76R12867 CBH-F
By Wolens, Carter H.B. No. 1777
Substitute the following for H.B. No. 1777:
By Wolens C.S.H.B. No. 1777
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the provision of local exchange telephone service in a
1-3 municipality and the management by the municipality of public
1-4 rights-of-way used by providers of that service.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Subtitle A, Title 9, Local Government Code, is
1-7 amended by adding Chapter 283 to read as follows:
1-8 CHAPTER 283. SUPERVISION OF PUBLIC RIGHT-OF-WAY USED BY
1-9 TELECOMMUNICATIONS PROVIDER IN MUNICIPALITY
1-10 SUBCHAPTER A. GENERAL PROVISIONS
1-11 Sec. 283.001. STATE POLICY; PURPOSE. (a) It is the policy
1-12 of this state to:
1-13 (1) encourage competition in the provision of
1-14 telecommunications services;
1-15 (2) reduce the barriers to entry for providers of
1-16 services so that the number and types of services offered by
1-17 providers continue to increase through competition;
1-18 (3) ensure that providers of telecommunications
1-19 services do not obtain a competitive advantage or disadvantage in
1-20 their ability to obtain a franchise for use of a public
1-21 right-of-way from a municipality; and
1-22 (4) fairly end the uncertainty and litigation
1-23 concerning franchise fees.
1-24 (b) It is also the policy of this state that municipalities:
2-1 (1) retain the authority to manage the public
2-2 right-of-way of the municipality and to ensure the health, safety,
2-3 and welfare of the public; and
2-4 (2) receive from certificated telecommunications
2-5 providers reasonable and stable revenue for the private use of the
2-6 public right-of-way within the municipality.
2-7 (c) The purpose of this chapter is to establish a uniform
2-8 method for compensating municipalities for the use of their public
2-9 right-of-way by certificated telecommunications providers that:
2-10 (1) is administratively simple for municipalities and
2-11 telecommunications providers;
2-12 (2) benefits consumers by keeping the cost of services
2-13 low;
2-14 (3) is consistent with state and federal law;
2-15 (4) is competitively neutral;
2-16 (5) is nondiscriminatory;
2-17 (6) is consistent with the burdens on municipalities
2-18 created by the incursion of certificated telecommunications
2-19 providers into the public right-of-way; and
2-20 (7) provides fair and reasonable compensation to
2-21 municipalities for the use of the public right-of-way.
2-22 Sec. 283.002. DEFINITIONS. In this chapter:
2-23 (1) "Access line" means, unless the commission adopts
2-24 a definition under Section 283.003, a unit of measurement
2-25 representing:
2-26 (A) each switched transmission path of the
2-27 transmission media within the public right-of-way extended to the
3-1 customer's network interface device within the municipality that
3-2 allows the delivery within the municipality of local exchange
3-3 services that is provided by a person leasing, reselling, or owning
3-4 facilities;
3-5 (B) each termination point or points of a
3-6 nonswitched telephone or other circuit consisting of transmission
3-7 media connecting specific locations identified by, and provided to,
3-8 a customer for delivery of nonswitched services within the
3-9 municipality; or
3-10 (C) each loop provided to any person used for
3-11 the provision of telecommunications transmission services.
3-12 (2) "Certificated telecommunications provider" means a
3-13 person who has been issued a certificate of convenience and
3-14 necessity, certificate of operating authority, or service provider
3-15 certificate of operating authority by the commission to offer local
3-16 exchange service and who is providing local exchange services to
3-17 customers within the municipality.
3-18 (3) "Commission" means the Public Utility Commission
3-19 of Texas.
3-20 (4) "Consumer price index" means the annual revised
3-21 consumer price index for all urban consumers for Texas, as
3-22 published by the federal Bureau of Labor Statistics.
3-23 (5) "Public right-of-way" means the area on, below, or
3-24 above a public roadway, highway, street, public sidewalk, or
3-25 utility easement in which the municipality has an interest. The
3-26 term does not include the airwaves above a right-of-way with regard
3-27 to nonwire telecommunications.
4-1 Sec. 283.003. COMMISSION REVIEW OF DEFINITION OF "ACCESS
4-2 LINE." (a) Not later than September 1, 2003, the commission, on
4-3 its own motion, shall determine whether changes in technology or
4-4 facilities justify adoption of a definition of "access line"
4-5 provided by this section.
4-6 (b) The commission by rule may define "access line" in the
4-7 manner necessary to maintain consistent levels of revenues, as
4-8 annually increased, to the municipalities to ensure that the
4-9 municipalities are not affected by changes in technology or
4-10 facilities.
4-11 (c) After September 1, 2003, the commission, on its own
4-12 motion, shall make the determination required by this section at
4-13 least once every three years.
4-14 Sec. 283.004. APPLICATION. This chapter applies only to
4-15 municipal regulations and fees imposed on and collected from
4-16 certificated telecommunications providers.
4-17 Sec. 283.005. INFORMATION. The commission may collect and
4-18 compile information from certificated telecommunications providers
4-19 and municipalities to implement this chapter. The commission shall
4-20 maintain the confidentiality of that information in accordance with
4-21 Section 52.207, Utilities Code.
4-22 (Sections 283.006-283.050 reserved for expansion
4-23 SUBCHAPTER B. FRANCHISE FEES
4-24 Sec. 283.051. FRANCHISE REQUIREMENT. Notwithstanding any
4-25 other law, a person may not operate in a municipality without a
4-26 franchise if the provider is:
4-27 (1) a certificated telecommunications provider who
5-1 uses a public right-of-way in the municipality and fails to pay
5-2 franchise fees in accordance with this chapter; or
5-3 (2) a noncertificated telecommunications provider who
5-4 locates facilities in a public right-of-way in the municipality.
5-5 Sec. 283.052. FRANCHISE FEE. (a) Notwithstanding any other
5-6 law, a certificated telecommunications provider is required to pay
5-7 as franchise fees to a municipality for use of the public
5-8 right-of-way in the municipality only the compensation amount
5-9 determined by the commission under Section 283.056.
5-10 (b) This section does not affect the right of a municipality
5-11 to initiate legal action against a certificated telecommunications
5-12 provider that has not compensated the municipality in accordance
5-13 with this chapter.
5-14 Sec. 283.053. EFFECT OF PAYMENT OF FRANCHISE FEES TO
5-15 MUNICIPALITY. (a) Subject to the requirements of Sections 283.058
5-16 and 283.059, a certificated telecommunications provider may erect
5-17 poles or construct conduit, cable, switches, and related
5-18 appurtenances and facilities and excavate within a public
5-19 right-of-way to provide telecommunications service if the
5-20 certificated telecommunications provider makes timely payments of
5-21 the franchise fee amount determined by the commission under Section
5-22 283.056 for the use of the public right-of-way.
5-23 (b) All use of a public right-of-way is nonexclusive and
5-24 subject to the rights of the municipality.
5-25 Sec. 283.054. BASE AMOUNT. (a) In determining a
5-26 municipality's "base amount" under this section, pole rental fees,
5-27 special assessments, and taxes of any kind, including ad valorem or
6-1 sales and use taxes, may not be included as revenue received by the
6-2 municipality.
6-3 (b) For purposes of determining the amount of a
6-4 municipality's franchise fee under Section 283.056, the "base
6-5 amount" for a municipality not described by another provision of
6-6 this section or Section 283.055 is the total amount of revenue
6-7 received by the municipality in franchise, license, permit, and
6-8 application fees from certificated telecommunications providers in
6-9 1998 within the boundaries of the municipality, including all newly
6-10 annexed areas.
6-11 (c) A municipality located in a county with a population of
6-12 less than 75,000 may negotiate a base amount that exceeds the
6-13 amount provided by this section if the resulting amount does not
6-14 result in an access line fee that exceeds the statewide average fee
6-15 per line.
6-16 (d) The base amount for a municipality that does not have an
6-17 effective franchise agreement on September 1, 1999, but that had a
6-18 franchise agreement during 1997 or 1998, is the total amount of
6-19 revenue received by the municipality during the 12 months
6-20 immediately preceding the date the agreement expired in franchise,
6-21 license, permit, and application fees from certificated
6-22 telecommunications providers within the boundaries of the
6-23 municipality, including all newly annexed areas, adjusted by the
6-24 consumer price index for the period from the date of the expiration
6-25 to September 1, 1999.
6-26 (e) The base amount for a municipality that has a population
6-27 of less than 15,000 or that has not had an effective franchise
7-1 agreement since January 1, 1997, is an amount equal to the state
7-2 average access line rate or the highest total amount of revenue
7-3 received by a similarly sized municipality within the same or an
7-4 adjacent county. The municipality may choose which amount the
7-5 commission must use.
7-6 (f) The base amount for a newly incorporated municipality
7-7 that did not have a franchise agreement in 1998 or for a
7-8 municipality that did not have a franchise agreement during 1997 or
7-9 1998 is an amount equal to the highest total amount of revenue
7-10 received by a similarly sized municipality within the same or an
7-11 adjacent county.
7-12 (g) The base amount for a municipality that was involved in
7-13 litigation relating to franchise fees during any part of 1998 and
7-14 that elects or agrees to withdraw from or otherwise voluntarily
7-15 terminate that litigation is equal to the greater of:
7-16 (1) the amount of revenue the municipality received in
7-17 franchise, license, permit, and application fees during any single
7-18 calendar year beginning in 1990 and ending in 1999, including the
7-19 amount the municipality is adjudged to have been entitled to
7-20 receive through final judgment or settlement of litigation relating
7-21 to the franchise fees during any part of 1998;
7-22 (2) an amount equal to the state average access line
7-23 rate multiplied by the total number of access lines located within
7-24 the boundaries of the municipality in 1999, including any newly
7-25 annexed areas; or
7-26 (3) an amount equal to 22 percent of the total sales
7-27 and use tax revenue received by the municipality in 1998.
8-1 Sec. 283.055. TREATMENT OF NEW ENTRANT OR PROVIDER SEEKING
8-2 RENEWAL. (a) If a municipality has entered into one or more
8-3 franchise agreements or has adopted a right-of-way ordinance before
8-4 January 12, 1999, the base amount for the municipality on
8-5 expiration of each agreement or ordinance, unless renewed as
8-6 provided by Subsection (c), and until all agreements and ordinances
8-7 expire, is an amount equal to the total amount of franchise,
8-8 license, permit, and application fees the municipality received in
8-9 the 12 months immediately preceding the date of the most recent
8-10 expiration of a franchise agreement or right-of-way ordinance
8-11 executed before January 12, 1999.
8-12 (b) If a franchise agreement expires before the commission
8-13 has determined the amounts to be paid to the municipality under
8-14 Section 283.056, the provider subject to that agreement shall
8-15 continue paying at the same rate until the commission determines
8-16 the appropriate rate. If the commission determines that the
8-17 provider would have paid more money during that period if the
8-18 commission had determined the rate on the expiration date, the
8-19 provider shall pay that amount not later than the 30th day after
8-20 the date the commission makes that determination.
8-21 (c) During the period in which a franchise agreement or
8-22 right-of-way ordinance entered into before January 12, 1999, is in
8-23 effect in a municipality, the municipality may require a new
8-24 entrant as a condition of beginning construction of facilities, or
8-25 an existing provider that wants to renew an agreement or ordinance,
8-26 to comply with any applicable terms of the most recent agreement or
8-27 ordinance entered into between the municipality and a certificated
9-1 telecommunications provider for the duration of that agreement or
9-2 ordinance. A new entrant may elect to pay an additional one
9-3 percent instead of providing any in-kind services and facilities
9-4 that would otherwise be required.
9-5 Sec. 283.056. DETERMINATION OF FRANCHISE FEE. (a) The
9-6 commission by rule shall prescribe categories of various access
9-7 lines considering the type, use, and function of the lines. At a
9-8 minimum, the commission shall prescribe categories that subdivide
9-9 residential, business, and point-to-point services.
9-10 (b) The commission shall establish for each municipality
9-11 monthly rates for each category of access lines so that the sum of
9-12 the rates for each category of access lines multiplied by the total
9-13 number of access lines in a municipality for the first month,
9-14 multiplied by 12, approximately equals the municipality's base
9-15 amount, as determined under Section 283.054, plus the value of
9-16 in-kind services and facilities. In determining the value of
9-17 in-kind services and facilities, the commission shall assume that
9-18 the value is equal to one percent of the base amount unless the
9-19 municipality can establish that it received a greater amount during
9-20 1998.
9-21 (c) The commission shall ensure that rates imposed under
9-22 this section and the allocation among telecommunications providers
9-23 are competitively neutral, do not unduly impair competition, are
9-24 nondiscriminatory, and comply with state and federal law.
9-25 (d) A municipality may annually establish the relationship
9-26 between fees on access line categories.
9-27 (e) The commission shall adjust access line rates on an
10-1 annual basis to reflect the percentage increase in the consumer
10-2 price index. At that time, the commission shall provide each
10-3 municipality with the adjusted monthly rates for each category of
10-4 access line.
10-5 Sec. 283.057. PAYMENT OF FRANCHISE FEE. (a) Each
10-6 certificated telecommunications provider within a municipality
10-7 shall pay the municipality according to the actual number of access
10-8 lines by access line category as of the last day of the preceding
10-9 calendar month. Each monthly payment must reflect any change in
10-10 the number of access lines. Every 13th month, the provider shall
10-11 reduce the payment due that month by an amount equal to the
10-12 statewide average annual percentage of local service revenues that
10-13 are not paid by consumers, as determined by the commission,
10-14 multiplied by the sum of the payments for the previous 12 months.
10-15 (b) The certificated telecommunications provider shall make
10-16 the payment for the preceding calendar month not later than noon on
10-17 the 15th day of each month. If the 15th day of the month is on a
10-18 weekend or holiday, the payment is due on the business day that
10-19 immediately precedes the 15th day of the month. The provider shall
10-20 make the payment by electronic funds transfer or by another method
10-21 that provides availability of the funds on the day the payment is
10-22 due.
10-23 (c) The certificated telecommunications provider shall file
10-24 a report with each payment that shows the number of access lines,
10-25 including access lines by category, that the provider has within
10-26 the municipality at the end of the month. The provider shall
10-27 include with the report a certified statement from an authorized
11-1 officer or duly authorized representative of the provider stating
11-2 that the information contained in the report is true and correct to
11-3 the best of the officer's or representative's knowledge and belief
11-4 after inquiry.
11-5 (d) The report required under Subsection (c) must
11-6 specifically identify access lines owned, operated, or maintained
11-7 by the provider that are leased or used by a person who is not an
11-8 end-use customer. A provider may not include in its monthly count
11-9 of access lines and is not required to remit a franchise fee to the
11-10 municipality on access lines that are resold, leased, or otherwise
11-11 provided to another certificated telecommunications provider if the
11-12 provider receives adequate proof that the provider leasing or
11-13 purchasing the access lines will include the access lines in its
11-14 monthly count and remit payment on those access lines to the
11-15 municipality.
11-16 (e) A municipality may use a report required under
11-17 Subsection (c) only to verify the number of access lines that serve
11-18 premises within the municipality.
11-19 (f) Notwithstanding any other provision of this chapter, a
11-20 payment by a certificated telecommunications provider that complies
11-21 with the terms of an unexpired franchise agreement or right-of-way
11-22 ordinance that applies to the provider satisfies the payment
11-23 attributable to the provider required by this chapter.
11-24 Sec. 283.058. MUNICIPAL AUTHORIZATIONS. Notwithstanding any
11-25 other law or any other provision of this chapter, a municipality,
11-26 for use of the public right-of-way, may:
11-27 (1) require a certificated telecommunications provider
12-1 locating facilities in or on a public right-of-way within the
12-2 municipality to obtain a permit without cost;
12-3 (2) exercise any police power-based regulations that
12-4 are not specifically precluded by this chapter and that are not
12-5 inconsistent with state or federal law; and
12-6 (3) determine and order, at the telecommunications
12-7 provider's expense, relocation, removal, colocation, maintenance,
12-8 or placement of the provider's facilities.
12-9 Sec. 283.059. INDEMNIFICATION. (a) A certificated
12-10 telecommunications provider shall indemnify and hold harmless the
12-11 municipality and its officers and employees for or against any
12-12 claim, lawsuit, judgment, cost, lien, loss, expense, fee, including
12-13 reasonable attorney's fees and costs of defense, proceeding,
12-14 action, demand, cause of action, liability, suit of any kind and
12-15 nature, including personal or bodily injury or death, property
12-16 damage, or other harm for which recovery of damages is sought that
12-17 may arise out of or be occasioned or caused by the negligent act,
12-18 error, or omission of the provider or of the provider's officer,
12-19 agent, director, representative, employee, affiliate, or
12-20 subcontractor or by their respective officers, agents, employees,
12-21 directors, or representative, while installing, repairing, or
12-22 maintaining facilities in the public right-of-way within the
12-23 municipality.
12-24 (b) The indemnity provided by this section does not apply to
12-25 liability that results from the negligence of the municipality or
12-26 of a municipal officer or employee that causes personal or bodily
12-27 injury, death, or property damage.
13-1 (c) If the certificated telecommunications provider and the
13-2 municipality are found to be jointly liable by a court, liability
13-3 shall be apportioned comparatively in accordance with the law of
13-4 this state without, however, waiving any governmental immunity
13-5 available to the municipality under state law and without waiving
13-6 any defenses of the parties under state law.
13-7 (d) This section is solely for the benefit of the
13-8 certificated telecommunications provider and the municipality and
13-9 is not intended to create or grant any rights, contractual or
13-10 otherwise, to any other person.
13-11 (e) The certificated telecommunications provider shall
13-12 promptly advise the municipality in writing of any claim or demand
13-13 against the municipality or the provider that the provider knows is
13-14 related to or arises out of the provider's activities in the public
13-15 right-of-way within the municipality.
13-16 SECTION 2. (a) This Act does not affect the validity of a
13-17 franchise agreement or right-of-way ordinance with a certificated
13-18 telecommunications provider executed before January 12, 1999. A
13-19 municipality may continue to enforce that agreement or ordinance
13-20 and to collect franchise fees and other charges under that
13-21 agreement or ordinance until the date on which the agreement or
13-22 ordinance expires on its own terms.
13-23 (b) In a municipality described by Section 283.054(g), Local
13-24 Government Code, as added by this Act, each certificated
13-25 telecommunications provider that does not have a franchise
13-26 agreement with the municipality shall begin paying franchise fees
13-27 to the municipality in accordance with Chapter 283, Local
14-1 Government Code, as added by this Act, at the time the Public
14-2 Utility Commission of Texas determines the amount the municipality
14-3 is entitled to receive under Section 283.056, Local Government
14-4 Code. A certificated telecommunications provider whose franchise
14-5 agreement expires after the commission makes that determination
14-6 shall begin paying franchise fees in accordance with Chapter 283 on
14-7 the earlier of the date the agreement expires on its own terms or
14-8 the date the agreement expires on mutual agreement of the parties.
14-9 SECTION 3. (a) The Public Utility Commission of Texas shall
14-10 determine the monthly rates for a municipality described by Section
14-11 283.056, Local Government Code, as added by this Act, as soon as
14-12 possible after the effective date of Chapter 283, Local Government
14-13 Code, but not later than 180 days after that date.
14-14 (b) The Public Utility Commission of Texas shall determine
14-15 the monthly rates for a municipality described by Section
14-16 283.055(a), Local Government Code, as added by this Act, not later
14-17 than the 60th day after the date the last franchise agreement or
14-18 right-of-way ordinance executed by the municipality under Section
14-19 283.055(c) expires.
14-20 SECTION 4. Section 1 of this Act takes effect September 1,
14-21 1999. The other sections of this Act take effect on the first date
14-22 on which they may take effect under Section 39, Article III, Texas
14-23 Constitution.
14-24 SECTION 5. The importance of this legislation and the
14-25 crowded condition of the calendars in both houses create an
14-26 emergency and an imperative public necessity that the
14-27 constitutional rule requiring bills to be read on three several
15-1 days in each house be suspended, and this rule is hereby suspended,
15-2 and that this Act take effect and be in force according to its
15-3 terms, and it is so enacted.