92840 Federal Register / Vol. 89, No. 227 / Monday, November 25, 2024 / Rules and Regulations 

preventing the use of best available science; 

(3) insisting on preclearance of a scientific 

product for purposes other than providing 

advance notification or opportunity to review 

for technical merit; (4) suppressing, altering 

or delaying the release of a scientific product 

for any reason other than technical merit or 

providing advance notification; (5) removing 

or reassigning scientific personnel for any 

reason other than performance, conduct or 

budgetary constraints; (6) using scientific 

products that are not representative of the 

current state of scientific knowledge and 

research (for example because of a lack of 

appropriate peer review, poor methodology, 

or flawed analyses) to inform decision 

making and policy formulation; or (7) 

misrepresenting the underlying assumptions, 

uncertainties, or probabilities of scientific 

products. This is not intended to be an 

exhaustive list. 9 Differences of scientific opinion are not 

necessarily inappropriate influence. 10See Federal Research Misconduct Policy, 

65 FR 76260, 76262 (Dec. 6, 2000); see also 

https://ori.hhs.gov/definition-researchmisconduct. 11Public Law 112–199 § 110. 12 5 U.S.C. 2302(b)(8). 13See Health Extenders, Improving Access 

to Medicare, Medicaid, and CHIP, and 

Strengthening Public Health Act of 2022, 

Public Law 117–328, Division FF, Title II, 

Section 2321 (Jan 3, 2023) and Chips and 

Science Act, Public Law 117–167, Title VI, 

Subtitle D, Section 10631 (Aug 9, 2022). 

OSTP guidance and relevant HHS policies to 

implement this legislation are forthcoming at 

the time of publication of this policy. 14HHS Grants Policy Statement, U.S. 

Department of Health and Human Services, 

Office of the Assistant Secretary for 

Resources and Technology, Office of Grants. 

January 1, 2007. Available at: https://

www.hhs.gov/sites/default/files/grants/ 

grants/policies-regulations/hhsgps107.pdf. 15HHS Grants Policy Administration 

Manual Version 1.02. November 13, 2023. 16 45 CFR 75.372. 17Presidential Memorandum for the Heads 

of Executive Departments and Agencies on 

Increasing Access to the Results of Federally 

Funded Scientific Research. Available at: 

https://obamawhitehouse.archives.gov/sites/ 

default/files/microsites/ostp/ostp_public_

access_memo_2013.pdf. 18Presidential Memorandum for the Heads 

of Executive Departments and Agencies on 

Ensuring Free, Immediate, and Equitable 

Access to Federally Funded Research. 

Available at: https://www.whitehouse.gov/ 

wp-content/uploads/2022/08/08-2022-OSTPPublic-Access-Memo.pdf. 19This provision is further outlined in the 

United States Office of Government Ethics 

Standards of Conduct and 18 U.S.C. 208 as 

Applied to Official Social Media Use. 

Available at: https://oge.gov/web/oge.nsf/ 

News+Releases/ 

EAE37A7DA3C38BF38525894700775339/ 

$FILE/LA-23-03%20The%20Standards%20of

%20Conduct%20and%2018%20U.S.C.

%20%C2%A7%20208%20as%20

Applied%20to%20Official%20Social%20

Media%20Use.pdf. 20Memorandum to Designated Agency 

Ethics Officials on The Standards of Conduct 

as Applied to Personal Social Media Use. 

Available at: https://www.oge.gov/web/ 

oge.nsf/0/195DAE83D38EF6A

9852585BA005BEC69/$FILE/LA-15-03-2.pdf. 21Office of Management and Budget. 

‘‘Final Information Quality Bulletin for Peer 

Review.’’ Federal Register. Doc. 05–769. 

Available at: https://www.federalregister.gov/ 

documents/2005/01/14/05-769/finalinformation-quality-bulletin-for-peer-review. 22 5 U.S.C. 7513, 4303. 23Commissioned Corps Directive 111.02. 24Subject to the limitations and 

requirements as to participation in foreign 

talent programs outlined in I.12–13 of this 

policy. 25 2010 Memorandum from the White 

House Office of Science and Technology 

Policy on Scientific Integrity. Available at: 

https://obamawhitehouse.archives.gov/sites/ 

default/files/microsites/ostp/scientificintegrity-memo-12172010.pdf. 26See https://oig.hhs.gov/fraud/ 

whistleblower/. Employees can also contact 

their OpDiv/StaffDiv’s office of Equal 

Employment Opportunity (‘‘EEO’’) for 

information regarding retaliation based on 

protected EEO activity or discrimination, or 

the Office of Special Counsel for information 

regarding retaliation based on 

whistleblowing. Additionally, although 

encouraged to use the process detailed 

herein, employees may also disclose 

wrongdoing to their supervisor or another 

individual higher up in management, the 

HHS OIG, the Office of Special Counsel, or 

to Congress. PHSCC officers should also refer 

to CCD 121.06, ‘‘Protected Communications,’’ 

CCD 111.01, ‘‘Equal Opportunity,’’ and CCI 

211.03, ‘‘Equal Opportunity.’’ 27https://oig.hhs.gov/fraud/report-fraud/ 

before-you-submit/. 

Dated: October 28, 2024. 

Katherine N. Bent, 

Associate Deputy Assistant Secretary, Office 

of Science and Data Policy, Office of the 

Assistant Secretary for Planning and 

Evaluation, Department of Health and 

Human Services. 

[FR Doc. 2024–25810 Filed 11–22–24; 8:45 a.m.] 

BILLING CODE 4150–05–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 36 

[WCB: CC Docket No. 80–286; FCC 24–118; 

FR ID 262275] 

Jurisdictional Separations and Referral 

to the Federal-State Joint Board 

AGENCY: Federal Communications 

Commission. 

ACTION: Final rule. 

SUMMARY: In this document, the Federal 

Communications Commission 

(Commission) extends, for up to an 

additional six years, the freeze of the 

jurisdictional separations category 

relationships and cost allocation factors 

(together, separations rules) for rate-ofreturn incumbent local exchange 

carriers (LECs). Further extending the 

freeze, which is set to expire on 

December 31, 2024, will enable the 

Commission to continue to work with 

the Federal-State Joint Board on 

Jurisdictional Separations (Joint Board) 

to determine the future of these rules. 

The Commission declines to provide 

carriers an opportunity to unfreeze their 

current category relationships and refers 

to the Joint Board to consider whether 

comprehensive reform is needed at this 

time or if the Commission should allow 

these rules to become obsolete over time 

and whether a permanent freeze is 

warranted, and if so, whether carriers 

still using separations should be given 

the chance to unfreeze their category 

relationships every few years. 

DATES: Effective November 25, 2024. 

FOR FURTHER INFORMATION CONTACT: 

Marv Sacks, Pricing Policy Division of 

the Wireline Communications Bureau, 

at (202) 418–2017 or via email at 

marvin.sacks@fcc.gov. 

SUPPLEMENTARY INFORMATION: This is a 

summary of the Commission’s Report 

and Order, in CC Docket No. 80–286, 

FCC 24–118, adopted and released on 

November 13, 2024. The full text of this 

document may be obtained from the 

following internet address: https://

docs.fcc.gov/public/attachments/FCC24-118A1.pdf. To request materials in 

accessible formats for people with 

disabilities (Braille, large print, 

electronic files, audio format), send an 

email to fcc504@fcc.gov, or call the 

Consumer and Governmental Affairs 

Bureau at (202) 418–0530 (voice) or 

(202) 418–0432 (TTY). This action arises 

from a Further Notice of Proposed 

Rulemaking and Order, FCC 24–71, 

released on July 1, 2024; 89 FR 58692 

(July 19, 2024). 

Synopsis 

I. Introduction 

1. In this Report and Order, the 

Commission extends, for up to an 

additional six years, the freeze of the 

separations rules for rate-of-return 

incumbent LECs. In light of sweeping 

technological and regulatory changes in 

the marketplace and the resulting 

ongoing transition from traditional 

telephone service to broadband-based 

voice services, the separations rules 

play a substantially diminished role in 

allocating costs between the interstate 

and intrastate jurisdictions. This 

extension of the separations rules freeze 

will enable the Commission to continue 

to work with the Joint Board to 

determine the future of these rules, 

which were last revised more than 35 


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Federal Register / Vol. 89, No. 227 / Monday, November 25, 2024 / Rules and Regulations 92841 

years ago in a vastly different 

telecommunications marketplace. We 

decline, however, to provide carriers an 

opportunity to change their current 

category relationships. 

2. Given the technological and 

regulatory changes that have occurred 

over the past three and a half decades 

and the compliance burdens that the 

separations rules impose on the limited 

and declining number of small rural 

carriers still subject to them, we also 

refer to the Joint Board for their 

consideration the question of whether 

comprehensive reform is needed at this 

time or if the Commission should allow 

these rules to become obsolete over 

time. Because repeated freeze 

extensions of the separations rules have 

yet to produce substantive changes to 

these rules and consume limited 

government and industry resources, we 

also refer to the Joint Board the issue of 

whether a permanent freeze is 

warranted and, if so, whether carriers 

still using separations should be given 

the chance to unfreeze their category 

relationships every few years. 

II. Background 

3. Jurisdictional Separations Process. 

Rate-of-return incumbent LECs use their 

networks and other resources to provide 

both interstate and intrastate 

telecommunications and other services. 

To prevent the recovery of the same 

costs from both the interstate and 

intrastate jurisdictions, the separations 

rules require that rate-of-return 

incumbent LECs divide their costs and 

revenues between the respective 

jurisdictions. These jurisdictional 

separations rules were designed to 

ensure that rate-of-return incumbent 

LECs apportion the costs of their 

regulated services between the interstate 

or intrastate jurisdictions in a manner 

that reflects the relative use of their 

networks to provide interstate or 

intrastate telecommunications services. 

4. Jurisdictional separations is the 

third step in a four-step cost-based 

regulatory rate-making process. First, a 

rate-of-return carrier records its costs 

and revenues in various accounts using 

the Uniform System of Accounts 

prescribed by the Commission’s part 32 

rules. Second, the carrier divides the 

costs in these accounts between 

regulated and nonregulated activities in 

accordance with the Commission’s part 

64 rules, a step that helps ensure that 

the costs of nonregulated activities will 

not be recovered through regulated 

interstate rates. Third, the carrier 

separates the regulated costs and 

revenues between the interstate and 

intrastate jurisdictions using the 

Commission’s part 36 jurisdictional 

separations rules. Finally, the carrier 

apportions the interstate regulated costs 

among the interexchange services and 

the rate elements that form the basis for 

its cost-based interstate rates. Carriers 

subject to rate-of-return regulation 

perform this apportionment in 

accordance with the Commission’s part 

69 rules. 

5. To comply with the Commission’s 

cost-based ratemaking rules, rate-ofreturn incumbent LECs must perform 

annual cost studies that include 

jurisdictional separations. The cost 

studies directly assign or allocate the 

regulated costs and revenues to various 

part 36 categories. Amounts in 

categories that are used exclusively for 

either interstate or intrastate 

communications are directly assigned to 

the appropriate jurisdiction. Costs that 

fall in categories that support both 

interstate and intrastate services are 

divided between the jurisdictions using 

allocation factors developed in 

accordance with part 36 that reflect 

relative use or a fixed percentage. 

6. In addition to being used for 

developing cost-based rates, separations 

is also used as part of the process to 

determine universal service support. 

The administrator of the federal 

universal service support program, the 

Universal Service Administrative 

Company, uses separations 

categorization results for calculating 

high-cost loop support for certain legacy 

support carriers. In addition, some 

states use separations results to 

determine the amount of intrastate 

universal service support and to 

calculate regulatory fees, and some 

states perform intrastate rate-of-return 

ratemaking using the assigned or 

allocated intrastate costs. 

7. Attempts at Separations Reform 

and Separations Freezes. In 1997, 

recognizing that ‘‘changes in the law, 

technology, and market structure of the 

telecommunications industry’’ 

necessitated a thorough reevaluation of 

the jurisdictional separations process, 

the Commission initiated a proceeding 

to comprehensively reform the 

separations rules. At the same time, 

pursuant to section 410(c) of the 

Communications Act of 1934, as 

amended (the Communications Act), the 

Commission referred the matter of 

jurisdictional separations reform to the 

Joint Board for a recommended 

decision. 

8. In 2000, the Joint Board— 

comprised of both State and Federal 

members—issued a recommendation 

that the Commission freeze the part 36 

category relationships and jurisdictional 

allocation factors pending resolution of 

comprehensive reform. In 2001, the 

Commission adopted an order 

concluding that a freeze would stabilize 

the separations process pending reform 

by minimizing any impact of cost shifts 

on separations results due to 

circumstances—such as the growth of 

internet usage, new technologies, and 

local competition—not contemplated by 

the rules. The Commission also 

determined that a freeze would simplify 

the separations process by eliminating 

the need for many separations cost 

studies until separations reform was 

implemented. Accordingly, the 

Commission froze all carriers’ part 36 

jurisdictional allocation factors at the 

percentages the carriers were using at 

that time, and allowed rate-of-return 

carriers to voluntarily freeze their 

category relationships, enabling each 

carrier to determine whether such a 

freeze would be beneficial ‘‘based on its 

own circumstances and investment 

plans.’’ Thus, at a minimum, rate-ofreturn carriers’ jurisdictional allocation 

factors are frozen at the December 31, 

2000 level, which allows these carriers 

to avoid the considerable burdens 

associated with conducting the traffic 

studies otherwise needed to comply 

with the rules for allocating investments 

and expenses between the intrastate and 

interstate jurisdictions. 

9. The Commission specified that the 

2001 freeze would last five years or 

until the Commission completed 

comprehensive separations reform, 

whichever came first. The Commission 

also concluded that, prior to the 

expiration of the five-year period, the 

Commission would, in consultation 

with the Joint Board, determine whether 

the freeze period should be extended, 

explaining that ‘‘the determination of 

whether the freeze should be extended 

at the end of the five-year period shall 

be based upon whether, and to what 

extent, comprehensive reform of 

separations has been undertaken by that 

time.’’ Since 2001, the Commission has 

extended the separations freeze eight 

times, for periods ranging from one year 

to six years, with the most recent 

extension expiring on December 31, 

2024. 

10. In 2009, the Commission made 

another referral to the Joint Board, 

asking it to consider comprehensive 

jurisdictional separations reform as well 

as ‘‘an interim adjustment of the current 

jurisdictional separations freeze.’’ In 

2018, the Commission referred to the 

Joint Board two specific interim issues 

for consideration pending 

comprehensive reform. These issues 

included exploring the possibility of 

amending separations rules to 

acknowledge that certain carriers are no 

longer bound by them, as well as 


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92842 Federal Register / Vol. 89, No. 227 / Monday, November 25, 2024 / Rules and Regulations 

updating existing recordkeeping 

requirements to align with the current 

applicability of separations rules. To 

date, the Joint Board has yet to submit 

a recommended decision on any interim 

adjustments or comprehensive 

separations reform. 

11. 2024 Further Notice of Proposed 

Rulemaking and Order. On July 1, 2024, 

the Commission released a Further 

Notice of Proposed Rulemaking (89 FR 

58692; July 19, 2024), inviting comment 

on its proposal to extend the separations 

freeze for another six years, given ‘‘the 

limited options available to the 

Commission under the current 

circumstances.’’ The Commission 

expressed its desire to continue working 

with the Joint Board and sought 

comment on its proposed finding that 

the benefits of an extension far outweigh 

the potential harm carriers could face if 

the freeze was not extended, permitting 

‘‘the long-fallow and outdated 

separations rules to take effect on 

January 1, 2025.’’ 

12. In the Order (89 FR 58631; July 19, 

2024) that accompanied the Further 

Notice of Proposed Rulemaking, the 

Commission renewed the prior referrals 

to the Joint Board, including both the 

1997 and 2009 comprehensive reform 

referrals and the 2018 interim reform 

measures referral. The Commission 

explained that it renewed these referrals 

in light of the need to achieve reform of 

the separations rules, given their 

declining applicability as a result of 

substantial telecommunications market 

and federal-state regulatory framework 

changes since these referrals were first 

made. 

13. Four of the five parties that filed 

comments or reply comments in this 

proceeding unconditionally support a 

six-year or longer freeze extension, and 

the other commenter stated it would 

support ‘‘a two-year extension or any 

longer extension endorsed by the 

majority of the members of the 

Separations Joint Board.’’ The four State 

members, which make up a majority of 

the Joint Board, made such an 

endorsement, supporting the proposed 

six-year freeze in an ex parte filing. The 

State members explained that ‘‘all three 

FCC Commissioners on the Joint Board, 

including the Chair [Commissioner 

Starks], voted to propose a six year 

extension,’’ and the State members 

‘‘agree with the federal members of the 

board that a six-year extension is 

appropriate.’’ 

III. Discussion 

14. We extend the freeze on Part 36 

category relationships and jurisdictional 

allocation factors up through December 

31, 2030, if necessary. We find this 

extension will best serve the public 

interest. The record unanimously 

demonstrates that an extension of the 

separations freeze beyond its scheduled 

December 31, 2024 expiration date will 

provide stability to carriers and further 

the Commission’s ability to work with 

the Joint Board to consider how best to 

address the antiquated separations rules 

in today’s telecommunications 

landscape. In determining the extension 

timeframe, we find that the record 

supports an extension of up to six 

additional years unless, after receipt of 

a Joint Board recommended decision on 

its referrals, the Commission adopts an 

order acting on the recommended 

decision sooner than December 31, 

2030. 

15. To fully address the future course 

of the separations rules, we also refer to 

the Joint Board three additional issues 

for their consideration in conjunction 

with the other pending referral issues. 

First, we ask the threshold question of 

whether comprehensive reform is even 

necessary any longer given current 

market conditions and the fact that the 

need for separations rules is naturally 

diminishing while the burden of 

complying with any new set of rules, 

were they to be reformed, would be 

substantial. Second, we refer to the Joint 

Board the question of whether a 

permanent freeze is warranted at this 

time. If so, we finally ask whether 

carriers still using separations should be 

given an opportunity, offered 

periodically, to unfreeze their category 

relationships. 

A. Further Extending the Separations 

Freeze 

16. We find that, based on the record 

and the fast approaching expiration of 

the current freeze extension on 

December 31, 2024, it is imperative to 

extend the freeze before it expires. All 

commenters agree that a continuation of 

the freeze is necessary, and the majority 

unconditionally support at least a six 

year extension. Consistent with 

precedent, the Commission has 

determined that freeze extensions— 

which essentially maintain the status 

quo—are within the scope of the 

original referral to the Joint Board for a 

recommended decision in 2001 and has 

extended the freeze several times 

without making an additional referral. 

Instead, the Commission has typically 

consulted with and received letters 

supporting freeze extensions from State 

members of the Joint Board prior to 

acting. The Commission’s actions here 

are consistent with NARUC’s and the 

State members’ position. 

17. Process Considerations. Section 

410(c) of the Communications Act 

contemplates a Joint Board 

recommendation on the pending 

comprehensive reform referral before 

the Commission moves forward on 

comprehensive separations reform. All 

parties that submitted filings in the 

record, including the Joint Board’s new 

State members, generally agree with the 

Commission’s assessment that recent 

changes to the composition of the Joint 

Board, the complex nature of the work 

required to develop comprehensive 

recommendations for separations 

reform, and the fact that the current 

freeze expires at the end of this calendar 

year have combined to leave limited and 

insufficient time within which the Joint 

Board could develop and advance 

recommended decisions and the 

Commission could act on such 

recommendations. This Joint Board has 

recently seated several new members 

who are just beginning their opportunity 

to delve into the complicated issues 

inherent in determining the future of the 

separations rules. Extending the freeze 

will provide the Commission and the 

Joint Board the additional time 

necessary to engage in the work to 

achieve our goals, and commenters 

unanimously agree on the importance of 

extending the freeze. 

18. Benefits Outweigh the Costs. We 

continue to find, based on the record 

here, that an extension of the freeze 

provides numerous benefits to carriers 

and is essential to avoid imposing 

significant costs and burdens on carriers 

that otherwise would be subject to the 

rules. Commenters point out that 

extending the freeze would provide ‘‘a 

measure of consistency and reliability of 

revenues.’’ Additionally, according to 

commenters, the Commission’s 

regulatory initiatives ‘‘have changed the 

way that rural consumers obtain voice 

and data services, as they increasingly 

transition to wholly interstate 

broadband only services in place of 

traditional regulated voice services,’’ 

which makes reinstating the old 

separations cost studies for these 

carriers difficult to justify. Further, 

commenters indicate that the allocation 

between interstate and intrastate 

services naturally balances out as 

carriers switch to broadband only 

services, and thus the cost of continuing 

the use of frozen category relationships 

and allocation factors for those carriers 

is not significant. In short, maintaining 

the current separations regime provides 

stability to carriers. 

19. In contrast, the costs to carriers of 

complying with part 36 rules if the 

freeze is allowed to expire are 

significant. The Commission has 

consistently found that letting the freeze 

expire would impose considerable 


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Federal Register / Vol. 89, No. 227 / Monday, November 25, 2024 / Rules and Regulations 92843 

burdens on carriers, particularly smaller 

rural carriers, and create undue 

instability. In extending the most recent 

freeze in 2018, the Commission 

explained that lifting the freeze and 

reinstating the separations rules after an 

absence of more than two decades, 

would make it extremely difficult, if not 

impossible, for most carriers to perform 

all of the studies needed to remain in 

full compliance. Parties in this 

proceeding confirm that is still the case. 

Commenters confirm that application of 

the rules would require substantial 

training and investment by rural 

incumbent LECs, and could cause 

significant disruptions to regulated 

rates, cost recovery, and other operating 

conditions when applying the outdated 

separations rules to today’s operations. 

Indeed, we agree with NECA that 

‘‘[r]emoval of the current freeze would 

necessitate . . . resources that would 

better be utilized to deploy advanced 

networks and provide service to 

consumers.’’ Thus, we continue to find 

that extension of the freeze is in the 

public interest. 

20. Length of the Freeze Extension. 

We find that our proposed extension of 

up to six years is most appropriate 

under the circumstances and supported 

by the record. In fact, certain 

commenters would support an even 

longer extension. When the Commission 

extended the freeze for six years in 

2018, it concluded that this time period 

best balances the competing 

considerations of a longer or shorter 

extension period. Commenters support 

an extension that is sufficient to ‘‘allow 

the Commission, the Federal-State Joint 

Board on Separations, and industry 

stakeholders time to determine the most 

effective way to address future 

separations issues.’’ The Commission 

has previously explained that a six-year 

extension enables the Joint Board to 

focus on solving the complex issues 

versus the Commission’s experience in 

granting a series of short-term 

separations extensions in the past. We 

find that this is particularly true today. 

Indeed, as several new members of the 

Joint Board are beginning to engage with 

the question of how to effectively 

address separations issues in line with 

a modern public communications 

network, all Federal and State members 

of the Joint Board agree that six years is 

the appropriate timeframe for an 

extension. 

21. The only commenter, NARUC, 

that proposed a shorter than six-year 

extension did so with the caveat that it 

would also support ‘‘any longer 

extension endorsed by the majority 

members’’ of the Joint Board. The State 

members of the Joint Board, which 

constitute the majority of the Joint 

Board, have endorsed a six-year 

extension, thus satisfying NARUC’s 

caveat, and making support in the 

record to a six-year freeze extension 

unanimous. As the State members note, 

‘‘all three FCC Commissioners [that are 

also members of] the Joint Board, 

including the Chair, voted to propose a 

six year extension.’’ 

B. Declining To Allow a One-Time 

Category Relationships Unfreeze 

22. We decline to grant carriers 

another one-time option to unfreeze 

category relationships. Unfreezing 

category relationships would allow 

carriers to allocate regulated 

investments and expenses among the 

part 36 separations categories/subcategories based on fresh cost studies. 

Relatedly, we also decline to grant 

carriers an option to freeze category 

relationships. We find that there is 

insufficient basis in the record to 

support a need to modify the 

separations freeze by providing carriers 

with either of these additional options. 

Only two commenters proposed 

possible modifications to the freeze. In 

2018, the Commission granted rate-ofreturn carriers with frozen category 

relationships a one-time opportunity to 

unfreeze them going forward. Only three 

carriers took advantage of that 

opportunity then and the limited record 

here suggests a similar result would 

occur were we to adopt that same option 

now. 

23. We are not persuaded, based on 

the record, that there is a need to 

provide an unfreeze option at this time, 

particularly in light of other 

opportunities the Commission has 

provided over the past several years that 

enabled rate-of-return carriers to opt out 

of the separations process partially or 

altogether. For example, since 2018, 348 

rate-of return carriers have accepted the 

Commission’s offers to receive modelbased Alternative Connect America Cost 

Model (A–CAM) or fixed high cost 

universal service support and transition 

certain business data services (BDS) 

from rate-of-return to incentive 

regulation. More generally, as a result of 

the Commission’s intercarrier 

compensation and universal service 

reforms, many carriers are no longer 

subject to cost-based regulation or the 

separations rules for any of their 

services. To the extent rate-of-return 

carriers believe they have a need to 

address problems or inaccuracies 

caused by frozen category relationships 

based on old data, they may seek a 

waiver of the category relationships 

freeze rules, as carriers have in the past. 

24. As for adopting a new freeze 

option, either alone or coupled with an 

unfreeze option, we would also require 

a more developed record before 

determining whether to permit carriers 

that did not freeze their category 

relationships in 2001 to freeze them or 

permit carriers that elected to freeze 

category relationships in 2001 to 

unfreeze and then refreeze them. In 

2001, ‘‘[f]ewer than 100 rate-of-return 

incumbent carriers elected to freeze 

their category relationships.’’ In 2018, 

the Commission declined to allow 

companies to unfreeze and then refreeze 

their category relationships, explaining 

that, based on the record at that time, 

this option risked the possibility of 

gamesmanship. Although one 

commenter suggests procedures that 

possibly could prevent gamesmanship 

or double-recovery, the record lacks 

sufficient information to accurately 

assess the benefits and drawbacks of 

adopting these options today. 

25. In any event, our referral below to 

the Joint Board includes the question of 

whether periodic opportunities to 

unfreeze category relationships are 

necessary in conjunction with our 

referral regarding a potential permanent 

freeze. The Joint Board’s 

recommendation on this issue will 

provide valuable input to taking future 

action that give carriers opportunities to 

recalibrate their category relationships. 

C. Joint Board Referrals 

26. Both the Commission and 

commenters have acknowledged that 

comprehensive reform is an arduous 

undertaking that would involve revising 

complex ratemaking rules and 

numerous Universal Service Fund (USF) 

programs that rely on the current 

separations framework. This task is 

further complicated by the fact that, 

after more than two decades since the 

Commission made the original referral 

of comprehensive reform to the Joint 

Board, regulatory agencies and the 

industry have substantially reduced 

personnel and resources with the 

expertise to conduct and evaluate fullscale cost studies. In the meantime, 

regulatory changes and consumer 

demand have transformed the 

telecommunications industry from one 

that was largely reliant on cost-based 

ratemaking to one where only a small 

and declining fraction of small rural 

carriers are still required to use 

separations to set their rates and 

calculate USF support. A small subset of 

rate-of-return carriers are the only 

remaining carriers required to comply 

with these rules. As a result of the 

Commission’s intercarrier compensation 

rate reforms, offers of fixed model-based 


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92844 Federal Register / Vol. 89, No. 227 / Monday, November 25, 2024 / Rules and Regulations 

A–CAM support programs, and the 

ongoing technological transition from 

traditional voice services to broadband, 

the number of rate-of-return carriers 

subject to the separations rules have 

been ever decreasing. Based on internal 

staff analysis, there are currently, out of 

approximately 1,107 rate-of-return 

carriers, only about 247 carriers that 

receive cost-based USF support and 

make the full use of separations to set 

end-user common line, BDS, and 

Consumer Broadband-Only Loop service 

rates, as well as to determine the level 

of USF support. 

27. To save carriers, particularly small 

carriers, from the burden of having to 

conduct all of the cost studies needed 

for full compliance with the separations 

rules, the separations freeze has been 

extended eight times over the past 23 

years. However, these small carriers 

may face the same, if not a heavier, 

burden of complying with any 

potentially revised cost allocation 

methodology if the Joint Board were to 

develop a recommended decision on 

comprehensive reform and the 

Commission were to adopt it. We agree 

with concerns in the record by present 

and past commenters that compliance 

with comprehensive reform would 

‘‘necessitate the hiring or retraining of 

staff—assuming commercial expertise 

can even be found to do so—and 

revising of internal procedures in ways 

that could overwhelm [the small 

carriers’] operations.’’ Thus, there is 

evidence in the record indicating that 

the expediency of comprehensively 

reforming the separations rules may 

have lost its urgency or value over the 

past 23 years. 

28. Some commenters suggest that the 

Joint Board should assess whether ‘‘the 

separations framework . . . is better 

viewed as transitioning itself organically 

toward an eventual sunset, rather than 

something in need of fundamental 

reform and revision.’’ Other commenters 

also question ‘‘the relevance and need 

for jurisdictional separations processes 

and rules.’’ NECA asserts that ‘‘[i]n this 

environment [of naturally transitioning 

to broadband only services], it makes 

little sense to reinstate traditional 

separations rules.’’ NTCA believes that 

technological transitions, consumer 

demand and regulatory reforms have 

‘‘moot[ed] the need for sweeping 

separations reform by enacting changes 

of their own accord.’’ We agree that the 

current separations rules may have the 

effect of promoting and encouraging the 

transition from traditional voice-only 

telephone lines to standalone broadband 

or VoIP services. In fact, we also 

acknowledge that revamped, 

comprehensive reform of separations 

rules may actually encourage carriers to 

cling to the old technology. 

29. Clarifying the Scope of the Prior 

Comprehensive Reform Referral. 

Although the scope of the 1997 referral 

is quite broad—asking the Joint Board to 

explore questions ranging from specific 

comprehensive reform proposals to 

questions on ‘‘whether separations rules 

are still needed during the transition 

from a regulated to a competitive 

marketplace’’—we find it appropriate to 

specifically reiterate a prior referral 

question and ask the Joint Board to 

consider, in particular, whether it 

should still pursue comprehensive 

reform especially given the diminishing 

relevance of the separations rules. 

Accordingly, we ask the Joint Board for 

a recommended decision on whether 

comprehensive reform is still in the 

public interest when the industry is 

naturally transitioning away from legacy 

technologies and cost-based ratemaking, 

and the burdens of compliance with any 

revised separations rules would be 

significant for the limited number of 

small carriers still subject to the 

separations rules. 

30. Referral of Considering a 

Permanent Freeze Extension. Given the 

record emphasis by commenters 

advocating for a longer than six-year 

freeze or even a freeze of unlimited 

duration, we refer to the Joint Board the 

question of whether a permanent freeze 

of the separations rules is appropriate at 

this time. As we have explained, over 

the past 23 years, the Commission has 

gone through eight full rulemaking 

cycles to continually extend the freeze; 

this current proceeding is its ninth such 

rulemaking. The Commission has never 

permitted the freeze to expire because 

allowing it to lapse would reinstate 

overnight obsolete rules, and would 

impose undue instability, disruption, 

and administrative burdens on affected 

carriers. We agree with commenters that 

these ‘‘repeated short-term extensions 

consume valuable and limited 

government and industry resources.’’ 

Accordingly, we find that exploring the 

possibility of a permanent freeze is 

warranted. 

31. This referral to the Joint Board to 

consider a permanent freeze is 

particularly relevant in light of our 

referral to the Joint Board on whether 

the separation rules still need to be 

reformed. If the Joint Board decides that 

comprehensive reform of the 

separations rules is no longer necessary, 

and the separations rules should be 

allowed to become obsolete through 

technological transitions and regulatory 

reforms, then a permanent freeze 

appears to be prudent. Accordingly, we 

ask the Joint Board for a recommended 

decision on whether it would be in the 

public interest to adopt a permanent 

freeze of the separations rules while it 

considers the future course of the 

separations rules and framework. 

32. In addition, if the Joint Board 

recommends a permanent separations 

freeze, we ask the Joint Board to assess 

whether the Commission should allow 

carriers to unfreeze their category 

relationships, and if so, consider related 

questions—such as whether this should 

be a one-time opportunity or an option 

that is extended every few years, and 

whether or not these carriers should be 

permitted to refreeze their category 

relationships. We recognize that if the 

Joint Board recommends, and the 

Commission adopts, a permanent 

separations freeze, some carriers may 

have a greater need to adjust their 

category relationships to provide more 

accurate data for categorizing their 

investments, and we look forward to the 

Joint Board’s input. 

IV. Procedural 

33. Paperwork Reduction Act. This 

document does not contain proposed 

information collection requirements 

subject to the Paperwork Reduction Act 

of 1995, Public Law 104–13. In addition, 

therefore, it does not contain any new 

or modified information collection 

burden for small business concerns with 

fewer than 25 employees pursuant to 

the Small Business Paperwork Relief 

Act of 2002, Public Law 107–198. 

34. Congressional Review Act. The 

Commission has determined, and the 

Administrator of the Office of 

Information and Regulatory Affairs, 

Office of Management and Budget, 

concurs, that this rule is non-major 

under the Congressional Review Act, 5 

U.S.C. 804(2). The Commission will 

send a copy of this Report and Order to 

Congress and the Government 

Accountability Office pursuant to 5 

U.S.C. 801(a)(1)(A). 

35. Final Regulatory Flexibility 

Certification (FRFC). The Regulatory 

Flexibility Act of 1980 (RFA) requires 

that an agency prepare a regulatory 

flexibility analysis for notice and 

comment rulemakings, unless the 

agency certifies that ‘‘the rule will not, 

if promulgated, have a significant 

economic impact on a substantial 

number of small entities.’’ The two 

statutorily mandated criteria to be 

applied in determining the need for 

RFA analysis are (1) whether the 

adopted rules would have a significant 

economic effect, and (2) if so, whether 

the economic effect would directly 

affect a substantial number of small 

entities. In this FRFC, the Commission 

has determined that extending the 


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Federal Register / Vol. 89, No. 227 / Monday, November 25, 2024 / Rules and Regulations 92845 

separations rules freeze will not have a 

significant economic impact on a 

substantial number of small entities. 

36. The purpose of the current 

extension of the freeze is to allow the 

Commission and the Joint Board 

additional time to consider the future 

course of the separations rules and 

process in light of changes in the law, 

technology, and market structure of the 

telecommunications industry without 

creating the undue instability and 

administrative burdens that would 

occur were the Commission to eliminate 

the freeze. Implementation of the freeze 

extension will ease the administrative 

burden of regulatory compliance for 

LECs, including small incumbent LECs. 

The freeze has eliminated the need for 

all incumbent LECs, including 

incumbent LECs with 1500 employees 

or fewer, to complete certain annual 

studies formerly required by the 

Commission’s rules. The effect of the 

freeze extension is to reduce a 

regulatory compliance burden for small 

incumbent LECs, by abating the 

aforementioned separations studies and 

providing these carriers with greater 

regulatory certainty. 

37. Accordingly, based on our 

application of the two statutorily 

mandated criteria to the new extension 

of the freeze adopted in this Order, 

which essentially maintains the status 

quo, we certify that the rules and/or 

policy changes adopted in this Order 

will not have a significant economic 

impact on a substantial number of small 

entities. 

38. The Commission will send a copy 

of this document, including a copy of 

this Final Regulatory Flexibility 

Certification, in a report to Congress 

pursuant to the Congressional Review 

Act. In addition, this document and 

final certification will be sent to the 

Chief Counsel for Advocacy of the SBA, 

and will be published in the Federal 

Register. 

39. Contact Person. For further 

information regarding this proceeding, 

please contact Marv Sacks, Pricing 

Policy Division, Wireline Competition 

Bureau, 45 L Street NE, Washington, DC 

20554, (202) 418–2017, or 

marvin.sacks@fcc.gov. 

40. Effective Date. We find good cause 

to make the extension of the separations 

freeze effective immediately upon 

publication of a summary of this Report 

and Order in the Federal Register. The 

current freeze is scheduled to expire on 

December 31, 2024, and making the 

freeze extension effective immediately 

upon publication is necessary to ensure 

that the separations freeze remains in 

place without interruption. Further, as 

the rules we adopt in this Report and 

Order maintain the current status quo 

for all affected parties, we find that 

ensuring the separations freeze remains 

uninterrupted outweighs any benefit 

that might accrue from an effective date 

later than the date of publication in the 

Federal Register. 

V. Ordering Clauses 

41. Accordingly, it is ordered that, 

pursuant to the authority contained in 

sections 1, 4(i) and (j), 201, 205, 220, 

221(c), 254, 303(r), 403, and 410 of the 

Communications Act of 1934, as 

amended, 47 U.S.C. 151, 154(i) and (j), 

201, 205, 220, 221(c), 254, 303(r), 403, 

410, and part 36 of the Commission’s 

rules, 47 CFR part 36, this Report and 

Order is adopted. 

42. It is further ordered that, pursuant 

to the authority contained in sections 1, 

4(i) and (j), 201, 205, 220, 221(c), 254, 

303(r), 403, and 410 of the 

Communications Act of 1934, as 

amended, 47 U.S.C. 151, 154(i) and (j), 

201, 205, 220, 221(c), 254, 303(r), 403, 

410, and Part 36 of the Commission’s 

rules, 47 CFR part 36, is amended. 

43. It is further ordered that, pursuant 

to the authority contained in sections 1, 

4(i) and (j), 201, 205, 220, 221(c), 254, 

303(r), 403, and 410 of the 

Communications Act of 1934, as 

amended, 47 U.S.C. 151, 154(i) and (j), 

201, 205, 220, 221(c), 254, 303(r), 403, 

410, the amendments to 47 CFR part 36 

shall be effective on the date of 

publication of a summary of this Report 

and Order in the Federal Register. 

44. It is further ordered that the 

Commission’s Consumer and 

Governmental Affairs Bureau, Reference 

Information Center, shall send a copy of 

this Report and Order, including the 

Final Regulatory Flexibility 

Certification, to the Chief Counsel for 

Advocacy of the Small Business 

Administration. 

45. It is further ordered that the Office 

of the Managing Director, Performance 

Program Management, shall send a copy 

of this Report and Order in a report to 

be sent to Congress and the Government 

Accountability Office pursuant to the 

Congressional Review Act, 5 U.S.C. 

801(a)(1)(A). 

List of Subjects in 47 CFR Part 36 

Communications common carriers, 

Reporting and recordkeeping 

requirements, Telecommunications, 

Telephone, Uniform System of 

Accounts. 

Federal Communications Commission. 

Marlene Dortch, 

Secretary. 

Final Rules 

For the reasons discussed in the 

preamble, the Federal Communications 

Commission amends 47 CFR part 36 as 

follows: 

PART 36—JURISDICTIONAL 

SEPARATIONS PROCEDURES; 

STANDARD PROCEDURES FOR 

SEPARATING 

TELECOMMUNICATIONS PROPERTY 

COSTS, REVENUES, EXPENSES, 

TAXES AND RESERVES FOR 

TELECOMMUNICATIONS COMPANIES 

■ 1. The authority citation for part 36 

continues to read as follows: 

Authority: 47 U.S.C. 151, 152, 154(i) and 

(j), 201, 205, 220, 221(c), 254, 303(r), 403, 

410, and 1302 unless otherwise noted. 

§§ 36.3, 36.123 through 36.126, 36.141, 

36.142, 36.152, 36.154 through 36.157, 

36.191, 36.212, 36.214, 36.372, 36.374, 

36.375, and 36.377 through 36.382 

[Amended] 

■ 2. In the following sections, remove 

the date ‘‘December 31, 2024’’ and add 

in its place the date ‘‘December 31, 

2030’’ wherever it appears: 

■ a. Section 36.3(a) through (c), (d) 

introductory text, and (e); 

■ b. Section 36.123(a)(5) and (6); 

■ c. Section 36.124(c) and (d); 

■ d. Section 36.125(h) and (i); 

■ e. Section 36.126(b)(5) and (6), (c)(4), 

(e)(4), and (f)(2); 

■ f. Section 36.141(c); 

■ g. Section 36.142(c); 

■ h. Section 36.152(d); 

■ i. Section 36.154(g); 

■ j. Section 36.155(b); 

■ k. Section 36.156(c); 

■ l. Section 36.157(b); 

■ m. Section 36.191(d); 

■ n. Section 36.212(c); 

■ o. Section 36.214(a); 

■ p. Section 36.372; 

■ q. Section 36.374(b) and (d); 

■ r. Section 36.375(b)(4) and (5); 

■ s. Section 36.377(a) introductory text, 

(a)(1)(ix), (a)(2)(vii), (a)(3)(vii), 

(a)(4)(vii); (a)(5)(vii), and (a)(6)(vii); 

■ t. Section 36.378(b)(1); 

■ u. Section 36.379(b)(1) and (2); 

■ v. Section 36.380(d) and (e); 

■ w. Section 36.381(c) and (d); and 

■ x. Section 36.382(a). 

[FR Doc. 2024–27480 Filed 11–22–24; 8:45 am] 

BILLING CODE 6712–01–P 


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