The FCC released a 911 fee diversion report and order today that adopts proposals in a notice of proposed rulemaking "with minor modifications and clarifications."

Section 902 of the Don't Break Up the T-Band Act of 2020, which was enacted in December as part of omnibus appropriations legislation, directed the Commission to adopt rules defining what 911 fee uses by states and jurisdictions constitute diversion (TR Daily, Jan.  4).

The NPRM in the proceeding was adopted in PS dockets 20-291 and 09-14 in February (TR Daily, Feb.  17).

"The new subpart I rules (1) clarify what does and does not constitute the kind of diversion of 911 fees that has concerned Congress (and the Commission); (2) establish a declaratory ruling process for providing further guidance to states and taxing jurisdictions on fee diversion issues; and (3) codify the specific obligations and restrictions that section 902 imposes on states and taxing jurisdictions, including those that engage in diversion as defined by our rules," the order noted.

"The record indicates that commenters are divided on whether expenditures of 911 fees for public safety radio systems and related infrastructure should be considered acceptable for Section 902 purposes.  Our new rules provide additional guidance on this question.  We also refer additional questions concerning the application of our new rules to the 911 Strike Force for the development of recommendations," the FCC added.  "We also note that the petition process established by section 902 provides a mechanism for further consideration of this issue in the context of specific fact patterns, after adoption of the initial rules in this proceeding.  We conclude that these changes to part 9 will advance Congress's stated objectives in section 902 in a cost-effective manner that is not unduly burdensome to providers of emergency telecommunications services or to state and taxing jurisdictions.  In sum, the rules we adopt today closely track the statutory language addressing 911 fee diversion, and seek to promote transparency, accountability, and integrity in the collection and expenditure of fees collected for 911 services, while providing stakeholders reasonable guidance as part of implementing section 902."

The order adopted the proposal in the NPRM "to define '911 fee or charge' in the rules to include fees or charges applicable to 'other emergency communications services' as defined in section 201(b) of the NET 911 Act.  Under the NET 911 Act, the term 'other emergency communications service' means 'the provision of emergency information to a public safety answering point via wire or radio communications, and may include 9-1-1 and enhanced 9-1-1 service.' We noted that this proposed modification will make clear that the rules in subpart I extend to all communications services regulated by the Commission that provide emergency communications, including wireline services, and not just to CMRS and IP-enabled voice services.  We also proposed in the Notice to extend the definition of '911 fee or charge' to include fees or charges designated for the support of 'public safety,' 'emergency services,' or similar purposes if the purposes or allowable uses of such fees or charges include the support or implementation of 911 services."

"We find that this expansion of the definition of '911 fee or charge' is reasonably ancillary to the Commission's effective performance of its statutorily mandated responsibilities under section 902 and other federal 911-related statutes and Communications Act statutory provisions that, taken together, establish an overarching federal interest in ensuring the effectiveness of the 911 system," the order added.

The order also codified the definition of diversion in section 902 "with minor changes to streamline it."

"Specifically, we proposed to define diversion as '[t]he obligation or expenditure of a 911 fee or charge for a purpose or function other than the purposes and functions designated by the Commission as acceptable pursuant to [the applicable rule section in subpart I].'  In addition, we proposed to clarify that the definition of diversion includes distribution of 911 fees to a political subdivision that obligates or expends such fees for a purpose or function other than those designated by the Commission. ...  We adopt this definition as proposed.  We find that it will encourage states and taxing jurisdictions to take proactive steps to address the conditions that enable diversion of 911 fees by political subdivisions, such as counties, that may receive 911 fees."

The FCC noted that "[s]everal commenters raise concerns with our proposal to specify that diversion includes distribution of 911 fees to a locality that diverts them."

It added, "We find that it is consistent with the intent of section 902 to hold states responsible for fee diversion by localities within their boundaries.  Absent such a policy, states or taxing jurisdictions could have an incentive to avoid oversight or accountability for expenditures by political subdivisions.  We also decline to require that local units report directly to the Commission, as NASNA requests."

The FCC also adopted its "proposal to classify as unacceptable for Section 902 purposes the transfer of 911 fees into a general fund or other fund for non-911 purposes.  The agency's annual fee reports consistently have found that transferring 911 fees to a state's general fund constitutes fee diversion.  In addition, no commenter opposes this provision.  We also adopt our proposal that expenditures of 911 fees for constructing or expanding non-public safety communications networks, such as commercial cellular networks, are not acceptable for Section 902 purposes.  This finding is consistent with our approach in the agency's annual 911 fee reports, where the agency has concluded, for example, that construction of commercial cellular towers to expand cellular coverage is not 911 related within the meaning of the NET 911 Act. ...  We also adopt with minor modifications our proposal to classify as unacceptable, for purposes of section 902, expenditures of 911 fees on equipment or infrastructure for law enforcement, firefighters, and other public safety/first responder entities that do not directly support 911 services."

"Some commenters raise concerns regarding the sufficiency of the process by which jurisdictions are determined to be engaged in diversion by the Commission, or request additional procedural safeguards before being designated a diverter in the annual fee report," the FCC noted.  "In addition, some commenters urge creation of an appeal process for states identified as diverters, and one commenter requests a process by which a diversion finding can be removed once a state has come into compliance.  We decline to adopt such procedures that are not provided for in either section 902 or the NET 911 Act.  As discussed above, Congress directed the Commission to adopt final rules defining the acceptable uses of 911 fees and to rule on petitions for determination for additional uses, in order to discourage fee diversion."  The FCC also declined "to establish a 'glide path' or 'phase-in' period for states and taxing jurisdictions to come into compliance with our rules, as proposed by some commenters."

The FCC also clarified "that only employees of a diverting jurisdiction (i.e., state or other taxing jurisdiction) who are acting as official representatives of that jurisdiction will be ineligible to participate on advisory committees established by the Commission.  Further, we clarify that this prohibition will not extend to representatives of non-diverting localities that are located within diverting states.  We also clarify that an individual who is employed by a diverting jurisdiction may still serve on a Commission advisory committee as a representative of a public safety organization or other outside association."

Association of Public-Safety Communications Officials-International Executive Director and Chief Executive Officer Derek Poarch said that "APCO appreciates the Commission's further action to address 9-1-1 fee diversion, particularly the decision, as APCO suggested, to gather information annually about the extent and impact of underfunding 9-1-1.  APCO looks forward to supporting the Commission's ongoing efforts, including through participation as a member of the 9-1-1 Fee Diversion Strike Force."

Dan Henry, NENA's regulatory counsel and director-government affairs, said, "The Commission's new rules provide much-needed clarity on what does and does not constitute 9-1-1 fee diversion, which is essential as the stakes for diversion are raised with the potential federal NG9-1-1 transition funding.  To the extent that edge cases remain in certain states' fee models, the 9-1-1 community will have to be proactive in seeking determinations from the Commission.  As always, we deeply appreciate the Public Safety Bureau's hard work in this and other 9-1-1 proceedings."

"Today, the FCC took a big step towards eliminating the unacceptable practice of 9-1-1 fee diversion," said Matt Gerst, vice president-regulatory affairs for CTIA.  "We thank Congress for giving the FCC the authority to help rein in those state and local governments that divert funds from 9-1-1, and we look forward to supporting the FCC on its important mission to ensure that the billions of 9-1-1 fees collected from wireless consumers every year are used to maintain and enhance our nation's 9-1-1 system."  – Paul Kirby, paul.kirby@wolterskluwer.com