West Linn staff rewrite right-of-way code; AT&T and Verizon raise legal, fee concerns

City staff presented a comprehensive rewrite of West Linn’s right-of-way code on April 21, proposing to move from a mix of long-standing franchise agreements to a standardized utility license and registration regimen that would clarify fees, audits, insurance and recordkeeping. Telecommunications companies attending the work session signaled they will submit written legal comments before the scheduled adoption hearing.

Stephanie Hastings, finance department staff, told council the rewrite responds to gaps that emerged after the city adopted a license-based approach in 2021. "We found that some protections that existed in franchise agreements were not carried over into the code when franchises were replaced by licenses," Hastings said. The proposed ordinance would add explicit language on utility provider registration, license terms, recordkeeping and auditing to protect revenue remittance, and would clarify construction, relocation, maintenance, insurance and indemnification requirements so staff can manage the right of way consistently across providers.

Staff also proposed a fee structure and related master-fee changes: the city would keep its existing gross-revenue percentage approach for usage fees but add a minimum fee for operators that use the right of way but report no gross revenue, and it would add a small-cell permit fee consistent with Federal Communications Commission (FCC) limits. Staff noted the FCC sets maximum permissible small-cell fees under the agency's small-cell orders and the city is constrained by those federal limits.

During a public-comment period, two telecommunications-company representatives urged the council and staff to clarify legal authority and fee structure before adoption. Meredith Pabst, representing AT&T (written comment submitted and presented orally), said AT&T does not own fiber in West Linn’s right of way but contracts for backhaul and asked the city to be careful not to impose a usage fee on providers who do not themselves operate facilities in the public right of way. "If a company does not own or operate facilities in the right of way, charging a percentage-of-revenue fee for privilege of doing business raises legal questions under state case law and municipal practice," Pabst said, adding AT&T would send a detailed letter to staff.

Leila Vega, representing Verizon, reiterated similar points and emphasized federal constraints on fees for wireless deployments. Vega pointed to FCC rules and case law in which courts evaluated whether a fee is tied to an "actual use" of right-of-way facilities and cautioned that a revenue-based fee could run afoul of the FCC’s cost-based fee framework for small wireless facilities and related doctrines. "Charging providers who are customers of a fiber backhaul service could create double-counting and administrative challenges," Vega said. Verizon also raised concerns about the city treating providers and infrastructure owners differently in fee treatment and asked for clearer exemptions and administrative rules.

Staff described current utility revenue sources to give context: the largest franchise remittances come from the electric utility (PGE) and natural-gas utility (Northwest Natural); telecommunications franchise revenue is a small fraction of total right-of-way payments. Staff said Comcast remains subject to a traditional franchise under federal rules and is not included in the ordinance.

Council directed staff to accept and review written comments from the telecommunications companies and scheduled a public adoption hearing on May 12. Staff said it will return with refined ordinance text, a separate master-fees resolution that will set the schedule of charges, and legal analysis addressing the points raised by commenters. Nancy Werner of Bradley Werner LLC, the city’s consultant on the revision, will be available to answer legal questions at the adoption hearing.

The session did not adopt the ordinance; the council gave staff direction to proceed with the May 12 hearing and requested the written industry comments. The council emphasized that the city intends to follow applicable state and federal law in any final ordinance.

Key authorities and legal issues raised in public comment (as described by commenters): - State and municipal precedent that a privilege/percentage-of-revenue fee generally requires an "actual use" of the right of way (commenters referenced Quest v. Portland and League of Oregon Cities guidance). - FCC small-cell orders and related rules that set permissible fee limits for small wireless facilities and require fees to be cost-based in certain contexts (commenters cited FCC small-cell guidance dating to the 2019 order). - State corporate activity tax preemption concerns for local privilege taxes, which commenters said affects how municipalities may levy business privilege taxes.

Next steps: staff will accept industry letters and return on May 12 with a revised ordinance, a proposed master-fees and charges resolution and legal analysis; the council will hear public testimony and may adopt or revise the ordinance at that meeting.