Viasat, Inc. v. Fed. Commc'ns Comm'n

47 F.4th 769

VIASAT, INC., Appellant

v.FEDERAL COMMUNICATIONS COMMISSION, Appellee

Space Exploration Holdings, LLC, Intervenor

No. 21-1123

C/w 21-1125, 21-1127, 21-1128

United States Court of Appeals, District of Columbia Circuit.

Argued December 3, 2021

Decided August 26, 2022

William M. Jay argued the cause for appellants Viasat, Inc. and The Balance Group. With him on the briefs were Colin L. Ward, David J. Zimmer, Gerard J. Cedrone, Jordan Bock, Michael F. Smith, and Stephen L. Goodman.

Pantelis Michalopoulos argued the cause for appellant DISH Network Corporation. With him on the briefs were Mark C. Savignac and William Travis West.

Ivan L. London, Jean-Claude Andre, and Philip E. Karmel were on the brief for amicus curiae Professor Andy Lawrence in support of appellants.

James M. Carr and Rachel Proctor May, Counsel, Federal Communications Commission, argued the causes for appellee. With them on the brief were Todd Kim, Assistant Attorney General, U.S. Department of Justice, Robert B. Nicholson, Robert J. Wiggers, Justin Heminger, and Allen Brabender, Attorneys, and Jacob M. Lewis, Associate General Counsel, Federal Communications Commission.

Pratik A. Shah argued the cause for intervenor Space Exploration Holdings, LLC in support of appellee. With him on the brief was Z. W. Julius Chen.

Corbin K. Barthold and James E. Dunstan were on the brief for amicus curiae TechFreedom in support of appellee.

Before: Wilkins, Katsas, and Walker, Circuit Judges.

Katsas, Circuit Judge:

The Federal Communications Commission approved a request by Space Exploration Holdings, LLC to fly its satellites at a lower altitude. One competitor contends that the FCC did not adequately consider the risk of signal interference, a claim we reject on the merits. Another competitor, joined by an environmental group, raises a claim under the National Environmental Policy Act. We decline to consider it because the environmental group lacks Article III standing, and the competitor's asserted injury does not fall within the zone of interests protected by NEPA.

I

A

The Communications Act of 1934 authorizes the FCC to grant radio station licenses, including for the operation of communications satellites. 47 U.S.C. § 307(a). The Commission may modify licenses if it finds that the modification would serve the public interest, convenience, and necessity. Id. § 316(a)(1). The Telecommunications Act of 1996 requires the agency to facilitate the provision of broadband internet service to unserved areas. Id. § 1302.

To further that goal, the FCC granted Space Exploration Holdings, LLC (which goes by SpaceX) a license to provide internet service by satellite. In re Space Exploration Holdings, LLC , 33 FCC Rcd. 3391 (2018). Once operational, this service will reach currently unserved areas.

SpaceX uses new technology to expand its coverage area. Traditional communications satellites move in geostationary orbit, or GSO. GSO satellites orbit at the same speed as the Earth's rotation, so they appear fixed in the sky. A single GSO satellite has a continuous sight line to users within its coverage area—and thus can provide continuous service to them. SpaceX's satellites, by contrast, move at lower altitudes in a non-geostationary orbit, or NGSO. The lower altitude reduces transmission latency, making NGSO satellites better suited to provide high-speed internet service. But these satellites do not synchronize with the Earth's spin, so a single satellite cannot maintain a sight line with any given user. SpaceX solved this problem by deploying multiple satellites that move and communicate as a constellation: When one satellite moves out of view of a user's ground antenna, it transfers the signal to the next satellite in line.

B

After receiving authorization for its satellites and launching about half of them, SpaceX requested permission to operate the constellation at a lower altitude. Given the complexity of satellite system design, the FCC seeks where possible to allow licensees "to modify the technical design of their satellites as they are being built." Teledesic LLC, Order and Authorization , 14 FCC Rcd. 2261, 2264 (Int'l Bureau 1999). But technical changes can interfere with signals from other satellites, so the Commission must find that "the proposed modification does not present any significant interference problems." Id. Various FCC rules govern this interference determination.

First, regulations prioritize GSO systems over NGSO systems. An NGSO system "must not cause unacceptable interference to" a GSO system. 47 C.F.R. § 25.289. More specifically, NGSO systems must operate within power limits set by the International Telecommunications Union (ITU), a United Nations agency responsible for addressing signal interference internationally. See id. The licensee must use ITU-approved software to show compliance with the power limits. Initially, the licensee enters its satellite data into the software and certifies the results to the FCC. 47 C.F.R. § 25.146(a) ; see Update to Parts 2 and 25 Concerning Non-Geostationary, Fixed-Satellite Service Systems and Related Matters , 32 FCC Rcd. 7809 ¶ 41 (2017) ( NGSO Order ). The licensee then submits the data to the ITU, which must make a "favorable" or "qualified favorable" finding before the licensee may provide service. 47 C.F.R. § 25.146(c).

The rules also address interference among NGSO systems. Priority is based on the order in which the competing systems were licensed; systems licensed later must not unduly interfere with those licensed earlier. NGSO Order, 32 FCC Rcd. 7809 ¶ 61. An NGSO licensee can modify its license without losing its priority only if the changes will not cause "significant interference" to existing services. Teledesic , 14 FCC Rcd. 2261 ¶ 5.

C

In 2019, the FCC's International Bureau approved SpaceX's request to lower roughly half the satellites in its constellation, after finding that the changes would impose no undue interference and would serve the public interest. In re Space Exploration Holdings, LLC , 34 FCC Rcd. 2526 (Int'l Bureau Apr. 26, 2019) ( First Modification Order ). Because of a backlog at the ITU, the Bureau waived the ITU-finding requirement in part: It allowed the satellites to fly at the lower altitude after SpaceX certified compliance with ITU power limits using ITU-approved software. Id. ¶ 28. But the Bureau still required SpaceX to submit its data to the ITU and cautioned that SpaceX would have to adjust its operations if the ITU were to make an unfavorable finding. Id.

In the order under review, the full Commission authorized SpaceX to lower the remainder of its constellation. In re Space Exploration Holdings, LLC , 36 FCC Rcd. 7995 (2021) ( Second Modification Order ). Again, the FCC permitted SpaceX to act upon a successful software certification. See id. ¶ 41. But it reiterated that SpaceX would have to bring its system into compliance if the ITU were to make an adverse finding. Id. ¶ 97(p).

DISH Network Corporation, one of SpaceX's competitors, objected to the modification. DISH argued that the proposed changes would interfere with its GSO satellite television service. Another competitor, Viasat, Inc., jointly objected with an environmental organization calling itself The Balance Group. They argued that NEPA required the FCC to prepare an environmental assessment before granting the modification. The FCC rejected both contentions. Second Modification Order, 36 FCC Rcd. 7995 ¶¶ 47, 92.

DISH, Viasat, and The Balance Group appeal the FCC's order. SpaceX has intervened to support the Commission. We have statutory jurisdiction under 47 U.S.C. § 402(b)(6).¹

II

We first consider interference issues. DISH argues that the FCC's interference determination violated the Administrative Procedure Act and the Communications Act. DISH also challenges the regulatory procedure for showing compliance with ITU power limits.

A

The APA requires us to set aside agency action that is arbitrary or capricious. 5 U.S.C. § 706(2)(A). An action is arbitrary if the agency relied on inappropriate factors, failed to consider important aspects of the problem, or ignored relevant evidence. Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co. , 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). Conversely, agency action is not arbitrary if it is "reasonable and reasonably explained." FCC v. Prometheus Radio Project , ––– U.S. ––––, 141 S. Ct. 1150, 1158, 209 L.Ed.2d 287 (2021). DISH contends that the interference determination was arbitrary for three reasons.

DISH first argues that the FCC unreasonably refused to consider expert reports claiming that SpaceX's proposed changes would interfere with DISH's GSO satellites. But the reports use a different method for assessing interference than what binding regulations require.

The FCC must "adhere to its own rules and regulations." AT&T Corp. v. FCC , 448 F.3d 426, 434 (D.C. Cir. 2006). Here, the governing rules require interference between GSO and NGSO systems to be assessed through the method used in the ITU-approved validation software. 47 C.F.R. § 25.146(a), (c)(2). DISH acknowledges that SpaceX's desired changes pass muster under that approach. Nevertheless, DISH argues that its experts have a better method for calculating interference. DISH thus faults the FCC for following its own interference rules. But an agency "abuses its discretion when it arbitrarily violates its own rules, not when it follows them." BDPCS, Inc. v. FCC , 351 F.3d 1177, 1184 (D.C. Cir. 2003).

DISH cites American Radio Relay League v. FCC , 524 F.3d 227 (D.C. Cir. 2008), to support its argument. There, we faulted the FCC for failing to consider data that undermined a regulation. Id. at 240–41. But we did so in reviewing the regulation itself, not its application in a later licensing proceeding. See id. at 236 ; see also Env't Health Trust v. FCC , 9 F.4th 893, 903 (D.C. Cir. 2021) (same for agency decision not to initiate a rulemaking). As we have explained, "an agency need...