Time to Get Ready for September 1 and S.B. 1004

by Georgia N. Crump

Senate Bill (“SB”) 1004, enacting a new Chapter 284 in the Texas Local Government Code, was signed by the Governor on June 9, 2017. With an effective date of September 1, 2017, this new law imposes strict limitations and prohibitions on cities’ regulation of what are commonly referred to as “small cell antennas” or “distributed antenna systems” (defined in the bill as “Network Nodes,” “Node Support Poles,” and “Transport Facilities”). The maximum amount of compensation cities can demand from the providers of wireless services using these facilities is also prescribed by the new law. The effective date is crucial to cities—by this date cities must have ordinances and processes in place or else find themselves unable to influence the location and appearance of these facilities in the public right-of-way (“ROW”).

What kinds of wireless facilities are covered?

The new law covers Network Nodes, Node Support Poles, Micro Network Nodes, and Transport Facilities:

• A Network Node includes equipment at a fixed location that enables wireless communications between user equipment and a communications network. Commonly known as “small cell antennas” or “distributed antenna systems,” the Network Node includes the equipment, the antenna, the radio transceiver, and the fiber or coax cable at the location—everything that is mounted on a pole, light standard, or other structure in the ROW. The Network Node does not include a generator, a pole, or a macro tower (pole higher than 55 feet with antennas). And there are size limitations for the nodes, antennas, “other” equipment, and ground- and pole-mounted enclosures.
• A Node Support Pole is just that—a pole installed by a network provider to support the Network Node. Height limitations on poles are allowed under the new law. The pole height cannot exceed the lesser of 10 feet above the tallest existing utility pole located within 500 linear feet of the new pole in the same ROW or 55 feet above ground level.
• Micro Network Nodes are small boxes that are usually hung on wires between poles and can be no larger than 24 inches x 15 inches x 12 inches.
• Transport Facilities are the physical lines (usually fiber) between Network Nodes connecting the Network Nodes to the network.

Chapter 284 contains other important definitions that distinguish between Service Poles (such as city-owned poles supporting traffic control devices, signs, and street lights) and Utility Poles (poles supporting electric distribution lines or phone lines).

Are any preexisting ordinances or agreements grandfathered?

Yes, but only to a limited extent. If a city has previously adopted an ordinance regulating the size, location, and appearance of Network Nodes and Node Support Poles, or if it has entered into license or ROW agreements with the providers of these facilities, the ordinance or agreement can remain in effect only if the facilities covered by the ordinance or agreement have both been installed and are operational before September 1, 2017. Otherwise, that ordinance or agreement has to be revised to conform to Chapter 284 no later than March 1, 2018, regardless of the effective date of the ordinance or the agreement.

Can a city adopt and enforce installation and construction standards?

Yes! A city can, and should, adopt design manuals applicable to the installation and construction of Network Nodes and new Node Support Poles. And this design manual should be in place by September 1, 2017. Construction standards can ensure that the providers do not: obstruct, impede, or hinder the usual travel or public safety on a public ROW; obstruct the legal use of the ROW by other utility providers; violate nondiscriminatory applicable codes; violate or conflict with the city’s publicly-disclosed public ROW design specifications; or violate the federal Americans with Disabilities Act of 1990.

The design manual can include installation and construction details that do not conflict with Chapter 284 and can protect historic areas and areas with special design characteristics. In these areas (that are so zoned or are identified by ordinance), the design manual can require camouflage measures for the nodes, poles, and ground equipment. Cities can also require compliance with nondiscriminatory undergrounding requirements and can prohibit the installation of the wireless facilities in parks and certain residential areas. The best option is for a city to also have in place a comprehensive ROW management ordinance that applies to all entities using or occupying the public ROW, as the wireless providers are subject to all applicable codes and ordinances.

Can a city require a permit and an application process?

Yes. A city can require a network provider to get a permit to install a Network Node, a Node Support Pole, and a Transport Facility in the ROW, but a provider may file a consolidated permit for up to 30 Network Nodes at a time. However, the new law also imposes a “shot clock” on the city’s processing of applications. Deficiencies in the applications must be timely brought to the attention of the provider, and the city must grant or deny a permit within specific time frames or the application will be deemed granted. Importantly, the time requirements cannot be tolled or extended pending adoption or modification of a design manual.

In addition to the application and permit requirement, if a provider wants to install Network Nodes on city-owned Service Poles, the city can require a separate pole use agreement and can impose a rental fee of not more than $20 per year, per Service Pole.

Can a city charge an application fee?

Yes. A city can charge an application fee if it also requires an application fee for “similar types of commercial development” inside the city unless such fees are not allowed by law. The application fee cannot exceed the lesser of: (i) the city’s actual, direct, and reasonable costs it determines are incurred in granting or processing an application (cannot include costs of third-party legal or engineering review); or (ii) $500/application (for up to 5 network nodes), $250 for each additional network node per application, and $1,000/application for each pole.

Can a city receive compensation for the use of the ROW by the providers?

Yes, although the amount of the compensation is very limited. With regard to activities related to Transport Facilities for Network Nodes, activities of a network provider locating Network Nodes in the public ROW or installing, constructing, operating, modifying, replacing, and maintaining Node Support Poles in a public ROW, a city may charge an annual public ROW fee. The fee may not exceed $250 for each Network Node in the public ROW. A city may, at its discretion, charge a lower fee if it is non-discriminatory, is related to the use of the ROW, and is not a prohibited gift of public property. The annual fee may be adjusted by the city no more often than once a year by an amount equal to ½ of the annual change in the consumer price index.

The maximum fee a city can charge for use of the public ROW for Transport Facilities is $28 per node serviced by the Transport Facilities, per month, not to exceed the aggregate amount received by the city on a per-node basis.

Does a municipally-owned electric utility have to allow the Network Nodes on its poles?

Yes. The municipally-owned utility (“MOU”) must allow access to its poles by network providers. But the terms and conditions of such access are to be governed by a negotiated pole attachment agreement, including any permitting requirements of the MOU. The annual pole attachment rate is to be based on the pole attachment rate charged to other attachers, consistent with § 54.204, Texas Utilities Code.

What must a city do before September 1, 2017?

1. If the city intends to exercise design/appearance/aesthetic controls over the Network Nodes, it must have a design manual in place before September 1, 2017.
2. If the city has areas that are of historic importance, or if it wants to control the appearance of facilities in certain areas, it should consider adopting, by ordinance, standards for a historic district or a design district, and have those standards in place before September 1, 2017. Design and aesthetic standards on decorative poles within a design district should also be in place by that date.
3. If the city wants to adopt standards for when new Node Support Poles might be allowed in public parks or in residential areas, it should have those non-discriminatory standards in place prior to September 1, 2017.
4. The city should develop and adopt permit processing procedures to ensure that the shot clock requirements can be met. Procedures must be in place by September 1, 2017, as no delays or moratoria are allowed.
5. The city should determine the city’s actual, direct, and
   reasonable costs likely to be incurred in granting or processing a permit application. These costs should be reasonably related in time to the time they are incurred. Once the costs are determined, the city may impose a fee that is the lesser of its actual costs or $500/application (for up to 5 network nodes), $250 for each additional network node per application, and $1,000 for each pole.

Without a doubt, SB 1004 presents some challenges. Cities should take advantage of the lead time available this summer to get ready for this new chapter in the continuing saga of public right-of-way management and communications providers.

Georgia Crump is the Chair of the Firm’s Energy and Utility Practice Group. Georgia assists cities with developing and implementing right-of-way management practices relating to telecommunications, gas, and electricity. If you have any questions related to these areas or would like additional information, please contact Georgia at 512.322.5832 or gcrump@lglawfirm.com.