Ms. Magalie Roman Salas
Secretary
Federal Communications Commission
1919 M Street, NW Suite 222
Washington, DC 20554
RE: Notice of Ex parte Presentation in
a Non-Restricted Proceeding
In re Implementation of
the Telecommunications Act of 1996: Telecommunications Carriers'
Use of Customer Proprietary Network Information and Other Customer
Information (CC Dkt. No. 96-115).
Dear Ms. Salas:
The Office of Advocacy, U.S. Small Business Administration,
by its undersigned representative and in accordance with Section
1.1206 of the Commission's rules, hereby respectfully submits
an original and one copy of this ex parte notification.
S. Jenell Trigg, Assistant Chief Counsel for Telecommunications,
had a telephone conversation with Thomas Power, Legal Advisor
for Chairman William E. Kennard on Wednesday, July 22, 1998 regarding
issues consistent with the written ex parte presentation
filed with the Commission on July 16, 1998. Advocacy's ex
parte filing asserted that the Commission violated the Administrative
Procedure Act and the Regulatory Flexibility Act ("RFA"),
as amended by the Small Business Regulatory Enforcement Fairness
Act of 1996, in its Second Report and Order that promulgated
rules for electronic flag and audit safeguards for all telecommunications
carriers(1)
One additional issue raised in this telephone conversation
not previously discussed are several statutory violations in the
Commission's compliance with the Paperwork Reduction Act ("PRA"),
as amended. Pub. L. No. 96-511, 94 Stat. 2812 (1980) (codified
at 44 U.S.C. §§ 3501 et seq.). Although approval of
the Office of Management and Budget ("OMB") for increased
reporting and recordkeeping burdens are not subject to judicial
review, 44 U.S.C. § 3507(d)(6),(2) the courts have held that
a rule which violates the PRA is unenforceable. Pacific National
Cellular v. United States, 1998 WL 214259 (rel. April 28,
1998); see also Career College Association v. Riley,
74 F.3d 1265 (1996). In
brief, Advocacy believes the FCC's PRA procedures are deficient
because the Commission did not develop a specific, objectively
supported estimate of burden, 44 U.S.C. § 3506(c)(1)(A)(iv);
and through public notice and comment, evaluate the accuracy of
the agency's estimate of the burden of the proposed collection
of information; evaluate whether the proposed collection is necessary;
and enhance the quality, utility, and clarity of the information
to be collected. 44 U.S.C. §§ 3506(c)(2)(a)(i)-(iii).
The Commission has a statutory duty to "minimize
the paperwork burden for . . . . small businesses . . . . and
other persons resulting from the collection of information by
or for the Federal Government; [and to] ensure the greatest possible
public benefit from and maximize the utility of information created,
collected, maintained, used, shared and disseminated by or for
the Federal Government." 44 U.S.C. § 3501(1)-(2). The
PRA, like the RFA, requires that an agency undertake an analysis
of the costs and burden of its rulemaking on small businesses
during its rulemaking deliberations and to provide an opportunity
for public notice and comment on any proposed information collection
at the NPRM stage. 44 U.S.C. § 3506(c)(2)(B). However,
both the NPRM and its PRA analysis are silent on the burdens of
any form of safeguards, because the NPRM tentatively concluded
to not impose safeguards on all telecommunications carriers.
In re Implementation of the Telecommunications Act of 1996:
Telecommunications Carriers' Use of Customer Proprietary Network
Information and Other Customer Information (CC Dkt. No. 96-115),
Notice of Proposed Rulemaking, 11 FCC Rcd 12513, para.
36 (1996).
Once the Commission changed its mind on this conclusion,
it then had a duty to submit new data to OMB if there was a "substantial
modification" in its PRA request for approval. 44 U.S.C.
§ 3507(d)(4)(D). The addition of audit and flag requirements,
and the extension of mechanized safeguards to all telecommunications
carriers to those not previously subject to Computer III
requirements, would qualify as a substantial modification by any
standard. Modified information on the burden of such requirements
should have been submitted to OMB "at least 60 days before
the issuance of the final rule." Id. (emphasis added).
The FCC's modified supporting statement to include the flag and
audit requirements was submitted to OMB on April 16, 1998, almost
two months after adoption of the rule and 4 months beyond the
statutory due date. More importantly, there are zero
estimates in the section where the cost of the audit and the flag
requirements should have been included. Given that the FCC's
request was not complete, we question whether OMB's approval includes
the approval for the flag and audit requirements
Advocacy realizes that the supporting data to OMB
are only estimates. However, lacking in the development of the
Commission's estimates are the cost of upgrades for software and
hardware, installation, personnel training and workload, professional
skills required, and maintenance of database for different sized
telecommunications carriers, especially small carriers that may
not have computer equipment at all. Given the absence of any
record evidence from the industry due to the lack of adequate
notice and opportunity to comment, the Commission's estimates
are speculative at best and unreasonable.
In summary, the Commission has failed to meet the
statutory requirements of the Administrative Procedure Act, the
Regulatory Flexibility Act, and the Paperwork Reduction Act.
Separately, the violations for each one of the above Acts are
sufficient to find the Second Report and Order arbitrary
and capricious. Cumulatively, these are overwhelming grounds
for the Commission to vacate or stay the flag and audit requirements,
issue a Further Notice of Proposed Rulemaking if it wished to
impose mechanized safeguards. We sincerely hope that the Commission
will act swiftly in its evaluation of these violations.
Thank you for your assistance in this matter. Please
call with any questions.
Very truly yours,
S. Jenell Trigg, Esq.
Assistant Chief Counsel for Telecommunications
Office of Advocacy
U.S. Small Business Administration
409 Third Street, SW Suite 7800
Washington, DC 20416
(202) 205-6533
ENDNOTES
1. In re Implementation of the Telecommunications Act of 1996: Telecommunications Carriers' Use of ustomer Proprietary Network Information and Other Customer Information, Second Report and Order and Further Notice of Proposed Rulemaking, CC Dkt. No. 96-115, FCC 98-27 (rel. Feb. 26,1998).
2. OMB granted its approval of the FCC's PRA request
for the Second Report and Order on June 23, 1998. It was
published in the Federal Register on July 21, 1998. 63 FR 39086
(1998).
Enclosure
cc: The Honorable William E. Kennard
The Honorable Susan Ness
The Honorable Michael Powell
The Honorable Harold Furchtgott-Roth
The Honorable Gloria Tristani
Mr. Tom Power, Legal Advisor to Chairman Kennard
Mr. Kevin Martin, Legal Advisor to Commissioner
Furchtgott-Roth
Mr. Paul Gallant, Legal Advisor to Commissioner
Tristani
Mr. Kyle Dixon, Legal Advisor to Commissioner Powell
Mr. Jim Casserly, Legal Advisor to Commissioner
Ness
Ms. Kathryn C. Brown, Common Carrier Bureau Chief