Item C: Telecommunications Tax Fund

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produced lots of litigation. Following is a summary of the important recent decision from the Ninth Circuit Court of Appeals: th Qwest Corporation v. City of Portland, 200 F.Supp.2d 1250 (D. Or. 2002); 9 Circuit Court of Appeals decision issued October 12, 2004, Case No. 02-35473. In July 2001, Qwest filed a lawsuit in the Oregon District Court, challenging Portland’s regulations for use of the public right of way (“ROW”), requirements based upon its charter provisions and state statute. In its complaint, Qwest argued that the city’s regulations and permit requirements were preempted under Section 253 of the 1996 Telecommunications Act. In particular, Qwest asserted that under the Ninth Circuit’s decision earlier in 2001 in City of Auburn v. Qwest, 247 F.3d 966, superseded on rehearing, 260 F.3d 1160 (9th Cir. 2001), cert. denied, 2002 US Lexis 232 (1/7/02), Portland was limited to recovering its actual costs of administering the ROW. Qwest also argued that Auburn mandated the preemption of several other regulatory requirements, including the mapping of facilities within the ROW and reporting information on the calculation of revenue-based payments. Following the filing of its complaint, Qwest sent a letter to the other eighty-plus cities in which it operated in Oregon, announcing that it would not pay revenue-based ROW fees until the lawsuit was concluded. Eight Oregon cities (“Cities”), represented as a coalition supported by the League of Oregon cities, as well as the City of Eugene, intervened as defendants in support of Portland in the proceeding. The opinion turned on the question of how to properly interpret § 253. Qwest argued that the issue of preemption could be determined as a matter of law, that it merely required a facial consideration of the Cities’ regulations. In response, the Cities argued that Qwest had the factual burden of showing how it had suffered from the “burdens” of regulation such that it had been prevented from providing a telecommunications service. On cross-motions for summary judgment, the court rejected Qwest’s broad reading of § 253. Qwest was unable to identify a single service that it, “or any other entity, [had been] effectively prohibited from providing.” Judge Jelderks noted that there was no dispute that Qwest had been operating for years using the ROW to offer telecommunications services. The court found that local requirements for submitting information about revenues, ownership, and placement of wires and equipment did not serve to bar Qwest’s entry or have the effect of prohibiting Qwest from offering telecommunications services. In ascertaining the scope of the Auburn holding, the court found it significant that Qwest had previously conceded the legality of revenue-based ROW fees imposed by Washington, where those fees were analytically similar to the “non cost-based” fees it was challenging in Oregon. The court alternately found that Qwest’s claims of preemption were barred by issue and claim preclusion, referring to the state appellate court opinions in U.S. West Communications v. City of Eugene, 177 Or.App 424, 37 P.3d 1001 (2001) (review pending) and AT&T Communications of the Pac. Northwest, Inc. v. City of Eugene, 177 Or.App 379, 35 P.3d 1029 (October 2001), review denied, 334, Or. 491 (August 2002). These related cases involved challenges by Qwest’s predecessor and other telecommunications providers to the legitimacy of Right of Way Management and Compensation Page 9 of 15 APWA Fall Conference - 2005