Welcome to the end-of-summer edition of the Miyares and Harrington LLP newsletter. If you’ve been looking for some beach-time reading, look no more. Nothing better than swinging in a hammock with the latest in municipal law developments!
 
We offer a congratulatory shout-out to the Reading Water Department, a recipient of MassDEP’s 2019 Public Water Systems Award for operational excellence. Reading’s Water Department has won that award for the last three consecutive years and was also awarded in 2018 a Consistent Performance Citation in the Beyond Compliance category and a citation from the Massachusetts House of Representatives.

Congratulations are also due to two of our own: Ivria Glass Fried is the new co-chair of the Boston Bar Association’s Wetlands, Waterways, and Water Quality Committee of the Environmental and Energy Law Section. Katie Stock is one of only 23 lawyers selected to participate in the Association’s 16th Public Interest Leadership Program for newer lawyers who participate in civic engagement and public service in their practice.
 
On August 8, Rebekah Lacey and Ivria Glass Fried gave a presentation on Permanent Land-Use Restrictions as part of a Massachusetts Municipal Law Association seminar on municipal real estate acquisitions and dispositions. If there is anything you want to know about conservation restrictions or Article 97, ask Rebekah or Ivria!



This month's newsletter features:
Municipalities to FCC: “There You Go Again.” Reinterpretation of Local Regulation of Cable Licensees

We reported in January’s newsletter on the Federal Communication Commission’s Declaratory Ruling and Third Report and Order that severely restricted the authority of local governments to regulate Small Wireless Facilities. The FCC is now making changes to the regulatory authority of municipalities with its cable franchisees.
 
In its Third Report and Order under the Cable Communications Policy Act of 1984, issued on August 2, 2019, the FCC made an important change to local fees collectible in return for the grant of a cable franchise. Section 622 of the Act, 47 U.S.C. § 542(b), imposes a cap on franchise fees set by local franchise authorities. That cap is 5% of the franchisee’s Gross Annual Revenues. The new report and order for the first time includes, as part of the 5% cap, non-monetary contributions related to the provision of cable service as a condition or requirement of a local license. Non-monetary contributions include the costs of providing free or discounted cable service to public buildings; non-capital costs to support public, educational, or governmental access facilities; and costs attributable to the construction of institutional networks. In short, when this rule goes into effect (30 days after publication in the Federal Register), municipalities can expect their cash payments from cable franchisees to decrease.
 
Most communities have I-net, PEG channels and some discounted or free cable service to public buildings, including schools. Those contributions will now be included by the cable operators as a portion of their franchise fee payment. The in-kind contribution is valued at its fair market value, not the actual cost to the company, which is likely to result in higher valuations and a higher negative impact on municipal budgets. The new interpretation applies to both new and existing franchise arrangements, but only applies going forward so there is no risk that municipalities will be required to repay payments received before the rule change. Your community should begin its own identification of these types of in-kind contributions that it now receives to determine the potential financial effect of this new interpretation.
 
The FCC Order also includes a mixed-use rule: “A franchising authority may not regulate the provision of any services other than cable services offered over the cable system of a cable operator, with the exception of channel capacity on institutional networks.” Proposed 47 C.F.R. § 76.43. Again, since the Order applies to new and existing franchises, your franchise agreement may be affected by this change.
The U.S. Supreme Court Speaks on Importation of Out-of-State Wine
In 2005, the U.S. Supreme Court in Granholm v. Heald, held that state laws that discriminate against out-of-state wineries were in violation of the Commerce Clause of the U.S. Constitution. Massachusetts then passed and (after the first version was declared unconstitutional) amended M.G.L. c.138, §19F, requiring shippers who ship wine to in-state private consumers to obtain an annual license from the Commonwealth to do so.
 
A recent Supreme Court case puts that requirement in doubt. In Tennessee Wine and Spirits Retailers Assn. v. Thomas, decided June 26, 2019, the Supreme Court considered whether a state could impose a residency requirement on applicants for a license to operate a liquor store. Tennessee required applicants for an initial license to have resided in the state for the prior two years. The majority held that the residency requirement violates the Commerce Clause and is not protected by Section 2 of the Twenty-First Amendment.
 
The Commerce Clause prohibits state laws that “unduly restrict interstate commerce.” The Court relied upon an extensive record of historical jurisprudence to find that state regulation of alcohol cannot discriminate between in-state and out-of-state suppliers, while agreeing that Section 2 of the Twenty-First Amendment grants states latitude in regulating alcohol. The Court therefore rejected the argument that out-of-state alcohol distributers can be treated differently from in-state distributers.
 
Massachusetts does not impose a residency requirement on those who apply for a license to ship wine from out-of-state to in-state private consumers. The law does, however, limit the quantity that any one consumer can obtain from a single shipper, prohibits sales to anyone other than a private consumer, and requires payment of a fee for the Massachusetts license in addition to the requirement that the shipper hold either a federal or another state’s license. These requirements are not imposed on in-state wine shippers, and thus appear vulnerable to attack under the Tennessee Wine ruling.
 
The Supreme Court suggested that the test of constitutionality for state laws that treat out-of-state alcohol purveyors differently from in-state purveyors will be whether the state can provide evidence that the difference is justifiable as a public health or safety measure.

The U.S. Supreme Court Changes the Process for Challenging Regulatory Takings
This past June, the U.S. Supreme Court upended decades of established law concerning government takings. Before, a person alleging that a government taking violated the Constitution’s takings clause was required to proceed first through state court before filing suit in a federal court. But the Court’s sharply divided opinion in Knick v. Township of Scott has overturned that rule: Now, a person arguing a violation of the Constitution’s takings clause may go straight to federal court.
 
As our readership is surely familiar, the takings clause of the Fifth Amendment to the Constitution provides: “nor shall private property be taken for public use, without just compensation.” The case in Knick arose from a dispute over a small family graveyard on Rose Mary Knick’s private, 90-acre rural property. Her local township adopted an ordinance requiring graveyards—including those such as Knick’s—to be open to the public during daytime hours. Knick sued in federal court saying that that this ordinance amounted to an unconstitutional taking, but a federal court dismissed her case, citing the 34-year-old rule from another Supreme Court case requiring local takings plaintiffs to proceed first in state court. In a 5-4 decision written by Chief Justice Roberts, the Supreme Court reversed, holding this requirement to be an “unjustifiable burden on takings plaintiffs” and in conflict with other types of constitutional violations.
 
A sharply worded dissent accused the majority of “smash[ing] a hundred-plus years of legal rulings to smithereens.” To reach this new rule, the Court decided that a constitutional violation—if it exists—happens at the moment of the taking, even if the government will later pay compensation. Often, local government does not know in advance whether implementing a regulatory program will yield a taking, much less of whose property—but regardless, even unintended takings now make local officials “constitutional malefactors” irrespective of later compensation.

Rapid Fire Updates:
How to Improve Cybersecurity Resiliency
 
Some municipalities have suffered serious cyberattacks, such as being locked out of their digital files until they pay ransom for the key to unlock. The Multi-State Information Sharing and Analysis Center, the National Governors Association, and the National Association of State Chief Information Officers have outlined key steps to strengthen protections against such attacks. You may find the outline here.
 
National Multidistrict Opiate Litigation
 
About 3,000 municipalities have filed suit in federal and state courts alleging that manufacturers of prescription opioids misrepresented the risks posed by their products and failed to monitor suspicious orders. The federal cases have been consolidated in an Ohio Federal District Court under the name In re: National Prescription Opiate Litigation, MDL 2804 (N.D. Ohio). On August 6, that District Court held a hearing to determine whether to approve certification of an opt-out class comprising all municipalities in the U.S., regardless of whether they have filed claims, to negotiate a settlement with the defendants. While, as of this writing, the judge has not ruled, he indicated support for approving the certification of such a class and the initiation of settlement discussions. We’ll keep you updated.


Trivia!
 
Question: What are the official state cat and state dog of Massachusetts? For extra credit: In what year were each designated?
 
Last issue's question: Who gave Hemingway his first polydactyl cat and what is his connection to Massachusetts?
 
Answer: Captain Stanley Dexter, a sailor from Massachusetts. Ray recalls that he was told that Captain Dexter was from Tewksbury, but we have not obtained verification.
 
Winner: Congratulations to that trivia star, Mark Abrahams of The Abrahams Group. But honorable mention to Jane Kinsella, DPW Director of Reading, who included the name of the cat, “Snow White.”


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