U.S. Supreme Court Hears Oral Argument in FCC “Shot Clock” Case

On January 16, the U.S. Supreme Court heard oral argument regarding the City of Arlington, Texas’s challenge to an FCC rule mandating a time within which municipalities must rule on certain cell tower applications.  The transcript and audio of the argument is available here.  Previously, we have written a thorough explanation of the so-called “shot clock” rule that readers will find here. The transcript and audio are a great example of two seasoned appellate attorneys arguing before the Court.  While one is never certain how the Court will rule until it issues its opinion (remember its decision in the Affordable Care Act case?) the justices’ questions indicate that the Court may ultimately affirm the FCC’s rule.

We will monitor this case and discuss the Court’s decision when it is issued later this term.

Further "shot clock" developments

On January 23, 2012, the Fifth Circuit Court of Appeals affirmed the FCC's "shot clock" order, but limited its effect.  The order allows providers to file suit in the event that a municipality takes longer than 90 - 150 days to act on cell tower zoning requests. The court said if a municipality has a reasonable excuse for exceeding the shot clock, then the presumption that it acted improperly does not apply, and the courts are able to independently examine the facts, and make a decision as to whether taking more time was actually reasonable.

This is certainly a good case for municipalities.  However, it must be noted that the Ninth Circuit has not yet ruled on this matter.  We will continue to monitor developments on this issue and provide updates accordingly.

Cell Tower Leases

Government entities are often approached by wireless communication companies searching for a site to build communication facilities.  Towards that end, below are some issues to keep in mind during cell tower lease negotiations. 1.      Term – Many wireless companies are looking for long term leases that average about 25 years.  Typically, this is in the form of 4 five year terms with automatic renewal clauses with little to no control on the part of the Landowner in terminating the lease.  A better approach is to negotiate a 10-15 year lease with an option to terminate after the first or second extension term.

2.      Rent Escalation – Some companies might suggest a term escalation (i.e. 5% increase every 5 years, etc).  The better option is to negotiate a yearly rent increase around 3%.

3.      Co-Location – Landowners should ensure there are lease provisions allowing for additional rent if other carriers co-locate (i.e. install antennas) on the site.  This additional rent can be in the form of co-location fees or ground space rental for the equipment required to co-locate.

4.      Equipment – Landowners should also require exact drawings of the equipment allowed on the site.  Any additional equipment should require written consent from the landowner.  This is particularly important for governmental entities who are concerned with site aesthetics.

5.      Bankruptcy Affirmation Clauses – It is also prudent for landowners to require a bankruptcy affirmation clause, particularly when renting to smaller, start-up carriers.  These clauses ensure that when a wireless company files for bankruptcy they are required to affirm the lease.  This offers some protection if the company abandons the site in the event of a bankruptcy.

6.      Easements – Carriers might ask for easements to access or build on the property.  Instead of granting easements, if possible, allow a right of access or license to access the property.

7.      Design – Encourage the carrier to use more aesthetically pleasing designs and retain final design approval.  The more integrated the design is with the existing structure or site, the better.

8.      Location – Remember, the carrier has chosen this site for a reason - because it is advantageous for them and there is a need for coverage.  Do not hesitate to negotiate with the carrier for higher rents!  Yearly rents can run from $700-$2000 a month.