Third Circuit Redefines ‘Effective Prohibition’ in Wireless Communications Disputes

By Edward W. Purcell |

On July 14, 2023, the U.S. Court of Appeals for the Third Circuit issued a precedential decision that expands the scope of the type of “need” a carrier can use to challenge a land use denial under the Federal Telecommunications Act (TCA). In Cellco Partnership v. White Deer Township Zoning Hearing Board, Docket No. 22-2392 (3d Cir. 2023), the court affirmatively adopted the Federal Communications Commission’s (FCC) “material inhibit” standard for violations of the TCA and replaced the existing “effective prohibition standard.” As will be discussed in this article, this standard is a lower threshold that can be met not only with respect to the filling of significant gaps in a carrier’s coverage, but also when a carrier is densifying a wireless network, introducing new services or otherwise improving service capabilities. The new standard of review also contemplates the totality of inhibiting factors, including costs, and not just those created by a municipal zoning ordinance. This is a sea change in the standard of review that will apply to local decisions impacting wireless services in New Jersey.

The old Third Circuit “effective prohibition” standard required a two-part test for whether a denial of a wireless service application constituted an unlawful prohibition of service in violation of 47 U.S.C. Section 332(c)(7)(B)(i)(II). The first step was to determine whether there was a significant gap in wireless service and the second step required the provider to demonstrate that it proposed to fill the coverage gap in the manner “least intrusive on the values that the denial sought to serve.” APT Pittsburgh v. Penn Township, 196 F.3d 469, 479, 480 (3d Cir. 1999). See also, T-Mobile Northeast v. Borough of Leonia Zoning Board of Adjustment, 942 F. Supp. 2d 474, 482 (D.N.J. 2013).

In White Deer Township, the Third Circuit explicitly overruled the old “effective prohibition” test set forth in APT Pittsburgh. In doing so, the court focused on a recent 2018 FCC ruling (the “Order”) that confirmed that a state or local legal requirement constitutes an “effective prohibition” under the TCA if it “materially limits or inhibits” the carrier’s ability to engage in any of a variety of activities related to its provision of personal wireless service. In the Matter of Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment; Accelerating Wireline Broadband Deployment by Removing Barriers to Infrastructure Investment, WT 17-29, WC 17-84, FCC 18-133, ¶40 n. 95, Sept. 26, 2018 (“the Order”); aff’d in part and reversed in part City of Portland v. United States, 969 F.3d 1020 (9th Cir. 2020), cert. denied 141 S. Ct. 2855 (2021). The FCC explained that “this test is met not only when filling a coverage gap, but also when densifying a wireless network, introducing new services or otherwise improving service capabilities.”

In White Deer Township, Verizon proposed a 195-foot monopole to fill a coverage gap in a rural area of Pennsylvania along Interstate 80. Most of the available land in the area was owned by the commonwealth and could not be used by Verizon due to a state moratorium on building such tower facilities on commonwealth forest and park lands. The subject property selected by Verizon, a private parcel, was only 0.0597 acres, so Verizon required a variance from the local code’s 1-acre minimum lot size. There were several structures near the proposed tower which also required a variance from the local code’s setback requirements. The board denied Verizon’s application alleging that under Pennsylvania law certain proofs with respect to hardship had not been shown. Verizon filed suit alleging that the board had violated the TCA under both APT Pittsburgh’s “effective prohibition” standard and also under the order’s “materially inhibit” standard.
With respect to the “effective prohibition” standard, the court held that Verizon had proven that there was a “significant gap” in its coverage, and that the proposed monopole would fill that gap. On appeal, the board argued that Verizon had failed to prove that the proposed site was “the least intrusive means” because Verizon could have challenged the commonwealth’s cell tower moratorium and built the tower on those lands. The court disagreed and held that “a provider need not disprove every possible alternative,” and notwithstanding that option, Verizon had shown that it had, in good faith, considered other locations, designs and technologies, but none were a feasible alternative to the proposed tower site. Ultimately, the court held that Verizon was entitled to summary judgment under the APT Pittsburgh “effective prohibition” standard. However, the court went on to further evaluate Verizon’s charge that the municipality had also violated the FCC’s “materially inhibit” standard.

With respect to the “materially inhibit” standard, the court held that the FCC’s interpretation, as presented in the Order, was a reasonable construction of the TCA and one that it was obliged to follow. Slip., Op. at 11-12 (citing Chevron USA v. Natural Resources Defense Council, 467 U.S. 837 (1984)). It further quoted the order that:
“Coverage gap-based-tests, like [APT Pittsburgh, reflect] an ‘unduly narrow reading of the statute and an outdated view of the marketplace.’ So as a general matter, the standard applies not only when a provider is attempting to fill a coverage gap in its wireless service, but also when a provider is pursuing ‘the introduction of new services or the improvement of existing services.’ Under the new standard, a local government can materially inhibit personal wireless service even if a provider has filled all coverage gaps.” Id., Slip. Op. at 13.
The court also embraced the FCC’s observation that “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., Slip. Op. at 16-17; (quoting the order).

In analyzing the “materially inhibit” standard, the court cited to other federal court decisions that had adopted the “materially inhibit standard” even before the order. For example, the court cited Qwest v. City of Santa Fe where, with respect to telecommunications facilities in the right-of-way, the U.S. Court of Appeals for the Tenth Circuit invalidated local regulations requiring providers to adhere to excess conduit requirements and to obtain appraisals for proposed rights-of-way because such requirements imposed a “substantial increase in costs.” 380 F.3d 1258, 1271 (10th Cir. 2004). The court also cited Puerto Rico Telephone Company v. Municipality of Guayanilla, where the U.S. Court of Appeals for the First Circuit held that a 5% gross revenue fee on telecommunications facilities in the right-of-way violated [the TCA] because it made the provision of wireless services cost prohibitive.” 450 F.3d 9, 18–19 (1st Cir. 2006).

Applying this “materially inhibit” standard to the case at hand, the court held:
“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 town-ship’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.” Id., Slip. Op. at 17.

In determining that the board had “materially inhibited” Verizon’s ability to “compete in a fair and balanced legal and regulatory market,” the court focused on the “totality” of factors at play. The court reasoned:
“Applying the FCC’s standard here, the zoning board has materially inhibited the ability of Verizon to compete in a fair and balanced legal and regulatory market because, considering the totality of the circumstances, its application denial prevented Verizon from providing wireless services without incurring unreasonable costs. Verizon was constrained by the Pennsylvania moratorium, service demands, and property sizes to select its chosen parcel and monopole design. When the zoning board denied Verizon’s variance application, it claimed not to be effectively prohibiting personal wireless services because Verizon had not pursued legal remedies against Pennsylvania.” Id. Slip. Op. at 17.

The court reasoned that by demanding that Verizon commence legal action against Pennsylvania to invalidate its moratorium, same would impose a “substantial increase in costs” and thus violate the “material inhibition” standard set forth in the Order. Id. Slip. Op. at 18. The court found that the costs of that moratorium challenge were akin to the excess conduit and appraisals required for the right-of-way in Qwest, in that same would be a “substantial increase in costs” that would have the effect of materially inhibiting service in violation of the TCA. Id. Slip. Op. at 18.

This case is important precedent. It will significantly impact how local governments review proposed wireless communications facilities in their towns. The Third Circuit’s new standard for a violation of the TCA, as set forth in White Deer Township, is a much lower threshold than the prior APT Pittsburgh standard. It reflects the modern reality that cell phones are an integral part of daily life, and it creates a legal environment more suited to that reality. Now, rather than having to prove a “significant gap,” a carrier need only show that it seeks to densify a wireless network, introduce new services or otherwise improve service capabilities and that other options would “materially inhibit” its ability to do so. In sum, this case represents a sea change in how courts in the Third Circuit will handle TCA claims, and attorneys and local governments would be well served to study it closely.
Edward W. Purcell is Of Counsel at Price, Meese, Shulman & D’Arminio, concentrating his practice in the areas of land use, planning and telecommunications law.
Reprinted with permission from the July 31, 2023 issue of the New Jersey Law Journal. Further duplication without permission is prohibited. All rights reserved.

Ed Purcell is Of Counsel with the firm. Currently the decision referenced in the article is not publicly available online, to contact him for a copy, click here.
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