Legal Issues Concerning the Use of Transportation Facilities to Generate Revenue for State DOTs (2020)

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NCHRP LRD 81 39 V. CONCLUSIONS The regulation of access to state rights-of-way along roads and highways is generally within the purview of the state DOT, which provides access to communications utilities where no risk or undue burden would be incurred by the public. The right to access rights-of-way, and rules regarding use, tend to differ when considering access-controlled and non-access-controlled rights-of-way. Where noted statute, DOTs have a greater ability to generate revenue from the use of access-controlled rightsof- way. However, some states do not include specific legal provi- sions for compensation or reimbursement of costs, regardless of the type of right-of-way. Relevant federal law and guidance fall under several cat- egories, including the TCA and adopted AASHTO guidelines. These provisions regulate fees and compensation and allow for the expansion of access to a right-of-way while preserving its main purpose, which is safe travel by the public. The AASHTO guidelines are endorsed by FHWA and pro- vide states with a framework to allow use of access-controlled rights-of-way by communications utilities. This does provide greater scope for compensation to the states for this access and usage of the rights-of-way. However, TCA sets the standard for the determination of fees, which is included in most state laws and legislation. Required compensation must be fair and reasonable, competitively neutral, on a nondiscriminatory basis, and publicly disclosed. Overall, while state DOTs generally have the authority to manage access of rights-of-way under their jurisdiction, includ- ing the permitting process, the ability to generate revenue is of- ten limited by state laws and regulations. Every state has slightly different rules on the usage of rights-of-way by communications utilities; however, generally the following principles apply: • State DOTs have the authority to manage access to the rights-of-way in the public’s best interest; this often in- cludes managing the permitting process; • Fees and charges are applied to recoup costs associated with managing the permitting process; • Access to rights-of-way can be denied if it interferes with usage of the roadway or poses a safety risk. However, management of the rights-of-way has to be conducted in a fair, reasonable, nondiscriminatory, and competitively neutral manner. Further rules and regulations either serve to limit or allow certain types of revenue generation or compensation. These include: • In-kind or resource sharing agreements; • Direct compensation for usage of rights-of-way by tele- communications companies (either limited to access- controlled or more broadly applied); • Flat rates or fees for access or usage of rights-of-way (as- sessed at the state level) rather than through permitting by DOTs. Microcell Collocation Agreements The State of Washington requires a copy of the pole agree- ment with the primary pole owner if a communications pro- vider requests to be a secondary occupant on a pole not owned by WSDOT. This rule allows the state to confirm that the in- stallation is permissible. In the case of necessary documents required by other agencies for an installation, the state does not regulate that type documentation. The provisions simply state that communications providers must acquire all necessary per- mits to install, but in practice the state cannot determine if the provider is compliant with this rule. Often Washington might give a Public Utility District (PUD) a permit to be on the WSDOT rights-of-way. If someone ap- proaches the PUD to collocate a cell site on their pole, the PUD’s agreement only states that the secondary party needs to get all necessary permits to collocate. If the secondary party installs a cell tower on the PUD pole without first requesting a permit from the state, the cell tower could be installed in the rights-of- way without WSDOT’s knowledge. The department often finds installations on poles that lack permits during site visits, but it is unclear how much revenue the state loses due to installations without a lease. Once WSDOT finds an unpermitted installa- tion, the state contacts the owners and informs them about the unlawful installation. The owners must either have an occu- pancy permit or a right-of-way use permit/lease. Wired Backhaul Connections for Microcells Washington representatives noted that wireless network connections must be included in the lease agreement. The fiber line could be considered a communications utility, but if it is a specific need of the wireless facility it should be considered part of the wireless service provider installation. WSDOT’s position is that the backhaul fiber is not consid- ered a utility because the installation only serves the wireless facility. Some wireless companies would like the backhaul to be separate from the lease and treated as a utility, because in state rights-of-way it could be accommodated by permit, and therefore without the cost of the lease to the utility. One wireless company in Washington went as far as registering as a utility with the State’s Utilities and Transportation Commission (UTC) and insisted to be treated as a utility. When WSDOT refused to accommodate the backhaul under utility rules, the wireless company lobbied the UTC to put pressure on WSDOT. In the end, the UTC determined that it is not up to the UTC but rather up to the state, and in this case WSDOT, to decide how the state wants to define a utility. Wireless Installations on Streetlights In Wisconsin, the state allows wireless carriers to install microcells on WisDOT-owned streetlights if the carrier pays a right-of-way occupancy fee and takes ownership of the pole. This relieves WisDOT of responsibility for the pole. However, the state’s breakaway and other safety and lighting standards continue to apply.

40 NCHRP LRD 81 intent to remain competitive and provide the best network for their own cities. These new laws and regulations typically have in common the following prohibitions: • Special or new fees or permits that relate specifically to small/micro-wireless facilities. • Increased fees for permitting these new installations or collocations. • Compensation for placement of new facilities are related to the DOTs’ costs of managing the permitting process. The FCC 2018 Declaratory Ruling further limited state and local entities from deriving compensation from small wireless facilities. It stated that any fees would be considered compen- sation and must not exceed the direct and actual cost of the permitting and application process. This ruling may be stricter than present state legislation. To avoid any negative impact of the new ruling, a state would have to prove that additional costs would be incurred in assessing and regulating the permitting process. Furthermore, many states do not require or allow direct compensation for the usage of their highway rights-of-way, and the new ruling appears to be imposing further restrictions on the ability of the state to generate revenue from telecommunica- tions utilities and their associated infrastructure. A common problem with states requiring compensation is the determination of what is fair and reasonable compensation. Some interviewees indicated that the determination of value was difficult to quantify and that their state preferred to ben- efit from telecommunications usage of the rights-of-way rather than require direct compensation. For example, the MDOT (MD) representative stated that determining value was too dif- ficult and so Maryland relies on resource sharing to gain value from the infrastructure placed by telecommunications utilities in the rights-of-way of controlled access facilities. Depending on the state, the use of in-kind or resource sharing agreements was either prohibited or specifically allowed due to difficulties in determining the value of a right-of-way. States that rely on formulas to provide an overall access fee for utilities simplify the issue of value determination, but state DOTs lose the ability to levy fees at the DOT level. Recent technological developments in the areas of 5G and small cell wireless have led to legislative updates that provide specific provisions for newer types of telecommunications in- stallations. New regulations and restrictions on revenue gen- eration from new telecommunications equipment have arisen out of a desire to advance 5G networks and technologies across the United States. Many states have passed these laws with the