[Federal Register Volume 61, Number 49 (Tuesday, March 12, 1996)]
[Proposed Rules]
[Pages 9966-9968]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5824]



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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 64

[GC Docket No. 96-42, FCC 96-87]


Implementation of Section 273(d)(5) of the Communications Act of 
1934, as Amended by the Telecommunications Act of 1996--Dispute 
Resolution Regarding Equipment Standards

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission is proposing to adopt a rule which will 
establish a dispute resolution process to be used by non-accredited 
standards development organizations in the event that a dispute 
resolution process is not agreed upon by all parties when establishing 
industry-wide standards or generic requirements for telecommunications 
equipment or customer premises equipment as required by 47 U.S.C. 
Sec. 273(d)(5). The rule will also establish penalties to be assessed 
against delaying parties. This proposal is in response to legislation 
enacted by Congress.

DATES: Comments must be submitted on or before April 1, 1996 and reply 
comments are due on or before April 11, 1996.

ADDRESSES: Comments and Reply Comments may be mailed to the Office of 
the Secretary, Federal Communications Commission, Washington, D.C. 
20554.

FOR FURTHER INFORMATION CONTACT: Sharon B. Kelley. Office of General 
Counsel, at (202)418-1720.

SUPPLEMENTARY INFORMATION:

I. Introduction

    1. The Telecommunications Act of 1996 1, amended the 
Communications Act by creating a new section 273, 47 U.S.C. Sec. 273, 
which sets forth procedures to be followed by non-accredited standards 
development organizations 2 that set industry-wide 3 
standards and requirements for manufacturing telecommunications 
equipment. The procedures allow interested industry parties to 
participate in setting industry-wide standards or generic requirements 
and require the organization and such parties to attempt to develop a 
dispute resolution process in the event of disputes on technical 
issues. 47 U.S.C. Sec. 273(d)(4). Section 273(d)(5) requires the 
Commission to prescribe within 90 days of enactment a dispute 
resolution process to be used in the event all parties cannot agree to 
a dispute resolution process. 47 U.S.C. Sec. 273(d)(5). Thus, the 
Commission's dispute resolution process is triggered only if the 
parties fail to agree to a process for resolving technical issues on 
their own. Section 273(d)(5) also requires the Commission to 
``establish penalties to be assessed for delays caused by referral of 
frivolous disputes to the dispute resolution process.'' Id.

    \1\ Pub. L. No. 104-104, 110 Stat. 56 (1996).
    \2\ As defined in section 273(d)(8)(E), [t]he term `accredited 
standards development organization' means any entity composed of 
industry members which has been accredited by an institution vested 
with the responsibility for standards accreditation by the industry.
    47 U.S.C. Sec. 273(d)(8)(E). Thus, for example, Bell 
Communications Research, Inc. (Bellcore) would not be an accredited 
standards development organization and is subject to the section 273 
procedures. H.R. Conf. Rep. No. 230, 104th Cong., 2d Sess. 39 
(1996).
    \3\  As defined in section 273(d)(8)(C), [t]he term `industry-
wide' means activities funded by or performed on behalf of local 
exchange carriers for use in providing wireline telephone exchange 
service whose combined total of deployed access lines in the United 
States constitutes at least 30 percent of all access lines deployed 
by telecommunications carriers in the United States as of the date 
of the enactment of the Telecommunications Act of 1996.
    47 U.S.C. Sec. 273(d)(8)(C).
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    2. The purpose of this proceeding is to establish dispute 
resolution procedures as provided for in section 273(d)(5). In section 
II(A) below, members of the public are requested to comment on the 
proposal set forth here and are also encouraged to submit alternative 
dispute resolution proposals that they believe would better implement 
this statutory section. Comment is also sought on methods for selecting 
an arbitrator or neutral and on the issue of whether the Commission 
should make its employees available for that purpose. In section II(B), 
we solicit proposals or recommendations concerning the types of 
penalties that should be assessed for referral of frivolous disputes.

II. Proposed Regulations

A. Binding Arbitration Proposal

    3. As explained above, section 273(d)(5) directs the Commission to 
prescribe a dispute resolution process to be used by non-accredited 
standards development organizations in situations where the parties 
involved cannot agree on the dispute resolution process to be used. 47 
U.S.C. 273(d)(5). Specifically, section 273(d)(5) provides:

--[w]ithin 90 days after the date of enactment of the 
Telecommunications Act of 1996, the Commission shall prescribe a 
dispute resolution process to be utilized in the event that a 
dispute resolution process is not agreed upon by all the parties 
when establishing and publishing an industry-wide standard or 
industry-wide generic requirement for telecommunications

[[Page 9967]]
equipment or customer premises equipment, pursuant to paragraph 
(4)(A)(v). The Commission shall not establish itself as a party to 
the dispute resolution process. Such dispute resolution process 
shall permit any funding party to resolve a dispute with the entity 
conducting the activity that significantly affects such funding 
parties interests, in an open, nondiscriminatory, and unbiased 
fashion within 30 days after the filing of such dispute. Such 
disputes may be filed within 15 days after the date the funding 
party receives a response to its comments from the entity conducting 
the activity. The Commission shall establish penalties to be 
assessed for delays caused by referral of frivolous disputes to the 
dispute resolution process.

47 U.S.C. 273(d)(5). According to the Conference Report, the intended 
purpose of the Commission's dispute resolution process is to ``enable 
all interested parties to influence the final resolution of the dispute 
without significantly impairing the efficiency, timeliness, and 
technical quality of the activity.'' \4\

    \4\ H.R. Conf. Rep. No. 230, 104th Cong., 2d Sess. 39 (1996).
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    4. We propose here to require binding arbitration as the dispute 
resolution process. Binding arbitration involves the submission of the 
dispute to a third party or arbiter who renders a decision after 
hearing arguments and reviewing evidence. The parties to the dispute 
are bound by this final decision. Because it is less formal and complex 
than a formal hearing (i.e., procedural and evidentiary rules may be 
relaxed), arbitration is often less costly and time consuming than 
other dispute resolution mechanisms. Given the short 30-day period for 
completing the dispute resolution process, we believe binding 
arbitration presents the most feasible dispute resolution approach. We 
also seek comment on whether additional procedures are necessary in the 
event that the dispute resolution process is not resolved within the 
allotted 30-day time period.
    5. Although binding arbitration appears to be the only dispute 
resolution method that could be accomplished within the short statutory 
period for completion of the dispute resolution process, we also seek 
comments on other approaches that might be used. For example, other 
methods of alternative dispute resolution include mediation, 
conciliation, neutral evaluation, settlement judges, mini-trial, or 
hybrids of these methods, such as ``med-arb'' (first, the neutral third 
party serves as a mediator and then as an arbitrator empowered to 
decide any issues not resolved through mediation). Although the 
Administrative Dispute Resolution Act, Pub. L. No. 101-552 (Nov. 15, 
1990), contained a sunset date of October 1, 1995, we also invite 
parties to review its provisions in making recommendations to us.
    6. In addition, we seek comment on what types of procedures are 
needed to govern the selection of an arbitrator or neutral fact-finder. 
For example, should the arbitrator or neutral be selected by agreement 
of the involved parties? If so, what procedures should apply in the 
event parties are unable to reach agreement on the arbitrator? We ask 
commenters to address these issues. Commenters may also wish to address 
whether Commission staff who have expertise in the area of dispute 
resolution should be available to serve as neutrals/arbitrators. We 
note, however, that any such proposal to use Commission staff could 
raise issues concerning the staff's delegated authority and the 
procedures for application for review to the full Commission in section 
5(c)(4) of the Act, 47 U.S.C. 155(c)(4).

B. Complaints of Frivolous Disputes

    7. Section 273(d)(5) directs the Commission to establish penalties 
for delays caused by the referral of frivolous disputes to the dispute 
resolution process. We request commenters to assist us in defining what 
constitutes a ``frivolous dispute.'' For example, section 1.52 of the 
Commission's rules requires that any document filed with the Commission 
be signed by the party or his counsel and that such signatures certify 
that the party or attorney has read the document, that ``to the best of 
his knowledge, information and belief there is good ground to support 
it'' and that ``it is not interposed for delay.'' 47 CFR 1.52.\5\ This 
appears to be a useful definition in this context as well. We expect 
that findings concerning possible frivolous disputes and 
recommendations for an appropriate penalty could be made in the first 
instance by the resolver of the dispute, e.g., the arbitrator. We 
encourage commenters to present specific proposals concerning 
procedures for the referral of complaints of frivolous disputes to the 
Commission.

    \5\ See generally, FCC Public Notice, ``Commission Taking Tough 
Measures Against Frivolous Pleadings,'' FCC 96-42, released February 
9, 1996.
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    8. In addition, we seek public comment on the penalties that should 
be assessed against delaying parties. Specifically, we ask commenters 
to address whether the Commission should rely solely on its forfeiture 
authority contained in section 503(b) of the Communications Act, or in 
the alternative or in addition, whether it should, or could, impose 
other penalties such as barring the party from further participation in 
the standards and requirements development processes or the imposition 
of costs on the complainant if its complaint is found to be frivolous. 
In addressing these issues, commenters should consider what procedural 
protections might be necessary to protect the party subject to such a 
complaint. Further, in addressing the potential use of forfeitures, 
commenters should consider the impact of section 503(b)(5), requiring 
that, for certain persons, there be a citation and subsequent 
misconduct before a forfeiture can be assessed. 47 U.S.C. 503(b)(5).

III. Conclusion

    9. As discussed above, we have proposed a dispute resolution 
process, binding arbitration, that may be used in the event that 
disputes arise over technical issues when setting standards pursuant to 
section 273(d)(5) of the Act. To assist us in our efforts, we invite 
public comment on this proposal and any other possible rules and 
procedures that would enable us to fulfill the congressional directive.

IV. Procedural Matters

    10. Pursuant to the applicable procedures set forth in sections 
1.415 and 1.419 of the Commission's rules, 47 CFR Secs. 1.415 and 
1.419, interested parties may file comments on or before April 1, 1996 
and reply comments on or before April 11, 1996. All relevant and timely 
comments will be considered by the Commission before final action is 
taken in this proceeding. To file formally in this proceeding, 
participants must submit an original and four copies of all comments, 
reply comments and supporting comments. If participants want each 
Commissioner to receive a personal copy of their comments, an original 
and nine copies must be filed. Comments and reply comments should be 
sent to the Office of the Secretary, Federal Communications Commission, 
Washington, D.C. 20554. Comments and reply comments will be available 
for public inspection during regular business hours in the FCC 
Reference Center (Room 239) of the Federal Communications Commission.
    11. This Notice of Proposed Rulemaking is a non-restricted notice 
and comment proceeding. Ex parte presentations are permitted, except 
during the Sunshine Agenda period, provided they are disclosed as 
provided in Commission rules. See generally 47

[[Page 9968]]
CFR Sections 1.1202, 1.1203, and 1.1206(a).
    12. As required by section 603 of the Regulatory Flexibility Act of 
1980, the Commission has prepared an Initial Regulatory Flexibility 
Analysis (IRFA) of the expected impact on small entities of the 
proposals in this document. The IRFA is set forth in the paragraph 
below. Written public comments are requested on the IRFA. These 
comments must be filed in accordance with the same filing deadlines as 
comments on the rest of the Notice, but they must have a separate and 
distinct heading designating them as responses to the Initial 
Regulatory Flexibility Analysis. The Secretary shall send a copy of 
this Notice of Proposed Rulemaking, including the Initial Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration in accordance with paragraph 603(a) of the 
Regulatory Flexibility Act. P.L. No. 96-354, 94 Stat. 1164, 5 U.S.C. 
Section 601, et seq. (1980).
    13. Initial Regulatory Flexibility Analysis. Reason for Action: The 
Telecommunications Act of 1996 permits a Bell Operating Company, 
through a separate subsidiary, to engage in the manufacture of 
telecommunications equipment and customer premises equipment after the 
Commission authorizes the company to provide in-region interLATA 
services. As one of the safeguards for the manufacturing process, the 
Telecommunications Act of 1996 amended the Communications Act by 
creating a new section 273, which sets forth procedures for a ``non-
accredited standards development organization,'' such as Bell 
Communications Research, Inc., to set industry standards for 
manufacturing such equipment. The statutory procedures allow outside 
parties to participate in setting the organization's standards and 
require the organization and the parties to attempt to develop a 
process for resolving any technical disputes. Section 273(d)(5) 
requires the Commission ``to prescribe a dispute resolution process'' 
to be used in the event that all parties cannot agree to a mutually 
satisfactory dispute resolution process. 47 U.S.C. Sec. 273(d)(5). This 
rulemaking proceeding was initiated to secure comment on our proposal 
to rely on binding arbitration as this dispute resolution process. The 
proposals advanced in this Notice are also designed to implement 
Congress' goal of establishing procedures ``to enable all interested 
parties to influence the final resolution of the dispute without 
significantly impairing the efficiency, timeliness and technical 
quality of the activity.'' H.R. Conf. Rep. No. 230, 104th Cong., 2d 
Sess. 39 (1996).
    Objectives: The Commission proposes a dispute resolution process 
that requires parties to rely on binding arbitration which appears to 
be the most feasible option given the 30 day period for completing the 
dispute resolution process. It also seeks to adopt rules that conform 
to specific statutory parameters. Section 273(d)(5) directs that the 
Commission ``shall not establish itself as a party to the dispute 
resolution process,'' that the process shall permit resolution ``in an 
open, non-discriminatory and unbiased fashion within 30 days after the 
filing of such dispute'' and that the Commission will ``establish 
penalties to be assessed for delays caused by referral of frivolous 
disputes to the dispute resolution process.'' 47 U.S.C. 273(d)(5).
    Legal Basis: The proposed action is authorized under the 
Communications Act, sections 4(i), 4(j), 273(d)(5), 303(r) and 403 of 
the Communications Act, 47 U.S.C. Secs. 154 (i) and (j), 273(d)(5), 
303(r), and 403.
    Reporting, Recordkeeping, and Other Compliance Requirements: The 
dispute resolution requirement contained in this Notice, if adopted, 
will require parties to use binding arbitration in the event that all 
parties cannot agree to a dispute resolution process. No reporting or 
recordkeeping requirements are proposed in this Notice.
    Federal Rules Which Overlap, Duplicate or Conflict With These 
Rules: None.
    Significant Alternatives Minimizing the Impact on Small Entities 
Consistent with the Stated Objectives: This Notice solicits comments on 
a variety of alternatives. Any additional significant alternatives 
presented in the comments will also be considered.
    IRFA Comments: We request written comments on the foregoing Initial 
Regulatory Flexibility Analysis. Comments must have a separate and 
distinct heading designating them as responses to the IRFA and must be 
filed by the comment deadlines set forth in this Notice.
    14. Authority to conduct this inquiry is given in sections 4(i), 
4(j), 273(d)(5), 303(r) and 403 of the Communications Act, 47 U.S.C. 
154 (i) and (j), 273(d)(5), 303(r) and 403.
    15. Further information on this proceeding may be obtained by 
contacting Sharon B. Kelley, Office of the General Counsel, 202/418-
1720.

List of Subjects in 47 CFR Part 64

    Communications common carriers, Dispute resolution process, 
Manufacturing by Bell operating companies, Non-accredited standards 
development organization, Penalties for delaying parties.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-5824 Filed 3-11-96; 8:45 am]
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