FCC Sued by Cities Across America

The city of Eugene, Oregon filed a Petition for Review in the United States Court of Appeals for the 9th Circuit in August to appeal an Order from the Federal Communications Commission (City of Eugene, Oregon v. FCC, et al 19-72219). The United States is also named as a Defendant. The Order, which is captioned Implementation of Section 621(a)(1) of the Cable Communications Policy Act of 1984 as Amended by the Cable Television Consumer Protection and Competition Act of 1992, is dated August 1. Multiple other municipalities, including the cities of Kirkland, Washington; Portland, Oregon; Chicago, Illinois; and the State of Hawaii have sued the FCC since the Order was issued. New York City is supporting the case against the FCC as an intervening party. The case was rejected from the 9th Circuit Mediation Program in September. A motion was filed on November 6 to consolidate the various suits under the appeal from the City of Eugene, Oregon. The FCC filed a motion, which is still pending, to move the appeal to the United States Court of Appeals for the 6th Circuit, which has ruled against the FCC in similar matters previously.

The appeal argued that the Order is “arbitrary, capricious, and an abuse of discretion within the meaning of the Administrative Procedure Act” and stated that it violated the U.S. Constitution, the Communications Act of 1934, the FCC regulations that are found there, and other federal laws.

The Order limits what certain government entities can charge cable companies in municipal fees and could cost cities millions of dollars. The Order may allow cable companies to count services provided as payments to the cities. The cities argue that it will cause a need for increased taxes and could cause certain public programming to be cut. The Order may also prohibit municipalities from regulating broadband services provided via cable networks.

The FCC went through a similar process a few years ago with the Montgomery County v. FCC case. The FCC attempted to implement an order which would also have allowed some services rendered to count as part of the franchise fee companies pay to municipal entities. The case was heard in the 6th Circuit Court of Appeals, which ruled that the FCC had failed to show how the Communications Act allowed for these non-monetary payments. There is an existing cap on franchising fees, so any service that counted as a payment toward the franchising fee took money from the cities. After the new Order was announced, FCC Chairman Ajit Pai said Congress has specified certain costs as being exempt from counting toward franchise fees, inferring that because certain services were not mentioned as exemptions, they could be counted towards the franchise fee. Counsel for the U.S. cities disagreed with this interpretation of the law, arguing that it goes against 35 years of practice and the basic way the statute reads.

The law firm of Spiegel & McDiarmid is counsel for the City of Eugene. The Internet & Television Association filed a Motion to intervene in September. The National Association of Telecommunications Officers and Advisors filed a Motion to intervene in October. Both motions are still pending.