Utilities Law - Transmission Towers photo
Alternative Dispute Resolution photo
Indianapolis Skyline

The FCC recently adopted broadband privacy rules which will be implemented on a staggered schedule. The FCC did not provide calendar dates for implementing the rules and some of the dates are based on pending PRA approvals. The following is a summary of the new privacy rules and the dates they are scheduled to take effect.

On January 3, 2017, sections 64.2010 and 64.2011(a) became effective. Section 64.2010 pertains to the Business Customer Exemption for Provision of Telecommunications Services other than BIAS, and states that Telecommunication carriers can utilize other contractual privacy and data security regimes for services other than BIAS as long as the issues of transparency, choice, data security, and data breach are addressed. There must also be a mechanism for the customer to communicate concerns to the carrier. Section 64.2011(a) pertains to BIAS Offers Conditioned on Waiver of Privacy Rights and states that a BIAS provider cannot condition providing BIAS on a customer’s agreement to waive privacy rights, nor may a BIAS provider terminate or refuse to provide service based on a customer’s refusal to waive their privacy rights. Section 64.2011(b) is not effective until on or after December 4, 2017, as discussed below.

On March 2, 2017, new section 64.2005 replaced old sections 64.2009 (Safeguards required for use of customer proprietary network information) and 64.2010 (Safeguards on the disclosure of customer proprietary network information). Section 64.2005 covers data security, states a carrier must take reasonable measures to protect customers’ proprietary information, and lists four  factors for determining reasonableness—the nature and scope of the carrier’s activities, the sensitivity of the data, the size of the carrier, and technical feasibility.

The Indiana General Assembly recently made changes to the Indiana Underground Plant Protection statute (Indiana Code § 8-1-26) which will take effect July 1, 2017. S.B. 472, 120th Gen. Assem., Reg. Sess. (Ind. 2017). The main change in this chapter is the creation of a new voluntary “design information notice” which applies to advance planning efforts relating to a demolition or excavation project. The amendments also establish procedures for Indiana 811 and operators once a design information notice is received.

A design engineer, consultant, or architect may voluntarily submit a design information notice to Indiana 811, which must include contact information for the person serving the notice, the person responsible for project planning activities, and the person planning to perform the excavation or demolition, if known. The notice must also include the scope and location of the proposed project and whether white lining will be performed. The person responsible for the project may not serve more than two design information notices for the same project within any 180-day period. Additionally, if the person serving the design information notice is unable to provide the physical location of the proposed excavation or demolition project with the location’s address or legal description, the person must perform white lining in the area affected by the proposed project. Indiana 811 must receive the notice at least ten working days, but not more than twenty calendar days before preliminary planning activities commence. Indiana 811 is required to adopt policies for processing design information notices, including alerting the operators of underground facilities that will be affected by the proposed project and providing this list of operators to the party serving the design information notice.

Once an operator or utility receives a design information notice, it must, within ten working days, contact the person serving the notice and inform them whether the operator has underground facilities located in the project area. If the operator does have underground facilities in the area, it must provide either a description of the location and type of facility affected by the proposed project, allow an inspection of the operator’s drawings or records for all of the operator’s underground facilities within the project area, or mark the location of the operator’s underground facilities within the project area with temporary markers. The operator must also, where applicable, provide the person serving the notice with the necessary maps or information to describe the location of all facility markers marking the underground utility. An operator may reject a design information notice where there are security considerations or the operator would be placed at a competitive disadvantage by producing the information. An operator who rejects a design information notice must provide notice to the person serving the design information notice and may request additional information.

The Indiana Tax Court recently ruled in Zimmer, Inc. v. Indiana Department of Revenue that Zimmer, Inc.’s Indiana activities regarding exhibition booth components constituted a taxable use and thus owed tax for some of the exhibition booth components.  Zimmer is in the business of designing, manufacturing and distributing a wide variety of medical device products.  In its activities, it participates in many out-of-state trade shows and conventions and has an elaborate system for construction storage, repair, refurbishment and modification of exhibit booth components, all of which are stored in its Indiana warehouse for use out-of-state.  The Indiana Department of Revenue argued, on four bases, that the exhibition booth components are subject to Indiana Use Tax for which the Indiana Tax Court disagreed as to three but agreed as to one basis.

First, the Indiana Department of Revenue argued that the revolving storage, out-of-state use, re-storage and reuse rendered the exhibition booth components taxable.  The Indiana Tax Court disagreed citing that the scheme is consistent with the statutory exclusion under Indiana statute allowing storage in Indiana “for subsequent use outside of the state”.

Second, the Department argued that Zimmer exercised other rights of ownership of the exhibition components while located in Indiana which constituted a taxable use.  In particular, it was argued that the selection of components for a particular convention, etc., were those ownership rights.  The Tax Court disagreed with the Department’s assertion that Zimmer’s act of decision-making in Indiana made those components taxable when none of those decisions were associated with physical actions in Indiana.

The Indiana Supreme Court ruled evidence of more than financing alone must be presented to demonstrate that the City has engaged in a policy-oriented decision making process  in order for discretionary function immunity to apply.  Cathy Beloat sued the City of Beech Grove after breaking her leg by stepping in hole in Main Street in the City. The City of Beech Grove claimed discretionary function immunity and presented an affidavit from its Mayor and minutes of the City Council and the Board of Works and Safety. The Mayor’s affidavit was not enough to demonstrate that an official policy decision was made. The minutes of City Council and the Board of Works and Safety, while establishing that the financing was discussed and approved, did not demonstrate the cost-benefit analysis, weighing of other options, and prioritization discussions that are required to decide that the City has engaged in a policy-oriented decision making process. The Court found that while the inference could be drawn that the City Council and/or the Board of Works and Safety did engage in the policy discussion necessary, the standard of review forbids that kind of inference.

Based on the Court’s decision, evidence of financing alone is not enough to show that the City completed all that was necessary to be shielded by discretionary function immunity. Had minutes been produced that demonstrated the cost-benefit analysis, weighing of options, why specific repairs were to be made and why total reconstruction rather than piecemeal, the Court might likely have found the City was immune.

James A. L. Buddenbaum has practiced law for more than 25 years with Parr Richey representing municipalities and businesses in utility, healthcare and general business sectors in both regulatory and transactional matters. Jim also has extensive experience in representing businesses in making large property damage and similar insurance claims.

Attorneys practicing in Indiana are well aware that Indiana courts and administrative agencies are moving to “mandatory” electronic filing.  The Indiana Supreme Court’s e-filing project is rolling along, with e-filing now mandatory (except upon a petition showing good cause) for the Supreme Court and Appellate Courts and over twenty counties.  More county courts are going “E” every month.  By 2018, e-filing will be mandatory in all circuit courts in Indiana.  The specific schedule is available at http://www.in.gov/judiciary/4273.htm.  In addition, some administrative agencies such as the Indiana Utility Regulatory Commission (“IURC”) are also moving to mandatory e-filing.  See IURC RM-15-02.

As an attorney practicing in a major metropolitan area with ample access to high-speed internet, I welcome this transition.  Many (probably most) attorneys have been exchanging documents and information electronically for many years.  The world is going digital, and the ability to e-file court and agency documents is, to be frank, rather 2001.  But would I welcome mandatory e-filing with such open arms if I practiced in a small town or rural area in Indiana, as many of our distinguished colleagues do?

Rural broadband access is a hot topic these days.  At the national level, the Federal Communications Commission (“FCC”) has made broadband access a priority.   The FCC’s 2016 Broadband Progress Report notes “there continues to be a significant disparity of access to advanced telecommunications capability across America with more than 39 percent of Americans living in rural areas lacking access to advanced telecommunications capability, as compared to 4 percent of Americans living in urban areas….”   2016 Broadband Progress Report at 3, GN Docket No. 15-191, Jan. 29, 2016.  I represent a number of rural electric cooperatives who serve much of the rural territory in Indiana.  The cooperatives and their members are acutely aware that significant portions of rural Indiana lack access to high-speed internet.  For attorneys that live or practice in these areas, “mandatory” e-filing could present a challenge.

On February 16, 2017, the Indiana Supreme Court issued an opinion regarding a sports participant’s duty owed to other participants in sports-injury tort cases. Megenity v. Dunn (No. 22D03-1309-CT-1354, decided Feb. 16, 2017). The Court affirmed the trial court’s ruling that a participant does not breach a duty owed to another participant by engaging in conduct ordinary in the sport, unless the participant intentionally or recklessly did so.

In Megenity, the plaintiff was a black belt in karate and attended classes at one particular studio for two years. At one session, she volunteered to hold a flying-kick bag while students practiced. The defendant was a green belt and accidentally executed a jump kick (both feet are off the ground) instead of a flying kick (one foot remains on the ground), which sent the plaintiff “flying and crashing to the floor”. The plaintiff suffered a knee injury, requiring surgery and months of physical therapy.

The plaintiff sued, arguing that the defendant breached a duty to her because a jump kick is never done during a flying kick drill. The trial court granted summary judgment for the defendant, finding a jump kick was an ordinary behavior during a kick-the-bag drill. The Supreme Court agreed, finding that “ordinary conduct” should be determined looking at the sport generally, not in the specific activity within the sport. As jump kicks are ordinary in the general sport of karate and the defendant did not intentionally or recklessly execute a jump kick, the defendant did not breach a duty even though the jump kick was contrary to protocol.

On February 15, 2017, the Indiana Court of Appeals issued a published opinion affirming a municipality’s ability to charge a Stormwater Fee to all property owners within the boundaries of the city. Mint Management, LLC v. City of Richmond (No. 89a01-1603-PL-496, decided February 15, 2017). The Court of Appeals found the definition of “user” under the statute included all property owners within the boundaries of the city, regardless of whether a particular property owner contributed to the city’s storm water runoff.

The City of Richmond adopted an ordinance in 2007 which created a Stormwater Management District in Richmond, which was financed by imposing a Stormwater Fee on all property within the city that directly or indirectly contributed to Richmond’s stormwater system. Four property owners whose stormwater runoff did not directly or indirectly drain into the city’s stormwater system sued, requesting a declaratory judgment that they were not required to pay the fee and a reimbursement of the fees already paid. The trial court granted summary judgment to the city, finding that the definition of “user” under the ordinance included the property owners.

The Court of Appeals agreed, finding that there would be “an irrational and disharmonizing interpretation” of the ordinance if the definition of “user” and statutory language was not taken into account. Specifically, the Stormwater Act under the Indiana Code (section 8-1.5-5-7) allows a stormwater management district to collect user fees “from all of the property of the storm water district” without exceptions. The Court found the ordinance also used language which encompassed all property owners within the city’s boundaries. Further, the court noted that the stormwater system benefitted everyone who uses any sewer infrastructure, so the property owners did directly or indirectly contribute to the stormwater system.

The Indiana Court of Appeals recently issued a decision in a dispute between a public utility and a local municipality that may be of interest to electric utilities.  Duke Energy Indiana filed a lawsuit against the City of Franklin after the city announced plans to improve the intersection of two streets near State Road 44.   Duke alleged that the expanded intersection would adversely impact its established transmission easement and overhead line and roadside utility pole.

After an evidentiary hearing, the trial judge denied Duke’s request for an injunction stopping the project.  The judge found that the project would not unreasonably interfere with Duke’s easement rights and that Duke was unlikely to prevail on any of its claims at trial.

In considering Duke’s appeal, a panel of the Court of Appeals unanimously upheld the trial judge’s decision.   Duke Energy Indiana, LLC v. City of Franklin, 41A01-1607-CT-1549 (December 16, 2016).   The appeals court held that “the reasonable necessity of an intersection expansion outweighed whatever injurious effect that expansion would have on an electric utility’s enjoyment of its easement.”  It considered Duke’s claim that the increased volume and speed of traffic near the utility pole would pose greater risks to its maintenance crews, but noted that the road could be closed or traffic re-routed as needed for utility work.   The court concluded that the public benefits from beautification of the corridor, improved traffic flow, and enhanced development of the area overrode any occasional inconvenience to Duke.

On November 2, 2016, the Federal Communication Commission (FCC) released their broadband privacy protection order, which came almost 18 months after the FCC reclassified broadband internet service (BIAS) as a common carrier telecommunication service under Title II of the Communications Act (the Act). The order communicates three main goals to be accomplished via the expanded consumer privacy standards: transparency, choice, and security for customers.

The FCC explained that expanded privacy protections for consumers are necessary because ISP’s have “untethered” access to their customer’s internet information. The order broadened the definitions of “telecommunications carrier” to include all carriers providing telecommunications services subject to Title II and “customer” encompassing current, former, and applicant customers. Three types of customer propriety information (PI) are included within the scope of the new rules: customer proprietary network information (CPNI); personally identifiable information (PII), defined as “any information that is linkable to an individual or device”; and “content of communications”, defined as “any part of the substance, purport, or meaning of a communication or any other part of a communication that is highly suggestive of the substance, purpose, or meaning of a communication.” Any “de-identified” data is not subject to the new rule.

To accomplish transparency, the FCC adopts privacy policy notice requirements mandating that ISPs provide easy access to “clear and conspicuous, comprehensible, and not misleading information about what customer data the carriers collect, how they use the data, who it is shared with and for what purposes”, including the categories of entities to which the carrier discloses access to customer PI, and “how customers can exercise their choices regarding privacy options.” These notices must be provided at the point of sale prior to purchase and advanced notice of material changes must be provided to existing customers.

Section 253(c) of the Communications Act, as amended in 1996, prohibits any “state or local statute or regulation, or other state or local legal requirement” to “have the effect of prohibiting the ability of any entity to provide interstate or intrastate telecommunications” including wireless communications.   This is commonly referred to as local government having barriers to entry.  The FCC is asking for public input on ways in which the Commission promotes wireless infrastructure deployment through a declaratory ruling. Many wireless providers are deploying small cell and distributed antenna systems (DAS) to meet the needs for coverage and to increase capacity. The facilities used in these networks are smaller and less obtrusive than traditional cell towers and antennas, but must be deployed more densely to function effectively. This has led to substantial increases in volume of applications for deployment for local land-use authorities, and the number of applications will likely accelerate as mobile data traffic is expected to grow by five times by 2022.

Mobilitie, LLC petitioned the FCC to issue a declaratory ruling interpreting three phrases in §253(c) of the Communications Act of 1934 to speed the deployment of advanced wireless infrastructure.  Mobilitie recommends the FCC interpret “fair and reasonable compensation” to mean only charges that enable a locality to recoup its costs related to issuing permits and managing the rights of way and that additional charges are unlawful. That “competitively neutral and nondiscriminatory” be interpreted as charges that do not exceed those imposed by other providers for similar access. And that “publicly disclosed by such government” obligate localities to make available the charges they previously imposed on others to a provider seeking access to the rights-of-way. Mobilitie thinks interpretation is necessary because they have dealt with varying types of fees from localities across the nation that seem exorbitant.  Fees have included application fees ranging from $1,000 to $10,000; annual per-pole fees up to $30,000 for each pole; percentage-of-revenue fees which have exceeded what localities can charge cable providers under federal law; fiber fees which have ranged from $0.19 per foot per year to fees based on fair market value of adjacent private property; and third-party manager fees.

The FCC is interested in comment, including updated information to help the Commission evaluate whether further action is warranted. This includes which actions (or inactions) of local government have hindered introduction of new services, obstructed efforts to improve existing service, or deterred prospective providers from entering the markets. The Commission requests specific information and detailed explanations, with greater weight given to systematic data. Specifically, how much time elapses between filing an application and approval or denial? How often are applications approved or denied and on what basis?