Rochester Didn’t Show Its Telecom Fees Reasonably Approximated Its Costs, Judge Finds

U.S. District Judge Elizabeth Wolford for Western New York in Rochester found in favor of Crown Castle, Extenet and Verizon on their consolidated claim that Rochester violated Sections 253 and 332 of the Telecommunications Act in the unlawful manner in which it assessed fees for telecom deployments within its jurisdiction, said her signed decision and order Tuesday (dockets 6:19-cv-06583, 6:20-cv-06866 and 6:20-cv-07129). A two-day bench trial was convened in early June (see 2212200065).

Rochester failed to meet its burden of showing that its wireless deployment fees are a reasonable approximation of the city’s actual costs of maintaining the rights of way used or occupied by telecommunications service providers, as sections 253 and 332 require, said the judge’s decision and order. But she denied the plaintiffs’ requests for discovery sanctions, based on their contention that the city sought to present testimony that relied on documents that were either destroyed or that it didn't produce during discovery.

Rochester relied on its cost spreadsheet to demonstrate that the fees charged in its telecom code are a reasonable approximation of its costs. But the court determined that the cost spreadsheet is “inadmissible hearsay,” as Crown Castle, Extenet and Verizon argued throughout the case, said the decision and order. For that reason alone, the city can't “bear its burden,” and the plaintiffs are entitled to judgment that the city has violated sections 253 and 332, it said.

Even assuming that the cost spreadsheet was admissible, it still wouldn’t be sufficient to demonstrate “by a preponderance of the evidence” that the fees at issue are a reasonable approximation of the city’s actual and direct costs related to the deployment of telecommunications facilities, said the decision and order. The city wasn’t required to follow “any particular accounting method” in estimating its costs, it said. But it’s “apparent” that the cost spreadsheet “is based virtually entirely on speculation and guesswork,” it said. It also was designed “not to be an accurate reflection” of the city’s actual costs, “but as a post hoc justification for the fees already enacted” into the telecom code, it said.

The problems with the methodology the city used to estimate its costs “are numerous and apparent,” said the decision and order. With respect to personnel costs, the court can’t find it reasonable to “simply defer to the judgment” of unnamed, untrained Rochester employees as to what tasks they perform that are directly attributable to telecommunications deployments, it said.

The internal city communications in the record “make it abundantly clear that many of the employees who were asked for such information were unable to make such determinations, or struggled to even understand what information they were being asked to provide,” said the decision and order. These employees were encouraged to characterize as much of their work as possible as being performed in the right of way, “in order to justify the fee structure that had already been passed into law,” it said: “A reasonable estimate cannot be produced where the underlying data is wholly unreliable.”