996. The Third Circuit's decision is significant because the court applied a pro-competition and pro-innovation interpretation of the "effective prohibition" requirement that the FCC made in a 2018 order.
The Third Circuit concluded that the local zoning board's decision was unlawful under the court's pre-existing APT Pittsburg test for claims that a local government's action violated the "effective prohibition" requirement. Under the APT Pittsburg test: "First, the provider must prove there is a significant gap in wireless service and, second, the provider must show it is filling that gap in the least intrusive manner."
But that did not end the court's analysis. The Third Circuit observed:
In a declaratory ruling, the Federal Communications Commission (FCC) criticized the APT Pittsburgh test and others like it for being too narrowly focused on coverage gaps and reflecting "an outdated view of the marketplace." Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Inv., 33 FCC Rcd. 9088, 9106-07 [paragraph 40] (2018). Instead, it interpreted the statute to prohibit government action that "materially limits or inhibits the ability of any competitor or potential competitor to compete in a fair and balanced legal and regulatory environment." Id. at 9102 [paragraph 35].
The court expressly adopted the FCC's "materially inhibit" standard, concluding that the agency's interpretation is entitled to Chevron deference. In doing so, court noted that the FCC has applied the "materially inhibit" standard to Section 253(a) since its 1997 California Payphone Association Order. Section 253(a) applies to effective prohibitions of "telecommunications services." Based on the canon of statutory construction that identical words in neighboring provisions of the same statute should have the same meaning, the court determined that the "materially inhibit" standard also should apply to the "effect of prohibiting" language found in Section 332(c)(7)(B)(i)(II).
Moreover, upon reviewing the FCC's 2018 order and various court decisions that the order referred to, the Third Circuit derived a few key points: (1) "a prohibition does not need to be complete or 'insurmountable' to run afoul of' § 332"; (2) "local government action which either imposes unreasonable fees or requires a provider to accept unreasonable costs materially inhibits wireless services"; and (3) the "materially inhibit" standard requires us to consider the totality of the circumstances" – meaning that "[a] legal requirement that imposes a reasonable cost on one tower in one jurisdiction may constitute an effective prohibition when aggregated across many towers, or many wireless facilities, in several jurisdictions."
The Third Circuit also recognized the implications of the FCC's "materially inhibit" for wireless competition policy:
The "materially inhibit" standard is more consistent than the APT Pittsburgh test with the TCA's goals of "promoting competition, securing higher quality services for American telecommunications consumers and encouraging the rapid deployment of new telecommunications technologies." 33 FCC Rcd. at 9105 (quoting Preamble to the Telecommunications Act of 1996, Pub. Law No. 104-104, § 202, 110 Stat. 56 (1996)) (ellipses and brackets omitted). Coverage-gap-based tests are "incompatible with a world where the vast majority of new wireless builds are going to be designed to add network capacity and take advantage of new technologies, rather than plug gaps in network coverage." Id. at 9107-08 (quotation marks and citation omitted).
Additionally, the Third Circuit acknowledged that the FCC's "materially inhibit" standard constitutes an improvement over the court's pre-existing test for claims that a local government action constitutes an "effective prohibition" on wireless services:
This case reveals the inadequacy of the APT Pittsburgh test. The Zoning Board plausibly argued that requiring Verizon to remove the property's existing structures or to purchase the property might be less intrusive on the values that the township's set-back requirements sought to serve. But it would be unreasonable for the Zoning Board to require such extreme measures. The APT Pittsburgh test does not clarify how much a local government can reasonably require a provider do to avoid intruding. We think that the "materially inhibit" better answers this question.
The Third Circuit also set forth the implications of the FCC's "materially inhibit" standard for network upgrades to next-generation technologies:
In light of our decision to adopt the "materially inhibit" standard, not only does "insufficiency in coverage" ordinarily entitle a provider to a variance but so does insufficiency in network capacity, 5G services, or new technology. In the TCA, Congress recognized that "[t]he telecommunications interests of constitutions are . . . statewide, national and international." 33 FCC Rcd. at 9110. Local zoning boards, like White Deer Zoning Board, are prohibited from preventing providers from meeting those broader interests.
The decision in Cellco Partnership v. White Deer Zoning Hearing Board constitutes binding precedent in the Third Circuit. And its reasoning ought to be persuasive to courts in other jurisdictions that face legal challenges to local government denials of wireless infrastructure citing permits.
For additional background on the FCC's 2018 order at issue in Cellco Partnership v. White Deer Zoning Hearing Board, see my September 2020 blog post "Court Decision Will Advance 5G Network Deployment" as well as a June 2022 Perspectives from FSF Scholars, co-authored with Andrew MagLoughlin, "The FCC Should Preserve and Expand Its Broadband Infrastructure Reforms."
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