Lawsuit Threat Level Varies Across States Enacting Small-Cells Laws

Governors have signed laws to spur 5G wireless deployment in Arizona, Colorado, Ohio, Indiana and Virginia. The Florida legislature passed a bill and many more states are considering legislation (see map). Ohio -- the first state to enact such legislation -- faces multiple suits in different courts. Localities expect courts to begin issuing rulings in June, said Ohio Municipal League Executive Director Kent Scarrett in an interview. Gov. John Kasich (R) signed the bill last year; cities sued after it took effect in March.

As more states pass small-cells laws, it’s “not unreasonable” to expect “a corresponding increase in the number of lawsuits challenging the legality of such legislation as a violation of that state's anti-gifting laws,” emailed Best Best local government attorney Gerard Lederer. “In Ohio, for instance, Cleveland took the lead, but there are scores of local governments that have joined in the lawsuit. I suspect we will see the same in other states as industry seeks to enforce the terms of legislation that runs afoul of state constitutional or state statutory prohibitions on gifting.” Cleveland argued the law violated the takings rule because it limits right of way charges.

“We may see others,” but it will vary by state because each jurisdiction differs on level of authority given to localities, said Ken Fellman, local government attorney. Fellman participated in negotiations that led to localities saying they wouldn’t oppose Colorado’s small-cells bill, now law. As explained by the National League of Cities, some states including Ohio have a “Home Rule” giving localities broad authority, while 39 states including Virginia and Arizona have “Dillon’s Rule,” a narrow interpretation.

Ohio’s home rule gives localities there a stronger legal case than they’d have in many other states, said Scarrett, saying he doesn’t expect many other legal challenges. The Ohio law “is much more aggressive … than what we’re seeing being rolled out across the country,” and localities in some other states have “better working relationships” with industry, he said.

Other states could follow the Ohio cities, NATOA President Steve Traylor emailed. “Being a home rule jurisdiction is a plus. If the process is seen as being some sort of ‘backroom’ deal with no local government involvement, that could increase the odds of legal action.” The more significant the loss in revenue for a local government, the more likely that body will sue, he said.

“The more we see community voices stifled via preemption, the more we will see local resistance,” emailed Institute for Local Self-Reliance Community Broadband Networks Director Chris Mitchell. “When people perceive a threat to their local control, they seek ways to reassert it.”

Phoenix Breaks With League

“Phoenix remains in opposition” to the small-cells bill enacted into Arizona law, emailed Street Transportation Department Assistant Director Kini Knudson. The city “has not considered or evaluated its options, including litigation,” he said. Phoenix voiced opposition before the bill passed and the governor signed it, Knudson said. The city is “a strong supporter of the deployment of 5G and small cell technology,” and has “had a strong working relationship with its wireless communications companies for many years and worked in partnership with those companies to efficiently deploy small cell technology in many areas.”

Phoenix is a member of the municipal league that supported the Arizona bill. The League of Arizona Cities and Towns, which praised the results of monthslong talks with industry (see 1704280056), didn’t comment on the continued opposition of the state’s most populated city. At a congressional hearing last week, sponsoring Rep. Jeff Weninger (R) described 20 meetings to craft the bill but said the negotiations “got easier” over time (see 1705030029).

It’s not uncommon for a city to break with a municipal league, said Fellman. In other states on other issues, league members sometimes disagreed with their league and acted on their own, he said. Leagues try to take positions covering all members, but some issues affect rural members differently than urban ones, he said. Wireless carriers say they’re focusing small-cells 5G deployments in cities with dense populations.

The Virginia Municipal League won’t challenge the state’s small-cells law and its general counsel said she isn’t aware of any locality now "contemplating such” in Virginia. The league supported the compromise bill, but members are still concerned, emailed General Counsel Michelle Gowdy. “This bill does not allow localities to require additional screening or other items in historic districts and/or entrance corridors.” Local land use control is “a core principal” for members “and any attempt to take that authority away is concerning,” she said.

“I’d be shocked if anybody sued” in Colorado, said Fellman. Even though it has home rule, in 1996 the state passed a law limiting local government right-of-way fees, he said. When Denver tested the law, Qwest sued the city and won in Colorado Supreme Court in 2001, he said. “In some states like mine, there’s no question about should we sue, because that question is already answered by a court case.” Colorado localities found industry to be “very reasonable” in negotiations, Fellman said. Verizon led the talks, he said. “They came in and said we want to get this to a point where you don’t oppose it.”

Localities Warned Ohio

The Ohio Municipal League warned lawmakers of possible legal challenges last year while saying they wouldn't oppose passage, Scarrett said. When the measure was first brought to localities, its wording was “extremely egregious,” he said. In late 2016, state legislative leaders told localities the bill would pass with or without their support, he said.

“We were given basically 48 hours” to negotiate revisions with AT&T, the carrier that led industry’s push for legislation in Ohio, Scarrett said. AT&T agreed conditionally to some alternate language floated by localities, he said. “The deal was that … for the changes to be made and inserted in the legislation, it was basically presented to us that we should back off if we want these changes. If we don’t want the changes, then we get what was originally opposed. So we changed our position from opposed to neutral … knowing that it was far from something that our membership would be happy with.”

"The legislative process always moves quickly at the end of the year," an AT&T spokeswoman responded Friday. "AT&T and the Ohio Municipal League were involved in fast-paced discussions to address OML’s concerns with the legislation. To address the concerns highlighted by the OML, there were approximately a dozen changes to the language of the bill."

There's a reason states and the FCC seek to spur small-cell deployment, the AT&T spokeswoman said. "Consumers are using wireless-based devices as the primary source of broadband and access and are yearning for faster and more robust services. The wireless industry must to keep pace with that demand. The consistent and predictable regulations we now have in Ohio for the deployment of advanced technologies is a critical step."