Louisiana Operator Opt-Out Option Could Be Clarified

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Local governments and video providers are likely to find out Oct. 29 whether a Louisiana state court judge will enforce language in that state's new franchising law that allows incumbent operators to opt out of current local contracts.


The law was challenged in August, two days before it was to go into effect, by municipalities and the Police Jury Association of Louisiana, the trade group for parishes there. Parishes and municipalities argue that the bill, which moves franchising authority to the office of the Secretary of State, violates the state constitution. 


The constitution prevents the state from passing laws that "extinguish" obligations between local governments and companies. Municipal officials argue "obligations" means contracts, and franchises are contracts. The state bill interferes with that right, they argue.


Lawmakers put the opt-out provision in the bill to gain the support of the legislation from incumbent operators, said Dan Gallagher, attorney for the Police Jury Association, noting that operators opposed a 2006 draft of the law that held operators to their current contracts.


By agreement of the parties to the litigation, no incumbents have sought to drop their local cable franchise agreements while the challenge is pending. The legislature anticipated a challenge to the opt-out provision, and put severability language in the bill. That means that should the judge agree that the opt-out defies state law, the rest of the act could still go into effect. 


So, while new providers could get 15-year franchises from the state, with few obligations beyond the payment of franchise fees, current operators would have to live out their franchises and their terms. However, incumbents operating under expired pacts, or those which expire soon, can apply for state oversight.


After arguments Monday, district judge Janice Clark took the issue under advisement, but Gallagher said the parties have been directed to come to court Wednesday and he expects a ruling then.

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