Nearly 60 cities have argued in lawsuits that the legislation violates state constitutional bans on giving things of value to private corporations without sufficient consideration and public purpose.
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Legislation capping telecommunication right-of-way fees — fees that bring in tens of millions of dollars annually to Texas cities and counties — goes before the Texas Supreme Court in March, according to reports.
The question before the court is whether the laws violate the Texas Constitution.
On one side of the case are cities, counties, and other political subdivisions. They argue that a pair of state laws from the previous decade violate the Texas Constitution’s “Gifts Clause” that generally bars the awarding of things of value to private companies without due consideration of public benefit. They argue that the laws are costing them money that otherwise could be applied to important public services.
On the other side are telecommunication companies that would prefer to pay to cities less money for the ability to install 5G equipment and other technology along roads, alleys, and other public rights of way. The Texas Legislature adopted the laws during a state and federal lobbying push by telecom providers as they started rolling out 5G wireless technology nationwide.
SB 1004 and SB 1152
The two laws at the heart of the dispute — Senate Bill 1004 and SB 1152 — were adopted by the Texas Legislature in 2017 and 2019 respectively. SB 1004 permits wireless network providers to install network nodes in public rights-of-way and allows cities to charge the providers an annual $250 right-of-way rate per node. SB 1152 bars cities from assessing separate cable and telecom installation fees on companies that provide both services. Instead, cities can charge companies only a single fee — whichever is higher — for both services.
According to Texas Public Media both the trial court and the Austin-based Third Court of Appeals have ruled the laws unconstitutional. But now, at the state’s request, the Texas Supreme Court has agreed to take up a case involving both laws. Justices are set to hear arguments on March 5, according to Texas Public Media
“The (Texas) Constitution says you can’t give public property away for free,” Bob Heath, one of the attorneys representing cities, told the news outlet. “That’s exactly what’s going on here.”
The Texas Attorney General’s Office has so far not responded to requests for comment, according to Texas Public Media.
The Background
Nearly 60 cities — including Dallas, Austin, San Antonio, Houston and El Paso — have argued in lawsuits that SB 1004 and SB 1152 violate “gift” clauses in the state constitution that ban the Texas Legislature from authorizing political subdivisions from giving things of value to private corporations without sufficient consideration and public purpose.
Cities argue that the $250 cap on right-of-way rates is significantly lower than market value for right of way. Houston alone estimates it lost $10 million in revenue from just one telecom provider, and other cities estimated they would lose $100 million per year altogether, according to Houston Public Media.
“If the cities are able to recover that revenue and collect it going forward, it means that cities have an easier time providing the services that they provide, whether it’s police protection, parks — whatever,” Heath told the news service.
The state, however, argues that SB 1004 and SB 1152 incentivize technology improvements, provide uniform regulation, reduce consumer costs and eliminate “double taxation” for utility companies. The state further argues that because cities charge anything at all for the use of public right of way that they are not providing a “gift.” The state also argues that cities lack standing to bring their suits because, ultimately, the state owns public roads.