Appellate Court Affirms FCC Franchise Fee Decisions


The Sixth Circuit U.S. Court of Appeals has affirmed a series of FCC orders on cable franchise fees, in a suit by the City of Eugene, Oregon.  The appeal was also joined by the City of Portland, Oregon, the State of Hawaii, Alliance for Communications Democracy; Anne Arundel County, Maryland, the City of Pittsburgh, Pennsylvania, the City of Chicago, Illinois, and others (Petitioners).  These Petitioners asked the Sixth Circuit to review the FCC’s most recent order on state and local cable franchise fees, claiming that the FCC misinterpreted the Communications Act.  The Court rejected a challenge to the FCC’s determination that “noncash cable-related exactions are franchise fees,” but held that “noncash cable-related exactions should be assigned a value equal to the cable operator’s marginal cost in providing them.”  Responding to a challenge as to who franchise fees are imposed upon, the Court also determined however, that the provision of cable services gives a person the status of a cable operator, and that a “franchise shall be construed to allow the cable operator to operate the cable system.”

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