[Federal Register Volume 80, Number 240 (Tuesday, December 15, 2015)]
[Proposed Rules]
[Pages 77592-77598]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31516]


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DEPARTMENT OF COMMERCE

National Telecommunications and Information Administration

47 CFR Chapter V

[Docket Number: 151209999-5999-01]
RIN 0660-AA30


Proposed Scope of NTIA's Authority Regarding FirstNet Fees

AGENCY: National Telecommunications and Information Administration, 
U.S. Department of Commerce.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The National Telecommunications and Information Administration 
(NTIA) publishes this notice of proposed rulemaking to request public 
comment as it develops rules related to its review and approval of fees 
imposed by the First Responder Network Authority (FirstNet) as 
authorized by the Middle Class Tax Relief and Job Creation Act of 2012 
(the Act).

DATES: Submit comments on or before January 14, 2016.

ADDRESSES: The public is invited to submit written comments to this 
proposed rule. Written comments may be submitted electronically through 
www.regulations.gov or by mail (to Office of Public Safety 
Communications; National Telecommunications and

[[Page 77593]]

Information Administration; U.S. Department of Commerce; 1401 
Constitution Avenue NW., Washington, DC 20230.). Comments received 
related to this proposed rule will be made a part of the public record 
and will be posted to www.regulations.gov without change. Comments 
should be machine readable and should not be copy-protected. Comments 
should include the name of the person or organization filing the 
comment as well as a page number on each page of the submission. All 
personally identifiable information (e.g., name, address) voluntarily 
submitted by the commenter may be publicly accessible. Do not submit 
confidential business information or otherwise sensitive or protected 
information.

FOR FURTHER INFORMATION CONTACT: Patrick Sullivan; Office of Public 
Safety Communications; National Telecommunications and Information 
Administration; U.S. Department of Commerce; 1401 Constitution Avenue 
NW., Washington, DC 20230; [email protected]; (202) 482-5948.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Introduction, Summary of Proposed Rules
II. Background: Relevant Statutory Provisions
    A. FirstNet-Assessed Fees Must Ensure Self-Funding and be 
Approved by NTIA.
    B. FirstNet's Finances are Subject to Broader, Independent 
Review.
III. NTIA's Annual Fee Review Focuses on Whether FirstNet Fees and 
Other Income, In Aggregate, Are Sufficient, and Do Not Exceed the 
Amount Necessary, to Recoup FirstNet's Total Expense
    A. Standard of NTIA Fee Review and Approval.
    B. NTIA's Fee Review and Approval Process Does Not Assess the 
Reasonableness of a Proposed Fee.
IV. Methodology of NTIA Fee Review and Approval Process
    A. Focus of NTIA Fee Review Methodology.
    B. NTIA's Fee Review and Approval Process Defers to FirstNet on 
Necessary Reserves.
V. FirstNet-Proposed Fees Subject to NTIA Review Under Section 6208 
Must be Addressed Upon NTIA Disapproval
    A. Fees Subject to NTIA Review and FirstNet Reconsideration Upon 
NTIA Disapproval.
    B. Income Other Than Fees is Not Subject to NTIA Fee Review.
VI. Ex Parte Communication

I. Introduction, Summary of Proposed Rules

    The Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. 
112-96, Title VI, 126 Stat. 256 (codified at 47 U.S.C. 1401 et seq.)) 
(Act) established the First Responder Network Authority (FirstNet) as 
an independent authority within the National Telecommunications and 
Information Administration (NTIA).\1\ Congress mandated FirstNet ensure 
the building, deployment, and operation of an interoperable nationwide 
public safety broadband network (Network).\2\ In order to meet this 
critical directive and provide affordable, reliable, and sustainable 
broadband services for first responders across the United States, 
FirstNet must operate as a business enterprise. Today, public safety 
entities procure broadband services from numerous commercial service 
providers. When it enters the market, FirstNet will start with no 
market share and will have to compete for customers by distinguishing 
its product in terms of features, price, and reliability from products 
offered by commercial providers. To be successful, FirstNet will need 
to employ business strategies with flexibility and agility commonplace 
in the private sector.
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    \1\ See 47 U.S.C. 1424(a).
    \2\ See 47 U.S.C. 1426(b)(1) (stating FirstNet shall ``. . . 
take all actions necessary to ensure the building, deployment, and 
operation of the nationwide public safety broadband network . . 
.'').
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    This document proposes rules that will enable NTIA to execute its 
duty to review specific fees proposed by FirstNet in a manner 
compatible with FirstNet's need to operate as a business in a 
competitive marketplace. NTIA proposes to execute its statutory fee 
review duties to afford FirstNet as much flexibility as possible to 
establish its business and budgetary goals and to adjust those goals as 
necessary to respond to the day-to-day realities of the broader 
competitive marketplace in which FirstNet must operate. Ultimately, 
NTIA intends to implement a fee review process that allows FirstNet to 
respond to changing market conditions and the demands of its vital and 
dynamic customer base: First responders.
    The Act requires FirstNet to be permanently self-funding and 
authorizes it to assess and collect certain types of fees to assure its 
sustainability. The Act requires that the total amount of FirstNet's 
annual fees must be sufficient to recoup FirstNet's total expenses, but 
such fees must not exceed the amount necessary to carry out its duties 
under the Act.\3\ As part of FirstNet's self-funding obligations, the 
Act directs NTIA to review these fees on an annual basis; they may only 
be assessed if approved by NTIA.\4\
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    \3\ See 47 U.S.C. 1428(b).
    \4\ See 47 U.S.C. 1428(c).
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    This notice of proposed rulemaking describes NTIA's overarching 
scope, boundaries, and guidelines for NTIA's fee review and approval 
process as required by law. Section II of this notice of proposed 
rulemaking details relevant statutory provisions and makes clear that, 
while NTIA has a distinct role through the fee review and approval 
process to ensure that FirstNet is self-funded, NTIA's role is a 
relatively limited part of broader statutory provisions designed to 
monitor FirstNet's financial condition and operational status.
    Section III defines the scope of NTIA's proposed fee review and 
approval process. NTIA has determined that this process is for a 
particular and limited purpose: it must examine only whether the 
proposed fees of another federal entity--FirstNet--as set forth under 
Section 6208 of the Act, are, in aggregate and in combination with any 
FirstNet non-fee-based income, sufficient, but not in excess of, the 
projected funds that FirstNet needs to recoup the total expenses 
required to carry out its statutory obligations in a given year. NTIA 
acknowledges that, as authorized by the Act, FirstNet might receive 
income which is separate and distinct from the fee categories defined 
in Section 6208. NTIA recognizes that such income will impact NTIA's 
determination whether FirstNet's proposed fees, in aggregate and in 
combination with such non-fee-based income, will meet but not exceed 
the funds it needs on an annual basis. However, NTIA proposes that the 
Act affords NTIA no authority to review or approve as a ``fee'' any 
other form of income FirstNet may receive beyond those fees listed in 
Section 6208(a).
    In Section IV, NTIA proposes a methodology for its fee review that 
must by law occur annually and prior to FirstNet's assessment of fees. 
Because NTIA's fee review process is for particular and limited 
purposes focusing on the financial sustainability of another federal 
entity within the Department of Commerce, NTIA will include in its 
review a review of FirstNet's projected expenses as set forth in its 
approved budgets as well as a review of FirstNet's prior-year actual 
expenses and revenues to facilitate FirstNet's compliance with Section 
6208(b). To that end, NTIA proposes to utilize FirstNet's regular 
budget process and financial statements. NTIA also proposes to defer to 
FirstNet on any need for reserves, working capital, or similar fund 
categories. NTIA, however, will take such fund categories into 
consideration as part of its determination of whether the total 
proposed fees under Section 6208(b) meet, but do not exceed, FirstNet's 
total expenses.

[[Page 77594]]

    In Section V, NTIA discusses the fees that NTIA has specific 
jurisdiction to review; if, in its review of aggregate revenues and 
costs, it determines that FirstNet has not satisfied the legal 
standard, FirstNet must adjust its fees or otherwise make budgetary 
changes to ensure that the standard is met. Specifically, NTIA proposes 
to define the term ``fee,'' for purposes of its statutory obligations 
under Section 6208(c) of the Act, to mean FirstNet's direct collection 
of money that is generated from the three categories established in 
Section 6208(a) of the Act: (1) Network user fees; (2) lease fees 
pursuant to a covered leasing agreement (CLA); and (3) fees from 
entities seeking access to or use of any network equipment or 
infrastructure constructed or otherwise owned by FirstNet.\5\ Under 
this proposed rule, NTIA can direct FirstNet to address only those 
proposed fees that fall into one of these three categories. Further, 
NTIA proposes that it will not evaluate the reasonableness, or similar 
subjective attributes, of the specific fees assessed by FirstNet or its 
prospective partner or partners as contemplated in the Act. Specific 
NTIA rules are proposed in new 47 CFR Chapter V; Subchapter A will be 
utilized for NTIA rules that relate to FirstNet, and Subchapter B will 
be reserved for rules promulgated by FirstNet itself.
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    \5\ See 47 U.S.C. 1428(a).
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    We seek comment on these preliminary proposals. We also look 
forward to FirstNet's progress in its procurement process, which may 
provide additional information relevant to NTIA's duties under Section 
6208(c). With such information from stakeholders and FirstNet, NTIA 
will be better informed to solidify the scope of its fee review and 
approval process as appropriate.

II. Background: Relevant Statutory Provisions

A. FirstNet-Assessed Fees Must Ensure Self-Funding and Be Approved by 
NTIA

    The Act established FirstNet as an independent authority within 
NTIA.\6\ The Act authorizes FirstNet to take all actions necessary to 
ensure the building, deployment, and operation of the Network.\7\ To 
achieve this significant and unprecedented task, FirstNet must operate 
in many respects as a private sector business enterprise.\8\
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    \6\ See 47 U.S.C. 1424(a).
    \7\ See 47 U.S.C. 1426(b).
    \8\ To that end, the Act set forth several key provisions 
establishing FirstNet as a business enterprise. For example, the Act 
requires the creation of the FirstNet Board, which has the fiduciary 
and operational functions assigned to boards of corporations. See 47 
U.S.C. 1424(b). Furthermore, Board members appointed by the 
Secretary of Commerce must include individuals with various types of 
business experience, including expertise in building, deploying, and 
operating commercial telecommunications networks, and in financing 
and funding telecommunications networks. See id. FirstNet may only 
act as authorized by the Board to execute any powers granted by the 
Act to FirstNet, spend funds, or take other actions deemed 
necessary, appropriate, or advisable to accomplish the purposes of 
the Act. See 47 U.S.C. 1426(a)(1); see also 47 U.S.C. 1426(a)(5). As 
a business enterprise, FirstNet may contract with individuals; 
private companies; organizations; institutions; and Federal, State, 
regional, and local agencies. See 47 U.S.C. 1426(a)(3). The Act 
allows FirstNet to engage in other business activities, including 
selecting agents, consultants, or experts and hiring a program 
manager to carry out key aspects of deploying the NPSBN. See 47 
U.S.C. 1425(b).
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    FirstNet's authority to operate as a business can and should 
further its ability to meet the Act's mandate that it become a self-
sustaining enterprise. Section 6208 of the Act makes clear that 
FirstNet must establish permanent self-funding and is authorized to 
collect fees for specified uses of the Network or its components in 
furtherance of that obligation.
    The Act established specific parameters for FirstNet's fee 
assessments described in Section 6208(a) to drive sustainability and 
continual reinvestment of FirstNet revenues into the Network. Section 
6208(b), entitled, ``Establishment of Fee Amounts; Permanent Self-
Funding,'' requires that the total amount of the fees assessed under 
Section 6208(c) for each fiscal year shall be sufficient, but cannot 
exceed, the amount necessary to recoup the total expenses of FirstNet 
as it carries out its duties under the Act.\9\ Moreover, FirstNet must 
reinvest amounts received from the assessment of fees under Section 
6208 for constructing, maintaining, operating, or improving the 
Network.\10\ Specific to FirstNet's authority to assess and collect 
these fees, Section 6208(c) requires that NTIA review such fees ``on an 
annual basis, and such fees may only be assessed if approved by . . . 
NTIA.'' \11\
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    \9\ See 47 U.S.C. 1428(b).
    \10\ See 47 U.S.C. 1428(d).
    \11\ 47 U.S.C. 1428(c).
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    Additionally, the Act makes clear that FirstNet should consider 
public-private partnerships, affording it additional authority to 
creatively support the provision of a self-funded broadband network for 
use by public safety entities.\12\ Such partnerships might result in 
FirstNet's collection of income that does not fall within the fees 
specified in Section 6208(a).\13\
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    \12\ See, e.g., 47 U.S.C. 1428(a) (describing public-private 
arrangements to construct, manage, and operate the nationwide public 
safety broadband network between FirstNet and a secondary user); see 
also 47 U.S.C. 1426(b)(3) (requiring that FirstNet requests for 
proposals, to the maximum extent economically feasible, ``include 
partnerships with existing commercial mobile providers to utilize 
cost- effective opportunities to speed deployment in rural areas'').
    \13\ See, e.g., Sec.  1426(a)(3) (referencing ``grants and funds 
from . . . individuals, private companies, organizations, 
institutions, and Federal, State, regional, and local agencies''); 
Sec.  1426(a)(4) (referencing ``gifts, donations, and bequests of 
property, both real and personal'').
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B. FirstNet's Finances are Subject to Broader, Independent Review

    NTIA's approach in this proposed rule reflects the scope of its 
fees review authority in the context of other supervision of FirstNet's 
finances and operations, which taken together, ensure a high degree of 
oversight over FirstNet's finances under the Act. The Act sets forth 
multiple methods of oversight of FirstNet well beyond the limited 
review and approval of fees required of NTIA under Section 6208(c). For 
example, FirstNet is subject to an independent financial audit. Section 
6209 of the Act requires that the Secretary of Commerce engage an 
independent auditor to conduct an annual audit of all of FirstNet's 
commercial corporate transactions which the auditor will submit to 
Congress, the President, and FirstNet.\14\ In addition, the Act 
requires an annual, ``comprehensive and detailed report of the 
operations, activities, financial condition, and accomplishments of 
[FirstNet],'' to be submitted to Congress along with ``recommendations 
or proposals for legislative or administrative action as [FirstNet] 
deems appropriate.'' \15\ Furthermore, FirstNet must comply on a day-
to-day basis with all other applicable federal financial laws and 
regulations. In light of these broader oversight provisions, NTIA's 
narrow scoping of its fee review authority is appropriate.
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    \14\ See 47 U.S.C. 1429.
    \15\ 47 U.S.C. 1430.
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III. NTIA's Annual Fee Review Focuses on Whether FirstNet Fees and 
Other Income, in Aggregate, Are Sufficient, and Do Not Exceed the 
Amount Necessary, To Recoup FirstNet's Total Expenses

A. Standard of NTIA Fee Review and Approval

    The Act does not provide a specific standard of review for NTIA's 
annual fee review and approval process under Section 6208(c).\16\ 
However, examination of other provisions in Section 6208 and the Act at 
large inform NTIA's proposed approach to FirstNet

[[Page 77595]]

fee review. FirstNet has a duty under Section 6208(b) to ensure that, 
during a given fiscal year, the fees it assesses are sufficient, and 
shall not exceed the amount necessary, to recoup the ``total expenses'' 
associated with carrying out its duties as specified under the Act.\17\
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    \16\ See 47 U.S.C. 1428(c).
    \17\ See 47 U.S.C. 1428(b).
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    Given this overarching directive in Section 6208(b), which 
immediately precedes the Act's assignation of fee review to NTIA in 
Section 6208(c), NTIA proposes that the Act's purpose for the fee 
review is solely to support FirstNet's obligation under Section 6208(b) 
to be self-funding. Thus, NTIA intends to base its decisions on 
FirstNet's proposed fees by only examining whether the fees are, in 
aggregate and combined with other non-fee-based income, sufficient, but 
not in excess, of the projected funds FirstNet needs to carry out its 
statutory obligations in a given fiscal year. In this way, NTIA's 
review and approval of FirstNet-proposed fees under Section 6208 will 
exclusively focus on FirstNet's projected income and expenses to 
further the self-funding requirements and limitations of Section 
6208(b). We seek comment on this proposed approach.

B. NTIA's Fee Review and Approval Process Does Not Assess the 
Reasonableness of a Proposed Fee

    The scope of review of a fee is established by the statute.\18\ As 
a result, we propose that NTIA's fee review is scoped to self-
sustainability and does not include review of the reasonableness of any 
fee assessed by FirstNet or its prospective partner or partners as 
contemplated in the Act.
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    \18\ See Principles of Federal Appropriations Law, Volume III, 
Third Edition, GAO, pp 12-140-12-181. GAO 08-978 SP (Washington, DC, 
September 2008).
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    The wording of the Act itself does not direct NTIA to perform a 
reasonableness review. Section 6208(b), entitled, ``Establishment Of 
Fee Amounts; Permanent Self-Funding,'' requires that the total amount 
of the fees assessed by FirstNet for each fiscal year must be 
sufficient, but cannot exceed, the amount necessary to recoup the total 
expenses of FirstNet as it carries out its duties under the Act.\19\ 
NTIA's mandate to review and approve FirstNet fees directly follows 
this fee structure requirement in Section 6208(c).\20\ The Act provides 
no other direction regarding fee review, but the structure of the 
statute clearly indicates congressional intent to ensure that the 
assessed fees drive a self-funded network.
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    \19\ See 47 U.S.C. 1428(b).
    \20\ See 47 U.S.C. 1428(c).
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    A review of other provisions of Title 47 demonstrates that when 
Congress intends for rates to be subject to a review for 
``reasonableness'' or other subjective standards, it states this 
intention explicitly. For example, Section 201 of the Communications 
Act directs the Federal Communications Commission (FCC) to determine 
whether the charges of telecommunications carriers are ``just and 
reasonable.'' \21\ Similarly, Section 224 of the Communications Act 
directs the FCC to regulate the rates, terms, and conditions of pole 
attachments to ensure they are ``just and reasonable.'' \22\ Here, with 
respect to FirstNet's assessment of fees under Section 6208, and NTIA's 
review and approval of such fees, the Act established no such ``just 
and reasonable'' standard.
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    \21\ See 47 U.S.C 201 (stating that, for common carrier 
services, ``[a]ll charges . . . for and in connection with such 
communication service, shall be just and reasonable, and any such 
charge, practice, classification, or regulation that is unjust or 
unreasonable is hereby declared to be unlawful.'').
    \22\ See 47 U.S.C 224 (b)(1) (stating that ``the Commission 
shall regulate the rates, terms, and conditions for pole attachments 
to provide that such rates, terms, and conditions are just and 
reasonable, and shall adopt procedures necessary and appropriate to 
hear and resolve complaints concerning such rates, terms, and 
conditions.'')
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    Moreover, a reasonableness review of FirstNet fees is unnecessary 
as a matter of policy. The Act does not mandate or require any public 
safety entity to purchase services from FirstNet. FirstNet must compete 
for subscribers by offering a compelling value proposition to 
prospective public safety customers. Public safety users themselves 
will determine whether FirstNet's proposed user fees are reasonable in 
comparison to the fees they are offered by competing providers.
    Thus, NTIA proposes that it will not assess whether individual or 
total fees in any given category described in Section 6208(a) are 
reasonable, proportionate, or otherwise subjectively appropriate in 
light of individual or total fees in that category, or any other 
category of fees listed in Section 6208(a). With the proposed scope of 
its fee review, NTIA meets the intent of the self-funding provisions, 
but does not import ``just and reasonable'' review parameters that 
Congress clearly could have, but did not, include in the statute. We 
seek comment on these preliminary proposals.

IV. Methodology of NTIA Fee Review and Approval Process

A. Focus of NTIA Fee Review Methodology

    Based on the preliminary conclusions above, NTIA proposes to base 
its approval of fees upon a determination of whether the proposed fees, 
in aggregate, when combined with any projected non-fee-based income 
that FirstNet receives, meet but do not exceed FirstNet's anticipated 
total expenses associated with carrying out its duties as specified 
under the Act in a given year. As required by the Act, NTIA will 
conduct its fee review and approval process on an annual basis. 
Further, NTIA's proposed fee review and approval process will occur 
before a fee is assessed as required by the Act, and NTIA expects that 
FirstNet will propose such fees to NTIA in writing. Because FirstNet 
must compete in a broader marketplace for the opportunity to provide 
broadband service to public safety entities, it will need the 
flexibility over the course of a fiscal year to adjust specific fees it 
wishes to assess pursuant to Section 6208(a).
    Thus, to empower FirstNet with the flexibility needed to compete in 
the marketplace, NTIA proposes that, as part of its annual fee review, 
it will also review FirstNet's actual fees and expenses from the 
previous four fiscal quarters. This process will afford FirstNet the 
opportunity to describe any significant discrepancies between projected 
and actual expenses and revenue of that previous fiscal year and detail 
how its projected fees and revenues for the upcoming fiscal year have 
addressed these discrepancies. In doing so, FirstNet will have an 
opportunity on an annual basis to ensure that its duty under Section 
6208(b) is met. To determine FirstNet's anticipated expenses, among the 
specific costs areas that NTIA may consider are: (1) Salaries and 
Benefits; (2) Travel; (3) Services: Federal Sources; (4) Services: Non-
Federal Sources; (5) Facilities Rental; (6) Supplies, Materials, and 
Printing; (7) Equipment; and (8) Other expenses or obligations incurred 
for future contract award, capital reserves, or other permitted 
expenses or obligations. NTIA anticipates deferring to FirstNet to 
determine the reasonableness of projected obligations in the 
aforementioned or other categories.
    Throughout the fee review and approval process, NTIA anticipates 
utilizing the budget documents and financial statements produced in the 
normal course of FirstNet's business. NTIA might also utilize 
FirstNet's

[[Page 77596]]

annual budget reports as approved by the FirstNet Board and submitted 
as part of the President's Budget and FirstNet's mandated annual report 
to Congress.
    Therefore, NTIA proposes that it will make, on an annual basis, one 
of three determinations with regard to proposed fees: (1) FirstNet's 
proposed fees, in aggregate, when combined with any projected non-fee-
based income to be received by FirstNet, meet but do not exceed 
FirstNet's projected total expenses; (2) FirstNet's proposed fees, in 
aggregate, when combined with any projected non-fee-based income to be 
received by FirstNet, do not meet FirstNet's projected total expenses; 
or (3) FirstNet's proposed fees, in aggregate, when combined with any 
projected non-fee-based income to be received by FirstNet, exceed 
FirstNet's projected total expenses. Upon making any of these 
determinations, NTIA will communicate its determination in writing to 
FirstNet. Should NTIA make the second or third determination listed 
above, NTIA will not approve FirstNet's proposed fees, and FirstNet may 
not assess them. NTIA proposes that it will accept any revised proposed 
fees or FirstNet approved revised budgets when provided by FirstNet in 
writing and evaluate them consistent with the scope and methodology 
proposed above.
    We seek comment on this proposed approach to NTIA's fee review and 
approval process. We also seek comment on alternative methodologies 
that will further our fee review and approval process consistent with 
the Act's directives.

B. NTIA's Fee Review and Approval Process Defers to FirstNet on 
Necessary Reserves

    NTIA proposes that it should defer to FirstNet, in the context of 
its budgetary planning process, regarding the use and retention of 
reserves or working capital funds. By doing so, NTIA will not, in its 
fee review and approval process, assess whether or what level of funds 
FirstNet should maintain in reserves, capital accounts, or other 
funding categories. FirstNet's routine budget, auditing, and accounting 
processes will presumably determine the need for such capital reserve 
funds. NTIA plans to defer to FirstNet's determination of need for such 
funds through these processes. We seek comment on this proposed 
approach to NTIA's fee review and approval process.
    Moreover, NTIA proposes that, in its fee review and approval 
process, it will take into consideration reserve funds at the levels 
designated in FirstNet's budget, to determine whether FirstNet's 
proposed fees meet but not exceed FirstNet's total expenses. In doing 
so, NTIA will deem such funds to be a part of FirstNet's projected 
total expenses under Section 6208(b) of the Act. We seek comment on 
this proposal.

V. FirstNet-Proposed Fees Subject to NTIA Review Under Section 6208 
Must Be Addressed Upon NTIA Disapproval

A. Fees Subject to NTIA Review and FirstNet Reconsideration Upon NTIA 
Disapproval

    The Act assigns a clear duty to NTIA under Section 6208: approve or 
disapprove the specific fees FirstNet aspires to assess under Section 
6208. Under Section 6208(a) of the Act, FirstNet is authorized to 
assess and collect the following fees:

    1. A Network User Fee: ``A user or subscription fee from each 
entity, including any public safety entity or secondary user, that 
seeks access to or use of the [Network].'' \23\
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    \23\ 47 U.S.C. 1428(a)(1).
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    2. Fees Pursuant to a Covered Leasing Agreement: ``A fee from 
any entity that seeks to enter into a [CLA].'' \24\
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    \24\ 47 U.S.C. 1428(a)(2)(A); See also 47 U.S.C. 1428(a)(2)(B) 
(stating that the Act defines a CLA as ``a written agreement 
resulting from a public-private arrangement to construct, manage, 
and operate the nationwide public safety broadband network between 
the First Responder Network Authority and secondary user to permit--
(i) access to network capacity on a secondary basis for non-public 
safety services; and (ii) the spectrum allocated to such entity to 
be used for commercial transmissions along the dark fiber of the 
long-haul network of such entity.'').
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    3. Lease Fees Related to Network Equipment and Infrastructure: 
``A fee from any entity that seeks access to or use of any equipment 
or infrastructure, including antennas or towers, constructed or 
otherwise owned by the First Responder Network Authority resulting 
from a public-private arrangement to construct, manage, and operate 
the [Network]'' \25\
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    \25\ 47 U.S.C. 1428(a)(3).

    As a threshold matter for purposes of this proposed rule and NTIA's 
duty under Section 6208 of the Act, the word ``fee,'' as used in 
Section 6208(c) of the Act, must be defined. By defining the fees NTIA 
is to review, NTIA identifies the specific fees FirstNet must address 
prior to NTIA approval in the event NTIA must disapprove FirstNet-
approved fees under the standards set forth above.
    To implement its fee review obligations under the Act, NTIA must 
determine the meaning of the term ``fee'' as used in Section 6208. In 
the case of the Act, the three sets of fees, which FirstNet may assess, 
and which NTIA must review if assessed, are clearly defined within 
Section 6208(a). Thus, NTIA proposes that a ``fee'' that will be 
subject to its review and approval under Section 6208(c) is FirstNet's 
collection of money that falls within the three categories in Section 
6208(a): (1) Network user fees; (2) lease fees related to network 
capacity, pursuant to a covered leasing agreement; and (3) fees from 
entities seeking access to or use of any equipment or infrastructure 
constructed or otherwise owned by FirstNet.\26\ Given the clear 
language in Section 6208(a) defining the fees that FirstNet may assess, 
and the corresponding language in Section 6208(c) directing NTIA to 
review fees ``assessed under [Section 6208],'' NTIA proposes that its 
fee review authority, and FirstNet's obligation to address fees upon 
NTIA disapproval of proposed fees, is scoped to the three above-
referenced categories. We seek comment on this preliminary proposal.
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    \26\ See 47 U.S.C. 1428(a).
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B. Income Other Than Fees Is Not Subject to NTIA Fee Review

    As noted above, NTIA recognizes that, under the Act, FirstNet may 
receive income that is separate and distinct from the fees defined in 
Section 6208(a). Such income must be factored into NTIA's determination 
of whether proposed fees, in aggregate, will meet but not exceed the 
funds needed by FirstNet on an annual basis. However, as the Act limits 
NTIA's review and approval authority to ``the fees assessed in [Section 
6208],'' NTIA proposes that the Act gives it no authority to review or 
approve as a ``fee'' any other form of income FirstNet might receive. 
NTIA proposes that non-fee-based income, emanating from arrangements 
allowed by statute, is not a ``fee'' under Section 6208(a). 
Furthermore, NTIA proposes that it will consider any non-fee income 
only as part of its determination of whether such income, when combined 
in aggregate with the fees defined in Section 6208(a), will be 
sufficient to recoup FirstNet's total expenses, but not exceed the 
amount necessary, to carry out its statutory duties and 
responsibilities for the fiscal year involved. Moreover, NTIA proposes 
that it will not analyze the terms and conditions of any CLA, or any 
other agreement between FirstNet and another entity, beyond those 
specific terms and conditions which establish any fees that meet the 
three categories described in Section 6208(a). We seek comment on these 
preliminary proposals.

VI. Ex Parte Communications

    Any non-public oral presentation to NTIA regarding the substance of 
this proposed rule will be considered an ex parte presentation, and the 
substance of

[[Page 77597]]

the meeting will be placed on the public record and become part of this 
docket. No later than two (2) business days after an oral presentation 
or meeting, an interested party must submit a memorandum to NTIA 
summarizing the substance of the communication. NTIA reserves the right 
to supplement the memorandum with additional information as necessary, 
or to request that the party making the filing do so, if NTIA believes 
that important information was omitted or characterized incorrectly. 
Any written presentation provided in support of the oral communication 
or meeting will also be placed on the public record and become part of 
this docket. Such ex parte communications must be submitted to this 
docket as provided in the ADDRESSES section above and clearly labeled 
as an ex parte presentation. Federal entities are not subject to these 
procedures.

Classification

    This rule has been determined to be not significant for purposes of 
Executive Order 12866.

Regulatory Flexibility Act

    This proposed rulemaking, issued under the authority of the Act, 
will not have a significant economic impact on a substantial number of 
small entities as defined under the Regulatory Flexibility Act (RFA). 
If implemented, this rule would establish regulations, as required 
under the Act, for NTIA and FirstNet regarding the process by which 
NTIA reviews and approves or disapproves fees FirstNet proposes to 
assess. The RFA requires federal agencies to prepare an analysis of a 
rule's impact on small entities whenever the agency is required to 
publish a notice of proposed rulemaking. However, a federal agency may 
certify, pursuant to 5 U.S.C. 605(b), that the action will not have a 
significant economic impact on a substantial number of small entities. 
The proposed regulations are for the particular and limited purpose of 
NTIA examining only whether the proposed fees of another federal 
entity--FirstNet--are, in aggregate and in combination with any 
FirstNet non-fee-based income, sufficient, but not in excess of, the 
projected funds that FirstNet needs to recoup the total expenses 
required to carry out its statutory obligations in a given year. No 
external entities, including any small businesses, small organizations, 
or small governments, will experience any direct economic impacts from 
this proposed rule. The only potential effect on any external entities, 
large or small, would likely be positive, as NTIA's proposed rules will 
assist in ensuring that FirstNet, as required under the Act, will 
sustain a nationwide public safety broadband network that provides 
broadband communications to first responders. Because this action, if 
adopted, would directly affect only federal entities--NTIA and 
FirstNet--and not any small entities, the Department of Commerce has 
concluded that the action would not result in a significant economic 
impact on a substantial number of small entities. Thus, the Department 
of Commerce Chief Counsel for Regulations has certified to the Chief 
Counsel for Advocacy of the Small Business Administration that this 
rule will not have a significant impact on a substantial number of 
small entities. Therefore, an initial regulatory flexibility analysis 
is not required and has not been prepared.

Executive Order 13132

    It has been determined that this document does not contain policies 
with Federalism implications as that term is defined in Executive Order 
13132.

List of Subjects in 47 CFR Part 500

    FirstNet, FirstNet Fees, Safety, Telecommunications.

    Dated: December 10, 2015.
Lawrence E. Strickling,
Assistant Secretary for Communications and Information.

    For the reasons set out in the preamble, the National 
Telecommunications and Information Administration proposes to add 47 
CFR Chapter V to read as follows:

CHAPTER V--THE FIRST RESPONDER NETWORK AUTHORITY (Parts 500-599)

SUBCHAPTER A--NATIONAL TELECOMMUNICATIONS AND INFORMATION 
ADMINISTRATION REGULATIONS (Parts 500-549)

PART 500--REVIEW AND APPROVAL OF FEES PROPOSED BY THE FIRST RESPONDER 
NETWORK AUTHORITY (FIRSTNET)

Sec.
500.1 Purpose and scope.
500.2 General definitions.
500.3 NTIA duty to review FirstNet proposed fees.
500.4 Scope of NTIA review of FirstNet proposed fees.
500.5 Methodology of NTIA fee review and approval process.

    Authority:  47 U.S.C. 1401.


Sec.  500.1  Purpose and scope.

    Sections 500.2 through 500.5 implement 47 U.S.C. 1428(c) as 
codified pursuant to the Middle Class Tax Relief and Job Creation Act 
of 2012 (Pub. L. 112-96, Title VI, 126 Stat. 256 (codified at 47 U.S.C. 
1401 et seq.) (the ``Act''), which requires the National 
Telecommunications and Information Administration to annually review 
fees the First Responder Network Authority (FirstNet) proposes to 
assess.


Sec.  500.2  General definitions.

    Fee means FirstNet's receipt of money from:
    (1) A Network User Fee;
    (2) Lease Fees Related To Network Capacity; or
    (3) Lease Fees Related To Network Equipment And Infrastructure, as 
those terms are defined under 47 U.S.C. 1428(a).
    FirstNet means the First Responder Network Authority.
    Fiscal Year means the 12-month accounting period for the federal 
government, which begins on 1 October of a given year and ends on 30 
September of the subsequent year.
    Non-fee-based income received by FirstNet means FirstNet's receipt 
of money from any source, transaction, entity, or any other means 
allowed under 47 U.S.C. 1401 et seq., other than those receipts 
described above in the definition of ``fee.''
    NTIA means the National Telecommunications and Information 
Administration.
    NTIA's fee review and approval process means the process by which 
NTIA executes its duties under 47 U.S.C. 1428(c).


Sec.  500.3  NTIA's duty to review FirstNet proposed fees.

    As required under 47 U.S.C. 1428(c), NTIA shall exclusively review 
fees, which must be proposed by FirstNet in writing, through NTIA's 
review and approval process conducted on an annual basis.


Sec.  500.4  Scope of NTIA review of FirstNet proposed fees.

    NTIA shall approve FirstNet proposed fees only if such fees, when 
combined with any non-fee-based income projected to be received by 
FirstNet, are sufficient, but do not exceed the amount necessary, to 
recoup FirstNet's total expenses in carrying out its duties and 
responsibilities under 47 U.S.C. 1401 et seq. for the fiscal year 
involved.


Sec.  500.5  Methodology of NTIA fee review and approval process.

    (a) Fee review approach. To execute NTIA's fee review and approval 
process, NTIA shall utilize FirstNet's standard financial 
documentation, which may include but is not limited to:

[[Page 77598]]

    (1) FirstNet's budget documents produced in the normal course of 
its business;
    (2) FirstNet's financial statements produced in the normal course 
of its business;
    (3) FirstNet's annual budget reports submitted as part of the 
President's Budget; and
    (4) FirstNet's annual report to Congress.
    (b) Deference to FirstNet on necessary reserves. In executing 
NTIA's fee review and approval process, NTIA shall defer to FirstNet 
with respect to its use and retention of reserve or working capital 
funds. NTIA shall consider any such designated funds to be a part of 
FirstNet's total expenses in carrying out its duties and 
responsibilities under 47 U.S.C. 1401 et seq. for the fiscal year 
involved.
    (c) Determination of fee review: NTIA shall make one of the 
following determinations annually upon review of FirstNet's proposed 
fees:
    (1) FirstNet's proposed fees, in aggregate, when combined with any 
projected non-fee-based income to be received by FirstNet, meet but do 
not exceed FirstNet's projected total expenses;
    (2) FirstNet's proposed fees, in aggregate, when combined with any 
projected non-fee-based income to be received by FirstNet, do not meet 
FirstNet's projected total expenses; or
    (3) FirstNet's proposed fees, in aggregate, when combined with any 
projected non-fee-based income to be received by FirstNet, exceed 
FirstNet's projected total expenses. Upon making any of these 
determinations, NTIA will communicate its determination in writing to 
FirstNet.
    (d) Outcome of determination of fee review:
    (1) Should NTIA make the determination listed in paragraph (c)(1) 
of this section, FirstNet may assess the proposed fees.
    (2) Should NTIA make one of the determinations listed in paragraph 
(c)(2) or (3) of this section, NTIA will disapprove FirstNet's proposed 
fees, and FirstNet may not assess those proposed fees.
    (e) Revision of Proposed Fees: Upon a disapproval of FirstNet's 
proposed fees as described in paragraph (d)(2) of this section, or upon 
FirstNet's determination that it must revise NTIA-approved fees to 
ensure compliance with 47 U.S.C. 1428(b), FirstNet shall prepare a 
revised written submission to NTIA, which shall evaluate any proposed 
fees therein consistent with the rules in Sec. Sec.  500.1-500.5.
    (f) Communication of NTIA fee approval or disapproval. Approval or 
disapproval of FirstNet-proposed fees shall be communicated in writing 
by the Assistant Secretary for Communications and Information and 
Administrator, National Telecommunications and Information 
Administration, U.S. Department of Commerce, to the Chair of the 
FirstNet Board.

Subchapter B--[Reserved]

[FR Doc. 2015-31516 Filed 12-14-15; 8:45 am]
BILLING CODE 3510-60-P