The Texas Supreme Court ruled that nearly 60 cities, including Dallas, Austin, San Antonio, Houston, and El Paso, sued the wrong party in their effort to challenge two state laws governing telecommunications fees.
Rather than deciding whether the laws are constitutional, the court dismissed the case, saying the cities should not have sued the State of Texas itself. According to Chief Justice Jimmy Blacklock, the cities should have sued a specific agency or official responsible for enforcing the laws, such as the Public Utility Commission of Texas, or possibly the telecommunications companies that benefit from them.
In 2017, Texas passed Senate Bill 1004, allowing wireless providers to place small-cell network equipment in public rights-of-way and capping city fees at $250 per node annually. In 2019, Texas passed Senate Bill 1152, which limited the fees companies must pay when providing both cable and telecommunications services.
The cities argued that the fee caps force them to charge far below market rates for access to public property. According to the lawsuit, market rates for these installations could range from $1,000 to $2,500 per location, making the $250 cap an unfair subsidy to telecommunications companies. They claimed this violated provisions of the Texas Constitution that prohibit governments from giving public assets or value to private corporations without adequate compensation and a public purpose.
The Third Court of Appeals had previously ruled that SB 1152 was unconstitutional and directed further review of whether the SB 1004 fee cap was adequate.
The Supreme Court did not rule on whether either law is constitutional. Instead, it concluded that any judgment against the state alone would not resolve the actual dispute because the telecommunications companies are not parties to the lawsuit and would not be bound by the court’s decision.
Blacklock wrote that courts are intended to resolve real disputes, not simply issue opinions on legal questions. Because the telecom companies were not before the court, any ruling would have limited practical effect.
The decision effectively ends the current lawsuit after nearly nine years of litigation. However, the court indicated that the cities may bring a new challenge if they name the proper defendants, such as the relevant state agency or the telecommunications companies themselves. As a result, the constitutionality of the telecom fee caps remains unresolved and could be litigated again in the future.
