Source: http://www.fcc.gov/document/assessment-and-collection-regulatory-fees-fiscal-year-2014
Timestamp: 2014-09-30 21:04:19
Document Index: 626151983

Matched Legal Cases: ['§ 159', '§ 159', '§ 159', '§ 159', '§ 1', '§ 1', '§ 159', '§ 159', '§ 159', '§ 159', 'art 43', '§ 1']

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FCC 14-129
MD Docket No. 14-92
MD Docket No. 13-140
Regulatory Fees )
Adopted: August 29, 2014
Reply Comment Date: (60 days after date of publication in the Federal Register)
I. INTRODUCTION AND EXECUTIVE SUMMARY ........................................................................... 1
III. DISCUSSION ........................................................................................................................................ 6
A. AM Expanded Band Radio Stations ................................................................................................ 6
B. Reallocations within Fee Categories................................................................................................ 8
1. Submarine Cable ....................................................................................................................... 8
2. Earth Stations .......................................................................................................................... 12
C. Improving the Regulatory Fee Process.......................................................................................... 13
D. Revising the De Minimis Threshold.............................................................................................. 18
E. Eliminating Certain Regulatory Fee Categories ............................................................................ 22
F. New Regulatory Fee Categories—Toll Free Numbers.................................................................. 25
G. Additional Regulatory Fee Reform................................................................................................ 29
H. Other Issues.................................................................................................................................... 30
IV. SECOND FURTHER NOTICE OF PROPOSED RULEMAKING.................................................... 36
A. Toll Free Numbers......................................................................................................................... 36
B. DBS................................................................................................................................................ 38
V. PROCEDURAL MATTERS................................................................................................................ 44
VI. ORDERING CLAUSES....................................................................................................................... 62
APPENDIX A — List of Commenters
APPENDIX B — Calculation of FY 2014 Revenue Requirement
APPENDIX C — FY 2014 Schedule of Regulatory Fees
APPENDIX D — Sources of Program Unit Estimates
APPENDIX E — Factors, Measurements, and Allocations
APPENDIX F — Final Regulatory Flexibility Analysis
APPENDIX G — Initial Regulatory Flexibility Analysis
APPENDIX H — Revised Allocations
APPENDIX I — Rule Changes
This Report and Order concludes the rulemaking proceeding initiated to collect $339,844,000 in regulatory fees for Fiscal Year (FY) 2014, pursuant to Section 9 of the Communications Act of 1934, as amended (the Act or Communications Act).1
These regulatory fees are due in September 2014. This Report and Order also adopts several proposals from our June 13, 2014 Notice of Proposed Rulemaking and Second Further Notice of Proposed Rulemaking (FY 2014 NPRM).2 Specifically the proposals adopted are: (1) ending the exemption of AM expanded band licenses from regulatory fees; (2) revising the apportionment between International Bureau licensees to reduce the proportion paid by the submarine cable/terrestrial and satellite bearer circuits by approximately five percent; (3) increasing the regulatory fees paid by earth station licensees by approximately 7.5 percent to more accurately reflect the regulation and oversight of this industry; (4) increasing our annual de minimis threshold from under $10 to $500; (5) eliminating several regulatory fee categories (218-219 MHz, broadcast auxiliaries, and satellite television construction permits) from regulatory fee requirements; and adopting a regulatory fee for each toll free number managed by a Responsible Organization. The increase in the annual de minimis threshold, the elimination of three regulatory fee categories, and the new toll free category will be effective in FY 2015, following the required notification of Congress. The other provisions adopted in this Report and Order will be in effect for FY 2014 upon publication of a summary of this Report and Order in the Federal Register and are reflected in the fee schedule attached as Appendix C.
We are also seeking further comment on methods to ensure or encourage compliance with our new toll free regulatory fee requirement as well as a proposal to adopt a new direct broadcast satellite (DBS) regulatory fee category in the attached Further Notice of Proposed Rulemaking.
The Commission is required by Congress to assess regulatory fees each year in an amount that can reasonably be expected to equal the amount of its appropriation.3 The Commission calculates the fees by first determining the full-time equivalent (FTE)4 number of employees performing
the regulatory activities specified in section 9(a), “adjusted to take into account factors that are reasonably 1 Section 9 regulatory fees are mandated by Congress and collected to recover the regulatory costs associated with the Commission’s enforcement, policy and rulemaking, user information, and international activities. 47 U.S.C. § 159(a). In FY 2013, the Commission was also required to collect $339,844,000 in regulatory fees. The final collection amount was $10.9 million over this total, which the Commission deposited in the U.S. Treasury. The year-to-date accumulated total is $81.9 million.
2 Assessment and Collection of Regulatory Fees for Fiscal Year 2014, Notice of Proposed Rulemaking, Second Further Notice of Proposed Rulemaking, and Order, MD Docket Nos. 14-92, 13-140, and 12-201, 29 FCC Rcd 6417 (2014) (FY 2014 NPRM). 3 47 U.S.C. § 159(b)(1)(B).
4 One FTE, a “Full Time Equivalent” or “Full Time Employee,” is a unit of measure equal to the work performed annually by a full time person (working a 40 hour workweek for a full year) assigned to the particular job, and subject to agency personnel staffing limitations established by the U.S. Office of Management and Budget.
related to the benefits provided to the payer of the fee by the Commission’s activities….”5 Regulatory fees must also cover the costs the Commission incurs in regulating entities that are statutorily exempt from paying regulatory fees,6 entities whose regulatory fees are waived,7 and entities that provide nonregulated services.8 To calculate regulatory fees, the Commission allocates the total amount to be collected among the various regulatory fee categories. This allocation is based on the number of FTEs assigned to work in each regulatory fee category. FTEs are categorized as “direct” if they are performing regulatory activities in one of the “core” bureaus, i.e., the Wireless Telecommunications Bureau, Media
Bureau, Wireline Competition Bureau, and part of the International Bureau. All other FTEs are considered “indirect.”9
The total FTEs for each fee category is calculated by counting the number of direct FTEs in the core bureau that regulates that category, plus a proportional allocation of indirect FTEs. Each regulatee within a fee category pays its proportionate share based on an objective measure, e.g.,
revenues, or number of subscribers or licenses.10 3.
Section 9 of the Act requires the Commission to make certain changes to the regulatory fee schedule “if the Commission determines that the schedule requires amendment to comply with the requirements” of section 9(b)(1)(A).11
The Commission is required, by rule, to revise regulatory fees by proportionate increases or decreases to reflect changes in the amount appropriated for the performance of its regulatory activities.12 The Commission must add, delete, or reclassify services in the fee schedule to reflect additions, deletions, or changes in the nature of its services “as a consequence of Commission rulemaking proceedings or changes in law.” These “permitted amendments” require Congressional notification13 before they may take effect and any resulting changes in fees are not subject to judicial review.14 4.
We continue our efforts to examine areas where we can improve our regulatory fee process to better reflect changes in the industry and at the Commission, and this Report and Order is another step in this process. The Commission began this regulatory fee reform analysis in the FY 2008 5 47 U.S.C. § 159(b)(1)(A).
When section 9 was adopted, the total FTEs were to be calculated based on the number of FTEs in the Private Radio Bureau, Mass Media Bureau, and Common Carrier Bureau. (The names of these bureaus were subsequently changed.) Satellites and submarine cable were regulated through the Common Carrier Bureau before the International Bureau was created. 6 Assessment and Collection of Regulatory Fees for Fiscal Year 2004, Report and Order, 19 FCC Rcd 11662, 11666, para. 11 (2004) (FY 2004 Report and Order). For example, governmental and nonprofit entities are exempt from regulatory fees under section 9(h) of the Act. 47 U.S.C. § 159(h); 47 C.F.R. § 1.1162.
7 47 C.F.R. § 1.1166.
8 E.g., broadband services, non-U.S.-licensed space stations.
9 The indirect FTEs are the employees from the International Bureau (in part), Enforcement Bureau, Consumer &
Governmental Affairs Bureau, Public Safety & Homeland Security Bureau, Chairman and Commissioners’ offices, Office of the Managing Director, Office of General Counsel, Office of the Inspector General, Office of Communications Business Opportunities, Office of Engineering and Technology, Office of Legislative Affairs, Office of Strategic Planning and Policy Analysis, Office of Workplace Diversity, Office of Media Relations, and Office of Administrative Law Judges, totaling 1,044 FTEs. 10 For a fuller description of this process, see Assessment and Collection of Regulatory Fees, Notice of Proposed Rulemaking, 27 FCC Rcd 8458, 8461-62, paras. 8-11 (2012) (FY 2012 NPRM).
11 47 U.S.C. § 159(b)(1)(A).
12 47 U.S.C. § 159(b)(2) (Mandatory Amendments).
13 47 U.S.C. § 159(b)(4)(B).
14 47 U.S.C. § 159(b)(3).
Further Notice.15 Regulatory fees cannot be precisely calibrated to the actual costs of the regulatory activities; however, there may be areas in which we can revise and improve the regulatory fee process.16 In that proceeding, the Commission sought comment on several issues, e.g., updating FTE allocations;17
ITTA’s proposal to add wireless providers to the Interstate Telecommunications Service Providers (ITSP) category, which includes interexchange carriers (IXCs), incumbent local exchange carriers (LECs), toll resellers, and other IXC service providers regulated by the Wireline Competition Bureau;18 adding a
category for Internet Protocol TV (IPTV);19 and adopting a per-subscriber fee for direct broadcast satellite (DBS).20 In its 2012 report on the Commission’s regulatory fee program the Government Accountability Office (GAO) encouraged the Commission to update the FTE allocations to better align regulatory fees with regulatory costs.21 In the FY 2012 NPRM 22 and the FY 2013 NPRM 23 the Commission also sought comment on revising the FTE allocations; and in the FY 2013 Report and Order we adopted updated FTE allocations to more accurately reflect the number of FTEs working on regulation and oversight of the regulatees in the various fee categories;24 we also combined the UHF and VHF television stations into one regulatory fee category,25 and created a fee category to include IPTV.26 5.
In our FY 2014 NPRM, we sought comment on proposed regulatory fees and on whether AM expanded band radio stations should remain exempt from regulatory fees. In addition, we sought comment on additional reform measures including: (1) reallocating some of the FTEs from the Enforcement Bureau, the Consumer & Governmental Affairs Bureau, and the Office of Engineering and Technology, as direct FTEs for regulatory fee purposes; (2) reapportioning the fee allocations between groups of International Bureau regulatees; (3) periodically updating FTE allocations; (4) applying a cap on any regulatory fee increases for FY 2014; (5) improving access to information through our website; (6) establishing a higher de minimis threshold; (7) eliminating certain regulatory fee categories; (8) combining ITSP and wireless voice services into one fee category; (9) adding DBS operators to the cable television and IPTV category; (10) creating a new regulatory fee category for non-U.S. licensed space stations, or, alternatively, reallocating some FTEs assigned to work on non-U.S. licensed space station 15 See Assessment and Collection of Regulatory Fees for Fiscal Year 2008, MD Docket No. 08-65, Report and Order and Further Notice of Proposed Rulemaking, 24 FCC Rcd 6388 (2008) (FY 2008 Further Notice).
16 FY 2008 Further Notice, 24 FCC Rcd at 6402, para. 30.
17 Id., 24 FCC Rcd at 6405, para. 41. 18 Id., 24 FCC Rcd at 6404, para. 40. 19 Id., 24 FCC Rcd at 6406-07, paras. 48-49.
20 Id., 24 FCC Rcd at 6407, para. 50. Although these proposals were not adopted at that time; we later adopted a new methodology for assessing regulatory fees for the submarine cable industry. See Assessment and Collection of Regulatory Fees for Fiscal Year 2008, Second Report and Order, 24 FCC Rcd 4208, 4213, para. 11 (2009) (Submarine Cable Order).
21 See GAO, Federal Communications Commission, “Regulatory Fee Process Needs to be Updated,” Aug. 2012, GAO-12-686 (GAO Report).
22 FY 2012 NPRM, 27 FCC Rcd at 8465-8469, paras. 18-34.
23 Assessment and Collection of Regulatory Fees for Fiscal Year 2013, Notice of Proposed Rulemaking and Further Notice of Proposed Rulemaking, MD Docket Nos. 13-140, 12-201, and 08-65, 28 FCC Rcd 7790, 7796-7803, paras. 15-29 (2013) (FY 2013 NPRM).
24 Assessment and Collection of Regulatory Fees for Fiscal Year 2013, MD Docket No. 08-65, Report and Order, 28
FCC Rcd 12351, 12354-58, paras 10-20 (2013) (FY 2013 Report and Order).
25 FY 2013 Report and Order, 28 FCC Rcd at 12361-62, paras. 29-31.
26 Id., 28 FCC Rcd at 12362-63, paras. 32-33.
issues as indirect for regulatory fee purposes; and (11) adding a new regulatory fee category for toll free numbers. Some of these issues had been raised in earlier regulatory fee proceedings and other issues were discussed for the first time as part of our reform process. We received 19 comments (some of which are joint comments) and six reply comments. Appendix A is a list of the commenters in this proceeding.
AM Expanded Band Radio Stations
Licensees operating a standard band AM station (540-1600 kHz) linked to an AM expanded band station (1605-1705 kHz) are subject to regulatory fees for the standard band station only.27 The Commission decided not to require section 9 regulatory fee payments for AM expanded band stations
to encourage the movement to the expanded band and reduce interference in the standard band. 28
In doing so, the Commission determined that at some future point we might impose section 9 regulatory fee requirements for AM expanded band stations.29 In the FY 2008 FNPRM, the Commission stated that “[t]here is no compelling reason to permanently exempt AM expanded band licensees from paying regulatory fees. As a general matter, it would be appropriate to treat the AM expanded band and the AM standard band similarly for regulatory fee purposes.”30 In the FY 2014 NPRM, we proposed adopting a section 9 regulatory fee obligation for all AM expanded band radio stations.31 7.
A number of AM expanded band broadcasters have chosen to operate exclusively in the expanded band; at least two opted to retain their standard band licenses. We find that there is no longer a reason to provide this regulatory fee exemption to AM broadcasters.32 Broadcasters who have retained both their standard and expanded band licenses should not continue to be exempt from paying regulatory fees because the exemption’s original purpose of encouraging AM broadcasters to move to the expanded band and reduce interference in the standard band has been achieved. Therefore, we adopt the proposal in the FY 2014 NPRM by discontinuing the exemption. Broadcasters who are operating in the AM expanded band will pay regulatory fees on the same basis as AM standard band licensees beginning in FY 2014. B.
Submarine cable systems33 transport data, as well as voice services, for international carriers, Internet providers, wholesale operators, corporate customers, and governments. The submarine cable industry is subject to minimal regulation and oversight from the Commission after the initial licensing process.34 After a submarine cable system is licensed, the regulatory activity is primarily 27 See Assessment and Collection of Regulatory Fees for Fiscal Year 2005 and Assessment and Collection of Regulatory Fees for Fiscal Year 2004, MD Docket Nos. 05-59 and 04-73, Report and Order and Order on Reconsideration, 20 FCC Rcd 12259, 12267, paras. 24-25 (2005) (FY 2005 Report and Order).
28 FY 2005 Report and Order, 20 FCC Rcd at 12267, para. 25.
30 See FY 2008 FNPRM, 24 FCC Rcd at 6393, para. 13.
31 FY 2014 NPRM, 29 FCC Rcd at 6424, para. 19.
32 Commenters addressing this issue support assessing regulatory fees on the AM expanded band licensees. See T. Cowan Comments at 1. We did not receive any comments objecting to discontinuation of the exemption.
33 Submarine cable systems are undersea cables between land-based stations carrying data and voice services.
34 FY 2014 NPRM, 29 FCC Rcd at 6427, para. 28.
limited to preparing Circuit Status Reports35 and filing of quarterly reports by licensees affiliated with a carrier with market power in destination market of the submarine cable.36 9.
Previously, commenters proposed that the regulatory fees among International Bureau licensees should be adjusted to reflect this minimal oversight37 and we sought comment on this issue in the FY 2014 NPRM.38 We tentatively concluded in the FY 2014 NPRM that we should revise the apportionment between satellite services (space station and earth station regulatory fee categories) and the
submarine cable operators/terrestrial and satellite circuits (submarine cable/bearer circuits) to more accurately reflect the amount of oversight and regulation for these industries.39
The satellite services pay 59 percent of the total regulatory fees allocated to International Bureau licensees and submarine cable pays 41 percent of this total. Submarine cable is subject to minimal regulation and oversight after being licensed, and therefore, the current allocation of 41 percent of regulatory fees is excessive for this industry.
For instance, in response to the FY 2014 NPRM, NASCA, representing several submarine cable operators (with 29 of the 41 active systems landing in the United States) emphasized that the Commission engages in limited enforcement activity, policy and rulemaking actions, user information services, and international activities regarding submarine cable operators.40 NASCA also observes that most of the Commission’s work related to submarine cable is limited to licensing, processing applications, and reviewing proposed transactions.41 11.
We agree that the combined revenue requirement for submarine cable is currently too high compared to the revenue requirement for the satellite and earth station operators.42 Specifically, the current regulatory fee assessment for the submarine cable category does not fairly take into account the Commission’s minimal oversight and regulation of the industry, as demonstrated by NASCA. We therefore reduce the regulatory fee apportionment for submarine cable to more accurately reflect the amount of regulation and oversight for this industry. In doing so, we find a five percent decrease in regulatory fee obligations is appropriate at this time. This decrease reflects that although only two FTEs in the International Bureau work on submarine cable issues, a total of 47.5 indirect FTEs devote time to both submarine cable and other regulatees of the International Bureau.43 A five percent decrease, is therefore appropriate because it reflects both the direct work on submarine cable issues and the indirect FTEs that devote their time to International Bureau regulatees as a whole. As discussed below, this
approximately five percent decrease in regulatory fees for submarine cable results in a change in the 35 See Reporting Requirements for U.S. Providers of International Telecommunications Services; Amendment of Part 43 of the Commission’s Rules, IB Docket No. 04-112, Second Report and Order, 28 FCC Rcd 575, 601-08, paras. 89-108 (2013), recon. pending.
36 See 47 C.F.R. § 1.767(l).
37 See, e.g., NASCA Comments at 8-9 (filed June 19, 2013); Telstra Comments at 2 (filed June 19, 2013); ICC Reply Comments at 2 (filed June 19, 2013).
38 FY 2014 NPRM, 29 FCC Rcd at 6427, para. 28.
39 The revenue allocation between submarine cable operators and common carrier terrestrial and satellite circuits is 87.6 percent/12.4 percent and was adopted in the Submarine Cable Order. See Assessment and Collection of Regulatory Fees for Fiscal Year 2008, Second Report and Order, 24 FCC Rcd 4208 (2009) (Submarine Cable
Order). We did not propose any change to this allocation in the FY 2014 NPRM.
40 NASCA Comments at 5-7.
41 NASCA Comments at 7.
42 NASCA Comments at 10-12.
43 FY 2013 Report and Order, 28 FCC Rcd at 12355, para. 13.
allocation percentage between Submarine Cable and Bearer Circuit issues (41 percent of International regulatory fees), and Satellite and Earth Station issues (59 percent of International regulatory fees) to 35.72 percent and 64.28 percent, respectively. We will revisit the issue of submarine cable systems in future regulatory fee proceedings to determine if additional adjustment is warranted. 2.
An earth station transmits or receives messages from a satellite. In the FY 2014 NPRM, the Commission recognized that oversight and regulation of the satellite industry by International Bureau FTEs involves legal, technical, and policy issues pertaining to both space station and earth station operations and is therefore interdependent to some degree.44 We also recognized in the FY 2014 NPRM, that our activities concerning the satellite industry also involve issues related to non-U.S. licensed space stations that access the U.S. market but do not pay regulatory fees.45
In light of this, we sought comment
on whether we should increase the earth station regulatory fee allocation in order to reflect more appropriately the number of FTEs devoted to the regulation and oversight of the earth station portion of the satellite industry.46 Commenters suggest that if the Commission needs a specific mechanism to account for International Bureau FTEs working on market access requests from non-U.S.-licensed satellites, the Commission should do so by increasing the earth station regulatory fee.47 EchoStar and DISH observe that earth station licensees’ regulatory fees may not reflect the regulatory cost associated with these systems for regulatory fee purposes. These commenters also note that space stations pay an unreasonably high portion of the regulatory fees for this allocation.48 Commenters also suggest the current allocation between space and earth station operators does not reflect the significant streamlining of space station regulation that has occurred.49 We agree with commenters and adjust the regulatory fees for earth stations to reflect the relative oversight and regulation of space stations and earth stations. Accordingly, as discussed above, we revise the allocation of the submarine cable/bearer circuit fee categories from 41 percent of all international regulatory fees to approximately 36 percent of all international regulatory fees. This reduction in the allocation of submarine cable/bearer circuit fee categories results in an increase in the satellite/earth station allocation percentage from 59 percent to
approximately 64 percent. This five percent change in allocation results in a larger projected revenue collection for satellite and earth stations. To collect this additional revenue for FY 2014 we will increase earth stations regulatory fees by 7.5 percent from their FY 2013 rates and we will collect the remaining revenue from the satellite fee categories. C.
As noted earlier, this Report and Order is our latest step in reforming our regulatory fee process. In the FY 2013 Report and Order, the Commission committed to additional regulatory fee reform, stating: 44 FY 2014 NPRM, 29 FCC Rcd at 6428, para. 29.
Some of these FTEs work on earth station issues that pertain to non-U.S.-licensed space stations.
45 Id., 29 FCC Rcd at 6433, paras. 47-50.
46 Id., 29 FCC Rcd at 6428, para. 29.
47 Satellite Parties Comments at 8-10 (“assessing these costs as part of earth station regulatory fees may be a better (albeit imperfect) method of capturing these costs”).
48 See, e.g., Echostar and DISH Comments at 5.
49 See, e.g., SIA Comments at 5. See also Comprehensive Review of Licensing and Operating Rules for Satellite Services, Report and Order, 28 FCC Rcd 12403 at 1205, n.2 (2013) (providing an exhaustive list of streamlined actions with respect to satellite services).
Various other issues relevant to revising our regulatory fee program were also raised in either the FY 2013 NPRM or in comments submitted in response to it. Because we require further information to best determine what action to take on these complex issues, we will consolidate them for consideration in a Second Further Notice of Proposed Rulemaking that we will issue shortly. We recognize that these are complex issues and that resolving them will be difficult. Nevertheless, we intend to conclusively readjust regulatory fees within three years.50
We adopted significant reforms in the FY 2013 Report and Order and we continued to seek comment on additional reforms in the FY 2014 NPRM and in the Further Notice included in this order. In the FY 2014 NPRM we sought comment on how often we should engage in an in-depth review of our regulatory fee methodology in a way that balances the need for stability to enable regulatees in various industry sectors to budget for regulatory fees against the need to reflect the changing work of the Commission FTEs.51
Commenters agree that we should update our FTE allocations at regular intervals, such as annually, to avoid assessing regulatory fees based on outdated information.52 15.
We conclude that it is appropriate to update the FTE count annually. We agree with commenters and the GAO that regular updates are appropriate in order to calculate regulatory fees more accurately. We also find it appropriate to perform these updates annually because doing so will ensure use of the most current FTE counts in regulatory fee calculations, while imposing little administrative burden on the Commission. We will begin this process beginning in FY 2015. 16.
Commenters also suggest that we conclude our regulatory fee proceedings earlier in the year;53 however, it is not feasible to do so because our fee calculations (unit estimates) are generally
updated based on industry submissions with filing deadlines between April and June, and this data is crucial in determining an accurate fee rate prior to release of the regulatory fee notice of proposed rulemaking.54 Given these deadlines, which are set for additional purposes beyond regulatory fees and the time needed to comply with rulemaking requirements, it is not currently feasible to conduct and conclude the regulatory fee process earlier in the year. 17.
Concerning revising allocations, we believe it would be appropriate to seek comment on any such revisions every two years, or as needed. Whereas updating the FTEs can be accomplished at minimal cost to the Commission, revising the allocations is a more complex process requiring in-depth analysis and public comment. Moreover, revising the allocations annually could create regulatory uncertainty based on changes stemming from small variations in annual workload rather than a longer
Therefore, given the need for regulatory certainty and the time needed for the
Commission to conduct the appropriate rulemaking proceedings we conclude that a biennial process for