By Eli Elbaum*

One of the bedrocks of the Telecommunication Act of 1996 (“TCA”) is that no municipal requirement, “…may prohibit or have the effect of prohibiting the ability of any entity… to provide intrastate or intrastate telecommunications service.” 47 U.S.C.A. § 253 (a). What constitutes an “effective prohibition” has been the subject of much litigation over the years. Examples include a variety of overly burdensome and/or unnecessary requirements, as well as excessive fees. Two recent District Court cases out of New York found municipal fees to be excessive to the point of effectively prohibiting telecommunications services in violation of the TCA resulting in the refund of the fees to the applicant.

In Crown Castle Fiber LLC v. Town of Oyster Bay, No. 21-CV-06305, 2024 U.S. Dist. LEXIS 11229 (E.D.N.Y. Jan. 19, 2024), report and recommendation adopted, 2024 U.S. Dist. LEXIS 44621 (E.D.N.Y. Mar. 13, 2024), the applicant submitted 23 applications for the installation of small cell nodes in the public right of way of the Town of Oyster Bay (“Town”). The Town’s telecom ordinance required the applicant to pay a staggering $276,400 in fees for the 23 applications, a significant amount of which was to be paid to the Town’s outside consultant. Following the Town’s denial of all 23 applications, the applicant sued the Town, alleging the denials were not supported by substantial evidence in the record and that the excessive fees amounted to an effective prohibition. The Eastern District of New York agreed with the applicant, finding that the fees violated Section 253(a) of the TCA. In particular, the court took the municipal consultant to task, stating that the fee structure incentivized the consultant to drag the process out to incur fees and to demand unnecessary data, which, the court concluded, had occurred. Id. at *95-96. The Court ultimately required the Town to grant all 23 permits and return $257,661 to the applicant.

In Crown Castle Fiber LLC v. City of Rochester, __ F. Supp.3d __, No. 19-CV-6583, 2024 U.S. Dist. LEXIS 33592 (W.D.N.Y. Feb. 27, 2024) the City of Rochester (“City”) enacted a telecom ordinance resulting in new fees for small cells in the amount of $1,500 per small cell node, as well as high fees for fiber in the right of way, including existing fiber. The fee scheme required the subject applicant to pay approximately $250,000 annually for existing fiber in the right of way. The applicant argued that the excessive fees would prohibit the rollout of 5G and broadband infrastructure. The Western District of New York sided with the applicant, ruling that the fees were not a reasonable approximation of the City’s costs and therefore violated the TCA for effectively prohibiting the provision of telecommunications services and personal wireless services. As a result, the fees were invalidated and the City is required to refund the applicant.

These two cases make it clear that excessive, unjustified fees will not be upheld by the courts, as these types of fees prohibit the rollout of badly needed infrastructure in violation of federal law.

*Eli Elbaum is Managing Counsel for Crown Castle. He regularly works with municipalities across the country to execute agreements and obtain approvals to build telecommunications and broadband infrastructure in the right of way. Eli also manages the related litigation arising from said endeavors.  Robert Gaudioso of Snyder & Snyder, LLP and NYSWA Vice President represented Crown Castle with Eli Elbaum in the Oyster Bay and Rochester matters.