John W. Pestle | Ronald G. DeWaard | Dale R. Rietberg |
Varnum, Riddering, Schmidt & Howlett LLP |

William C. Mathewson | General Counsel for the Michigan Municipal League |

John H. Bauckham | General Counsel for the Michigan Townships Association

Michigan Townships Association (MTA)

It is appropriate that municipalities, which are charged with the burden of maintaining the rights-of-way, be compensated to ameliorate this injurious interference. Also, the state has the authority to impose the permit and maintenance fee requirements under Act 48 despite any claim under Act 129 is part of its inherent police powers. Finally, the permit and maintenance fee requirements of Act 48 do not impermissibly impair the contract rights claimed by incumbent providers under Act 129. Under the moderm interpretation of the
Contract Clause, which has been adopted by this Court, the incumbent providers (ILEC’s) cannot successfully claim that Act 48 unconstitutionally impairs an alleged contract right they received under Act 129.The answer to the second question posed is “yes.” The Oversight Authority, as established in Act
48, is duly constituted as a metropolitan authority under Article VII, Section 27 of the Michigan Constitution. The creation of the Oversight Authority satisfies the technical requirements of Section 27 since it applies to a metropolitan area and perfonns multipurpose functions. Moreover, the Oversight Authority is consistent with the intent of Section 27, which was to recognize the state legislature’s ability to create customized forms of government as necessary to address problems that could not be addressed through existing units of government, such as the unique situation addressed by the Act. The answer to the third question posed is “yes.” The Oversight Authority, possessing the powers and duties provided for in Act 48, is a constitutional exercise of the legislature’s powers consistent with Article VII, Section 29 of the Michigan Constitution. Act 48 is not inconsistent with any of the express provisions of Section 29, and it also preserves municipal control of the local rights-of-way through its permitting procedures. Moreover, the requirement under Act 48 that permits for use of rights-of-way not be unreasonably denied is consistent with Section 29 because that section expressly requires that municipalities’ control of rights-of-way be reasonable. This Court has also specifically held that municipalities’ right to consent to the use of the rights-of-way must be exercised in a reasonable manner.
The answer to the fourth question posed is “yes.” The annual maintenance fee required to be paid by telecommunications providers under Act 48 constitutes a valid fee which does not require voterapproval under Article IX, Section 31 of the Michigan Constitution. Act 48 does not implicate the
Headlee Amendment because it is a user fee and not a tax. The maintenance fee in Act 48 is a user fee and not a tax because the Act serves a regulatory rather than a revenue raising purpose. The maintenance fee cannot be characterized as raising revenue since it is limited to partial recovery of the costs associated with the providers’ use of the rights-of-way. The purpose of Act 48 is also regulatory because the Act’s
primary purpose is to regulate use of the public rights-of-way by telecommunications providers. The maintenance fees are further not a tax, but a user fee, because they are proportionate to the cost of the service used. Providers are charged proportionately based upon the length of the rights-of-way which they use. Finally, the maintenance fees are not a tax because they are voluntary. It is ultimately the providers’ decision whether they wish to place or leave their telecommunications lines in the public rights-of-way or put them elsewhere. The providers also have the option of choosing to provide their service by other means, such as cell phones, which do not use public right-of-way.

On order of the Court, the Court having on May 28, 2002 granted the request by the House of Representatives for an advisory opinion and briefs amicus curiae having been filed and reviewed, the order of May 28, 2002 is VACATED and the Court respectfully declines to issue an advisory opinion.

The Michigan House of Representatives requested an advisory opinion on PA 48 of 2002 addressing each of four constitutional questiona. At its core, Public Act 48 makes a simple yet profound change in Michigan’s telecommunications law: it establishes a uniform statewide right-of-way fee. Under current law (the 1995 amendments to the MTA), the statutory language requires each telecommunications provider to pay fees to a municipality in an amount no greater than the “fixed and variable” costs of maintaining the public rights-of-way in each municipality where the provider has lines. Thus there was a different fee for each municipality due to the different right-of-way costs incurred by each. Some believed the differing fees among municipalities deterred and/or delayed broadband investment. A frequently cited example involved a
hypothetical fiber optic telecommunications network that would encircle the Detroit metropolitan area. Such a network would traverse approximately 100 communities, each of which would have a different fee, some with multiple levels of fees depending upon the exact street being used. Adding to the
perceived difficulty was the lack of a common-and agreed upon-methodology to determine the costs and thereby compute the applicable fees.Public Act 48 resolves this problem by setting a uniform statewide fee (generally 5 cents per foot
of right-of-way used by each telecommunications provider) as partial compensation for the costs the provider’s usage causes. In addition, providers claiming grandfathered franchises are expressly made”subject to the permit and fee requirements of this act.” Act 48, Section 5(2). Because the fee is paid by
all providers, including the ILECs, and because the amount of the fee is fixed, the cost/fee uncertainty is resolved. At the same time, the Act directs the new Oversight Authority (to which the fees are paid) to distribute the funds to participating municipalities using a statutory formula which generally reflects the amount, cost and complexity of the rights-of-way within each municipality. To make this approach work, the new Oversight Authority created by the Act is given the
“exclusive power to assess fees on telecommunications providers … to recover the costs of using the rights-of-way.” Act 48, Section 3(3). Once per year the Oversight Authority is required to distribute the fees it receives (100 percent) to municipalities. Section 8(2) and (3). Municipalities are required to use the funds they receive “solely for rights-of-way related purposes.” Section 10(4). Providers may in many cases recover the cost of their fees through a credit against the utility property tax they would otherwise pay. Section 8(14)-(17).