[Federal Register Volume 61, Number 88 (Monday, May 6, 1996)]
[Rules and Regulations]
[Pages 20155-20170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10974]



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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 3

[MD Docket No. 93-297; FCC 96-110]


Administration of U.S. Certified Accounting Authorities in 
Maritime Mobile and Maritime Mobile-Satellite Radio Services

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This Report and Order establishes final rules related to the 
administration of U.S. certified accounting authorities in the maritime 
mobile and maritime mobile-satellite radio services except for distress 
and safety communications. The rules are required in order to ensure 
adherence to international settlement procedures. This Report and Order 
contains modified information collections requirements subject to the 
Paperwork Reductions Act of 1995.

EFFECTIVE DATE: This regulation is effective July 5, 1996 subject to 
the review of information collection requirements by the Office of 
Management and Budget. Upon approval of the information collections 
requirement from the Office of Management and Budget (OMB). The 
Commission will publish a public notice to notify the public of the 
effective date.

ADDRESSES: Comments on the information collections contained in this 
Report and Order should be directed to Office of The Secretary, Federal 
Communications Commission, 1919 M Street, N.W., Washington, DC 20554. 
In addition to filing comments with the Secretary, a copy of any 
comments on the information collections contained herein should be 
submitted to Dorothy Conway, Federal Communications Commission, Room 
234, 1919 M Street, N.W., Washington, DC 20554, or via the Internet to 
<a href="/cdn-cgi/l/email-protection#3450575b5a43554d745257571a535b42"><span class="__cf_email__" data-cfemail="6a0e0905041d0b132a0c0909440d051c">[email protected]</span></a> and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 
17th Street, N.W., Washington, DC 20503 or via the Internet to
<a href="/cdn-cgi/l/email-protection#e284838b8cbdbd96a2838ecc878d92cc858d94"><span class="__cf_email__" data-cfemail="dcbabdb5b28383a89cbdb0f2b9b3acf2bbb3aa">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: Shirley F. Wood, Office of the 
Managing Director, Financial Analysis Branch, Telephone: (202) 418-1990 
or via the Internet at <a href="/cdn-cgi/l/email-protection#ec9f9b838388ac8a8f8fc28b839a"><span class="__cf_email__" data-cfemail="780b0f17171c381e1b1b561f170e">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Synopsis of Commission's Report and Order Adopted March 13, 1996 and 
Released April 23, 1996

    1. The Federal Communications Commission's International 
Telecommunications Settlements Section, located in Gettysburg, 
Pennsylvania, acts as a national clearinghouse for the settlement of 
international maritime mobile service and maritime mobile-satellite 
service accounts. In this capacity, the FCC is known as an accounting 
authority and settles accounts for messages transmitted or received by 
U.S. licensed vessels via foreign coast station facilities.
    2. The FCC has also allowed private entities to settle accounts 
with foreign administrations. By approving these additional 
``accounting authorities'', the FCC has, in effect, delegated a portion 
of its traditional responsibilities regarding settlement of maritime 
accounts to private enterprise, at least in those instances where the 
accounting authority is settling accounts of U.S. licensed ship 
stations.
    3. The FCC is issuing final rules regarding the approval and/or 
operations of accounting authorities. This Report and Order delineates 
rules for (a) determining the eligibility for granting/revoking 
certification as a U.S. accounting authority, (b) settlement 
operational procedures, (c) reporting requirements, and (d) enforcement 
procedures.
    4. Further, the Report and Order establishes rules to ensure 
compliance by ship station licensees to make proper and timely payments 
and declares the ship station licensee to be ultimately responsible for 
settlement of their accounts.
    5. The complete text of this rulemaking may be purchased from the 
Commission's copy contractor, International Transcription Service, Inc. 
(202) 857-3800, 2100 M Street, N.W., Suite 140, Washington, DC 20037.

Paperwork Reduction Act

    The Commission, as part of its continuing effort to reduce 
paperwork burdens, invites the general public and OMB to comment on the 
information collections contained in this Report and

[[Page 20156]]

Order, as required by the Paperwork Reduction Act of 1995, Pub. L. No. 
104-13. OMB notification of action is due July 5, 1996; public and 
agency comments are due at the same time. Comments should address: (a) 
whether the proposed collection of information is necessary for the 
proper performance of the functions of the Commission, including 
whether the information shall have practical utility; (b) the accuracy 
of the Commission's burden estimates; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burden of the collection of information on the 
respondents, including the use of automated collection techniques or 
other forms of information technology.
    OMB Approval Number: 3060-0584.
    Title: Administration of U.S. certified accounting authorities in 
maritime mobile and maritime mobile-satellite radio services.
    Form No.: FCC Form 44 and FCC Form 45.
    Type of Review: Revision to an existing collection to consolidate 
three information collection requirements.
    Respondents: Individuals and households; businesses and other for-
profit.
    Number of Respondents: 25.
    Estimated Time Per Response: Three hours per response for 
Application for Certification of Accounting Authority form; one hour 
per response for the Annual Statistical Report of Settlement Operations 
form; and one hour per response for the Report of Additions/
Modifications/Deletions to Inventory.
    Needs and Uses: The Commission will use the information in this 
information collection to determine eligibility of applicant; to create 
internal studies and to ensure compliance. The Commission will also use 
the information to identify the accounting authorities of U.S. licensed 
vessels and to update the reporting of changes in accounting authority 
functions to the International Telecommunication Union for inclusion in 
their List of Ship Stations Report. The Report and Order is modified to 
reduce a monthly reporting of changes to the inventory of ships for 
which the accounting authority performs settlements to a semi-annual 
requirement. A requirement for this information was included in the 
Notice of Proposed Rulemaking, 58 FR 246, December 27, 1993, however, 
the burden of the requirement was not adequately addressed at that 
time.

    Adopted: March 13, 1996.
    Released: April 23, 1996.

    By the Commission.

Table of Contents

                                                                        
                                                               Paragraph
                            Topic                                 No.   
                                                                        
I. Introduction..............................................    1-2    
II. Background...............................................   3-12    
III. Issues Analysis.........................................     13    
  A. Eligibility.............................................  14-22    
  B. Application Procedures..................................  23-33    
  C. Settlement Operations...................................  34-44    
  D. Reporting Requirements..................................  45-50    
  E. Enforcement.............................................  51-53    
  F. Conclusion..............................................     54    
IV. Procedural Matters.......................................           
  A. Ex Parte................................................     55    
  B. Final Regulatory Flexibility Analysis...................     56    
  V. Ordering Clauses........................................  57-58    
                                                                        

I. Introduction

    1. By this Report and Order, the Commission adopts rules governing 
the administration of accounting authorities in the maritime mobile and 
the maritime mobile-satellite radio services, except for distress and 
safety communications. The Report and Order establishes a certification 
process and settlement procedures within a regulatory framework that is 
flexible enough to invite participation by many diverse entities. The 
rules clarify accounting authority responsibilities and strengthen the 
settlement process while promoting the improvement of standards and 
settlement operations in industry.
    2. The rules we adopt below establish an application and approval 
process for becoming an accounting authority to ensure that only 
qualified applicants perform this function. The application process and 
procedural rules also apply to entities currently settling accounts 
under interim Commission certification. The interim certification will 
be cancelled 60 days after the effective date of these rules if these 
entities do not follow the application process. The Report and Order 
also establishes standardized operational procedures and reporting 
requirements that will assist the FCC in monitoring the overall 
settlement function. The rules establish the accounting authority's 
receipt date of accounts for purposes of determining the appropriate 
conversion rate for the Special Drawing Rights (SDRs) and sets forth 
enforcement procedures for both accounting authorities who are not 
operating in accordance with FCC and established international 
procedures and for ship station licensees where the licensee fails to 
remit proper and timely payment for public correspondence 
communications to the Commission or to another accounting authority. 
Finally, the rules declare that the ship station licensee is ultimately 
liable for proper and timely payment of accounts.

II. Background

    3. International telecommunications settlements involve the 
collection and payment by various accounting entities of charges due 
foreign administrations for messages transmitted at sea by or between 
maritime mobile stations located on board ships subject to U.S. 
registry and utilizing foreign coast and coast earth station 
facilities. The United States Government has performed accounting 
settlements for maritime mobile service message charges since 1913 and, 
more recently, for maritime mobile-satellite service messages.
    4. On June 10, 1934, the Federal Radio Commission was absorbed by 
the Federal Communications Commission (FCC), which had been created by 
the Communications Act of 1934. At that time the international radio 
accounts were transferred to the jurisdiction of the FCC, where they 
are now maintained.
    5. The subjects of international telecommunications accounting and 
settlements are addressed in the International Telecommunication 
Convention (Nairobi, 1982), in the International Telecommunication 
Regulations (Melbourne, 1988) (ITR), in the ITU Radio Regulations and 
in the ITU-T (formerly CCITT) Recommendations.<SUP>1 The ITU-T develops 
technical, operational and service recommendations applicable to 
essentially all international telecommunications services via wire and 
radio. Provisions of Conventions and Regulations have treaty status and 
are therefore binding on the parties thereto. The ITU-T Recommendations 
do not have treaty status and are not legally binding. However, as a 
practical matter, the ITU-T Recommendations are

[[Page 20157]]

effectively the standards that govern international telecommunications.
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    \1\ ``CCITT'' is the French acronym for the International 
Telegraph and Telephone Consultative Committee within the 
International Telecommunication Union (ITU). ``CCITT'' was, 
nevertheless, the recognized acronym used in most languages--
including English. At the ITU Additional Plenipotentiary Conference 
(APP) in Geneva (December 1992), the structure, working methods, and 
construct of the basic ITU treaty instrument was modified. The 
result is that the names of the sub-entities of the ITU have changed 
(e.g., the CCITT has become the Telecommunication Standardization 
Sector--ITU-T and the primary treaty instruments have become the ITU 
Constitution and the ITU Convention with consequential renumbering 
of all provisions). We note the changes coming from the APP were 
placed into provisional effect on March 1, 1993, with the formal 
entry into force of these changes being July 1, 1994 (as between 
those ITU Member countries who have ratified or acceded to the new 
instruments). We will, subsequently, refer to the new nomenclatures 
within this proceeding wherever practicable.
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    6. The World Administrative Radio Conference (Geneva, 1979) changed 
the procedures governing accounting practices in the maritime mobile 
and maritime mobile-satellite services, partly in response to the 
perceived need to improve the efficiency of the international 
telecommunication settlements system. The Final Acts of the Conference, 
ratified by the U.S. Senate on October 27, 1983, revised Chapter IX of 
the international Radio Regulations by establishing a new Article 66 
which set forth the following general principles to govern the 
international accounting for public correspondence in the maritime 
mobile and maritime mobile-satellite services:

5086 Sec. 2. Charges for radiocommunications from ship to shore shall 
in principle, and subject to national law and practice, be collected 
from the maritime mobile station licensee:
5087 (a) by the administration that has issued the license; or
5088 (b) by a recognized private operating agency; or
5089 (c) by any other entity or entities designated for this purpose by 
the administration referred to in No. 5087.

    7. The Mobile World Administrative Radio Conference in 1987 passed 
a resolution (contained in the Regulations as Resolution No. 334) 
providing that the provisions of Article 66 should merely refer to the 
International Telecommunication Regulations (ITR), assuming that the 
World Administrative Telegraph and Telephone Conference (WATTC-88) 
placed the substance of the Article 66 provisions into the ITR. The 
WATTC-88 did incorporate these provisions into the ITR, effective July 
1, 1990 (ITR, Appendix 2). We assume a future competent 
Radiocommunication Conference will eventually implement the provisions 
of Resolution No. 334.<SUP>2 In any event, both the current Radio 
Regulations and the ITR provide that the ITU-T Recommendations are to 
be taken into account when applying the international regulatory 
provisions. As it now stands, the implementing recommendations 
developed by the ITU-T include: (1) Rec. D.90 on charging, accounting 
and refunds; (2) Rec. D.195 on settlement of international 
telecommunication balances of accounts; (3) Rec. E.200 on operational 
provisions for maritime mobile services; (4) Rec. F.100 on mobile 
operational provisions; and (5) the newest recommendation adopted, Rec. 
F.111 on principles of service for mobile systems.
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    \2\ The ITU Voluntary Group of Experts (VGE), charged with 
simplifying the Radio Regulations has, indeed, made such a 
recommendation. Once adopted by a competent World Radiocommunication 
Conference, the VGE recommendation would result in Article 66 simply 
stating that: ``The provisions of the ITR, taking into account ITU-T 
Recommendations, shall apply [to charging and accounting for 
Maritime Radiocommunications].''
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    8. The organization within the FCC responsible for the settlement 
of maritime mobile and maritime mobile-satellite accounts with foreign 
administrations is the International Telecommunications Settlements 
(ITS) Section of the Financial Operations Division, Office of the 
Managing Director. The settlement operation basically consists of 
examining and processing invoices received from foreign administrations 
to ensure the validity of the charges and, in turn, billing U.S. ship 
station licensees for the charges due the foreign country. The accounts 
generally contain the ship call sign and name, the date the message was 
transmitted, the number of words or minutes, the cost per word or 
minute in gold francs or Special Drawing Rights (SDRs) and the amount 
due shown in either gold francs or SDRs. Collections are then processed 
and appropriate payments made to the foreign countries or their agents 
through the U.S. Treasury.
    The settlement clearinghouse service was performed by the FCC at no 
cost to licensees until December 19, 1989 when Public Law 101-239 
established a $2.00 per line item administrative fee applicable to all 
ITS billings.
    9. The FCC, in accordance with international procedures described 
within this document, has also permitted private entities, called 
``accounting authorities'', to settle accounts between U.S. registered 
ships and foreign administrations just as ITS does. (See In The Matter 
of Accounting and Operating Procedures in the Maritime Mobile Service, 
FCC 80-741, Mimeo No. 28600 (released December 12, 1980).) The 
accounting authority may settle accounts of foreign licensed vessels in 
addition to settling U.S. accounts. Vessel operators/licensees choosing 
to have these private entities settle their accounts are generally also 
charged a fee under a contractual arrangement. In certain cases, the 
vessels are owned and/or operated by the same company that is acting as 
an accounting authority.
    10. Accounting authorities have been established or certified by 
the FCC in accordance with the procedures delineated in the ITU-T 
Recommendations. Those procedures allow administrations to establish up 
to 25 accounting authorities per country. Specifically, accounting 
authorities are designated by the assignment of an individual 
Accounting Authority Identification Code (AAIC). This code is used by 
ships and foreign coast stations to identify where charges for messages 
transmitted through foreign facilities are to be sent for collection. 
All accounting authorities approved by the FCC to settle maritime 
accounts for U.S. licensed vessels are assigned a discrete four-
character alpha-numeric code. Accounting authorities operating in the 
U.S. are assigned codes with a ``US'' prefix. Currently, only eight 
codes beginning with the prefix ``US'' are authorized, including US01 
which is used by the Commission's ITS Section in its settlement 
activities.<SUP>3 Foreign-based accounting authorities may also be 
certified to settle accounts of U.S. licensed vessels. If approved, 
they use the AAIC originally assigned to them by their country of 
origin. The Commission has currently certified seven foreign-based 
accounting authorities <SUP>4 to settle accounts for U.S. flag vessels. 
Although all certifications have technically been interim 
certifications, fifteen years have elapsed since the original interim 
assignments.
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    \3\  Besides the FCC, the accounting authorities assigned a 
``US'' code are: Mackay Communications, Inc.; Radio-Holland 
Communications, Inc.; SAIT Communications, Inc.; Mobile Marine 
Radio, Inc.; Exxon Communications Company; Raytheon Service Company 
and Global Communications, Inc.
    \4\ The following foreign companies have been approved as 
accounting authorities: Kelvin Hughes, Ltd. (England); Peninsular 
Electronics, Ltd. (England); STC International Marine, Ltd. 
(England); Marconi International Marine Co., Ltd. (England); E.B. 
Communications, Ltd. (England); International Radio Traffic Services 
(Ireland) and ANDgate, Ltd. (Gibraltar).
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    11. There are currently no rules, formal guidance or procedures 
issued by the Commission for determining who should be certified as an 
accounting authority. There are no FCC standards of conduct for 
accounting authorities nor any requirement to keep the Commission 
informed of their activities. There are no rules to ensure that the 
overall United States settlement activity is conducted uniformly. We 
believe that at least minimal regulations should be in place to assist 
current and future accounting authorities in adhering to those 
international procedures as a matter of public interest and in 
fulfillment of U.S. treaty interests.
    12. On November 9, 1993, the Commission adopted a Notice of 
Proposed Rulemaking (NPRM) that invited comment on our proposed rules 
governing the administration of

[[Page 20158]]

accounting authorities (2FCC Record, Volume 8, No. 26, December 13-23, 
1993). The NPRM proposed rules providing for: (1) a certification 
process, (2) settlement procedures, (3) compliance procedures, and (4) 
determining responsibility for proper and timely settlement of 
accounts.

III. Issues Analysis

    13. The NPRM proposed rules and raised many issues regarding the 
administration of accounting authorities. Comments and Reply Comments 
were received from eleven (11) entities and are discussed in the 
paragraphs below where we review each of the categories and consider 
the comments. The commenters are listed in Appendix 2 of the Report and 
Order.

A. Eligibility

    14. The NPRM proposed no U.S. citizenship requirements, but did 
propose certain restrictions regarding the physical location of 
settlement facilities for those accounting authorities wishing to be 
assigned an AAIC with a ``US'' prefix. The NPRM proposed that prior 
experience in accounting or settlement activities will be considered 
but is not a prerequisite to becoming an accounting authority; and, 
that applicants must (1) be willing and able to accept clients at a 
reasonable charge; (2) agree to accept accounts in both gold francs and 
Special Drawing Rights (SDRs) and to use the conversion rate as 
directed by the International Monetary Fund; and (3) agree to conduct 
operations in accordance with applicable FCC policies and rules, the 
International Telecommunication Regulations and other international 
rules, regulations, agreements, and, where appropriate, ITU-T 
Recommendations. Finally, the NPRM proposed that all entities intending 
to settle accounts of U.S. licensed vessels obtain prior Commission 
authorization to do so.
    15. Comments. Mackay Communications (Mackay) urged that we prohibit 
the Commission from ``operating as a Recognized Private Operating 
Agency'' so that it can be neutral and enforce compliance of 
regulations without creating potential conflicts of interest. In reply 
comments, COMSAT Corporation (COMSAT) stated that the Commission can 
still be an impartial administrator and questioned Mackay's suggestion 
that the Commission remove itself from the accounting authority 
function.
    Response. The Commission cannot operate as a Recognized Private 
Operating Agency because (1) we are a Federal government agency and (2) 
we do not operate telecommunications installations nor do we provide 
telecommunications services. However, we believe that Mackay meant 
``accounting authority'' and address this response in that context. The 
Commission has a dual role in the administration of settlement of 
accounts for international telecommunications. First, as the 
administration responsible for settlement of accounts of U.S.-flag 
vessels, we are establishing rules for non-U.S. governmental accounting 
authorities. Second, the Commission provides a valuable function in 
that ship station licensees who do not select an accounting authority, 
simply ``default'' to US01, the AAIC of the Commission's International 
Telecommunications Settlements Section (ITS) which performs the FCC's 
accounting authority function. We believe that the functions are 
separate and can be administered without any conflict of interest.
    16. Comments. Mackay urged the Commission to consider a requirement 
that the applicant must offer services to all U.S.-flagged vessels--not 
just vessels owned directly or indirectly by the applicant. EXXON 
Communications Company (EXXON) stated their objection to any proposal 
that accounting authorities ``be required to serve as common carriers 
offering service indiscriminately to the public.'' They pointed out 
that they serve as an accounting authority for their vessels only, they 
are not a revenue generating endeavor and, ``were the Commission to 
require EXXON to hold itself out to the general public 
indiscriminately, it would no longer be in a position to serve as an 
accounting authority.'' In reply comments, the American Institute of 
Merchant Shipping (AIMS) agreed with EXXON's proposal that accounting 
authorities should not be required to act as a common carrier and 
COMSAT opposed a ban on accounting authorities who process settlements 
exclusively for their own vessels. COMSAT further stated that ``the 
Commission may consider imposing conditions on the certifications 
awarded to these entities, e.g., the Commission may wish to reserve the 
right to require such accounting authorities to serve all customers or 
relinquish their AAIC when there are no * * *. codes available and 
there is a demonstrable need for broader-based services.''
    Response. We believe the function of accounting authorities should 
be such that the public's best interests are served by the 
organizations. Such is not the case when an accounting authority 
settles accounts for themselves only. Thus, the rules we have adopted 
require that accounting authorities settle accounts for any qualified 
ship station licensees who request it. Accounting authorities may 
require credit checks, and clients must accept the terms of settlement 
charges, deposits, etc. However, it is not the Commission's intent in 
establishing these rules to place additional requirements on the 
interim accounting authorities nor to establish a requirement in the 
application process that could not be overcome. We acknowledge COMSAT's 
workable suggestions and we are waiving this requirement for accounting 
authorities who are ``grandfathered'' with the provision that, should 
all 25 AAICs be assigned and the need for additional codes become 
necessary, these same organizations will be required to extend their 
services to the public or to relinquish their certification. Should 
these grandfathered accounting authorities cease their settlement 
activities, the new accounting authorities assigned the AAICs will be 
required to serve the general public. 47 CFR, Part 3, section 3.10 is 
amended to add this waiver information.
    17. Comments. Mobile Marine Radio, Inc. (MMR) requested that the 
Commission impose requirements that accounting authorities verify the 
creditability of its clients and ``another means of guarantee for the 
provider could be a requirement that the accounting authority * * * 
share in a loss should it occur.'' COMSAT supported the recommendation 
that accounting authorities be required to verify the credit worthiness 
of their customers and that accounting authorities should be able to 
reject customers they determine are credit risks and further suggest a 
rule to require a deposit from customers before contracting to settle 
accounts.
    Response. The rules we are adopting below declare that the ship 
station licensee is ultimately responsible for the proper and timely 
payment of their accounts (47 CFR Part 3, section 3.76). However, this 
in no way relieves the accounting authority from performing their 
settlement activities timely and accurately. We have purposely left out 
regulations which would prevent accounting authorities from verifying 
the credit standings of potential clients or requiring deposits. The 
contractual agreement between accounting authorities and clients should 
be entered into mutually without further regulation. Ship station 
licensees who do not enter into such an arrangement will default to 
US01, the International Telecommunications Settlement Section at 
Gettysburg, Pennsylvania.

[[Page 20159]]

    18. Comments. Mackay raised the issue of foreign accounting 
authorities settling traffic for U.S.-flagged vessels. Mackay does not 
object, provided U.S.-flagged vessels of foreign accounting authorities 
are required to pay the same ``federal excise taxes'' that vessels 
represented by U.S. accounting authorities are required to pay.
    Response. This subject is beyond the scope of this proceeding and 
is not addressed in the Report and Order.
    19. Comments. Mackay urged considering that owners of coast 
stations or coast earth stations not be allowed as accounting 
authorities. In reply comments, EXXON stated that Mackay has no 
rationale for their suggestion and COMSAT opposes any limitation on 
land earth station operators stating the ``operators * * * are more at 
risk to justify their involvement * * * than many other entities * * 
*''
    Response. Our experience has been that we have encountered no 
problems in the past with accounting authorities who are also owners 
and/or operators of coast stations that lead us to believe there is a 
potential problem. Thus, the final rule will not ban coast stations, 
coast earth stations or any other entity from becoming accounting 
authorities as long as they meet the eligibility requirements.
    20. Comments. Radio Holland USA B.V. (Radio Holland) recommended 
that prior relevant experience be a mandatory requirement. In reply 
comments, COMSAT stated that prior experience as an accounting 
authority should not be the sole determining factor for qualification.
    Response. The Commission, in this final rule, has purposely 
declined to adopt regulations requiring specific prior relevant 
experience. We believe the rule at Part 3, section 3.10(c) is clear 
that related prior experience will be reviewed favorably, however, this 
experience or lack of experience will not be the sole determinant in 
granting certification. COMSAT appears to be referring to the 
``grandfathering'' process directed toward the interim accounting 
authorities. In that case, experience will not be the sole determining 
factor, either, but will be evaluated along with other requirements.
    21. Comments. Mackay urges the Commission to consider prohibiting 
``foreign-based RPOAs'' from settling for U.S.-flagged vessels unless 
their administration has a reciprocal agreement allowing U.S. 
accounting authorities to operate in their administration. In reply 
comments, COMSAT agreed with Mackay that the Commission should consider 
whether foreign administrations permit U.S. entities to apply for 
accounting authority identification codes in their country.
    Response. Based on our past experience where no problems of this 
nature have occurred, we do not think it is necessary to adopt a policy 
of reciprocity. At most, only ten of the AAICs will be available to 
foreign-based organizations. We have not addressed this issue in the 
rules adopted below, however, should the situation change, the 
Commission could revisit the issue.
    22. Comments. MMR commented that, in the case of assignment of a 
U.S. accounting authority identification code, all settlements should 
be processed and made from the physical location of the accounting 
authority from its U.S. address. COMSAT stated there is no ``rule 
section providing the standard of evidence for establishing that an 
accounting authority will conduct operations in the United States'' and 
recommended the submission of partnership or corporate documents 
demonstrating where the entity intends to do business. COMSAT further 
suggested imposing a jurisdictional requirement on foreign-based 
accounting authorities settling for U.S. vessels requiring the 
accounting authorities to be subject to the jurisdiction of the U.S. 
courts.
    Response. We will assign a ``US'' AAIC to those accounting 
authorities who demonstrate they are operating from a physical U.S. 
location. As the administration responsible, the FCC will be in a 
better position to monitor operations and perform audits, as 
applicable. Title 47 CFR, Part 3, section 3.11(a) is revised to state 
this explicitly. Further, we believe the reporting requirements will 
assist the Commission in assuring the accounting authority is 
continuing to settle from a U.S. location. We do not think it is 
necessary to subject foreign-based accounting authorities to the 
jurisdiction of the U.S. courts. We have concluded that such a 
requirement would be complex, unwieldy, and time consuming, far beyond 
the regulatory structure we are establishing. At this time, it appears 
that disputes can be satisfactorily resolved without judicial 
intervention.

B. Application Procedures

    23. The NPRM proposed rules requiring the filing of an original FCC 
application form in order to be considered as an accounting authority. 
The NPRM requested only basic information identifying the applicant and 
describing the applicant's objectives and capabilities with respect to 
the accounting authority function. The NPRM stated our intention to 
request that any relevant experience of an applicant be detailed, that 
the applicant's proposed settlement plans be provided and documents 
demonstrating financial responsibility should provide an adequate basis 
for determining whether to issue a certification. We intend to process 
applications on a first-come, first-served basis, however, we proposed 
to ``grandfather'' current accounting authorities as long as they are 
otherwise qualified and follow the procedures established by the final 
rule (Report and Order) to obtain permanent accounting authority 
authorizations. Existing accounting authorities are not exempt from the 
new application procedures and would be required to apply for permanent 
accounting authority certifications within 60 days of the effective 
date of these rules or risk losing their status as accounting 
authorities. The NPRM established an FCC policy that a minimum of 15 of 
the available 25 Accounting Authority Identification Codes (AAICs) be 
reserved for use by accounting authorities conducting settlement 
operations in the United States. Accounting authorities conducting 
settlement operations within the United States will be assigned a 
``US'' AAIC prefix if approved. Certified accounting authorities, who 
maintain their settlement operations outside the U.S., would retain the 
AAIC originally assigned by the country of origin.
    24. The NPRM included language in the application and rules which 
would make clear to applicants the requirement to adhere to applicable 
FCC policies and rules, the International Telecommunication Regulations 
(ITR), and other international rules, regulations, agreements, and, 
where appropriate, ITU-T Recommendations. We invited comment as to the 
types of documents acceptable for proving financial responsibility as 
well as the specific criteria for evaluation. The NPRM proposed that, 
although the United States is not a guarantor of payments by its 
citizens, our proposed rules sought to minimize potential financial 
risks that might be present if settlement operations are performed by 
other accounting authorities. Further, the NPRM documented the FCC 
policy that the ship station licensee has final responsibility for 
settlement should their selected accounting authority be unable or 
unwilling to make valid payments to foreign entities.
    25. The NPRM also detailed the procedures the Commission will 
utilize to obtain public comment on applications received by the 
Commission. Comments received during

[[Page 20160]]

the informal public comment period will be taken into consideration in 
making a determination as to whether to approve the applicant as an 
accounting authority. The NPRM further states that, if the applicant is 
found to be qualified, the Commission will inform the applicant, in 
writing, that the application has been approved.
    26. Comments. Mackay stated that they encourage the proposed 
``grandfathering'' of interim accounting authorities. EXXON commented 
that the proposed formal application process is unnecessary for the 
grandfathering process. COMSAT stated they do not understand how the 
grandfathered applications will participate in the licensing process, 
that the grandfathered applications will limit the number of new 
entrants to ten and the public interests will not be served by limiting 
the number of new applicants. IDB Mobile Communications, Inc. (IDB) 
agreed with COMSAT that ``all applicants should be considered equally 
in the applicant process and should be subject to the same criteria for 
approval.'' In reply comments, EXXON stated that all applicants do have 
an equal opportunity to apply and ``there is no shortage of available 
accounting authority identification codes.'' EXXON further commented it 
is only fair to allow grandfathered accounting authorities to retain 
their status and ``action to the contrary would prove extremely 
disruptive to existing accounting procedures.'' In reply comments, AIMS 
stated their agreement with EXXON's position, but COMSAT disagreed with 
commenters who would restrict the certification process by exempting 
interim accounting authorities from the application filing 
requirements.
    Response. The Commission does not intend to hinder the current 
operations of interim accounting authorities and the final rule has 
provided for the ``grandfathering'' of such applicants, provided they 
meet the eligibility requirements. Applicants will be subject to the 
same criteria and considered equally. It should be noted that, although 
only ten accounting authority identification codes will be available 
provided all interim accounting authorities are approved, this is not a 
new limitation. Additionally, the interim rules for granting 
certification did not provide the Commission with the same information 
requested in this rule, and, since there have been no reporting 
requirements, the Commission has little information about the 
settlement activities of the interim accounting authorities. 
Information provided in response to the Report and Order should assist 
the Commission in its role as administrator of accounting authorities.
    27. Comments. Mackay urged the Commission to give ``existing U.S.-
based RPOAs'' preference in order of consideration regardless of when 
the application was received in relation to other applications. In 
reply comments, COMSAT opposed any ban on foreign-based settlement 
entities, but proposed that the Commission reserve the right to process 
U.S.-based accounting authority applications before foreign-based 
applicants, should the Commission receive more applications than the 
available number of accounting authority identification codes.
    Response. The rules we are adopting will not place a ban on 
foreign-based settlement entities, however, it should be noted that, 
although the rule states (47 CFR, Part 3, section 3.21(b)) that a 
minimum of 15 identification codes will be retained for ``US'' codes, 
that does not mean we will withhold certification of U.S. entities and 
await applications from foreign-based entities until a quota of ten is 
certified. In cases where U.S. applicants apply and no foreign-based 
applications are on-hand, the U.S. applications could be approved.
    28. Comments. Mackay commented they want to ensure there is 
sufficient notification to enable existing accounting authorities to 
complete the application process. COMSAT stated there is no mention of 
the triggering date for filing.
    Response. This final rule establishes the effective date of the 
rules, which is 30 days following the publication of the Report and 
Order in the Federal Register. Interim accounting authorities will be 
required to apply for permanent accounting authority certifications 
within 60 days of the effective date. Others seeking certification may 
submit their applications at any time following the release date. They 
cannot usurp those requesting ``grandfathering'' but they will be 
considered on a first-come, first-served basis for the remaining codes.
    29. Comments. Radio Holland recommended the retention of their 
existing accounting authority identification code for interim 
accounting authorities approved for a permanent ``license.'' Further, 
Radio Holland seeks clarification of the term ``entity''.
    Response. The Commission believes the implementation of these rules 
should make little disruption to the manner in which interim accounting 
authorities are currently conducting business. Title 47 CFR, Part 3, 
section 3.22 is amended to state that those interim accounting 
authorities approved for permanent certification will retain their 
existing accounting authority identification code.
    In addressing the request to define ``entity'', the following 
definition is provided: An entity is an individual or a business that 
is self-contained, separate and independent of other organizations. An 
entity may exist within or be a part of an overall, widely diversified 
organization.
    30. Comments. Radio Holland pointed out their perceived 
consequences if an application for an accounting authority with interim 
certification was not approved. They pointed out that communications 
from/to vessels would cease and a change in code might involve huge 
costs. Radio Holland stated that certain countries mention the 
accounting authority identification code on their registrations and 
that, changes can cost up to $500 per vessel. Radio Holland proposed, 
in case of non-approval, the Commission extend the period to include 
time for resolution of problems including a 6-month period to satisfy 
requirements. SAIT Communications (SAIT) recommended a procedure for 
resolution of problems before a final decision. In reply comments, 
EXXON agreed with SAIT that the rules should provide procedures for 
appeal. IDB disagreed, in reply comments, with Radio Holland's proposal 
of additional time to meet the requirements and proposed ``the 
Commission only consider * * * applicants which meet the requirements 
at the time of application and that the Commission subject every 
applicant to the same level of scrutiny.'' In reply comments, COMSAT 
Corporation agreed with commenters requesting a clarification of the 
process for evaluating applications and the appeal rights of applicants 
denied certification. Further, COMSAT proposed a ``thirty-day petition 
to deny process for reviewing * * *.''
    Response. The Commission recognizes the consequences of not 
approving a permanent certification to an interim accounting authority. 
However, we anticipate that interim accounting authorities will have no 
problem completing the application process. Inasmuch as possible, we 
propose to work through these situations during the comment period to 
prevent unusual delays. 47 CFR, Part 3, section 3.29 is amended in the 
Report and Order to provide procedures for seeking review when the 
application for certification is denied. We do emphasize, however, that 
all comments resulting from the public notice will be

[[Page 20161]]

considered in granting/denying certifications.
    31. Comments. Mackay raised the issue of continued use of an 
accounting authority identification code if a business is acquired, 
merged or sold. Radio Holland proposed that codes not be canceled 
automatically in case of transfer or change of control of an accounting 
authority. Radio Holland is concerned that the new application of the 
new controlling entity might not be considered due to the ``first come-
first served'' clause and the limitation of total codes. In reply 
comments, COMSAT supported commenters who propose a modification of the 
rule to permit the transfer of accounting authority identification 
codes pursuant to the sale or transfer of control. EXXON recommended 
that the Commission develop procedures for the pro-forma transfer of 
control of accounting authorities.
    Response. The final rules adopted below will allow the continued 
use of accounting authority codes in these cases provided the new 
entity can meet the eligibility qualifications. 47 CFR Part 3, section 
3.51 is amended to require the transferee to comply with the same 
application process including public comment and Commission scrutiny 
that all applicants do. The rules also require the transferee to 
certify to the Commission that all accounts are accepted and to provide 
a list of the accounts. In the case of a merger of accounting 
authorities, the merged entity will be allowed to decide which AAIC to 
keep.
    32. Comments. Mackay stated the Commission should define what 
constitutes sound financial status and how the status will be monitored 
in the future. Mackay suggested requiring the applicant to be a 
business with established accounting procedures and formal audited 
statements. Radio Holland recommended that a sound financial track 
record be made a mandatory requirement. Marconi Marine asks if a copy 
of their statutory accounts would be acceptable as evidence of 
financial status. COMSAT recommended fairly strict financial 
requirements and offered several options: (1) requiring a bond, (2) 
requiring accounting authorities to demonstrate and maintain an asset 
value of a certain percentage in relation to outstanding debts, (3) 
requiring accounting authorities to put deposits in escrow, (4) dollar 
requirements for cash-on-hand amounts, (5) limits on the number of 
outstanding loans and the amount of risk undertaken, and/or (6) 
requiring accounting authorities to take deposits from customers under 
certain circumstances. COMSAT further recommended the rules be revised 
to require the initial (and annual) submission of independently 
``audited financial statements'' and cite requirements in the rural 
cellular radio services (47 CFR 22.917(c)(6)). EXXON commented that a 
formal financial showing should not be required of accounting 
authorities with interim authority during the ``grandfathering'' 
process and, in reply comments, EXXON disagreed with COMSAT's proposal 
for stricter financial requirements for accounting authorities. Global 
Communications (Global) recommended accounting authorities require a 
deposit from vessels to be placed in an escrow account to assure some 
company reserve in case of default.
    Response. The Commission is interested in ensuring that accounting 
authorities have a sound financial background with a reputation for 
good business practices. Any comments received following the public 
notice announcing the application will be carefully considered. 
However, we believe our objective can be met by requiring formal 
financial statements from applicants who are business entities and 
other documents, e.g., tax statements, statements proving assets and 
liabilities from individuals. These, coupled with any forthcoming 
comments, will provide adequate information for making a sound 
decision. Marconi Marine's statutory accounts will probably be adequate 
to prove financial responsibility. However, 47 CFR, section 3.24 is 
amended in the final rule to include a requirement to provide 
additional information to the Commission, as required. As to whether 
accounting authorities who will be grandfathered should provide 
financial responsibility evidence, as stated elsewhere, the interim 
accounting authorities, although not subject to any formal FCC rules in 
the past, must now prove their eligibility by complying with the 
application process.
    33. Comments. Mackay asked what method will be used to obtain 
public comment and who will evaluate the comments. Mackay is concerned 
that significant time and money could be spent while responding to 
unsubstantiated comments or accusations. COMSAT requested that 
applicants ``be subject to petitions to deny filed within 30 days of 
the public notice identifying the applicant. Radio Holland recommended 
consideration of consultation with selected U.S. coast stations and 
foreign administrations involved in international telecommunication 
settlements in assessing the qualifications and actual performance of 
applicants. In reply comments, COMSAT supported Radio Holland's comment 
``that the Commission consider foreign-based applicant's record in 
dealing with U.S. service providers.''
    Response. The public notice/comment process is discussed in Part 3, 
section 3.29 of the final rule. The comments and application will be 
evaluated by Commission employees designated by the Managing Director 
and including the Accounting Authority Certification Officer. As to 
whether consultations with U.S. service providers will be necessary, 
these organizations will have an opportunity to comment as discussed in 
the same rule cite.

C. Settlement Operations

    34. The NPRM proposed several operational requirements for 
accounting authorities. Basically, the operational requirements 
parallel applicable ITR and other international rules, regulations, 
agreements, and applicable ITU-T Recommendations and require adherence 
to established international procedures. The NPRM proposed that 
accounting authorities be allowed a full six months following 
certification as an accounting authority to commence settlement 
operations. The NPRM also proposed a settlement period within which 
individual settlements must be accomplished, consistent with ITU 
procedures. This provision requires accounting authorities to make 
timely payment to foreign administrations and to accept accounts both 
in gold francs and in Special Drawing Rights (SDRs). The proposed rules 
are in accord with existing international procedure and FCC policy, as 
is the requirement to settle accounts taking into consideration ITU-T 
Recommendation D.90.<SUP>* In addition, the NPRM proposed rules to 
establish the requirement that accounting authorities cooperate fully 
with the Commission concerning maritime settlements issues. Since the 
United States government is required, upon request, to take all 
possible steps, within the limits of applicable national law, to ensure 
settlement of the accounts of the licensee, (Radio Regulations, Geneva 
1979, Article 66, Section III Accounting, paragraph 10, number 5097; 
and, International

[[Page 20162]]

Telecommunication Regulations, Melbourne 1988, Appendix 2--Additional 
Provisions Relating to Maritime Telecommunications, paragraph 4.2) this 
requirement is intended to ensure that the Commission is kept aware of 
potential problems or issues which could affect the national interest 
or which could have a significant impact on overall settlement 
operations. The proposed rules also made accounting authorities subject 
to audit by the Commission or its representative.
---------------------------------------------------------------------------

    \*\ We note that the latest (ITU-T Study Group 3, December 1994) 
accepted version of ITU-T Recommendation D.90 provides that bills be 
paid by the accounting authority without delay and within 3 months 
of receipt or within 4 months after dispatch, whichever is the 
shortest period. However, the Revised Rec. D.90 also recognizes that 
the ITR period of 6 months after dispatch is controlling.
---------------------------------------------------------------------------

    35. Comments. One commenter, Global, responded both as an 
accounting authority and a radiotelephone station. Global recommended 
providing detailed requirements for the day-to-day operation of 
accounting authorities. They commented that detailed rules would 
eliminate confusion in identifying accounts, promote the dissemination 
of mutual information and the timeliness of settlements and produce 
better records and internal accounting. Global recommended requiring 
accounting authorities with more than 100 vessels to maintain an 
``800'' number 24 hours a day that coast stations can call for 
information. They further stated that accounting authorities should 
acknowledge receipt of invoices, should notify coast stations of 
rejections within 30 days and clearly identify invoices being paid. 
When invoices are paid by bank draft, a separate notice should be sent 
to coast stations detailing the paid invoices.
    Response. Global's recommendations are good, sound business 
practices which we hope accounting authorities will consider. However, 
the final rules do not provide detailed requirements for day-to-day 
operation because the Commission believes that organizations should not 
be limited in methodology as long as they achieve timely and accurate 
settlements.
    36. Comments. Marconi Marine referred to rules in the NPRM stating 
that payments should be made in U.S. dollars. They stated that most of 
their payments are made in Sterling.
    Response. The final rules, Part 3, sections 3.46 and 3.47, provide 
for payment in other currencies. However, it should be noted that, 
although payments can be made in currency other than U.S. dollars, the 
rules require a written agreement between the foreign administration(s) 
and the accounting authority to be approved by the Commission. This 
agreement can be a part of the original certification process or it can 
be presented to the Commission at anytime.
    37. Comments. COMSAT suggested the consideration of permitting 
maritime customers to select direct billing payment methods from their 
service providers. COMSAT further states that, although Article 66 
provides for collection of charges for radiocommunications by RPOAs, 
that, ``in order for RPOAs to settle accounts with foreign 
administrations on behalf of their customers, the Commission requires 
that the service provider be certified as an accounting authority.''
    Response. There is no legal bar preventing service providers from 
engaging in direct billing. (Radio Regulations, Geneva 1979, Article 
66, Section II, Accounting Authority, para. 2, numbers 5086-5089; see 
also ITR, Appendix 2) Neither do we believe the adopted rules contain 
language that prevent a service provider from entering into contractual 
agreements with their clients to include direct billing. The issue of 
requiring RPOAs to become accounting authorities arises when the RPOA 
settles debtor accounts for their clients.
    38. Comments. Peninsular Electronics (Peninsular) commented that 
most ship licensing administrations for which they are an accounting 
authority require them to confirm acceptance of total accounting 
responsibilities before they issue the Ship Radio Station license. 
Their services cover settlement of all communications originated by 
clients. They stated that the proposed rules only refer to settlement 
with foreign administrations. Peninsular asks if U.S. settlements are 
also covered by FCC regulations.
    Response. These rules apply to settlements of accounts for U.S. 
flag vessels for messages transmitted via foreign coast and coast earth 
station facilities only. The final rules are amended, at 3.1 to explain 
``[Accounting authorities] settle accounts due foreign administrations 
for messages transmitted at sea by or between maritime mobile stations 
located on board ships subject to U.S. registry and utilizing foreign 
coast and coast earth station facilities.''
    39. Comments. MMR commented that they were instrumental in 
establishing the current 4-month settlement time frame, they are a 
strong advocate for reducing the settlement time frame and they suggest 
that settlements not handled within the allotted time frame should have 
interest penalties applied and enforced. COMSAT Corporation urged the 
Commission to ``consider expediting the settlement procedures down to 
four months, or shorter * * *'' In reply comments, IDB recommended a 
three-month settlement period and referred to the NPRM which requires a 
6-month settlement period. In reply comments, COMSAT agreed with MMR 
that accounting authorities who do not make timely settlements should 
be assessed an interest penalty by the Commission.
    Response. The Commission recognizes that many organizations have 
up-to-date technology and can effect settlements well ahead of the 6-
month settlement period. This can be an advantage in soliciting 
clients; however, it is not our intention to place additional burdens 
on existing accounting authorities but to provide a structure within 
which they can continue to function. The final rules do not adopt a 
requirement that is more stringent than Radio Regulations, Article 66, 
and ITR, Appendix 2 which require a 6-month settlement period (See note 
to paragraph 34, above.). As to the issue of interest penalties, we 
will not impose such a rule; however, the rules in 47 CFR, Part 3 
establish a number of sanctions including cancellation of their 
certification for those accounting authorities who repeatedly fail to 
settle accounts timely.
    40. Comments. Mackay commented that the Commission should be more 
specific regarding the extent, time and scope of proposed audits. 
Marconi Marine commented that they do not see the necessity for audit 
since they are regularly audited internally and externally. COMSAT 
requested clarification of audit authority to describe events that 
could ``trigger the audit process.''
    Response. Routine audits are not a part of this rulemaking, rather, 
an audit would normally be precipitated only in the event of a 
disagreement as to amounts of accounts, late payments, etc. The audits 
will be strictly related to accounting authority activities.
    41. Comments. Peninsular pointed out that the NPRM states that ITU-
T recommendations are not legally binding, but it is indicated they 
must be taken into account together with FCC rules and regulations. 
Peninsular further commented that it is not clear whether compliance 
with D.90 is an FCC requirement or if parallel FCC rules exist. Marconi 
Marine expressed concern about references regarding ``abiding by FCC 
rules'' and commented that ``this seems somewhat open ended to us, as 
we do not know what rules we would be agreeing to abide by.'' Marconi 
recommended altering the wording of the text to reflect agreement to 
abide by rules relating to accounting authorities only.
    Response. The Commission believes that accounting authorities 
should follow the ITU-T recommendations which are generally considered 
to

[[Page 20163]]

govern international telecommunications, and they should always be 
considered in technical, operational and service decisions. Any 
references to FCC rules within this Report and Order refer to 47 CFR, 
Part 3, the new rules being established by this proceeding and related 
to the oversight and administration of accounting authorities. 47 CFR, 
Part 3, section 3.43(f) is amended to add the CFR reference.
    42. Comments. MMR commented there are presently no guidelines 
whereby accounting authorities can enlist assistance from its 
administration ``when conflicts arise between the provider and the 
accounting authority.'' In reply comments, COMSAT endorses MMR's 
suggestion for enlisting the Commission's assistance in attempting to 
resolve bad debt * * *''
    Response. The Commission believes that each administration has a 
responsibility to assist in resolving outstanding issues between 
accounting authorities and clients or foreign administrations. The 
Commission proposes to respond through all available methods to resolve 
issues and are prepared to follow through by enforcing applicable rules 
(Part 3, 3.52(b), 3.70-3.76).
    43. Comments. COMSAT commented that the rules should make it clear 
that the accounting authority is a guarantor of payment.
    Response. In the rules adopted below, the non-governmental 
accounting authorities, by virtue of their contractual agreement with 
their clients and their signed application wherein they agree to 
perform settlements in accordance with 47 CFR, Part 3, must perform 
their settlement activities properly or be subjected to a number of 
sanctions and/or cancellation of their certification.
    However, the Report and Order does not state that any accounting 
authority is a guarantor of payment. Rather, at Part 3, section 3.76, 
the ship station licensee is declared responsible for final payment of 
its accounts. Because the ship station licensee has the most to lose 
for non-payment of accounts, the Commission believes care will be given 
to the selection of an accounting authority.
    44. Comments. Marconi Marine recommends the rules define more 
clearly the complaint/inquiry resolution procedures and there should be 
a clearly defined arbitration procedure.
    Response. These rules, section 3.52, are purposely presented in 
general terms because we believe complaints and arguments must be 
addressed on a case-by-case basis. By leaving these rules ``general'' 
in tone, the Commission will be able to respond to issues without 
restrictions. We think this approach will be an advantage to applicants 
and/or accounting authorities. Section 3.52(a) is amended in the final 
rule to require that a copy of complaint/inquiry resolution procedures 
be sent, upon request, to the Commission.

D. Reporting Requirements

    45. The NPRM proposed several new reporting requirements for 
accounting authorities. These reports should enable the Commission to 
monitor accounting authority operations to ensure adherence to the 
adopted rules and to appropriate international settlement procedures. 
Currently, the Commission submits monthly reports to the ITU in Geneva 
detailing the inventory of U.S. licensed ship stations operating in 
international waters. The NPRM proposed that accounting authorities 
provide the Commission with a detailed report of additions, deletions, 
or modifications to their inventory of serviced vessels each month. The 
Commission would use this information to maintain the ITU database and 
to assure efficient settlement operations. The proposed rules also 
required an end of year inventory of vessels for which the accounting 
authority is the settlement entity and an annual statistical report 
which would provide information to the Commission regarding settlement 
operations.
    Comments will be addressed separately for each of the reports, as 
follows:

Annual Statistical Report of Operations

    46. Comments. Peninsular stated that their settlement operation 
does not require identifying the actual number of settlements and this 
information would not be readily available. They asked if the necessity 
for this information could be reexamined. Marconi Marine commented they 
would have difficulty providing both the number of line items and 
payments to individual administrations. MMR asked what purpose the 
collection of monetary statistics serves.
    Response. The Commission is delegating a portion of its settlement 
responsibility to the certified non-governmental accounting 
authorities. Our oversight responsibilities require that we ensure that 
settlements for U.S. licensees are being performed properly and timely. 
The information will assist us in monitoring the volume and aging of 
accounts. We have reviewed statements from foreign administrations and 
observe the billings have sufficient detail (a line-by-line listing of 
individual calls to a specific ship for a specific service) to comply 
with this requirement. Therefore, the final rule will require 
accounting authorities to comply with this reporting requirement.
    47. Comments. COMSAT recommended modifying the rules to require 
additional evidence of financial responsibility and recommended 
quarterly statistical reports filed within one month of the end of each 
quarter, showing an aging of liabilities. In reply comments, EXXON 
opposed the proposals to require the annual reports on a quarterly 
basis. EXXON further commented that if the report is required, it 
should apply to accounting authorities settling for unaffiliated 
entities and on an annual basis only. In reply comments, AIMS supported 
EXXON's proposal that the reporting requirement apply only to 
accounting authorities settling accounts for unaffiliated entities. In 
reply comments, COMSAT supported ``the adoption of streamlined 
reporting requirements which provide the Commission and the public with 
an accurate * * * mechanism for monitoring the aging of accounts and 
assessing the financial performance of accounting authorities.'' COMSAT 
opposed any limitation of the annual statistical report and commented 
that the report can be used to assess the accounting authority's 
settlement performance, determine whether the accounting authority is 
meeting its obligations to customers and service providers * * *''
    Response. The Commission will retain the reporting requirement and 
believes the usefulness of the information outweighs our desire to 
minimize the burden of reporting. The NPRM, Part 3, 3.60(d) states that 
the information will provide statistical data for Commission use. 
Subsequently, we have determined that the data can be useful in 
determining whether accounting authorities are performing settlements, 
the volume of settlements and the timeliness of settlements. The 
report, FCC Form 45 states ``provide statistical information to the 
Commission for overall program monitoring purposes.'' Lines 2, 3, and 4 
referenced by Peninsular address the average number of unprocessed 
settlements on hand, the number processed to completion more than 180 
days after dispatch from foreign administration and the percent of 
settlements processed to completion more than 180 days after dispatch. 
This information will be helpful in determining whether settlements are 
being accomplished timely. Rule section 3.60 (d) is amended to include 
the additional uses of the report.

[[Page 20164]]

Inventory of Vessels

    48. Comments. MMR questioned the proposed requirement to report an 
inventory of vessels. MMR believes this information is available 
through the Private Radio Bureau's Licensing Division. Global, who is 
both an accounting authority and a high-seas radiotelephone station, 
cited the difficulty in using ITU's List of Ship Stations, saying it is 
published once a year and is often out of date because of delays in 
reporting changes to ITU.
    Response. As background, the Commission/ITS has a responsibility to 
provide a report of accounting authority information to ITU. ITS has 
experienced the same problems that Global has in identifying the 
accounting authorities of vessels. This reporting is accomplished in 
the following manner: The Wireless Telecommunications Bureau maintains 
a database of ships in the maritime service. That database is used to 
prepare a report of changes in accounting authority functions to ITU, 
however, the database can only be updated by ITS when current 
information becomes available. By requiring accounting authorities to 
provide the initial inventory of vessels and the end-of-year inventory, 
the List of Ship Stations Report will provide more accurate, up-to-date 
information. Additionally, the title of Part 3, section 3.60(a) is 
changed to ``Initial Inventory of Vessels.''

Report of Additions/Modifications/Deletions

    49. Comments. EXXON stated that they settle only for their own 
vessels and their inventory remains relatively constant and a monthly 
report would serve no useful purpose and be unduly burdensome. In reply 
comments, AIMS agreed with commenters who feel it is unnecessary to 
require monthly inventories when there is no change. COMSAT agreed with 
EXXON regarding the modification of inventory reporting so that only 
commercial accounting authorities are required to submit monthly 
inventory reports. Global recommended that accounting authorities 
should publish lists of ships accepted quarterly or monthly.
    Response. We have considered the requests for a less burdensome 
requirement. Part 3, section 3.60(b) is revised to require a semi-
annual report. However, we believe there is merit in requiring a ``no-
change'' report, as applicable. The report will assure a ``status-quo'' 
in inventory.
    50. Comments. Marconi Marine stated that some information reported 
would be commercially sensitive and should be kept confidential.
    Response. The rules adopted below do not automatically offer 
confidentiality because we do not believe that the information 
requested is commercially sensitive. The application form states that 
``Information requested by this form will be available to the public.'' 
Nonetheless, any entity submitting information to the Commission may 
submit a request that such information not be made routinely available 
for public inspection. We will consider requests as discussed in 47 
CFR, section 0.459. A new rule section, Part 3, section 3.62, addresses 
this issue.

E. Enforcement

    51.The NPRM set forth the procedures the Commission will use to 
investigate and to resolve complaints or infractions of the 
Commission's rules or established international settlement procedures. 
The proposed rules specified grounds for enforcement sanctions, 
including forfeiture, and/or cancellation of an accounting authority's 
certification and also specified that the Commission will afford an 
accounting authority notice and an opportunity to present its side of 
any issue involving cancellation of its accounting authority privilege. 
The proposed rules also provide that any ship station licensee affected 
by the cancellation of an accounting authority's privilege must find 
another accounting authority to settle its accounts. The Commission 
will notify the ship stations, via a Public Notice, of any 
cancellations, and, inasmuch as possible, list individual shipowners 
serviced by the cancelled accounting authority as identified from the 
required reports of vessel inventories. Finally, the proposed rules 
provided for forfeiture or other sanction action, should a ship 
operator or licensee not remit full and timely payment to the 
Commission or to an approved accounting authority when properly billed 
or in the event that the accounting authority fails in their 
responsibility to forward payment to the foreign entity. The Commission 
reserves the right to cooperate with foreign administrations in 
restricting public correspondence communications to and from vessels 
for which valid payments have not been received or made as required 
(Distress and safety communications must be carried without charge.) 
and to utilize available debt collection procedures to collect amounts 
owed.
    52. Comments. Mackay stated that there is no mention of a procedure 
to be followed or the opportunity for appeal if the Commission denies 
privilege, Part 3, section 3.28, [and] further, Mackay commented that a 
procedure and appeal process should be available under a rule section.
    Response. Part 3, section 3.29 is amended in the final rule to 
provide time frames for problems encountered during the application 
process. Every effort will be made to remedy any problems during the 
timeframes. As to any format for appeal, we are purposely presenting 
this rule section in general terms only because we believe these 
situations would need to be addressed on a case-by-case basis. Part 3, 
section 3.72(b) is also amended in the final rule to include timeframes 
for appeal of sanctions and to include the address for filing an 
appeal.
    53. Comments. COMSAT urged the Commission to clarify that U.S. 
approved accounting authorities may be sanctioned by the Commission for 
failing to perform settlement operations here, or abroad, involving 
either U.S.-registered or foreign vessels.
    Response. The rules adopted below address settlement of accounts of 
U.S. ship station licensees and do not address the settlement of 
foreign vessels.

F. Conclusion

    54. In this Report and Order, we are adopting rules that establish 
basic qualifications and requirements for individuals or entities who 
may wish to serve as accounting authorities for the settlement of 
international radio maritime accounts involving U.S. registered vessels 
operating in foreign or international waters. These rules also 
establish requirements to ensure that accounting authorities operate in 
accordance with established international procedures. There are few 
changes in this final rule from the related Notice of Proposed 
Rulemaking. All comments and changes are discussed in III, Issues 
Analysis, paragraphs 13-53.

IV. Procedural Matters

A. Ex Parte

    55. This is a non-restricted Report and Order rulemaking 
proceeding. Ex parte presentations are permitted, except during the 
Sunshine Agenda period, provided they are disclosed as provided in 
Commission rules. See generally 47 CFR Sections 1.1202, 1.1203, and 
1.1206(a).

B. Final Regulatory Analysis

    56. Pursuant to the Regulatory Flexibility Act of 1980, the 
Commission's final analysis is as follows:
    (a) Purpose of this action: This Report and Order sets forth the 
final rules

[[Page 20165]]

concerning the administration of accounting authorities in the maritime 
mobile and the maritime mobile-satellite services except for distress 
and safety communications.
    (b) Summary of the issues raised by the public comments in response 
to the Initial Regulatory Flexibility analysis: There were no comments 
submitted in response to the Initial Regulatory Flexibility Analysis.
    (c) Significant alternatives considered: The Notice of Proposed 
Rulemaking (November 9, 1993) in this proceeding presented standards 
for the approval/cancellation of accounting authority certifications 
and set forth guidelines for settlement operations, reporting 
requirements and enforcement. The commenters supported the Commission's 
intent to provide an effective regulatory framework which permits 
markets for communications services to function effectively while 
eliminating unnecessary regulations. There were several requests for 
more stringent guidelines. Upon review, we determined the public 
interest would be better served by allowing accounting authorities to 
perform settlements in an environment that allows them to operate as 
closely as possible to the manner in which interim accounting 
authorities have performed in previous years. Because the system has 
worked relatively trouble-free with no established FCC rules in the 
past, we intend to minimize any regulations/additional burden on 
accounting authorities in this Order.

V. Ordering Clauses

    57. Accordingly, it is ordered that the rules specified below are 
adopted.
    58. It is further ordered that the rules herein will be effective 
immediately upon approval of the information collection requirements by 
the Office of Management and Budget. The Commission will publish a 
public notice to notify the public of the effective date.

List of Subjects in 47 CFR Part 3

    Accounting, Administrative practice and procedure, maritime 
carriers, Penalties, Reporting and recordkeeping requirements, 
Telecommunications.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Rule Changes

    Title 47 of the Code of Federal Regulations is amended by adding a 
new Part 3 as follows:

PART 3--AUTHORIZATION AND ADMINISTRATION OF ACCOUNTING AUTHORITIES 
IN MARITIME AND MARITIME MOBILE-SATELLITE RADIO SERVICES

General

Sec.
3.1  Scope, basis, purpose.
3.2  Terms and definitions.

Eligibility

3.10  Basic qualifications.
3.11  Location of settlement operation.

Application Procedures

3.20  Application form.
3.21  Order of consideration.
3.22  Number of accounting authority identification codes per 
applicant.
3.23  Legal applicant.
3.24  Evidence of financial responsibility.
3.25  Number of copies.
3.26  Where application is to be mailed.
3.27  Amended application.
3.28  Denial of privilege.
3.29  Notifications.

Settlement Operations

3.40  Operational requirements.
3.41  Amount of time allowed before initial settlements.
3.42  Location of processing facility.
3.43  Applicable rules and regulations.
3.44  Time to achieve settlements.
3.45  Amount of charges.
3.46  Use of gold francs.
3.47  Use of SDRs.
3.48  Cooperation with the Commission.
3.49  Agreement to be audited.
3.50  Retention of settlement records.
3.51  Cessation of operations.
3.52  Complaint/inquiry resolution procedures.
3.53  FCC notification of refusal to provide telecommunications 
service to U.S. registered vessel(s).
3.54  Notification of change in address.

Reporting Requirements

3.60  Reports.
3.61  Reporting address.
3.62  Request for confidentiality.

Enforcement

3.70  Investigations.
3.71  Warnings.
3.72  Grounds for further enforcement action.
3.73  Waiting period after cancellation.
3.74  Ship stations affected by suspension, cancellation or 
relinquishment.
3.75  Licensee's failure to make timely payment.
3.76  Licensee's liability for payment.

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

General


Sec. 3.1  Scope, basis, purpose.

    By these rules the Federal Communications Commission (FCC) is 
delineating its responsibilities in certifying and monitoring 
accounting authorities in the maritime mobile and maritime mobile-
satellite radio services. These entities settle accounts for public 
correspondence due to foreign administrations for messages transmitted 
at sea by or between maritime mobile stations located on board ships 
subject to U.S. registry and utilizing foreign coast and coast earth 
station facilities. These rules are intended to ensure that settlements 
of accounts for U.S. licensed ship radio stations are conducted in 
accordance with the International Telecommunication Regulations (ITR), 
taking into account the applicable ITU-T Recommendations.


Sec. 3.2  Terms and definitions.

    (a) Accounting Authority. The Administration of the country that 
has issued the license for a mobile station or the recognized operating 
agency or other entity/entities designated by the Administration in 
accordance with ITR, Appendix 2 and ITU-T Recommendation D.90 to whom 
maritime accounts in respect of mobile stations licensed by that 
country may be sent.
    (b) Accounting Authority Certification Officer. The official 
designated by the Managing Director, Federal Communications Commission, 
who is responsible, based on the coordination and review of information 
related to applicants, for granting certification as an accounting 
authority in the maritime mobile and maritime mobile-satellite radio 
services. The Accounting Authority Certification Officer may initiate 
action to suspend or cancel an accounting authority certification if it 
is determined to be in the public's best interest.
    (c) Accounting Authority Identification Codes (AAICs). The discrete 
identification code of an accounting authority responsible for the 
settlement of maritime accounts (Annex A to ITU-T Recommendation D.90).
    (d) Administration. Any governmental department or service 
responsible for discharging the obligations undertaken in the 
Convention of the International Telecommunication Union and the Radio 
Regulations. For purposes of these rules, ``Administration'' refers to 
a foreign government or the U.S. Government, and more specifically, to 
the Federal Communications Commission.
    (e) Authorization. Approval by the Federal Communications 
Commission to operate as an accounting authority. Synonymous with 
``certification''.
    (f) CCITT. The internationally recognized French acronym for the 
International Telegraph and Telephone Consultative Committee, one of 
the

[[Page 20166]]

former sub-entities of the International Telecommunication Union (ITU). 
The CCITT (ITU-T)\1\ is responsible for developing international 
telecommunications recommendations relating to standardization of 
international telecommunications services and facilities, including 
matters related to international charging and accounting principles and 
the settlement of international telecommunications accounts.
---------------------------------------------------------------------------

    \1\ At the ITU Additional Plenipotentiary Conference in Geneva 
(December, 1992), the structure, working methods and construct of 
the basic ITU treaty instrument were modified. The result is that 
the names of the sub-entities of the ITU have changed (e.g., the 
CCITT has become the Telecommunication Standardization Sector--ITU-T 
and Recognized Private Operating Agency has become Recognized 
Operating Agency-ROA). The changes were placed into provisional 
effect on March 1, 1993 with the formal entry into force of these 
changes being July 1, 1994. We will refer to the new nomenclatures 
within these rules, wherever practicable.
---------------------------------------------------------------------------

    Such recommendations are, effectively, the detailed implementation 
provisions for topics addressed in the International Telecommunication 
Regulations (ITR).
    (g) Certification. Approval by the FCC to operate as an accounting 
authority. Synonymous with ``authorization''.
    (h) Coast Earth Station. An earth station in the fixed-satellite 
service or, in some cases, in the maritime mobile-satellite service, 
located at a specified fixed point on land to provide a feeder link for 
the maritime mobile-satellite service.
    (i) Coast Station. A land station in the maritime mobile service.
    (j) Commission. The Federal Communications Commission. The FCC.
    (k) Gold Franc. A monetary unit representing the value of a 
particular nation's currency to a gold par value. One of the monetary 
units used to effect accounting settlements in the maritime mobile and 
the maritime mobile-satellite services.
    (l) International Telecommunication Union (ITU). One of the United 
Nations family organizations headquartered in Geneva, Switzerland along 
with several other United Nations (UN) family organizations. The ITU is 
the UN agency responsible for all matters related to international 
telecommunications. The ITU has over 180 Member Countries, including 
the United States, and provides an international forum for dealing with 
all aspects of international telecommunications, including radio, 
telecom services and telecom facilities.
    (m) Linking Coefficient. The ITU mandated conversion factor used to 
convert gold francs to Special Drawing Rights (SDRs). Among other 
things, it is used to perform accounting settlements in the maritime 
mobile and the maritime mobile-satellite services.
    (n) Maritime Mobile Service. A mobile service between coast 
stations and ship stations, or between ship stations, or between 
associated on-board communication stations. Survival craft stations and 
emergency position- indicating radiobeacon stations may also 
participate in this service.
    (o) Maritime Mobile-Satellite Service. A mobile-satellite service 
in which mobile earth stations are located on board ships. Survival 
craft stations and emergency position-indicating radiobeacon stations 
may also participate in this radio service.
    (p) Public Correspondence. Any telecommunication which the offices 
and stations must, by reason of their being at the disposal of the 
public, accept for transmission. This usually applies to maritime 
mobile and maritime mobile-satellite stations.
    (q) Recognized Operating Agencies (ROAs).\2\ Individuals, companies 
or corporations, other than governments or agencies, recognized by 
administrations, which operate telecommunications installations or 
provide telecommunications services intended for international use or 
which are capable of causing interference to international 
telecommunications. ROAs which settle debtor accounts for public 
correspondence in the maritime mobile and maritime mobile-satellite 
radio services must be certified as accounting authorities.
---------------------------------------------------------------------------

    \2\ Id.
---------------------------------------------------------------------------

    (r) Ship Station. A mobile station in the maritime mobile service 
located on board a vessel which is not permanently moored, other than a 
survival craft station.
    (s) Special Drawing Right (SDR). A monetary unit of the 
International Monetary Fund (IMF) currently based on a market basket of 
exchange rates for the United States, West Germany, Great Britain, 
France and Japan but is subject to IMF's definition. One of the 
monetary units used to effect accounting settlements in the maritime 
mobile and maritime mobile-satellite services.
    (t) United States. The continental U.S., Alaska, Hawaii, the 
Commonwealth of Puerto Rico, the Virgin Islands or any territory or 
possession of the United States.

Eligibility


Sec. 3.10  Basic qualifications.

    (a) Applicants must meet the requirements and conditions contained 
in these rules in order to be certified as an accounting authority. No 
individual or other entity, including accounting authorities approved 
by other administrations, may act as a United States accounting 
authority and settle accounts of U.S. licensed vessels in the maritime 
mobile or maritime mobile-satellite services without a certification 
from the Federal Communications Commission. Accounting authorities with 
interim certification as of the effective date of this rule must submit 
to the application process discussed in Section 3.20. They will be 
``grandfathered'', i.e, granted permanent certification provided they 
demonstrate their eligibility and present a proper application.
    (b) U.S. citizenship is not required of individuals in order to 
receive certification from the Commission to be an accounting 
authority. Likewise, joint ventures need not be organized under the 
laws of the United States in order to be eligible to perform 
settlements for U.S. licensed vessels. See, however, Section 3.11.
    (c) Prior experience in maritime accounting, general commercial 
accounting, international shipping or any other related endeavor will 
be taken into consideration by the Commission in certifying accounting 
authorities. The lack of such expertise, however, will not 
automatically disqualify an individual, partnership, corporation or 
other entity from becoming an accounting authority.
    (d) Applicants must provide formal financial statements or 
documentation proving all assets, liabilities, income and expenses.
    (e) Applicants must be willing to offer their services to the 
public at a reasonable charge. This requirement will be waived for 
applicants who settle their own accounts only and are eligible to be 
``grandfathered'' during the initial application period. However, 
should the need for additional accounting authorities be proven, these 
accounting authorities will be required to offer their services to the 
public or relinquish their certification.


Sec. 3.11  Location of settlement operation.

    (a) Within the United States. A certified accounting authority 
maintaining all settlement operations, as well as associated 
documentation, within the United States will be assigned an AAIC with a 
``US'' prefix.
    (b) Outside the United States. A certified accounting authority 
maintaining settlement operations outside the United States will be 
assigned the same AAIC as that originally assigned to such entity by 
the administration of the country of origin. However, in no case will 
an entity be

[[Page 20167]]

certified as an accounting authority for settlement of U.S. licensed 
vessel accounts unless the entity is requesting to conduct a settlement 
operation in the United States or has already been issued an AAIC by 
another administration.

Application Procedures


Sec. 3.20  Application form.

    Written application must be made to the Federal Communications 
Commission on FCC Form 44, ``Application For Certification As An 
Accounting Authority'' in order to be considered for certification as 
an accounting authority. No other application form may be used. No 
consideration will be given to applicants not submitting applications 
in accordance with these rules or in accordance with any other 
instructions the Commission may issue. FCC Form 44 may be obtained from 
the Commission by writing to the address shown in Section 3.61.


Sec. 3.21  Order of consideration.

    (a) Accounting Authority applications will be processed on a first-
come, first-served basis. When applications are received on the same 
day, the application with the earliest mailing date, as evidenced by 
the postmark, will be processed first. Interim accounting authorities 
seeking permanent certifications through the ``grandfathering'' process 
will not compete with other applicants during the first 60 days 
following the effective date of these rules which is allowed for 
submission of their applications. After the ``grandfathering'' process 
is completed, all other applicants will be processed as in paragraph 
(a) of this section.
    (b) At any given time, there will be no more than 25 certified 
accounting authorities with a minimum of 15 ``US'' AAICs reserved for 
use by accounting authorities conducting settlement operations within 
the United States. The Commission will retain all valid applications 
received after the maximum number of accounting authorities have been 
approved and will inform such applicants that should an AAIC become 
available for reassignment in the future, the Commission will 
conditionally certify as an accounting authority the oldest of the 
qualified pending applicants, as determined by the order of receipt. 
Final certification would be conditional upon filing of an amended 
application (if necessary). The Commission will inform the applicant of 
his/her conditional selection in writing to confirm the applicant's 
continued interest in becoming an accounting authority.


Sec. 3.22  Number of accounting authority identification codes per 
applicant.

    (a) No entity will be entitled to or assigned more than one AAIC.
    (b) AAICs may not be reassigned, sold, bartered or transferred and 
do not convey upon sale or absorption of a company or firm without the 
express written approval of the Commission. Only the FCC may certify 
accounting authorities and assign U.S. AAICs for entities settling 
accounts of U.S. licensed vessels in the maritime mobile and maritime 
mobile-satellite services.
    (c) Accounting authorities who are ``grandfathered'' during the 
initial application period may retain their interim AAIC.


Sec. 3.23  Legal applicant.

    The application shall be signed by the individual, partner or 
primary officer of a corporation who is legally able to obligate the 
entity for which he or she is a representative.


Sec. 3.24  Evidence of financial responsibility.

    All applicants must provide evidence of sound financial status. To 
the extent that the applicant is a business, formal financial 
statements will be required. Other applicants may submit documentation 
proving all assets, liabilities, income and expenses which supports 
their ability to meet their personal obligations. Applicants must 
provide any additional information deemed necessary by the Commission.


Sec. 3.25  Number of copies.

    One original and one copy of FCC Form 44, ``Application For 
Certification As An Accounting Authority'' will be required. Only 
applications mailed to the Commission on official, Commission approved 
application forms will be considered. Applications should be mailed at 
least 90 days prior to planned commencement of settlement activities to 
allow time for the Commission to review the application and to allow 
for the informal public comment period.


Sec. 3.26  Where application is to be mailed.

    All applications shall be mailed to the Accounting Authority 
Certification Officer in Washington, D.C. The designated address will 
be provided on the FCC Form 44, ``Application for Certification As An 
Accounting Authority''.


Sec. 3.27  Amended application.

    Changes in circumstances that cause information previously supplied 
to the FCC to be incorrect or incomplete and that could affect the 
approval process, require the submission of an amended application. The 
amended application should be mailed to the Commission immediately 
following such change. See also Sections 3.24 and 3.51.


Sec. 3.28  Denial of privilege.

    (a) The Commission, in its sole discretion, may refuse to grant an 
application to become an accounting authority for any of the following 
reasons:
    (1) Failure to provide evidence of acceptable financial 
responsibility;
    (2) If the applicant, in the opinion of the FCC reviewing official, 
does not possess the qualifications necessary to the proper functioning 
of an accounting authority;
    (3) Application is not personally signed by the proper official(s);
    (4) Applicant does not provide evidence that accounting operations 
will take place in the United States or its territories and the 
applicant does not already possess an AAIC issued by another 
administration;
    (5) Application is incomplete, the applicant fails to provide 
additional information requested by the Commission or the applicant 
indicates that it cannot meet a particular provision; or
    (6) When the Commission determines that the grant of an 
authorization is contrary to the public interest.
    (b) These rules provide sufficient latitude to address defects in 
applications. Entities seeking review should follow procedures set 
forth in Sections 1.106 or 1.115 of this chapter.


Sec. 3.29  Notifications.

    (a) The Commission will publish the name of an applicant in a 
Public Notice before granting certification and will invite informal 
public comment on the qualifications of the applicant from any 
interested parties. Comments received will be taken into consideration 
by the Commission in making its determination as to whether to approve 
an applicant as an accounting authority. Thirty days will be allowed 
for submission of comments.
    (b) The Commission will notify each applicant in writing as to 
whether the applicant has been approved as an accounting authority. If 
the application is not approved, the Commission will provide a brief 
statement of the grounds for denial.
    (c) The names and addresses of all newly certified accounting 
authorities will be published in a Public Notice issued by the 
Commission. Additionally, the Commission will notify the ITU within 30 
days of any changes to its approved list of accounting authorities.

[[Page 20168]]

Settlement Operations


Sec. 3.40  Operational requirements.

    All accounting authorities must conduct their operations in 
conformance with the provisions contained in this section and with 
relevant rules and guidance issued from time to time by the Commission.


Sec. 3.41  Amount of time allowed before initial settlements.

    An accounting authority must begin settling accounts no later than 
six months from the date of certification. Failure to commence 
settlement operations is cause for suspension or cancellation of an 
accounting authority certification.


Sec. 3.42  Location of processing facility.

    Settlement of maritime mobile and maritime mobile-satellite service 
accounts must be performed within the United States by all accounting 
authorities possessing the ``US'' prefix. Other accounting authorities 
approved by the Commission may settle accounts either in the U.S. or 
elsewhere. See also Sections 3.11 and 3.21(b).


Sec. 3.43  Applicable rules and regulations.

    Accounting authority operations must be conducted in accordance 
with applicable FCC rules and regulations, the International 
Telecommunication Regulations (ITR), and other international rules, 
regulations, agreements, and, where appropriate, ITU-T Recommendations. 
In particular, the following must be adhered to or taken into account 
in the case of ITU-T.
    (a) The latest basic treaty instrument(s) of the International 
Telecommunication Union (ITU);
    (b) Binding agreements contained in the Final Acts of World 
Administrative Radio Conferences and/or World International 
Telecommunication Conferences;
    (c) ITU Radio Regulations;
    (d) ITU International Telecommunication Regulations (ITR);
    (e) ITU-T Recommendations (particularly D.90 and D.195); and
    (f) FCC Rules and Regulations (47 CFR Part 3).


Sec. 3.44  Time to achieve settlements.

    All maritime telecommunications accounts should be timely paid in 
accordance with applicable ITU Regulations, Article 66 and 
International Telecommunication Regulations (Melbourne, 1988). 
Accounting authorities are deemed to be responsible for remitting, in a 
timely manner, all valid amounts due to foreign administrations or 
their agents.


Sec. 3.45  Amount of charges.

    Accounting Authorities may charge any reasonable fee for their 
settlement services. Settlements themselves, however, must adhere to 
the standards set forth in these rules and must be in accordance with 
the International Telecommunication Regulations (ITR) taking into 
account the applicable ITU-T Recommendations and other guidance issued 
by the Commission.


Sec. 3.46  Use of gold francs.

    An accounting authority must accept accounts presented to it from 
foreign administrations in gold francs. These gold francs must be 
converted on the date of receipt of the bill to the applicable Special 
Drawing Right (SDR) rate (as published by the International Monetary 
Fund) on that date utilizing the linking coefficient of 3.061 gold 
francs = 1 SDR. An equivalent amount in U.S. dollars must be paid to 
the foreign administration. Upon written concurrence by the FCC, an 
accounting authority may make separate agreements, in writing, with 
foreign administrations or their agents for alternative settlement 
methods, in accordance with ITU-T Recommendation D.195.


Sec. 3.47  Use of SDRs.

    An accounting authority must accept accounts presented to it from 
foreign administrations in Special Drawing Rights (SDRs). These SDRs 
must be converted to dollars on the date of receipt by the accounting 
authority and an equivalent amount in US dollars must be paid to the 
foreign administration. The conversion rate will be the applicable rate 
published by the International Monetary Fund (IMF) for the date of 
receipt of the account from the foreign administration. Upon written 
concurrence by the FCC, any accounting authority may make separate 
agreements, in writing, with foreign administrations or their agents 
for alternative settlement methods, provided account is taken of ITU-T 
Recommendation D.195.


Sec. 3.48  Cooperation with the Commission.

    Accounting authorities must cooperate fully with the FCC in all 
respects concerning international maritime settlements issues, 
including the resolution of questions of fact or other issues arising 
as a result of settlement operations.


Sec. 3.49   Agreement to be audited.

    Accounting authorities accept their certifications on condition 
that they are subject to audit of their settlement activities by the 
Commission or its representative. Additionally, the Commission reserves 
the right to verify any statement(s) made or any materials submitted to 
the Commission under these rules. Verification may involve discussions 
with ship owners or others as well as the requirement to submit 
additional information to the Commission. Failure to respond 
satisfactorily to any audit findings is grounds for forfeiture or 
suspension or cancellation of authority to act as an accounting 
authority for U.S. vessels.


Sec. 3.50   Retention of settlement records.

    Accounting authorities must maintain, for the purpose of compliance 
with these rules, all settlement records for a period of at least seven 
years following settlement of an account with a foreign administration 
or agent.


Sec. 3.51   Cessation of operations.

    The FCC must be notified immediately should an accounting authority 
plan to relinquish its certification or cease to perform settlements as 
authorized. Additionally, the Commission must be advised in advance of 
any proposed transfer of control of an accounting authority's firm or 
organization, by any means, to another entity.
    (a) When an accounting authority is transferred, merged or sold, 
the new entity must apply for certification in its own right if it is 
interested in becoming an accounting authority. Provided the new 
applicant is eligible and completes the application process 
satisfactorily, the AAIC will be transferred to the new applicant. In 
the case of a merger of two accounting authorities, the merged entity 
must decide which AAIC to retain.
    (b) Section 3.21(a) will be waived for these applicants.
    (c) The applicant must comply with application process including 
public comment.
    (d) The applicant must certify acceptance of all accounts and must 
furnish a list of the accounts to the Commission at the time of 
application.


Sec. 3.52   Complaint/inquiry resolution procedures.

    (a) Accounting authorities must maintain procedures for resolving 
complaints and/or inquiries from its contractual customers (vessels for 
which it performs settlements), the FCC, the ITU, and foreign 
administrations or their agents. These procedures must be available to 
the Commission upon request.
    (b) If a foreign administration requests assistance in collection 
of accounts from ships licensed by the FCC, the

[[Page 20169]]

appropriate accounting authority will provide all information requested 
by the Commission in a timely manner to enable the Commission to 
determine the cause of the complaint and to resolve the issue. If 
accounts are in dispute, the Commission will determine the amount due 
the foreign administration, accounting authority or ROA, and may direct 
the accounting authority to pay the accounts to the foreign 
administration. If the accounting authority does not pay the disputed 
accounts within a reasonable timeframe, the Commission may take action 
to levy a forfeiture, cancel the AAIC privilege and/or to revoke any 
operating authority or licenses held by that accounting authority. (See 
also Section 3.72).


Sec. 3.53   FCC notification of refusal to provide telecommunications 
service to U.S. registered vessel(s).

    An accounting authority must inform the FCC immediately should it 
receive notice from any source that a foreign administration or 
facility is refusing or plans to refuse legitimate public 
correspondence to or from any U.S. registered vessel.


Sec. 3.54   Notification of change in address.

    The Commission must be notified in writing within 15 days of any 
change in address of an accounting authority. Such written notification 
should be sent to the address shown in Section 3.61.

Reporting Requirements


Sec. 3.60   Reports.

    (a) Initial Inventory of Vessels. Within 60 days after receiving 
final approval from the FCC to be an accounting authority, each 
certified accounting authority must provide to the FCC an initial list 
of vessels for which it is performing settlements. This list should 
contain only U.S. registered vessels. Such list shall be typewritten or 
computer generated, be annotated to indicate it is the initial 
inventory and be in the general format of the following and provide the 
information shown:

                                                                        
                Vessel Name                           Call Sign         
                                                                        
                                                                        
                                                                        

    (b) Semi-Annual Additions/Modifications/Deletions to Vessel 
Inventory. Beginning with the period ending on the last day of March or 
September following submission of an accounting authority's Initial 
Inventory of Vessels (See paragraph (a) of this section.) and each 
semi-annual period thereafter, each accounting authority is required to 
submit to the FCC a report on additions, modifications or deletions to 
its list of vessels for which it is performing or intending to perform 
settlements, whether or not settlements actually have taken place. The 
list should contain only U.S. registered vessels. The report shall be 
typewritten or computer generated and be in the following general 
format:

                  ADDITIONS TO CURRENT VESSEL INVENTORY                 
                                                                        
           Vessel Name                 Call Sign        Effective Date  
                                                                        
                                                                        
                                                                        


                                    MODIFICATIONS TO CURRENT VESSEL INVENTORY                                   
                                                                                                                
      Previous Vessel Name        Previous Call Sign    New Vessel Name      New Call Sign      Effective Date  
                                                                                                                
                                                                                                                
                                                                                                                


                  DELETIONS TO CURRENT VESSEL INVENTORY                 
                                                                        
           Vessel Name                 Call Sign        Effective Date  
                                                                        
                                                                        
                                                                        

The preceding report must be received by the Commission no later than 
15 days following the end of the period (March or September) for which 
the report pertains. Modifications refer to changes to call sign or 
ship name of vessels for which the accounting authority settles 
accounts and for which basic information has previously been provided 
to the Commission. Reports are to be submitted even if there have been 
no additions, modifications or deletions to vessel inventories since 
the previous report. If there are no changes to an inventory, this 
should be indicated on the report.
    (c) End of Year Inventory. By February 1st of each year, each 
accounting authority must submit an end-of-year inventory report 
listing vessels for which the accounting authority performed 
settlements as of the previous December 31st. The list should contain 
only U.S. registered vessels. The report must be typewritten or 
computer generated and prepared in the same general format as that 
shown in paragraph (a) of this section except it should be annotated to 
indicate it is the End of Year inventory.
    (d) Annual Statistical Report of Settlement Operations. By February 
1st of each year, each accounting authority settling accounts for U.S. 
registered vessels must submit to the FCC an Annual Statistical Report, 
FCC Form 45, which details the number and dollar amount of settlements, 
by foreign administration, during the preceding twelve months. 
Information contained in this report provides statistical data that 
will enable the Commission to monitor operations to ensure adherence to 
these rules and to appropriate international settlement procedures. FCC 
Form 45 can be obtained by writing to the address in 3.61 of these 
rules.


Sec. 3.61   Reporting address.

    All reports must be received at the following address no later than 
the required reporting date:

Accounting Authority Certification Officer, Financial Operations 
Division, Stop 1110A, Federal Communications Commission, 1919 M 
Street NW., Washington, D.C. 20554


Sec. 3.62   Request for confidentiality.

    Applicants should comply with Section 0.459 of this chapter when 
requesting confidentiality and cannot assume that it will be offered 
automatically.

Enforcement


Sec. 3.70  Investigations.

    The Commission may investigate any complaints made against 
accounting authorities to ensure compliance with the Commission's rules 
and with applicable ITU Regulations and other international maritime 
accounting procedures.


Sec. 3.71  Warnings.

    The Commission may issue written warnings or forfeitures to 
accounting authorities which are found not to be operating in 
accordance with established rules and regulations. Warnings will 
generally be issued for violations which do not seriously or 
immediately affect settlement functions or international relations. 
Continued or unresolved violations may lead to further enforcement 
action by the Commission, including any or all legally available 
sanctions, including but not limited to, forfeitures (Communications 
Act of 1934, Sec. 503), suspension or cancellation of the accounting 
authority certification.


Sec. 3.72  Grounds for further enforcement action.

    (a) The Commission may take further enforcement action, including 
forfeiture, suspension or cancellation of an accounting authority 
certification, if it is determined that the public interest so 
requires. Reasons for which such action may be taken include, inter 
alia:
    (1) Failure to initiate settlements within six months of 
certification or failure to perform settlements during any subsequent 
six month period;

[[Page 20170]]

    (2) Illegal activity or fraud;
    (3) Non-payment or late payment to a foreign administration or 
agent;
    (4) Failure to follow ITR requirements and procedures;
    (5) Failure to take into account ITU-T Recommendations;
    (6) Failure to follow FCC rules and regulations;
    (7) Bankruptcy; or
    (8) Providing false or incomplete information to the Commission or 
failure to comply with or respond to requests for information.
    (b) Prior to taking any of the enforcement actions in paragraph (a) 
of this section, the Commission will give notice of its intent to take 
the specified action and the grounds therefor, and afford a 30-day 
period for a response in writing; provided that, where the public 
interest so requires, the Commission may temporarily suspend a 
certification pending completion of these procedures. Responses must be 
forwarded to the Accounting Authority Certification Officer. See 
Section 3.61.


Sec. 3.73  Waiting period after cancellation.

    An accounting authority whose certification has been cancelled must 
wait a minimum of three years before reapplying to be an accounting 
authority.


Sec. 3.74  Ship stations affected by suspension, cancellation or 
relinquishment.

    (a) Whenever the accounting authority privilege has been suspended, 
cancelled or relinquished, the accounting authority is responsible for 
immediately notifying all U.S. ship licensees for which it was 
performing settlements of the circumstances and informing them of the 
requirement contained in paragraph (b) of this section.
    (b) Those ship stations utilizing an accounting authority's AAIC 
for which the subject accounting authority certification has been 
suspended, cancelled or relinquished, should make contractual 
arrangements with another properly authorized accounting authority to 
settle its accounts.
    (c) The Commission will notify the ITU of all accounting authority 
suspensions, cancellations and relinquishments, and
    (d) The Commission will publish a Public Notice detailing all 
accounting authority suspensions, cancellations and relinquishments.


Sec. 3.75  Licensee's failure to make timely payment.

    Failure to remit proper and timely payment to the Commission or to 
an accounting authority may result in one or more of the following 
actions against the licensee:
    (a) Forfeiture or other authorized sanction.
    (b) The refusal by foreign countries to accept or refer public 
correspondence communications to or from the vessel or vessels owned, 
operated or licensed by the person or entity failing to make payment. 
This action may be taken at the request of the Commission or 
independently by the foreign country or coast station involved.
    (c) Further action to recover amounts owed utilizing any or all 
legally available debt collection procedures.


Sec. 3.76  Licensee's liability for payment.

    The U.S. ship station licensee bears ultimate responsibility for 
final payment of its accounts. This responsibility cannot be superseded 
by the contractual agreement between the ship station licensee and the 
accounting authority. In the event that an accounting authority does 
not remit proper and timely payments on behalf of the ship station 
licensee:
    (a) The ship station licensee will make arrangements for another 
accounting authority to perform future settlements, and
    (b) The ship station licensee will settle any outstanding accounts 
due to foreign entities.
    (c) The Commission will, upon request, take all possible steps, 
within the limits of applicable national law, to ensure settlement of 
the accounts of the ship station licensee. As circumstances warrant, 
this may include issuing warnings to ship station licensees when it 
becomes apparent that an accounting authority is failing to settle 
accounts. See also Sections 3.70 through 3.74.

[FR Doc. 96-10974 Filed 5-03-96; 8:45 am]
BILLING CODE 6712-01-P

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