DC Circuit Voices Skepticism on Foreign Satellite Fees Challenge
Foreign-flagged satellite operators challenging FCC regulatory fees approved last year (see 2012300046) faced apparently dubious judges in oral argument Friday at the U.S. Court of Appeals for the D.C. Circuit. The three-judge panel appeared dismissive of petitioner arguments that there wasn't requisite notice and that the FCC's interpretation of the Communications Act allowing it to charge such fees is inconsistent with how it's written. A decision could come around June or July, we were told.
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The FCC's history of not charging fees on foreign-flagged satellites might not be applicable today, given changing circumstances in the satellite industry and the growth of privately operated satellites, suggested Judge David Tatel. Ken Ferree of Goldberg Godles, representing petitioners Telesat, Eutelsat, Kineis, Hiber and Inmarsat, replied that the circumstances "haven't changed dramatically or materially" since 2014, and the last time, the FCC found it didn't have jurisdiction. "It was only at the eleventh hour they came up with this brand-new theory" about Section 9 of the Communications Act, which requires the agency to charge fees to recoup its regulatory activity costs.
Judge Laurence Silberman said the legislative history of Section 9 looks ambiguous on exemptions, which could suggest the FCC interpretation was correct. Silberman also challenged petitioner claims about there not being proper notice, noting questions in the NPRM about whether foreign-licensed satellites should be charged regulatory fees. "You were on notice they were trying to figure a way" to read the law in a manner that permits such fees, he said. "Any lawyer would have realized they were reaching for the property theory." The FCC believing it didn't have that authority "had been a given for 25 years," Ferree replied. Responded Judge David Sentelle, "This interpretation seems to be consistent with the statute. You're not hurt by any lack of notice.”
If FCC costs come not from its licensing but its regulation of satellite operators, Sentelle asked, why wouldn't this be a valid approach by the FCC? Ferree replied that lots of entities generate costs for the FCC but aren't charged fees.
The adequate notice argument also is undercut by Telesat having filed reply comments in the proceeding specifically about whether the FCC has authority to impose such regulatory fees, FCC lawyer Pamela Smith said. She said the agency had authority under Section 9 to amend its regulatory fee structure to also cover foreign-flagged satellites with U.S. market access. She said the agency looked at the legislative history of Section 9, and it wasn't a bar.
Smith said it was an "unfair characterization" that the FCC action was the result of a last-minute brainstorming, because the agency has reviewed this issue repeatedly since satellite regulatory fees were enacted, and this was only the latest time the FCC sought comment on whether it should levy such fees. The FCC can't use an "incantation" to create change in Section 9 "out of whole cloth," Ferree replied.