UPDATES & ANALYSIS

7.18

Eighth Circuit Court of Appeals issues a split decision on the legality of Des Moines’ utility fee

by Rox Laird | July 18, 2018

The U.S. Court of Appeals for the Eighth Circuit in St. Louis handed down a split decision Tuesday on a City of Des Moines utility fee, holding that the fee is not pre-empted by federal law while remanding to the trial court the question of its legality under Iowa law.

Des Moines charges a fee to telecommunications carriers for the use of the city’s rights of way for their cables and wires. After the city increased the fee, it was sued in federal court by Century Link, Windstream Communications and McLeod USA Telecommunications Services.

The carriers argued the fee structure is pre-empted by federal law and that the city exceeded its powers under state law. U.S. District Judge Charles Wolle in Des Moines ruled against the carriers on both counts in December 2016 following a bench trial.

A three-judge panel of the Eighth Circuit upheld Wolle’s ruling on the federal pre-emption question but sent the case back for more fact-finding on the state law question. The decision was written by Judge Jane Kelly of Cedar Rapids and joined by Judges Duane Benton of Kansas City and David Stras of Minneapolis.

The statutory question is whether the city’s “management costs” may include construction expenses related to engineering and working around the utilities’ presence in the rights of way. Kelly wrote that “management fees are limited to costs actually incurred by municipalities in managing the rights-of-way,” and those limits are prescribed by the statute.

The panel remanded the case to resolve that fact question, saying the complex factual disputes in this case are not amenable to summary disposition.

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