Public Telecommunications Facilities Program

SUMMARY: This document revises and clarifies the rules governing

administration of the Public Telecommunications Facilities Program

(PTFP). The PTFP is authorized to provide matching grants to plan and

construct public telecommunications facilities.1

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\ 1\ See 47 U.S.C. Secs. 390-393, and 397-399b (1994), The

Communications Act of 1934, as amended. Unless otherwise noted, all

statutory citations are to title 47 of the United States Code.

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EFFECTIVE DATE: November 8, 1996.

FOR FURTHER INFORMATION CONTACT: Dennis Connors, Director, Public

Broadcasting Division, NTIA, Department of Commerce, 14th Street and

Constitution Avenue, NW., Room 4625, Washington, DC 20230. Telephone:

(202) 482-5802; Fax (202) 482-2156. Internet address:

[email protected].

SUPPLEMENTARY INFORMATION: In 61 FR 27230, the National

Telecommunications and Information Administration (NTIA) announced

proposed revisions of the rules that govern the PTFP and requested

public comments on those revisions. In response to the notice of

proposed rulemaking NTIA received comments from 7 different

organizations.2

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2 Comments were submitted by the following organizations:

Association of America's Public Television Stations (APTS); Indiana

University Radio and Television Services, operator of WFIU-FM/WTIU-

TV (IURTS); the National Federation of Community Broadcasters

(NFCB); National Public Radio (NPR); the National Technological

University, Ft. Collins, CO (NTU); the Public Broadcasting Service

(PBS); and the Rocky Mountain Corporation for Public Broadcasting,

Albuquerque, NM (RMCPB).

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There was general support for the overall direction of the proposed

revision. APTS, NPR, and NFCB supported the general thrust of the

proposed clarifications and the reorganization of the rules. No

opposition was received to many of NTIA's proposed changes to the rules

including the incorporation of the priorities from the Appendix into

the body of the rules and the changes proposed in the following

sections: Sec. 2301.1 Program Purposes; Sec. 2301.3 Applicant

Eligibility; Sec. 2301.6 Amount of Federal Funding; Sec. 2301.7

Eligible and Ineligible Project Costs; Sec. 2301.9 Deferred

Applications; Sec. 2301.12 Federal Communications Commission

Authorizations; Sec. 2301.13 Public Comments; Sec. 2301.14 Supplemental

Application Information; Sec. 2301.15 Withdrawal of Applications;

Sec. 2301.16 Technical Evaluation Process; Sec. 2301.18 Selection

Process; Sec. 2301.19 General Conditions Attached to the Federal Award;

Sec. 2301.20 Schedules and Reports; Sec. 2301.21 Payment of Federal

Funds; Sec. 2301.22 Protection, Acquisition and Substitution of

Equipment; Sec. 2301.23 Completion of Projects; Sec. 2301.24 Final

Federal Payment; Sec. 2301.25 Retention of Records and Annual Status

Reports; and Sec. 2301.26 Waivers.

Comments on the proposed rules were mainly focused on two sections:

Sec. 2301.4 Scope of Projects and Sec. 2301.17 Evaluation Criteria. The

subject that prompted the most public comments, however, was not a

section of the proposed rules, but rather a discussion in the

Supplemental Information section of the Notice regarding the conversion

of public broadcasting to advanced digital technologies.3 We

discuss each of these three subjects and several other issues raised by

the public in the following sections.

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3 See NPRM at 27230.

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Section 2301.4 Scope of Projects

Section 2301.4 relates to the scope of projects eligible for PTFP

funding and moved a section that was an Appendix in prior years into

the body of the Rules. APTS supported the incorporation of the

priorities in the Rules as part of its general support for the

reorganization of the PTFP Rules.

There were several comments on the proposed changes to this

section. RMCPB suggested that the title of this section was

nondescriptive of the content. RMCPB recommended this section be titled

``Types of Projects, Priorities.'' We agree that this is an improvement

and so have modified the title to ``Types of Projects and Broadcast

Priorities'' in the Final Rules.

Three organizations, NFCB, NTU and RMCPB, commented on NTIA's

proposal to place all broadcast applications within the five funding

priorities and revise the scope of the Special Applications category to

consist solely of nonbroadcast projects. NFCB supported NTIA's proposal

and thought that reserving the Special Applications category for non-

broadcast would be useful for considering applications utilizing new

technologies. NTU hoped that the proposed reorganization did not change

the priority status that PTFP has developed for distance learning

projects over the past decade. RMCPB questioned whether, under the

proposed rules, NTIA continued to possess the discretionary authority

to award grants to eligible broadcast as well as nonbroadcast

applicants with unique/innovative proposals. NTIA encourages the

submission of applications that propose unique and innovative

telecommunications projects, whether using broadcast or nonbroadcast

technologies. We have therefore clarified this position through the

creation of Sec. 2301.4(b)(6) Other Cases within the Broadcast

Applications section. This section provides broadcast applicants the

same opportunities for submission of unique or innovative applications

as contained in the Special Applications Sec. 2301.4(a) for

nonbroadcast applicants.

RMCPB proposed that, if NTIA were to place broadcast and

nonbroadcast applications in different categories, NTIA should

establish a set of priority distinctions for the nonbroadcast

applications similar to that of the broadcast applications. While NTIA

has established specific priorities for broadcast applications and

continues to refine those priorities in the current regulations, we

have chosen not to establish a fixed set of priorities for nonbroadcast

applications for two reasons. The first reason is that under the Act,

NTIA can only fund construction applications that establish or expand a

nonbroadcast facility,4 which are comparable to Priority 1A and 1B

broadcast applications. Nonbroadcast applications are not eligible for

equipment replacement, improvement or augmentation, which are

Priorities 2, 4 and 5 of the broadcast applications. Priority 3 in the

broadcast priorities, first local origination, is not applicable for

nonbroadcast since NTIA considers the service provided by a

nonbroadcast facility rather than the service area and recognizes that

different technologies and services may provide a unique service in a

particular service area. In effect, nonbroadcast applications are

already grouped into a single category, Special Applications, which is

comparable to Priority 1. NTIA has not broken the Special Applications

category into different priorities for a second reason. We recognize

that nonbroadcast applicants propose many

[[Page 57967]]

different technologies, each technology with its own strengths in

meeting the needs of a particular community, whether that community is

a city, state, region or the nation. In encouraging the submission of

innovative and unique applications, NTIA prefers not to establish rigid

priorities but to let applicants propose projects which identify and

serve needs in their chosen service area. We have, therefore, not

published a set of priorities for Special Applications but have made

minor changes to the Special Applications category to further clarify

the intent of this category.

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4 Section 390 of the Act, which is included as Sec. 2301.1

of these final rules.

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NFCB and APTS commented on NTIA's proposal to consider projects to

construct public broadcast stations to address underserved needs in an

area already served by other public broadcasting facilities within the

Priority 4A, Improvement of Public Broadcasting Services. APTS

supported the proposal to place these ``second station'' applications

within the broadcast priorities but suggested that a lower priority--

Priority 5A--would be more appropriate. APTS noted that given limited

Federal funding, it was important to support existing public

broadcasting facilities that are serving distinct and unserved needs

before supporting new facilities. APTS indicated that stations in

multi-station markets are treated as Priority 4A and that treating

applicants for new second stations under Priority 5A would insure that

existing facilities receive support before applications for new

facilities to serve underserved needs.

NFCB, however, supported NTIA's placement of projects to construct

public broadcast stations to address underserved needs in an area

already served by other public broadcasting facilities within the

Priority 4A. NFCB noted that public radio is a targeted medium and that

even the best stations can only hope to serve a portion of their

communities of license. NFCB felt that placement of second stations

within Priority 4A recognized the need for such stations in an

increasingly multicultural American society.

In the Notice of Proposed Rulemaking, NTIA proposed that projects

to construct public broadcast stations to address underserved needs in

an area already served by other public broadcasting facilities would be

considered in Priority 4A so they could be considered with other

applications from stations in areas already served by another public

broadcasting facility. NTIA believes that not only is it important to

maintain the existing services of second stations, but it is also

important that communities with underserved needs have the opportunity

to receive additional service from new facilities. We expect that new

second service stations will be radio facilities that serve

demonstrated needs in their community, and we do not anticipate that

this provision will have a major impact on television facilities. We

recognize that there is a delicate balance between supporting

applications for new such services and maintaining those second

stations already in place, but we believe that there is no clear reason

to favor one type of application over the other. Therefore, we believe

that Priority 4A is the appropriate placement for these applications.

In a related matter, RMCPB raised an issue under Secs. 2304.4(b)

(2) and (4), regarding those instances where two full-service public

radio stations serve the same area with two discrete and distinct

program services. RMCPB noted that even when utilizing different

national program services and distinctive local programming, neither

station can qualify as ``essential'' (existing broadcast stations that

provide either the only public telecommunications signal or the only

locally originated public telecommunications signal to a geographical

area) and therefore neither may be eligible for Priority 2 replacement.

These applications are accordingly placed in Priority 4A. RMCPB

suggested that ``PTFP discretionary consideration differing from that

given either of two such stations without discrete service'' be

given.5 NTIA appreciates RMCPB's concern regarding the priority of

stations in multi-station areas. NTIA notes that some stations in a

multi-station area may in fact qualify for Priority 2 as an

``essential'' station as the term is used in the PTFP regulations.

Applicants are encouraged to provide information as part of their

applications documenting whether they provide either the only public

telecommunications signal or the only locally originated public

telecommunications signal to a geographical area. NTIA, however, is

reluctant to distinguish between stations on the basis of their

programming services as proposed by RMCPB. NTIA has been able to fund

Priority 4A applications in the past and expects to be able to do so in

the future, dependent on the availability of funds.

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5 Comments of RMCPB, p. 3.

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RMCPB supported NTIA's clarification of how PTFP considers the

presence of AM daytime only stations in determining the Priority for

proposed FM facilities serving a similar coverage area. RMCPB raised

the question regarding the priority for a public radio FM station

serving an area covered by a student noncommercial educational station

that does not operate full-time or year-round. NTIA's long-time

practice is not to consider student noncommercial educational stations

that do not operate full-time or year-round as providing a public

telecommunications service. The presence of a student noncommercial

educational radio station in an area, therefore, does not preclude

Priority 1 consideration of an application for a public radio FM

station proposing to provide a public telecommunications service.

Section 2301.17 Evaluation Criteria for Construction and Planning

Applications.

Four organizations addressed the issue of evaluation criteria and

each supported the combination of construction and planning into a

single set of evaluation criteria.6 The four organizations

supported the criteria proposed by NTIA, though APTS and IURTS both

opposed deleting the community support criterion from the past

evaluation criteria.

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6 APTS, and NPR specifically supported a common set of

criteria for evaluation of planning and construction applications

and NFCB and RMCPB supported the common evaluation criteria by

reference.

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APTS noted that public broadcasting stations exist to serve their

local communities and that NTIA should not make grants to applicants

who cannot demonstrate significant ties to their community. APTS

suggested that financial support is the clearest objective evidence

that an applicant is providing service valued by their community and

that NTIA continue to require that applicants demonstrate that they

receive local financial support. IURTS suggested that demonstration of

community support is a good check to insure that the purposes of the

PTFP program are being served.

NTIA agrees with the thrust of both the APTS and IURTS comments. We

believe that demonstration of community support is an important element

in the evaluation of an application. Indeed, we intend to incorporate

demonstration of community support into the evaluation of several of

the evaluation criteria proposed. As noted by APTS, community support

is an important element in an applicant's ability to raise funds. This

is true both for determining whether an applicant can raise both the

short-term local match required by the PTFP application and the long-

term funds necessary to operate the system

[[Page 57968]]

during the Federal interest period. NTIA believes that demonstration of

community support, therefore, is important for the financial

qualifications criterion but also believes the demonstration of

community support will be useful in evaluating other criteria as well.

In most applications, demonstration of community support will be useful

in documenting an applicant's fulfillment of the project objectives

criterion. In many applications, demonstration of community support can

be used to document urgency, applicant qualifications and special

consideration. Rather than making community support an independent

criterion, we have chosen to give applicants the opportunity to

document community support for those criteria that are most appropriate

to their application. Information on how this documentation can be

included in the application will be contained in the Application

Guidelines distributed to each applicant.

In a similar manner, we will include information within the

Guidelines on another matter which was not included on the list of new

criteria in the proposed rules--coordination of the application with

other telecommunications organizations. NTIA continues to believe that

coordination of a project with other telecommunications organizations

is an important issue but as with demonstration of community support,

this information could support several evaluation criteria, depending

on the nature of the applicant's project.

The four organizations each addressed the question raised by NTIA

in the Notice which solicited comments on the appropriate weight to be

assigned to each criteria.7 Three of the four organizations

presented suggestions on how the criteria should be weighted and all

three suggested that ``project objectives'' and ``urgency'' be given

the greatest weight.8 NFCB and RMCPB each suggested that

``urgency'' and ``project objectives'' be given the greatest weight.

NPR indicated that ``urgency'' and ``project objectives'' (proposed

criteria #3 and #1) have traditionally distinguished the most worthy

applications. NPR cautioned, however, that ``the most urgent need may

not warrant a grant if the applicant lacks sufficient financial or

other qualifications to implement the project.'' 9 Likewise, RMCPB

suggested that the ``financial qualifications'' and ``applicant

qualifications'' (proposed criteria #2 and #4) are in effect threshold

criteria and should be given minimal weight but that NTIA might

disqualify applications that did not meet a minimum on these two

criteria. NFCB also felt that these two criteria would have to be met

for a project to succeed but cautioned that there should be some

evaluative process on these criteria which enables small public radio

stations with limited staff and budget to compete equally for PTFP

funds against larger stations. NFCB indicated that the ``technical/

planning qualification'' (criterion 5(a) or 5(b)) should be a criterion

that indicates whether a project is a go or a no-go. RMCPB recommended

that criterion 5 and ``special consideration'' (criterion 6) should be

equally weighted.

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7 See NPRM at 27230.

8 APTS opposed giving the criteria different weights,

indicating it was not clear which criterion was more important than

the others. APTS also felt NTIA had already decided what factors it

considers most significant by establishing priorities for grants and

that applicants would tailor their proposals to match the weighting.

9 Comments of National Public Radio, p. 3.

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NTIA appreciates the thoughtful responses received on this issue.

We agree that ``project objectives'' and ``urgency'' are the most

significant of the criteria and so these criteria will be given the

greatest weight during evaluation. We also agree that NTIA should not

award a grant for a proposal, no matter how well the application meets

the ``project objectives'' and ``urgency'' criteria, if the applicant

is not financially qualified or otherwise able to complete the project.

Therefore, the applicant's qualifications and financial qualifications

will each serve as qualifying criteria. An application must meet a

minimum threshold as defined in each of these criteria for further

consideration during the evaluation process. The two remaining

criteria, technical/planning qualifications and special consideration

will be given lesser weight in evaluation than that awarded to

``urgency'' and ``project objectives.''

NTIA has, therefore, modified this section to reflect the

evaluation weighting adopted. The criteria in Sec. 2301.17(b) have been

reordered to list first the two qualifying criteria, ``applicant

qualifications'' and ``financial qualifications'' as numbers 1 and 2.

``Project objectives'' will be criterion number 3 and ``urgency'' has

been placed as criterion number 4. Since the financial qualification

criterion has been made a qualifying criterion, the requirement that

applicants ``adequately justify the need for Federal funds in excess of

fifty (50) percent of total project costs (see Sec. 2301.6(b)(2)), if

requested for equipment replacement, improvement, or augmentation

projects'' has been relocated to the project objectives criterion. The

justification for more than 50% Federal funding only relates to the

level of potential Federal funding and should not be a part of a

criterion which is used to qualify the application for further

consideration. A sentence has also been added to the project objective

criterion which clarifies that evaluation of the applicant's proposal

includes evaluation of the applicant's ability to implement the

proposal, if funded. A sentence reading ``that the condition of

existing equipment justifies its prompt replacement'' has been

relocated from criterion 5(a) ``technical qualifications'', to

criterion 2 ``urgency'' to reflect the weight given this criterion.

Several new phrases have been added to clarify the ``urgency'' and

``applicant qualifications'' criteria. Finally, new language has been

added to Sec. 2301.17(a) which incorporates the weighting adopted by

NTIA.

Conversion to Digital Technology

Although not a part of the proposed rules itself, six of the seven

organizations commented on the statement in NTIA's Notice which

welcomed applications which will assist in planning for the digital

conversion of public broadcasting facilities.10 Five of these six

organizations supported NTIA's interest in supporting projects to plan

for digital conversion of public broadcasting facilities. NFCB

supported the concept in general, as did NPR, which cautioned that NTIA

should bear in mind the program's broader objectives so that the

funding of digital conversion planning projects promotes, rather than

undermines, the availability of public telecommunications services,

particularly in rural areas. RMCPB was supportive of NTIA's recognition

of the issue of conversion to digital technologies but suggested that

public broadcasters capable of practicable conversion are also capable

of planning without PTFP grants. RMCPB concluded that NTIA funds might

better be devoted to funding acquisition of digital components through

construction grants.

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10 See NPRM at 27230. The only organization not addressing

this issue was NTU.

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Both APTS and PBS suggested changes in NTIA policy to encourage

digital conversion. APTS expressed concern that the number of

applications for planning grants for ATV conversion could swamp the

PTFP funds if a large number of public television stations seek

planning grants. APTS noted that

[[Page 57969]]

it and PBS have launched efforts to coordinate public television's

transition to digital technology. APTS urged NTIA to clarify that these

coordinated efforts, such as reducing the cost of digital transition by

pooling engineering resources, establishing model planning programs for

different types of stations, and consolidating buying power in order to

obtain volume discounts, would be eligible for PTFP planning funds.

APTS requested that these coordinated efforts be afforded a high

priority in receiving Federal grants. APTS also urged that NTIA make it

clear that planning for capital campaigns to finance the transition to

ATV at individual public television stations will be eligible for

planning grants. APTS noted that for a number of stations, the cost of

planning capital campaigns will itself be a significant drain on their

finances.

PBS addressed two issues in its comments regarding digital

conversion: fund allocation priority and the percentage of costs that

may be funded. Because digital television is intended to replace,

rather than to supplement, analog television and because the FCC plans

to mandate a transition to digital and abandonment of analog operation,

PBS urged that NTIA consider the coordinated planning of digital

facilities as a first service to an unserved area, with no diminution

of priority because of the existence of analog service. PBS also urged

that such applications be considered new or extended service, thereby

qualifying the proposals for 75% rather than only 50% funding.

PBS also suggested that some aspects of the proposed regulations

may require modification after the FCC adopts its digital television

regulations. PBS noted as an example that the FCC may not require the

filing of applications for digital conversion or may establish

timetables which may not conform to that required under the PTFP

regulations. NTIA recognizes that the FCC has the lead in establishing

policy regarding television's transition to digital technology and will

indeed be mindful of FCC requirements for digital conversion. NTIA will

ensure that the PTFP regulations do not restrict public television's

ability to seek Federal funding or FCC authorizations during the

conversion to digital technology. NTIA will also keep an open mind on

the use of ancillary data streams on NTIA-funded facilities.

PBS suggested that NTIA should be flexible in releasing the Federal

interest in analog equipment that becomes obsolete because of the

transition to digital equipment. PBS further noted that a ten-year

Federal interest period may be inappropriate for digital equipment,

since the useful life span of this equipment is as yet unknown. In a

similar comment, IURTS noted that even traditional broadcast-grade

products cannot remain current for the duration of the ten-year Federal

interest period. IURTS commented that PTFP should consider reducing the

federal interest period from ten years. IURTS is concerned that due to

the rapid advancements in computer platforms and operating systems in

today's market, the hardware and software will be obsolete in about

half the Federal interest period described by PTFP. IURTS recommended

that NTIA expand its support of computer-based PC-type technology in

place of traditional broadcast products. Specific reference was made to

PC based character generators, still-store devices, digital special

effects devices, replacement for audio carts, digital audio

workstations, etc. With the development of PC-based technology, IURTS

noted that these less-expensive solutions can reduce station's costs

while still providing service to the community. Acknowledging that

these PC-based solutions will not last the ten-year Federal interest

period, IURTS recommended both a shortening of the Federal interest

period and a corresponding reduction in the recommended funding level.

IURTS gave an example of a dual channel still-store normally funded by

PTFP at a $50,000 level which could be reduced to $25,000 and provide

many stations with digital options they could not otherwise afford or

support.

NTIA acknowledges the problem in a rapidly changing technical

environment that some analog or digital broadcast equipment may not

have a useful life of ten years. PTFP is mandated by statute to

maintain a ten-year Federal interest period. See 47 U.S.C. 392(g).

While we appreciate the concerns expressed by PBS and IURTS, until such

time as the statute is changed, NTIA is bound to maintain this

requirement. NTIA notes that grantees may have alternatives in

satisfying NTIA's Federal interest in equipment and calls grantees

attention to Sec. 2301.22(g) Transfer of Federal interest to different

equipment of the final rules. Under this provision, a grantee may

request that the Agency transfer the remaining Federal interest in a

piece of equipment to another item of equipment presently owned or to

be purchased by the grantee with non-Federal funds. Grantees may also

dispose of the equipment at any time in accordance with the Uniform

Administrative Requirements under OMB Circular A-110, section 34 and 15

CFR 24.32. The recipient may request disposition of the equipment from

the agency; and, if the fair market value of the equipment at the time

of disposition is under $5,000, there is no further obligation to the

Federal Government.

NTIA appreciates the support shown by the public comments for its

interest in participating in the digital conversion of public

broadcasting facilities. We have carefully considered the suggestions

for changes in the proposal offered by the respondents, including

changes to priorities and funding levels. We believe that it is

premature to make those changes at this time since so much about the

transition to digital technology is still unknown. The FCC has neither

adopted technical standards for digital television nor established its

digital television regulations. It has yet to set a timetable for the

transition of television facilities from analog to digital technology.

NTIA will work with the public broadcasting community and closely

monitor the development and transition to digital technologies. As

conditions warrant, NTIA can revise its policies towards digital

conversion through publication of the annual closing date notice or

through other publications. For the moment, we will adopt the

suggestion of RMCPB, which noted that, despite the Agency's recognition

of the issue of digital conversion, there was no provision in the

proposed rules for addressing the issue or welcoming applications to

plan for conversion. We have modified the language in Sec. 2301.4(b)(6)

Other Cases within the Broadcast Applications section to specifically

reference planning applications for digital conversion as a unique or

innovative project. NTIA has been routinely funding digital equipment

for replacement which is compatible with the proposed standards for

digital television. Under Other Cases, NTIA would also accept

applications for construction of digital facilities that could be

considered unique or innovative.

In addition to the comments on these three major sections, there

were public comments on several other changes in the Notice of Proposed

Rulemaking.

Section 2301.2 Definitions

APTS expressed concern about its perceived change to the Federal

interest period to the useful life of the equipment under the

definition contained in Sec. 2301.2 of the proposed rule. We did not

change the federal interest period, as mandated in 47 U.S.C. 392(g),

from ten years to the useful life. The federal interest period remains

at ten years and is primarily a

[[Page 57970]]

financial interest within which PTFP must collect a proportionate share

of the Federal funds expended under an award if a grantee ceases to be

a public telecommunications entity or the facilities cease to be used

for the provision of public telecommunications services. We intended to

clarify that Federal Constitutional interests, for example, the First

Amendment's protections under the Establishment of Religion and the

Freedom of Speech Clauses, and the Fourteenth Amendment's equal rights

protections, extend for the useful life of the facilities. Even where a

grant program statute establishes a federal interest period, the

Supreme Court has ruled that certain Constitutional guarantees remain

for the useful life of Federally-funded facilities.11 We have

inserted ``Constitutional'' to clarify what federal interests extend

for the useful life of property.

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\11\ See Tilton v. Richardson, 403 U.S. 672 (1971).

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RMCPB suggested we define the term ``useful life.'' A definition of

``useful life'' has been added as the last defined term in Sec. 2301.2.

Section 2301.5 Special Consideration

As mandated by Congress under Sec. 392(f) of the Act, the Agency

will give special consideration to applications that foster ownership

of, operation of, and participation in public telecommunications

entities by minorities and women. This statutory provision remains and

over the past nine years, the Corporation for Public Broadcasting has

assembled a report to Congress on the provision of services to minority

and diverse audiences by public telecommunications entities, which

evidences the continued need for these services. NTIA is particularly

concerned with the provision of services to minorities, women, and

diverse audiences by public telecommunications entities. Therefore,

NTIA will continue to evaluate how well applicants demonstrate

significant diversity in the ownership of, operation of, and

participation in public telecommunications facilities. Special

consideration, therefore, remains as one of several evaluation criteria

contained in the regulation, specifically, at 15 CFR 2301.17(b)(6).

NFCB expressed concern over the elimination of the 50% minimum

participation of minorities an/or women in order to qualify for special

consideration. NFCB argued that the elimination of the 50% minimum

requirement may open up special consideration to such a degree that it

becomes useless as a factor in evaluating applications. NTIA does not

believe that it is necessary to establish any minimum minority or women

participation requirements for special consideration in PTFP

evaluations in order to carry out the objectives of the statute.

Rather, NTIA believes that the congressional intent can be achieved in

a fair and flexible manner by taking into account all factual

circumstances that might lead to special consideration.

PTFP applies special consideration to encourage all applicants to

assist the program to achieve one of its statutory purposes, to

increase the amount of public telecommunications facilities owned by,

operated by and participated in by minorities and women. Employment of

minorities or women is not the only way in which NTIA may assess

whether an application promotes significant diversity in the ownership

of, operation of, and participation in by minorities and women. NTIA is

also interested in outreach efforts, audience development, and

programming strategies. One stated purpose of this program is to

respond to the educational, cultural and related programming needs of

diverse groups. If an applicant can demonstrate to the NTIA that its

application is furthering the statutory objective, that application

will be more highly rated under the special consideration factor.

The language of this section has been modified to clarify NTIA's

policy on special consideration and an accompanying modification has

been made in the Special Consideration evaluation criterion in

Sec. 2301.17(b)(6). To the degree there is any discrepancy of

interpretation, this final rule will take precedence and is intended to

describe special consideration as required by 47 U.S.C. 392(f).

Section 2301.6 Amount of Federal Funding

RMCPB observed that Sec. 2301.6(a) permits 100% Federal funding of

planning grants and noted that this provision is permissive and not

obligatory. Since NTIA has limited funds for the PTFP program, RMCPB

suggested that 75% be the general presumption for planning purposes.

NTIA appreciates this suggestion and notes that most of the planning

grants awarded by PTFP in recent years include matching in-kind

services and funds contributed by the grantee. Modifying Sec. 2301.6(a)

as suggested by RMCPB would codify what already has become PTFP

practice. We are, however, mindful that planning grants are sometimes

the only resource that emerging community groups have with which to

initiate the planning of new facilities in unserved areas. We have,

therefore, included a provision at Sec. 2301.(6)(a)(2) that NTIA will

continue to award up to 100% of total project costs in cases of

extraordinary need. We have also modified the evaluation criteria with

a new section at Sec. 2301.17(b)(3) to reflect the need for applicants

to justify a request for more than 75% Federal funding for planning

projects.

Section 2301.8 Submission of Applications

RMCPB expressed concern in a change in the proposed Sec. 2301.8(d)

which removed the number of copies of applications required by NTIA

from the specific number ``2'' to the more flexible ``the number of

copies specified by the Agency.'' RMCPB pointed out that any increase

in the number required will be an added burden on the small station and

community broadcaster applicants. We note that under 5 CFR

1320.5(d)(2)(iii), an agency can only require an original plus two

copies of an application. Any request for additional copies would have

to be justified to and cleared by the Office of Management and Budget.

The flexibility in the number of applications which NTIA can request

is, therefore, extremely limited. For the first time in FY 1996, NTIA

requested three copies of an application to permit concurrent

processing of the applications by NTIA reviewers and thereby enable

issuance of timely awards.

APTS expressed its concern about NTIA's proposal to delete from the

rules the specific showings required of applicants and to specify those

requirements in the application form in the bid solicitation. APTS

indicated that, while the deletion of this information is intended to

give NTIA flexibility to reduce application burdens, the proposal can

create uncertainty as to the showing required of applicants. APTS

continued that the flexibility conferred would also permit NTIA to

impose additional burdensome requests without affording public

broadcasters the opportunity to comment meaningfully.

NTIA appreciates the concerns expressed by APTS. It was NTIA's

intention in removing the specific requirements from the Rules to give

NTIA the flexibility of future reductions in requirements on the

application form to lessen the burden on applicants. We believe that

this flexibility will be beneficial to applicants in several ways.

First, it will permit NTIA to lessen the burden on applicants during

the FY 97 grant cycle while using the existing PTFP application form.

These

[[Page 57971]]

improvements will include several changes supported by APTS which are

contained in the proposed rules, such as the proposal to modify the

requirement that an applicant report changes in its board structure and

to require applicants to provide only summaries of their application to

the State Single Point of Contact rather than complete copies of the

application. Second, flexibility in these final rules will permit NTIA

to further lessen the burden on applicants through modification of the

PTFP application form in 1997 without having to promulgate another set

of accompanying PTFP rules.12 Promulgation of a set of PTFP rules

is a lengthy administrative process and one that cannot be done every

year. The average PTFP rules are in force for a period of three to five

years. Therefore, removing the specific application requirements from

the final rules also gives NTIA the flexibility of continually making

improvements in lessening applicant burdens during the periods between

formal revisions of the PTFP rules. NTIA supports a continuing dialog

with members of the public telecommunications community to improve the

responsiveness of the PTFP. PTFP continually solicits comments on the

application process from those who are sent the application packet,

both from applicants and those who choose not to submit an

application.13 NTIA will also discuss application guidelines with

members of NTIA's National Advisory Panel of Public Broadcasting

Organizations at its annual meetings.

---------------------------------------------------------------------------

\12\ The current PTFP application form expires October 1, 1997.

The new form will be adopted after public comment in conjunction

with Office of Management and Budget review pursuant to the

Paperwork Reduction Act, 44 U.S.C. 3501., et. seq.

\13\ See for example the ``Special Note'' on the inside back

cover of the FY 96 PTFP Guideline for Preparing Applications.

---------------------------------------------------------------------------

APTS felt that NTIA's proposal could create uncertainty as to the

showing required of applicants since, ``the solicitation of bids is

typically published with only a few weeks notice before applications

are due.'' 14 NTIA has typically published formal announcements of

the acceptance of applications approximately 3 months before the

closing date.15 We believe that this is sufficient time for

preparation of applications since the major objectives and priorities

of the program are well known and have not significantly changed in

these final rules. PTFP distributes a detailed set of Guidelines to

assist applicants in the preparation of applications, and applicants

may contact PTFP for technical assistance in the preparation of

application during the period prior to the application deadline.

---------------------------------------------------------------------------

14 Comments from APTS, p. 4.

15 For fiscal year 1996, the Department of Commerce did

not receive a final appropriation until April 26, 1996. See

Department of Commerce and Related Agencies Appropriations Act,

1966, P.L. 104-134. This, in turn, left PTFP with five months to

review, evaluate and make awards.

---------------------------------------------------------------------------

APTS also commented on the financial responsibility requirements

contained in Secs. 2301.8 (g), (h) and (i). APTS believes that the

financial responsibility requirements ``confers virtually unfettered

discretion on NTIA as to which applicants will be subject to the

request for data,'' ``the scope of the inquiry is astonishingly

broad,'' can be ``potentially burdensome'' and contain ``vague

provisions''.16

---------------------------------------------------------------------------

\16\ Comments from APTS, p. 5-7.

---------------------------------------------------------------------------

Sections 2301.8 (g) and (h) are based on the ``Department of

Commerce Financial Assistance Name Check Procedures.'' This policy has

been in effect since 1988, has served as a reasonable attempt to

protect the public interest, and has not proven to be overburdensome.

NTIA does not intend to use the ``responsibility determination''

process in a punitive or detrimental manner against potential award

recipients. As an agency which has been provided authority to make

discretionary decisions for the Federal Government, it is reasonable

for NTIA to make every effort to determine that potential award

recipients are responsible. To the extent possible, the regulation is

intended to ensure that there are no matters facing potential award

recipients that might significantly and negatively impact on their

business honesty, financial integrity and/or ability to successfully

perform the proposed grant activity. We think that the trust vested in

NTIA demands that it makes a reasonable attempt to protect the public

interest by trying to ensure that it deals with only responsible

parties. Therefore, no changes have been made to this section.

Based on ``a reasonable person'' standard which is employed

throughout these regulations, we feel that Sec. 2301.8(i) is clear.

Unsatisfactory performance essentially means that one does not

substantially achieve his or her project goals and objectives. As

project goals and objectives vary from one project to another,

unsatisfactory performance must, to some extent, be situationally

determined. It would be unreasonable to attempt to precisely define

``unsatisfactory performance'' in the regulation for all projects, all

circumstances and for all times.

Section 2301.10 Applications Resulting From Catastrophic Damage or

Emergency Situations

APTS and RMCPB commented on NTIA's addition of a phrase regarding

``complete equipment failure'' to this section on applications

resulting from catastrophic damage or emergency situations. RMCPB

characterized the proposal as being ``a box of Pandoras''. APTS warned

that NTIA may inadvertently create a loophole in the funding priorities

by creating incentives for applicants to claim that the imminent loss

of an essential piece of equipment warrants an immediate grant. APTS

continued that unlike a catastrophic loss, a clearly defined

unanticipated event, the complete loss of essential equipment lacks any

clearly defining moment. APTS concluded that, in many cases, the

``loss'' may have been avoided by a timely request for funding.

NTIA believes that APTS and RMCPB raise valid concerns, which are

shared by the Agency. NTIA's intent in making this proposal was to be

able to quickly respond to the emergency of a complete failure of basic

equipment essential to a station's continued operation, whether that

failure was caused by natural or manmade causes. This section is

limited to equipment essential to a station's continued operation. We

do not believe this section would include most program origination

equipment but rather would be applicable to equipment such as

transmitters, tower, antennas, STL's or similar equipment which, if the

equipment failed, would result in a complete loss of service to the

community. For example, NTIA recently received an emergency request

from an applicant regarding the strengthening of a tower. A recent

engineering study on the tower indicated that the tower was dangerously

overloaded and in danger of imminent collapse. NTIA felt that it was

both prudent and good business sense to make the modest investment in

strengthening the tower on an emergency grant basis rather than risking

loss of service to a community and incur the greater expense of

replacing a collapsed tower.

NTIA will, therefore, retain the originally proposed language in

this section but will add clarifying language in regarding the nature

of the equipment eligible for emergency applications, as well as

language indicating that an applicant claiming complete equipment

failure must document the circumstances of the equipment failure and

demonstrate that the equipment has

[[Page 57972]]

been maintained in accordance with standard engineering practice.

Section 2301.11 Service of Applications

NPR and RMCPB supported NTIA's proposal in Sec. 2301.11 that the

applicant's notification to the SPOC, the FCC and the state

telecommunications agencies need only be a summary of the application,

rather than the full application required in prior PTFP Rules. Both

organizations cautioned, however, that if selecting/compiling excerpt

materials is too complicated, it will be an added burden on applicants

instead of a benefit. RMCPB noted that the New Mexico Commission on

Public Broadcasting only needs to review pages 1 and 2 of the PTFP

application form and the narrative. NTIA's intent in proposing that

applicants submit a summary of the application rather than the full

application to the SPOC and other appropriate agencies was intended to

reduce the paperwork burden on applicants. We did not intend this

summary to be a burdensome exercise and the information suggested by

RMCPB appears to be reasonable notification. In making notification to

the appropriate agencies, applicants should make clear that additional

information regarding their PTFP application is available upon request.

Future application materials will provide guidance as to what should be

included in the summary to provide adequate notification to the

requisite agencies while reducing the notification burden on all

applicants.

Section 2301.18 Selection Process

NTIA is making two revisions to this section to clarify internal

procedures in the selection process for the public. At Sec. 2301.18(a)

and the new Sec. 2301.18(b), we have added language which clarifies

that the PTFP Director presents recommendations to the OTIA Associate

Administrator for review and approval prior to their submission to the

NTIA Administrator. We have also clarified in the new

Sec. 2301.18(a)(4) that NTIA may consider in the selection of a grant

recipient whether the applicant has any current NTIA grants. This

provision recognizes that in some instances the presence of a current

NTIA grant is relevant in the decision to make a new award and does not

prohibit the award of new grants to current grant recipients.

Restatement of Existing Policies

We are also taking this opportunity to restate several long-

standing PTFP policies which were published in the preambles of

previous PTFP rules or as a separate policy statement. The following

policies remain in effect:

Evidence of Tax-exempt Status

Applicants who are eligible for a section 501(c)(3) exemption from

the IRS or the equivalent exemption from the Commonwealth of Puerto

Rico must submit a copy of that exemption. Applicants who are

ineligible for section 501(c)(3) exemption but who can demonstrate

nonprofit status by showing an applicable State tax exemption will be

considered on a case-by-case basis. They must submit: (a) Evidence of

their State tax-exempt status; (b) citation to, and a copy of, the

State statutory provisions governing that exemption; and (c) a brief

statement explaining why they lack a section 501(c)(3) exemption. (Fed.

Reg. Vol. 44, No. 104, p. 30899)

Equipment Which Becomes Obsolete Before the End of the Ten-year Period

of Federal Interest

In the case of equipment which becomes obsolete or wears out before

the ten-year period of Federal interest expires, we will permit the

trade-in or sale of the equipment and application of the remaining

portion of the ten-year period to the new equipment. (Fed. Reg. Vol.

44, No. 104, p. 30910)

Selection of Priority

In preparing the narrative portions of its application, each

applicant should state under which priority it desires NTIA to consider

its application. In doing so, each applicant makes sure that its

application contains sufficient documentation to justify its

qualification under the selected priority. NTIA will then evaluate the

application with the selected priority unless the Agency determines

that the priority selected by the applicant is not supported by the

documentation provided. Each applicant will be notified of any change

in the priority under which its application is to be considered. Such

notifications will be in writing and will not be subject to appeal.

(Fed. Reg. Vol. 47, No. 228, p. 53653)

Award of Deferred Applications

The Administrator retains the discretion to award grants to

deferred applications at any time where the Administrator can determine

with reasonable certainty that the particular project is exceptionally

meritorious (on the basis of the Agency's preliminary determination of

all other applications within the priority) and that the Agency would

fund the project after completing the evaluation of all the

applications in the priority (on the basis of the Agency's prior

experience in making grants.) Under this process, the Agency will be

able to fund applications that the Agency had deferred in the prior

year because of technical problems (such as the inability to obtain the

necessary FCC authorizations) which have since been eliminated. (Fed.

Reg. Vol. 47. No. 50, p. 11232.)

Support for Salary Expenses

NTIA regards its primary mandate to be funding the acquisition of

equipment and only secondarily the funding of salary expenses, even

when allowed by law. Moreover, NTIA notes that the competition for PTFP

funding remains intense. To ensure that PTFP monies are distributed as

effectively as possible in this competitive atmosphere, NTIA must weigh

carefully its support for any project cost not directly involved with

the purchase of equipment.

Therefore, NTIA generally will not fund salary expenses, including

staff installation costs, pre-application legal and engineering fees,

and pre-operational expenses of new entities. NTIA will support such

costs only when the applicant demonstrates that exceptional need exists

or that substantially greater efficiency would result from the use of

staff installation instead of contractor installation.

As regards the installation of transmission equipment, NTIA

strongly favors the use of either manufacturer or professional

contractor personnel and commonly funds these costs. NTIA believes that

the value of transmission equipment and the complicated nature of its

installation require expertise beyond that normally found on station

staffs.

NTIA will rarely support requests for assistance for the

installation of studio and test equipment, whether that installation is

by staff or by contract employees. Such installation is normally of

minimum difficulty, and the associated installation costs should be

absorbed in the recipient's normal operating budget. Again, NTIA will

take into account demonstrations of exceptional need. (Fed. Reg. Vol.

56, No. 226, p. 59172)

Sectarian Activities

Applicants are advised that on December 22, 1995, NTIA issued a

notice and an amendment to the PTFP regulations in the Federal Register

on its policy with regard to sectarian activities. Under NTIA's prior

policy, NTIA funds could not be used for any sectarian purposes. Under

the revised policy, while religious activities cannot be the essential

thrust of a grant, an

[[Page 57973]]

application will not be ineligible where sectarian activities are only

incidental or attenuated to the overall project purposes for which

funding is requested. (60 Fed. Reg. 66491).

It has been determined that this rule is not significant for

purposes of Executive Order (E.O.) 12866.

A Regulatory Flexibility Analysis is not required under The

Regulatory Flexibility Act (5 U.S.C. 601 et seq.) because the rules

were not required to be promulgated as proposed rules before issuance

as final rules by section 553 of the Administrative Procedures Act (5

U.S.C. 553) or by any other law. This rule does not contain policies

with Federalism implications sufficient to warrant preparation of a

Federalism assessment under Executive Order 12612.

The Department has determined that these rules will not

significantly affect the quality of the human environment. Therefore,

no draft or final Environmental Impact Statement has been or will be

prepared. Notwithstanding any other provision of law, no person is

required to respond to nor shall a person be subject to a penalty for

failure to comply with a collection of information subject to the

requirements of the Paperwork Reduction Act unless that collection of

information displays a currently valid OMB Control Number.

The Office of Management and Budget has approved the information

collection requirements contained in these rules pursuant to the

Paperwork Reduction Act under OMB Control Nos. 0660-0003, 0660-0001 and

0605-0001. The public reporting burden for the application requirements

vary from 16 hours to 200 hours with an estimated average of 125 hours

per application, including associated exhibits; the reporting and

record keeping burden for the grant monitoring reports vary from 1 to

24 hours depending on the respective requirement; and, the reporting

burden for the name-check form (CD-346) is estimated at 15 minutes.

These estimates include the time for reviewing instructions, searching

existing data sources, gathering and maintaining the data needed, and

completing and reviewing the collections of information. Send comments

regarding these burden estimates, or any other aspects of the

collections of information, including suggestions for reducing this

burden, to the Office of Policy and Coordination and Management, NTIA,

U.S. Department of Commerce, Washington, DC 20230; and to the Office of

Information and Regulatory Affairs, Office of Management and Budget,

Washington, DC 20503 (Attention: NTIA Desk Officer).

(Catalogue of Federal Domestic Assistance No. 11.550)

List of Subjects in 15 CFR Part 2301

Administrative procedure, Grant programs-communications, Reporting

and recordkeeping requirements, Telecommunications.

Larry Irving,

Administrator.

For the reasons set out above, part 2301 of title 15, Code of

Federal Regulations, is revised to read as follows:

PART 2301--PUBLIC TELECOMMUNICATIONS FACILITIES PROGRAM

Subpart A--General

2301.1 Program purposes.

2301.2 Definitions.

Subpart B--Application Requirements

2301.3 Applicant eligibility.

2301.4 Types of projects and broadcast priorities.

2301.5 Special consideration.

2301.6 Amount of Federal funding.

2301.7 Eligible and ineligible project costs.

2301.8 Submission of applications.

2301.9 Deferred applications.

2301.10 Applications resulting from catastrophic damage or

emergency situations.

2301.11 Service of applications.

2301.12 Federal communications commission authorizations.

2301.13 Public comments.

2301.14 Supplemental application information.

2301.15 Withdrawal of applications.

Subpart C--Evaluation and Selection Process

2301.16 Technical evaluation process.

2301.17 Evaluation criteria for construction and planning

applications.

2301.18 Selection process.

Subpart D--Post-Award Requirements

2301.19 General conditions attached to the Federal award.

2301.20 Schedules and reports.

2301.21 Payment of Federal funds.

2301.22 Protection, acquisition, and substitution of equipment.

Subpart E--Completion of Projects

2301.23 Completion of projects.

2301.24 Final Federal payment.

2301.25 Retention of records and annual status reports.

Subpart F--Waivers

2301.26 Waivers.

Authority: 47 U.S.C. 390-393 and 397-399b.

Subpart A--General

Sec. 2301.1 Program Purposes.

Pursuant to section 390 of the Act, (The Communications Act of

1934, as amended), the purpose of the Public Telecommunications

Facilities Program (PTFP) is to assist, through matching grants, in the

planning and construction of public telecommunications facilities in

order to achieve the following objectives:

(a) Extend delivery of public telecommunications services to as

many citizens in the United States as possible by the most efficient

and economical means, including the use of broadcast and nonbroadcast

technologies;

(b) Increase public telecommunications services and facilities

available to, operated by, and owned by minorities and women; and

(c) Strengthen the capability of existing public television and

radio stations to provide public telecommunications services to the

public.

Sec. 2301.2 Definitions.

Act means Part IV of Title III of the Communications Act of 1934,

47 U.S.C. 390-393 and 397-399b, as amended.

Administrator means the Assistant Secretary for Communications and

Information of the United States Department of Commerce who is also

Administrator of the National Telecommunications and Information

Administration.

Agency means the National Telecommunications and Information

Administration of the United States Department of Commerce.

Broadcast means the distribution of electronic signals to the

public at large using television (VHF or UHF) or radio (AM or FM)

technologies.

Closing date means the date and time which the Administrator sets

as the deadline for the receipt of applications during a grant cycle.

Construction (as applied to public telecommunications facilities)

means acquisition (including acquisition by lease), installation, and

improvement of public telecommunications facilities and preparatory

steps incidental to any such acquisition, installation or improvement.

Department means the United States Department of Commerce.

FCC means the Federal Communications Commission.

Federal interest period means the period of time during which the

Federal government retains a reversionary interest in all facilities

constructed with Federal grant funds. This period begins with the

purchase of the facilities and

[[Page 57974]]

continues for ten (10) years after the official completion date of the

project. Although OMB Circular A-110, sections 33 and 34 (58 FR 62992,

Nov. 29, 1993) and 15 CFR 24.31 and 24.32, specify that the Federal

government maintains a reversionary interest in the facilities for as

long as the facilities are needed for the originally authorized

purpose, PTFP's authorizing statute (47 U.S.C. 392(g)) limits the

reversionary period for ten years for purposes of this program.

However, Federal Constitutional limitations on the use of the

facilities survive for the useful life of the facilities whether or not

this period extends beyond the ten-year Federal interest period.

Minorities means American Indians, Alaska Natives, Asian or Pacific

Islanders, Hispanics, and Blacks, not of Hispanic Origin.

Nonbroadcast means the distribution of electronic signals by a

means other than broadcast technologies. Examples of nonbroadcast

technologies are Instructional Television Fixed Service (ITFS),

satellite systems, and coaxial or fiber optic cable.

Noncommercial educational broadcast station or public broadcast

station means a television or radio broadcast station that is eligible

to be licensed by the FCC as a noncommercial educational radio or

television broadcast station and that is owned (controlled) and

operated by a state, a political or special purpose subdivision of a

state, public agency or nonprofit private foundation, corporation,

institution, or association, or owned (controlled) and operated by a

municipality and transmits only noncommercial educational, cultural or

instructional programs.

Noncommercial telecommunications entity means any enterprise that

is owned (controlled) and operated by a state, a political or special

purpose subdivision of a state, a public agency, or a nonprofit private

foundation, corporation, institution, or association; and that has been

organized primarily for the purpose of disseminating audio or video

noncommercial educational, cultural or instructional programs to the

public by means other than a primary television or radio broadcast

station, including, but not limited to, coaxial cable, optical fiber,

broadcast translators, cassettes, discs, satellite, microwave or laser

transmission.

Nonprofit (as applied to any foundation, corporation, institution,

or association) means a foundation, corporation, institution, or

association, no part of the net earnings of which inures, or may

lawfully inure, to the benefit of any private shareholder or

individual.

Operational cost means those approved costs incurred in the

operation of an entity or station such as overhead labor, material,

contracted services (such as building or equipment maintenance),

including capital outlay and debt service.

Planning (as applied to public telecommunications facilities) means

activities to form a project for which PTFP construction funds may be

obtained.

Pre-operational costs means all nonconstruction costs incurred by

new public telecommunications entities before the date on which they

began providing service to the public, and all nonconstruction costs

associated with the expansion of existing stations before the date on

which such expanded capacity is activated, except that such costs shall

not include any portion of the salaries of any personnel employed by an

operating public telecommunications entity.

PTFP means the Public Telecommunications Facilities Program, which

is administered by the Agency.

PTFP Director means the Agency employee who recommends final action

on public telecommunications facilities applications and grants to the

Administrator.

Public telecommunications entity means any enterprise which is a

public broadcast station or noncommercial telecommunications entity and

which disseminates public telecommunications services to the public.

Public telecommunications facilities means apparatus necessary for

production, interconnection, captioning, broadcast, or other

distribution of programming, including but not limited to studio

equipment, cameras, microphones, audio and video storage or processors

and switchers, terminal equipment, towers, antennas, transmitters,

remote control equipment, transmission line, translators, microwave

equipment, mobile equipment, satellite communications equipment,

instructional television fixed service equipment, subsidiary

communications authorization transmitting and receiving equipment,

cable television equipment, optical fiber communications equipment, and

other means of transmitting, emitting, storing, and receiving images

and sounds or information, except that such term does not include the

buildings to house such apparatus (other than small equipment shelters

that are part of satellite earth stations, translators, microwave

interconnection facilities, and similar facilities).

Public telecommunications services means noncommercial educational

and cultural radio and television programs, and related noncommercial

instructional or informational material that may be transmitted by

means of electronic communications.

Sectarian means that which has the purpose or function of advancing

or propagating a religious belief.

State includes each of the fifty states, the District of Columbia,

the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American

Samoa, and the Northern Mariana Islands.

System of public telecommunications entities means any combination

of public telecommunications entities acting cooperatively to produce,

acquire or distribute programs, or to undertake related activities.

Useful life means the normal operating life of equipment.

Subpart B--Application Requirements

Sec. 2301.3 Applicant eligibility.

(a) To apply for and receive a PTFP Construction or Planning Grant,

an applicant must be:

(1) A public or noncommercial educational broadcast station;

(2) A noncommercial telecommunications entity;

(3) A system of public telecommunications entities;

(4) A nonprofit foundation, corporation, institution, or

association organized primarily for educational or cultural purposes

(see also 60 FR 66491 (Dec. 22, 1995)); or

(5) A state, local, or Indian tribal government (or agency

thereof), or a political or special purpose subdivision of a state.

(b) An applicant whose proposal requires an authorization from the

FCC must be eligible to receive such authorization.

(c) If an applicant does not meet the above eligibility

requirements, the application may be rejected and returned without

further consideration.

(d) An applicant may request a preliminary determination of

eligibility any time prior to the closing date.

Sec. 2301.4 Types of Projects and Broadcast Priorities.

An applicant may file an application with the Agency for a planning

or construction grant. To achieve the objectives set forth at 47 U.S.C.

393(b), the Agency has developed the following categories. Each

application shall be identified as a broadcast or nonbroadcast project

and must fall

[[Page 57975]]

within at least one of the following categories:

(a) Special applications. NTIA possesses the discretionary

authority to recommend awarding grants to eligible nonbroadcast

applicants whose proposals are unique or innovative and which address

demonstrated and substantial community needs (e.g., service to the

blind or deaf and nonbroadcast projects offering educational or

instructional services).

(b) Broadcast applications. The Broadcast Priorities are set forth

in order of priority for funding.

(1) Priority 1--Provision of Public Telecommunications Facilities

for First Radio and Television Signals to a Geographic Area. Within

this category, NTIA establishes three subcategories:

(i) Priority 1A--Projects that include local origination capacity.

This subcategory includes the planning or construction of new

facilities that can provide a full range of radio and/or television

programs, including material that is locally produced. Eligible

projects include new radio or television broadcast stations, new cable

systems, or first public telecommunications service to existing cable

systems, provided that such projects include local origination

capacity.

(ii) Priority 1B--Projects that do not include local origination

capacity. This subcategory includes projects such as increases in tower

height and/or power of existing stations and construction of

translators, cable networks, and repeater transmitters that will result

in providing public telecommunications services to previously unserved

areas.

(iii) Priority 1C--Projects that provide first nationally

distributed programming. This subcategory includes projects that

provide satellite downlink facilities to noncommercial radio and

television stations that would bring nationally distributed programming

to a geographic area for the first time.

(iv) Priority 1 and its subcategories apply only to grant

applicants proposing to plan or construct new facilities to bring

public telecommunications services to geographic areas that are

presently unserved, i.e., areas that do not receive public

telecommunications services. (It should be noted that television and

radio are considered separately for the purposes of determining

coverage. In reviewing applications from FM stations that propose to

serve, or that already serve, areas covered by AM-daytime only

stations, PTFP will evaluate the amount of service provided via the AM-

daytime only station in determining whether the FM proposal qualifies

for a Priority 1 or Priority 2, as appropriate.)

(v) An applicant proposing to plan or construct a facility to serve

a geographical area that is presently unserved should indicate the

number of persons who would receive a first public telecommunications

signal as a result of the proposed project.

(2) Priority 3--Replacement of Basic Equipment of Existing

Essential Broadcast Stations. (i) Projects eligible for consideration

under this category include the urgent replacement of obsolete or worn

out equipment at ``essential stations'' (i.e., existing broadcast

stations that provide either the only public telecommunications signal

or the only locally originated public telecommunications signal to a

geographical area).

(ii) To show that the urgent replacement of equipment is necessary,

applicants must provide documentation indicating excessive downtime, or

a high incidence of repair (i.e., copies of repair records, or letters

documenting non-availability of parts). Additionally, applicants must

show that the station is the only public telecommunications station

providing a signal to a geographical area or the only station with

local origination capacity in a geographical area.

(iii) The distinction between Priority 2 and Priority 4 is that

Priority 2 is for the urgent replacement of basic equipment for

essential stations. Where an applicant seeks to ``improve'' basic

equipment in its station (i.e., where the equipment is not ``worn

out''), or where the applicant is not an essential station, NTIA would

consider the applicant's project under Priority 4.

(3) Priority 3--Establishment of a First Local Origination Capacity

in a Geographical Area. (i) Projects in this category include the

planning or construction of facilities to bring the first local

origination capacity to an area already receiving public

telecommunications services from distant sources through translators,

repeaters, or cable systems.

(ii) Applicants seeking funds to bring the first local origination

capacity to an area already receiving some public telecommunications

services may do so, either by establishing a new (and additional)

public telecommunications facility, or by adding local origination

capacity to an existing facility. A source of a public

telecommunications signal is distant when the geographical area to

which the source is brought is beyond the grade B contour of the

origination facility.

(4) Priority 4 Improvement of Public Broadcasting Services.

(i) Projects eligible for consideration under this category are

intended to improve the delivery of public broadcasting services to a

geographic area. These projects include the establishment of a public

broadcast facility to serve a geographic area already receiving public

telecommunications services, projects for the replacement of basic

obsolete or worn-out equipment at existing public broadcasting

facilities and the upgrading of existing origination or delivery

capacity to current industry performance standards (e.g., improvements

to signal quality, and significant improvements in equipment

flexibility or reliability). As under Priority 2, applicants seeking to

replace or improve basic equipment under Priority 4 should show that

the replacement of the equipment is necessary by including in their

applications data indicating excessive downtime, or a high incidence of

repair (such as documented in repair records). Within this category,

NTIA establishes two subcategories: Priority 4A and Priority 4B.

(ii) Priority 4A. (A) Applications to replace urgently needed

equipment from public broadcasting stations that do not meet the

Priority 2 criteria because they do not provide either the only public

telecommunications signal or the only locally originated public

telecommunications signal to a geographic area. NTIA will also consider

applications that improve as well as replace urgently needed

production-related equipment at public radio and television stations

that do not qualify for Priority 2 consideration but that produce, on a

continuing basis, significant amounts of programming distributed

nationally to public radio or television stations.

(B) The establishment of public broadcasting facilities to serve a

geographic area already receiving public telecommunications services.

The applicant must demonstrate that it will address underserved needs

in an area which significantly differentiates its service from what is

already available in its service area.

(C) The acquisition of satellite downlinks for public radio

stations in areas already served by one or more full-service public

radio stations. The applicant must demonstrate that it will broadcast a

program schedule that does not merely duplicate what is already

available in its service area.

(D) The acquisition of the necessary items of equipment to bring

the inventory of an already-operating station to the basic level of

equipment requirements established by PTFP. This

[[Page 57976]]

is intended to assist stations that went on the air with a complement

of equipment well short of what the Agency considers as the basic

complement.

(iii) Priority 4B. The improvement and non-urgent replacement of

equipment at any public broadcasting station.

(5) Priority 5 Augmentation of Existing Broadcast Stations.

Projects in this category would equip an existing station beyond a

basic capacity to broadcast programming from distant sources and to

originate local programming.

(i) Priority 5A Projects to equip auxiliary studios at remote

locations, or to provide mobile origination facilities. An applicant

must demonstrate that significant expansion in public participation in

programming will result. This subcategory includes mobile units,

neighborhood production studios, or facilities in other locations

within a station's service area that would make participation in local

programming accessible to additional segments of the population.

(ii) Priority 5B--Projects to augment production capacity beyond

basic level in order to provide programming or related materials for

other than local distribution. This subcategory would provide equipment

for the production of programming for regional or national use. Need

beyond existing capacity must be justified.

(6) Other cases. NTIA possesses the discretionary authority to

recommend awarding grants to eligible broadcast applicants whose

proposals are so unique or innovative that they do not clearly fall

within the five Priorities listed in this section. Innovative projects

submitted under this category must address demonstrated and sub

stantial community needs or must address issues related to the

conversion of public broadcasting facilities to advanced digital

technologies.

(c) An applicant may request a preliminary determination of whether

a proposed project fits within at least one of the above listed

categories any time prior to the closing date.

(d) All applications will be reviewed after the closing date. If an

application does not fall within one of the listed categories, it may

be rejected and returned without further consideration.

Sec. 2301.5 Special consideration.

In accordance with section 392(f) of the Act, the Agency will give

special consideration to applications that foster ownership of,

operation of, and participation in public telecommunications entities

by minorities and women. Ownership and operation of includes the

holding of management and other positions in the entity, especially

those concerned with programming decisions and day-to-day operation and

management. Participation may be shown by the entity's involvement of

women and minorities in public telecommunications through its

programming strategies as meeting the needs and interests of those

groups. Minorities include American Indians or Alaska natives; Asian or

Pacific Islanders, Hispanics, and Blacks, not of Hispanic Origin. The

special consideration element is provided as one of several evaluation

criteria contained in the regulations at 15 CFR 2301.17(b)(6).

Sec. 2301.6 Amount of Federal funding.

(a) Planning grants. The Agency may provide up to one hundred (100)

percent of the funds necessary for the planning of a public

telecommunications construction project.

(1) Seventy-five (75) percent Federal funding will be the general

presumption for projects to plan for a public telecommunications

construction project.

(2) A showing of extraordinary need (e.g., small community group

proposing to initiate new public telecommunication service) will be

taken into consideration as justification for grants of up to 100% of

the total project cost.

(b) Construction grants. (1) A Federal grant for the construction

of a public telecommunications facility may not exceed seventy-five

(75) percent of the amount determined by the Agency to be the

reasonable and necessary cost of such project.

(i) Seventy-five (75) percent Federal funding will be the general

presumption for projects to activate stations or to extend service.

(ii) Fifty (50) percent Federal funding will be the general

presumption for the replacement, improvement or augmentation of

equipment. A showing of extraordinary need (i.e. small community-

licensee stations or a station that is licensed to a large institution

[e.g., a college or university] documenting that it does not receive

direct or in-kind support from the larger institution), or an emergency

situation will be taken into consideration as justification for grants

of up to 75% of the total project cost for such proposals.

(2) Since the purpose of the PTFP is to provide financial

assistance for the acquisition of public telecommunications facilities,

total project costs do not normally include the value of eligible

apparatus owned or acquired by the applicant prior to the closing date.

Inclusion of equipment purchased prior to the closing date will be

considered on a case-by-case basis only when clear and compelling

justifications are provided to PTFP. Obligating funds--either in whole

or in part--for equipment before the closing date is considered

ownership or acquisition of equipment. In like manner, accepting title

to donated equipment prior to the closing date is considered ownership

or acquisition of equipment.

(c) No part of the grantee's matching share of the eligible project

costs may be met with funds:

(1) Paid by the Federal government, except where the use of such

funds to meet a Federal matching requirement is specifically and

expressly authorized by the relevant Federal statute; or

(2) Supplied to an applicant by the Corporation for Public

Broadcasting, except upon a clear and compelling showing of need.

(d) No funds from the Federal share of the total project cost may

be obligated until the award period start date. If an applicant or

recipient obligates anticipated Federal Award funds before the start

date, the Department may refuse to offer the award or, if the award has

already been granted, disallow those costs of the grant. After the

closing date, the applicant may, at its own risk, obligate non-Federal

matching funds for the acquisition of proposed equipment.

Sec. 2301.7 Eligible and ineligible project costs.

(a) Each year the Agency reviews its list of eligible and

ineligible equipment, supplies, and costs. The list is published in the

Federal Register as part of the solicitation for applications and a

copy is provided with every application package for PTFP grants.

(b) All broadcast equipment that a grantee acquires under this

program shall be of professional broadcast quality. An applicant

proposing to utilize nonbroadcast technology shall propose and purchase

equipment that is compatible with broadcast equipment wherever the two

types of apparatus interface.

(c) Total project costs do not include the value of eligible

apparatus owned or acquired by the applicant prior to the closing date

unless approved by PTFP on a case-by-case basis in writing pursuant to

Sec. 2301.6(b)(2).

Sec. 2301.8 Submission of applications.

(a) Applications can be obtained from the following address: Public

Telecommunications Facilities Program,

[[Page 57977]]

NTIA/DOC, 14th Street and Constitution Avenue, NW., Room H-4625,

Washington, DC 20230.

(b) The Administrator shall select and publish in the Federal

Register a closing date by which applications for funding in a current

fiscal year are to be filed.

(c) All applications, whether mailed or hand delivered, must be

received by the Agency at the address listed in the annual Federal

Register announcement requesting applications at or before 5:00 P.M. on

the closing date. Applications received after the closing date shall be

rejected and returned without further consideration (but see

Sec. 2301.26).

(d) A complete application must include all of the information

required by the Agency application materials and must be submitted in

the number of copies specified by the Agency.

(e) Each copy of the Agency application must contain an original

signature of an officer of the applicant who is legally authorized to

sign for the applicant.

(f) Applicants must certify whether they are delinquent on any

Federal debt.

(g) Applicants may be required to submit Name Check forms (Form CD-

346) which may be used to ascertain background information on key

individuals associated with potential grantees as part of the

application, per Department Pre-Award Administrative Requirements and

Policies.

(h) Applicant organizations may also be subject to a responsibility

determination by the Department which may include but not be limited to

reviews of financial and other business activities. Responsibility

determinations are intended to ascertain whether potential grantee

organizations or their key personnel have been involved in or are

facing any matters that might significantly and negatively impact on

their business honesty, financial integrity and/or ability to

successfully perform the proposed grant activities.

(i) Unsatisfactory performance by the applicant under prior Federal

awards may result in the application not being funded.

Sec. 2301.9 Deferred applications.

(a) An applicant may reactivate an application deferred by the

Agency in a prior year during the two consecutive years following the

application's initial filing with the Agency; provided the applicant

has not substantially changed the stated purpose of the application.

(b) To reactivate a deferred application, the applicant must file

an updated application, whether mailed or hand delivered, at or before

5:00 P.M. on the closing date.

(c) An updated application must include all of the information

required by the Agency application materials and must be submitted in

the number of copies specified by the Agency.

(d) Deferred applications that are resubmitted under this section

and contain substantial changes will be considered as new applications.

(e) All deferred applications may be subject to a determination of

eligibility during subsequent grant cycles.

Sec. 2301.10 Applications resulting from catastrophic damage or

emergency situations.

(a) An application may be filed with a request for a waiver of the

closing date, as provided in Sec. 2301.26, when an eligible broadcast

applicant suffers catastrophic damage to the basic equipment essential

to its continued operation as a result of a natural or manmade

disaster, or as the result of complete equipment failure, and is in

dire need of assistance in funding replacement of the damaged

equipment. This section is limited to equipment essential to a

station's continued operation such as transmitters, tower, antennas,

STL's or similar equipment which, if the equipment failed, would result

in a complete loss of service to the community.

(b) The request for a waiver must set forth the circumstances that

prompt the request and be accompanied by appropriate supporting

documentation.

(c) A waiver will be granted only if it is determined that the

applicant either carried adequate insurance or had acceptable self-

insurance coverage.

(d) Applicants claiming complete failure of equipment must document

the circumstances of the equipment failure and demonstrate that the

equipment has been maintained in accordance with standard broadcast

engineering practices.

(e) Applications filed and accepted pursuant to this section must

contain all of the information required by the Agency application

materials and must be submitted in the number of copies specified by

the Agency.

(f) The application will be subject to the same evaluation and

selection process followed for applications received in the normal

application cycle, although the Administrator may establish a special

timetable for evaluation and selection to permit an appropriately

timely decision.

Sec. 2301.11 Service of applications.

On or before the closing date, all new or deferred applicants must

serve a summary copy of the application on the following agencies:

(a) In the case of an application for a construction grant for

which FCC authorization is necessary, the Secretary, Federal

Communications Commission, 1919 M Street, NW., Washington, DC 20554;

(b) The state telecommunications agency(-ies), if any, having

jurisdiction over the development of broadcast and/or nonbroadcast

telecommunications in the state(s) and the community(-ies) to be served

by the proposed project; and

(c) The state office established to review applications under

Executive Order 12372, 47 FR 30959, 3 CFR, 1982 Comp., p. 197, as

amended by Executive Order 12416, 48 FR 15587, 3 CFR, 1983 Comp., p.

186, in all states where equipment requested in the application will be

located and where the state has established such an office and wishes

to review these applications.

Sec. 2301.12 Federal Communications Commission authorizations.

(a) Each applicant whose project requires FCC authorization must

file an application for that authorization on or before the closing

date. NTIA recommends that its applicants submit PTFP-related FCC

applications to the FCC at least 60 days prior to the PTFP closing

date. The applicant should clearly identify itself to the FCC as a PTFP

applicant.

(b) In the case of FCC authorizations where it is not possible or

practical to submit the FCC license application with the PTFP

application, such as C-band satellite uplinks, low-power television

stations and translators, remote pickups, studio-to-transmitter links,

and Very Small Aperture Terminals, a copy of the FCC application as it

will be submitted to the FCC, or the equivalent engineering data, must

be included in the PTFP application.

(c) Applications requesting C-band downlinks are not required to

submit the FCC application or equivalent engineering data as part of

the PTFP application. When such a project is funded, however, grantees

will be required to submit evidence of FCC registration of the C-band

downlink prior to the release of Federal funds.

(d) Any FCC authorization required for the project must be in the

name of the applicant for the PTFP grant.

(e) If the project is to be associated with an existing station,

the FCC operating authority for that station must be current and valid.

(f) For any project requiring new authorization(s) from the FCC,

the applicant must file a copy of each FCC application and any

amendments with the Agency.

[[Page 57978]]

(g) If the applicant fails to file the required FCC application(s)

by the closing date, or if the FCC returns, dismisses, or denies an

application required for the project or any part thereof, or for the

operation of the station with which the project is associ ated, the

Agency may reject and return the application.

(h) No grant will be awarded until confirmation has been received

from the FCC that any necessary authorization will be issued.

Sec. 2301.13 Public comments.

(a) After the closing date, the Agency will publish a list of all

applications received.

(b) The applicant shall make a copy of its application available at

its offices for public inspection during normal business hours.

(c) A copy of the application will be available in the PTFP offices

for public inspection during normal business hours.

(d) Any interested party may file comments with the Agency

supporting or opposing an application and setting forth the grounds for

support or opposition. Any opposing comments must contain a

certification that a copy of the comments has been delivered to the

applicant. Comments must be sent to the address listed in

Sec. 2301.8(a).

(e) The Agency shall incorporate all comments from the public and

any replies from the applicant in the applicant's official file for

consideration during the evaluation of the application.

Sec. 2301.14 Supplemental application information.

(a) The Agency may request from the applicant any additional

information that the Agency deems necessary to clarify the application.

Applicants must provide to the Agency additional information that the

Agency requests within fifteen (15) days of the date of the Agency's

notice. Applicants must submit a copy of the requested information for

each copy of the application submitted by the closing date.

(b) Applicants must immediately provide to the Agency information

received after the closing date that materially affects the

application, including:

(1) State Single Point of Contact and State Telecommunications

Agency comments on applications;

(2) FCC file numbers and changes in the status of FCC applications

necessary for the proposed project;

(3) Changes in the status of proposed local matching funds,

including notification of the passage (including reduction or

rejection) of a proposed state appropriation or receipt (or denial) of

a proposed substantial matching gift;

(4) Changes that affect the applicant's eligibility under

Sec. 2301.3;

(5) Changes in the status of proposed production, participation, or

distribution agreements (if relevant to the proposed project);

(6) Changes in lease or site rights agreements; and

(7) Complete failure of major items of equipment for which

replacement costs have been requested or changes in the status of the

need for the equipment requested.

(c) Applicants must place copies of any additional information

submitted to the Agency in the copy of the application made available

for public inspection pursuant to Sec. 2301.13.

(d) Neither the Department nor the Agency will discuss the merits

of an application when it is under review.

Sec. 2301.15 Withdrawal of applications.

(a) Applicants may request withdrawal of an application from

consideration for funding without affecting future consideration.

Withdrawn applications will be returned by the Agency.

(b) A request that the Agency defer an application for

consideration in a subsequent year will be treated as a request for

withdrawal.

Subpart C--Evaluation and Selection Process

Sec. 2301.16 Technical evaluation process.

(a) In determining whether to approve or defer a construction or

planning grant application, in whole or in part, and the amount of such

grant, the Agency will evaluate all the information in the application

file.

(b) PTFP grants are awarded on the basis of a competitive review

process. The evaluation of the applications is based upon the

evaluation criteria provided under Sec. 2301.17.

(c) The competitive review process may include the following:

evaluation by PTFP staff; technical assessment by engineers; an

evaluation by outside reviewers, all of whom have demonstrated

expertise in either public broadcasting or distance learning; and

rating by a national advisory panel, composed of representatives of

major national public radio and television organizations.

(d) In acting on applications and carrying out other

responsibilities under the Act, the Agency shall consult (as

appropriate) with the FCC, the Corporation for Public Broadcasting,

state telecommunications agencies, public broadcasting agencies,

organizations, and other agencies administering programs that may be

coordinated effectively with Federal assistance provided under the Act;

and, the state office established to review applications under

Executive Order 12372, as amended by Executive Order 12416.

(e) Based upon the evaluation criteria contained in Sec. 2301.17,

the PTFP program staff will prepare summary evaluations. These will

incorporate the outside reviewers' recommendations, engineering

assessments, and program staff evaluations.

Sec. 2301.17 Evaluation criteria for construction and planning

applications.

(a) For each application that is filed in a timely manner by an

applicant, is materially complete, and proposes an eligible project,

the Agency will consider the evaluation criteria listed in

Sec. 2301.17(b):

(1) The criteria in paragraphs (b)(1), Applicant qualifications,

(b)(2), Financial qualifications, of this section are qualifying

criteria. Applications meeting the minimum qualifications on these

criteria will be considered for further review.

(2) The remaining four criteria listed in Sec. 2301.17(b) will be

weighted in the evaluation as follows:

(i) Criteria in paragraph (b)(3), Project objectives, and (b)(4),

Urgency, of this section will be given the most weight in the

evaluation.

(ii) The remaining criteria in paragraph (b)(5), Technical/Planning

qualifications, and (b)(4), Special consideration, of this section will

be given less weight and are listed in descending order.

(b) Evaluation criteria

(1) Applicant qualifications: Documentation that the applicant has

or will have the ability to complete the project, including having

sufficient qualified personnel to operate and maintain the facility,

and to provide services of professional quality.

(2) Financial qualifications: Documentation reflecting the

applicant's ability to provide non-Federal funds required for the

project, including funds for the local match and funds to cover any

ineligible costs required for completion of the project; and to ensure

long-term financial support for the continued operation of the facility

during the Federal interest period.

(3) Project objectives: The degree to which the application

documents that the proposed project fulfills the objectives and

specific requirements of one or more of the categories set forth

[[Page 57979]]

in Sec. 2301.4, documents the applicant's ability to implement the

proposed project and adequately justify the need for Federal funds in

excess of fifty (50) percent of total project costs (see

Sec. 2301.6(b)(2)), if requested for equipment replacement,

improvement, or augmentation projects; and, in the case of planning,

adequately justifies the need for Federal funds in excess of seventy

five (75) percent of total project costs (see Sec. 2301.6(a)(2)), if

requested.

(4) Urgency: Documentation that justifies funding the proposed

project during the current grant cycle or, when appropriate, that the

condition of existing equipment justifies its prompt replacement.

(5)(i) Technical qualifications (construction applicants only).

Documentation that the eligible equipment requested is necessary to

achieve the objectives of the project; that the proposed costs reflect

the most efficient use of Federal funds in achieving project

objectives; that the equipment requested meets current industry

performance standards (and FCC standards, if appropriate) and that an

evaluation of alternative technologies has been completed that

justifies the selection of the requested technology (where alternative

technologies are possible).

(ii) Planning Qualifications (planning applicants only).

Documentation of the feasibility of the proposed planning process and

timetable for achieving the expected results; that costs proposed

reflect the most efficient use of Federal funds; that the applicant has

sufficient qualified staff or consultants to complete the planning

project with professional results; and that an evaluation of

alternative technologies will be incorporated into the plan, if

appropriate.

(6) Special Consideration: For this evaluation criterion,

applicants should demonstrate that its broadcast or non-broadcast

application will achieve significant diversity in the ownership of,

operation of, and participation in public telecommunications

facilities. Applicants may demonstrate how their project will better

serve the characteristics, values and attitudes of diverse listeners by

promoting the development of more effective programming strategies,

conducting station outreach projects, through audience development

efforts, and through the participation of minorities and women on the

Board of Directors, and in other policy making positions.

(c) The Agency will provide each applicant with guidance in the

application materials on the type of documentation necessary to meet

each of the above evaluation criteria.

Sec. 2301.18 Selection process.

(a) The PTFP Director will consider the summary evaluations

prepared by program staff, rank the applications, and present

recommendations to the OTIA Associate Administrator for review and

approval. The Director's recommendations and the OTIA Associate

Administrator's review and approval will take into account the

following selection factors:

(1) The program staff evaluations, including the outside reviewers.

(2) The type of projects and broadcast priorities set forth at

Sec. 2301.4.

(3) Whether the application is for broadcast or a nonbroadcast

project.

(4) Whether the applicant has any current NTIA grants.

(5) The geographic distribution of the proposed grant awards.

(6) The availability of funds.

(b) Upon approval by the OTIA Associate Administrator, the

Director's recommendations will then be presented to the Selecting

Official, the NTIA Administrator.

(c) The Administrator makes final award selections taking into

consideration the Director's recommendations and the degree to which

the slate of applications, taken as a whole, satisfies the program's

stated purposes set forth at Sec. 2301.1 (a) and (c).

(d) No grant will be awarded until confirmation has been received

from the FCC that any necessary authorization will be issued.

(e) After final award selections have been made, the Agency will

notify the applicant of one of the following actions:

(1) Selection of the application for funding, in whole or in part;

(2) Deferral of the application for subsequent consideration;

(3) Rejection of the application with an explanation and the

reason, if an applicant is not eligible or if the proposed project does

not fall within at least one of the categories enumerated at

Sec. 2301.4; or

(4) Return of applications that were deferred by the Agency after

consideration during three grant cycles.

(f) The Agency will notify the following organizations of those

applications selected for funding:

(1) The state educational telecommunications agency(ies), if any,

in any state any part of which lies within the service area of the

applicant's facility;

(2) The FCC; and

(3) The Corporation for Public Broadcasting and, as appropriate,

other public telecommunications entities.

Subpart D--Post-Award Requirements

Sec. 2301.19 General conditions attached to the Federal award.

(a) During the project award period and the remainder of the

Federal interest period, the grantee must:

(1) Continue to be an eligible organization as described in

Sec. 2301.3;

(2) Obtain and continue to hold any necessary FCC authorization(s);

(3) Use the Federal funds for which the grant was made for the

equipment and other expenditure items specified in the application for

inclusion in the project, except that the grantee may substitute other

items where necessary or desirable to carry out the purpose of the

project if approved in advance by the Department in writing. These

changes include but are not limited to the following:

(i) Costs (including planning costs);

(ii) Essential specifications of the equipment;

(iii) The engineering configuration of the project;

(iv) Extensions of the approved grant award period; and

(v) Transfers of a grant award to a successor in interest, pursuant

to Sec. 2301.19(c);

(4) Use the facilities and any monies generated through the use of

the facilities primarily for the provision of public telecommunications

services and ensure that the use of the facilities for other than

public telecommunications purposes does not interfere with the

provision of the public telecommunications services for which the grant

was made;

(5) Not make its facilities available to any person for the

broadcast or other transmission intended to be received directly by the

public, of any advertisement, unless such broadcast or transmission is

expressly and specifically permitted by law or authorized by the FCC;

and

(6) State when advertising for bids for the purchase of equipment

that the Federal government has an interest in facilities purchased

with Federal funds under this program that begins with the purchase of

the facilities and continues for ten (10) years after the completion of

the project.

(b) During the period in which the grantee possesses or uses the

Federally funded facilities, the grantee may not use or allow the use

of the Federally funded equipment for purposes the essential thrust of

which are sectarian for the useful life of the equipment even when this

extends beyond the ten-year Federal interest period. (See NTIA's policy

on sectarian activities at 60 FR 66491, Dec. 22, 1995.)

[[Page 57980]]

(c) If necessary to further the purpose of the Act, the Agency may

reassign a grant to a successor in interest or subsidiary corporation

of a grantee in cases where a similar operational entity remains in

control of the grant and the original objectives of the grant remain in

effect. Each party must provide, in writing, its assent to the

substitution. Any substituted party must meet the eligibility

requirements.

Sec. 2301.20 Schedules and reports.

(a) Within thirty (30) calendar days of the award date the grantee

shall submit to the Agency, in duplicate, a construction schedule or a

revised planning timetable that will include the information requested

in the grant terms and conditions in the award package.

(b) During the project period of this grant, the grantee shall

submit performance reports, in duplicate, on a calendar year quarterly

basis for the period ending March 31, June 30, September 30, and

December 31, or any portions thereof. The Quarterly Performance Reports

should contain the following information:

(1) A comparison of actual accomplishments during the reporting

period with the goals and dates established in the Construction or

Planning Schedule for that reporting period;

(2) A description of any problems that have arisen or reasons why

established goals have not been met;

(3) Actions taken to remedy any failures to meet goals; and

(4) Construction projects must also include a list of equipment

purchased during the reporting period compared with the equipment

authorized. This information must include manufacturer, make and model

number, brief description, number and date of the items purchased, and

cost.

Sec. 2301.21 Payment of Federal funds.

(a) The Department will not make any payment under an award, unless

and until the recipient complies with all relevant requirements imposed

by this Part. Additionally:

(1) The Department will not make any payment until it receives

confirmation that the FCC has granted any necessary authorization;

(2) The Department may not make any payment under an award unless

and until all special award conditions stated in the award documents

that condition the release of Federal funds are met; and

(3) An agreement to share ownership of the grant equipment (e.g., a

joint venture for a tower) must be approved by the Agency before any

funds for the project will be released.

(b) As a general matter, the Agency expects grantees to expend

local matching funds at a rate at least equal to the ratio of the local

match to the Federal grant as stipulated in the grant award.

Sec. 2301.22 Protection, acquisition, and substitution of equipment.

(a) To assure that the Federal investment in public

telecommunications facilities funded under the Act will continue to be

used to provide public telecommunications services to the public during

the Federal interest period, the Agency may require a grantee to:

(1) Execute and record a document establishing that the Federal

government has a priority lien on any facilities purchased with funds

under the Act during the period of continuing Federal interest. The

document shall be recorded where liens are normally recorded in the

community where the facility is located and in the community where the

grantee's headquarters are located; and

(2) File a certified copy of the recorded lien with the

Administrator ninety (90) days after the grant award is received.

(b) The grantee shall maintain protection against common hazards

through adequate insurance coverage or other equivalent undertakings,

except that, to the extent the applicant follows a different policy of

protection with respect to its other property, the applicant may extend

such policy to apparatus acquired and installed under the project. The

grantee shall purchase flood insurance (in communities where such

insurance is available) if the facilities will be constructed in any

area that has been identified by the Federal Emergency Management

Agency as having special flood hazards.

(c) The grantee shall not dispose of or encumber its title or other

interests in the equipment acquired under this grant during the Federal

interest period.

(d) The grantee shall demonstrate that the grantee has obtained

appropriate title or lease satisfactory to protect the Federal interest

to the site or sites on which apparatus proposed in the project will be

operated. The grantee must have the right to occupy, construct,

maintain, operate, inspect, and remove the project equipment without

impediment to assure the sufficient continuity of operation of the

facility; and nothing must prevent the Federal government from entering

the property and reclaiming or securing PTFP-funded property.

(e) The Agency will allow the acquisition of facilities by lease;

however, the following requirements apply:

(1) The lease must be of benefit to the Federal government;

(2) The actual amount of the lease must not be more than the

outright purchase price would be; and

(3) The lease agreement must state that in the event of anticipated

or actual termination of the lease, the Federal government has the

right to transfer and assign the leasehold to a new grantee for the

duration of the lease contract.

(f) Transfer of equipment. Where the grant equipment is no longer

needed for the original purposes of the project, the Department may

transfer the equipment to the Federal government or an eligible third

party, in accordance with Office of Management and Budget guidelines.

(g) Transfer of Federal interest to different equipment. The

Department may transfer the Federal interest in PTFP-funded equipment

to other eligible equipment presently owned or to be purchased by the

grantee with non-Federal monies, provided the following conditions are

met:

(1) If the Federal interest is to be transferred to other equipment

presently owned or to be purchased by a grantee, the Federal interest

in the new equipment must be at least equal to the Federal interest in

the original equipment.

(2) Equipment previously funded by PTFP that is within the Federal

interest period may not be used in a transfer request as the designated

equipment to which the Federal interest is to be transferred.

(3) The same item can be used only once to substitute for the

Federal interest. However, the Federal interest in several items of

equipment from different grants may be transferred to a single item if

the request for all such transfers is submitted at the same time.

(4) A lien on equipment transferred to the Federal interest may be

required by PTFP and must be recorded in accordance with

Sec. 2301.23(b)(8). A copy of the lien document must be filed with the

PTFP within sixty (60) days of the date of approval of the transfer of

Federal interest.

(h) Termination by buy-out. A grantee may terminate the Federal

revisionary interest in a PTFP grant by buying out the Federal interest

with non-Federal monies. Buy-outs may be requested at any time.

Subpart E--Completion of Projects

Sec. 2301.23 Completion of projects.

(a) Upon completion of a planning project, the grantee must

promptly provide to the Agency two copies of any

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report or study conducted in whole or in part with funds provided under

this program.

(1) This report shall meet the goals and objectives for which the

grant is awarded and shall follow the written instructions and guidance

provided by the Agency. The grant award goals and objectives are stated

in the planning narrative as amended and are incorporated by reference

into the award agreement.

(2) The Agency shall review this report for the extent to which

those goals and objectives are addressed and met, for evidence that the

work contracted for under the grant award was in fact performed, and to

determine whether the written instructions and guidance provided by the

Agency, if any, were followed.

(3) If the Agency determines that the report fails to address or

meet any grant award goals or objectives, or if there is no evidence

that the work contracted for was in fact performed, or if this report

clearly indicates that the written instructions and guidance provided

by the Agency, if any, were disregarded, then the Agency may pursue

remedial action.

(4) An unacceptable final report may result in the disallowance of

claimed costs and the establishment of an account receivable by the

Department.

(b) Upon completion of a construction project, the grantee must:

(1) Certify that the grantee has acquired, installed, and begun

operating the project equipment in accordance with the project as

approved by the Agency, and has complied with all terms and conditions

of the grant as specified in the Grant Award document;

(2) Certify that the grantee has obtained any necessary FCC

authorizations to operate the project apparatus following the

acquisition and installation of the apparatus and document the same;

(3) Certify and document that the facilities have been acquired,

that they are in operating order, and that the grantee is using the

facilities to provide public telecommunications services in accordance

with the project as approved by the Agency;

(4) Certify that the grantee has obtained adequate insurance to

protect the Federal interest in the project in the event of loss

through casualty;

(5) Certify, if not previously provided, that the grantee has

acquired all necessary leases or other site rights required for the

project;

(6) Certify, if appropriate, that the grantee has qualified for

receipt of funds from the Corporation for Public Broadcasting;

(7) Provide a complete and accurate final inventory of equipment

acquired under the project and a final accounting of all project

expenditures, including non-equipment costs (e.g., installation costs);

and

(8) Execute and record a final priority lien, if required by PTFP,

reflecting the completed project and assuring the Federal government's

reversionary interest in all equipment purchased under the grant

project for the duration of the Federal interest period.

(c) When an applicant completes a construction project, the Agency

will assign a completion date that the Agency will use to calculate the

termination date of the Federal interest period. The completion date

will usually be the date on which the project period expires unless the

grantee certifies in writing prior to the project period expiration

date that the project is complete and in accord with the terms and

conditions of the grant, as required under Sec. 2301.23(b)(1). If the

PTFP Director determines that the grantee improperly certified the

project to be complete, the PTFP Director will amend the completion

date accordingly.

Sec. 2301.24 Final Federal payment.

If the total allowable, allocable, and reasonable costs incurred in

completing the planning or construction project are less than the total

project award amount, the Agency shall reduce the amount of the final

Federal share on a pro rata basis. If, however, the actual costs

incurred in completing the project are more than the estimated total

project costs, in no case will the final Federal funds paid exceed the

grant award.

Sec. 2301.25 Retention of records and annual status reports.

(a) All grantees shall keep intact and accessible all records

specified in Office of Management and Budget Circular A-110 (for

educational institutions, hospitals, and nonprofit organizations), or

15 CFR part 24 (for State and Local Governments).

(b) Recipients of construction grants:

(1) Are required to submit an Annual Status Report for each grant

project that is in the Federal interest period. The Reports are due no

later than April 1 in each year of the Federal interest period.

Information about what is to be included in the Annual Status Report is

supplied to grant recipients at the time grants are closed out.

(2) Shall retain an inventory of the equipment for the duration of

the ten-year Federal interest period and shall mark project apparatus

in a permanent manner to assure easy and accurate identification and

reference to inventory records. The marking shall include the PTFP

grant number and an inventory number assigned by the grantee.

(3) May also be required to take whatever steps may be necessary to

ensure that the Federal government's reversionary interest continues to

be protected for the 10-year period by recording, when and where

required, a lien continuation statement and reporting that fact in the

Annual Status Report.

Subpart F--Waivers

Sec. 2301.26 Waivers.

It is the general intent of NTIA not to waive any of its

regulations. However, under extraordinary circumstances and when it is

in the best interests of the Federal government, NTIA, upon its own

initiative or when requested, may waive the regulations adopted

pursuant to section 392(e) of the Act. Waivers may only be granted for

regulatory requirements that are discretionary.

[FR Doc. 96-28771 Filed 11-7-96; 8:45 am]

BILLING CODE 3510-60-P #