Court Opinion

ID: 3035685
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:53:03.344829+00
Date Added: 2024-06-11T09:51:32.738925
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

QWEST COMMUNICATIONS INC.,               
                   Plaintiff-Appellee,
                  v.
CITY OF BERKELEY; CITY                        No. 03-15852
COUNCIL OF BERKELEY; WELDON
RUCKER, in his official capacity as            D.C. No.
                                             CV-01-00663-SI
Acting City Manager of the City
                                               OPINION
of Berkeley; PHIL KAMLARZ, in his
official capacity as Deputy City
Manager of the City of Berkeley,
             Defendants-Appellants.
                                         
        Appeal from the United States District Court
           for the Northern District of California
       Susan Yvonne Illston, District Judge, Presiding

                 Argued and Submitted
       December 6, 2005—San Francisco, California

                    Filed January 12, 2006

      Before: Stephen S. Trott, Thomas G. Nelson, and
              Richard A. Paez, Circuit Judges.

                    Opinion by Judge Trott

                              613
616          QWEST COMMUNICATIONS v. BERKELEY

                        COUNSEL

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

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

John H. Ridge, Stoel Rives, LLP, Seattle, Washington, for the
plaintiff-appellee.
             QWEST COMMUNICATIONS v. BERKELEY             617
                         OPINION

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 telecom-
munications 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 them-
selves. 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 competi-
tion and reduce regulation in order to secure lower prices and
higher quality services for American telecommunications con-
sumers and encourage the rapid deployment of new telecom-
munication technologies.” As indicated by the title, the
purpose of the act was to reduce regulation of telecommunica-
tions 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
618           QWEST COMMUNICATIONS v. BERKELEY
“safe harbor” clause that allows state and local government
“to manage the public rights-of-way or to require fair and rea-
sonable compensation from telecommunications providers” so
long as the management and compensation is done on a “com-
petitively 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 Law-
rence 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 sys-
tem. 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 construc-
tion 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 telecommunica-
tions infrastructure work with exceptions for emergency and
hardship cases. As a result, the City stopped issuing excava-
tion 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 telecommunica-
tions 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
             QWEST COMMUNICATIONS v. BERKELEY             619
response, Qwest amended its complaint to challenge Ordi-
nance 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 deci-
sion 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

   [1] Under the Supremacy Clause of the United States Con-
stitution, Congress may preempt state law through federal leg-
islation. U.S. Const. art. VI, § 2; Chicago & N.W. Transp. Co.
v. Kalo Brick & Tile Co., 450 U.S. 311, 317-18 (1981). Con-
gress can preempt state law through legislation in several
ways. Jones v. Rath Packing Co., 430 U.S. 519, 525 (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 telecommunica-
tions 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 telecommuni-
cations.” City of Auburn v. Qwest Corp., 260 F.3d 1160, 1175
620            QWEST COMMUNICATIONS v. BERKELEY
(9th Cir. 2001) (internal quotation marks omitted). The nar-
rowly 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. Specifi-
cally, the City contends that Qwest must show the actual
impact of Ordinance 6630 on Qwest’s ability to provide tele-
communications 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 pre-
      viously ruled that regulations that may have the
      effect of prohibiting the provision of telecommunica-
      tions 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 reg-
              QWEST COMMUNICATIONS v. BERKELEY              621
ulations of Ordinance 6630 “may have the effect of prohibit-
ing 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

   [2] Section 16.11.070 of Ordinance 6630 requires telecom-
munications 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 rea-
sonable based on the text and organization of § 253 that
require an individualized determination of whether the regula-
tion prohibits or may have the effect of prohibiting the provi-
sion 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.

   [3] 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 telecommunica-
tions 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).
622           QWEST COMMUNICATIONS v. BERKELEY
   [4] However, the “common carrier exemption procedure” is
not a simple process. The City’s own witness described the
exemption as a “very exhaustive process” that requires the
applicant company to provide extensive information about the
company and the specific project. Although not identical to
the franchise application process in Auburn, the exemption
process in this case is similarly onerous and, therefore, has the
same discouraging effect.

   To begin with, section 11.16.070(D)(1) requires the appli-
cant seeking exemption to identify its qualifications to pro-
vide telecommunications services and to certify that it is in
compliance with state and federal laws. This includes compli-
ance with state environmental law as well as federal and state
tariffing     and      detariffing   requirements.     Section
11.16.070(D)(1) also requires the applicant to disclose to the
City and the public the material terms of “any and all agree-
ments, tariffs, or other documents relating to” telecommunica-
tions services provided by the applicant.

   In addition, section 16.11.070(D)(2) requires the applicant
to provide the City with an annual written report that includes
the following information: (1) current rate information and
information regarding terms and conditions “upon the ser-
vices being furnished on or over the facilities located within
the public rights-of-way;” (2) copies of all information made
available to the public pursuant to the tariffing, detariffing,
and related notice requirements of federal and state law,
including copies of all negotiated contracts related to the pro-
vision of telecommunications services; (3) the name, address,
and phone number of each person or entity to whom the tele-
communications provider denied service, access to, or capac-
ity over the facilities during the preceding year and reasons
for the denial; (4) copies of any contracts effecting the trans-
fer of the ownership, operation or control of the telecommuni-
cations company’s facilities or systems.

   Finally, section 16.11.070(D)(4) requires that the applicant
allow the city “at any time, and from time to time, and upon
               QWEST COMMUNICATIONS v. BERKELEY            623
reasonable notice” to audit the applicant’s books and records
to determine whether the applicant is “continuing to furnish
requisite” services in conformity with federal regulations “to
qualify for exemption from licensing, franchising, and related
provisions of [Ordinance 6630]” and whether the applicant is
acting within the scope of its certification.

  [5] These requirements, particularly when considered
together, are patently onerous and have the effect of prohibit-
ing Qwest and other telecommunications companies from
providing telecommunications services.

  2.    Sections 16.11.060 and 16.11.330

   [6] The onerous nature of the regulations of section
16.11.070 is compounded by other sections. Section
16.11.060(B)(6) allows the City to deny an excavation permit
and thus the use of public rights-of-way if the applicant fails
to comply with any other requirement of the ordinance,
including the onerous provisions of section 16.11.070. Fur-
ther, section 16.11.060 affords the City significant discretion
to deny companies the ability of providing telecommunica-
tions services. These provisions, which are similar to those at
issue in Auburn, contribute to an impermissible regulatory
scheme. See Auburn, 260 F.3d at 1178-79.

   [7] Section 16.11.330 similarly contributes to an impermis-
sible regulatory scheme by allowing the City to impose civil
and criminal penalties for not complying with any require-
ment of Ordinance 6630. See Auburn, 260 F.3d at 1176.
When read together, sections 16.11.060, 16.1130, and
16.11.070 contribute to a regulatory structure that may have
the effect of prohibiting telecommunications companies from
providing services.

B.     Safe Harbor: § 253(c)

   Because sections 16.11.070, 16.11.060 and 16.11.330 have
the effect of prohibiting telecommunications services, the
624           QWEST COMMUNICATIONS v. BERKELEY
ordinance falls within the preemptive language of § 253(a).
These regulations, however, will not be preempted if they
meet the “safe harbor” requirements found in § 253(c). The
City argues that even if Ordinance 6630 contains regulations
that have an impermissive effect, the regulations are properly
related to the City’s legitimate interests in public rights-of-
way management and are, therefore, saved by § 253(c). This
argument misconstrues our case law interpreting § 253(c).

   [8] As set forth in Auburn, the phrase “manage the public
rights-of-way” means “control over the right-of-way itself,
not control over companies with facilities in the right-of-
way.” Auburn, 260 F.3d at 1177. Proper management activi-
ties include “coordination of construction schedules, determi-
nation of insurance, bonding and indemnity requirements,
establishment and enforcement of building codes, and keeping
track of the various systems using the rights-of-way to pre-
vent interference between them.” Id. at 1177 (quoting In re
TCI Cablevision of Oakland County, Inc., 12 F.C.C.R. 21396
(F.C.C. 1997), ¶ 103). In contrast, regulations requiring “the
applicant [to] submit proof of its financial, technical, and
legal qualifications do not regulate the public rights-of-way”
are impermissible. Id. at 1178 (internal citations and quotation
marks omitted).

   [9] Here, the City’s regulations identified in the § 253(a)
analysis are not saved by § 253(c)’s “safe harbor” because
they go to an applicant’s technical and legal qualifications
rather than the actual management of the public rights-of-way
itself.

   For instance, an applicant is required to identify its state
and federal qualifications and furnish annual documentation
that it provides telecommunications services and is in compli-
ance with state and federal environmental and telecommuni-
cations law. Ordinance 6630 § 16.11.070(D)(1). The applicant
is required also to provide yearly documentation regarding
current rate information, tariffing, and detariffing, as well as
              QWEST COMMUNICATIONS v. BERKELEY              625
copies of all contracts relating to the applicant’s provision of
services. Ordinance 6630 § 16.11.070(D)(2). If the applicant
violates these provisions, the City may deny the applicant an
excavation permit, effectively preventing the applicant from
using the public rights-of-way and providing services. Ord.
6630 § 16.11.060. Even after the applicant has been granted
access to the public rights-of-way, the applicant is subject to
having its books and records audited to ensure the veracity of
the applicant’s submissions regarding an applicant’s technical
and legal qualifications under federal and state law, with the
potential for criminal and civil penalties in the event that
something is inaccurate. These requirements do facilitate the
City’s control over the public rights-of-way but are attempts
to regulate and control the companies by requiring certifica-
tion and documentation of their legal and technical status.
Following our reasoning in Auburn, we conclude that these
regulations are not protected by § 253(c) and are, therefore,
preempted.

C.   Severability

   [10] Ordinance 6630 contains a severability clause. Section
16.11.260 states that if any part of the ordinance is declared
invalid, the invalidity will not affect the permissible parts of
the ordinance. To determine whether this language is effective
and the invalid provisions of Ordinance 6630 are severable,
we look to state law. Leavitt v. Jane L., 518 U.S. 137, 139
(1996). Under California law, the presence of a severability
clause coupled with the ability functionally, mechanically,
and grammatically to sever the invalid portion from the valid
portions of an enactment ordinarily will allow severance but
only if the remainder of the enactment is complete in itself
and would have been adopted without the invalid portion.
Sonoma County Org. of Pub. Employees v. County of
Sonoma, 591 P.2d 1, 14 (Cal. 1979); Calfarm Ins. Co. v.
Deukmejian, 771 P.2d 1247, 1256 (Cal. 1989).

  [11] Here, it does not appear that the invalid portions of the
ordinance can be severed from the valid provisions of the
626           QWEST COMMUNICATIONS v. BERKELEY
ordinance without affecting the general functionality of the
ordinance. Removing the preempted regulations found in sec-
tions 16.11.070, 16.11.060, and 16.11.330 would result in a
disjointed and nonsensical fee exemption process, annual
reporting system, and certification process.

   [12] More problematic is whether Ordinance 6630 would
have been adopted by the City without the invalid portions of
the enactment. In Sonoma, the California Supreme Court gave
great deference to the purpose and design of the statute. 591
P.2d at 14-15. However, that purpose and design was consti-
tutionally permissible. Id. Here, the stated purpose of Ordi-
nance 6630 is to “more specifically regulate
telecommunications carriers providing telecommunications
and telecommunications services . . . .” This stated purpose is
impermissible and in direct conflict with the title and text of
§ 253. Thus, as we have disemboweled the portions of the
ordinance that accomplish this express purpose, there is no
evidence—even with the severability clause—that suggests
the City would have passed the Ordinance. Accordingly, we
decline to sever the invalid portions of Ordinance 6630.

                      CONCLUSION

   [13] We affirm the district court’s order granting summary
judgment in favor of Qwest. Section 253(a) preempts Ordi-
nance 6630 because the enactment contains regulations and
requirements that have the effect of prohibiting telecommuni-
cations companies from providing telecommunications ser-
vices in the City of Berkeley. Furthermore, the offending
provisions are not saved by the “safe harbor” clause found in
§ 253(c) because they are not regulations that manage the
public rights-of-way, but regulations that allow the City to
manage the telecommunications companies themselves by
requiring the companies to certify and document their legal
and technical qualifications. We also determine that Ordi-
nance 6630 is not severable.
      QWEST COMMUNICATIONS v. BERKELEY   627
AFFIRMED