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Montgomery County v. Federal Communications Commission

United States Court of Appeals, Sixth Circuit

July 12, 2017

Montgomery County, Maryland, et al. Petitioners,
v.
Federal Communications Commission, et al., Respondents, United States Telecom Association, et al., Intervenors.

         On Petitions for Review of Orders of the Federal Communications Commission. Nos. 07-190; 15-3.

          Argued: December 8, 2016

         ARGUED:

          Joseph Van Eaton, BEST BEST & KRIEGER LLP, Washington, D.C., for Petitioners.

          Maureen K. Flood, FEDERAL COMMUNICATIONS COMMISSION, Washington, D.C., for Respondents.

         ON BRIEF:

          Joseph Van Eaton, BEST BEST & KRIEGER LLP, Washington, D.C., for Petitioners.

          Maureen K. Flood, FEDERAL COMMUNICATIONS COMMISSION, Washington, D.C., Robert B. Nicholson, Robert J. Wiggers, UNITED STATES DEPARTMENT OF JUSTICE, for Respondents.

          Robert G. Kidwell, Tara M. Corvo, MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C., Washington, D.C., Bennett L. Ross, Brett A. Shumate, Dwayne D. Sam, WILEY REIN LLP, Washington, D.C., William H. Johnson, VERIZON, Washington, D.C., for Intervenors.

          James N. Horwood, Tillman L. Lay, SPIEGEL & MCDIARMID LLP, Washington, D.C., for Amici Curiae.

          Before: McKEAGUE, GRIFFIN, and KETHLEDGE, Circuit Judges.

          OPINION

          KETHLEDGE, Circuit Judge.

          In this case we have one set of regulators litigating against another. Over the last ten years, the Federal Communications Commission has published three written orders that together establish a series of rules governing how local governments may regulate cable companies and cable services. Several local governments have petitioned our court to review the FCC's two most recent orders, arguing among other things that the FCC misinterpreted the Communications Act, 47 U.S.C. § 151 et seq., and failed to explain the bases for some of its decisions. We agree with some of those criticisms, and thus grant the petition in part and deny it in part.

         I.

         A.

         Our opinion in Alliance for Community Media v. FCC, 529 F.3d 763 (6th Cir. 2008), sets forth the relevant history of the Communications Act and cable regulation generally. In short, the Act regulates the way cable services, which include video programming, reach viewers nationwide. Under the Communications Act, cable companies may provide cable services only if their local or state governmental authorities (which we call "franchising authorities") grant them a "cable franchise." 47 U.S.C. § 541(b)(1). But those authorities do not have unlimited discretion in negotiating, granting, and denying franchises. See id. § 541(a)(1). For example, those authorities may not "grant an exclusive franchise" to any operator, or "unreasonably refuse to award an additional competitive franchise." Id. And they may not require a cable company to pay a "franchise fee" that exceeds five percent of the company's gross revenues for any 12-month period. Id. § 542(b).

         As a condition of granting a franchise, local government authorities may demand, among other things, that a cable operator provide certain services or equipment for public, educational, or governmental purposes. See id. §§ 541(a)(3)-(4), 544(b)(1), 546(c)(1)(D). In return, some cable operators demand concessions like "most-favored-nation clauses, " which allow incumbent franchisees to adjust the terms of their franchise agreements whenever a competing cable provider secures more favorable contract terms. Once a company has a franchise, it may provide cable services to subscribers via an infrastructure that the Act calls a "cable system[.]" Id. ยง 522(7). Franchises generally expire every ten to fifteen years, at which time the cable ...


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