Judge Frederic Block of the U.S. District Court, Eastern District of New York held on July 29, 2022 that the Village of Flower Hill, NY (the “Village”) and its Board of Trustees (“Board”) acted within its powers under the Telecommunications Act of 1996 (“TCA”) when it denied the application of ExteNet, Inc. (“ExteNet”) to install eighteen (18) small cell 4G wireless antennas in the Village’s public rights of way.1
ExteNet was under a contract with a wireless carrier (“Carrier”) to build and operate small wireless facilities throughout Long Island. The contract stated that one of its goals was to improve coverage of the Carrier’s 4G LTE network. In 2016, the Carrier identified an area around the Village as having insufficient 4G LTE service and asked ExteNet to design and install sixty-six (66) small wireless facilities, eighteen of which would be located within the Village. Since 2017, when ExteNet filed its first permit application for a small wireless facility, ExteNet worked with the Village as it attempted to obtain approvals to build the small wireless facilities.
The case dealt with the eighteen (18) small wireless facilities proposed to be built within the Village. In his decision, Judge Block wrote that the TCA: (1) “forbids a municipality from prohibiting or effectively prohibiting the provision of wireless services[,]” (2) “requires a municipality to support its decision with substantial evidence[,]” and (3) “requires a municipality to make its permitting decisions in a nondiscriminatory matter.” ExteNet Sys., Inc. v. Vill. Of Flower Hill, No. 19-CV-5588-FB-VMS, 2022 U.S. Dist. LEXIS 135267, at *7-8 (E.D.N.Y. Jul. 29, 2022).
In regard to the first point, while Judge Block acknowledged that “the Act is not a model of clarity,” citing Sprint Spectrum L.P. v. Willoth, 176 F.3d 630 (2d Cir. 1999), he stated that the TCA only covers access to voice cellular service and not improved capacity and speed. ExteNet argued that re Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Inv., 33 F.C.C.R. 9088 (2018) (“Third Report and Order”) expanded the scope of the TCA to include services beyond telephone network access in which it “clarif[ied] that an effective prohibition occurs where a state or local legal requirement materially inhibits a provider’s ability to engage in any variety of activities related to its provision of a covered service” and that the test can be met by filling a coverage gap “but also when densifying a wireless network, introducing new services or otherwise improving service capabilities.” ExteNet argued that the Third Report and Order was entitled to deference under Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984). Judge Block stated that Chevron deference is only applicable when the statute in question is silent or ambiguous and that, in this case, the phrase “personal wireless services” was not ambiguous.2 Judge Block held further that “[i]mproved speed and capacity are desirable (and, no doubt, profitable) goals…but they are not protected by the [TCA],” relying on Willoth at 643. Therefore, since ExteNet’s contract with the Carrier was intended to improve the Carrier’s 4G and LTE services, it was not covered by the TCA.
Regarding the second point, Judge Block wrote that the lack of coverage gap was relevant to this point and constituted substantial evidence that justified the denial of a permit to ExteNet. On the third point, Judge Block wrote that a discriminatory denial would be a comparison between providers of functionally equivalent services and that ExteNet had not identified any structures offering functionally equivalent services to the proposed small cell wireless services, therefore the Village’s denial was not discriminatory.
Finally, Judge Block added that the Board’s decision had not violated New York law, specifically § 27 of New York’s Transportation Corporations Law. He stated that though that section states that telephone and telegraph corporations “may erect, construction and maintain the necessary fixtures for its lines upon, over or under any of the public roads, streets, and highways,” its focus on “lines” it is ambiguous as to whether it applies to providers of wireless services, and that the statute also requires that the corporation must obtain permission to use the streets from the trustees of the village, which ExteNet did not do. Id.
At first glance, this ruling weakens the likelihood that the standard set forth in the Third Report and Order must be adhered to by municipalities when companies developing telecommunications infrastructure are seeking approvals from municipal bodies. While municipalities must still adhere to the TCA in approving telecommunications infrastructure that remedies gaps in coverage, the decision seemingly strengthens the municipalities’ powers to reject telecommunications infrastructure projects that only enhance service. However, such assessments are a drastic overstatement of the impact of the Flower Hill decision for several reasons.
First, the Flower Hill decision is limited to the facts of the case and has essentially been rendered irrelevant by changes in the wireless industry in the second half of 2022. While 4G facilities that enable users to make voice calls using digital technology, e.g., VoLTE, are considered personal wireless facilities subject to the protections of §332(c)(7),3 Judge Block’s decision turned on the fact that the existing signal strength was sufficient to enable mobile users to make voice calls via the Carrier’s 3G service. In other words, Judge Block held that ExteNet did not make out an effective prohibition claim because ExteNet failed to establish a deficiency in both 3G and 4G services that inhibited mobile users from making and receiving phone calls. However, this holding is no longer applicable as wireless carriers retired their 3G networks throughout the United States in the months following the Flower Hill decision.4
Second, Judge Block’s decision is further limited by the Hobbs Act, which provides that “[t]he court of appeals (other than the United States Court of Appeals for the Federal Circuit) has exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or to determine the validity of . . . all final orders of the Federal Communication [sic] Commission made reviewable by section 402(a) of title 47[.]” 28 U.S.C. § 2342. In other words, while Judge Block held that ExteNet failed to satisfy the materially inhibit standard in this instance, Judge Block lacked jurisdiction to consider the validity of the Third Report and Order. See Bell Atl. Mobile of Rochester L.P. v. Town of Irondequoit, N.Y., 848 F. Supp. 2d 391, 399, n.4 (W.D.N.Y. 2012) (citing the Hobbs Act and explaining that “review of an FCC order must, by statute, be performed by the Circuit Court, not in district court”); Rivers v. Verizon Commc’n of New York, No. 19 CIV. 11554, 2020 WL 6039586 at *7 (S.D.N.Y. Oct. 13, 2020) (citing the Hobbs Act and holding that the fact that an FCC rule was raised as a defense did not alter the court’s determination that it lacked jurisdiction to resolve the plaintiff’s claims against Verizon).
Third, contrary to the Flower Hill decision, courts throughout the United States, including courts in the Second Circuit, have upheld and applied the Third Report and Order or otherwise determined that the Third Report and Order is entitled to deference. See, e.g., City of Portland v. U.S., 969 F.3d 1020 (9th Cir. 2020), cert. denied sub nom., City of Portland, Oregon v. Fed. Commc’ns Comm’n, 141 S. Ct. 2855 (2021) (holding “with the exception of one provision” not at issue in Flower Hill, the Third Report and Order is “in accord with the congressional directive in the [TCA], and not otherwise arbitrary, capricious, or contrary to law”); New Cingular Wireless Pcs, LLC v Town of Colonie, No. 20-CV-1388 (NAM/ATB), 2022 U.S. Dist. LEXIS 64265, at *18 (N.D.N.Y. Mar. 31, 2022) (holding the town materially inhibit[ed] Plaintiff’s efforts to improve its services, and therefore, effectively prohibit[ed] the provision of personal wireless services in violation of 47 U.S.C. § 332(c)(7)(B)(i)(II)”); Cellco P’ship v. City of Rochester, No. 6:19-CV-06583, 2022 WL 3584476, at *2 (W.D.N.Y. Aug. 22, 2022) (applying the Third Report and Order’s materially inhibit standard to determine whether the city’s fees effectively prohibited the provision of wireless services); ExteNet Sys. LLC v. City of Rochester, New York, No. 6:20-CV-07129 EAW, 2022 WL 3584358, at *1 (W.D.N.Y. Aug. 22, 2022) (same); Crown Castle Fiber LLC v. City of Rochester, New York, No. 6:20-CV-06866 EAW, 2022 WL 3584336, at *4 (W.D.N.Y. Aug. 22, 2022) (same); T-Mobile Ne. LLC v. Town of Hempstead, New York, No. 19CV506WFKRML, 2020 WL 13560055, at *3 (E.D.N.Y. Dec. 16, 2020) (same); Up State Tower Co., LLC v. Town of Southport, 412 F. Supp. 3d 270, 292 n.6 (W.D.N.Y. 2019) (holding that “the FCC’s interpretations in the 2018 [Third Report and Order] are entitled to deference under Chevron” but declining to apply the materially inhibit standard on retroactivity grounds); T-Mobile, Ne., LLC v. City of Wilmington, No. CV 16-1108-ER, 2020 U.S. Dist. LEXIS 44981, 2020 WL 1245306, at *5 (D. Del. Mar. 16, 2020) (assuming the materially inhibits standard set forth in the Third Report and Order merits deference but declining to apply the FCC standard because it does not have retroactive effect under Third Circuit law); New Cingular Wireless PCS LLC v Zoning Bd. of Adj. of N. Haledon, 469 F. Supp. 3d 262, 278 (D.N.J. 2020) (same); ExteNet Sys. v. City of E. Orange, No. 2:19-cv-21291, 2020 U.S. Dist. LEXIS 231126 (D.N.J. Dec. 9, 2020) (applying the Third Report and Order’s presumption that a state or local government’s failure to act within the Small Wireless Facility shot clock is a “presumptive prohibition on the provision of personal wireless services within the meaning of Section 332(c)(7)(B)(i)(II)”); Capital Telecom Holdings II LLC v Mun. of Bethel Park, No. 2:20-CV-01181, 2022 U.S. Dist. LEXIS 57376, at *35 (W.D. Pa. Mar. 29, 2022) (holding the Third Report and Order, including the materially inhibit standard, is entitled to deference under Chevron).
Fourth, Judge Block’s holding that “[i]mproved capacity and speed are desirable . . . goals in the age of smartphones, but they are not protected by the Act” was based upon his determination that the Third Report and Order is not entitled to Chevron deference because the phrase “personal wireless services” is not ambiguous. However, Judge Block failed to identify the fact that the FCC sought to clarify in the Third Report and Order the meaning of the term “effect of prohibiting[,]” which is not precisely address[ed]” by “the [TCA’s] plain terms[.]” Bethel Park, 2022 U.S. Dist. LEXIS 57376, at *30, n.4. He also failed to identify that the need for improved capacity and the need to remedy a deficiency that prohibits users’ access to voice cellular services are not mutually exclusive. See T-Mobile Northeast LLC v Town of Barnstable, Civil Action No. 19-cv-10982, 2020 U.S. Dist. LEXIS 106468, at *4 (D. Mass. June 17, 2020) (“[g]aps in wireless service coverage can result from a lack of reliable signal coverage and strength or a lack of system capacity. [Such] [g]aps in service lead to an inability for users to place calls, low voice call quality, low connection speeds and an increase in dropped calls.”).
In summary, the Flower Hill case was not appealed and carriers little to no precedential value. The holding is extremely limited given the facts of the case and the fact that 3G service is generally no longer relevant. The court simply misapplied the law because it failed to defer to the materially inhibit standard that the FCC adopted in the Third Report and Order and the Ninth Circuit upheld on appeal, clarifying the meaning of the term “effective prohibition[,]” which is not defined within the statutory language of the TCA.
The foregoing article is not intended to offer legal advice. Prepared by Flora D. Donovan, Esq. Vice Chair – Zoning Litigation and Chairman Robert D. Gaudioso, Esq. of the NYSWA Education Committee, and Jonathan Kaufman, Esq.
1 Small wireless facilities are significantly smaller than freestanding cellular towers. Generally, they are approximately the size of a backpack, and, under regulations promulgated by the Federal Communications Commission, they are mounted on structure either no more than fifty (50) feet high or 10% taller than adjacent structures, whichever is greater.
2 Judge Block stated that though the Second Circuit had found the phrase “personal wireless services” to be “opaque,” it had relied on “[t]he plain statutory language” to define it. Flower Hill, 2022 U.S. Dist. LEXIS 135267, at *10.
3 Crown Castle NG East LLC v. Town of Hempstead, 2018 WL 6605857, at *7 (E.D.N.Y. Dec. 17, 2018).
4 See https://www.fcc.gov/consumers/guides/plan-ahead-phase-out-3g-cellular-networks-and-service.