Texas Supreme Court justices say they won’t decide whether two state laws give an illegal discount to telecommunication companies — because the nearly 60 cities challenging the statutes in a lawsuit shouldn’t have sued the state of Texas in the first place.
The court ruled Friday the plaintiffs — which include the cities of Dallas, Austin, San Antonio, Houston and El Paso — can’t just name the state as a defendant in a lawsuit challenging the constitutionality of two laws the Texas Legislature passed in 2017 and 2019 that capped costs for providers.
The cities should have named a specific officer or agency with the authority to enforce those laws, like the Public Utility Commission, or even the telecom companies themselves in order to give the court a way to concretely resolve the dispute, the justices ruled.
“If the wrong parties are before the court, the judgment’s binding force will not resolve the dispute in the real world,” Chief Justice Jimmy Blacklock wrote. “Here, if the cities want the courts to bind the telecom companies to pay the higher rates, they may consider seeking a judgment against the companies.”
It brings an unceremonious end to nine years of litigation over the issue. Blacklock wrote the case could be revived if the plaintiffs name a proper defendant.
KERA News reached out to the Office of the Attorney General and an attorney for the cities and will update this story with any comment.
Network nodes are typically installed on street lights or utility poles 30-40 feet above the ground, enabling 5G wireless services.
State lawmakers passed Senate Bill 1004 in 2017. It lets wireless network providers install nodes in public rights-of-way — like roads — and allows cities to charge the providers an annual right-of-way rate of $250 per node.
Lawmakers passed Senate Bill 1152 two years later. Instead of companies providing both cable and telecom services paying cities to deliver both services, the law allowed companies to only pay whichever charge was higher.
Cities soon sued Texas, arguing those laws violate "gift" clauses in the state constitution. The clauses ban the Legislature from authorizing political subdivisions, like cities and counties, to give public money or things of value to private corporations without sufficient consideration and public purpose.
The cities argue the $250 cap on rates is significantly lower than market value — which they say is anywhere from $1,000 to $2,500. That, they say, amounts to an unconstitutional gift to the telecom companies.
"The (Texas) Constitution says you can't give public property away for free," Bob Heath, one of the plaintiffs' attorneys, told KERA News earlier this year. "That's exactly what's going on here."
The Austin-based Third Court of Appeals declared SB 1152 unconstitutional and ruled the trial court needed to further consider whether the $250 rate cap in SB 1004 was adequate.
Texas argued in part that the companies are not receiving a gift if they will be charged. The state also says the cities lack standing to bring their suits because the state doesn’t enforce the fee caps — and Texas owns public roads, not the cities.
The Texas Supreme Court ultimately sided with this reasoning. Plaintiffs who are affected by state laws often sue to question a law’s constitutionality, and the state of Texas can participate in the litigation if it chooses.
But sometimes, the court ruled, neither the state or any state agencies are a proper defendant. And the telecom companies could easily ignore a ruling in this case because they’re not involved in it.
“The judgment sought in this lawsuit would therefore not redress the cities’ injury or resolve the real-world dispute animating this litigation. It would merely declare the position of the judiciary on the legal question the cities raise,” Blacklock wrote. “But that is not what courts are for.”
Toluwani Osibamowo is KERA’s law and justice reporter. Got a tip? Email Toluwani at tosibamowo@kera.org.
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