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Fifth Circuit Upholds New FCC Ruling Setting "Shot Clock" On Wireless Communications

City of Arlington, Texas v. Federal Communications Commission, ___ F3d ___, 2012 WL 171473 (5th Cir.) involved certain new commission rules to assure timely, reasoned local decisions on the grant or denial of wireless communication facilities. The declaratory ruling was the result of a petition from a wireless trade association to clarify ambiguities in the law under the Telecommunications Act (“TCA”). Petitioner sought (1) time limits for acting on wireless applications for land use approval, (2) to deem the applications approved if not acted upon within a certain time, (3) a determination that if one provider already in the area, that other providers could also take advantage of the TCA to locate in the same jurisdiction and (4) the prohibition in the use of a variance to allow for the siting of a wireless facility. The FCC granted the petition in part.

The issue before the FCC was 47 U.S.C. § 332(c)(7) which imposed certain restrictions on state and local governments with regard to decisions on the placement or construction of wireless communication facilities. Among other provisions, decisions on such facilities must be made in a “reasonable period of time.” The declaratory ruling established a 90-day period for personal wireless facilities and a 150-day period for all other wireless facilities, determining that the failure to act within those deadlines would presumably constitute a “failure to act” under that legislation which would allow for an applicant to seek judicial relief. In addition, the new rules allow for a 30-day completeness check and for a mutual extension of the deadlines. However, the FCC rejected the “deemed granted” proposal from the petitioner in the event the local government failed to act, as well as the request to obviate the variance mechanism. Nonetheless, the Commission did grant that part of the petition that would prohibit a local government from denying a land use application because another carrier was present in the area and could provide service. Several organizations sought reconsideration of the declaratory ruling, which the FCC rejected. Two Texas cities sought judicial review – one before the Petition for Reconsideration was filed and one after.

The court turned first to jurisdiction. Noting that many of the issues in the two review requests were in common, the court noted that there were some issues unique to each petitioner as well and that one of the petitioners had filed a Petition for Judicial Review within 60 days of the original ruling and another within 60 days of the ruling on Reconsideration. San Antonio, Texas did not file a Petition for Reconsideration but did file its Petition for Judicial Review within 60 days of the action on Reconsideration, though not within 60 days of the original ruling. The court found that that city did not file a timely Petition for Review under the circumstances. The Petition for Reconsideration cannot itself provide the basis for a challenge to one who did not file it – in that case the 60-day period for seeking judicial review ran from the date of the original order. This is so even if San Antonio provided comments during the reconsideration period and even if that city intervened in the validly-filed Petition for Judicial Review of these rules filed by the city of Arlington, Texas, which did request reconsideration and did file its Petition for Judicial Review within 60 days of the denial of reconsideration. The court thus declined to consider those issues raised solely by San Antonio.

Arlington first challenged the imposition of the 90 and 150 day time limits by the declaratory ruling, contending that there were administrative rules under the Federal Administrative Procedures Act (“APA”) and thus subject to statutory notice and comment requirements. The court accepted the FCC’s view that the new standards were the product of adjudication, finding that the agency so characterized its action and the ultimate product was that of an adjudication via administrative declaratory ruling permitted under the APA. That ruling may be invalidated under the APA if it is “arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law.” Under those standards, the court said that it had “serious doubts” over FCC’s choice of procedures, as the ruling looked more like rulemaking and affected a large number of entities. Nevertheless, the court declined to consider those contentions as it found the failure to comply with rulemaking procedures was harmless and those procedures used did not prejudice petitioners. The ruling was preceded by notice and multiple comments which contained all the arguments now before the court. Moreover, the ruling accommodated the issue of pending applications before local governments by providing extra time for them to be decided, as well as establishing a presumption of new timelines. In addition, the court rejected application of an FCC procedural rule that required notice on parties that might be affected by a preemption claim, upholding FCC’s interpretation that the rule was inapplicable when the proposed ruling applied to numerous jurisdictions and noting that the Petition for Declaratory Ruling did not identify specific parties. The court concluded that the Due Process clause was not violated by these proceedings.

The court then turned to FCC’s authority to adopt the challenged ruling under the APA. Under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 US 837 (1984), the review involved a two-step process to determine whether Congress had directly spoken to an issue and whether the interpretation of its jurisdiction was outside the scope of the enabling legislation. The court found in this case that Congress did not directly address the issue of whether these rules could be established and determined that the construction of the TCA by the FCC in this case was reasonable, even as to its determination of its own jurisdiction. Petitioners claimed the TCA’s provisions relating to state and local government which left them with the authority to deal with placement, construction and modification of wireless facilities except as modified by Section 332(c)(7) and the deprivation of FCC authority to make rulings on wireless facilities in particular cases (which were required to go to court) was not impermissible. The court used Chevron deference to determine the FCC was not unambiguously precluded under its general APA authority to adopt rules and declaratory rulings from adopting this ruling, noting a similar result in the Sixth Circuit in Alliance for Community Media v. FCC, 529 F3d 763 (6th Cir. 2008) under its general power to adopt rules and declaratory rulings, which was not affected by Section 332(c)(7) that provided state and local governments made those land use decisions, as the statute also said that the time for making these land use decisions must be “reasonable.”

Having determined that the FCC had power to adopt a declaratory ruling in this matter, the court then turned to the ruling at issue in view of the challenge made to its reasonableness under the APA. The court rejected petitioner’s characterization of the ruling as changing a presumption against preemption to one for preemption, stating that the function of a presumption deals only with the burden of going forward with the evidence and does not change the burden of persuasion. The court used what is called a “bubble-bursting” theory of presumptions. The wireless provider must still convince a court of the unreasonableness of the delay to obtain relief and the local government may provide evidence that the delay in those circumstances was reasonable. The court said it was unconvinced by petitioner’s argument that the ruling would create more litigation, a possibility present under the existing circumstances before the ruling. Nor was the court convinced that the completeness step was unreasonable, given the stakes at issue. Subsequent discovery of the need for additional information later may enter into the calculation of reasonableness in the same way any circumstances would affect the reasonableness of the timing of decision making. The court concluded that the timelines established under the ruling were not hard and fast but a presumption to be used in determining whether delays were “unreasonable” in evaluating the evidence. Given this background, the declaratory ruling was thus not “arbitrary and capricious” under the circumstances in the light of the FCC explanation as well as the evidence of delay in many pending cases. The declaratory ruling was thus upheld.

The federal government has decided to undertake a significant intrusion into local government land use decision-making processes. The wisdom of that decision is open to question, but the time limit portions of the ruling appears to be within the power of the FCC to adopt. The other portion of the ruling, prohibiting a local government from limiting personal wireless facilities to an existing provider, also seems to be within those same powers.

City of Arlington, Texas v. Federal Communications Commission, ___ F3d ___, 2012 WL 171473 (5th Cir.).

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