FEDERAL COMMUNICATIONS COMMISSION WASH INGTON OFFICE OF THE CHAIRMAN May23, 2019 The Honorable Mary Gay Scanlan U.S. House of Representatives 1535 Longworth House Office Building Washington, D.C. 20515 Dear Congresswoman Scanlan: Thank you for your letter regarding the impact that the statutory cap on franchise fees has on funding for public, educational, or governmental (PEG) channels. As you know, the Communications Act limits franchise fees to 5% of cable revenues and defines  franchise fee to include  any tax, fee, or assessment of any kind imposed by a franchising authority or other governmental entity on a cable operator or cable subscriber, or both, solely because of their status as such. 47 U.S.C. §542(g)(1). The U.S. Court of Appeals for the Sixth Circuit has held that the terms  tax and  assessment can include nonmonetary exactions. Montgomery County, lid. etat. v. FCC, 863 F.3d 485, 490-91 (6thCir. 2017). In response to a remand from the Sixth Circuit, the Commission unanimously issued its Second Further Notice of Proposed Rulemaking to consider the scope of the congressionally- mandated statutory limit on franchise fees. Among other things, the Commission observed that Congress broadly defined franchise fees; indeed, with respect to PEG channels, it only excluded support payments with respect to franchises granted prior to October 30, 1984 as well as capital costs required by franchises granted after that date. 47 U.S.C. §542(g)(2)(B) & (C). The record of this proceeding remains open, and I encourage all interested parties and stakeholders including local franchising authorities to provide us with relevant evidence regarding these issues so that the Commission can make the appropriate judgment about the path forward, consistent with federal law. Your views will be entered into the record of the proceeding and considered as part of the Commission s review. Please let me know if I can be of any further assistance. Sincerely, V. Pai