DIRECTV, LLC v. Department of Revenue

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SJC-11658

DIRECTV, LLC, & another1 vs. DEPARTMENT OF REVENUE.

Suffolk. November 4, 2014. - February 18, 2015.

Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, &
Hines, JJ.

Taxation, Excise, Broadcasting company. Interstate Commerce.
Constitutional Law, Interstate commerce.

Civil action commenced in the Superior Court Department on
January 26, 2010.

The case was heard by Thomas P. Billings, J., on motions
for summary judgment.

The Supreme Judicial Court granted an application for
direct appellate review.

E. Joshua Rosenkranz, of New York (Jeremy N. Kudon &
Nicholas G. Green, of New York, Eric A. Shumsky, of the District
of Columbia, & Kelley A. Jordan-Price with him) for the
plaintiffs.
Pierce O. Cray, Assistant Attorney General (Kirk G. Hanson,
Assistant Attorney General, with him) for the defendant.
The following submitted briefs for amici curiae:

1
Dish Network L.L.C.
 2

Eric S. Tresh, Amelia Toy Rudolph, & Zachary T. Atkins, of
Georgia, & Nicholas M. O'Donnell & David Nagle for New England
Cable & Telecommunications Association.
John Bergmayer, of the District of Columbia, & Karen A.
Pickett for Public Knowledge.
Kristen S. Scammon for Satellite Broadcasting &
Communications Association.
John A. Hinman, of California, & Allison M. O'Neil & Jamie
C. Notman for National Association of Wine Retailers.
Sheldon H. Laskin & Lila D. Disque, of the District of
Columbia, for Multistate Tax Commission.
David Parkhurst, of the District of Columbia, & David Hadas
for National Governors Association.

LENK, J. General Laws c. 64M, § 2, imposes a five per cent

excise tax on video programming delivered by direct broadcast

satellite (tax). The plaintiffs are two companies that provide

services subject to the tax (satellite companies). They brought

a complaint for declaratory and injunctive relief in the

Superior Court, alleging that the tax violates the commerce

clause of the United States Constitution.2 The satellite

companies contend that the tax discriminates against interstate

commerce, both in its effect and in its purpose, by disfavoring

them as compared with those companies that provide video

programming via cable (cable companies). The satellite and

cable companies that operate in Massachusetts are all

incorporated and headquartered in other States; the satellite

2
The companies that provide video programming delivered by
direct broadcast satellite (satellite companies) also argued
below that the excise tax violates their right to equal
protection. They do not pursue this claim on appeal.
 3

companies argue, however, that the cable companies represent in-

State interests inasmuch as their in-State commercial operations

are substantially greater than those of the satellite companies.

A Superior Court judge granted summary judgment in favor of

the defendant, the Department of Revenue (department). The

satellite companies appealed, and we allowed their application

for direct appellate review.

We conclude that summary judgment was warranted. The cable

companies and the satellite companies are subject to similar tax

obligations, which differ primarily in the ways in which they

are collected and calculated. These differences are grounded in

important characteristics of the cable and satellite companies'

respective methods of operation, and in the different regulatory

regimes to which they are subject. The satellite companies thus

have raised no genuine issue as to the facts material to their

claim of discrimination against interstate commerce, and the

department is entitled to judgment as a matter of law.3

1. Facts. We summarize the undisputed facts important to

our analysis, focusing on the nature of the video programming

3
We acknowledge the amicus briefs submitted by Public
Knowledge, the Satellite Broadcasting and Communications
Association, and the National Association of Wine Retailers on
behalf of the satellite companies; and the briefs by the
National Governors Association, the Multistate Tax Commission,
and the New England Cable and Telecommunications Association on
behalf of the Department of Revenue.
 4

industry; the similarities and differences between the methods

of operation used by the participants in this industry, namely

cable companies and satellite companies; these companies'

respective economic impacts on Massachusetts; their respective

tax obligations; and the changes to those obligations introduced

by the Legislature in 2010.

a. The video programming industry. The service that

permits customers to view a variety of video channels on their

television sets is known as multi-channel video programming.

The satellite companies compete in the market for video

programming services primarily with cable companies, including

Comcast Corporation (Comcast) and Charter Communications Inc.

Verizon Communications, Inc. (Verizon), a telephone company,

participates in this market as well. All of the major

participants in the market for video programming services,

including Verizon, are incorporated and headquartered outside of

Massachusetts.

The cable companies and the satellite companies both offer

several programming packages. These packages generally include

local broadcasts, basic cable channels, premium cable channels,

pay-per-view movies and events, and on-demand programming.

Customers typically choose between cable and satellite on the

basis of considerations such as price, customer service,

reception quality, and program offerings.
 5

b. Methods of operation. The methods of operation used by

the cable and satellite companies overlap substantially. Both

types of company purchase the rights to distribute programming

from content providers. Both designate certain percentages of

their channel capacity to public, educational, and government

programming.4 Both advertise their services using television,

billboards, mail, newspapers, and the Internet. Both lease some

equipment, such as set-top boxes (which convert signals for

viewing on television sets) and recording devices, to their

subscribers.

The cable companies and the satellite companies differ,

however, in the methods by which they assemble and deliver

programming to their customers. The cable companies assemble

their programming in local facilities known as "headends."

There are approximately sixty headends in Massachusetts. At the

headends, programming signals are gathered by satellite dishes

and fiber optics equipment. These signals are then processed,

packaged, and delivered to customers' homes through networks of

cables laid on the ground or hung from buildings and poles.5

4
See note 16, infra.
5
Telephone companies like Verizon Communications, Inc., use
similar technology.
 6

The satellite companies, by contrast, collect, process, and

package their programming at "uplink centers." Each of the

satellite companies has two primary uplink centers nationally.

These uplink centers are located outside Massachusetts.

Programming signals are transmitted from the uplink centers to

satellites orbiting the earth, and then relayed to small

receiver dishes mounted on or near customers' homes. The

satellite companies maintain small, intermittently-staffed

"collection facilities," which gather content from local

broadcast stations and transmit it to the uplink centers.

c. Economic impact. The methods of assembly and delivery

used by cable and satellite result in different impacts on the

Commonwealth's economy. From 2006 to 2010, the cable companies

spent more than $1.6 billion in Massachusetts, including

investments in headend facilities, cable networks, and vehicles.

As of 2010, the cable companies employed approximately 5,500

people in Massachusetts.

The satellite companies, on the other hand, hire relatively

few employees in Massachusetts. Their expenditures on

facilities and equipment are concentrated primarily on their

out-of-State uplink centers. The satellite companies also pay

fees to the Federal government for the right to locate their

satellites in outer space and to use certain transmission

frequencies.
 7

d. Tax obligations. Both the cable companies and the

satellite companies are subject to real property taxes in

Massachusetts, and both pay personal property taxes on

possessions located in the Commonwealth. They both pay State

income taxes, and they collect and remit sales tax on certain

transactions.

The cable companies, in addition, pay "franchise fees" to

local governments. The rates of these fees are determined in

negotiated agreements. Under Federal law, franchise fees may be

no higher than five per cent of a cable company's gross revenue

from the provision of cable services. See 47 U.S.C. § 542(b)

(2012). Typically, the fees charged in Massachusetts are three

to five per cent of gross revenue. Local governments also

usually impose an additional fee on cable companies, at an

average rate of 1.09% of gross revenue, dedicated to supporting

public, educational, and government programming. In addition to

these fees, cable companies ordinarily are required by local

governments to (a) provide services, facilities, and equipment

for the use of public, educational, and governmental channels;

(b) deliver free video programming services to municipal

buildings, schools, and libraries; and (c) meet certain service
 8

quality and customer service requirements.6 A Federal statute

prohibits the imposition of any such fees or taxes on the

satellite companies at the local level, but it permits the

taxation of the satellite companies by the States. See

Telecommunications Act of 1996 § 602, P.L. 104-104, 110 Stat.

144 (reprinted in notes following 47 U.S.C. § 152 [2012])

(Telecommunications Act).

e. Changes introduced in 2010. The Act making

appropriations for the fiscal year 2010,7 St. 2009, c. 27 (2010

appropriations act), introduced two significant changes to the

scheme of taxation that governs the video programming industry.

First, the 2010 appropriations act established the excise tax.

See St. 2009, c. 27, § 61, enacting G. L. c. 64M. The excise

tax is imposed upon the satellite companies at a rate of five

per cent of their gross revenues derived from the provision of

6
The agreements between the local governments and the
companies that provide video programming via cable (cable
companies) also typically require that the companies set aside
channels for public, educational, and governmental programming.
These obligations apparently augment the requirement of Federal
law that the cable companies designate a percentage of their
channel capacity to public-oriented programming. See note 16,
infra.
7
The full title of the act is "An Act making appropriations
for the fiscal year 2010 for the maintenance of the departments,
boards, commissions, institutions and certain activities of the
Commonwealth, for interest, sinking fund and serial bond
requirements and for certain permanent improvements."
 9

video programming in Massachusetts. See G. L. c. 64M, §§ 1, 2.

The satellite companies pass on the cost of the excise tax to

their customers. See G. L. c. 64M, § 3.8

The 2010 appropriations act also imposed a personal

property tax on "[p]oles, underground conduits, wires and pipes

of telecommunications companies." St. 2009, c. 27, § 25,

amending G. L. c. 59, § 18. "[T]elecommunications companies"

are defined to include "cable television, [I]nternet service,

telephone service, data service and any other telecommunications

service providers." Id. In essence, this provision increased

the personal property tax liability of the cable and telephone

companies, but not of the satellite companies (which do not use

poles, wires, and the like).

2. Legal framework. a. Summary judgment. We review a

grant of summary judgment de novo. See Federal Nat'l Mtge.

Ass'n v. Hendricks, 463 Mass. 635, 637 (2012); 81 Spooner Rd.,

LLC v. Zoning Bd. of Appeals of Brookline, 461 Mass. 692, 699

(2012). Summary judgment is appropriate "if the pleadings,

depositions, answers to interrogatories, and responses to

requests for admission . . . , together with the affidavits, if

any, show that there is no genuine issue as to any material fact

8
The cable companies also pass on the cost of the franchise
fees to their customers.
 10

and that the moving party is entitled to a judgment as a matter

of law." Mass. R. Civ. P. 56 (c), as amended, 436 Mass. 1404

(2002). The evidence in the record must be viewed "in the light

most favorable to the nonmoving party." Surabian Realty Co. v.

NGM Ins. Co., 462 Mass. 715, 718 (2012), quoting Fuller v. First

Fin. Ins. Co., 448 Mass. 1, 5 (2006). We "need not rely on the

rationale cited and 'may consider any ground supporting the

judgment.'" District Attorney for N. Dist. v. School Comm. of

Wayland, 455 Mass. 561, 566 (2009), quoting Augat, Inc. v.

Liberty Mut. Ins. Co., 410 Mass. 117, 120 (1991).

b. The dormant commerce clause. The commerce clause

provides that "Congress shall have Power . . . to regulate

commerce with foreign nations, and among the several [S]tates,

and with the Indian Tribes." Art. I, § 8, cl. 3 of the United

States Constitution. The United States Supreme Court has "long

interpreted the commerce clause as an implicit restraint on

[S]tate authority, even in the absence of a conflicting

[F]ederal statute." United Haulers Ass'n v. Oneida-Herkimer

Solid Waste Mgmt. Auth., 550 U.S. 330, 338 (2007) (collecting

cases). This implicit restraint is known as the "dormant"

commerce clause. See id.

A State tax is permissible under the dormant commerce

clause if it "[1] is applied to an activity with a substantial

nexus with the taxing State, [2] is fairly apportioned, [3] does
 11

not discriminate against interstate commerce, and [4] is fairly

related to the services provided by the State." Complete Auto

Transit, Inc. v. Brady, 430 U.S. 274, 279 (1977). See American

Trucking Ass'ns v. Michigan Pub. Serv. Comm'n, 545 U.S. 429, 438

(2005). The satellite companies' challenge to the excise tax is

limited to the third of these requirements, namely the

prohibition on discrimination against interstate commerce.

c. Discrimination against interstate commerce. The ban on

discrimination against interstate commerce is rooted in the

"principle that our economic unit is the Nation, which alone has

the gamut of powers necessary to control of the economy."

Oregon Waste Sys., Inc. v. Department of Envtl. Quality of Or.,

511 U.S. 93, 98 (1994) (Oregon Waste), quoting H.P. Hood & Sons

v. Du Mond, 336 U.S. 525, 537–538 (1949). The dormant commerce

clause seeks to prevent economic "Balkanization," Bacchus

Imports, Ltd. v. Dias, 468 U.S. 263, 276 (1984), and to protect

"an area of free trade among the several States." Boston Stock

Exch. v. State Tax Comm'n, 429 U.S. 318, 328 (1977), quoting

McLeod v. J.E. Dilworth Co., 322 U.S. 327, 330 (1944).

In the context of the dormant commerce clause,

"'discrimination' simply means differential treatment of in-

[S]tate and out-of-[S]tate economic interests that benefits the
 12

former and burdens the latter." Oregon Waste, 511 U.S. at 99.9

The concept of "discrimination" also implicitly assumes "a

comparison of substantially similar entities." General Motors

Corp. v. Tracy, 519 U.S. 278, 298 (1997).10

A statute may be discriminatory on its face, in its effect,

or in its underlying purpose. See Amerada Hess Corp. v.

Director, Div. of Taxation, 490 U.S. 66, 75 (1989) (Amerada

9
Notwithstanding the stated simplicity of this test, the
United States Supreme Court has recognized that its "case-by-
case" approach to the dormant commerce clause "has left 'much
room for controversy and confusion and little in the way of
precise guides to the States.'" Westinghouse Elec. Corp. v.
Tully, 466 U.S. 388, 403 (1984), quoting Boston Stock Exch. v.
State Tax Comm'n, 429 U.S. 318, 329 (1977). See also E.
Chemerinsky, Constitutional Law, Principles and Policies, § 5.3
at 444-445 (4th ed. 2011).
10
In General Motors Corp. v. Tracy, 519 U.S. 278, 299
(1997), the United States Supreme Court determined that the
entities involved were dissimilarly situated because they
"serve[d] different markets." Relying on the analysis of Tracy,
the satellite companies argue that any entities that serve the
same market are necessarily similarly situated. But the
conceptual prerequisite that entities must be "substantially
similar" in order for discrimination to occur also may be
undermined by other types of differences. Thus, "competing in
the same market is not sufficient to conclude that entities are
similarly situated." National Ass'n of Optometrists & Opticians
LensCrafters, Inc. v. Brown, 567 F.3d 521, 527 (9th Cir. 2009).
See Amerada Hess Corp. v. Director, Div. of Taxation, 490 U.S.
66, 78 (1989) (Amerada Hess) (differential treatment permissible
when it "results solely from differences between the nature of
[entities'] businesses, not from the location of their
activities"); Philadelphia v. New Jersey, 437 U.S. 617, 626-627
(1978) (differential treatment permissible if "there is some
reason, apart from . . . origin, to treat [entities]
differently" [emphasis supplied]).
 13

Hess); Chemical Waste Mgmt., Inc. v. Hunt, 504 U.S. 334, 344 n.6

(1992). The burden to show discrimination against interstate

commerce rests on the party challenging the validity of a

statute. See Hughes v. Oklahoma, 441 U.S. 322, 336 (1979);

Family Winemakers of Cal. v. Jenkins, 592 F.3d 1, 9 (1st Cir.

2010). If this burden is carried, the discriminatory law is

"virtually per se invalid." Department of Revenue of Ky. v.

Davis, 553 U.S. 328, 338 (2008), citing Oregon Waste, 511 U.S.

at 99.11

3. Analysis. a. Discriminatory effect. The satellite

companies argue that the excise tax discriminates against

interstate commerce in its effect by disadvantaging the

satellite companies and benefiting the cable companies. The

department responds, first, that the cable companies and the

satellite companies do not represent in-State and out-of-State

interests, respectively. The department argues also that the

11
"[N]ondiscriminatory regulations that have only
incidental effects on interstate commerce are valid unless 'the
burden imposed on such commerce is clearly excessive in relation
to the putative local benefits.'" Oregon Waste Sys., Inc. v.
Department of Envtl. Quality of Or., 511 U.S. 93, 99 (1994),
quoting Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970).
The satellite companies do not contend that the excise tax fails
this test. Conversely, a discriminatory statute may be upheld
if "the State has no other means to advance a legitimate local
purpose." United Haulers Ass'n v. Oneida-Herkimer Solid Waste
Mgmt. Auth., 550 U.S. 330, 338-339 (2007), citing Maine v.
Taylor, 477 U.S. 131, 138 (1986). The Department of Revenue has
not argued that the excise tax satisfies this requirement.
 14

excise tax is not discriminatory because the cable and satellite

companies are not similarly situated.

For the reasons we describe, we adopt the latter argument.

In so doing, we follow the other courts that have considered and

rejected the satellite companies' challenges to the laws of

other States. See Directv, Inc. v. Treesh, 487 F.3d 471 (6th

Cir. 2007) (Treesh I), cert. denied, 552 U.S. 1311 (2008);

DIRECTV, Inc. v. State, 178 N.C. App. 659 (2006); DIRECTV, Inc.

v. Levin, 128 Ohio St. 3d 68 (2010), cert. denied, 133 S. Ct. 51

(2012). We assume for purposes of our analysis, while

appreciating the weighty arguments to the contrary, that the

cable companies and the satellite companies represent in-State

and out-of-State interests, respectively.12

12
As to this issue, compare Freedom Holdings, Inc. v.
Spitzer, 357 F.3d 205, 218 (2d Cir. 2004) ("For dormant
[c]ommerce [c]lause purposes, the relevant 'economic
interests' . . . are parties using the stream of commerce, not
those of the state itself"), with Westinghouse Elec. Corp. v.
Tully, 466 U.S. at 403-404 (discussing cases in which "the Court
struck down state tax statutes that encouraged the development
of local industry by means of taxing measures that imposed
greater burdens on economic activities taking place outside the
State than were placed on similar activities within the State");
Lewis v. BT Inv. Managers, Inc., 447 U.S. 27, 42 n.9 (1980)
("discrimination based on the extent of local operations is
itself enough to establish the kind of local protectionism we
have identified"); and Philadelphia v. New Jersey, 437 U.S. at
627 ("The Court has consistently found parochial
legislation . . . to be constitutionally invalid, whether the
ultimate aim of the legislation was to assure a steady supply of
milk . . . , or to create jobs by keeping industry within the
State . . . , or to preserve the State's financial resources
 15

i. The broader context. The excise tax applies to

satellite companies only. Our analysis must not be "divorced,"

however, from the broader context of the act; we are required to

consider the regulatory scheme "as a whole." See West Lynn

Creamery, Inc. v. Healy, 512 U.S. 186, 201 (1994) (West Lynn

Creamery). Accord DIRECTV, Inc. v. Tolson, 513 F.3d 119, 122

(4th Cir. 2008) (Tolson); Zenith/Kremer Waste Sys., Inc. v. West

Lake Superior Sanitary Dist., 572 N.W.2d 300, 304 (Minn. 1997),

cert. denied, 523 U.S. 1145 (1998). See also Minneapolis Star &

Tribune Co. v. Minnesota Comm'r of Revenue, 460 U.S. 575, 589

n.12 (1983) (United States Supreme Court "evaluat[es] the

relative burdens of different methods of taxation" in commerce

clause cases). As described supra, both the cable companies and

the satellite companies are subject to corporate income taxes,

sales taxes, real property taxes, and personal property taxes.

The cable companies are, in addition, subject to obligations in

money and in services to local governments.

The satellite companies suggest that the cable companies'

obligations toward local governments should play no part in our

analysis of the ways in which the two types of company are

treated. In the satellite companies' view, these obligations

from depletion by fencing out indigent immigrants" [citations
omitted]).
 16

are merely "rent" payments imposed on cable companies on the

basis of the use that they, but not the satellite companies,

make of public spaces. We do not agree.

The localities' power to charge franchise fees as to cable

companies but not satellite companies flows, not from the

localities' ownership of public property, but from statutory

provisions. A Federal statute provides that, subject to certain

limitations, "any cable operator may be required . . . to pay a

franchise fee." 47 U.S.C. § 542(a) (2012). The imposition of

such fees is facilitated by a Massachusetts statute that

prohibits the construction or operation of any cable system "in

any city or town . . . without first obtaining . . . a written

license from each city or town." G. L. c. 166A, § 3. Franchise

fees and related obligations are, in this sense, not rent

payments, but rather statutorily authorized tax payments. See

Tolson, 513 F.3d at 123, 125-126 & n.3 (holding that cable

franchise fees are "taxes" for purposes of Tax Injunction Act,

28 U.S.C. § 1341 (2012), and explaining that "a sum fixed for

the privilege of doing business" is unlike "[a] per-pole charge

levied . . . for the use of [a] city's telegraph poles").

Correspondingly, cable companies do not obtain leases or

other property rights in return for their franchise fees. What

they do receive in return are special privileges. See Tolson,

513 F.3d at 126 n.3 ("Taxpayers . . . often receive something of
 17

value in exchange for their taxes"). In the Superior Court

proceedings, the satellite companies recognized that the

privileges granted in exchange for franchise fees are "the

privilege of doing business in a locality and . . . the rights

to access public-rights-of-way in a locality." See 47 U.S.C.

§ 522(9) (2012) (franchise permits "construction" or "operation"

of cable system); Treesh I, 487 F.3d at 480 (Kentucky cable

franchises provided "the right to conduct business and use local

rights-of-way").13

Because of the method by which they deliver their

programming, the satellite companies do not need to access

public rights-of-way. The privilege of doing business with

local consumers, on the other hand, is one that benefits the

satellite companies no less than the cable companies.

Consequently, if not for the Telecommunications Act's

prohibition on the imposition of local taxes on satellite

services, the satellite companies "certainly could have been"

13
At his deposition, a representative of Charter
Communications Inc. defined a franchise fee as "a fee to
authorize [the company] to do business in [a] community," paid
as compensation both for "using the public right-of-way" and for
"being authorized to provide the service to customers." A
representative of Comcast Corporation (Comcast) testified that a
franchise agreement "allow[s] [Comcast] to operate within [an]
area by selling its products and services." The representative
agreed that the right to use public rights-of-way is "one
component of a franchise."
 18

subjected "to the tangled regime of local taxation and franchise

fees" that applies to cable companies. See Treesh I, 487 F.3d

at 481. Namely, by way of a statute akin to G. L. c. 166A, § 3,

the Legislature could have forbidden the provision of video

services by satellite without a license from a local authority.

Cf. Commissioner of Corps. & Taxation v. Metropolitan Life Ins.

Co., 327 Mass. 582, 584 (1951) (excise tax on insurance imposed

"for the privilege of doing business in this Commonwealth").

In our analysis of whether the cable and satellite

companies are subjected to "differential treatment . . . that

benefits the former and burdens the latter," Oregon Waste, 511

U.S. at 99, we therefore consider the fact that each of these

types of company is subject to unique obligations in connection

with the privilege of selling video programming services to

Massachusetts consumers.

ii. Differences between the obligations of the cable and

satellite companies. The cable companies' local obligations and

the excise tax imposed on the satellite companies are different

in two ways. First, the cable companies' obligations are

collected piecemeal by an assortment of local authorities,

whereas the satellite companies pay the entirety of the excise

tax to the department. Second, the cable companies' local

obligations are made up of several components determined via

negotiations with each locality, including franchise fees,
 19

additional payments to support public-oriented programming, and

services in kind. The excise tax, on the other hand, is set at

a uniform, flat rate.

These differences in the manners in which the cable and

satellite companies are treated do not amount to actionable

discrimination if they do not impose a greater burden on the

satellite companies. See Oregon Waste, 511 U.S. at 99. These

differences also are not discriminatory if they are rooted in

meaningful differences between the two types of company. See

Tracy, 519 U.S. at 298.14 We conclude that, on the summary

judgment record, the satellite companies have "no reasonable

expectation" of proving a discriminatory effect; there is thus

no genuine issue of material fact, see HipSaver, Inc. v. Kiel,

464 Mass. 517, 522 (2013) (HipSaver), quoting Kourouvacilis v.

14
The bare existence of differences between the satellite
and cable companies would not alone defeat allegations of
discrimination, because a statute does not "need to be drafted
explicitly along [S]tate lines in order to demonstrate its
discriminatory design." Amerada Hess, 490 U.S. at 76.
Differences between entities render regulation nondiscriminatory
only if they represent substantive reasons to treat the entities
differently, rather than proxies for geographical distinctions.
See West Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 201 (1994)
(West Lynn Creamery), quoting Best & Co. v. Maxwell, 311 U.S.
454, 455-456 (1940) ("The commerce clause forbids
discrimination, whether forthright or ingenious. In each case
it is our duty to determine whether the statute under attack,
whatever its name may be, will in its practical operation work
discrimination against interstate commerce").
 20

General Motors Corp., 410 Mass. 706, 716 (1991), and the

department is entitled to judgment as a matter of law.

A. Method of collection. We examine first the divergent

manners by which payments for the privilege of doing business in

Massachusetts are collected from cable and satellite companies,

respectively. As previously described, the excise tax is

collected in its entirety by the department, whereas the cable

companies owe varying obligations to each of the localities in

which they operate. This instance of differential treatment,

rather than burdening the satellite companies, is advantageous

to them. The excise tax provides a streamlined method of

collection, far less cumbersome than the cable companies'

assortment of local obligations.

Congress conferred this benefit on the satellite companies

by design in the Telecommunications Act. Section 602(a) of that

statute states that "[a] provider of . . . satellite service

shall be exempt from . . . any tax or fee imposed by any local

taxing jurisdiction on direct-to-home satellite service." 110

Stat. at 144. The phrase "tax or fee" is defined to include a

number of different types of taxes, including any "privilege

tax" and any "fee that is imposed for the privilege of doing

business." Telecommunications Act § 602(b)(5), 110 Stat. at

145. On the other hand, the same section states that it "shall

not be construed to prevent taxation of a provider of . . .
 21

satellite service by a State." Telecommunications Act § 602(c),

110 Stat. at 145.

The decision to excuse the satellite companies from

burdensome dealings with local authorities was rooted in the

characteristics of their operations. "Congress's intent . . .

was not to spare the [satellite] providers from taxation as

such, but to spare national businesses with little impact on

local resources from the administrative costs and burdens of

local taxation." DirecTV, Inc. v. Treesh, 290 S.W.3d 638, 643

(Ky. 2009), cert. denied, 558 U.S. 1111 (2010) (Treesh II).

This objective was explained on the floor of the House of

Representatives by Congressman Henry Hyde:

"[Satellite companies] utilize satellites to provide
programming to their subscribers in every jurisdiction. To
permit thousands of local taxing jurisdictions to tax such
a national service would create an unnecessary and undue
burden on the providers of such services. . . . The power
of the States to tax this service is not affected by
[Telecommunications Act §] 602."

142 Cong. Rec. H1145, H1158 (Feb. 1, 1996). See W. Hellerstein,

State Taxation ¶ 4.25[1][l] (3d ed. 2014) ("Congress was

concerned with burdening [satellite] providers with the

requirement of complying with taxes in thousands of local taxing

jurisdictions. This was the rationale for preempting local, but

not [S]tate, taxing authority" [emphasis in original]). In sum,

the divergent methods by which payment for the privilege of

doing local business is collected from the cable and satellite
 22

companies are both advantageous to the satellite companies and

rooted in the different operational methods employed by the two

types of company.

B. Method of calculation. We turn to the different

methods by which the obligations of the cable and satellite

companies are calculated. Whereas the satellite companies'

services are subject to a flat tax rate of five percent of gross

revenues, the cable companies' obligations are composed of

(a) franchise fees, running to approximately three to five per

cent of gross revenues; (b) additional fees, used to support

public-oriented programming, averaging 1.09% of gross revenues;

(c) services, facilities, and equipment for the use of public,

educational, and governmental channels; (d) free video

programming services delivered to municipal buildings, schools,

and libraries; and (e) requirements imposed by local governments

concerning service quality and customer service. On the basis

of these facts, the satellite companies do not have a

"reasonable expectation" of proving that their obligations are

more burdensome than those of the cable companies.15 See

15
Implicit in the satellite companies' argument is the
assumption that because they, unlike the cable companies, do not
use local rights-of-way, the Legislature is required to impose a
heavier tax burden on the cable companies. As explained by the
United States Court of Appeals for the Sixth Circuit, however,
"States and local government are under no mandate to charge for
the use of local rights-of-way; this is readily apparent from
 23

HipSaver, 464 Mass. at 522. This is particularly so given that

no affidavits or other evidence has been submitted that might

shed light on the value of the in-kind services that cable

companies provide to local governments.

Moreover, even if the satellite companies were able to show

some discrepancy between the amounts charged to them and to the

cable companies, respectively, this discrepancy would be

permissibly attributable to important differences between the

cable and satellite industries, some of which we have already

discussed.

For one, franchise fees are, as noted, capped by Federal

law at five per cent of gross revenue. See 47 U.S.C. § 542(b)

(2012). Massachusetts law does not require that cable's

franchise fees be any lower. It follows that if the cable

companies' obligations to local governments amount to a lighter

burden than the satellite companies' excise tax, this

discrepancy results from certain localities' consent to reduce

franchise fees from the statutory maximum. In this sense, any

benefit to the cable companies results from the fact that they

are required, unlike the satellite companies, to negotiate

the fact that not every road is a toll road. . . . The
provision of access to the [S]tate infrastructure free of charge
is an acceptable option that the [S]tate may exercise."
Directv, Inc. v. Treesh, 487 F.3d 471, 479 (6th Cir. 2007),
citing West Lynn Creamery, 512 U.S. at 199 n.15.
 24

separate arrangements with an array of local governments. In

turn, this difference between the treatment of the cable and

satellite companies is rooted, as we have explained, in the

different nature of these businesses, namely in the fact that

the cable companies, unlike the satellite companies, cannot

avoid interface with local governments. See Treesh II, 290

S.W.3d at 643.

As the department argues, another difference between the

cable and satellite companies' respective operations would

support the imposition of a somewhat lower tax rate on cable.

This difference lies in the respective regulatory regimes to

which the two types of company are subject.

When the technology for satellite provision of video

programming became available in the 1980s, the Federal

government "concluded that the public interest is best served by

a flexible regulatory approach." 2 D.L. Brenner, M.E. Price, &

M.I. Meyerson, Cable Television and Other Nonbroadcast Video,

Law and Policy, § 15:5 (2014). Accordingly, the satellite

industry was subjected to "regulatory requirements [that are]

minimal . . . . This approach allows [satellite] operations to

experiment with service offerings and methods of financing. Few

rules exist." Id. See 2 C.D. Ferris & F.W. Lloyd,

Telecommunications Regulation: Cable, Broadcasting, Satellite,

and the Internet ¶ 20.04[5][b], at 20-9 (rev. ed. 2014).
 25

Cable, on the other hand, a veteran industry with well-

established methods of operation, has long been subject to an

extensive scheme of Federal regulation. See 1 C.D. Ferris &

F.W. Lloyd, Telecommunications Regulation: Cable, Broadcasting,

Satellite, and the Internet ¶ 5.04[1], at 5-5 (rev. ed. 2014)

(discussing development of cable in 1940s and 1950s); id. at

¶ 5.04[3][b], at 5-7 (rev. ed. 2014) (discussing origins of

cable regulation in 1960s). Among other things, cable companies

must comply with standards concerning the technical operation

and signal quality of their programming. See 47 U.S.C. § 544(e)

(2012); 47 C.F.R. §§ 76.601-76.640 (2013). They are subject to

minimum standards for office hours, telephone availability,

installations, outages, service calls, and billing. See 47

U.S.C. § 552(b) (2012); 47 C.F.R. § 76.309 (2013). They are

required to enable their customers to receive emergency

information. See 47 U.S.C. § 544(g) (2012). They must provide

subscribers with a device that permits the subscribers to limit

access to certain channels, see 47 U.S.C. § 544(d)(2) (2012),

and they may be forbidden by localities to provide access to

channels that carry obscene content. See 47 U.S.C. § 544(d)(1)

(2012).

In addition, the rates for the provision of basic cable

services are determined by Federal regulations, unless the

Federal Communications Commission finds that these services are
 26

subject to "effective competition." See 47 U.S.C. § 543(a)(2)

(2012); 47 C.F.R. §§ 76.901-76.990 (2013). Cable companies may

not discriminate between different "tiers" of subscribers in the

provision of programming offered on a per-channel or per-program

basis. See 47 U.S.C. § 543(b)(8)(A) (2012). With some

exceptions, cable companies are required to operate a

geographically uniform rate structure. See 47 U.S.C. § 543(d)

(2012).16

The divergent regulatory regimes that govern the cable and

satellite companies' respective operations are relevant to the

selection of the tax obligations to which these companies are

subjected. Cf. Tracy, 519 U.S. at 295-297, 300-301 (considering

regulatory obligations of local utility companies); National

Ass'n of Optometrists & Opticians LensCrafters, Inc. v. Brown,

567 F.3d 521, 526-527 (9th Cir. 2009) (considering regulatory

obligations of optometrists and ophthalmologists). The rate of

the excise tax permissibly may allow for the fact that satellite

companies do not bear the additional regulatory burdens imposed

16
In addition, cable companies are required to devote a
greater percentage of their channel capacity to public,
educational, and government programming than satellite companies
are. See 47 U.S.C. §§ 335, 531, 534, 535 (2012). Compare 1
C.D. Ferris & F.W. Lloyd, Telecommunications Regulation: Cable,
Broadcasting, Satellite, and the Internet ¶ 7.15[2], at 7-40
(rev. ed. 2014), with 2 C.D. Ferris & F.W. Lloyd,
Telecommunications Regulation ¶ 20.4[6][c], at 20-11 (rev. ed.
2014).
 27

on cable companies. The Legislature also permissibly may wish

to support the provision of cable services, in order to ensure

that this regulated product remains available to Massachusetts

consumers. See Treesh I, 487 F.3d at 481 (Kentucky may have

sought to support viability of cable "for reasons entirely

unrelated to geography -- for example, that cable providers

often provide [I]nternet access as well, that cable providers

are more likely to provide public access channels, etc.").

In summary, given the nuances of the divergence between the

ways in which the cable and satellite companies are treated,

examined in light of the differences between the ways in which

these two types of company do business, the satellite companies

have no reasonable expectation of proving that the excise tax

discriminates against interstate commerce in its effect. See

HipSaver, 464 Mass. at 522. No genuine issue of material fact

was presented, therefore, and the department was entitled to

judgment as a matter of law.

b. Discriminatory purpose. The satellite companies

contend also that the excise tax is unconstitutional because it

is discriminatory in its purpose. This argument relies almost

entirely on lobbying materials prepared on behalf of the cable
 28

industry.17 For instance, a letter sent by cable lobbyists to

members of the Legislature read, in part:

"Satellite TV companies have long enjoyed a one-way
relationship with Massachusetts, selling their service here
but giving almost nothing back. Unlike cable companies,
satellite providers pay no personal property or real estate
taxes . . . . Nor do satellite companies make investments
in the economy or community, as cable providers do.
Comcast alone, for example, employs more than 5,000 people
in Massachusetts who collect more than $336 million in
salary and benefits."

The satellite companies assert that lobbying efforts of this

nature indicate that the excise tax was intended to reward the

cable companies for their contributions to the Commonwealth's

economy. We conclude that the summary judgment record does not

support a reasonable expectation that a discriminatory purpose

could be proved. See HipSaver, 464 Mass. at 522.

"It is well settled that a statute is presumed to be

constitutional, and every rational presumption in favor of its

validity is to be made." Cote-Whitacre v. Department of Pub.

Health, 446 Mass. 350, 367 (2006). See Commonwealth v. King,

374 Mass. 5, 16 (1977). For the reasons previously explained,

the excise tax is understood most naturally as an element of a

17
The satellite companies point also to the testimony of a
high-ranking satellite company executive who asserted at
deposition that he had been told by members of the Legislature
that they would vote for the excise tax, at least in part,
because of the cable industry's "significant local presence."
Like the Superior Court judge, we ascribe little significance to
this vague testimony.
 29

balanced scheme of taxation that imposes corresponding burdens,

different in nuanced and rational ways, on the cable and

satellite companies. The burden of establishing that the

statute was motivated not by this legitimate goal, but rather by

a discriminatory purpose, is necessarily difficult to carry.

See Treesh I, 487 F.3d at 480 (affirming dismissal of

discrimination claim where, "[w]hile a purpose of the [statute]

might have been to aid the cable industry rather than the

satellite industry . . . there were clearly many other

purposes," including "collecting taxes from the previously

untaxed, burgeoning satellite industry").

The evidence offered by the satellite companies does not

suffice to carry this burden. In the context of statutory

interpretation, we have cautioned against "confus[ing] the

intention of the private proponents of legislation with the

intentions of the legislative body that enacted the statutory

change, to the extent we may ascertain them. They are not

necessarily the same." Commonwealth v. Ray, 435 Mass. 249, 257

n.15 (2001). The United States Supreme Court similarly has

explained that:

"Legislative history is problematic even when the
attempt is to draw inferences from the intent of duly
appointed committees of the [Legislature]. It becomes far
more so when we consult sources still more steps
removed . . . and speculate upon the significance of the
fact that a certain interest group sponsored or opposed
particular legislation."
 30

Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 120 (2001),

citing Kelly v. Robinson, 479 U.S. 36, 51 n.13 (1986). We

cannot assume, in other words, that the Legislature embraced the

reasons expressed by private interests, such as lobbyists for

the cable companies, merely because those interests advocated

vocally for a statute.18

Moreover, the lobbying materials identified by the

satellite companies also make repeated reference to the goal of

"tax parity." Written testimony by a cable industry executive

before a committee of the Legislature stated, for instance, that

the excise tax would "ensure[] that the overall level of

taxation is equal among video providers, so that all

multichannel video providers operate on a level playing

field . . . . Tax parity ensures fair competition and true

consumer choice." Other communications stressed that, before

the 2010 appropriations act was passed, the satellite companies

paid no tax corresponding to the franchise fees paid by cable

companies. A letter to legislators from the New England Cable

and Telecommunications Association stated that the excise tax

would create a "competitively neutral tax policy for the

18
A representative of DIRECTV, LLC acknowledged at his
deposition that his company does not know whether the cable
companies' lobbying materials had an impact "on any individual
legislator" or "on the Legislature as a whole."
 31

delivery of video signals," and described the tax as "expanding

the [five per cent] franchise fee to include satellite

companies." These facts further weaken the suggestion that the

Legislature was motivated by sympathy for in-State interests as

such.

The conclusion that the excise tax was not intended to

confer a special disadvantage on the satellite companies is

reinforced by the context in which the tax was enacted. As

mentioned, in addition to creating the excise tax, the 2010

appropriations act also imposed a personal property tax on

"[p]oles, underground conduits, wires and pipes of

telecommunications companies." St. 2009, c. 27, § 25, amending

G. L. c. 59, § 18. This provision increased Comcast's annual

tax obligations by approximately $5.1 million. It also

resulted, in 2010, in a tax assessment of approximately $29.8

million against Verizon. Verizon employs approximately 9,500

people in Massachusetts, 4,000 more than the cable companies.

These facts support the conclusion that the excise tax was not

intended to discriminate against interstate commerce, but rather

was part of an effort to increase, across the board, the amount

of tax revenue collected from the video programming industry.

Judgment affirmed.