WASHINGTON (CN) — The D.C. Circuit seemed unimpressed Friday with five satellite operators from Canada, France, the Netherlands and the U.K. that seek to opt-out of paying U.S. regulatory fees.
Under a 2019 Federal Communications Commission decision, the satellite companies must pay American fees on top of what they already owe in their home countries — but U.S. companies are exempt from paying fees in Canada, France and the like.
The fees can be up to $1 million annually for Telesat and Eutelsat, up to $300,000 for Kinéis and Hiber, and up to $400,000 for Inmarsat.
“The government would have the court believe that this is a cookie-cutter case of an agency interpreting its statute,” Wayne Kenneth Ferree, counsel for Telesat Canada, told a panel of judges in Washington this morning. “It is not. What we have instead is the FCC doing an unlawful U-turn on its here-to-for —”
“Unlawful is your assumption — that’s what this case is about, counsel,” interrupted U.S. Circuit Judge David B. Sentelle, a Reagan appointee. “You would have to agree that it's possible for an agency to lawfully change its position on its interpretation of the statute, would you not?”
Before the about-face, the commission had decided in 1995 that an operator called Comsat did not have to pay the fees for its satellites that were owned by international organizations.
The FCC acknowledged that they reversed its previous interpretation of Section 9 of the Communications Act, which directs the FCC to collect regulatory fees from entities that benefit from its activities.
It says the new interpretation is reasonable, however, since the two Comsat satellites no longer exist, and nothing in the text of the statute exempts non-U.S. licensed space stations from imposing regulatory fees. International satellite companies benefit from the commission’s regulatory activities and the U.S. market in the same way that U.S.-licensed satellites do, the commission argues.
It’s a “very different marketplace and regulatory environment” the commission concluded in 2019.
Ferree, arguing for Telesat, called it a scrambled explanation. “It was only in the 11th hour that they came up with this brand-new theory: oh no, we’ve gone back and looked at legislative history from 30 years ago, decided we interpreted it incorrectly 25 years ago, and now we have a new view of what Section 9 has always meant,” Ferree said.
“Excuse me, counsel, you’re referring to your shock on the change on the legal theory as being inadequate notice,” retorted U.S. Circuit Judge David Tatel, a Clinton appointee.
In their petition, the satellite operators had claimed that there wasn’t adequate notice of the decision.
Judges pushed back on every one of Ferree’s arguments throughout his time in front of them.
“They have legally said enough to get this done in this rulemaking,” Sentelle said. “So you’re still stuck with the problem that this interpretation by the agency seems to be consistent with the language of the statute. And you’re not hurt by any lack of notice.”
The internationally licensed satellite companies have been operating under the Communications Act without fees since 1993.
Read the opening brief from the satellite operators, and the response brief from the agency.
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