Liberty Cab. of Pr v. Municipality of Barceloneta, No. CIV.01-2650IJP.
| Decision Date | 06 July 2004 |
| Docket Number | No. CIV.01-2650IJP. |
| Parties | LIBERTY CABLEVISION OF PUERTO RICO, Plaintiff, v. MUNICIPALITY OF BARCELONETA, et al., Defendants. |
| Court | U.S. District Court — District of Puerto Rico |
Orlando Fernández, Esq., García & Fernández, San Juan, PR, for Plaintiff.
Luis F. Colón, Esq., Colón González Law Office, Old San Juan, PR, Eglee W. Pérez Rodríguez, Esq., San Juan, PR, Carmen S. Curet Salim, Esq., Hato Rey, PR, for Defendants.
Before the Court is the novel issue of whether a party who is paying a franchise fee under federal law to one entity for use of municipal rights of way for cable television layout is obligated to pay an additional fee to the owner of those same rights of way, a municipality, for their use. For the foregoing reasons, the Court concludes that Plaintiff is obligated to compensate both the franchisor and the municipalities whose rights of way it uses.
Plaintiff in this case is Liberty CableVision of Puerto Rico, Inc., a corporation organized and existing under the laws of the state of Delaware, with its principal place of business in Luquillo, Puerto Rico. It is a cable television company which operates as a franchise to provide cable services to the Municipalities of Barceloneta, Las Piedras, Hatillo and Arecibo, among others. Co-Defendants Municipality of Barceloneta and Municipality of Las Piedras are local government entities. Co-Defendant Junta Reglamentadora de Telecomunicaciones de Puerto Rico (the Telecommunications Regulatory Board of Puerto Rico, or hereinafter, the "Board") is the state agency that regulates and supervises cable television access systems within the Commonwealth of Puerto Rico. The Board, as a local franchising authority, is also responsible for awarding cable franchises (in reality, licenses to operate cable systems) to cable systems operators in Puerto Rico.
Plaintiff claims that in November 2001, Co-Defendants Municipality of Barceloneta and Municipality of Las Piedras passed local ordinances that authorized them to charge a five percent (5%) fee on the gross revenue of Liberty's services within each Municipality for the use and maintenance of their respective rights of way and easements that connect Plaintiff's cable services throughout both Municipalities. Plaintiff alleges that both ordinances are null because the amount it pays to the Board as a franchise fee already encompasses the use of municipal rights of way.
Liberty's argument comes under the Federal Cable Act, 47 U.S.C. § 521, and the Puerto Rico Telecommunications Act, 27 P.R. Laws Ann. § 265 (West 2000). Liberty alleges that under said statutes, a cable entity that is granted a franchise must pay a franchise fee to the Board for the authorization to lay out its cable system and to provide cable services, and that said franchise fee specifically grants Liberty the use of public rights of way and municipal easements within the area served by the franchise. Therefore, Plaintiff alleges that this federal law preempts the field, that the additional fee imposed by the Municipality is incompatible with these federal and state laws, and therefore, duplicitous. It seeks a Declaratory Judgment that renders the ordinances null and void.
Co-Defendants Municipality of Barceloneta and Las Piedras allege that the Federal Cable Act and their municipal ordinances do not conflict. In addition, they argue that the Board has effected a taking without just compensation in using their rights of way without providing them compensation therefor.
Liberty argues that the applicable federal law in fact, merges the franchise fee with the fee for the use of municipal rights of way. Therefore, the 3% franchise fee it already pays to the Board encompasses both the franchise fee and the fee for use municipal rights of way.
The statute in question reads as follows:
Any franchise shall be construed to authorize the construction of a cable system over public rights-of-way, and through easements, which is within the area to be served by the cable system and which have been dedicated for compatible uses, except that in using such easements the cable operator shall ensure —
(A) that the safety, functioning, and appearance of the property and the convenience and safety of other persons not be adversely affected by the installation or construction of facilities necessary for a cable system;
(B) that the cost of the installation, construction, operation, or removal of such facilities be borne by the cable operator or subscriber, or a combination of both; and
(C) that the owner of the property be justly compensated by the cable operator for any damages caused by the installation, construction, operation, or removal of such facilities by the cable operator.
Liberty alleges that this language enables it to construct its cable system over public rights-of-way identical to those in the case at bar, and that therefore, the Municipality's additional levy is duplicitous. Traditionally, in cases where problems with the Cable Act have arisen, the Municipality has acted both as the franchisor as well as the owner of the municipal rights of way. See generally, In the Matter of TCI Cablevision of Oakland Cty., Inc., 12 FCC Rcd. 21396 (FCC 1997) and 13 FCC Rcd. 16,400 (FCC 1998); Keleher v. New England Tel. and Tel. Co., 947 F.2d 547 (2d Cir.1991); Robinson Protective Alarm Co. v. City of Philadelphia, 581 F.2d 371 (3d Cir.1978). Therefore, there was no obvious problem with the payment of use of municipal rights of way as in the case at bar, because the moneys paid went to the same entity.1 What is interesting about this case is precisely that dichotomy: that the Board is the franchisor, but a different entity, the Municipality, is the owner of the rights of way being utilized.
Plaintiff relies on two cases for the proposition that private arrangements restricting a cable operator's use of rights of way or compatible easements is impermissible. See Missouri-Kansas-Texas R.R. Co. v. Heritage Cablevision of Dallas, Inc., 783 S.W.2d 273 (Tex.App. — Dallas 1989); and Cable Holdings of Georgia, Inc. v. McNeil Real Estate Fund VI, Ltd., 953 F.2d 600 (11th Cir.1992); see also H.R.Rep. No. 934, 98th Cong.2d Sess. 59, reprinted in 1984 U.S.C.C.A.N. 4655, 4696. Liberty further argues that the statute only provides for just compensation to the owner for any damages caused by the installation, construction, operation, or removal by the cable operator, and not for the use of and access to the rights of way. See 47 U.S.C. § 541(a)(2)(C).
Interestingly enough, unlike the case at bar, 47 U.S.C. 201-276, the telecommunications statute specifically provides for fair compensation from providers for their use of their public rights-of-way.
Nothing in this section affects the authority of a State or local government to manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for use of public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly disclosed by such government.
See also, In the Matter of Classic Telephone, 11 FCC Rcd. 13082 (FCC 1986). Therefore, at first blush, it would seem like the Cable Act has no statutory counterpart to the Communications Act, and therefore, Plaintiff would be correct in stating that it does not have to pay the municipalities for its use of their rights of way. See also, Cable Holdings of Georgia, 953 F.2d at 606, quoting 130 Cong. Rec. H10444 (). However, the Cable Act does include very specific language regarding franchise fees, and what they do and do not encompass. Under the statute defining the franchise fee, the same is defined as:
(1) the term "franchise fee" includes any tax, fee, or assessment of any kind imposed by a franchising authority or other governmental entity on a cable operator or cable subscriber, or both, solely because of their status as such;
(2) the term "franchise fee" does not include —
(A) any tax, fee, or assessment of general applicability (including any such tax, fee, or assessment imposed on both utilities and cable operators or their services but not including a tax, fee, or assessment which is unduly discriminatory against cable operators or cable subscribers)
47 U.S.C. § 542(g)(1) and (2). Therefore, it would also appear that under the Cable Act, other fees of general applicability could be charged, as long as they are imposed on utilities and cable operators for their services, and the same is not unduly discriminatory against cable operators or cable subscribers. See also, Medlock v. Leathers, 311 Ark. 175, 842 S.W.2d 428, 432 (1992) (). The Court finds this language is quite clear, and concludes that this language is directly applicable to the case at bar, since the municipal regulations in question apply to all utilities, such as water, electricity and telephone, as well as to Plaintiff's cable services. See Barceloneta and Las Piedras Ordinances.
After thoroughly analyzing the voluminous documents in the case at bar, the Court believes that the franchise fee in question encompasses only the fee for the "access", if you will, to the rights of way, and finds that the statute allows for the owners of the rights of way to also be compensated for such use. However, the Court's analysis is mindful of the factual intricacies of this case. Whereas before the distinction between the franchise fee and the use of the rights of way was non-issue, since the franchisor and the right of...
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