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TML Update-CS001027 17 Legrislat'Ive ,7 Texas Municipal League UPDATE T e(,e October 27, 2000 e4- Number 7 THE TRUTH ABOUT MUNICIPAL AUTHORITY IN THE RIGHT-OF-WAY Brief Summary Nothing enacted under state or federal law has reduced the authority of cities to exercise their police powers for the protection of the health, safety, and welfare of the public in connection with the use of city streets and rights-of-way by telecommunication companies and other entities. Discussion Many Texas cities are experiencing an unprecedented level of activity in their streets and rights-of-way (ROWs). This is the result of an explosion in new communications technology coupled with the growth of competition in the telecommunications and cable industries resulting from deregulation of those industries. In order to offer such new services as broadband, communications providers are rushing to install fiber optic cable, DSL stations, and other new facilities in ROWs. This level of activity will not go on indefinitely,but it has been more pervasive and invasive than any state or city official expected. With this activity come two serious problems. The first is a detrimental effect on public safety, traffic flow, city infrastructure, and efficient city administration. Major water lines have recently been breached in Dallas and San Antonio during excavations. Traffic in Austin and Houston has become so heavy and ensnarled due to activities in the ROWs that the stories have been front-page news. Other cities have experienced the cutting of utility lines. City streets are being barricaded and torn up repeatedly, significantly shortening their life expectancies and suitability for traffic. City staffs are being inundated with applications for expedited issuance of construction and excavation permits. The second problem is dissemination of incorrect or misleading information about the extent of city authority to issue permits and to impose police power-based regulations in the management of their ROWs. Police powers encompass the authority of a governmental body to enact regulations to protect the health, safety,and welfare of the public, and are generally regarded by the public as some of the most important functions of government. The reasonable exercise of police powers is considered to be of utmost importance under the law and has repeatedly been upheld by the courts, even when compared to private property rights and obligations under contracts. Nevertheless, many city officials are being told that their police powers have been seriously restricted, particularly with regard to the activities of telecommunications providers. For example, cities are hearing that they cannot impose regulations on the time, place, and manner of construction or excavation in the ROWs unless precisely identical regulations are imposed on each entity that uses ROWs, including Note: When you receive this TML Legislative Update,please make copies of it and distribute them to members of the governing body and to depart- ment heads as appropriate.TML sends only one copy to each city,and we rely on those who receive it to distribute it.Thanks for your help. Published by the Texas Municipal League 1821 Rutherford Lane , Suite 400 , Austin , Texas 78754 - 5128 • ( 512 ) 719 - 6300 the city's own water and sewer departments. City officials are also hearing that they can never refuse to allow a telecommunications provider to use particular ROWs, that a city cannot require a telecommunications provider to furnish the city copies of maps depicting the location of the provider's facilities, and that a city cannot require proof of insurance or bonding. The basis of authority for these statements is often identified as H.B. 1777,enacted by the Texas Legislature in 1999. This type of information is not only inaccurate, it's also dangerous. The inability of a city to adequately regulate activities in its ROWs will increase traffic accidents, cause severance of utility lines, permanently damage streets and other infrastructure, and may cost human lives. The breach of a water line may cause inundation,property damage,and loss of water. The breach of a cable television, electric, or telecommunications cable may cause loss of residential and commercial service. More serious is the breach of a sewer main, resulting in health and environmental threats. Finally, the breach of a gas pipeline may result in catastrophic property damage, injury,and death. Significant statutory changes have occurred in Texas and the nation in the last five years that are relevant to city ROW practices, but none has resulted in the loss or diminution of city police power authority. The first of these was deregulation of the telecommunications industry in the state, which occurred in 1995 with the enactment of H.B. 2128. Rather than limit city authority, however, H.B. 2128 contained a provision stating that "(n)othing in the Act shall restrict or limit a municipality's historical right to control and receive reasonable compensation for access to its public streets, alleys, or rights-of-way or other public property." The Legislature's intent about this provision was made clear during debate on the bill when Senators Shapiro and Sibley explained on the floor of the Senate that the bill "does not diminish the authority of municipalities, as such authority existed prior to the effective date of this Act, to regulate the use of municipal streets by utilities and to require utilities to pay compensation for the use of such streets." The second significant statutory change was the congressional enactment of the Federal Telecommunications Act of 1996. Again,this bill did not diminish city police power authority. Instead, it contains provisions stating that"(n)othing in this section shall affect the ability of a State to impose, on a competitively neutral basis . . . requirements necessary to preserve and . . . protect the public safety and welfare . . ." and "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 . . . ." It must be noted, however, that the same section of this federal law prohibited states and local governments from imposing statutes, regulations, or other legal requirements that prohibit or have the effect of prohibiting the ability of any entity to provide interstate or intrastate telecommunications service. This latter provision, coupled with the competitively neutral and nondiscriminatory obligations, has been a significant basis for the misinformation currently being disseminated. The third significant statutory change was enactment of H.B. 1777 by the Texas Legislature in 1999. This bill, which is codified as Chapter 283 of the Texas Local Government Code, accomplished a major change in the procedure and methodology for a city's collection of compensation from telecommunications providers for use of ROWs in the furnishing of local telephone service. City franchising of such providers was essentially eliminated, and the formula for calculating city compensation was changed. Again, however, the bill did not diminish city police power authority. To the contrary, the bill declares as policy of the state "that municipalities retain the authority to manage a right-of-way within a municipality to ensure the health, safety,and welfare of the public." The language of H.B. 1777 that has been the source of much of the misinformation and confusion is contained in provisions that were intended to ensure compliance with the requirements of the Federal Telecommunications Act of 1996 and to eliminate city requirements (often included in city franchises) that were not based on either police powers or a city's authority to collect compensation for the use of its 2 ROWs. These latter types of requirements sometimes required phone companies to maintain a billing office in a city, required companies to file reports and documents with the city not otherwise required by law, authorized the city to review or audit company records for purposes other than proof of adequate franchise compensation, and granted cities the right to approve transfers of ownership or control of the phone company. Accordingly, in specifying the extent of city police power authority, H.B. 1777 specifies that the type of police power-based regulations a city may exercise: (1) are those "that apply to all persons within the municipality;" (2) may be imposed "only to the extent that they are reasonably necessary to protect the health, safety, and welfare of the public;" (3) may not include activities within the sole business discretion of the telecommunications provider; (4) must be competitively neutral and may not be unreasonable or discriminatory; and (5) may not include unauthorized requirements, including the four identified in the previous paragraph. The bill also obligates cities to process promptly all valid and complete applications for construction permits, and to make every reasonable effort not to delay or unduly burden telecommunications providers in the timely conduct of their business. Finally, the bill' prohibits cities from charging fees for the issuance of construction permits, such fees being considered to be part of the access line compensation the city is entitled to receive. These provisions, however, were not intended to limit a city's ability to protect the public. H.B. 1777 was a compromise bill, negotiated by representatives of cities and the telecommunications industry. The foregoing provisions were included to eliminate city practices that the industry contended were not based on police powers,and which were arguably creating obstacles to timely entry into the competitive market that was the goal of the state and federal laws deregulating the telecommunications industry. Nor does the language require identical treatment of different users of the ROWs. The requirement that regulations must apply to others in the city is intended to define the purpose of the regulations as protective of the public and to make clear that telecommunications providers are not to be singled out for inequitable treatment. Cities may tailor their ROW regulations to address different threats to safety just as the state may impose different speed limits on different highways and streets. Federal courts have recognized that cities may, and often must, distinguish between users of the ROWs based on their varying uses of the rights-of-way. Regulations applicable to a gas or sewer utility might require greater public protection (e.g. more inspections, greater depth of excavation, trench safety, and a higher bond) than would those applicable to a company installing fiber optic cable. A utility installing overhead lines would generate concerns that differ from a utility installing underground lines. A permit issued to an entity excavating near a hazardous gas pipeline, in a ROW crowded with other facilities, or along a heavily-traveled main thoroughfare, could be different from that issued to an entity installing the first facilities along a newly-constructed residential street. At the same time, the differing requirements must be tied to health, safety, and welfare concerns rather than unrelated issues, and may not give a competitive advantage to one entity over another making the same type of use. Nor does H.B. 1777 require a city to expedite permit applications from telecommunications providers and issue the permits more quickly for their activities than for any other entity. The bill simply prohibits cities from unduly or unreasonably delaying the normal rate of processing such permits. Finally, the bill does not prohibit cities from collecting fees to recover costs to the city that are based on the reasonable exercise of police power regulations, but which are not connected to permit issuance. For example, if the excavation activities of a particular telecommunications provider required the city to employ police officers on overtime to direct traffic, the city would be justified in recovering cost of that use of city personnel from the telecommunications provider. One practical effect H.B. 1777 does have in many cities is the necessity to adopt a new ROW management ordinance. Because city police power requirements are often contained in franchise agreements,-and because H.B. 1777 essentially eliminated telecommunications franchise agreements so 3 long as telecommunications providers comply with the new law and city regulations, such an ordinance should be adopted to replace the police power regulations that were contained in those franchises. The types of regulations that cities may impose on entities that use ROWs are numerous and will withstand legal challenge if they are reasonably connected to protection of the health, safety, or welfare of the public. Such regulations include,but are not limited to,the following: • requirements for permits for construction,excavation,relocation, and other work in a ROW; • limitations on the time for construction and excavation during peak traffic hours; • requirements for traffic and pedestrian protection; • signage and nagger requirements; • requirements for the employment of particular safety devices or practices; • emergency procedures; • environmental protection and erosion prevention provisions; • specifications and standards for restoration of streets and ROWs; • inspections of work and restoration; • coordination of times for construction or excavation with work being performed by other parties; • requirements for proof of insurance or self-insurance; • requirements for bonds in the event of damage to property; • requirements for the name, address, and phone numbers of contact persons with the user; • specification of the location and depth of particular facilities; • requirements for underground lines in particular areas; • requirements for trimming of trees near overhead lines; • requirements for maps depicting the location and depth of underground facilities; • requirements for reasonable notification prior to commencement of construction or excavation activities; • requirements for the removal of overhead facilities to permit passage of large or bulky structures on streets; • facility relocation conditions;and • similar requirements. Cities that do not have an ordinance in place that contains regulations to protect the public in connection with work in and use of their ROWs should implement one. In some cases, it may be necessary for cities to impose a moratorium on new construction or excavation in the ROWs for a short, reasonable time in order to adopt such an ordinance. If the ordinance is to be applicable to entities other than telecommunications providers, the city should verify that nothing therein conflicts with existing franchises with such entities. The desire of the public for new communications technology and the desire of communications providers to provide such technology are important and have been afforded aid and assistance by state and federal law. Those aids and assistance are, however, secondary to the importance of protecting the health, safety, and welfare of the public. Any user of the ROW who disagrees with or forgets that fact does so at its own and the public's peril. TML member cities may use the material herein for any purpose. No other person or entity may reproduce,duplicate,or distribute any part of this document without the written authorization of the Texas Municipal League. Executive Director-Frank Sturzl General Counsel-Susan Horton Director of Legislative Services-Shanna Igo Legislative Associate-Snapper Can For further information contact the TML Legislative Services Department 1821 Rutherford lane, Suite 400, Austin, Texas 78754- 5128 • ( 512 ) 719 - 6300, Fax ( 512 ) 719-6390