Public Utility Easements in Public Rights-of-Way

September 25, 1997, Richmond

Members of the House Corporations, Insurance and Banking committee and the Senate Commerce and Labor committee met jointly to further consider the issue of public utility easements in public rights-of-way, a subject addressed by both committees during the 1997 Session of the General Assembly (HB 2915 and SB 1013). The passage of these identical bills, which expire July 1, 1998, limits the rates charged by localities and the Commonwealth Transportation Board for the use of public rights-of-way or easements to amounts or rates in effect as of February 1, 1997.

Representatives from the Virginia Telephone Industry Association (VTIA), localities, and the Virginia Department of Transportation (VDOT), which conducted a series of meetings following the adjournment of the 1997 General Assembly to try to negotiate an agreement concerning future rates or charges for the use of such rights-of-way, briefed the special subcommittee on the outcome of those meetings. To date, no agreement has been reached among the participants.

Telephone Industry Concerns

The VTIA described the issues remaining to be settled as (i) how much money will be collected from utilities for the use of rights-of-way? (ii) how or on what basis will the fees be collected? (iii) will the fees be passed through directly to the consumer? and (iv) who pays the associated costs of relocating existing telecommunication facilities?

The VTIA voiced concerns over the higher rates sought by localities in light of the amount of taxes already paid by utilities to the Commonwealth and local governments. As an example, the VTIA informed the special subcommittee that Bell Atlantic currently provides over $226 million in tax revenue to the Commonwealth and its localities.

The VTIA also stated that the proposed increases in fees are discriminatory because telecommunication companies already pay taxes for the use of rights-of-way just as others who also use the right-of-way and users of the road itself pay. The imposition of additional new fees was described as unfairly singling out the communications industry. According to the VTIA, any increases in access charges by localities must be passed directly through to the consumer, since the incumbent telecommunications companies are prohibited by law from increasing their prices. Additionally, incumbent utilities must remain as providers of last resort and thus are prohibited from refusing to offer service in high-tax localities. Such an arrangement, argues the VTIA, prohibits the establishment of fair market prices since the utility cannot choose not to provide service.

Collecting fees based on a percentage of gross receipts or a per-access line fee were suggested by VTIA as the easiest ways administratively to collect the fees. The VTIA also stated that VDOT is moving ahead with the promulgation of its fee schedule, and that this could result in multiple, confusing payment plans depending on who controls the right-of-way.

The last major issue discussed by the VTIA was relocation of existing facilities, which is very expensive. For the first seven months of 1997, Bell Atlantic paid $9 million for relocation. The VTIA stated that it is not fair for localities to charge excessive fees for the use of rights-of-way and not pay for any necessary relocation fees.

Representatives from MCI supported the proposals presented by the VTIA and emphasized the negative economic development consequences that may result from localities charging excessive fees for the use of public rights-of-way. MCI stated that potential new service providers may choose to site facilities (such as switches) outside of Virginia if there is an excessive cost associated with locating inside the Commonwealth. The rates charged for the use of rights-of-way were described as a factor considered by industry when picking a business location.

Local Government

Representatives from the Virginia Municipal League (VML), the Virginia Association of Counties (VACO), and the Hampton Roads Planning District Commission offered testimony supporting the continuing authority of localities to set and collect reasonable fees for the use of publicly owned rights-of-way. The authority for local governments to collect such fees is derived from the state Constitution. Additionally, localities have a fiscal obligation to protect local assets and should not be giving away a benefit to private enterprise without collecting fair and reasonable fees.

VACO acknowledged that a significant portion of the rights-of-way sought by telecommunications providers is assigned to the secondary road system and is thus managed and controlled by VDOT. However, VACO feels that localities should maintain the authority to regulate the placement of telecommunications providers through the local zoning and comprehensive planning process, whether or not these facilities are in a VDOT right-of-way.

Another idea presented by VACO is to deposit any revenue generated from the use of rights-of-way to the Transportation Trust Fund, to be reallocated back to the locality of origin for secondary roads above and beyond any budgeted VDOT secondary road allocation.

VDOT

A representative from VDOT reported to the special subcommittee that guidelines were being developed regarding the use of rights-of-way. VDOT is promulgating these standards and guidelines in accordance with the Administrative Process Act. VDOT anticipates publishing these standards in the Virginia Register sometime in early November.

The chairman concluded the meeting by urging the affected parties to continue working towards an agreement regarding the use of rights-of-way and expressed hope that another meeting could be conducted prior to the 1998 Session of the General Assembly to finalize an acceptable proposal.