National Electric Code Requires the Removal of Abandoned Cabling, BUT WHO PAYS?
 
October 30, 2003
 
James M. "Jim" Norman- Ft Lauderdale

A version of this article was published in the December 2003 issue of National Real Estate Investor

The approval of the 2002 National Electric Code (NEC) has brought with it a subtle and unheralded change that has already demonstrated its potential as a major deal killer. 

The 2002 NEC, drafted by the National Fire Protection Association, was made effective and approved as an American National Standard on August 2, 2001.  This highly influential publication is used by many federal, state, and local agencies as the standard for electrical safety.  As a result, the vast majority of building inspectors turn to the NEC’s provisions when conducting inspections, authorizing use permits or issuing certificates of occupancy.

The most recent edition of the NEC describes wiring methods to be used in buildings.  Plainly and without further explanation, it states that “abandoned cables shall not be permitted to remain” in ducts, plenums, or other horizontal and vertical riser and air-handling spaces.  The NEC established this requirement to reduce problems created by harmful materials found in older cabling and to prevent electrical fire hazards.

Requiring the removal of abandoned telecommunication cable, which the 2002 NEC defines as “installed communications cable that is not terminated at both ends at a connector or other equipment and not identified for future use with a tag,” has given rise to a dilemma with the potential to complicate or kill leasing agreements.  Indeed, the 2002 NEC requires the removal of abandoned communications cables, but says nothing with regard to who bears the burden of removal.  Further, the 2002 NEC defines abandoned cable, but does not define abandoned equipment.  We can only wonder whether the reference to abandoned telecommunications cable will be interpreted so broadly as to include installed communications cable that is terminated at both ends at a connector or other equipment – if that connector or other equipment is itself abandoned, inoperative or dead.  Darlene Pope of CRE Partners of Sterling, Virginia, has noted that dead or abandoned cables don’t necessarily mean unusable cables.  Much of the wiring infrastructure left behind by bankrupt telecommunications companies over the last several years, i.e., single and multi-mode fiber, and even Cat5 cabling, is actually a valuable asset to the building that can be used for future provisioning of services.  Perhaps the 2002 NEC will be interpreted to require that a landlord go back to tag such wiring for future use.  In that case, there would be a need for an extensive physical survey of telephone closets and an audit of existing telecommunications cabling to identify and tag cables for future use.  This would be an unwelcome additional cost to the building owner that perhaps would simply be passed on to the tenants as part of the operating expense of the building. 

According to Randall Thompson of Cushman & Wakefield in Dallas, Texas, building inspectors in the Dallas-Fort Worth area have begun enforcing the 2002 NEC requirements before issuing certificates of occupancy.  Consequently, debates over the cost of compliance, which can add between 15% and 30% to the cost of installing communications cables, have slowed or completely stalled some lease negotiations.  In one case, according to Mr. Thompson, the cost of pulling the old cable added 50% to the cost of new cable installation, causing the tenant to end negotiations and seek a lease in a newer building that was less encumbered by years of abandoned cables and wires in its riser space. 

Currently, many leases leave landlords unprotected with regard to who should remove or pay for the removal of abandoned cabling when making office improvements, changing service, or upon lease termination.  In addition, there is a need to address those circumstances  where the tenant does not own the cables and the landlord does not want the cabling removed; but instead wants it abandoned in-place upon lease termination by the tenant or the telecommunications service provider, and tagged for future use.  Most new tenants will contend that landlords have the obligation to remove abandoned cabling because it constitutes leftover materials from previous occupants.  At this time, there is no national “prevailing view.”  However, in markets that have become “tenant markets,” the cost of removing abandoned cabling will likely be borne by landlords, perhaps for no other reason than to get a tenant to occupy the space.  One obvious solution, which may be easier to agree upon than to actually enforce, is for the landlord to agree to remove the abandoned cabling, so long as the tenant agrees to remove their lines when they vacate the premises, unless the landlord tells them to tag the lines for future use and leave the lines in place.

Needless to say, the eventual outcome of this debate is uncertain and will vary from jurisdiction to jurisdiction, and from deal to deal based upon the relative market position of the parties.  With the rush to install broadband and other telecommunications services just a few years ago, followed by the massive and rapid collapse of many of the telecommunications service providers that may have brought their system to the building, it seems only natural that the next stage will require dealing with not only the very old wires taking up space in risers, but the relatively new wires and cables that are just as dead as the old ones!

It is important for prospective tenants and building owners to understand the state and local regulations in this area.  Since it is not unusual for local regulators to apply codes that are not the most recent version, both sides should become familiar with the current inspection patterns and areas of enforcement established by local building inspectors.  For example, while the 2002 NEC requirements are being applied in the Dallas area, they are not yet being applied in the District of Columbia and the larger counties within Maryland and Virginia.  Such inquiries will undoubtedly help to form negotiation strategies.  Parties will want to negotiate this issue in advance, and building owners will want to examine their building access agreements with telecommunications service providers to insure that such providers have the obligation to remove abandoned cables.  Building owners may also want any new providers to first survey the building and remove all abandoned cabling that the landlord does not want to preserve for future use.

For more information, e-mail Jim Norman at jim.norman@hklaw.com or call toll free, 1-888-688-8500.