On Friday, December 18, 2015, the U.S. Court of Appeals for the Fourth Circuit affirmed the FCC’s rules implementing Section 6409(a) of the Spectrum Act, including the “deemed granted” remedy for a local government’s failure to grant an eligible wireless tower or base station modification request within sixty days. In Montgomery County v. FCC (opinion here), the Court rejected an appeal by several municipalities, holding that the FCC’s action “is fully consonant with the Tenth Amendment,” and that “the FCC has reasonably interpreted the ambiguous terms of Section 6409(a) of the Spectrum Act.”

The Fourth Circuit panel’s decision is an important step in fulfilling the Congressional desire to promote the rapid deployment of wireless infrastructure and services by removing local government impediments. The Fourth Circuit’s decision confirms the preemptive scope of both Section 6409(a) and the FCC’s rules implementing it.

Background On Section 6409 And The FCC’s Wireless Infrastructure Order

Congress adopted Section 6409 in 2012 as a provision of Title VI of the Middle Class Tax Relief and Job Creation Act, which is more commonly known as the Spectrum Act. The Spectrum Act sought to promote the deployment of wireless services through several measures, including requiring the FCC to allocate additional bands of spectrum for commercial use and to conduct an incentive auction of broadcast television spectrum in order to make additional spectrum available for commercial broadband service. The Spectrum Act also established the First Responder Network Authority (FirstNet) to oversee the construction and operation of a nationwide public safety wireless broadband network.

In the context of the goals of the Spectrum Act, Congress included Section 6409(a), which contributes to the goal of prompt deployment of wireless infrastructure by prohibiting state and local governments from denying an “eligible facilities request” to modify an existing wireless tower or base station that does not “substantially change the physical dimensions of such tower or base station.”  

To implement Section 6409(a), on October 21, 2014, the FCC released a Report And Order in its “Acceleration of Broadband Deployment by Improving Wireless Facilities Siting Policies” docket (the “Wireless Infrastructure Order”). The Wireless Infrastructure Order adopted rules implementing Section 6409(a), as well as addressing other steps to promote the deployment of wireless infrastructure and services.

Relevant to the Fourth Circuit’s decision, to implement the Spectrum Act’s mandate that localities “shall approve” facility-modification requests covered by Section 6409(a), the Wireless Infrastructure Order established a “deemed granted remedy.”  Under the FCC’s rule, when a locality receives a covered facility-modification request, it has sixty days to review the application.  If the locality fails to act before the sixty-day period expires, “the request shall be deemed granted.”  The FCC determined that the “deemed granted remedy” was consistent with Section 6409(a), which states that localities “may not deny, and shall approve” qualifying applications.

The FCC’s Order also undertook the task of interpreting several undefined terms. In the Fourth Circuit case, the local governments challenged two in particular: the FCC’s definition of what is a “base station” that may be modified, and what does it mean to “substantially change” the physical dimensions of a tower or base station.  Addressing what is means to substantially change the physical dimensions of a tower or base station, the FCC provided a multi-part definition, establishing objective criteria for determining when a proposed modification “substantially changes the physical dimensions” of a facility.  In addition, the FCC defined the term “base station” to include “structures other than towers that support or house an antenna, transceiver, or other associated equipment,” even if the structure was not built primarily for that purpose.

The Fourth Circuit Appeal

A group of local governments lead by Montgomery County, Maryland, challenged the FCC’s Section 6409 rules in the Fourth Circuit. In their appeal, the local governments asserted that the Section 6409 rules, and in particular the “deemed granted” remedy, violated the Tenth Amendment by forcing local governments to implement a federal scheme. They also argued that the FCC’s definitions and rules were arbitrary and capricious and unsupported by the record.

The Fourth Circuit rejected the challengers’ arguments. The Fourth Circuit “readily conclude[d] that the FCC’s ‘deemed granted’ procedure comports with the Tenth Amendment.” The court explained that the deemed grant “does not require the states to take any action at all” because the applications are granted “by operation of federal law.” Importantly, the Court noted that “[t]he purpose and effect of Section 6409(a) is to bar states from interfering with the expansion of wireless networks. To achieve that end, the Act preempts local regulation of collocations and bars states from denying facility modification applications that meet certain standards. The FCC’s Order does no more than implement the statute.”

The Fourth Circuit also had no trouble rejecting the local governments’ challenge to the FCC’s definitions. Under the well-establishedChevron standard of deference to agency statutory interpretation, the Court found that there was “no question that the terms of the Spectrum Act at issue here are ambiguous,” and thus, the FCC’s definitions must be upheld if based on a permissible construction of the statute.

The Court rejected the local governments’ argument that the statutory phrase “substantial change” required a contextual evaluation of every application by local governments. The Court agreed with the FCC that the “physical dimensions of objects are, by their very nature, suitable for regulation through quantifiable standards.” The Court explained that the local governments’ challenge was fundamentally an objection to the fact that “the Spectrum Act displaces discretionary municipal control over certain facility modification requests. But that is exactly what Congress intended by forbidding localities from denying qualifying applications.” 

Notably, the Court also rejected the municipalities’ argument that the FCC’s rules should not apply to facilities that were initially granted on the condition that the facility not be modified in the future. The Court found that the FCC’s view – that regardless of the circumstances under which a provider obtained permission to build a facility, now that it has been built, any expansion proposals are reviewed only to determine whether it will substantially increase the physical dimensions – is “faithful to the text of Section 6409(a), which does not contain any exemptions for facilities that existing on condition of non-modification.”

Finally, the Court rejected the local governments’ attack on the FCC’s definition of “base station,” which included both the equipment and “non-tower supporting structure.” The Court found that the FCC’s definition was consistent with both the statutory text and also the context of the regulatory scheme.

Attorneys for the challengers are reported as indicating that the challengers will be evaluating whether to seek rehearing by the Fourth Circuit or file a petition for certiorari to the Supreme Court.