2007-091, VERIZON NEW ENGLAND, INC. v. CITY OF ROCHESTER

the facts necessary to decide this appeal. Rochester, 144 N.H. 118 (1999) (Rochester I). We recite only a brief history of of Rochester, 151 N.H. 263 (2004) (Rochester II); N.E. Tel. & Tel. Co. v. City of This case is before us for a third time. See Verizon New England v. City

property violated Verizon’s equal protection rights. We affirm. Verizon New England, Inc. (Verizon), for its use and occupation of public of the Superior Court (Morrill, J.) ruling that the city’s taxation of the plaintiff, DUGGAN, J. The defendant, City of Rochester (city), appeals a decision

the brief and orally), for the defendant. Wensley, Jones & Azarian, PLLC, of Rochester (Danford J. Wensley on

plaintiff. Middleton and Scott H. Harris on the brief, and Mr. Harris orally), for the to press. Errors may be reported by E-mail at the following address: McLane, Graf, Raulerson & Middleton, P.A., of Manchester (Jack B.

editorial errors in order that corrections may be made before the opinion goes No. 2007-091 Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Rockingham Readers are requested to notify the Reporter, Supreme Court of New ___________________________

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00

well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule p. 2 22 as 2

share of the common tax burden. Id. at p. 2 266. of Verizon’s use of the land pursuant to its pole licenses.” satisfy its burden of establishing that it is paying more than its proportional Verizon’s petitions for abatement because Verizon failed, as a matter of law, to The city cross-appealed and argued that the trial court erred in granting in part Verizon’s pole licenses is not consistent with the public good. Id. at 265-66. unconstitutionally singles out Verizon; and (3) the city’s amendment of city to tax Verizon’s use of the public ways; (2) the city’s proposed tax In from amending Verizon’s licenses and remanded for further proceedings. Rochester II, Verizon argued that: (1) RSA 72:23, I, does not allow the

appropriate methodology.” Id. (quotation omitted). Both parties appealed. Id. the extent that the city’s tax bills . . . must be reassessed based on an omitted). Therefore, the trial court granted Verizon’s abatement petitions “to

recognized methodology in reaching its conclusions regarding the market value taxes. Id. The trial court, however, also found that the city “failed to follow a lawfully amend Verizon’s pole licenses to require Verizon to pay real estate On remand, after a bench trial, the trial court ruled that the city could

Accordingly, we reversed the trial court’s order insofar as it prohibited the city also held that the amendments were required by the public good. Id. property, and, therefore, the terms of RSA 7 p. 2 2:23, I(b) were applicable. Id. We Verizon’s pole licenses constituted agreements to occupy and use public In Rochester I, we reversed the trial court’s decision, holding that

appealed. Id. that the public good required the city to amend Verizon’s licenses. Id. The city meaning of RSA 7 p. 2 2:23, I; and (2) the mayor and city counsel erred in finding held that: (1) Verizon’s licenses were not leases or other agreements within the Verizon appealed this decision to the superior court. Id. The trial court

151 N.H. at p. 2 265. required the licenses to be amended and granted the petition. Rochester II, August 1996, the mayor and the city council determined that the public good 72:23, I (Supp. 1993) (amended 1999, 2002, 2003); RSA 72:6 (1991). In Verizon to pay real estate taxes for its use of the public ways. Id.; see RSA from RSA 72:23, I(b) (Supp. 1993) (amended 1999, 2002, 2003), and to require petitioned the city council to amend Verizon’s pole licenses to include language In March 1996, the city manager and the commissioner of public works

other equipment on city-maintained highways. Id. obtained licenses from the city for the placement of its poles, wires, cables and Rochester II, 151 N.H. at p. 2 265. In accordance with RSA 231:161 (1993), Verizon Verizon provides telecommunications services to the residents of the city. the city’s tax assessment of this land was disproportionate.

p. 3 used or occupied by Verizon for real estate tax purposes was $218,700,” and

petitions, finding that, “as of April 1, 1996, the market value of the public land Foreseeing an appeal, the trial court additionally granted Verizon’s abatement rationally related to any legitimate governmental interest. RSA 72:6, :23, I.

unconstitutional because the city’s reasons for taxing Verizon alone are not

for its use and occupancy of public property under its pole licenses is bench trial, the trial court determined that the city’s taxation of only Verizon issues of fact remained with respect to Verizon’s abatement petitions. After a

constitutional; (2) improperly ruling that as applied, RSA 72:23, I, violates Verizon’s equal protection challenge to whether RSA 72:23, I, is facially adhere to the scope of the remand in Rochester II by not confining its review of for either party on” Verizon’s as-applied challenge. The court also found that On appeal, the city argues that the trial court erred by: (1) failing to “the record [wa]s . . . insufficiently clear to warrant entry of summary judgment

opinion.” consequently, “remand[ed] for further proceedings consistent with th[e] petitions because the trial court applied an erroneous standard, and, trial court ruled that RSA 72:23, I, is constitutional on its face, but found that abatement petitions because the city’s proposed tax was disproportionate. The equal protection rights. Verizon also requested that the court grant its public ways from which it[] seeks a real estate tax,” and, therefore, violated its contended that the city “singled Verizon out as the sole entity occupying the that RSA 72:23, I, does not, on its face, violate equal protection. Verizon On remand, both parties moved for summary judgment. The city argued

Id. at 272.

Additionally, we reversed the trial court’s partial grant of Verizon’s abatement that similarly use and occupy the public ways. “remand[ed] for further proceedings consistent with th[e] opinion.” Id. insufficiently developed with respect to how the various utilities are taxed,” we varying treatment by the legislature.” Id. Because “[t]he record [wa]s it could “properly consider whether differences between the utilities justif[ied] (2004). Id. We directed the trial court that, in applying the rational basis test, the equal protection analysis set forth” in In re Sandra H., 150 N.H. 634 We “vacate[d] the trial court’s ruling and remand[ed] for application of

common burden.” Id. at 271 (quotation omitted). demonstrate that its total tax obligation is greater than its share of the found no equal protection violation, ruling that Verizon had “failed to

occupation of public land, but not upon the gas, cable and electric companies selectively impose real estate tax assessments upon Verizon’s use and broad taxing power under RSA 72:6 and the exemption in RSA 72:23, I, to 70. In its equal protection challenge, Verizon attacked the city’s use of its Verizon’s pole licenses to require Verizon to pay real estate taxes. Id. at 267- We upheld the trial court’s ruling that the city could lawfully amend p. 4 It therefore denied the cross-motions and received additional evidence before respect to Verizon’s as-applied challenge to warrant judgment for either party.

assessing its equal protection argument. 4 applied, and the trial court properly considered additional evidence in

to how the other utilities are taxed. judgment, the trial court found that the record was “insufficiently clear” with transcripts from the first bench trial, was insufficiently developed with respect On remand, in ruling upon the parties’ cross-motions for summary

(2007). on its face and as applied to Verizon. See 5 C.J.S. Appeal and Error § 1136 properly interpreted Rochester II as requiring it to analyze RSA 72:23, I, both utilities are taxed would have been irrelevant. Accordingly, the trial court challenged RSA 72:23, I, on its face only, information concerning how the other violation. Verizon counters that it has always challenged RSA 72:23, I, as only whether RSA 72:23, I, is facially unconstitutional. Indeed, if Verizon had never suggested that upon remand the trial court was confined to addressing

proceedings consistent with the opinion because the record, which included reviewing Verizon’s claims. Id. at 270-71. We then remanded for further court had not applied the rational basis test as articulated in that case in recently clarified our equal protection analysis in In re Sandra H., and the trial Rochester II. Rather, we vacated the trial court’s ruling because we had RSA 72:23, I, as applied to Verizon. We did not rule upon either challenge in protection.” Id. at 270. We thus understood that Verizon was also attacking manner indistinguishable from Verizon’s, thus violating its right to equal as-applied equal protection challenge, and erred in finding an equal protection but not to the gas, cable and electric companies that use the public ways in a argues that the trial court improperly heard additional evidence upon Verizon’s maintained that “the city has issued real estate tax assessments to Verizon, unconstitutionally the State and Federal Constitutions. Based upon this interpretation, the city singles out Verizon.” Id. at 265-66 (emphasis added). It However, we noted that Verizon contended that “the city’s proposed tax This language suggests that Verizon was challenging RSA 72:23 on its face. city interprets an unconstitutional classification of taxpayers.” Rochester II, 151 N.H. at 270. In Rochester II, we stated that “Verizon argue[d] that RSA 72:23 creates

governmental relations as to Verizon’s potential sale of its landlines. the city’s subpoena seeking testimony from Verizon’s vice president for

of whether RSA 72:23, I, on its face, violates the Equal Protection Clauses of

Rochester II as remanding to the trial court solely for an analysis

addressed whether RSA 72:23, I, is unconstitutional as applied to Verizon. The court failed to adhere to the scope of the remand in Rochester II when it We first address the equal protection issue. The city argues that the trial

remand; (4) failing to dismiss Verizon’s abatement petitions; and (5) quashing Verizon’s equal protection rights; (3) revisiting the disproportionality issue on through an “as applied” assault on RSA 72:23, I.

p. 5 . . . through . . . petitions for abatement, . . . not taxation is to challenge its property tax assessment[s]

remedy to Verizon’s allegedly disparate property

(2003); the city.” Cagan’s Inc., 126 N.H. at 245-46. market value than the percentage at which property is generally assessed in Estate of Robitaille v. N.H. Dept. of Revenue Admin., 149 N.H. 595, 596-97 reviewing this equal protection argument. burden; that is, that “its property is assessed at a higher percentage of fair Rochester II, 151 N.H. at 271; the trial court applied the correct test, that is, the rational basis test, in Verizon is not arguing that it is paying more than its share of the common 144 N.H. 374, 383-84 (1999). Thus, pursuant to our directive in Rochester II, Opinion of the Justices (Mun. Tax Exemptions for Elec. Utility Personal Prop.), 46 (1985); cf. Appeal of Town of Bethlehem, 154 N.H. 314, 322-25 (2006); be dismissed.” amend. XIV; owned land, is abrogated[, and, therefore,] . . . the Cagan’s, Inc. v. N.H. Dept. of Revenue Admin., 126 N.H. 239, 245public ways. exemption, normally accorded to governmentally See N.H. CONST. pt. I, arts. 2, 10, 12, pt. II, art. 5; U.S. CONST. even though other private utilities similarly use and occupy real estate on 72:23, I, is merely a vehicle through which the tax without a rational basis, intentionally applied RSA 72:23, I, to only Verizon,

Rochester II, 151 N.H. at 272. Rather, it contends that the city has,

its distinct disproportionality argument. In its equal protection challenge, The city erroneously conflates Verizon’s equal protection challenge with

assessments were disproportionate . . . [its] petitions for abatement . . . must According to the city, “because . . . Verizon has failed to prove that its asked to pay more than its just and fair proportion of the common tax burden.” property taxation pursuant to RSA 72:6, and RSA basis test, but, should instead have inquired into “whether [Verizon] is being Thus, the city argues that the trial court should not have applied the rational city contends:

basis test, it could consider the differences between the utilities in applying the rational

Verizon’s “as applied” challenge actually implicates

that RSA 72:23, I, as applied, violates Verizon’s equal protection rights. The We now address the city’s argument that the trial court erred in ruling

receiving additional evidence upon this issue. court ruled upon the summary judgment motions, the trial court did not err in insufficiently clear” with respect to how the utilities were taxed when the trial

Rochester II, 151 N.H. at 270-71, and the record was “still

protection. Because we specifically informed the trial court that upon remand ultimately ruling that as applied, RSA 72:23, I, violates Verizon’s right to equal tax against Verizon was unreasonable and arbitrary. p. 6 authority of RSA 231:163.” the trial court’s decision Consequently, “the City had amended all the ‘pole licenses’ it could through the 1996; and (3) the gas Company had no written agreements with the City.”

selects [it] out for discriminatory treatment by subjecting [it] to taxes not “The equal protection clause protects [an entity] from state action which

use and occupy public property. trial court had no basis to find that its assertion of the de novo. Id. they did not have “a mutual understanding and arrangement” with the city to N.H. at 596. Because the constitutionality of a tax is a matter of law, we review Constitution, relying upon federal opinions only for guidance. Robitaille, 149 RSA 72:23, I; (2) the cable TV company had no ‘pole licenses’ on March 28, We now conduct this inquiry. We first examine the issue under the State

upon the other utilities.

the relevant inquiry under Verizon’s equal protection challenge is whether the city may have amended all its existing pole licenses and/or other agreements, public property used and occupied by its poles and wires. Thus, although the challenges the city’s assessment of real estate taxes to only Verizon for the

arguably may not have had the same “pole licenses” as Verizon does not mean on the value of the land used and occupied in the Rochester I, 144 N.H. at 121 (citation omitted). Simply because other utilities against which it sought to exact a real estate tax based licenses’ were identically amended to include required language specified in understanding,’ or ‘the act of agreeing or coming to a mutual arrangement.’” “(1) both Verizon’s and [Public Service Company of New Hampshire]’s ‘pole in this case that the term “agreement” in RSA 72:23, I, means “‘harmonious city contends that the testimony and evidence from both trials established that: other agreements.” (Emphasis added.) It further disregards our prior holding language of RSA 72:23, I(b), which states that the statute applies to “leases and of whether it amended its pole licenses. First, the city ignores the plain The city improperly narrows the constitutional issue to a determination

Verizon out from the other utilities as the sole utility

surrounding the city’s treatment of Verizon and other utilities. Specifically, the Instead, the city argues that the trial court misapprehended the facts

The City does not contest the fact that it singled

unconstitutional as applied, Verizon correctly notes: With respect to the trial court’s ultimate ruling that RSA 72:23, I, is for their use and occupancy of the public ways,

p. 7 treatment. Accordingly, we reject the city’s contention that the trial court erred

Verizon.

company has pole licenses; (2) the gas companies have consent from the city understanding” with the city to use and occupy public ways: (1) the electric permission.” Each utility also has an agreement or “harmonious

that any legitimate governmental interest is furthered by this disparate

public land. Accordingly, the city is selectively applying RSA 72:23, I, against demonstrates that the city does not in fact tax this “use and occupation” of occupation” of real property owned by the public. Moreover, the evidence pipe lines,” it does not authorize the city to tax the companies’ “use and 7 streets of Rochester. In order to do so, each must obtain Rochester’s

property in the same manner as Verizon. Moreover, the record fails to indicate tax upon Verizon, and not upon other utilities that use and occupy public reveals, and we can conceive of, no rational reason for selectively imposing this (2007) (quotation and citation omitted). Here, the city offers, the record record,” Cmty Res. for Justice, Inc. v. City of Manchester, 154 N.H. 748, 761 might support [the selection], whether or not the basis has a foundation in the omitted), and, as in the federal test, “to negative every conceivable basis which “structures, machinery, dynamos, apparatus, poles, wires, fixtures . . ., and [selection] is arbitrary or without some reasonable justification,” the city to tax electric and gas companies’ personal property, specifically, id. (citation N.H. at 270. Under this test, Verizon “has the burden to prove that the utility “supplies a public service to citizens over and under the roads and pay this tax under RSA 72:8 (1991) (amended 1997). While RSA 72:8 allows under “other agreements” with the city. As the trial court explained, each appears to argue that the gas and electric companies, unlike Verizon, already taxation is reasonably related to a legitimate state interest. Rochester II, 151 the gas, cable, and electric companies that use and occupy the public ways There is no equal protection violation, however, if the city’s selective

utilities’ indistinguishable use and occupation of the public ways. The city the public ways through its pole licenses in a manner indistinguishable from However, the city does not impose a real property tax upon the other

(3) the cable television company has a franchise agreement. a legitimate state interest. see RSA 231:184 (1993); and

The evidence in the record demonstrates that Verizon uses and occupies

determine whether the city’s selective taxation of Verizon is rationally related to test.” Rochester II, 151 N.H. at 270. Under this as-applied challenge, we right to equal protection is being violated, we must apply the rational basis omitted). As we discussed in Rochester II, “to determine whether Verizon’s Comm’n of Webster Cty., 4 p. 8 88 U.S. 336, 345 (1989) (quotation and citation imposed on others of the same class.” Allegheny Pittsburgh Coal Co. v. County 8 do not reach the city’s remaining arguments. court’s ruling that RSA 72:23, I, is unconstitutional as applied to Verizon, we

estate tax.” We agree with Verizon. would still be the only utility using and occupying the public ways to pay a real

BRODERICK, C.J.