Source: https://wiredwest.net/2017/01/20/legal-notes-regarding-regional-mlp-operation-collaboration/
Timestamp: 2019-04-22 21:55:29+00:00

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Below is a legal opinion regarding the re-organization of the WiredWest MLP Coop as a Limited Liability Corporation (LLC). In brief, it finds that the WiredWest MLP Coop may function as an LLC. There is some follow-up email correspondence with Duncan & Allen regarding MLP operation and collaboration posted below the document. After that, there is a further legal opinion about exemption from procurement laws (30b), the limitations imposed by the recommended town article authorizing appropriation, and whether MLP’s must conform to the prevailing wage laws.
Are there any other legal structures that two or more MLPs can use to work together other than Chap 164 sect 47C? i.e. inter municipal agreements?
Municipal light plants can enter into contracts to work together. For example, they enter into mutual aid agreements (storm related etc). Light plants have always had the legal authority to freely contract. It is also possible for towns to do things through their light plants via inter-municipal agreements, but those must be approved by town meeting. However, none of these alternative arrangements give MLPs more powers than they currently possess under c. 164. The Coop statute allows them to behave more like private corporations, in terms of their ability to borrow, form entities and issue shares, etc. In other words, when MLPs join and act through their cooperatives, they possess very different and expansive powers not available to them acting on their own as individual MLPs under the other sections of c. 164.
There has never been a MLP that has been formed solely for telecommunications. This is new territory. One could argue that the “wherever apt” language of G.L. c. 164, sec. 47E, would permit the depreciation statute to apply to telecommunications-only MLPs. (“Wherever apt, the provisions of this chapter and chapter 44, which apply to the operation and maintenance of a municipal lighting plant, shall apply also to the operation and maintenance of such telecommunications system.”) The Legislature put that in for a reason, and I would argue that where it makes sense, other provisions applicable to systems that operate electric facilities ought to apply to systems just operating telecommunications system. The depreciation statute, provisions governing the borrowing of funds, budgets, management of the plant, all those provisions seem “apt” to apply to MLPs operating telecommunications systems.
I can talk Monday pretty much any time from 8:30 on and on Tuesday after 1:00 pm.
It is well-settled that municipal light plants and departments (“MLPs”) cannot operate, let alone exist, absent the statutory scheme that governs them: “It is only by the authority conferred by G.L. c. 164…that…[a city or town] can maintain a gas and electric plant.” Adie v. Mayor of Holyoke, 303 Mass. 295, 299 (1939); MacRae v. Selectmen of the Town of Concord, 296 Mass. 394 (1937). Indeed, the Supreme Judicial Court (“SJC”) has held that “[w]here cities and towns are authorized to enter the field of business enterprises like the manufacture of gas and electricity they do it, not under the laws relating to private corporations, but under special statutory provisions; that the offices of the…[light plant officials] having been created and their duties defined by statute, they must be held to be public officers under legislative mandate, and not agents of the city….[emphasis added.]” Municipal Light Commission of Taunton v. City of Taunton (“Taunton”), 323 Mass. 79, 82 (1948). Further, “[i]t is also settled that a municipality can exercise no direction or control over one whose duties have been defined by the Legislature.” Id. The duties of the GM have been defined by Chapter 164.
Chapter 164 provides for the appointment of a manager of the light plant, to perform statutory duties under the supervision of a light board, or where one does not exist, by the Board of Selectmen (“BOS”) acting in that capacity. The reason for this separate management and operational scheme and general independence from town processes is due to the fact that MLPs are public utilities with obligations to their ratepayers, not to the taxpayers. The SJC has recognized that light plant funds are ratepayer funds generated by electric rates and not taxpayer funds generated by tax revenues. See Town of Middleborough v. Middleborough Gas and Electric Department, 422 Mass 583, 586-87 (1996). In that case, the SJC held that MLPs are so operationally and fiscally distinct from their cities and towns so as to permit them to maintain lawsuits against each other. Id. at 588. In other words, a MLP is neither the town nor simply another town department.
As set forth by the SJC in Whiting v. Mayor of Holyoke, 272 Mass. 116 (1930), a municipal light plant “…is separate from the town and exists to operate property ‘in its right of private ownership,’ to the end of providing electricity to retail consumers.” Id. at 120. MLPs have public service franchise obligations, which are identical to private utilities. Planning Bd. of Braintree v. Department of Pub. Utils., 420 Mass. 22, 27 (1995). Each has the same “duty to exercise [their] franchise for the benefit of the public, with a reasonable regard for the rights of individuals who desire to be served, and without discrimination between them.” Id. at 27-28; Bertone v. Department of Pub. Utils., Mass. 411 Mass. 536, 544 (1992). In fact, the Department of Public Utilities (“DPU”) specifically recognized that a light plant has an “obligation to furnish adequate, reliable service to all of its customers.” See North Attleborough Elec. Dept. (“NAED”), D.P.U. 86-261, at 17 (1987); Prybyla v. Wellesley Municipal Light Plant, D.P.U. 19535, at 3, affirmed Prybyla v. Department of Pub. Utils. S.J. No. 79-188 (1979).
Given the public service franchise obligations of MLPs, under the statutory scheme of Chapter 164, MLPs are operated and managed as commercial enterprises, separate and independent from general town governmental departments. Taunton, supra at 84. Municipal light departments are “quasi-commercial” entities created by special act. See, e.g., MacRae, supra at 396; Spaulding v. Peabody, 153 Mass. 129, 137 (1891). The SJC has held that pursuant to G.L. c. 164, § 56, the manager and board’s “determination as to what should be expended for the efficient operation of the business is not subject to change by other public officers or the legislative department.” Municipal Light Comm’n. of Peabody v. Peabody, 348 Mass. 266, 268 (1964). Further, a “municipal light plant is not dependent upon…appropriations by the municipality.” Id. at 271. Accordingly, the Legislature enacted a management and operation structure for MLPs that enable them to fulfill their public service obligations.
Can a town own and operate a telecom network without an MLP? Chap 164 gives permission for MLPs to own telecom networks but does a town need to be specifically allowed to own and operate a telecom network. Chap 44 sect 8 paragraph 8 was changed to allow towns to borrow without an MLP.
(8) For establishing, purchasing, extending, or enlarging a gas or electric lighting plant, a community antenna television system, whether or not operated by a gas or electric lighting plant, or a telecommunications system operated by a municipal lighting plant, 20 years; but the outstanding indebtedness so incurred shall not exceed in a town 5 per cent and in a city 2.5 per cent of the equalized valuation of such town or city; provided, however, that the majority of the members of the municipal finance oversight board, may authorize a city to incur indebtedness under this clause in excess of 2.5 per cent but not in excess of 5 per cent of the equalized valuation of such city, and may authorize a town to incur indebtedness under this clause in excess of 5 per cent but not in excess of 10 per cent of the equalized valuation of such town.
(8) For establishing, purchasing, extending, or enlarging a municipally owned gas or electric lighting plant, community antenna television system, or telecommunications system, 20 years.
You are correct that the borrowing statute now does not specify who may operate the telecommunications system. But this statute is not the source of authority for cities and towns to construct and operate telecommunications systems, and it never was. It simply specified the purposes for which borrowings may be made outside the debt limits. Previously, it said a town could borrow for establishing, etc. a telecommunications system operated by a municipal lighting plant. Now, it says a town may borrow for establishing a municipally owned telecommunications system, thereby broadening the purposes for which it might borrow. (I do not have information on why this change was made.) This revision can’t be used to justify a town operating a telecommunications system not through a light plant.
The authority for cities and towns to operate telecommunications systems (and municipal electric light plants, and cable televisions systems) still resides in c. 164. There is a long line of cases that establishes that “where cities and towns are authorized to enter the field of business enterprises, like the manufacture of gas and electricity, they do it not under the laws relating to private corporations . . . but under special statutory provisions.” Adie v. Mayor of Holyoke, 303 Mass. 295, 299 (1939) citing MacRae v. Selectmen of Concord, 296 Mass. 394 , 397 (1937). “It is only by the authority conferred by G.L. (Ter. Ed.) c. 164, Sections 34-69, and not by virtue of any implied power of the city…that it can maintain a gas and electric plant. In the absence of any express provision in the city charter, any power of the mayor over those in charge of the management of the plant must be derived from the governing statutes, and is not to be implied from the provisions of the city charter…..” Id. at 299. Further, cities and towns may only operate municipal lighting plants, and ostensibly telecommunications systems, pursuant to the provisions of Chapter 164.
Presumably, the Legislature knew of the existence of G.L. c. 164, sec.47E when it passed the changes to G.L. c. 44, sec. 8(8). It chose not to change the language of Section 47E regarding a “municipal lighting plant or a cooperative public corporation and any municipal lighting plant member thereof” having the sole authority to construct a telecommunications system. There is probably good reason for this. Having a municipal lighting plant in place (or a cooperative formed for that specific purpose) ensures that there is an existing structure for dealing with technical and financial matters involved with running a quasi-commercial enterprise. Further, repeals by implication are disfavored. “A statute is not to be deemed to supersede a prior statute in whole or in part in the absence of express words or clear implication.” Hersch v. Police Commissioner of Boston, 319 Mass. 428, 432 (1946). There is no reference in c. 44 to anything in c. 164. “Repeals by implication are not favored, and both statutes must stand unless it plainly appears that the later was intended to be a complete substitute for the earlier one.” There is nothing to indicate that G.L. c. 44, sec. 8(8) was intended to be a complete substitute for G.L. c. 164, sec. 47E, especially since c. 44 only deals with the borrowing aspect for a municipally-owned telecommunications system, and does not address anything to do with the actual construction and operation of a municipally-owned telecommunications system as set forth in G.L. c. 164, sections 34-69A. Additionally, there are many other statutes addressing matters pertaining to telecommunications systems throughout the General Laws and every single one of them refers to “municipal lighting plants or cooperatives that operate telecommunications systems,” not cities and towns operating telecommunications systems. See e.g., G.L. c. 159, sec. 11 (rates); G.L. c. 166, secs.11 (annual returns), 13 (equal access to exchanges), 21 (lines in public ways), 25A (pole attachments); G.L. c. 258, sec. 1 (Tort Claims Act definition of public employer). None of these have been amended to reference a municipality operating a telecommunications system other than through a municipal light plant or cooperative.
municipalities in this Commonwealth. Opinion of the Justices, 150 Mass. 592 . Spaulding v. Peabody, 153 Mass. 129 . Whiting v. Mayor of Holyoke, 272 Mass. 116 , 118, 119.” See MacRae, supra at 397-97.

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