Crown Castle Fiber, L.L.C. v. City of Pasadena

76 F.4th 425

CROWN CASTLE FIBER, L.L.C., Plaintiff—Appellee, v. CITY OF PASADENA, TEXAS, Defendant—Appellant.

No. 22-20454

United States Court of Appeals, Fifth Circuit

FILED August 4, 2023

Appeal from the United States District Court for the Southern District of Texas, USDC No. 4:20-CV-3369, David Hittner, U.S. District Judge

Jeff M. Golub, Russell S. Post, Joshua S. Smith, Beck Redden, L.L.P., Houston, TX, for Plaintiff-Appellee.

William S. Helfand, Lewis, Brisbois, Bisgaard & Smith, L.L.P., Houston, TX, for Defendant-Appellant.

Before Smith, Higginson, and Willett, Circuit Judges.

Jerry E. Smith, Circuit Judge:

This case is part of the battle between telecommunications providers that are attempting to expand next-generation wireless services (commonly called 5G) and municipalities that are resisting that expansion. Although the usual fights over installation of new technology involved local governments' imposing hefty fees,¹ the City of Pasadena used another method: aesthetic-design standards incorporating spacing and undergrounding requirements. The city invoked those requirements to block Crown Castle's² ability to develop a 5G network in the region, and Crown Castle sued for relief.

Congress and the Federal Communications Commission ("FCC") anticipated those strategies and previously had passed the Federal Telecommunications Act ("FTA") and responsive regulations. As a result, the district court decided in favor of Crown Castle, primarily basing its decision on the expansive language of the FTA and an FCC ruling interpreting the Act in light of 5G technology and associated challenges. The court determined that the City of Pasadena's requirements that functionally blocked the build-out of Crown Castle's infrastructure were preempted by the FTA. It entered summary judgment for Crown Castle and imposed a permanent injunction prohibiting the city's use of its Design Manual.

We agree with the district court. The FTA preempts the city's spacing and undergrounding requirements, and the city forfeited its arguments relating to the safe-harbor provision in the FTA. Nor did the district court abuse its discretion in ordering a permanent injunction. We affirm.

I.

Telecommunications providers are expanding 5G networks through-out the country. But 5G requires higher radio frequencies than did previous-generation networks, thereby requiring telecommunications and mobile service providers to install new equipment and infrastructure. Previous networks used tall towers spaced far apart to provide service, as the lower-frequency waves they used could travel long distances and through objects.

In contrast, the higher radio frequencies used for 5G communications cannot easily pass through buildings and can only travel short distances. As a result, telecommunications providers have begun using "small cell sites" placed close together to relay signals in an umbrella-esque pattern to provide similar coverage by relaying signals further distances and around obstacles. Unlike the infrastructure required for older networks, the small cell sites can be installed on utility poles, buildings, street-lights, and other structures. Such a build-out of small cells is referred to as "densification."

Crown Castle entered into a contract with T-Mobile whereby Crown Castle agreed to provide T-Mobile with a small cell, distributed antenna systems ("DAS") network in the Houston market, which includes the City of Pasadena. Crown Castle specifically offers telecommunications services by providing network "nodes" and "fiber." More precisely, Crown Castle uses its infrastructure to transport its customer's (here, T-Mobile's) voice and data signals through these nodes and fiber networks, allowing T-Mobile (or any other wireless service provider it contracts with) to service a particular area with 5G. To build out a small cell network, Crown Castle must install the physical infrastructure, and the company alleged that it must have access to public rights-of-way to accomplish that task, which requires a permit.

The twist is that the city has a small cell ordinance and a Design Manual for the Installation of Network Nodes and Node Support Poles (the "Manual"). The Manual was adopted in 2017, purportedly to comply with state law. It requires that new support poles for a network must be spaced at least 300 feet from existing utility poles or other node support poles.³ Additionally, in 2021, after Crown Castle had sued, the city updated the Manual to include an additional restriction ("undergrounding"):

A Network Provider is prohibited from installing above ground on an existing pole a Network Node and related equipment in a public right of way in a residential area . . . . [A]ll the equipment is required to be installed underground for the safety of the residents and the aesthetics of the area.[⁴]

Almost all equipment associated with a network node must be stored underground in residential areas.

In 2017, Crown Castle and T-Mobile identified 100 locations in the city's public rights-of-way where Crown Castle wanted to build new utility poles (otherwise known as "nodes"). Of those, 33 were in residential neighborhoods. After discussions with the city,⁵ Crown Castle applied for right-of-way permits for the 67 non-residential locations. Crown Castle divided the applications into 3 batches per the city's request. In June 2019, for the first batch, the city rejected 16 of Crown Castle's first 22 applications because they violated the spacing requirement. Crown Castle reviewed its remaining proposed locations and determined that they, too, would violate the spacing requirement.

The parties disagree about whether Crown Castle and T-Mobile explored alternatives, such as placing the new nodes on existing infrastructure. The city maintains that Crown Castle did not attempt to identify new locations or create a network map that would comply with the Manual. Crown Castle represents that it did so and rejected using existing infrastructure because it was not located at the correct height⁶ or in feasible areas. Crown Castle alleges that only seven existing poles in Pasadena would have satisfied the city's and Crown Castle's criteria.⁷ Crown Castle also avows that placing the required radio equipment underground in Pasadena is technologically impossible because of concerns with overheating and Pasadena's regular flooding.

In September 2020, Crown Castle sued for declaratory and injunctive relief, alleging that the minimum spacing restriction violated, and was thus preempted by, both 47 U.S.C. § 253(a) and Texas state law.

After the district court denied the city's motion to dismiss, the city never filed an answer to the complaint. Even after the city had updated its Manual in 2021 to include the undergrounding requirement, and Crown Castle amended its complaint to allege that that requirement was also preempted, the city still did not answer the complaint. Only after nine months had passed since the deadline to file an answer did the city move for leave to file an answer, averring that the delay resulted from an "oversight" and "inadvertent mistake" by its counsel. The district court refused to accept that explanation as sufficient, denied the city's motion, and decided that the city had forfeited⁸ affirmative defenses.

Both sides sought summary judgment. The district court ruled in Crown Castle's favor and permanently enjoined the city from enforcing the regulations against Crown Castle. First, the court ruled that it had jurisdiction to hear the case because, as a preemption dispute, it involved a federal question, and it was of no consequence that § 253(a) has no private right of action.

On the merits, the district court ruled that its analysis of whether densification effects were protected by § 253(a) was controlled⁹ by the FCC's rule stating that densification effects were so protected.¹⁰ Nor did the city properly challenge the FCC's conclusions as arbitrary and capricious. As a result, the district court found that § 253(a) did preempt the city's small cell node regulations, as they violated the FTA by preventing Crown Castle from providing telecommunications services.

The district court also rejected the city's argument that § 253(c), which provides that state and local governments may manage their public rights-of-way in a reasonable and nondiscriminatory manner, acted as a safe harbor. First, the court noted that the city had forfeited the affirmative defense by failing to answer the complaint. Secondly, adjudicating the affirmative defense on the merits, the court concluded that the section still did not allow the city's discriminatory treatment of Crown Castle's applied small cell nodes. Then the court granted Crown Castle a permanent injunction but stayed it pending this appeal.

II.

We review issues of Article III standing de novo. Contender Farms, L.L.P. v. U.S. Dep't of Agric., 779 F.3d 258, 264 (5th Cir. 2015). "[F]ederal courts are under an independent obligation to examine their own jurisdiction . . . ." FW/PBS, Inc. v. City of Dall., 493 U.S. 215, 231, 110 S.Ct. 596, 107 L.Ed.2d 603 (1990). The district court granted summary judgment on the basis of federal preemption, a question of law reviewed de novo. Friberg v. Kan. City S. Ry. Co., 267 F.3d 439, 442 (5th Cir. 2001).

We review a summary judgment de novo as well. Norman v. Apache Corp., 19 F.3d 1017, 1021 (5th Cir. 1994). A party is entitled to summary judgment when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). "As is appropriate at the summary-judgment stage, facts that are subject to genuine dispute are viewed in the light most favorable to [the non-moving party]." Taylor v. Riojas, — U.S. —, 141 S. Ct. 52, 53 n.1, 208 L.Ed.2d 164 (2020) (per curiam).

This court reviews a permanent injunction for abuse of discretion. Thomas v. Hughes, 27 F.4th 995, 1011 (5th Cir. 2022) (citing ICEE...