Qwest Communications v. City of Berkeley

• Decision Date: 12 January 2006
• Docket Number: No. 03-15852.,03-15852.
• Citation: 433 F.3d 1253
• Parties: QWEST COMMUNICATIONS INC., Plaintiff-Appellee, v. CITY OF BERKELEY; City Council of Berkeley; Weldon Rucker, in his official capacity as Acting City Manager of the City of Berkeley; Phil Kamlarz, in his official capacity as Deputy City Manager of the City of Berkeley, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

433 F.3d 1253

QWEST COMMUNICATIONS INC., Plaintiff-Appellee, v. CITY OF BERKELEY; City Council of Berkeley; Weldon Rucker, in his official capacity as Acting City Manager of the City of Berkeley; Phil Kamlarz, in his official capacity as Deputy City Manager of the City of Berkeley, Defendants-Appellants.

No. 03-15852.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 6, 2005.

Filed January 12, 2006.

Jeffrey T. Melching, Rutan & Tucker, LLP, Costa Mesa, CA, for the defendants-appellants.

David R. Goodnight, Stoel Rives, LLP, Seattle, WA, for the plaintiff-appellee.

John H. Ridge, Stoel Rives, LLP, Seattle, WA, for the plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California; Susan Yvonne Illston, District Judge, Presiding. D.C. No. CV-01-00663-SI.

Before: TROTT, T.G. NELSON, and PAEZ, Circuit Judges.

TROTT, Circuit Judge:

The City of Berkeley appeals the district court's summary judgment ruling that its Interim Telecommunication Carriers Ordinance is preempted by the Federal Telecommunications Act of 1996 ("Act"). The district court ruled that the Interim Telecommunication Carriers Ordinance is preempted by the Act because the ordinance imposed an onerous burden on telecommunications providers seeking entry into the telecommunications market in Berkeley. The court held also that the ordinance is not saved by the Act's "safe harbor" clause because the regulations that create this prohibiting effect do not merely regulate the City of Berkeley's public rights-of-way but regulate the telecommunications companies themselves. We come to the same conclusions as the district court and, therefore, AFFIRM the district court's judgment.

I BACKGROUND

In 1996, Congress passed the Federal Telecommunications Act. The full title of the Act is "An act to promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunication technologies." As indicated by the title, the purpose of the act was to reduce regulation of telecommunications providers by creating a "procompetitive, de-regulatory national policy framework." H.R.Rep. No. 104-458 (1996) (Conf.Rep.). The Act was later codified in 47 U.S.C. § 253. Section 253 furthers this de-regulatory purpose by precluding states and municipalities from passing laws that "prohibit or have the effect of prohibiting the ability of any entity" from providing telecommunications services. 47 U.S.C. § 253(a). This preemption is not absolute. Section 253 also includes a "safe harbor" clause that allows state and local government "to manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers" so long as the management and compensation is done on a "competitively neutral and nondiscriminatory basis." 47 U.S.C. § 253(c).

In December 1999, Qwest Communications Corporation ("Qwest") won a competitive bidding process to provide faster and expanded telecommunications capacity to Lawrence Berkeley National Laboratory ("LBNL") located in the City of Berkeley, California ("City"). In order to upgrade LBNL's telecommunications capacity, Qwest needed to install a "local loop" between LBNL and Qwest's central system. This involved laying a conduit through the City's public rights-of-way. From March through December 2000, Qwest and the City negotiated and developed an acceptable construction plan to lay the conduit in the public rights-of-way. On July 10, 2000, Qwest presented an application for the permits necessary to begin work on LBNL conduits. However, on July 25, 2000, the Berkeley City Council adopted Resolution No. 60,729-N.S., declaring a moratorium on telecommunications infrastructure work with exceptions for emergency and hardship cases. As a result, the City stopped issuing excavation permits for telecommunications infrastructure work and Qwest was unable to obtain the necessary permits to begin construction.

On December 22, 2000, the City enacted Ordinance No. 6608-N.S. ("Ordinance 6608") to regulate telecommunications companies and their use of the public rights-of-way. On February 13, 2001, Qwest filed suit against the City arguing in part that Ordinance 6608 was preempted under federal and state law. Qwest also sought temporary injunctive relief. In May 2001, the district court enjoined the City from enforcing Ordinance 6608. Following the court's ruling, the City passed Resolution No. 61,102-N.S., adopting Ordinance No. 6630-N.S. ("Ordinance 6630") to replace Ordinance 6608. In response, Qwest amended its complaint to challenge Ordinance 6630 in addition to Ordinance 6608. On April 7, 2003, the district court ruled that Ordinances 6608 and 6630 were preempted by § 253. The City appealed the district court decision with regard to only Ordinance 6630.

II STANDARD OF REVIEW

The district court's grant of summary judgment is reviewed de novo. See Buono v. Norton, 371 F.3d 543, 545 (9th Cir.2004). Thus, our review is governed by the same standard used by the trial court under Federal Rule of Civil Procedure 56(c). See Olsen v. Idaho St. Bd. of Med., 363 F.3d 916, 922 (9th Cir.2004).

III DISCUSSION

Under the Supremacy Clause of the United States Constitution, Congress may preempt state law through federal legislation. U.S. Const. art. VI, § 2; Chicago & N.W. Transp. Co.v. Kalo Brick & Tile Co., 450 U.S. 311, 317-18, 101 S.Ct. 1124, 67 L.Ed.2d 258 (1981). Congress can preempt state law through legislation in several ways. Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 51 L.Ed.2d 604 (1977). One way is to expressly state an intention to preempt, id., as Congress has done with § 253(a): "[n]o State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service." See, e.g., Metrophones Telecomm., Inc. v.Global Crossing, 423 F.3d 1056, 1071-72 (9th Cir.2005). We have interpreted this preemptive language to be clear and "virtually absolute" in restricting municipalities to a "very limited and proscribed role in the regulation of telecommunications." City of Auburn v. Qwest Corp., 260 F.3d 1160, 1175 (9th Cir.2001) (internal quotation marks omitted). The narrowly circumscribed role is set forth in § 253(c). This "safe harbor" clause permits state and local government control over the use of the rights-of-way, so long as the control is management of the rights-of-way itself and not control of the telecommunications companies with facilities in the rights-of-way. Id. at 1177.

A. Preemption: § 253(a)

Before considering whether Ordinance 6630 falls within the "safe harbor," we must determine whether the ordinance's regulations fall within the preemptive language of § 253(a). The City argues Qwest failed to produce any facts showing how any section or combination of sections of Ordinance 6630 does what § 253(a) precludes—prohibiting or having the effect of prohibiting telecommunications services. Specifically, the City contends that Qwest must show the actual impact of Ordinance 6630 on Qwest's ability to provide telecommunications services. However, we explicitly rejected this argument in Qwest Corp. v. City of Portland:

The district court noted that Qwest has not pointed to a single telecommunications service that it, or any other entity, is effectively prohibited from providing because of the Cities' revenue-based fees or any of the other challenged requirements. We do not agree that Qwest was required to make an actual showing of a single telecommunications service that it . . . is effectively prohibited from providing. We have previously ruled that regulations that may have the effect of prohibiting the provision of telecommunications services are preempted.

385 F.3d 1236, 1241 (9th Cir.2004) (citations and quotation marks omitted).

Consequently, rather than considering the actual impact of Ordinance 6630, we must determine whether the specific regulations of Ordinance 6630 "may have the effect of prohibiting the provision of telecommunications services" in the City. Id. As explained below, the regulations of Ordinance 6630 have that prohibiting effect.

1. Section 16.11.070

Section 16.11.070 of Ordinance 6630 requires telecommunications companies using the public rights-of-way to pay what the City refers to as a "non-cost based compensation fee." In Auburn, we stated that fees "not based on the costs of maintaining the [public rights-of-way], as required under the Telecom Act" contributed to a regulatory scheme that had the impermissible effect of precluding telecommunications companies from providing services. 260 F.3d at 1176.

In Portland, 385 F.3d at 1242, we questioned whether this language stood for the proposition that all non-cost based fees would be automatically preempted. That questioning is reasonable based on the text and organization of § 253 that require an individualized determination of whether the regulation prohibits or may have the effect of prohibiting the provision of telecommunications services before determining whether the regulation is saved by the "safe harbor" clause of § 253. Thus, we decline to read Auburn to mean that all non-cost based fees are automatically preempted, but rather that courts must consider the substance of the particular regulation at issue.

The City makes no attempt to assert that its non-cost based fee is not the type of regulation that prohibits or may have the effect of prohibiting the provision of telecommunications services. Instead, the City asserts that section 16.11.070 escapes preemption because it allows telecommunications companies protected by § 253(a) to be excluded from paying this fee by complying with the "common carrier exemption procedure." Ordinance 6630 § 11.16.070(D).

However, the "common...