Legal and Regulatory Issues in PROW Management

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Legal and Regulatory Issues in PROW Management

• Nicholas P. Miller
• University of Wisconsin, Madison
• March 4, 2002
• www.millervaneaton.com

Miller Van Eaton P.L.L.C.
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OVERVIEW

• Local Governments Interests
• Who is Using PROW
• The Source of Local Authority
• Federal Law Dispute

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Local Government Interests

• Unfunded Mandates
• Property Rights
• Planning and Management of Infrastructure
• Public Benefits for Public Resources

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Unfunded Mandates--cost transfers from companies
to taxpayers

• accelerated deterioration of infrastructure
• additional costs imposed on other PROW users
• Dallas and Southfield floods
• Abandoned bankrupt facilities
• DC road disruption
• public safety and disaster recovery costs

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Property rights in ROW

• PROW is not a free good
• must be allocated for highest and best use

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Planning and Management of Infrastructure

• first come-first served doesnt work
• Growth and Limited Space
• Aesthetics and Congested Facilities
• GIS requirements

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Public Benefits for Public Resources

• Taxpayer benefit
• fair compensation for use of public resource
• Community benefit
• smart growth
• in-kind resources to address
• digital divide
• universal service
• government efficiency

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Who is Using Rights of Way?

• CATV-- 5 fees, normal permitting
• ILECs-- usually a fee or user tax, normal
  permitting
• CLECs --
• dont charge us more than ILEC
• speed to market
• costs of construction
• risks of construction

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Others Using Rights of Way?

• Dark fiber providers
• Conduit providers
• Pass-through/spot users
• Combo companies/consortia

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What is a Franchise?

• A Grant of a Special Privilege
• A Revocable Personal License to Use PROW
• Possibly a Privilege to Offer a Service
• Broad Confusion Between These Two

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State Property Law Controls

• Same Principles as other Property
• Company Must Acquire a Property Right (Right to
  Use) From the Owner of the Property
• Estate in Fee/Lease/Easement/ Franchise/or
  License (Explicit or Implicit) Required
• Fifth Amendment Federal Law May NOT Preempt
  State Property Law

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If State Law Controls

• State Legislation Controls
• Usual Rule Cities are Creatures of State and
  State Can Pull Back
• property
• police power authority
• Local Government May Have Independent Right of
  Ownership

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Local Governments Response

• Government Property
• normal state property law controls right to use
• local governments own or control right to use
• local governments can set terms and price of use
• Exception
• prior State grant of property to company
• recent State preemption of local governments

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Companies Response

• Telecomm Regulation in the Guise of Property
  Rights
• State PUCs, not Locals, Retain Authority to
  Regulate--253(b)
• Local regulation preempted--253(a)

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Companies Response (Continued)

• Taxation in the Guise of Rent
• No New Property Interest
• States/Locals gave RBOCs easements long ago
• new companies have right to partition the same
  easements
• e.g. 47 USC 224
• Compensation limited to impact fees

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Federal Law --47 USC 253(c ) 332(c )(7))

• Right to Charge Rent
• Right to Manage Behavior in ROW
• Right to zone and site antennas and towers

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SEC. 253. 47 U.S.C. 253 REMOVAL OF BARRIERS TO
ENTRY.

• (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.
• (c) State and Local Government
  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.

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Every Word and Phrase in Sec 253 Still Disputed

• Auburn v. QWEST--Not The Last Word
• Qwest v. Portland--Gross revenues OK

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Title II (Sec. 253) Definitions

• What is a prohibition?
• Auburn combination of requirements
• Coral Springs a factual question
• Cases that Permit Exclusion
• Omnipoint v. Port Authority of NY (D.Ct. NY)
  local govt can require new entrant to conform to
  pre-existing standards
• Cablevision v. Boston (2d Cir, 2000) local govt
  can impose different terms on new entrant

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Definitions (cont)

• What is use?
• Dallas II only physical occupancy
• Dearborn anticipatory and inchoate uses

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Definitions (cont)

• What is management?
• Troy (FCC) specific list, community burden to
  prove
• Coral Springs a factual question, safe-harbor
  analysis

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Definitions (cont)

• What is fair reasonable compensation
• Dallas II Allocated Direct and Indirect costs
• Prince Georges I Only Cost of Regulation
• Dearborn reasonably related to value conveyed

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Fundamental PROW Dispute

• is franchise a regulatory relationship?
• a property interest?

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Case outcomesdetermined by this question

• Dearborn Cablevision of Boston right to occupy
  PROW is property interest, subject to state
  property law.
• Auburn Prince Georges II Chattanooga PROW
  occupancy is a regulatory interest, subject to
  state and federal regulatory exclusion.
• Coral Springs If govt action prohibits, OK if
  related to property interests

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AD HOC AGREEMENTSShort Term Relief, Long Term
Pain

• Avoids Immediate Litigation
• Risks Least Restrictive Terms in Each Agreement
  Will Apply to All
• Risks Granting Free and Unlimited Property
  Interests
• Imposes Contractual Limits on Future Regulations
• Most Vulnerable to Claims of Discrimination

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AN ORDINANCEShort Term Pain, Long Term Control

• Companies Uniformly Join to Intimidate
• Tell the Courts What You are Trying to Do
• Define
• Scope of Your Authority to Control Entry
• Right-of-Way Management Authority
• Compensation Mechanisms
• Enforcement Authority

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CONCLUSION

• Management should not be the fight
• Every Provider becomes an Incumbent
• Huge private investment
• Compensation is the issue--Is PROW a free good?
• Short-sighted by industry lobbyists
• Long-term taxpayer costs
• Electeds Must Be Told the Taxpayers Interest