[Federal Register Volume 60, Number 128 (Wednesday, July 5, 1995)]
[Rules and Regulations]
[Pages 34902-34904]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16375]



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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 1

[MD Docket No. 94-19; FCC 95-257]


FY 1994 Regulatory Fees

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In June 1994, the Commission adopted rules to implement 
Section 9 of the Communications Act to provide for the assessment and 
collection of regulatory fees to recover the cost of the Commission's 
enforcement, policy and rulemaking, user information and international 
activities. This MO&O is responding to petitions for reconsideration 
and clarification of the FY 1994 Report and Order. This MO&O clarifies 
the standards under which waivers, reductions or exemptions will be 
granted and the rule adopted broadens the scope of the exemptions for 
nonprofit entities. The intended effect of this MO&O is to provide 
guidance to the public and avoid any potential uncertainty.

EFFECTIVE DATE: September 5, 1995.

FOR FURTHER INFORMATION CONTACT: Jerome D. Remson, Office of General 
Counsel, (202) 418-1780.

SUPPLEMENTARY INFORMATION: A summary of the Commission's Memorandum 
Opinion and Order (MO&O), adopted June 15, 1995 and released June 22, 
1995, is set forth below. The full text of this document is available 
for inspection and copying during normal business hours in the 
Administrative Law Division, Office of General Counsel (Rm. 616), 1919 
M Street, N.W., Washington, D.C. The full text may also be purchased 
from the Commission's copy contractor, International Transcription 
Service, Inc. (ITS), 2100 M Street, N.W., Suite 140, Washington, D.C. 
20037.

Summary of Memorandum Opinion and Order

    1. Introduction. In the Implementation of Section 9 of the 
Communications Act, 59 FR 30984 (June 16, 1994), 9 FCC Rcd 5333 (1994) 
(FY 1994 Report and Order), the Commission adopted rules to implement 
Section 9 of the Communications Act, as amended, 47 U.S.C. 159. Those 
rules provide for the assessment and collection of regulatory fees to 
recover the cost of the Commission's enforcement, policy and 
rulemaking, user information and international activities. 47 U.S.C. 
159(a). Now before the Commission are petitions for reconsideration and 
clarification of the FY 1994 Report and Order. A list of the parties 
filing petitions for reconsideration are set forth in Appendix A. We 
also considered several issues arising from petitions for waiver, 
reduction or exemption of the regulatory fees assessed for the 1994 
fiscal year (FY 94).
    2. Discussion. Small Entities. We properly rejected Fireweed's 
contention that our efforts to distribute the NPRM to small businesses 
were inadequate. As noted in the FY 1994 Report and Order, 9 FCC Rcd at 
5337 n.6, 5 U.S.C. 609 requires that we ``assure that small entities 
have been given an opportunity to participate in the rulemaking.'' 
Although the statute lists appropriate measures which the Commission 
may use to ensure that the small entities have such an opportunity to 
participate, the Act does not require the Commission to follow any 
specific procedure.
    3. We also rejected Fireweed's contention that our rules are biased 
against small entities. To the contrary, in implementing the fee 
schedule, we have expressly adopted procedures for payment of fees that 
are designed to minimize the burden on small entities, in accordance 
with congressional intent. Congress provided that the Commission may 
grant individual waivers of the fees, and it is our policy to grant 
individual waivers where imposition of the regulatory fee would be 
inequitable or would impinge on a regulatee's ability to serve the 
public. To the extent that Fireweed objects to specific fees, the fees 
for FY 1994 were adopted by Congress, and we did not depart from the 
fee schedule for FY 1994.
    4. Nonprofit Entities. Section 9(h) exempts nonprofit entities from 
the regulatory fee requirement. 47 U.S.C. 159(h). In the FY 1994 Report 
and Order, we held that the nonprofit exemption will be available only 
to those regulatees who establish their nonprofit status under section 
501 of the Internal Revenue Code. 26 U.S.C. 501. 9 FCC Rcd at 5340 
para.17. We have received requests for exemptions from the regulatory 
fees from regulatees that have been certified as nonprofit entities by 
state agencies (i.e., they hold nonprofit status at the state level) 
but which do not possess Section 501 IRS Certification. Thus, there are 
instances where bona fide nonprofit entities should be accorded 
exemptions under Section 9(h) event though they have not established 
their tax exempt status 

[[Page 34903]]
under Section 501. Therefore, while we will continue to grant an 
automatic exemption for nonprofit status to all Section 501 tax exempt 
organizations, we are amending our rules to allow entities to 
demonstrate nonprofit status by certification from a state or other 
government entity. See 47 CFR 1.1162(c).
    5. Confidentiality. The FY 1994 Report and Order, 9 FCC Rcd at 
5372, para.110, denied a request to amend Section 0.457 of the rules to 
protect the confidentiality of data submitted with regulatory fee 
payments. We noted that regulatees could request confidentiality for 
such data when they submitted their fee payments. NYNEX and Cellular 
Telecommunications Industry Association (CTIA) now request the 
Commission to reconsider this determination. For FY 1994, common 
carrier fee calculations were based on the number of a carrier's 
presubscribed lines, access lines, or subscribers. The carriers argue 
that this information should be regarded as confidential because it can 
be used by competing carriers to determine the extent of market 
penetration and thereby gain a competitive advantage. Thus, the 
carriers conclude that the Commission should amend Section 0.457 of the 
rules to protect the confidentiality of the fee calculations.
    6. The requests to amend the rules will be denied. There has been 
no convincing showing of a need to modify the rules. We are unaware of 
any FOIA requests for access to fee data. Moreover, if any regulatee 
perceives a need to protect information filed with the Commission from 
public disclosure, they can request confidential protection pursuant to 
47 CFR 0.459 when they file information with the Commission.
    7. Bearer circuits: Sprint Corporation (Sprint) filed a petition 
requesting reconsideration of the language in the FY 1994 Report and 
Order, 9 FCC Rcd at 5367 para.98, which reads:

    The fee is to be paid by the facilities-based common carrier 
activating the circuit in any transmission facility for the purpose 
of service to an end user or resale carrier. Private submarine cable 
operators also are to pay fees for circuits sold on an indefeasible 
right of use (IRU) basis or leased in their private submarine cables 
to any customer of the private cable operator.

    Sprint asserts that this language applies the regulatory fees for 
active 64 Kilobyte per second international circuits to both the 
operators of private submarine cable systems and to the common carriers 
who use circuits on such systems to provide international 
telecommunication services. This policy results in Sprint paying two 
regulatory fees for the PTAT-1 cable circuits used by Sprint 
Communications Co. L.P. for common carrier services. Sprint complains 
that this results in it being double charged as both the international 
carrier and the private cable operator for the same private cable 
circuits. Sprint points out that there is no similar double charge for 
other common carrier cable systems, and that the double charges place 
it at a severe and unjustified competitive disadvantage.
    8. We agree with Sprint, and we will eliminate the double charge 
assessments for private submarine cable system circuits used by 
international common carriers. We will modify the above quoted language 
to read:

    Private submarine cable operators also are to pay fees for 
circuits sold on an indefeasible right of use (IRU) basis or leased 
to any customer other than an international common carrier 
authorized by the Commission to provide U.S. international common 
carrier services.

    9. Waiver Issues. In the FY 1994 Report and Order, 9 FCC Rcd at 
5344 para.29, we stated that we would waive the regulatory fees ``on a 
case by case basis in extraordinary and compelling circumstances upon a 
showing that a waiver * * * would override the public interest in 
reimbursing the Commission for its regulatory costs.'' However, the FY 
1994 Report and Order did not establish specific standards for waivers 
of the fees or define with specificity what information would be 
required.
    10. We will grant waivers of the fees on a sufficient showing of 
financial hardship. Mere allegations or documentation of financial 
loss, standing alone, will not support a waiver request. Rather, we 
will grant a waiver only when the impact of the regulatory fee will 
affect a regulatee's ability to serve the public. It will be incumbent 
upon each regulatee to fully document its financial position and show 
that it lacks sufficient funds to pay the regulatory fees and to 
maintain its service to the public. Regulatees may be asked to provide 
information such as a balance sheet and profit and loss statement 
(audited if available), a cash flow projection for the next twelve 
months (with an explanation of how it is calculated), a list of their 
officers and their individual compensation, together with a list of 
their highest paid employees, other than officers, and the amount of 
their compensation, or similar information.
    11. Evidence of bankruptcy or receivership is sufficient to 
establish financial hardship. Moreover, where a bankruptcy trustee, 
receiver, or debtor in possession is negotiating a possible transfer of 
a license, the regulatory fee could act as an impediment to the 
negotiations and the transfer of the station to a new licensee. Thus, 
we will waive the regulatory fees for licensees whose stations are 
bankrupt, undergoing Chapter 11 reorganizations or are in receivership.
    12. We will also grant petitions for waivers of the regulatory fees 
on grounds of financial hardship from licensees of broadcast stations 
which are dark (not operating). When a station is dark, it generally is 
either without or with greatly reduced revenues. Moreover, broadcast 
stations which are dark must request permission to suspend operation 
pursuant to Section 73.1740(a)(4) of the Rules. 47 CFR 73.1740(a)(4). 
Petitions to go dark are generally based on financial hardship. Under 
these circumstances, imposition of the regulatory fees could be an 
impediment to the restoration of broadcast service, and it is 
unnecessary to require a licensee to make a further showing of 
financial hardship.
    13. We will waive the regulatory fee for community-based 
translators if the licensee: (1) Is not licensed to, in whole or in 
part, and does not have common ownership with, the licensee of a 
commercial broadcast station; (2) does not derive income from 
advertising; and (3) is dependent on subscriptions or contributions 
from the members of the community served for support. Waivers will also 
ease the regulatory burden on these regulatees. However, the burden 
will remain on the translator licensees to document their eligibility 
for the waiver.
    14. Congress in adopting the Schedule of Fees of FY 1994 did not 
distinguish between the fees for full service and satellite television 
stations. Thus, licensees with a full-service station and satellite 
stations, may be assessed with separate but identical fees for their 
full service stations and each of their supporting satellite stations. 
We find, however, that the regulatory fees can be particularly 
inequitable for licensees operating satellite stations. Thus, for those 
licensees that have timely filed petitions for reconsideration or for 
waiver or reduction of the regulatory fees for satellite stations, we 
will grant partial waivers and reduce the fees for licensees operating 
satellite stations so each set of parent and satellite stations will 
pay a regulatory fee based on the total number of television households 
served, and will be assessed a single regulatory fee comparable to the 
fee assessed stations serving markets with the same number of 
television households.
    15. Withers Broadcasting Company of Texas also argues that the 
Commission 

[[Page 34904]]
should reduce the regulatory fees for certain television stations 
operating in large markets, but which are part of that market only 
because the residents in the station's service area primarily view the 
market's principle city's stations. These stations are generally UHF 
stations, they lack network affiliations, and are located outside of 
the principle city's metropolitan area and do not provide a Grade B 
signal to a substantial portion of the market's metropolitan areas. 
Often these stations are not carried by cable systems serving the 
principal metropolitan areas. These stations will be assessed a fee 
based on the number of television households served, and will be 
charged the same fee as stations serving markets with the same number 
of television households. For example, stations that do not serve the 
principal metropolitan areas within their assigned markets and serve 
fewer than 242,000 television households will be assessed the same 
regulatory fee as stations not located in the top-100 markets. We will 
entertain requests for reductions in the regulatory fee assessments 
from those licensees that have filed timely petitions for waiver or 
reduction of the regulatory fee.
    16. COMSAT General Corporation (COMSAT) petitioned the Commission 
to either reduce or waiver the regulatory fee for FY 1994 for its D-2 
satellite. COMSAT deorbited its D-2 satellite on December 16, 1993, and 
inter alia, it urges the Commission to reduce proportionally the 
regulatory fee to reflect the limited period in which it was in 
operation. Fees are assessed on an annual basis and the Commission, 
will not issue pro rata refunds. COMSAT's request for a proportional 
reduction of the regulatory fee is denied. However, COMSAT's request 
for a waiver of the fee, as well as other requests for waivers 
discussed here, will be considered by the Office of Managing Director 
pursuant to its delegated authority to rule upon requests to waive, 
reduce or defer regulatory fees. 47 CFR 1.1166(a).

Ordering Clauses

    17 Accordingly, it is ordered that the Petitions for 
Reconsideration identified in Appendix are granted to the extent 
indicated in the full text and in all other respects are denied.
    18. It is further ordered that the rule changes as specified above 
and below are adopted.
    19. It is further ordered that the rule changes made herein will 
become effective 60 days after publication in the Federal Register. 
This action is taken pursuant to Section 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.

List of Subjects in 47 CFR Part 1

    Administrative practice and procedure.

Appendix

Petitions for Reconsideration were filed by:

Dennis C. Brown & Robert H. Schwaninger

Cellular Telecommunications Industry Association

Fant Broadcasting Company

Fireweed Communications

National Association of Broadcasters

NYNEX Corporation

Southwestern Bell Telephone Company

Sprint Corporation

Withers Broadcasting Company of Texas

Rule Change

    Part 1 of Chapter I 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:

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

    2. Section 1.1162 is amended by revising paragraph (c) to read as 
follows:

Sec. 1.1162  General exemptions from regulatory fees.

* * * * *

    (c) Applicants and permittees who qualify as nonprofit entities. 
For purposes of this exemption, a nonprofit entity is defined as: an 
organization duly qualified as a nonprofit, tax exempt entity under 
section 501 of the Internal Revenue Code, 26 U.S.C. 501; or an entity 
with current certification as a nonprofit corporation or other 
nonprofit entity by state or other governmental authority.

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[FR Doc. 95-16375 Filed 7-3-95; 8:45 am]
BILLING CODE 6712-01-M