Federal Register / Vol. 61, No. 97 / Friday, May 17, 1996 / Rules and Regulations 24897

1 Pub. L. 104–104, 110 Stat. 56 (1996).

2 As defined in section 273(d)(8)(E), ‘‘[t]he term

‘accredited standards development organization’

means any entity composed of industry members

which have been accredited by an institution vested

with the responsibility for standards accreditation

by the industry.’’ 47 U.S.C. 273(d)(8)(E). Thus, for

example, Bell Communications Research, Inc.

(Bellcore) would not be an accredited standards

development organization and is subject to the

section 273 procedures. H.R. Cong. Rep. No. 230,

104th Cong., 2d Sess. 39 (1996).

3 As defined in section 273(d)(8)(C), ‘‘[t]he term

‘industry-wide’ means activities funded by or

performed on behalf of local exchange carriers for

use in providing wireline telephone exchange

service whose combined total of deployed access

lines in the United States constitutes at least 30

percent of all access lines deployed by

telecommunications carriers in the United States as

of the date of the enactment of the

Telecommunications Act of 1996.’’ 47 U.S.C.

273(d)(8)(C).

4 As defined in section 273(d)(8)(B), ‘‘[t]he term

‘generic requirement’ means a description of

acceptable product attributes for use by local

exchange carriers in establishing product

specification for the purchase of

telecommunications equipment, customer premises

equipment, and software integral thereto.’’ 47

U.S.C. 273(d)(8)(B).

federalism implications to warrant the

preparation of a Federalism Assessment.

Regulatory Flexibility Act

The Maritime Administration certifies

that this rulemaking will not have a

significant economic impact on a

substantial number of small entities.

Environmental Assessment

The Maritime Administration has

considered the environmental impact of

this rulemaking and has concluded that

an environmental impact statement is

not required under the National

Environmental Policy Act of 1969.

Paperwork Reduction Act

This rulemaking contains no reporting

requirement that is subject to OMB

approval under 5 CFR Part 1320,

pursuant to the Paperwork Reduction

Act of 1980 (44 U.S.C. 3501, et seq.)

List of Subjects in 46 CFR Part 381

Freight, Maritime carriers.

Accordingly, MARAD hereby amends

46 CFR Part 381 as follows:

PART 381—[AMENDED]

1. The authority citation for Part 381

continues to read as follows:

Authority: 46 App. U.S.C. 1101, 1114(b),

1122(d) and 1241; 49 CFR 1.66.

2. Section 381.9 is revised to read as

follows:

§ 381.9 Available U.S.-flag service.

For purposes of shipping bulk

agricultural commodities under

programs administered by sponsoring

Federal agencies from U.S. Great Lakes

ports during the 1996–2000 Great Lakes

shipping seasons, if direct all-U.S.-flag

service, at fair and reasonable rates, is

not available at U.S. Great Lakes ports,

a joint service involving a foreign-flag

vessel(s) carrying cargo no farther than

a Canadian port(s) or other point(s) on

the Gulf of St. Lawrence, with

transshipment via a U.S.-flag privatelyowned commercial vessel to the

ultimate foreign destination, will be

deemed to comply with the requirement

of ‘‘available’’ commercial U.S.-flag

service under the Cargo Preference Act

of 1954. Shipper agencies considering

bids resulting in the lowest landed cost

of transportation based on U.S.-flag rates

and service shall include within the

comparison of U.S.-flag rates and

service, for shipments originating in

U.S. Great Lakes ports, through rates (if

offered) to a Canadian port or other

point on the Gulf of St. Lawrence and

a U.S.-flag leg for the remainder of the

voyage. The ‘‘fair and reasonable’’ rate

for this mixed service will be

determined by considering the U.S.-flag

component under the existing

regulations at 46 CFR Part 382 or 383,

as appropriate, and incorporating the

cost for the foreign-flag component into

the U.S.-flag ‘‘fair and reasonable’’ rate

in the same way as the cost of foreignflag vessels used to lighten U.S.-flag

vessels in the recipient country’s

territorial waters. Alternatively, the

supplier of the commodity may offer the

Cargo FOB Canadian transshipment

point, and MARAD will determine fair

and reasonable rates accordingly.

Dated: May 10, 1996.

By Order of the Maritime Administrator.

Joel Richard,

Secretary, Maritime Administration.

[FR Doc. 96–12188 Filed 5–16–96; 8:45 am]

BILLING CODE 4910–81–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 64

[GC Docket No. 96–42; FCC 96–205]

Implementation of Section 273(d)(5) of

the Communications Act of 1934, as

Amended by the Telecommunications

Act of 1996; Dispute Resolution

Regarding Equipment Standards

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: In order to implement a new

statutory provision of the

Telecommunications Act of 1996, the

Commission adopts rules establishing a

default dispute resolution process to be

used when technical disputes arise

between a non-accredited standards

development organization (NASDO) and

any party who funds the activities of the

NASDO. Under the new rules, disputes

will be resolved by a recommendation

of a three-person expert panel, selected

by both the disputing party and the

NASDO, with the recommendation

subject to disapproval by a vote of threefourths of the other funding parties. As

intended by Congress, this procedure

ensures that disputes can be resolved in

an open, non-discriminatory, and

unbiased fashion within 30 days, and it

will be used only when all of the parties

are unable to agree on a process for

resolving their disputes. In addition,

persons who willfully refer frivolous

disputes will be subject to forfeiture

pursuant to section 503(b) of the

Communications Act.

EFFECTIVE DATE: June 17, 1996.

FOR FURTHER INFORMATION CONTACT:

Sharon B. Kelley, Office of General

Counsel, (202) 418–1720.

SUPPLEMENTARY INFORMATION:

Adopted: May 7, 1996.

Released: May 7, 1996.

I. Introduction

1. The Telecommunications Act of

1996,1 amended the Communications

Act by creating new sections 273 (d)(4)

and (d)(5), which set forth procedures to

be followed by non-accredited standards

development organizations (NASDOs),2

such as Bellcore, when these

organizations promulgate industrywide 3 standards and generic

requirements 4 for telecommunications

equipment. Typically, as in the case of

Bellcore, carriers fund these voluntary

standard setting activities in order to

assist the carriers in developing

standards to guide their subsequent

purchases of telecommunications

equipment.

2. In this Report and Order, the

Commission adopts rules to implement

new section 273(d)(5), which requires

the Commission to prescribe a default

dispute resolution process when

technical disputes arise between the

NASDO and any parties who fund the

standards setting activities of the

NASDO. In accordance with the statute,

this ‘‘default’’ procedure would be used

only when all funding parties are unable

to reach agreement as to a means for

resolving technical disputes. As

described below, we have decided that

disputes governed by section 273(d)(5)

should be resolved in accordance with

the recommendation of a three-person
24898 Federal Register / Vol. 61, No. 97 / Friday, May 17, 1996 / Rules and Regulations

5 61 FR 9966, at ¶ 2.

6 47 U.S.C. 273 (d)(4), (e).

7 Id.

8 Id.

9 47 U.S.C. 273(d)(5).

10 Id.

11 61 FR at 9966–9967, ¶3-¶6.

12 Id. at 9967, ¶6.

13 Id. at 9966, ¶2.

14 Id. at 9967, ¶8.

15 See note 10, supra.

16 Id. at 9967, ¶3.

17 Id. at ¶4.

18See comments of Corning at ii, 6–7; comments

of Telecommunications Industry Association (TIA)

at 2–3; comments of Bellcore at i, 16–18; comments

of Bell Atlantic at 2; comments of U.S. West at 2–

3; comments of BellSouth at 2–3; comments of

Nortel at 4; reply comments of Pacific Bell at 1;

reply comments of Alliance for

Telecommunications Industry Solutions (ATIS) at

2; reply comments of BellSouth at 1; reply

comments of SBC at 2; reply comments of Corning

at 2; reply comments of Bellcore at 1. But see latefiled comments of MCI at 1.

19 Comments of Corning at 6.

20 Comments of TIA at 2–3.

expert panel, selected by both the

disputing party and the NASDO, with

the recommendation subject to

disapproval by a vote of three-fourths of

the other funding parties.

II. Background

3. As detailed in the Notice of

Proposed Rulemaking (NPRM), 61 FR

9966, March 12, 1996, the purpose of

this proceeding is to establish dispute

resolution procedures in accordance

with new section 273(d)(5) of the Act.5

Section 273(d)(5) was enacted in

conjunction with other procedures, set

forth in section 273(d)(4), that impose

new procedural requirements on

voluntary standards setting activities by

NASDOs, such as Bellcore, which is

owned by the regional Bell operating

companies (RBOCs). As indicated

above, Bellcore sets voluntary standards

to assist in the carriers’ purchase of

telecommunications equipment. The

statutory procedures generally require

more openness and fairness in the

standards setting process, particularly in

light of the potential that, under other

provisions of the Telecommunications

Act, the BOCs may be permitted to

engage in the manufacture of

telecommunications equipment.6

4. To foster more open procedures,

under new section 273(d)(4), a NASDO

is required to issue a public invitation

to interested industry parties to fund

and participate in setting any industrywide standards or generic requirements.

Further, such funding and participation

must be allowed ‘‘on a reasonable and

nondiscriminatory basis, administered

in such a manner as not to unreasonably

exclude any interested industry party.’’ 7

In the event of disputes on technical

issues, the NASDOs and funding parties

must also attempt to develop a dispute

resolution process.8 Section 273(d)(5)

requires the Commission to prescribe

within 90 days of the section’s

enactment a dispute resolution process

to be used if the parties cannot agree to

a dispute resolution process.9

5. Specifically, section 273(d)(5)

provides:

[W]ithin 90 days after the date of

enactment of the Telecommunications Act of

1996, the Commission shall prescribe a

dispute resolution process to be utilized in

the event that a dispute resolution process is

not agreed upon by all the parties when

establishing and publishing any industrywide standard or industry-wide generic

requirement for telecommunications

equipment or customer premises equipment

pursuant to paragraph (4)(A)(v). The

Commission shall not establish itself as a

party to the dispute resolution process. Such

dispute resolution process shall permit any

funding party to resolve a dispute with the

entity conducting the activity that

significantly affects such funding party’s

interests, in an open, nondiscriminatory, and

unbiased fashion, within 30 days after the

filing of such dispute. Such disputes may be

filed within 15 days after the date the

funding party receives a response to its

comments from the entity conducting the

activity. The Commission shall establish

penalties to be assessed for delays caused by

referral of frivolous disputes to the dispute

resolution process.

Thus, as described in new section

273(d)(5), the Commission’s dispute

resolution process must be conducted in

an open, non-discriminatory and

unbiased fashion and so that disputes

are resolved within 30 days of the filing

of the dispute. The process is triggered

only if all funding parties fail to agree

to a process for resolving technical

issues. Section 273(d)(5) also requires

the Commission to establish penalties to

be assessed for delays caused by referral

of frivolous disputes to the dispute

resolution process.10

6. In the NPRM, we invited members

of the public to comment on our

proposal to require binding arbitration

as the dispute resolution process.11 We

asked commenters to address the

methods for selecting an arbitrator or

neutral and whether the Commission

should make its employees available to

serve in that capacity.12 In addition, we

invited commenters to submit

alternative proposals to implement this

statutory provision.13 Finally, the NPRM

solicited proposals or recommendations

concerning the types of penalties that

should be assessed for delays caused by

the referral of frivolous disputes to the

dispute resolution process.14

7. We received comments from the

following entities: (1) Bell Atlantic; (2)

Bellcore; (3) BellSouth Corporation and

BellSouth Communications, Inc.

(BellSouth); (4) Corning Incorporated

(Corning); (5) Telecommunications

Industry Association (TIA); and (6) U.S.

West, Inc. (U.S. West). Reply comments

were received from: (1) Ameritech; (2)

American National Standards Institute

(ANSI); (3) Alliance for

Telecommunications Industry Solutions

(ATIS); (4) Bellcore; (5) BellSouth; (6)

Corning; (7) Northern Telecom, Inc.

(Nortel); (8) Pacific Bell; (9) SBC

Communications, Inc. (SBC); (10)

SpecTran Corp; and (11) TIA. The

Commission also received late-filed

reply comments from MCI and ex parte

submissions from Bellcore, Corning and

Nortel.

III. Discussion

A. Commission’s Binding Arbitration

Proposal

8. In the NPRM, we sought comment

on a binding arbitration as a method

that could be used to satisfy the

statutory dispute resolution default

provision requirement.15 We observed

that this approach appeared consistent

with the stated purpose of section

273(d)(5), set forth in the Conference

Report, to ‘‘enable all interested parties

to influence the final resolution of the

dispute without significantly impairing

the efficiency, timeliness and technical

quality of the activity.’’ 16 In addition,

the NPRM concluded that binding

arbitration seemed to be the only

feasible dispute resolution process in

view of the 30 day deadline for

completion of the process.17

9. For a variety of reasons, the

commenting parties overwhelmingly

opposed the binding arbitration

proposal set forth in the NPRM.18 The

parties generally agreed with Corning’s

view in its initial comments that

binding arbitration would not

adequately take into account the broad

impact of standards-related disputes on

industry participants other than the

NASDO and the participating party who

invokes the dispute resolution

process.19 The commenters also

indicated it would be difficult to

identify a neutral arbitrator to resolve

these highly technical issues and to

arbitrate these issues within the 30-day

time frame required by the law. TIA also

stated that the use of arbitrators would

lead to ‘‘compromise’’ solutions that

were inappropriate in view of the

technical nature of these disputes.20

Others, including Bellcore and U.S.

West, believed that imposing binding

arbitration, without the consent of the

parties, was inconsistent with the
Federal Register / Vol. 61, No. 97 / Friday, May 17, 1996 / Rules and Regulations 24899

21 Comments of Bellcore at i, 16; comments of

U.S. West at 3.

22 Comments of U.S. West at 2.

23 Comments of Bellcore at 17.

24 Id. at 5 and 17.

25 Late-filed reply comments of MCI at 1–3.

26 61 FR at 9967,¶5.

27Comments of Bellcore at 3–4, 7; comments of

BellSouth at 4.

28Late-filed reply comments of MCI at 3.

29Comments of TIA at 2–3; reply comments of

ATIS at 4–5.

30Reply comments of ATIS at 4.

31Comments of Nortel at 2–3; comments of

SpecTran at 1.

32Ex Parte submission of Corning at 1.

33Reply comments of Corning at 14–16; late-filed

comments of MCI at 2.

34See generally, ex parte submission of Bellcore.

voluntary nature of the underlying

standards process.21

10. For example, as U.S. West

observed, nothing in the

Telecommunications Act alters the fact

that standards setting activities by both

accredited and non-accredited entities,

continue to remain voluntary,

depending almost entirely on the good

faith of the individual funding entities

for their ultimate success or failure.22

Bellcore further observed in its

comments that generic requirements

complement standards which by their

very nature are not binding on anyone,

vendors or purchasers.23 While noting

that generic requirements provide

valuable technical information to

exchange carriers, Bellcore underscored

the fact that such requirements ‘‘only

have meaning if exchange carriers

choose to use them and if suppliers

choose to conform their products to

them.’’ 24

11. In late-filed comments, one

commenter, MCI, supported the

Commission’s binding arbitration

proposal, finding it preferable to either

of two alternative proposals, discussed

more fully below, that had been

submitted by Corning (Corning I) and

Bellcore.25 As discussed below,

however, we conclude that a second

proposal submitted by Corning (Corning

II) resolves many of the defects that had

been evident in both the Corning I and

Bellcore alternatives. This proposal also

appears to be superior in some respects

to the Commission’s proposal to use

binding arbitration. Therefore, as

explained below, we have decided not

to use binding arbitration as the default

dispute mechanism under section

273(d)(5). We will instead use the

alternative procedure proposed by

Corning, the Corning II proposal, with

some modifications.

B. Commenters’ Alternative Proposals

12. In addition to proposing the use

of binding arbitration, the NPRM invited

commenters to submit alternative

proposals. We noted that other methods

of alternative dispute resolution

included, for example, mediation,

neutral evaluation, and hybrids of these

methods.26 In response, two very

different alternative proposals were

initially submitted, one by Corning, a

manufacturer of fiber optics equipment,

and another by Bellcore.

13. The Corning I proposal involved

referral of the technical dispute to an

accredited standards development

organization (SDO). Many parties

commented on this proposal. Although

comment was somewhat divided, much

of the comment was sharply critical of

the proposal. For example, Bellcore and

many of the BOCs believed that the

Corning I proposal was inconsistent

with congressional intent because it

excluded the funding parties from

participating in resolution of the

technical dispute, even though the

funders played a major role in funding

the NASDO’s work and would be most

affected by any dispute resolution.27

They also pointed out that there was no

assurance that the SDOs had procedures

in place that would enable resolution of

the dispute within the 30 day statutory

time period. They further believed that

the process would often lead to no

resolution at all of key technical issues,

thereby frustrating the essential purpose

of NASDOs to create standards that lead

to efficiencies and interoperability

within the communications industry.

Similarly, in its late filed comments,

MCI opposed the Corning I proposal

because it was unlikely to result in a

binding decision.28

14. The two organizations

representing relevant SDOs who

commented were divided on the

Corning I proposal. One of these, TIA,

approved the proposal, but the other

organization, ATIS, strongly criticized

the proposal as promoting ‘‘forum

shopping.’’ 29 ATIS further stated that its

Committee T1, which develops

standards for network interfaces, could

not accommodate the statutorily

mandated 30 day resolution period.30

Similarly, the two manufacturing

companies who commented were

divided, with one commenter, SpecTran

Corp., supporting the Corning I

proposal, and the other, Nortel, strongly

disagreeing with it as inviting forum

shopping and abuse.31

15. Bellcore’s original proposal is

discussed below, in the context of

modifications to it suggested by

Corning. In response to the Bellcore

proposal, Corning submitted a second

proposal, which it characterized as a

compromise proposal, and which

incorporated many features of the

dispute resolution proposal that had

been submitted by Bellcore.32 For the

reasons discussed below, we conclude

that Corning’s latest proposal, which we

shall refer to as the Corning II proposal,

is generally consistent with the dispute

resolution procedure envisioned by

Congress in section 273(d)(5). In

addition, we believe the Corning II

proposal avoids many of the practical

and other problems associated with both

the Corning I and Bellcore proposals.

We have therefore decided to adopt,

with some modifications, the Corning II

proposal, which is described and

discussed below.

C. The Corning II Proposal

16. As indicated above, the dispute

resolution rule we adopt in this

proceeding is based on a proposal

suggested by Bellcore that has been

modified by Corning. The Corning II

proposal retains many significant

features of the original Bellcore proposal

that were praised by those commenters

who preferred Bellcore’s proposal over

Corning I. Most significantly, unlike the

Corning I plan, the Corning II variation

does not require that technical disputes

be resolved in forums other than the

NASDO. Bellcore’s original plan, and

the Corning II variation adopted here,

permit the funding parties to resolve

these disputes internally. To that extent,

we believe that the Corning II proposal

is consistent with Congress’s intent that

the process we select should enable all

interested parties to influence the final

resolution of the dispute.

17. Corning, however, suggests several

changes to Bellcore’s proposal that we

believe will better enable the resolution

of disputes in an ‘‘open, nondiscriminatory and unbiased fashion,’’

consistent with section 273(d)(5). For

example, some commenters, primarily

Corning and MCI, expressed concern

that the Bellcore proposal afforded too

much power to the BOCs and Bellcore

in controlling resolution of any

disputes.33 The Corning II variation

makes five major changes to Bellcore’s

plan. Most of those changes, we believe,

better promote the statutory objectives

of fair, unbiased decisionmaking. In

response to ex parte comments from

Bellcore, however, we have modified

some aspects of the Corning II proposal

to develop the dispute resolution

default process we now adopt.34

18. Tri-Partite Panel. The Corning II

proposal permits the disputant to select

only one dispute resolution approach.

Under the approach proposed by
24900 Federal Register / Vol. 61, No. 97 / Friday, May 17, 1996 / Rules and Regulations

35Late-filed reply comments of MCI at 2.

36April 18, 1996, ex parte letter from Bellcore at

1.

37 47 U.S.C. 273(d)(4).

38Ex parte submission of Corning at 1, note 1;

reply comments of Nortel at 7; late-filed comments

of MCI at 2.

39Ex parte submission of Bellcore at 1.

40Ex parte submission of Corning at 3.

41Ex parte submission of Bellcore at 3.

Bellcore, the funding parties could, by

majority vote, choose among several

‘‘default’’ options for resolving disputes.

These options included ‘‘escalating’’ the

dispute to higher decisionmaking bodies

within the NASDO; resolution of the

dispute by a majority of those funding

the standards development effort; or,

resolution of the dispute based on the

recommendation of a three-party expert

advisory panel. The Corning II variation,

in contrast, retains only the option of

using a three-party expert panel, with

one panelist selected by the disputing

party, another selected by the NASDO,

and a third panelist selected jointly by

the panelists representing the NASDO

and disputing party. Persons who

participated in the generic requirements

or standards development process,

including the disputing party and the

NASDO, are eligible to serve on the

panel. As with Bellcore’s proposal, this

three-member panel, by majority vote,

would make a written recommendation

concerning the dispute.

19. Several parties, including MCI,

criticized some of the dispute resolution

options permitted under Bellcore’s

proposal, particularly the escalation and

majority vote options, because these

options appeared to give the BOCs

undue power in resolving disputes.35

We agree that the Corning II proposal,

which retains only the option of using

a tri-partite expert panel, is superior in

terms of avoiding the potential that the

BOCs or Bellcore would unduly

dominate decisionmaking.

20. In commenting on the Corning II

proposal, however, Bellcore continues

to believe that, while a tri-partite panel

should be available as an option and as

the fall-back in the event of a deadlock,

the funding parties should also be able

to use escalation and other

procedures.36 We recognize that this

variation on Bellcore’s plan removes

some of the flexibility that several

commenters had applauded in

commenting on Bellcore’s proposal. We

nevertheless conclude that the

advantage of the Corning II proposal in

terms of avoiding possible unfairness far

outweighs any concern about loss of

flexibility.

21. Further, as reflected in Corning’s

comments and in the Corning II

proposed rule, disputing parties and

Bellcore are also permitted to agree to a

means of dispute resolution other than

the default procedure provided for in

section 273(d)(5). The statutory dispute

provision clearly is a remedial measure,

which is designed to protect the

interests of disputing parties. Hence, the

statute merely provides that a disputing

party has the option of using the section

273(d)(5) default procedure. Section

273(d)(4) thus states that a disputing

party ‘‘may utilize the dispute

resolution procedures established

pursuant to [section 273(d)(5)] * * *’’

(Emphasis added.) 37 The default

procedure therefore is not mandatory if

the disputing party and Bellcore both

agree to select another approach.

Accordingly, we believe that parties will

not be deprived of desirable flexibility

even though we have decided to limit

the default dispute resolution procedure

to a single approach. We emphasize, as

do many of the commenters, that

funding parties should adopt their own

dispute resolution procedures whenever

possible.

22. Override Provision. A second

major change to Bellcore’s proposal

involves the Bellcore provision that

would have allowed a majority of the

funding parties to reject the

recommendation of the tri-partite expert

panel. We are sympathetic to the

argument that any dispute resolution

procedure should permit the funding

parties to participate in dispute

resolution by having some final say in

how the dispute is resolved.

Nevertheless, we agree with Corning

and other parties, such as MCI and

Nortel, who believe that allowing

‘‘overrides’’ by a simple majority of

funders may afford too much power to

particular blocks of funding parties,

including the regional BOCs who

currently own Bellcore.38

23. To resolve this concern, the

Corning II proposal would generally

permit funding parties to override a

panel recommendation by a vote of

three-fourths of the funding parties,

excluding the party who invoked the

dispute resolution process and the

NASDO. Each funding party would have

one vote. However, when a funding

party has an indirect equity interest in

the NASDO or any ownership interest in

intellectual property that would be

advantaged by the final resolution of the

dispute, a decision to reject the

recommendation must be by a

unanimous vote of the funding parties,

again excluding the party which

invoked the dispute resolution process

and the NASDO.

24. Presumably, due to the regional

BOCs’ ownership interests in Bellcore,

the unanimous vote requirement would

apply to Bellcore. Bellcore is concerned

that requiring a unanimous vote would

permit an affiliate of a disputing party,

or another serving as its proxy, to veto

the decision of all carriers. Bellcore also

believes that Nortel has proposed a

reasonable compromise in suggesting

that a vote of two-thirds of the funding

parties voting be required to reject a

panel recommendation.39

25. In contrast to the original Bellcore

proposal, we think a more stringent

‘‘override’’ proposal offers better

protection against biased

decisionmaking. We agree with Bellcore

that requiring a unanimous vote of

funders may be too onerous. However,

we think a fair compromise is to require

a vote by three-fourths of the voting

funders both to reject a panel’s

recommendation and to substitute

another resolution of the dispute. The

three-fourths proposal avoids Bellcore’s

concern that a unanimous vote

requirement affords the disputing party

the power to veto the decision of all the

carriers. At the same time, the threefourths requirement also decreases

Corning’s fear that a simple majority—

or possibly even a two-thirds vote—

affords too much control to the RBOC’s.

26. Standard for Recommended

Decision. The Corning II proposal has

recommended a third change that

improves upon the original Bellcore

proposal. Bellcore proposed that the

appropriate issue to be resolved by the

recommending panel was ‘‘whether

there is a sound technical basis for the

position of the [NASDO] * * *.’’ That

standard, we believe, unfairly

disadvantages the disputant by placing

upon it an undue burden to demonstrate

that the NASDO’s approach is not based

on a sound technical basis, instead of

focusing more on the relative merits of

the two approaches. The Corning II

proposal, in contrast, focuses more on

the relative merits of the technical

arguments by requiring the panel to

choose ‘‘the option that provides the

most technically sound solution that is

commercially viable* * *.’’ 40 We

recognize that the statutory 30-day

deadline will create difficulties in

resolving the technical merits. Bellcore,

for example, objects to the standard

proposed by Corning, believing that the

panel will be unable to decide within

the statutory timeline what is ‘‘the most

technically sound solution.’’ 41 The

statute, however, places no limitation

on the types of technical disputes that

may be raised by funding parties. We

therefore do not believe that the

standard for dispute resolution can be
Federal Register / Vol. 61, No. 97 / Friday, May 17, 1996 / Rules and Regulations 24901

42 Id.

43 Id. at 4.

44 Id.

45Ex parte submission of Nortel.

46Ex parte submission of Corning at 2. 47Reply comments of ANSI at 4.

48 Reply comments of TIA at 2.

49 Reply comments of Corning at 12.

50 Id.

limited to whether the NASDO’s

proposal can be reasonably supported

by technical evidence, as Bellcore

proposes.

27. For the same reason, we do not

agree with Bellcore’s view that the panel

should be precluded from deciding

‘‘that a particular issue is not ready for

a decision because there is insufficient

technical evidence to support the

soundness of any one proposal over any

other proposal.’’ 42 Moreover, such a

recommendation would not necessarily

lead to the absence of a decision on a

standard, as Bellcore claims. As

indicated above, even if that were the

panel’s recommendation, the funders

would still be able to select a technical

standard by a two-third’s vote.

28. Finally, Bellcore believes that

‘‘commercial viability’’ should not be

part of the decisional basis, claiming

that such a basis may go beyond the

technical matters contemplated by

section 273(a)(5).43 Bellcore also

believes such a standard may involve

economic analysis and competitively

sensitive business information, data that

may be difficult for the panel to

obtain.44

29. We think that in resolving

technical disputes it may well be

appropriate to consider the complexity

and practical feasibility of particular

technical solutions in some

circumstances. However, we also

believe that the decisional standard

proposed by Corning places undue

emphasis on commercial and costrelated issues not the technical issues.45

We shall therefore modify the standard

to state that a panel is not precluded

from taking into account the complexity

of technical approaches and other

practical considerations in deciding

which option is most technically sound.

30. Disclosure Requirements. The

Corning II proposal also includes a new

disclosure provision requiring that any

party in interest submitting information

for consideration by the panel must

disclose its ownership of intellectual

property that may be advantaged or

disadvantaged by the final decision, and

that the panel must consider this

information in making its

recommendation.46 This provision

seems designed to lead to

decisionmaking that is more fully

informed about the possible biases of

commenting parties and to result in

technical standards that may be met by

a broader spectrum of equipment

manufacturers. Bellcore objects to this

proposal. It states that ANSI-accredited

standards development organizations

encourage early disclosure of

intellectual property rights, but do not

require it. Bellcore also believes that

requiring disclosure of intellectual

property rights would inhibit funding

and participation in the activities of the

NASDO.

31. We believe the disclosure

provisions suggested by Corning are

generally consistent with requirements

of ANSI-accredited standards

organizations. The TIA Engineering

Manual, for example, has a policy of

encouraging early disclosure of essential

patents, and requires its Committees to

ask at the beginning of each meeting

where a potential standard is being

considered whether there is knowledge

of essential patents, the use of which

may be essential to the standard being

developed. Moreover, the fact that the

question was asked will be recorded in

the meeting report, along with any

affirmative responses. Similarly, ANSI’s

patent policy requires that, prior to

approval of any proposed standard, any

licenses will be made available to

applicants without compensation or

‘‘under reasonable terms and

conditions.’’ 47

32. We think that the Corning II

proposal that parties submitting

information to the panel disclose similar

information is generally consistent with

these ANSI requirements. However, we

shall modify the Corning II proposal

somewhat to make it more consistent

with the rule followed by the TIA

Engineering Manual. Specifically, the

rule will require that the panel ask

commenting parties whether there is

knowledge of patents, the use of which

may be essential to the standard or

generic requirement being considered.

In addition, the fact that the question

was asked along with any affirmative

responses may be recorded and

considered in the panel’s

recommendation. We do not believe that

such a requirement will affect funding

and participation in NASDOs. The

requirement applies only to those who

submit comments to the expert panel,

and moreover, such requirements have

apparently not discouraged

participation in ANSI accredited

standards development organizations. In

addition, Nortel points out that there

appears to be no precedent for ANSIaccredited bodies to link voting rights to

intellectual property interests. We see

no reason, therefore, to disqualify the

holders of such interests from voting on

the recommendations of the tri-partite

panel.

33. Costs of Dispute Resolution.

Finally, whereas the Bellcore proposal

had required the disputing party to bear

the entire cost of the default dispute

resolution procedure, the CorningBellcore variation requires that the cost

of resolving disputes be absorbed by all

of the funding parties. This

modification, in our view, better ensures

that disputants are not unduly

discouraged from raising technical

issues. In addition, all of the funding

parties should benefit from the fairer

and more open resolution of these

technical questions. It is therefore fitting

that they should all share in the cost.

34. In summary, we believe that the

statutory objectives can be best fulfilled

by the new Corning II approach, with

some modifications. This approach

incorporates the best aspects of the

Bellcore proposal and modifies them to

achieve the goal of unbiased

decisionmaking. The proposal to utilize

a tri-partite expert panel to make

recommendations resolving disputes,

with a provision that allows the funding

parties to override the recommendation,

also ensures that, as Congress intended,

all of the funding parties are able to

participate in influencing the final

outcome. The approach is set out in

detail in the Appendix of the Report and

Order.

D. Funding Parties

35. The commenters were divided

over the meaning of the term ‘‘funding

party.’’ Corning and TIA take the

position that Congress intended to allow

any interested party access to the

alternative dispute resolution process.48

While acknowledging that sections

273(d)(4) and (d)(5) refer to ‘‘funding

parties,’’ Corning argues that the clear

intent of the statute was only to provide

a basis for determining the legitimacy of

parties interested in participating in

NASDO processes.49

36. To put this in perspective,

Corning explained that the direct costs

of Bellcore’s generic requirements were

traditionally borne by the affected

carriers, with vendors generally making

some form of ‘‘in-kind’’ contributions,

i.e., technical presentation or technical

support.50 Corning also argues that,

under the new statute, funding levels

may not be used as an exclusionary

device. In this same vein, TIA maintains

that a funding party should not be

defined by the amount that the party

contributed to funding the standards
24902 Federal Register / Vol. 61, No. 97 / Friday, May 17, 1996 / Rules and Regulations

51Comments of TIA at 3–4.

52 Id.

53 Reply comments of Bellcore at 10–11.

54 Id. at 7–9.

55 Comments of Corning at 13.

56 See Rule 11 of the Federal Rules of Civil

Procedure; comments of Bellcore at 23.

57 Comments of Corning at 13.

58 61 FR 9967 at ¶8.

59 Id.

60 Id.

61Comments of U.S. West at 8.

62Comments of Bellcore at 23.

63 Id. at 23–24.

64 Comments of Bellcore at 24; comments of

Corning at 15.

65 Comments of Bellcore at 23.

66 Comments of Corning at 16.

67 Comments of Bellcore at 24.

setting activities but rather, by ‘‘any

amount that demonstrates the party

shows a responsible interest in the

proceeding.’’ 51 TIA suggests that parties

could meet this requirement by posting

a performance bond.52

37. In response, Bellcore and the

RBOC’s state that, since there was no

congressional debate on section 273(d),

the Commission must look to the plain

language of the statute. As noted by

Bellcore, section 273(d)(4)(A)(v)

provides that ‘‘a funding party may

utilize the dispute resolution

procedures established pursuant to

paragraph (5)’’ and section 273(d)(5)

states that ‘‘[s]uch dispute resolution

process shall permit any funding party

to resolve a dispute .’’* * * 53 Bellcore

thus opposes TIA’s performance bond

proposal, concluding that if a vague

genuine interest and not actual funding

is to be the standard, this could open

the door to a variety of ill-motivated

though colorable ‘‘technical’’ disputes

that the section 273(d)(5) process should

not promote.54

38. We conclude that the language of

the statute clearly supports that only a

funding party is permitted to invoke the

dispute resolution process contained in

Section 273(d). The statute expressly

provides that a party may become a

funder after a public invitation is issued

to interested industry parties ‘‘to fund

and to participate’’ and that only a

‘‘funding party’’ may invoke dispute

resolution. Moreover, consistent with

the clear language of the statute, we

think that only parties who are willing

to provide actual funding to support the

standards setting process may utilize the

statutory dispute resolution process. We

thus do not agree with TIA’s suggestion

that merely by posting a performance

bond an entity may become a funding

party, nor with Corning that ‘‘in-kind’’

contributions are necessarily adequate.

39. At the same time, section

273(d)(4)(A)(2) of the statute expressly

requires that funding and participation

be allowed on ‘‘a reasonable and

nondiscriminatory basis, administered

in such a manner as not to unreasonably

exclude any interested industry party.’’

We therefore believe that the statute

requires that NASDOs must make

reasonable and nondiscriminatory

efforts to ensure that the funding

requirement is not manipulated so as to

unreasonably exclude outside

participants.

E. Referral of Frivolous Disputes

40. Section 273(d)(5) directs the

Commission to establish penalties for

delays caused by the referral of frivolous

disputes to the Commission’s default

process. Both Bellcore and Corning

endorsed the proposal made in our

NPRM to rely on section 1.52 of the

Commission’s rules to define the term

‘‘frivolous dispute.’’ Section 1.52

requires that any document filed with

the Commission be signed by the party

or attorney and that such signature

certifies that the person has read the

document, that there is good ground to

support it, and thus it is not filed for the

purpose of delay.

41. Other commenters either offered

alternate suggestions or raised concerns

with our proposal. For example, we

were referred to the ‘‘sham’’ exception

to antitrust immunity enjoyed by parties

under the Noerr-Pennington doctrine.55

Another party referred us to the

standards used by federal courts to

determine whether complaints are filed

in good faith.56 Another commenter

questioned whether we need to assess

the motive of the disputant if the claim

has no legitimate basis.57

42. We recognize that any attempt to

give meaning to the term ‘‘frivolous’’ is

inherently difficult, as reflected by

attempts the courts have made to

grapple with similar problems. We have

decided, however, to be guided by our

existing rule which appears to be as

workable as any of the alternatives

suggested. Thus, the party responsible

for referring a dispute to our process

does so with the understanding that the

dispute, as defined in section 1.52, is

not frivolous, is supported by good

ground, and is not filed for the purpose

of delay.

43. In seeking comment on the

penalties that should be assessed against

delaying parties, the NPRM asked

whether the Commission should rely on

its forfeiture authority contained in

section 503(b) of the Communications

Act, or whether other penalties should

be imposed ‘‘such as barring the party

from further participation in the

standards development processes or the

imposition of costs on the complainant

if its complaint is found to be

frivolous.’’ 58 The NPRM also sought

comment on whether procedural

protections were necessary to protect

the party subject to the dispute.59 In this

connection, commenters were asked to

consider whether there should be a

citation and subsequent misconduct

before the assessment of such

forfeitures.60

44. U.S. West argued that ‘‘punitive

actions being taken to prevent frivolous

invocation of the mediation process’’

were unnecessary and emphasized that

the Commission could later adopt rules

if necessary.61 Bellcore argued against

the imposition of penalties by the tripartite panel, emphasizing that the

panel’s role is a ‘‘technical one, not a

legalistic penalty-imposing one.’’ 62 In

addition, Bellcore proposes that the

remedy of barring further participation

should ‘‘be reserved to address only a

pattern of abuse, and not an isolated

act’’ 63 and Corning maintains that it

‘‘could substantially impair the subject

company’s ability to compete in the

manufacture and marketing of products

which are the subject of the relevant

NASDO activities’’ and is ‘‘neither

required not authorized by the

statute.’’ 64 Finally, Bellcore advocates

that, in cases where the Commission

determines that a frivolous dispute was

referred to the dispute resolution

process, in addition to imposing

forfeitures as proposed in the NPRM, we

should require ‘‘the party raising a

frivolous claim to bear all costs of

dispute resolution, and compensating

the funding parties for delay.’’ 65

45. We have concluded that, in light

of the above comments, at this time,

violations for filing frivolous disputes

can be handled best pursuant to our

forfeiture authority under section 503(b)

of the Communications Act. While we

clearly expect referrals of frivolous

disputes to be rare occurrences, we will

not hesitate to revisit this issue, if

necessary, to determine whether more

severe penalties should be imposed.

F. Sunset Provision

46. In its initial comments, Corning

urged the Commission to make clear

that an applicant seeking removal of the

requirements of sections 273(d)(3) or

273(d)(4) provide appropriate

documentary evidence to support such

a request.66 Bellcore, in response,

believes Corning’s request is

premature.67 We agree that adoption of

evidentiary requirements at this time

appears premature. The statute

prescribes a public comment period on
Federal Register / Vol. 61, No. 97 / Friday, May 17, 1996 / Rules and Regulations 24903

any such application. We believe we

will be in a better position to evaluate

the adequacy of the support for any

particular application after we have

received comment on it.

IV. Procedural Matters

47. Final Regulatory Flexibility

Analysis. Pursuant to the Regulatory

Flexibility Act of 1980, the

Commission’s final analysis is as

follows:

Reason for Action

The Telecommunications Act of 1996

permits a Bell Operating Company,

through a separate subsidiary, to engage

in the manufacture of

telecommunications equipment and

customer premises equipment after the

Commission authorizes the company to

provide in-region interLATA services.

As one of the safeguards for the

manufacturing process, the

Telecommunications Act of 1996

amended the Communications Act by

creating a new section 273, which sets

forth procedures for a ‘‘non-accredited

standards development organization,’’

such as Bell Communications Research,

Inc., to set industry standards for

manufacturing such equipment. The

statutory procedures allow outside

parties to fund and participate in setting

the organization’s standards and require

the organization and the funding parties

to attempt to develop a process for

resolving any technical disputes.

Section 273(d)(5) requires the

Commission ‘‘to prescribe a dispute

resolution process’’ to be used in the

event that all parties cannot agree to a

mutually satisfactory dispute resolution

process. 47 U.S.C. 273(d)(5). The

purpose of this Report and Order is to

implement Congress’s goal by

prescribing a dispute resolution process

which ‘‘enable[s] all interested parties to

influence the final resolution of the

dispute without significantly impairing

the efficiency, timeliness and technical

quality of the activity.’’ H.R. Conf. Rep.

No. 230, 104th Cong., 2d Sess. 39

(1996).

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.

Significant Alternatives Considered

The Notice of Proposed Rulemaking

in this proceeding offered a binding

arbitration proposal and solicited

alternative proposals from the

commenters. The commenters

overwhelmingly opposed the binding

arbitration proposal. Alternative

proposals were also submitted by the

commenters. The regulation selected, a

tri-partite expert panel, fulfills the

specific statutory parameters of section

273—that the process shall permit

resolution ‘‘in an open, nondiscriminatory and unbiased fashion

within 30 days after the filing of such

dispute’’ and that the process will

‘‘enable all interested parties to

influence the final resolution of the

dispute without significantly impairing

the efficiency, timeliness and technical

quality of the activity.’’

48. Accordingly, it is ordered that

Subpart Q, Part 64 of the Commission’s

rules is adopted effective June 17, 1996

as set forth below.

49. The action taken herein is taken

pursuant to sections 4(i), 4(j), 273(d)(5),

303(r) and 403 of the Communications

Act, 47 U.S.C. §§ 154(i) and (j),

273(d)(5), 303(r) and 403.

List of Subjects in 47 CFR Part 64

Communications common carriers,

Dispute resolution process,

Manufacturing by Bell Operating

Companies, Non-accredited standards

development organizations, Penalties

for delaying parties.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Rule Changes

Part 64 of Title 47 of the Code of

Federal Regulations is amended as

follows:

PART 64—MISCELLANEOUS RULES

RELATING TO COMMON CARRIERS

1. The authority citation for Part 64 is

revised to read as follows:

Authority: 47 U.S.C. 154, unless otherwise

noted. Interpret or apply 47 U.S.C. 201, 218,

226, 228, 273(d)(5), unless otherwise noted.

2. A new Subpart Q is added to Part

64 to read as follows:

Subpart Q—Implementation of Section

273(d)(5) of the Communications Act:

Dispute Resolution Regarding Equipment

Standards

Sec.

64.1700 Purpose and scope.

64.1701 Definitions.

64.1702 Procedures.

64.1703 Dispute resolution default process.

64.1704 Frivolous disputes/penalties.

Subpart Q—Implementation of Section

273(d)(5) of the Communiations Act:

Dispute Resolution Regarding

Equipment Standards

§ 64.1700 Purpose and scope.

The purpose of this subpart is to

implement the Telecommunications Act

of 1996 which amended the

Communications Act by creating section

273(d)(5), 47 U.S.C. 273(d)(5). Section

273(d) sets forth procedures to be

followed by non-accredited standards

development organizations when these

organizations set industry-wide

standards and generic requirements for

telecommunications equipment or

customer premises equipment. The

statutory procedures allow outside

parties to fund and participate in setting

the organization’s standards and require

the organization and the parties to

develop a process for resolving any

technical disputes. In cases where all

parties cannot agree to a mutually

satisfactory dispute resolution process,

section 273(d)(5) requires the

Commission to prescribe a dispute

resolution process.

§ 64.1701 Definitions.

For purposes of this subpart, the

terms ‘‘accredited standards

development organization,’’ ‘‘funding

party,’’ ‘‘generic requirement,’’ and

‘‘industry-wide’’ have the same meaning

as found in 47 U.S.C. 273.

§ 64.1702 Procedures.

If a non-accredited standards

development organization (NASDO) and

the funding parties are unable to agree

unanimously on a dispute resolution

process prior to publishing a text for

comment pursuant to 47 U.S.C.

273(d)(4)(A)(v), a funding party may use

the default dispute resolution process

set forth in section 64.1703.

§ 64.1703 Dispute resolution default

process.

(a) Tri-Partite Panel. Technical

disputes governed by this section shall

be resolved in accordance with the

recommendation of a three-person

panel, subject to a vote of the funding

parties in accordance with paragraph (b)

of this section. Persons who participated

in the generic requirements or standards

development process are eligible to

serve on the panel. The panel shall be

selected and operate as follows:

(1) Within two (2) days of the filing

of a dispute with the NASDO invoking

the dispute resolution default process,

both the funding party seeking dispute

resolution and the NASDO shall select

a representative to sit on the panel;

(2) Within four (4) days of their

selection, the two panelists shall select
24904 Federal Register / Vol. 61, No. 97 / Friday, May 17, 1996 / Rules and Regulations

a neutral third panel member to create

a tri-partite panel;

(3) The tri-partite panel shall, at a

minimum, review the proposed text of

the NASDO and any explanatory

material provided to the funding parties

by the NASDO, the comments and any

alternative text provided by the funding

party seeking dispute resolution, any

relevant standards which have been

established or which are under

development by an accredited-standards

development organization, and any

comments submitted by other funding

parties;

(4) Any party in interest submitting

information to the panel for

consideration (including the NASDO,

the party seeking dispute resolution and

the other funding parties) shall be asked

by the panel whether there is knowledge

of patents, the use of which may be

essential to the standard or generic

requirement being considered. The fact

that the question was asked along with

any affirmative responses shall be

recorded, and considered, in the panel’s

recommendation; and

(5) The tri-partite panel shall, within

fifteen (15) days after being established,

decide by a majority vote, the issue or

issues raised by the party seeking

dispute resolution and produce a report

of their decision to the funding parties.

The tri-partite panel must adopt one of

the five options listed below:

(i) The NASDO’s proposal on the

issue under consideration;

(ii) The position of the party seeking

dispute resolution on the issue under

consideration;

(iii) A standard developed by an

accredited standards development

organization that addresses the issue

under consideration;

(iv) A finding that the issue is not ripe

for decision due to insufficient technical

evidence to support the soundness of

any one proposal over any other

proposal; or

(v) Any other resolution that is

consistent with the standard described

in section 64.1703(a)(6).

(6) The tri-partite panel must choose,

from the five options outlined above,

the option that they believe provides the

most technically sound solution and

base its recommendation upon the

substantive evidence presented to the

panel. The panel is not precluded from

taking into account complexity of

implementation and other practical

considerations in deciding which option

is most technically sound. Neither of the

disputants (i.e., the NASDO and the

funding party which invokes the

dispute resolution process) will be

permitted to participate in any decision

to reject the mediation panel’s

recommendation.

(b) The tri-partite panel’s

recommendation(s) must be included in

the final industry-wide standard or

industry-wide generic requirement,

unless three-fourths of the funding

parties who vote decide within thirty

(30) days of the filing of the dispute to

reject the recommendation and accept

one of the options specified in

paragraphs (a)(5) (i) through (v) of this

section. Each funding party shall have

one vote.

(c) All costs sustained by the tripartite panel will be incorporated into

the cost of producing the industry-wide

standard or industry-wide generic

requirement.

§ 64.1704 Frivolous disputes/penalties.

(a) No person shall willfully refer a

dispute to the dispute resolution

process under this subpart unless to the

best of his knowledge, information and

belief there is good ground to support

the dispute and the dispute is not

interposed for delay.

(b) Any person who fails to comply

with the requirements in paragraph (a)

of this section, may be subject to

forfeiture pursuant to section 503(b) of

the Communications Act, 47 U.S.C.

503(b).

[FR Doc. 96–12217 Filed 5–16–96; 8:45 am]

BILLING CODE 6712–01–U

DEPARTMENT OF TRANSPORTATION

Research and Special Programs

Administration

49 CFR Parts 171, 173 and 180

[Docket No. HM–200; Notice No. 96–9]

RIN 2137–AB37

Hazardous Materials in Intrastate

Transportation; Extension of Comment

Period

AGENCY: Research and Special Programs

Administration (RSPA), DOT.

ACTION: Supplemental notice of

proposed rulemaking (SNPRM);

extension of comment period.

SUMMARY: RSPA is extending for 60

days, until August 16, 1996, the period

for submitting comments on its March

20, 1996 supplemental notice of

proposed rulemaking (SNPRM) in this

proceeding. In the SNPRM, RSPA

proposed certain exceptions from

requirements in the Hazardous

Materials Regulations that would

otherwise apply to: the transportation of

small quantities of certain hazardous

materials used by carriers, particularly

private carriers, in the conduct of their

businesses (‘‘materials of trade’’);

smaller cargo tank motor vehicles (less

than 13,250 liters [3,500 gallons]

capacity) used exclusively in intrastate

transportation of flammable liquid

petroleum products; and registered

inspections of these smaller cargo tank

motor vehicles used exclusively for

transporting flammable liquid

petroleum fuels.

DATES: Written comments: Comments

must be received on or before August

16, 1996.

ADDRESSES: Comments: Address

comments to Dockets Unit, Research

and Special Programs Administration,

U.S. Department of Transportation,

Washington, DC 20590–0001.

Comments should identify the Docket

(HM–200) and be submitted, if possible,

in five copies. Persons wishing to

receive confirmation of receipt of their

comments should include a selfaddressed stamped postcard showing

the docket number. The Dockets Unit is

located in Room 8421 of the Nassif

Building, 400 Seventh Street, SW.,

Washington, DC 20590–0001.

Telephone: 202–366–5046. Public

dockets may be reviewed between the

hours of 8:30 a.m. and 5:30 p.m.;

Monday through Friday except Federal

holidays.

FOR FURTHER INFORMATION CONTACT:

Jackie Smith or Diane LaValle, 202–

366–8553, Office of Hazardous Materials

Standards, RSPA, 400 Seventh Street,

SW., Washington, DC 20590–0001.

SUPPLEMENTARY INFORMATION: In July

1993, RSPA proposed to extend the

application of the Hazardous Materials

Regulations (HMR), 49 CFR Parts 171–

180, to all intrastate carriers of

hazardous materials in commerce and

their shippers. The notice of proposed

rulemaking (NPRM), was published on

July 9, 1993 (58 FR 36920), and a

correction was published on July 15,

1993 (58 FR 38111). Based on comments

to that NPRM, on March 20, 1996, RSPA

published a supplemental notice

proposing three additional changes to

the HMR. See 61 FR 11481. These

changes would provide: (1) An

exception for ‘‘materials of trade,’’

certain small quantities of hazardous

materials transported and used by

carriers, particularly private carriers, in

the conduct of their businesses; (2) an

exception to permit the continued use of

non-specification smaller cargo tank

motor vehicles (i.e., less than 13,250

liters [3,500 gallons] capacity) used

exclusively in intrastate transportation

of flammable liquid petroleum products;

and (3) an exception from certain