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Volume 8 - Opinions of Counsel SBEA No. 118

Opinions of Counsel index

Special franchise assessment (public place) (N.Y.S. Thruway) - Public Authorities Law, § 351; Real Property Tax Law, § 102(17):

The New York State Thruway is a public highway and, therefore, fiber optic cable installed on a Thruway right-of-way by a telephone company is tangible property of a special franchise.

Subdivision 17 of section 102 of the Real Property Tax Law defines special franchise as “the franchise, right, authority or permission to construct, maintain or operate in, under, above, upon or through any public street, highway, water or other public place, mains, pipes, tanks, conduits, wires or transformers, with their appurtenances, for conducting water, steam, light, power, electricity, gas or other substance” (emphasis added) (see also, 9 NYCRR 197-l.l[a][41]). Pursuant to this definition, telephone lines which have, until recently, consisted exclusively of copper wire cable, have been assessed as special franchise when located in the public right-of-way.

Fiber optic technology differs from the traditional telephone line in several ways. The foremost of these is that its mode of transmission is optical, rather than electrical: pulses of light are transmitted through glass fibers rather than by electric current through metal wires. For purposes of the definition of special franchise, however, this is a distinction without a difference, because both light and electricity are referred to in section 102(17).

We have reviewed “New York State Thruway Authority Occupancy Permit No. 3315” by which New York Telephone Company received permission “to use AUTHORITY right-of-way to install, maintain and repair an underground communications facility for a 36 optic fiber cable and associated equipment as set forth in detailed plans to be submitted by the COMPANY”. If this “AUTHORITY right-of-way” constitutes a “highway”, as that term is used in subdivision 17, then this fiber optic cable meets the definition of special franchise property.

Section 351 of title 9 of the Public Authorities Law (“New York State Thruway Authority Act”) provides that “[t]he term ‘thruway’ shall mean, generally, a divided highway under the jurisdiction of the authority for mixed traffic with access permitted as the authority may determine . . .” (subd. 2) (emphasis added). The courts have held that “[t]he ‘Thruway’, as it is generally known, is a specially engineered, constructed, divided and controlled access express highway designed for greatest possible visibility and on which vehicular traffic travels at high speed ...” (New York State Thruway Authority v. Ashley Motor Corp., Inc., 12 A.D.2d 223, 210 N.Y.S.2d 193, 196 (3d Dept. 1961), aff’d 10 N.Y.2d 151, 176 N.E.2d 566, 218 N.Y.S.2d 640 (1961), mot. for rearg. den. 10 N.Y.2d 814, 178 N.E.2d 231, 221 N.Y.S.2d 518 (1961) (emphasis added)). Perhaps, the clearest statement regarding the nature of the Thruway was given by the Court of Claims in Isquith v. New York State Thruway Authority, 27 Misc.2d 539, 215 N.Y.S.2d 393 (Ct. Cl. 1961):

We cannot escape the fact that the Thruway is not anything but a state highway. It is the manner in which it was created and its necessary distinctive operation that have called for a “special treatment” for this particular highway, which is still a part of the State of New York. It is a public highway. It is for the benefit and comfort of the people of the State of New York, and the statute makes it clear that all the laws of the State apply thereto in addition to the special rules and regulations which the Authority has the power to promulgate (215 N.Y.S.2d at 398) (emphasis added).

Accordingly, the fiber optic cable being a conduit for the transmission of light under a public highway, we conclude that this fiber optic cable is tangible property of a special franchise and is assessable by the State Board. {*}

October 18, 1987


{*}  Of additional significance is the State Board’s longstanding administrative practice of assessing as special franchise New York Telephone lines located along the Thruway right-of-way in the vicinity of Newburgh (see, Engle v. Talarico, 33 N.Y.2d 237, 306 N.E.2d 796, 351 N.Y.S.2d 677 (1973), concerning judicial deference to interpretation by an agency charged with responsibility for administration of statute); but cf., Kurcsics v. Merchants Mutual Insurance Co., 49 N.Y.2d 451, 403 N.E.2d 159, 426 N.Y.S.2d 454 (1980), limiting that deference in cases where “the question is one of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent”, in which case “there is little basis to rely on any special competence or expertise of the administrative agency” (49 N.Y.2d at 459, 426 N.Y.S.2d at 458).

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