SPECTRUM NORTHEAST, LLC; CHARTER COMMUNICATIONS, INC., Plaintiffs, Appellees, v. AARON FREY, in his official capacity as Attorney General of the State of Maine, Defendant, Appellant.
No. 20-2142
United States Court of Appeals For the First Circuit
January 4, 2022
Thompson, Dyk, and Barron, Circuit Judges.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MAINE [Hon. Jon D. Levy, U.S. District Judge]
Paul E. Suitter, Assistant Attorney General, with whom Aaron M. Frey, Attorney General, and Christopher C. Taub, Chief Deputy Attorney General, were on the brief, for appellant.
Matthew S. Hellman, with whom Howard J. Symons, Jonathan A. Langlinais, Allison M. Tjemsland, Joshua D. Dunlap, Jenner & Block LLP, and Pierce Atwood LLP were on the brief, for appellee.
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I.
On March 18, 2020, Maine adopted “An Act to Require a Cable System Operator to Provide a Pro Rata Credit When Service Is Cancelled by a Subscriber” (“Pro
II.
The Cable Act expressly preempts state regulation of “rates for the provision of cable service.”
On May 11, 2020, Spectrum Northeast, LLC and Charter Communications, Inc. (“Spectrum“) filed suit in the United States District Court for the District of Maine, challenging the new law, requesting a declaratory judgment that the law is preempted by the Cable Act, and moving to preliminarily enjoin enforcement of the law. Spectrum argued that the FCC has determined that cable providers in Maine are “subject to effective competition” and that the Pro Rata Act is preempted by the Cable Act because it is an attempt to regulate “rates for the provision of cable service.”
The district court stayed the preliminary-injunction briefing while it considered the Attorney General‘s motion to dismiss. On October 7, 2020, the district court denied the Attorney General‘s motion to dismiss, concluding that the Pro Rata Act “regulates ‘rates for the provision of cable service,’ which is prohibited by
The court also rejected Maine‘s argument that the law is a “customer service requirement” exempted from preemption in
In light of the district court‘s conclusion that the Pro Rata Act was “preempted by the [Cable Act] as a matter of law,” the parties stipulated that “there [were] no remaining genuine issues of fact for the [district court] to resolve and that [Spectrum] [was] entitled to judgment as a matter of law.” Joint Mot. to Grant Summ. J. to Pls. & Enter Final J. 1, 4, No. 20-cv-168, ECF No. 33 (internal citations omitted).
The Attorney General now appeals. We have jurisdiction under
III.
The sole issue in this case is whether Maine‘s Pro Rata Act is preempted by federal law. The parties agree that this question is purely one of law. We review a district court‘s legal conclusions de novo. Lawless v. Steward Health Care Sys., LLC, 894 F.3d 9, 21 (1st Cir. 2018).
A.
“In any preemption analysis, ‘[t]he purpose of Congress is the ultimate touchstone.‘” Philip Morris Inc. v. Harshbarger, 122 F.3d 58, 67 (1st Cir. 1997) (quoting Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138 (1990)); see also Gobeille v. Liberty Mut. Ins. Co., 577 U.S. 312, 324 (2016) (“[P]re-emption claims turn on Congress‘s intent.“).
The parties agree that the question here is one of express preemption as the Cable Act contains a specific preemption provision. There is no issue as to congressional authority to preempt state law regulating the provision of cable service. Our task is to determine the scope of the federal statute and “to identify which state laws are preempted.” Brown v. United Airlines, Inc., 720 F.3d 60, 63 (1st Cir. 2013). That inquiry “start[s] with the text and context of the provision itself,” and “[o]ur analysis is informed by the statutory structure, purpose, and history.” Tobin v. Fed. Express Corp., 775 F.3d 448, 452 (1st Cir. 2014).
B.
The parties disagree as to whether the general presumption against preemption аpplies in this case. Because we conclude that the structure and legislative history of the Cable Act and its amendments compel a finding of no preemption of the Pro Rata Act, we need not address whether the presumption against preemption applies here.
C.
The Cable Act includes both general and specific preemption provisions. The general preemption provision states, “any provision of law of any State . . . or franchising authority . . . which is inconsistent with this chapter shall be deemed to be preempted and superseded.”
The parties agree that the Cable Act here neither defines “rates” nor “rates for the provision of cable service.” Given this statutory silence, they agree that plain and ordinary meaning of terms, informed by the purpose and history of the Cable Act, should guide our analysis. They even do not dispute the plain and ordinary meaning of the term “rate“--that a “rate” is “the amount charged for a particular product; [] as defined by a particular unit of measurement in relation to the product.” Appellant‘s Br. 15. As the FCC has explained, in a different context (addressed infra),
[A] “rate” has no significance without the element of service for which it applies. . . . the term “rate” is defined in the dictionary as an “amount of payment or charge based on some other amount.” In this regard also, the Supreme Court has recently stated: “Rates, however, do not exist in isolation. They have meaning only when one knows the services to which they are attached.”
Sw. Bell Mobile Sys., Inc., 14 F.C.C. Rcd. 19,898, 19,906 (1999) (internal citations omitted) (citing WEBSTER‘S THIRD NEW INTERNATIONAL DICTIONARY (1993); AT&T Co. v. Cent. Off. Tel., Inc., 524 U.S. 214, 223 (1998)). Thus, as the FCC acknowledged, a “rate” depends not only on the price charged, but also on the type and amount of service provided.
But that is where the agreement ends. The parties propose two different interpretations of the statutory language “rates for the provision of cable service” in
We think that the language “provision of cable service” most naturally refers to the amount a subscriber is charged for receiving cable service, i.e., the price per month or per channel, or for equipment required to receive the subscribed-to programming of the cable service. In our view, the rate for “the provision of cable service” is not
To see why this narrow reading of the scope of
There is no question that
IV.
On its inception in 1948 and in the two decades thereafter, cable primarily served to retransmit over-the-air broadcast signals, particularly in areas where such signals experienced interference. This was referred to as community antenna television (CATV): systems that connected households to a community antenna that brought broadcast reception by wire to households where a signal was otherwise unavailable. S. REP. NO. 98-67, at 5–6 (1983). These systems did not initially include additional, non-broadcast programming. H.R. REP. NO. 98-934, at 20–21 (1984). Early regulation focused on a frаnchising process between local governments and cable operators, which allowed the use of streets and rights of way and imposed various service requirements. S. REP. NO. 98-67, at 6–7.
During the period from the development of the first commercial cable system until the FCC‘s first comprehensive regulation of cable in 1972, some state and local governments prohibited cable operators from charging rates in excess of upper limits set in the franchise agreements with cable operators. MARTIN H. SEIDEN, AN ECONOMIC ANALYSIS OF COMMUNITY ANTENNA TELEVISION SYSTEMS AND THE TELEVISION BROADCASTING INDUSTRY, 46 (1965); see S. REP. NO. 98-67, at 5, 7; Cable Television Ass‘n v. Finneran, 954 F.2d 91, 95–96 (2d Cir. 1992). The precise nature of that rate regulation across franchising authorities and states is, however, unclear, though it appears that it focused on regulating monthly charges.5
At the federal level, the FCC “gradually asserted jurisdiction over” cable television beginning in 1960. United States v. Sw. Cable Co., 392 U.S. 157, 165 (1968). In 1968 in Southwestern Cable, the Supreme Court recognized
Before the early 1970s, cable‘s primary function was still to improve access to broadcast television programming by distributing, or retransmitting, the broadcast signals via cable. See S. REP. NO. 98-67, at 6. In 1972, the FCC attempted to “define the boundaries of federal and state regulation” with its first comprehensive rulemaking for cable, and these regulations included rules regarding subscriber rate regulation. Finneran, 954 F.2d at 96; Cable Television Rep. and Ord., 36 F.C.C.2d 143, 207–10 (1972). The 1972 order adopted rules requiring local franchise authorities to have “specified or approved the initial rates which the franchisee charges subscribers for installation of equipment and regular subscriber services.”
In 1974, the FCC determined it would preempt state regulation of rates for premium service. The FCC viewed this nascent category as any “specialized programming for which a per-program or per-channel charge is made” that was separate from “regular subscriber service” including “all broadcast signal carriage and all [the FCC‘s] required access channels.” Clarification, 46 F.C.C.2d at 199. The FCC determined that “there should be no regulation of rates for such [specialized] services at all by any governmental level” and clarified that “for now we are pre-empting the field and have decided not to impose restrictive regulations.” Id. at 199–200; see Cap. Cities Cable, Inc. v. Crisp, 467 U.S. 691, 702–703, 703 n. 9 (1984) (explaining the FCC‘s preemption and exclusion from regulation of nonbasic cable service).
In 1976, the FCC changed course and determined that “deletion of Section 76.31(a)(4) [requiring local rate regulation for basiс service] would be advisable.” Rep. and Ord., 60 F.C.C.2d 672, 682 (1976). The FCC deleted the rule primarily due to problems for local authorities that did “not hav[e] the jurisdiction to . . . regulate rates” or that “found subscriber rate regulation to be either onerous or unnecessary.” Id. at 673. The FCC explained that deletion “will enable local authorities to decide whether subscriber rates should be regulated, and will best facilitate experimentation in the types of rate controls exercised.” Id. at 682.
The result was “that local authorities should be permitted to decide for themselves whether they will undertake such regulation.” Id. at 683. The “regular subscriber services” required to be regulated prior to deletion of the rule were “charges for installation, disconnection and reconnection as well as charges for broadcast signal carriage and all required access
Significantly, the 1976 order did not preempt state regulation of regular subscriber services. Id. at 684–85.
Following the 1976 FCC rulemaking, states continued to engage in rate regulation directed largely to monthly charges for basic serviсe.7
In the late 1970s to early 1980s, cable television continued to mature into modern cable with national programming and premium movie channels like Home Box Office (“HBO“). H.R. REP. NO. 98-934, at 20–21. As the industry matured, the FCC‘s position on cable began to shift “from viewing cable as merely a threat to established broadcasters to viewing cable as a significant communications media of its own.” Finneran, 954 F.2d at 96. The FCC preemption of state regulation continued to be limited to nonbasic cable services. In 1983 in In Re: Community Cable TV, 95 F.C.C.2d 1204, 1204, 1218 (1983), the FCC considered and expanded its preemption of regulation to “specialized or auxiliary cable services—primarily satellite-delivered programming—of the kind commonly provided in tiers of services offered to subscribers at a single package rate distinct from the rate charged for regular subscriber services.” The FCC noted it had “preempted state regulation of non-basic program offerings, both non-broadcast programs and broadcast programs,” and it concluded “we see no reason . . . to limit the scope of our preemption of state and local rate regulation of services not regularly provided to all subscribers.” Id. at 1215, 1218; see Finneran, 954 F.2d at 97; Cap. Cities, 467 U.S. at 703; H.R. REP. NO. 98-934, at 24. The FCC continued not to preempt state regulation of rates for basic cable service.
The Supreme Court, in 1984, upheld the FCC‘s jurisdiction and authority to
V.
Against this backdrop, in 1984, Congress passed the statute at issue here--the Cable Communications Policy Act of 1984 (“Cable Act“), which created the first federal legislative scheme for the regulation of cable television.
The FCC was required, where there was no effective competition, to “prescribe and make effective regulations which authorize a franchising authority to regulatе rates for the provision of basic cable service” and to “establish standards for such rate regulation.”
While the Cable Act largely deregulated basic cable service, and also preempted rate regulation for the provision of basic cable service (when cable operators faced “effective competition“), the new statute preserved state authority to adopt consumer protection laws. See
Pursuant to the mandate in the 1984 Act, the FCC conducted a rulemaking to address the definition of effective competition and to determine what “procedures and methodologies” state or local authorities “must follow in regulating basic cable service rates” in the absence of effective competition. Implementation of the Provisions of the Cable Communc‘ns Pol‘y Act of 1984, 50 Fed. Reg. at 18,654. The FCC decided to leave the specific structure and rules of rate regulation to local franchising authorities. Id. at 18,651–55. Thus, although the FCC required notice, opportunity to respond, and a formal statementfor the process of rate regulation by local franchising authorities, it did not otherwise establish rules regulating rates. Id.
In the years following the Cable Act, cable rates increased substantially, leading to an amendment to the 1984 Cable Act--the Cable Television Consumer Protection and Competition Act of 1992 (“1992 Amendments“). S. REP. NO. 102-92, at 3–8, 18–20; see Cable Television Consumer Prot. and Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992). The 1992 Amendments maintained many of the provisions of the 1984 Cable Act but made several significant adjustments. The 1992 Amendments adopted an updated and more limited definition for “effective competition” such that many cable operatоrs were no longer exempt from rate regulation. § 3, 106 Stat. at 1470. They extended the rate regulation allowed (in the absence of effective competition) to include a heavily subscribed tier above the most basic cable service tier if the most basic tier was not heavily subscribed. S. REP. NO. 102-92, at 63. The 1992 Amendments also required the FCC to set more detailed rules “identifying, in individual cases, rates for cable programming services that are unreasonable” and “the procedures to be used to reduce rates for cable programming services that are determined by the Commission to be unreasonable.” § 3, 106 Stat. at 1468.
The 1992 Amendments also clarified the exclusion frompreemption for consumer protection laws and customer service requirements. The earlier Cable Act in 1984 included a carve-out from preemption for consumer protection laws “not inconsistent with this title.”
The 1992 Amendments also restructured and clarified a distinct carve-out for “customer service requirements” by preserving “the establishment or enforcement of . . . any State law, concerning customer service that imposes customer service requirements that exceed . . . , or that addresses matters not addressed by” the minimum standards set by the FCC.
The 1992 Amendments for the first time required the FCC to set federal minimum customer service requirements for three categories. These were “(1) cable system office hours and telephone availability; (2) installations, outages, and service calls; and (3) communications between the cable operator and the subscriber (including standards governing bills and refunds).”
Pursuant to the 1992 Amendments, the FCC conducted a rulemaking to redefine “effective competition” and adopt more specific rate regulation requirements. Cable Television Act and Cable Television Sys., 58 Fed. Reg. 29,736 (May 21, 1993). The FCC‘s rulemaking replaced the previous light-touch rate regulations in
Four years later, Congress enacted the Telecommunications Act of 1996 (“1996 Amendments“), modifying the 1992 Amendments. Telecomms. Act of 1996, Pub. L. No. 104-104, § 301, 110 Stat. 56, 115 (1996). Relevant portions of the 1996 Amendments confined rate regulation (in the absence of effective competition) to the basic tier of cable service.
VI.
Four aspects of the structure and legislative history support our conclusion that the preemption of “rates for the provision of cable service” does not extend to the regulation of termination rebates.
A.
First, the legislative history of the Cable Act and the FCC‘s regulations (evidencing the FCC‘s interpretation of the congressional mandate) focused on preempting monthly “rates“charged for the provision of basic cable service.9 The legislative history
The regulations promulgated by the FCC to ensure reasonable rates (in the absence of effective competition)similarly focused on monthly prices for basic cable service. The FCC‘s regulations set the “maximum monthly charge per subscriber for a tier of regulated programming services.”
Spectrum has not identified, and we have not found, any reference to preempting state regulation of termination rebates in the history of federal cable regulation. There is no reference at all to termination rebates, and the only reference to disconnection fees in the context of rate regulation was in a footnote (quoted earlier in Section IV) in the context of an FCC rule requiring local authorities to have “specified or approved the initial rates” charged to subscribers by a cable company “for installation of equipment and regular subscriber services” (a rule abandoned by the FCC in 1976).10
B.
Second, the congressional silence concerning terminationfees or rebates is particularly significant because Congress required regulation of rates for installation of equipment for basic cable service (in the absence of effective competition). In the 1984 Cable Act, Congress required the FCC to “regulate rates for the initial installation or the rental оf 1 set of the minimum equipment which is necessary for the subscriber‘s receipt of basic cable service” (in the absence of effective competition).
Relatedly, Congress did not address prices or rates for service termination even though Congress well knew service termination occurred and addressed the disposition of cable wiring “upon termination of service.”
C.
Third, The Cable Act established a federal preference for competition through
Spectrum has not suggested how relatively small, pro rata termination credits would be controlled by effective competition. If anything, Maine‘s Pro Rata Act encourages competition by prohibiting cable companies from creating artificial barriers to switching between competitors by charging consumers beyond termination of service. See Finneran, 954 F.2d at 100 (noting how Congress’ purpose “to allow market forces to control [] rates” was frustrated by excessive cable downgrade charges that “insulate cable companies from market forces“).
D.
Fourth, Congress in the 1984 Cable Act and amendments contemplated that the states could continue to adopt and enforce “consumer protection” laws. Generally, Congress expressed a purpose to preserve state consumer protection laws, though at the same time making clear that regulation of “rates for the provision of cable service” was preempted:
Nothing in this subchapter shall be construed to prohibit any State or any franchising authority from enacting or enforcing any consumer protection law, to the extent not specifically preempted by this subchapter.
Nothing in Title VI is intended to interfere with a state‘s or franchising authority‘s exercise of its authority to enact and enforce consumer protection laws, to the extent that the exercise of that authority is not inconsistent with Title VI. A state or franchising authority may not, for instance, regulate the rates for cable services in violation of section 623 of Title VI, and attempt to justify such regulation as a “consumer protection” measure.
H.R. REP. NO. 98-934, at 79. Maine‘s Pro Rata Act is a consumer protection law--it has the plain purpose of protecting consumers from paying for cable after termination of service.
Though a state‘s ability to adopt consumer protection laws does not extend to regulating the “rates for the provision of cable service,” this provision and its history show a purpose to preserve a significant role for state consumer protection laws, such as Maine‘s, and favor a narrow reading of the scope of the preemption provision. It makes sense in light of the Cable Act‘s
provision regarding “consumer protection laws” to read the scope of expressly preemptive provisions in a manner that accounts for Congress’ evident intent to protect state “consumer protection laws” from preemption absent their being “specifically preempted.”
It is also not a stretch to think that Maine‘s limited termination-rebate law in the Pro Rata Act protects against the kind of deceptive business practices that consumer protection laws typically target. There are reasons to be concerned that consumers will not recognize that they are being required to pay as much for the days of non-service following termination as they pay for all the preceding days in which the service is provided, just as there are reasons to be concerned that consumers will not recognize that they are signing up to pay for non-service during outages in which the service is not being provided.
And the termination-rebate requirement in the Pro Rata Act is at no risk of being preempted under the general provision for state laws “inconsistent with this chapter,”
VII.
Although a few district court cases have followed the district court here,12 the relevant
In reaching that conclusion, the court noted that “Congress left regulation of complete disconnections to the states.” Id. at 101. The court explained, “we think Congress meant to pre-empt only those state rules that regulate rates charged by cable companies for providing services to customers.” Id. at 102. Thus, because “a reduction in service is not a provision of service, and since the FCC has not spoken clearly on the matter,” the court concluded “that the Cable Act does not expressly pre-empt state regulation of downgrade charges.” Id. at 100.
Spectrum attempts to distinguish Finneran as no longer good law since Congress acted to change the law. After Finneran, Congress аmended the Cable Act to require that “charges for changing the service tier selected shall be based on the cost of such change,” similar to the New York regulation in Finneran.
Spectrum also argues that Time Warner v. FCC, 56 F.3d 151 (D.C. Cir. 1995), supports its position. We do not find TimeWarner pertinent. In Time Warner, the court addressed a provision of the Cable Act stating, “A cable operator shall have a rate structure, for the provision of cable service, that is uniform throughout the geographic area in which cable service is provided over its cable system.”
Spectrum finally points to decisions addressing preemption of state regulation prohibiting charges for mobile service in whole-minute increments. The relevant federal law provides that “no State or local government shall have any authority to regulate the entry of or the rates charged by any” mobile telephone provider.
VIII.
Bеcause we decide that the Pro Rata Act is not preempted, we do not reach whether the Pro Rata Act is a “customer service requirement[]” exempt from preemption by virtue of
restructured the carve-out with the 1992 Amendments, it repeated that “customer service requirements . . . relate to interruption of service; disconnection; rebates and credits to consumers;” etc. H.R. REP. NO. 102-628, at 34.15 The Attorney General argues that the use of “requirements . . . related to disconnection” and “requirements . . . related to rebates and credits to consumers” in House Report 934 “indicates that Congress intended to permit states to enact precisely the type of legislation” that Maine has enacted. Appellant‘s Br. 29. In the light of our resolution of this case, we need not reach this issue.
IX.
For these reasons we conclude that the Maine law is not a law governing “rates for the provision of cable service” but rather governs a period after the provision of cable service and is a “consumer protection law” that is not preempted. The judgment accordingly is
Reversed.
Notes
The Commission shall . . . establish standards by which cable operators may fulfill their customer service requirements. Such standards shall include, at a minimum, requirements governing—
(1)cable system office hours and telephone availability;
(2)installations, outages, and service calls; and
(3)communications between the cable operator and the subscriber (including standards governing bills and refunds).
Section 552(d)(2) states:
(2) Customer service requirement agreements
Nothing in this section shall be construed to preclude a franchising authority and a cable operator from agreeing to customer service requirements that exceed the standards established by the Commission under subsection (b). Nothing in this subchapter shall be construed to prevent the establishment or enforcement of any municipal law or regulation, or any State law, concerning customer service that imрoses customer service requirements that exceed the standards set by the Commission under this section, or that addresses matters not addressed by the standards set by the Commission under this section.
- Whether the Maine statute,
Me. Stat. tit. 30-A, § 3010(1-A) , constitutes the regulation of “rates for the provision of cable service” preempted by47 U.S.C. § 543(a)(2) . - At the time of the enactment of the Cable Communications Policy Act of 1984, in what respects were states regulating “rates for the provision of cable service“?
- Any other relevant analysis or information that the Commission believes would be helpful to this court.
Order (June 22, 2021), No. 20-2142, ECF No. 00117755456. On August 23, 2021, the FCC declined this Court’s invitation to file an amicus brief, stating, “After due consideration, we have determined that we do not have anything material to add to the party submissions.” Letter (Aug. 23, 2021), No 20-2142, ECF No. 00117778108.
The subscriber rates whose regulation is at issue in this proceeding are rates charged for services regularly provided to all cable subscribers: that is, charges for installation, disconnection and reconnection as well as charges for broadcast signal carriage and all required access channels, including origination programming. It does not include subscriber rates for specialized programming for which a per-program or per-channel charge is made. The Commission has preempted jurisdiction of subscriber rates for such specialized programming and has determined that rates for these services should not be regulated by any governmental entity.
Massachusetts in 1971 enacted legislation requiring the state commission to “fix and establish” a “fair and reasonable rate of return from subscription rates charged to subscribers” for cable.
For example, the legislative history of the Cable Act as proposed in 1984 illustrates the definition of “basic cable service” in terms of monthly prices:
[A]ny service tier which is separately offered and does not include the retransmission of local broadcast signals is not basic cable serviсe, for purposes of Title VI. For instance, a single tier which includes the retransmission of local broadcast signals together with other cable services, and which is offered to subscribers for $7 per month, is basic cable service. By contrast, if a tier includes only those other cable services for $2 per month, and the subscriber must purchase a $5 tier in order to receive the retransmitted local broadcast signals, then the $2 tier is not basic cable service-even if the subscriber must “buy through” the $5 tier in order to be able to purchase the $2 tier.
H.R. Rep. NO. 98-934, at 40.
Section 552(d)(1) was еnacted in the Cable Act as 47 U.S.C. § 552(c), which provided, with minor differences, the following:
Nothing in this title shall be construed to prohibit any State or any franchising authority from enacting or enforcing any consumer protection law, to the extent not inconsistent with this title.
H.R. REP. NO. 98-934, at 79 states:
In general, customer service means the direct business relation between an cable operator and a subscriber. Customer service requirements include requirements related to interruption of service; disconnection; rebates and credits to consumers; deadlines to respond
H.R. REP. NO. 102-628, at 34 states:
The 1984 Cable Act enables a franchising authority to require, as part of a franchise, provisions for the enforcement of customer service requirements. Such requirements relate to interruption of service; disconnection; rebates and credits to consumers; deadlines to respond to consumer requests or complaints; the location of the cable operator‘s consumer service offices; and the provision to customers, or potential customers, of information on billing or services.