[Federal Register Volume 62, Number 214 (Wednesday, November 5, 1997)]
[Proposed Rules]
[Pages 59842-59844]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29246]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 36

[CC Docket No. 80-286; FCC 97-354]


Jurisdictional Separations Reform and Referral to the Federal-
State Joint Board

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: On October 2, 1997, the Commission adopted a Notice of 
Proposed Rulemaking (NPRM), that initiates a proceeding with the goal 
of reviewing comprehensively the Part 36 jurisdictional separations 
procedures to ensure that they meet the objectives of the 
Telecommunication Act of 1996 (1996 Act), and to consider changes that 
may need to be made to the jurisdictional separations process in light 
of changes in the law, technology, and market structure of the 
telecommunications industry. Pursuant to section 410(c) of the 
Communications Act, the Commission refers the issues raised in the NPRM 
to the Federal-State Joint Board established in CC Docket No. 80-286 
(Separations Joint Board) for preparation of a recommended decision.
    This NPRM contains proposed or modified information collections 
subject to the Paperwork Reduction Act of 1995 (PRA). It has been 
submitted to the Office of Management and Budget (OMB) for review under 
the PRA. OMB, the general public, and other Federal agencies are 
invited to comment on the proposed or modified information collections 
contained in this proceeding.

DATES: Pursuant to applicable procedures set forth in Secs. 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 December 10, 1997, and reply 
comments on or before January 26, 1998. Written comments by the public 
on the proposed and/or modified information collections are due 
December 10, 1997. Written comments must be submitted by the Office of 
Management and Budget (OMB) on the proposed and/or modified information 
collections on or before January 5, 1998.

ADDRESSES: Parties should send their comments or reply comments to 
Office of the Secretary, Federal Communications Commission, 1919 M 
Street, N.W., Room 222, Washington, D.C. 20554. Parties should also 
send a paper copy, and a copy on 3.5 inch diskette formatted in an IBM 
compatible form using, if possible, WordPerfect 5.1 for Windows 
software, to Connie Chapman of the Common Carrier Bureau's Accounting 
and Audits Division, 2000 L Street, N.W., room 258H, Washington, D.C. 
20554. Parties also must serve comments on the Federal-State Joint 
Board in accordance with the service list (See Attachment). Commenters 
should also provide one copy of any documents filed in this proceeding 
to the Commission's copy contractor, International Transcription 
Service, 1231 20th Street, N.W., Washington, D.C. 20036.
    In addition to filing comments with the Secretary, a copy of any 
comments on the information collections contained herein should be 
submitted to Judy Boley, Federal Communications Commission, Room 234, 
1919 M Street, N.W., Washington, DC 20554, or via the Internet to 
<a href="/cdn-cgi/l/email-protection#f69c94999a938fb6909595d8919980"><span class="__cf_email__" data-cfemail="f09a929f9c9589b0969393de979f86">[email protected]</span></a>, and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725-
17th Street, N.W., Washington, DC 20503 or via the Internet to 
<a href="/cdn-cgi/l/email-protection#e18780888fbebe95a1808dcf848e91cf868e97"><span class="__cf_email__" data-cfemail="7513141c1b2a2a013514195b101a055b121a03">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: Lynn Vermillera, Accounting and Audits 
Division, Common Carrier Bureau, (202) 418-7120. Alternate contact, 
Connie Chapman (202) 418-0885. For additional information concerning 
the information collections contained in this Notice contact Judy Boley 
at 202-418-0214, or via the Internet at <a href="/cdn-cgi/l/email-protection#a3c9c1cccfc6dae3c5c0c08dc4ccd5"><span class="__cf_email__" data-cfemail="8ce6eee3e0e9f5cceaefefa2ebe3fa">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking adopted October 2, 1997, and released October 7, 
1997 The full text of this Commission NPRM is available for inspection 
and copying during normal business hours in the FCC Public Reference 
Room (Room 239), 1919 M St., N.W., Washington, D.C. The complete text 
of this NPRM may also be purchased from the Commission's copy 
contractor, International Transcription Service, 1231 20th Street, 
N.W., Washington, D.C. 20036.

Summary of Notice of Proposed Rulemaking

    1. The NPRM seeks comment on the changes in law, technology, and 
market structure of the telecommunications industry that affect the 
separations process. It then seeks comment on the criteria that should 
be used to evaluate the existing separations process and proposals to 
reform the process in light of the goals of our comprehensive review.
    2. In addition, the NPRM seeks comment on whether separations rules 
are still needed during the transition period from a regulated to a 
competitive marketplace. In this section, the Commission seeks comment 
on whether some form of separations must exist under the 1930 Smith v. 
Illinois decision, or whether statutory, regulatory and market changes 
since that decision have been so pronounced and persuasive as to make 
its holding inapplicable in the new deregulatory environment.
    3. The NPRM then seeks comment on industry proposals to replace the 
existing Part 36 separations rules. In particular, the NPRM seeks 
comment on three industry proposals. The NPRM first seeks comment on 
NYNEX's proposal to separate costs for individual incumbent local 
exchange carriers (ILECs) in a given study area based on a single, 
frozen, interstate allocation factor. It then seeks comment on Bell 
South's proposal to separate costs in each study area based on two 
factors, one for investment and one for expenses. It then seeks comment 
on Southwestern Bell's proposal to consolidate the several dozen plant 
and service categories in the existing separations rules into four cost 
categories.
    4. The NPRM then evaluates the existing separations rules and seeks 
comment on how various separations reform options would affect prices 
and revenue requirements. In this section, the NPRM seeks comment on 
revisions to the definition of ``study area.'' It also seeks comment on 
whether the existing set of plant, expense, and service categories 
should be revised. The NPRM also seeks comment on whether there is a 
need to revise the way in which costs are apportioned to each category 
and the way in which those costs are then apportioned to the interstate 
and intrastate jurisdiction.
    5. The NPRM also seeks comment on whether and how to separate the 
costs associated with interconnection. In this section, the Commission 
proposes two alternatives for allocating the costs of providing 
interconnection between the state and federal jurisdiction. The first 
alternative is for the costs, once identified in part 32 as proposed in 
the companion NPRM on accounting for interconnection, to be removed 
entirely from the separations process and allocated through a process 
designed to apply exclusively to these costs. The second alternative is 
that the costs, once identified in part 32, be separated

[[Page 59843]]

through the current separations process and allocated directly to the 
state jurisdiction. In this section, the NPRM also seeks comment on 
whether the 8th Circuit holding in Iowa Utilities Board v. FCC requires 
the assignment of all costs associated with the provision of local 
exchange service to the intrastate jurisdiction.
    6. Finally, the NPRM requests comment regarding changes to the 
separations rules that may be necessary as a result of the Universal 
Service Order and the Communications Assistance for Law Enforcement Act 
(CALEA).

Paperwork Reduction Act

    7. This NPRM contains either a proposed or modified information 
collection. The Commission, as part of its continuing effort to reduce 
paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collections 
contained in this NPRM, as required by the Paperwork Reduction Act of 
1995, Public Law 104-13. Public and agency comments are due at the same 
time as other comments on this Notice; OMB notification of action is 
due January 5, 1998. Comments should address: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information 
shall have practical utility; (b) the accuracy of the Commission's 
burden estimates; (c) ways to enhance the quality, utility, and clarity 
of the information collected; and (d) ways to minimize the burden of 
the collection of information on the respondents, including the use of 
automated collection techniques or other forms of information 
technology.
    OMB Approval Number: 3060-0233.
    Title: Part 36--Separations.
    Form No.: N/A.
    Type of Review: Revision.
    Respondents: Businesses or other for profit.
    Number of Respondents: 100.
    Estimated Time Per Response: 20 hours.
    Total Annual Burden: 2000 hours for proposal only. 63,800 burden 
hours for all Part 36 requirements.
    Estimated costs per respondent: $0.
    Needs and Uses: In the Notice of Proposed Rulemaking issued in CC 
Docket No. 80-286, the Commission initiates a proceeding with the goal 
of reviewing comprehensively our Part 36 jurisdictional separations 
procedures to ensure that they meet the objectives of the 1996 Act and 
to consider changes that may need to be made to the jurisdictional 
separations process in light of changes in the law, technology, and 
market structure of the telecommunications industry. The Commission 
seeks comment on a proposal allowing incumbent LECs to separate joint 
and common costs on an individual basis. The Commission also seeks 
comment on whether this proposal should be contingent on an ILEC's 
showing that competition exists in the local markets for which they 
seek relaxed separations rules. If such a showing is required, the 
Commission also seeks comment on what level of competition would be 
required and what indicators should be used to measure the levels of 
competition in local markets to ensure that joint and common costs are 
allocated in a manner that produces just and reasonable rates. The 
proposed requirement will be used to determine whether competition 
exists in local markets.

Regulatory Flexibility Analysis

    8. This NPRM seeks comment on the extent to which separations rules 
are required, what standards should be used to evaluate separations 
proposals, and what changes should be made to our existing separations 
rules. The NPRM states that we want to adopt rules that are easily 
interpreted and that will minimize any regulatory burdens on affected 
parties. Section 603 of the Regulatory Flexibility Act (RFA), as 
amended,<SUP>1</SUP> requires an initial Regulatory Flexibility Act 
Analysis in notice-and-comment rulemaking proceedings unless we certify 
that ``the rule will not, if promulgated, have a significant economic 
impact on a significant number of small entities.'' <SUP>2</SUP>
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    \1\ 5 U.S.C. Sec. 603.
    \2\ Id. at Sec. 605(b).
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    9. Section 603 of the Regulatory Flexibility Act (``RFA'') 
<SUP>3</SUP> requires an initial regulatory flexibility analysis that 
describes the impact of the proposed rule on small entities for 
rulemakings that are required to have public notice and comment. We 
have determined that the RFA is inapplicable to this proceeding insofar 
as it pertains to the Bell Operating Companies and other incumbent 
local exchange carriers. The RFA defines a ``small business'' to be the 
same as a ``small business concern'' under the Small Business 
Act.<SUP>4</SUP> Under the Small Business Act, a ``small business 
concern'' is one that: (1) is independently owned and operated; (2) is 
not dominant in its field of operation; and (3) meets any additional 
criteria established by the Small Business Administration 
(``SBA'').<SUP>5</SUP> Section 121.201 of the Small Business 
Administration regulations defines a small telecommunications entity in 
SIC code 4813 (Telephone Companies Except Radio Telephone) as any 
entity with 1,500 or fewer employees at the holding company 
level.<SUP>6</SUP> Because our proposals concerning the Part 36 
separations process will affect all incumbent local exchange carriers 
providing interstate services, some entities employing fewer than 1500 
employees at the holding company level may be affected by the proposals 
made in this NPRM. However, we do not consider such entities to be 
``small entities'' under the RFA because they are either affiliates of 
large corporations or dominant in their field of operations. Therefore, 
we do not believe that the proposed rules will affect a substantial 
number of small entities. Even if small ILECs were ``small entities'' 
under the SBA, however, we would still certify that no regulatory 
flexibility analysis is necessary here because none of the proposals in 
this NPRM, if adopted, would have a significant economic impact (as 
such term is used in the RFA) on the carriers which must comply with 
our accounting rules. One of the primary objectives of this proceeding 
is to seek comment on proposals to simplify the current separations 
process in an effort to lessen the regulatory burden on carriers in 
furtherance of a deregulatory national policy framework.
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    \3\ See id. Sec. 603.
    \4\ Id. Sec. 601(6) (adopting 15 U.S.C. Sec. 632(a)(1)).
    \5\ Id. Sec. 632. See, e.g., Brown Transport Truckload, Inc. v. 
Southern Wipers, Inc., 176 B.R. 82 (N.D. Ga. 1994).
    \6\ 13 CFR 121.201.
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    10. We therefore certify, pursuant to section 605(b) of the RFA, 
that the rules proposed in this NPRM will not have a significant 
economic impact on a substantial number of small entities. The 
Commission will publish this certification in the Federal Register and 
will provide a copy of the certification to the Chief Counsel for 
Advocacy of the SBA. The Commission will also include this 
certification in the report to Congress pursuant to the Small Business 
Regulatory Enforcement Fairness Act.<SUP>7</SUP>
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    \7\ 5 U.S.C. Sec. 801(a)(1)(A).
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Ordering Clause

    11. Accordingly, It Is Ordered that, pursuant to sections 1, 2, 4, 
201-205, 215, 218, 220, 229, 254, and 410 of the Communications Act of 
1934, as amended, 47 U.S.C. 151, 152, 154, 201-205, 215, 218, 220, 229, 
254 and 410 that Notice Is Hereby Given of proposed amendments to Part 
36 of the Commission's rules, 47 CFR Part 36, as

[[Page 59844]]

described in this Notice of Proposed Rulemaking.
    12. It Is Further Ordered that, pursuant to section 410(c) of the 
Communications Act of 1934, 47 U.S.C. 410(c), the proposals set forth 
in the Notice of Proposed Rulemaking are hereby referred to the 
Federal-State Joint Board established in CC Docket No. 80-286 for 
preparation of a recommended decision.
    13. It Is Further Ordered, that a copy of all filings in this 
proceeding shall be served on each of the appointees and staff 
personnel on the attached service list.

List of Subjects in 47 CFR Part 36

    Jurisdictional Separations Procedures; Standard Procedures for 
Separating Telecommunications Property, Costs, Revenues, Expenses, 
Taxes and Reserves for Telecommunications Companies.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Attachment--Service List: 80-286 Separations Federal-State Joint 
Board

The Honorable Reed E. Hundt, Chairman, Federal Communications 
Commission, 1919 M Street N.W.--Room 814, Washington, D.C. 20554, 202-
418-1000
The Honorable Rachelle B. Chong, Commissioner, Federal Communications 
Commission, 1919 M Street N.W.--Room 844, Washington, D.C. 20554, 202-
418-2200
The Honorable Susan Ness, Commissioner, Federal Communications 
Commission, 1919 M Street N.W.--Room 832, Washington, D.C. 20554, 202-
418-2100
The Honorable Cheryl L. Parrino, Chair, Wisconsin Public Service 
Commission, Post Office Box 7854, Madison, WI 53707-7854
The Honorable David W. Rolka, Commissioner, Pennsylvania Public Utility 
Commission, North Office Building--Room 110, Commonwealth Avenue and 
North Street, Harrisburg, PA 17105
The Honorable Joan H. Smith, Commissioner, Oregon Public Utility 
Commission, 550 Capitol Street, N.E., Salem, OR 97310
The Honorable Thomas L. Welch, Chairman, Maine Public Utilities 
Commission, 242 State Street, State House Station 18, Augusta, ME 04333

Joint Board Staff

Debra M. Kriete, Pennsylvania Public Utility Commission, North Office 
Building--Room 110, Commonwealth Avenue and North Street, Harrisburg, 
PA 17105-3265
Steve Burnett, Federal Communications Commission, Common Carrier 
Bureau--Accounting & Audits Div., 2000 L Street, N.W.--Room 257, 
Washington, D.C. 20036
Connie Chapman, Federal Communications Commission, Common Carrier 
Bureau--Accounting & Audits Div., 2000 L Street, N.W.--Room 258H, 
Washington, D.C. 20036
Sandy Ibaugh, Indiana Utility Regulatory Commission, 302 W. Washington, 
Suite E-306, Indianapolis, IN 46204
Jonathon Lakritz, California Public Utilities Commission, California 
State Building 505 Van Ness Avenue, San Francisco, California 94102
Samuel Loudenslager, Arkansas Public Service Commission, 1000 Center 
Street, Little Rock, AR 72203
Chuck Needy, Federal Communications Commission, Common Carrier Bureau--
Accounting & Audits Div., 2000 L Street, N.W.--Room 812, Washington, 
D.C. 20036
Paul Pederson, Missouri Public Service Commission, Post Office Box 360, 
Jefferson City, MO 65102
Scott Potter, Public Utilities Commission of Ohio, 180 E. Broad St., 
3rd Fl., Columbus, OH 43215
James Bradford Ramsay, Assistant General Counsel, National Association 
of Regulatory Utility Commissioners, 1102 ICC Building, Constitution 
Avenue & 12th Street, N.W., Post Office Box 684, Washington, D.C. 
20044-0684
Jeffrey J. Richter, Public Service Commission of Wisconsin, P.O. Box 
7854, Madison, WI 53707-7854
Mike Sheard, Montana Public Utilities Commission, 1701 Prospect Ave., 
P.O. Box 202601, Helena, MT 59620
Kaylene Shannon, Federal Communications Commission, Common Carrier 
Bureau--Accounting & Audits Div., 2000 L Street, N.W.--Room 200H, 
Washington, D.C. 20036
Joel B. Shifman, Maine Public Utilities Commission, State House Station 
#18, Augusta, ME 04333
Fred Sistarenik, State Joint Board Staff Chair, New York State 
Department of Public Service, Communications Division, Three Empire 
State Plaza, Albany, New York 12223-1350
Cynthia Van Landuyt, Oregon Public Utility Commission, 550 Capitol St. 
NE, Salem, OR 97310
Lynn Vermillera, Federal Communications Commission, Common Carrier 
Bureau--Accounting & Audits Div., 2000 L Street, N.W.--Room 200E, 
Washington, D.C. 20036
John Wobbleton, Federal Communications Commission, Common Carrier 
Bureau--Accounting & Audits Div., 2000 L Street, N.W.--Room 257, 
Washington, D.C. 20036
[FR Doc. 97-29246 Filed 11-4-97; 8:45 am]
BILLING CODE 6712-01-P


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