**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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**TWENTY-THIRD ORDER ON RECONSIDERATION**

**Adopted: July 5, 2001 Released: July 11, 2001**

By the Commission: Commissioner Abernathy not participating

# INTRODUCTION

1.  In this Order, the Commission on its own motion[^1] makes a
    correction to section 36.605(c)(3)(ii) of its rules adopted in the
    *Fourteenth Report and Order* released on May 23, 2001.[^2] The
    correction concerns the calculation of safety net additive support
    in the years following qualification for such support and is
    necessary to make the rule consistent with the text of the
    underlying order.[^3] Specifically, this correction revises the
    language in section 36.605(c)(3)(ii) to make it clear that rural
    telephone companies receive the lesser of either: (1) the sum of
    capped support and the safety net additive support in each year
    or (2) uncapped support in each year when the cap is not triggered.

# BACKGROUND

2.  In the *Fourteenth Report and Order*, the Commission adopted the
    safety net additive mechanism, which seeks to mitigate the potential
    negative effects of a cap, and provide rural carriers with the
    predictability to make investments in their communities.[^4] Rural
    telephone companies that become eligible for safety net support
    receive support for the incremental expense adjustment associated
    with new investments. Recognizing that the costs associated with
    these investments are not typically recovered in one year, the
    Commission adopted provisions that allow for recovery in the four
    succeeding years provided that the cap, as calculated by section
    36.601 of the Commission's rules, is subsequently triggered.[^5] The
    Commission described the mechanics of the payment of support in the
    succeeding years as follows:

    \[i\]n any of the succeeding four years in which the cap is again
    triggered, the carrier will be eligible for the lesser of the sum of
    capped support and the safety net additive received in the
    qualifying year or uncapped support. Therefore, qualifying carriers
    will receive safety net additive in each year that the cap is
    triggered under the five-year plan we adopt in this order." [^6]

    This formulation was necessary to prevent rural telephone companies
    from receiving more support than the amount they would have received
    if the cap had not been triggered.[^7] As adopted, however, the rule
    states in relevant part that "\[s\]upport in the four succeeding
    years shall be the lesser of ... the amount of support based on
    \[a\] recalculation of support,"[^8] thus indicating that the
    Administrator should recalculate safety net additive support in each
    of the four succeeding years.

# DISCUSSION

3.  This Order on Reconsideration corrects section 36.605(c)(3)(ii) of
    our rules so that support paid in the succeeding four years shall be
    the lesser of: (1) the sum of capped support and the safety net
    additive received in the qualifying year or (2) uncapped support in
    that year if the cap is not triggered.[^9] Uncorrected, the rule
    could be read to require the Administrator to recalculate safety net
    additive support in the succeeding years in order to determine the
    amount that the rural telephone company is eligible to receive.[^10]
    As described above, such an interpretation would be contrary to the
    Commission's stated intent in the order. Accordingly, we modify
    section 36.605(c)(3)(ii) so that safety net additive support paid in
    succeeding years will be the lesser of: (1) the sum of capped
    support and the safety net additive received in the qualifying year
    or (2) uncapped support in that year if the cap is not
    triggered.[^11]

# PROCEDURAL MATTERS 

## Regulatory Flexibility Act Certification

4.  The Regulatory Flexibility Act (RFA)[^12] requires an Initial
    Regulatory Flexibility Analysis (IRFA)[^13] whenever an agency
    publishes a notice of proposed rulemaking, and a Final Regulatory
    Flexibility Analysis (FRFA)[^14] whenever an agency subsequently
    promulgates a final rule, unless the agency certifies that the
    proposed or final rule will not have \"a significant economic impact
    on a substantial number of small entities,\" and includes the
    factual basis for such certification.[^15] The RFA generally defines
    \"small entity\" as having the same meaning as the terms \"small
    business,\" \"small organization,\" and \"small governmental
    jurisdiction.\"[^16] In addition, the term \"small business\" has
    the same meaning as the term \"small business concern\" under the
    Small Business Act.[^17] A small business concern is one which: (1)
    is independently owned and operated; (2) is not dominant in its
    field of operation; and (3) satisfies any additional criteria
    established by the Small Business Administration (SBA).[^18] The SBA
    defines a small telecommunications entity in NAICS code 51331 (Wired
    Telecommunications Carrier) as an entity with 1,500 or fewer
    employees.[^19]

5.  In the *Fourteenth Report and Order*, the Commission prepared a FRFA
    detailing the ways in which the Commission had sought to minimize
    the burden of new regulations on small businesses.[^20] The rule
    change adopted in this Order on Reconsideration is merely a
    correction of the rule adopted in the *Fourteenth Report and Order*.
    Therefore, we certify pursuant to the RFA that the final rule
    adopted in this order will not have a significant economic impact on
    a substantial number of small entities.[^21] The Consumer
    Information Bureau, Reference Information Center, will send a copy
    of the *Twenty-Third Order on Reconsideration*, including this final
    certification, to the Chief Counsel for Advocacy of the SBA in
    accordance with the RFA.[^22] In addition, this certification and
    order will be published in the Federal Register.[^23]

## Effective Date of Final Rules

6.  Pursuant to 5 U.S.C. § 553(d), the rule change adopted herein shall
    take effect thirty (30) days after publication in the Federal
    Register.

# ORDERING CLAUSES

7.  Accordingly, IT IS ORDERED that, pursuant to the authority contained
    in sections 1-4, 201-205, 218-220, 254, 303(r), 403, 405, and 410 of
    the Communications Act of 1934, as amended, 47 U.S.C. §§ 151-154,
    201-205, 218-220, 254, 303(r), 403, 405, and 410, this Twenty-Third
    Order on Reconsideration in CC Docket No. 96-45 IS ADOPTED.

8.  IT IS FURTHER ORDERED that Part 36 of the Commission's Rules, 47
    C.F.R. Part 36, IS AMENDED as set forth in Appendix A hereto,
    effective 30 days after publication in the Federal Register.

9.  IT IS FURTHER ORDERED that the Commission\'s Consumer Information
    Bureau, Reference Information Center, SHALL SEND a copy of this
    Order on Reconsideration in CC Docket No. 96-45, including the
    Regulatory Flexibility Act Certification, to the Chief Counsel for
    Advocacy of the Small Business Administration.

    FEDERAL COMMUNICATIONS COMMISSION

    Magalie Roman Salas

    Secretary

    **APPENDIX A -- RULE CHANGE**

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1.  Section 36.605 is amended by revising paragraph (c)(3)(ii) to read
    as follows:

    (c)(3)(ii) continue to pay safety net additive support in any of the
    four succeeding years in which the total carrier loop expense
    adjustment is limited by the provisions of § 36.603. Safety net
    additive support in the succeeding four years shall be the lesser
    of:

```{=html}
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```
(A) the sum of capped support and the safety net additive support
    received in the qualifying year; or

(B) the rural telephone company's uncapped support.

[^1]: Section 1.108 of the Commission's rules provides that "\[t\]he
    Commission may, on its own motion, set aside any action made or
    taken by it within 30 days from the date of public notice of such
    action ...." 47 C.F.R. § 1.108. The Federal Register item for the
    *Fourteenth Report and Order* was published in the Federal Register
    on June 5, 2001. *See* Federal-State Joint Board on Universal
    Service, 66 Fed. Reg. 30,080 (2001).

[^2]: *Federal-State Joint Board on Universal Service*, Fourteenth
    Report and Order, Twenty-Second Order on Reconsideration, and
    Further Notice of Proposed Rulemaking in CC Docket No. 96-45, and
    *Multi-Association Group (MAG) Plan for Regulation of Interstate
    Services of Non-Price Cap Incumbent Local Exchange Carriers and
    Interexchange Carriers*, Report and Order in CC Docket No. 00-256,
    FCC 01-157 (rel. May 23, 2001) (*Fourteenth Report and Order*).

[^3]: *Id*. at para. 88.

[^4]: *Id*. at para. 80.

[^5]: *Id*. at para. 88. *See also* 47 C.F.R. § 36.601.

[^6]: *Fourteenth Report and Order*, at para. 88.

[^7]: *Id*.

[^8]: *Id*. at Appendix A.

[^9]: *Id*. at para. 88.

[^10]: 47 C.F.R. § 36.605(c)(3)(ii).

[^11]: *See* Appendix A.

[^12]: *See* 5 U.S.C. § 601 *et seq*. The RFA was amended by the Small
    Business Regulatory Enforcement Fairness Act of 1996, Title II of
    the Contract with America Advancement Act of 1996, Pub. L. 104-121,
    110 Stat. 847 (1996).

[^13]: 5 U.S.C. § 603.

[^14]: 5 U.S.C. § 604.

[^15]: 5 U.S.C. § 605 (b).

[^16]: 5 U.S.C. § 601 (6).

[^17]: 5 U.S.C. § 601 (3) (incorporating by reference the definition of
    "small business concern" in Small Business Act, 15 U.S.C. § 632).

[^18]: Small Business Act, 15 U.S.C. § 632.

[^19]: 13 C.F.R. § 121.201.

[^20]: *Fourteenth Report and Order*, at para. 212-236.

[^21]: See 5 U.S.C. §605 (b).

[^22]: *Id*.

[^23]: *Id.*