Opinion ID: 164968
Heading Depth: 4
Heading Rank: 1

Heading: Prohibitive Effect

Text: 45 The district court ruled that section 27-2.1 and section 27-3.2 of the Ordinance were not per se prohibitive because they simply require telecommunications providers to register with the city and obtain a lease for the use of rights-of-way. We agree with the district court; the mere naked requirement of a registration or lease with the city is not prohibitive within the meaning of the statute. See TCG Detroit, 206 F.3d at 624; In re Classic Telephone, Inc., 11 F.C.C.R. 13082, 13097, 1996 WL 554531 (1996). 46 This court also agrees that Qwest has not shown the cost-based fees for registration and lease applications have a prohibitive effect. Sections 27-2.4 and 27-5.2 of the Ordinance require that each application for registration or a lease shall be accompanied by a cost-based fee to be established by resolution of the governing body, sufficient to reimburse the city for the costs of reviewing the application. Santa Fe, N.M., Santa Fe City Code §§ 27-2.4, 27-5.2 (2003). Qwest does not argue that these provisions, standing alone are prohibitive. Instead, Qwest argues that by analyzing these provisions separately from the rest of the Ordinance the district court failed to realize that the cumulative impact of the provisions would be prohibitive. 8 Merely allowing the City to recoup its processing costs, however, cannot in and of itself prohibit the provision of services. 47 Qwest also contends that the informational requirements of the registration process and lease application are prohibitive. Leaving out certain discretionary provisions, the registration and lease applications require the following information: the identity and legal status of the registrant; a map of the location of the registrant's existing telecommunications facilities within the city; a description of the telecommunications services that the registrant is currently providing, if any; information sufficient to determine whether the registrant is subject to public right of way leasing requirements; and, a description of the transmission medium that will be used by the lessee to offer or provide telecommunications services. Santa Fe City Code §§ 27-2.3, 27-3.3. In addition, the lease application requires detailed preliminary engineering plans. Santa Fe City Code § 27-3.3(D). The complex lease application process required of Qwest does create a significant burden. Thus, once Qwest completes the registration process it is still required to submit information for each right-of-way leased. 48 The Ordinance also grants Santa Fe broad discretion in determining whether or not to accept a registration or lease application. Section 27-3.4 states: Leases shall be entered into only when the governing body finds, by way of ordinance, that the lease agreement is in the best interest of the public and states the grounds for permitting the location of the facilities upon city land or facilities. Section 27-3.3(D)(16) requires that a lease application contain preliminary engineering plans with sufficient detail to identify such other and further information as may be required by the city. Section 27-2.3(E) calls for such other information as the city may reasonably require, to be included in the registration information. Such broad discretionary language has been repeatedly held to be prohibitive. See, e.g., TCG New York, 305 F.3d at 76. 49 These provisions allow the City unfettered discretion to prohibit the provision of services. RT Communications, Inc., 201 F.3d at 1268. This regulatory structure denies telecommunications providers the fair and balanced legal and regulatory environment the TCA was designed to create. In re Cal. Payphone Ass'n, 12 F.C.C.R. 14191, 14206, 1997 WL 400726 (1997). Taken together, these [informational and discretionary] requirements have the effect of prohibiting Qwest and other companies from providing telecommunications services.... City of Auburn v. Qwest Corp., 260 F.3d 1160, 1176 (9th Cir.2001) (quotation and citation omitted); See TCG New York, 305 F.3d at 81. 9 50 The Ordinance also creates new costs for telecommunications providers. A telecommunications provider must obtain an appraisal from a city-approved appraiser of the rental value for the right-of-way which it proposes to use. Santa Fe City Code § 27-3.3(D)(15). Section 27-5.3 of the Ordinance provides that the City will set a fair and reasonable rental price for leasing the right-of-way based on the appraisal. 51 As noted above, the proposed annual rent for a single twelve-by-eighteen foot concrete pad was $6000. Qwest notes that it has 365 roadside utility cabinets that would require approximately the same amount of space. Assuming the $6000 rental price is representative, the resulting cost increase would nearly quadruple Qwest's cost of doing business under the franchise agreement. See Qwest Corp. v. City of Santa Fe, 224 F.Supp.2d 1305, 1324 (D.N.M.2002). That estimate does not account for the costs associated with surveying, obtaining the appraisal, or the rent required for other smaller Qwest facilities. Nonetheless, it is sufficient to show that the rental provisions are prohibitive because they create a massive increase in cost. 52 The Ordinance also raises the costs of doing business by requiring any telecommunications company installing conduit to install double capacity and dedicate the conduit to the City. Santa Fe City Code § 27-3.7(F). The district court found that the excess conduit requirements could increase Qwest's installation costs by 30 to 59%. Qwest Corp., 224 F.Supp.2d at 1324-25. While section 27-3.7(G) does require anyone using the conduit to pay the company which installed it a just and reasonable portion of costs, it is not certain that any reimbursement will occur. 53 The City argues that a mere increase in cost cannot be prohibitive and cites AT & T Corp. v. Iowa Utilities Board, 525 U.S. 366, 390, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999) for support. Although Iowa Utilities Board addresses a different statutory provision, we will assume that Santa Fe is correct to assert that not every increase in costs creates a prohibition within the meaning § 253. As stated in RT Communications, however, an absolute bar on the provision of services is not required. 201 F.3d at 1268-69. It is enough that the Ordinance would materially inhibit the provision of services. See In re Cal. Payphone Ass'n, 12 F.C.C.R. at 14206 (1997). Given the substantial costs generated by this Ordinance, it meets that test and is prohibitive under 47 U.S.C. § 253. 54 Finally, we examine the cumulative impact of the Ordinance. Viewing the Ordinance as a whole does not reveal a scheme which prohibits telecommunications service through interrelated provisions. It is the substantial increase in costs imposed by the excess conduit requirements and the appraisal-based rent that in themselves renders those provisions prohibitive, not the additional cost-based application and registration fees. Likewise, it is the free ranging discretion that is objectionable, not the interplay between the discretionary provisions and rest of the Ordinance. Accordingly, we conclude that it is the individual provisions identified above which are prohibitive and not the Ordinance as a whole. 55