Posted By: John Pestle, Partner, Varnum LLP
Attendees at IMLA’s spring seminar heard an update on recent appellate decisions favoring municipalities on their control of the rights-of-way as to (and fees from) telecommunications companies. This reflects 13 years of litigation on basic principles under the Telecommunications Act of 1996 which now appears to be coming to a favorable close, although the Supreme Court may yet step in. And attendees heard about state and Federal efforts to site electric transmission lines, overriding local control.
Viewed from a longer perspective, these are both part of a long-term and continuing debate between local units of government and state/national authorities regarding franchising and control over the rights-of-way. Briefly, at their inception most classic utilities (telephone, gas, electric, cable) were solely local operations – - operated just within one city – -and thus were franchised and regulated locally. And hence control over the rights-of-way as to them was local as well.
Technological developments helped change this. For example, the electric industry shifted to large, much more efficient plants which served large areas, such as many cities and counties, and built transmission lines which connected plants within a state and then between states. As a result, electric regulation over rates and terms of service shifted to the state and national level. The telephone industry had previously followed a similar trajectory and with the shift from locally manufactured gas to natural gas from the Southwest after World War II, gas utilities followed a similar route. Most recently, the cable industry has moved in the same direction, with more operations moving from the purely local to the regional level.
From the perspective of local government although economic regulation (rates, terms of service) tended to shift to the state or national level, control of the rights-of-way tended to remain local for obvious reasons. Even so, tensions remained, and remain to this day.
In the most widely used type of example, if a line (telephone, electric, gas or whatever) has to run through Community A (but not provide service in A) in order to provide local service in Community B, then can/should Community A be able to take actions to protect its interests, with consequent adverse affects on persons in Community B who are receiving service? Community’s A’s actions may range from prohibiting the construction of the line, to changing its route, to taking other actions to mitigate visual or other harms (e.g. – - undergrounding), to the most prosaic of engineering-oriented street and right of way matters.
But if, as has occurred or been proposed in some instances, the state or Federal government controls the permitting process for such a line, to what extent can or should it in the interest of the residents of Community B be able to ignore or overturn the interests of Community A, such as running a line through natural or scenic areas of Community A with consequent significant adverse impacts on it and its residents?
The point is that the tension created by these issues is long-standing, and is sometimes portrayed as being between state and local interests, and sometimes portrayed as being between the interests of the communities receiving service versus those traversed by (but not receiving service from) utility lines. That tension can be seen in court decisions and constitutional debates from over a hundred years ago. And these issues are still being wrestled with today, as exemplified by the IMLA sessions this past week.