Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-00-01458/USCOURTS-caDC-00-01458-0/pdf.json

Parties Involved:
COMSAT Corporation
Petitioner
Federal Communications Commission
Respondent
PanAmSat Corporation
Intervenor
United States of America
Respondent

Document Text:

<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 14, 2002 Decided March 22, 2002

No. 00-1458

COMSAT Corporation,

Petitioner

v.

Federal Communications Commission and

United States of America,

Respondents

PanAmSat Corporation,

Intervenor

On Petition for Review of an Order of the

Federal Communications Commission

Lawrence W. Secrest, III argued the cause for petitioner.

With him on the briefs were William B. Baker, Daniel E.

Troy, Howard D. Polsky and Robert A. Mansbach. Warren

Y. Zeger entered an appearance.

USCA Case #00-1458 Document #666630 Filed: 03/22/2002 Page 1 of 8
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

C. Grey Pash, Jr., Counsel, Federal Communications Commission, argued the cause for respondents. With him on the

brief were Jane E. Mago, General Counsel, Daniel M. Armstrong, Associate General Counsel, FCC, and Charles A.

James, Assistant Attorney General, Catherine G. O'Sullivan

and Andrea Limmer, Attorneys, U.S. Department of Justice.

Henry Goldberg and Joseph A. Godles were on the brief for

intervenor. W. Kenneth Ferree entered an appearance.

Before: Sentelle and Rogers, Circuit Judges, and

Williams, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

Williams.

Williams, Senior Circuit Judge: Under s 9 of the Communications Act of 1934, Congress requires the Federal Communications Commission to "assess and collect regulatory fees to

recover the costs of ... enforcement activities, policy and

rulemaking activities, user information services, and international activities." 47 U.S.C. s 159(a)(1). In executing this

mandate, the Commission collects fees according to the

Schedule of Regulatory Fees found at 47 C.F.R. s 1.1156.

The statute authorizes the Commission to adjust these fees

annually to reflect changes in operating costs or in the

regulatory "services" it provides. 47 U.S.C. ss 159(b)(2) &

(3); see also id. s 159(g) (showing original fee schedule prior

to agency amendment).

Until 1995, the Commission exempted petitioner COMSAT

from the s 9 regulatory fees charged to satellite service

providers for each "space station" in operation. See Report

and Order, Assessment and Collection of Regulatory Fees for

Fiscal Year 1995, 10 FCC Rcd 13512, 13550 p 110 (1995)

("1995 Order"). The exemption arose from COMSAT's status

as the United States signatory to the International Telecommunications Satellite Organization ("Intelsat"), which was

formed via intergovernmental treaty and is immune from

governmental regulation. See PanAmSat Corp. v. FCC, 198

F.3d 890, 896 (D.C. Cir. 1999); 22 U.S.C. s 288 note (Public

International Organizations Entitled to Enjoy Certain PriviUSCA Case #00-1458 Document #666630 Filed: 03/22/2002 Page 2 of 8
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

leges, Exemptions, and Immunities); id. s 288a(b) (establishing immunity for certain international organizations).

COMSAT's exemption from space station fees naturally

inhibited the Commission in fulfilling its congressional mandate to recover all regulatory costs. See, e.g., COMSAT

Corp. v. FCC, 114 F.3d 223, 226 (D.C. Cir. 1997) ("COMSAT

I"); see also 1995 Order, 10 FCC Rcd at 13550 p 110 (expressing intention "to explore other ways to recover the

regulatory costs imposed on the Commission" by COMSAT's

activities). The Commission therefore attempted to institute

a special "signatory fee" for COMSAT in 1996. COMSAT I,

114 F.3d at 225-26; see also Report and Order, Assessment

and Collection of Regulatory Fees for Fiscal Year 1996, 11

FCC Rcd 18774, 18787-91 p p 37-47 (1996) ("1996 Order").

We held in COMSAT I, however, that the signatory fee

exceeded the Commission's authority to amend the fee schedule under s 159(b)(3) because it was not imposed "pursuant

to any rulemaking or change in law." COMSAT I, 114 F.3d

at 227-28. We vacated that portion of the 1996 Order, id. at

228, and the Commission subsequently dropped the signatory

fee in future rulemakings, PanAmSat, 198 F.3d at 893; see

Report and Order, Assessment and Collection of Regulatory

Fees for Fiscal Year 1997, 12 FCC Rcd 17161, 17186-87 p 65

(1997) (declining to recover signatory costs); see also Report

and Order, Assessment and Collection of Regulatory Fees for

Fiscal Year 1998, 13 FCC Rcd 19820, 19835-36 p p 50-53

(1998) (not mentioning signatory costs).

In 1998, PanAmSat, a competitor of COMSAT and intervenor in this case, sought review of the Commission's exemption

of COMSAT from space station fees. See PanAmSat, 198

F.3d at 891-92. We held that the language of s 9 made "no

suggestion that Comsat should be exempt," and that requiring COMSAT's payment of regulatory fees "would serve s 9's

general purpose of recovering the Commission's costs for its

regulatory activities." Id. at 894. We also noted that

COMSAT was already subject to regulatory fees under s 8

for "launch and operation of stations," id. at 895, and that the

regulatory immunity granted to Intelsat was "most plausibly"

USCA Case #00-1458 Document #666630 Filed: 03/22/2002 Page 3 of 8
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

confined to it alone (i.e., it did not extend to COMSAT), id. at

896. We therefore remanded to the Commission for reconsideration of the exemption. Id. at 898.

In its 2000 Order, citing our decision in PanAmSat and

Congress's March 2000 enactment of the Open Market Reorganization for the Betterment of International Telecommunications Act ("ORBIT"), Pub L. No. 106-180, 114 Stat. 48

(2000), the Commission determined that COMSAT was subject to space station fees under s 9. Report and Order,

Assessment and Collection of Regulatory Fees for Fiscal

Year 2000, 15 FCC Rcd 14478, 14485-90 p p 17-27 (2000)

("2000 Order"). It then assessed COMSAT's s 9 space station fee at $1,609,050--calculated as $94,650 for each of its 17

geosynchronous space stations. See id. at 14507 (schedule of

regulatory fees). COMSAT now brings this petition for

review.

* * *

We review the Commission's determination to impose s 9

space station fees on COMSAT under the familiar standard of

Chevron U.S.A., Inc. v. Natural Resources Defense Council,

Inc., 467 U.S. 837 (1984). Our inquiry here, however, is

substantially limited by PanAmSat's holding that the statute

did not "compel[ ] an exemption for Comsat" from s 9 regulatory fees. See PanAmSat, 198 F.3d at 896.

COMSAT attempts to limit PanAmSat, characterizing the

case as only foreclosing its claims for "legal immunity" under

the Intelsat treaty. COMSAT contends that the scope of s 9

more generally was not in issue in PanAmSat, and is thus a

matter of first impression. This reading of PanAmSat

strikes us as unconvincing. The language there addressed

the issue of COMSAT's exemption from s 9 space station fees

quite generally, and was not confined to only whether

COMSAT had legal immunity arising from its relationship to

Intelsat. For example, we broadly held that "the statute

plainly does not require--and may not permit--Comsat's

exemption from space station regulatory fees," id. at 895, that

"the legislative history's embrace of fees for satellites 'directUSCA Case #00-1458 Document #666630 Filed: 03/22/2002 Page 4 of 8
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

ly licensed by the Commission under Title III' seems reasonably to encompass Comsat," id. at 896, and that "the FCC [at

the time] was mistaken in its conclusion that the statute

compelled an exemption for Comsat," id. Indeed, the

PanAmSat opinion referred to the Intelsat treaty only as an

aid to interpreting the statute and its legislative history.

COMSAT is correct, however, that PanAmSat left open the

possibility that there might be "some ambiguity in the coverage of the 'space station' category in s 9, such that the

Commission might 'permissibly' read the statute as allowing a

Comsat exemption." Id. But assuming there is enough

ambiguity in s 9's "space station" category to permit the

Commission to fashion an exemption for COMSAT, we cannot

find the Commission's refusal to find an exemption unreasonable. See Chevron, 467 U.S. at 843-44. Unlike other

foreign-licensed satellites, COMSAT clearly generates significant regulatory costs through its signatory activities, see, e.g.,

1996 Order, 11 FCC Rcd at 18790 p 45, and COMSAT historically has not paid for these costs. In light of s 9's policy

favoring the recovery of regulatory costs, the Commission has

good reason for forcing COMSAT to bear its "proportionate

share of the [space station] fees." 2000 Order, 15 FCC Rcd

at 14489 p 24. Furthermore, the previously unrecoverable

costs have been borne by COMSAT's competitors. See 1996

Order, 11 FCC Rcd at 18790 p 46 (demonstrating that if

signatory costs were recovered, the Commission could lower

the s 9 space station fee). Clearly, the Commission might

reasonably endeavor to prevent such cross-subsidization.

In response, COMSAT first argues that COMSAT I precludes the Commission from recovering signatory-related

costs. But COMSAT I did not so hold. It stands only for

the narrow proposition that under the procedural requirements of the Communications Act, the Commission may not

impose new fee structures absent a new "rulemaking or

change in law." COMSAT I, 114 F.3d at 227-28; see also

PanAmSat, 198 F.3d at 894-95. Nothing in COMSAT I

prevents the Commission from recovering its signatoryrelated costs through proper application of its existing s 9 fee

structure.

USCA Case #00-1458 Document #666630 Filed: 03/22/2002 Page 5 of 8
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

COMSAT next argues that the Commission's decision is

unreasonable because the original statutory fee schedule lists

the "space station category" with a parenthetical reference

that is inapplicable to the licensing of Intelsat satellites:

Space Station (per operational station in geosynchronous

orbit) (47 C.F.R. Part 25).

47 U.S.C. s 159(g) (emphasis added). Since Intelsat satellites are not regulated under that section of the regulations,

see 2000 Order, 15 FCC Rcd at 14487 p 21, COMSAT argues

that it cannot be subject to s 9 space station fees. We

disagree. The Commission views the parenthetical as nothing more than a marker used by Congress to aid the Commission in understanding the schedule; this is neither precluded

by the language nor unreasonable. See Chevron, 467 U.S. at

843-44. And the Commission's conduct thus far has been

consistent with this view; the agency's annually amended

schedule at 47 C.F.R. s 1.1156 has never mentioned the

marker. See 47 C.F.R. s 1.1156 (1999); 47 C.F.R. s 1.1156

(1998); 47 C.F.R. s 1.1156 (1997); 47 C.F.R. s 1.1156 (1996);

47 C.F.R. s 1.1156 (1995). The Commission perhaps could

have interpreted the parenthetical as limiting the category to

exclusively those space stations regulated under 47 C.F.R.

Part 25, but that possibility does not render the opposite view

unreasonable. As the Commission explained in the Order,

s 9's "primary mandate is for the Commission to recover the

costs of its regulatory activities." 2000 Order, 15 FCC Rcd at

14487 p 22; see also 47 U.S.C. s 159(a). The Commission's

interpretation of the parenthetical facilitates fulfillment of

this mandate; COMSAT's does not.

Aside from the question whether the Commission can impose space station fees on COMSAT at all, COMSAT also

challenges the amount charged. Because it only uses 17% of

the transponder capacity of the Intelsat system, see

COMSAT Brief at 54, COMSAT contends that its space

station fee should be prorated accordingly. But we again

cannot find the Commission's rejection of this proposal unreasonable. The Commission has previously rejected suggestions to assess space station fees "on the number of transponUSCA Case #00-1458 Document #666630 Filed: 03/22/2002 Page 6 of 8
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

ders used rather than the number of space segments." 2000

Order, 15 FCC Rcd at 14490 p 26 (citing 1995 Order, 10 FCC

Rcd at 13550-51 p 111). The Commission has also noted that

assessing fees per satellite is more consistent with the Congress's original schedule, see 47 U.S.C. s 159(g) (establishing

original schedule that assessed fees "per operational station"),

and is apparently less administratively burdensome on the

Commission and regulatees, see 1995 Order, 10 FCC Rcd at

13550-51 p 111. Furthermore, the Commission has maintained that the costs associated with regulating satellite systems are reasonably related to the number of operational

satellites. 1995 Order, 10 FCC Rcd at 13550-51 p 111. As

COMSAT offers no evidence demonstrating that regulatory

costs are generally more closely related to the number of

transponders than to the number of satellites, we must reject

the request to mandate its proration theory. See also id.

(noting that commenter "provided ... no demonstrable evidence that the costs of regulating the various satellite systems is [sic] more closely related to the number of transponders that a satellite carries than to the total number of

operational satellites").

While we reject COMSAT's proration argument, we do not

suggest that the fees imposed on COMSAT were wellapportioned. Indeed, the $1.6 million in fees assessed to

COMSAT seem to bear no relation to the signatory-related

costs that the Commission identified COMSAT as having

created and that it has said it wishes to recover. Signatoryrelated costs apparently amounted to only $233,425 in 1996,1

__________

1 In its 1996 Order, FCC estimated that signatory-related costs

amounted to 14.7% of "the costs attributable to space station

regulatory oversight ($3,175,850)." 1996 Order, 11 FCC Rcd at

18790 p 45. The signatory-related costs for 1996 were thus

$466,850. However, since COMSAT is signatory to two separate

international organizations (Intelsat and the International Mobile

Satellite Organization), the Commission divided that figure by two.

See id. at 18787-88 p 37, 18790 p 45; see also Notice of Proposed

Rulemaking, Assessment and Collection of Regulatory Fees for

Fiscal Year 1996, 11 FCC Rcd 16515, 16528 p 46 (1996) (making a

similar signatory-related cost calculation, albeit with slightly lower

USCA Case #00-1458 Document #666630 Filed: 03/22/2002 Page 7 of 8
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

and although the record lacks reported figures for 2000, an

extrapolation on the basis of the change in the regular fee per

satellite would yield an estimate for Intelsat signatory-related

costs in 2000 of about $442,000, only about a quarter of the

fees actually assessed.2

We do not reach this issue, however, because it was not

raised on this appeal. Indeed it appears that the Commission

was and perhaps remains willing to consider a request for a

fee reduction on this ground. It said in the 2000 Order that

reductions of fees were "granted on a case-by-case basis" and

that COMSAT remains "free to submit such a request." 2000

Order, 15 FCC Rcd at 14490 p 27 (noting that the Commission "express[es] no view in this rulemaking proceeding

whether such a reduction in fees should be granted"); see

also 47 C.F.R. s 1.1166 (establishing procedures for requesting fee waivers or reductions).

Since s 9 of the statute as interpreted in PanAmSat is

sufficient to justify the Commission's actions, we need not

reach issues raised by the Commission's ancillary reliance on

ORBIT.

* * *

COMSAT's petition for review is

Denied.

__________

figures). For reasons not disclosed by the parties, it appears that

only fees charged with reference to Intelsat satellites are before us.

2 According to the 2000 Order, regulatory costs associated with

(geosynchronous) space stations in 2000 are estimated at $6,010,513.

See 2000 Order at 14532 attachment C. (Here, we use the same

figure corresponding to the "Pro-Rated Revenue Requirement" for

"Space Stations (Geosynchronous)" as in the 1996 Order.) Assuming that signatory costs remained at 14.7% of total space station

regulatory costs as in 1996, see 1996 Order, 15 FCC Rcd at 18790

p 45, signatory costs in 2000 were approximately $883,545. Again,

because COMSAT is signatory to two organizations, id., the Commission would presumably divide this figure by two to yield

$441,773.

USCA Case #00-1458 Document #666630 Filed: 03/22/2002 Page 8 of 8