Rochester Wrongly Calculates Its ROW Costs, Say Crown Castle, Extenet, Verizon

Rochester, New York's Sept. 8 opposition, denying the allegations of plaintiffs Crown Castle, Extenet and Verizon that the city imposes excessively high fees on telecom providers in violation of federal law (see 2309110005|), rests its entire case on a misinterpretation of the FCC’s September 2018 “barriers” order, said the plaintiffs’ reply Friday (docket 6:19-cv-06583) in U.S. District Court for Western New York in Rochester.

The reply was in support of the plaintiffs' motion for judgment on partial findings, to exclude evidence, and for discovery sanctions against the city. Rochester wrongly asserts the FCC's barriers order requires only an approximation of a city’s costs in calculating its telecom fees, and doesn’t require “any particular type of cost accounting,” said the plaintiffs.

The city is wrong, said the plaintiffs, because the FCC’s use of the word “approximation” in the barriers order isn’t “a catch-all safe harbor allowing local governments to justify fees based on undocumented, purely speculative estimates.” The barriers order requires that a city’s fees be a “reasonable” approximation of the costs, they said. Those costs must also be “objectively reasonable,” “actual and direct,” and “specifically related to and caused by the deployment” of the relevant telecom facilities, they said.

Though the barriers order “gives leeway to municipalities in the manner that they account for costs,” it requires that the costs be known and caused by the facilities at issue, “so that the reasonableness of the fees can be determined,” said the plaintiffs. Rochester’s claimed costs are “none of those things,” they said. The city already recoups its one-time, nonrecurring costs through a $2,000 permitting fee “but nevertheless seeks to recover them again through its annual recurring fees,” they said.

The trial evidence also shows the city intended to charge an alleged “fair market value rental” fee for use of the public rights of way, said the plaintiffs. But when the barriers order made clear that “fair market value” fees weren’t allowed, the city “simply changed the name of the annual fees without substantially altering the structure or amount,” they said.

Rochester then went about trying to justify these fees as cost-based, said the plaintiffs. But it faced “a significant problem” because the city didn’t track its costs associated with telecom in the ROW, they said. The method the city devised to justify its already-adopted fee amounts “was haphazard, post hoc, untestable, and untrustworthy,” they said.

The barriers order “demands more than this type of ad hoc process for counting costs,” said the plaintiffs. The cost-based standard otherwise “would devolve into pure speculation, as it did in this case,” they said. When reviewed under the proper cost-based standard that the barriers order articulated, Rochester’s exercise “is plainly inadequate,” they said. The plaintiffs therefore are entitled to be granted judgment under Rule 52, they said.

Judgment can also be entered for the plaintiffs because the evidence that the city relied on to meet its burden is “inadmissible,” said the plaintiffs. The city argues the evidence it presented in a spreadsheet of its ROW costs isn’t hearsay “because it reflects factual findings of a legally authorized investigation,” they said. But there’s no evidence in the record of the city or state authorizing the steps Rochester took to put together the spreadsheet, they said. Nor does the spreadsheet “represent factual findings,” they said.

Rochester also misstates the facts “regarding its spoliation of evidence,” said the plaintiffs. The city created its spreadsheet in April 2019, continued to edit it up until September 2020, and then produced the final version during discovery, they said. But all “prior iterations” of the spreadsheet “were destroyed as the document was edited, a process that admittedly continued while the lawsuit was pending,” they said. All the city’s “discovery violations” warrant sanctions from the court, “including the exclusion of evidence and adverse inferences,” they said.