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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of: ) ) Century Communications Corporation) City of Bayard, New Mexico ) ) Petition for Stay of Local Rate Orders) MEMORANDUM OPINION AND ORDER Adopted: January 17, 1997 Released: January 24, 1997 By the Chief, Cable Services Bureau: I. Introduction 1. Century Communications Corporation ("Century") filed on October 28, 1996, an Emergency Petition for a Stay of Enforcement Pending Review ("Petition") of the local rate orders adopted by the City of Bayard, New Mexico ("the City") on August 5, 1996 and October 21, 1996. The City did not submit an opposition to Century's Petition. In its August 5, 1996 local order, the City directed Century to reduce its basic programming service tier rate form $22.92, the rate justified by Century's June 1996 Form 1210, to $20.37, the rate justified by Century's March 1996 Form 1200, and to make corresponding refunds. The August 5, 1996 local order also required Century to reduce its hourly service charge based on the initial Form 1205 that had accompanied the Form 1200. The City based its finding on its consultant's report summarizing the consultant's review of Century's Form 1200. 2. On September 4, 1996, Century appealed the August 5, 1996 local rate order contending that the City, which did not begin regulating Century's basic service equipment rates until February 1996, erred in prescribing programming and equipment rates and corresponding refunds based solely on the operator's March 1996 Form 1200. Century contends that the City should have considered its June 1996 Form 1210 in setting the rates. The City did not file an opposition to Century's appeal. Instead, on October 21, 1996, the City adopted a new rate order affirming the rate reductions and refunds ordered in the August 5, 1996 rate order and directing Century to implement the refunds ordered in the August 5, 1996 local order or face fines of $500.00 per day back to August 1996. Accompanying the October 21, 1996 rate order was an October 22, 1996 letter from the City's consultant explaining that, if Century pursued an appeal of either the August 5 or October 21, 1996 rate orders, the fine of $500 per day would apply and would accumulate separately for each violation of the City's orders along with accompanying legal fees. Moreover, in addition to the cumulative fines, the City's consultant threatened that if Century appealed either order the City would request that the Commission impose forfeitures for unspecified rule violations. II. Standard of Review 3. The Commission evaluates petitions for stays under well-settled principles. To support a stay, a petitioner must demonstrate: (1) that it is likely to prevail on the merits; (2) that it will suffer irreparable harm if a stay is not granted; (3) that other interested parties will not be harmed if the stay is granted; and (4) that the public interest favors the granting of a stay. As discussed below, resolution of this stay petition centers primarily on the strength of Century's argument regarding the second and third prong of this test. III. Discussion 4 A stay of the payment of refunds owed by Century will not harm any interested party. If the City's decision is upheld, an adequate refund can be implemented. Additionally, under our rules, Century can choose to issue refunds by crediting current subscribers. The Commission's rules permit operators to implement refunds in either of the following ways: (1) by returning overcharges directly to those subscribers who actually paid the overcharges; or (2) by means of a prospective percentage reduction in the rates for the basic service tier or associated equipment for current subscribers via a specifically identified, one-time credit. Under either option, refunds shall include interest computed at the applicable rates published by the Internal Revenue Service for tax refunds and additional tax payments. The Commission's rules are structured so individuals who were actually overcharged might not receive refunds in the future. A stay of the local rate order will not alter Century's right under our rules to choose the class of subscribers to receive refunds. 5. We find it appropriate to stay both the August 5 and October 21, 1996 local rate orders in their entirety pending our review of these cases on the merits. The premise of our decision is the City's threatened fine of $500.00 per day and associated legal fees if Century appealed either the August 5 or October 21, 1996 local orders to the Commission. In completing its FCC Form 328, Request for Certification as a Local Franchising Authority, the City agreed to adopt and administer regulations with respect to basic cable service that are consistent with the regulations adopted by the Commission. While the Commission's rules allow local authorities to impose fines on operators which fail to comply with local rate orders, the rules also expressly provide operators an opportunity to appeal local franchising authorities' ratemaking decisions to the Commission. In the present matter, based on the consultant's letter to Century, it appears that the City's threatened fine is coercive, the intent of which is to dissuade Century from exercising its right to appeal the local authority's ratemaking decision to the Commission. We find the City's threatened fine is inconsistent with the Commission's rules. Irreparable harm will occur if a party is not permitted to pursue its appeal rights. 6. As we have concluded in several previous requests for stays of local rate orders, we conclude in this case that Century must establish an escrow account or post a bond to protect the interests of subscribers and to ensure that the refunds will be paid if Century does not prevail on appeal. During the period of this stay, Century must deposit in an interest-bearing escrow account the total amount of money that the City has ordered Century to refund to its customers. Alternatively, Century may elect to post a bond for the benefit of the City. The amount of the bond shall be the total amount of money that the City has ordered Century to refund to its customers, plus interest on that amount for a 12 month period from the date of this Order. The bond shall provide that if Century is unable to fulfill its refund obligations for any reason, then the surety will fulfill that obligation to the City, on behalf of Century's subscribers. IV. Ordering Clauses 7. Accordingly, IT IS ORDERED that the request for a stay filed by Century is GRANTED pending the resolution of Century's appeal on the merits. 8. IT IS FURTHER ORDERED that the total amount of money that the City has ordered Century to refund to its customers SHALL BE PLACED by Century in an interest-bearing escrow account OR SHALL BE SECURED by the posting of a bond for the benefit of the City for the total amount of money that the City has ordered Century to refund to its customers, plus interest on that amount for a 12 month period from the date of this Order. Proof of Century's compliance with this Order shall be filed with the Commission within 30 days of the release of this Order. Interest shall accrue, or be computed, at the prevailing U.S. Internal Revenue Service Rate for tax refunds and additional tax payments. 9. This action is taken by the Chief, Cable Services Bureau, pursuant to authority delegated by Section 0.321 of the Commission's rules. 47 C.F.R. 0.321. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau