ORDER GRANTING IN PART, DENYING IN PART, PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION
I. Introduction and Background
Plaintiff Cox Communications PCS, L.P., (d.b.a. Sprint PCS), (“Sprint”) is a provider of wireless telecommunications service throughout the San Diego area, including the City of San Marcos (“City”). On April 20, 2001, Sprint requested the right to use the City’s public rights-of-way to install various facilities at three sites in the City. The facilities include wireless cell devices that attach to electrical poles and boxes at the base of the poles to provide power to the wireless transmission units. On August 2, 2001, the City indicated that Sprint could not use the public rights-oL way without first obtaining a Conditional Use Permit (“CUP”).
The process for receiving a CUP from the City is contained in Title 20 of the San Marcоs Municipal Code. To obtain a permit, a party must file an application with the City that includes a complete plan, description of the property, the proposed use, satisfactory evidence that the applicant will begin construction within six months of receiving the permit, and a fee of $3,476. San Marcos Municipal Code § 20.96.170. A public hearing is required. §§ 21.104.070, 20.104.075, 20.104.080. The applicant must show that its proposed use of the rights-of-way will not be “materially detrimental to the public health, safety, or welfare or injurious to the property or improvement in such vicinity and zone in which the property is locаted” and “will not adversely affect any master or precise plan adopted pursuant to law.” § 20.96.170. The City retains unlimited discretion to grant or deny permits. § 20.96.040 (“Use permits may be granted upon such conditions ... as shall deem to be reasonable and necessary or advisable under the cir- *1263 eumstances so that the objectives of this ordinance shall be achieved.”); § 20.96.190 (“Use permits may be granted for such period of time and upon such conditions and limitations as may be deemed appropriate.”). Violators of the ordinance may be punished by fine and/or imprisonment. §§ 20.112.20, 20.112.30, 20.112.040. Finally, if a permit is granted, the City may require a bond to insure performance and furnish security. § 20.96.050.
On October 1, 2001, Sprint informed the City that it believed the CUP process, as contained in the parts of the San Marcos Ordinance described above, violated Sprint’s federal and state rights. On or about November 16, 2001, the City and Sprint met to discuss Sprint’s proposed projects and right to install such facilities. The parties did not agree whether the City could require Sprint to receive a CUP before it used the City’s rights-of-way. On November 26, 2001, Sprint sent another letter to the City reiterating its earlier legal position about the CUP process and requesting a response within ten days. Sprint has never applied for a CUP pursuant to the ordinance.
On December 14, 2001, Sprint filed the complaint in this case. Among other causes of action, Sprint asserted that the CUP application process was preempted by the Telecommunications Act of 1996 and violated California Public Utilities Code § 7901. Sprint now seeks a preliminary injunction preventing the City from enforcing its application process as it applies to Sprint, pending final judgment in this case. 1
II. Preliminary Injunction
To obtain a preliminary injunction, the moving party must demonstrate either (1) a combination of probable success on the merits and the possibility of irrеparable injury, or (2) that serious questions are raised and the balance of hardships tips sharply in-favor of the movant.
Associated General Contractors of Cal. v. Coalition for Econ. Equity,
A. Irreparable Injury and the Balance of Hardships
Sprint maintains that it has significant gaps in its sеrvice and is losing customers every day its facilities are not placed within the City’s rights-of-way. According to Sprint, the continued delay will constitute irreparable harm to its reputation and goodwill.
Injury to a business’s goodwill 'and reputation is not easily measurable, and thus supports a finding of irreparable harm.
Rent-A-Center, Inc. v. Canyon Television & Appliance Rental, Inc.,
Although the City may suffer harm if the ordinance describing the permit process is enjoined, the balance tips in favor of Sprint. The City is “free to legislate provided it does so within the constraints of federal and state law.”
Berkeley,
B. Likelihood of Success
The crux of the case, however, is whether Sprint has a likelihood or probability of success on its claim that the City CUP process violates federal and state law.
Federal Preemption: The Telecommunications Act of 1996
Sprint claims the City CUP process, as described in the San Marcos Municipal Code, is preempted by § 253 of the Federal Telecommunications Act of 1996 (“FTA”).
See
47 U.S.C. §§ 151
et seq.
Congress enacted the FTA to “provide for a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced technologies and services ... by opening all telecommunications markets open to competition.”
Cellular Tel. Co. v. Oyster Bay,
(a) In general: No 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.
(b) State regulatory authority: Nothing in this section shall affect the ability of a State to impose, on a competitively neutral basis and consistent with Section 254 of this section, requirements necessary to preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers.
(c) State and local governmental authority: Nothing in this section affects the authority of a State or local government to manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for use of public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly disclosed by such government.
Section 253 preempts all state and local regulations that “prohibit or have the effect of prohibiting” any company’s ability to provide telecommunications services, unless such regulations fall within either of the statute’s two safe harbor provisions, sections 253(b) and 253(c). Section 253(b) allows states to adopt “competitively neutral” regulations to “protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers.” This provision only applies to states (not municipalities), unless “a state specifically delegated the state authority to its local governments.”
BellSouth Telecomms., Inc. v. City of Coral Springs,
Based on this statutory framework, the Court first analyzes whether the City regulations have the effect of prohibiting wireless services under section 253(a), then determines whether any of the regulations are saved by the safe harbor prоvisions of sections 253(b) or 253(c).
Section 253(a)
Section 253(a) preempts regulations that not only prohibit outright the ability of any entity to provide telecommunications services, but also those that “may ... have the effect of prohibiting the provision of such services.” 47 U.S.C. § 253(a). In two recent cases,
City of Auburn v. Qwest Corp.,
In Berkeley, the Northern District of California considered a similar local permit process as the one before the court in Auburn. The ordinance required the applicants to complete a detailed application process, pay a $ 3,400 registration fee, and attend a рublic hearing. Id. at 1197. Furthermore, after the provider received permission to proceed, the ordinance regulated the installation and operation of the facilities. Id. The city was given the ultimate discretion to grant or deny the permit based on many factors, including the carrier’s legal and technical ability and evidence of previous convictions or violations of local laws. Id at 1198. Violations of the ordinance were punishable by fine or imprisonment. Id. Similar to the court in Auburn, the court in Berkeley found these regulations had the effect of prohibiting telecommunication services in violation of § 253(a).
Other courts have held similar requirements violate § 253(a).
See e.g., TCG New York, Inc. v. City of White Plains,
Based on Auburn, Berkeley, and the other cases cited above, the San Marcos CUP process has the effect of prohibiting Sprint and other telecommunications companies from using the public rights-of-way in the City. The City permit process requires a lengthy application process, imposes criminal and civil fines for those who use the right of way without the consent of the city, provides for public hearings, and charges expensive fees. §§ 21.104.070, 20.104.075, 20.104.080, 20.96.170, 20.112.20, 20.112.30, 20.112.40. Most significant is *1266 the fact that the ordinance gives the City unfettered discretion to deny a permit for unspecified reasons. §§ 20.96.040, 20.96.190. Sprint has shown a substantial likelihood of success on its claim that the regulations, considered collectively, create a substantial barrier to entry and thus violate § 253(a).
253(c)
Even though the City permit process may violate section 253(a), it will only be preempted if it does not fall under the safe harbor provisions of sections 253(b) and/or 253(c). Section 253(c) permits local regulations that “manage the public rights-of-way.” Although the FTA did not define “manage the rights-of-way,” the courts, FCC, and legislative history have provided some guidance. In determining the scope of a city’s authority to manage public-rights-of-way, the courts in Auburn and Berkeley looked to the Federal Communications Commission, which states as follows:
Section 253(c) preserves the authority of state and local governments to manage public rights-of-way. Local governments must be allowed to perform the range of vital tasks necessary to preserve the physical integrity of streets and highways, to control the orderly flow of vehicles and pedestrians, to manage gas, water, cable (both electric and cable television), and telephone facilities that crisscross the streets and public rights-of-way.... The types of activities that fall within the sphere of appropriate rights-of-way management ... include coordination of construction schedules, determination of insurance, bonding and indemnity requirements, establishment and enforcement of building codes, and keeping track pf the various systems using the rights-of-way to prevent interference between them.
In re TCI Cablevision of Oakland County, Inc.,
12 FCC Red 21396 (1997), P103,
“regulate the time or location of excavation to preserve effective traffic flow, prevent hazardous road conditions, or minimize notice impacts;” (2) “require a company to place its facilities underground, rather than overhead, consistent with the requirements imposed on other utility companies;” (3) “require a company to pay fees to recover an appropriate shafce of the increased street repair and paving costs that result from repeated excavation;” (4) “enforce local zoning regulations;” and (5) “require a company to indemnify the City against any claims of injury arising from the company’s excavation.”
In re Classic Telephone, Inc.
11 FCC Red 13082,
The Court must analyze the particular provisions at issue in this case to determine if they permissibly “manage” the rights-of-way, or impermissibly regulate the carriers themselves.
20.96.040, 20.96.190: City retains discretion to grant or deny a permit
These provisions which give the City the discretion to grant or deny a permit do not fall within the safe harbor provision of § 253(c) and, thus, are preempted. The courts have clearly said that local governments do not have discretion to deny permits.
See Auburn,
20.96.170(c) “That the granting of a CUP zuill not be materially detrimental to the public, health, safety or welfare or injurious to the propеrty or improvement in such vicinity and zone in which the property is located ”
The first part of this provision that relates to the public, health, safety and welfare is not saved under section 253(c). Although municipalities can “manage” the rights-of-way, they do not have the authority to protect the public safety and welfare, unless this power is delegated to them by the states.
See BellSouth Telecomms., Inc. v. City of Coral Springs,
The second part of this provision, however, is probably saved under section 253(c). Senator Feinstein, in her comments, notes how section 253(c) allows cities to enforce local zoning laws.
See In re Classic Telephone, Inc.,
at P39,
20.96.170(d) That the granting of a CUP mil not “adversely affect any master or precise plan adopted pursuant to law”
This statute is most likely saved by 253(c) because it “manages” the rights-of-way. As noted above, cities can enforce local zoning laws. As a result, section 253 does not prevent a city from reasonably regulating a rights-of-way in a way that is consistent with a master plan.
20.104.020: To obtain a permit to use the Rights-of-way, a party must file an application with the City with a complete plan, description of the property, the proposed use, аnd satisfactory evidence that the applicant will begin construction within six months of the permit
This provision, for the most part, reasonably manages the rights-of-way. As Senator Feinstein points out in her comments, cities are given the authority to “regulate the time or location of excavation to preserve effective traffic flow, prevent hazardous road conditions, or minimize notice impacts.” In re Classic Telephone, Inc., at P39. A complete plan, description of the property, and evidence that the applicant will begin construction within six months is necessary to achieve these goals and, thus, probаbly constitute permitted local regulation.
Knowing what the
property will be used for,
however, has less to do with management of the rights-of-way than it does with regulation of the carrier.
See City of Coral Springs,
20.104.070, 20.104.075 Any application for a permit must have a public hearing
Public hearings affect the management of the rights-of-way. Public hearings can apprise the City of possible traffic or zoning concerns, issues over which the local government has authority tо regulate.
Furthermore, when section 253(c) is read in light of 47 U.S.C. § 332(c)(7)(B), it becomes evident that local governments can conduct public hearings. Section 332(c)(7)(B) says that “nothing in this chapter” should affect the local government’s authority “over decisions regarding the placement, construction, and modification of personal wireless services.” Subsection 332(c)(7)(B)(iii) states:
*1268 Any decision by a State or local government or instrumentality thereof to deny a request to place, construct, or modify personal wireless service facilities shall be in writing and supported by substantial evidence contained in the written record.
In this case, the phrase, “contained in the written record,” implies a hearing. If public hearings were preempted under section 253, then local governments would be prevented from gaining useful evidence to help them in their decisions over the “placement, construction, and modification of wireless services.” This interpretation of section 253(c) would frustrate the purposes of 332(c)(7)(B). Reading the FTA as a whole, public hearings are allowed before municipalities decide whether to issue permits. Although Sprint argues that the holding in
Auburn
is to the contrary, that case is distinguishable in that-there thе court held public hearings were not allowed before a
franchise
was issued, not a
permit. Auburn,
For these reasons, public hearings are probably saved under section 253(c).
20.112.020, 20.112.030, 20.112.030 Violators will be punished by fine and imprisonment
As long as the City can implement reasonable regulations, it can enforce them without violating section 253. Because §§ 20.112.20, 20.112.30, and 20.112.030 are simply enforcement mechanisms to its regulations of the rights-of-way, these statutes are likely not preempted.
See City of Coral Springs, Florida,
20.96:050: City may require a bond to insure performance of conditions and limitations
The FCC, when defining the contours of local power over the rights-of-way, specifically held that bonding requirements were acceptable.
See In re TCI Cablevision of Oakland County, Inc.,
12 FCC Red 21396,
253(b)
The Court also must decide whether section 253(b) saves any of the provisions not saved under section 253(c). Section 253(b) permits states to adopt “competitively neutral” regulations “to protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumеrs.” This provision only applies to states unless a state delegates this authority to municipalities.
In its complaint, Sprint concedes that in section 7901.1 of the California Public Utilities Code, the state delegated its authority over public safety and welfare to municipalities. The Complaint alleges:
Through California Public Utilities Code Section 7901.1, the state delegated to its lower divisions only the narrower police power of regulating the time, place, and manner of installing such facilities. This power is limited to exercises necessary to safeguard the public, health, safety and welfare to the extent not prohibited by law.
Complaint, ¶26 (emphasis added). The legislative history of section 7901.1 supports this interpretation, where the Committee noted how it wrote the bill in response to the City’s complaints of “a lack of ability to plan maintenance programs, protect public safety, minimize public inconvenience, and ensure adherence to sound construction practices.” S 621, Util *1269 ities & Commerce Committee, 3rd Reading (Cal.1995) (emphasis added). Because the City has the right to protect the public safety and welfare, the first part of San Marcos Ordinance § 20.96.170 is probably saved by 253(b) and thus not preempted by the FTA. See § 20.96.170 (“That the granting of a variance will not be materially detrimental to the public health, safety, or welfare.... ”).
Competitively Neutral
Sprint further argues the regulations in the City Ordinance cannot be saved under sections 253(c) or 253(b) because they are enforced against Sprint, but not against San Diego Gas & Electric (“SDG & E”) and Metricom, Inc. According to Sprint, sections 253(b) and 253(c) allow the City to regulate the rights-of-way, but only in a nondiscriminatory manner.
This argument, however, does not have a likelihood of success because Sprint is unlikely to show that it has been treated unfairly. Sprint alleges SDG & E was not required to obtain CUPs, but was given “virtually unrestricted access to all public right-of-way within the city for purposes of installing gas lines and providing gas service.” Complaint, ¶ 37(d). Although SDG
&
E was given greater access to the public rights-of-way than Sprint, the gas company installs most of its facilities underground which impacts the City’s zoning and visual concerns differently than above-ground facilities. Interpreting section 253(c), the First Circuit noted that “[a]s long as the City makes distinctions based on valid considerations, it cannot be said to have discriminated against a service provider.”
Cablevision of Boston v. Public Improvement Comm’n,
Moreover, although the phrase, “competitively neutral and nondiscriminatory,” in section 253(c) applies to the compensation that can be required, it is questionable whether the expression modifies the management of the public rights-of-way, as Sprint contends. 2 The legislative history of this section suggests that it only applies to the compensation a telecommunications provider may be charged.
Subsection (c) of the new section1 [253] provides that nothing in new section [253] affects the authority of States of local governments to manage the public rights-of-way or to require on a competitively neutral and nondiscriminatory basis, fair and reasonable compensation for the use of public rights-of-way on a nondiscriminatory basis, provided any compensation required is publicly disclosed.
Conference Report, 142 Cоng. Rec. Hllll (daily ed. Jan. 31, 1996) (H.R.Conf.Rep. 104-458). And-as the First Circuit noted, “[a]s a matter of bare syntax, we find the language to be unambiguous: the phrase ‘on a competitively neutral and nondiscriminatory basis’ can only apply to compensation schemes, not management decisions.”
*1270
Cablevision of Boston v. Public Improvement Comm’n,
Overall, Sprint is not likely to succeed on its argument that it is being unfairly discriminated against by San Marcos in violation of section 253.
Based on this preliminary analysis, all the provisions of the City ordinance as they relate to the CUP process appear to fall within the safe - harbors of sections 253(c) and/or 253(b) except section 20.96.040 and parts of sections 20.96.190 and 20.104.020. As a result, Sprint has shown a likelihood of success on its contention that at least sections 20.96.040, 20.96.190, and 20.104.020 violate the Constitution because they are preempted; Sprint has failed to show a probability of success on its arguments thаt the other regulations in the San Marcos code are preempted.
Severability
The Court needs to determine whether Sprint has a probability of success on its claim that sections 20.96.040, 20.96.190, and 20.104.20 are not severable. According to California law, an invalid provision can be severed from an ordinance if the provision is grammatically, functionally, and volitionally separable.
See Calfarm Ins. Co. v. Deukmejian,
In
Auburn
and
Berkeley,
the courts refused to sever the invalid portions from the remaining parts of the statute. As
Auburn,
The Counterclaim Cities’ ordinances contain a complex mix of application procedures, approval requirements, required franchise terms, financiаl and operations disclosure, and discretionary “catchall” clauses whose preempted provisions are so pervasive that it is not practicable to conduct a line-by-line sev-erability analysis of each city’s municipal code. Were we to do so, the eliminátion of preempted sections of the codes would result in regulation requiring a disjointed franchise application, a lack of standards for approval, disapproval, or revocation by the cities, and cross-references leading the reader to non-existent provisions.
See Berkeley,
*1271
Contrary to the many provisions in
Auburn,
State law claims
Sprint asks the Court to preliminarily enjoin the City from enforcing its CUP process because it violates state law. The
Court will not decide this issue because it has declined jurisdiction over Sprint’s supplemental state law claims.
See Cox Communications v. City of San Marcos,
Order Granting in Part, Denying in Part, Defendants’ Motion to Dismiss,
III. Conclusion
Based on 47 U.S.C. § 253, the Court enjoins pendente lite the City from enforcing the following parts of the City ordinance as it applies to Sprint’s attempt to install the three facilities in the City public rights-of-way.
It is hereby ordered that the City will not enforce § 20.94.040, which states:
Variances and Use Permits may be granted upon such conditions and limitations and for such periods of time as the City Manager, or designee, Planning Commission or the City Council shall deem to be reasonable and necessary or advisable under thе circumstances so that the objectives of this ordinance shall be achieved.
It is hereby ordered that the City will not enforce the part of § 20.96.190, which states:
Use Permits may be granted for such period of time and upon such conditions and limitations as may be deemed appropriate.
*1272 It is hereby ordered that the City will not enforce the part of § 20.104.020(A), which states:
and proposed use.
The Court does not enjoin pendente lite the City from requiring Sprint to obtain a CUP before it can use the public rights-of-way or from enforcing any other part of the CUP process not specifically enjoined by the Court.
IT IS SO ORDERED.
Notes
. Pursuant to the defendants’ request, the Court takes judicial notice of the San Marcos Ordinance and California Public Utilities Commissiоn General Order 159A. Defendants’ Request for Judicial Notice, Exhibits, A-B.
. The provision, "for use of public rights-of-way on a nondiscriminatory basis,” clearly only modifies "requiring] fair and reasonable compensation.”
. Sprint attempts to save federal jurisdiction by framing their state law claims as federal claims. According to Sprint, the City impairs a contract Sprint has with the state of California, based on California Public Utilities Code § 7901, in violation of the federal constitution. This argument, however, is unavailing. As discussed more in the Court’s motion to dismiss, Sprint does not have a "contract” to use the City's public rights-of-way and, thus, these state law issues never become federal claims.
