[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]
BILLING CODE 6712-01-P
