Cable Communications Bd. v. Nor-West Cable Communications Partnership
| Decision Date | 26 October 1984 |
| Docket Number | Nos. C2-84-865,C4-84-866,NOR-WEST,R-WEST,s. C2-84-865 |
| Parties | CABLE COMMUNICATIONS BOARD of the State of Minnesota, Petitioner, City of St. Paul, Petitioner, Continental Cablevision of St. Paul, Inc., Petitioner, v.CABLE COMMUNICATIONS PARTNERSHIP, Respondent, Ronald E. Wills, Intervenor/Respondent. |
| Court | Minnesota Supreme Court |
Syllabus by the Court
1. An objector to confirmation of a cable franchise is not entitled to a hearing as a matter of right under the Cable Communications Act, due process principles, or Cable Communications Board regulations.
2. The Cable Communications Board's use of a three-part test to determine if a matter was substantially contested within the meaning of its rule was a permissible interpretation of its existing rule and was not the improper promulgation of a new rule.
3. Cable Communications Board finding that objector's challenge to the St. Paul cable franchisee was not substantially contested was based upon substantial evidence, and was not arbitrary or capricious.
Hubert H. Humphrey, III, Atty. Gen., Andrea Mitau Kircher, Sp. Asst. Atty. Gen., St. Paul, for Cable Communication Bd.
Edward P. Starr, City Atty., Jane A. McPeak, Deputy City Atty., Deborah J. Palmer, Ernest I. Reveal, St. Paul, for City of St. Paul.
Wayne G. Popham, Lee E. Sheehy, Minneapolis, for petitioner Continental Cablevision of St. Paul Inc.
Ronald Haskvitz, Minneapolis, Harold R. Farrow, E. Nicholas Selby, Oakland, Cal., for Nor-West Cable Comm. Partnership.
Stanley G. Peskar, St. Paul, amicus curiae for League of MN Cities.
Heard, considered, and decided by the court en banc.
Nor-West Cable Communications Partnership, an unsuccessful applicant for a cable communications franchise in the City of St. Paul, appealed to the Court of Appeals from an order of the Minnesota Cable Communications Board. In that order, the Board granted a certificate of confirmation to St. Paul's franchisee, Continental Cablevision of St. Paul, Inc., and denied the request of Nor-West for a contested case proceeding under the Minnesota Administrative Procedure Act (MAPA), Minn.Stat. §§ 14.57-14.62 (1982). The Court of Appeals, by order dated May 29, 1984, remanded the matter to the Board with instructions to convene a contested case hearing before a hearing examiner. Continental, the City of St. Paul, and the Board sought review by this court. We must determine (1) whether the Cable Communications Act, due process principles, or Board regulations require initiation of a contested case hearing in this case as a matter of right; (2) whether the Board, in utilizing a three-part method of analysis to determine whether this matter was substantially contested within the meaning of its rules, improperly promulgated an interpretive rule in violation of MAPA; and (3) whether the Board's finding that this matter was not substantially contested was supported by substantial evidence. We reverse.
The Cable Communications Act created the Minnesota Cable Communications Board to "oversee development of the cable communications industry in Minnesota." Minn.Stat. § 238.01 (1982). The Board is empowered to prescribe the procedures and practices municipalities must follow in granting franchises to cable companies, including minimum standards for inclusion in franchises. Minn.Stat. § 238.05, subd. 2 (1982). The Board may promulgate such rules and regulations as it finds necessary or appropriate to carry out its statutory duties. Minn.Stat. § 238.06, subd. 1 (1982).
Municipalities must require a franchise of any cable communications company providing service within the municipality. Minn.Stat. § 238.08, subd. 1 (1982). No franchise is effective, however, unless the Board issues a certificate confirming the franchise. Minn.Stat. § 238.09, subd. 1 (1982). A certificate of confirmation is issued to the franchisee only upon compliance with the minimum standards required by the Board's rules for award of a cable communications franchise. Minn.Stat. § 238.05, subd. 4 (1982); Minn.Admin.R. 2320.0300 (1983). The Cable Communications Act, however, allows municipalities to formulate franchise requirements in excess of Board minimum standards, provided that such requirements are not inconsistent with Board standards. Minn.Stat. § 238.08, subd. 2 (1982).
The Board has described its function as follows:
[T]he statutory duties of the Cable Board do not include de novo review of the award of the cable communications franchises by municipalities. The legislative intent appears to be that the Board set the parameters of the franchise process and to [sic] then ensure that those procedural requirements are complied with through its authority to deny a certificate of confirmation.
In re Northern Cablevision of Minneapolis, Inc.'s Application for Certification of the Minneapolis Cable Communications Franchise; Minnesota Cable Communications Board Findings of Fact, Conclusions, Memorandum, and Order at 50 (May 5, 1981) (incorporating the Hearing Examiner's Report) [Northern Cablevision ].
The City of St. Paul began its current search for a cable communications franchisee by appointing a task force to study the cable communications needs of the City. The task force completed its needs assessment report in September 1982. The City then prepared a Request for Proposals Providing Cable Communications Services to the City of St. Paul (RFP), issuing the RFP on November 1, 1982. On March 1, 1983, the proposal deadline, three cable companies submitted proposals for a St. Paul cable franchise. Those companies were Continental Cablevision of St. Paul, Inc., Group W Cable of St. Paul, and Nor-West Cable Communications Partnership.
The City retained an outside consultant to evaluate the three proposals. The consultant provided the City with a preliminary assessment of the proposals on April 5, 1983. Each applicant responded to the preliminary assessment and on June 15, 1983, the consultant submitted its final evaluation of the proposals to the City.
The City Council passed a resolution awarding a cable franchise to Nor-West Cable Communications Partnership on July 5, 1983. The resolution, passed by a 4-3 vote, made the award contingent upon a final agreement between the City and Nor-West leading to the enactment of a franchise ordinance, and contingent upon the receipt of a certificate of confirmation from the Minnesota Cable Communications Board. Mayor George Latimer vetoed the council resolution on July 13, 1983. The City Council failed to override the Mayor's veto.
By a resolution dated July 29, 1983, the City Council again awarded a St. Paul cable franchise, this time to Continental Cablevision of St. Paul. The award was made contingent upon the enactment of a franchise ordinance embodying a final agreement between the City and Continental, and upon receipt of a certificate of confirmation from the Board. The City and Continental reached final agreement concerning the details of the franchise, and the City passed a franchise ordinance on November 10, 1983. Mayor Latimer approved the ordinance on November 14.
Continental applied to the Board for a certificate of confirmation on November 21, 1983. After examining the franchise agreement and other documents, the Board staff determined that Continental and the City had complied with the procedures and standards of the Board and recommended on January 6, 1984, that the Board issue Continental a certificate of confirmation. On January 10, 1984, Nor-West filed a complaint with the Board seeking denial of Continental's certificate of confirmation or, in the alternative, a contested case (trial-type) hearing.
Nor-West alleged numerous deficiencies in the City's franchising process. Nor-West complained of several violations of Board rules, including eight instances where Continental's application allegedly failed to comply with the minimum requirements of the City's Request for Proposals, 15 instances where the City's franchise ordinance allegedly amended Continental's application substantially, and four instances where the City's franchise ordinance allegedly lacked required recitations. Nor-West also alleged that the City violated Board rules by evaluating applicants with criteria and priorities which differed from those set forth in the Request for Proposals and by issuing an exclusive cable franchise in violation of state law. Finally, Nor-West alleged violations of state antitrust law and the first and fourteenth amendments of the Federal Constitution.
The Board's staff reviewed Nor-West's complaint and concluded that
The petition raises serious questions about the franchising decision made by the City of St. Paul, and provides new, as yet unsubstantiated, information about the procedure followed and about certain franchise provisions.
Persuaded that the St. Paul franchise award was substantially contested by Nor-West, the staff then recommended that the Board convene a contested case hearing.
Board rules provide that the Board shall hold a public meeting on applications for a certificate of confirmation. If an application is "substantially contested" at the public meeting, "the Board may adjourn the public meeting and deem the matter a contested case * * *." Minn.Admin.R. 2320.0500 (1983). At its January 13, 1984, meeting, the Board first heard comment from Continental and the City in support of confirmation of the cable franchise. Representatives of Nor-West then spoke in opposition to confirmation and requested that the Board convene a contested case hearing. Following these presentations, the Board determined that it needed additional information before it could decide whether the matter was substantially contested. Consequently, Continental and the City were given 10 days to submit memoranda in response to the Nor-West complaint. Nor-West would then reply in writing to these memoranda.
The Board met again to consider the St. Paul cable franchise on February 29...
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