Texas Bldg. Owners v. Public Utility Com'n

• Decision Date: 05 June 2003
• Docket Number: No. 03-02-00611-CV.,03-02-00611-CV.
• Citation: 110 S.W.3d 524
• Parties: TEXAS BUILDING OWNERS AND MANAGERS ASSOCIATION, INC.; Building Owners and Managers Association International; Tanglewood Property Management Company; Emissary Group; 5599 San Felipe, Ltd., and the Real Access Alliance, Appellants, v. The PUBLIC UTILITY COMMISSION OF TEXAS and the State of Texas, Appellees.
• Court: Texas Court of Appeals

110 S.W.3d 524

TEXAS BUILDING OWNERS AND MANAGERS ASSOCIATION, INC.; Building Owners and Managers Association International; Tanglewood Property Management Company; Emissary Group; 5599 San Felipe, Ltd., and the Real Access Alliance, Appellants, v. The PUBLIC UTILITY COMMISSION OF TEXAS and the State of Texas, Appellees.

No. 03-02-00611-CV.

Court of Appeals of Texas, Austin.

June 5, 2003.

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C. Brian Cassidy, James W. Checkley, Jr., John K. Arnold, Locke, Liddell & Sapp, L.L.C., Larry Niemann, Niemann & Niemann, Austin, Gerard Lavery Lederer, Miller & Van Eaton, P.L.L.C., Washington, DC, for appellants.

Steven Baron, Assistant Attorney General, Natural Resources Division, Austin, for appellees.

John C. Eichman, Robert B. Gilbreath, John T. Gerhart, Jenkens & Gilchrist P.C., Dallas, for MCI Worldcom.

Susan C. Gentz, Valerie P. Kirk, Casey & Gentz L.L.P., Austin, for Time Warner.

Before Chief Justice LAW, Justices B.A. SMITH and PURYEAR.

OPINION

W. KENNETH LAW, Chief Justice.

This case concerns the scope of the Public Utility Commission's power to enforce the Building Access Statutes (the "Statutes") of the Public Utility Regulatory Act (PURA). See generally Tex. Util.Code Ann. §§ 54.259-.261 (West 1998). The Statutes require a public or private property owner to give a telecommunications utility access to the property for the purposes of installing a service facility at a tenant's request. Appellants, consisting of property management organizations and trade groups (collectively, "the Building Owners"), sued the Commission in district court, seeking both a declaratory judgment that the Statutes are unconstitutional on their face and a permanent injunction to enjoin the Commission from enforcing the Statutes by way of the Commission's promulgated rules. See 16 Tex. Admin. Code § 26.129 (2003). The district court declared the Statutes facially constitutional and denied the Building Owners' requests for injunctive relief. On appeal, the Building Owners contend in three issues that the district court erred because: (1) the Statutes cause a taking of their property without providing an adequate procedure for determining compensation; (2) the Commission lacks the delegated power to determine compensation; and (3) even if the Commission has that power, it results from an unconstitutional delegation. We will affirm the judgment of the district court.

BACKGROUND

The Building Access Statutes

To understand the context in which this particular dispute has arisen, we must begin with an overview of the history of telecommunications regulation in Texas. Under traditional regulatory structures for telephone service, one telecommunications company would hold the exclusive right to provide customers within specific geographic regions of the state with basic local telephone service.¹ In 1983, the Texas Legislature began to reform the traditional regulatory structure by amending PURA. See Act of May 26, 1983, 68th Leg., R.S., ch. 274, § 18, 1983 Tex. Gen. Laws 1282 (codified at Tex. Util.Code Ann. § 52.001 (West 1998)). At that time, the legislature set as a policy goal that rules, policies, and principles of telecommunications regulation be geared towards providing "equal opportunity to each telecommunications utility in a competitive marketplace." Id. (codified at Tex. Util. Code Ann. § 52.011(b)(2) (West 1998)). In 1995, Texas continued its reform of the regulatory structure by permitting basic local telephone service competition. It became the policy of Texas to promote diversity of telecommunications providers, encourage competition in the telecommunications marketplace, and maintain wide availability of high quality, affordable services. See Act of May 12, 1995, 74th Leg., R.S., ch. 231, § 7, 1995 Tex. Gen. Laws 2018 (codified at Tex. Util.Code Ann. § 51.001(b) (West Supp.2003)). This policy of modernizing telecommunications regulation is to be achieved by legislation that both guarantees the affordability of basic telephone service in a competitively neutral manner and fosters free market competition in the telecommunications industry. See id. (codified at Tex. Util.Code Ann. § 51.001(c)(1)-(2) (West Supp.2003)).

On the federal level, Congress has enacted the federal Telecommunications Act of 1996 ("the Act"), Pub.L. No. 104-104, 110 Stat. 56 (codified in scattered sections of 15 and 47 U.S.C.), which opened local markets to competition nationwide. The Act created a new type of provider ("competitive local exchange carriers" or "CLECs"), defined the rights and obligations of these new carriers and of the ILECs, and eliminated barriers to competitive entry into markets. In addition, the Act continued the tradition in telecommunications law of shared state-federal jurisdiction. See AT & T Corp. v. Iowa Util. Bd., 525 U.S. 366, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999). Under this form of telecommunications regulation, CLECs are permitted to choose to provide services to customers in one of two ways. CLECs can choose to buy the services of other providers at wholesale rates and then resell them at retail to end-user customers, or they can acquire and install their own equipment so as to limit or eliminate reliance on the networks of other providers.

When only ILECs provided local telephone service, owners of office buildings and other multi-tenant properties typically allowed these telephone companies to install wiring and equipment in their buildings according to that provider's procedures.² Business needs required only regular dial telephone service, and, even when a business needed multiple lines, providing service was relatively uncomplicated. Today, the need to exchange vast amounts of data and information means that high-speed, large-capacity data circuits and internet access have become essential elements of operating a business. As a result, businesses approach the issue of choosing a telecommunications provider by considering a radically new set of factors: previously installed ILEC hardware may not offer the high-capacity service needed; hardware may not include fiber optic cabling necessary to support advanced services; a CLEC may offer lower prices or different packages of services; or a business may require redundant facilities from two different providers because of the need for uninterrupted service and network security.

From the perspective of a telecommunications provider, an office building presents a dense customer base that can be efficiently served using a discrete set of facilities. In addition, when a CLEC is able to establish service to a multi-tenant property, that CLEC may then be able to invest in equipment so as to make provision of their services economical to customers in a geographic area much larger than the building itself. The Statutes were thus enacted to ensure that tenants have the same right to choose their provider of telecommunications services as other residential and business customers by prohibiting a property owner from discriminating between service providers or from preventing a service provider from installing equipment upon the request of a tenant. See Tex. Util.Code Ann. § 54.259.³ Without building access for CLECs guaranteed through this statutory mechanism, the right of a property owner to exclude others from its property would enable it to prevent tenant choice between telecommunications providers. A property owner could prevent access to a building, demand high fees of the provider, or impose difficult and expensive conditions, thus limiting tenant choice to lease negotiations.⁴ In an effort to safeguard property rights, however, the legislature provided for multiple conditions that a property owner can impose on a utility for its access to the property. See id. § 54.260.⁵

In accordance with the legislature's directive that the Commission have the jurisdiction to enforce each provision of the Statutes, see id. §§ 54.259(c), .260(b), the Commission received formal comments from interested parties, held a public hearing, and conducted workshops to solicit input to enable it to promulgate a set of rules to implement the Statutes. See Texas Pub. Util. Comm'n, Order Adopting New § 26.129, Project No. 21400 (Sept. 20, 2000). Commission staff toured buildings in order to study potential space constraints and the technical aspects of installation of telecommunications equipment. See id. As a result of these studies, the Commission has promulgated rules with the purpose of enforcing "the non-discriminatory treatment of a telecommunications utility by the property owner upon a tenant's request for ... services." 16 Tex. Admin. Code § 26.129(a) (2003) (Tex. Pub. Util. Comm'n, Standards for Access to Provide Telecommunications Services at Tenant Request). The rules recognize and balance the tenant's right to choose the provider of its telecommunications services, the property owner's right to manage access to the property, and the carrier's right to access the property. Id. § 26.129(d). The rules require the property owner and requesting carrier to negotiate reasonable compensation due the property owner for the installation, id. § 26.129(f), (h); however, should the parties fail to reach a negotiated agreement, either party may petition the Commission to resolve the dispute and determine compensation. Id. § 26.129(i)(3)(B)(iii).⁶ The rules also direct the procedure the Commission will use in resolving a dispute. Id. § 26.129(i)(4).

The Dispute

Geoquest Center (the "property") is a 450,508 square foot commercial office building located in Houston. Appellant San Felipe, Ltd. owns the property, appellant Tanglewood Property Management Company serves as property manager, and appellant Emissary Group manages the provision of telecommunications services to property tenants. Time Warner Telecom, a licensed telecommunications utility, requested access to the property to provide service to a tenant. At that time, the...