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ICO, et al. v. FCC & USA, No. 10-1322 (D.C. Cir.)

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Released: September 7, 2011
ORAL ARGUMENT SCHEDULED OCTOBER 14, 2011
USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 1 of 92
BRIEF FOR RESPONDENTS
IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
NO. 10-1322
ICO GLOBAL COMMUNICATIONS (HOLDINGS) LTD., 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
SHARIS A. POZEN
AUSTIN C. SCHLICK
ACTING ASSISTANT ATTORNEY GENERAL
GENERAL COUNSEL
ROBERT B. NICHOLSON
PETER KARANJIA
ROBERT J. WIGGERS
DEPUTY GENERAL COUNSEL
ATTORNEYS
RICHARD K. WELCH
UNITED STATES
DEPUTY ASSOCIATE GENERAL COUNSEL
DEPARTMENT OF JUSTICE
WASHINGTON, D.C. 20530
STEWART A. BLOCK
JOEL MARCUS
COUNSEL
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON, D.C. 20554
(202) 418-1745

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 2 of 92

CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES

1. Parties.
The parties to this case are:
Petitioner in No. 10-1322: ICO Global Communications (Holdings) Ltd.
(ICO);
Petitioners in No. 10-1401: New DBSD Satellite Services, G.P.; DBSD
North America, Inc.; DBSD Satellite Management, LLC; DBSD Satellite
North America, Ltd.; DBSD Satellite Services G.P.; DBSD Satellite Services
Limited; SSG UK Limited; 3421554 Canada Inc. (collectively, DBSD)
Respondents: the Federal Communications Commission; and the United
States of America.
2. Ruling under review.
The ruling under review is Improving Public Safety Communications in the
800 MHz Band
, Fifth Report and Order, Eleventh Report and Order, Sixth
Report and Order, and Declaratory Ruling, FCC No. 10-179, 25 FCC Rcd
13874 (2010) (JA 189).
3. Related cases.
Litigation related to the matter before this Court is pending in three cases,
which are described in the related cases certificate of the petitioners. Br. iii-
iv. See Sprint Nextel Corp. v. New ICO Satellite Servs. G.P., et al., No. 1:08-
cv-651 (E.D. Va.); In re DBSD N. America, Inc., et al., No. 09-13061 (Bankr.
S.D.N.Y.); Sprint Nextel Corp. v. ICO Global Communications (Holdings)
Ltd.
, No. 1:10-cv-01414 (E.D. Va.). In addition, bankruptcy proceedings
involving TerreStar, which is not a party to this case but whose interests may
be affected by the order before the Court, are pending. In re TerreStar Corp.,
No. 11-10612 (Bankr. S.D.N.Y.).

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 3 of 92

TABLE OF CONTENTS

TABLE OF CONTENTS .................................................................................. i
TABLE OF AUTHORITIES .......................................................................... iv
GLOSSARY .................................................................................................... ix
JURISDICTION................................................................................................1
QUESTIONS PRESENTED .............................................................................1
STATUTES AND REGULATIONS ................................................................3
COUNTERSTATEMENT ................................................................................3
1.
Reorganization Of The 2 GHz Band And
Assignment Of Relocation Responsibilities To MSS
Providers............................................................................................4
2.
Allocation Of 2 GHz Spectrum To AWS And Sprint
And New MSS Cost-Sharing Obligations. .......................................6
3.
Cost Reimbursement For BAS Relocation. ....................................10
4.
Revisions To The Anticipated Schedules. ......................................13
5.
2009 BAS Order. .............................................................................16
6.
2010 BAS Order. .............................................................................18
a.
Reiteration That Repayment Obligations Did Not
End On June 26, 2008. ................................................................18
b.
Clarification Of ICO's Potential Reimbursement
Responsibility..............................................................................21
c.
Definition Of "Enter The Band." ................................................23
d.
Establishment Of A Date-Certain For The Cost-
Sharing Cutoff.............................................................................24
SUMMARY OF ARGUMENT ......................................................................24
ARGUMENT ..................................................................................................28
i

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 4 of 92
I.
STANDARD OF REVIEW. ....................................................................28
II. THE COURT LACKS JURISDICTION OVER DBSD'S
ARGUMENT THAT THE AGENCY IMPROPERLY
DEFINED "ENTER THE BAND," WHICH IS
MERITLESS IN ANY EVENT...............................................................29
A.
DBSD Failed To Raise "Enter The Band" Arguments
Before The Commission And May Not Do So Now. .........................29
B.
DBSD's Claims Fail On Their Merits.................................................32
1.
The Commission Did Not Engage In Retroactive
Rulemaking When Defining "Enter The Band." ............................32
2.
The Commission's Order Did Not Violate Fair
Notice Principles. ............................................................................42
3.
The Commission Did Not Depart From Precedent
When Defining "Enter The Band." .................................................44
III. THE COMMISSION REASONABLY INTERPRETED
PRIOR ORDERS REFERRING TO THE CUTOFF
DATE, AND IT PROPERLY ESTABLISHED A FIXED
CUTOFF DATE.......................................................................................48
IV. THE COMMISSION PROPERLY ESTABLISHED
STANDARDS FOR DETERMINING ICO'S COST-
SHARING RESPONSIBILITY...............................................................52
A.
The Commission Has Authority To Require
Reimbursement From Affiliated Companies Entering
The Band As An Integrated Enterprise. ..............................................53
B.
The Declaratory Ruling Is Not Impermissibly
Retroactive Because It Adjudicated A Dispute
Between ICO And Sprint. ...................................................................58
1.
The Declaratory Ruling Was An Adjudication...............................58
2.
The Declaratory Ruling Was Not Impermissibly
Retroactive. .....................................................................................61
ii

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 5 of 92
C.
Bankruptcy Court Decisions Do Not Preclude The
Declaratory Ruling. .............................................................................62
CONCLUSION ...............................................................................................65
iii

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 6 of 92
1

TABLE OF AUTHORITIES

CASES

Am. Fed. of Gov't Employees, Council 214
v. FLRA, 835 F.2d 1458 (D.C. Cir. 1987) ..................................................63
*
Arkema, Inc. v. EPA, 618 F.3d 1 (D.C. Cir. 2010) .................................. 33, 36
AT&T Corp. v. FCC, 448 F.3d 426 (D.C. Cir. 2006) .....................................28
AT&T v. FCC, 454 F.3d 329 (D.C. Cir. 2006)................................................61
* Auer
v.
Robbins, 519 U.S. 452 (1997) ............................................... 28, 50, 53
*
Bartholdi Cable Co. v. FCC, 114 F.3d 274
(D.C. Cir. 1997)...........................................................................................30
Bergerco Canada v. U.S. Treasury Dept.,
129 F.3d 189 (D.C. Cir. 1997) ............................................................. 33, 41
Bowen v. Georgetown University Hospital,
488 U.S. 204 (1988) ....................................................................... 35, 51, 58
*
Capital Tel. Co. v. FCC, 498 F.2d 734
(D.C. Cir. 1974).................................................................................... 55, 56
Cassell v. FCC, 154 F.3d 478 (D.C. Cir. 1998)..............................................31
CMC Real Estate Corp. v. ICC, 807 F.2d 1025
(D.C. Cir. 1986)...........................................................................................28
Consumer Electronics Ass'n v. FCC, 347 F.3d 291
(D.C. Cir. 2003)...........................................................................................29
*
Cookeville Regional Medical Center v. Leavitt,
531 F.3d 844 (D.C. Cir. 2008) ....................................................................35
Fabi Construction Co. v. Secretary of Labor,
508 F.3d 1077 (D.C. Cir. 2007) ..................................................................43
FCC v. NextWave Personal Communications Inc.,
537 U.S. 293 (2003) ....................................................................................57
FCC v. Schreiber, 381 U.S. 279 (1965) ..........................................................60

1 Cases and other authorities principally relied upon are marked with
asterisks.
iv

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 7 of 92
Gates & Fox Co. v. OSHRC, 790 F.2d 154
(D.C. Cir. 1986)...........................................................................................43
General Electric Co. v. EPA, 53 F.3d 1324
(D.C. Cir. 1995)...........................................................................................43
General Tel. Co. of the S.W. v. United States,
449 F.2d 846 (5th Cir. 1971).......................................................................56
Global NAPS v. FCC, 247 F.3d 252
(D.C. Cir. 2001)...........................................................................................64
In Re Core Commn'cns, Inc., 455 F.3d 267
(D.C. Cir. 2006)...........................................................................................30
In re DBSD N. America, Inc., 427 B.R. 245
(S.D.N.Y. 2010) ................................................................................... 62, 64
In re DBSD N. America, Inc., No. 09-13061
(Bankr. S.D.N.Y).........................................................................................62
Landgraf v. USI Film Prods., 511 U.S. 244 (1994) ........................................33
Levy v. Sterling Holding Co., 544 F.3d 493
(3d Cir. 2008) ....................................................................................... 36, 65
*
Mansfield Journal Co. v. FCC, 180 F.2d 28
(D.C. Cir. 1950).................................................................................... 55, 57
Motion Picture Ass'n of Am., Inc. v. Oman,
969 F.2d 1154 (D.C. Cir. 1992) ..................................................................60
National Cable & Telecom. Ass'n v. Brand X
Internet Servs., 545 U.S. 967, 982-983 (2005) ...........................................64
National Mining Ass'n v. Dept. of Labor,
292 F.3d 849 (D.C. Cir. 2002) ............................................................. 33, 36
New Eng. Pub. Commc'ns Council, Inc. v. FCC,
334 F.3d 69 (D.C. Cir. 2003) ......................................................................32
*
Qwest v. FCC, 509 F.3d 531 (D.C. Cir. 2007)............................. 44, 59, 60, 61
Reytblatt v. NRC, 105 F.3d 715 (D.C. Cir. 1997) ...........................................63
Satellite Broadcasting Co. v. FCC, 824 F.2d 1
(D.C. Cir. 1987)...........................................................................................43
*
Sprint Nextel Corp. v. FCC, 524 F.3d 253
(D.C. Cir. 2008)...........................................................................................30
v

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 8 of 92
Sprint Nextel Corp. v. ICO Global Commc'ns
(Holdings) Ltd., No. 1:10-cv-01414 (E.D. Va.) ..........................................16
Sprint Nextel Corp. v. New ICO Satellite Servs.
G.P., No. 1:08-cv-651 (E.D. Va.) ...............................................................15
Stern v. Marshall, 131 S. Ct. 2594 (2011) ......................................................64
Teledesic LLC v. FCC, 275 F.3d 75
(D.C. Cir. 2001).................................................................................... 29, 41
Time Warner Entm't Co. v. FCC, 144 F.3d 75
(D.C. Cir. 1998)...........................................................................................30
Town of Deerfield v. FCC, 992 F.2d 420
(2d Cir. 1993) ..............................................................................................63
Trinity Broadcasting of Florida, Inc. v. FCC,
211 F.3d 618 (D.C. Cir. 2000) ....................................................................43
*
United States v. Bestfoods, 524 U.S. 51 (1998) ..............................................54
United States v. Chrysler Corp., 158 F.3d 1350
(D.C. Cir. 1998)...........................................................................................43
*
United States v. Mendoza, 464 U.S. 154 (1984) .............................................63
*
WAIT Radio v. FCC,
418 F.2d 1153 (D.C. Cir. 1969,
cert. denied, 409 U.S. 1027 (1972) ...................................................... 31, 32

ADMINISTRATIVE DECISIONS

Advanced Wireless Service,
18
FCC
Rcd
2223 (2003) ..............................................................................7
Attachment To Grant File Nos. SAT-MOD-
20070806-00110 and SAT-AMD-20071109-
00155 (Int'l Bur. April 2, 2008). .................................................................14
ICO Satellite Services,
20 FCC Rcd 9797 (Int'l Bur. 2005) ............................................................13
Improving Public Safety Communications
in the 800 MHz Band
,
19 FCC Rcd 14969 (2004) ..................... 8, 9, 10, 11, 13, 34, 37, 38, 42, 46, 49
Improving Public Safety Communications in the
800 MHz Band, 20 FCC Rcd 16015 (2005) ....................... 12, 19, 34, 42, 49
vi

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 9 of 92
Improving Public Safety Communications in the
800 MHz Band, 23 FCC Rcd 18512 (2008) ................................................13
Improving Public Safety Communications
in the 800 MHz Band
,
23 FCC Rcd 4393 (2008) ................................... 6, 9, 14, 35, 39, 40, 42, 46, 49
Improving Public Safety Communications in the
800 MHz Band, 25 FCC Rcd 1294 (OET 2010) .........................................14
Improving Public Safety Communications in the
800 MHz Band, No. DA 11-1076
(PSHSB
June
20, 2011)...............................................................................15
Mobile Satellite Service, 12 FCC Rcd 7388 (1997)......................... 4, 5, 34, 42
Mobile Satellite Service, 15 FCC Rcd 12315 (2000)......................... 4, 5, 6, 38
Mobile Satellite Service, 18 FCC Rcd 23638 (2003)......................... 5, 6, 7, 38
Policies and Service Rules for the Mobile Satellite
Service, 15 FCC Rcd 16127 (2000) ....................................................... 6, 41
Sharing the Costs of Microwave Relocation, 11
FCC Rcd 8825 (1996) ...................................................................................5

STATUTES AND REGULATIONS

5 U.S.C. 706(2)(A) .......................................................................................29
28 U.S.C. 2342(1) ..........................................................................................1
47 U.S.C. 152(a)...........................................................................................57
47 U.S.C. 201(a)...........................................................................................57
47 U.S.C. 309(a)...........................................................................................57
47 U.S.C. 310(d)...........................................................................................57
47 U.S.C. 402(a).............................................................................................1
47 U.S.C. 405(a)............................................................................ 1, 2, 25, 30
47 C.F.R 1.2..................................................................................................61
47 C.F.R. 24.247(a) ............................................................................... 37, 39
47 C.F.R. 24.247(a)(1) .................................................................................39
47 C.F.R. 24.247(a)(3) .................................................................................39
47 C.F.R. 27.1168(a) ....................................................................................37
vii

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 10 of 92
47 C.F.R. 27.1184(a) ....................................................................................37

OTHERS

Annual Report of DBSD to FCC, available at
http://hraunfoss.fcc.gov/edocs_public/attachmatc
h/DOC-302445A1.pdf .................................................................................48
viii

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 11 of 92

GLOSSARY

AWS
Advanced Wireless Service. A terrestrial wireless
communications service.
BAS
Broadcast Auxiliary Service. A service that is used to provide
adjuncts to television broadcasting, such as live news feeds.
DBSD
All of the petitioners here other than ICO. Among the DBSD
petitioners is New DBSD Satellite Services G.P., (formerly
known as ICO Satellite Services, and then New ICO Satellite
Services) which holds an MSS provider authorization from the
FCC. All of the DBSD petitioners are debtors in In re DBSD N.
America, Inc., et al.
, No. 09-13061 (Bankr. S.D.N.Y.).
GHz
Gigahertz. A measure of radiofrequency at one billion cycles
per second.
ICO
Petitioner ICO Global Communications (Holdings) Ltd. ICO is
the ultimate parent of the DBSD petitioners. For simplicity, ICO
refers to the currently named entity and all of its immediate
predecessors.
MHz
Megahertz. A measure of radiofrequency at one million cycles
per second.
MSS
Mobile Satellite Service. A service that allows mobile
communication via satellite.
Sprint
Sprint Nextel Corp. Sprint Corp and Nextel Communications
merged in 2005. For simplicity, "Sprint" refers to both
companies as well as to the combined company.

GLOSSARY OF FCC ORDERS

800 MHz Order
Improving Public Safety Communications in the 800 MHz
Band
, 19 FCC Rcd 14969 (2004).
800 MHz
Reconsideration
Order

Improving Public Safety Communications in the 800 MHz
Band
, 20 FCC Rcd 16015 (2005).
ix

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 12 of 92
1997 MSS Order Mobile Satellite Service, 12 FCC Rcd 7388 (1997).
2000 MSS Order Mobile Satellite Service, 15 FCC Rcd 12315 (2000).
2003 MSS Order Mobile Satellite Service, 18 FCC Rcd 23638 (2003).
2008 BAS Order Improving Public Safety Communications in the 800 MHz
Band, 23 FCC Rcd 4393 (2008).
2009 BAS Order
Improving Public Safety Communications in the 800 MHz
Band
, 24 FCC Rcd 7904 (2009) (JA 47).
2010 BAS Order
Improving Public Safety Communications in the 800 MHz
Band, 25 FCC Rcd 13874 (2010) (JA 189).
Emerging Technologies Orders:
Redevelopment of Spectrum to Encourage Innovation in
the Use of New Telecommunications Technologies, First
Report and Order and Third Notice of Proposed Rule
Making
, 7 FCC Rcd 6886 (1992); Second Report and
Order
, 8 FCC Rcd 6495 (1993); Third Report and Order
and Memorandum Opinion and Order
, 8 FCC Rcd 6589
(1993); Memorandum Opinion and Order, 9 FCC Rcd
1943 (1994); Second Memorandum Opinion and Order, 9
FCC Rcd 7797 (1994), aff'd Ass'n of Public Safety
Communications Officials-Int'l, Inc. v. FCC
, 76 F.3d 395
(D.C. Cir. 1996).
x

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 13 of 92
IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
NO. 10-1322
ICO GLOBAL COMMUNICATIONS (HOLDINGS) LTD., 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
BRIEF FOR RESPONDENTS

JURISDICTION

The Court has jurisdiction over final orders of the Federal
Communications Commission under 47 U.S.C. 402(a) and 28 U.S.C.
2342(1). Pursuant to 47 U.S.C. 405(a), the Court lacks jurisdiction over
claims that the Commission improperly defined the phrase "enter the band,"
which petitioners did not raise before the agency.

QUESTIONS PRESENTED

In the order on review, Improving Public Safety Communications in the
800 MHz Band, 25 FCC Rcd 13874 (2010) (2010 BAS Order) (JA 189), the
Commission completed reorganization of the 2 GHz spectrum band, which

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 14 of 92
involved relocating existing licensees to new spectrum assignments. In prior
orders intended to maximize use of the band by freeing up spectrum that
could support new technologies, the Commission required communications
providers moving into the band to share the costs of relocating the incumbent
licensees.
Sprint Nextel Corp. ("Sprint"), one recipient of the freed-up spectrum,
ultimately paid about $750 million to relocate the incumbents and sought to
recover a fair share of its band-clearing expenses from petitioners,
beneficiaries of Sprint's efforts. Petitioners have disavowed any obligation to
share those expenses.
The Commission reached three decisions at issue here: (1) it clarified
the meaning of a term "enter the band" that triggers the responsibility of
band entrants to contribute to the costs of band clearing; (2) it resolved a
dispute between Sprint and petitioners concerning the cutoff date for cost-
sharing liability; and (3) it established criteria for determining whether
petitioner ICO, the parent of the DBSD petitioners, could be liable for
relocation costs. The questions presented are:
1) Whether petitioners' arguments that the Commission improperly
interpreted "enter the band" are barred by 47 U.S.C. 405(a) because they
were not raised before the agency; and if the Court has jurisdiction over those
2

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 15 of 92
claims, whether that interpretation was consistent with principles forbidding
retroactive rulemaking, requirements of fair notice, and Commission
precedent;
2) Whether the Commission acted consistently with principles
forbidding retroactive rulemaking and Commission precedent when it
reiterated that its prior orders had not set a predetermined cutoff date for cost-
sharing liability and established a cutoff date;
3) Whether the Commission acted within its discretion in establishing
criteria for determining whether ICO must share relocation costs because it
acted in concert with its DBSD affiliates as an integrated enterprise.

STATUTES AND REGULATIONS

Pertinent materials are contained in the appendix.

COUNTERSTATEMENT

Sprint spent nearly $750 million to relocate incumbent spectrum users
so that it and other companies could use that spectrum. Sprint did so in
reliance upon a series of FCC orders establishing that any company that bore
relocation costs would be equitably entitled to reimbursement for a pro rata
portion of the costs from other incoming users of the band. Petitioners
benefited from Sprint's band clearing efforts but have refused to pay their fair
3

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 16 of 92
share of the expenses, leaving Sprint to foot the entire bill and potentially
discouraging future band clearing efforts.
1.

Reorganization Of The 2 GHz Band And Assignment
Of Relocation Responsibilities To MSS Providers.

Before 1997, the spectrum band from 1990 MHz to 2110 MHz, known
as the 2 GHz band (one gigahertz is 1000 megahertz), had been assigned to
the broadcast auxiliary service (BAS), which supports television broadcasting
adjuncts such as live on-location news feeds. When new technology made it
feasible to provide the same service using less spectrum, the Commission
reallocated part of the BAS spectrum for use by Mobile Satellite Services
(MSS), which are wireless mobile communication services provided via
satellite. See Mobile Satellite Service, 12 FCC Rcd 7388 14 (1997) (1997
MSS Order); Mobile Satellite Service, 15 FCC Rcd 12315, 12322-12323
(2000) (2000 MSS Order).
Because electromagnetic interference prevents BAS and MSS
operations from using the same spectrum simultaneously, the Commission
segregated BAS and MSS into separate spectrum zones. BAS licensees
would be relocated to new spectrum, a complex and expensive process.
Invoking a number of prior orders governing reassignments in other services,
known collectively as the "Emerging Technologies" orders, the Commission
required incoming MSS providers to bear the relocation costs. See 2000 MSS
4

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 17 of 92
Order 6. Under the Emerging Technologies principles, any incoming user
that paid for BAS relocation would be entitled to pro rata (based on its
spectrum allotment) cost reimbursement from later band entrants. See
Sharing the Costs of Microwave Relocation, 11 FCC Rcd 8825 (1996).
Cost-sharing avoids a free-rider problem by ensuring that costs will not
be borne disproportionately by any party, thus averting a disincentive to be
the first user of a new band. 1997 MSS Order 72. Cost-sharing thus
protects the public interest in putting spectrum to its most efficient use. If all
the costs of band clearing fell on the first user, "future licensees might be
unwilling or unable to assume the burden and cost of clearing spectrum
quickly if they were unsure of the likelihood that they will be reimbursed by
other new entrants." 2010 BAS Order 41 (JA 207).
To minimize disruption to broadcasters' operations, MSS providers
were required to relocate BAS licensees in the 30 largest television markets
before beginning satellite operations the "top-30 market" rule. 2000 MSS
Order 31; see also Mobile Satellite Service, 18 FCC Rcd 23638 38 (2003)
(2003 MSS Order) (retaining rule). To give BAS incumbents incentive to
relocate, 2000 MSS Order 109, the Commission decided that any incumbent
that did not move by the "band sunset date" would have to bear its own
relocation costs; also at that point, the bearer of band clearance expenses
5

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 18 of 92
would no longer have a right to reimbursement. See 2000 MSS Order 29-
33. The sunset date was to occur ten years after the August 7, 2000, Federal
Register publication of the 2000 MSS Order. Id. 52; 65 Fed. Reg. 48174.
Eight companies were authorized to use the MSS spectrum. Although
MSS providers were responsible for clearing the band (and were barred from
commencing operations until the BAS licensees had been moved in the top
30 markets), between 1997 and 2004, "there was no evidence" that MSS
operators had engaged in "any meaningful relocation negotiations" to move
the BAS licensees. Improving Public Safety Communications in the 800 MHz
Band, 23 FCC Rcd 4393 11 (2008) (2008 BAS Order). Due to that failure,
the Commission extended the band sunset date to December 9, 2013. 2003
MSS Order 47.
2.

Allocation Of 2 GHz Spectrum To AWS And Sprint
And New MSS Cost-Sharing Obligations.

MSS providers were required as a condition of their authorizations to
meet a series of progress "milestones," the last of which was that the "entire
system ... be launched and operational within six years of authorization."
Policies and Service Rules for the Mobile Satellite Service, 15 FCC Rcd
16127 106 (2000). Six of the original eight MSS companies were unable to
meet their milestones and lost their authorizations, reducing the spectrum
needed by MSS. Today, the only remaining MSS providers are TerreStar
6

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 19 of 92
1
Networks, Inc. and petitioner New DBSD Satellite Services, G.P. (DBSD).
In 2003, recognizing the reduced demand for 2 GHz spectrum, the
Commission reassigned a portion of the MSS spectrum to Advanced Wireless
Service (AWS). See Advanced Wireless Service, 18 FCC Rcd 2223, 2238-
2242 (2003).
The Commission recognized that AWS licensees "will benefit from the
band clearing paid for by MSS licensees," and pledged to "provide an
equitable mechanism" for cost sharing. 2003 MSS Order 9. But the agency
deferred the creation of "a comprehensive set of procedures" for
reimbursement because the future use of the band "may affect the manner by
which we apply the general cost-sharing principles embodied in the Emerging
Technologies procedures." Id. 10.
The following year, the Commission awarded Sprint a license for 5 of
the 15 megahertz of AWS spectrum. Thus, the current spectrum assignments

1 DBSD was originally named ICO Satellite Services, then became New ICO
Satellite Services. Although New DBSD Satellite Services holds the MSS
authorization, "DBSD" will refer collectively to all of the petitioners in No.
10-1401.
7

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 20 of 92
in the 2 GHz band are as follows (not to scale):
Sprint
AWS
MSS
AWS
BAS
1990 1995 2000 2020 2025
2110
MHz
MHz
Sprint received its 2 GHz spectrum as part of the Commission's effort
to reorganize another spectrum area, the 800 MHz band. In that
reorganization, Sprint, agreed to relinquish some of its 800 MHz spectrum
valued at over $2 billion and pay for 800 MHz band reorganization in
exchange for 5 megahertz of spectrum in the 2 GHz band and another 5
megahertz in an adjoining band. See Improving Public Safety
Communications in the 800 MHz Band, 19 FCC Rcd 14969 (2004) (800 MHz
Order); see also Improving Public Safety Communications in the 800 MHz
Band, 24 FCC Rcd 7904 75 n.173 (2009) (2009 BAS Order) (JA 77). Sprint
also agreed to relocate BAS incumbents in the entire 2 GHz band even
though it would have only 5 of the 35 megahertz newly available in the band.
Despite Sprint's agreement to relocate the BAS incumbents, the
Commission maintained the independent responsibility of MSS operators to
relocate BAS providers, thus "overlaying" the two relocation obligations.
800 MHz Order 250.
8

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 21 of 92
The Commission did not apply the top-30 market rule to Sprint because
its site-specific terrestrial network has interference characteristics different
from MSS systems, the signals of which can cover the entire country and thus
interfere pervasively with BAS operations. 800 MHz Order 255. Instead,
the Commission allowed Sprint to "determine its own schedule for relocating
incumbent BAS facilities," ibid., rather than targeting the largest markets
first. An MSS operator that wished to provide service prior to Sprint's
having cleared the top 30 markets "will retain the option of accelerating the
clearing of those markets so that they could begin operations before [Sprint]
has completed nationwide clearing." Id. 257.
The 800 MHz Order required Sprint to file a plan showing the order in
which Sprint proposed to clear BAS markets. DBSD and other MSS entrants
"then had 30 days to review this plan and identify which of the top 30
markets they intended" to clear themselves. 2008 BAS Order 13. After
Sprint submitted its plan, which did not include clearing several of the top 30
markets in the first phase, "no MSS entrant opted to invoke its right to
relocate BAS licensees in any of the top 30 markets that had not been
identified" by Sprint. Ibid. DBSD ever took any step to relocate any BAS
licensee, leaving that task entirely to Sprint.
9

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3.

Cost Reimbursement For BAS Relocation.

In the 800 MHz Order, the Commission instituted "an equitable
mechanism" for BAS relocation cost reimbursement. Id. 259. The
Commission decided "to generally follow the cost-sharing principle that the
licensees that ultimately benefit from the spectrum cleared by the first entrant
shall bear the cost of reimbursing the first entrant for the accrual of that
benefit." Id. 261.
The Commission deviated from the general rule in two ways. First,
Sprint could obtain reimbursement from MSS operators only for the cost of
relocating BAS in the top 30 markets, plus all fixed (as opposed to mobile)
BAS links in any market; other costs would be borne by Sprint alone.
Second, Sprint's 2 GHz spectrum was valued at close to $5 billion, 800 MHz
Order 297, and the Commission wanted to ensure that Sprint was not
unjustly enriched by the spectrum grant. Sprint therefore would be entitled to
reimbursement for BAS relocation costs only if its total costs for BAS and
800 MHz band reorganization, plus the value of Sprint's relinquished 800
MHz spectrum, exceeded the value of the 2 GHz spectrum. Id. 261; 2010
BAS Order 6 (JA 191-192).
If the value of the 2 GHz spectrum that Sprint received exceeded the
company's costs, Sprint would make a "true-up" payment to the government
10

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 23 of 92
for the difference. Following the true-up, Sprint "would no longer be entitled
to reimbursement from other entrants to the band after receiving credit for its
relocation costs." 800 MHz Order 261. That mechanism would avoid an
effective double payment to Sprint.
On the other hand, if Sprint's costs plus the approximately $2 billion
value of its surrendered spectrum exceeded the value of the new 2 GHz
spectrum, Sprint would be entitled to pro rata reimbursement from MSS
operators under the general cost-sharing principle. Ibid. The Commission
reminded all 2 GHz users that "[b]oth [Sprint] and MSS licensees under the
MSS plan must clear the entire [2 GHz] band." Id. 262.
The Commission expected that the 800 MHz band reorganization
would take 36 months and that the true-up payment would occur no later than
6 months thereafter. 800 MHz Order 330. On that understanding, the
Commission stated that Sprint "is entitled to seek pro rata reimbursement of
eligible clearing costs incurred during the 36-month reconfiguration period
from MSS licensees that enter the band prior to the end of that period." Id.
261. The Commission did not define what constituted "entering the band,"
thus triggering a cost-sharing obligation, but it determined that "the two
relocation plans will complement each other" since both MSS providers
11

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 24 of 92
"must certify that their systems are operational by no later than July 2007,"
within the 36-month period. Id. 270.
On reconsideration of the 800 MHz Order, the Commission rejected an
argument by MSS operators that their obligations should terminate if they did
not enter the band by the end of the BAS relocation process (as opposed to
the 36-month expected period for the 800 MHz band reorganization).
TerreStar's system was not expected to be operational by that time, which
would have excused it from cost-sharing. The agency explained that it "has
adhered to the cost sharing principle that the licensees that ultimately benefit
from the spectrum cleared by the first entrant shall bear the cost of
reimbursing the first entrant for the accrual of that benefit." Improving
Public Safety Communications in the 800 MHz Band, 20 FCC Rcd 16015
111 (2005) (800 MHz Reconsideration Order).
The Commission also explained that the 800 MHz Order had tied the
cutoff date for cost-sharing to completion of the 800 MHz true-up. See 800
MHz Reconsideration Order 113 ("The Commission decided to end the
reimbursement obligations" of the MSS operators "at the end of the 800 MHz
band true-up period for administrative efficiency in the accounting process
...."); see also id. 112 ("once the `true-up is completed, [Sprint] Nextel may
not obtain reimbursement from subsequent entrants to the band."). The
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USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 25 of 92
agency declined petitioners' request to shorten the cost-sharing time frame
and decided instead to "maintain the schedule previously established, i.e., the
true-up period." Id. 113.
4.

Revisions To The Anticipated Schedules.

At the time of the 800 MHz Order, the Commission expected that BAS
clearing would be completed in 30 months, by May 2007, 800 MHz Order
252, and that the reorganization of the 800 MHz band would take 36
months, id. 28. Band reorganization began on June 26, 2005, and thus was
expected to end on June 26, 2008. See Improving Public Safety
Communications in the 800 MHz Band, 23 FCC Rcd 18512 5 (2008). At the
same time, the Commission expected MSS providers to have operational
satellite systems before that time no later than July 2007. 800 MHz Order
270. In that expected scenario, there would be no question about cost-
sharing responsibility.
Those expectations proved overly optimistic on every front. By 2005,
DBSD had asked the Commission to extend its launch and operational
milestones, and it requested several additional extensions after that. See ICO
Satellite Services, 20 FCC Rcd 9797 (Int'l Bur. 2005). Ultimately, the
Commission extended the deadline for DBSD to have an operational system
to May 2008. See Attachment To Grant File Nos. SAT-MOD-20070806-
13

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 26 of 92
00110 and SAT-AMD-20071109-00155 (Int'l Bur. April 2, 2008). Pursuant
to that milestone deadline, DBSD launched its satellite in April 2008 and
certified the following month that its system was operational.
On Sprint's side, the BAS relocation process proved far more difficult
than anticipated because of unexpected technical complexity and a shortage
of available equipment and installers. See 2008 BAS Order 20, 31. Sprint
sought an extension, which the Commission granted on the ground that "the
record illustrates many valid reasons" why Sprint "was unable to achieve
timely relocation of the BAS incumbents," including the unusual and
unexpected complexity of BAS. Id. 31-32. The Commission established a
new deadline of March 5, 2009. Id. 37.
Despite what the Commission found to be Sprint's "good faith effort to
increase the pace of the BAS transition," that deadline, too, was extended two
more times, ultimately until August 9, 2010. See Improving Public Safety
Communications in the 800 MHz Band, 25 FCC Rcd 1294 (OET 2010).
Sprint completed the BAS relocation in July 2010. See July 15, 2010, ex
parte (JA 161).
DBSD took no steps to relocate any incumbent BAS licensee. Sprint
spent approximately $750 million on the relocation, see id. (JA 161); the
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MSS providers' total pro rata share of that amount is about $200 million, see
July 8, 2010, ex parte at 2 (JA 142).
The 800 MHz band reorganization likewise proved to be far more
complex than contemplated and has been subject to delays. Instead of being
completed by June 26, 2008, the process is still underway today. Because the
band reorganization has not been completed, the subsequent true-up process
has not yet occurred. The true-up is currently scheduled for December 31,
2011. See Improving Public Safety Communications in the 800 MHz Band,
Order No. DA 11-1076 (PSHSB June 20, 2011).
Neither MSS operator has reimbursed Sprint for relocation expenses.
In June 2008, Sprint sued DBSD and TerreStar for their pro rata
contributions. Sprint Nextel Corp. v. New ICO Satellite Servs. G.P., No.
1:08-cv-651 (E.D. Va.). In August 2008, under the doctrine of primary
jurisdiction, the district court referred to the FCC all questions in the case,
which has been stayed in the meantime. Order of Aug. 29, 2008.
Subsequently, in May 2009, all of the DBSD petitioners (but not ICO)
declared bankruptcy. In re DBSD North America, Inc., No. 09-13061 (Bankr.
S.D.N.Y.). TerreStar also declared bankruptcy. In re TerreStar Corp., No.
11-10612 (Bankr. S.D.N.Y.). In December 2010, Sprint sued ICO, DBSD's
parent company, seeking reimbursement. Sprint Nextel Corp. v. ICO Global
15

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 28 of 92
Commc'ns (Holdings) Ltd., No. 1:10-cv-01414 (E.D. Va.). That case has
been stayed pending the outcome of this proceeding.
5.
2009 BAS Order.
The 2009 BAS Order comprises a decisional order and a further notice
of proposed rulemaking. The order eliminated the top-30 market rule and
reset the BAS relocation deadline as described above. JA 60, 61-65. The
Commission also began a rulemaking to finalize the BAS relocation process
(still pending at the time) and to address the disputes between MSS operators
and Sprint.
In the further notice of proposed rulemaking, the Commission first
explained the existing cutoff date rule for cost-sharing liability for BAS
relocation the subject addressed in the 800 MHz Order and the 800 MHz
Reconsideration Order. See pages 11-12, supra. This was an issue because
MSS operators had refused to reimburse Sprint, arguing that paragraph 261 of
the 800 MHz Order extinguished their liability 36 months after the start of
800 MHz band reorganization i.e., on June 26, 2008.
Interpreting its earlier order, the Commission recognized that "a
narrow, literal interpretation of certain language" in paragraph 261 referring
to a 36-month cutoff period could support the MSS providers' view. 2009
BAS Order 78 (JA 78). But that approach "would arguably undermine the
16

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stated purposes of the BAS cost-sharing regime set up by the Commission."
Id. 79 (JA 78). Moreover, nothing in the 800 MHz Order or any other order
"suggests that the Commission limited the time ... to provide an independent
benefit to MSS entrants." Id. 80 (JA 78). Thus, "the most logical and
appropriate interpretation of the language in the 800 MHz orders is that the
MSS entrants must pay their pro rata share of BAS relocation costs to the
extent that they enter the band before the 800 MHz rebanding or true up is
complete." Ibid. (JA 79).
Turning to specific proposed rules, the Commission noted that, under
the existing cost-sharing rule, there was no "future date certain for completing
either the 800 MHz rebanding or the true up." 2009 BAS Order 80 (JA 79).
The Commission thus sought comment on a proposal to cut off
reimbursement responsibilities on the BAS sunset date of December 9, 2013.
Id. 82 (JA 79).
The Commission also proposed to define what it means to "enter the
band." The 800 MHz Order had used that term to describe the trigger for
MSS operator cost-sharing responsibility "but did not define" it. 2009 BAS
Order 89 (JA 82). Under the Commission's general approach to
reimbursement of band clearing costs, a later entrant must pay at the point
that it "would have been in a position to have caused interference to the
17

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 30 of 92
incumbent." Ibid. Because MSS systems "are capable of providing
nationwide coverage," any operational satellite system is "capable of causing
interference to any" BAS licensee. Id. 91 (JA 83). The agency thus sought
comment on the proposal that "an MSS entrant will have entered the band
and incurred a cost sharing obligation when it certifies that its satellite is
operational for purposes of meeting its operational milestone." Id. 91, 100
(JA 82-83, 86).
6.
2010 BAS Order.
The order on review has two components: a Declaratory Ruling
adjudicating several disputes between the parties, and a Report and Order that
follows from the further notice of proposed rulemaking in the 2009 BAS
Order.
a.

Reiteration That Repayment Obligations Did Not
End On June 26, 2008.

The Declaratory Ruling ratified the rejection in the 2009 BAS Order of
MSS providers' claim that reimbursement obligations ended on June 26,
2008. The 800 MHz Order did not create such a cutoff date, the Commission
reiterated; rather, "the most logical and appropriate interpretation of the 800
MHz orders is that MSS ... entrants have an obligation to share in the cost of
relocating the BAS incumbents if they enter the band prior to the completion
of the 800 MHz realignment or true-up." 2010 BAS Order 20 (JA 196);
18

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accord, 2009 BAS Order 78-79 (JA 78); 800 MHz Reconsideration Order
112-113.
The Commission explained that the 36-month period for 800 MHz
band reorganization did not limit MSS reimbursement responsibility. Rather,
it was simply the time "during which the 800 MHz reconfiguration was
expected to be completed." 2010 BAS Order 22 (JA 197) (emphasis added).
The 800 MHz Order thus cut off reimbursement obligations not at 36 months,
but no sooner than the "completion of the 800 MHz band reconfiguration."
Ibid. The Commission had made that point explicitly in the 800 MHz
Reconsideration Order, when it ruled that the cutoff "was tied to the 800
2
MHz true-up period." Ibid.
The MSS providers' contrary interpretation, the Commission found, "is
unreasonable." 2010 BAS Order 24 (JA 198). "The goal of the 800 MHz
[Order] clearly was not to provide a benefit to the MSS entrants," but only to
"provid[e] administrative efficiency in the accounting process" for the
"calculation of the anti-windfall payment." Ibid. In other words, the 36-
month period was not "a means for the MSS entrants to avoid paying BAS
relocation expenses." Ibid. Interpreting the 800 MHz Order as having

2 Because the Commission established a specific cutoff date, it did not
address whether the existing cutoff occurred upon band reorganization or the
true-up. 2010 BAS Order 23 (JA 197).
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USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 32 of 92
established a cutoff date in June 2008 "would both fail to provide any
practical administrative benefits and would undermine the larger principle
that MSS entrants must pay their pro rata share of the BAS relocation costs."
Ibid.
Nor could the MSS providers reasonably expect that Sprint would bear
all BAS relocation costs. From the time of the 1997 MSS Order, MSS opera-
tors were always independently responsible for relocating BAS incumbents,
and that did not change in 2005 when Sprint was awarded 2 GHz spectrum.
2010 BAS Order 21 (JA 196-197). Instead, the Commission "explicitly kept
in place the [MSS] obligation ... to relocate" BAS. Id. 22 (JA 197).
Moreover, the Commission had never suggested in any of its orders
that adjusting the schedules for the BAS and 800 MHz band reorganizations
would relieve MSS operators of their responsibility to share costs with Sprint.
"Considering the great cost of the BAS relocation, if the Commission had
intended to upend the BAS relocation cost sharing scheme ... it would have
affirmatively stated" as much. 2010 BAS Order 25 (JA 199). To deem
silence tantamount to a decision with such significant monetary
consequences, the Commission held, "is unreasonable." Ibid.
The Commission rejected claims that Sprint was responsible for delays
in BAS relocation and thus should bear all of the costs. "Given the
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unanticipated complexities of the BAS transition, we do not believe it
appropriate to penalize the party who has undertaken the difficult task of band
clearing at the expense of those who will also receive the benefit of the
cleared spectrum." 2010 BAS Order 26 (JA 199). That was particularly so
"when the BAS relocation had been moribund for the four years that MSS
entrants had the sole responsibility to clear BAS." Ibid. Were it not for
Sprint, "the MSS entrants most likely would have experienced similar
complexities and delays ... while also having to shoulder a financial
obligation far more burdensome than any cost sharing obligation" to Sprint.
Ibid.
b.

Clarification Of ICO's Potential Reimbursement
Responsibility.

The Declaratory Ruling also addressed the conditions under which ICO
could be liable for BAS relocation costs. 2010 BAS Order 28-40 (JA 200-
207). The Commission first explained ambiguities in prior orders, which
interchangeably referred to an MSS "entrant," "operator," and "licensee" as
the entity responsible for cost sharing. 2010 BAS Order 29 n.68 (JA 201).
Rejecting petitioners' contrary argument, see ICO July 30 ex parte letter at 1
(JA 165), the Commission concluded that collectively those terms did not
refer only to the nominal MSS licensee. 2010 BAS Order 30 (JA 201).
Rather, affiliates of the MSS licensee could be liable for reimbursement costs
21

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if they were part of an integrated enterprise entering the band and operating
the MSS system as a unit. In that situation, the Commission may "treat the
separate entities as one and the same for purposes of regulation.' " 2010 BAS
Order 33 (JA 202-203) (citation omitted).
Turning to the dispute between Sprint and ICO Global, the
Commission concluded that if ICO divided up the regulatory actions
necessary to enter the band and operate the system (such as contracting to
construct, own, and operate the satellite) between various subsidiaries and
directed and coordinated those subsidiary actions so that the integrated
enterprise acted as a unit, then under Commission precedent the entire
enterprise could be held responsible for the reimbursement costs. 2010 BAS
Order 35 (JA 204-205).
The record showed that ICO and its subsidiaries operated as an
integrated enterprise prior to a 2005 restructuring. 2010 BAS Order 36-37
(JA 205-206). ICO asserted that after the restructuring, DBSD operated
independently. Id. 38 (JA 206). Sprint disputed ICO's description of the
post-2005 operations. Id. 39 (JA 206-207).

The debate over the significance of the 2005 restructuring on ICO's
potential liability arose shortly before issuance of the 2010 BAS Order. See
ICO Sept. 1, 2010 Ex parte letter (JA 185). Rather than delay the order to
22

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resolve the factual dispute, and given that Sprint had indicated its intention to
sue ICO for reimbursement in federal court, the Commission decided to leave
the factual development to the district court. 2010 BAS Order 40 (JA 207).
c.

Definition Of "Enter The Band."

In the accompanying Report and Order, the Commission explained the
meaning of the term "enter the band," which it had not defined in earlier
orders. 2010 BAS Order 46 (JA 209). The Commission "look[ed] to [its]
prior Emerging Technologies proceedings" for guidance. Id. 48 (JA 210).
Under those policies, a band entrant must share relocation costs if it "would
have caused interference to the incumbent licensees." Ibid. In the MSS
context, with nationwide signal coverage and the incompatibility of MSS and
BAS use of the same spectrum, "once the ... satellites are operational, they
would have the potential for causing interference" with BAS. Id. 49 (JA
210). An MSS operator thus would "enter the band" under the Emerging
Technologies test when it "certifies that its satellite is operational." Ibid.
The Commission distinguished the MSS context from other band
clearing contexts, which use a "market-by-market or system-by-system test
for incurring cost sharing liability." 2010 BAS Order 49 (JA 210-211).
Such a test would not be "practical or appropriate" given the "highly
integrated nationwide" service provided by BAS as well as the "nationwide
23

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 36 of 92
nature of MSS." Ibid. The operational-satellite test is "easy to apply and not
subject to contention." Ibid.
d.

Establishment Of A Date-Certain For The Cost-
Sharing Cutoff.

The Report and Order established a firm termination date for
reimbursement of Sprint's BAS relocation expenses. Under the Emerging
Technologies principles, the Commission found, the band sunset date also
serves as the cutoff date for reimbursement obligations. 2010 BAS Order 44
(JA 208-209).

SUMMARY OF ARGUMENT

From the beginning of MSS service in 1997, the Commission made
clear that MSS providers benefiting from the relocation of BAS licensees in
the 2 GHz band must pay their fair share of the relocation costs. Cost sharing
is not only equitable, but is also necessary to further the important public
interest in putting spectrum to its greatest use. A regulatory scheme that fails
to ensure sharing of band-clearance expenses provides a strong disincentive
for any company to agree to undertake the significant expense and burden of
clearing spectrum, thereby impeding efforts to expand public access to new
services.
Sprint spent $750 million on BAS relocation. Despite the
Commission's plain intent that MSS providers share the burden, DBSD made
24

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 37 of 92
no effort to clear the 2 GHz band and has resisted payment to Sprint in
multiple fora. In this Court, petitioners read the FCC's orders as having
created a reimbursement obligation that is not triggered until petitioners begin
commercial operations (which has not yet happened), yet was permanently
extinguished three years ago. The Commission did not create such an
illusory obligation, and the Court should reject petitioners' effort to avoid the
Commission's equitable cost-sharing regime.
1.
Petitioners did not raise their "enter the band" arguments before
the Commission, and they may not raise them now. The Commission
explicitly called for comment on a proposed definition of that phrase, but
petitioners did not respond. They now make new arguments, none of which
the Commission had an opportunity to confront. All of those arguments are
barred by 47 U.S.C. 405(a).
2.
The Commission's definition of "enter the band" is not
retroactive. The 800 MHz Order clearly established that MSS operators
would share BAS relocation costs and was predicated on the expectation that
those operators would have an operational system before 800 MHz
reorganization was completed. The trigger for cost-sharing thus was tied to
system operation. When the Commission expressly defined "enter the band,"
it imposed no new requirement on DBSD. Nor did the Commission change
25

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 38 of 92
any vested expectation that DBSD would bear no cost-sharing obligation
until it began commercial operations. The four-part test on which petitioners
base their claim of a vested right applies to bands other than the 2 GHz band
and does not apply to BAS relocation. The definition did not upset any
legitimate reliance interests: petitioners launched their satellites in order to
meet regulatory requirements, not because they relied on any particular
definition of the term "enter the band."
The Commission's definition is consistent with principles of fair
notice. Petitioners always had notice that they would be required to share
costs and they did not rely on their own four-part definition of "enter the
band." Moreover, the fair notice doctrine only applies when an agency
imposes a punishment and not in a non-punitive context. It is not unfair if
petitioners bear some costs before they begin commercial operations; that is
exactly what Sprint had to do.
3.
If the Court rejects petitioners' "enter the band" arguments either
under Section 405(a) or on the merits, the cutoff-date question is moot
because, by declaring their satellite operational in May 2008, petitioners
entered the 2 GHz band under the applicable definition before petitioners'
suggested cutoff of June 26, 2008. In any event, the Commission properly
interpreted its prior orders to conclude that it had not established that date as
26

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a firm cutoff. The orders made clear that Sprint was entitled to
reimbursement for its band-clearing efforts through at least the end of the 800
MHz band reorganization an event that has not yet occurred. The 800 MHz
Order spoke of a 36-month reimbursement period as shorthand for the
expected duration of band clearing, not as a predetermined cutoff date.
4.
The Commission properly concluded that ICO potentially could
be held responsible for band clearing costs. Prior orders had referred
ambiguously and interchangeably to MSS "entrants," "licensees," and
"operators." In clarifying that those terms could include entities other than
the MSS licensee itself, the Commission did not impose "derivative" liability
on ICO, but instead ruled that ICO could be held liable for its own actions as
part of an integrated enterprise. Common law standards for piercing the
corporate veil are irrelevant in such circumstances.
In reaching that conclusion, the Commission adjudicated a concrete
dispute between Sprint and ICO, even though it did not render a final
judgment on ICO's liability. Because retroactivity is the norm for
adjudicatory rulings, the Commission did not act impermissibly.
The Commission's determination of ICO's potential liability is not
precluded by judicial decisions in the DBSD bankruptcy case. Neither the
Commission nor ICO was a party to that case, and the bankruptcy court did
27

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 40 of 92
not render a judgment on Sprint's claim against ICO. Moreover, the
Commission cannot be collaterally estopped from reasonably interpreting its
own precedent.

ARGUMENT

I.

STANDARD OF REVIEW.

This case principally involves the Commission's interpretation of its
own rules and prior orders, which is "entitled to substantial deference."
AT&T Corp. v. FCC, 448 F.3d 426, 431 (D.C. Cir. 2006). Indeed, an
"agency's interpretation of the intended effect of its own orders is controlling
unless clearly erroneous." CMC Real Estate Corp. v. ICC, 807 F.2d 1025,
1034 (D.C. Cir. 1986); accord Auer v. Robbins, 519 U.S. 452, 461 (1997)
(agency interpretation is "controlling" unless "plainly erroneous or
inconsistent with the regulation").
Review under the Administrative Procedure Act is also highly
deferential. The Court may reverse only if petitioners establish that the
Commission's action was "arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law." 5 U.S.C. 706(2)(A). The Court
"presume[s] the validity of the Commission's action and will not intervene
unless the Commission failed to consider relevant factors or made a manifest
error in judgment." Consumer Electronics Ass'n v. FCC, 347 F.3d 291, 300
28

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 41 of 92
(D.C. Cir. 2003). The FCC is entitled to "the greatest deference" on issues
related to its spectrum reallocation polices and the payment of costs
associated with the relocation of incumbent users. See Teledesic LLC v.
FCC, 275 F.3d 75, 84 (D.C. Cir. 2001).

II.

THE COURT LACKS JURISDICTION OVER DBSD'S
ARGUMENT THAT THE AGENCY IMPROPERLY
DEFINED "ENTER THE BAND," WHICH IS MERITLESS
IN ANY EVENT.

A. DBSD Failed To Raise "Enter The Band"

Arguments Before The Commission And
May Not Do So Now.

3
DBSD devotes 17 pages of its brief to attacking the Commission's
explanation of what it means to "enter the band" and thereby trigger cost-
sharing obligations. It argues that the Commission acted retroactively, failed
to give fair notice, and altered the definition of the term without
acknowledging the change. Br. 28-44. All of those arguments are foreclosed
because neither DBSD nor any other party raised them before the
Commission.
The filing of a petition for agency reconsideration is "a condition
precedent to judicial review" whenever a litigant "relies on questions of fact
or law upon which the Commission ... has been afforded no opportunity to

3 ICO does not challenge the Report and Order portion of the 2010 BAS
Order
. Br. 3.
29

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 42 of 92
pass." 47 U.S.C. 405(a). See, e.g., Sprint Nextel Corp. v. FCC, 524 F.3d
253, 256 (D.C. Cir. 2008). This Court "has strictly construed that section,
holding that [the Court] generally lack[s] jurisdiction to review arguments
that have not first been presented to the Commission." In Re Core
Commn'cns, Inc., 455 F.3d 267, 276 (D.C. Cir. 2006) (internal quotations
omitted). That statutory bar applies whenever the Commission does not have
a "fair opportunity" to address an issue. Bartholdi Cable Co. v. FCC, 114
F.3d 274, 279-280 (D.C. Cir. 1997); accord Time Warner Entm't Co. v. FCC,
144 F.3d 75, 79 (D.C. Cir. 1998).
Thus, to preserve an issue for judicial review, the litigant either must
have raised the issue before the agency in the first instance or seek
reconsideration of the agency's order, so that the FCC has the opportunity to
address the issue before it is called upon to defend itself in court. Petitioners
took neither action here. And that failure is particularly acute here because in
the 2009 BAS Order the Commission expressly invited comment on a
proposed definition of "enter the band," which the agency noted had not been
defined previously. Id. 89 (JA 82). Despite that invitation, "[n]either MSS
entrant addressed the proposed definition of `enter the band' in their
30

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 43 of 92
comments." 2010 BAS Order 47 (JA 209). Indeed, the pleadings filed by
4
DBSD (as well as TerreStar) were completely silent on the issue.
Given that silence, although the agency itself had raised the general
issue of how to define "enter the band," the Commission had no opportunity
to address any of the specific arguments now raised by DBSD, none of which
are necessarily implicated by the general definitional question. See Cassell v.
FCC, 154 F.3d 478, 485 (D.C. Cir. 1998) (argument barred under section
405(a) where party "knew full well that the Commission would address" a
matter but failed to raise its argument before the Commission). The
Commission could not have known that its attempt to give meaning to the
term would be attacked as retroactive, lacking in fair notice, and inconsistent
with an allegedly settled earlier definition that petitioners never even
mentioned in their comments.
DBSD apparently raised some of its current claims in pleadings filed in
litigation pending before the courts and subsequently attached to submissions

4 DBSD would be wrong if it claimed on reply that it raised the issue by
arguing that the Commission's "modification of the BAS cost-sharing requi-
rements" would be impermissibly retroactive. See DBSD Comments at 9-13
(JA 121-125). That argument referred to the band cutoff date and not to the
definition of "enter the band" and the Commission reasonably understood
that DBSD's comments did not raise any of the "enter the band" arguments
that it now advances in its brief before this Court. See WAIT Radio v. FCC,
418 F.2d 1153, 1157 (D.C. Cir. 1969) (argument must be "stated with clarity"
to be preserved for judicial review), cert. denied, 409 U.S. 1027 (1972).
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made to the FCC. Such pleadings, however, do not give the Commission a
fair opportunity to confront an issue. The onus was on petitioners to raise
their claims squarely in the main pleadings they filed with the Commission.
The Commission has no responsibility to "sift pleadings and documents to
identify" arguments that are not "stated with clarity" by a petitioner. WAIT
Radio, 418 F.2d 1153, 1157 (D.C. Cir. 1969); New Eng. Pub. Commc'ns
Council, Inc. v. FCC, 334 F.3d 69, 79 (D.C. Cir. 2003).

B.

DBSD's Claims Fail On Their Merits.

1.

The Commission Did Not Engage In Retroactive
Rulemaking When Defining "Enter The Band."

DBSD argues that the Commission's definition of "enter the band" is
impermissibly retroactive. Even if DBSD had preserved this argument, it
lacks merit.
DBSD's theory is that it launched its satellite and certified the satellite
as operational in reliance upon Commission precedent clearly establishing
that those acts did not constitute entering the band. According to DBSD, the
Commission retroactively changed the law to impose reimbursement
obligations on the basis of the already completed launch and certification.
Br. 30. In fact, the Commission changed neither the law nor any vested rights
held by DBSD. Rather, from the outset, DBSD knew and was repeatedly
reminded by the Commission that it would have to contribute a pro rata
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share of relocation costs. The Commission's action fixing the starting date
for that responsibility thus was not retroactive.
"[R]etroactivity law is concerned with the protection of reasonable
reliance" on settled existing law. Bergerco Canada v. U.S. Treasury Dept.,
129 F.3d 189, 193 (D.C. Cir. 1997). Thus, administrative action is not
retroactive merely because it is applied in "a case arising from conduct
antedating" that action. Landgraf v. USI Film Prods., 511 U.S. 244, 269
(1994). Rather, whether an administrative action is retroactive depends on
"considerations of fair notice, reasonable reliance, and settled expectations."
Id. at 270. The Court "must ask whether the legal status quo ante created
`rights' favorable to [the litigant] and later modified." Bergerco, 129 F.3d at
193. An action is retroactive only if it "takes away or impairs vested rights
acquired under existing law, or creates a new obligation, imposes a new duty,
or attaches a new disability." National Mining Ass'n v. Dept. of Labor, 292
F.3d 849, 859 (D.C. Cir. 2002) (citation and quotation marks omitted);
accord Arkema, Inc. v. EPA, 618 F.3d 1, 7 (D.C. Cir. 2010) ("A rule operates
retroactively if it takes away or impairs vested rights" that are "substantively
inconsistent" with prior agency practice).
The Commission's definition of "enter the band" was not retroactive.
It did not change DBSD's rights and reimbursement obligations, nor did it
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change the law. And DBSD did not take any action in reliance on an
understanding of "enter the band" that would have allowed it to escape
payment responsibility.

No new duty.

The 2010 BAS Order imposed no new duty on DBSD,
which was always required to pay its share of BAS relocation costs. The 800
MHz Order plainly contemplated as much, as it was premised on the idea that
both MSS operators would launch their satellites and put them into operation
before the 36-month 800 MHz band reorganization had been completed a
timeline based on a condition in the MSS authorizations themselves. 800
MHz Order 270; see 2010 BAS Order 7 (JA 192). Thus, although the 800
MHz Order did not directly define "enter the band," it used the phrase in a
manner tied directly to the schedule contemplated at the time, under which
DBSD would declare its satellite operational (a condition on its authorization)
prior to the completion of band reorganization.
Moreover, throughout every stage of the 2 GHz band reorganization,
the Commission consistently and repeatedly informed DBSD that it would be
bound by "the cost-sharing principle that the licensees that ultimately benefit
from the spectrum cleared by the first entrant shall bear the cost of
reimbursing the first entrant for the accrual of that benefit." 800 MHz Order
261; accord 1997 MSS Order 72; 800 MHz Reconsideration Order 111;
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2008 BAS Order 15. That "important underlying principle[]" was central to
the Emerging Technologies orders and is necessary to prevent free-ridership
and deterrence to future licensees to "assume the burden and cost of clearing
spectrum quickly if they were unsure of the likelihood that they will be
reimbursed by other new entrants." 2010 BAS Order 41 (JA 207). Thus,
while the Commission's definition of "enter the band" clarified the precise
point in time when DBSD's reimbursement obligation attached, it did not
"impose a new duty" or "create a new obligation" that previously had not
applied to DBSD.
For that reason, this case is unlike typical retroactivity cases such as
Bowen v. Georgetown Univ. Hosp., 488 U.S. 204 (1988), where the agency
imposed new regulatory requirements that applied to past time periods when
no such requirements existed. Unlike such cases, DBSD knew from the 800
MHz Order that its MSS milestones were related directly to its obligation to
share BAS relocation expenses. A subsequent clarification of the precise
point at which that obligation began does not constitute a new duty. Thus, far
more on point are cases like Cookeville Regional Med. Ctr. v. Leavitt, 531
F.3d 844, 849 (D.C. Cir. 2008), where the Court held that clarifications
applied to past conduct were not retroactive because they did not upset any
settled expectation. See also Levy v. Sterling Holding Co., 544 F.3d 493, 506
35

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(3d Cir. 2008) ("where a new rule constitutes a clarification rather than a
substantive change of the law as it existed beforehand, the application of
that new rule to pre-promulgation conduct necessarily does not have an
impermissible retroactive effect").

No change to existing law.

A "critical question" in assessing
retroactivity "is whether the interpretation established by the new rule
changes the legal landscape." Arkema, 618 F.3d at 7; see National Mining,
292 F.3d at 859 (to be retroactive, ruling must disrupt "vested rights" under
"existing law"). DBSD asserts that it had a vested right not to contribute
when it launched its satellite and certified it as operational because at that
point "the law was clear" that doing so did not constitute entering the band.
Br. 33. The gist of DBSD's claim is that prior to the 2010 BAS Order the
Commission had "consistently ruled" that "entering the band" was defined by
a specific four-part test, which the Commission failed to apply in the order on
review. Br. 30-31.
If the meaning of "enter the band" had been clear, DBSD presumably
would have argued as much to the Commission after it requested comment on
a proposed definition. Instead, DBSD did not even mention the four-part test
in its comments. In any event, the argument DBSD now makes to the Court
fails because it rests wholly on regulations addressing reimbursement
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obligations applicable to services other than BAS. See 47 C.F.R.
24.247(a) (PCS service); 27.1168(a) (2110-2150 MHz band); 27.1184(a)
(BRS service). None of those regulations uses the term "enter the band."
Nor are we aware of other FCC orders, including the Emerging Technologies
orders, in any relocation proceeding other than BAS that used that term (and
DBSD identifies no such order). Indeed, the Commission pointed out in the
2009 and 2010 BAS Orders that prior orders in the 2 GHz proceeding "did
not define the term." 2009 BAS Order 89 (JA 82); see 2010 BAS Order 46
(JA 209); cf. 800 MHz Order App. C Rule 74.690 (defining "new entrants" to
2 GHz band as companies "proposing to ... implement" MSS in the band).
Thus, DBSD's argument that it met none of the four alleged criteria for
entering the band, Br. 31-32, is beside the point. There were no established
criteria for the 2 GHz band, and as a result the Commission could not have
changed the law when it defined "entering the band."
To be sure, the rules cited by DBSD are used to determine when a
reimbursement obligation attaches in the bands to which they apply. But the
rules themselves set forth for each service individually make clear that the
Commission determines the trigger point on a service-by-service basis and
not by a one-size-fits-all rule for every situation.
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The Commission never codified such a rule for BAS relocation. To the
contrary, when the Commission allocated 2 GHz spectrum to AWS, it
expressly deferred implementation of a cost-reimbursement plan for that
service. 2003 MSS Order 10. The following year, when the Commission
allotted spectrum to Sprint and implemented an "equitable" cost-sharing plan,
it did not rely on reimbursement rules established for other services, but only
on the general principle that "the licensees that ultimately benefit from the
spectrum cleared by the first entrant shall bear the cost of reimbursing the
first entrant for the accrual of that benefit." 800 MHz Order 261.
The Commission explained from the beginning of this proceeding that
BAS band clearing was fundamentally unlike other band clearings and that
MSS is technologically different from terrestrial services governed by the
rules cited by DBSD. "The nature of BAS as an integrated, coordinated
system, and the nationwide nature of MSS" requires a different "relocation
framework than that contemplated in [the] Emerging Technologies
proceeding." 2000 MSS Order 42. That is because of the "substantial
differences between BAS and [fixed service] microwave" facilities that were
at issue in other bands (and that are governed by the regulations relied on by
DBSD). Ibid. Fixed service "is far less integrated, consisting essentially of a
large number of individual links, with coordination required only upon first
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activation of any link." Ibid. In contrast, the "integrated nature of BAS,
along with the nationwide ... scope of MSS, makes a licensee-by-licensee
relocation of BAS impossible." Ibid. "Because of the nationwide nature of
MSS and ... BAS," the Commission determined, "a market-by-market or
system-by-system test" of the type used in other services would not be
"practical or appropriate." 2010 BAS Order 49 (JA 210-211); see also 2008
BAS Order 31 (BAS is an "entirely different service with many
5
complexities" not present in moving fixed links).
Far from impermissibly changing the law when it defined "enter the
band," the Commission reasonably applied existing law to a new context. To
interpret that phrase, the Commission relied on the concepts embodied in the
Emerging Technologies proceeding. Specifically, "a later entrant is generally
required to share in the cost that an earlier entrant has incurred ... if the
subsequent entrant would have caused interference to the incumbent
licensees." 2010 BAS Order 48 (JA 210). Under the approach applicable to
other services (on which DBSD relies), the potential for interference would

5 For those reasons, rules establishing the cost-sharing trigger in other
services do not apply to BAS on their face. BAS does not have a
"clearinghouse" to coordinate payments, e.g., 47 C.F.R. 24.247(a); it makes
no sense to trigger cost-sharing based on a "microwave link," id.
24.247(a)(1); and interference is not caused only by "turn[ing] on a fixed
base station at commercial power," id. 24.247(a)(3).
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arise when an operator is prepared to use full commercial power. See 2009
BAS Order 89 & n.196 (JA 82). By contrast, an operational MSS satellite
can never "operate without causing interference to the BAS incumbents," and
potential interference thus would occur "when [an MSS provider] certifies
that its satellite is operational." 2010 BAS Order 49 (JA 210).
DBSD misinterprets a passage in one Commission order as evidence
that the Commission had given "enter the band" a fixed meaning other than
having an operational satellite prior to the 2010 BAS Order. Br. 30, 40. In
2008, the Commission proposed to eliminate the top-30 market rule. Because
of that proposal, the Commission held in abeyance a request to waive the
rule, noting its "tentativ[e] conclu[sion]" that it would "eliminate the top 30
market rule to allow the MSS operators to enter the band in January 2009."
2008 BAS Order 40. That "tentativ[e] conclu[sion]" cannot plausibly be
understood as the promulgation of a settled definition of "entering the band"
particularly where the Commission explained that its prior orders in the 2
GHz proceeding "did not define the term," 2009 BAS Order 89 (JA 82);
2010 BAS Order 46 (JA 209). Such an understanding also would be
inconsistent with the 800 MHz Order, which was predicated on a temporal
link between cost-sharing responsibility and the operational satellite
milestone.
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In short, rules governing the relocation of other services do not apply to
BAS and MSS, which have unique technical characteristics. That matter lies
within the agency's core technical expertise and is one on which the
Commission's determinations are entitled to particular deference. See
Teledesic, 275 F.3d at 84.

No reliance.

DBSD's retroactivity argument also fails because DBSD
cannot credibly claim that it launched its satellite and declared it operational
in reliance on an understanding that doing so would not constitute entering
the band. See Bergerco, 129 F.3d at 193.
DBSD took those actions in order to fulfill conditions on its spectrum
authorization independent of its cost-sharing obligations to Sprint. Had
DBSD failed to meet the established launch and operational milestones, it
would have lost its authorization. MSS Policies, 15 FCC Rcd at 16178. In
fact, DBSD expressly recognized that the launch of its satellite and the
certification of it as operational were not undertaken in reliance on any
understanding of its BAS cost-sharing responsibilities. In 2008, DBSD
applied to the Commission to extend its launch and operational milestones.
Sprint asked the agency to condition any milestone extension on DBSD's
sharing of BAS relocation costs. DBSD opposed Sprint's requested condition
on the ground that matters "concerning BAS relocation obligations" are
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"irrelevant to [the] pending modification application." Letter of March 24,
2008, from Suzanne Hutchings Malloy to Marlene H. Dortch, Secretary, FCC
at 2 (attached hereto).
In sum, although the Commission's definition of "enter the band"
applied to an act that already had taken place, the definition did not impose
any new obligation on DBSD, effectuate a change in the law, or undermine
DBSD's reliance on a different definition. It therefore was not retroactive.
2.

The Commission's Order Did Not Violate Fair Notice
Principles.

DBSD next charges that the Commission's reading of "enter the band"
violates principles of due process because DBSD lacked fair notice of that
definition. That argument fails.
First, there was no failure of notice because DBSD (along with other
MSS operators) was notified repeatedly of its responsibility to contribute
toward BAS relocation costs. See 1997 MSS Order 72; 800 MHz Order
261; 800 MHz Reconsideration Order 111; 2008 BAS Order 15.
Furthermore, as just explained, DBSD did not launch its satellite in
reliance on any understanding of the term "enter the band" that was different
from the one set forth in the order on review. By contrast, the fair notice
cases cited by DBSD (Br. 36-37) involved parties that acted in reliance upon
a regulation that was subsequently altered. In Satellite Broad. Co. v. FCC,
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824 F.2d 1 (D.C. Cir. 1987), for example, an applicant for an FCC license
sent its application to the wrong address in reliance on unclear directions in
the FCC's rules. Similarly, in Trinity Broad. of Florida, Inc. v. FCC, 211
F.3d 618 (D.C. Cir. 2000), the licensee created a corporate structure in
reliance on a reasonable reading of an FCC rule.
Finally, the fair notice doctrine does not apply at all to petitioners'
cost-sharing obligation. While that doctrine "preclude[s] an agency from
penalizing a private party for violating a rule without first providing adequate
notice of the substance of the rule," Satellite Broad., 824 F.2d at 3, the key
term is "penalizing": the fair notice doctrine applies only where an agency
6
7
imposes punishment such as a fine, a mandatory product recall, the
8
dismissal or denial of an application, or another type of criminal or civil
sanction for the violation of an ambiguous rule. In the "non-penal" context,
the Court has declined to apply the doctrine. Gates & Fox Co. v. OSHRC,
790 F.2d 154, 156 (D.C. Cir. 1986); see also General Elec., 53 F.3d at 1329-
1330. Otherwise, the fair notice doctrine could not be reconciled with the
general rule that adjudications, which frequently clarify ambiguous regulatory

6 See Fabi Constr. Co. v. Sec. of Labor, 508 F.3d 1077 (D.C. Cir. 2007);
General Elec. Co. v. EPA, 53 F.3d 1324 (D.C. Cir. 1995).
7 See United States v. Chrysler Corp., 158 F.3d 1350 (D.C. Cir. 1998).
8 See Trinity, 211 F.3d 618; Satellite Broad., 824 F.2d at 3-4.
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terms that result in monetary liability, are retroactive. See Qwest v. FCC, 509
F.3d 531 (D.C. Cir. 2007).
The due process concerns that underlie the fair notice doctrine in fact
support the Commission's approach, not DBSD's. Sprint relied at great
expense on the understanding that it would be reimbursed for a portion of
its costs when other users entered the band. To let DBSD off scot-free on the
ground that it lacked fair notice of its cost-sharing responsibilities would
unfairly injure Sprint, which in that situation would have lacked notice that it
would bear the entire expense itself.
3.

The Commission Did Not Depart From Precedent
When Defining "Enter The Band."

Finally, DBSD argues that the Commission "changed, without
explanation, the meaning of `entering the band.' " Br. 38. That claim rests on
the same incorrect premises as DBSD's retroactivity argument and it fails for
the same reasons. As explained at pages 36-39 supra, the Commission did
not change the meaning of "enter the band," but defined it for the first time.
To the degree that the Commission did not explain why it was not adopting
the four-part test on which DBSD relies, that is because DBSD failed to raise
that issue before the agency, which thus had no opportunity to explain why
DBSD's test is inapposite.
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DBSD also contends that the Commission abused its discretion by
failing to adequately explain its supposed departure from another FCC
"policy." Br. 42-44. According to DBSD, the Commission had previously
implemented a "pay for benefit policy" under which no reimbursement
obligation would attach until a band user could provide commercial service.
Br. 42-44. But DBSD cites no source for such a policy, and the relevant
BAS/MSS orders make no mention of it. DBSD may be referring to the rules
discussed at page 37, supra applicable to other services under which the
Commission assesses whether a licensee is prepared to use a transmitter at
"commercial power." Even if that rule amounted to a "pay for benefit"
approach, as we have explained, the Commission adopted no such rule for
BAS/MSS, which is technologically far different from the services in which
the commercial power rule applies.
In any event, DBSD benefited substantially from Sprint's band-
clearing efforts. It will be able to use cleared spectrum without having
undertaken the substantial relocation efforts. It also received a financial
"float" from Sprint's bearing the expenses up front. Conversely, if DBSD
had cleared the band, it would have borne those costs.
Nor is DBSD correct in claiming that it is unfair to set the point of
entering the band upon certification of its satellite's operation. Br. 32, 42, 44.
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DBSD posits a "Catch-22" in which the top-30 market rule prevented it from
providing commercial service yet it still had to pay for relocation. Br. 42.
That argument ignores the Commission's clear warnings that MSS operators
had an obligation to clear the band independent of and equal to Sprint's. 800
MHz Order 250; 2010 BAS Order 60 (JA 214). Indeed, the Commission
expressly recognized the effects of the top-30 market rule and reiterated that
MSS entrants should engage in their own band clearing efforts if Sprint's
schedule did not suit their needs. Yet DBSD neither objected to Sprint's
schedule, nor engaged in any band clearing of its own, preferring to rely
entirely on Sprint's effort and financing. 2008 BAS Order 13. DBSD thus
is wrong when it claims that it "could not have meaningfully engaged in BAS
clearing on [its] own." Br. 14. The Commission determined that it should
not "remove Sprint ... from the process," 2008 BAS Order 30, but it
recognized at the same time that MSS operators retained "the obligation ... to
relocate the BAS licensees," id. 13.
Furthermore, although DBSD faults Sprint's efforts, Br. 12-13, the
Commission found that there were "many valid reasons" for the delays in the
proceeding. 2010 BAS Order 26 (JA 199). Sprint had an incentive to act
quickly because it was "unable to access its 5 MHz block" of spectrum in the
2 GHz band "due to ... relocation delays," ibid., despite having spent $750
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million on the process and relinquished $2 billion worth of spectrum in the
800 MHz band.
Contrary to DBSD's suggestion (Br. 42-44), there is nothing
"arbitrar[y]" or "irrational" about requiring DBSD to pay its fair share of
band-clearing costs in return for receiving a valuable future benefit. No rule
or law or FCC precedent required DBSD to receive an income stream before
bearing costs. Rather, cost-sharing here reflects the ordinary sequence in
which outlays for relocation expenses necessarily precede revenue from new
service. The same was true for Sprint. Indeed, if the MSS entrants had
undertaken the relocation themselves, the time lag between expenses and
revenues would have been even greater. DBSD's flawed logic also is
inconsistent with MSS providers' independent band clearing obligations.
Finally, DBSD has not shown that it would have been able to provide
service in the absence of the top-30 market rule. That rule was repealed in
June 2009, yet as of December 2010, DBSD reported to the Commission that
it had engaged only in "alpha testing" of its operations in a small handful of
markets. See Annual Report of DBSD to FCC, available at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-302445A1.pdf . The
Commission determined that "the MSS entrants have suffered little harm
from the delays in the BAS relocation." 2010 BAS Order 57 (JA 213).
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III.

THE COMMISSION REASONABLY INTERPRETED
PRIOR ORDERS REFERRING TO THE CUTOFF DATE,
AND IT PROPERLY ESTABLISHED A FIXED CUTOFF
DATE.

Petitioners contend that the 800 MHz Order set a hard-and-fast
reimbursement cutoff date of June 26, 2008, and that the order on review
impermissibly sought to "revive" a "lapsed" reimbursement obligation when
the Commission established December 9, 2013, as the new cutoff date. Br.
44-53. According to petitioners, that ruling constitutes impermissible
retroactivity. Id.
If the Court does not reach or upholds the Commission's "enter the
band" ruling, the question of the cutoff date will be moot. DBSD declared its
satellite operational in May 2008 (Br. 13) prior to June 26, 2008 and thus
entered the band at that time. At that point, it incurred a reimbursement
obligation even if that obligation terminated on June 26, 2008, and there
would no longer be a live controversy concerning the cutoff date. Should the
Court reach the issue, however, petitioners' claims lack merit.
Petitioners' argument is based on the false premise that the 800 MHz
Order established a firm cutoff date of June 26, 2008. Paragraph 261 of that
order stated that Sprint may seek reimbursement of "costs incurred during the
36-month reconfiguration period," and that it would "no longer be entitled to
reimbursement ... after receiving credit ... at the 800 MHz true-up." 800
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MHz Order 261. On reconsideration, the Commission explained that
paragraph 261 tied the cutoff to the true-up period. The reimbursement
obligation would end, the Commission explained, "once the true-up is
completed." 800 MHz Reconsideration Order 112. The Commission
rejected efforts to establish a different time period, deciding instead to
"maintain the schedule previously established, i.e., the true-up period." Id.
113. See also 2008 BAS Order 16 ("Prior to the true-up" Sprint "is entitled
to seek a pro rata reimbursement," which ends only "[a]t the conclusion of
the true-up.").
The Commission thus reasonably determined in the 2010 BAS Order
that the "36-month period" referred only to the timeframe in which "the 800
MHz reconfiguration was expected to be completed." 2010 BAS Order 22
(JA 197) (emphasis added). In other words, that timeframe was employed in
the 800 MHz Order as shorthand for the reconfiguration and true-up period,
not to establish a cutoff on a date certain June 26, 2008. The Commission
therefore properly rejected petitioners' "narrow" and "unreasonable" reading
of its prior orders. 2010 BAS Order 24 (JA 198). That reading not only was
inconsistent with the Commission's explanation of the cutoff date in other
orders, 800 MHz Reconsideration Order 112-113; 2008 BAS Order 16;
2009 BAS Order 79-80 (JA 78-79), but also would "undermine the larger
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principle that MSS entrants must pay their pro rata share of the BAS
relocation costs." 2010 BAS Order 24 (JA 198). The Commission's
reasonable interpretation of its own orders is "controlling." Auer, 519 U.S. at
461.
The Commission also properly rejected petitioners' claim that the
initial 36-month window in which Sprint had a right to reimbursement
reflected an immutable balance of interests between Sprint and MSS
operators. Br. 1, 11, 45, 48, 49, 52. Rather, the Commission was only
"providing administrative efficiency in the accounting process" for 800 MHz
band reconfiguration, and not "provid[ing] a benefit" to MSS operators or "a
means for the MSS entrants to avoid paying BAS relocation expenses." 2010
BAS Order 24 (JA 198). Indeed, freeing MSS operators from their cost-
sharing obligation due to unexpected difficulties in band clearing would
thwart the Commission's band-clearing policy and might cause future
licensees to be "unwilling or unable to assume the burden and cost of clearing
spectrum quickly if they were unsure of the likelihood that they will be
reimbursed by other new entrants." Id. 41 (JA 207).
Because the Commission had not established a specific cutoff date, and
the cutoff event (i.e., the 800 MHz reconfiguration and true-up) had not yet
occurred, the agency did not act retroactively in any sense when it
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prospectively established a new date of December 9, 2013. 2010 BAS Order
85 (JA 223). The new date is not primarily retroactive because it changes
nothing about the past. The new date does not "alter[] the past legal
consequences of past actions." Bowen, 488 U.S. at 219 (Scalia, J.,
concurring). Neither did the Commission "revive" an obligation that had
"lapsed" or been "extinguished" (Br. 44, 46, 50); this case thus bears no
similarity to the revival of a cause of action "after the pre-existing period of
limitations ha[d] expired" (Br. at 46-47) (citation omitted).
The order does not entail secondary retroactivity because it upset no
expectation that reimbursement responsibility would be cut off. The
Commission had not established any firm cutoff date, but had tied the end of
reimbursement responsibility to events the completion of band
reorganization and the true-up that had no fixed timetable.
Finally, contrary to petitioners' argument (Br. 53-55), the Commission
adequately explained why it prospectively established a firm cutoff at the
band sunset date. That date was originally established as the point when
reimbursement obligations would terminate. 2010 BAS Order 21 (JA 196).
Because "the main reason for allowing early termination of the new entrants'
cost-sharing obligation no longer applies i.e., [Sprint] will probably not be
taking credit for all of its BAS relocation costs against the anti-windfall
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payment," the Commission explained that "there is no compelling reason to
end the cost sharing obligation of the new entrants any earlier than the band
sunset date." Id. 44 (JA 208-209).

IV.

THE COMMISSION PROPERLY ESTABLISHED
STANDARDS FOR DETERMINING ICO'S COST-
SHARING RESPONSIBILITY.

In the Declaratory Ruling portion of the 2010 BAS Order, the
Commission identified circumstances under which ICO and other corporate
affiliates of DBSD may be responsible for reimbursement of a share of BAS
9
relocation costs. ICO attacks that decision on three grounds: that the
Commission lacks authority to hold corporate affiliates of an MSS licensee
liable for reimbursement responsibilities or to treat affiliated companies as a
unit for those obligations; that the decision is impermissibly retroactive; and
that decisions by the bankruptcy court preclude the Commission's rulings.
Those arguments lack merit.

9 The MSS license is held by one of the bankrupt DBSD entities, all of which
are subsidiaries of non-bankrupt ICO. Because Sprint's "recovery of any
reimbursement claim against the bankrupt debtors will be governed by the
proceedings in the bankruptcy court," 2010 BAS Order 29 (JA 200), unless
otherwise ordered by that court, any monetary claims resulting from the
Commission's ruling on enterprise liability are limited to ICO. We therefore
refer only to ICO in this section of the brief.
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A. The Commission Has Authority To Require

Reimbursement From Affiliated Companies
Entering The Band As An Integrated Enterprise.


ICO's argument rests on the erroneous premise that, before the
Declaratory Ruling on review, only the specific corporate entity holding an
MSS authorization had reimbursement responsibility. Br. 61. From that
flawed assumption, ICO asserts that the Declaratory Ruling unlawfully
imposed a new "derivative" liability on ICO as the licensee's parent without
meeting the standards for piercing the corporate veil. Id. at 55.
In fact, the Commission's prior orders had assigned responsibility to
MSS "operators" and "entrants," not simply licensees. See 2010 BAS Order
29 n.68 (JA 201). The Declaratory Ruling interpreted those ambiguous
terms, explaining that they are not and never were limited to the nominal
licensee, id. 30 (JA 201), but instead could include additional entities that
work with the licensee as an integrated enterprise to enter the band and
operate an MSS system, id. 31, 35 (JA 202, 204-205). ICO does not
challenge the reasonableness of the agency's construction of its prior orders,
which, in any event, is "controlling." Auer, 519 U.S. at 461.
The Commission's decision therefore does not shift reimbursement
responsibility from the licensee to others (Br. 55), but instead defines the
scope of the original reimbursement obligation. In particular, the
53

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 66 of 92
Commission emphasized that affiliates are not being made derivatively liable
for the licensee's obligations, but could be liable for their own actions as part
of an integrated unit. 2010 BAS Order 34 (JA 203-204) (explaining that
enterprise liability as defined in the Declaratory Ruling is "distinct from the
standards for `piercing the corporate veil' or finding an `alter ego' under
common law").
United States v. Bestfoods, 524 U.S. 51 (1998), cited by ICO (Br. 56-
57), is entirely consistent with the Commission's approach. There, the Court
recognized at the outset that a parent could not be derivatively liable for its
subsidiary's conduct under an environmental statute because Congress did
not modify the common law in enacting the statute. But the Court
nonetheless concluded that, because statutory liability attached to either the
"owner" or "operator" of a facility, the parent could be directly liable as an
"operator" of the facility even if its subsidiary was nominally the facility
owner. 524 U.S. at 64; see also id. at 71 (parent can also be liable if it
operates alongside its subsidiary as a joint venture). Because the parent was
directly liable "for its own actions," the standards for veil piercing were
"simply irrelevant." Id. at 65 ("direct, personal liability ... is distinct from
the derivative liability that results from piercing the corporate veil") (citation
and quotation marks omitted). Indeed, a parent cannot "hid[e] behind the
54

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 67 of 92
corporate shield" when it actually participated in the prohibited conduct. Id.
Here, the FCC similarly made any "MSS entrant" or "MSS operator"
responsible for relocation costs; ICO's veil piercing argument thus is equally
"irrelevant." See 2010 BAS Order 34 n.85 (JA 204).
ICO is incorrect that the Commission lacks the statutory authority to
treat separate corporate entities as a unit for regulatory purposes unless it
applies the traditional common law requirements for veil piercing. Br. 57-58.
As this Court has recognized, the Communications Act, not the common law,
sets the standards for the Commission's regulatory authority. Capital Tel.
Co. v. FCC, 498 F.2d 734, 738 (D.C. Cir. 1974). Consequently, when
reviewing a Commission decision that recognized the practical reality that a
parent and its affiliate may act in concert as an integrated unit, the Court
"need not pause" to consider the "standards of the common law alter ego
doctrine which would apply in a tort or contract action." Id. See also
Mansfield Journal Co. v. FCC, 180 F.2d 28, 37 (D.C. Cir. 1950) (where one
family controlled two newspapers in separate communities, the Commission
could ascertain "the true locus of control" and treat the two corporations as a
single entity for regulatory purposes). "Where the statutory purpose could ...
be easily frustrated through the use of separate ... entities," the Commission
may treat the separate entities "as one and the same for purposes of
55

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 68 of 92
regulation." General Tel. Co. of the S.W. v. United States, 449 F.2d 846, 855
(5th Cir. 1971).
ICO attempts to distinguish these cases on the ground that they
preceded Bestfoods. Br. 58. But Bestfoods stands for the proposition that
courts must look to the applicable law to determine treatment of parents and
subsidiaries. For the FCC, the "applicable standard" comes from the
Communications Act, not "court decisions involving civil suits." Capital
Tel., 498 F.2d at 738. Congress empowered the FCC to regulate
communications services "in the public interest," e.g., 47 U.S.C. 201(a),
309(a), and granted the Commission regulatory authority over "all persons"
engaged in "wire or radio communication" service, id. 152(a), and
addressed directly those entities that "control" a license, id. 310(d). Under
that broad mandate, the Commission has regularly treated corporate affiliates
as a single entity where necessary to determine the true nature of a transaction
and to ensure compliance with the Communications Act and Commission
policies and regulations. See 2010 BAS Order 33 nn.79-82 (JA 203) (citing
FCC decisions treating affiliated entities collectively for regulatory
56

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 69 of 92
purposes); see also id. 34 n.86 (similar decisions by other agencies) (JA
10
204).
ICO also argues that Capital Telephone and similar cases concern only
FCC actions denying license grants rather than those imposing financial
liability. Br. 59-60. Those decisions, however, turn not on the type of FCC
action being reviewed, but on the authorization granted to the Commission to
ascertain "the true locus of control." Mansfield Journal, 180 F.2d at 37.
Moreover, the reimbursement issue here arises in the context of band clearing
for MSS licensees and establishing the conditions for the granting such
licenses. For that reason, too, ICO's attempt to distinguish Capital Telephone
fails.
Finally, contrary to ICO's assertion (Br. 59), the Declaratory Ruling
does not penalize the DBSD licensee for its bankruptcy or discriminate
against ICO as an affiliate of a debtor. Unlike the situation in FCC v.
NextWave Personal Commc'ns Inc., 537 U.S. 293 (2003), cited by ICO (Br.

10 Tri-State Steel Constr. Co. v. Herman, 164 F.3d 973 (6th Cir. 1999), relied
on by ICO (Br. 56), merely illustrates that different statutory schemes
generate different outcomes. There, the court refused to allow aggregation of
assets among affiliates for purposes of the Equal Access to Justice Act. Id. at
979. By contrast, under the Communications Act, the FCC regularly
aggregates the assets of affiliates of licensees to determine the qualification as
a "small business" for participation in spectrum auctions. See, e.g.,
Omnipoint Corp. v. FCC, 78 F.3d 620, 633 (D.C. Cir. 1996).
57

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 70 of 92
59), the FCC is not a creditor in the bankruptcy case and is not seeking
recovery from ICO under these rulings. The Commission made clear that it
was not challenging the bankruptcy court's authority to determine payment to
Sprint from the bankruptcy estate, 2010 BAS Order 29 (JA 200-201).

B.

The Declaratory Ruling Is Not Impermissibly
Retroactive Because It Adjudicated A Dispute
Between ICO And Sprint.

ICO attacks the Declaratory Ruling as an allegedly improper
retroactive rulemaking and further contends that, even if the decision is an
adjudication, it cannot have retroactive effect because it significantly changed
the law of corporate liability. Br. 62-68. Neither argument withstands
scrutiny.
1.

The Declaratory Ruling Was An Adjudication.

"Adjudication is concerned with the determination of past and present
rights and liabilities." Bowen, 488 U.S. at 219 (Scalia, J., concurring)
(citation and quotation marks omitted). Rulemaking, by contrast, regulates
"future conduct ... [and] is essentially legislative in nature, not only because
it operates in the future but also because it is primarily concerned with policy
considerations." Id. at 218-219.
Under those standards, the Declaratory Ruling was an adjudication.
The decision did not announce a new policy for future application, but instead
58

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 71 of 92
interpreted and clarified past orders for the narrow purpose of addressing the
specific Sprint-ICO controversy, see, e.g., 2010 BAS Order 32 (JA 202)
(Declaratory Ruling focused on "whether or not ICO Global is liable to Sprint
Nextel"), and elucidated the standards that a district court will apply to
determine liability after it has made the necessary factual findings. Id. 40
(JA 207).
ICO is wrong that the Declaratory Ruling must be treated as a
rulemaking because it arose in a rulemaking docket. Br. 64. This Court
rejected that same argument in Qwest, 509 F.3d at 536, upholding an
adjudicatory ruling issued in a rulemaking docket, where the Commission
initiated a rulemaking to resolve the issue, received comments in the
rulemaking docket, and issued a declaratory ruling without giving prior notice
to the parties of the Commission's intention to bifurcate the proceeding).11
ICO is also incorrect in arguing that the Declaratory Ruling is a
rulemaking because the Commission generally described the factors it
considered relevant to determining whether affiliates operate as an integrated

11 ICO has shown no additional point of fact or law it would have raised had
it been aware that the FCC would issue a declaratory ruling rather than a rule.
See Qwest, 509 F.3d at 536. ICO made several ex parte presentations to the
FCC concerning enterprise liability and retroactivity. E.g., ICO ex parte,
August 2, 2010 at 7-8 (JA 173-174). ICO suffered no prejudice from the
bifurcation and points to none in its brief.
59

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 72 of 92
unit. Br. 63. The agency did so in the context of resolving the concrete
dispute between Sprint and ICO concerning ICO's reimbursement
obligations. That the reasoning of the Declaratory Ruling might apply to
other controversies does not change its adjudicatory character. See Qwest,
509 F.3d at 536 (a declaratory ruling was an adjudication even though it
applied generally to all calling cards).12
Finally, the decision was an adjudication even though the Commission
concluded that the record was inadequate to render a decision applying the
law to the disputed facts and rendering a judgment on ICO's liability. 2010
BAS Order 40 (JA 207). In resolving the dispute between ICO and Sprint
over the interpretation of ambiguous orders, the decision performed the
essential function of a declaratory ruling "terminating a controversy or
removing uncertainty." See 47 C.F.R 1.2. The Commission's further
decision not to resolve the late-blossoming factual dispute regarding ICO's
conduct after its 2005 corporate restructuring (see pages 22-23, supra) was
within the FCC's "broad delegation" to formulate its own procedures. See
FCC v. Schreiber, 381 U.S. 279, 290 (1965).

12 ICO's reliance (Br. 63) on Motion Picture Ass'n of Am. v. Oman, 969 F.2d
1154 (D.C. Cir. 1992), is misplaced. There, the agency acknowledged that
the action did not decide any specific controversy. Id. at 1157.
60

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 73 of 92
2.

The Declaratory Ruling Was Not Impermissibly
Retroactive.


Retroactivity is the "norm" for adjudicatory rulings that are merely
"new applications of existing law, clarifications, and additions." AT&T v.
FCC, 454 F.3d 329, 332 (D.C. Cir. 2006). ICO's argument that the
Declaratory Ruling was impermissibly retroactive suffers from the same flaw
as its attack on the merits the mistaken premise that the decision "shifts"
liability from the DBSD licensee to affiliates without first piercing the
corporate veil. Br. 62. As explained above, the FCC changed no law, but
only clarified ambiguous terms in its existing orders. That clarification was
permissibly retroactive.
Although retroactive effect may be denied in cases of "manifest
injustice," AT&T, 454 F.3d at 332, ICO has not and could not make that
showing here. A "lack of clarity in the law does not make it manifestly
unjust to apply a subsequent clarification of that law to past conduct." Qwest,
509 F.3d at 540. Moreover, any assessment of "manifest injustice" must
recognize that the loss inflicted to one party by retroactivity may be matched
by an equal loss to the other party from non-retroactivity. Id. at 540-541.
Here, there is no "manifest injustice" in retroactive application of an order
that may require ICO to pay a fair share of expenses incurred by Sprint for
ICO's benefit.
61

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C. Bankruptcy Court Decisions Do Not Preclude

The Declaratory Ruling.

In a ruling on Sprint's proofs of claims against each of the bankrupt
DBSD debtors, the bankruptcy court hearing the DBSD bankruptcy case
interpreted "entrant" and "operator" as used in the FCC's pre-2010 orders to
mean only the licensee and concluded that no current FCC rule or regulation
imposes joint and several liability on corporate affiliates of a licensee for
reimbursement costs. See In re DBSD N. America, Inc., No. 09-13061
(Bankr. S.D.N.Y), Bench Order, Sept. 30, 2009 at 16-18 [Dkt. No. 434],
aff'd, 427 B.R. 245 (S.D.N.Y. 2010). The FCC was not a party to the DBSD
bankruptcy case; it filed an amicus brief solely to alert the bankruptcy court
that the question of enterprise liability was pending before the Commission,
which intended to address the issue "either as part of the final rule or as a
separate order within the rulemaking proceeding clarifying the existing rules
and orders." Brief for FCC as Amicus Curiae 15-16, Case No. 10-1322 [Dkt.
No. 323] (Bankr. S.D.N.Y.). The court declined the Commission's request to
make a primary jurisdiction referral to the agency on that question. Bench
Order, Sept. 30, 2009 at 14-15.
62

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ICO asserts (Br. 65-66) that the DBSD bankruptcy decision precluded
the Commission from later interpreting "entrant" or "operator" to impose
13
BAS relocation reimbursement obligations on ICO. ICO is flatly wrong.
It is black letter law that full mutuality of parties is required for issue
preclusion against the federal government. See United States v. Mendoza,
464 U.S. 154, 162-163 (1984); see also Am. Fed. of Gov't Emps., Council
214 v. FLRA, 835 F.2d 1458, 1462 (D.C. Cir. 1987) ("Collateral estoppel
[runs] against the government only if mutuality of parties exists.") (citing
14
Mendoza). Here, there is no mutuality because neither the Commission nor
ICO was a party to the DBSD bankruptcy proceeding.
For that reason, Town of Deerfield v. FCC, 992 F.2d 420, 428 (2d Cir.
1993), is inapposite. There, the Second Circuit held that once a claim is fully
adjudicated between two private parties the FCC could not re-adjudicate that
same claim involving the same parties. Here, the FCC has not sought to
relitigate a matter fully and finally adjudicated between the same parties to a

13 ICO claims (Br. 67) that the Commission was required to respond to the
preclusion argument in the Declaratory Ruling, but no response is required to
a claim that is plainly wrong under governing law. The FCC "need not
address every comment," but only "those that raise significant problems."
Reytblatt v. NRC, 105 F.3d 715, 722 (D.C. Cir. 1997).
14 ICO argues that issue preclusion does not require mutuality (Br. 67 n.5),
but that proposition applies to disputes between private parties.
63

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 76 of 92
prior litigation. See 2010 BAS Order 29 (JA 200). ICO was not a party to
the DBSD bankruptcy case, and the bankruptcy court did not purport to enter
a judgment on Sprint's claim against ICO nor could the court have done so
under its limited jurisdiction, see Stern v. Marshall, 131 S. Ct. 2594, 2608-
2620 (2011).
Moreover, the bankruptcy court's decision did not purport to bind the
FCC or prevent it from making its own decision on enterprise liability.
Indeed, in reviewing the bankruptcy court's order, the district court
emphasized that the "relevant issue" related only to Sprint's claim of joint
and several liability against the bankrupt debtors, "not whether the FCC had
the authority to impose such liability or whether future FCC orders could do
so." In re DBSD N. America, Inc., 427 B.R. at 255.
Finally, ICO's argument ignores National Cable & Telecom. Ass'n v.
Brand X Internet Servs., 545 U.S. 967, 982-983 (2005), which instructs that
the Commission's reasonable construction of an ambiguous provision of the
Communications Act will trump a contrary court decision that previously
construed the same provision. The FCC is owed even greater deference when
construing its own orders and rules. See Global NAPS v. FCC, 247 F.3d 252,
257-258 (D.C. Cir. 2001). Thus, the Commission is not precluded from
reaching a reasonable interpretation of its own orders contrary to a prior
64

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 77 of 92
judicial construction. See Levy, 544 F.3d at 508-509 (applying Brand X to
construction of agency regulations). Allowing the sequence of decisions to
govern the Commission's interpretation of its BAS orders, as advocated by
ICO, would produce the same "anomalous results" condemned in Brand X.
See 545 U.S. at 983.

CONCLUSION

The petition for review should be denied.
Respectfully
submitted,
SHARIS A. POZEN
AUSTIN C. SCHLICK
ACTING ASSISTANT ATTORNEY
GENERAL COUNSEL
GENERAL
PETER KARANJIA
ROBERT B. NICHOLSON
DEPUTY GENERAL COUNSEL
ROBERT J. WIGGERS
ATTORNEYS
RICHARD K. WELCH
DEPUTY ASSOCIATE GENERAL
UNITED STATES
COUNSEL
DEPARTMENT OF JUSTICE
WASHINGTON, D.C. 20530
/s/ Joel Marcus
STEWART A. BLOCK
JOEL MARCUS
COUNSEL
FEDERAL COMMUNICATIONS
COMMISSION
WASHINGTON, D.C. 20554
(202) 418-1745
September 7, 2011
65

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 78 of 92
IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
ICO GLOBAL COMMUNICATIONS (HOLDINGS)
LTD., ET AL.
PETITIONERS,
v.
NO. 10-1322
FEDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES OF AMERICA,
RESPONDENTS.
CERTIFICATE OF COMPLIANCE
Pursuant to the requirements of Fed. R. App. P. 32(a)(7), I hereby
certify that the accompanying "Brief for Respondents" in the captioned case
contains 13,917 words.
/s/ Joel Marcus
Joel Marcus

Counsel
Federal Communications Commission
Washington, D.C. 20554
(202) 418-1745 (Telephone)
(202) 418-2819 (Fax)
September 7, 2011

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 79 of 92

EXHIBIT

Letter of March 24, 2008 from New ICO Satellite Services

To Marlene H. Dortch, Secretary, FCC


USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 80 of 92

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 81 of 92

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 82 of 92

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 83 of 92

STATUTORY AND REGULATORY APPENDIX

47 U.S.C. 405(a)
47 C.F.R. 24.247(a)
47 C.F.R. 27.1168(a)
47 C.F.R. 27.1184(a)

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 84 of 92
47 U.S.C. 405(a)
405. Petition for reconsideration; procedure; disposition; time of
filing; additional evidence; time for disposition of petition for
reconsideration of order concluding hearing or investigation; appeal of
order

(a) After an order, decision, report, or action has been made or taken in any
proceeding by the Commission, or by any designated authority within the
Commission pursuant to a delegation under section 155(c)(1) of this title,
any party thereto, or any other person aggrieved or whose interests are
adversely affected thereby, may petition for reconsideration only to the
authority making or taking the order, decision, report, or action; and it shall
be lawful for such authority, whether it be the Commission or other authority
designated under section 155(c)(1) of this title, in its discretion, to grant such
a reconsideration if sufficient reason therefor be made to appear. A petition
for reconsideration must be filed within thirty days from the date upon
which public notice is given of the order, decision, report, or action
complained of. No such application shall excuse any person from complying
with or obeying any order, decision, report, or action of the Commission, or
operate in any manner to stay or postpone the enforcement thereof, without
the special order of the Commission. The filing of a petition for
reconsideration shall not be a condition precedent to judicial review of any
such order, decision, report, or action, except where the party seeking such
review (1) was not a party to the proceedings resulting in such order,
decision, report, or action, or (2) relies on questions of fact or law upon
which the Commission, or designated authority within the Commission, has
been afforded no opportunity to pass. The Commission, or designated
authority within the Commission, shall enter an order, with a concise
statement of the reasons therefor, denying a petition for reconsideration or
granting such petition, in whole or in part, and ordering such further
proceedings as may be appropriate: Provided, That in any case where such
petition relates to an instrument of authorization granted without a hearing,
the Commission, or designated authority within the Commission, shall take
such action within ninety days of the filing of such petition.
Reconsiderations shall be governed by such general rules as the Commission
may establish, except that no evidence other than newly discovered

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 85 of 92
evidence, evidence which has become available only since the original
taking of evidence, or evidence which the Commission or designated
authority within the Commission believes should have been taken in the
original proceeding shall be taken on any reconsideration. The time within
which a petition for review must be filed in a proceeding to which section
402(a) of this title applies, or within which an appeal must be taken under
section 402(b) of this title in any case, shall be computed from the date upon
which the Commission gives public notice of the order, decision, report, or
action complained of.

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 86 of 92
47 C.F.R. 24.247(a) (2010)

24.247 Triggering a Reimbursement Obligation.

(a) Licensed PCS. The clearinghouse will apply the following test to
determine if a PCS entity preparing to initiate operations must pay a
PCS relocator or a voluntarily relocating microwave incumbent in
accordance with the formula detailed in 24.243:
(1) All or part of the relocated microwave link was initially co-
channel with the licensed PCS band(s) of the subsequent PCS
entity;
(2) A PCS relocator has paid the relocation costs of the microwave
incumbent; and
(3) The subsequent PCS entity is preparing to turn on a fixed base
station at commercial power and the fixed base station is located
within a rectangle (Proximity Threshold) described as follows:
(i) The length of the rectangle shall be x where x is a line
extending through both nodes of the microwave link to a
distance of 48 kilometers (30 miles) beyond each node. The
width of the rectangle shall be y where y is a line
perpendicular to x and extending for a distance of 24
kilometers (15 miles) on both sides of x. Thus, the rectangle
is represented as follows:

(ii) If the application of the Proximity Threshold test
indicates that a reimbursement obligation exists, the
clearinghouse will calculate the reimbursement amount in
accordance with the cost-sharing formula and notify the
subsequent PCS entity of the total amount of its
reimbursement obligation.


USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 87 of 92
47 C.F.R. 27.1168(a) (2010)

27.1168 Triggering a Reimbursement Obligation.

(a)
The clearinghouse will apply the following test to determine when
an AWS entity or MSS/ATC entity has triggered a cost-sharing
obligation and therefore must pay an AWS relocator, MSS relocator
(including MSS/ATC), or a voluntarily relocating microwave incumbent
in accordance with the formula detailed in 27.1164:
(1) All or part of the relocated microwave link was initially co-
channel with the licensed AWS band(s) of the AWS entity or the
selected assignment of the MSS operator that seeks and obtains
ATC authority (see 25.149(a)(2)(i) of this chapter);

(2) An AWS relocator, MSS relocator (including MSS/ATC) or a
voluntarily relocating microwave incumbent has paid the
relocation costs of the microwave incumbent; and
(3) The AWS or MSS entity is operating or preparing to turn on a
fixed base station (including MSS/ATC) at commercial power and
the fixed base station is located within a rectangle (Proximity
Threshold) described as follows:
(i) The length of the rectangle shall be x where x is a line
extending through both nodes of the microwave link to a
distance of 48 kilometers (30 miles) beyond each node. The
width of the rectangle shall be y where y is a line
perpendicular to x and extending for a distance of 24
kilometers (15 miles) on both sides of x. Thus, the rectangle
is represented as follows:




USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 88 of 92
(ii) If the application of the Proximity Threshold Test
indicates that a reimbursement obligation exists, the
clearinghouse will calculate the reimbursement amount in
accordance with the cost-sharing formula and notify the
AWS or MSS/ATC entity of the total amount of its
reimbursement obligation.

USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 89 of 92
47 C.F.R. 27.1184(a)

27.1184 Triggering a reimbursement obligation.

(a)
The clearinghouse will apply the following test to determine when
an AWS entity has triggered a cost-sharing obligation and therefore
must pay an AWS relocator of a BRS system in accordance with the
formula detailed in 27.1180:
(1) All or part of the relocated BRS system was initially co-channel
with the licensed AWS band(s) of the AWS entity;
(2) An AWS relocator has paid the relocation costs of the BRS
incumbent; and
(3) The other AWS entity has turned on or is preparing to turn on
a fixed base station at commercial power and the incumbent BRS
system would have been within the line of sight of the AWS
entity's fixed base station, defined as follows.
(i) For a BRS system using the 2150-2160/62 MHz band
exclusively to provide one-way transmissions to subscribers,
the clearinghouse will determine whether there is an
unobstructed signal path (line of sight) to the incumbent
licensee's geographic service area (GSA), based on the
following criteria: use of 9.1 meters (30 feet) for the receiving
antenna height, use of the actual transmitting antenna
height and terrain elevation, and assumption of 4/3 Earth
radius propagation conditions. Terrain elevation data must
be obtained from the U.S. Geological Survey (USGS) 3-
second database. All coordinates used in carrying out the
required analysis shall be based upon use of NAD-83.
(ii) For all other BRS systems using the 2150-2160/62 MHz
band, the clearinghouse will determine whether there is an
unobstructed signal path (line of sight) to the incumbent
licensee's receive station hub using the method prescribed in
"Methods for Predicting Interference from Response Station
Transmitters and to Response Station Hubs and for
Supplying Data on Response Station Systems. MM Docket
97-217," in Amendment of 47 CFR parts 1, 21 and 74 to


USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 90 of 92
Enable Multipoint Distribution Service and Instructional
Television Fixed Service Licensees to Engage in Fixed Two-
Way Transmissions, MM Docket No. 97-217, Report and
Order on Further Reconsideration and Further Notice of
Proposed Rulemaking
, 15 FCC Rcd 14566 at 14610,
Appendix D.


USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 91 of 92

IN THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

ICO Global Communications
Limited, Petitioner,

v.








10-1322

Federal Communications Commission and
United States of America, Respondents.

CERTIFICATE OF SERVICE

I, Joel Marcus, hereby certify that on September 7, 2011, I electronically
filed the foregoing Brief for Respondents with the Clerk of the Court for the
United States Court of Appeals for the D.C. Circuit by using the CM/ECF
system. Counsel listed below who are registered CM/ECF users will be
served by the CM/ECF system. Others, marked with asterisks, will be
served by U.S. Mail, unless another attorney at the same address is receiving
electronic service via CM/ECF.
Howard Jeffrey Symons
William Henry Burgess, IV
Robert Gil Kidwell
Jeffrey Bossert Clark, Sr.
Tara Corvo
Kirkland & Ellis LLP
Mintz Levin Cohn Ferris Glovsky
655 Fifteenth Street, N.W.
and Popeo, PC
Suite 1200
701 Pennsylvania Avenue, N.W.
Washington, D.C. 20005
Suite 900
Counsel for: New DBSD Satellite
Washington, D.C. 20004-2608
Services G.P.
Counsel for: ICO Global
Communications Limited


USCA Case #10-1322 Document #1327982 Filed: 09/07/2011 Page 92 of 92
*Joseph Serino, Jr.
Robert J. Wiggers
Kirkland & Ellis LLP
Robert B. Nicholson
601 Lexington Avenue
U.S. Department of Justice
New York, New York 10022
Antitrust Division Appellate
Counsel for: ICO Global
Section
Communications Limited
950 Pennsylvania Avenue, N.W.
Room 3224
Washington, D.C. 20530
Counsel for: USA
*Jay P. Lefkowitz
John Caviness O'Quinn
Aaron Lloyd Nielson
Kirkland & Ellis LLP
655 15th Street, NW
Suite 1200
Washington, DC 20005
Counsel for: ICO Global
Communications Ltd.

/s/ Joel Marcus
Joel Marcus

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