TR Daily Judges Appear Skeptical of Satellite Regulatory Fee Order Challenge
Friday, April 16, 2021

Judges Appear Skeptical of Satellite Regulatory Fee Order Challenge

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit appeared skeptical today of arguments by satellite companies that the FCC exceeded its authority when it adopted an order designed to ensure that domestic and foreign operators abide by the same regulatory fee framework.

The report and order, which was adopted in May 2020 in MD dockets 20-105 and 19-105, replaced a regime where foreign-licensed operators that had access to the U.S. market were not required to pay regulatory fees (TR Daily, May 13, 2020). The order imposed the same fee framework on those operators.

The order was challenged in the D.C. Circuit by Telesat Canada, Eutelsat S.A., Kinéis, Hiber, Inc., and Inmarsat Group Holdings Ltd.

The satellite entities challenging the order argued that the FCC exceeded its authority in changing its regime because it had previously relied on 1991 legislative history of section 9 of the Communications Act of 1934, which directs the Commission to recover all of the annual appropriations approved by Congress from regulatory fees on entities that benefit from its activities.

The Commission previously had interpreted the legislative history as prohibiting it from imposing fees on foreign-licensed satellite operators that are granted access to the U.S. market by the FCC.

The legislative history said that "[t]he Committee intends that fees in this category be assessed on operators of U.S. facilities, consistent with FCC jurisdiction. Therefore, these fees will apply only to space stations directly licensed by the Commission under Title III of the Communications Act. Fees will not be applied to space stations operated by international organizations subject to the International Organizations Immunities Act, 22 U.S.C. Section 288 et seq."

In its brief in Telesat Canada, et al., v. FCC (case no. 20-1234), the Commission argued that the bar on imposing fees on such international organizations was a reference to treaty-based international governmental organizations INTELSAT and INMARSAT, which have since been privatized. It also noted that the U.S. satellite market has changed drastically in the past 30 years with numerous private satellite constellations. The agency also observed that section 9 does not exempt foreign-licensed satellite operators with U.S. market access from the regulatory fee mandate.

The Commission also said it makes sense to treat space stations serving the U.S. market the same to fulfill the mandate of Congress to recover the costs related to the agency’s activities. The Commission also said it provided adequate notice to parties that it was considering modifying its rules.

But the petitioners argued that the FCC lacked the authority to make the change based on the legislative history and said that Congress has implicitly and explicitly endorsed the FCC’s interpretation of its authority. They also said that the FCC failed to provide adequate notice that it might impose regulatory fees on foreign-licensed satellite operators with U.S. market access.

During the oral argument this morning, the judges seemed skeptical of the petitioners’ arguments.

They suggested that the language of section 9 was ambiguous and thus the petitioners, under Chevron step 2, had to convince them that the FCC’s interpretation was unreasonable. They also stressed that the statute, not the legislative history, was controlling.

"The legislative history was not enacted by Congress. The statue was enacted by Congress," said Senior Circuit Judge David B. Sentelle.

"Even the legislative history is ambiguous," said Senior Circuit Judge Laurence H. Silberman, adding that there is "no hook" between the legislative history and the statute. Because the legislative history is silent on the treatment of foreign-licensed space stations, the statute is even more appropriately interpreted by the Commission, he said.

"The circumstances have completely changed," said Circuit Judge David S. Tatel, referring to the U.S. satellite market. "We’re no longer governed … by conference language."

Judge Silberman also didn’t buy the argument that the FCC violated the Administrative Procedure Act by failing to provide notice that might change its regulatory fee regime.

"It put that general question out," he said of the FCC’s notice of proposed rulemaking in the proceeding. "You were on notice that they were trying to figure a way to interpret the language … to allow them to impose fees on foreign-licensed satellites."

FCC attorney Pamela Smith argued that the statute is clear. She also said that the FCC had raised the issue of changing its fee regime in other proceedings.

But Ken Ferree, an attorney for the petitioners, argued that the agency had taken an "unlawful U-turn" in changing its rules. —Paul Kirby, [email protected]

MainStory: Courts FCC FederalNews Satellites

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