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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Petition of Hughes Network Systems, Inc. ) Application File Nos. to have Ordinances of Coconut Creek, Florida ) 120-SAT-DR-95 and Coral Gables, Florida, Preempted by Section ) 132-SAT-DR-95 25.104 of the Commission's Rules ) MEMORA NDUM OPINION AND ORDER Adopted: June 30, 1997 Released: July 1, 1997 By the Chief, International Bureau: I. INTRODUCTION 1. By this Memorandum Opinion and Order, we dismiss Hughes Network Systems, Inc.'s ("Hughes'") Petitions for Declaratory Rulings preempting the zoning ordinances of the cities of Coral Gables and Coconut Creek, Florida. We find that Hughes has failed to meet the procedural threshold, contained in section 25.104 of the Commission's rules, for exhausting all available local administrative remedies in both cases. Accordingly, the Commission will not intervene and review the merits of either of these local zoning disputes. II. BACKGROUND 2. In 1986, the Commission adopted a rule preempting, in certain circumstances, local regulation of satellite earth stations. In May 1995, the Commission released a Notice of Proposed Rulemaking ("1995 NPRM") in order to, among other things, modify our exhaustion of remedies policies in light of the the decision of a federal appellate court invalidating our requirement that satellite users exhaust all legal remedies before petitioning the Commission for a declaratory ruling. In March 1996, the Commission issued a Report and Order revising its zoning preemption rules and establishing a new standard for Commission review of local zoning disputes ("March Order"). 3. In both of the cases before us, the antennas at issue are very small aperture terminals ("VSAT") that transmit and receive data signals over private satellite networks. This type of antenna is used by a variety of businesses, including retail, gasoline stations, automobile, and financial services. The antenna installed at the Coral Gables station was 1.8 meters in diameter. The antennas installed in Coconut Creek are stated to be "less than 6 feet across." 4. In formulating rules governing the preemption of local zoning restrictions on satellite earth stations, the Commission has attempted to craft policies that take into account the differences in the antennas involved. In the March Order, the Commission described how its rule would apply to satellite antennas of different types and sizes, including VSAT antennas. In that Order, we also began implementing Section 207 of the Telecommunications Act of 1996, which mandates a different standard for the preemption of restrictions on certain over-the-air reception devices with a diameter of less than one meter. We note here for clarity that the antennas at issue in these petitions are not part of the class of devices mentioned in Section 207 of the Act, and are therefore subject to a different rule, 47 C.F.R.25.104, and a different threshold for Commission review than are over-the-air reception devices, as defined in 47 C.F.R.1.4000. 5. In both of these cases, Hughes' customer is Amoco Oil Company. Amoco owns a national chain of gasoline stations and uses a VSAT satellite network manufactured and maintained by Hughes. Amoco uses the antennas as part of its internal business communications network to track station inventory and allow customers to pay for gasoline from the pump. Hughes states that Amoco has installed nearly 500 antennas at gas stations in Florida alone, each priced at less than $8,000, including installation. In Coconut Creek, the dispute involves three gas stations, and in Coral Gables one station is involved. III. POSITION OF THE PARTIES A. Coconut Creek Installation: 6. Hughes offers the following facts about its efforts to install three VSAT antennas at Amoco stations in Coconut Creek. Hughes states that it retained local installers who performed an analysis at the three stations and determined that the only feasible installation site would be on the canopy of each station. Hughes states that it normally retains local installation contractors to install VSATs for its customers' systems. Hughes advised its installers that they need not apply for permits from the city prior to installation of the VSAT antennas, believing that the Coconut Creek City Code did not require permits for transmitting antennas. 7. The City Code provision in question, 13-373(i)(2)(b), which regulates antennas and structures, states that building permits are required for "dish or disc antennas designed to receive transmissions of television signals from communication satellites." Hughes argues that, in this particular case, Amoco's VSAT antennas both receive and transmit satellite communications data for business use, and not for television use. 8. In December 1994 and January 1995, Hughes directed its contractors to install three antennas, each less than 6 feet in diameter, on the canopies of the Amoco stations. On May 3, 1995, Amoco received three separate warnings from the City, stating that Amoco had violated a section of the City Code by not applying for a building permit prior to installation of the antennas. Hughes claims that the installers then inquired about obtaining permits for the VSAT antennas at these stations and were informed by a City Code enforcement officer that permits could not be issued for the VSAT antennas installed because the City Code prohibits roof mounting of satellite dish antennas. In addition, Hughes stated that it was informed that, if permit applications were filed, they would be denied unless the antennas were removed from the canopies, reinstalled on the ground and made to comply with City screening requirements. Hughes also asserted that it was informed by the City that the antennas would be confiscated unless they were removed from the canopies. 9. Hughes contends that it is expensive to comply with Coconut Creek's zoning requirements. Hughes states that, along with the permit application, which requires a fee of $80, the applicant must submit a survey prepared by a registered land surveyor, at a cost of approximately $500. Hughes states further that reinstallation on the ground will involve excavation, compliance with environmental regulations, site drawings, and security fencing. Hughes estimates that total reinstallation costs would be $2,000, not including excavation, which will cost an additional $1,000. According to Hughes, screening will cost another $500, permits will cost $80 each, and satisfying the permitting requirements will require survey drawings at a price of approximately $500 each. Hughes claims that the sum total of relocating each site in compliance with the City's demands would exceed $4,000, not including the loss of ground space--costs imposed even though the City Code does not on its face apply to VSAT antennas. 10. Hughes filed a petition with the Commission on June 22, 1995. In its petition, Hughes requested the Commission to issue a declaratory ruling that Coconut Creek City Code Section 13-383(i)(2) is preempted by Section 25.104 of the Commission's rules because the code section: (1) does not clearly define any aesthetic objective; (2) places unreasonable limitations on satellite signal reception; and (3) imposes excessive costs and delays on the installation of satellite dishes. 11. Coconut Creek argues that Hughes and Amoco have administrative remedies available to them that have not been pursued. In addition, it argues that there is no "case or controversy" between Amoco and the City because the City has issued only "warnings" and not "citations," which are required to trigger enforcement action by the City. The City also asserts that, contrary to Hughes' claim, Coconut Creek did not advise Hughes that permits for the three installed VSAT antennas would be denied. The City argues further that, even if a code enforcement officer did express the opinion that a permit would be denied, neither Hughes nor Amoco pursued this matter with any other City official, including the Director of Community Development, the City Attorney or the Mayor's Office. The City also asserts that Hughes was not threatened with confiscation of the antennas and imminent civil action because the City does not have the legal authority to undertake such actions. 12. Finally, the City argues that, contrary to Hughes's assertions, one of Hughes's contract installers (Polaris Communication) did file a permit application with the Department of Community Development on April 28, 1995 for an installation at one of the locations in question. The City claims that the applicant was orally advised of certain defects in the application and that, to date, Polaris has not attempted to meet with department officers concerning the defects or to correct them. B. Coral Gables Installation: 13. Hughes provides the following details about its efforts to install a VSAT antenna at the Amoco station in Coral Gables. After the first installer originally hired by Hughes determined that no line of sight could be achieved with the satellite from the station, Hughes hired a second installer, Polaris Communications, who then located an appropriate site behind the main station building. Polaris concluded that a VSAT antenna could be installed there if it were mounted on a nine-foot pole. Hughes instructed Polaris to proceed with the installation without a permit, believing that the permit application process "would unreasonably delay the installation in violation of Section 25.104." On March 14, 1995, Polaris installed a 1.8 meter VSAT antenna. The mount is located on a nine-foot wide grassy strip between the concrete wall and the main station building. 14. On March 27, 1995, the City of Coral Gables issued its first Notice of Violation against Amoco for "maintaining and/or installing a satellite dish antenna on property without necessary approval and permit" in violation of the City Code. Amoco then asked Polaris to file for a permit. In April, Polaris returned to the Amoco station to survey the site and take pictures. A Second Notice of Violation was issued to Amoco on April 13, 1995. 15. On May 1, 1995, Polaris submitted drawings of the site and antenna to the City. Hughes alleges that it was told the drawings were acceptable and that the City would thereafter send the necessary paperwork for completion. However, Hughes contends that in mid-June, when the City sent the application materials to Polaris, the installer was informed that a permit could not be granted without a variance, because the installation did not comply with the landscaping, screening, and setback requirements of the City Zoning Code. Hughes states that Polaris is now in the process of applying for a variance, which will cost approximately $3400. 16. On June 6, 1995, the City's Code Enforcement Board held a hearing, found the VSAT installation to be in violation of the City Zoning Code, and demanded that Amoco obtain a permit or remove the antenna by June 11, 1995. The City also started levying a fine of $100 per day. Hughes contends that it was advised at the time that the fines would continue until final city approval was granted, unless the antenna and mount were removed. According to Hughes, it was informed that the review process will take approximately three months or more with the outcome uncertain. 17. Hughes filed a Petition with the Commission on July 10, 1995. In its Petition, Hughes asks the Commission to issue a declaratory ruling that the Coral Gables zoning code on its face and in the application of its procedures is preempted by 25.104 because it (1) does not contain any aesthetic objective to justify its setback or landscaping requirements; (2) places unreasonable limitations on satellite signal reception; and (3) imposes excessive costs and delays in the installation of satellite dishes. 18. Coral Gables argues that Hughes' petition should be dismissed for failure to exhaust all other legal remedies before petitioning the Commission for a declaratory ruling. The City of Coral Gables also disputes the facts as described by Hughes. According to Coral Gables, the City's Building and Zoning Director purchased gasoline at the Amoco station in question and "caught" the work crew installing the VSAT antenna "after business hours." The director apparently insisted that the work be stopped; however, the installer continued to complete the installation after she left. 19. Coral Gables also contends that, contrary to Hughes's position, Hughes did not submit any application or plans to the City, and the City did not advise any party that the installation was acceptable. Declarations by Joseph King and Walter Carlson, employees of the City of Coral Gables refer to an "incomplete sketch" that was transmitted via facsimile to the City Building and Zoning Department and was found to be deficient. According to the City, there has not been any attempt at compliance with the Zoning Code since the sketch was shown and, despite Hughes' claim to the contrary, the installer could have easily sought approval for a roof-mounted antenna, which would not have required a variance hearing. In addition, the City contends that there are other possible mounting locations on the property that, based on field inspections, would appear to comply with the City's zoning regulations. 20. Coral Gables contends that the entire process for approval of a properly mounted antenna would take no more than two months. However, because Hughes installed the antenna without first applying for a permit in what appears to be the setback, the City states that Hughes could potentially be required to undergo an additional step, which would increase the time for approval to three months. The City outlines the process for approval as follows: (1) Applicant submits plans and application to the Board of Architects for review. The Board meets once a week. (2) Upon approval of the plans by the Board of Architects, the Building and Zoning Department reviews the plans to determine if Planning Department approval is needed. (3) Where necessary, the Planning Department reviews the plans and either grants administrative approval or schedules a public hearing before the Planning and Zoning Board. This Board meets once a month. (4) The Planning and Zoning Board holds a public hearing, where necessary, and makes a recommendation to the City Commission. (5) The City Commission meets twice a month, approves the plans by resolution, [and] sends them back to the Building and Zoning Department to ensure that the plans meet the technical requirements to properly mount the antenna and provide any required electrical grounding. A resolution of the Commission does not require second reading and a 30-day waiting period. (6) The Building and Zoning Department issues the Building Permit for the antenna. Coral Gables also states that if a variance is sought, the applicant must apply for a hearing before the Board of Adjustment, which will take up the matter before the Planning and Zoning Board considers the request for conditional use. If the applicant seeks a permit for just one location, as alleged in this matter, then a case for legal hardship would be made and a variance granted. Coral Gables states that the fees for the entire application and permit process for all conditional use applications total $319.40. If a variance is requested, the fee, according to the City, would be $350.00. A bond of $300 is also required. However, it would be returned upon permit approval. IV. DISCUSSION 21. We find that Hughes has failed to exhaust available local administrative remedies in both cases before us. As previously stated, petitioners wishing to file with the Commission for declaratory relief from local zoning regulations must first exhaust all local administrative remedies. In our 1995 NPRM, the Commission announced its willingness to entertain petitions for interim declaratory relief with respect to zoning disputes during the pendency of that proceeding. Consequently, we received the present petitions prior to the enactment of our final rules, but after the Deerfield decision. Accordingly, we base our findings on the standard articulated in the 1995 Notice of Proposed Rulemaking, which defined exhaustion of nonfederal administrative remedies as follows: (1) the petitioner's application for a permit or other authorization required by the state or local authority has been denied and any administrative appeal and variance procedure has been exhausted; (2) the petitioner's application for a permit or other authorization required by the state or local authority has been pending with that authority for ninety days; (3) the petitioner has been informed that a permit or other authorization required by the state or local authority will be conditioned upon the petitioner's expenditure of an amount greater than the aggregate purchase and installation cost of the antenna; or (4) a state or local authority has notified the petitioner of impending civil or criminal action in a court of law and there are no more nonfederal administrative steps to be taken. The facts in both the Coconut Creek and Coral Gables cases indicate that Hughes is appealing neither the City's denial of a permit application nor a request for a variance. Moreover, Hughes has chosen not to participate in the permitting process. In addition, Hughes suggests that the costs associated with adhering to the City's procedures are not great enough to override the general requirement to exhaust local administrative remedies. Thus, we conclude that Hughes has failed to satisfy the conditions for triggering the Commission's preemption review. Coconut Creek 22. Hughes contends that there are no administrative remedies available in the Coconut Creek case and that its only options are to comply with the "City Code's unreasonable restrictions, submit to an expensive and lengthy (and preempted) variance procedure, or, as it has done, petition the Commission for relief." 23. Coconut Creek, however, contends that administrative remedies remain available to Hughes and Amoco in this case. The City contends that neither Amoco, nor Hughes on Amoco's behalf, has undertaken to challenge the violation warnings or apply for a permit. In addition, the City argues that they have not invoked the jurisdiction of the City's Code Enforcement Board to obtain a ruling with respect to compliance. Moreover, the City contends that, if a permit application is denied, Hughes and Amoco will have available the following administrative remedies: (1) denials for structural or electrical defects may be appealed to Broward County; (2) denials for zoning defects could be reviewed by the City's Planning and Zoning Board for a de novo hearing and then to the City Commissioners. According to the City, the applicants are also given an opportunity to obtain a variance from zoning regulations. The City asserts that neither Hughes nor Amoco took advantage of these administrative appeal procedures. 24. We agree with Coconut Creek that Hughes has made no showing that it has exhausted all local administrative remedies. Instead, Hughes merely states that it has relied on the statements of a code enforcement officer as a denial of a permit -- a permit for which it failed to apply in the first instance. As our rules make clear, a final denial of a permit application or variance from the appropriate level of government is necessary before Commission review can be sought. An oral statement, such as the one described in the record, will not suffice. 25. Moreover, complying with the steps set out in the permit and variance process does not appear to be unreasonable. We do not dispute that there is a fee of $80 for the application and another $500 may be necessary for a survey. However, the actual cost for the permit application is reasonable in light of the $8,000 stated cost of the VSAT antenna. Because we find that Hughes has not met the threshold for exhaustion under section 25.104, we do not reach the issue of whether the Coconut Creek ordinance, as applied to VSATs, should be subject to preemption. Therefore, Hughes' Petition for declaratory relief from the Coconut Creek zoning ordinance is dismissed. Coral Gables 26. With regard to the installation in Coral Gables, once again, Hughes did not attempt to apply for a permit prior to filing its petition. Hughes states that it did not apply for a permit because the permit application process "would unreasonably delay the installation in violation of 25.104." Hughes also argues that the City's four-step permit and variance process is an unreasonable limitation on the reception of satellite-delivered signals, in contravention of Section 25.104(b). 27. We find that Hughes is required to avail itself of the City's processes before applying to the Commission. Hughes cannot unilaterally determine that a permit application process is unreasonable and, on the basis of this determination, install an antenna in violation of a city ordinance. Rather, Hughes must make a good faith effort at securing a permit before petitioning the Commission. Hughes and Polaris are experienced installers who knew about the City's permit requirement. Moreover, the steps for the permit and variance process are not unreasonable in this case and the actual cost for the permit application or variance appear reasonable in light of the stated estimated cost of the VSAT antenna. Hughes' Petition for Declaratory Relief from the Coral Gables zoning ordinance is therefore dismissed for failure to exhaust all available local administrative remedies. IV. CONCLUSION 28. In both of these cases, Hughes fails to show that it has exhausted all local administrative remedies, including the permit application and variance processes. V. ORDERING CLAUSES 29. Accordingly, IT IS ORDERED that File Nos. 120-SAT-DR-95 and 132-SAT- DR-95 are DISMISSED and the petitions for declaratory relief filed by Hughes Network Systems, Inc. from the zoning ordinances of Coconut Creek and Coral Gables, Florida, are DENIED pursuant to authority delegated to the Chief, International Bureau (47 C.F.R.  0.261 a (15)). FEDERAL COMMUNICATIONS COMMISSION Peter F. Cowhey Chief, International Bureau