The FCC has taken the position that PEG fees, by federal statute, may only be used for the capital costs incurred for PEG access facilities. This position was challenged in federal court and was upheld on June 27, 2008.[*]
Thus, any additional fees collected from the proposed PEG fee legislation must go solely for studios. In fairness to the sponsors of the legislation, this federal court ruling came well after the proposed Michigan legislation was introduced. It was still an open issue at the time the PEG legislation was introduced as to whether PEG fees could be used for programming, equipment, or general expenses related to PEG channels, but the issue has now been clarified by the federal courts. If Michigan enacts the proposed legislation, cable subscribers and cable companies will pay tens of millions of dollars each year for every imaginable improvement to PEG studios, but these additional PEG revenues will not, by federal law, be allowed to go toward programming, production, overhead or equipment costs.
[*] Alliance for Community Media v. FCC, 529 F.3d 763, 784-86 (6th Cir. 2008). ("During the enactment of this provision, Congress made clear that it intended section 622(g)(2)(C) to reach 'capital costs associated with the construction of [PEG] access facilities.' H.R. Rep. No. 98-934, at 26. ... Against this legislative pronouncement, the FCC's limitation of 'capital costs' to those 'incurred in or associated with the construction for PEG access facilities' represents an eminently reasonable construction of section 622(g)(2)(C).")