PTFP Rules and Policies
Federal Register, Part IV, Volume 61, Issue 218, p. 57966, November 8, 1996


National Telecommunications and Information Administration

15 CFR Part 2301
[Docket No. 960524148-6243-02 ]
RIN 0660-AA09

Public Telecommunications Facilities Program

AGENCY: National Telecommunications and Information Administration (NTIA), Commerce.

ACTION: Final rules.

SUMMARY: This document revises and clarifies the rules governing administration of the Public Telecommunications Facilities Program (PTFP). The PTFP is authorized to provide matching grants to plan and construct public telecommunications facilities.<1>

EFFECTIVE DATE: November 8, 1996

FOR FURTHER INFORMATION CONTACT: Dennis Connors, Director, Public Broadcasting Division, NTIA, Department of Commerce, 14th Street and Constitution Avenue, NW, Room 4625, Washington, DC 20230. Telephone: (202) 482-5802; Fax (202) 482-2156. Internet address: dconnors@ntia.doc.gov.

SUPPLEMENTARY INFORMATION: In 61 FR 27230, the National Telecommunications and Information Administration (NTIA) announced proposed revisions of the rules that govern the PTFP and requested public comments on those revisions. NTIA has reviewed the comments submitted as a result of the notice of proposed rulemaking and is now responding to the comments and issuing final rules. In response to the notice of proposed rulemaking (61 FR 27230, May 30, 1996) NTIA received comments from 7 different organizations.<2>

There was general support for the overall direction of the proposed revision. APTS, NPR, and NFCB supported the general thrust of the proposed clarifications and the reorganization of the rules. No opposition was received to many of NTIA's proposed changes to the rules including the incorporation of the priorities from the Appendix into the body of the rules and the changes proposed in the following sections: §2301.1 Program Purposes; §2301.3 Applicant Eligibility; §2301.6 Amount of Federal Funding; §2301.7 Eligible and Ineligible Project Costs; §2301.9 Deferred Applications; §2301.12 Federal Communications Commission Authorizations; §2301.13 Public Comments; §2301.14 Supplemental Application Information; §2301.15 Withdrawal of Applications; §2301.16 Technical Evaluation Process; §2301.18 Selection Process; §2301.19 General Conditions Attached to the Federal Award; §2301.20 Schedules and Reports; §2301.21 Payment of Federal Funds ; §2301.22 Protection, Acquisition and Substitution of Equipment; §2301.23 Completion of Projects; §2301.24 Final Federal Payment; §2301.25 Retention of Records and Annual Status Reports; and §2301.26 Waivers.

Comments on the proposed rules were mainly focused on two sections: §2301.4 Scope of Projects and §2301.17 Evaluation Criteria. The subject that prompted the most public comments, however, was not a section of the proposed rules, but rather a discussion in the Supplemental Information section of the Notice regarding the conversion of public broadcasting to advanced digital technologies.<3> We discuss each of these three subjects and several other issues raised by the public in the following sections.

§2301.4 Scope of Projects

§2301.4 relates to the scope of projects eligible for PTFP funding and moved a section that was an Appendix in prior years into the body of the Rules. APTS supported the incorporation of the priorities in the Rules as part of its general support for the reorganization of the PTFP Rules.

There were several comments on the proposed changes to this section. RMCPB suggested that the title of this section was nondescriptive of the content. RMCPB recommended this section be titled "Types of Projects, Priorities." We agree that this is an improvement and so have modified the title to "Types of Projects and Broadcast Priorities" in the Final Rules.

Three organizations, NFCB, NTU and RMCPB, commented on NTIA's proposal to place all broadcast applications within the five funding priorities and revise the scope of the Special Applications category to consist solely of nonbroadcast projects. NFCB supported NTIA's proposal and thought that reserving the Special Applications category for non-broadcast would be useful for considering applications utilizing new technologies. NTU hoped that the proposed reorganization did not change the priority status that PTFP has developed for distance learning projects over the past decade. RMCPB questioned whether, under the proposed rules, NTIA continued to possess the discretionary authority to award grants to eligible broadcast as well as nonbroadcast applicants with unique/innovative proposals. NTIA encourages the submission of applications that propose unique and innovative telecommunications projects, whether using broadcast or nonbroadcast technologies. We have therefore clarified this position through the creation of §2301.4(b)(6) Other Cases within the Broadcast Applications section. This section provides broadcast applicants the same opportunities for submission of unique or innovative applications as contained in the Special Applications §2301.4(a) for nonbroadcast applicants.

RMCPB proposed that, if NTIA were to place broadcast and nonbroadcast applications in different categories, NTIA should establish a set of priority distinctions for the nonbroadcast applications similar to that of the broadcast applications. While NTIA has established specific priorities for broadcast applications and continues to refine those priorities in the current regulations, we have chosen not to establish a fixed set of priorities for nonbroadcast applications for two reasons. The first reason is that under the Act, NTIA can only fund construction applications that establish or expand a nonbroadcast facility,<4> which are comparable to Priority 1A and 1B broadcast applications. Nonbroadcast applications are not eligible for equipment replacement, improvement or augmentation, which are Priorities 2, 4 and 5 of the broadcast applications. Priority 3 in the broadcast priorities, first local origination, is not applicable for nonbroadcast since NTIA considers the service provided by a nonbroadcast facility rather than the service area and recognizes that different technologies and services may provide a unique service in a particular service area. In effect, nonbroadcast applications are already grouped into a single category, Special Applications, which is comparable to Priority 1. NTIA has not broken the Special Applications category into different priorities for a second reason. We recognize that nonbroadcast applicants propose many different technologies, each technology with its own strengths in meeting the needs of a particular community, whether that community is a city, state, region or the nation. In encouraging the submission of innovative and unique applications, NTIA prefers not to establish rigid priorities but to let applicants propose projects which identify and serve needs in their chosen service area. We have, therefore, not published a set of priorities for Special Applications but have made minor changes to the Special Applications category to further clarify the intent of this category.

NFCB and APTS commented on NTIA's proposal to consider projects to construct public broadcast stations to address underserved needs in an area already served by other public broadcasting facilities within the Priority 4A, Improvement of Public Broadcasting Services. APTS supported the proposal to place these "second station" applications within the broadcast priorities but suggested that a lower priority -- Priority 5A -- would be more appropriate. APTS noted that given limited Federal funding, it was important to support existing public broadcasting facilities that are serving distinct and unserved needs before supporting new facilities. APTS indicated that stations in multi-station markets are treated as Priority 4A and that treating applicants for new second stations under Priority 5A would insure that existing facilities receive support before applications for new facilities to serve underserved needs.

NFCB, however, supported NTIA's placement of projects to construct public broadcast stations to address underserved needs in an area already served by other public broadcasting facilities within the Priority 4A. NFCB noted that public radio is a targeted medium and that even the best stations can only hope to serve a portion of their communities of license. NFCB felt that placement of second stations within Priority 4A recognized the need for such stations in an increasingly multicultural American society.

In the Notice of Proposed Rulemaking, NTIA proposed that projects to construct public broadcast stations to address underserved needs in an area already served by other public broadcasting facilities would be considered in Priority 4A so they could be considered with other applications from stations in areas already served by another public broadcasting facility. NTIA believes that not only is it important to maintain the existing services of second stations, but it is also important that communities with underserved needs have the opportunity to receive additional service from new facilities. We expect that new second service stations will be radio facilities that serve demonstrated needs in their community, and we do not anticipate that this provision will have a major impact on television facilities. We recognize that there is a delicate balance between supporting applications for new such services and maintaining those second stations already in place, but we believe that there is no clear reason to favor one type of application over the other. Therefore, we believe that Priority 4A is the appropriate placement for these applications.

In a related matter, RMCPB raised an issue under §§2304.4(b)(2) and (4), regarding those instances where two full-service public radio stations serve the same area with two discrete and distinct program services. RMCPB noted that even when utilizing different national program services and distinctive local programming, neither station can qualify as "essential" (existing broadcast stations that provide either the only public telecommunications signal or the only locally originated public telecommunications signal to a geographical area) and therefore neither may be eligible for Priority 2 replacement. These applications are accordingly placed in Priority 4A. RMCPB suggested that "PTFP discretionary consideration differing from that given either of two such stations without discrete service" be given<5>. NTIA appreciates RMCPB's concern regarding the priority of stations in multi-station areas. NTIA notes that some stations in a multi-station area may in fact qualify for Priority 2 as an "essential" station as the term is used in the PTFP regulations. Applicants are encouraged to provide information as part of their applications documenting whether they provide either the only public telecommunications signal or the only locally originated public telecommunications signal to a geographical area. NTIA, however, is reluctant to distinguish between stations on the basis of their programming services as proposed by RMCPB. NTIA has been able to fund Priority 4A applications in the past and expects to be able to do so in the future, dependent on the availability of funds.

RMCPB supported NTIA's clarification of how PTFP considers the presence of AM daytime only stations in determining the Priority for proposed FM facilities serving a similar coverage area. RMCPB raised the question regarding the priority for a public radio FM station serving an area covered by a student noncommercial educational station that does not operate full-time or year-round. NTIA's long-time practice is not to consider student noncommercial educational stations that do not operate full-time or year-round as providing a public telecommunications service. The presence of a student noncommercial educational radio station in an area, therefore, does not preclude Priority 1 consideration of an application for a public radio FM station proposing to provide a public telecommunications service.

§2301.17 Evaluation Criteria for Construction and Planning Applications.

Four organizations addressed the issue of evaluation criteria and each supported the combination of construction and planning into a single set of evaluation criteria <6>. The four organizations supported the criteria proposed by NTIA, though APTS and IURTS both opposed deleting the community support criterion from the past evaluation criteria.

APTS noted that public broadcasting stations exist to serve their local communities and that NTIA should not make grants to applicants who cannot demonstrate significant ties to their community. APTS suggested that financial support is the clearest objective evidence that an applicant is providing service valued by their community and that NTIA continue to require that applicants demonstrate that they receive local financial support. IURTS suggested that demonstration of community support is a good check to insure that the purposes of the PTFP program are being served.

NTIA agrees with the thrust of both the APTS and IURTS comments. We believe that demonstration of community support is an important element in the evaluation of an application. Indeed, we intend to incorporate demonstration of community support into the evaluation of several of the evaluation criteria proposed. As noted by APTS, community support is an important element in an applicant's ability to raise funds. This is true both for determining whether an applicant can raise both the short-term local match required by the PTFP application and the long-term funds necessary to operate the system during the Federal interest period. NTIA believes that demonstration of community support, therefore, is important for the financial qualifications criterion but also believes the demonstration of community support will be useful in evaluating other criteria as well. In most applications, demonstration of community support will be useful in documenting an applicant's fulfillment of the project objectives criterion. In many applications, demonstration of community support can be used to document urgency, applicant qualifications and special consideration. Rather than making community support an independent criterion, we have chosen to give applicants the opportunity to document community support for those criteria that are most appropriate to their application. Information on how this documentation can be included in the application will be contained in the Application Guidelines distributed to each applicant.

In a similar manner, we will include information within the Guidelines on another matter which was not included on the list of new criteria in the proposed rules -- coordination of the application with other telecommunications organizations. NTIA continues to believe that coordination of a project with other telecommunications organizations is an important issue but as with demonstration of community support, this information could support several evaluation criteria, depending on the nature of the applicant's project.

The four organizations each addressed the question raised by NTIA in the Notice which solicited comments on the appropriate weight to be assigned to each criteria.<7> Three of the four organizations presented suggestions on how the criteria should be weighted and all three suggested that "project objectives" and "urgency" be given the greatest weight.<8> NFCB and RMCPB each suggested that "urgency" and "project objectives" be given the greatest weight. NPR indicated that "Urgency" and "Project Objectives" (proposed criteria #3 and #1) have traditionally distinguished the most worthy applications. NPR cautioned, however, that "the most urgent need may not warrant a grant if the applicant lacks sufficient financial or other qualifications to implement the project." <9> Likewise, RMCPB suggested that the "financial qualifications" and "applicant qualifications" (proposed criteria #2 and #4) are in effect threshold criteria and should be given minimal weight but that NTIA might disqualify applications that did not meet a minimum on these two criteria. NFCB also felt that these two criteria would have to be met for a project to succeed but cautioned that there should be some evaluative process on these criteria which enables small public radio stations with limited staff and budget to compete equally for PTFP funds against larger stations. NFCB indicated that the "technical/planning qualification" (criterion 5(a) or 5(b)) should be a criterion that indicates whether a project is a go or a no-go. RMCPB recommended that criterion 5 and "special consideration" (criterion 6) should be equally weighted.

NTIA appreciates the thoughtful responses received on this issue. We agree that "project objectives" and "urgency" are the most significant of the criteria and so these criteria will be given the greatest weight during evaluation. We also agree that NTIA should not award a grant for a proposal, no matter how well the application meets the "project objectives" and "urgency" criteria, if the applicant is not financially qualified or otherwise able to complete the project. Therefore, the applicant's qualifications and financial qualifications will each serve as qualifying criteria. An application must meet a minimum threshold as defined in each of these criteria for further consideration during the evaluation process. The two remaining criteria, Technical/Planning qualifications and Special Consideration will be given lesser weight in evaluation than that awarded to "urgency" and "project objectives."

NTIA has, therefore, modified this section to reflect the evaluation weighting adopted. The criteria in §2301.17(b) have been reordered to list first the two qualifying criteria, "applicant qualifications" and "financial qualifications" as numbers 1 and 2. "Project objectives" will be criterion number 3 and "urgency" has been placed as criterion number 4. Since the financial qualification criterion has been made a qualifying criterion, the requirement that applicants "adequately justify the need for Federal funds in excess of fifty (50) percent of total project costs (see §2301.6(b)(2) ), if requested for equipment replacement, improvement, or augmentation projects" has been relocated to the project objectives criterion. The justification for more than 50% Federal funding only relates to the level of potential Federal funding and should not be a part of a criterion which is used to qualify the application for further consideration. A sentence has also been added to the project objective criterion which clarifies that evaluation of the applicant's proposal includes evaluation of the applicant's ability to implement the proposal, if funded. A sentence reading "that the condition of existing equipment justifies its prompt replacement" has been relocated from criterion 5(a) "technical qualifications", to criterion 2 "urgency" to reflect the weight given this criterion. Several new phrases have been added to clarify the "urgency" and "applicant qualifications" criteria. Finally, new language has been added to §2301.17(a) which incorporates the weighting adopted by NTIA.

Conversion to Digital Technology

Although not a part of the proposed rules itself, six of the seven organizations commented on the statement in NTIA's Notice which welcomed applications which will assist in planning for the digital conversion of public broadcasting facilities.<10> Five of these six organizations supported NTIA's interest in supporting projects to plan for digital conversion of public broadcasting facilities. NFCB supported the concept in general, as did NPR, which cautioned that NTIA should bear in mind the program's broader objectives so that the funding of digital conversion planning projects promotes, rather than undermines, the availability of public telecommunications services, particularly in rural areas. RMCPB was supportive of NTIA's recognition of the issue of conversion to digital technologies but suggested that public broadcasters capable of practicable conversion are also capable of planning without PTFP grants. RMCPB concluded that NTIA funds might better be devoted to funding acquisition of digital components through construction grants.

Both APTS and PBS suggested changes in NTIA policy to encourage digital conversion. APTS expressed concern that the number of applications for planning grants for ATV conversion could swamp the PTFP funds if a large number of public television stations seek planning grants. APTS noted that it and PBS have launched efforts to coordinate public television's transition to digital technology. APTS urged NTIA to clarify that these coordinated efforts, such as reducing the cost of digital transition by pooling engineering resources, establishing model planning programs for different types of stations, and consolidating buying power in order to obtain volume discounts, would be eligible for PTFP planning funds. APTS requested that these coordinated efforts be afforded a high priority in receiving Federal grants. APTS also urged that NTIA make it clear that planning for capital campaigns to finance the transition to ATV at individual public television stations will be eligible for planning grants. APTS noted that for a number of stations, the cost of planning capital campaigns will itself be a significant drain on their finances.

PBS addressed two issues in its comments regarding digital conversion: fund allocation priority and the percentage of costs that may be funded. Because digital television is intended to replace, rather than to supplement, analog television and because the FCC plans to mandate a transition to digital and abandonment of analog operation, PBS urged that NTIA consider the coordinated planning of digital facilities as a first service to an unserved area, with no diminution of priority because of the existence of analog service. PBS also urged that such applications be considered new or extended service, thereby qualifying the proposals for 75% rather than only 50% funding.

PBS also suggested that some aspects of the proposed regulations may require modification after the FCC adopts its digital television regulations. PBS noted as an example that the FCC may not require the filing of applications for digital conversion or may establish timetables which may not conform to that required under the PTFP regulations. NTIA recognizes that the FCC has the lead in establishing policy regarding television's transition to digital technology and will indeed be mindful of FCC requirements for digital conversion. NTIA will ensure that the PTFP regulations do not restrict public television's ability to seek Federal funding or FCC authorizations during the conversion to digital technology. NTIA will also keep an open mind on the use of ancillary data streams on NTIA-funded facilities.

PBS suggested that NTIA should be flexible in releasing the Federal interest in analog equipment that becomes obsolete because of the transition to digital equipment. PBS further noted that a ten-year Federal interest period may be inappropriate for digital equipment, since the useful life span of this equipment is as yet unknown. In a similar comment, IURTS noted that even traditional broadcast-grade products cannot remain current for the duration of the ten-year Federal interest period. IURTS commented that PTFP should consider reducing the federal interest period from ten years. IURTS is concerned that due to the rapid advancements in computer platforms and operating systems in today's market, the hardware and software will be obsolete in about half the Federal interest period described by PTFP. IURTS recommended that NTIA expand its support of computer-based PC-type technology in place of traditional broadcast products. Specific reference was made to PC based character generators, still-store devices, digital special effects devices, replacement for audio carts, digital audio workstations, etc. With the development of PC-based technology, IURTS noted that these less-expensive solutions can reduce station's costs while still providing service to the community. Acknowledging that these PC-based solutions will not last the ten-year Federal interest period, IURTS recommended both a shortening of the Federal interest period and a corresponding reduction in the recommended funding level. IURTS gave an example of a dual channel still-store normally funded by PTFP at a $50,000 level which could be reduced to $25,000 and provide many stations with digital options they could not otherwise afford or support.

NTIA acknowledges the problem in a rapidly changing technical environment that some analog or digital broadcast equipment may not have a useful life of ten years. PTFP is mandated by statute to maintain a ten-year Federal interest period. See 47 U.S.C. §392(g). While we appreciate the concerns expressed by PBS and IURTS, until such time as the statute is changed, NTIA is bound to maintain this requirement. NTIA notes that grantees may have alternatives in satisfying NTIA's Federal interest in equipment and calls grantees attention to §2301.22(g) Transfer of Federal interest to different equipment of the final rules. Under this provision, a grantee may request that the Agency transfer the remaining Federal interest in a piece of equipment to another item of equipment presently owned or to be purchased by the grantee with non-Federal funds. Grantees may also dispose of the equipment at any time in accordance with the Uniform Administrative Requirements under OMB Circular A-110, §34 and 15 CFR §24.32. The recipient may request disposition of the equipment from the agency; and, if the fair market value of the equipment at the time of disposition is under $5,000, there is no further obligation to the Federal Government.

NTIA appreciates the support shown by the public comments for its interest in participating in the digital conversion of public broadcasting facilities. We have carefully considered the suggestions for changes in the proposal offered by the respondents, including changes to priorities and funding levels. We believe that it is premature to make those changes at this time since so much about the transition to digital technology is still unknown. The FCC has neither adopted technical standards for digital television nor established its digital television regulations. It has yet to set a timetable for the transition of television facilities from analog to digital technology. NTIA will work with the public broadcasting community and closely monitor the development and transition to digital technologies. As conditions warrant, NTIA can revise its policies towards digital conversion through publication of the annual closing date notice or through other publications. For the moment, we will adopt the suggestion of RMCPB, which noted that, despite the Agency's recognition of the issue of digital conversion, there was no provision in the proposed rules for addressing the issue or welcoming applications to plan for conversion. We have modified the language in §2301.4(b)(6) Other Cases within the Broadcast Applications section to specifically reference planning applications for digital conversion as a unique or innovative project. NTIA has been routinely funding digital equipment for replacement which is compatible with the proposed standards for digital television. Under Other Cases, NTIA would also accept applications for construction of digital facilities that could be considered unique or innovative.

In addition to the comments on these three major sections, there were public comments on several other changes in the Notice of Proposed Rulemaking.

§2301.2 Definitions

APTS expressed concern about its perceived change to the Federal interest period to the useful life of the equipment under the definition contained in §2301.2 of the proposed rule. We did not change the federal interest period, as mandated in 47 U.S.C. §392(g), from ten years to the useful life. The federal interest period remains at ten years and is primarily a financial interest within which PTFP must collect a proportionate share of the Federal funds expended under an award if a grantee ceases to be a public telecommunications entity or the facilities cease to be used for the provision of public telecommunications services. We intended to clarify that Federal Constitutional interests, for example, the First Amendment's protections under the Establishment of Religion and the Freedom of Speech Clauses, and the Fourteenth Amendment's equal rights protections, extend for the useful life of the facilities. Even where a grant program statute establishes a federal interest period, the Supreme Court has ruled that certain Constitutional guarantees remain for the useful life of Federally-funded facilities. <11> We have inserted "Constitutional" to clarify what federal interests extend for the useful life of property.

RMCPB suggested we define the term "useful life." A definition of "useful life" has been added as the last defined term in §2301.2.

§2301.5 Special Consideration

As mandated by Congress under §392(f) of the Act, the Agency will give special consideration to applications that foster ownership of, operation of, and participation in public telecommunications entities by minorities and women. This statutory provision remains and over the past nine years, the Corporation for Public Broadcasting has assembled a report to Congress on the provision of services to minority and diverse audiences by public telecommunications entities, which evidences the continued need for these services. NTIA is particularly concerned with the provision of services to minorities, women, and diverse audiences by public telecommunications entities. Therefore, NTIA will continue to evaluate how well applicants demonstrate significant diversity in the ownership of, operation of, and participation in public telecommunications facilities. Special consideration, therefore, remains as one of several evaluation criteria contained in the regulation, specifically, at 15 CFR §2301.17(b)(6).

NFCB expressed concern over the elimination of the 50% minimum participation of minorities an/or women in order to qualify for special consideration. NFCB argued that the elimination of the 50% minimum requirement may open up special consideration to such a degree that it becomes useless as a factor in evaluating applications. NTIA does not believe that it is necessary to establish any minimum minority or women participation requirements for special consideration in PTFP evaluations in order to carry out the objectives of the statute. Rather, NTIA believes that the congressional intent can be achieved in a fair and flexible manner by taking into account all factual circumstances that might lead to special consideration.

PTFP applies special consideration to encourage all applicants to assist the program to achieve one of its statutory purposes, to increase the amount of public telecommunications facilities owned by, operated by and participated in by minorities and women. Employment of minorities or women is not the only way in which NTIA may assess whether an application promotes significant diversity in the ownership of, operation of, and participation in by minorities and women. NTIA is also interested in outreach efforts, audience development, and programming strategies. One stated purpose of this program is to respond to the educational, cultural and related programming needs of diverse groups. If an applicant can demonstrate to the NTIA that its application is furthering the statutory objective, that application will be more highly rated under the special consideration factor.

The language of this section has been modified to clarify NTIA's policy on special consideration and an accompanying modification has been made in the Special Consideration evaluation criterion in §2301.17(b)(6) . To the degree there is any discrepancy of interpretation, this final rule will take precedence and is intended to describe special consideration as required by 47 U.S. C. §392(f).

§2301.6 Amount of Federal Funding

RMCPB observed that §2301.6(a) permits 100% Federal funding of planning grants and noted that this provision is permissive and not obligatory. Since NTIA has limited funds for the PTFP program, RMCPB suggested that 75% be the general presumption for planning purposes. NTIA appreciates this suggestion and notes that most of the planning grants awarded by PTFP in recent years include matching in-kind services and funds contributed by the grantee. Modifying §2301.6(a) as suggested by RMCPB would codify what already has become PTFP practice. We are, however, mindful that planning grants are sometimes the only resource that emerging community groups have with which to initiate the planning of new facilities in unserved areas. We have, therefore, included a provision at §2301.(6)(a)(2) that NTIA will continue to award up to 100% of total project costs in cases of extraordinary need. We have also modified the evaluation criteria with a new section at §2301.17(b)(3) to reflect the need for applicants to justify a request for more than 75% Federal funding for planning projects.

§2301.8 Submission of Applications

RMCPB expressed concern in a change in the proposed §2301.8(d) which removed the number of copies of applications required by NTIA from the specific number "2" to the more flexible "the number of copies specified by the Agency." RMCPB pointed out that any increase in the number required will be an added burden on the small station and community broadcaster applicants. We note that under 5 CFR §1320.5(d)(2)(iii), an agency can only require an original plus two copies of an application. Any request for additional copies would have to be justified to and cleared by the Office of Management and Budget. The flexibility in the number of applications which NTIA can request is, therefore, extremely limited. For the first time in FY 1996, NTIA requested three copies of an application to permit concurrent processing of the applications by NTIA reviewers and thereby enable issuance of timely awards.

APTS expressed its concern about NTIA's proposal to delete from the rules the specific showings required of applicants and to specify those requirements in the application form in the bid solicitation. APTS indicated that, while the deletion of this information is intended to give NTIA flexibility to reduce application burdens, the proposal can create uncertainty as to the showing required of applicants. APTS continued that the flexibility conferred would also permit NTIA to impose additional burdensome requests without affording public broadcasters the opportunity to comment meaningfully.

NTIA appreciates the concerns expressed by APTS. It was NTIA's intention in removing the specific requirements from the Rules to give NTIA the flexibility of future reductions in requirements on the application form to lessen the burden on applicants. We believe that this flexibility will be beneficial to applicants in several ways. First, it will permit NTIA to lessen the burden on applicants during the FY 97 grant cycle while using the existing PTFP application form. These improvements will include several changes supported by APTS which are contained in the proposed rules, such as the proposal to modify the requirement that an applicant report changes in its board structure and to require applicants to provide only summaries of their application to the State Single Point of Contact rather than complete copies of the application. Second, flexibility in these final rules will permit NTIA to further lessen the burden on applicants through modification of the PTFP application form in 1997 without having to promulgate another set of accompanying PTFP rules.<12> Promulgation of a set of PTFP rules is a lengthy administrative process and one that cannot be done every year. The average PTFP rules are in force for a period of three to five years. Therefore, removing the specific application requirements from the final rules also gives NTIA the flexibility of continually making improvements in lessening applicant burdens during the periods between formal revisions of the PTFP rules. NTIA supports a continuing dialog with members of the public telecommunications community to improve the responsiveness of the PTFP. PTFP continually solicits comments on the application process from those who are sent the application packet, both from applicants and those who choose not to submit an application.<13> NTIA will also discuss application guidelines with members of NTIA's National Advisory Panel of Public Broadcasting Organizations at its annual meetings.

APTS felt that NTIA's proposal could create uncertainty as to the showing required of applicants since, "the solicitation of bids is typically published with only a few weeks notice before applications are due.<14> NTIA has typically published formal announcements of the acceptance of applications approximately 3 months before the closing date.<15> We believe that this is sufficient time for preparation of applications since the major objectives and priorities of the program are well known and have not significantly changed in these final rules. PTFP distributes a detailed set of Guidelines to assist applicants in the preparation of applications, and applicants may contact PTFP for technical assistance in the preparation of application during the period prior to the application deadline.

APTS also commented on the financial responsibility requirements contained in §§2301.8(g), (h) and (i). APTS believes that the financial responsibility requirements "confers virtually unfettered discretion on NTIA as to which applicants will be subject to the request for data," "the scope of the inquiry is astonishingly broad," can be "potentially burdensome" and contain "vague provisions".<16>

§§2301.8(g) and (h) are based on the "Department of Commerce Financial Assistance Name Check Procedures." This policy has been in effect since 1988, has served as a reasonable attempt to protect the public interest, and has not proven to be overburdensome. NTIA does not intend to use the "responsibility determination" process in a punitive or detrimental manner against potential award recipients. As an agency which has been provided authority to make discretionary decisions for the Federal Government, it is reasonable for NTIA to make every effort to determine that potential award recipients are responsible. To the extent possible, the regulation is intended to ensure that there are no matters facing potential award recipients that might significantly and negatively impact on their business honesty, financial integrity and/or ability to successfully perform the proposed grant activity. We think that the trust vested in NTIA demands that it makes a reasonable attempt to protect the public interest by trying to ensure that it deals with only responsible parties. Therefore, no changes have been made to this section.

Based on "a reasonable person" standard which is employed throughout these regulations, we feel that §2301.8(i) is clear. Unsatisfactory performance essentially means that one does not substantially achieve his or her project goals and objectives. As project goals and objectives vary from one project to another, unsatisfactory performance must, to some extent, be situationally determined. It would be unreasonable to attempt to precisely define "unsatisfactory performance" in the regulation for all projects, all circumstances and for all times.

§2301.10 Applications Resulting from Catastrophic Damage or Emergency Situations

APTS and RMCPB commented on NTIA's addition of a phrase regarding "complete equipment failure" to this section on applications resulting from catastrophic damage or emergency situations. RMCPB characterized the proposal as being "a box of Pandoras". APTS warned that NTIA may inadvertently create a loophole in the funding priorities by creating incentives for applicants to claim that the imminent loss of an essential piece of equipment warrants an immediate grant. APTS continued that unlike a catastrophic loss, a clearly defined unanticipated event, the complete loss of essential equipment lacks any clearly defining moment. APTS concluded that, in many cases, the "loss" may have been avoided by a timely request for funding.

NTIA believes that APTS and RMCPB raise valid concerns, which are shared by the Agency. NTIA's intent in making this proposal was to be able to quickly respond to the emergency of a complete failure of basic equipment essential to a stations continued operation, whether that failure was caused by natural or manmade causes. This section is limited to equipment essential to a station's continued operation. We do not believe this section would include most program origination equipment but rather would be applicable to equipment such as transmitters, tower, antennas, STL's or similar equipment which, if the equipment failed, would result in a complete loss of service to the community. For example, NTIA recently received an emergency request from an applicant regarding the strengthening of a tower. A recent engineering study on the tower indicated that the tower was dangerously overloaded and in danger of imminent collapse. NTIA felt that it was both prudent and good business sense to make the modest investment in strengthening the tower on an emergency grant basis rather than risking loss of service to a community and incur the greater expense of replacing a collapsed tower.

NTIA will, therefore, retain the originally proposed language in this section but will add clarifying language in regarding the nature of the equipment eligible for emergency applications, as well as language indicating that an applicant claiming complete equipment failure must document the circumstances of the equipment failure and demonstrate that the equipment has been maintained in accordance with standard engineering practice.

§2301.11 Service of Applications

NPR and RMCPB supported NTIA's proposal in §2301.11 that the applicant's notification to the SPOC, the FCC and the state telecommunications agencies need only be a summary of the application, rather than the full application required in prior PTFP Rules. Both organizations cautioned, however, that if selecting/compiling excerpt materials is too complicated, it will be an added burden on applicants instead of a benefit. RMCPB noted that the New Mexico Commission on Public Broadcasting only needs to review pages 1 and 2 of the PTFP application form and the narrative. NTIA's intent in proposing that applicants submit a summary of the application rather than the full application to the SPOC and other appropriate agencies was intended to reduce the paperwork burden on applicants. We did not intend this summary to be a burdensome exercise and the information suggested by RMCPB appears to be reasonable notification. In making notification to the appropriate agencies, applicants should make clear that additional information regarding their PTFP application is available upon request. Future application materials will provide guidance as to what should be included in the summary to provide adequate notification to the requisite agencies while reducing the notification burden on all applicants.

§2301.18 Selection Process

NTIA is making two revisions to this section to clarify internal procedures in the selection process for the public. At §2301.18(a) and the new §2301.18(b), we have added language which clarifies that the PTFP Director presents recommendations to the OTIA Associate Administrator for review and approval prior to their submission to the NTIA Administrator. We have also clarified in the new §2301.18(a)(4) that NTIA may consider in the selection of a grant recipient whether the applicant has any current NTIA grants. This provision recognizes that in some instances the presence of a current NTIA grant is relevant in the decision to make a new award and does not prohibit the award of new grants to current grant recipients.

Restatement of Existing Policies

We are also taking this opportunity to restate several long-standing PTFP policies which were published in the preambles of previous PTFP rules or as a separate policy statement. The following policies remain in effect:

Evidence of tax-exempt status

Applicants who are eligible for a §501(c)(3) exemption from the IRS or the equivalent exemption from the Commonwealth of Puerto Rico must submit a copy of that exemption. Applicants who are ineligible for §501(c)(3) exemption but who can demonstrate nonprofit status by showing an applicable State tax exemption will be considered on a case-by-case basis. They must submit: (a) evidence of their State tax-exempt status; (b) citation to, and a copy of, the State statutory provisions governing that exemption; and (c) a brief statement explaining why they lack a §501(c)(3) exemption. (Fed. Reg. Vol. 44, No. 104, p. 30899)

Equipment which becomes obsolete before the end of the ten-year period of Federal interest

In the case of equipment which becomes obsolete or wears out before the ten-year period of Federal interest expires, we will permit the trade-in or sale of the equipment and application of the remaining portion of the ten-year period to the new equipment. (Fed. Reg. Vol. 44, No. 104, p. 30910)

Selection of Priority

In preparing the narrative portions of its application, each applicant should state under which priority it desires NTIA to consider its application. In doing so, each applicant makes sure that its application contains sufficient documentation to justify its qualification under the selected priority. NTIA will then evaluate the application with the selected priority unless the Agency determines that the priority selected by the applicant is not supported by the documentation provided. Each applicant will be notified of any change in the priority under which its application is to be considered. Such notifications will be in writing and will not be subject to appeal. (Fed. Reg. Vol. 47, No. 228, p. 53653)

Award of Deferred Applications

The Administrator retains the discretion to award grants to deferred applications at any time where the Administrator can determine with reasonable certainty that the particular project is exceptionally meritorious (on the basis of the Agency's preliminary determination of all other applications within the priority) and that the Agency would fund the project after completing the evaluation of all the applications in the priority (on the basis of the Agency's prior experience in making grants.) Under this process, the Agency will be able to fund applications that the Agency had deferred in the prior year because of technical problems (such as the inability to obtain the necessary FCC authorizations) which have since been eliminated. (Fed. Reg. Vol. 47. No. 50, p. 11232.)

Support for Salary Expenses

NTIA regards its primary mandate to be funding the acquisition of equipment and only secondarily the funding of salary expenses, even when allowed by law. Moreover, NTIA notes that the competition for PTFP funding remains intense. To ensure that PTFP monies are distributed as effectively as possible in this competitive atmosphere, NTIA must weigh carefully its support for any project cost not directly involved with the purchase of equipment.

Therefore, NTIA generally will not fund salary expenses, including staff installation costs, pre-application legal and engineering fees, and pre-operational expenses of new entities. NTIA will support such costs only when the applicant demonstrates that exceptional need exists or that substantially greater efficiency would result from the use of staff installation instead of contractor installation.

As regards the installation of transmission equipment, NTIA strongly favors the use of either manufacturer or professional contractor personnel and commonly funds these costs. NTIA believes that the value of transmission equipment and the complicated nature of its installation require expertise beyond that normally found on station staffs.

NTIA will rarely support requests for assistance for the installation of studio and test equipment, whether that installation is by staff or by contract employees. Such installation is normally of minimum difficulty, and the associated installation costs should be absorbed in the recipient's normal operating budget. Again, NTIA will take into account demonstrations of exceptional need. (Fed. Reg. Vol. 56, No. 226, p. 59172)

Sectarian Activities

Applicants are advised that on December 22, 1995, NTIA issued a notice and an amendment to the PTFP regulations in the Federal Register on its policy with regard to sectarian activities. Under NTIA's prior policy, NTIA funds could not be used for any sectarian purposes. Under the revised policy, while religious activities cannot be the essential thrust of a grant, an application will not be ineligible where sectarian activities are only incidental or attenuated to the overall project purposes for which funding is requested. (60 Fed. Reg. 66491).

It has been determined that this rule is not significant for purposes of Executive Order (E.O.) 12866.

A Regulatory Flexibility Analysis is not required under The Regulatory Flexibility Act (5 U.S.C. §601 et seq.) because the rules were not required to be promulgated as proposed rules before issuance as final rules by §553 of the Administrative Procedures Act (5 U.S.C. §553) or by any other law. This rule does not contain policies with Federalism implications sufficient to warrant preparation of a Federalism assessment under Executive Order 12612.

The Department has determined that these rules will not significantly affect the quality of the human environment. Therefore, no draft or final Environmental Impact Statement has been or will be prepared. Notwithstanding any other provision of law, no person is required to respond to nor shall a person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a currently valid OMB Control Number.

The Office of Management and Budget has approved the information collection requirements contained in these rules pursuant to the Paperwork Reduction Act under OMB Control Nos. 0660-0003, 0660-0001 and 0605-0001. The public reporting burden for the application requirements vary from 16 hours to 200 hours with an estimated average of 125 hours per application, including associated exhibits; the reporting and record keeping burden for the grant monitoring reports vary from 1 to 24 hours depending on the respective requirement; and, the reporting burden for the name-check form (CD-346) is estimated at 15 minutes. These estimates include the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collections of information. Send comments regarding these burden estimates, or any other aspects of the collections of information, including suggestions for reducing this burden, to the Office of Policy and Coordination and Management, NTIA, U.S. Department of Commerce, Washington, D.C. 20230; and to the Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503 (Attention: NTIA Desk Officer).

(Catalogue of Federal Domestic Assistance No. 11.550)

List of subjects in 15 CFR Part 2301

Administrative procedure, Grant programs -- communications, Reporting and recordkeeping requirements, Telecommunications.

Larry Irving



<1> See 47 U.S.C. 309-393, and 397-399b (1994), The Communications Act of 1934, as amended. Unless otherwise noted, all statutory citations are to title 47 of the United States.

<2> Comments were submitted by the following organizations: Association of America's Public Television Stations (APTS); Indiana University Radio and Television Services, operator of WFIU-FM/WTIU-TV (IURTS); the National Federation of Community Broadcasters (NFCB); Public Broadcasting Service (PBS); and the Rocky Mountain Corporation for Public Broadcasting, Albuquerque, NM (RMCPB).

<3> See NPRM at 27230.

<4> §390 of the Act, which is included at §2301.1 of these final rules.

<5>Comments of RMCPB, p.3.

<6>APTS, and NPR specifically supported a common set of criteria for evaluation of planning and construction applications and NFCB and RMCPB supported the common evaluation criteria by reference.

<7> See NPRM at 27230.

<8> APTS opposed giving the criteria different weights, indicating it was not clear which criterion was more important than the others. APTS also felt NTIA had already decided what factors it considers most significant by establishing priorities for grants and that applicants would tailor their proposals to match the weighting.

<9> Comments of National Public Radio, p. 3.

<10> See NPRM at 27230. The only organization not addressing this issue was NTU.

<11> See Tilton vs. Richardson, 403 U.S. 672 (1971).

<12> The current PTFP application form expires October 1, 1997. The new form will be adopted after public comment in conjunction with Office of Management and Budget review pursuant to the Paperwork Reduction Act, 44 U.S.C. 3501., et. seq.

<13> See for example the "Special Note" on the inside back cover of the FY 96 PTFP Guideline for Preparing Applications.

<14> Comments from APTS, p. 4.

<15> For fiscal year 1996, the Department of Commerce did not receive a final appropriation unitl April 26, 1996. See Department of Commerce and Related Agencies Appropriations Act, 1996, P.L. 104-134. This, in turn, left PTFP with five months to review, evaluate and make awards.

<16> Comments from APTS, P. 5-7.

Source: U.S. Department of Commerce
National Telecommunications and Information Administration
Office of Telecommunications and Information Applications
Posted: 08 Nov 96