Qwest Corp. v. City of Santa Fe, New Mexico

Decision Date30 August 2002
Docket NumberNo. CIV. 00-795 MCA/DJS.,CIV. 00-795 MCA/DJS.
Citation224 F.Supp.2d 1305
PartiesQWEST CORPORATION, a Colorado corporation, Plaintiff, v. CITY OF SANTA FE, NEW MEXICO, Defendant.
CourtU.S. District Court — District of New Mexico

Bruce T. Thompson, Santa Fe City Attorney's Office, Santa Fe, NM, Peter A. Dwyer, Espanola City Atty., Espanola, NM, for City of Santa Fe.

Kathleen C. Desjacques, Stanley N. Hatch, Robert M. Doughty, III, Hatch, Allen & Shepherd, Albuquerque, NM, Susan H. Widner, Rosenfelt Barlow & Borg, PA, Albuquerque, NM, William R. Richardson, Jr., Lynn R. Charytan, Mark S. Morelli, Wilmer, Cutler,& Pickering, Washington, DC, for QWest Corp.

MEMORANDUM OPINION AND ORDER

ARMIJO, District Judge.

THIS MATTER comes before the Court on Plaintiff Qwest Corporation's Motion for Summary Judgment [Doc. No. 20] filed on October 31, 2000, and the parties' stipulation at the status conference in this matter on July 24, 2002, that all of Qwest's claims can be decided by the Court based upon undisputed material facts without a trial. Having considered the pleadings of record, the briefs and exhibits attached thereto, the relevant law, and otherwise being fully advised in the premises, the Court finds that Qwest is entitled to partial summary judgment declaring that Sections 27-2.3(E), 27-3.2, 27-3.3, 27-3.4, 27-3.5, 27-3.6, 27-3.7(F), 27-3.7(G), 27-5.2, 27-5.3, and 27-6.3(B) of Defendant City of Santa Fe's 1998 telecommunications ordinance, when viewed as a whole, are preempted by federal law. The Court determines that the City should be enjoined from enforcing these provisions of the 1998 ordinance against Qwest. The Court further determines that the City of Santa Fe is entitled to partial summary judgment as to the remainder of Qwest's claims. Accordingly, Qwest's Motion for Summary Judgment is granted in part and denied in part, and the Court grants partial summary judgment to the City of Santa Fe sua sponte based upon the parties' stipulations at the status conference.

I. BACKGROUND

The facts alleged in Qwest's summary-judgment motion are undisputed except as specifically noted below. Qwest is a telecommunications carrier authorized under federal and state law to provide telephone exchange service throughout the State of New Mexico, including the City of Santa Fe. Under Qwest's tariff with New Mexico's Public Regulation Commission (PRC), Qwest is obligated to provide service to all customers requesting service within the geographical area it serves and may not terminate or withdraw service without an order from the PRC. Qwest seeks to serve new customers as well as to upgrade its existing services and add new telecommunications services in the City of Santa Fe.

In 1975, Qwest's predecessor and the City of Santa Fe entered into a franchise agreement under which Qwest has paid a franchise fee of two percent (2%) of its gross receipts from local exchange service in consideration for the right to use any of the City's public rights-of-way for purposes of providing telecommunications services to residents of the City of Santa Fe. The franchise agreement also imposed certain obligations on Qwest regarding management of the City's rights-of-way, including a requirement that a right-of-way disturbed by Qwest be returned to its prior condition within ninety (90) days, a permitting requirement for street cuts, a requirement that Qwest perform a survey to ensure that any trenching would not damage existing cables or pipes, and provisions for traffic-control planning when Qwest's work on the rights-of-way closed a street or reduced it to a single lane. See Santa Fe, N.M., Ordinance No.1975-8 (1975). (Ex. 3-A to Mem. in Supp. of Qwest's Mot. for Summ.J.)

Under this franchise agreement, Qwest used the City's rights-of-way to construct a network of telephone lines, switches, offices, transport, and related facilities to provide telecommunications services to residents of the City of Santa Fe. Qwest needs to continue to use the City's rights-of-way to maintain, upgrade, and expand these facilities in order to maintain service to existing customers, serve new customers, and provide new services.

In 1996, Congress enacted legislation to deregulate and encourage competition in the telecommunications market. Section 253 of the Telecommunications Act of 1996, 47 U.S.C. § 253 (West Supp.2001), provides, in relevant part, that:

(a) In general

No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.

(b) State regulatory authority

Nothing in this section shall affect the ability of a State to impose, on a competitively neutral basis and consistent with [S]ection 254 of this section, requirements necessary to preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers.

(c) State and local government authority

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.

(d) Preemption

If, after notice and an opportunity for public comment, the [Federal Communications] Commission determines that a State or local government has permitted or imposed any statute, regulation, or legal requirement that violates subsection (a) or (b) of this section, the Commission shall preempt the enforcement of such statute, regulation, or legal requirement to the extent necessary to correct such violation or inconsistency.

On or about March 25, 1998, the City of Santa Fe enacted a telecommunications ordinance which established several new rules governing the use of its rights-of-way by owners of telecommunication facilities. See Santa Fe, N.M., Ordinance No.1998-16 (1998) (codified in Chapters 14 and 27 SFCC 1987). Among these new rules are a requirement that telecommunications owners must register with the City and apply for a lease if they desire to install new telecommunications facilities, or maintain existing ones within the City's rights-of-way. See §§ 27-2 and 27-3 SFCC 1987.

The ordinance also provides for the City to charge cost-based registration fees and application fees. See id. §§ 27-2.4 and 27-5.2. The exact amount of such fees, however, has not yet been determined by the City. As part of the application process, the ordinance further requires a lease applicant to provide certain information to the City, including an appraisal of the "fair market rental value" of the right-of-way issued by a third-party appraiser approved by the City. See id. § 27-3.3. The parties disagree about the extent to which the requested information is relevant to the usage of the City's rights-of-way.

The ordinance requires the City to hold a hearing on a lease application within sixty (60) days, but permits the City to exercise its discretion in granting or denying a lease. See id. § 27-3.4. If a lease is granted, the ordinance requires, among other things, that the lessee pay an appraisal-based rental fee for its use of the City's right-of-way and dedicate all conduit laid upon the City's property to the City. See id. § 27-3.7(F) and 27-5.3. If a lessee installs new conduit, the ordinance requires the lessee to install double the amount of capacity needed for the applicant's own use. See id. § 27-3.7(G). The parties disagree about whether these requirements are competitively neutral. They also disagree about some aspects of the methodology used to calculate the rental fee.

In late 1999 or early 2000, Qwest sought permission from the City to install a four-foot by four-foot "cabinet" sitting on a twelve-by-eighteen foot concrete pad within a portion of the City's right-of-way on Bishop's Lodge Road for the purpose of providing telecommunications services to new customers. The City refused to permit Qwest to install this cabinet until Qwest agreed, without any reservation of its rights under state or federal law, to enter into a lease which could be terminated for cause and/or upon sixty (60) days written notice.

In attempting to comply with the City's ordinance, Qwest performed two professional surveys of the property in question at $2,000 per survey and incurred the labor costs of $6,650 for 53.2 hours of work (calculated at $125 per hour) on the part of a field engineer, right-of-way agent, and design engineer. These costs were in addition to the costs of placing the facility in the right-of-way under the 1975 franchise agreement. Qwest estimates the typical cost of obtaining an appraisal for property of comparable size to the Bishop's Lodge Road property at $750 and notes that the annual rent charged by the City for this property is $6,000. (Decl. of Alan Varela; Decl. of Daniel T. Sanchez.)

Within the City of Santa Fe, Qwest has more than 365 large cabinets comparable to the one at the Bishop's Lodge Road location, thousands of smaller cabinets and pedestals, hundreds of manholes and vaults, and hundreds of miles of cable. In addition, Qwest has approximately 120 planned or ongoing projects in Santa Fe that involve installation of new facilities which involve use of the City's rights-of-way. For projects that involve installation of new conduit, Qwest estimates a 59% increase in cost in order to meet the requirement of 100% excess-capacity conduit (Decl. of Daniel T. Sanchez) while the City estimates a cost increase of between 30% and 50% for such work (Aff. of Leroy N. Pacheco). Qwest also contends that there is no guarantee that the company will be reimbursed for the...

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