Michigan's Metro Act and AT&T: pipelines, telecoms and cable

Wm. Roger Buell, P.E.
Director of Public Services
Grand Blanc Township, Michigan
Member, APWA UPROW Committee

In the State of Michigan, the right of local jurisdiction or control of the public right-of-way is guaranteed in the state's constitution of 1963. Section 29 of that document states, in part,

"The right of all counties, townships, cities and villages to the reasonable control of their highways, streets, alleys and public places is hereby reserved to such local units of government."

Even the previous state constitution of 1908 placed the right of all cities, villages and townships to reasonable control of their streets. It was section 28 that stated, in part,

"No person operating a public utility shall have the right to use of the streets, without the consent of the city, village or township; nor to transact business without first obtaining a franchise from such cities, villages and townships."

Well, a lot has changed since 1963 to include computers, the Internet and the Federal Telecom Act of 1996. Even with these advancements, a slow and steady erosion of local control has occurred. Here are just a few of the most recent issues in Michigan's public right-of-way history.

In 2000, a pipeline company came to a small township just outside of the state capital, Lansing. This pipeline company was proposing to install a new line next to their old line through existing easements acquired in the 1930s. All was going fairly well by May of 2000. The local municipality had approved the location going through various parks and rights-of-way and the local water/sewer department was ensured coordination of road crossings.

Then, on the morning of June 7, 2000, the worst oil spill in mid-Michigan occurred. At least 75,000 gallons of gasoline were released into the environment due to a defective valve on the pipeline. The situation posed an immediate and serious threat to public health and safety due to the potential for fire, explosion and environmental contamination. Although no lives were lost, it sent shock waves through the regulatory agencies.

The township then had second thoughts as to where this pipeline was going, since the pipe that broke was owned and operated by the very same company. Apparently, back when the pipeline was originally constructed, easements were obtained from farmers and others with wide-open spaces of property. Since then, the east side has developed with mostly upscale housing, new schools and other development all near the pipeline and its easement.

Since the local planners are unsophisticated about pipeline easements and minimum safe distances, development up to the edge of the easement was permitted. The locals were aware of some dangers though; after a train derailment in 1988, they required a dwelling unit setback of 175' from all railroad corridors regardless of the width of their easement—but nothing for pipelines.

Since the east side didn't want the pipeline anymore, the company decided to relocate to the west side and go around. Unfortunately, the west side felt that they were being dumped on by the influential east side and, when they found out that it was being rerouted through their area, and even though it would be under the highway almost its entire length, the fight was on.

While the applicant was working with the state agencies for placement within the Interstate's right-of-way, the locals had concurrent jurisdiction. Needless to say one city, Lansing, where the highway went through, denied the right-of-way permit application. The company took the City to the State Supreme Court, but the City prevailed.

Well, off to the state capital the company went to change the law, and in 2002 the state passed PA 151, which removed local jurisdiction on limited access right-of-way. Section 13 of that law states, in part,

"A utility may enter upon, construct, and maintain utility lines and structures, including pipelines, longitudinally within limited access highway rights-of-way and is not required to obtain the consent of the governing body of the city, village, or township."

The City of Lansing then filed suit against the company and the state, and in 2004 the City prevailed again. Construction has halted on the pipeline but the company's efforts haven't. By November of 2004, a State House Bill (6314) moved through the legislature that would again take local control away from the cities. Successful lobbying stopped the bill from going forward into law.

Unfortunately, by July of 2005 another law, PA 103, was enacted that restated the same language and still did not require local permits.

During this time frame of the pipeline issue, the telecommunication firms were busy also. In 2002, the State of Michigan enacted PA 48, the Metropolitan Extension Telecommunication Rights-of-Way Oversight act also known as the Metro Act. It basically stripped local municipalities of the ability to charge their own reasonable fees for telecom utility installation and required an approval/denial deadline. Local permits must be approved/denied within 45 days and any fees are paid to the state ($0.05/l.f.) and are then mostly redistributed back to the locals for "right-of-way purposes." It doesn't matter if you're in an urban area or rural. It's all the same reimbursement.

One of the more contentious issues of the bill is the requirement that each provider must produce a "route map." A route map to the provider means a black line on a street map, where a route map to most municipalities means something closer to an ASCE Standard 38-02 "Standard Guidelines for the Collection and Depiction of Existing Subsurface Utility Data" or Quality Level A for SUE—subsurface utility engineering. That involves the use of nondestructive digging equipment at critical points to determine the precise horizontal and vertical position of the underground utility to include type, size, condition, material, and other characteristics. The map "discussion" between the state, locals and the providers is ongoing.

So now comes AT&T. The baby bells have gotten back together and want to offer bundled services over wires/fiber to include telephone, television, cable and Internet services. The key here is the word "television" and the fact that all of the cable companies have franchise agreements with each of the local cities, villages and townships that they service. AT&T doesn't want to go through the same trouble that the cable companies did in getting individual agreements. One of the key aspects of most agreements is that they contain what is called "build-out" requirements. When a particular street or area has a certain number of potential customers, the cable company must lay cable, weather it's profitable or not.

AT&T wants to offer its services to only a select few, or cherry-pick, those that can afford the $150/month or so in fees for the bundled services. Those customers tend to be in affluent areas and that's where they want to build. That's it. No build-out requirements. So the local municipalities got together using a variety of agencies and groups, including Municipal League, PROTEC, NATOA and APWA, and responded to the applicant that they could come into their areas with the same type of agreements that the cable companies did.

As history has shown, you either play by the law or change the law. So off to the state capital the applicant went, and this time they came out with a house bill that would create the Cable and Video Competition Act. By March of 2006, HB 5895 was introduced which asserted that the cable franchise requirements and associated build-out requirements have acted as a barrier to entry to many new facilities-based entrants, because time to market and reasonable cost of entry are critical for new entrants seeking to compete with the cable incumbents. It would strip locals of their ability to require individual franchise agreements but would give them their 5% of gross receipts in franchise fees.

The last hearing on this bill was on June 21. With our state legislature out for summer recess, it's anyone's guess what'll happen when they come back in session this fall.

On both the local and the national level, it's important that any cable bill: maintains local control of the cable franchise process; ensures build-out requirements so that providers are not able to "cherry-pick" customers; preserves the ability of local government to manage the public rights-of-way; and ensures no reduction in direct revenues.

In conclusion, keep one eye on the right-of-way and the other on the lawmakers. Sign up for legislative alerts and participate in organizations that promote local oversight (like APWA amongst others) and become informed.

This article was produced with the assistance of the APWA Utilities and Public Right-of-Way Committee and members of its subcommittee on Right-of-Way Management. Wm. Roger Buell, a former member of the Smart Growth Task Force, can be reached at (810) 424-2620 or Buell@twp.grand-blanc.mi.us.