Municipal Competitive Franchising

Many cities/cable commissions in the Twin Cities Metro area have been approached by CenturyLink about submitting an application for a cable franchise. While receiving an application to provide competitive cable service may be an exciting prospect, it is important to recognize that, in Minnesota, the cable franchising process is quasi-judicial and certain procedural safeguards must be followed. The following is a general point of reference for interested city/commission staff and policy makers generally describing the cable franchising process. Cities/commissions are encouraged to consult their attorneys.

State Law – Process for Additional Cable Communications Franchises

The Minnesota Cable Act, found in Minnesota Statutes Chapter 238, lays out the process for granting an additional cable franchise. Each franchising authority should also review its records to determine if it had adopted a franchising policy in previous years. Charter cities should also consult their city charters for additional requirements. The following is a summary of the franchising process found in Section 238.081:

• Publication of Notice. A notice of intent to franchise must be published once a week for two successive weeks in a newspaper of general circulation. The statute identifies the information required in the notice.
• Written Notice. In addition to publishing the notice of intent to franchise in one or more newspapers, a franchising authority must mail copies of the notice of intent to franchise to any person it has identified as being a potential candidate for a franchise.
• Deadline for Application Submission. A franchising authority must allow at least 20 days from the first date of published notice for the submission of franchise proposals. In other words, the deadline for submitting franchise proposals cannot be earlier than 20 days after the date that a jurisdiction’s notice of intent to franchise was first published in a newspaper of general circulation.
• Contents of franchising proposal. The Minnesota Cable Act requires all franchise applications be signed in front of a notary and that certain other information also be included in all franchise applications. Additional federal law requirements should also be reviewed.
• Public hearing on franchise. Each franchising authority must hold a public hearing before the franchising authority affording reasonable notice and a reasonable opportunity to be heard with respect to all applications for a franchise. We address the conduct of the public hearing below.
• Award of franchise. Cable franchises may be awarded only by ordinance, after holding any necessary public hearings. A franchise may not be awarded until at least seven days after the public hearing.

FCC 90/180-Day Shot Clock

In 2007, the FCC released a Report and Order and Further Notice of Proposed Rulemaking, which was subsequently affirmed by the Sixth Circuit United States Court of Appeals and recently clarified by the FCC in an Order on Reconsideration in 2015. The Report and Order addressed how local franchising authorities could franchise new franchise applicants.

The FCC found “the current operation of the local franchising process in many jurisdictions constitutes an unreasonable barrier to entry that impedes the achievement of the interrelated federal goals of enhanced cable competition and accelerated broadband deployment.” To eliminate these alleged barriers, the FCC promulgated certain market entry rules and furnished “guidance” to cable franchise applicants and local franchising authorities in several subject areas, including the franchise application process.

The Report and Order established a 90-day deadline for acting on franchise applications submitted by an entity with existing authority to access public rights-of-way. Franchise applications for all other entities must be acted on within 180-days. These deadlines begin to run from the date that a complete application or other writing containing all the information required by FCC rules and state and/or local law is first filed with a franchising authority. Payment of a “reasonable application fee” may be required.

Federal Cable Act Considerations

The federal Cable Act does not disturb the process set forth in Minnesota law, however, it does prohibit a franchising authority from unreasonably refusing to award an additional competitive franchise.

Procedural Due Process Considerations

The Minnesota Supreme Court has held that the basic rights of procedural due process required in a hearing such as this are reasonable notice of the hearing date and a reasonable opportunity to be heard. Quasi-judicial proceedings such as this do not invoke the full panoply of procedures required in regular judicial proceedings. The rules of evidence that you would find in a regular judicial proceeding are of course not applicable in municipal public hearings.

The failure to provide adequate due process exposes a franchising authority to possible claims under 42 U.S.C. § 1983 (government deprived a person of a constitutionally protected liberty or property interest) and 42 U.S.C. § 1988 (authorization of attorney fees to the prevailing party of a section 1983 claim).

Minnesota Cable Franchising is Quasi-Judicial

In Minnesota, the consideration of a cable franchise application is quasi-judicial if it complies with the requirements of Minnesota Statutes Section 238.081. “Quasi-judicial proceedings involve an investigation into a disputed claim that weighs evidentiary facts, applies those facts to a prescribed standard, and results in a binding decision.” The franchising procedure under Minnesota law (as described above), “requires documentary evidence in the proposal and allows for testimonial evidence at the public hearing and results in a binding decision.” In most instances, to be upheld on appeal, a quasi-judicial decision must not be arbitrary, oppressive, unreasonable, fraudulent, under an erroneous theory of law, or without any evidence to support it.

Quasi-Judicial Municipal Best Practices

Bias of a Council Member who takes part in a quasi-judicial process may render a City’s decision as arbitrary and capricious. It is therefore critical that once a cable franchise application has been submitted, Council Members/Commissioners should take measures to provide adequate safeguards for the due process rights of cable franchise applicants that will appear before them.

In a separate post I discuss some aspirational “best practices” that Council Members and/or Commissioners should consider using in connection with quasi-judicial matters over which they may have decision-making authority.

Appeal of Additional Franchise Decision

An applicant may seek Certiorari Review by the Minnesota Court of Appeals of any quasi-judicial final action by a City/Commission. An applicant may also seek judicial review under 47 U.S.C. § 555, which may be brought in– (1) the district court of the United States for any judicial district in which the cable system is located; or (2) in any State court of general jurisdiction having jurisdiction over the parties.

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