TEXAS SUPREME COURT ISSUES FAVORABLE UTILITY RELOCATION OPINION

Texas cities have the authority to manage and regulate the use of public rights-of-way by utility companies. However, it seems that authority is under constant attack.

For example, in 2005 the City of Houston adopted an ordinance that requires owners of facilities located in public rights-of-way to bear the cost of relocating their equipment to accommodate city public works projects. The city then required AT&T to remove its facilities for a city drainage improvement project at a cost of $420,000. AT&T relocated its facilities but, believing the city’s relocation ordinance was preempted by federal law, sued the city to recover the cost of the relocation.

The federal Fifth Circuit Court of Appeals concluded in Southwestern Bell v. City of Houston that the Houston ordinance is not preempted. That decision is a favorable one for Houston and all other cities that have projects that might require relocation of utility facilities. However, AT&T’s state law claims were not addressed in the federal courts. AT&T has since re-filed the suit in county court in Harris County. The suit claims that AT&T has a “vested right” to use the city’s rights-of-way, and that the city’s ordinance worked an unconstitutional taking of that property right. Previous case law indicates that the claim is without merit, and the state court suit seems to simply be another in a long and storied dispute between cities and telecommunications providers over right-of-way issues.

An April 3, 2009, Supreme Court of Texas decision in a similar suit clearly refutes AT&T’s claims. In Southwestern Bell Telephone, L.P. v. Harris County Tollroad Authority, the facts were essentially identical to the City of Houston case, but involved a toll road authority and a county instead of a city.

After refusing to pay the costs of relocation caused by a transportation project, AT&T brought a takings claim under Article I, Section 17, of the Texas Constitution (presumably to do an end run around the county’s immunity). The court concluded that AT&T, because it does not have a vested property interest in the public right-of-way in which its facilities are located, it is not entitled to reimbursement. Citing the U.S. Supreme Court and various secondary sources, the court concluded that a utility essentially uses the public rights-of-way pursuant to a license, and that the license is secondary to the primary public need, which is transportation.

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