Detroit v Comcast, Cell Tower Zoning and Metro Act Update

Transcription

1 Detroit v Comcast, Cell Tower Zoning and Metro Act Update By John W. Pestle & Timothy Lundgren prepared for Michigan Municipal Attorneys Association August 16, 2012 Seminar Important Notice: This presentation has been prepared by Varnum LLP for informational purposes only and does not constitute legal advice. Copyright 2012, Varnum LLP. All rights reserved.

2 Introduction Brief updates on Metro Act Cell tower zoning - - Section 6409(a) of Middle Class Tax Relief Act, added on February 22, 2012 Main topic: Federal Court decision in Detroit vs State of Michigan and Comcast 2

3 Detroit v Comcast, Background Facts (simplified, see pleadings for specifics) In 1985 Barden gets cable franchise from City, Barden purchased by Comcast in 1994 Franchise provides substantial cash, in-kind benefits and protections for City, its residents and institutions Franchise expires by its terms on Feb 28, 2007 On Feb 28 Comcast applies for new franchise under 2006 State Video Act with a 5% franchise fee, no other benefits City timely acts on application in early March, sends franchise back with changes which Comcast rejects 3

4 Detroit v Comcast, Background (cont d) Procedural Summary June City files Federal court suit vs Comcast AG intervenes to defend State Act against preemption claim Comcast 12(b)(6) Motion to Dismiss denied in March 2011 Rule 56 dispositive motions filed, argued in last half 2011 Amicus briefs filed by AT&T, state cable association and League, Twps Association et al. (thanks!) Decision issued July 10, 2012 Comcast Motion for Reconsideration denied August 7 4

5 Detroit v Comcast, Background (cont d) Procedural Summary (cont d). July 10 decision finds (based on 1912 Michigan Supreme Court case that franchisee operating after franchise expires is not a holdover tenant) that Comcast has been a trespasser since Feb 2007, orders briefing on remedies Briefs on remedies filed July 31 City: Relief includes damages for failure to provide benefits City would have received under 1985 franchise, disgorgement of profits and municipal civil infraction fines Comcast: At most nominal damages, no actual damages, should be awarded 5

6 Detroit v Comcast, Background (cont d) Main claims of parties, simplified (see pleadings for specifics) City of Detroit 2006 Michigan Uniform Video Local Franchise Act Federally preempted by Cable Act, and Invalid under Mich Const Art VII Section 29 Comcast attempted renewal under State Act thus ineffective Comcast a holdover tenant under original (1985) franchise Comcast attempts to modify that franchise ineffective Comcast has been unjustly enriched by operating in City after 2006, damages and equitable relief thus required AG/State of Michigan 6 State Act can be reconciled with Federal Act, not preempted

7 Detroit v Comcast, Background (cont d) Main claims of parties, simplified (cont d) Comcast State Act is valid and not preempted Cities as subordinate bodies of state are subject to state control on franchising Federal Cable Act allows states to control, specify local franchising decisions State is/can be the franchising authority Comcast s franchise renewal under State Act in Feb 2007 is valid and effective as applied for (without changes added by City) 7

8 July 10 Decision - - Generally Caution: These slides are just a summary of some main points, see the 42 page decision for specifics Effect of decision Persuasive with other Michigan Federal judges Especially in combination with Dearborn case upholding local PEG requirements Preclusive effect/estoppel of Comcast, State, State courts, MPSC and AG Particularly helpful for those municipalities who preserved their rights in the event of court decisions regarding the validity of part or all of the State Act or Uniform Franchise or who never approved a Uniform Franchise (took effect by operation of law) 8

9 July 10 Decision State Franchising Rejects City s argument that State Act is generally preempted by the locally oriented renewal provisions of Federal Cable Act "[T]he existence of state-wide franchising procedures does not subvert the Cable Act s goal of creating national standards, municipalities retain a role in the franchising process under the Michigan Act, and many other states have state-wide franchising procedures and standards. Opinion, p. 37 But bases this conclusion in large part on the State Act s 9 Allowing cities and cable operators to enter into franchises differing from state Uniform Franchise, Requirement that cable companies comply with all valid local ordinances, and Municipalities ability to deny/reject a Uniform Franchise (see below)

10 July 10 Decision State Franchising (cont d) Implications Municipalities with cable operators with Uniform Franchises should adopt at minimum a Video Service Provider Right of Way Ordinance Carefully drafted to impose on cable companies the same, favorable right of way management provisions that apply to telecom companies under Metro Act permits, which have been approved by the legislature and MPSC Assures good, local control of ROW Assures provider (not municipality) pays the large cost to relocate its lines when there is street work Avoids discrimination claims, challenges 10

11 July 10 Decision State Franchising (cont d) Implications (cont d) Municipalities approving Uniform Franchises in the future should preserve their rights as to court decisions overturning part/all of State Act or Uniform Franchises On existing Uniform Franchises, claims (especially by municipalities who preserved rights or where Uniform Franchise took effect by operation of law) that it is ineffective 11

12 July 10 Decision - - Renewal Accepts AG s argument that State Act is not preempted by renewal provisions of Federal Cable Act Based on strong preference for upholding constitutionality of statutes Result: Municipalities now have (as AG argued) 15/30 days to accept or reject franchise applications under State Act AG argues rejection leads to renewal proceeding under Federal Cable Act process 12

13 July 10 Decision - - Renewal (cont d) Implications Uniform Franchise in general has no obligation to provide service (homes per mile or universal service), 5% franchise fee, no more than prior PEG fee (not to exceed 2%), no more than existing number of PEG channels, no in kind services, few protections for municipalities and their residents Municipalities wanting different terms than in a Uniform Franchise can deny it and likely comply with Cable Act s formal renewal process Comcast since 2006 often has invoked the formal renewal process, and municipalities in some cases may consider invoking it themselves 13

14 July 10 Decision - - Modifications Rejects on Federal preemption grounds the State Act s automatic modification of all franchises in existence as of date of the Act by making unenforceable all franchise provisions in conflict with or in addition to those in State Uniform Franchise Based on language ( shall ) in 47 U.S.C. 545 that the Federal modification process and restrictions on modifications set forth there is mandatory and exclusive The provisions of the Michigan Act invalidating provisions in existing franchises is expressly preempted by the Cable Act. Opinion at

15 July 10 Decision - - Modifications (cont d) Implications: Pre-2007 franchises thus continue in effect, unmodified Cable companies in 2007 took away many of the benefits required by pre-2007 franchises. Examples: Free service to municipal buildings Cable company operation of PEG studios Changes in how franchise fees are computed and paid Universal service and homes per mile standards for service Local customer service provisions Etc. 15

16 July 10 Decision - - Modifications (cont d) Implications (cont d): Examine franchise for any items not being provided or complied with Send notice of violation and opportunity to cure letter (needed to use violations against company in Federal Cable Act formal renewal process) Make claim against cable company 16

17 July 10 Decision - - PEG Channels State may have some latitude to decide what is adequate support for PEG channels going forward May relate to PEG support fee, 2% cap No ruling on State Act s limits on number of PEG channels, inkind services such as free service to PEG center, free drop to studio and other locations to receive PEG channel signal 17

18 July 10 Decision - - PEG Channels (cont d) Implications Where desired, press for number of PEG channels, in kind services and other PEG support or provisions that are needed, especially if they were contained in or provided under prior franchise State Act allows voluntary franchises with cable operator with terms different from Uniform Franchise 18

19 July 10 Decision - - Anti-Redlining Anti-redlining: Cable Act says franchising authority shall prevent redlining based on income of residents in local area State Act says there is no redlining violation (safe harbor) if 30% of company s customers statewide are low income. Decision rejects state safe harbor 19 As the plaintiff points out, Comcast could actually discriminate against every low income resident in the City, as long as 30% of households anywhere in Michigan with access to its service are low-income. Mich. Comp. Laws (2)(b). This application of a state-wide standard, in place of a franchise-area one, clearly conflicts with the Federal Act's prohibition on income-based discrimination of the residents of the local area in which such group resides. 47 U.S.C. 541(a)(3). Opinion, p. 34

20 July 10 Decision - - Anti-Redlining (cont d) Implications Municipalities can (must?) implement franchise or ordinance provisions preventing redlining, e.g. Monitoring, reporting provisions, as well as Substantive provisions Some municipalities may elect to have state anti-redlining provisions continue to apply, but without statewide-based safe harbor provision 20

21 July 10 Decision - - Customer Service "[T]he Michigan Act s restrictions against municipalities from enforcing customer service likely conflict with 47 U.S.C. 552(a)(1) ( A franchising authority may establish and enforce... customer service requirements of the cable operator.... ). Opinion p. 32. Clearly applies to customer service provisions of pre-2007 franchises And likely to later ones as well 21

22 July 10 Decision - - Customer Service (cont d) Implications Municipalities can continue to enforce customer service provisions of pre-2007 franchises And ones in later franchises as well 22

23 July 10 Decision - - Universal Service Rejects City s argument that Cable Act requires or permits a universal service requirement (cable company must provide service to everyone in a municipality), at least to enforce antiredlining provision of Cable Act Says there may be valid non-income based reasons for cable company failure to serve certain areas Notes that FCC has reached a similar conclusion 23

24 July 10 Decision - - Universal Service (cont d) Implications Universal service and homes per mile requirements in pre franchises likely enforceable (under portions of decision striking automatic modification provisions of State Act) New requirements may be possible 24

25 Cell Tower Zoning Three sets of Federal laws and orders applicable to cell tower zoning 47 U.S.C. Sec. 332(c)(7), a/k/a Section 704, added in 1996 Shot clock orders in 2009 and 2010 Section 6409(a) of Middle Class Tax Relief Act, added on February 22, 2012 Federal law now divides cell towers into two classes: New towers - - Mainly Section 704 Modifications - - Mainly Section 6409(a) Recent change to Michigan zoning law, PA 143 of

26 Major Points on Section 704 Adds to, overlay on, state and local zoning law Have to comply with both In general good news for municipalities - - Section 704 preserves local zoning But remedy for violations is often an order approving tower as applied for, not a remand No attorneys fees, damages for successful challenges Procedural rules often different than state law Written decision, written record, etc. RF emissions preclusion, to extent tower complies with FCC emissions rules 26

27 Major Points on Section 704 (cont d) Local zoning principles generally not affected, such as decision between Fewer, higher towers More, shorter towers Allowable grounds include standard items Aesthetics Number and height Safety Environmental Impact on residential area, historic areas Effect on property values Zoning conditions increasing cost generally OK 27

28 Major Points on Section 704 (cont d) Only unreasonable discrimination prohibited by Act Some discrimination, different treatment, is allowed Generally cannot prohibit or have the effect of prohibiting service, i.e. gap in service BUT Federal law and cases allow small gaps Exact legal standard varies with Federal Circuit Courts Alternate site analysis Fill the gap by the least intrusive means 28

29 Shot Clock Orders Collocations 90 days to act. Reasoning Not a collocation if: More than 10% increase in height More than 4 equipment cabinets (or 1 shelter) New antenna extends more than 20' from the tower Excavation needed outside current site New Towers 150 days to act presumed reasonable. 29

30 Section 6409(a) on Modifications Part of February, 2012 Middle Class Tax Relief Act (which extended the payroll tax cut) Notwithstanding section or any other provision of law, a State or local government [1] may not deny, and shall approve, any [2] eligible facilities request for a modification of an existing wireless tower or base station that does not [3] substantially change the physical dimensions of such tower or base station Eligible facilities request means "any request for modification of an existing wireless tower or base station that involves --- (A) collocation of new transmission equipment; (B) removal of transmission equipment; or 30 (C) replacement of transmission equipment."

31 Section 6409(a) Background Latest in long series of industry efforts to preempt local cell tower zoning. At least six major attempts: 1995 FCC Rulemaking to preempt local zoning, stopped by 1996 Act Industry position in initial cases on Section 704, largely rejected by courts San Diego case challenging all local cell tower zoning under 47 USC 253, rejected by courts 543 F.3d 571 Shot clock orders Various proposed Federal bills FCC 2011 Notice of Inquiry on Public Rights of Way and Wireless Siting 31

32 State Collocation Statutes Preempted? Michigan and California, among others, have collocation statutes, roughly similar to 6409(a) See Michigan Public Act 143 of 2012 State collocation statutes likely preempted by Section 6409(a) Good arguments for same, e.g. under field preemption (Federal statute preempts entire field, no state statutes allowed) Industry will argue to the contrary under narrower preemption doctrines (e.g., conflict preemption). And see also Nixon v. Missouri, 541 U.S. 125 (no intent of Congress to free subordinate units of government from state restrictions) and related Federalism concerns (Feds improperly intruding on state local relations). 32

33 Section 6409(a) - - Practical Considerations Obvious impacts on cell tower modifications, collocations Shot clocks still apply One major impact will be on new tower applications Cities have to consider tower not just as proposed, but under cumulative impact of Section 6409(a) and Public Act 143 changes Especially sensitive for camouflaged towers May result in initial approval either Being for very small tower, or Specifying conditions for multiple, larger antennas, etc. 33

34 Section Practical (cont d) Many cases can be easily resolved, due to general local preference for collocations Compromises possible until dust (Constitutional, statutory construction) settles E.g. - - Go forward with local proceeding, both parties reserving rights under 6409(a) City to rescind for unconstitutionality Provider to compel automatic approval Municipalities should raise, preserve Constitutional claims in all events 34

35 Metro Act In its 2012 payment report the Metro Authority found several cities and townships non-compliant with Metro Act Withheld over $800,000 in funding pending their coming into compliance Municipalities should make sure they are in compliance with Metro Act, notify MPSC of action on Metro Act permit applications, timely file with Metro Authority annual reports on Use and Disposition of Funds Received Under PA 48 of 2002 so as to continue to receive Metro Act payments 35

36 Conclusion Metro Act - - Comply with its provisions so as to continue to receive Metro Act funding Cell tower zoning - - Be aware of 6409(a) and its potential preemption of 2012 PA 143 Cable franchising - - Be aware of the several aspects of July 10 Federal Court decision in Detroit v Comcast Take actions where appropriate to preserve, protect municipalities rights under the decision PPTX