United States Court of Appeals For the First Circuit

No. 20-2142

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.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MAINE

[Hon. Jon D. Levy, U.S. District Judge]

Before

Thompson, Dyk, and Barron Circuit Judges.

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.

January 4, 2022

 Of the Federal Circuit, sitting by designation. DYK, Circuit Judge. The Cable Communications Act of

1984 ("Cable Act") preempts state laws that regulate "rates for

the provision of cable service" if the Federal Communications

Commission ("FCC") has determined that cable operators in that

state are "subject to effective competition."

(a)(2), 556(c). Recently, Maine, a state that has effective

competition, see

(2020), enacted a statute that

requires cable operators to grant subscribers, if they cancel their

cable service three or more days prior to the end of a billing

period, pro rata credits or rebates for the days remaining in the

billing period after the termination of cable service. We must

decide whether this Maine statute is preempted by the Cable Act.

We hold that it is not because it does not regulate "rates for the

provision of cable service." We do not reach the question whether

it is also a "customer service requirement" exempt from preemption.

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 Rata Act") into law. As relevant

here, the legislation amended Me. Stat. tit. 30-A, § 3010, titled

"Consumer rights and protection relating to cable television

service," to add: "A franchisee shall grant a subscriber a pro

rata credit or rebate for the days of the monthly billing period

after the cancellation of service if that subscriber requests

- 2 - cancellation of service 3 or more working days before the end of

the monthly billing period." Me. Stat. tit. 30-A, § 3010(1-A)

(2021). The Pro Rata Act also requires that cable providers notify

consumers of their right to a pro rata credit in "nontechnical

language, understandable by the general public." Id. § 3010(2-

A). The Act was to become effective on June 16, 2020. According

to the Pro Rata Act's sponsor in the Maine House of

Representatives, the purpose of the statute was to "reform unfair

cable company billing practices" by requiring Maine "cable

providers . . . to pro-rate charges when a customer disconnects

service." In the legislator's view, the Pro Rata Act would

"protect cable customers from paying for service they do not

receive."

II.

The Cable Act expressly preempts state regulation of

"rates for the provision of cable service."

(a)(2). Specifically, "the rates for the provision of cable

service . . . shall not be subject to regulation" by the FCC,

states, or local authorities when "a cable system is subject to

effective competition."

If there is not effective

competition, 1 local authorities may regulate "rates for the

1 Under federal rules set by the FCC, "effective competition" is presumed in all markets unless rebutted.

. There is no dispute here that cable operators in Maine are subject to effective competition.

- 3 - provision of basic cable service" pursuant to regulations

promulgated by the FCC pursuant to § 543. § 543(a)–(b). Basic

cable service constitutes the minimum tier of service and generally

includes, for each locality, all over-the-air broadcast television

channels, required public access channels, and additional channels

added to the basic tier by the cable operator. See

(a). Rates for cable programming services beyond basic

cable service, i.e., nonbasic, higher-tier program packages or

premium, pay-per-channel offerings, cannot be regulated even if

there is not effective competition. § 543(a)(1)–(2), (b)(1),

(c)(4). However, "customer service requirements" are exempt from

preemption under

(d)(2).

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."

§ 543(a)(2). The Attorney General moved to dismiss the complaint,

contending that the Pro Rata Act was not preempted.

The district court stayed the preliminary-injunction

- 4 - 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 § 543(a)(2) of the Cable Act." In reaching this

conclusion, the district court found "Maine's Pro Rata Law does

not regulate a one-time cancellation or deinstallation fee but

operates directly on the rate that Charter may charge for providing

a certain quantity of cable service before a customer cancels

service." Spectrum Ne. LLC v. Frey,

, 514 (D.

Me. 2020). The court accepted Spectrum's argument that "it

provides cable service at a monthly, not daily, rate" and that the

"whole-month billing policy effectively charges a higher daily

rate to subscribers who cancel their service mid-month than to

subscribers who do not cancel, because Charter sells cable service

in monthly increments."

. Despite acknowledging that

"the Pro Rata Law applies only to the month in which a subscriber

cancels her cable service," the district court nonetheless found

the law's "prohibition on charges for service that was not provided

[has] the effect of prescribing a daily rate for the service that

was provided before the cancellation."

.

The court also rejected Maine's argument that the law is

a "customer service requirement" exempted from preemption in

- 5 - § 552(d)(2) of the Cable Act.2 The court noted the same section

of the Cable Act requires the FCC to set minimum "customer service

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)."

Spectrum, 496 F. Supp. 3d at 515 (citing

(b)). The

court held that Maine's "Pro Rata Law cannot be characterized as

2 Section 552(b) states in pertinent part: 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 imposes 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.

- 6 - a 'law concerning customer service'" (exempted from preemption).

at 515–16. The court acknowledged that "customer service

requirements" are not limited to the minimum federal standards and

confirmed both that "some laws requiring cable operators to grant

credits, rebates, or refunds might meet" a dictionary definition

of customer service and that the legislative history, discussed in

detail infra, "may" support reading customer service to encompass

rebates and credits.

. But the court nonetheless

concluded that the Pro Rata Act "goes well beyond" customer service

and "directly regulates the rates" that Spectrum charges.

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 district court

entered judgment for Spectrum, granting declaratory relief that

the Pro Rata Act is preempted by the Cable Act.3

The Attorney General now appeals. We have jurisdiction

3 The court’s judgment did not grant the preliminary injunction, but the Attorney General agreed that "he will not seek to enforce, directly or indirectly, the Pro Rata [Act] absent vacatur or reversal." Final J., No. 20-cv-168, ECF No. 34.

- 7 - 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,

(1st Cir. 2018).

A.

"In any preemption analysis, '[t]he purpose of Congress

is the ultimate touchstone.'" Philip Morris Inc. v. Harshbarger,

(1st Cir. 1997) (quoting Ingersoll-Rand Co. v.

McClendon,

(1990)); see also Gobeille v. Liberty

4 On June 22, 2021, this court invited the FCC to file an amicus brief in this appeal addressing the following questions: 1. Whether the Maine statute, Me. Stat. tit. 30-A, § 3010(1-A), constitutes the regulation of "rates for the provision of cable service" preempted by

(a)(2). 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"? 3. 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.

- 8 - Mut. Ins. Co.,

(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.,

(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.,

(1st

Cir. 2014).

B.

The parties disagree as to whether the general

presumption against preemption applies 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

- 9 - . . . which is inconsistent with this chapter shall be deemed to

be preempted and superseded."

(c). This Court

recently had occasion to review this provision in the context of

public, educational, and government (PEG) access requirements and

rural service availability requirements. NCTA -- The Internet &

Television Ass'n v. Frey,

, 3–4 (1st Cir. 2021) (rejecting

preemption challenge and upholding Maine law addressing PEG

channels and rural service availability). We now consider the

question in the context of rate regulation subject to a specific

preemption provision relevant here. This provision states, "the

rates for the provision of cable service . . . shall not be subject

to regulation by the [Federal Communications] Commission or by a

State or franchising authority under this section." § 543(a)(2).

The parties dispute whether Maine's Pro Rata Act is a regulation

of "rates for the provision of cable service" within the meaning

of § 543(a)(2).

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.

- 10 - 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.,

(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 § 543(a)(2).

Spectrum argues that Maine's Pro Rata Act is a form of rate

regulation because, in Spectrum's view, it "must measure the

quantity of service it provides in daily increments [during the

last month of service], rather than monthly increments" in order

to provide the pro rata credits required by the law. Appellees'

Br. 19. The Attorney General argues that Maine's Pro Rata Act

does not force a cable provider "to sell its product by 'daily'

rates rather than a 'monthly' rate," but instead, the law "merely

- 11 - requires [Spectrum] to refund customers for the portion of their

final monthly billing cycle, at the rate charged by [Spectrum], in

which they did not receive cable service." Appellant's Br. 17–

18. Further, the Attorney General argues, Maine's Pro Rata Act

only applies to a period after termination. "[A]lthough the Cable

Act prohibits states from setting rates for the provision of cable

service, the statute does not prohibit states from protecting

citizens from being charged for cable services that are never

provided." Appellant's Br. 21–22.

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 naturally read to encompass a termination

rebate. A termination event ends cable service, and a rebate on

termination falls outside the "provision of cable service." Thus,

the plain language of § 543 excludes the time after provision of

service--i.e., the only time when Maine’s Pro Rata Act applies.

Significantly, Spectrum conceded at oral argument that a state law

requiring pro rata rebates for periods of service outage would not

be rate regulation (but would instead be consumer protection).

To see why this narrow reading of the scope of

§ 543(a)(1)'s expressly preemptive ban may be warranted, it helps

- 12 - to focus on the difference between a hypothetical state law that

would cap the amount that a cable operator could charge a customer

on an ongoing monthly basis for cable service and the Maine law

that is at issue here.

There is no question that § 543(a)(1)'s preemption of a

state regulation of "the rates for the provision of cable service,"

§ 543(a)(1), would encompass the hypothetical state law that sets

a $50 cap. In fact, we do not understand Maine to suggest

otherwise. But, Maine's termination-rebate law differs from that

hypothetical monthly cap on what may be charged for cable service

because it regulates only the charge that the cable operator may

impose on a customer for the month in which that customer has

terminated--i.e., when the cable operator no longer provides--

"cable service." It is difficult to conclude that Maine's

termination rebate law regulates "the rates for the provision of

cable service," § 543(a)(1) (emphasis added), even though there

can be no question that the posited measure that imposes the $50

monthly cap would. The history of the Cable Act confirms the

correctness of this interpretation.

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

- 13 - 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 franchising 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,

, 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

5 See note 7, infra.

- 14 - States v. Sw. Cable Co.,

(1968). In 1968 in

Southwestern Cable, the Supreme Court recognized that the FCC could

regulate cable under its existing statutory authority, but such

regulatory authority was "restricted to that reasonably ancillary

to the effective performance of the Commission's various

responsibilities for the regulation of [over-the-air] television

broadcasting."

. Southwestern Cable did not address

the FCC's ability to regulate cable rates or to preempt state rate

regulation.

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,

; Cable Television Rep. and Ord.,

, 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."

(a)(4) (1972).

The order explained that § 76.31(a)(4) applied to regulation of

rates "for services regularly furnished to all subscribers" and

that the proper standard was "the maintenance of rates that are

- 15 - fair to the system and to the subscribing public." Cable

Television Ord., 36 F.C.C.2d at 209; see S. REP. NO. 98-67, at 9

(discussing FCC's 1972 Rulemaking). Although premium, or nonbasic

cable programming was developing, the FCC's instruction to

regulate rates in 1972 focused on the basic cable tier and excluded

higher tiers with specialized programming. Cable Television Ord.,

36 F.C.C.2d at 209; Clarification of the Cable Television Rules,

, 199–200 (1974).

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,

, 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

- 16 - for basic service] would be advisable." Rep. and Ord.,

, 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."

.

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."

.

The result was "that local authorities should be

permitted to decide for themselves whether they will undertake

such regulation."

. 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

channels, including origination programming."

at 673 n.1.6

6 The FCC's 1976 order deleting its 1972 regulation of rates for "services regularly furnished to all subscribers" stated in a footnote that such regulation included "disconnection" charges, Rep. and Ord., 60 F.C.C.2d at 673 n.1, which reads as follows: 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

- 17 - 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 service.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

jurisdiction of subscriber rates for such specialized programming and has determined that rates for these services should not be regulated by any governmental entity. 7 See Cox Cable New Orleans, Inc. v. New Orleans,

(E.D. La. 1984) (addressing a franchise agreement authorizing "a Basic Service package of 31 stations" offered "for $7.95 per month"); Helicon Corp. v. Brownsville,

, 118–120 (Pa. Commw. Ct. 1982) (addressing a local ordinance prohibiting a cable operator from charging a "monthly cable television fee in excess of the maximum rate"); Munhall v. Dynamic Cablevision, Inc.,

, 853–54 (Pa. Commw. Ct. 1977) (addressing a local ordinance permitting cable company to "charge subscribers for its services the sum of $4.95 per month"); Cablevision, Inc. v. Sedalia,

, 49–50 (Mo. 1974) (addressing an agreement between the cable operator and the city council that the "monthly service rate be $4.50 with no installation charge"). 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. M.G.L.A. 166A § 15 (1976) (originally enacted Nov. 16, 1971). The Massachusetts legislation initially limited the "monthly charge to subscribers" to "seven dollars" until the cable commission could determine rates and charges under the state statute. St. 1971, c. 1103, § 2 (Nov. 16, 1971).

- 18 - 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,

. The FCC preemption of state regulation continued to be

limited to nonbasic cable services. In 1983 in In Re: Community

Cable TV,

, 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." 95 F.C.C.2d at 1215,

1218; see Finneran,

; Cap. Cities,

;

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 preempt state regulation, including

the regulation at issue in that case, which required cable

operators "to delete all advertisements for alcoholic beverages

contained in the out-of-state signals that they retransmit by

- 19 - cable." Cap. Cities,

. Capital Cities expanded

the FCC's jurisdiction beyond the "reasonably ancillary"

requirement in Southwestern Cable and "placed within the FCC's

discretion the power to pre-empt virtually any state regulation of

the cable industry." Finneran,

.

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. Cable Act,

Stat. 2779 (1984). The Cable Act implemented a "uniform

national policy" of deregulation intended to "eliminate and

prevent conflicting and counterproductive regulations" and

encourage competition. S. REP. NO. 98-67, at 17. Preemption was

no longer limited to rates for nonbasic service. It applied as

well to rate regulation for the "provision of basic cable service."

§ 623(b)(1), 98 Stat. at 2788. The Act included the general and

specific preemption provisions codified in

(c) and

543(a). They provide now, as they essentially did then, that "any

provision of law of any State . . . or franchising authority . . .

which is inconsistent with this chapter shall be deemed to be

preempted and superseded" and "[n]o Federal agency or State may

regulate the rates for the provision of cable service" subject to

the exception in the absence of "effective competition."

- 20 - §§ 556(c), 543(a)(1)–(2). "Effective competition" was so broadly

defined that "97 percent of all cable systems" were exempt from

rate regulation within a few years of enactment. S. REP. NO. 102-

92, at 3 (1991).

The FCC was required, where there was no effective

competition, to "prescribe and make effective regulations which

authorize a franchising authority to regulate rates for the

provision of basic cable service" and to "establish standards for

such rate regulation." § 623(b)(1)–(2), 98 Stat. at 2788. For

the purpose of rate regulation under this section, the FCC defined

"basic cable service" in 1985 to mean "the tier of service

regularly provided to all subscribers that includes the

retransmission of all must-carry broadcast television signals

. . . and the public, educational and governmental channels, if

required by a franchising authority." Implementation of the

Provisions of the Cable Communc'ns Pol'y Act of 1984,

, 18,653 (May 2, 1985). The regulation of a nonbasic service

tier continued to be preempted whether or not there was effective

competition. See

.

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

(d). Section 552

- 21 - as enacted left to the states the ability to "enact[] or enforc[e]"

consumer protection laws "to the extent not inconsistent with this

title." Significantly, state "customer service requirements" were

not preempted. § 632(a)–(c), 98 Stat. at 2796. According to

House Report 934, these customer service requirements reserved to

the states include "requirements related to interruption of

service; disconnection; rebates and credits to customers;

deadlines to respond to consumer requests or complaints; the

location of the operator's consumer services offices; and the

provision to customers (or potential customers) of information on

billing or services." H.R. REP. NO. 98-934, at 79. The House

report is particularly authoritative because the Senate

specifically adopted the explanation in House Report 934 when it

concurred in the House amendments. 130 CONG. REC. 31,871 (1984).

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 statement

- 22 - for 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,

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 operators 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 from

- 23 - preemption 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." § 632, 98 Stat. at 2796. The 1992 Amendments

changed the language of the preemption carve-out in § 552(d)(1)8

to preserve a state's ability to "enact[] or enforc[e]" consumer

protection laws "not specifically preempted by this title." § 8,

106 Stat. at 1484. Congress included the clarification in

§ 552(d)(1) to indicate "that state and local authorities retain

all authority to enact and enforce consumer protection laws that

they have under current law." H.R. REP. NO. 102-628, at 105–106

(1992).

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. § 552(d)(2).

The distinct carve-out in § 552(d)(2) was added to clarify that

the "legislation allows local authorities . . . to establish and

enforce laws that impose more stringent customer service

requirements." H.R. REP. NO. 102-628, at 35–37. In other words,

8 Section 552(d) was enacted as § 552(c).

- 24 - § 552(d)(2) now specifically excepted state customer service

requirements from the preemption provision. With this amendment,

Congress again confirmed that "customer service requirements . . .

relate to interruption of service; disconnection; rebates and

credits to consumers;" etc. Id. at 34.

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)."

(b).

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.,

(May 21, 1993). The

FCC's rulemaking replaced the previous light-touch rate

regulations in

(1985), promulgated under the

1984 Cable Act, with an entire sub-chapter for "Cable Rate

Regulation."

. The sub-chapter specifically

regulated rates in a new section,

, which set

the "maximum monthly charge per subscriber for a tier of regulated

programming services offered by a cable system" in terms of the

"permitted per channel charge multiplied by the number of channels

- 25 - on the tier, plus a charge for franchise fees."

.

The regulations did not regulate termination fees or termination

rebates.

Four years later, Congress enacted the

Telecommunications Act of 1996 ("1996 Amendments"), modifying the

1992 Amendments. Telecomms. Act of 1996,

,

, 115 (1996). Relevant portions of the 1996

Amendments confined rate regulation (in the absence of effective

competition) to the basic tier of cable service. § 301(b)-(c),

110 Stat. at 115–16. In 2015, the FCC promulgated a rule presuming

"effective competition" in all markets unless rebutted by the local

franchising authority--effectively ending rate regulation in all

but two markets.

; see Mass. Dep't of Telecomms.

& Cable v. FCC,

, 32 n.1 (1st Cir. 2020).

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"

- 26 - charged for the provision of basic cable service.9 The legislative

history of the 1984 Cable Act does not suggest a concern with, or

a purpose to preempt, state regulation of termination fees or

termination rebates. Nor does it suggest that the term "rates for

the provision of cable service" includes termination fees or

termination rebates.

(a). The focus in the

later amendments was similarly on monthly rates for basic cable

service and not on termination fees and termination rebates. For

example, in passing the 1992 Amendments, Congress' first finding

highlighted the increase in "monthly rates for the lowest priced

basic cable service." § 2(a)(1), 106 Stat. at 1460.

The regulations promulgated by the FCC to ensure

reasonable rates (in the absence of effective competition)

9 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 service, 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.

- 27 - 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."

(a). Copious details, factors, and requirements followed

that are related to that maximum monthly charge per subscriber.

See § 76.922. These FCC regulations similarly do not discuss or

address termination rebates or termination fees.

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

(a)(4) (1972).

B.

Second, the congressional silence concerning termination

10While the FCC did not propose to preempt termination fees, it did collect, pursuant to the congressional mandate in § 543(k), information about "(a) Rates charged for basic cable service, cable programming services, and other cable programming; (b) fees for converter boxes, remote control units, installation and disconnection; and (c) any other charges for equipment or service levied on subscribers." Cable Television Act and Cable Television Sys., 58 Fed. Reg. at 29,749.

- 28 - fees 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 of 1 set of the minimum

equipment which is necessary for the subscriber's receipt of basic

cable service" (in the absence of effective competition).

§ 623(c)(3), 98 Stat. at 2789. As amended by the 1992 Amendments,

§ 543 now states, "The regulations prescribed by the Commission

under this subsection shall include standards to establish, on the

basis of actual cost, the price or rate for-(A) installation and

lease of the equipment used by subscribers to receive the basic

service tier . . . ." § 543(b)(3). Installation fees were viewed

as rates "for the provision of cable service." Termination fees

were not.

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."

(i).

C.

Third, The Cable Act established a federal preference

for competition through market forces because such competition

would "keep the rates for basic cable services reasonable in that

market without the need for regulation." H.R. REP. NO. 98-934, at

- 29 - 25; S. REP. NO. 98-67, at 5, 17, 22. Congress barred state

regulation only where "marketplace forces would determine and

control rates." S. REP. NO. 98-67, at 22. Congress acknowledged

multiple potential sources of competition including "multipoint

distribution services, subscription television stations,

videodiscs and cassettes, master antenna television and satellite

master antenna television systems, low power television stations,

and direct satellite-to-home broadcast systems."

.

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,

(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:

- 30 - 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.

§ 552(d)(1).11 The House Committee Report in 1984 explained:

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

11Section 552(d)(1) was enacted in the Cable Act as

(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.

- 31 - 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."

As noted earlier, Spectrum itself appears to concede

that Maine's outage-rebate requirement, which requires cable

operators to give subscribers a "pro rata credit or rebate" for

service outages "for 6 or more consecutive hours in a 30-day

period," Me. Rev. Stat. tit. 30-A, § 3010(1)(A), is a "consumer

protection law" and so is not preempted. That concession (itself

mandated by the language and legislative history of the Cable Act)

is significant. If the outage-rebate measure is not preempted

because it is a "consumer protection law," then it must be because

such an outage-rebate requirement also is not "specifically

preempted by" § 543(a). And, if that is so, then it must also

follow that Maine's termination-rebate requirement in the Pro Rata

Act, too, is both not "specifically preempted" by § 543(a) and is

a "consumer protection law." For, while Spectrum does attempt to

distinguish the two Maine rebate measures on the ground that the

outage-rebate law merely guarantees that a "customer gets the month

that he or she paid for," while the termination-rebate law does

not, Maine's outage-rebate law applies even when the outage is not

the cable operator's fault, as it applies by its plain terms

whenever "service to any subscriber is interrupted." Me. Rev.

- 32 - Stat. tit. 30-A, § 3010(1)(A). Thus, both Maine laws mandate a

rebate for non-service that is not owing to any failing on the

cable operator's part. Accordingly, Spectrum's own logic for

explaining why Maine's outage-rebate requirement is not preempted

supports the conclusion that Maine's termination-rebate

requirement in the Pro Rata Act must also not be preempted, since

Spectrum advances no argument that would permit us to find the

termination-rebate law preempted if the outage-rebate law is not.

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," § 556(c), because

§ 552(d)(1) preserves any "consumer protection law" from

preemption unless it is "specifically preempted." Because we find

the Pro Rata Act is not specifically preempted under § 543(a)--

- 33 - and because Spectrum has advanced no other reason as to why it

would otherwise be "inconsistent" with the Cable Act--we find the

Pro Rata Act is not preempted under the general provision in

§ 556(c).

VII.

Although a few district court cases have followed the

district court here,12 the relevant cases at the Circuit level

either support our holding or do not contradict it. In Finneran,

the Second Circuit considered whether New York could regulate rates

charged "to customers wishing to downgrade to a less expensive

level of cable service" by limiting such downgrade charges "to the

company's actual cost." 954 F.2d at 92–93. The court determined

that such downgrade fees for stepping from a higher tier of cable

service to a lower tier did not constitute regulation of "rates

for the provision of cable service" and were not preempted by

12A New Jersey Board of Public Utilities (BPU) rule that is similar to, but not identical with, the Maine Pro Rata Act was found to be preempted by the Cable Act in Altice USA, Inc. v. Fiordaliso. No. 3:19-CV-21371-BRM-ZNQ,

, at *5 (D.N.J. Mar. 23, 2021) (unpublished); see Altice USA, Inc. v. New Jersey Bd. of Pub. Utils., No. 3:19-CV-21371-BRM-ZNQ,

, at *1 (D.N.J. Jan. 22, 2020)(explaining the factual background and granting a preliminary injunction). That case is also currently on appeal. No. 21-1791 (3d Cir. Apr 22, 2021). The district court in Altice relied heavily on the district court's decision below in this case in reaching the same result.

, at *4–7. Similarly, a non-precedential state court decision holding that the same New Jersey BPU rule was preempted by the Cable Act indirectly relied on the decision on appeal here (through the D.N.J. decision). See In re Altice USA, Inc., No. A-1269-19,

(N.J. Super. Ct. App. Div. Oct. 15, 2021).

- 34 - § 543--the same statute governing rate regulation at issue in this

case. Id. at 102.

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 amended 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.

§ 543(b)(5)(C);

. But Congress' action does nothing

to undermine the reasoning of the court in Finneran--it simply

demonstrates that Congress was persuaded to address the same

problem the statute at issue in Finneran addressed, but at the

federal level.

Spectrum also argues that Time Warner v. FCC,

(D.C. Cir. 1995), supports its position. We do not find Time

- 35 - Warner 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."

(d). In interpreting this

provision, the FCC had determined "that the uniform rate structure

provision applies not only to regulated systems, but also to

systems subject to effective competition and otherwise exempt from

rate regulation." Time Warner,

. The court

concluded that the exemption from rate regulation for systems

facing "effective competition" exempts cable operators "from any

rate regulation that the Commission or franchising authorities

promulgate 'under this section [543],'" and thus set aside the

FCC's decision.

. We fail to see how that decision

relates to the issues here.

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.

(c)(3)(A). The FCC

found it "clear from the language and purpose of Section 332(c)(3)

of the Act that states do not have authority to prohibit [mobile

telephone] providers from . . . charging in whole minute

- 36 - increments." Sw. Bell, 14 F.C.C. Rcd. at 19,907. But the

situation here is quite different. First, whole-minute billing

is directed at the continuing provision of service rather than the

period after service is terminated. Second, the pertinent

statutory text in § 332(c)(3) at issue there addresses "rates

charged" generally, which is distinct from "rates for the provision

of cable service" in § 543.13

VIII.

Because 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 § 552(d)(2).

The 1984 legislative history explained that "customer service

requirements" include both "disconnection" and "rebates and

credits." H.R. REP. NO. 98-934, at 79. 14 When Congress

13Another case Spectrum relies on found a state law that imposed a waiting period on rate changes preempted. Cellco P'ship v. Hatch,

(8th Cir. 2005). But Cellco is inapplicable because it also addresses "rates charged" generally under § 332(c)(3), for cellular service providers, instead of "rates for the provision of cable service" under § 543. Id. at 1080. And the law at issue in Cellco directly regulated on-going monthly rates by forbidding changes in the terms of service, including rate changes, during a mandatory waiting period unless subscribers consented to the changes. Id. at 1079. 14 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

- 37 - 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.

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. 15 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.

- 38 - 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.

- 39 -