Ninth Circuit Narrows Federal Telecommunications Act's Preemption Standard for Local Regulation

Relying on the Ninth Circuit's decision in City of Auburn v. Qwest Corp. (9th Cir. 2001) 260 F.3d 1160, the district court held that the County's Ordinance violated § 253(a) of the Act. In Auburn, the court noted that  § 253(a) preempted regulations that not only prohibited the ability of any company to provide telecommunications services, but also regulations that "may . . . have the effect of prohibiting" the provision of those services. Relying on the "may . . . have the effect of prohibiting" language, the court found that regulations that could possibly prohibit provision of telecommunication services were preempted by federal law. A three-judge panel of the Ninth Circuit affirmed, followed a rehearing en banc. On rehearing, the Ninth Circuit revisited its analysis in Auburn, and concluded that its "previous interpretation of the word 'may' as meaning 'might possibly' [was] incorrect" and had led to an overly broad application of preemption principles. The Court overruled the Auburn decision, and in an attempt to harmonize the legal standard under both sections 253(a) and 332(c)(7), held that "a plaintiff suing a municipality under section 253(a) must show actual or effective prohibition, rather than the mere possibility of prohibition." Applying the revised standard the Court found that that San Diego's Ordinance was not preempted by the Telecommunications Act.