[00:00:00] Speaker 00: Phase number 20-1234, Telesat Canada et al. [00:00:04] Speaker 00: Petitioners versus Federal Communications Commission and United States of America. [00:00:09] Speaker 00: Mr. Furey for the petitioners, Ms. [00:00:11] Speaker 00: Smith for the respondents. [00:00:14] Speaker 03: Thank you. [00:00:15] Speaker 03: Good morning, Your Honors. [00:00:16] Speaker 03: Good morning. [00:00:18] Speaker 03: I'm sorry. [00:00:19] Speaker 04: I said good morning. [00:00:20] Speaker 03: Oh, okay. [00:00:22] Speaker 03: I'm Ken Furey. [00:00:23] Speaker 03: I'll be speaking for the joint petitioners this morning. [00:00:26] Speaker 03: In the order before you, the FCC has abandoned its long-standing view that Section 9 of the Communications Act permits it to assess regulatory fees only upon the satellites that it licenses. [00:00:38] Speaker 03: We hope and expect that the court will conclude upon review that its newly expansive view of its Section 9 fee authority does not comport with the statute. [00:00:48] Speaker 03: Now, the government would have the court believe that this is a cookie-cutter case of an agency interpreting its organic statute. [00:00:55] Speaker 03: It is not. [00:00:56] Speaker 03: What we have instead is the FCC doing an unlawful U-turn on a tier two fort. [00:01:01] Speaker 02: Unlawful is your assumption. [00:01:03] Speaker 02: That's what this case is about, counsel. [00:01:05] Speaker 03: I'm hoping you're going to agree with me by the time I've finished your honor. [00:01:08] Speaker 02: You would have to agree that it is possible for an agent to lawfully change its position on its interpretation of the statute, would you not? [00:01:15] Speaker 03: Sure. [00:01:16] Speaker 03: It is possible. [00:01:18] Speaker 03: That's not what happened here. [00:01:19] Speaker 02: Well, that's what we're here to decide. [00:01:22] Speaker 02: Now, if that's the case that the agency did in fact lawfully, [00:01:26] Speaker 02: change its position, and this were before us as an initial matter, do you have an argument that this would be an unlawful interpretation, or is this unlawful simply because it's a change of position? [00:01:42] Speaker 03: Well, I would say both, Your Honor. [00:01:43] Speaker 03: I mean, there's two. [00:01:44] Speaker 02: Let's deal with the one first. [00:01:46] Speaker 02: Okay. [00:01:46] Speaker 02: Which you want to deal with. [00:01:47] Speaker 02: We know that you're saying it's an unlawful change, but if the first interpretation had never been there, if this were just the first interpretation the agency had made, do you have an argument against this interpretation? [00:01:59] Speaker 03: Yes, Your Honor, we do. [00:02:04] Speaker 03: You would be approaching this under a sort of a Chevron step two kind of analysis. [00:02:08] Speaker 03: Right. [00:02:09] Speaker 03: So [00:02:11] Speaker 03: The agency in this case has changed its, again, I'm not arguing about the change of position, but the change was based solely on its new interpretation of the 1993 conference report. [00:02:24] Speaker 04: There's a lot of other- We're talking about the conference report. [00:02:26] Speaker 04: We're talking about the statute. [00:02:28] Speaker 04: Judge Santel asked you about the statute. [00:02:31] Speaker 04: And if I could just refine it a little bit, it seems to me for you to prevail at Chevron too, [00:02:40] Speaker 04: you have to convince us that the FCC's interpretation of the statute, namely that it authorizes it to impose fees on satellite operators that are not US licensed. [00:02:56] Speaker 04: That's my question. [00:02:59] Speaker 04: You have to demonstrate that that position is, that that interpretation is unreasonable [00:03:05] Speaker 04: and you can't start with the legislative history. [00:03:08] Speaker 03: You've got to start with the language of the statute. [00:03:10] Speaker 03: That's fine. [00:03:11] Speaker 03: So the language of the statute, I think we all agree, doesn't get you very far because all the statute says is it creates a payee category for space stations. [00:03:25] Speaker 04: It doesn't tell you. [00:03:27] Speaker 04: It has a section called exemptions or exceptions. [00:03:30] Speaker 04: Exceptions. [00:03:31] Speaker 04: And as we said in Pan Am set, [00:03:34] Speaker 04: you're going to find an exception in the statute, you would expect to find it in 90. [00:03:40] Speaker 04: It's not there. [00:03:41] Speaker 03: But you don't have to get to exceptions when you're talking about the basic authority of the commission to assess the fees, just like in ComSAT where they said the FCC couldn't come up with a fee category for unregulated railroads or people eating ice cream. [00:03:58] Speaker 03: it has to have an initial grant of authority to reach the entities it's trying to assess the fees from. [00:04:05] Speaker 03: So here, the statute just says space stations, that's it. [00:04:10] Speaker 03: And it doesn't in any way limit what that is. [00:04:13] Speaker 03: That could be on the most ridiculous level, every space station around the earth. [00:04:18] Speaker 03: Nothing in the statute says it's not that. [00:04:20] Speaker 04: No, no, it says space stations. [00:04:23] Speaker 04: It lists two kinds, near earth orbit and geosyncratic. [00:04:28] Speaker 04: and they have to be satellites, they have to be operations that impose costs on the commission, right? [00:04:39] Speaker 04: So it's not just any satellite anywhere on the planet. [00:04:42] Speaker 03: Well, okay, right, but there are a lot of different ways you could split that baby. [00:04:46] Speaker 03: It could be space stations. [00:04:49] Speaker 02: that's what gets us to chevron too if there are a lot of different ways you can split that baby that that's what gets us to chevron too you have don't you have to show us why it's unreasonable to make the baby split that they've made here fine but i i'm i'm conceding that the statute doesn't get you to the answer but chevron allows you to look at at the structure of the statute and the legislative history and that's in fact here imposes the fees based on cost [00:05:18] Speaker 02: cost are generated, not because of licensing, but because of operation in the United States. [00:05:26] Speaker 02: So why doesn't that lead us to think that not only this is an acceptable interpretation, but perhaps even the best interpretation? [00:05:34] Speaker 03: Well, first of all, Your Honor, I mean, there are lots of entities that impose regulatory costs upon the agency that are not assessed regulatory fees. [00:05:43] Speaker 03: That's beyond doubt. [00:05:44] Speaker 02: There's lots and lots of... It's also beyond doubt that the agencies under this particular statute are paying... The agency under this particular statute is receiving fees based on cost. [00:05:56] Speaker 02: Never mind that there are lots of things in the world that are regulated that aren't fee paying. [00:06:01] Speaker 02: We're dealing with this particular statute and these particular facts. [00:06:04] Speaker 02: And so why isn't it reasonable for the agency to operate on that basis when it determines who it's going to charge the fees to? [00:06:12] Speaker 03: Well, because again, I would get to Congress has spoken to this issue and you can see that if you hire Chevron analysis. [00:06:22] Speaker 03: I'm sorry, Judge Silverman. [00:06:24] Speaker 01: Excuse me. [00:06:24] Speaker 01: Let me go to your legislative history. [00:06:30] Speaker 01: Looking you're looking particularly the language with the committee intends back when originally legislation was passed. [00:06:40] Speaker 01: Look at that legislative history you rely on. [00:06:44] Speaker 01: Why is there a last sentence? [00:06:53] Speaker 01: Fees will not be applied to space stations operated by international organizations. [00:07:00] Speaker 01: Why is that sentence there? [00:07:03] Speaker 03: Well, that's actually a good question because [00:07:06] Speaker 03: As this court pointed out in Pan AMSAT, the international organizations were exempt already under the International Organizations Immunities Act. [00:07:17] Speaker 03: So in a sense that the commission's new interpretation, trying to say that all of that legislative history is simply about the NGOs. [00:07:25] Speaker 01: Well, you're not following my question. [00:07:29] Speaker 01: Here's where it looks to me that even the legislative history is ambiguous. [00:07:38] Speaker 01: The last sentence combined with the second sentence seems to have an implied thus. [00:07:48] Speaker 01: Therefore, these fees will apply only to space stations directly licensed by the commission under the act. [00:07:56] Speaker 01: Thus, fees will not be applied. [00:07:58] Speaker 01: I'm adding the word thus. [00:08:00] Speaker 01: Thus, fees will not be applied to space stations operated by an international organization. [00:08:08] Speaker 01: That can be read as the second sentence and the third sentence are connected. [00:08:17] Speaker 01: In other words, the Congress was only focusing on the international organizations. [00:08:25] Speaker 01: If that's true, then the legislative history was silent with respect to space stations licensed by foreign countries. [00:08:37] Speaker 03: Right. [00:08:38] Speaker 03: And that's the government. [00:08:38] Speaker 01: If the legislative history was silent on your issue, then the statute is even more appropriately interpreted by the commission. [00:08:51] Speaker 03: But I don't think that's the correct reading of that legislative history. [00:08:54] Speaker 03: As I was going to say, the international organizations were already exempt. [00:08:59] Speaker 03: So in a sense, that was duplicative to begin with. [00:09:03] Speaker 03: So why did Congress have that last sentence? [00:09:05] Speaker 03: And then the commission wants to say that both of those sentences are only about the NGO. [00:09:11] Speaker 03: So it's surplusage on top of surplusage at that point. [00:09:14] Speaker 02: Well, there's no rule against surplusage in legislative history. [00:09:20] Speaker 02: I mean, you've got the statute has to stand the legislative history. [00:09:27] Speaker 02: If the statute is interpreted reasonably, the legislative history was never enacted by Congress. [00:09:31] Speaker 02: The statute was enacted by Congress. [00:09:34] Speaker 02: Indeed. [00:09:34] Speaker 02: Who cares if there's surplus in legislative history? [00:09:37] Speaker 02: There's often surplus in the legislative history just because some congressman wants to get that statement in the record. [00:09:43] Speaker 02: Our former colleague, it was a former congressman, used to say that he went around making up legislative history in order to have it there later. [00:09:51] Speaker 01: Well, even at that point. [00:09:53] Speaker 01: The problem with the legislative history, I think, is ambiguous itself. [00:09:57] Speaker 01: But it does not, there's no hook, as we've said before, there's no hook between the legislative history or your interpretation of legislative history and the statute. [00:10:10] Speaker 03: There is. [00:10:11] Speaker 03: It's entirely consistent with the entire structure of the statute, which was [00:10:16] Speaker 03: The one originally passed by Congress only applied fees to entities that the FCC directly licensed or authorized. [00:10:25] Speaker 03: And that's exactly what the legislative history says, is they're entirely consistent. [00:10:29] Speaker 03: We mean when we say space stations, only those authorized by the FCC pursuant to Title III. [00:10:36] Speaker 04: Well, okay, even if you're right about that, let's assume you're right about that. [00:10:42] Speaker 04: And like Judge Silverman, I'm not persuaded, but just assume you are, [00:10:47] Speaker 04: The commission says, well, you know, that was a totally different situation. [00:10:50] Speaker 04: We now have, there were very few, if any, privately operated satellites not licensed then. [00:11:00] Speaker 04: And now there are. [00:11:01] Speaker 04: The circumstances has completely changed. [00:11:04] Speaker 04: And so we were no longer governed by conference language that dealt with a different circumstance existing in satellite technology. [00:11:17] Speaker 03: Well, again, first of all, I'd say that the circumstances haven't changed dramatically or materially since 2014, which was the last time the FCC decided it didn't have jurisdiction. [00:11:27] Speaker 03: And they haven't changed since the further notice of proposed rulemaking in this very proceeding in which the FCC seemed to assume that its prior construction was correct and that the only way it could reach non-U.S. [00:11:39] Speaker 03: licensed satellites was via some change that happened in Ray Boms Act. [00:11:44] Speaker 03: It was only at 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. [00:11:56] Speaker 03: And now we have a new view of what section nine has always meant, apparently that we were supposed to be applying regulatory fees to non-US satellites. [00:12:06] Speaker 01: Meanwhile, Congress- Excuse me, counsel. [00:12:08] Speaker 01: We're referring to your shock, [00:12:12] Speaker 01: on the change on the legal theory as being inadequate notice under APA. [00:12:19] Speaker 01: I saw what I would call the NPRM and the agency specifically made several statements looking to general questions as to whether or not the foreign [00:12:37] Speaker 01: licensed satellites should be charged regulatory fees. [00:12:42] Speaker 01: They put that general question out. [00:12:44] Speaker 01: To be sure, they said, did the Ray Baum statute alter the situation? [00:12:50] Speaker 01: But they had several times looked at the general question. [00:12:54] Speaker 01: So you were in notice that they were trying to figure a way to interpret the language of everything to allow them to impose fees [00:13:07] Speaker 01: on foreign licensed satellites. [00:13:11] Speaker 01: So you were on notice on that. [00:13:13] Speaker 01: And it seems to me any lawyer would have realized they were, they had been several times reaching for the proper theory. [00:13:23] Speaker 01: So you were, it was broader than Ray Brown. [00:13:28] Speaker 03: Well, no lawyer that actually commented in formal comments thought to go back and argue about what the 1993 conference report meant. [00:13:37] Speaker 03: That had been a given for almost 30 years at that point, 25 years. [00:13:43] Speaker 03: Nobody thought that that was an issue. [00:13:46] Speaker 01: Well, except that the agency had several times been looking to see how they would get around the original interpretation of the statute. [00:13:56] Speaker 03: Well, to be sure that's true. [00:13:58] Speaker 03: I mean, this was clearly an ends driven decision. [00:14:00] Speaker 03: They wanted to be able to apply these fees to foreign licensed satellites. [00:14:04] Speaker 03: But it was, you would just make it a pure guessing game then if it's like we're going to make the most general statement and you've got to think about every conceivable argument, including those that have been decided for 25 years and accepted as the given construction of the statute. [00:14:21] Speaker 02: Nonetheless, assuming that they have or haven't given notice, [00:14:26] Speaker 02: They've legally said enough to get this done in this rulemaking. [00:14:30] Speaker 02: So you're still stuck with the problem that you have. [00:14:32] Speaker 02: This interpretation by the agency seems to be consistent with the language of the statute. [00:14:39] Speaker 02: All the rest of this, you're not hurt by any lack of notice. [00:14:43] Speaker 02: You have every chance you need now to make the legal argument. [00:14:46] Speaker 02: You're talking about legal arguments. [00:14:47] Speaker 02: You have all those chances now. [00:14:49] Speaker 02: It didn't hurt you. [00:14:50] Speaker 02: You didn't think this notice was adequate. [00:14:52] Speaker 03: I would agree. [00:14:53] Speaker 03: We have everything we need now. [00:14:54] Speaker 03: And I do. [00:14:55] Speaker 03: I agree. [00:14:56] Speaker 03: The court should make the decision and tell us what section nine means. [00:14:59] Speaker 03: I would like to have had a chance to talk about reenactment because I think this is a classic reenactment case. [00:15:05] Speaker 03: But I see my time is expired. [00:15:07] Speaker 04: You're well over. [00:15:08] Speaker 04: And unless either of my colleagues has any more questions, I think we'll hear from the commission. [00:15:13] Speaker 03: Thank you, Your Honor. [00:15:14] Speaker 04: OK. [00:15:18] Speaker 05: Good morning, Your Honors. [00:15:21] Speaker 05: Pamela Smith for the Federal Communications Commission. [00:15:27] Speaker 05: I first want to start out with Mr. Faree's statement that no parties filed comments regarding the commission's prior interpretation of the legislative history for Section 9. [00:15:46] Speaker 05: In particular, petitioner Telesad filed formal comments [00:15:51] Speaker 05: about formal reply comments, specifically opposing those comments that maintain that the commission has had authority to impose regulatory fees on space stations that are directly authorized by the commission to access U.S. [00:16:12] Speaker 05: spectrum and provide satellite service in the United States ever since Section 9 was first enacted. [00:16:21] Speaker 05: Section nine provided the commission with a specific authority to assess regulatory fees on space stations, space stations that are in geostationary orbit and space stations that are a non-geostationary orbit. [00:16:39] Speaker 05: Those were the only two categories. [00:16:43] Speaker 05: The space stations petitioners [00:16:47] Speaker 05: They operate in the United States and provide service in the United States under authority that is directly granted to them by the commission. [00:17:00] Speaker 05: No space station, whether domestically licensed or foreign licensed, can operate in the United States and access U.S. [00:17:12] Speaker 05: spectrum except as authorized by the commission. [00:17:18] Speaker 05: the therefore the commission lawfully exercised its authority under section nine to amend the schedule of regulatory fees to include non-U.S. [00:17:34] Speaker 05: licensed space stations that have been granted U.S. [00:17:37] Speaker 05: market access as payers of the commission's regulations. [00:17:42] Speaker 01: Council, do you agree with your opponent that our interpretation [00:17:48] Speaker 01: of the statute is based on the assumption that it's ambiguous and we are therefore at Chevron step two. [00:17:58] Speaker 01: Do you agree with that? [00:18:02] Speaker 05: Yes, it can be. [00:18:05] Speaker 05: I'm sorry. [00:18:11] Speaker 05: I think the easy answer. [00:18:13] Speaker 05: I think the easy answer. [00:18:16] Speaker 05: step one, because the statute is clear. [00:18:20] Speaker 04: The easy answer to Judge Sullivan's question for you, I think, is that in your brief, you don't argue, Chevron, step one. [00:18:28] Speaker 04: You say the commission's interpretation is reasonable. [00:18:31] Speaker 04: That's your argument, isn't it? [00:18:33] Speaker 05: Correct. [00:18:34] Speaker 04: That's the title of the section, I think. [00:18:38] Speaker 04: That's the way you title your section? [00:18:40] Speaker 05: Yes. [00:18:41] Speaker 05: The commission's interpretation is reasonable and looking at the legislative history and concluding that that legislative history does not act as a bar to imposing regulatory fees on market access grantees. [00:19:02] Speaker 01: Why do you dismiss the legislative history? [00:19:06] Speaker 01: It's because you, do you read it as focused really on the international organizations only, that that is the interpretation of the two sentences together, or do you say that the legislative history is irrelevant because it doesn't, there's no hook tying it to [00:19:31] Speaker 01: an interpretation of the actual statute, which is the position or is it both? [00:19:40] Speaker 05: In this context, it's both because previously the commission based its decision not to assess regulatory fees on non-US licensed space stations and that [00:19:59] Speaker 05: And the reason it did so was rooted exclusively in the legislative history, not in the statute. [00:20:07] Speaker 05: And now the commission could not reasonably have. [00:20:15] Speaker 01: In your brief, you argue that the focus of the Congress, even on the legislative history, was not to touch [00:20:28] Speaker 01: international organizations. [00:20:30] Speaker 01: And that's implicitly, that's what you're interpreting the second and third sentences together, even if you look at the legislative history. [00:20:40] Speaker 01: But as Judge Santel points out, there is no connection. [00:20:45] Speaker 01: First of all, even if you look at the legislative history, there's no connection. [00:20:49] Speaker 01: There's no hook, as we've said before, between the petitioner's interpretation of the legislative history [00:20:57] Speaker 01: and any language in the statute. [00:21:00] Speaker 01: It seems to be sort of freestanding. [00:21:05] Speaker 05: Yes, that is true, Judge Silverman, but the commission interpreted that, looked to that legislative history in the context of there being only two types of satellites when [00:21:24] Speaker 05: Section 9 was enacted. [00:21:26] Speaker 05: There were only satellites that were directly licensed by the commission, or there were these international satellites that were not directly licensed by any country. [00:21:39] Speaker 05: And those satellites operated, those satellites were subject to the International Organizations Immunities Act, and they were not in their operations in the US [00:21:54] Speaker 05: were only indirectly regulated by the commission. [00:21:59] Speaker 02: Don't reject too hastily the proposition that perhaps we ought not to be looking with much favor on legislative history at all. [00:22:08] Speaker 02: The words of the statute as enacted are controlling and your interpretation of them has to be reasonable, regardless of the legislative history, doesn't it? [00:22:18] Speaker 05: Yes, and that is in the commission's interpretation is reasonable. [00:22:25] Speaker 02: Thank you. [00:22:28] Speaker 05: Unless the court has any other questions, the commission requests that the petition for review be dismissed as to petitioner Keney's and otherwise denied review of the commission's lawful exercise of its authority to amend the schedule of regulatory fees [00:22:52] Speaker 05: to improve market access grantees as payers. [00:22:57] Speaker 04: What's your reaction to Mr. Ferrier's argument that the commission's new interpretation of the legislative history is just the last minute, a brainstorm they had that A is suddenly new, it's just come up and nobody had any notice of that. [00:23:23] Speaker 05: That is an unfair characterization of the proceeding below. [00:23:31] Speaker 05: The commission did not decide just in this, did not review this issue just in this proceeding. [00:23:41] Speaker 05: The commission has reviewed this issue since [00:23:45] Speaker 05: regulatory fees were enacted. [00:23:48] Speaker 05: And this was only the latest time that the commission sought comment on whether or not it should apply regulatory fees to market access grantees. [00:24:06] Speaker 01: I'm sorry. [00:24:07] Speaker 01: Your notice of proposed rulemaking specifically said we're looking to whether or not [00:24:14] Speaker 01: We have legal authority to impose regulatory fees on foreign licensed satellites. [00:24:22] Speaker 01: You said that openly in your notice of proposed rulemaking. [00:24:27] Speaker 01: That is correct. [00:24:29] Speaker 01: So you should focus on that. [00:24:32] Speaker 01: Although you specifically referred to the Ray Bound statute, you did put the general question up. [00:24:39] Speaker 01: Do we have legal authority to impose regulatory fees? [00:24:43] Speaker 05: That is correct. [00:24:45] Speaker 05: And the commission actually dismissed comments regarding the Ray bombs act as irrelevant to the issue of whether or not the commission has authority under section nine to assess these regulatory fees. [00:25:03] Speaker 04: Okay, thank you. [00:25:04] Speaker 05: Thank you so much. [00:25:07] Speaker 04: Mr. Three, you were out of time, but you can take a minute if you'd like. [00:25:13] Speaker 03: I just have three quick points, John. [00:25:14] Speaker 03: I mean, first of all, I would point out that this court in the Pan Am stat case treated Title III as being coterminous with the FCC's fee authority. [00:25:26] Speaker 03: For better or worse, that's what the court did at that case. [00:25:29] Speaker 03: I think that was the right approach. [00:25:32] Speaker 03: I note again that the commission has referred once again to a Section 9D amendment. [00:25:39] Speaker 03: Claiming that this was a 90 amendment the the action in the report in order. [00:25:44] Speaker 03: I don't think you can just use that as an orphan incantation and do whatever you want. [00:25:48] Speaker 03: If you're the FCC create new categories out of whole cloth. [00:25:53] Speaker 03: And finally, My opponent, my opposing counsel. [00:26:02] Speaker 03: Oh, just made the point that the market was quite different in the early 1990s. [00:26:07] Speaker 03: We wouldn't dispute that, but there were instances of non-U.S. [00:26:12] Speaker 03: satellites providing service at the time, and it was official U.S. [00:26:16] Speaker 03: policy to facilitate the expansion of that kind of service. [00:26:20] Speaker 03: It wasn't any kind of surprise to anybody. [00:26:22] Speaker 03: And indeed, the contemporaneous FCC, roughly contemporaneous with the Congress that passed this act, looked at it and said, yes, what Section 9 means is [00:26:32] Speaker 03: fees applicable only to Title III space stations. [00:26:39] Speaker 04: Thank you. [00:26:40] Speaker 03: Thank you, Your Honors. [00:26:42] Speaker 04: Thank you both. [00:26:42] Speaker 04: The case is submitted.