In September 2017, DLS sent out a Guidance Memo with subject of “Last Mile Broadband Project Financial Guidance.” The memo describes recommended practices for accounting for the design / construction of broadband systems; and for subsequent operation of the system. WiredWest and several Town Counsels have some objections to portions of the memo regarding operation. Specifically there are three main concerns:
- The advice in the memo appears to contradict Massachusetts General Laws (MGL).
- The Enterprise Fund entity created by adopting G.L. c. 44, § 53F1⁄2 is not an MLP. It would require a town meeting to appropriate the use of sales income to meet expenses.
- Since the Enterprise Fund entity is not an MLP, it cannot be a member of WiredWest, or any other MLP Coop for regional operation.
The following letter was sent to DSL questioning aspects of their guidance memo.
We received the following reply from DLS:
We are working with Tom Scanlon of Scanlan & Associates, who audit most of our towns, to produce guidance for accounting for Telecom MLP’s primarily engaged in broadband service.
Q. Are state bureaucrats infallible?
Q. What section of the M.G.L,. authorizes a town to operate a telecommunication system?
A. M.G.L. Chap 164 Sect. 36 authorizes a town to create a Municipal Light Plant and Chap 164 Sect 47E authorizes a town’s MLP to operate a telecommunication system
Q. Are there any other sections of the M.G.L. that authorize a town to operate a telecommunications system?
Q. is regulation of internet and VoIP services allowed by any state or local governmental body?
A. No, M.G.L. Chap 25C sect 6A “… no department, agency, commission or political subdivision of the commonwealth, shall enact, adopt or enforce, either directly or indirectly, any law, rule, regulation, ordinance, standard, order or other provision having the force or effect of law that regulates or has the effect of regulating, the entry, rates, terms or conditions of VoIP Service or IP enabled service. ”
Q. Would an enterprise fund established under Chap. 44 Sect 53F 1/2 have the effect of regulating the internet and VoIP services offered by a town?
A. Yes Chap 44 Sect 53F ½ stipulates “…an estimate of the income for the ensuing fiscal year and a proposed line item budget of the enterprise shall be submitted to the mayor, board of selectmen or other executive authority of the city or town by the appropriate local entity responsible for operations of the enterprise. Said board, mayor or other executive authority shall submit its recommendation to the town meeting, town council or city council, as the case may be, which shall act upon the budget in the same manner as all other budgets.” By regulating the budget of the enterprise the town meeting is regulating the rates, terms, and conditions of the VoIP and Internet service provided by the town.
Q. Has the Massachusetts Supreme Judicial Court ruled that the MLP cannot be subject to town meeting vote?
A. Yes The Massachusetts Supreme Judicial Court (“SJC”) has held that with regard to the MLP manager’s authority under G.L. c. 164, § 56, subject to the direction and control of the selectmen or light board, if any, “[t]his in terms is an unrestricted power in the manager and the commission. There is in this section an implication that their determination as to what should be expended for the efficient operation of the business is not subject to change by other public officers or the legislative department..” Municipal Light Comm’n. of Peabody v. Peabody, 348 Mass. 266, 268 (1964).
Q. Has the Department of Local Services issued guidance as to the appropriate method of establishing a gas and/or electric department?
A. Yes The document published by DLS titled Enterprise Fund Manual, Informational Guideline Release 08-101, states on page 34 in response to frequently asked questions:
“1. Can a community establish a gas or electric enterprise fund under G.L. c. 44, § 53F½?
No. A gas and/or electric department would be established under G.L. c. 164.”
Q. Does a telecommunications department operated by a town follow the same guidance as a gas and/or electric department?
A. Yes M.G.L. Chap 47E “Wherever apt, the provisions of this chapter and chapter 44, which apply to the operation and maintenance of a municipal lighting plant, shall apply also to the operation and maintenance of such telecommunications system.”
Q. Will DLS take punitive action against a town that chooses to use Chap 164 instead of Chap 44 Sect 53F ½?
A. No. The letter from Sean Cronin, Senior Deputy Commissioner for DLS states “…DLS will not, as you phrase it, take “negative action” against broadband-only municipal light plants (MLPs).”