Posted by: Patricia Salkin | April 21, 2019

Fed. Dist. Court in NY Rejects 10th Amendment Challenge to Local Preemption under the Spectrum Act and Reverses Village’s Permit Denial for Wireless Facilities Modifications

This post was authored by Amy Lavine, Esq.

The U.S. District Court for the Southern District of New York held in March that the Spectrum Act’s preemption of state and local restrictions on wireless networks is valid and constitutional. As a result, the court determined that the village’s denial of a building permit to allow modifications to an existing wireless network was preempted and had to be reversed.

The case involved a permit application seeking to replace antennas and add equipment to an existing distributed antenna system, which would allow the system to accommodate use by another carrier. The village denied ExteNet’s building permit, however, on the basis that “ExteNet has failed to provide inkind survey data required by Village Code section 87-8(A) and has failed to establish that the wireless telecommunications facility continues to fill a significant gap in current wireless telecommunications services in the Village of Pelham.” The village conceded that, if applicable, the Spectrum Act would require it to grant ExteNet’s permit, but it claimed that the law violated the Tenth Amendment’s anti-commandeering principle “by directing local governments to reach a federally-mandated result when adjudicating permit applications.”

The Spectrum Act was enacted in 2012 as a complement to the preemption provisions in the Telecommunications Act of 1996. The legislations provided that “a State or local government may not deny, and shall approve, any eligible facilities request for a modification of an existing wireless tower or base station that does not substantially change the physical dimensions of such tower or base station.” An FCC order issued in 2014 provided further rulemaking and more specific implementing provisions, such as defining a “substantial change” and, as relevant to this case, prohibiting state and local governments from “requir[ing] an applicant to submit any other documentation, including but not limited to documentation intended to illustrate the need for such wireless facilities or to justify the business decision to modify such wireless facilities.”

The court rejected the village’s Tenth Amendment claims and concluded that the Spectrum Act was a constitutionally valid preemption of local laws. Although a matter of first impression in the Second Circuit, the court noted that the Fourth Circuit rejected a similar claim in a 2015 case involving the Spectrum Act and the “deemed granted” procedure included in the FCC’s implementing rules. Applying a similar federal preemption analysis, the court first determined that the law was in consistent with Congress’ authority under the Commerce Clause to regulate a national telecommunications network. The law also met the second prong of the federal preemption test, which required that it be best read to regulate private actors, as opposed to commandeering state or local actors. Despite the law’s phrasing that local governments “shall approve” wireless permits, the court emphasized that “even where the language of the federal statute ‘might appear to operate directly on the States,… it is a mistake to be confused by the way in which a preemption provision is phrased.'” In the context of the Spectrum Act, the court determined that “fairly read it confers on telecommunications companies the right to make such modifications without having to seek local approval. It thus confers a federal right on private actors and properly preempts conflicting state and local laws.”

The court also rejected the argument that the Spectrum Act compelled “the Village’s elected officials to exercise their official powers in a way that undermines their accountability to the public.” As the court explained, permits granted under the Spectrum Act were a matter of federal law and would “bear the imprimatur” of federal authority, and thus “[v]oters who like or dislike the effects of the regulation know who to credit or blame.” The court similarly disagreed with the village’s contention that the law was somehow invalid because it failed to “displace” all state telecommunications regulations. Beyond the fact that federal law does indeed encompass a comprehensive system of regulation for telecommunications, the court noted that nothing in federal preemption analysis requires the elimination of all state and local regulations pertaining to the same matter.

Although the village conceded that the Spectrum Act applied to ExteNet’s application, it nevertheless claimed that its denial was appropriate under the terms of ExteNet’s Right of Way Agreement, which incorporated various requirements from the village code. The court disagreed with this argument, however, because while the agreement required ExteNet to comply with “applicable” code provisions, the disputed regulations were not “applicable” because they were preempted under the terms of the Spectrum Act. And even if the code provisions were clearly applicable under the agreement, the village would have to bring a separate breach of contract action to enforce them, rather than raising the agreement as a defense against federal preemption.

As a final matter, the court dismissed ExteNet’s claim for damages under Section 1983. The court noted that federal preemption claims are distinct from claims for enforcement under Section 1983, and whether a statute qualifies for Section 1983 enforcement depends on the existence of “rights creating” language “phrased in terms of the persons benefited.” The Spectrum Act failed to meet this standard, as it was phrased in terms of prohibited state and local actions, not “in terms of the persons benefited.”

Extenet Sys. v. Pelham, 2019 WL 1382650 (SDNY 3/27/19)

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