HOUSE OF REPRESENTATIVE
STATE OF MINNESOTA
HOUSE OF REPRESENTATIVE FLOOR
Senate File 442, Right-of-Way Bill
May 2, 1997
Tape 1, side A
Speaker: The member from Chisago.
Jennings: Well thank you Mr. Speaker, members SF 42 is the right of way bill. We’ve been working on this since actually before session started, I want to thank the municipalities, the League of Cities and the utility companies. They sat down together and worked out their differences. I can tell you they spent many many hours and there probably are some attorneys and some lobbyists who made some money on this bill, but I guess that’s ok. What we have is probably a result of, I don’t know if some of you read in the papers in Redwood Falls, in Representative Vickerman’s. It was a fight that happened between the cities and a telecommunications company out there. And it really was a discussion of who controls the right of way and more importantly, what should be the value of the right of way or what should [we charge ] the right of way. In SF 442 which is the SF language, those issues have been worked out and there is no opposition to the bill at this time. Now this is ongoing at this time because we’re putting together a working group who will work on some issues of what the degrade and the restoration to the road should be, statewide mapping systems for utilities. A number of other issues, and that’s an group that will continue to work and come back with some recommendations next year.
But in this bill, it says the cities have the right to charge for their costs of maintaining an operation within the right of way. That being the fee which has been too low, it needs to come up. So they can charge for that, their actual costs to issue permits, do the inspections and such. It also, if there is a dispute it gives a solution for the groups to go to if its an issue as far as the fee that goes to an arbitration. If it’s an issue as to how we lay the pipe or lay the telephone lines or the distance and its a, then they can take that tom the PUC and get a ruling on that, so that’s what’s happened. Again, there’s no opposition. I can go through the bill in great lengths if you like to, but in this point and time everybody has signed off on the bill and I would appreciate your support.
Speaker: Is there any discussion? Representative Abrams.
Abrams: Mr. Speaker, will Representative Jennings yield to some questions?
Speaker: He will yield. Representative Abrams.
Abrams: Mr. Speaker, Rep. Jennings, as you know I’m one of the few members of the legislature every to negotiate right of way agreements. So I see this bill does alot of things and I’m somewhat concerned. Mr. Speaker, Rep. Jennings, does this allow a municipality to require the use of conduit in the placement of lines, can they require that as a matter of right?
Speaker: Rep. Jennings.
Jennings: Mr. Speaker, Rep. Abrams, it does not. If there is a need for that it’s mutually agreed upon by both parties, that could happen. But the city couldn’t demand to encompass the wire or conduits without the agreement. If there’s a disagreement, and the city is solid on the issue then the utility company can take that to the PUC and get a ruling on that. But this would not allow the city to just flatly say this is how it has to be. What we’re working on is a statewide standards of how we should place our utilities within the right of way. They would, the cities would not be able to do it.
Speaker: Rep. Abrams.
Abrams: Mr. Speaker, Rep. Jennings, my next question is alot of areas are served both by overhead wires and also underground utilities, is there anything in this bill which would require a user of the easement to have to locate new serve lines underground or would, if there’s poles in place and something up on the poles would they still have the right to be able to use the poles rather than to go underground.
Speaker: Rep. Jennings.
Jennings: Mr. Speaker, Rep. Abrams, yes. [What we say that] we’ll continue to use the poles, there’s no force of a total hundred percent underground. Above ground is still allowed even though there are some cities who are pushing more towards it. Utility companies are pushing to it to. But there’s no requirement nor can a city force them to do totally one way or the other, its a mutually agreed upon between the two parties of what’s the proper thing.
Abrams: So Mr. Speaker I take it from your answer Rep. Jennings, Mr. Speaker could we have a little order in the chamber. Mr. Speaker, Rep. Jennings, so as I understand it, if there is something up on the poles currently the new entrant can still use the poles and if the municipality makes a decision that they want to have everything go underground they would all go underground at the same time. Would that be correct Mr. Jennings?
Speaker: Rep. Jennings.
Jennings: Mr. Speaker, Rep. Abrams, yes.
Abrams: Mr. Speaker.
Speaker: Rep. Abrams.
Abrams: Mr. Speaker, Rep. Jennings, I note that you have in here that the municipality could charge fees for the management of the easement would that be in addition to any franchise fees that may currently be paid by utility companies or cable television companies?
Speaker: Rep. Jennings.
Jennings: Mr. Speaker, Rep. Abrams, normally what, franchise fees that’s negotiated between the utility company, the cable company whoever and some cities, alot of cities that includes the fees for cutting a road or whatever and also, we do not affect franchise fees and we treat everybody the same. If you look in here also if a telecommunications company becomes a cable company we make them fall under the cable laws as well. So the city can collect their fees and if there is a difference, they can arbitrate that if they think it’s too high. But in most cities, the franchise fees cover that fees presently, there’ll be no change from present law.
Speaker: Rep. Abrams.
Abrams: So Mr. Speaker, Rep. Jennings, what you’re telling us is that if there’s currently a franchise agreement, either by a gas, electric, cable or other utility, which states that the franchise fee that is being paid is being paid of the city’s streets and right of ways. There is nothing in this bill which will negate that agreement nor cause increased reimbursement to a municipality because of this bill, would that correct?
Speaker: Rep. Jennings.
Jennings: Mr. Speaker, Rep. Abrams you are correct again, and if by chance there’s a disagreement we now have a way for them to go to an arbitrator versus going to courts. But this is current law and you are absolutely correct in what you just said.
Speaker: Rep. Abrams.
Abrams: Mr. Speaker, Rep. Jennings. One final line of questioning and you’re very gracious to answer these questions. On page 13, section 6, telephone company providing cable service it requires that a telephone company providing cable television service probably pursuant to the definitions contained in chapter 237, will be subject to the same franchise requirements and procedures and fees regarding public education and government access requirements. How is this going to work, simply because you have one studio, you may have some payments from one franchise, a company to another, how does that provision work and is it even enforceable?
Speaker: Rep. Jennings.
Jennings: Mr. Speaker, Rep. Abrams members, today if it’s a cable company that’s a negotiated franchise between the city and the cable company. As we enter the new world of telecommunications a few years from now you’re not going to be able to tell the difference between the phone company the cable company, internet service or whoever. So if the telephone company takes on cable service and there are costs that cable companies have, alot of its called PEG lines, the public education channels, that telephone company that takes on the responsibility, or more importantly takes on the issue of becoming a cable company by here, we tell them that they also have to follow chapters 238 which is the cable laws. So that doesn’t allow a phone company who’s become a cable company to bypass 238. It ensures that they follow the same rules and make sure that the cities have the right to require them to pay their PEG channels and their franchise fees and get out of, around it.
Speaker: Rep. Abrams:
Abrams: Mr. Speaker, Rep. Jennings. Does this go beyond the channel requirement? Does the provision of 237.79 in your bill also require that studios be giving to municipalities, does it also require any additional fees beyond the franchise fees to pay the staff studios, does it provide for anything other than access to [band] width?
Speaker: Rep. Jennings.
Jennings: What we’ve done, I believe is, we’ve copied, we’ve copied the federal law. That’s what we’ve done on this issue in the Federal Communications Act. And this is what was worked about between the cities and the utility companies and what it is is following current law. This is what the cable companies have to do today and if a phone company, as we change the world of telecommunications we want to make sure they follow the same thing the cable company does, and more importantly if there is a change, the city has the right and the cable company and phone company to work together to come to that conclusion, so everybody gets treated equally.
Speaker: Rep. Abrams.
Abrams: Well, Mr. Speaker, Rep. Jennings. Hypothetically if the, let’s say hypothetically the city of Mpls. required Paragon cable to maintain a studio and to pay $200,000 a year for staff and to maintain the studio in addition to the franchise fee. Does 237.79 require a telephone company, and I point out it could be a telephone company other than US West, but a telephone company if they wanted to provide cable services in the city of Mpls, to provide another studio and an additional $200,000 a year or does this just require the access to band width?
Speaker: Rep. Jennings.
Jennings: Mr. Speaker, Rep. Abrams, what it would require them to do if we use that Paragon cable company. If they were paying $200,000 it would not make any sense to create another studio, what they would do is pay the same amount of money towards it. What would probably would happen is you reduce the cost to Paragon because there’s a competitor in the market. So the city would, through the franchise agreement would say all right we need $200,000 from you but you do not have to build a studio, but you got to give us the same amount of money. They might say well, we only need $200,000 let’s reduce it to a $100,000 and $100,000 so the new cable company, whoever it is, plus Paragon get treated equally the same. But it doesn’t require them to duplicate or triplicate another studio just pay in their share.
Speaker: Rep. Abrams.
Abrams: Well thank you Rep. Jennings. I think you did a good job on the right on the right of way section. I do have alot of concern about those six little sentences dealing with the telephone company providing cable service I’m kinda unique of people who’ve been involved in the cable industry in that I very much want to see the second wire into the home being able to provide entertainment services. I very much want DBS to be successful. I very much want the second DBS or third DBS option to be available. I very much want additional competition in the market place for our consumers. I think that section 6 of this bill may need a little work. I guess I’m going to vote against the bill with section 6 in it. I’m not going to make the amendment to take it out because I wasn’t part of the hearing process as you conducted in your committee, Rep. Jennings. But I think that there’s a whole lot more to that issue as to how you foster competition in the home video market and delivery of cable television like services that can be contained in these six sentences. I think it’s a very very complicated issue. I think your other bill is going to need alot of work in that area and I’m just concerned that these six sentences are going to prevent new entrants into the market rather than encourage new entrants into the market. But, as to the right of way sections, the answers to those questions were good Rep. Jennings and I congratulate you on that accomplishment.
Jennings: Mr. Speaker, Rep. Abrams, members, I know that you’re very close to this and working very hard. This was worked out between the cities, the cable companies, the telecommunications companies and what we wanted to do was not saddle one one sector with the cost. We wanted to spread it equally. I don’t believe that will cause that problem. But I also believe that we will be back here year after year working in right of way and more importantly in the telecommunications field. It is changing so quickly. I don’t think that will do that it certainly was not intended to stop anybody from entering the market. I don’t think it does that. What it does do is gives everybody equal footing. But you’re right we’ll be back here next year and I suspect we’re going to get real deeply into the telecommunications side, which is the cable.
Speaker. Rep. Abrams.
Abrams: Mr. Speaker, members, a cable television franchise agreement can run several hundred pages in length and put on the cable television provider a number of restrictions and obligations. I’ve negotiated probably 70 or 80 of them in the metropolitan area and I can tell you that no two are alike that the mix between different franchise areas is substantial. And that what I’m concerned with about the provision that I pointed out to Rep. Jennings is that the cable industry, and although I Iike the cable industry, and I certainly like alot of what they say, the area where I differ is going to use the provisions in this bill in order to prevent that second wire to be used for the provision of video signals from a telephone company, be it US West or somebody else. It’s a very complicated issue. It was made more complicated when the cities were granting virtual monopoly franchises to cable television companies and what I want to see is also of competition in the market and what I’m afraid is that if some telephone company wants to get involved in home video market they’re going to be basically told to either sign this thing, 200 or 300 page franchise agreement or you can’t do business in the city of whatever and that’s my concern about this provision, Rep. Jennings. I think it’s a legitimate concern and that’s why I’m going to be voting against your bill.
Speaker: Third Reading (**** to be continued. Approximately six more speakers left in the debate.)
Cont.
Speaker: ...Is there further discussion? Rep. Hasskamp.
Hasskamp: Thank you Mr. Speaker. I thought maybe a couple other one other person should be able to ask a question on this bill. Would Rep., I need to ask a question of Rep. Jennings. (Yields.) Rep. Jennings I received some information from my telephone companies that were concerned about one of the bills and they said telecommunications bill. I need to know that this bill is not the one that they alerted me to and have concerns with.
Speaker: Rep. Jennings.
Jennings: Rep. Hasskamp probably the information you received is a bill called 1172. This is not that, this is the right of way. There is no opposition to this bill from an factor whatsoever.
Hasskamp: Thank you.
Speaker: Is there any further discussion. Rep. McElroy.
McElroy: Thank you Mr. Speaker, will Rep. Jennings yield for another question?
Speaker: He’ll yield, Rep. McElroy.
McElroy: Thank you. Mr. Speaker, Rep. Jennings. In section 4, subd. 8, para. (a), on page 12, line 26 the bill sets out the criteria the PUC will use for adopting the statewide standards which are required by March of next year. And there are two standards that I can see. That the standards be competitively neutral among telecommunications vendors and that they provide for new technology. I’m concerned that one of those standards is not fairness to the local units of governments or their taxpayers or cost neutrality in terms of maintaining the right of way. Why are those standards just about fairness to the telecomm companies or technology and not about fairness to the local units?
Speaker: Rep. Jennings.
Jennings: Well Rep. McElroy this has to do with the standards themselves as far as how we put it into the right of way. This section works specifically with the utility companies and the cities. Included in this group that we’re going to be working with over the next twelve months to bring back this, we will also be looking at the fees and such that they can look at. I think where you’re headed to is is this is the standards about how we put the pipe in the ground or how we lay the cable in the ground, how deep, how far apart and where it should be. If you’re headed, if the question is, should we allow cities to charge more the cities are free to charge and to recover their complete costs of what it costs them to manage the right of way and to recover the fees, which certainly, today has been too low and that was really what started right of way hearings this year to achieve or more importantly so property tax payer in that local unit of government doesn’t have to subsidize what’s going on in the right of way. And I think that’s where you’re headed. We believe that this bill clearly lets the cities set the amount so they can recover completely what the true costs are for running that right of way, for putting the inspectors out there, for keeping track of the paper work. The numbers are going to rise on fees that cities can charge and it has to rise to do that. So if there is a disagreement, let’s say someone thinks it’s too high there’s a way they can go to arbitration for that. But a, I don’t think, what we can do in this bill is the city can raise their fees to recover their true costs. Now there were some cities who wanted to charge a little more and make it a revenue source, we don’t allow that to happen. But we don’t think the property tax payers should be the ones who pay for the right of way from some outside utility company.
Speaker: Seeing no further, Rep. Vickerman.
Vickerman: Thank you Mr. Speaker. I would also like to thank Rep. Jennings for having worked long and hard on this particular legislation. The name of Redwood Falls has been taken in vain a few times regarding this bill. But it did come to a head because of a problem there and I think that the legislation you have before you is is really very fair to both the cities and the telephone companies, so I would ask for your support on SF 442. Thank you.
Speaker: Rep. Johnson A.
Johnson A: Mr. Speaker, and would Rep. Jennings yield please?
Speaker: He will yield. Rep. Johnson A.
Johnson A: Rep. Jennings, has there been a position taken by the League of Cities?
Speaker: Rep. Jennings.
Jennings: Mr. Speaker, Rep. Johnson, the League of Cities were an integral part of this negotiations and they support the bill.
Speaker: Rep. Johnson.
Johnson A: Mr. Speaker and members, Rep. Vickerman says that the cities are supportive of the bill and also the utility companies are supportive of the bill. However, I’m wondering about the property tax impact that could forseeably happen to homeowners if the cities have a right to levy for anything that goes on. And that is what I understand about this bill. Another question, Rep. Jennings I see is standing and he will maybe respond to that and I’d appreciate it. But also Rep. Jennings if you could tell me if there was other, any opposition organized opposition to this bill, if you don’t mind talking to me about that please.
Speaker: Rep. Jennings.
Jennings: Rep. Johnson, on the first issue, the cities will not levy property taxes, what they’ll do is they will raise the fees to the utility companies coming in and saying we want to put this line, put this telephone line, this gas line through your right of way. What’s happened in the past has they’ve been capped at $25. So really the property taxes today, are paying today. What we’re doing is we’re allowing the cities to raise that number to whatever the true cost is. We think this will actually probably save property taxes. It will certainly take the costs off of property taxes and let the utility company who is coming through that town pay the true cost and the actual cost of the fee. The fee to the utility company is going to go up, that will be passed on to the consumer of that service. So I think there is no levies here, there is no property tax shift we’re actually taking dollars away from the property tax because I will tell you that I believe city property tax payers have been paying to support, to subsidize the utilities and the right of ways they’ve gone through in some cases. So there is no property tax here, actually it’s a benefit to the cities and that was their major concerns that they were able to capture their full fee charge and not put it on the property tax.
Speaker: Rep. Johnson.
Johnson A: Mr. Speaker and Rep. Jennings I have another question on that but then if you would again talk about anyone who opposed this, if there was any organized opposition. But at, let me ask you then, could the utility company then include that in their, in their rate under the present rate setting situation.
Speaker: Rep. Jennings.
Jennings: Mr. Speaker, Rep. Johnson. The fees that are charged to utility companies are paid by the end user of that product, that’s in the fee today. If that rate goes up, that if it’s a significant number statewide it could probably go up to utility, will utility costs come up? In the overall cost utility is such a small number I don’t know see it. But clearly there will be a shift, there will be an increased cost to the utility company. Now if you’re an investor owned, you obviously have to go into the PUC and get a rate increase and that’s a one or two year project. You’re not going to see on your light bill that Columbia Heights charged $200 for a fee. No that doesn’t happen. So, as far as your other question is there anybody opposed to the bill or was there any groups in opposed in the beginning. There was a major difference of opinion between he cities and the utility companies when we started. And they spent three to four months working through the process, giving, taking and the players in the room were the cities, and they have come to an agreement. So at this point and time there is no opposition. And the only groups that really were involved were the cities and the utility companies. I don’t, I have not heard of anybody else, nobody else has talked to me and we have reached that point of agreement.
Speaker: Rep. Johnson.
Johnson A: Mr. Speaker and members, even if the cities, or the municipalities are satisfied and the utility companies are satisfied I guess I’m concerned because I. My concerns is for the people and sometimes, especially I’ve heard some of the people in this body be very fearful that cities might raise taxes without good reason and so forth. So I think we need to be careful that in fact we aren’t allowing utility rates to go up. Which is really, basically a fee increase if you want to call it that. And most of us consider fees to be taxes. Also members, this morning in the tax committee, we had another bill that we heard very briefly, SF 1754 and in that bill there is a provision that permits municipalities to undertake electric and gas improvements and to levy special assessments for these purposes. It seems to me that there’s a relationship here, although I can’t quite figure it out yet. I hope that I can get some help and be able to understand.
Jennings: Mr. Speaker.
Speaker: Rep. Jennings.
Jennings: Rep. Johnson. Let me try one more time. Today, cities are capped at $25 that they can charge for a fee for a right of way whatever it is. That is too low, so you and your city is subsidizing the right, the utility companies because it costs more than that. What we’re allowing in the cities is to raise that fee so you don’t have to, or your constituents don’t have to subsidize the utility companies to pay for that fee. That’s what we’re doing here in this bill. We’re not allowing the cities to go out and levy from someplace else to pay for this. On the other hand, the utility companies obviously, if they feel that number gets to high, they have a way to go and discuss that, versus going to court. Now as far as what you saw in the tax bill to allow a city to become, a municipality to become the light or a gas company what that does is that a city can become a light company or a gas company. Its got nothing to do with fees whatsoever. This bill will help keep property taxes down and put the true cost where it truly is. Also, and when we’re talking about cities we’re also talking about counties and townships who are involved also. So again, there’s no opposition.
Speaker: Is there any further discussion? Rep. Westrom.
Westrom: Thank you Mr. Speaker, will the author yield?
Speaker: He will yield. Rep. Westrom.
Westrom: Rep. Jennings, just a couple of quick questions. What will this do for rural utility companies in smaller towns and rural sparsely populated areas and also what’s the current standard for utility companies as far as returning the roads back to its original form, or the ground in which they tear up to put the lines in?
Speaker: Rep. Jennings.
Jennings. Mr. Chairman, Representative. I think this is not a mandatory, this is a permissive language, so if a city, township or county wants to use a roadmap, this is what they’ll use. I anticipate that certainly in the country where I come from most counties, townships and smaller cities don’t even do permits. I don’t think they’re going to do it in the future. I think they’re very happy with the utility company and they are close enough, they work together. The city, local unit of government does not have (Tape 1, side A ends.) (Tape 1, side B) ...mandate, this is an option. But if they’re going to do right of way management this is what they have to use, so its fair for everybody and the standards are the same. So, I don’t see this being used, especially in the country, but only in the bigger cities. So that’s your first question. As far as today the law is the utility companies have to restore the right of way back to the standard in which they came into it. So if it’s, most times it’s grass or wildfield, they have to plant it back and that continues as well. We don’t put higher level of upgrade or restoration. They have to return it to what it was when they entered.
Speaker: Rep. Westrom.
Westrom: Thank you Mr. Speaker. I guess, what would we need this for if right now the utility companies are already obligated to return roads or the grass or the ground in which they tear up back to its original form. What’s the purpose of requiring this then if they’re already required under law to return that back to its original form?
Speaker: Rep. Jennings.
Jennings: Mr. Speaker, Rep. Westrom. The main reason for it is there’s a disagreement of, as you’re traveling from city to city that the standards, how you [encapass] the pipe, how deep the pipe should be, the wires whatever. We want to go to a statewide standards so when you go from one town, or one local unit of government the standards stay the same. Also there was some disagreements on what the true costs should be for the fee. Some people said it shouldn’t go up. Well that was unfair to the cities . On the other hand we didn’t want to go to high that would be unfair to the utility companies and all of used utilities. Mainly this was a fight in the bigger cities, is where it was. It wasn’t really out in the country. I could tell you that small telephone companies probably small utility companies, like I say where, didn’t, they thought it was going to be mandate and after they understood that it is not a mandate, it’s only an option to be used. Then they felt alot more comfortable with it. I don’t think it gets used out in the countryside. But in the cities it was meant so everybody understood what the ground rules were and we didn’t have to go to court every single time. I just, even though my brother’s an attorney, I just hate giving money to attorneys I just think that’s a waste.
Speaker: Rep. Westrom.
Westrom: One last question and I’ll make it quick Mr. Speaker. So this language, if I understand you correctly has changed from the original bill to basically clarify that cities can’t overcharge and use this as a tax? Has there been some changes in the bill from its origination?
Speaker: Rep. Jennings.
Jennings: Mr. Speaker, Rep. Westrom. You’re absolutely correct, there’s been made alot of changes. And as it started out there were some small utility companies who were very very much opposed to what cities were doing and cities were opposed to what the utilities were [coming to] do. At this point in time, nobody opposes the bill and it does exactly what you just said. It allows for a fair and true accurate, I think, representation of what the costs are for the cities and utilities companies have some safeguards as well. So we have reached a point that everybody agrees.
Speaker: Any further, we have Rep. Ozment.
Ozment: Thank you Mr. Speaker. I want to stand in support of the bill and thank Rep. Jennings for all the work he’s put into this. I also believe, Rep. Westrom, one of the things we were concerned about is the coordination of efforts of, utilities sometimes go through tear up a street, put down their needs and then, seal it back up and then two months later another utility comes along and tears it back up again. And this allows for local communities to coordinate that effort so that the citizens don’t have their streets torn up constantly one right after another.
Speaker: Seeing no further discussion, the clerk will take the roll. (SF 442 passes, 128-4.)
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