Concluding that federal courts lack the jurisdiction to overrule the decision of state lawmakers regarding municipal franchise tax authority, the Fourth Circuit Court of Appeals rejected a lawsuit brought by DirecTV and EchoStar against North Carolina, which the two direct broadcast satellite (DBS) providers had accused of discrimination in imposing a 7% sales tax on the gross revenues of cable and DBS companies. At issue are amendments to the North Carolina tax code, adopted in 2006, that revoked the authority of local municipalities to assess franchise fees on cable firms. (The amendments correspond with the enactment of a state law that transfers video franchising authority from local governments to the North Carolina Secretary of State.) A year prior to the amendments, North Carolina had enacted legislation prescribing the 7% sales tax on cable and DBS revenues. At that time, cable companies were also required to continue franchise payments to local municipalities but were allowed to credit the amount of their local franchise payments against the amount owed to the state. Upon the adoption of the 2006 amendments, the cable franchise tax credit was eliminated. Although that measure also revoked the authority of local municipalities to collect franchise fees, it provided for the distribution of a portion of the state sales tax proceeds to local governments. Arguing that the arrangement effectively subsidizes cable companies that “no longer have to pay franchise taxes but continue to receive the valuable right of access to publicly-owned rights-of-way that they formerly obtained through the payment” of local franchise fees, DirecTV and EchoStar challenged the 2006 amendments as discriminatory. Rejecting the complaint, the Fourth Circuit observed that local franchise fees imposed on cable operators prior to 2006 qualify as taxes as “these charges were imposed not by an administrative or regulatory agency, but by North Carolina’s [municipalities] with the authorization of the general assembly.” Because those fees qualify as taxes, the court therefore concluded that it lacked the authority to reverse the 2006 tax amendments.