[Federal Register Volume 85, Number 45 (Friday, March 6, 2020)]
[Rules and Regulations]
[Pages 13069-13070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04707]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MB Docket No. 05-311; DA 20-148; FRS 16523]


Local Franchising Authorities' Regulation of Cable Operators and 
Cable Television Services

AGENCY: Federal Communications Commission.

ACTION: Interpretive rule.

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SUMMARY: In this document, the Media Bureau, Federal Communications 
Commission (Commission), clarifies a Media Bureau order denying a 
motion for stay of the Commission's Third Report and Order in the 
above-mentioned docket.

DATES: This interpretive rule is effective on March 6, 2020 and 
applicable beginning February 11, 2020.

FOR FURTHER INFORMATION CONTACT: For additional information on this 
proceeding, contact Raelynn Remy of the Media Bureau, Policy Division, 
at [email protected] or (202) 418-2120.

SUPPLEMENTARY INFORMATION: This is a summary of the Media Bureau's 
Order on Reconsideration, DA 20-148, adopted and released on February 
11, 2020. The full text is available for public inspection and copying 
during regular business hours in the FCC Reference Center, Federal 
Communications Commission, 445 12th Street SW, Room CY-A257, 
Washington, DC 20554. This document will also be available via ECFS at 
https://docs.fcc.gov/public/attachments/DA-20-148A1.docx. Documents 
will be available electronically in ASCII, Microsoft Word, and/or Adobe 
Acrobat. The complete text may be purchased from the Commission's copy 
contractor, 445 12th Street SW, Room CY-B402, Washington, DC 20554. 
Alternative formats are available for people with disabilities 
(Braille, large print, electronic files, audio format), by sending an 
email to [email protected] or calling the Commission's Consumer and 
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 
(TTY).

Synopsis

    1. By this Order, we grant NCTA--The internet & Television 
Association's (NCTA's) Petition for Clarification \1\ of the Media 
Bureau's Order Denying Motion for Stay of the Commission's Third Report 
and Order \2\ in the above-captioned proceeding.\3\ In its Petition, 
NCTA requests that the Bureau remove from the Stay Denial Order certain 
language in paragraph 21 that ``creates the potential for confusion and 
the appearance of a conflict with the Third Report and Order.'' In 
particular, NCTA asks that the Bureau excise two statements from 
paragraph 21. These statements are: ``The rules in the [Third Report 
and Order] did not supersede provisions in existing franchise 
agreements on their effective date'' and ``[i]f negotiations fail, the 
terms in the franchise remain in effect unless and until a cable 
operator challenges those terms and proves that the terms violate the 
[Third Report and Order's] requirements.''
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    \1\ NCTA Petition for Clarification of Order Denying Motion for 
Stay, MB Docket No. 05-311, filed Nov. 15, 2019 (Petition). Although 
NCTA did not title its submission as a petition for reconsideration, 
we will treat it as a petition for reconsideration because it seeks 
further review of the Stay Denial Order.
    \2\ The Third Report and Order became effective on September 26, 
2019 (84 FR 44725, Aug. 27, 2019).
    \3\ An extensive discussion of the historical background of this 
proceeding is set forth in the Third Report and Order and the Stay 
Denial Order (https://docs.fcc.gov/public/attachments/DA-19-1149A1.docx); thus, we do not reiterate it at length here. After the 
Stay Denial Order was issued, certain municipalities sought a 
judicial stay of the Third Report and Order in the Ninth Circuit. 
That court subsequently transferred challenges to the Third Report 
and Order then pending before it, including the motion for judicial 
stay, to the Sixth Circuit.
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    2. After reviewing the record developed in response to the 
Petition,\4\

[[Page 13070]]

we agree with NCTA that these statements could be interpreted ``to 
conflict with the Third Report and Order's plain directives and require 
procedures not mandated by the Commission.'' In particular, we note 
that the Third Report and Order states that ``[i]f a franchising 
authority refuses to modify any provision of a franchise agreement that 
is inconsistent with this Order, that provision is subject to 
preemption under section 636(c).'' We also note that the Third Report 
and Order ``encourage[s] the parties to negotiate franchise 
modifications within a reasonable time,'' and ``find[s] that 120 days 
should be, in most cases, a reasonable time for the adoption of 
franchise modifications.'' Contrary to these statements in the Third 
Report and Order, the statements that NCTA is seeking to excise from 
the Stay Denial Order could be construed as authorizing local 
franchising authorities (LFAs) to enforce unlawful franchise provisions 
unless and until a cable operator has proven to a court that they are 
unlawful.
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    \4\ The Media Bureau issued a Public Notice seeking comment on 
NCTA's petition (84 FR 66186, Dec. 3, 2019). One party filed 
comments opposing the Petition. One party filed comments in support 
of the Petition.
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    3. We disagree with the National Association of Telecommunications 
Officers and Advisors (NATOA) that removing the relevant statements 
from paragraph 21 of the Stay Denial Order undermines our reasons for 
denying the stay petition. That argument ignores our two primary 
reasons for finding that LFAs will not suffer irreparable harm, absent 
a stay. First, we concluded in the Stay Denial Order that the injury 
claimed by LFAs (municipalities' loss of critical facilities and 
services) is speculative. We determined that localities can maintain 
access to critical facilities and services by adjusting revenues and 
expenses in response to changes in franchise fee revenue streams--for 
example, LFAs can maintain critical facilities and services ``either by 
prioritizing some in-kind contributions over others or by prioritizing 
in-kind contributions over the fees they would otherwise recover.'' \5\ 
Second, we concluded that the harm alleged by LFAs (loss of free 
services) was an economic loss, which under well-established case law, 
does not, in and of itself, constitute irreparable harm. These grounds 
alone were sufficient for denying the administrative stay request.
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    \5\ As NCTA notes, ``revenues would be recoverable in the event 
that the Third Report and Order is ultimately overturned on appeal, 
further undermining the notion that such losses could constitute 
irreparable harm.''
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    4. NATOA claims that budget amendments and procurement processes to 
authorize payment for services previously furnished pursuant to a cable 
franchise are often lengthy, and that LFAs ``cannot . . . start the 
process without knowing what value a cable operator will assert for 
non-monetary franchise obligations that [would be] offset against 
franchise fee payments.'' \6\ However, NATOA provides no evidence that 
any cable operator would abruptly cease services or take other 
unilateral action during the pendency of the appeal that would 
adversely affect municipalities, or create immediate or irreparable 
harm. Instead, as we explained in the Stay Denial Order, ``the Order 
encouraged LFAs, in response to a request from a cable operator, to 
negotiate franchise terms that conform to the Order in a reasonable 
amount of time . . . Thus, for example, an LFA is not required to 
assess the costs of in-kind contributions that it currently receives 
from a cable operator (e.g., free cable service) against the franchise 
fee until the cable operator asks the LFA to amend the terms of its 
franchise.'' Accordingly, consistent with the terms of this order, we 
grant NCTA's petition.
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    \6\ NCTA asserts that this argument is baseless and states that 
``[a]ll NCTA seeks in its Petition is what the Third Report and 
Order already provided: Clarification that parties should negotiate 
timely and in good faith to reach mutually agreeable franchise terms 
that comply with the Cable Act and rulings set forth in the Order.''
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    5. We therefore conclude that the following two sentences in 
paragraph 21 of the Stay Denial Order misinterpret the Order: ``The 
rules in the [Third Report and Order] did not supersede provisions in 
existing franchise agreements on their effective date'' and ``[i]f 
negotiations fail, the terms in the franchise remain in effect unless 
and until a cable operator challenges those terms and proves that the 
terms violate the [Third Report and Order's] requirements.'' The same 
is true of the sentence in paragraph 21 of the Stay Denial Order that 
reads: ``At that point, the LFA and the cable operator have 120 days to 
renegotiate the franchise agreement.'' Instead, we find, in accordance 
with the Third Report and Order, that the LFA and the cable operator 
have a reasonable period of time to renegotiate the franchise 
agreement, which in most cases is 120 days. If negotiations fail, the 
cable operator and the LFA can continue to rely on the processes and 
remedies that may be contained in their franchise agreement or that are 
otherwise available.\7\
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    \7\ For example, the cable operator and the LFA can take the 
dispute to court or, in the case of an interpretive dispute 
regarding the scope of the rules adopted in the Third Report and 
Order, request a declaratory ruling from the Commission.
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    6. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 4(i), 4(j), 303(r), and 405 of the Communications 
Act of 1934, as-amended, 47 U.S.C. 154(i)-(j), 303(r), and 405 and the 
authority delegated in Sec. Sec.  0.61, 0.283, and 1.106 of the 
Commission's rules, 47 CFR 0.61, 0.283, and 1.106, this Order in MB 
Docket No. 05-311 is adopted. It is further ordered that the Petition 
for Clarification of Order Denying Motion for Stay pending judicial 
review of the Third Report and Order in this proceeding, filed by NCTA, 
is granted to the extent indicated above. It is further ordered that 
this Order shall be effective upon its release.

    Federal Communications Commission.
Thomas Horan,
Media Bureau.
[FR Doc. 2020-04707 Filed 3-5-20; 8:45 am]
 BILLING CODE 6712-01-P