Foreign-Flagged Satellite Fees Order Likely to Get Tweaks
New language in the FCC's draft regulatory fees order on the agenda for when commissioners meet Wednesday (see 2004220048) might provide some rate relief for VHF satellites and foreign satellites that ping U.S. customers but don't have U.S. market access, but still would broadly levy U.S. regulatory fees on foreign-flagged satellites. That's according to satellite experts and an FCC official interviewed last week. Some consider 5-0 commissioner approval likely. Foreign satellite operators resisted the fee (see 2003240047), saying the issue needs more study.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
U.S. operators disagree. "There's a fairness issue here," with foreign operators getting the benefit of FCC staff work, with that cost borne by U.S. operators, EchoStar/Hughes Senior Vice President-Regulatory Affairs Jennifer Manner told us. "Everyone's benefiting." Intelsat joined EchoStar/Hughes in backing the draft order.
There are unanswered questions about statutory authority to put regulatory fees on non-U.S.-licensed satellite operators, counsel for Eutelsat, Myriota, Inmarsat, OneWeb, Kepler and Hiber told the FCC, per a docket 19-105 posting Friday. The draft order doesn't consider the consequences on foreign operators of those fees, and the fee methodology is flawed, they said, asking the agency to defer levying the charges while it issues an NPRM to address those matters. They said the commission in the meantime should adopt 2020 regulatory fees based on 2019 methodologies or recalculate 2020 regulatory fees without adding foreign-licensed satellite operators. The satellite counsel met with aides to Chairman Ajit Pai and the other commissioners and offices of General Counsel and Managing Director and International Bureau staffers.
Even if the FCC has authority to charge such fees, the item is inconsistent in its math, with the draft indicating 16 full-time equivalent employees are addressing U.S. satellite licensing and four FTEs addressing foreign market access, said Carlos Nalda of LMI Advisors, representing Eutelsat and Myriota. In an interview, he said that regime would mean recovering foreign satellite operators shouldn't account for more than 20% of FTE allocation costs. He said if anything, the FCC should be considering a sliding scale. Small non-geostationary constellations with a few satellites would pay less than mega constellations. Foreign-licensed geostationary satellites incidentally providing coverage to a portion of the U.S. would pay less than GSOs doing full continental U.S. coverage.
Nalda said there's "a real possibility [approval] could be challenged in the D.C. Circuit." He said the fundamental statutory authority question "is particularly situated for judicial review."
A satellite lawyer said U.S. operators pay fees in other countries that have them, though they're not always called regulatory fees, and countries where only domestic operators pay fees aren't common. The lawyer said FCC approval of the fees order likely wouldn't be challenged because the fees are an expense for foreign operators but not a big enough one to warrant that type of fight.
A satellite company outside counsel said commissioners might be more prone to follow the staff evaluation on the issue and unanimously approve it, after the FCC's April orbital debris order, which made notable changes due to industry concerns. He said cost recovery regulatory fees across foreign and domestic operators aren't commonly employed and foreign administrations instead look to domestic licensees for cost recovery.
New Zealand's Commerce Commission emailed us that the nation's space agency doesn't charge or cost recover either one-off or ongoing fees for permits for payloads launched from there. It said it also doesn't have a landing rights regime and satellite operators aren't charged a fee when providing coverage over New Zealand, though downlinks also aren't subject to protection. It said it charges a flat fee for earth station-receive annual licenses.
Canada's Industry Canada emailed that Innovation, Science and Economic Development grants regulatory approval for foreign-licensed satellites to provide service in Canada, but there are no fees with that approval. Fees for the use of the spectrum are applied to the earth stations in Canada that communicate with the approved foreign satellite, it said.