Court Opinion

ID: 4692961
Source: CourtListenerOpinion
Date Created: 2021-06-04 15:01:23.761309+00
Date Added: 2024-06-11T08:05:19.636650
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 16, 2021                  Decided June 4, 2021

                        No. 20-1234

                 TELESAT CANADA, ET AL.,
                      PETITIONERS

                             v.

   FEDERAL COMMUNICATIONS COMMISSION AND UNITED
               STATES OF AMERICA,
                  RESPONDENTS

             On Petition for Review of an Order
        of the Federal Communications Commission

    W. Kenneth Ferree argued the cause for petitioners. With
him on the briefs were Henry Goldberg, Joseph A. Godles,
Carlos M. Nalda, Bruce Henoch, David S. Keir, and Brennan
Price.

     Pamela L. Smith, Counsel, Federal Communications
Commission, argued the cause for respondents. With her on
the brief were Michael F. Murray, Deputy Assistant Attorney
General, U.S. Department of Justice, Robert B. Nicholson and
Matthew C. Mandelberg, Attorneys, Thomas M. Johnson, Jr.,
General Counsel, Federal Communications Commission,
Ashley S. Boizelle, Deputy General Counsel, and Jacob M.
Lewis, Associate General Counsel. Richard K. Welch, Deputy
                               2
Associate General Counsel, Federal             Communications
Commission, entered an appearance.

   Before: TATEL, Circuit Judge, and SILBERMAN and
SENTELLE, Senior Circuit Judges.

    Opinion for the Court filed by Senior Circuit Judge
SILBERMAN.

     SILBERMAN, Senior Circuit Judge: This case deals with the
question whether the FCC can charge foreign satellite operators
with U.S. market access the same regulatory fees that their
American licensed competitive counterparts pay. The FCC,
reversing a long-held position, concluded by rule that the
foreign satellite operators (Petitioners) must pay these fees. We
deny the petition for review.

                               I

     Congress, in 1993, amended the Communications Act to
require the Commission to assess and collect regulatory fees to
recover the costs of its various activities. 1 Congress set an
initial schedule of fees that apply “until amended by the
Commission.” “Space stations” (i.e., satellites) were included
in the schedule but there were blanket exceptions for
“governmental entities or nonprofit entities” and for “amateur
radio operator[s].”

     Initially, the Commission limited regulatory fees to those
entities licensed by the Commission—which did not (and does

    1
      Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-
66, § 6003, 107 Stat 312, 397 (1993) (codified at 47 U.S.C. § 159
(1994)).
                                3
not) include foreign-licensed satellites. 2 The Commission
relied on a passage incorporated into the Conference Report for
the 1993 Act—on which Petitioners now rely—which states:

            The 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
                               3
            Immunities Act.

     The Commission consistently reasserted this view until
2013, when it expressed doubts on “whether regulatory fees
should be assessed on non-U.S. licensed space station operators
providing service in the United States.” The FCC invited
comment on its previous conclusion whether “the regulatory
fee category for space stations . . . covers only Title III license

     2
       Assessment and Collection of Regulatory Fees for Fiscal Year
1995, Report and Order, 10 FCC Rcd. 13512, 13549–51 (1995).
Cable television services, which are not licensed by the FCC, were
also charged regulatory fees.
     3
      H.R. Rep. No. 207, 102d Cong., 1st Sess. 26 (1991) (emphasis
added). The Conference Report incorporates by reference this
language from the House Committee Report. H. Conf. Rep. No. 213,
103d Cong., 1st Sess. 499 (1993) (“To the extent applicable, the
appropriate provisions of the House Report (H.R. 102-207) are
incorporated herein by reference.”).
                                4
holders.” 4 But the Commission declined to decide the issue,
stating additional time was needed for further consideration.

     In 2018, as part of the so-called Ray Baum’s Act, Congress
again amended Section 9 of the Communications Act.5
Congress changed the Commission’s authority to adjust the fee
schedule based on the number of “units” (that is, satellites)
subject to the payment of fees rather than either the number of
units or licensees. 6 It also added the power to adjust fees based
on factors “reasonably related to the benefits provided to the
payor of the fee by the Commission’s activities.” 7 And another
fee exemption was added for “noncommercial radio station[s]
or noncommercial television station[s].” 8

     In 2019, the Commission again sought “comment on
whether [the Commission] should or must assess regulatory
fees on non-U.S. licensed space stations serving the United
States under section 9.” 9 The FCC recognized that it previously

    4
       Notice of Proposed Rulemaking, 28 FCC Rcd. 7790, 7809
¶ 49 (2013).
    5
      Ray Baum’s Act of 2018, Pub. L. No. 115-141, 132 Stat. 348
Division P, Title I, § 102 (2018) (codified at 47 U.S.C. § 159).
    6
      Compare 47 U.S.C. § 159(b)(2)(A) (1994), with 47 U.S.C.
§ 159(c)(1)(A) (2018).
    7
      Compare 47 U.S.C. § 159(b)(2)–(3) (1994), with 47 U.S.C.
§ 159(d) (2018).
    8
      Compare 47 U.S.C. § 159(h) (1994), with 47 U.S.C. § 159(e)
(2018).
    9
      Notice of Proposed Rulemaking, 34 FCC Rcd. 8189, 8213
¶¶ 62–65 (2019) (hereinafter, “Notice”).
                               5
declined to assess fees on non-U.S. licensed space stations.
However, it noted that in 2013 it had started to reevaluate that
position.

     The FCC “observe[d]” that the Ray Baum’s Act “requires
the Commission to consider increases and decreases in the
‘number of units’ subject to payment of regulatory fees, but
does not state ‘licensees,’” and that language appears equally
applicable to the U.S.- and foreign-licensed satellites. The
Commission noted that foreign-licensed space stations that
serve U.S. customers benefit in the same manner as their U.S.-
licensed competitors. Considering these benefits, the FCC
asked whether it was fair or equitable to maintain the
exemption.

     In the Order (actually a rule) before us, the Commission
concluded it could adopt regulatory fees for non-U.S. licensed
space stations with U.S. market access. 10 The Commission did
not rely on the Ray Baum’s Act’s use of the term units rather
than licensees. Instead, the Commission reasoned that the
statutory text did not foreclose its reading, since the statute
contemplates fees that reflect “benefits provided to the payor
of the fee by the Commission’s activities.” Order ¶ 10 (quoting
47 U.S.C. § 159(d)). And, although the text includes some
explicit exemptions from regulatory fees, none exempt non-
U.S. licensed space stations with U.S. market access. Id.

     The Commission thought, based on policy considerations,
it should impose regulatory fees on non-U.S. licensed space
stations that have been granted access to the U.S. market. Id.
¶¶ 19–27. Foreign-licensed satellite operators must petition the
FCC to access the U.S. market. The FCC explained that it

    10
       Report and Order, 35 FCC Rcd. 4976, 4980–81 ¶ 10 (2020)
(hereinafter, “Order”); see also id. ¶¶ 9–34.
                               6
devotes significant resources to processing the growing
number of such petitions. Foreign-licensed satellites benefit
from the Commission’s oversight and regulation in the same
manner as U.S. licensed satellites. Id. ¶ 21. And processing a
petition for market access, according to the Commission,
“requires evaluation of the same legal and technical
information as required of U.S. licensed applicants.” Id. The
current exemption “places the burden of regulatory fees . . .
solely on the shoulders of U.S. licensees.” Id. ¶ 26. Therefore,
assessing the same regulatory fees on foreign-licensed space
stations with market access would better reflect the benefits
received by these operators and promote regulatory parity. Id.

     The Commission frankly acknowledged its previous
position that foreign-licensed space stations were exempt based
on the Conference Report but concluded that the Report was
not relevant. The Commission explained that commercial
foreign-licensed satellites with general U.S. market access did
not exist until 1997. Id. ¶ 15. Only then did the Commission
adopt a formal process “for granting market access to non-U.S.
licensed space stations.” Id. ¶ 16. Therefore, the Report
actually focused on Intelsat and Inmarsat—two “treaty-based
international governmental organizations,” that provided most
satellite services to the U.S. market at that time. Id. ¶ 15–16.
The market has since changed: Intelsat and Inmarsat are no
longer international governmental organizations, but
commercial enterprises, and there are many foreign-licensed
satellite operators—including Petitioners—that compete with
U.S.-licensed satellite operators in the U.S. market. Id. ¶ 17.

                              II

    Petitioners’ primary argument is based not on the text of
the Communications Act, but rather the Conference Report,
which, as we noted, explicitly states that “fees will apply only
                                7
to space stations directly licensed by the Commission.” But the
statute, as will be recalled, provides a general guide to the FCC
that it should charge regulatory fees to those who benefit from
its regulations. It is undeniable that foreign satellites and their
operators that serve the United States do benefit from the
Commission’s regulation in much the same way as their U.S.-
licensed counterparts. The Commission creates a fair and safe
environment for all U.S. market participants by, among other
things, minimizing the risks of radio interference and
mitigating the danger of orbital debris. Order ¶ 21. The
Commission reviews petitions for market access by foreign-
licensed satellites to ensure legal and compliance with this
carefully coordinated system. Id.

    Moreover, the Act as amended explicitly excludes from
regulatory fees only four categories: (1) government entities,
(2) non-profit entities, (3) amateur operators and (4) non-
commercial radio and TV stations. Petitioners do not fit into
these exceptions.

     To be sure, as Petitioners emphasize, there are a number
of other “entities” which gain the benefit of FCC regulations—
such as TV networks, internet service providers, and
consumers—that are not charged regulatory fees. Petitioners
argue that makes the statute “ambiguous” with regard to which
beneficiaries may be charged regulatory fees. Therefore, one
must go to the legislative history (the Conference Report) to
reconcile the ambiguity (or, to put it more accurately, to fill the
statutory “gap”—the failure to specify whether non-licensee
beneficiaries may be charged fees, see Chevron, U.S.A., Inc. v.
Nat. Res. Def. Council, Inc., 467 U.S. 837, 843 (1984)).
Petitioners argue that the Conference Report explains that, at
least for satellites, only those that are licensed by the
Commission may be charged regulatory fees.
                                  8
     The problem with Petitioners’ argument is the Report
reads as a freestanding statement—it is not directed to any
particular statutory language. As we have said in a previous
case, “there is no obvious hook” in the text of the statute on
which to hang any exemption or other limitation found in the
Report. PanAmSat Corp. v. FCC, 198 F.3d 890, 895 (D.C. Cir.
1999). 11 And the Report cannot be said to clarify the term
“space station” as used in the fee schedule (assuming its
ambiguity), because the Report addresses the applicability of
fees rather than providing a definition. Although we
sometimes—cautiously—look at legislative history to guide
interpretation of ambiguous statutory language, it has to be
history that can be said to be directed to the ambiguity in a
statute. That is not true here.

     Even if one looks to the Conference Report, we think it is
hardly pellucid. The second sentence, on which Petitioners
rely—“Therefore, these [regulatory] fees will apply only to
space stations directly licensed by the Commission”—can be
interpreted in connection with the third sentence— “Fees will
not be applied to space stations operated by international
organizations subject to the International Organizations
Immunities Act.” The third sentence can be read as an
explanation of the second sentence. In other words, the entities
excluded by the second sentence are specifically identified in
the third. Otherwise, the third sentence would be surplusage.

     11
         In PanAmSat, the FCC had concluded, erroneously we
thought, that Comsat (an American company involved in launching
international satellites) was legally entitled to an exception because
of the Conference Report. We remanded to the FCC to reconsider
their position without regard to the Conference Report. 198 F.3d at
895.
                               9
     This reading supports the Commission’s policy
determination. As it stressed, there was a “very different
marketplace and regulatory environment” at the time of the
Conference Report. It was focused on intergovernmental—not
foreign-licensed—satellites. Order ¶¶ 15–17. At that time,
foreign-licensed space station operators only had a “very
limited provision of service[s]” and even that depended “upon
a showing that existing U.S. domestic satellite capacity was
inadequate to satisfy specific service requirements.” Id.
Approval for this limited market access was obtained on a
“case-by-case” basis after “bilateral, government to
government” discussions. Order ¶ 17. It was only after 1997
that foreign-licensed space stations could provide general
commercial services in the United States. 12 When the
Conference Report was written, the relevant category of
satellites—foreign-licensed commercial satellites with general
U.S. market access—simply didn’t exist. Thus, Congress was
unlikely to have contemplated the type of satellites at issue in
this case.

     Petitioners make much of the fact that some foreign-
licensed satellites were serving the U.S. market prior to the
Conference Report. But as the Commission notes and
Petitioners do not dispute—such services were limited in scope
and ad hoc until 1997. So the Commission reasonably
concludes that Congress was not focused on foreign-licensed
satellites.

    Still, Petitioners argue that even if the Commission’s
reading would have been legitimate if announced initially, its
contrary reading had been ratified by Congress both implicitly
and explicitly. Between 1993 and the 2018 Ray Baum’s Act,

    12
       DISCO II Order, 12 FCC Rcd. 24094 (1997); 47 C.F.R.
§ 25.137.
                               10
Congress repeatedly had the opportunity to address Section 9
fees through its annual budget process, but never questioned
the FCC’s conclusion that its Section 9 authority is
coterminous with its Title III licensing authority. Thus,
according to Petitioners, this case fits within the proposition
that “the practical construction given to an act of Congress,
fairly susceptible of different constructions, by those charged
with the duty of executing it is entitled to great respect and, if
acted upon for a number of years, will not be disturbed except
for cogent reasons.” Udall v. Tallman, 380 U.S. 1, 18 (1965)
(quoting McLaren v. Fleischer, 256 U.S. 477, 481 (1921)).

     But, as the Commission correctly observes, Congressional
silence does not imply acquiescence absent additional
indications of ratification. See Boys Markets, Inc. v. Retail
Clerks Union, Local 770, 398 U.S. 235, 241–42 (1970). Even
an undisputed 25-year-old agency interpretation does not
graduate into a statute through mere Congressional inaction.
See Cape Cod Hospital v. Sebelius, 630 F.3d 203, 214 (D.C.
Cir. 2011).

     Petitioners’ claim that the Ray Baum’s Act explicitly
ratified the Commission’s policy is also wide of the mark.
Petitioners contend that Congress reenacted the Section 9 fee
schedule, including the “space station” category which the
Commission long interpreted to exclude foreign-licensed
satellites. This, Petitioners assert, triggers the rule that the
reenactment of a statute presumptively adopts the
Commission’s prior interpretation. See Alexander v. Sandoval,
478 U.S. 833, 846 (1986) (“[W]hen Congress revisits a statute
giving rise to a longstanding administrative interpretation
without pertinent change, the congressional failure to revise or
repeal the agency’s interpretation is persuasive evidence that
the interpretation is the one intended by Congress.”) (internal
quotation omitted).
                                11
    The Commission persuasively responds that Congress’
reenactment of the fee schedule does not fit the Sandoval test.
The Ray Baum’s Act merely provided that the regulatory fees
established under Section 9 of the Communications Act “shall
remain in effect . . . until such time as the Commission adjusts
or amends such fee under subsection (c) or (d) . . . .” 13 Rather
than endorsing the Commission’s prior interpretation of
Section 9, the Act notes that the Commission retains flexibility
to adjust or amend regulatory fees—which the Commission
then did in the Order. Id. ¶ 34 (noting the Order is an
amendment to the fee schedule under Section 9(d)); see also 47
U.S.C. § 159(d).

      The Ray Baum’s Act’s other changes to Section 9 support
this conclusion. As we noted, Congress made clear that the
Commission’s regulatory fee schedule should take account of
“the benefits provided to the payor of the fee by the
Commission’s activities.” 47 U.S.C. § 159(d). This suggests
benefits—not licenses—should be the touchstone for whether
it is reasonable for the FCC to collect regulatory fees. And—
critically—Congress added a category of entities to the list of
those statutorily exempt from regulatory fees, 47 U.S.C.
§ 159(e)(1)(C) (noncommercial radio and television stations),
but did not add an exemption for foreign-licensed space
stations with U.S. market access.

                           *    *    *

     Petitioners’ alternative argument is that the Commission’s
Notice was defective because it failed to specify the relevant
legal theory that supported the Order. The Order was an
improper surprise that avoided pertinent commentary because
the Notice was directed to the Ray Baum’s Act. That, according

     13
       Pub. L. 115-141, Division P, Title I, § 102(d)(2), 132 Stat.
1086 (2018).
                               12
to Petitioners, was the only legal basis suggested that would
authorize the Commission’s volte face.

    First, we note that the Commission met the APA’s
requirement in § 553(b)(2) by referencing the relevant legal
authority. It clearly identified the basic governing statute as
well as the Communications Act and its 2018 amendment. See
Nat’l Tour Brokers Ass’n v. United States, 591 F.2d 896, 900
(D.C. Cir. 1978). A notice need not explicate a rule’s final legal
theory. See, e.g., Koretoff v. Vilsack, 707 F.3d 394, 398 (D.C.
Cir. 2013) (holding that even final rules need not
comprehensively explain relevant legal theories).

     Turning to the logical outgrowth test, “we ask ourselves,
would a reasonable member of the regulated class . . .
anticipate” the general aspects of the rule. Allina Health Servs.
v. Sebelius, 746 F.3d 1102, 1107, 1109 (D.C. Cir. 2014). The
Commission certainly foreshadowed that it was reaching,
indeed had been repeatedly reaching, for a legal theory that
would justify switching its initial position that the statute
precluded charging foreign satellites fees. After all, the Notice
specifically asked whether the Commission “should or must
assess regulatory fees on non-U.S. licensed space stations
serving the United States” and even referenced the
Commission’s 2013 and 2014 requests for comment on the
issue.

                           *    *    *

    In sum, Petitioners have not shown that the Commission
unreasonably interpreted Section 9 of the Communications Act
                                13
or provided inadequate notice of the Order. We therefore deny
the petition. 14

    So ordered.

     14
       In addition to the foregoing arguments, Petitioners have made
a number of other and subsidiary arguments which we have
considered and reject without written opinion.