good morning morning your honour's cheryl and i would like to reserve four minutes for rebuttal very well for thirty five years local franchise authorities and cable operators have negotiated local franchise agreements which provide institutional networks and discounted services to elementary school children senior citizens networks for police and fire departments court systems boards of election and more the c is order under review turns it inside out the cable act under which these agreements have been negotiated this leaves the elevators in an impossible said situation having to either give up these important facilities and services or pay for something that for which they've already bargained we have met the task for a stay pending appellate review and i'd like to start with our success on the merits and then move to  one of the easiest ways to think about the f c c is and i should start by saying what the f c c decided in this case was to apply cable related franchise requirements against the five percent franchise fee limit in the act and that seems to be the only thing that you're challenging in the order in other words i don't see that you've tried to make any showing that they're mixed use rule should be stated work that there preemption are the ones i just said oh yes well for example your honor at the order is very interrelated with one another so the f c c preempts all state and local government authority that they find are not already authorized by the act so we need to know what the act means and this in kind is part of what the act means similarly they apply in their rulings to state franchises we need to know what their order means in order to know what is what what's different are you have to do and in addition your honor one of the key facts with regard to this case is the f c c anticipates that we would have negotiations between cable operators and local governments to try to determine how to implement the f c c as well i mean you all haven't exactly been blindsided by this from what i mean they came out with this rule basically thirteen years ago and then we looked at it three years ago or to two and a half years ago we didn't say it was wrong they just we just said they didn't hadn't explained certain aspects of their interpretation and remanded it for them to do that so you've you've known that this is coming and i understand your argument about hardship but at the same time this can hardly be a surprise to the folks in your situation well your honor we never know what the f c c is going to do until it actually does it so we're even some to have been pretty consistent s well i think when you're talking about governmental entities river lea you know we've got the state of why we've got local governments around the country they can't really make plans until they know what the law is what do you think what do you think as to in kind cable related services being treated exactions but anyway the point is that the f c c really hasn't gone any further than where they had gone i would disagree i think they i mean just to put my cards on the table or be candid with you i think they've come back with a quite thoughtful answer in this order that speaks directly to the concerns that we read so the idea that they just you know haven't haven't explained their interpretation and i think you're going to have a hard time speaking for myself with that you might just want to say here's where the reasoning goes astray i mean there's plenty of reason here so where do they have a misstep absolutely so where the reasoning goes astray honor is that their st explanation for why the people related franchise requirements count against the cap is that they see no difference between cable related requirements and non cable requirements this is the cable act it's centrally concerned with really key what do you mean by no difference between those two things that's what the commission fines are a main reason why the original finding with regard to non cable requirements can be expanded to cable really like they point out that the exceptions to the definition of franchise fee include two dollars different kinds of cable service costs and there would have been no reason for congress to exclude those had had those cable related costs not otherwise been part of the franchise fee definition that that's just sort of statutory interpretation want to want so what's wrong with with that what with respect your honor i would disagree i believe that those provisions actually very clearly change the treatment of how the support for peg services are treated so congress that i want to make sure that we're focusing on the structure of the franchise fee definition itself so the franchise fee definition has exceptions but those are exceptions were designed to allow local governments to impose additional fees and on cable operators that says you may charge a five percent fee and you may also charge these things and one  did do in those two provisions you're describing is that oppose things were part of what counts towards a five percent the st place why would they have to accept those things out of the five percent well be usually doesn't waste its time in that manner correct but congress usually doesn't anticipate new interpretations thirty years down the no i that's that that's really not an answer to the to the point about the rules of statutory construction i mean one of the good things about having courts interpret statutes is everyone knows the rules going in and we're not doing it based on a policy objective we're doing it based on rules that you all can know and people can conform their conduct around here they of applied one of those rules and so i mean on that one i'm having a hard it seems like the clear inference is that incoming cable related services can be print they are counting towards it while you're at i guess i would answer a question this way which is to look at section five hundred and forty six of the actual engines where local franchise authorities are assigned by congress there are their obligation to  then the operator offers a proposal then the local franchise authority must do another process work hard with regard to four points one of which is the local cable related needs and interests there must be a decision a written decision cable operators are protected in order to provide evidence judicial review is gone once again engage with local cable related needs and interests if we have this entire process thank together in the cable act why do we need that if all local a local government is doing is just purchasing services from the cable operator why do you need findings why do you need a standard why do you need cable operators providing evidence with regard to local cable related needs and interests if we don't have if the local government is just purchasing these these problems you're i mean i'm trying to hold you to something but you didn't make any argument in your brief as to section as to this absolutely we did your good ok maybe i just forgot about it so the essence of your argument is that the renewal sections then orme what the definition the original definition is in the beginning of that yet well because the entire act works as a whole and one thing i did want to highlight for your honour's is the quote from alliance in terms of facially ambiguous provisions can have their meanings clarified and rendered unambiguous by reference to the statute structure right of the cable act structure designates well the franchise authorities with significant rights and obligations with regard to local cable related needs and interests the reason it's in the renewal provision is in one thousand nine hundred and four most local governments already had franchises so congress is stepping in and providing some changes for how those local franchises should go forward but this is the key have section and to have the franchise fee definition completely override the entire subset of section under which operate seems inconsistent of his would override it because now instead of having in an act where local needs and interests are primary focus and goal which is also i should say numerated in the purposes of the act now it's just can you afford to pay for it why do we need congressional legislation at all if the only answer the local government pay for something like that's not that's something that we already know as it is we didn't need the one thousand nine hundred and four cable act to tell us that question so the cable act must have been trying to do something else and one thing i also wanted to explain is that i think they're producers nd so your argument is that in this renewal section then you're analyzing the ability of the municipality to pay for or the cost of to the to the franchisee to provide so typically so in five hundred and forty six the local government st in five hundred and forty six they have to make a finding about what the cable related needs and interests of the community are and then later when there's a four part test to determine whether the operator hazmat the needs the community letter d there in that four part test is whether it meets the cable related needs an interest taking into account costs so st of all we have this complex process of just ask harm give you a couple minutes ok i just wanted to quickly explain your honour's two things in particular right now local governments around the country are making contingency plans they are under severe budget uncertainty for example city of new york  y why are trying to figure out how to handle the coronavirus one of the key things that governments do and everybody does is to require telecommuting how can you require telecommuting if you don't know that your institutional network is going to be available to you these institutions are essential services and we have shown in the declarations that these are essential for core operations of government and that unlike the f c c is conclusion and it's state and i'll order a paragraph seventeen it is not a simple matter to just buy them or replace them is anybody threatening to cut them off right now your honor the cable industry has not done that but we do expect is very likely if your owners deny the sta that we will see those requests the entire premise of this i mean you know like they're going to cut off for new york city is that is there really something in the record that says that's a reality well your honour's the cable industry has has elation no they've been asking for this seriously they even when the f c c denied our stay went back and said no we need to be sure that it's very clear that we can continue to go on we need to be sure it's very clear that these agreements are going to be enforced immediately they were not willing to wait and this the entire point of the f t c is your honor is to is to effectuate this outcome and i did want to cite there is one i think very helpful site we put in our reply from the previous case in the rd circuit where says the government cannot adopt a policy expressly designed to have a certain effect and then when the policy is challenged in court by those who would be harmed responded the policies consequences are entirely speculative this is in the financial interest of the cable industry to vindicate their shareholders rights  and interests in this case and we see no reason to doubt and i wanted to be sure i was clear that under for example to santa clara county case the harm is occurring right now we cannot plan right now we cannot do things right now so it doesn't depend was there any contingency planning based upon the likelihood that you would be in precisely the situation that you're in now this is a mixed a massive change your honor and i think that it's a change again that has been coming at you since two thousand and seven i mean you know barely us skated in two thousand and seventeen did nobody anticipated that this time i to rival nobody has made any contingency you know for that i think it's certainly folks are trying but it is an extremely difficult situation which is led to us ask for the stay on it because it's not really possible to do i think that this would like to just put the order in effect as of today exactly the kind of situation when a stay is warranted there is public safety at risk the complex negotiations that would need to occur in order to implement that warner would just have to be redone depending on what your honour's decide with regard to the f c c is decision so even if one piece of the order is overturned then we would have to go renegotiate all over again because a in kaiden is overturned but mixed use is upheld when you're negotiating having one piece of the default rules of the road pulled out from under you change the entire in this court they've failed to demonstrate a substantial likelihood or any likelihood of success on the merits of the commission in the order to find franchise fair and target in the definition of franchise and the act to cover cable related in kind contributions the commission found support in the broad language of the definition of franchise which defines a franchise fee as any taxpayer assessment of any kind imposed by a franchising authority on a cable operator or a found that the broad definition doesn't make any distinctions between cable related and non cable related in kind contributions also in your exchange with the council for a petition are the structure of the actor the structure the franchise  definition supports our interpretation again there are two exceptions for certain cuban related and kind contributions those associated with educational governmental use but no other cable related in kind contributions are accepted which necessarily means that all other cable related contributions fall within the statutory definition just talk a lot about the fact that our interpretation of franchise would prohibit franchising  performing their duty under section five hundred and forty six of the act to assure that in the franchise renewal process community needs are met that's not correct in fact our interpretation of franchise does not require the franchising authority or the municipality to bear the cost of franchise requirements cable operators are required to bear the cost of franchise requirements up to the five percent ca seven million dollars in franchise fees so that gives new york city one hundred and twenty seven million dollars to to sas any other franchise or any kind contributions but what even but again our interpretation does not prohibit the franchising authorities from imposing those requirements it does not force them to bear the requirements or the cost of those requirements up to the franchise cap where the act does is it per congress provided but in opposes the budget they have to set their priorities it does not impose on the cable operator to bear the cost of any requirement that could meet community needs what is your response specifically study where they identify cable related community needs and interests with the implication being apparently that the costs related to those needs and interests should not count against the cap what would you say specifically to that our response is that we can harmoniously interpret that provision with their franchise interpretation the franchising authority certainly can go into the franchising new process and determine whether or not if they if they exercise their discretion under section six hundred and eleven dollars to impose on that requirements or peg buyers or even to require free cable service to schools and libraries whether or not that meets community needs and the cable operator will bear the cost of those requirements to the five percent franchise cap but if the cable operator is required to bear on the cost of each and every requirement then it's community means it renders the franchise cap and section six year that's a significant amount of money we have any idea how much how much cost would be attributed to things like i know or let's say i know you know like her new york city or freni jurisdiction or we we have an overall franchise fee number you know i mean if if if we see if they had if that i know it cost started irreparable harm they're arguing that our interpretation of franchise will make it impossible for them to cover the cost of their i ask but if you look at the who i declaration for example and paragraph where team who i says currently carriers including currently carriers including cable writers do not sell the type of service we get and why they offer a connectivity price by the amount of data usage which is significantly more expensive salut looking at a product in the marketplace but they're not telling us how much it costs also neither new york city nor why tell us how much they collect in franchise is each year so i can't answer your question your honor because the petitioners haven't put anything on the rocker to determine whether or not our franchise the with the fam arc it fell you there and that will be but two responses if they don't know what their fair market value is one of their basis for coming in and saying that if they have to come to the marketplace the fair market value of what they will have to purchase will be greater than the amount of their franchise and the fact that they can point something into that in the marketplace at least probably gives them some as idea of what fair market value will be secondly you know the commissions that th guy lives in paragraph sixty two  franchise authority is that they have to engage in negotiations they need to negotiate for a reasonable period of time the commissions that in most instances that will be one hundred and twenty days but in most and says not in all instances it's a guideline not a deadline so for example if you very large complicated and out like the one in new york city it's probably going to take more time to renegotiate franchise terms with their commission do anything in your view the cable provider was not allowing a reasonable time in a particular jurisdiction yes so as we pointed out in the order reconsideration it's paragraph five and footnote twenty and this is the order that we released in response same remedies that existed prior to the order on reviews are still available to franchising authorities and the cable operator so when there is an impasse in negotiations before we release the order on or do primarily two options one of the parties could go to court or another party could come to the commission so it's our our workers and you have to negotiate for a reasonable period of time of a franchising authority felt that the cable operator was being intractable or pushing things too quickly commission in the state and i'll order and then it reiterate in the order on reconsideration the cable operator has to reach out to the franchising authority before it can amend the terms of its franchise and then the commission into  the guidelines that the commission set out in the order and clarify in the state and i'll order and reiterate in the order on reconsideration of a process that works like this if the cable operator wants to renegotiate terms in it cable operator has approached a franchising authority yet to renegotiate term and none of them have kind of said ok i don't want to have to keep providing some of these things for free because it's going to be over  percent and i want to shut it down they haven't said that they haven't and for the process to work for renegotiation to work your honor the cable operator has to contact the franchising authority sure the cable operator will propose a fair market value rate the parties then have a reasonable period of time to negotiate back rate so if the franchising authority things that fair market value is set too high they can engage in negotiations and also i want to go back to something you said is that how realistic is it that a cable operator would shut down the i not in new york city there was no evidence in the record that any cable operator has ever shut down and i know that or had any intention to do so there was no evidence in the record that cable operators we unilaterally engage in self help and as you pointed out it doesn't make sense cable operators and franchising authorities to live under a multi year franchise agreement to do something as toxic as that would poison the relationship between the two parties and also would in fact the cable operators ability to get a new franchise that franchise renewal time so there's a whole process in place to avoid the upheaval that franchising authorities are speculating will happen and aren't the basis of it's a reputable harm claim and just real quick if i may th the act as interpreted in the order what were they saying corbett say you're fighting about fair market value what would we have to say about that while they were going to court and they would have an argument over what the  they're having this fight they would found petition for declaratory ruling with the commission and they would ask the commission to provide clarity on what the fair market value is of a certain product i think more than likely they would go to court i draw again the court's attention to footnote to the question judge carefully jast you quite a bit ago i was looking through your brief at the same time he was asking the question as to what your responses to the section five hundred and forty six argument and all i could find in the brief on page nineteen is is just one sentence that says that argument lacks merit because sections six hundred and twenty three and six hundred and twenty six require an accounting of the cost of the franchise requirements that do not not being a tele sized accounting of the cost of the franchise requirements that do not count towards a franchise fee caps and then it goes on and gives a couple examples so is that really sort of is that phrase page nineteen you could be the whole of your answer no it's not your honor we were limited for space i would try the court's attention the answer i gave about the community needs assessment more fulsome answer can be found in paragraph twenty one dollars of the order on review the point in our brief about the cost the fact that it cable operators cost at all and so when we and our in our opposition your honor were saying well no in fact it considers other types of costs we were responding to the argument in their stay motion when i came up to the lectern today i was responding to petitioners argument which they're presented to the court today that are interpreted franchise renders the needs assessment and the same statutory provision superfluous my response  the text of the our our interpretation of franchise is based on the text of the statute and the structure of the statute and even if petitioners could demonstrate irreparable harm which they can't they are not entitled leave because they cannot demonstrate any likelihood of success on the merits with respect to their irreparable harm claims as we pointed out petitioners in the st instance haven't demonstrated that harm because they haven't demonstrated that the franchise fees they collect today will not cover the value in kind contributions like that i'd also point out their lack of urgency in coming to the court the rules took a fact on september petitioners failure to show any imminent or likely irreparable harm to judge question there is nothing in the record that anyone is threatening to shut down i pads in new york city or in hawaii or anywhere else  and as your honor's question indicated that would not probably be a very good idea for cable operators to do so just to sort of spell out exactly what would happen in this situation the process that the f put forward is that the cable operator must st go to the l s a with the fair market value of the inclines cable related in kind services that they are providing the l f they should in most instances be well able to cover the cost of those cable related services from the five percent franchise fee that they are getting or do you mean by that i mean i presume given that you all are fighting about about this new order that there are to be charging the full five percent and so that they're going to have to to to take on some costs of cells that currently you're paying for right your honor so they are in fact in most cases charging the five percent as monetary and then asking for in kind services free services i know it's on top of the ok out over it's a so they're getting five percent of they're just going to start paying in your view for the fair market value of things that that now count in the commissions interpretation towards printer exactly your honor so right now the cable operators are writing them and you know in most cases a check for five percent and then also providing in kind services on top of that and here they simply have to apply some of that check to cover the cost of the income services that they're provide that they're receiving so that the cable operator comes toward and says are right you know this stuff is now part of the fee and here's what we think the fair market value of this particular d services they think that number's crazy hypothetically let's say so what happens well so then the f c c has set forth that there's a process of negotiation that they are in most places should take one hundred and twenty days if you get to the end of the one hundred and twenty dollars days and there's  as misplayed said either party can go to court either party can go to the commission so the same rights and remedies that were available under the the franchise to begin with remain in effect so that that part of the order was not taken out on the motion for reconsideration decision no that part of the order was actually reiterated on the on the reconsideration decision so your it's your representation to this court that your members would not just sort of unilaterally say well then we're just not go provide it for well your honor i think that it would certainly not if they get to the end of that process and before even going to the commission or going to court just say fine you know get back to us when you're ready to pay this we're not going to court or you know we're just we're going to cut you off well if our members were to were to say that then they would know that franchising authority would take them to court for doing that so they're making a calculation that the same rights and remedies that would be available in the franchise agreement before would remain available so in terms of the speculative nature of the irreparable harm that petitioners have alleged they have said that they are facing sort of the loss of services but what i'm saying is that there is still a process at which if an l f a in new york or hawaii is facing a cable operator saying we're actually going to cut off your services then they that they could then go to court and seek an injun and against the operator for doing that so so there's certainly no likely or imminent harm happening now and the petitioners have failed to put any evidence in the record to show that anything like that is happening or that there's any intent of that happening so just briefly i see my time has expired but just briefly if i could just address the renewable provision and i just want to say that in doing that community needs assessment it's important to remember that  what the elevator is also looking at is the cable operators ability to provide just the basic service so even things that don't count for the franchise fee but the construction and operation of the key will system itself is also that is actually required when the cable operator requests it and the cable operator is going to request it because the cable operator cannot avail itself of the review provisions under the statute if it doesn't make that request in the process doesn't go forward so although it is may it says shall later down in the paragraph and as a factual matter those occur all the time because otherwise cable operators interests are not protected so those do occur which is very important is the local franchise authorities from doing something that is much more cost effective and is explicitly covered by the act as we explained in the as the declaration showed very clearly for example the duct the fiber that  referred to in hawaii that is an extremely cost effective way for local governments and cable operators to work together to provide services to their at a much less expense to the taxpayer the f c c has no evidence whatsoever about what the fair market value of cost for growth if they do count what value would you propose other than pure market well sometimes the f c c imposes cost as opposed to fair market value and what there's this doesn't go to i mean that's an interpretive question hardship on i think such group makes a point it's your burden to show hardship so it's it's your burden to come forward with some evidence that hey this is going to i guess i don't know be so expensive that we're going to have terrible consequences  going to have any any speculation even about what the normal i'm sorry on what we did the declaration which are uncontested both who i n york city say that would cost millions and millions of dollars far beyond any budget allocation they already have for internet services and because the f c c is valuing these in a completely different way than they have been in the past so they have explained very clearly in its many many more multiples and i believe it's the past or declaration of paragraph thirty one dollars and the cologne declaration i think that seventeen talks about the extreme costs that the local government would have to incur and the f c c assumes that they can just either pay for it which they can't so as a practical matter this answer is not in line with the facts on the ground and then in addition sir i guess what would convince me throughout this argument is if we do look at this question of whether the local authorities can or can't bear this additional cost that's a policy question that that's what how does that go to the question of the interpretation because the act gives to local franchise authorities the obligation and the responsibility to manage their local cable related related needs and interests the accent as you may impose a fee that he has to work lee is rent and the act very clearly in the statute says you may impose a five percent fee and you can also impose capital costs for pay and you can also impose incidental fees and you can also impose generally applicable taxes that's what the franchise fee provision says it does not say doesn't say that but you're reading it that way i respectfully disagree with that your honor i mean to say you can also you can also i mean you're you're sort of putting it but that's but that's no but that's in addition to the franchise fee that is not at all in contest and in the facts here so that is that is what it means in other words cat the capital costs do not count towards correct and they're very careful to carve that out in their or correct but what i'm saying is that the purpose of the exceptions is to allow additional collections to be made not to impose additional but you're complaining about things that are not among those exceptions counted towards  yes yes and i didn't want to just draw one more focus on the act and the distinction because the f c c tries to use this analysis but then it can't even comply with its own analysis and that goes with what we explained in our motion with regard to institutional networks and cable system bill that well that's because one thing is mandated and the other is i think would be to know your honor that's not what bill that's mandated it mandated at least impliedly by the readline provision anti require as a condition of the franchise a certain thing it's up to you and so it's not a mandated provision under the act itself it's something it would seem that congress is left to the discretion of the local print charging authority as to whether that's that part at least as they read the act part of what you want to count towards your five percent you don't have to but but if you do and they don't do it they don't agree to that then then it's a reasonable rejection for purposes of the you know you can't reasonably reject the franchise your honor that there is not and the f c c is decision unfortunately it might be a way to distinguish these things c went through three different ways to try to distinguish cable buildout and i nuts and it couldn't do it and it couldn't do it this time as well well no look at that thank you very much anybody for the questions or cases submitted i want to thank counsel for your argument also to end up early we will