Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | MD Docket No. 98-36          |
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**MEMORANDUM OPINION AND ORDER**

**Adopted:** April 1, 2003 **Released:** April 9, 2003

By the Commission:

1\. By this order, we address the question of whether and in what amount
COMSAT Corporation should be required to pay the geosynchronous space
station regulatory fee identified in section 9 of the Communications
Act, 47 U.S.C. § 159(g), for Fiscal Year 1998.

**I. BACKGROUND**

2\. On December 21, 1999, the United States Court of Appeals for the
District of Columbia Circuit set aside and remanded our 1998 fee
order[^1] to the extent that it treated COMSAT as exempt from the
section 9 space station regulatory fee. [Panamsat Corp. v.
FCC]{.underline}, 198 F.3d 890 (D.C. Cir. 1999). The court held that:

. . . the statute \[[i.e.]{.underline}, section 9\] does not require --
and may not permit -- Comsat's exemption from space station regulatory
fees. Nor would the legislative history change the result, assuming the
statute to be ambiguous enough to allow its consideration.

[Panamsat,]{.underline} 198 F.3d at 895.

3\. Prior to the court's ruling, the Commission had treated COMSAT as
exempt from the section 9 fee with respect to the satellites it operates
as the United States Signatory to INTELSAT. The Commission relied on the
following language contained in H.R. Rep. No. 207, 102^d^ Cong., 1^st^
Sess. 26 (1991), [incorporated by reference in]{.underline} H.R. Conf.
Rep. No. 213, 103^d^ Cong., 1^st^ Sess. 499 (1993):

The Committee intends that fees in this category \[space stations\] be
assessed on operators of U.S. facilities, consistent with FCC
jurisdiction. Therefore, these fees will apply only to space stations
directly licensed by the Commission under Title III of the
Communications Act. Fees will not be applied to space stations operated
by international organizations subject to the International
Organizations Immunities Act, 22 U.S.C. Section 288 et seq.
\[[e.g.]{.underline}, INTELSAT\].

[See]{.underline}, [e.g.,]{.underline} [Assessment and Collection of
Fees for Fiscal Year 1995]{.underline}, 10 FCC Rcd 13512 (1995).
Pursuant to this language, the Commission did not view COMSAT's
operation of the INTELSAT space stations as "directly licensed" by the
Commission, although the Commission routinely grants COMSAT Title III
authorizations to operate the satellites. [Id]{.underline}. [See
also]{.underline} [Communications Satellite Corp.]{.underline}, 46 FCC
2d 338 (1974) (establishing procedures for COMSAT to obtain Commission
authorization to participate in the construction and operation of
INTELSAT facilities, pursuant to Title III and section 214 of the
Communications Act and section 201(c) of the Communications Satellite
Act). The court, however, disagreed with the Commission's reasoning in
this regard and held that:

. . . it seems perfectly reasonable to say under these circumstances
that the Commission "licenses" Comsat's operation of Intelsat
satellites. Thus, the legislative history's embrace of fees for
satellites "directly licensed by the Commission under Title III" seems
reasonably to encompass Comsat.

[Panamsat]{.underline}, 198 F.3d at 896. The court thus made clear that
the Commission's former rationale for treating COMSAT as exempt from the
regulatory fee with respect to INTELSAT space stations is invalid and
that COMSAT's liability for fees must be reconsidered.

**II. DISCUSSION**

4\. **COMSAT's liability.** We must now consider whether and in what
amount COMSAT should be required to pay the space station regulatory
fee. In this regard, while the court invalidated our former rationale
for treating COMSAT as exempt from the fee, it left open the possibility
that:

Perhaps there is some ambiguity in the coverage of the "space station"
category in § 9, such that the Commission might "permissibly" read the
statute as allowing a Comsat exemption.

[Panamsat]{.underline}, 198 F.3d at 896.[^2] Subsequent events, however,
have effectively resolved any doubt left by the court's opinion in
[Panamsat]{.underline} as to the propriety of assessing the fee against
COMSAT.

5\. In our fiscal year 2000 fee order, the Commission concluded that
COMSAT should be held liable for the full amount of the section 9
regulatory fee. [Assessment and Collection of Fees for Fiscal Year
2000]{.underline}, 15 FCC Rcd 14478 (2000), [aff'd sub nom.]{.underline}
[COMSAT Corp. v. FCC]{.underline}, 283 F.3d 344 (D.C. Cir. 2002) (2000
Fee Order). The Commission concluded that COMSAT's INTELSAT operations
should be considered "directly licensed" within the meaning of section 9
and were not the equivalent of foreign-licensed space stations that are
exempt from the fee. 15 FCC Rcd at 14486-87 ¶¶ 19-20, 14489 ¶ 24.
Moreover, the Commission rejected the argument that the section 9 space
station fee was intended to apply only to facilities subject to the
technical and other regulations set forth in Part 25 of the Commission's
rules. The Commission found that the reference to Part 25 in section 9
is essentially clerical; that is, it simply calls attention to the
section of the rules most relevant to the fee, but does not reflect a
substantive limitation. 15 FCC Rcd at 14487-88 ¶¶ 21-22.

6\. As an additional matter, the Commission concluded that there is no
basis to discount the fee charged Comsat based on the level of its usage
of INTELSAT's system (reportedly 17.01 percent of INTELSAT's transponder
capacity). The Commission found it significant that: (1) the Commission
had previously rejected proposals to base the space station fee on the
number of transponders used rather than the number of space segments,
and (2) COMSAT's situation is distinguishable from that in [Columbia
Communications Corp.]{.underline}, 14 FCC Rcd 1122 (1999), in which fees
were discounted pursuant to a waiver. 15 FCC Rcd at 14490 ¶ 26.

7\. On March 22, 2002, the United States Court of Appeals for the
District of Columbia Circuit denied review of the 2000 Fee Order. The
court held, applying the [Chevron]{.underline} doctrine,[^3] that the
Commission's decision to impose a section 9 space station fee on COMSAT
represented a reasonable interpretation of the statute and that it
should be upheld. 283 F.3d at 347-48. The court also upheld the
Commission's decision not to prorate the fee based on how much of the
capacity of INTELSAT's satellites was used by COMSAT. [Id]{.underline}.
At 348-49. In light of the court's decision, we see no need to entertain
further argument as to whether COMSAT should be deemed liable for the
regulatory fee for fiscal year 1998. Consistent with the Commission's
interpretation of the statute, upheld by the court, COMSAT should have
been assessed the section 9 regulatory fee for fiscal year 1998.

8\. **Procedural matters.** Following issuance of the court's opinion in
[Panamsat]{.underline}, COMSAT and Panamsat submitted letters to the
Commission's General Counsel raising several issues.[^4] For the reasons
stated above, we will not discuss the parties' arguments further to the
extent that they concern the issues resolved by the [COMSAT]{.underline}
case. We will, however, consider these letters to the extent that they
raise two additional arguments: (1) whether imposition of a fee for
fiscal year 1998 would constitute improper retroactive rulemaking or
violate the prior "notice" requirement of the Administrative Procedure
Act (APA), 5 U.S.C. § 553, and (2) whether COMSAT should pay fees for
fiscal years other than 1998.

9\. COMSAT argues that applying the regulatory fee to it for Fiscal Year
1998 would constitute improper retroactive rulemaking, such as the
Supreme Court disapproved in [Bowen v. Georgetown University
Hospital]{.underline}, 488 U.S. 204 (1988). COMSAT contends that the
notice of proposed rulemaking for the Fiscal Year 1998 fee proceeding
did not provide notice as required by the Administrative Procedure Act
that a fee would be assessed against COMSAT. [See]{.underline} 5 U.S.C.
§ 553(b), (c). COMSAT further argues that the Report and Order issued
for Fiscal Year 1998 did not impose a fee and that COMSAT received no
notice of and was not a party to Panamsat's appeal of the 1998 fee
order. Panamsat responds that, in view of the court's decision, the
Commission has an obligation to recompute the fees chargeable for Fiscal
Year 1998. Panamsat observes that section 9 requires the Commission to
collect fees sufficient to recover the total cost of its regulatory
activities and to apportion these fees based on the costs and benefits
attributable to various classes of regulated entities. According to
Panamsat, the Commission's failure to assess a fee against COMSAT
resulted in Panamsat having to pay COMSAT's fair share. Panamsat
suggests that COMSAT should also pay fees for other fiscal years.

10\. We believe that assessing a regulatory fee against COMSAT for
Fiscal Year 1998 would not constitute improper retroactive rulemaking or
otherwise violate the APA. Pursuant to section 9, and contingent on
amounts specified in yearly Appropriation Acts, the Commission must
initiate a new rulemaking during each fiscal year to determine the
amount of fees due for that year. [See]{.underline} 47 U.S.C. § 159(a),
(b)(2). The Commission's final decision concerning the amount of the
fees is normally issued several months prior to the end of the fiscal
year for which the fees are collected, and, generally speaking, the fees
themselves normally must be paid just prior to the end of the fiscal
year. (The payment of certain fees, including those in the private
wireless service and some license fees, are treated differently.) These
rulemakings are prospective in character in that they apply only to the
amounts that will be due in the future for the fiscal year at issue. In
this regard, they are no more retroactive than any action newly adopting
a fee or tax that applies to preexisting property rights. As courts have
noted:

Even uncontroversially prospective statutes may unsettle expectations
and impose burdens on past conduct: a new property tax . . . may upset
the reasonable expectations that prompted those affected to acquire
property . . . .

[DIRECTV v. FCC]{.underline}, 110 F.3d 816, 826 (D.C. Cir. 1997),
[quoting]{.underline}, [Landgraf v. USI Film Products]{.underline}, 511
U.S. 244, 270 n.24 (1994).

11\. In this case, the rulemaking for Fiscal Year 1998 remains a pending
proceeding insofar as it concerns Panamsat\'s appeal and the court's
remand. It retains its prospective character, despite the passage of
time, because, as long as the proceeding remains pending, the space
station regulatory fee for Fiscal Year 1998, as applied to COMSAT, was
never finally determined prospectively.[^5] Moreover, COMSAT will not be
unfairly penalized for its failure to pay the fee by the due date
originally established for Fiscal Year 1998 (or for any other past
conduct).[^6] Any payment dates for COMSAT will be adjusted in
accordance with our conclusions in this proceeding. This case is, thus,
distinguishable from cases in which agencies have been faulted for
initiating rulemakings to impose additional fees for past years in which
the fee schedule was already final and had not been challenged at the
time of adoption. [See]{.underline} [Air Transport Association of
America v. CAB]{.underline}, 732 F.2d 219, 227 (D.C. Cir. 1984)
(disapproving new rule that "offset" refunds of fees by amounts
underpaid under prior final rule). Accordingly, we do not agree that
imposition of a fee here would be improperly retroactive.

12\. The fact that the NPRM in this proceeding did not propose to charge
COMSAT the section 9 fee does not alter this result. To accept COMSAT's
position that it was not afforded adequate "notice" would be to deprive
the [Panamsat]{.underline} court's opinion of any effect insofar as the
court's decision invalidated the legal basis for the Commission's
failure to assess a fee for FY 1998. Moreover, once the court issued its
opinion on December 21, 1999, COMSAT received actual notice of the
court's ruling and thus, the possibility that it would be liable for the
section 9 fee in FY 1998. In response, COMSAT submitted the letters
cited above fully commenting on the issue. In addition, following the
remand of the [Panamsat]{.underline} decision, COMSAT had the
opportunity to comment again on the issue of its liability for the
section 9 fee in the fiscal year 2000 proceeding and, indeed, it
prosecuted an appeal of that decision through the court of appeals.
Therefore, we find no basis to conclude that COMSAT has not been
afforded clear notice and a full opportunity to comment on this issue
prior to imposition of the fee.

13\. On the other hand, we agree with COMSAT that [Panamsat]{.underline}
cannot be applied to fiscal years prior to 1998. Newly established law
does not apply to proceedings already closed. [See]{.underline}
[Reynoldsville Casket Co. v. Hyde]{.underline}, 514 U.S. 749, 758
(1995). The rulemakings for fiscal years before 1998 have long since
become final.

14\. We also decline to apply [Panamsat]{.underline} to Fiscal Year
1999. Panamsat did not challenge the Commission's failure to assess a
fee in FY 1999. Further, the rulemaking for that year would have been
final at the time [Panamsat]{.underline} was decided but for a petition
for reconsideration filed by the Cellular Telephone Industry Association
on an issue unrelated to COMSAT.[^7] Because the petition was then
pending, Panamsat believes that we should treat the Fiscal Year 1999
proceeding as not yet final. COMSAT urges, in contrast, that the concept
of finality of an agency action is a party-based concept.
[See]{.underline} [Bellsouth Corp. v. FCC]{.underline}, 17 F.3d 1487,
1489 (D.C. Cir. 1994); [ICG Concerned Workers Association v. United
States]{.underline}, 888 F.2d 1455, 1458 (D.C. Cir. 1989). Accordingly,
it believes that the proceeding had become final with respect to
Panamsat as it pertains to the COMSAT issue. The Commission has
sometimes held that the filing of a petition for reconsideration tolls
the period in which the Commission may reconsider one of its actions
[sua sponte]{.underline}. [See]{.underline} [Central Florida
Enterprises, Inc. v. FCC]{.underline}, 598 F.2d 37, 48 n.51 (D.C. Cir.
1978). We decline, however, to apply that principle here, since Panamsat
had ample opportunity to seek review of the 1999 fee order and did not
do so.

15\. **Further Action.** Finally, the parties' submissions raise the
issue of how the amount of COMSAT's potential liability should be
computed based on the 24 INTELSAT satellites in service in Fiscal Year
1998. The court, in remanding this proceeding, did not address this
question. Panamsat proposes that the inclusion of COMSAT's 24 satellites
in the Fiscal Year 1998 fee computation would result in a geosynchronous
satellite fee of \$78,200 for each COMSAT satellite. COMSAT would be
liable for a total of \$1,876,800 based on this figure (\$78,200 x 24).
COMSAT does not dispute this analysis. We will therefore apply the
formula proposed by Panamsat, and direct the Office of the Managing
Director to take appropriate action.[^8]

**III. ORDERING CLAUSE**

16\. ACCORDINGLY, IT IS ORDERED, That the Office of the Managing
Director IS DIRECTED to take appropriate administrative action to give
effect to this Memorandum Opinion and Order.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

> Secretary

[^1]: [Assessment and Collection of Fees for Fiscal Year
    1998]{.underline}, 13 FCC Rcd 19820 (1998).

[^2]: Elsewhere, however, the Court states: "The plain terms of § 9 . .
    . clearly do not require an exemption for Comsat, and there is no
    obvious hook in the language on which to hang an exemption."
    [Panamsat]{.underline}, 198 F.3d at 895.

[^3]: [See]{.underline} [Chevron USA, Inc. v. Natural Resources Defense
    Counsel, Inc.]{.underline}, 467 U.S. 837 (1984).

[^4]: Letter from Warren Y. Zeger \[COMSAT\] to Christopher J. Wright,
    Esq., General Counsel (Jan. 27, 2000); Letter from Henry Goldberg
    \[Panamsat\] to Mr. Christopher J. Wright (Feb. 15, 2000); Letter
    from Warren Y. Zeger to Christopher J. Wright, Esq., General Counsel
    (Feb. 25, 2000); Letter from Henry Goldberg to Mr. Christopher J.
    Wright (Feb. 29, 2000).

[^5]: The fact that we are reexamining our prior interpretation of the
    statute does not make our action impermissibly retroactive.
    [See]{.underline} [National Mining Association v Department of
    Labor]{.underline}, 292 F.3d 849, 868 (D.C. Cir. 2002)
    (distinguishing an action that merely corrected the application of
    principles in effect when costs were incurred with actions that
    "changed the legal landscape").

[^6]: [Compare with]{.underline} [Sierra Club v. Whitman]{.underline},
    285 F.3d 63, 68 (D.C. Cir. 2002) (states would face fines and suits
    for not implementing air pollution prevention plan of which they had
    no notice).

[^7]: Petition for Reconsideration of The Cellular Telecommunications
    Industry Association, filed August 2, 1999. [See also]{.underline}
    [Public Notice]{.underline}, Mimeo No. 94665 (Aug. 12, 1999). The
    Commission subsequently disposed of this petition. [Assessment and
    Collection of Regulatory Fees for Fiscal Year 1999]{.underline}, 15
    FCC Rcd 19927 (2000).

[^8]: COMSAT also requested a reduction in its fee for fiscal year 2001
    pursuant to 47 C.F.R. § 1.1166. [See]{.underline} Letter from Robert
    A. Mansbach to Andrew S. Fishel (Sept. 24, 2001). [See
    also]{.underline} Letter from Lawrence W. Secrest, III to Ms.
    Marlene Dortch, Secretary (May 6, 2002); Letter from Lawrence W.
    Secrest, III to Ms. Marlene Dortch, Secretary (Oct. 7, 2002). In
    addition, in a May 6, 2002 ex parte presentation, COMSAT asked for a
    reduction in its fiscal year 2000 fee. These waiver requests are
    unrelated and will be addressed separately by the Office of Managing
    Director.