State of Washington
Washington Utilities and Transportation Commission
In the Matter of: )
Access To Premises ) UT -99990146
COMMENTS IN OPPOSITION TO STAFF PROPOSAL AND
REQUEST FOR LEAVE TO FILE ADDITIONAL
BUILDING OWNERS AND MANAGERS
While the proposed rule referenced above (staff proposal) purports to establish
rules against exclusive telecommunications contracts and address uncooperative
relationships among telecommunications service providers (TSPs), the proposal, if
adopted, would result in mandatory access to office buildings, a per se taking of private
property. The Building Owners and Managers Association, International (BOMA I)
respectfully joins our members from BOMA Seattle and BOMA Spokane in submitting
these comments in opposition to the staff proposal on mandatory access. We also request
1 Founded in 1907, the Building Owners and Managers Association (BOMA) International is a dynamic
federation of 101 local associations whose nearly 20,000 members own or manage over 8.5 billion square
feet of downtown and suburban commercial properties and facilities in North America. The membership --
composed of building owners, managers, developers, leasing professionals, facility managers, asset
managers and the providers of goods and services -- collectively represents all facets of the commercial real
leave to document these points with further research that has been previously conducted
on behalf of real estate and for other regulatory and legislative bodies on the issue of
Market forces demand, and history documents, that building owners have met their
tenants’ requests for alternative TSPs. BOMA asks the Commission to reject efforts to
force private property owners to permit telecommunications providers to place their
equipment on or inside a building without the building owner’s consent.
The record from numerous hearings and proceedings of the U.S. Congress, the FCC,
numerous state legislatures and public utility commissions establishes2:
1. Absent legislative delegation of specific power, telecommunications regulatory
agencies lack the legal authority to regulate building owners, let alone the
authority to deprive a party of their constitutionally protected property rights.
2. Regulatory bodies should not seek to regulate a highly competitive business, such
as real estate, simply because they are frustrated by the inability or refusal of
TSPs to cooperate in meeting tenants’ needs or the refusal of TSPS to cooperate
in providing tenant choice;
3. Building owners have promoted the choice of TSPs to their tenants3. When
asked 98% of tenants indicated that the building owners assisted them in
obtaining service from the provider of their choice;
2 All of real estate’s filings before the Congress and FCC may be downloaded form the Real Access
Alliance homepage at www.realaccess.com.
4. The staff proposal, despite the efforts to camouflage the taking as tenants’ rights
regulations, is a mandatory access proposal and as such has been found by the
U.S. Supreme Court in Loretto to be in violation of a building owner’s
constitutionally protected property rights.
5. The delay in affording tenants a choice in service providers may be directly
attributed to TSPs’ failure to meet deployment time frames for choice in office
buildings; their downright refusal to deploy infrastructure to meet residential
needs; and the inability of incumbent and competitive providers to resolve their
3 Building owners and managers of America's real estate increasingly are focused on improving wire
management within buildings and targeting investments in what is sometimes called "smart building"
technology. The highly competitive office market demands no less of owners, who by nature are inclined
to satisfy their tenants by providing ample access to the expansive array of telecommunications products
and services needed to facilitate information flows.
In acknowledgment of this investment prerequisite, a number of real estate owners have even devised
systems on a building-specific basis that provide cabling (copper or fiber optic) that is accessible to any and
all telecommunications providers; this approach is one of the most cost-effective means of ensuring that
tenants have the widest possible access to the ever-proliferating number of service providers.
For example, the 31-story, 400,000-square-foot office building located 55 Broad Street in lower Manhattan
used to be a "hollow headstone for the Eighties." It was vacant for more than five years following the
bankruptcy of its anchor tenant in the late 1980s. New York City's moribund downtown real estate market
left little hope that the building could ever return to life again. That was before it was retrofitted by its
owner (at a cost of more than 15 million dollars) with fiber optic and high-speed copper wire as well as
ISDN, T-1, and fractional T-1 lines to enable Internet, LAN and WAN connectivity; voice, video and data
transmissions; and satellite accessibility. The building owner suggests that prospective tenants need only
"plug in," and this message has been getting the attention of potential tenants as far away as the West
Of course, many other building owners prefer not to get into the business of owning or operating
telecommunications facilities. But this does not mean they ignore the occupants' needs. The simple facts
are that commercial tenants have considerable leverage when negotiating lease terms and that no
commercial building owner will refuse a technically and financially feasible request from a tenant that
conforms to the owner's business plan for the property. Even during the lease term, it is important for
building owners and managers to keep their customers satisfied. Happy tenants are more likely to renew
their leases and less likely to break them -- and building operators have a strong incentive to reduce the
administrative costs and disruption that accompany high turnover rates.
Size and Competitive Nature of Real Estate
BOMA represents the entire office-building sector of commercial real estate. We
speak for the developers, builders, managers, and financiers of office real estate. Along
with our colleagues in residential real estate, we are a cornerstone of the U.S. economy,
producing 12% of the nation’s GDP, and employing nearly nine million Americans. We
are also the source of seventy percent (70%) of the tax base for most states.
While these comments are filed only on behalf of BOMA (because of the time
constraint we find ourselves in), the attachments and research as well as the record before
the FCC, and within the numerous states, makes it clear that real estate stands united in
asking this and government to reject all proposals to extend regulation to our industry in
the name of deregulating the telecommunications industry.
Regulation, let alone taking our property, is wholly inappropriate because the real
estate industry is competitive and adapts daily to market-place price signals and customer
demand. In 1996, the Federal Trade Commission found the real estate sector was
sufficiently dispersed in ownership that no entity exercised enough market power to
warrant pre-merger notification of federal antitrust authorities. In fact, no single entity
controls more than five percent of the real estate industry’s assets. This stands in stark
contrast to other major sectors of the economy, especially telecommunications.
Computing power, networking technology and smart buildings are revolutionizing
the way office space, shopping centers and apartment buildings are being designed,
managed and operated today. These changes in technology — along with other major
political and economic developments — add up to enormous opportunities and
challenges for our industry as well as for telecommunications providers.
Our industry welcomes the focus on consumer choice that telecommunications
companies bring to the market. It parallels our own interest in giving tenants what they
want and need in the way of new telecommunications services. Tenants today demand
the most advanced technologies for data and messaging capabilities at the most
affordable cost — needs that the real estate industry is working hard to meet.
BOMA Opposes Forced Access.
The real estate industry supports reasonable policies to advance competition in
telecommunications. The real estate industry benefits from telecommunications
competition. We want it to expand as quickly as the markets will allow. Cheaper, better
telecommunications service will improve the services available to our building
occupants, the health of our occupants’ businesses, and the health of the economy in
general. In our view, however, the current proposal to mandate forced access to private
property for a privileged group of telecommunications companies is unnecessary,
inappropriate, and unconstitutional.
There are no significant market obstacles in real estate that prevent
telecommunications competitors from reaching tenants. The only issue is the speed of
network build-out by competitive telecommunications providers. These networks are
expensive to build and may be economically viable only in highly concentrated business-
core regions. To expand these networks more broadly and more expeditiously may
require some form of additional subsidy to reduce the relative costs of the networks. Any
effort to find a source of subsidy for expediting network construction, however, should
not be confused with allegations that forced building access is justified by the behavior of
the real estate industry. There is, in fact, no evidence that building access is affecting the
rate of competitive telecommunications network expansion. The evidence instead
indicates that demand by building owners and their tenants for service by competitors is
outstripping the competitors’ ability to provide the service. The competitive
telecommunications companies are growing as fast as they can under current economic
conditions and present building access policies are not slowing growth in
The staff proposal before the Commission, however, will distort the existing free
market forces that shape capital investment in real estate ventures. Tenants and occupants
want buildings that offer modern facilities and services, including choice in
telecommunications providers. Building owners who ignore this demand will lose
occupants to competing buildings. The proposals before the Commission will distort the
market forces that discipline owners and building managers to act in the best interests of
―Forced access‖ is industrial policy in search of a source of subsidies to fund
selected telecommunications companies. It is rhetoric of false alarms and misleading
anecdotes in search of non-existent problems. If the Commission believes
telecommunications providers need a subsidy to expand competitive networks, the
Constitution requires the cost of the subsidy to be fairly distributed across the entire
society, not arbitrarily assigned to the owners of real estate.
Our conclusions are built on a mass of evidence including five separate studies
that are both attached hereto and which we seek to fully file within the next two weeks.
1. Survey of Competitive Availability.
BOMA4 commissioned a survey of available telecommunications competition, as
it exists for building owners today. This survey, conducted by Strategic Policy Research
on behalf of the Real Access Alliance, and attached hereto as Attachment 1, demonstrates
among other points of interest that:
91% of tenants are aware that they have choice for local service;
Less that 1% have every indicated any obstacle to their receiving services from
Almost 40% of tenants will leave a property if that property does not meet their
This research alone demonstrates convincingly that the staff proposal is based on false
assumptions about the market place and that the claims of the proponents of the proposed
rules have no basis in fact. The survey is drawn on research that is less than two months
old. In fact the research was filed with the FCC on February 23, 2001.
Attachment 1 is but the most recent research effort of the real estate industry to document
that the tenants needs and desires are being met. Attachment 2 is an excerpt of the Real
Access Alliances August 1999 filing with the FCC, which summarizes numerous other
research efforts conducted by real estate.
4 While we identify BOMA as the party commissioning much of this research, as the Commission will see
when filed, a great deal of the research was done by the Real Access Alliance of which BOMA is a very
proud and active member. All the research may be downloaded from www.realaccess.org.
As reflected in greater detail in Attachment 2, all the surveys were statistically valid,
random sampling of building owners and managers, which showed that:
Two-thirds of all requests for access by telecommunications providers have resulted
either in an agreement or pending negotiations.
Specialized telecommunications access agreements do not take substantially longer to
negotiate than ordinary tenant leases.
82% of building owners and managers cite tenant-related reasons (choice,
satisfaction, retention) as their primary motivation for offering competitive
The allegations and anecdotes of unreasonable behavior by building owners are not
2. Economic Policies do not support Telecommunications Access to Private
BOMA International provided the Federal Communications Commission and the
United States House of Representatives with expert economic analysis of their various
forced access proposals. The testimony of Chip Shooshan and John Haring of Strategic
Policy Research is attached hereto as Attachment 3.
We share the Shooshan/Haring analysis with this Commission as you are
considering a nearly identical rule and the conclusion of that analysis is that the forces of
competition are already adequately addressing building access.
The economic analysis discusses the economic theory of market failures that
warrant regulatory intervention, and finds that the real estate industry is competitively
structured, with very low levels of economic concentration, and that there is no evidence
of market failure. Economic theory teaches that market prices and voluntary negotiations
are the most efficient and responsive mechanisms for accelerating delivery of competitive
telecommunications services to building occupants. Regulatory intervention would
interfere with these market forces, which discipline building owners and managers to act
rationally and in the best interests of their occupants, and would stifle innovation and
creativity in the marketplace.
The economic analysis finds that Commission intervention is unwarranted
because local telecommunications competition is thriving. In addition, the proposals in
the staff proposal are ultimately unworkable because of the large number of properties
and the complexity of the relationships involved. The analysis also observes that if the
Commission were to compel building owners to supply access to buildings on terms and
conditions below those at which they would otherwise be voluntarily willing to make
such access available, they would then be compelled to effectively subsidize the business
activities of others, such as competitive telecommunications providers. The current
proposal before the Commission is therefore a request for a hidden subsidy in the form of
below-market prices for access to capital investment, masquerading as consumer
3. Legal Analysis of the Relationship between Building Owners and
Telecommunications Facility Providers on the Premises.
In Attachment 4, BOMA shares with the Commission an analysis of the real
property concepts underlying the access and use rights of telecommunications providers
that was also prepared for the Federal Communications Commission to clarify the real
property issues involved in rights of way, versus easements, versus license. BOMA
International believes that this analysis will be an aid to the Commission as it looks at
questions outside its area of expertise.
We believe the Commission needs first to understand the legal history of existing
property and contractual rights before addressing proposals that would radically change
those rights and interests.
Most telecommunications facility providers currently enter our buildings as
invitees. State property law governs the relationship. The providers typically hold a
limited privilege to occupy the physical space. Seldom does their interest inside a
building rise to the level of an easement. It is best characterized as a ―license coupled
with an interest,‖ which gives the provider the right to occupy the building with its
facilities and protects the provider’s property rights in those facilities by limiting the
owner’s ability to revoke the license. These rights cannot be readily expanded under
4. Constitutional Analysis of Private Property Rights and Forced Access.
Finally, in Attachment 5, BOMA seeks to share with the Commission a review of
the constitutional restraints on your ability to regulate the owners of private property.
The Fifth Amendment to the United States Constitution as applied to the states
through the 14th Amendment, as well as the State of Washington’s own constitutional
prohibitions on uncompensated takings requires government to pay the entire value of
any private property that is confiscated for a governmental purpose. The Supreme Court
in Loretto, the leading case in this area leaves no ambiguity on this point. If the State of
Washington wants our property, it can take it—but it has to pay full value. The societal
consensus that underpins the ―takings‖ obligations of the government is simple. The
burden of governmental actions should be shared equitably by all, not imposed unfairly
on a few. The constitutional analysis we will provide concludes that no matter how
government at the Federal or State level might try to structure it, any forced access
proposal would effect a taking of private property and impose massive liability on the
federal or state treasury.
Further, this Commission has no explicit statutory authority to mandate a taking
of private property. The courts are clear. Takings authority must be explicit and is
narrowly construed. There is no evidence of legislative intent to grant the Commission
authority to condemn private property and to dedicate that property to the privileged use
of telecommunications companies. There is no budget authority or appropriations
authority to fund any takings the Commission does order.
The Commission should avoid this ―takings‖ quagmire. The financial risks to the
real estate industry and to the general taxpayer are enormous. Current surveys reflect that
property access rights are just beginning to generate noticeable revenues for building
owners—about $.12/square foot of office rental space per year. But there are 8.5 billion
square feet of office property and countless billions of square feet of residential property
in the United States. As building access enhances the values of telecommunications
companies, this number is certain to grow. A direct or inverse condemnation of this
growing value would generate large yearly liabilities to the United States Treasury.
Forced access would alter the fundamental principles underlying the law and
business of real estate markets in the United States. This is an odd and infrequent
adventure by any regulatory agency.
A better approach is for the Commission to address directly the true nature of the
problem faced by the Commission in extending telecommunications competition. The
essence of this proceeding is the question of subsidies. Competition is not being retarded
by lack of access to office and residential buildings. The question is whether competitive
telecommunications companies need subsidies to compete? If so, how much and how
should they be funded? Forced access proposals implicitly assume that the market alone
will not sustain competitive network facilities. Does the Commission believe that
competitive providers cannot pay the full value of the resources they consume as they
create competitive networks? If so, the Commission may favor an industrial policy of
accelerated telecommunications infrastructure development. But this policy preference
does not give the Commission the authority to grant implicit subsidies to favored
telecommunications operators. Even more, it does not authorize unconstitutional
transfers of private property values from building owners to favored telecommunications
If the Commission adopts the approach proposed in the staff proposal, the general
taxpayer will have to pick up the financial tab. Neither the Washington Legislature nor
the courts are likely to favor a policy that could impose an unbudgeted and unpredictable
financial liability to the tune of billions of dollars on the taxpaying public.
The Building Owners and Managers Association, International urges the
Commission to act decisively and reject the pending staff proposal. The Commission
should allow the capital markets — both in real estate and in telecommunications — to
work without regulatory interference in this area. Forced access to private property for
the benefit of a few companies will distort the current, effective forces of real estate
competition that encourage building access by competitive providers.
Gerard Lavery Lederer, Esq., CAE
1201 New York Avenue
Washington, DC 20005
202 326 6351
Business Tenant Survey
Knowledge Systems and
Research, Inc. (KS&R)
For electronic version of filing see attached PowerPoint.
Status of Competitive Markets.
Except from Real Access Alliance FCC filing of August 19995
The Real Access Alliance finds it remarkable that the Telecommunications Act of
1996 (the ―1996 Act‖), a historic attempt to deregulate the traditionally highly regulated
telecommunications industry and replace historical monopolies with competitive markets,
is being used to justify anticompetitive regulation of an entirely different industry.
Congress neither intended nor foresaw this result.6
For these reasons, we strongly believe that this proceeding is unnecessary and
should be terminated without the adoption of new rules. The record in this proceeding
will demonstrate that regulation would be unwise and counterproductive; to assist the
Commission in recognizing this, the Real Access Alliance has compiled a mass of
evidence, including the following:
Competitive Access Survey. Charlton Research Company conducted a survey
of building owners on behalf of the Alliance between July 26 and August 4,
1999 (―the ―Charlton Survey‖). With a sample size of 316, the margin of
error of the survey is +\- 5.5%. The objectives of the study were to assess the
5 Total filing may be found at www.realaccess.org.
6 Public policy has long recognized free and open competition as the principal and preferred means of
regulating the nation’s economy. See generally, Otter Tail Power Company v. United States, 410 U.S. 372,
374 (1973); United States v. Philadelphia National Bank, 374 U.S. 321, 350-51 (1963); California v.
Federal Power Commission, 369 U.S. 482, 489 (1962); United States v. Radio Corporation of America,
358 U.S. 334 (1959).
level of access granted to competitive telecommunications providers by
building owners; gauge the length of time it takes to negotiate leases with
providers; and determine the primary motivation of owners and managers in
making competitive telecommunications services available to their tenants.
The Charlton Survey found that property owners normally grant requests for
access, primarily because they wish to respond to the needs of their tenants.
Access is granted in a timely manner, although negotiations may take
somewhat longer than normal lease negotiations. A copy of the survey report
is attached as Exhibit C.
Economic Analysis of the Forced Access Proposals. Strategic Policy
Research, Inc. has analyzed the proposals in the NPRM from an economic
standpoint and prepared a report, which is attached as Exhibit D (the ―SPRI
Study‖). The SPRI Study concludes that real estate is a competitive market
and demonstrates none of the normal signs of an industry with market failures.
The study finds that local competition is thriving. Forced access would
therefore constitute unwarranted public-utility style regulation of a
competitive market. In addition, the proposals pending before the
Commission are ultimately unworkable because of the large number of
properties and the complexity of the relationships involved.
I. COMMISSION ACTION IS NOT NECESSARY BECAUSE THE MARKET
The real estate and telecommunications industries present a stark contrast. The
real estate industry consists of thousands and thousands of businesses of every size, some
operating only in a single small community, others national and international in scope.
On the other hand, the telecommunications industry remains dominated by large
regulated utilities. Congress and the Commission have set out to infuse the
telecommunications industry with the competition and innovation characteristic of the
real estate industry.7 The Alliance welcomes this change because it will benefit property
owners, tenants and our entire society.
The Commission should let this process unfold naturally, without extending
regulation to currently unregulated enterprises. The real estate industry has compelling
market incentives to meet tenant demands for better and more competitive
telecommunications services, and it is responding to that demand. Furthermore, any
Commission attempt to regulate real estate investors will be counterproductive. The real
estate industry functions in a competitive market, fully responsive to consumer demand
and the wider society’s economic environment. Regulation should only be used as a
substitute for failed market forces in those few instances in which the market does not
function. Real estate and telecommunications access to private property is not such a
case, and Commission intervention would only distort the current and effective free
market forces without justification in economics, law or policy.
7 The purpose of the 1996 Act was ―to promote competition and reduce regulation.‖ Upon introducing the
floor debate on S. 652, which became the 1996 Act, Senator Pressler stated:
History teaches us that, under existing law, the FCC and the
courts have not been able to respond to market and technology
changes in an expeditious manner. This delay prevents the
consumer from gaining the benefits of competition, such as
lower rates, better services, and deployment of new and better
The courts, FCC and Justice Department have been micro-
managing the growth of competition in the
telecommunications industry. That is why the committee
believes [new legislation is needed].
Statement of Sen. Pressler, 141 Cong. Rec. 57885 (June 7, 1996) (daily ed.). If the Commission adopts
forced access it will not only be micromanaging the telecommunications industry, but the real estate
industry as well. It will certainly not be promoting competition.
A. The Real Estate Industry Is Competitive, Dynamic and Responsive to
Few industries are as competitive or entrepreneurial as real estate. The key inputs
are land and capital, both readily available in today’s marketplace. Other skills are
needed to transform those inputs into valuable properties, but the relative ease of entry
means that established players are always looking over their shoulders – or across the
street – to see what the competition is doing. This ease of entry also means that there are
literally thousands of small property owners and managers all across the country. The
existence of so many competitors of all sizes, scattered throughout every community,
makes the industry a model of free market economics. See SPRI Study at 2-4.
The federal government has already recognized the high level of competition in
the real estate industry. In 1996, the Federal Trade Commission modified its premerger
notification rules to exempt the real estate industry. Premerger Notification, Reporting
and Waiting Period Requirements, 61 Fed. Reg. 13666, 13674 (March 28, 1996). The
FTC concluded that the real estate industry was sufficiently competitive that no single
entity is likely to have enough market concentration to trigger antitrust concerns. This
conclusion is borne out by figures discussed in the SPRI Study. For example, the largest
building owner/management firm in the country only controls 5.5% of all the office space
in the country. SPRI Study at 4. The residential marketplace is even less concentrated.
Furthermore, owners of rental property compete not only with each other, but also with
all the businesses and public sector entities that own their own buildings and have the
option of expanding existing buildings or constructing new ones.
This lack of market concentration means that real estate developers are true ―price
takers.‖ They must respond to the demand of building occupants and cannot shape that
demand or price property developments independently of consumer preferences. Tenants
and building occupants have real alternatives to a landlord or developer that does not
respond to the tenant’s requirements. First of all, the range of properties available to
potential tenants is enormous. Not only is the industry diversified by type of property:
office, apartment, shopping center, industrial park and so on, but there is a great variety
of different buildings in each geographic area and within each category. For example,
there are 1,397 buildings in downtown Manhattan alone. SPRI Study at 3. This means
that prospective tenants have meaningful alternatives, if a building owner is unable or
unwilling to meet their needs, whether it be for more space, cheaper space,
telecommunications service, or anything else. In economic terms, buildings are a
substitutable commodity, and demand for space in any one building is likely to be highly
elastic. SPRI Study at 3-4.
Second, tenants are not tied down. If the building owner refuses a tenant’s
request for specific services, such as access to multiple telecommunications providers,
the tenant can leave -- in real time. Market forces keep lease terms short. The typical
residential lease is for one year only, and 33% of renters move every year; in some areas,
such as Florida, the annual turnover rate is easily 60% per apartment property owner.8
Most developers assume a 50% turnover rate when computing pro-forma financial
statements. This is obviously a highly fluid marketplace, and building owners must
respond to consumer preferences or face unoccupied space. Similarly, the average office
lease term is approximately three to five years, and businesses move frequently as they
grow. While not as high as in the apartment market, the average annual turnover rate in
office buildings is substantial. This means that new tenants — with new demands — are
8 See Statement of Lyn C. Lansdale (―Lansdale Statement‖) attached as Exhibit O.
coming into buildings constantly. The market is not static, but dynamic, and owners
cannot ignore their tenants, new technological developments, or changes in the market
just because they have signed leases with existing tenants.
Third, office tenants make their needs for telecommunications services very clear,
not only in initial lease negotiations, but during the lease term. Building owners have
strong incentives to avoid turnover in their buildings, and have no incentive to keep a
tenant’s preferred telecommunications provider out of the building, so long as safety,
aesthetic and liability concerns are met.9 Unreasonable owners can count on losing
The Commission itself has recognized in parallel proceedings that building
owners have strong incentives to meet their tenants’ demands for telecommunications
services. See Inquiry Concerning the Deployment of Advanced Telecommunications
Capability, Report, CC Docket No. 98-146, 14 FCC Rcd. 2398 (rel. Feb. 2, 1999), at ¶ 103;
Telecommunications Services – Inside Wiring, CS Docket No. 95-184 and MM Docket No
92-260, Report and Order and Second Further Notice of Proposed Rulemaking, 13 FCC Rcd
2659, 10 Comm. Reg. (P&F) 193 (1997), at ¶ 178. In fact, tenants are remarkably well
satisfied with the telecommunications services provided by their buildings. BOMA and the
Urban Land Institute conducted a survey of office tenants in 1999, which indicated that 89%
of office tenants are satisfied with the telecommunications services available to them. See
9 For a discussion of the kinds of concerns addressed in both negotiations for telecommunications access
and general lease negotiations with tenants, see the Declaration of Richard Stern attached as Exhibit G (the
What Office Tenants Want, 1999 BOMA/ULI Office Tenant Survey Report (―ULI Survey‖),
at p. 43.10
Some may argue that building owners have a financial incentive to deny tenants
services they want. This is not the case. Ancillary revenue from telecommunications
providers is not substantial enough for building owners to put tenant rent revenues at risk.
The base access charge reported by a national site management firm responsible for over
12,000 buildings averages only $300-$500 per month. See Stern Declaration at ¶ 10.
Similarly, average annual rent for office space is currently about $19.29 a square foot,
nationwide -– but revenue from telecommunications providers (including not just
CLECs but cellular and PCS antenna leases and other sources) averages only $0.12 per
square foot per year. BOMA International, Experience Exchange Report (1999) at 16,
25. This is 0.6% of a building’s total income. Id.
10 In the ULI Survey, tenants were asked to identify technology features that they needed but were not
available in their building. Only 11% identified any such features: the most common ones were
telecommunications capability, wiring for Internet access and high-speed networks, advanced HVAC systems,
security systems and redundant power supplies.
No rational property owner would jeopardize $19.29 to earn $0.12. There is no
marketplace evidence that building owners have any incentive whatsoever to keep service
providers off their properties. All of the economic incentives work in the other direction
-- building owners want and welcome new telecommunications services that can address
the requests of their tenants.11
Thus, there is powerful evidence that building owners continually respond to
tenant requirements, and Commission policy must recognize this fundamental fact.
B. Building Owners Are Giving Competitive Providers Access to Their
The NPRM is based on the false premise that CLECs are unable to obtain access
to properties. There is overwhelming evidence that building owners in fact allow
competitive providers into their buildings. Not surprisingly, building owners do so
because they want to satisfy their tenants.
The Charlton Survey demonstrates that lack of access is not a problem. The
Survey notes the following points:
Over 65% of the time, building access is successfully negotiated, or
negotiations are still in progress.
11 Ironically, until very recently, federal tax policy has deterred property owners from entering into
agreements with telecommunications providers. Under the Internal Revenue Code, a real estate investment
trust (―REIT‖) property owner must earn most of its income from real estate rents. Any income it derives
from providing customary services to its tenants is considered part of the qualifying real estate rents.
However, if the REIT provides ―non-customary‖ services to a tenant, not only is the income from the
service not qualifying, but also the underlying rents are ―tainted‖ and therefore not considered as ―good
rents‖ for the REIT tax tests. IRS rules thus have prevented REITs from receiving any payment associated
with ―non-customary‖ services, even if the payments were intended simply to cover the additional costs
arising from the presence of an additional provider on a property. The IRS has been slow in
acknowledging that the real estate market has evolved to the customer-oriented business it has become.
Only in January of this year did two office REITs get private letter rulings from the IRS in which it
concluded that fees the REITs received from partners that provide high speed internet and other telecom
services to the REIT’s tenants were qualifying income. Before that, REITs by and large did not sign access
agreements because of the possibility that they would be de-REITed, even if they did not receive any fees
from their joint venture partners. The IRS has yet to issue any private letter rulings allowing apartment
REITs to enter into similar arrangements, although several apartment REITs are now doing so based on the
office REIT private letter rulings.
13% of building owners report having requested service from a
competitive provider and being turned down.
Respondents have been contacted by a total of 134 providers; of these,
104 (or 78%) were granted access.
Over half the respondents have never denied access to a provider; only
37% have denied access, many on only a single occasion.
Respondents gave the following reasons for denying access:12
- Breakdown in negotiations: 33%
- Provider problem: 21%
- Space and security issues: 19%
- No tenant demand: 15%
82% of respondents gave as their primary reason for granting access either
tenant interest, or the desire to keep the building competitive. Only 9% cited
revenue as their primary reason.
Specialized telecommunications access agreements take an average of less
than five months to negotiate, compared to three months for ordinary tenant
We invite the Commission to examine all the survey results carefully: They show
that building owners are treating competitive providers fairly and reasonably.13 Owners
rarely turn providers away, and when they do it is for sound business reasons.
The Charlton Survey is by no means the only evidence that the alleged problem
does not exist. The CLECs themselves routinely trumpet their success in executing
12 This is real evidence that when access is denied it is for a valid reason. Even assuming that negotiations
broke down because the owner was unreasonable in half the cases where that factor was cited, over 70% of
the time access was denied for entirely sound business reasons relating to the building, the provider, or
demand for the service.
13 The National MultiHousing Council recently conducted an informal survey of its members, inquiring
about their experience and policies in allowing competitive telecommunications providers’ access to their
buildings. The respondents represented over 3600 buildings and nearly 860,000 apartment units in 48
states plus the District of Columbia. Every company has entered into agreements with at least one
agreements with property owners. The following list refers to just a few of the many
recent press releases on this topic:14
On August 13, 1999, Advanced Radio Telecom Corp. announced
completion of an agreement to serve 420 buildings in 11 states
managed by DEVNET, L.L.C.
On August 11, 1999, Teligent announced that it had raised its year-end
target for securing access rights by 20% from 5000 to 6000 buildings.
On July 8, 1999, WinStar announced that it had set a new company
record for access rights in new buildings. WinStar now has access
rights for over 5500 buildings, having added more than 700 in the
second quarter of 1999. The company also announced that it expected
to have the right to serve 8000 buildings by year-end.
In the first quarter of 1999, WinStar’s penetration in networked
buildings increased to an average of 14%, above the company’s long-
term goal of 10%. Communications Daily, May 13, 1998, p. 10.
On May 11, 1999, WinStar announced a deal to serve 11 buildings
owned by Great Lakes REIT, with an option for 20 more. The press
release stated that WinStar’s service will allow Great Lakes ―to
differentiate [their] properties from their competition.‖
WinStar has entered into an agreement to provide broadband, voice,
data, and Internet services in 90 buildings owned by Equity Office
Properties Trust. These buildings are located in Atlanta, Boston,
Chicago, Dallas, Denver, Los Angeles, Philadelphia, and Seattle.
Communications Daily, Apr. 7, 1999, p. 8.
On January 5, 1999, WinStar announced that it has obtained access
rights to more than 4200 commercial buildings nationwide, exceeding
its 1998 goal.
WinStar and Spieker Properties have negotiated an agreement that
gives WinStar access to over 600 office buildings in Los Angeles, the
Bay Area, and Seattle. Telecommunications Reports, Dec. 21, 1998, p.
In addition, at a recent Congressional hearing on forced access, the representative
of the CLEC industry on the panel was asked whether his company had ever been denied
14 These and other press releases are attached as Exhibit N.
access to customers in MDU’s that wanted his company’s services. He replied ―Rarely
Furthermore, there is no question that the CLEC industry is growing, and growing
fast. If the industry were not able to obtain access to buildings, it would not be able to
grow.16 The Commission’s own figures illustrate the industry’s enormous growth rate.
For example, Table 8.14 of the Common Carrier Bureau’s report, 1997 Statistics of
Communications Common Carriers, shows that total CLEC revenue in 1992 was only
$69 million, but by 1997 it had grown exponentially to $1.9 billion. This represents an
increase of nearly 2700 percent in only five years. Similarly, the Common Carrier
Bureau reports that between 1993 and 1997, the number of miles of fiber optic cable
installed by CLECs has grown from 200,000 to 1.8 million. Trends in Telephone Service,
Industry Analysis Division, Common Carrier Division, Federal Communications
Commission (February 1999) Chart 9.1. Anybody who has walked the streets of
Washington, D.C. in the last three years will have seen the proliferation of street cuts
criss-crossing the city as CLECs and others install fiber optic capacity —if building
owners were not permitting providers to enter their buildings, none of this construction
would occur. One analyst predicts that by the year 2004, total CLEC revenue will reach
$40.5 billion, representing 25% of local exchange revenues. State Telephone Regulation
Reports, July 23, 1999 at p. 9.
15 Access to Buildings and Facilities by Telecommunications Providers, Hearing before the Subcommittee
on Telecommunications, Trade, and Consumer Protection, 106 th Cong. 2d Sess. (May 13, 1999) Serial No.
106-22, at p. 74 (―House Hearing Transcript‖).
16 The SPRI Study notes that the CLEC industry seems to have ample access to the capital markets; if
investors perceived that the industry favored serious difficulties in expanding its networks, this would not
likely be the case.
STATEMENT OF JOHN HARING AND
HARRY M. SHOOSHAN
STRATEGIC POLICY RESEARCH, Inc.
ON BEHALF OF THE
REAL ACCESS ALLIANCE
Subcommittee on the Constitution
House Judiciary Committee
March 21, 2000
7979 OLD GEORGETOWN ROAD SUITE 700 BETHESDA, MARYLAND 20814-2429 301-718-0111 FAX 301-215-4033
EMAIL firstname.lastname@example.org WEBSITE www.spri.com
Statement of John Haring and Harry M. Shooshan
March 21, 2000
Mr. Chairman, Members of the Subcommittee. My name is John Haring. I am a
principal in the economics and public policy consultancy Strategic Policy Research, Inc.
(SPR). In a previous life, I served as Chief Economist of the Federal Communications
Commission and as Chief of the Commission’s Office of Plans and Policy. Before that I
taught economics at the University of Virginia and served consecutively on the staffs of
the Federal Trade Commission, the Antitrust Division of the U.S. Department of Justice
and at the Civil Aeronautics Board under Alfred Kahn.
I am appearing today in lieu of my partner Chip Shooshan, who was originally planning
to present our testimony, but had a conflict after the Hearing was rescheduled. As many
of you know, Chip served for several years as Chief Counsel and Staff Director of what is
now the House Telecommunications Subcommittee. Chip was also an adjunct professor
at the Georgetown University Law Center for sixteen years where he taught
communications law and regulation. I know how much he, as a Hill veteran, regrets his
inability to be here today.
Last year, SPR was retained by the Real Access Alliance that represents eleven national
real estate associations consisting of about a million real estate owners, investors,
developers and managers from throughout the country. We were asked to analyze the
economic issues surrounding the various federal legislative and regulatory proposals for
forced access to private buildings. Specifically, we examined the competitiveness of real
estate market, assessed the financial status of the so-called ―CLEC‖ (or competitive local
exchange carrier) industry and examined the allegations of discrimination.
The detailed results of our study and the conclusions we reached are contained in a filing
made by the Alliance last year with the Federal Communications Commission. I have
provided copies of that study for the Subcommittee’s consideration.
I would like to summarize for you today what we found.
Generally speaking, as a matter of economic principles, the free market is best suited to
determine entry, pricing and investment—in short, the most efficient allocation of
resources. Government intervention should be limited to instances where there is a
market failure; that is, instances where it is clear that competitive forces must be
supplemented—and I emphasize, even then, supplemented, not replaced—by regulation.
Government intervention in an efficient market actually tends to reduce—not enhance—
the economic efficiency of the market, by, for example, encouraging inefficient entry and
So a good place to start an economic analysis of forced access is to assess how well the
markets are working.
The commercial real estate industry is competitively structured. There are over 712,000
commercial office buildings in the United States, accounting for over 10.5 billion square
feet. The industry is characterized by very low levels of concentration. In the business
sector, the fifty largest firms account for only 22% of revenues. On the residential side,
they account for less than 10% of revenues. There are no barriers to entry and exit. And
there are savvy customers who are perfectly capable of exploiting the alternative sources
And you don’t have to take my word for it. In 1996, the Federal Trade Commission
exempted transactions involving business and residential rental properties from pre-
merger notification requirements under the Hart-Scott-Rodino Act because they are not
―likely to violate anti-trust laws.‖
Regulatory intervention in the form of forced access is, therefore, not only unwarranted,
but also could be counterproductive by ―chilling‖ innovation and stifling the very creative
arrangements currently being negotiated in the competitive marketplace. As building
owners compete with each other for tenants, telecommunications capabilities—including
unique arrangements—take on an even greater importance. More and more ―smart‖
buildings are coming on the market all the time in an effort to attract high-technology and
We see pretty much the same picture when we examine the market for local
telecommunications services. CLECs, including fixed wireless providers such as Winstar
and Teligent (who have been among the leading advocates of imposing forced access),
are growing rapidly and about as fast as they can add customers. I have attached a chart
to my written testimony that shows the average number of buildings in each market
served by some of the larger CLECs. On average, these eight firms have obtained access
to nearly 230 buildings in each market in which they operate a local network.
But again, don’t take my word for it. Here is what Teligent had to say in a press release it
issued on December 20, 1999:
Forty markets. Seven thousand buildings. Ten thousand customers.
In 14 months…Teligent has…signed lease or option
agreements…with hundreds of individual landlords and more than
35 major real estate concerns [and] has secured access to more than
700 million square feet of office space throughout the United
States… ―No other local communications company has launched as
many markets in as short a time,‖ said Teligent Chairman and CEO
Alex J. Mandl.
Those strides have not gone unnoticed. Not only does Teligent count AT&T as a major
shareholder, but it also recently attracted a large investment from Microsoft.
Microsoft is also an investor in Teligent’s chief wireless competitor, Winstar. On
January 7, 2000 Winstar announced that it had added 1,500 buildings in the fourth quarter
of 1999 alone, bringing its total to 8,000 buildings.
And it is not just the big name players that are growing. Last year, we reviewed the
market capitalization of 20 publicly traded CLECs. Their market capitalization at that
time amounted to $92 billion. More recently we identified 34 publicly traded CLECs
with a collective market capitalization of $176 billion.
So, if the real estate industry is competitive and CLECs are thriving, what is the problem
that forced access is intended to solve?
The record at the FCC—such as it is—is largely anecdotal and contains few specific
examples of unreasonable conduct on the part of building owners. In our view, it is
hardly an adequate basis to justify a regulatory taking that my colleague Steven
Rosenthal has estimated could expose the government to a liability of more than $10
As I see it, the complaints of those CLECs that are leading the forced access fight arise
from three circumstances. First, there may well be building owners and managers who,
for whatever reason, are denying access to multiple telecommunications providers or who
are setting a high price for that access. In my view, although those owners and managers
have that right, in the highly competitive real estate market, they may be shooting
themselves in the foot by making their properties less attractive.
Second, newer entrants (and there are hundreds of CLECs nationally) may find that their
competitors got to a building first. Where a building already has several providers in
place, the owner may quite appropriately decide not to permit additional access; indeed, it
may be physically difficult, if not impossible to do so, if all riser space is occupied.
There are 14 CLECs certificated in the District of Columbia. Is the intent to ensure that
each one of them has access to every building in DC?
Finally, the CLECs argue that they should have access because the incumbent local
telephone company (for example, Bell Atlantic here in Washington) has access. Why
shouldn’t government ―level the playing field‖ if it wants to promote local competition?
There are two fundamental problems with this superficially appealing argument. First, as
I noted earlier and as our study demonstrates, local competition is alive and well. The
CLEC industry as a whole is flourishing. Our national telecommunications policy is to
promote competition, not to ensure that every competitor succeeds. Second, the CLECs
want the benefits of forced access without the responsibility of providing universal
service. Incumbents, such as Bell Atlantic, are under a legal obligation to serve every
business and residence customer. New entrants bear no such burden; indeed, they are
free to pick and choose among locations they want to serve.
With regard to the value of the potential takings were the federal government to impose a
forced access policy, we have reviewed the discussion of potential damage claims
presented by Steven Rosenthal in his testimony. The number of commercial office
square feet in the U.S. in 1995 was $10.5 billion. The telecommunications revenues per
rentable square foot were about $0.12 in 1997. Thus, telecommunications revenues were
about $1 billion per year in 1997 for commercial office space alone — i.e., this estimate
does not consider residential rental property. This amount has been growing and can be
expected to continue to grow rapidly as businesses intensify their use of communications
capabilities and there is growth in the total amount of space. Telecommunications is
obviously assuming an ever-increasing importance in the way people do business.
Tenants increasingly demand more telecommunications services. Forced access can
therefore be expected to reduce the anticipated revenue stream significantly. Taking
these growth factors into account, a multiplier significantly greater than 10 is required to
convert the stream of lost revenues into a discounted present value. We thus conclude
that Rosenthal’s illustrative reference to the value of lost revenues is not only reasonable,
but, if anything, likely to understate actual ―takings.‖
In conclusion, I urge this Subcommittee to consider not only the compelling
Constitutional arguments against forced access, but also the overwhelming evidence that
the marketplace is working. In my opinion, government intervention is unwarranted and
is likely to be counterproductive.
Statement of John Haring and
Harry M. Shooshan
Number of Buildings Accessed by CLECs
CLEC Number of Buildings Number of Local Average Number of
WinStar Over 5,500 Over 30 183
Teligent Over 3,100 26 119
e.Spire 3,231 35 92
MCIW Over 33,000 100 330
ELI 783 7 111
AT&T 22,680 83 273
NEXTLINK 14,804 38 390
ICG 6,126 18 340
Sources: WinStar Press Release, “WinStar Gains Access Rights to More Than 700 Buildings in Second Quarte
1999; Teligent Press Release, “Teligent Report First Quarter Revenue of $1.5M, Tripling Total for Fourth Quarte
12, 1999; “e.Spire Fact Sheet, at http://www2.espire.net/investorfactsheets/factsheet1q99.cfm; MCI Worldcom C
Overview at www.wcom.com/about_the_company/corporate_overview/international_fact_sheet/; ELI Press Rele
Chooses Electric Lightwave as its Preferred Local Access Provider,” July 14, 1999; AT&T Form 10-Q, March 31
NEXTLINK Communications Form 10-Q, March 31, 1999, filed May 14, 1999; and ICG Communications Form 1
31, 1999, filed May 17, 1999.
UTILITY ACCESS AND USE RIGHTS
IN REAL PROPERTY17
Charles A. Hansen and Andrew N. Jacobson18
This memorandum is filed as a supplement to comments being submitted to the Commission by
the Real Estate Coalition,19 in response to the Commission’s Notice of Proposed Rulemaking and Notice
of Inquiry in WT Docket No. 99-217, and Third Further Notice of Proposed Rulemaking in CC Docket
No. 96-98 (released July 7, 1998) (the NPRM).
17 In preparing this brief for electronic filing BOMA was forced to convert the original document from a
word to a Microsoft file. We apologize to the authors and the Commission for any errors not picked up in the
manual review of the conversion.
Charles A. Hansen is a partner in the law firm of WENDEL, ROSEN, BLACK & DEAN, LLP in Oakland,
California, where his practice focuses on real estate, commercial and secured transactions litigation. Mr. Hansen is
also a professor at Boalt Hall School of Law, University of California, Berkeley, where he has taught advanced
courses in real property law, secured transactions and real estate litigation since 1986. Mr. Hansen has authored a
number of books, articles and materials published by the University of California, The California Law Review, the
California State Bar, the Rutter Group and the California Continuing Education of the Bar (CEB). Mr. Hansen
graduated in 1977 with a J.D. from Boalt Hall School of Law and received his B.A. degree, summa cum laude, from
U.C.L.A. in 1973.
Andrew N. Jacobson is an attorney with the law firm of MASLON EDELMAN BORMAN & BRAND, LLP in
Minneapolis, Minnesota, where his practice focuses on transactional real estate, land use, construction law and
telecommunications. Mr. Jacobson has lectured and written several articles and materials on the interface between
the real estate and telecommunications industries for the California State Bar, American Bar Association, ABA
Probate & Property Journal and the California Continuing Education of the Bar (CEB). Mr. Jacobson received his
J.D. in 1991 from Boalt Hall School of Law and graduated with a Bachelor of Architecture degree from California
Polytechnic State University at San Luis Obispo in 1984. Mr. Jacobson is a licensed architect and admitted to the
California and Minnesota Bars.
The members of the Real Estate Coalition are: the Building Owners and Managers Association
International, the Institute of Real Estate Management, the International Council of Shopping Centers, the
Manufactured Housing Institute, the National Apartment Association, the National Association of Home Builders,
the National Association of Office and Industrial Properties, the National Association of Realtors, the National
Association of Real Estate Investment Trusts, the National Multi-Housing Council, and the National Realty
Committee. A further description of the members is contained in comments submitted to the Commission by the
Real Estate Coalition's attorneys -- Miller & Van Eaton, P.L.L.C.
This memorandum reviews the basic principals of real property law pertaining to use and access
rights in the real property. The purpose of this review is to establish the legal framework necessary to
properly address the implications of certain proposals and issues presented in the NPRM. This
memorandum is intended to provide a consolidated outline and summary of the general legal principles
and concepts of real property law applicable to consideration of issues addressed in the NPRM. Because
many of the legal principles discussed in this memorandum are rooted in the common law, there exist
exceptions to these general principles and, in some instances courts in various jurisdictions have taken
different, sometimes even opposing, positions on the same issues. Similarly, over time changes have
occurred in how certain real property issues. This is an instance of the dynamic nature of the common
law, which frequently evolves in response to changes and advances in society and technology. As a
result, many of the cases and secondary sources cited in this memorandum are intended to provide the
Commission with representative examples and majority rules rather than invariable holdings.
Part I of this memorandum discusses the origins of any basis for use and access rights in real
property law. Part I also discusses the fact that rules of real property law, including rights of use and
access to the land of another, are, with few exceptions, created by the several states by way of both
legislative and decisional processes. In fact, substantive real property law may be the best example of
legal matters left to the states and subject to a strong ethic of deference by Congress, the federal courts
and federal administrative agencies. Part II contains a summary of the relevant general legal
characteristics of various types of access and use rights in real property, with a focus on the fee interests,
leases, easements and real property licenses, which are the most common forms of use and access rights
held by utilities. Part III examines the nature of utility company access and use rights to real property
and how the form of those rights (i.e., easements, leases or real property licenses) tends to vary depending
on factors including the purpose of the use, location of the use, relationship of the parties and cost of the
use an access rights.
It is important to note that a number of the terms discussed in this memorandum can have
multiple meanings, some of common usage and others of specific legal significance. Even the legal terms
of art can sometimes have very different legal characteristics, dependent upon the context in which the
term is used. A lease, for example, can pertain to real property or personalty, with one being an estate
in real property while the other is merely the right to use personalty for a specified term. Similarly, the
legal significance of the term license can vary dramatically, depending on the specific factual setting
and type of license is at issue (e.g., real property license, a license to practice a profession, a license
issued by the Commission to utilize a portion of the radio spectrum, a driver's license or the license of
intellectual property rights). Because many of the questions presented and proposals presented in the
NPRM raise significant issues of real property law, it is important that any meaningful analysis of these
items be done with legal precision and respect for the underlying body of real property law. It has been
observed that muddiness in legal writings and seeming conflicts in judicial opinions have resulted, in
many instances, from the loose use of words.20
Rights to Use and Access Real Property
Are Issues of State Law
It is a fundamental principal of real property law in this country that rights in real property arise
from and are subject to state and local laws. As enunciated by the United States Supreme Court in
Butner v. United States,[p]roperty interests are created and defined by state law.21 Similarly, in Webb's
Fabulous Pharmacies, Inc. v. Beckwith the Supreme Court elaborated further, stating,
[p]roperty interests . . . are not created by the Constitution. Rather, they are created and
their dimensions are defined by existing rules or understandings that stem from an
independent source such as state law."22
Real property rights, which are defined in substantial part by applicable state law and concepts of real
property are deeply rooted in state traditions, customs and habits.23 Traditionally, the federal courts have
granted strong deference to state law standards in the area of real property laws.24 This deference has
been consistent, even though the courts recognize that this can lead to results varying from state to state.25
Powell on Real Property, 5.01
Butner v. United States, 440 U.S. 48, 55 (1979).
449 U.S. 155, 161 (1980) (internal quotation omitted); see also, Ruckelshaus v. Monsanto Co., 467
U.S. 986, 1001 (1984); Hughes v. Washington, 389 U.S. 290, 295 (1967) (Surely it must be conceded as a general
proposition that the law of real property is, under our Constitution, left to the individual States to develop and
administer )(J. Stewart, concurring).
Reconstruction Finance Corporation v. Beaver County, Pa., 328 U.S. 204, 210 (1946).
Kamen v. Kemper Financial Services, Inc., 500 U.S. 90, 98 (1991).
Butner v. United States, 440 U.S. 48, 53 (1979).
In past proceedings, the Commission has recognized this important principle of federalism and
acknowledged that [t]he scope of a utility's ownership or control of an easement or right-of-way is a
matter of state law.26 In this proceeding, in addition to the policy considerations, jurisdictional issues and
constitutional implications of the proposals and questions raised in the NPRM, the issues in the NPRM
pertaining to use of and access to privately owned real property must be examined within the legal
framework of applicable real property law of the states. While this deference to the states may result in
some variation between jurisdictions on certain issues, this freedom of the states to experiment and
establish real property laws is a basic characteristic of American federalism.27
Local Competition First Report and Order, 11 FCC Rcd 15499, 16082 1179, citing S. Rep. No.
580, 95th Cong., 1st Sess. 16 (1977).
Gaudio, American Law of Real Property, Introduction 1.01.
Survey of Use and Access Rights to Real Property
A. Types and Categories of Use and Access Rights.
The NPRM raises a number of issues pertaining to the scope of the duty which utilities (including
incumbent local exchange carriers) have to provide nondiscriminatory access to their infrastructures to
telecommunications carriers pursuant to Section 224(f)(1). One of the foundational questions in any
exploration of this issue is to determine the nature and legal parameters of the use and access rights
enjoyed by the utilities which are subject to the requirements of Section 224(f)(1). It is axiomatic that a
utility can only provide access to real property which it possesses and has the right to share, and that a
statute cannot require a utility to grant a real property right to another which that utility does not possess.
The discussion below in this Section II surveys the spectrum of use and access rights to real
property, and the general legal parameters associated with those various categories. The forms of access
and use rights which will be most relevant to any discussion of the proposals and questions raised in the
NPRM are: fee interests, easements, leases and real property licenses. In addition, Part II(A)(3) below
addresses the issue of fixtures, which issue has a direct bearing on the Commissions consideration of the
meaning of ownership and control of poles, ducts and conduits under Section 224(f)(1).
When examining the various forms for use and access rights to real property, it is useful to keep
in mind the classic law school metaphor of real property ownership resembling a bundle of sticks.28 In
essence, the forms of access and use rights discussed below can represent various points on a spectrum of
ownership of real property, running from ownership of the entire bundle (i.e., fee simple absolute) to
much less comprehensive personal privileges to merely use certain sticks from that bundle (i.e., real
property license). While the actual physical use of real property can appear to be identical to the casual
observer under any of the categories on this spectrum, the rights (i.e., sticks of the bundle) held by the
user vary dramatically depending on the specific nature of the underlying interest and its attendant rights
See, e.g., Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 435(1982).
See, Powell on Real Property, 16.02; Gaudio, American Law of Real Property, 5.02
(Question of whether particular use and access rights constitute possessory rights (lease) or nonpossessory rights
(easement or license) is important to the resolution of a variety of issues).
1. Fee Interests. A fee interest in real property is the most comprehensive form of
land ownership. In its purest form, the fee simple absolute, fee ownership represents the entire bundle of
ownership sticks, which collectively constitute the ownership rights in real property. 30
Some fee interests are less than absolute, and these are commonly referred to as defeasible fee
estates.31 The issue of fee estates, absolute and defeasible, relates to the analysis of the NPRM as it
relates to the Commissions inquiries as to the nature of rights of way. American courts have
consistently ruled that grants of rights of wayconstitute either easements or fee interests, with the strong
judicial preference being towards easements for the simple reason that easements are less intrusive on the
real property rights of the person whose land is being appropriated for the right of way. 32 The concept of
defeasible estates has sometimes arisen in relation to these rights of way cases, with courts determining
that, even where it is clear that a grant of a right of way created a fee interest, the fee interest created was
defeasible such that the real property constituting the right of way would revert back to the grantor in the
event the specified use for the right of way was terminated in the future.33
2. Easements. While variously defined, an easement fundamentally consists of the
nonpossessory right of one party to use and/or prevent certain uses of the real property of another.34 An
easement constitute interests in real property, not a mere contract right, but is distinct from the fee interest
in the land on which the easement is located. An easement is not an estate in land, as estates include a
possessory right. Rather, an easement is an interest in the land, as an incorporeal rights -- i.e., the
right to an intangible. Consequently, one cannot simultaneously posses both the fee and an easement
interest in the same parcel of real property.35 Where such interests are simultaneously held, the easement
will be said to have merged into the fee interest.
Gaudio, American Law of Real Property, 2.02[a].
Gaudio, American Law of Real Property, 2.02[a].
Bruce and Ely, Law of Easements and Licenses, 1.06.
See, e.g. Concord & Bay Point Land Co. v. City of Concord, 229 Cal. App.3d 209, 296 (Ca.
1991); and Patricca v. Zoning Bd. of Adjustment of City of Pittsburg, 527 Pa. 267, 276 (Pa. 1991).
Bruce and Ely, Law of Easements and Licenses, 1.01; Gerstein, Maloney and Philbin, Easements
and Licenses in Real Property, __; 25 Am.Jur.2d, Easements and Licenses, 1 and 2; Long Beach Unified School
District v. Godwin Living Trust, 32 F.3d 1364, 1368 (9th Circ., 1994).
Board of County Supervisors of Prince William County, Va., v. United States, 116 F.3d 454, __
(__ Cir. 1996), cert. denied 516 U.S. 812 (1997); Hidaglo County Water Control & Improvement Dist. v. Hippchen,
233 F.2d 712, 714 (5th Cir. 1956).
Easements are typically created by an express grant, by implication or prescription (each of which
presupposes a grant has occurred), reservation, necessity or pre-existing use.36 Easements are subject to
the formalities of the Statute of Frauds and thus typically cannot be created by parole (i.e., verbal
agreement).37 Some courts have made exceptions to this general no parole rule, creating easements by
estoppels, based on the legal theory of detrimental reliance.38 Only the owner of the real property to be
burdened has the power to create an easement, and it is fundamental that an easement may not create a
right that the grantor does not possess.39 As a result, a party holding less than a fee interest in a parcel of
land may only create an easement within the terms of its estate.40
a. Easements Appurtenant and In Gross. Traditionally, easements were deemed
to benefit a specific parcel of land (i.e., be appurtenant to).41 The benefits and burdens of an
appurtenant easement are said to run with the land of both the benefited land (the dominant estate) and
the land on which the easement is burdens or is located (the servient estate), such that both the benefit
and burden pass or run to subsequent owners of the affected properties. Id. Over time, certain types of
easements developed which did not benefit a specific parcel of land and instead benefited a specific
individual or an entity. Such easement have come to be known as easements in gross, and easements
in gross are now recognized by the courts as distinct from appurtenant easements.42 Where an easement
in gross is for the benefit of a business or entity, rather than for an individual, that easement is referred to
as commercial.43 Utility easements used in connection with the construction and maintenance of a
25 Am.Jur.2d, Easements and Licenses 3 and 16; CITES.
See, C/R TV, Inc. v. Shannondale, Inc., 27 F.3d 104, 107 (__ Cir. 1994).
See, Exxon Corp. v. Schutzmaier, 537 S.W.2d 282, 286-287 (Tex. 1976); Lake Meredith
Development Co. v. City of Fritch, 564 S.W.2d 427, 430 (Tex. 1978); Cleek v. Povia, 515 So.2d 1246, 1248 (Ala.
25 Am.Jur.2d, Easements and Licenses, 14.
25 Am.Jur.2d, Easements and Licenses, 14.
25 Am.Jur2d, Easements and Licenses, 10; Gaudio, American Law of Real Property,
25 Am.Jur.2d, Easements and Licenses 11; see, Bennett v. Commissioner of Food & Agriculture,
411 Mass. 1, 6 (Mass. 1991) (old common law rules barring the creation and enforcement of easements in gross
have no continuing force).
Sandy Island Corp. v. Ragsdale, 143 S.E.2d 803, __ (S.C. 1965); Miller v. Lutheran Camp, 200 A.
646, 648 (__ 1938).
utility's distribution infrastructures (e.g., power lines, telephone cables, sewer pipes) are generally
deemed to constitute commercial easements in gross.44
b. Location of the Easement. The location of an easement may be fixed by
agreement between the parties, by use or by acquiescence.45 Once selected or fixed, the location of an
easement generally cannot be changed by either the easement holder or the owner of the servient estate
(i.e., the burdened parcel of land), without the other partys’ consent.46 This general rule is based on the
reasoning that treating the location of an easement as variable would incite litigation, depreciate the value
of the burdened real property, and discourage the improvement of the burdened land.47
Where the scope of an easement is specific, it decisively establishes the limits of the easement.48
A floating easement (also referred to as blanket easements and roving easements) is an easement which
is not limited to any specific area on the burdened real estate.49 While there are variations based on
specific facts and the law of the applicable jurisdiction, the courts generally have taken the practical
approach of permitting burdened landowners to designate reasonable locations for floating easements,
taking into proper consideration the purpose of the easement.50 The courts will generally infer an intent
by both parties to the easement that the easement be reasonably convenient under the circumstances.51
Where the burdened landowner fails to designate the location of the easement, the easement owner often
will be deemed to have the right to locate the easement, provided that the location is reasonable to the
See, e.g., Antonopulos v. Postal Tel. Cable Co., 26 N.Y.S.2d 403 (N.Y. 1941), affd. 39 N.E.2d 931
25 Am.Jur.2d, Easements and Licenses, 77; see also, 24 ALR4th 1053.
25 Am.Jur.2d, Easements and Licenses, 79; Bruce & Ely, Law of Easements and Licenses,
7.05; see generally, Annotation, Relocation of Easements (Other Than Those Created by Necessity) - Rights as
Between Private Parties, 80 ALR2d 743 (1961).
Stamatis v. Johnson, 72 Ariz. 158, 160 (Ariz. 1951).
25 Am.Jur.2d Easements and Licenses 81.
City of Los Angeles v. Howard, 244 Cal. App.2d 538, 541 n.1 (1966); Missouri Pub. Serv. Co. v.
Argenbright, 457 S.W.2d 777, 780-783 (Mo. 1970) (blanket easement); Salt Lake City v. JB&RE Walker, Inc.,
123 Utah, 1, 8 (1953) (roving easement).
Bruce and Ely, Law of Easements and Licenses, 7.02[a]; see also, Annotation, Location of
Easement of Way Created by Grant Which Does Not Specify Location, 24 ALR 4th 1053, 1062-1064 (1983); Carrol
Electric Coop. Corp. v. Benson, 312 Ark 183, ___ (1983).
Bruce and Ely, Law of Easements and Licenses, 7.02[b].
burdened parcel of land.52 A floating easement generally becomes fixed once the usage and location is
A small minority of courts have taken a much more restrictive approach towards floating
easements, holding that such easements void if they fail to adequately describe the easement area or
requiring the description of the easement to meet general conveyancing standards applicable to
identifying parcels of land.54
c. Permitted Use of Easement. The use of an easement is often established in the
documents which create the easement and the use of the easement is restricted to that use.55 In some
instances, courts have permitted limited increases in the scope of use for an easement, provided that the
easement holder does not unreasonably increase the burden which the easement places on the servient
estate.56 Situations of expanded use often arise in the context of the introduction of new technologies
(e.g., fiber optic cable, cable television). In some jurisdictions the courts have been receptive to the
modification of uses of easements to accommodate technological advancements, particularly where the
modified use is deemed not to impose an unreasonable increased burden on the landowner.57 However,
other courts have been less receptive to such permitting such modifications.58 With some courts in other
jurisdictions tightly interpreting use provisions in easements, declining to imply a right of expanded use.59
One state, Maine, has enacted a statute which eliminates implied expansion rights to certain easements.60
25 Am.Jur.2d, Easements and Licenses, 76 and 83.
See, Beavers v. West Penn Power Company, 436 F.2d 869, 874 (3rd Cir. 1970) (Where no specific
limitation is placed on a utility easement, the boundaries of the easement are determined by the actual location of the
utility's wires and cables); see also, City of Los Angeles v. Howard, 244 Cal.App.2d 538, 541 n.1 (1966).
See, e.g., Allen v. Duvall, 311 N.C. 245, 249 (1984); Highway Properties v. Dollar Sav. Bank, 431
S.E.2d 95, 98-100 (W.Va. 1993); Germany v. Murdock, 99 N.M. 679, 681 (1983); Vrabel v. Donohoe Creek
Watershed Auth., 545 S.W.2d 53, 53 (Tex. 1976).
Bruce and Ely, Law of Easements and Licenses, 8.02.
Bruce and Ely, Law of Easements and Licenses, 8.03.
See, e.g.,Salvaty v. Falcon Cable Television, 165 Cal.App.3d 798, 804 (Ca. 1985); Hoffman v.
Capital Cable Television System, Inc., 383 N.Y.S.2d 674, 676 (NY 1976); Cousins v. Alabama Power Co., 597
So.2d 683, 687 (Ala. 1992).
See, e.g., Consolidated Cable Utilities, Inc. v. City of Aurora, 429 N.E.2d 1272, ___ (19___);
Devon-Aire Villas Homeowners Assn No. 4, Inc. V. Americable Associates, Ltd., 490 So.2d 60, __ (1985).
See, e.g. Brown Properties, Inc. v. Cooper, 737 S.W.2d 471, 473 (Ark. 1987); Benno v. Central
Lake County Joint Action Water Agency, 609 N.E. 2d 1056, 1060 (Ill. 1993); U.S. Cablevision v. Theodoreau, 596
N.Y.2d 485, 487 (N.Y. 1993); and Gordon v. Hoy, 178 S.E.2d 495, 496 (Va. 1971).
Me. Rev. Stat. Ann., Title 33, 458 (__________).
The term right of way or ways is sometimes used as a description of the use of an easement.61 In
such instances, the grant or reservation of a right of way or way in general terms is ordinarily construed
by the courts as creating a general right of way which is usable by the easement holder for all reasonable
purposes, including in some jurisdictions the right to utilize new technologies and inventions.62
d. Transferability of Easements in Gross. Contrary to the general rule that
prohibits the assignment of easements in gross, commercial easements in gross (e.g., utility easements)
have generally been held to be assignable, and several jurisdictions have statutory provisions expressly
permitting the transfer of easements in gross.63
e. Divisibility/Apportionment of Easements in Gross. Related to the issue of the
transferability of commercial easements in gross, is the issue whether the easement holder has the right to
divide or apportion its interest in the easement with others. In the context of discussing easements in
gross, the term apportionment refers to the division of use of an easement.64 The courts have generally
concluded that easements in gross are capable of apportionment when: (i) the instrument creating the
easement permits apportionment; or (ii) the easement granted is deemed exclusive and the proposed
apportionment will not overburden the easement65 In the context of apportionment, the term
exclusive is generally intended to designate situations where the easement holder has the sole right to
engage in the type of activity authorized by the easement, although some courts have construed the term
exclusive as referring to the exclusion of the landowner from using the easement for the activities
See, e.g., Annotation, Location of Easement of Way Created by Grant of Way Which Does Not
Specify Location, 24 ALR4th 1053.
25 Am.Jur.2d, Easements and Licenses, 86; see also, 3 ALR3d 1256; C/R TV, Inc. v.
Shannondale, Inc., 27 F.3d 104 (19__) (installation of fiber optic cable permitted in easement held by utility
company); Centel Cable Tel. Co. v. Cook, 58 Ohio.St.3d 8, ___ (19__), motion denied 111 S.Ct. 2883 (permitting
installation of coaxial cable by television company along utility easement).
25 Am.Jur.2d, Easements and Licenses, 102; Bruce and Ely, Law of Easements and Licenses,
9.03; see, e.g., Banach v. Home Gas Co., 12 A.D.2d 373, 375 (N.Y. 1961) (We know of no case in this
jurisdiction which has held that easements authorizing the construction of telephone lines, electric lines or gas lines
are inalienable.) Collier v. Oelke, 202 Cal.App.2d 843, 845-846 (1962) (applying Cal. Civ. Code 1044, which
permits the transfer of real property, to easements in gross); see also, Ind. Code Ann. 32-5-2-1(b) and Va. Code
See, Witteman v. Jack Barry Cable TV, 228 Cal.Rptr. 584 (1986); Salvaty v. Falcon Cable
Television, 165 Cal.App.3d 798, ___ (1985); Hoffman v. Capitol Cablevision Sys., Inc., 383 NYS2d 674, ___
(1976); Henley v. Continental Cablevision of St. Louis County, Inc., 692 SW2d 825 (Mo. Ct. App. 1985).
Bruce and Ely, Law of Easements and Licenses, 9.04; Hoffman v. Capitol Cablevision Sys., Inc.,
383 N.Y.S.2d 674, ___ (1976); Hinds v. Phillips Petroleum Co., 591 P.2d 697, 699 (Okla. 1979).
described in the easement.66 The justification for permitting apportionment of exclusive easements is that
the property owner has granted away their right to use the easement area and thus they have no basis to
oppose the apportionment, provided that the combined use of the easement stays within the ambit of the
original grant of easement and does not overburden the easement or the servient estate.67
In general, the courts disfavor exclusive easements, although courts occasionally held easements
to be exclusive even in the absence of specific language in the granting document.68 As one court has
said: [a] n exclusive easement is an unusual interest in land; it has been said to amount to almost a
conveyance of the fee . . . no intention to convey such a complete interest can be imputed to the owner of
the servient tenement in the absence of a clear indication of such an intention.69 The holder of a
nonexclusive easement does not have the right, absent an express agreement with the real property owner,
to apportion its easement, as the right of division is retained by owner of the servient estate.70 In some
jurisdictions, the courts have been more liberal in finding easements to be exclusive and permitting
apportionment, sometimes presuming exclusiveness unless specific language to the contrary is included in
the instrument which created the easement.71 In other instances, the certain language contained in the
grant has been deemed to imply the intent of the parties that the easement is apportionable.72
The second limitation on apportionment of easements in gross is the concept of overburden,
which consists of the easement holder: (i) causing a material increase in the burden of the easement on the
servient land beyond the scope of the easement granted, or (ii) imposing a new an additional burden
Henley v. Continental Cablevision of St. Louis County, Inc., 692 S.W.2d 825, 828 (Mo. Ct. App.
1985); Hoffman v. Capital Cablevision Sys., Inc., 383 N.Y.S.2d 674, 676 (1976).
Bruce and Ely, Law of Easements and Licenses, 9.04.
Bruce and Ely, Law of Easements and Licenses, 1.06; see Hoffman v. Capital Cablevision
Sys., Inc. 52 A.D.2d 313, 315 (1976); Salvaty v. Falcon Cable Television, 165 Cal.App.3d 798, ___ (1985).
City of Pasadena v. California-Mich. Land & Water Co., 17 Cal.2d 576, 578-579 (1941); also
see, NEWER CAL CASE.
See, Consolidated Gas Co. v. City Gas Co., 477 So.2d 351, 352 (Fla. 1984).
See, e.g., Salvaty v. Falcon Cable Television, 165 Cal.App.3d 798, 804 (Ca. 1985); Hoffman v.
Capital Cable Television System, Inc., 383 N.Y.S.2d 674, 676 (NY 1976); but, see Centel Cable Television
Company of Ohio, Inc. v. Cook, 567 N.E.2d 1010, ___ (Ohio 1991) (declining to infer intent for exclusive easement,
but finding exclusiveness on other grounds).
See, e.g., Joliff v.Hardin Cable Television Co., 269 N.E. 2d 588, ___ (Ohio 1971).
beyond the scope of the easement granted.73 Some courts have been more liberal than others in the
overburden analysis, finding no overburden where the public interest of making technological advances
available are deemed strong and the court perceives only a minor intrusiveness of the additional use as
partial justification for permitting the apportionment as supporting a finding of no overburden
landowner.74 While the level of intrusiveness of the additional user is a factor in any overburden
analysis, it is important to distinguish the issue of overburden, where an underlying right to apportion
exists, from the issues of whether a taking has occurred. In a takings analysis, the size and scope of any
permanent occupation, or the policy reasons in support of that occupation, are irrelevant to the issue of
whether a taking has occurred.75
f. Secondary Easements. In connection with the use, enjoyment and repair of
easements, an easement holder typically also has the right to enter upon the burdened land, at reasonable
times, to effect necessary repairs and maintenance necessary for the use and enjoyment of the easement.76
This additional access right is an incident of the underlying easement and is sometimes referred to as a
secondary easement.77 Secondary easements must be exercised only when necessary and in a
reasonable manner so as not to needlessly burden or injury to the burdened landowner.78
Real Property Licenses. Real property licenses are the revocable permission and/or
authority to use land of another for a specific purpose, without the licensee acquiring an interest in the
real property.79 Some have described real property licenses as the permissive right to do an act on real
25 Am.Jur.2d, Easements and Licenses, 81; Hayes v. Aquia Marina, Inc., 243 Va. 255, ___
See, e.g., Salvaty v. Falcon Cable Television, 165 Cal.App.3d 798, 804 (Ca. 1985); Hoffman v.
Capital Cable Television System, Inc., 383 N.Y.S.2d 674, 676 (NY 1976); C/R TV, Inc. V. Shannondale, Inc., 27
F.3d 104, 109 (4th Cir. 1994); Joliff v. Hardin Cable Television Co., 269 N.E.2d 588, 591 (Oh. 1971).
Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 420, 437 n. 16 (1982).
25 Am.Jur.2d, Easements and Licenses, 95; see also, 28 ALR2d 626; Centel Cable v. White
Development Co., 902 F.2d 905, 909 (11th Cir. 1990) (every easement carries with it by implication the right,
sometimes called secondary easement, of doing what is reasonably necessary for full enjoyment of the easement
itself. (Citing, Crutchfield v. Sebring Realty Co., 69 So.2d 328, 330 (Fla. 1954).
See, Ward v. Monrovia, 16 Cal.2d 815, ___ (19__); Fourth Davis Island Land Co. V. Parker, 469
So.2d 516, ___ (19___).
25 Am.Jur.2d, Easements and Licenses, 95.
25 Am.Jur.2d, Easements and Licenses, 138; Bruce and Ely, Law of Easements and Licenses,
11.01; United States v. Anderson County, 575 F.Supp 574, 578 (ED Tenn. 1983), affd, 761 F.2d 1169 (6th Cir.
1985), cert. denied, 474 U.S. 919 (1985).
property which would otherwise be prohibited (e.g., trespass).80 Real property licenses have also been
defined as an interest in the land of another which: (i) entitles the licensee to use of the land; (ii) arises
from the consent of the landowner; (iii) is not incident to an estate in the land; and (iv) is not an
The scope of a real property license is determined by the extent of the privilege which is granted
by the licensor. 82 A real property license allows the occupation and use of land only to the extent
necessary to conduct the licensed act.83 Thus, a real property license may be exercised, based on a fair
and reasonable interpretation of the real property license, only in the manner and for the specific purpose
for which the consent was granted.84 The use of a real property license is limited to the authorized
activities and cannot be used for other purposes.85 Attempted use of a real property license beyond its
permitted scope constitutes a trespass by the licensee upon the licensors' real property.86
Unlike easements and real property leases, both of which are generally subject to the formalities
Statute of Frauds, the only indispensable element to the creation of a license is the consent of the
licensor.87 As transient, impermanent interests, real property licenses are not subject to the Statute of
Frauds.88 In some instances, real property licenses will sometimes result when parties fail to comply with
the required formalities of creating a proper easement or lease.89
25 Am.Jur.2d, Easements and Licenses, 139; Bruce and Ely, Law of Easements and Licenses,
1.03 and 11.01.
Powell on Real Property, 34.24 (citing Restatement of Property 512).
Bruce and Ely, Law of Easements and Licenses, 11.03.
Bruce and Ely, Law of Easements and Licenses, 11.03; See, e.g., Wright v. Edison, 619 S.W.2d
797, 803 (Mo. 1981); State v. Quinell, 151 N.W.2d 598, 602 (Minn. 1967).
25 Am.Jur.2d, Easements and Licenses, 139; Roberts River Rides v. Steamboat Dev. Corp., 520
N.W.2d 294, ____ (19__).
Bruce and Ely, Law of Easements and Licenses, 11.03.; see, e.g., Thiokol Chem. Corp. v. Morris
County Bd. Of Taxation, 197 A.2d 176, 182 (1964).
See, e.g., Wright v. Edison, 619 S.w.2d 797, 803 (Mo. 1981).
Bruce and Ely, Law of Easements and Licenses, 11.02; see, e.g., Adams v. Heisen, 423 P.2d 414,
417 (1967) (The essential element in the creation of a license is the permission or consent of the licensor.).
25 Am.Jur.2d, Easements and Licenses, 138.
Gaudio, American Law of Real Property, 6.03; Powell on Real Property, 34.26; See, e.g.,
Walton v. Town of New Hartford, 612 A.2d 1153, 1157 (1992) (failed attempt to satisfy the formalities of creating
an easement resulted in creation of a license); Crigger v. Florida Power Corp., 436 So.2d 937, 948 n.27 (1983)
(infirmity in creation of easement results in a license); Bob Daniels & Sons v. Weaver, 106 Idaho 535, 542 (1984)
(unwritten agreement establishes license, not easements).
a. Irrevocable Licenses. Although one of the distinctive features of a license is its
revocability, there are certain situations where courts have placed qualifications or restrictions on a
licensor right to terminate a real property license. This can result in what have been referred to by
courts with terms such as licenses coupled with an interest, irrevocable licenses, executed
licenses, equitable easements and similar terms.90 In rare instances, a revocable license may even be
found to have ripened into an easement (an easement by equity) based on the concept of equitable
estoppel.91 Some commentators have noted the tendency of courts to utilize irrevocable licenses as a
means to reach a desired equitable result.92
A more limited type of restriction on revocability occurs when the licensee has an ownership
interest in personal property located on the real property subject to the license, referred to often as a
license coupled with a grant or interest.93 In general, a license coupled with a grant or interest is deemed
to be irrevocable to the extent necessary to allow the licensee to remove its personal property from the
real property.94 Similarly, some courts have held that the payment of valuable consideration by the
licensee in exchange for the license may restrict the licensors' ability to revoke the license.95
Another situation where the revocability of a real property licenses becomes an issue is where a
licensee reasonably expends money or labor in reliance on the continued existence of the license. In order
to avoid injustice to the licensee, such courts have sometimes labeled such licenses as executed
licenses and treated them as irrevocable.96 Courts typically arrive at this result based on a theory of
either detrimental reliance or the prevention of fraud by the licensor against the licensee.97 Licenses do
not necessarily become irrevocable because they are granted for consideration, rather it is the licensees'
reasonable and material expenditures in reliance on the continuing existence of the easement which
25 Am.Jur.2d Easements and Licenses 145; Powell on Real Property, 34.24.
Gaudio, American Law of Real Property, 6.03; 25 Am. Jur. 2d Easements and Licenses 145.
See, e.g., Powell on Real Property, 34.24.
25 Am.Jur.2d, Easements and Licenses, 142; Gaudio, American Law of Real Property, 6.03.
Gaudio, American Law of Real Property, 6.03, Page 6-74; Hass v. Brannon, 99 Okla 94, ___
(19__) (license coupled with a grant); Western U. Tel. Co. v. Pennsylvania Co.,129 F 849, ___ (___) (license
coupled with an interest).
25 Am.Jur.2d Easements and Licenses 143; See, e.g., Paul v. Balkely, 243 Iowa 335, ___ (Iowa
19__); Markley v. Christen, 226 S.W. 150, ___ (Texas 19__).
25 Am.Jur.2d Easements and Licenses 145.
Keystone Copper Mining Co. v. Miller, 63 Ariz. 544, ___ (____); Schuman v. Stevenson, 25 Ark.
102, ___ (___); Noronha v. Stewart, Cal.App.3d 485, __ (19___); Closson Lumber Co. v. Wiseman, 507 N.E.2d 974,
causes a license to become irrevocable.98 In addition, the courts have tended to apply this doctrine with
caution, requiring the licensee expend a substantial sum of money, with the licensors' knowledge. 99
Some courts add the additional requirement that the expenditures by the licensee be at least partly for the
benefit of the licensor.100
As an alternative approach to finding real property licenses to be irrevocable, some courts have
taken alternative approaches such as placing limits on revocability (e.g., reasonable notice and
opportunity for the licensee to remove its personal property) or requiring the licensor to compensate the
licensee for its expenditures which benefit the licensor upon the licensors' revocation.101
b. Assignment of Real Property Licenses. As personal privileges, the general rule
is that real property licenses may not be assigned.102 A minority of courts have gone so far as to take the
position that an attempted assignment terminates a real property license.103 Some courts have taken a
more liberal position on the assignment issue, holding that real property licenses which arise from
commercial transactions are deemed assignable, unless the parties have expressed an intention to the
contrary.104 In addition, where the license is coupled with an interest, most jurisdictions will permit
assignment of the license in connection with the licensee's sale of the interest.105 Of course, the common
law rules pertaining to the assignment of real property licenses can be altered by agreement of the party
and, in practice, commercial licensees will often negotiate for some form of assignment rights.
Industrial Disposal Corp. of Am. v. City of East Chicago, Dep't of Water Works, 407 N.E.2d 1203,
1205 (Ind. Ct. App. 1980)
Bruce and Ely, Law of Easements and Licenses, 11.06[b].
See, e.g., Camp v. Milam, 277 So.2d 95, 99-100 (Ala. 1973); O'hara v. Chicago Title & Trust Co.,
450 N.E.2d 1183, 1191 (Ill. 1983); Ethan's Glen Community Assn. v. Kearney, 667 S.W.2d 287, 291 (Tex. 1984).
Bruce and Ely, Law of Easements and Licenses, 11.06; Annotation, Right of Licensee for Use
of Real Property to Compensation for Expenditures Upon Revocation of License, 120 ALR 549 (1939); see also,
Lake Martin/Alabama Power Licensee Asso. v. Alabama Power Co., 547 So.3d 404, ___ (19__); Hector v. Metro
Ctrs., 498 N.W.2d 113, ___ (19__); Sinclair Pipe Line Co. v. United States, 287 F.2d 175, ___ (19__).
Bruce and Ely, Law of Easements and Licenses, 11.04.
Bruce and Ely, Law of Easements and Licenses, 11.04; Powell on Real Property, 34.25; see,
e.g., Waterville Estates Assn v. Town of Campton, 446 A.2d 1167, 1169 (NH 1982); Waltimyer v. Smith, 556 A.2d
912, 914 (PA 1989).
See., e.g., Tarlow v. Arntson, 505 P.2d 338, 342 (1973) (normally inferred that parties intend
license to be assignable).
Bruce and Ely, Law of Easements and Licenses, 11.04; see, e.g., Booker v. Cherokee Water Dist.,
651 P.2d 452, 453-454 (Colo. 1982); Radke v. Union P.R. Co., 138 Colo 189, ___ (___); Paul v. Balkely, 243 Iowa
355, ___ (19__); Smyre v. Board of Comm.’s, 89 Kan 664, ___ (19__)..
The issue of whether a real property license is assignable is distinct from the issue of
apportionment, which can apply to exclusive commercial easements in gross as discussed above in Part
II(__)(__). As real property licenses constitute personal privileges, parceling up of that privilege or
apportionment would not be permitted, in the absence of an express provision in the license permitting the
licensee such additional privileges. Unlike an easement where there may be sticks in the bundle which
constitutes the easement may be shared by the easement holder with others. A real property license, on
the other hand, involves the privilege of the licensee to use only some sticks in the bundle, but does
not create any ownership interest in those sticks for the licensee. Thus, an attempt by a licensee to share
its use privileges under a real property license with a separate or piggy backed user would constitute use
of the real property license beyond its permitted scope and constitutes a trespass by the additional user
upon the licensor's real property.106 This is to be distinguished from instances where a licensee's
contractor or employees utilize the licenses access and use rights, since in that situation the other parties
are part of the licensee's use, not part of a separate use. 107 For example, typically a private contractor
servicing the licensee's equipment would enter into the real property under the licensee's use and access
4. Real Property Leases. The next category of use and access right is real property leases.
Unlike other real property estates in real property which are typically created by deed and may be
based on gift, leases are often said to have a dual nature, in that they are commonly viewed as both a
conveyance of a protected possessory interest in real property and contract between the landlord and
tenant.109 Black's Law Dictionary describes real property leases as [a] contract for exclusive possession
of lands . . . for terms of years . . . usually for a specified rent or compensation. The key characteristic of
a lease, as a use and access right, is the right to possession. In the absence of that facet, the transaction is
instead an easement, profits a prendre or real property license.110
See, e.g., Wright v. Edison, 619 S.w.2d 797, 803 (Mo. 1981).
Bruce and Ely, Law of Easement, 11.03.
When discussing leases, it is important to distinguish between real property leases (e.g., the right to occupy
and use office space) and personal property leases (e.g., the right to use computer equipment). One type of lease creates an
estate in the land, while the other, at most, creates a privilege (i.e., license) to access the real property where the personalty is
located. It is possible that a personal property lease includes an implied license related to the personal property (i.e., license
coupled with an interest). However, the existence of such a license would depend on the owner of the personalty having the use
and access rights which could be allocated to the lessee of the personalty.
Powell on Real Property, 16.02; Gaudio, American Law of Real Property, 5.01; see, e.g.,
Kendall v. Pestana, 40 Cal.3d 488, ___ (1985).
49 Am.Jur.2d, Landlord and Tenant, 5.
5. Rights of Way. The term right of way can be used to refer to the nature of the use on
a property, the location of the use or to refer to the nature of the use and access rights. Black's Law
[The] [t]erm right of way sometimes is used to describe a right belonging to a party to
pass over land of another, but is also used to describe that strip of land upon which
railroad companies construct their road bed, and when so used, the term refers to the land
itself, not the right of passage over it. [citation omitted] As used in reference to right to
pass over another's land, [a right of way] is only an easement; and grantee acquires only
right to a reasonable and usual enjoyment thereof with owner of soil retaining rights and
benefits of ownership consistent with the easement. [citation omitted]
When used in reference to an interest in real property, the term right of way can refer to real property
owned in fee, however, the majority of courts have deemed that rights of way to constitute a type of
easement, unless the instrument creating the right of way specifically grants a fee interest.112 One of the
practical reason for courts adoption of this presumption is that long narrow strips of land serve little or no
function other than for use as roads or rights of way, thus common sense dictates a presumption that
parties do not intend to create otherwise unusable interest in land. 113 Notwithstanding this presumption,
there are numerous cases where rights of way have been held to be fee interest, although in a number of
those instances the fee interest is deemed to be subject to defeasance if the land is not used for right of
Rights of way are generally split into two general categories -- public and private. Public rights
of way typically have the characteristic of common enjoyment by the general public, such as public
Gaudio, American Law of Real Property, 5.03.
Board of Supervisors of Prince Wm. Cty., Va. v. U.S., 48 F.3d 520, 527 (1995); Capelli v. Justice,
496 P.2d 209, 213 (Or. 1972) (In common parlance the term right of way signifies an easement.); Great
Northern Ry. Co. v. United States, 315 U.S. 262, 271(1942) (Under the General Railroad Right-of-Way Act, grants
or right of way are only easements (use and occupancy only) and not fee title to the land); also see, Bruce and Ely,
The Law of Easements and Licenses in Land, 1.06; see also, Annotation, Deed as Conveying Fee or Easement,
136 ALR, 379, 391 (1942).
See, Hartman v. J&A Dev. Co., 672 SW2d 364, 365 (Mo. Ct. App. 1984); Brown v. Penn. Cent.
Corp., 510 NE2d 641, 644 (Ind. 1987).
25 Am.Jur.2d, Easements and Licenses, 7; Bruce and Ely, Law of Easements and Licenses,
1.06; see also, e.g., Concord & Bay Point Land Co. v. City of Concord, 229 Cal.App.3d 289, 296 (1991),
Patricca v. Zonin Bd. Of Adjustment of City of Pittsburg, 527 Pa. 267, 276 (1991); SEE FN34 (PG 1-43).
roads.115 Private rights of way, on the other hand, generally relate to particular users or class of users, as
opposed to the general public.116 This issue of the distinction between public and private rights of way
and easements was an issue in several cases interpreting the scope of 47 U.S.C. 541(a)(2) which is
similar to 47 U.S.C. Section 224 (f)(1), with some courts focusing on the meaning of the word public
and others on the proper definition of dedicated.117 Where a grant of private right of way has been made
in general terms, the courts will ordinarily broadly construe the easement to be useable for all reasonable
uses.118 However, the courts have generally recognized that a private right of way cannot be used in a
manner which creates a greater burden than intended by the grantor.119
In spite of the lack of precision typically used when references are made to rights of way,
whether determined to be a fee interest or easement, a consistent theme which emerges in the right of way
related case law, is that rights of way are linked to the creation of a right of transit across real property.
This basic characteristic applies whether the right of way in question refers to a road, railroad tracts,
pipelines, power lines or telecommunications cables. In each instance, the essential physical function of
the right of way is to provide a required right of passage to transit an item across a parcel of land. In spite
of the vast array of items requiring transit across the real property (e.g., people, animals, trains, water,
electrical current, etc.) and numerous infrastructures constructed for that transmitting, from a dirt path to
fiber optic cable, this common theme of passage or transit across the property is a consistent characteristic
of a right of way.
7 Am.Jur.2d, Easements and Licenses, 7; 39 Am.Jur.2d Highways, Streets and Bridges, 1;
County of Alameda v. Ross, 32 Cal.App.2d 135, ___ (19__).
7 Am.Jur.2d, Easements and Licenses, 7; Ryder v. Petrea, 416 S.E.2d 686, ___ (Va. 19__); Byrd
v. Cos. v. Smith, 591 So.2d 844 (Ala. 19__).
See, Century Southwest Cable Television v. CIIF Associates, 33 F.3d 1068, 1070 (9th Cir. 1994);
TCI of North Dakota, Inc. v. Schriock Holding Co., 11 F.3d 812, 817 (8th Cir. 1993); Media General Cable v.
Sequoyah Condominium Coun., 991 F.2d 1169, 1173 (4th Cir. 1993); Cable Holdings of Georgia v. McNeil Real
Estate, 953 F.2d 1169, 1173 (11th Cir.1992), cert. denied, ___ U.S. ___ (1993)).
See, Annotation, Extent and Reasonableness of Use of Private Way in Exercise of Easement
Granted in General Terms, 3 ALR3d 1256, 1266.
See, Annotation, Extent and Reasonableness of Use of Private Way in Exercise of Easement
Granted in General Terms, 3 ALR3d 1256, 1270.
6. Profits A Prendre. Also referred to sometimes as a right of common or profits, a profit
a prendre is the right of one party to enter upon the lands of another to participate in the profits of the soil
and/or to take part of the soil or produce of the land.120 While constituting an interest in real property,
similar to an easement, and not an estate, a profit a prendre is distinguishable from an easement in that
under an easement the grantee does not have the right to participate in the profits of the land which is
subject to the easement.121 Common examples profits a prendre include the right to harvest timber,
quarry gravel, mine coal, extract gas and oil or the right to graze livestock.122 A profit a prendre typically
includes the entry and access rights to the real property reasonably necessary to accomplish the purpose of
the profit a prendre, and in most respects is treated using the same rules as apply to easements.123 Thus, a
profits a prendre to harvest timber would necessarily include the entry and access rights to the subject real
property necessary for the profit holder to come upon the land to cut and remove the trees. Similarly, a
profits a prendre to extract sand and gravel deposits would necessarily include the right to excavate on the
land for those materials.
7. Franchises. The concept of public franchises is derived from English law and
originally referred to royal privileges or prerogatives which were delegated to a subject of the crown.124
In the United States, public franchises involve the delegation of some aspect of sovereignty to an
individual or entity, and constitute a special privilege conferred by the government which is generally not
a common right.125 American public franchises serve a wide spectrum of purposes, often related to the
provision of regulated utility services.126 A public franchise can include a delegation by government to a
franchisee of a proprietorial type interest in public land (e.g., public streets), similar to (and sometimes
deemed to be) an easement or a license in public land.127
25 Am.Jur.2d, Easements and Licenses, 4; Black's Law Dictionary.
25 Am.Jur.2d, Easements and Licenses, 4.
For cites to specific examples, see Bruce and Ely, Law of Easements and Licenses, 1.04, fn. 1.
Bruce and Ely, Law of Easements and Licenses, 1.04; see also, Evans v. Holloway Sand &
Gravel, Inc., 106 Mich.App. 70, 78 (1981) (noting similarity of a profits a prendre and easement); Restatement of
Property, 450 spec. note (1944) (concluding that in the United States identical rules are applied to easements and
profits a prendre).
Powell on Real Property, 431.
Powell on Real Property; 433; Bank of Augusta v. Earle, 38 U.S. 519, ___ (1839).
Powell on Real Property, 433; see, e.g. Pearce v. Commercial Tel. & Tel. Co. 277 Ill. 265, ___
Powell on Real Property, 431 and 433; see, e.g., Group W. Cable, Inc. v. City of Santa Cruz,
679 F.Supp. 977, 979 (ND Cal. 1988); Utah Light Traction Co.v. Public Serv. Co., 101 Utah 99, ___ (1941);
Arkansas State Hwy. Comm v. Arkansas Power & Light Co., 231 Ark, 307, ___ (1959); City of New York v. Comtel,
Inc., 57 Misc.2d 585, 595 (Sup. Ct. 1968), affd, 25 N.Y.S.2d 852 (1969).
8. Natural Rights. There are a limited number of rights in the land of others which are considered
to be inherent in the land or a natural incident of land ownership, commonly referred to as natural
rights.128 While limited, natural rights are typically deemed to include the right to lateral and subjacent
support and the right to use water flowing through a property.129 Natural rights resemble, and are often
treated by courts, in the same manner as easements. CITE.
B. Distinctions Among Easements, Real Property Licenses and Leases.
As observed by some courts and commentators, at times it can be challenging to distinguish
between an easement, license and lease.130 While often considered by the courts, the title to a particular
document or the reference to technical words associated with specific use and access rights are typically
not dispositive of the legal character of that right (i.e., easement, license or lease).131 In differentiating
these three categories of use and access rights, the courts look to the substance of the agreement, rather
than the form or label, with primary focus on the intent of the parties creating the arrangement (e.g., what
specific rights did the parties intend to create), rather than the parties characterization.132 In the end it is
the substance of the access and use rights which is paramount.133
Bruce and Ely, Law of Easements and Licenses, 1.01 and 1.02; 6A American Law of Real
Gaudio, American Law of Real Property, 28.36-28.68.
Roberts River Rides v. Steamboat Dev., 520 N.W.2d 294, 300 (Iowa 1994); OTHER CITES?
25 Am.Jur.2d, Easements and Licenses, 138; Bruce and Ely, Law of Licenses and Easements,
11.01; see, e.g., Kapiolani Park Preservation Socy v. Honolulu, 69 Hawaii 569, __ (19___); Cooper Boise Church
of Christ, 96 Idaho 45, __ (19__); Roberts River Rides v. Steamboat Dev. Corp., 520 N.W.2d 294, ___ (19___).
Bruce and Ely, Law of Easements and Licenses, 11.01; see, e.g., Charlton v. Champaign Park
Distr., 110 Ill.App.3d 554, 558 (Ill. 1982); Dime Laundry Serv., Inc. v. 230 Apartments Corp., 120 Misc.2d 399, 401
See, Application of Rosewell, 387 N.E.2d 866, ___ (Ill. 1979); State ex rel. Tucker v. District
Court, 468 P.2d 773, ___ (Mont. 1970), Dime Laundry Service, Inc v. 230 Apartments Corp., 120 Misc.2d 399,
___(N.Y. 1983); Lee v. North Dakota Park Service, 262 N.W.2d 467, ___ (N.D., 1977).
The potential challenge in distinguishing between easements, leases and real property licenses
arises in part because the physical use of real property occupied under an easement, lease or real property
licenses can appear to be very similar. For example, a utility could obtain a right to construct and
maintain its distribution system across a parcel of land pursuant to an easement, lease, real property
license or even by obtain the fee interest in the land. To an outside observer each of these situations might
appear identical. However, the rights possessed by the utility in each of these situations would be quite
different. A useful analogy is to consider the relationship of a driver to a car. Whether the vehicle is
owned, leased, rented or borrowed, the driver's use of the car and the physical attributes of the car and its
ability to transport the driver from Point A to Point B are the same. As modes of transportation, the cars
in each situation and their apparent uses are identical. However, in other respects, the nature of the
driver's interest in the vehicle dictates divergent rights and outcomes. For example, if the driver owned
the car, he or she would have the right to sell it, loan it, donate it to charity or use the vehicle as collateral
to secure debt. The driver of a rental or borrowed car, on the other hand, would have none of these
rights. Similarly, when judged on basis of the physical use an easement, lease and real property license
may appear very similar, however, the nature of the underlying interest and its attendant rights and
obligations are very different.134
Another factor which can cause confusion in distinguishing between easements, leases and real
property licenses is that land use arrangements are often a combination or hybrid of use and access rights.
For example, a retailer occupying space in a regional shopping mall will typically lease its shop space and
obtain the necessary access rights through the common areas to that shop in the form of an easement or a
license typically included as part of the lease agreement. Similarly, a wireless telecommunications carrier
may lease specific rooftop space for its equipment and antennae in conjunction with a license with the
building owner for riser access rights. As discussed above in Part II(A)(2)(f), even easements often
include the ancillary access rights necessary for the use and enjoyment of the easement (i.e., secondary
See, Powell on Real Property, 16.02; Gaudio, American Law of Real Property, 5.02
(Question of whether particular use and access rights constitute possessory rights (lease) or nonpossessory rights
(easement or license) is important to the resolution of a variety of issues).
As a result of the superficial resemblance of easements, leases and licenses in real property, the
distinction between these types of use and access rights can at times be subtle.135 As discussed above, the
fundamental characteristics which distinguish these categories are: (i) possession v. use, (ii) revocability
v. irrevocability, and (iii) real property interest v. mere privilege. In addition to these fundamental
differences, the distinctions between these three forms of use and access rights has significant legal
effects in the following situations:
Formality of Creation: Easements and leases are typically subject to the requirements and
formalities of the Statute of Frauds, real property licenses are not. CITE
Tax Treatment: Easements and leases are taxable as real property interests, real property
licenses are not.136
Divisibility: Exclusive commercial easements in gross are apportionable. Division of interests
under a lease (e.g., subleases) will be dictated by the terms of the lease and the laws of the
specific jurisdiction. Real property licenses, are not divisible unless expressly provided for in the
license agreement. CITE
Condemnation: As real property interests, easements and leases are treated as compensable
property in condemnation actions, whereas real property licenses are generally not considered a
compensable interest in an eminent domain action.137
Legal Protections & Remedies: The rights and remedies available can vary dramatically
depending on the type of interest. For example, in many states tenants under leases receive
substantial statutory and common law protections which are unavailable to easement holders or
licensees.138 Similarly, a tenant will often have contract rights or causes action available which
would not pertain to an easement holder. DUAL NATURE CITE
Expiration & Revocability: In general, real property licenses are much easier to terminate or
revoke then an easement or a lease. CITE Similarly, by their very terms, most leases and real
property licenses have a set term. CITE In contrast, easements can be of perpetual duration.
While this list above is not intended to be comprehensive, it does illustrate that the distinctions between
an easement, lease and real property license makes a substantial legal difference.
Bruce and Ely, Law of Easements and Licenses, 11.01; See, Closson Lumber Co. V. Wiseman,
507 N.E.2d 974, 976 (1987) (In many instances the legal distinction between a license and an easement becomes
blurred); Evans v. Taraszkiewicz, 125 A.D.2d 884, 885 (1986) ([d]istinguishing an easement from a license is not
always an easy task . ..)
See, e.g., United States v. Anderson County, 575 F.Supp. 574, 578 (ED Tenn. 1983) .
Bruce and Ely, Law of Easements and Licenses 1.01, 3.01, 10.13 and 11.01; 26 Am.Jur.2d,
Eminent Domain, 174 and 181; See, United States v. 126.24 Acres of Land, 572 F.Supp. 832, 834 (WD Mo.
1983); Griffith v. Montgomery County, 57 Md.App. 472, 484-485 (Md. 1984) cert denied, 469 U.S. 1191 (1985).
See, e.g., Cal. Civ. Code 1942, 1946, 1951.2, 1951.4.
C. Fixtures. Related to the issue of utility use and access rights to real property is the identity of
ownership of the physical distribution infrastructure used to facilitate the utility's access and use (e.g.,
poles, conduits, cable, risers etc.). Once again, this relates directly to one of the primary issues raised in
NPRM, the meaning of the phrase owned or controlled in 47 U.S.C. 224(f)(1). A key factor in
determining ownership of physical infrastructure is the task of determining whether the items in question
Fixtures have been described as the species of property lying in the gray area which divides
real and personal property.139 While the precise parameters vary from jurisdiction to jurisdiction,
generally a fixture is an item of personal property which has become affixed to and part of the real
estate either through attachment to or use in association with a parcel of real property.140 Common
examples of items which are often deemed to be fixtures include HVAC. (heating, air conditioning and
ventilation) and fire suppression systems. Fixtures do not include items which, although once personal
property, have lost their separate identity through incorporation into the construction of improvements on
real estate through the accession doctrine (e.g., lumber, bricks , structural steel, etc.).141 As with real
property law in general, the precise legal definition of what constitutes a fixture is an issue of state law.
Consequently, the Uniform Commercial Code (UCC) defers to the individual states on this issue.142
Whether an item is deemed a fixture (i.e., part of the real property) or personal property has
significant legal implications, including: (i) whether the item may be removed by other than the owner of
the real property, (ii) tax status of the item (i.e., sales tax typically does not apply to a fixture, value of the
fixture is a component of valuation for real estate tax purposes), (iii) how creditors create and perfect
security interests in the item (e.g., a fixture becomes part of the security for a mortgage, whereas security
interests in personal property are secured by UCC filings), (iv) whether the item is deemed included in a
sale or transfer of the underlying real property; and (v) how the item is addressed in condemnation
actions.143 For example, in a condemnation action, nonfixtures remain the property of the condemnee,
Powell on Real Property, 648; 35 Am.Jur.2d Fixtures, Section 1.
Id., also see, Gaudio, American Law of Real Property, Vol. 1, 7.01.
Powell on Real Property, 652; Vol. 1, 7.01.
35 Am.Jur.2d Fixtures, 3; see, e.g., United States v. General Motors Co., 323 U.S. 373, ___
(1945); United States v. Certain Property, 344 F.2d 142, ___ (2d Cir. 1965).
who often must incur the cost of removal, whereas fixtures (as part of the real property) must be
compensated for in a condemnation action.144
1. Common Tests. Because of the practical difficulties in creating a comprehensive
principle for defining fixtures, there is no clear single statement or definitive rule in determining whether
an object constitutes a fixture.145 Instead, the fixture issue is typically examined in the context of the
specific facts and circumstances of the individual case. Over time, the courts have developed various
means of analyzing this issue and several tests for determining whether a particular item constitutes a
fixture. The classical three prong fixture test, which is the originally articulated in Teaff v. Hewitt,
consists of an examination of the following factors: (i) whether there has been actual annexation of the
item to the real estate; (ii) adaption and appropriateness of the item to the use or purpose to the real
estate, and (iii) the intention of the party making the annexation to make the article a permanent
accession to the real estate.146 Another test used by the courts, referred to as the institutional test or the
assembled industrial plant doctrine, places the focus on the necessity of the item of personal property
for the operation of the real estate.147 The institutional test is based on the public policy underpinnings
that society is better served when property essential to the operation of real estate is preserved intact and
to encourage the financing of industrial plants.148 A third fixture test, takes an objective view of the item
in question, examining whether an ordinary buyer, mortgagee or judgment creditor would reasonably
expect an item to be a part of the real estate.149 In the end, each of the varying fixture tests are
permutations of the Teaff v. Hewitt test, with the variety arising from which of the three prong the
emphasis is placed -- annexation, adaption or intent.150 The majority of courts have placed the emphasis
on the intent prong of the Teaff v. Hewitt test.151
United States v. General Motors, 323 U.S. 373, ___ (19__); Powell on Real Property , 651;
see also 151 A.L.R. 1429 (1984).
Powell on Real P]roperty, 649; 35 Am.Jur.2d Fixtures, 1.
Teaff v. Hewitt, 1 Ohio St. 511, ___ (1853).
Phil v. Kugler's Rest. Co., 52 D & C 375 (Pa. 1945) (citing, Voorhis v. Freeman, 2 W & S 116,
___ (Pa. 1841)); see also Powell on Real Property ___.
Commonwealth v. Haveg Indus. Inc., 411 Pa. 515, 519 (1963); Phil v. Kugler's Rest. Co., 52 D &
C 375, ___ (Pa. 1945).
See, Gaudio, American Law of Real Property, 7.02.
Wayne County v. Britton Trust, No 104299, 1997 WL 32862 (Mich, 6/17/97)
See, United States v. 52.67 Acres of Land, More or Less, 150 F.Supp 347 (E.D. Ill. 1957) (federal
courts have almost universally accepted the intention test); Seatrain Terminals of Cal., Inc. v. County of Alameda,
83 Cal.App.3d 69, ___ (1978) (intent is crucial overriding factor with the other two criteria only subsidiary
ingredients); see also, Squillante, The Law of Fixtures: Common Law and the Uniform Commercial Code - Part I,
15 Hostra L. Rev. 191, 198.
2. Trade Fixtures. The murkiness of fixture law is further complicated by the trade fixture
exception. A trade fixture is generally an item of personal property placed on real property by the
party in furtherance of its trade or business conducted on the real estate. Unlike ordinary fixtures, which
typically may not be removed, and typically remain the personal property of the original owner.152
Traditionally, the required characteristics of a trade fixture are: (i) the item be annexed to the real
property, (ii) the item be related to the proper and efficient conduct of the user's trade or profession on the
real property, and (iii) the item can be removed from the real property without permanent injury to the
underlying real property.153 The trade fixture issue most frequently arises in the context of divided
ownership, such as with a lease or real property license. Trade fixtures are the major exception to the
standard rules of fixtures. Thus, an item which otherwise might be deemed a fixture retains its status as
personal property by qualifying as a trade fixture.154 At common law, a party is typically entitled to
remove its trade fixtures at the end of its occupancy or use of the real property, provided that any damage
related to that removal is repaired.155 However, in some instances the courts will deny trade fixture status
if the construction of the improvements in question was part of the consideration for the underlying access
agreement (licenses or lease), if items are installed as replacements for previously existing articles, or
where the item is deemed to be for the benefit of the owner of the real estate.156 For example, in T-V
Transmission, Inc. v. County Board of Equalization a Nebraska court held that service drops to customer's
residences installed by a cable television provider under a real estate license where fixtures and thus could
not be removed by the cable television company.157
3. Mutual Agreement & Severance. Items may also retain their status as personalty by
agreement between the owner of the personalty and the owner of the real property, although there can be
limitations on the enforceability of such agreements in certain situations.158 Similarly, an item which is a
Gaudio, American Law of Real Property, 7.03.
Powell on Real Property, 653.
Powell on Real Property, 653.
See e.g., Millford v. Tennessee Revier Pulp & Paper Co, 335 So.2d 687, 690 (Ala. 1978) (general
right of licensee to remove trade fixtures); see also, Gaudio, American Law of Real Property, 7.03.
See, T-V Transmission, Inc. v. County Board of Equalization, 215 Neb. 363, ___ (1983); Rothman
v. Butin, 142 Colo. 505, ___ (1960); Brown, Personal Property 546 (3d ed. 1975).
Id. at 367.
See e.g., Holt v. Henley 232 U.S. 637, 641 (1914); Premonstratensian Fathers v. Badger Mur. Ins.
Co., 46 Wis.2d 362, ___ (1970).
fixture can again become personalty through the severance (actual or constructive) of the item from the
real property, effectively reversing the process of an item transforming from personalty to a fixture.159
Analysis Of Utility Access And Use Rights
The discussion above in Part II provides the legal framework to examine the nature of utility use and
access rights interest in real property.160 Understanding the precise legal nature of those utility rights is an
essential step in determining the answers to a number of the questions, as well as analyzing the
appropriateness of certain proposals, raised in the NPRM. For example, the nature of these use and
access rights is at the core of several of the Commissions main inquiries in the NPRM -- the meaning of
the phrases owned or controlled and right-of-way as used in the context of 47 U.S.C. 224(f)(1).
In general, there are three main categories of access and use rights by which utilities obtain the
necessary interests to construct and maintain their distribution networks: (a) real property which is owned
in fee by the utility; (b) rights to use publicly owned or controlled real property (e.g., public streets and
highways); and (c) access and use rights to privately owned real property. The Real Estate Coalition
anticipates that the Commission will receive extensive comments from both utility providers and public
entities regarding pertinent issues related to the impact of the NPRM on the first two categories of these
use and access rights. As the Real Estate Coalition's members are typically constitute private property
owners, the discussion in this Part III focuses on the nature of utility's access to private real property.
The three most common forms of utility access and use rights to private real property are
easements, leases and real property licenses. It is useful to conceptualize these three forms of use and
access rights as three points on the continuum of ownership rights, with easements creating the highest
degree of control over the real property (i.e., most strands from the bundle of ownership rights), real
property licenses the lowest degree of control (a mere personal privilege), and with leases falling
somewhere between easements and licenses on that spectrum. The nature of the utility's use and access
Peiser v. Mettler, 50 Cal.2d 594, __ (1958); Marsh v. Spradling, 537 S.W.2d 402, ___ (Mo. 1976).
A number of aspects of the discussion in this Part III are based on the experience of the authors,
information provided by major utility companies, property management firms, riser management companies and
rooftop managers, and prior research on real property law telecommunications related issues conducted by one of
the authors of this memorandum in connection with materials which appear in California CEB, Office Leasing --
Drafting and Negotiating the Lease and the writing of An Owner's View of Telecommunications Site Agreements,
ABA Probate & Property, Pg. 53 (January/February 1998).
rights often can vary depending on what point in its distribution chain the rights are located. For instance,
an electrical utility might own its power generating facility and perhaps some of its major distribution
rights of way in fee, with secondary distribution rights of way and elements in the form of easements and
individual service drops from the utility's distribution grid to particular properties in the form of written or
oral service agreements, which typically constitute real property licenses.
The nature and form the use and access rights chosen or obtained by the utility at any point along
this distribution chain is often influenced by several factors, including: (i) the nature of the use; (ii)
physical location of the use; (iii) relationship of the parties; (iv) availability eminent domain rights; and
(iv) cost of obtaining a particular type of use and access rights. While specific circumstances will
naturally vary, consideration of these factors leads to some general patterns of certain types of use rights
typically occurring in certain situations. For example, where a utility is piggybacking onto another party's
easement as a result of an apportionment, the piggy backed utility will typically have a real property
license (rather than an easement to the easement) to use the easement. Awareness of these general
patterns is useful in determining the practical implications of a number of the proposal in the NPRM.
1. Nature of Use. This first factor involves the nature of the particular use for which the
utility needs the use and access rights to a particular property. In general, there are uses can be broken
down into two groups -- service related and nonservice related. Service related refers to situations where
the access and use rights of the utility are directly related to the utility's provision of its services to the
particular parcel of land. For example, this would include situations where an electric utility or local
exchange carrier extend service lines to a particular parcel of real property from their distribution grid or
loop. Non-service related uses, on the other hand, refers to situations where a utility obtains use and
access rights to private real property which are unrelated to the provision of that utility's services to the
land in question. Examples of this situation would include rights acquired for purposes of establishing a
utilities distribution infrastructure (e.g., transmission lines and supporting structures) across a property or
the establishment of wireless telecommunications sites (e.g., Cellular, PCS, SMR, etc.).
This service/nonservice distinction is important because in the nonservice scenario the utility
typically has a greater concern with protecting its use and access rights from both the landowner and third
parties. In nonservice related circumstances, the uses of the real property by the utility and the landowner
are typically separate and insulated from each other. A utility has an obvious need to maintain the
integrity and contiguity of its distribution infrastructure, as any distribution chain is only as strong as its
weakest link. Thus prudent business practices dictate that the utility obtain use and access rights for its
distribution infrastructure which are not subject to unexpected extinguishment or termination, as can
happen with a real property license. Easements (interests in real property) and leases (estates in real
property) also provide the utility with the opportunity, if desired, to acquire title insurance coverage for its
use and access rights. Such coverage is not available for a real property license. Thus an easement or
lease provides a utility with a higher degree of control (i.e., more strands from the bundle of ownership)
and thus are typically preferred by the utilities in these situations.
In contrast, the service scenario typically occurs in a permissive and cooperative situation. Quite
often it is the landowner who approaches the utility with a request for the utility to provide its service to
the landowner's property. In the service scenario, the need for the utility to obtain defensible use and
access rights is greatly reduced. If the landowner prevents the utility from obtaining the necessary access
to the serviced property, the utility simply will cease providing the service. In multi-tenant situations, the
landowner often has some type of obligation to provide the tenants with utility service. CITE. Thus, if
the landowner interfered with the utilities service access, it would face the ire and potential damage
claims from its tenants as well as potential breach of contract damages under the service agreement
between the landowner and the service provider.
Two other components of the use factor are the intensity and duration of the use required by
utility. For example, use of real property for right of way purposes (i.e., transiting its utility service
across the property) typically involves a less intensive use of the property, requiring only use and access
rights, whereas construction of a tower or monopole for transmission of telecommunications signals
typically necessitates the utility acquiring exclusive use over the portion of the property which it uses.
Similarly, utilities often will try to acquire perpetual use and access rights for real property used in
connection with the utility's distribution network. In other situations, such as office space, work yards or
wireless telecommunications sites, the utility may have a shorter-term use and access needs.
2. Physical Location. Another factor which can influence the form of the use and access
rights is the physical location of the use. Depending on the particular location of the use and access
rights, certain forms of use and access rights may be more appropriate or desirable. For example, even in
a service related scenario, is still sometimes desirable for access and use rights related to underground
distribution lines to be memorialized in the form of easements rather than real property licenses,
particularly in commercial settings. In these situations, there is an understandable to minimize the
chances of accidental disruption from excavation or improvements being constructed on the surface above
the utility's underground infrastructure. In this instance, a recorded easement provides the benefits of
creating a permanent record of both the existence and precise location of the utility lines.
In contrast, utility access and use rights within buildings are typically not structured in the form
of an easement. Instead, interior access and use rights are more commonly delineated as real property
licenses for service related rights and as leases or real property licenses in the case of nonservice related
uses (e.g., telecommunications switching station, wireless telecommunications site). Where the access is
to a shared area of the building infrastructure which the owner uses in conjunction with others (e.g.,
utility closets, risers and chases) rather than a discernable exclusive use space, licenses are the typical
vehicles for access and use rights. In these situations, building owners and managers need to be able to
maintain the ability to coordinate users, maintain security and safety and plan the prudent use of limited
physical resources (e.g., riser space).
3. Relationship of Parties. The relationship between the utility and the party from which
the utility acquires its use and access rights can also influence the nature of that right. As discussed above
in Part II(A)(1), where the use is service related the relationship between the utility and the landowner is
one of customer and provider, and thus typically in a cooperative and permissive environment. In
contrast, with the nonservice situation there may be no relationship between the parties and while many
nonservice access and use agreements are freely negotiated, the relationship of the parties is not
necessarily cooperative or permissive. Another instance where the relationship between the parties may
be a factor is in the context of an apportioned easement. There, the additional utility derives its use rights
through the easement holder, rather than from the underlying property owner. This arrangement can be
entered into voluntarily or pursuant to statutory requirements, such as 47 U.S.C. 541(a)(2). Commonly,
additional users on apportioned easements enter into a license agreement with the easement holder.
4. Availability of Eminent Domain Rights. The ability of a utility to obtain use and
access rights through eminent domain can influence the form of rights. The availability of condemnation
rights to utilities as a tool for use and access rights acquisition can vary widely from state to state. CITE
For example, some states have delegated fairly broad condemnation rights to certain regulated utilities,
while other states have been more restrictive in their delegation of the power of eminent domain. CITES.
On a practical level, the right to acquire property through eminent domain provides a utility with leverage
in negotiations with the landowner and, if such negotiations should fail, provides a fallback means for the
utility to obtain the use and access rights it seeks. Where utilities possess state delegated eminent domain
rights, these rights often have well significant limitations (e.g., utility must show public use and necessity
for the taking) and procedural protections for the land owner and thus eminent domain may not be the
most appealing method of right of way acquisition. However, in a situations where a utility desires broad
easement rights (e.g., exclusive easement for broad range of uses) and the landowner is only willing to
grant lesser use and access rights (e.g., a real property license or nonexclusive easement), the utility's
ability to acquire the desired easement through eminent domain can influence its decision on whether to
settle for more restrictive use and access rights. In contrast, where no eminent domain rights are
available, the utility must reach a consensual arrangement with in order to obtain its use and access rights,
which often will require compromise.
5. Cost of Obtaining Rights. Finally, the cost of the type of use and access rights is a
factor. Typically, the intensity of the use and access rights will bear a relationship to the costs of those
rights. For example, an exclusive easement for all utility purposes would be more costly than a real
property license for utility purposes across the same strip of land. Similarly, in the absence of an
abandonment of an easement by a utility, most easements run indefinitely. Thus when purchased, the cost
of the easement is often based on the assumption that the utility is purchasing a perpetual right. Leases,
on the other hand, provide a category of use and access rights which can be paid for over time in the form
of rental. Thus where a utility does not need particular use and access rights indefinitely, a lease may be
more appealing form of use and access rights, since the lease will not require the initial investment of the
typical easement and the utility can often negotiate the lease agreement such that it effectively only pays
for the use and access rights it actually needs, for the period of time when those rights are needed.
B. General Patterns of Use Rights. Because of the impact of the five factors discussed above,
certain general patterns of utility use and access rights emerge. While there will always be exceptions to
these general patterns as a result of varied factual settings and differing rules between jurisdictions, these
general patterns provide a useful practical context in which to explore the questions and issues presented
in the NPRM.
1. Exterior, Nonservice Related. Nonservice related uses which occur outside of a
building and which are used for distribution infrastructure are often in the form of easements. These
easements may be dedicated by a land developer in connection with platting/subdividing property,
negotiated between the utility and landowner or obtained through eminent domain. In situations where
the utility requires a possessory interest on a property (e.g., wireless telecommunications facility) rather
than simple use and access rights, leases are common.
2. Exterior, Service Related. Service related exterior uses are commonly done by a real
property license, oral or written, which is often a component of the basic service agreement between the
owner and utility. An exception to this rule is where the utilities are located underground and there is a
concern regarding accidents or disruption. In these instances, easements may be used.
3. Interior, Service Related. Utility use and access rights within a building related to
servicing the building most frequently occur in the form of a real property license, oral or written.
4. Interior, Nonservice Related. Wireless site agreements within or on buildings (e.g.,
rooftops) tend to be in the form of either leases or real property licenses or combinations of the two (e.g.,
lease of exclusive use areas in combination with real property license rights to nonexclusive areas). In
some situations, the rooftop is master leased to a management company which then enters into licenses
with the individual wireless telecommunications providers. Other nonservice uses by utilities within
buildings (e.g., switching stations, offices) tend to be in the form of leases.
5. Apportioned Easements. Secondary users on apportioned easements typically obtain
licenses from the easement holder for use the easements.161 The reason for this arrangement, in part,
often is related to the easement holder's desire to maintain control over the easement so that it can protect
its primary use and exert the control over additional users necessary coordinate the overall use of the
apportioned easement. In addition, use of a license arrangement eliminates the issue of further
apportionment and subdividing of an apportionment easements and assures that a subsequent users of the
easement derive their use and access rights directly from the easement holder.
See, e.g., C/R TV, Inc. v. Shannondale, Inc., 27 F.3d 104, 106 (4th Cir. 1994); Salvaty v. Falcon
Cable Television, 165 Cal App. 3d 798, 800 (Ca. 1985); Hoffman v. Capitol Cablevision System, Inc., 383 N.Y.S.2d
674, 676 (N.Y. 1976).
STATEMENT OF STEVEN S. ROSENTHAL
OF THE LAW FIRM OF
COOPER, CARVIN & ROSENTHAL, PLLC
ON BEHALF OF THE
REAL ACCESS ALLIANCE
Subcommittee on the Constitution
House Judiciary Committee
March 21, 2000
Good afternoon, Chairman Canady and Members of the Subcommittee. My
name is Steven Rosenthal, and I am a partner at the law firm of Cooper, Carvin &
Rosenthal. My practice includes cases involving a broad range of constitutional issues,
including questions arising under the Takings Clause of the Fifth Amendment to the
I appear before you today on behalf of the Real Access Alliance (“the Alliance”)
on the question whether certain proposals raised or discussed in a notice of proposed
rulemaking issued by the FCC last year would, if actually promulgated as final rules,
constitute a taking of private property under the Takings Clause. The Alliance
represents 11 different national real estate associations162 that in turn represent
approximately 1 million members who participate in the real estate industry as
owners, investors, developers, and managers, situated in every State and the District of
Columbia. The Alliance seeks to further the interests of the real estate industry and its
customers, and to ensure that the evolving nature of this industry‟s role in facilitating
customer access to telecommunication services is understood by policymakers. In
particular, the Alliance has attempted to demonstrate to the FCC that the rights of
property owners must be recognized as the Commission seeks to promote competition
162 BUILDING OWNERS AND MANAGERS ASSOCIATION INTERNATIONAL, INSTITUTE OF REAL ESTATE MANAGEMENT,
INTERNATIONAL COUNCIL OF SHOPPING CENTERS, MANUFACTURED HOUSING INSTITUTE, NATIONAL APARTMENT
ASSOCIATION, NATIONAL ASSOCIATION OF HOME BUILDERS, NATIONAL ASSOCIATION OF INDUSTRIAL AND OFFICE
PROPERTIES, NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT TRUSTS, NATIONAL ASSOCIATION OF
REALTORS, NATIONAL MULTI HOUSING COUNCIL, AND NATIONAL REALTY COMMITTEE/THE REAL ESTATE
pursuant to its mandate under the Telecommunications Act of 1996. Just as important,
the Alliance has sought to demonstrate that the rights of property owners are in no
way incompatible with the proliferation of competitive, state-of-the art
The most far reaching of the FCC‟s proposals would require building owners to
provide access to their premises to any and all telecommunications providers on what is
referred to as a “nondiscriminatory” basis. Another proposal would require local
incumbent exchange companies (“ILECs”) and other public utilities to make their in-
building facilities available to any and all cable companies and telecommunications
providers, also on so-called nondiscriminatory terms. Both of these proposals would
allow competitors to “piggyback” on whatever access rights an incumbent provider,
such as a local Bell company, has to a building owner‟s property. A third proposal
would extend a rule issued two years ago prohibiting landlords from setting lease
restrictions preventing tenants from installing antennas on any part of their leased
premises—the earlier rule covered antennas only for video services, and the proposed
extension would cover antennas for non-video services as well.
While these rules vary in the nature and extent of the uncompensated taking
they would effect, all of them share the characteristic of requiring building owners to
acquiesce to an uninvited occupation on their private property.
In this testimony, I will discuss how the proposed rules in the FCC‟s notice,
which I will refer to as the NPRM, would effect a taking of private property within the
meaning of the Fifth Amendment of the Constitution. At the outset, however, I would
like to make clear what the effect is of concluding that the NPRM effects a taking. The
Takings Clause obviously does not prohibit the government from exercising its eminent
domain power. Rather, it simply requires that when private property is taken by the
government, just compensation must be paid to the owner of that property. It has been
suggested that, while the proposals would clearly constitute a taking, the FCC might be
able to provide the constitutionally required just compensation by requiring that
building owners be paid the equivalent rates they receive from incumbent providers.
But this proposal is fatally flawed, both as a constitutional and as a practical matter.
Under the Fifth Amendment, just compensation requires an award of fair market value
as of the date of the taking, and not a payment based on some past benchmark. More
importantly, at the time when most incumbent providers were given access to building
facilities, they were part of a monopoly provider, so that building owners had
essentially no choice but to provide them access, and in some instances did so pursuant
to an actual or threatened exercise of eminent domain.
In addition to the just compensation requirement, the power of the government
to take property is also limited by the constraints built into our system of divided
government: where an executive agency proposes to act in a manner that triggers the
Federal government‟s liability to pay just compensation under the Takings Clause, it
must be clear that the agency was in fact given the power to do so. This concern is
especially acute where the potential liability to the government is extremely large.
In this instance, the aggregate of all the property rights taken by the finalization
of the proposed rules in the NPRM would likely exceed the largest single body of
damage claims ever asserted against the United States Government under a takings
theory. The takings claims of owners of 10 billion square feet of commercial leaseholds
and of the 28% of housing units located in multi-tenant environments would give rise to
claims that credibly would run in excess of ten billion dollars. This fact deserves to be
emphasized and understood as I proceed to analyze why it is that the NPRM, if
finalized, would indeed trigger liability to the Federal government under the Takings
II. THE COMMISSION’S PROPOSALS WOULD LEAD TO THE TAKING OF
THE PRIVATE PROPERTY OF BUILDING OWNERS WITHIN THE
MEANING OF THE FIFTH AMENDMENT
The Takings Clause is often understood as operating through two distinct
doctrines.163 First, it provides an absolute prohibition against uncompensated per se
takings, which are defined as occurring whenever there is a government-authorized,
permanent physical occupation of private property.164 Central to this doctrine is the
principle that if the government overrides a property owner‟s right to exclude third
parties from his property, it has effected a taking, regardless of the level of economic
163 See, e.g., Penn Cent. Transp. Co. v. New York City, 438 U.S. 104 (1978).
164 Of more recent vintage is a second category of per se takings. “When the owner of real property has
been called upon to sacrifice all economically beneficial use in the name of the common good, that is, to
leave his property economically idle, he has suffered a taking.” Lucas v. South Carolina Coastal Council, 505
U.S. 1003, 1019 (1992) (emphasis added); see also Agins v. Tiburon, 447 U.S. 255, 260 (1980).
harm suffered by the private party.165 A second category of takings is described as
“regulatory takings,” which are defined according to a balancing test used to determine
when a government regulation goes “too far” in burdening a property owner so that
“justice and fairness” requires payment of just compensation.166 Because
determination of a regulatory taking involves a balancing test and a subjective
determination, its focus is different from that of a per se taking, relying heavily on the
extent of economic harm suffered by the property owner, the interference with
investment backed expectations, and the importance of the government interest at
The proposed rules contained in the NPRM would require building owners to
acquiesce to the physical presence on their premises of uninvited telecommunications
providers, and therefore they fall squarely within the per se takings rule as articulated
by the Supreme Court in its famous 1982 decision in Loretto v. Teleprompter Manhattan
CATV Corp.168 Moreover, even if analyzed under the different standards of a
regulatory taking, these proposals unfairly transfer substantial economic value from
building owners to investors in telecommunications businesses, and thereby
unreasonably interfere with the investment backed expectations of the real estate
165 Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982).
166 See Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922).
167 See, e.g., Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211 (1986).
168 458 U.S. 419 (1982).
industry. In so doing, the NPRM proposes not only to authorize the physical
occupation of building owners‟ property, but also to appropriate assets of substantial
economic value to the property owners and to transfer them free of charge, or through
inadequate compensation, to telecommunications companies. Absent this
governmental action, these companies would have to pay fair market value for the right
to have access to private property.
(A) The Supreme Court’s Decision in Loretto Demonstrates The Constitution’s
Absolute Protection Against A Requirement That Building Owners Provide
Uncompensated Access To Their Property By Telecommunications Carriers
In the landmark Loretto decision, the Supreme Court held that a New York
statute authorizing a cable television company to place cable equipment onto
Ms. Loretto‟s building constituted an automatic—or per se—taking under the Fifth
Amendment. The decision rested upon the following basic principle:
[W]e have long considered a physical intrusion by government to be a property
restriction of an unusually serious character for purposes of the Takings Clause.
Our cases further establish that when the physical intrusion reaches the extreme
form of a permanent physical occupation, a taking has occurred. In such a case,
“the character of the government action” not only is an important factor in
resolving whether the action works a taking but also is determinative.169
In reaching this conclusion, the Court emphasized that a physical occupation of
another‟s property “is perhaps the most serious form of invasion of an owner‟s property
interests,”170 and paid special attention to the importance of protecting a landowner‟s
169 Loretto, 458 U.S. at 426.
170 Id. at 435.
“right to exclude.”171 Indeed, the Court reiterated this principle twice, stating that
“[t]he power to exclude has traditionally been considered one of the most treasured
strands in an owner‟s bundle of property rights,” and “„one of the most essential
sticks in the bundle of rights that are commonly characterized as property.‟”172 The
Supreme Court‟s opinions have consistently returned to this articulation of a property
owner‟s constitutional right to exclude others from his property, including in a decision
issued just last term.173
Moreover, the Loretto decision clearly held that a taking occurred even though
the total area occupied was less than two cubic feet, and stated that “whether the
installation is a taking does not depend on whether the volume of space it occupies is
bigger than a breadbox.”174 Thus, the Loretto rule cannot be avoided by arguing that
the physical intrusion is too small or insignificant to matter.
The proposals contained in the NPRM require real property owners to acquiesce
to the physical presence of uninvited telecommunications service providers on their
private property. As the NPRM observes, “In order to serve customers in multiple
tenant environments, telecommunications carriers typically require a means of
transporting signals across facilities located within the building or on the landowner’s
171 Id. at 426.
172 See Id. at 433, 435 (quoting Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979)).
173 College Sav. Bank v. Florida Prepaid Postsecondary Ed. Expense Bd., 144 L.Ed. 2d 605, 614-615 (1999).
174 Loretto, 458 U.S. at 438 n.16.
premises to individual units.”175 These facilities consist of, among other things, poles,
ducts, conduits, in-building wiring, rights of way, and most importantly, rooftops.176
The NPRM‟s proposals have as their overarching objective the requirement that all such
facilities be made fully available to any and all telecommunications carriers—meaning
that these carriers will be relieved of the normal process of actually bargaining for and
acquiring access rights to these facilities. Indeed, even though the normal system of free
market negotiation is reputedly working very well for competitive telecommunications
carriers in all but a very small minority of cases, these carriers have asked the FCC to
appropriate the property rights of building owners in order to advance their economic
interests and propel their businesses forward.
Before moving on to discuss the NPRM‟s proposals in more detail, I want to
make two additional points that serve to underscore the full meaning of Loretto and
therefore of the Takings Clause as well. The first is that property rights are what they
are, and generally find their definition in local law—they certainly cannot be defined by
the federal branch of government seeking to take them away. Second, the
unambiguous force of the Loretto holding in this context cannot be avoided by the
somewhat naïve argument that building owners are given a free choice to grant access
either to no telecommunications carriers, or to all of them.
175 NPRM, ¶ 30 (emphasis added).
176 See, e.g. NPRM, ¶¶ 28, 36, 44.
(1) The Property Rights Of Each Building Owner Must Be Defined Under
Applicable State And Local Property Law, Not Under General
Principles Identified By The Commission
In determining whether the interests of a litigant meet the definition of
“property” so as to warrant the protections of the Takings Clause, the Supreme Court
has repeatedly emphasized that courts must look to the traditional sources of property
law for guidance as to what constitutes private property. For instance, in one case the
Supreme Court stated that:
[W]e are mindful of the basic axiom that “‟[property] interests … are not created
by the Constitution. Rather, they are created and their dimensions are defined
by existing rules or understandings that stem from an independent source such
as state law.‟”177
In another case, the Court held that “the logically antecedent inquiry into the
nature of the owner‟s estate” demonstrated that a prohibition of certain construction
was a taking of pre-existing, established property rights. 178 This principle is consistent
with basic federalism principles reflected in the Constitution. Essentially, those
principles reflect the Founders‟ understanding that the States are the primary source of
property rights and that the Federal Government is limited by the Constitution in the
manner in which it is permitted to restrict or abrogate those rights. Among those limits
are the requirement that if property rights are taken within the meaning of the Takings
Clause, then just compensation must be paid.
177 Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1001 (1984) (citing Webb’s Fabulous Pharmacies, Inc. v.
Beckwith, 449 U.S. 155 (1980), quoting Board of Regents v. Roth, 408 U.S. 564 (1972)).
178 Lucas¸ 505 U.S. at 1027.
In analyzing whether or not the NPRM‟s proposed rules might lead to the
“permanent physical occupation” of the “property” of certain building owners, it is
therefore necessary to determine the scope of the building owners‟ property rights
under local law. Specifically, if a building owner has agreed to allow one
telecommunications carrier to have access to his building through certain conduits,
ducts, and rights of way, has he retained the right to exclude others from those same
facilities, or has he irrevocably ceded that right of access to other carriers? Under the
accepted rule as described by the Supreme Court in the cases I just quoted, among
others, the question of what rights the building owner has retained must be answered
by reference to the terms of the actual agreements he previously made with the carriers
to whom he provided access, as those agreements are understood against the “logically
antecedent inquiry into the nature of the owner‟s estate.”179
As a general matter, when a building owner agrees to provide access to specific
telecommunications and power providers, he is not deemed to have also made a
general grant to all similar carriers. Thus, a requirement forcing the building owner to
provide nondiscriminatory access to all possible carriers will constitute a taking under
the Fifth Amendment. Likewise, when a landowner rents his building to tenants, he
may often reserve, either explicitly in the lease or implicitly under the facts and
circumstances of the lease as analyzed under local law, the right to prohibit his tenants
179 Lucas¸ 505 U.S. at 1027.
from affixing telecommunications equipment onto certain parts of the building.180 In
short, so long as the building owner is recognized as having retained a property right
cognizable under local law, the appropriation of that right through a permanent,
physical occupation constitutes a taking.
(2) A Nondiscriminatory Forced Access Rule Can Only Be Understood As A
Forced Access Rule, And Cannot Properly Be Categorized As A
Regulation Of The Lessor-Lessee Economic Relationship
Having discussed the importance of Loretto and of the determination of property
rights under local law, I next address the argument, advanced by some commenters in
front of the Commission, that a nondiscrimination requirement is not like other forced,
physical occupations, but instead is part of the general regulation of the landlord-tenant
relationship, and hence does not constitute a per se taking.
Five years after declaring the per se takings rule in Loretto, the Supreme Court
had an opportunity to define the boundary between a per se taking and a regulatory
taking. In FCC v. Florida Power Corp.,181 the Court ruled that an FCC order under the
Pole Attachment Act that restricted the rates a utility could charge cable companies for
use of its poles did not violate the Takings Clause. The Court distinguished Loretto
180 It should be noted that the Supreme Court in Loretto chose not to “hazard an opinion” on the
respective rights of the tenant and the owner to the use of the rooftop of Ms. Loretto‟s building, as that
opinion was not necessary because the New York law at issue did not require the landlord to provide
cable installation “if the tenant so desires,” but simply required the landlord to have the cables installed
irrespective of any tenant‟s desires. See Loretto, 458 U.S. at 439 nn. 18, 19. Nevertheless, it is obvious that
underlying the decision in Loretto was the assumption that Ms. Loretto had a property interest in the
rooftop which included the right to exclude the cable company‟s equipment.
181 480 U.S. 245 (1987).
based on the fact that “nothing in the Pole Attachment Act as interpreted by the FCC …
[gave] cable companies any right to occupy space on utility poles, or prohibit[ed] utility
companies from refusing to enter into attachment agreements with cable operators.”182
Instead, the rate restrictions had to be analyzed under “traditional Fifth Amendment
standards,” which dictate that “regulation of rates chargeable from the employment of
private property devoted to public uses is constitutionally permissible” because
“investors‟ interests provide only one of the variables in the constitutional calculus of
reasonableness.”183 Similarly, in a case called Yee v. Escondido, the Court upheld a rent
control statute because “[p]ut bluntly, no government has required any physical
invasion of petitioners‟ property.”184
By contrast, the facts in Loretto, as here, did involve a required physical invasion,
rather than a mere regulation of rents or rates. It does no good to describe a
requirement that other parties be allowed permanent access as an “economic term” of a
pre-existing relationship in order to bootstrap Loretto facts into the holding of Florida
Power. Loretto itself rejected exactly that approach when it refused to agree that the
forced access statute in that case could be avoided by simply not renting out the
building to tenants. The Court responded to this argument in a footnote, stating: “The
right of a property owner to exclude a stranger‟s physical occupation of his land cannot
182 Id. at 251 (emphasis added).
183 Id. at 253 (citations omitted).
184 Yee v. City of Escondido, 503 U.S. 519, 528 (1992).
be so easily manipulated.”185 Moreover, the Supreme Court has articulated the
distinction with crystal clarity: “The line which separates these cases [such as Florida
Power] from Loretto is the unambiguous distinction between a commercial lessee and an
interloper with a government license.”186
The NPRM proposes rules that are designed to provide telecommunications
carriers‟ access to multiple tenant environments to which they do not currently have
access without paying some form of negotiated compensation to the owners. It is
therefore an attempt to authorize physical presence, rather than an attempt to regulate
economic terms. As a result, the proposed restrictions in the NPRM fall plainly on the
Loretto side of the line. The decisions in Florida Power and Yee v. Escondido, both of
which deal with the economic terms of a relationship between a landowner and an
existing “commercial lessee,” rather than with the rights of an “interloper” to use
government authority to gain access, are therefore both inapposite to determining
whether the proposals in the NPRM would constitute a taking.
(B) At Least Three Specific Proposals Contained In The NPRM Will Give Rise To
A Taking Of Property Under The Fifth Amendment
At least three specific proposals will effect a taking of private property under the
Takings Clause, which will thereby trigger the questions of whether the Commission
185 Loretto, 458 U.S. at 439 n. 16.
186 Florida Power, 480 U.S. at 252-53 (emphasis added).
had statutory authority to issue such rules, and of how the private property owners will
receive just compensation.
(1) The NPRM’s Proposed Rule Requiring Building Owners To Allow
Access To Any Telecommunications Provider To Their Premises On
Nondiscriminatory Terms Would Constitute A Taking Of Property
In Paragraph 58 of the NPRM, the Commission asks “for comment on whether
there would be any constitutional impediment to our adoption and enforcement of a
nondiscrimination requirement.”187 As summarized in the NPRM, the
nondiscrimination requirement would state that “building owners who allow access to
their premises to any provider of telecommunications services should make comparable
access available to all such providers under nondiscriminatory rates, terms, and
conditions.”188 I believe that the Takings Clause, properly understood, would apply to
such a requirement, thereby certainly creating a “constitutional impediment” to its
adoption and enforcement.
As already explained, the mere fact that a building owner has invited a single
carrier onto his property in no way relinquishes the owner‟s right to exclude others
from his property. Under virtually universal state and local property law principles,
the terms of the arrangement with the telecommunications provider who was
specifically granted access would determine whether or not the building owner had
ceded his rights to exclude any other providers. In the absence of a very clear cession of
187 See generally NPRM, ¶ 58-60.
188 NPRM, ¶ 53.
rights, the building owner could not be forced to acquiesce to the presence of any and
all other providers without triggering a per se application of the Takings Clause under
Loretto. Notwithstanding the importance of the Commission‟s goal of expanding the
nation‟s telecommunications infrastructure, a nondiscrimination requirement simply
cannot be made to “piggyback” on prior specific access arrangements without taking
the property rights of the building owners.
Indeed, in a directly analogous context, a federal appeals court has already held
such a requirement to constitute a Loretto taking. In Gulf Power Co. v. United States,189
the court considered an FCC rule requiring that “‟a utility shall provide a cable
television system or any telecommunications carrier with nondiscriminatory access to
any pole, duct, conduit, or right-of-way owned or controlled by it.‟”190
In affirming the district court, the Eleventh Circuit rejected the assertion that the
procompetitive policies behind the authorized occupation cured it of the takings
infirmity, and also refused to agree that a permanent occupation authorized through a
nondiscriminatory rule was somehow not a taking because the utilities could avoid it
by refraining from making their facilities available for any carrier.
Not only are there no grounds for distinguishing the NPRM‟s proposal from the
taking in Gulf Power, if anything, the building owners subject to the Commission‟s
proposed rule would be in a far stronger position to assert their rights under the Fifth
189 187 F. 3d 1324 (11th Cir. 1999).
190 Id. at 1328 (quoting 47 U.S.C. § 224(f)(1)).
Amendment. First, their rights fall squarely within the most protected form of property
under the Takings Clause—namely, real property.191 Moreover, there can be no
question here, as there was in Gulf Power, of the “partly public, partly private status of
utility property.”192 Private building owners decidedly do not have—nor have they
ever been found to have—the quasi public status of public utilities or common carriers.
In addition to Gulf Power, there are other cases demonstrating that the grant of
limited access to one or a limited number of service providers cannot be used to
override the Takings Clause problem of a nondiscriminatory, forced access
requirement. In interpreting mandatory access provisions from the Cable Act, a
number of courts have held that it is only when a landowner has clearly created a
“dedicated legal easement” that a mandatory access rule, such as the nondiscrimination
rule proposed in the NPRM, can be applied without raising “substantial constitutional
difficulties.” By contrast, applying a mandatory access rule to a landowner who had
merely entered into private and limited access arrangements with other carriers would
“effectively permit exactly the same occupation found impermissible in Loretto—the
permanent physical presence of a franchised cable company inside private apartment
buildings against the express wishes of the property owner.”193
191 See generally Lucas, 505 U.S. at 1027.
192 See, e.g., Gulf Power Co. v. United States, 998 F. Supp. 1386, 1394 (N.D. Fla. 1998).
193 Cable Holdings of Georgia, Inc. v. McNeil Real Estate Fund VI, Ltd., 953 F.2d 600, 605 (11th Cir. 1992); see
also TCI of North Dakota, Inc. v. Schriock Holding Co., 11 F.3d 812 (8th Cir. 1993) (rejecting the plaintiffs
broad interpretation of “dedicated” easement as raising “serious questions” under the Takings clause);
Media Gen. Cable of Fairfax, Inc. v. Sequoyah Condominium Council of Co-Owners, 991 F.2d 1169 (4th Cir. 1993)
In sum, a general regulation requiring a building owner who makes her property
available to a single telecommunications provider to also make her property available
to any and all such providers would effect a “permanent physical occupation” of that
landowner‟s property under Loretto. The only conceivable exception to this proposition
would arise in the very rare instance where the property owner, under local law, has
created a “dedicated” legal easement for all utility and communications providers, i.e.,
where the property owner has effected a complete cession of his rights to that property.
In all other cases, the building owner retains his right under local law to exclude others,
which is protected by the per se Loretto rule, notwithstanding an invitation and
arrangement extended to one or more specific telecommunications providers.
(2) The NPRM’s Proposed Extension Of Section 224 To Facilities Located
Inside Buildings Will Cause A Taking Of Property
A very similar analysis applies to the Commission‟s proposed interpretation of
section 224 of the Communications Act.194
The FCC proposal would require utilities and ILECs to provide
nondiscriminatory access to facilities located on the premises of building owners. In so
doing, the proposed rule would provide guaranteed access to private property without
the permission of the owner of that property. There should be no analytical difference
(adopting result of Cable Holdings); Cable Inv., Inc. v. Woolley, 867 F.2d 151 (3rd Cir. 1989) (construing
section 621(a)(2) narrowly to avoid constitutional concerns about a potential taking without just
compensation).Cf. Centel Cable Television of Florida v. Admiral’s Cove Associates, Ltd., 835 F.2d 1359, 1363 n.7
(11th Cir. 1988) (once a developer dedicates easements in a development to utilities, cable operators had
right of access to place cable in those easements).
194 See NPRM, ¶¶ 36-48.
under the Takings Clause between the treatment of the proposed interpretation of
Section 224 and the proposed nondiscrimination requirement that would apply directly
to building owners. In both cases, the Commission proposes a rule of required access
that ignores the extent of the building owner‟s pre-existing grant of access—generally
speaking, under local property law, inviting one person onto your property is not
equivalent to inviting an unlimited number of people onto your property. In both
cases, therefore, the proposal would allow for a permanent physical occupation of the
building owners‟ property, and would thereby constitute a per se taking under the
authority of Loretto.
(3) The NPRM’s Proposed Extension Of The Rule Requiring Building
Owners To Allow Tenants To Place Antennas On Their Premises For
Non-Video Services Will Effect A Taking Of Private Property
In 1998, the Commission issued an Order entitled In The Matter of Implementation
of Section 207 of the Telecommunications Act of 1996 (“OTARD Ruling”). The OTARD
Ruling drew a distinction between requiring building owners to allow tenants to install
antennas on their rental property, and requiring building owners to allow tenants to
install antennas on common building areas: with respect to the latter, the Commission
recognized that the per se takings doctrine applied to protect the property interests of
the building owners; with respect to the former, the Commission judged itself able to
prohibit building owners from “lease restrictions that would impair a tenant‟s ability to
install, maintain or use a Section 207 reception device.”195
195 OTARD Ruling, ¶ 20.
We respectfully disagree with the distinction drawn in the OTARD Ruling, and
therefore also disagree with the NPRM‟s proposal to extend the same rule to antennas
for non-video services. As explained above, the baseline for any Takings Clause inquiry
is the nature of the underlying property rights as determined in accordance with—to
use the words of the Supreme Court—“‟existing rules or understandings that stem from
an independent source such as state law.‟”196 The Commission simply lacks the power
to define, extend, or limit the property interests of landowners. Yet that is exactly what
it attempts to do in the OTARD Ruling, by prohibiting landlords from making otherwise
permissible restrictions—under the terms of the lease as interpreted under local law—
on the ability of tenants to install antennas or satellite dishes. The ruling states that the
“property owner relinquishes its right to control the use of its property when it leases
its property.” 197
It appears from this statement that the Commission is itself deciding the nature
and extent of the respective property rights of all the nation‟s tenants and landlords.198
Once the Commission has explained the general definitions of what should fall within
each category, then it interprets the Takings Clause so as to find that it is not
implemented by a prohibition against lease restrictions for areas that the Commission
has already determined are not, in its view, really subject to the control of the landlord.
196 Lucas, 505 U.S. at 1030 (quoting Board of Regents of State Colleges v. Roth, 408 U.S. 564, 577 (1972)).
197 See OTARD Ruling, ¶ 19.
198 See OTARD Ruling, ¶ 29 (defining leased property as typically including ―balconies, balcony railings, and
It reaches this conclusion without regard to the possibility that the landlord and tenant
may well have agreed in a lease provision that is valid under local law, that the
landlord in fact retained control over those areas of the premises. This approach is
completely at odds with a fundamental principle that the Takings Clause is not itself a
source of substantive property rights, but rather a constitutional protection designed to
preserve those rights against acts of the Government.
(C) Even If Analyzed Under The Multi-Factor Balancing Test Applied To
Regulatory Takings, The Proposed Rules Would Effect A Taking Of Private
Property From The Building Owners
My foregoing testimony has focused on explaining why the NPRM‟s proposals
clearly constitute per se takings of the property of building owners. This conclusion
flows directly from the Supreme Court‟s holding in Loretto. It is also important to note
two other, related points, before addressing the question as to whether the Commission
has authority to effect these takings. These two points are that the NPRM‟s proposals
would also constitute a “regulatory taking” if analyzed under the multi-factor test
associated with that doctrine, and that the value of the property at stake is very
The Supreme Court has held that “investment-backed expectations” are the
essence of the private property rights protected by the regulatory takings doctrine, and
that the interference with such expectations may itself dispose of the regulatory takings
analysis.199 Thus, the real estate industry‟s potential to earn returns on its assets
199 See, e.g., Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005 (1984).
related to the provision of telecommunications services provides the basis for finding
that regulations which totally eviscerate and frustrate that potential constitute a
Recent developments in the real estate industry show that owning a multiple
tenant building is no longer simply a business of leasing space to tenants.200 Instead,
building owners now seek to provide a comprehensive bundle of services to their
“customers,” including, at least in some instances, the provision of telecommunications
services. Examples of this include real estate businesses that have established joint
ventures with telephone carriers to establish a consumer points rebates system or to
provide a bundled internet/telecommunications service, that have decided to directly
invest in a fiber optic backbone to provide delivery of telephony, high-speed
Internet/intranet, and video services to tenants, or that have simply created a telephone
service company to provide services directly to tenants on an independent basis.201
The real estate industry therefore has already made a substantial investment
based on its well-established right to receive substantial telecommunications revenue.
The commercial real estate industry has reported that the telecommunications revenue
it has received works out to an annual average of approximately 12¢ per rentable square
200 Cf. OTARD Ruling, ¶ 19, n. 50.
201 Additional evidence of the changing nature of the real estate business, and its shift to a more “service-
based” approach, can also be seen in the fact that the Internal Revenue Service has agreed that income
earned from providing telecommunications services to tenants will be considered “good” income under
the tax code‟s REIT rules—meaning it will be treated identically to rental income and other traditional
sources of REIT revenue. See, e.g., Priv. Ltr. Rul. 99-17-039 (April 30, 1999); Priv. Ltr. Rul. 94-52-032
(September 30, 1994).
foot.202 One example of this revenue is the market for PCS antennas, which contributes
a significant amount to real estate owners, with antenna sites reportedly being leased
for as high as $1,500 per month. Given the well-established nature of the
telecommunications revenue received by real estate owners, the proposals must be read
as seriously interfering with the reasonable investment backed expectations of these
owners that they will be able to continue to generate these revenues in the future.
Thus, the Commission‟s proposals would very likely rise to the level of a
regulatory taking even in the absence of the clear-cut Loretto rule. Likewise, these
proposals would also have a severe economic impact on building owners, giving rise to
a very large liability to pay constitutionally required just compensation for property
that is taken. On a going forward basis, the ability to sell access, as well as directly or
indirectly to provide telecommunications services, to 28% of all housing units
nationwide,203 in addition to the businesses occupying in excess of 10.5 billion square
feet204 currently under commercial lease in the United States, will certainly command
enormous value. Even beginning with the very conservative information from two
years ago showing 12¢ of telecommunications income per rentable square foot, the
present value of the rapidly growing, future stream of telecommunications income is
likely to indicate a total fair market valuation for this property right in the many billions
of dollars, if not in well excess of $10 billion. For the Commission to take the property
202 See 1999 BOMA EXPERIENCE EXCHANGE REPORT, at 16 (BOMA International, 1999).
203 NATIONAL MULTI-HOUSING COUNCIL, 1998 Annual Report (Research Notes) (1998).
204 AMERICA’S REAL ESTATE: NATURAL RESOURCE, NATIONAL LEGACY, at 42 (The Urban Land Institute) (1997).
at issue in the NPRM without paying just compensation of roughly this amount would
be both unjust and unconstitutional. Of course, for the government to trigger this great
of a liability without first examining the authority and policy that support such an
action would be unwise.
III. CONGRESS DID NOT PROVIDE STATUTORY AUTHORITY TO THE
COMMISSION TO EXERCISE THE POWER OF EMINENT DOMAIN
Given that the proposals contained in the NPRM will effect a widespread and
extremely costly taking of the private property of building owners within the meaning
of the Fifth Amendment, the relevant inquiry is whether the Telecommunications Act of
1996 (“Telecommunications Act”) granted the Commission the power of eminent
domain with respect to these building owners.
(A) No Provision In The 1996 Telecommunications Act Provides The
Commission With Authority To Take The Private Property Of Building
As an initial matter, there is no provision in the Telecommunications Act that
expressly provides the Commission with the power of eminent domain over the
property of building owners. In proposing its general nondiscrimination requirement
in the NPRM, the Commission relies upon its general jurisdiction to enforce the
Telecommunications Act with respect to “all interstate and foreign communication by
wire or radio,” and then points out that the definition of both “wire communication”
and “radio communication” include “all instrumentalities, facilities, apparatus, and
services … incidental to” such communication.205 This statutory authority hardly
supports the Commission‟s ability to take private property and to provide just
compensation for that property in accordance with the Takings Clause.
Likewise, the statutory authorities relied upon in the NPRM for the extension of
section 224 and the OTARD Ruling both involve rules broadly authorizing the
Commission to enforce certain access rights, but by no means contemplating that the
Commission would or could infringe upon the established property rights of building
owners in fulfilling its enforcement duty.206 For example, neither of these rules contain
any language that refers to the need to pay just compensation to building owners.
Accordingly, the Telecommunications Act provides no explicit authority
allowing the Commission to promulgate rules that will effect a taking of the private
property of building owners, so that if the power of eminent domain is somehow
granted by that legislation, it must be implicit rather than explicit.
(B) It Is Well Established That, In The Absence Of Express Statutory
Language, Courts Will Avoid Interpreting Legislation In A Manner That
Either Raises A Serious Question As To Its Constitutionality Or
Otherwise Implicates Constitutional Concerns
The Supreme Court has repeatedly stated that it construes statutes to defeat
administrative orders that raise substantial constitutional considerations.207 This
205 See NPRM, ¶ 56.
206 See generally NPRM, ¶¶ 36, 69.
207 See Rust v. Sullivan, 500 U.S. 173 (1991); Edward J. DeBartolo Corp. v. Florida Gulf Coast Trades Council,
485 U.S. 568 (1988).
doctrine of invalidating constitutionally questionable regulations and orders reflects the
broader doctrine of generally interpreting statutes so as to avoid raising serious
This principle must be followed in cases that raise a question whether an
administrative order might constitute a taking of private property under the Fifth
Amendment, notwithstanding the fact that a taking is not strictly speaking
unconstitutional unless it goes uncompensated.209 Thus, the Supreme Court has ruled
that whenever “there is an identifiable class of cases in which application of a [rule] will
necessarily constitute a taking,” courts should adopt a narrowing construction of the
rule so as to avoid this outcome.210 Indeed, based in part on this doctrine of construing
statutes so as to avoid constitutional questions, the D.C. Circuit decided in the 1994 Bell
Atlantic case that the Commission did not have authority to order physical collocation
of competitive access providers (“CAPs”) to the central offices of incumbent local
exchange companies (“ILECs”).211 The court stated that it would uphold the
Commission‟s authority only if “any fair reading of the statute would discern the
208 See, e.g., Gregory v. Ashcroft, 501 U.S. 452, 473 (1991).
209 See United States v. Security Industrial Bank, 459 U.S. 70 (1982).
210 See United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 128 n.5.
211 Bell Atlantic v. FCC, 24 F.3d 1441 (D.C. Cir. 1994).
requisite authority,” or if the Commission‟s authority would “as a matter of necessity”
be defeated absent such authority.212
In addition to Bell Atlantic, a number of other cases, referenced earlier in my
testimony, have narrowly construed the Cable Act in order to avoid possible Takings
Clause problems. Indeed, these cases primarily involved the question as to the scope of
forced access requirements, and whether they could be read to extend to rights of way
that had previously been granted to specific carriers, or applied only to clearly
dedicated “easements.” Courts have construed the statutes narrowly so as to avoid the
question whether the broader construction urged by the plaintiffs would constitute a
Because the Telecommunications Act, which was enacted two years after the
D.C. Circuit‟s decision in Bell Atlantic, in no way speaks to the question of how to
exercise the power of eminent domain or of how to compensate building owners, it
seems very clear that the Commission lacks statutory authority to issue these
212 Id. at 1445-46 (emphasis added).
213 See, e.g. Cable Holdings of Georgia, Inc. v. McNeil Real Estate Fund VI, Ltd., 953 F.2d 600 (11th Cir. 1992);
TCI of North Dakota, Inc. v. Schriock Holding Co., 11 F.3d 812 (8th Cir. 1993) (rejecting the plaintiffs broad
interpretation of “dedicated” easement as raising “serious questions” under the Takings clause); Media
General Cable of Fairfax, Inc. v. Sequoyah Condominium Council of Co-Owners, 991 F.2d 1169 (4th Cir. 1993)
(adopting result of Cable Holdings); Cable Investment Inc. v. Woolley, 867 F.2d 151 (3rd Cir. 1989) (construing
section 621(a)(2) narrowly to avoid constitutional concerns about a potential taking without just
In conclusion I would like to reiterate that, as a general matter under local law,
building owners are free to restrict access to their property to specific utilities and
telecommunications providers, and to negotiate leases with tenants that restrict the
tenants‟ ability to place telecommunications equipment on the building. If the
Commission promulgates a rule that prohibits or abrogates these underlying rights of
building owners, then it has effected a taking of their property. Under established
Supreme Court precedent, this taking is best analyzed as a per se taking by virtue of the
fact that it causes a permanent physical occupation of the property. In addition,
however, because the prohibitions essentially disable building owners from being able
to generate any telecommunications-related revenue from their otherwise uniquely
valuable telecommunications assets, the prohibitions also amount to a regulatory
But whether viewed as a Loretto taking or a regulatory taking, the regulations
proposed by the Commission in the NPRM would trigger a very large financial liability
for the Government to pay just compensation to building owners. This liability was
certainly not foreseen or intended by Congress when it passed the Communications
Act, nor was there any indication at all in the act that Congress meant for the
Commission to have the authority to issue regulations restricting the established rights
of real property owners.
For these reasons, the Real Access Alliance has submitted comments to the
Commission stating that the proposals discussed in its NPRM cause a taking of
property under the Fifth Amendment to the Constitution.
Again, thank you for this opportunity to address the Subcommittee on this