Housatonic Cable Vision v. Dept. of Public Utility Control, H-85-502 (MJB) Civil.

CourtUnited States District Courts. 2nd Circuit. United States District Court (Connecticut)
Writing for the CourtBLUMENFELD, Senior
Citation622 F. Supp. 798
Docket NumberNo. H-85-502 (MJB) Civil.,H-85-502 (MJB) Civil.
Decision Date22 November 1985


William M. Rubenstein, Howard L. Slater, Thomas A. Rouse, Byrne, Slater, Sandler, Shulman & Rouse, Hartford, Conn., for plaintiff.

Barry S. Zitser and Valerie J. Bryan, Div. of Consumer Counsel, New Britain, Conn., Joseph I. Lieberman, Atty. Gen., and Clarine N. Riddle, Ass't. Atty. Gen., Hartford, Conn., for defendants.


BLUMENFELD, Senior District Judge.

This motion for a preliminary injunction, which has been consolidated with a consideration of the merits of the case, raises an issue concerning the interpretation of a recently-enacted statute, the Cable Communications Policy Act of 1984 (the "Cable Act"). Plaintiff Housatonic Cable Vision Company ("HCV") seeks to enjoin the Department of Public Utility Control and the Attorney General of Connecticut from enforcing a state regulation and two orders entered against HCV pursuant to that regulation, and from proceeding with administrative hearings concerning the regulation and orders. Plaintiff has also requested declaratory relief in the form of a declaration by this court that the regulation and orders are preempted by the Cable Act and are no longer of any force and effect.

Defendants have moved to have the action dismissed for failure to exhaust state administrative and judicial remedies, or on abstention grounds.


The State of Connecticut historically has regulated cable television systems on a state-wide basis in the same manner as public utilities through the Department of Public Utility Control ("DPUC").1 Conn. Gen.Stat. §§ 16-1 et seq. In order to construct or operate a cable television system, a cable operator was required to obtain a certificate of public convenience and necessity from the DPUC. Conn.Gen.Stat. § 16-331. Such a certificate, issued after a public hearing, authorized the holder to operate its service within a specified territory for a 15-year period. Because only one certificate was issued for each area, a cable operator holding a certificate enjoyed a monopoly within its territory. The DPUC had statutory authority to regulate cable operators on an ongoing basis by "specifying in the certificate at the time of issue and from time to time thereafter such terms and conditions as the public interest may require" and also "for due cause shown, ... to amend, suspend or revoke any such certificate." Conn.Gen.Stat. § 16-331(a). Over the years, the DPUC exercised its regulatory authority to establish and occasionally to alter line extension requirements for cable operators.

HCV holds the franchise to provide cable television service to Area 8, which includes the towns of Brookfield, New Fairfield, Monroe, Newton, Sherman, and Trumbull. HCV applied for this franchise in 1975. The company asserts that it emphasized in its original application and in the memorandum that it filed in support of that application that it did not intend to provide service to the entire franchise area. Rather, it proposed to provide access to cable service to 62% of potential subscribers within the first three years of service and indicated that thereafter market forces would dictate the schedule of construction, with further line extensions depending on the acceptance of the service in the previously-wired areas and the existence of firm orders in unwired areas.

The DPUC issued a certificate of public convenience and necessity for Area 8 to HCV on October 13, 1976. At that time, the DPUC's line extension policy required all cable operators to wire 20% of their franchise areas each year until they had provided service to 100% of their areas. The DPUC had implemented this policy in 1972 by adopting regulations amending all existing cable certificates. See Finding & Order, Public Utilities Commission Docket No. 11343, Nov. 10, 1972 (Defendants' Exhibit 7).

The DPUC altered its line extension regulations in 1978 by adopting Section 16-333-13 of the Regulations of Connecticut State Agencies. See Public Utilities Control Authority Docket No. 760207 (Defendants' Exhibit 11). A subsequent revision of Section 16-333-13 on September 4, 1980 established the line extension regulation at issue in this case. The revised regulation provides in relevant part:

(c)(2) Each franchise holder shall, upon completion of the construction (in the primary area) extend energized trunk and feeder, at no charge, to all areas within the franchise territory where there are at least: 1) 25 prospective subscribers per aerial plant mile extension or 2) 50 prospective subscribers per underground plant mile of extension. The construction required by this section shall be completed at a rate specified in the company's tariffs, filed pursuant to subsection (d) of these regulations and approved by the DPUC.
(d)(1) Each franchise holder shall, within 30 days of effective date of these regulations, ... file proposed tariffs or tariff revisions which shall specify the obligation of the franchise holder regarding service to all areas where such service is not provided for in these regulations.
(2) All tariffs and tariff revisions are subject to approval by the DPUC.

Conn.Agencies Regs. § 16-333-13.

HCV filed a proposed tariff with the DPUC on October 2, 1980, which it revised on August 21, 1981. In its tariff, HCV claimed that the regulation imposed a financial burden upon it and proposed a graduated construction schedule. HCV also claimed that it would not be economically feasible to wire sparse areas2 without charging customers in those areas contributions in aid of construction to help finance the extensions.

The DPUC held a hearing on HCV's proposed tariffs on August 31, 1981 and issued a decision on July 20, 1982 denying the proposed tariffs and requiring HCV to file a new set of tariffs. At that time the DPUC ordered HCV to construct all tertiary areas3 by December 31, 1983, and to construct sparse areas at a rate of not less than 60 miles per year. The order also prohibited HCV from demanding contributions in aid of construction from subscribers in sparse areas. This order ("Line Extension Order") is one of the orders that HCV is now challenging.

On August 19, 1982, HCV filed a petition for rehearing and reconsideration, which the DPUC denied. HCV appealed the denial in Connecticut Superior Court but apparently has not pursued that appeal. On December 1, 1983, HCV filed a motion with the DPUC to reopen and modify the Line Extension Order. The DPUC granted that motion on December 20, 1983, and directed HCV to continue to comply with the previously-ordered schedule for constructing sparse areas pending reconsideration. The DPUC took no further action until March 25, 1985, when it issued a notice that the HCV hearing was being reopened for reconsideration of the Line Extension Order.

In the meantime, Congress had enacted legislation aimed at restructuring and harmonizing the regulation of cable television by setting certain federal standards. The Cable Communications Policy Act of 1984 ("Cable Act") was passed on October 11, 1984 and became effective on December 29, 1984. The Cable Act, codified at 47 U.S.C. §§ 521 et seq., contains a broad range of provisions governing various aspects of cable television regulation. While the Act provides in one section that state laws and regulations inconsistent with it are preempted and superseded, 47 U.S.C. § 556, other sections specifically preserve provisions of existing franchises and of state law, e.g., 47 U.S.C. §§ 557(a), 544(c). This combination of preemption and preservation has generated considerable controversy as to the extent of the Cable Act's preemptive effect.

Informed of the reactivation of the hearing before the DPUC, HCV filed a motion to dismiss with the DPUC on the ground that the Cable Act had preempted the DPUC's jurisdiction over line extension requirements. At the reopened hearing, held on April 4, 1985, the DPUC ordered HCV to file exhibits relating to changes in conditions in its franchise area since the 1982 Line Extension Order. These exhibits were to be filed within three months following a decision on the pending motion to dismiss if that decision were adverse to HCV. On April 24, 1985, the DPUC denied the motion to dismiss and ordered HCV to file its exhibits within three months ("1985 Order"). This 1985 Order is the second order that HCV is now challenging.

On June 12, 1985, HCV filed its complaint in this federal court action, seeking to enjoin enforcement against it of the Line Extension Regulation and the two DPUC Orders; to enjoin any future DPUC proceedings concerning these matters; and to obtain a declaration that the Regulation and the two Orders are preempted by the Cable Act.


The defendants have moved this court to dismiss the case. Defendants assert two grounds for dismissal: (1) that plaintiff has failed to exhaust its state judicial and administrative remedies, and (2) that this is an appropriate case for federal court abstention. These contentions must be addressed at the outset, since either one could signal an absence of jurisdiction in this court to decide the case.

I. Failure to Exhaust State Remedies

The defendants argue that HCV has several state remedies available to it and should be required to exhaust those remedies before seeking relief in federal court. According to the defendants, these remedies include continued participation in the reopened hearing before the DPUC, with an eventual review in Connecticut state courts in the event of a final decision adverse to HCV, and resumption of its earlier appeal in superior court of the denial of its motion to reconsider. In addition, the defendants argue that HCV can seek modification of its franchise...

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