NOTICE ********************************************************* NOTICE ********************************************************* This document was originally prepared in Word Perfect. If the original document contained-- * Footnotes * Boldface & Italics --this information is missing in this version The document format (spacing, margins, tabs, etc.) is changed too. If you need the complete document, download the Word Perfect version. For information about downloading documents (FTP) see file how2ftp. File how2ftp (.txt & .wp) is in directory /pub/Bureaus/Miscellaneous/Public_Notices/ ***************************************************************** ******** Before the FEDERAL COMMUNICATIONS COMMISSION FCC 96-87 Washington, D.C. 20554 In the Matter of ) ) Implementation of Section 273(d)(5) ) of the Communications Act of 1934, ) GC Docket No. 96-42 as amended by the Telecommunications ) Act of 1996 -- Dispute Resolution ) Regarding Equipment Standards ) Notice of Proposed Rulemaking Adopted: March 5, 1996; Released: March 5, 1996 Comment Date: [20 days from Federal Register publication] Reply Comment Date: [30 days from Federal Register publication] By the Commission: I. INTRODUCTION 1. The Telecommunications Act of 1996, amended the Communications Act by creating a new section 273, 47 U.S.C.  273, which sets forth procedures to be followed by non- accredited standards development organizations that set industry-wide standards and requirements for manufacturing telecommunications equipment. The procedures allow interested industry parties to participate in setting industry-wide standards or generic requirements and require the organization and such parties to attempt to develop a dispute resolution process in the event of disputes on technical issues. 47 U.S.C.  273(d)(4). Section 273(d)(5) requires the Commission to prescribe within 90 days of enactment a dispute resolution process to be used in the event all parties cannot agree to a dispute resolution process. 47 U.S.C.  273(d)(5). Thus, the Commission's dispute resolution process is triggered only if the parties fail to agree to a process for resolving technical issues on their own. Section 273(d)(5) also requires the Commission to "establish penalties to be assessed for delays caused by referral of frivolous disputes to the dispute resolution process." Id. 2. The purpose of this proceeding is to establish dispute resolution procedures as provided for in section 273(d)(5). In section II(A) below, members of the public are requested to comment on the proposal set forth here and are also encouraged to submit alternative dispute resolution proposals that they believe would better implement this statutory section. Comment is also sought on methods for selecting an arbitrator or neutral and on the issue of whether the Commission should make its employees available for that purpose. In section II(B), we solicit proposals or recommendations concerning the types of penalties that should be assessed for referral of frivolous disputes. II. PROPOSED REGULATIONS A. Binding Arbitration Proposal 3. As explained above, section 273(d)(5) directs the Commission to prescribe a dispute resolution process to be used by non-accredited standards development organizations in situations where the parties involved cannot agree on the dispute resolution process to be used. 47 U.S.C.  273(d)(5). Specifically, section 273(d)(5) provides: -- [w]ithin 90 days after the date of enactment of the Telecommunications Act of 1996, the Commission shall prescribe a dispute resolution process to be utilized in the event that a dispute resolution process is not agreed upon by all the parties when establishing and publishing any industry-wide 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. 47 U.S.C.  273(d)(5). According to the Conference Report, the intended purpose of the Commission's dispute resolution process is to "enable all interested parties to influence the final resolution of the dispute without significantly impairing the efficiency, timeliness, and technical quality of the activity." 4. We propose here to require binding arbitration as the dispute resolution process. Binding arbitration involves the submission of the dispute to a third party or arbiter who renders a decision after hearing arguments and reviewing evidence. The parties to the dispute are bound by this final decision. Because it is less formal and complex than a formal hearing (i.e., procedural and evidentiary rules may be relaxed), arbitration is often less costly and time consuming than other dispute resolution mechanisms. Given the short 30-day period for completing the dispute resolution process, we believe binding arbitration presents the most feasible dispute resolution approach. We also seek comment on whether additional procedures are necessary in the event that the dispute resolution process is not resolved within the allotted 30-day time period. 5. Although binding arbitration appears to be the only dispute resolution method that could be accomplished within the short statutory period for completion of the dispute resolution process, we also seek comments on other approaches that might be used. For example, other methods of alternative dispute resolution include mediation, conciliation, neutral evaluation, settlement judges, mini-trial, or hybrids of these methods, such as "med-arb" (first, the neutral third party serves as a mediator and then as an arbitrator empowered to decide any issues not resolved through mediation). Although the Administrative Dispute Resolution Act, Pub. L. No. 101-552 (Nov. 15, 1990), contained a sunset date of October 1, 1995, we also invite parties to review its provisions in making recommendations to us. 6. In addition, we seek comment on what types of procedures are needed to govern the selection of an arbitrator or neutral fact-finder. For example, should the arbitrator or neutral be selected by agreement of the involved parties? If so, what procedures should apply in the event parties are unable to reach agreement on the arbitrator? We ask commenters to address these issues. Commenters may also wish to address whether Commission staff who have expertise in the area of dispute resolution should be available to serve as neutrals/arbitrators. We note, however, that any such proposal to use Commission staff could raise issues concerning the staff's delegated authority and the procedures for application for review to the full Commission in section 5(c)(4) of the Act, 47 U.S.C.  155(c)(4). B. Complaints of Frivolous Disputes 7. Section 273(d)(5) directs the Commission to establish penalties for delays caused by the referral of frivolous disputes to the dispute resolution process. We request commenters to assist us in defining what constitutes a "frivolous dispute." For example, section 1.52 of the Commission's rules requires that any document filed with the Commission be signed by the party or his counsel and that such signatures certify that the party or attorney has read the document, that "to the best of his knowledge, information and belief there is good ground to support it" and that "it is not interposed for delay." 47 CFR  1.52. This appears to be a useful definition in this context as well. We expect that findings concerning possible frivolous disputes and recommendations for an appropriate penalty could be made in the first instance by the resolver of the dispute, e.g., the arbitrator. We encourage commenters to present specific proposals concerning procedures for the referral of complaints of frivolous disputes to the Commission. 8. In addition, we seek public comment on the penalties that should be assessed against delaying parties. Specifically, we ask commenters to address whether the Commission should rely solely on its forfeiture authority contained in section 503(b) of the Communications Act, or in the alternative or in addition, whether it should, or could, impose other penalties such as barring the party from further participation in the standards and requirements development processes or the imposition of costs on the complainant if its complaint is found to be frivolous. In addressing these issues, commenters should consider what procedural protections might be necessary to protect the party subject to such a complaint. Further, in addressing the potential use of forfeitures, commenters should consider the impact of section 503(b)(5), requiring that, for certain persons, there be a citation and subsequent misconduct before a forfeiture can be assessed. 47 U.S.C.  503(b)(5). III. CONCLUSION 9. As discussed above, we have proposed a dispute resolution process, binding arbitration, that may be used in the event that disputes arise over technical issues when setting standards pursuant to section 273(d)(5) of the Act. To assist us in our efforts, we invite public comment on this proposal and any other possible rules and procedures that would enable us to fulfill the congressional directive. IV. PROCEDURAL MATTERS 10. Pursuant to the applicable procedures set forth in section 1.415 and 1.419 of the Commission's rules, 47 CFR  1.415 and 1.419, interested parties may file comments on or before (20 days from date of publication in the Federal Register) and reply comments on or before (30 days from date of publication in the Federal Register). All relevant and timely comments will be considered by the Commission before final action is taken in this proceeding. To file formally in this proceeding, participants must submit an original and four copies of all comments, reply comments and supporting comments. If participants want each Commissioner to receive a personal copy of their comments, an original and nine copies must be filed. Comments and reply comments should be sent to the Office of the Secretary, Federal Communications Commission, Washington, D.C. 20554. Comments and reply comments will be available for public inspection during regular business hours in the FCC Reference Center, (Room 239), of the Federal Communications Commission. 11. This Notice of Proposed Rulemaking is a non-restricted notice and comment proceeding. Ex parte presentations are permitted, except during the Sunshine Agenda period, provided they are disclosed as provided in Commission rules. See generally 47 CFR Sections 1.1202, 1.1203, and 1.1206(a). 12. As required by section 603 of the Regulatory Flexibility Act of 1980, the Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the expected impact on small entities of the proposals in this document. The IRFA is set forth in the paragraph below. Written public comments are requested on the IRFA. These comments must be filed in accordance with the same filing deadlines as comments on the rest of the Notice, but they must have a separate and distinct heading designating them as responses to the Initial Regulatory Flexibility Analysis. The Secretary shall send a copy of this Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration in accordance with paragraph 603(a) of the Regulatory Flexibility Act. P.L. No. 96-354, 94 Stat. 1164, 5 U.S.C. Section 601, et seq. (1980). 13. Initial Regulatory Flexibility Analysis Reason for Action: The Telecommunications Act of 1996 permits a Bell Operating Company, through a separate subsidiary, to engage in the manufacture of telecommunications equipment and customer premises equipment after the Commission authorizes the company to provide in-region interLATA services. As one of the safeguards for the manufacturing process, the Telecommunications Act of 1996 amended the Communications Act by creating a new section 273, which sets forth procedures for a "non-accredited standards development organization," such as Bell Communications Research, Inc., to set industry standards for manufacturing such equipment. The statutory procedures allow outside parties to participate in setting the organization's standards and require the organization and the parties to attempt to develop a process for resolving any technical disputes. Section 273(d)(5) requires the Commission "to prescribe a dispute resolution process" to be used in the event that all parties cannot agree to a mutually satisfactory dispute resolution process. 47 U.S.C.  273(d)(5). This rulemaking proceeding was initiated to secure comment on our proposal to rely on binding arbitration as this dispute resolution process. The proposals advanced in this Notice are also designed to implement Congress' goal of establishing procedures "to enable all interested parties to influence the final resolution of the dispute without significantly impairing the efficiency, timeliness and technical quality of the activity." H.R. Conf. Rep. No. 230, 104th Cong., 2d Sess. 39 (1996). Objectives: The Commission proposes a dispute resolution process that requires parties to rely on binding arbitration which appears to be the most feasible option given the 30 day period for completing the dispute resolution process. It also seeks to adopt rules that conform to specific statutory parameters. Section 273(d)(5) directs that the Commission "shall not establish itself as a party to the dispute resolution process," that the process shall permit resolution "in an open, non-discriminatory and unbiased fashion within 30 days after the filing of such dispute" and that the Commission will "establish penalties to be assessed for delays caused by referral of frivolous disputes to the dispute resolution process." 47 U.S.C.  273(d)(5). Legal Basis: The proposed action is authorized under the Communications Act, sections 4(i), 4(j), 273(d)(5), 303(r) and 403 of the Communications Act, 47 U.S.C.  154(i) and (j), 273(d)(5), 303(r), and 403. Reporting, Recordkeeping, and Other Compliance Requirements: The dispute resolution requirement contained in this Notice, if adopted, will require parties to use binding arbitration in the event that all parties cannot agree to a dispute resolution process. No reporting or recordkeeping requirements are proposed in this Notice. Federal Rules Which Overlap, Duplicate or Conflict With These Rules: None Significant Alternatives Minimizing the Impact on Small Entities Consistent with the Stated Objectives: This Notice solicits comments on a variety of alternatives. Any additional significant alternatives presented in the comments will also be considered. IRFA Comments: We request written comments on the foregoing Initial Regulatory Flexibility Analysis. Comments must have a separate and distinct heading designating them as responses to the IRFA and must be filed by the comment deadlines set forth in this Notice. 14. Authority to conduct this inquiry is given in sections 4(i), 4(j), 273(d)(5), 303(r) and 403 of the Communications Act, 47 U.S.C.  154(i) and (j), 273(d)(5), 303(r) and 403. 15. Further information on this proceeding may be obtained by contacting Sharon B. Kelley, Office of the General Counsel, 202/418-1720. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary