City of Huntington Beach v. Pub. Utilities Comm'n of State

214 Cal.App.4th 566

154 Cal.Rptr.3d 241

CITY OF HUNTINGTON BEACH, Petitioner,

v. PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA, Respondent;Crown Castle Ng West, Inc., Real Party in Interest.

G044796

Court of Appeal, Fourth District, Division 3, California.

Filed March 14, 2013

Review Denied June 26, 2013

Affirmed in part and reversed in part.

See also 294 Fed.Appx. 303

See 8 Witkin, Summary of Cal. Law (10th ed. 2005) Constitutional Law, § 1084 et seq.

Original proceeding; review of decisions of the Public Utilities Commission of the State of California. Decisions affirmed in part and reversed in part. (CPUC Nos. D.10–10–007 & D.11–01–027)

Office of the City Attorney, Jennifer McGrath, City Attorney, and Scott F. Field, Assistant City Attorney for Petitioner.

Frank R. Lindh, Helen W. Yee, Dale Holzschuh, San Francisco, and Hien C. Vo Winter for Respondent.

Davis Wright Tremaine, T. Scott Thompson, Daniel P. Reing, Martin L. Fineman, and Suzanne K. Toller, San Francisco, for Real Party in Interest.

IKOLA, J.

OPINION

Public Utilities Code section 7901 ¹ grants “telephone corporations” the privilege to construct infrastructure upon public rights of way, subject to a municipality's “right to exercise reasonable control as to the time, place, and manner in which roads, highways, and waterways are accessed” (§ 7901.1, subd. (a)). In the proceeding under review, the California Public Utilities Commission (commission or PUC) classified NextG ² as a telephone corporation and approved NextG's proposed construction project in the City of Huntington Beach (the City).

The City is opposed to aspects of NextG's project. As its first line of defense to the NextG project, the City asserts that NextG is a wireless provider and therefore not a telephone corporation. The City contends that the definition of “telephone corporation” for purposes of section 7901 does not include wireless providers, as opposed to traditional landline providers. But in our view, the commission correctly interpreted and applied the Public Utilities Code in designating NextG as a telephone corporation entitled to the privileges of section 7901.

As its second line of defense to the NextG project, the City relies on municipal ordinances requiring, subject to exceptions, the undergrounding of wires and other communications equipment. The City claims the commission erred by purporting to “preempt” local ordinances in approving NextG's construction project in the City. We agree with this contention. Throughout the PUC proceedings, the parties and the commission emphasized that a court, not the commission, would adjudicate the validity of the City's municipal ordinances. The commission exceeded the scope of the proceedings when it ruled, via a modification to its initial decision, that its approval of NextG's project preempted local ordinances.

We therefore affirm in part commission decisions D.10–10–007 (the October 2010 initial decision) and D.11–01–027 (the January 2011 rehearing decision), but reverse and set aside those portions of the decisions purporting to preempt local ordinances. (§§ 1758, subd. (a) [appellate court “shall enter judgment either affirming or setting aside the order or decision”], 1759, subd. (a) [providing jurisdiction to reviewing court to “reverse” PUC orders and decisions].)

FACTS

NextG builds and owns fiber optic networks. However, NextG does not directly serve individual customers whose calls are carried over NextG's networks. Instead, NextG sells capacity on its networks to other companies, who use the capacity to serve their end-use customers. NextG is thus a “carrier's carrier.”

The project at issue is “the completion of [a distributed antenna system] within the City.... The ... communications network is intended to transmit wireless voice and data communications to clients in the City” (The Project). The Project includes aerial fiber cable and underground fiber cable. Part of the Project already has been constructed under previously granted authority. NextG's customer for the Project is MetroPCS, a company that provides commercial mobile radio service to its customers.

NextG's regulatory status with the PUC and the history of the dispute between NextG and the City are relevant to our review. This summary chart of the PUC proceedings mentioned in this opinion may be useful as a reference point.

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The January 2003 Decision (D.03–01–061)

In January 2003, the commission issued a certificate of public convenience and necessity to NextG, which authorized NextG “to provide limited facilities-based and resold local exchange, access and interexchange telecommunications services.” The authorization was conditioned on NextG complying with various rules applicable to its class of competitors. NextG's application was uncontested.

The commission issued the certificate under the authority of section 1001, which provides in relevant part, “No ... telephone corporation ... shall begin the construction of ... a line, plant, or system, or of any extension thereof, without having first obtained from the commission a certificate that the present or future public convenience and necessity require or will require such construction.” It is implied in the issuance of a certificate under section 1001 that the PUC considered NextG to be a “telephone corporation,” but the January 2003 decision did not explicitly address this question.

The April 2007 Decision (D.07–04–045)

In April 2007, the commission issued a decision granting NextG's “request for full facilities-based local exchange services authority and expedited environmental review” like that previously authorized for firms engaged in similar activities. This expansion of NextG's authority was necessary for it to engage in “(1) new pole installations, (2) small-scale trenching and underground conduit installation, and (3) micro-trenching and installation of laterals.”

The commission also approved the use of its previously developed expedited CEQA ³ review process for individual NextG projects. NextG would submit a description of the proposed project to the CEQA staff in the Energy Division of the PUC, with all necessary documentation required to support the project's fast-track approval under CEQA.

With regard to the issue of “utility poles in underground districts,” the commission ruled that “the procedure we adopt here will apply to installing utility poles in underground districts where local jurisdictions grant such exceptions.” The April 2007 decision did not purport to preempt all local ordinances that would limit NextG's ability to engage in ground breaking activities. Indeed, in denying NextG's petition for rehearing of the April 2007 decision, the commission observed: “We are aware that the California Constitution does provide this Commission with preemptive authority over local jurisdictions with respect to the regulation of utilities. At the same time, the Constitution provides cities the power to make and enforce local ordinances and regulations not in conflict with general laws. The process adopted in [the April 2007 decision] is consistent with long standing Commission policy to recognize local government concerns and require utilities to accommodate local land use requirements in constructing their facilities.” ( In re Application of NextG Networks of California, Inc. (2007) Cal. P.U.C. Dec. No. D.07–07–023, pp. 5–6, fns. omitted (the July 2007 decision).)

NextG's Application to the City

In March 2006, NextG formally applied to the City for authorization “to conduct business as a telecommunications company operating with infrastructure located in the ... public ways.” NextG requested “a non-exclusive right-of-way agreement or other appropriate form of authorization ... in order to install, operate, and maintain fiber optic cable and associated equipment, including optical repeaters and antenna facilities, on, over, and under the public way ... in connection with the provision of telecommunications provided by NextG as a carrier's carrier to its wireless carrier customers.”

The City did not readily accede to NextG's requests. As of September 2007, NextG's representative professed to be “disappointed and frustrated” with the City. Although further discussion continued (as evidenced by written communications), NextG and the City were unable to resolve their differences. The City took the position that pertinent local ordinances precluded aspects of the Project, which called for the construction of new utility poles and aerial lines.

Pertinent Local Ordinances

In 1977, the City adopted Ordinance No. 2222, adding Chapter 17.64 to its Municipal Code, commonly referred to as the “ ‘Undergrounding Ordinance.’ ” The City cites various portions of the Undergrounding Ordinance as pertinent to its refusal to allow NextG unfettered access to the public right of way in the City. Pursuant to Municipal Code section 17.64.050, which was amended in 2007, “All new public and private utility lines and distribution facilities ... shall be installed underground,” subject to certain exceptions. Municipal Code section 17.64.130 lists exclusions “from the provisions of this chapter unless otherwise provided in the resolution designating the underground utilities district[,]” including “(f) Antennas used by a utility for furnishing communication services.” The City contends this exclusion “permits attaching antennas to existing, pre–1977 utility poles, but any equipment or facilities accessory to an antenna must be installed underground.”

Also of note to this opinion is the City's so-called “Wireless Ordinance,” which consists of Chapter 230.96 of the City's Zoning and Subdivision Ordinance. As its name implies, the Wireless Ordinance regulates the deployment of wireless communications equipment in the City.

PUC Energy Division Proceedings

On November 12, 2007, NextG submitted a notice of proposed construction to install a distributed antenna system on...