Legal and Regulatory Issues in PROW Management

1. Legal and Regulatory Issues in PROW Management Nicholas P. Miller University of Wisconsin, Madison March 4, 2002 www.millervaneaton.com

2. OVERVIEW Local Government’s Interests Who is Using PROW The Source of Local Authority Federal Law Dispute

3. Local Government Interests Unfunded Mandates Property Rights Planning and Management of Infrastructure Public Benefits for Public Resources

4. 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

5. Property rights in ROW PROW is not a “free good” must be allocated for “highest and best use”

6. Planning and Management of Infrastructure “first come-first served” doesn’t work Growth and Limited Space Aesthetics and Congested Facilities GIS requirements

7. 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

8. Who is Using Rights of Way? CATV-- 5% fees, normal permitting ILECs-- usually a fee or user tax, normal permitting CLECs -- “don’t charge us more than ILEC” speed to market costs of construction risks of construction

9. Others Using Rights of Way? Dark fiber providers Conduit providers “Pass-through”/”spot” users Combo companies/consortia

10. 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

11. 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

12. 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

15. 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

16. 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)

17. 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

18. 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

19. 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.

20. Every Word and Phrase in Sec 253 Still Disputed Auburn v. QWEST--Not “The Last Word” Qwest v. Portland--Gross revenues OK

21. 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 gov’t can require new entrant to conform to pre-existing standards Cablevision v. Boston (2d Cir, 2000): local gov’t can impose different terms on new entrant

22. Definitions (con’t) What is “use”? Dallas II: only physical occupancy Dearborn: anticipatory and inchoate uses

23. Definitions (con’t) What is “management”? Troy (FCC): specific list, community burden to prove Coral Springs: a factual question, safe-harbor analysis

24. Definitions (con’t) 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

25. Fundamental PROW Dispute is “franchise” a regulatory relationship? a property interest?

26. 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

27. 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

28. 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

29. 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