[Federal Register Volume 80, Number 240 (Tuesday, December 15, 2015)]
[Proposed Rules]
[Pages 77592-77598]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31516]
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DEPARTMENT OF COMMERCE
National Telecommunications and Information Administration
47 CFR Chapter V
[Docket Number: 151209999-5999-01]
RIN 0660-AA30
Proposed Scope of NTIA's Authority Regarding FirstNet Fees
AGENCY: National Telecommunications and Information Administration,
U.S. Department of Commerce.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The National Telecommunications and Information Administration
(NTIA) publishes this notice of proposed rulemaking to request public
comment as it develops rules related to its review and approval of fees
imposed by the First Responder Network Authority (FirstNet) as
authorized by the Middle Class Tax Relief and Job Creation Act of 2012
(the Act).
DATES: Submit comments on or before January 14, 2016.
ADDRESSES: The public is invited to submit written comments to this
proposed rule. Written comments may be submitted electronically through
www.regulations.gov or by mail (to Office of Public Safety
Communications; National Telecommunications and
[[Page 77593]]
Information Administration; U.S. Department of Commerce; 1401
Constitution Avenue NW., Washington, DC 20230.). Comments received
related to this proposed rule will be made a part of the public record
and will be posted to www.regulations.gov without change. Comments
should be machine readable and should not be copy-protected. Comments
should include the name of the person or organization filing the
comment as well as a page number on each page of the submission. All
personally identifiable information (e.g., name, address) voluntarily
submitted by the commenter may be publicly accessible. Do not submit
confidential business information or otherwise sensitive or protected
information.
FOR FURTHER INFORMATION CONTACT: Patrick Sullivan; Office of Public
Safety Communications; National Telecommunications and Information
Administration; U.S. Department of Commerce; 1401 Constitution Avenue
NW., Washington, DC 20230; [email protected]; (202) 482-5948.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction, Summary of Proposed Rules
II. Background: Relevant Statutory Provisions
A. FirstNet-Assessed Fees Must Ensure Self-Funding and be
Approved by NTIA.
B. FirstNet's Finances are Subject to Broader, Independent
Review.
III. NTIA's Annual Fee Review Focuses on Whether FirstNet Fees and
Other Income, In Aggregate, Are Sufficient, and Do Not Exceed the
Amount Necessary, to Recoup FirstNet's Total Expense
A. Standard of NTIA Fee Review and Approval.
B. NTIA's Fee Review and Approval Process Does Not Assess the
Reasonableness of a Proposed Fee.
IV. Methodology of NTIA Fee Review and Approval Process
A. Focus of NTIA Fee Review Methodology.
B. NTIA's Fee Review and Approval Process Defers to FirstNet on
Necessary Reserves.
V. FirstNet-Proposed Fees Subject to NTIA Review Under Section 6208
Must be Addressed Upon NTIA Disapproval
A. Fees Subject to NTIA Review and FirstNet Reconsideration Upon
NTIA Disapproval.
B. Income Other Than Fees is Not Subject to NTIA Fee Review.
VI. Ex Parte Communication
I. Introduction, Summary of Proposed Rules
The Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L.
112-96, Title VI, 126 Stat. 256 (codified at 47 U.S.C. 1401 et seq.))
(Act) established the First Responder Network Authority (FirstNet) as
an independent authority within the National Telecommunications and
Information Administration (NTIA).\1\ Congress mandated FirstNet ensure
the building, deployment, and operation of an interoperable nationwide
public safety broadband network (Network).\2\ In order to meet this
critical directive and provide affordable, reliable, and sustainable
broadband services for first responders across the United States,
FirstNet must operate as a business enterprise. Today, public safety
entities procure broadband services from numerous commercial service
providers. When it enters the market, FirstNet will start with no
market share and will have to compete for customers by distinguishing
its product in terms of features, price, and reliability from products
offered by commercial providers. To be successful, FirstNet will need
to employ business strategies with flexibility and agility commonplace
in the private sector.
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\1\ See 47 U.S.C. 1424(a).
\2\ See 47 U.S.C. 1426(b)(1) (stating FirstNet shall ``. . .
take all actions necessary to ensure the building, deployment, and
operation of the nationwide public safety broadband network . .
.'').
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This document proposes rules that will enable NTIA to execute its
duty to review specific fees proposed by FirstNet in a manner
compatible with FirstNet's need to operate as a business in a
competitive marketplace. NTIA proposes to execute its statutory fee
review duties to afford FirstNet as much flexibility as possible to
establish its business and budgetary goals and to adjust those goals as
necessary to respond to the day-to-day realities of the broader
competitive marketplace in which FirstNet must operate. Ultimately,
NTIA intends to implement a fee review process that allows FirstNet to
respond to changing market conditions and the demands of its vital and
dynamic customer base: First responders.
The Act requires FirstNet to be permanently self-funding and
authorizes it to assess and collect certain types of fees to assure its
sustainability. The Act requires that the total amount of FirstNet's
annual fees must be sufficient to recoup FirstNet's total expenses, but
such fees must not exceed the amount necessary to carry out its duties
under the Act.\3\ As part of FirstNet's self-funding obligations, the
Act directs NTIA to review these fees on an annual basis; they may only
be assessed if approved by NTIA.\4\
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\3\ See 47 U.S.C. 1428(b).
\4\ See 47 U.S.C. 1428(c).
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This notice of proposed rulemaking describes NTIA's overarching
scope, boundaries, and guidelines for NTIA's fee review and approval
process as required by law. Section II of this notice of proposed
rulemaking details relevant statutory provisions and makes clear that,
while NTIA has a distinct role through the fee review and approval
process to ensure that FirstNet is self-funded, NTIA's role is a
relatively limited part of broader statutory provisions designed to
monitor FirstNet's financial condition and operational status.
Section III defines the scope of NTIA's proposed fee review and
approval process. NTIA has determined that this process is for a
particular and limited purpose: it must examine only whether the
proposed fees of another federal entity--FirstNet--as set forth under
Section 6208 of the Act, are, in aggregate and in combination with any
FirstNet non-fee-based income, sufficient, but not in excess of, the
projected funds that FirstNet needs to recoup the total expenses
required to carry out its statutory obligations in a given year. NTIA
acknowledges that, as authorized by the Act, FirstNet might receive
income which is separate and distinct from the fee categories defined
in Section 6208. NTIA recognizes that such income will impact NTIA's
determination whether FirstNet's proposed fees, in aggregate and in
combination with such non-fee-based income, will meet but not exceed
the funds it needs on an annual basis. However, NTIA proposes that the
Act affords NTIA no authority to review or approve as a ``fee'' any
other form of income FirstNet may receive beyond those fees listed in
Section 6208(a).
In Section IV, NTIA proposes a methodology for its fee review that
must by law occur annually and prior to FirstNet's assessment of fees.
Because NTIA's fee review process is for particular and limited
purposes focusing on the financial sustainability of another federal
entity within the Department of Commerce, NTIA will include in its
review a review of FirstNet's projected expenses as set forth in its
approved budgets as well as a review of FirstNet's prior-year actual
expenses and revenues to facilitate FirstNet's compliance with Section
6208(b). To that end, NTIA proposes to utilize FirstNet's regular
budget process and financial statements. NTIA also proposes to defer to
FirstNet on any need for reserves, working capital, or similar fund
categories. NTIA, however, will take such fund categories into
consideration as part of its determination of whether the total
proposed fees under Section 6208(b) meet, but do not exceed, FirstNet's
total expenses.
[[Page 77594]]
In Section V, NTIA discusses the fees that NTIA has specific
jurisdiction to review; if, in its review of aggregate revenues and
costs, it determines that FirstNet has not satisfied the legal
standard, FirstNet must adjust its fees or otherwise make budgetary
changes to ensure that the standard is met. Specifically, NTIA proposes
to define the term ``fee,'' for purposes of its statutory obligations
under Section 6208(c) of the Act, to mean FirstNet's direct collection
of money that is generated from the three categories established in
Section 6208(a) of the Act: (1) Network user fees; (2) lease fees
pursuant to a covered leasing agreement (CLA); and (3) fees from
entities seeking access to or use of any network equipment or
infrastructure constructed or otherwise owned by FirstNet.\5\ Under
this proposed rule, NTIA can direct FirstNet to address only those
proposed fees that fall into one of these three categories. Further,
NTIA proposes that it will not evaluate the reasonableness, or similar
subjective attributes, of the specific fees assessed by FirstNet or its
prospective partner or partners as contemplated in the Act. Specific
NTIA rules are proposed in new 47 CFR Chapter V; Subchapter A will be
utilized for NTIA rules that relate to FirstNet, and Subchapter B will
be reserved for rules promulgated by FirstNet itself.
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\5\ See 47 U.S.C. 1428(a).
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We seek comment on these preliminary proposals. We also look
forward to FirstNet's progress in its procurement process, which may
provide additional information relevant to NTIA's duties under Section
6208(c). With such information from stakeholders and FirstNet, NTIA
will be better informed to solidify the scope of its fee review and
approval process as appropriate.
II. Background: Relevant Statutory Provisions
A. FirstNet-Assessed Fees Must Ensure Self-Funding and Be Approved by
NTIA
The Act established FirstNet as an independent authority within
NTIA.\6\ The Act authorizes FirstNet to take all actions necessary to
ensure the building, deployment, and operation of the Network.\7\ To
achieve this significant and unprecedented task, FirstNet must operate
in many respects as a private sector business enterprise.\8\
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\6\ See 47 U.S.C. 1424(a).
\7\ See 47 U.S.C. 1426(b).
\8\ To that end, the Act set forth several key provisions
establishing FirstNet as a business enterprise. For example, the Act
requires the creation of the FirstNet Board, which has the fiduciary
and operational functions assigned to boards of corporations. See 47
U.S.C. 1424(b). Furthermore, Board members appointed by the
Secretary of Commerce must include individuals with various types of
business experience, including expertise in building, deploying, and
operating commercial telecommunications networks, and in financing
and funding telecommunications networks. See id. FirstNet may only
act as authorized by the Board to execute any powers granted by the
Act to FirstNet, spend funds, or take other actions deemed
necessary, appropriate, or advisable to accomplish the purposes of
the Act. See 47 U.S.C. 1426(a)(1); see also 47 U.S.C. 1426(a)(5). As
a business enterprise, FirstNet may contract with individuals;
private companies; organizations; institutions; and Federal, State,
regional, and local agencies. See 47 U.S.C. 1426(a)(3). The Act
allows FirstNet to engage in other business activities, including
selecting agents, consultants, or experts and hiring a program
manager to carry out key aspects of deploying the NPSBN. See 47
U.S.C. 1425(b).
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FirstNet's authority to operate as a business can and should
further its ability to meet the Act's mandate that it become a self-
sustaining enterprise. Section 6208 of the Act makes clear that
FirstNet must establish permanent self-funding and is authorized to
collect fees for specified uses of the Network or its components in
furtherance of that obligation.
The Act established specific parameters for FirstNet's fee
assessments described in Section 6208(a) to drive sustainability and
continual reinvestment of FirstNet revenues into the Network. Section
6208(b), entitled, ``Establishment of Fee Amounts; Permanent Self-
Funding,'' requires that the total amount of the fees assessed under
Section 6208(c) for each fiscal year shall be sufficient, but cannot
exceed, the amount necessary to recoup the total expenses of FirstNet
as it carries out its duties under the Act.\9\ Moreover, FirstNet must
reinvest amounts received from the assessment of fees under Section
6208 for constructing, maintaining, operating, or improving the
Network.\10\ Specific to FirstNet's authority to assess and collect
these fees, Section 6208(c) requires that NTIA review such fees ``on an
annual basis, and such fees may only be assessed if approved by . . .
NTIA.'' \11\
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\9\ See 47 U.S.C. 1428(b).
\10\ See 47 U.S.C. 1428(d).
\11\ 47 U.S.C. 1428(c).
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Additionally, the Act makes clear that FirstNet should consider
public-private partnerships, affording it additional authority to
creatively support the provision of a self-funded broadband network for
use by public safety entities.\12\ Such partnerships might result in
FirstNet's collection of income that does not fall within the fees
specified in Section 6208(a).\13\
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\12\ See, e.g., 47 U.S.C. 1428(a) (describing public-private
arrangements to construct, manage, and operate the nationwide public
safety broadband network between FirstNet and a secondary user); see
also 47 U.S.C. 1426(b)(3) (requiring that FirstNet requests for
proposals, to the maximum extent economically feasible, ``include
partnerships with existing commercial mobile providers to utilize
cost- effective opportunities to speed deployment in rural areas'').
\13\ See, e.g., Sec. 1426(a)(3) (referencing ``grants and funds
from . . . individuals, private companies, organizations,
institutions, and Federal, State, regional, and local agencies'');
Sec. 1426(a)(4) (referencing ``gifts, donations, and bequests of
property, both real and personal'').
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B. FirstNet's Finances are Subject to Broader, Independent Review
NTIA's approach in this proposed rule reflects the scope of its
fees review authority in the context of other supervision of FirstNet's
finances and operations, which taken together, ensure a high degree of
oversight over FirstNet's finances under the Act. The Act sets forth
multiple methods of oversight of FirstNet well beyond the limited
review and approval of fees required of NTIA under Section 6208(c). For
example, FirstNet is subject to an independent financial audit. Section
6209 of the Act requires that the Secretary of Commerce engage an
independent auditor to conduct an annual audit of all of FirstNet's
commercial corporate transactions which the auditor will submit to
Congress, the President, and FirstNet.\14\ In addition, the Act
requires an annual, ``comprehensive and detailed report of the
operations, activities, financial condition, and accomplishments of
[FirstNet],'' to be submitted to Congress along with ``recommendations
or proposals for legislative or administrative action as [FirstNet]
deems appropriate.'' \15\ Furthermore, FirstNet must comply on a day-
to-day basis with all other applicable federal financial laws and
regulations. In light of these broader oversight provisions, NTIA's
narrow scoping of its fee review authority is appropriate.
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\14\ See 47 U.S.C. 1429.
\15\ 47 U.S.C. 1430.
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III. NTIA's Annual Fee Review Focuses on Whether FirstNet Fees and
Other Income, in Aggregate, Are Sufficient, and Do Not Exceed the
Amount Necessary, To Recoup FirstNet's Total Expenses
A. Standard of NTIA Fee Review and Approval
The Act does not provide a specific standard of review for NTIA's
annual fee review and approval process under Section 6208(c).\16\
However, examination of other provisions in Section 6208 and the Act at
large inform NTIA's proposed approach to FirstNet
[[Page 77595]]
fee review. FirstNet has a duty under Section 6208(b) to ensure that,
during a given fiscal year, the fees it assesses are sufficient, and
shall not exceed the amount necessary, to recoup the ``total expenses''
associated with carrying out its duties as specified under the Act.\17\
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\16\ See 47 U.S.C. 1428(c).
\17\ See 47 U.S.C. 1428(b).
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Given this overarching directive in Section 6208(b), which
immediately precedes the Act's assignation of fee review to NTIA in
Section 6208(c), NTIA proposes that the Act's purpose for the fee
review is solely to support FirstNet's obligation under Section 6208(b)
to be self-funding. Thus, NTIA intends to base its decisions on
FirstNet's proposed fees by only examining whether the fees are, in
aggregate and combined with other non-fee-based income, sufficient, but
not in excess, of the projected funds FirstNet needs to carry out its
statutory obligations in a given fiscal year. In this way, NTIA's
review and approval of FirstNet-proposed fees under Section 6208 will
exclusively focus on FirstNet's projected income and expenses to
further the self-funding requirements and limitations of Section
6208(b). We seek comment on this proposed approach.
B. NTIA's Fee Review and Approval Process Does Not Assess the
Reasonableness of a Proposed Fee
The scope of review of a fee is established by the statute.\18\ As
a result, we propose that NTIA's fee review is scoped to self-
sustainability and does not include review of the reasonableness of any
fee assessed by FirstNet or its prospective partner or partners as
contemplated in the Act.
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\18\ See Principles of Federal Appropriations Law, Volume III,
Third Edition, GAO, pp 12-140-12-181. GAO 08-978 SP (Washington, DC,
September 2008).
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The wording of the Act itself does not direct NTIA to perform a
reasonableness review. Section 6208(b), entitled, ``Establishment Of
Fee Amounts; Permanent Self-Funding,'' requires that the total amount
of the fees assessed by FirstNet for each fiscal year must be
sufficient, but cannot exceed, the amount necessary to recoup the total
expenses of FirstNet as it carries out its duties under the Act.\19\
NTIA's mandate to review and approve FirstNet fees directly follows
this fee structure requirement in Section 6208(c).\20\ The Act provides
no other direction regarding fee review, but the structure of the
statute clearly indicates congressional intent to ensure that the
assessed fees drive a self-funded network.
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\19\ See 47 U.S.C. 1428(b).
\20\ See 47 U.S.C. 1428(c).
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A review of other provisions of Title 47 demonstrates that when
Congress intends for rates to be subject to a review for
``reasonableness'' or other subjective standards, it states this
intention explicitly. For example, Section 201 of the Communications
Act directs the Federal Communications Commission (FCC) to determine
whether the charges of telecommunications carriers are ``just and
reasonable.'' \21\ Similarly, Section 224 of the Communications Act
directs the FCC to regulate the rates, terms, and conditions of pole
attachments to ensure they are ``just and reasonable.'' \22\ Here, with
respect to FirstNet's assessment of fees under Section 6208, and NTIA's
review and approval of such fees, the Act established no such ``just
and reasonable'' standard.
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\21\ See 47 U.S.C 201 (stating that, for common carrier
services, ``[a]ll charges . . . for and in connection with such
communication service, shall be just and reasonable, and any such
charge, practice, classification, or regulation that is unjust or
unreasonable is hereby declared to be unlawful.'').
\22\ See 47 U.S.C 224 (b)(1) (stating that ``the Commission
shall regulate the rates, terms, and conditions for pole attachments
to provide that such rates, terms, and conditions are just and
reasonable, and shall adopt procedures necessary and appropriate to
hear and resolve complaints concerning such rates, terms, and
conditions.'')
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Moreover, a reasonableness review of FirstNet fees is unnecessary
as a matter of policy. The Act does not mandate or require any public
safety entity to purchase services from FirstNet. FirstNet must compete
for subscribers by offering a compelling value proposition to
prospective public safety customers. Public safety users themselves
will determine whether FirstNet's proposed user fees are reasonable in
comparison to the fees they are offered by competing providers.
Thus, NTIA proposes that it will not assess whether individual or
total fees in any given category described in Section 6208(a) are
reasonable, proportionate, or otherwise subjectively appropriate in
light of individual or total fees in that category, or any other
category of fees listed in Section 6208(a). With the proposed scope of
its fee review, NTIA meets the intent of the self-funding provisions,
but does not import ``just and reasonable'' review parameters that
Congress clearly could have, but did not, include in the statute. We
seek comment on these preliminary proposals.
IV. Methodology of NTIA Fee Review and Approval Process
A. Focus of NTIA Fee Review Methodology
Based on the preliminary conclusions above, NTIA proposes to base
its approval of fees upon a determination of whether the proposed fees,
in aggregate, when combined with any projected non-fee-based income
that FirstNet receives, meet but do not exceed FirstNet's anticipated
total expenses associated with carrying out its duties as specified
under the Act in a given year. As required by the Act, NTIA will
conduct its fee review and approval process on an annual basis.
Further, NTIA's proposed fee review and approval process will occur
before a fee is assessed as required by the Act, and NTIA expects that
FirstNet will propose such fees to NTIA in writing. Because FirstNet
must compete in a broader marketplace for the opportunity to provide
broadband service to public safety entities, it will need the
flexibility over the course of a fiscal year to adjust specific fees it
wishes to assess pursuant to Section 6208(a).
Thus, to empower FirstNet with the flexibility needed to compete in
the marketplace, NTIA proposes that, as part of its annual fee review,
it will also review FirstNet's actual fees and expenses from the
previous four fiscal quarters. This process will afford FirstNet the
opportunity to describe any significant discrepancies between projected
and actual expenses and revenue of that previous fiscal year and detail
how its projected fees and revenues for the upcoming fiscal year have
addressed these discrepancies. In doing so, FirstNet will have an
opportunity on an annual basis to ensure that its duty under Section
6208(b) is met. To determine FirstNet's anticipated expenses, among the
specific costs areas that NTIA may consider are: (1) Salaries and
Benefits; (2) Travel; (3) Services: Federal Sources; (4) Services: Non-
Federal Sources; (5) Facilities Rental; (6) Supplies, Materials, and
Printing; (7) Equipment; and (8) Other expenses or obligations incurred
for future contract award, capital reserves, or other permitted
expenses or obligations. NTIA anticipates deferring to FirstNet to
determine the reasonableness of projected obligations in the
aforementioned or other categories.
Throughout the fee review and approval process, NTIA anticipates
utilizing the budget documents and financial statements produced in the
normal course of FirstNet's business. NTIA might also utilize
FirstNet's
[[Page 77596]]
annual budget reports as approved by the FirstNet Board and submitted
as part of the President's Budget and FirstNet's mandated annual report
to Congress.
Therefore, NTIA proposes that it will make, on an annual basis, one
of three determinations with regard to proposed fees: (1) FirstNet's
proposed fees, in aggregate, when combined with any projected non-fee-
based income to be received by FirstNet, meet but do not exceed
FirstNet's projected total expenses; (2) FirstNet's proposed fees, in
aggregate, when combined with any projected non-fee-based income to be
received by FirstNet, do not meet FirstNet's projected total expenses;
or (3) FirstNet's proposed fees, in aggregate, when combined with any
projected non-fee-based income to be received by FirstNet, exceed
FirstNet's projected total expenses. Upon making any of these
determinations, NTIA will communicate its determination in writing to
FirstNet. Should NTIA make the second or third determination listed
above, NTIA will not approve FirstNet's proposed fees, and FirstNet may
not assess them. NTIA proposes that it will accept any revised proposed
fees or FirstNet approved revised budgets when provided by FirstNet in
writing and evaluate them consistent with the scope and methodology
proposed above.
We seek comment on this proposed approach to NTIA's fee review and
approval process. We also seek comment on alternative methodologies
that will further our fee review and approval process consistent with
the Act's directives.
B. NTIA's Fee Review and Approval Process Defers to FirstNet on
Necessary Reserves
NTIA proposes that it should defer to FirstNet, in the context of
its budgetary planning process, regarding the use and retention of
reserves or working capital funds. By doing so, NTIA will not, in its
fee review and approval process, assess whether or what level of funds
FirstNet should maintain in reserves, capital accounts, or other
funding categories. FirstNet's routine budget, auditing, and accounting
processes will presumably determine the need for such capital reserve
funds. NTIA plans to defer to FirstNet's determination of need for such
funds through these processes. We seek comment on this proposed
approach to NTIA's fee review and approval process.
Moreover, NTIA proposes that, in its fee review and approval
process, it will take into consideration reserve funds at the levels
designated in FirstNet's budget, to determine whether FirstNet's
proposed fees meet but not exceed FirstNet's total expenses. In doing
so, NTIA will deem such funds to be a part of FirstNet's projected
total expenses under Section 6208(b) of the Act. We seek comment on
this proposal.
V. FirstNet-Proposed Fees Subject to NTIA Review Under Section 6208
Must Be Addressed Upon NTIA Disapproval
A. Fees Subject to NTIA Review and FirstNet Reconsideration Upon NTIA
Disapproval
The Act assigns a clear duty to NTIA under Section 6208: approve or
disapprove the specific fees FirstNet aspires to assess under Section
6208. Under Section 6208(a) of the Act, FirstNet is authorized to
assess and collect the following fees:
1. A Network User Fee: ``A user or subscription fee from each
entity, including any public safety entity or secondary user, that
seeks access to or use of the [Network].'' \23\
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\23\ 47 U.S.C. 1428(a)(1).
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2. Fees Pursuant to a Covered Leasing Agreement: ``A fee from
any entity that seeks to enter into a [CLA].'' \24\
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\24\ 47 U.S.C. 1428(a)(2)(A); See also 47 U.S.C. 1428(a)(2)(B)
(stating that the Act defines a CLA as ``a written agreement
resulting from a public-private arrangement to construct, manage,
and operate the nationwide public safety broadband network between
the First Responder Network Authority and secondary user to permit--
(i) access to network capacity on a secondary basis for non-public
safety services; and (ii) the spectrum allocated to such entity to
be used for commercial transmissions along the dark fiber of the
long-haul network of such entity.'').
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3. Lease Fees Related to Network Equipment and Infrastructure:
``A fee from any entity that seeks access to or use of any equipment
or infrastructure, including antennas or towers, constructed or
otherwise owned by the First Responder Network Authority resulting
from a public-private arrangement to construct, manage, and operate
the [Network]'' \25\
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\25\ 47 U.S.C. 1428(a)(3).
As a threshold matter for purposes of this proposed rule and NTIA's
duty under Section 6208 of the Act, the word ``fee,'' as used in
Section 6208(c) of the Act, must be defined. By defining the fees NTIA
is to review, NTIA identifies the specific fees FirstNet must address
prior to NTIA approval in the event NTIA must disapprove FirstNet-
approved fees under the standards set forth above.
To implement its fee review obligations under the Act, NTIA must
determine the meaning of the term ``fee'' as used in Section 6208. In
the case of the Act, the three sets of fees, which FirstNet may assess,
and which NTIA must review if assessed, are clearly defined within
Section 6208(a). Thus, NTIA proposes that a ``fee'' that will be
subject to its review and approval under Section 6208(c) is FirstNet's
collection of money that falls within the three categories in Section
6208(a): (1) Network user fees; (2) lease fees related to network
capacity, pursuant to a covered leasing agreement; and (3) fees from
entities seeking access to or use of any equipment or infrastructure
constructed or otherwise owned by FirstNet.\26\ Given the clear
language in Section 6208(a) defining the fees that FirstNet may assess,
and the corresponding language in Section 6208(c) directing NTIA to
review fees ``assessed under [Section 6208],'' NTIA proposes that its
fee review authority, and FirstNet's obligation to address fees upon
NTIA disapproval of proposed fees, is scoped to the three above-
referenced categories. We seek comment on this preliminary proposal.
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\26\ See 47 U.S.C. 1428(a).
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B. Income Other Than Fees Is Not Subject to NTIA Fee Review
As noted above, NTIA recognizes that, under the Act, FirstNet may
receive income that is separate and distinct from the fees defined in
Section 6208(a). Such income must be factored into NTIA's determination
of whether proposed fees, in aggregate, will meet but not exceed the
funds needed by FirstNet on an annual basis. However, as the Act limits
NTIA's review and approval authority to ``the fees assessed in [Section
6208],'' NTIA proposes that the Act gives it no authority to review or
approve as a ``fee'' any other form of income FirstNet might receive.
NTIA proposes that non-fee-based income, emanating from arrangements
allowed by statute, is not a ``fee'' under Section 6208(a).
Furthermore, NTIA proposes that it will consider any non-fee income
only as part of its determination of whether such income, when combined
in aggregate with the fees defined in Section 6208(a), will be
sufficient to recoup FirstNet's total expenses, but not exceed the
amount necessary, to carry out its statutory duties and
responsibilities for the fiscal year involved. Moreover, NTIA proposes
that it will not analyze the terms and conditions of any CLA, or any
other agreement between FirstNet and another entity, beyond those
specific terms and conditions which establish any fees that meet the
three categories described in Section 6208(a). We seek comment on these
preliminary proposals.
VI. Ex Parte Communications
Any non-public oral presentation to NTIA regarding the substance of
this proposed rule will be considered an ex parte presentation, and the
substance of
[[Page 77597]]
the meeting will be placed on the public record and become part of this
docket. No later than two (2) business days after an oral presentation
or meeting, an interested party must submit a memorandum to NTIA
summarizing the substance of the communication. NTIA reserves the right
to supplement the memorandum with additional information as necessary,
or to request that the party making the filing do so, if NTIA believes
that important information was omitted or characterized incorrectly.
Any written presentation provided in support of the oral communication
or meeting will also be placed on the public record and become part of
this docket. Such ex parte communications must be submitted to this
docket as provided in the ADDRESSES section above and clearly labeled
as an ex parte presentation. Federal entities are not subject to these
procedures.
Classification
This rule has been determined to be not significant for purposes of
Executive Order 12866.
Regulatory Flexibility Act
This proposed rulemaking, issued under the authority of the Act,
will not have a significant economic impact on a substantial number of
small entities as defined under the Regulatory Flexibility Act (RFA).
If implemented, this rule would establish regulations, as required
under the Act, for NTIA and FirstNet regarding the process by which
NTIA reviews and approves or disapproves fees FirstNet proposes to
assess. The RFA requires federal agencies to prepare an analysis of a
rule's impact on small entities whenever the agency is required to
publish a notice of proposed rulemaking. However, a federal agency may
certify, pursuant to 5 U.S.C. 605(b), that the action will not have a
significant economic impact on a substantial number of small entities.
The proposed regulations are for the particular and limited purpose of
NTIA examining only whether the proposed fees of another federal
entity--FirstNet--are, in aggregate and in combination with any
FirstNet non-fee-based income, sufficient, but not in excess of, the
projected funds that FirstNet needs to recoup the total expenses
required to carry out its statutory obligations in a given year. No
external entities, including any small businesses, small organizations,
or small governments, will experience any direct economic impacts from
this proposed rule. The only potential effect on any external entities,
large or small, would likely be positive, as NTIA's proposed rules will
assist in ensuring that FirstNet, as required under the Act, will
sustain a nationwide public safety broadband network that provides
broadband communications to first responders. Because this action, if
adopted, would directly affect only federal entities--NTIA and
FirstNet--and not any small entities, the Department of Commerce has
concluded that the action would not result in a significant economic
impact on a substantial number of small entities. Thus, the Department
of Commerce Chief Counsel for Regulations has certified to the Chief
Counsel for Advocacy of the Small Business Administration that this
rule will not have a significant impact on a substantial number of
small entities. Therefore, an initial regulatory flexibility analysis
is not required and has not been prepared.
Executive Order 13132
It has been determined that this document does not contain policies
with Federalism implications as that term is defined in Executive Order
13132.
List of Subjects in 47 CFR Part 500
FirstNet, FirstNet Fees, Safety, Telecommunications.
Dated: December 10, 2015.
Lawrence E. Strickling,
Assistant Secretary for Communications and Information.
For the reasons set out in the preamble, the National
Telecommunications and Information Administration proposes to add 47
CFR Chapter V to read as follows:
CHAPTER V--THE FIRST RESPONDER NETWORK AUTHORITY (Parts 500-599)
SUBCHAPTER A--NATIONAL TELECOMMUNICATIONS AND INFORMATION
ADMINISTRATION REGULATIONS (Parts 500-549)
PART 500--REVIEW AND APPROVAL OF FEES PROPOSED BY THE FIRST RESPONDER
NETWORK AUTHORITY (FIRSTNET)
Sec.
500.1 Purpose and scope.
500.2 General definitions.
500.3 NTIA duty to review FirstNet proposed fees.
500.4 Scope of NTIA review of FirstNet proposed fees.
500.5 Methodology of NTIA fee review and approval process.
Authority: 47 U.S.C. 1401.
Sec. 500.1 Purpose and scope.
Sections 500.2 through 500.5 implement 47 U.S.C. 1428(c) as
codified pursuant to the Middle Class Tax Relief and Job Creation Act
of 2012 (Pub. L. 112-96, Title VI, 126 Stat. 256 (codified at 47 U.S.C.
1401 et seq.) (the ``Act''), which requires the National
Telecommunications and Information Administration to annually review
fees the First Responder Network Authority (FirstNet) proposes to
assess.
Sec. 500.2 General definitions.
Fee means FirstNet's receipt of money from:
(1) A Network User Fee;
(2) Lease Fees Related To Network Capacity; or
(3) Lease Fees Related To Network Equipment And Infrastructure, as
those terms are defined under 47 U.S.C. 1428(a).
FirstNet means the First Responder Network Authority.
Fiscal Year means the 12-month accounting period for the federal
government, which begins on 1 October of a given year and ends on 30
September of the subsequent year.
Non-fee-based income received by FirstNet means FirstNet's receipt
of money from any source, transaction, entity, or any other means
allowed under 47 U.S.C. 1401 et seq., other than those receipts
described above in the definition of ``fee.''
NTIA means the National Telecommunications and Information
Administration.
NTIA's fee review and approval process means the process by which
NTIA executes its duties under 47 U.S.C. 1428(c).
Sec. 500.3 NTIA's duty to review FirstNet proposed fees.
As required under 47 U.S.C. 1428(c), NTIA shall exclusively review
fees, which must be proposed by FirstNet in writing, through NTIA's
review and approval process conducted on an annual basis.
Sec. 500.4 Scope of NTIA review of FirstNet proposed fees.
NTIA shall approve FirstNet proposed fees only if such fees, when
combined with any non-fee-based income projected to be received by
FirstNet, are sufficient, but do not exceed the amount necessary, to
recoup FirstNet's total expenses in carrying out its duties and
responsibilities under 47 U.S.C. 1401 et seq. for the fiscal year
involved.
Sec. 500.5 Methodology of NTIA fee review and approval process.
(a) Fee review approach. To execute NTIA's fee review and approval
process, NTIA shall utilize FirstNet's standard financial
documentation, which may include but is not limited to:
[[Page 77598]]
(1) FirstNet's budget documents produced in the normal course of
its business;
(2) FirstNet's financial statements produced in the normal course
of its business;
(3) FirstNet's annual budget reports submitted as part of the
President's Budget; and
(4) FirstNet's annual report to Congress.
(b) Deference to FirstNet on necessary reserves. In executing
NTIA's fee review and approval process, NTIA shall defer to FirstNet
with respect to its use and retention of reserve or working capital
funds. NTIA shall consider any such designated funds to be a part of
FirstNet's total expenses in carrying out its duties and
responsibilities under 47 U.S.C. 1401 et seq. for the fiscal year
involved.
(c) Determination of fee review: NTIA shall make one of the
following determinations annually upon review of FirstNet's proposed
fees:
(1) FirstNet's proposed fees, in aggregate, when combined with any
projected non-fee-based income to be received by FirstNet, meet but do
not exceed FirstNet's projected total expenses;
(2) FirstNet's proposed fees, in aggregate, when combined with any
projected non-fee-based income to be received by FirstNet, do not meet
FirstNet's projected total expenses; or
(3) FirstNet's proposed fees, in aggregate, when combined with any
projected non-fee-based income to be received by FirstNet, exceed
FirstNet's projected total expenses. Upon making any of these
determinations, NTIA will communicate its determination in writing to
FirstNet.
(d) Outcome of determination of fee review:
(1) Should NTIA make the determination listed in paragraph (c)(1)
of this section, FirstNet may assess the proposed fees.
(2) Should NTIA make one of the determinations listed in paragraph
(c)(2) or (3) of this section, NTIA will disapprove FirstNet's proposed
fees, and FirstNet may not assess those proposed fees.
(e) Revision of Proposed Fees: Upon a disapproval of FirstNet's
proposed fees as described in paragraph (d)(2) of this section, or upon
FirstNet's determination that it must revise NTIA-approved fees to
ensure compliance with 47 U.S.C. 1428(b), FirstNet shall prepare a
revised written submission to NTIA, which shall evaluate any proposed
fees therein consistent with the rules in Sec. Sec. 500.1-500.5.
(f) Communication of NTIA fee approval or disapproval. Approval or
disapproval of FirstNet-proposed fees shall be communicated in writing
by the Assistant Secretary for Communications and Information and
Administrator, National Telecommunications and Information
Administration, U.S. Department of Commerce, to the Chair of the
FirstNet Board.
Subchapter B--[Reserved]
[FR Doc. 2015-31516 Filed 12-14-15; 8:45 am]
BILLING CODE 3510-60-P