Assessment and Collection of Regulatory Fees for Fiscal Year 1997

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[MD Docket No. 96-186; FCC 97-384]

Assessment and Collection of Regulatory Fees for Fiscal Year 1997

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Commission is revising its collection procedures for

regulatory fees in order to help assure increased accuracy and

timeliness of regulatory fee payments. First, permittees, licensees or

other entities subject to a regulatory fee and claiming an exemption

from regulatory fees based upon its status as a nonprofit entity, shall

make a one-time filing with the Secretary of the Commission written

documentation establishing the basis for its exemption with 60 days of

its coming under the regulatory jurisdiction of the Commission or at

the time its fee payment would otherwise be due, whichever is sooner,

or at such other time as required by the Managing Director. Second,

for-profit purchasers or assignees of licenses, stations or facilities

previously owned by non-profit entities not subject to regulatory fees

must notify the Secretary of the Commission of such purchase or

reassignment within 60 days of the effective date of the purchase or

assignment. Third, the Commission is requiring licensees of Commercial

Mobile Radio Service (CMRS) stations to retain for two years, and

submit to the Commission upon request, documentation used in

calculating their fee payments. Finally, the Commission is delegating

authority to the Managing Director to publish annually in the Federal

Register lists of those commercial communications firms and businesses

for commercial purposes that have paid a regulatory fee for the

preceding fiscal year.

EFFECTIVE DATE: November 5, 1997.

ADDRESSES: Federal Communications Commission, Room 222, 1919 M Street,

N.W., Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Regina W. Dorsey, Chief, Billings &

Collections Branch, (202) 418-1995.

SUPPLEMENTARY INFORMATION:

1. In the Further Notice of Proposed Rulemaking in this proceeding,

the Commission proposed to adopt several new procedures in order to

more efficiently and equitably collect the annual regulatory fees

required by

[[Page 59823]]

Section 9 of the Communications Act, 47 U.S.C. 159. See Further Notice

of Proposed Rulemaking in the Matter of Assessment and Collection of

Regulatory Fees for Fiscal Year 1997, 62 FR 40036 (July 25,

1997)(FNPRM). We address below the comments filed in this proceeding

and adopt the proposed new procedures with some

modifications.1

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\1\ See Attachment for a list of commenters who responded to the

FNPRM.

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2. Specifically, we adopt a requirement that non-profit entities

claiming an exemption from regulatory fees make a one-time filing of

documentation establishing their exempt status. We also adopt a

requirement that for-profit purchasers or assignees of stations or

facilities previously owned by non-profit entities notify the

Commission of such reassignment or sale. Additionally, we adopt a

requirement that licensees of Commercial Mobile Radio Services (CMRS)

maintain, and submit upon request, documentation supporting the

calculations of their fee payments. Finally, the amendments will

authorize the Managing Director to publish annually in the Federal

Register the names of all fee payers.

Documentation for Non-Profit Entities

3. Section 1.1162(c) of the Commission's Rules currently exempts

from payment of regulatory fees those entities possessing non-profit

status under section 501 of the Internal Revenue Code, 26 U.S.C. 501,

or certification as a non-profit corporation or other non-profit entity

by a state or other governmental authority. See 47 CFR 1.1162(c). The

FNPRM proposed a one-time requirement that non-profit entities claiming

exemptions from the regulatory fee requirement submit documentation

establishing their non-profit status. Currently, non-profit entities

are required to file such documentation only when requested by the

Commission. In its comments, the National Telephone Cooperative

Association (NTCA) opposed this proposed requirement, arguing that the

FNPRM failed to demonstrate a need for the filing requirement.

4. We are adopting the requirement for filing non-profit

documentation as proposed. We believe this requirement will

substantially assist us in administering the fee program. Development

of a comprehensive data base of exempt entities will enable us to

assure that only those entities entitled to the exemption benefit from

it. It will also help assure that we calculate fees based upon a more

accurate assessment of the number of entities expected to pay fees. The

one-time filing requirement will thus enable us to more equitably

establish appropriate fees for all payers. Further, although NTCA

expresses concern regarding the burden of the filing requirement, we

believe that duplication and mailing of a document already retained in

the ordinary course of an entity's business for tax and other purposes

results in only a minimal administrative burden. We will thus require

that all entities claiming an exemption from payment of regulatory fees

file a copy of the documentation supporting their non-profit status.

These documents must be submitted to the Secretary of the Commission at

a time to be established in a public notice which will be published in

the Federal Register. Entities claiming non-profit status must also

notify the Secretary within sixty days of any change in their non-

profit status; and for-profit purchasers or assignees of stations or

facilities previously owned or operated by non-profit entities must

also notify the Secretary of the purchase or reassignment within 60

days of the purchase or assignment.

5. NTCA also requested that we permit entities claiming exemption

from payment of a regulatory fee to establish their non-profit status

using types of documentation other than their current IRS determination

letters or certification from a state or other governmental authority.

Specifically, NTCA argues that an entity's Articles of Incorporation

are the best evidence of its non-profit status and the Commission

should also accept the Articles, annual state reports or similar

documents. NTCA believes that its proposal will lessen the

administrative burden on small entities. We note that IRS determination

letters and state or government certifications are generally one or two

page documents maintained as part of an entity's business files, which

can easily be copied and filed with the Commission. Nevertheless, if

for some reason an entity is unable to produce governmental

certification, the amended rules also permit submission of other

documents establishing non-profit status, as long as the documents bear

evidence that non-profit status has been approved by a state or other

governmental authority, consistent with the laws or regulations of the

jurisdiction.

Documentation of CMRS Fees

6. The FNPRM proposed to require Commercial Mobile Radio Service

(CMRS) licensees to retain documents used in the calculation of their

regulatory fees for a period of three years. A number of commenters

argued that the Commission should not specify a format for those

documents; that CMRS licensees should continue to retain flexibility in

maintaining record keeping systems; that they should not be required to

generate new or additional paperwork; and that they should not be

required to substantiate fees in a manner not required for other

services. See Comments filed by Bell Atlantic, NYNEX Mobile, Inc.,

Rural Cellular Association, Rural Telecommunications Group and GTE

Service Corporation (GTE).

7. We agree that CMRS licensees should have maximum flexibility to

determine what documents they will use to calculate fees and that they

should not be required to generate new or additional paperwork. Our

proposal required only that CMRS entities retain the work papers used

or developed in the course of calculating their fees. Thus, we were not

requiring that CMRS licensees undertake new or additional paperwork, or

utilize any particular format for calculating their fees. Also to the

extent this proposal imposed somewhat different requirements on CMRS

licensees, we believe those differences were justified. We have

identified several discrepancies between projected and actual CMRS

regulatory fees which are of concern. For example, for FY 1996 the

actual number of units for which regulatory fees were paid was 18.1%

below the total that was used to formulate the CMRS fees. While this

disparity may result from errors in estimating the overall number of

subscribers in the CMRS services, we believe that closer oversight of

CMRS fee payments is prudent. Assessing more accurate fees would also

benefit, without any significant burden, all CMRS licensees by helping

to ensure that all CMRS fee payers fully comply with their obligation

to contribute to the recovery of our costs of regulating CMRS. Thus, we

will require CMRS licensees to retain, and submit to the Commission

upon request, those documents which were actually used in the

calculation of their fee payments and that demonstrate the accuracy of

the payment. This will enable the Commission to efficiently audit the

fee payments of CMRS licensees without creating any undue additional

burden.

8. GTE and United States Cellular Corporation (USCC) also argue

that our proposed requirement that CMRS regulatees maintain their

payment records for a three year period is unreasonable. GTE notes that

our rules require telephone companies to retain their billing records

for only eighteen

[[Page 59824]]

months. See 47 CFR 42.6. We agree that requiring CMRS licensees to

retain these records for three years is unnecessary. We expect that any

verification of fee payments would be accomplished within two years

from the time that the fee payments are made. Thus, we are modifying

our proposal and will require only a two year retention period for this

documentation. Southwestern Bell Mobile Systems, Inc. also asserts that

the fee documentation may contain highly confidential customer

information. In this regard, CMRS licensees with concerns about the

disclosure of sensitive information in any submissions to the

Commission may request confidential treatment pursuant to Sec. 0.459 of

the Rules. See 47 CFR 0.459.

Publication of Fee Data

9. In the FNPRM, we proposed to publish in the Federal Register a

list of all commercial regulatees that have paid their regulatory fees,

along with the amount of the fee paid by each fee payor, and the volume

or number of units upon which the fee payment was based.2

Many commenters opposed our proposal, contending that publication of

fee payments and units would require regulatees to disclose highly

confidential business information.

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\2\ Southwestern Bell Mobil Systems also contends that the

FNPRM's statement that regulatory fee payments by CMRS licensees

shall be calculated on the ``number of pagers, cellular telephones,

or PCS units'' is inconsistent with the fee payment requirements set

forth in the Report and Order. We disagree. The Report and Order

established fees for cellular telephone and PCS units in the CMRS

Mobile Services and a fee for paging units in the CMRS Messaging

Service.

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10. We agree that the proposal to publish payment data could result

in the disclosure of sensitive marketing information in some instances.

We also conclude that there is an insufficient basis at this time to

warrant disclosure of such information. Thus, we will not publish

either fee payment information or the unit totals upon which a fee

payment is calculated. We believe, however, that publication of the

names of commercial fee payers may serve as a deterrent to non-payment.

Thus, we delegate to the Managing Director authority to issue annually

a public notice setting forth the names of commercial regulatory fee

payers and to publish the public notice in the Federal Register.

Final Regulatory Flexibility Analysis

11. As required by the Regulatory Flexibility Act

(RFA),3 an Initial Regulatory Flexibility Analysis (IRFA)

was incorporated in the Further Notice of Proposed Rulemaking In the

Matter of Assessment and Collection of Regulatory Fees for Fiscal Year

1997, 62 FR 40036 (July 25, 1997). The Commission sought written public

comments on the proposals in its FNPRM, including on the IRFA. This

present Final Regulatory Flexibility Analysis (FRFA) conforms to the

RFA, as amended.4

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\3\ 5 U.S.C. Sec. 603.

\4\ See 5 U.S.C. Sec. 604. The RFA, see 5 U.S.C. 601 et seq.,

has been amended by the Contract with America Advancement Act

(CWAAA), Public Law 104-121, 110 Stat. 847 (1996). Title II of the

CWAAA is ``The Small Business Regulatory Enforcement Fairness Act of

1996'' (SBREFA).

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I. Need for and Objectives of this Report and Order

12. This rulemaking proceeding was initiated in order to modify our

collection procedures for regulatory fees in order to help assure

increased accuracy and timeliness of regulatory fee payments.

II. Summary of Significant Issues Raised by Public Comments in Response

to the IRFA

13. None.

III. Description and Estimate of the Number of Small Entities To Which

the Proposed Rules Will Apply

14. Under the RFA, small entities may include small organizations,

small businesses, and small governmental jurisdictions. 5 U.S.C.

601(6). The RFA, 5 U.S.C. 601(3), generally defines the term ``small

business'' as having the same meaning as the term ``small business

concern'' under the Small Business Act, 15 U.S.C. 632. A small business

concern is one that: (1) Is independently owned and operated; (2) is

not dominant in its field of operation; and (3) meets any additional

criteria established by the Small Business Administration (SBA).

15. The proposals adopted in this Report and Order affect a very

broad array of small entities, including small entities described as

cable services or systems, common carrier services and related

entities, international services, mass media services, and wireless and

commercial mobile services. In the rulemaking proceeding in this docket

preceding the FNPRM, we extensively described the small entities that

might be affected by this action, and have also described the numbers

of such entities. (See ``Final Regulatory Flexibility Analysis,''

Attachment A of Report and Order, MD Docket No. 96-186, FCC 97-215,

released June 26, 1997, 62 FR 37408 (July 11, 1997).) We hereby

incorporate into this FRFA, by reference, those descriptive sections

from the previous Report and Order.

IV. Description of Projected Reporting, Recordkeeping, and Other

Compliance Requirements

16. With certain exceptions, the Commission's Schedule of

Regulatory Fees applies to all Commission licensees and regulatees. In

the rulemaking proceeding in this docket preceding the FNPRM, we

described the methodology used by affected entities to determine

required fee amounts, the procedures for calculating and filing fee

payments, the skills necessary to file, and the results of not filing

in accordance with the rules. (See Report and Order, FCC 97-215 supra.

at Attachment H and Sec. 1.1157 through 1.1167 of the Commission's

Rules, 47 CFR 1.1157 through 1.1167.) We hereby incorporate into this

FRFA, by reference, those descriptions. In addition, we note that the

proposals adopted here require Commercial Mobile Radio Service (CMRS)

licensees to maintain and make available to the FCC, upon request,

documentation concerning the basis for their fee payments and that

these documents be retained by the payer for two years; require that

non-profit entities exempt from the regulatory fee requirement submit

documentation of their non-profit status; that for-profit entities

purchasing a station from a non-profit entity notify the Commission of

the sale or reassignment; and authorize the Commission to publish

annually, in the Federal Register, a list of those firms and

individuals who paid a fee for the preceding fiscal year and who

engaged in the provision of communications for commercial purposes.

V. Steps Taken To Minimize Any Significant Economic Impact on Small

Entities, and Significant Alternatives Considered

17. As described in the Paragraph 16, the Commission proposed

certain modifications to the collection procedures for regulatory fees

in order to help assure increased accuracy and timeliness of regulatory

fee payments. Each of the above-described proposals that require

compliance would entail some level of economic impact, and this impact

would fall on some small entities. We believe, however, that these

proposals, if adopted, would help ensure the integrity of the

regulatory fees program. We have reduced the impact as a result of

public comments. Documentation concerning the basis for CMRS fees must

be retained for only two years rather than three, and need not be

submitted to the Commission

[[Page 59825]]

unless requested. Further, this Report and Order authorizes the

Managing Director the option to publish only the names of fee payers

and not fee amounts and unit counts objected to by commenters.

Report to Congress: The Commission shall include a copy of this

Final Regulatory Flexibility Analysis, along with this Report and

Order, in a report to Congress pursuant to the Small Business

Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 601(a)(1)(A). A

copy of this FRFA (or summary thereof) will also be published in the

Federal Register, along with this Report and Order.

Ordering Clauses

18. Accordingly, it is ordered, That the rule changes as specified

above and as set forth in the Attachment are adopted.

19. It is further ordered that the rule changes made herein will

become effective November 5, 1997. This action is taken pursuant to

Sections 4(i), 4(j), 9 and 303(r) of the Communications Act as amended,

47 U.S.C. 154(i), 154(j), 159 and 303(r).

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Rule Changes

Part 1 of title 47 of the Code of Federal Regulations is amended as

follows:

PART 1--PRACTICE AND PROCEDURE

1. The authority citation for part 1 continues to read as follows:

Authority: 47 U.S.C. 151, 154, 207, 303 and 309(j) unless

otherwise noted.

2. Section 1.1157 is amended by adding a new paragraph (d) to read

as follows:

Sec. 1.1157 Payment of charges for regulatory fees.

* * * * *

(d) Any Commercial Mobile Radio Service (CMRS) licensee subject to

payment of an annual regulatory fee shall retain for a period of two

(2) years from the date on which the regulatory fee is paid, those

business records which were used to calculate the amount of the

regulatory fee.

3. Section 1.1159 is amended by adding a new paragraph (e) to read

as follows:

Sec. 1.1159 Filing locations and receipts for regulatory fees.

* * * * *

(e) The Managing Director may issue annually, at his discretion, a

Public Notice setting forth the names of all commercial regulatees that

have paid a regulatory fee and shall publish the Public Notice in the

Federal Register.

4. Section 1.1162 is amended by adding new paragraphs (c)(1) and

(c)(2) to read as follows:

Sec. 1.1162 General exemptions from regulatory fees.

* * * * *

(c) * * *

(1) Any permittee, licensee or other entity subject to a regulatory

fee and claiming an exemption from a regulatory fee based upon its

status as a nonprofit entity, as described above, shall file with the

Secretary of the Commission (Attn: Managing Director) written

documentation establishing the basis for its exemption within 60 days

of its coming under the regulatory jurisdiction of the Commission or at

the time its fee payment would otherwise be due, whichever is sooner,

or at such other time as required by the Managing Director. Acceptable

documentation may include Internal Revenue Service determination

letters, state or government certifications or other documentation that

non-profit status has been approved by a state or other governmental

authority. Applicants, permittees and licensees are required to file

documentation of their nonprofit status only once, except upon request

of the Managing Director.

(2) Within sixty (60) days of a change in nonprofit status, a

licensee or permittee previously claiming a 501(C) exemption is

required to file with the Secretary of the Commission (Attn: Managing

Director) written notice of such change in its nonprofit status or

ownership. Additionally, for-profit purchasers or assignees of a

license, station or facility previously licensed or operated by a non-

profit entity not subject to regulatory fees must notify the Secretary

of the Commission (Attn: Managing Director) of such purchase or

reassignment within 60 days of the effective date of the purchase or

assignment.

* * * * *

Note: The following attachment will not appear in the Code of

Federal Regulations.

Attachment

Comments were filed by the following parties:

GTE Service Corporation

United States Cellular Corporation

Saco River Cellular Corporation

Citizens Utilities Company

Cellular XL Associates

Cellular Telecommunications Industry Association

American Mobile Telecommunications Association

BellSouth Corporation

PrimCo Personal Communications

Rural Cellular Association

Bell Atlantic NYNEX Mobile, Inc.

Rural Telecommunications Group

National Telephone Cooperative Association

Southwestern Bell Mobile Systems, Inc., et. al.

Personal Communications Industry Association

[FR Doc. 97-29176 Filed 11-4-97; 8:45 am]

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