On Monday Aug. 8, 2016, the U.S. District Court for the Eastern District of Virginia issued an opinion in Crown Castle v. City of Newport News, holding that Crown Castle proved at trial that the City of Newport News violated state law and its Franchise Agreement with Crown Castle by asserting that Crown Castle must obtain zoning approval before it could deploy its distributed antenna system (“DAS”) nodes in the public right of way.

The decision is an important one for telecommunications providers in the Commonwealth of Virginia, most notably because it recognizes that Section 56-462(C) of the Virginia Code prohibits local authorities from imposing on certificated telecommunications providers requirements, such as zoning or land use regulations, that it does not impose on all other right of way users.

Background

The City and Crown Castle entered a Franchise Agreement that grants Crown Castle, a certificated telecommunications provider, the right to occupy the public rights of way for the installation of its DAS node facilities. The Franchise Agreement specifies the process for City approval of each installation, which includes only the issuance of permits by the City’s Department of Engineering – which is the same and only process the City has required of any other company deploying facilities in the public right of way.

Under the Franchise, Crown Castle applied for and was granted standard right of way permits to install facilities at four locations in the City, and it constructed those facilities. But before Crown Castle could finalize installation and activate its facilities, the City (in response to a citizen complaint about one of the installations) issued stop work orders for all four locations, asserting that the node installations either required additional zoning approval or were altogether prohibited in the zoning districts in which they were located.

Crown Castle’s complaint asserted that the City’s actions requiring Crown Castle to obtain zoning approval or any other permits or approvals beyond those already obtained violated the Franchise Agreement. Crown Castle also claimed that the City’s actions violated Section 56-462 of the Virginia Code, which provides that the City cannot impose on any certificated provider of telecommunications service “any restrictions or requirements concerning the use of the public right of way . . . any greater than those imposed on the following users of the public rights of way; all providers of telecommunications services and nonpublic providers of cable television, electric, natural gas, water and sanitary sewer services.”

Crown Castle further claimed that the City’s prohibition of installations in certain areas and imposition of the Zoning Ordinance on Crown Castle’s installations in the public rights of way effectively prohibited Crown Castle from being able to provide telecommunications service and was not competitively neutral and nondiscriminatory management of the public rights of way under Section 253 of the federal Telecommunications Act.

District Court’s Holding

The Court held that the terms of the Franchise Agreement control and set forth the entirety of the conditions for use of the public right of way, which does not include conditions regarding zoning requirements or approvals. Accordingly, the Court held that the City’s actions to require Crown Castle to comply with the City’s Zoning Ordinance violate the Franchise Agreement. The Court noted that, even if the Zoning Ordinance applied to Crown Castle’s installations, Crown Castle would fit within the Zoning Ordinance’s definition of a “local utility,” which is a permitted use in every zoning district without the requirement of additional zoning approval.

The Court also held that the City’s attempt to require Crown Castle to comply with the Zoning Ordinance violates Section 56-462 of the Virginia Code. The evidence at trial demonstrated that the City did not require any other entity, telecommunications, cable, or electric, to obtain any approval under the Zoning Ordinance before deploying in the public rights of way – including installation of new and larger utility poles. Accordingly, the Court held that the City was not treating Crown Castle the same as all other entities occupying the public right of way. The Court agreed with Crown Castle that Section 56-462 is technology neutral, and that the City cannot single out Crown Castle based on the unique equipment or technology it uses compared to other users of the public right of way.

Because the Court resolved the case under state law, the Court did not reach Crown Castle’s Section 253 claim and held that it was prohibited from doing so under Bell Atlantic Maryland, Inc. v. Prince George’s County, Maryland, 212 F.3d 863 (4th Cir. 2000).

Conclusion

This decision is an important recognition that Section 56-462 of the Virginia Code protects new entrants who are deploying next generation technologies in the public rights of way, such as DAS, to provide telecommunications service, and makes clear that municipalities may not single out a certificated provider of telecommunications services based solely on the unique equipment or technology it uses.