Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 57183 

Authority: 46 U.S.C. 2113, 3306; 

Department of Homeland Security Delegation 

No. 0170.1. 

§ 3.03–1 [Amended] 

■ 2. In § 3.03–1, remove the words ‘‘in 

this subchapter’’ and add, in their place, 

the words ‘‘in this part’’. 

PART 10—LICENSING OF MARITIME 

PERSONNEL 

■ 3. The authority citation for part 10 

continues to read as follows: 

Authority: 14 U.S.C. 633; 31 U.S.C. 9701; 

46 U.S.C. 2101, 2103, and 2110; 46 U.S.C. 

chapter 71; 46 U.S.C. 7502, 7505, 7701, and 

8906; Department of Homeland Security 

Delegation 0170.1. Section 10.107 is also 

issued under the authority of 44 U.S.C. 3507. 

§ 10.201 [Amended] 

■ 4. In § 10.201(c), remove the text 

‘‘§ 10.464(i)’’ and add, in its place, the 

text ‘‘10.467(h)’’. 

§ 10.467 [Amended] 

■ 5. In § 10.467(b), after the words 

‘‘under paragraph’’, remove the text 

‘‘(f)’’ and add, in its place, the text ‘‘(g)’’. 

PART 114—GENERAL PROVISIONS 

■ 6. The authority citation for part 114 

continues to read as follows: 

Authority: 46 U.S.C. 2103, 3306, 3703; 

Pub. L. 103–206, 107 Stat. 2439; 49 U.S.C. 

App. 1804; Department of Homeland 

Security No. 0170.1; Sec. 114.900 also issued 

under 44 U.S.C. 3507. 

§ 114.400 [Amended] 

■ 7. In § 114.400(b) in the definition for 

‘‘High speed craft’’, after the text 

‘‘V=3.7xdispl .1667’’, remove the text ‘‘h’’. 

PART 147—HAZARDOUS SHIPS’

STORES 

■ 8 . The authority citation for part 147 

continues to read as follows: 

Authority: 46 U.S.C. 3306; E.O. 12234, 45 

FR 58801, 3 CFR, 1980 Comp., p. 277; 

Department of Homeland Security Delegation 

No. 0170.1. 

§ 147.30 [Amended] 

■ 9. In § 147.30(b), after the words 

‘‘Federal Hazardous Substances Act 

Regulations in’’, remove the text ‘‘26 

CFR’’ and add, in its place, the text ‘‘16 

CFR’’. 

PART 151—BARGES CARRYING BULK 

LIQUID HAZARDOUS MATERIAL 

CARGOES 

■ 10. The authority citation for part 151 

continues to read as follows: 

Authority: 33 U.S.C. 1903; 46 U.S.C. 3703; 

Department of Homeland Security Delegation 

No. 0170.1. 

§ 151.15–10 [Amended] 

■ 11. In § 151.15–10(b), remove the text 

‘‘151.03–43’’ and add, in its place, 

‘‘151.03–49’’

PART 175—GENERAL PROVISIONS 

■ 12. The authority citation for part 175 

continues to read as follows: 

Authority: 46 U.S.C. 2103, 3205, 3306, 

3703; Pub. L 103–206, 107 Stat. 2439; 49 

U.S.C. App. 1804; Department of Homeland 

Security Delegation No. 0170.1; 175.900 also 

issued under authority of 44 U.S.C. 3507. 

§ 175.400 [Amended] 

■ 13. In § 175.400 in the definition for 

‘‘High speed craft’’, after the text 

‘‘V=3.7xdispl .1667’’, remove the text ‘‘h’’. 

Dated: September 15, 2005. 

Stefan G. Venckus, 

Chief, Office of Regulations and 

Administrative Law, United States Coast 

Guard. 

[FR Doc. 05–19723 Filed 9–28–05; 1:31 pm] 

BILLING CODE 4910–15–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 1 

[WT Docket No. 97–82; FCC 04–295] 

Competitive Bidding Procedures 

AGENCY: Federal Communications 

Commission. 

ACTION: Final rule. 

SUMMARY: In the Second Order on 

Reconsideration of the Fifth Report and 

Order the Commission grants two 

petitions for reconsideration filed in 

response to the Commission’s Part 1 

Order on Reconsideration of the Fifth 

Report and Order, 68 FR 42984 (July 21, 

2003) (Part 1 Reconsideration Order). 

The Commission revises one element of 

the exemption from part 1 attribution 

rules for certain rural telephone 

cooperatives that participate in the 

Commission’s spectrum auction 

program. The revised rule permits a 

rural telephone cooperative applicant or 

its controlling interest to demonstrate 

that either it is eligible for tax-exempt 

status under the Internal Revenue Code 

or it adheres to the cooperative 

principles enumerated in a previous 

decision of the United States Tax Court. 

DATES: Effective December 9, 2005. 

FOR FURTHER INFORMATION CONTACT: 

William Huber, Auctions and Spectrum 

Access Division, Wireless 

Telecommunications Bureau, (202) 418–

0660. 

SUPPLEMENTARY INFORMATION: This is a 

summary of the Second Order on 

Reconsideration of the Fifth Report and 

Order adopted December 22, 2004 and 

released on January 31, 2005. The 

complete text of the Second Order on 

Reconsideration of the Fifth Report and 

Order, is available for public inspection 

and copying during regular business 

hours at the FCC Reference Information 

Center, Portals II, 445 12th Street, SW., 

Room CY–A257, Washington, DC 20554. 

The Second Order on Reconsideration 

of the Fifth Report and Order and 

related Commission documents may 

also be purchased from the 

Commission’s duplicating contractor, 

Best Copy and Printing, Inc. (BCPI), 

Portals II, 445 12th Street, SW., Room 

CY–B402, Washington, DC, 20554, 

telephone 202–488–5300, facsimile 

202–488–5563, or you may contact BCPI 

at its Web site: http:// 

www.BCPIWEB.com. When ordering 

documents from BCPI, please make sure 

you provide the appropriate FCC 

document number (for example, FCC 

04–295 for the Second Order on 

Reconsideration of the Fifth Report and 

Order) and related documents are also 

available on the Internet at the 

Commission’s Web site: http:// 

wireless.fcc.gov/auctions/. 

I. Overview 

1. In the Second Order on 

Reconsideration of the Part 1 Fifth 

Report and Order, the Commission 

grants two petitions for reconsideration 

of the Commission’s Part 1 

Reconsideration Order. The petitioners 

seek to modify one of the elements of 

the three-part test that rural telephone 

cooperatives must satisfy to receive a 

limited exemption from the attribution 

rules that are part of the Commission’s 

part 1 competitive bidding rules. In 

particular, petitioners seek to refine a 

portion of the rule that defines the 

category of eligible rural telephone 

cooperatives so as not to limit the 

flexibility of rural telephone 

cooperatives to provide new 

telecommunications and other advanced 

communications services to consumers 

in rural areas. In this decision, the 

Commission revises the third element of 

the exemption to permit a rural 

telephone cooperative applicant (or its 

controlling interest) to demonstrate that 

either it is eligible for tax-exempt status 

pursuant to section 501(c)(12) of the 

Internal Revenue Code or it adheres to 

the cooperative principles enumerated 

in Puget Sound Plywood, Inc. v. 

Commissioner of Internal Revenue 

(Puget Sound), 44 T.C. 305 (1965). The 

Commission also clarifies how the first 

element of this rule applies in cases 

where a rural telephone cooperative 

applicant is organized in a jurisdiction 

57184 Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 

that lacks a specific statute governing 

organization as a cooperative. 

II. Background 

A. Section 1.2110 Controlling Interest 

Standard 

2. In the Part 1 Fifth Report and 

Order, 65 FR 52323 (August 29, 2000), 

the Commission adopted as part of its 

attribution rule for competitive bidding 

a controlling interest standard, 

§ 1.2110(c)(2), to be used to determine 

which applicants are eligible for small 

business status. Applicants that qualify 

as small businesses may apply for 

bidding credits if they are available in 

a particular service. Through the 

attribution rule, including the 

controlling interest standard, the 

Commission ensures that only those 

entities truly meriting small business 

status qualify for the small business 

provisions. 

3. Section 1.2110(c) also provides 

specific guidance on attribution of 

interests and gross revenues in certain 

circumstances. For example, 

§ 1.2110(c)(2)(ii)(F) provides that the 

officers and directors of any applicant 

will be considered to have a controlling 

interest in the applicant. Because the 

gross revenues of all affiliates of the 

applicant and affiliates of the 

applicant’s controlling interests are 

attributed to the applicant in calculating 

an applicant’s gross revenues, the gross 

revenues of other entities controlled by 

such officers and directors must be 

included. 

B. Exemption From Part 1 Attribution 

for Officers and Directors of Rural 

Telephone Cooperatives 

4. Following the adoption of the Part 

1 Fifth Report and Order, certain rural 

telephone cooperative interests 

petitioned for reconsideration, seeking 

an exemption for rural telephone 

cooperatives from the requirement that 

the gross revenues of entities controlled 

by an applicant’s officers and directors 

are attributed to the applicant. The 

petitioners argued that the typical 

structure and operation of a rural 

telephone cooperative makes it unlikely 

that affiliates of officers and directors of 

a rural telephone cooperative could 

exercise control over the cooperative. 

5. Acknowledging the unique 

characteristics of rural telephone 

cooperatives, as compared with 

traditional business forms, the 

Commission in its Part 1 

Reconsideration Order, adopted a 

narrow exemption from the attribution 

rule for the officers and directors of a 

rural telephone cooperatives pursuant to 

which the gross revenues of the 

affiliates of the cooperative’s officers 

and directors are not attributed to the 

applicant. Specifically, the gross 

revenues of the affiliates of a 

cooperative’s officers and directors will 

not be attributed if either the applicant 

or a controlling interest, as the case may 

be, meets all of the following 

conditions: (1) The applicant (or the 

controlling interest) is validly organized 

as a cooperative pursuant to state law; 

(2) the applicant (or the controlling 

interest) is a ‘‘rural telephone company’’

as defined by section 153(37) of the 

Communications Act, as amended; and 

(3) the applicant (or the controlling 

interest) is eligible for tax-exempt status 

under section 501(c)(12) of the Internal 

Revenue Code. In the Part 1 

Reconsideration Order, the Commission 

noted that the exemption will not apply 

if the gross revenues or other financial 

and management resources of the 

affiliates of the applicant’s officers and 

directors (or the controlling interests’

officers and directors) are available to 

the applicant. Also, the Commission 

noted that if an officer or director of a 

rural telephone cooperative is 

considered a controlling interest of the 

applicant under another subsection of 

the controlling interest attribution rule, 

this exemption does not apply. Through 

these measures the Commission has 

sought to prevent sham small businesses 

from obtaining bidding credits while 

ensuring that bidding credits are 

received by rural telephone cooperatives 

that are bona fide small businesses. 

6. Consistent with the policy 

objectives underlying that decision, the 

Commission also granted three pending 

waiver requests filed by rural telephone 

cooperative applicants in Auction No. 

44. Specifically, three winning bidders 

that are rural telephone cooperatives (or 

wholly-owned by rural telephone 

cooperatives) and which had filed 

substantively identical requests for 

waiver of § 1.2110(c)(2)(ii)(F) were 

granted waivers conditioned upon the 

submission of information 

demonstrating each applicant’s 

compliance with rule adopted in the 

Part 1 Reconsideration Order. Certain 

winning bidders in Auction No. 49 also 

requested similar relief. 

III. Discussion 

A. Proposed Change to Exemption’s 

Tax-Exempt Element 

7. After adoption of the rural 

telephone cooperative exemption, the 

Commission received two petitions for 

reconsideration of the Part 1 

Reconsideration Order asking the 

Commission to modify the eligibility 

requirements for the exemption by 

changing one part of the three-part 

eligibility standard. Specifically, 

petitioners ask the Commission to 

eliminate the prerequisite that the rural 

telephone cooperative applicant (or its 

controlling interest) be eligible for taxexempt status under section 501(c)(12) 

of the Internal Revenue Code. 

Petitioners suggest that the Commission 

should instead employ a test based on 

a showing that the cooperative operates 

consistent with the cooperative 

principles enumerated in Puget Sound. 

For the reasons discussed below, the 

Commission revises the eligibility 

criteria in § 1.2110(b)(3)(iii)(A) to 

provide an alternative eligibility 

showing pursuant to which a rural 

telephone cooperative seeking to 

exempt from attribution gross revenues 

(or, where applicable, total assets) 

attributable through its officers or 

directors may show that it operates 

pursuant to the cooperative principles 

described in Puget Sound. 

1. Section 501(c)(12) Tax-Exempt Status 

Criterion 

8. The Commission included the taxexemption criterion in the rule as a 

means of ensuring that only bona fide 

rural telephone cooperatives would be 

eligible to receive the benefits of this 

exemption. Parties participating in 

earlier stages of this proceeding had 

advised the Commission that rural 

telephone cooperatives were typically 

characterized by their tax-exempt status. 

Section 501(c)(12) of the Internal 

Revenue Code exempts a telephone 

cooperative from federal income tax 

only if 85 percent or more of the 

cooperative’s income consists of 

amounts collected from members for the 

sole purpose of meeting losses and 

expenses. The Commission crafted this 

exemption based, in part, on the 

Commission’s belief that a cooperative’s 

tax status provided a bright-line rule for 

which compliance would create no 

additional burdens on cooperatives 

beyond their current obligations to 

comply with the tax code. 

9. Petitioners maintain that 

compliance with the tax code’s 85 

percent member revenue test is an 

overly narrow standard for weeding out 

shams. 

10. Petitioners argue that a rural 

telephone cooperative’s tax status is 

irrelevant to whether or not the entity is 

controlled by an outside interest or has 

access to the resources of outside 

interests. 

11. The Commission agrees that the 

tax-status of a rural telephone 

cooperative is independent of whether it 

is a bona fide cooperative. 

Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 57185 

2. Puget Sound Cooperative Principles 

12. RCC suggests that the Commission 

should instead use the Puget Sound 

principles as an element of the 

eligibility standard for the part 1 

attribution exemption. In Puget Sound, 

the Tax Court identified three basic 

principles of a cooperative: (1) 

Subordination of capital, both as regards 

control over the cooperative 

undertaking, and as regards the 

ownership of the cooperative’s 

pecuniary benefits; (2) democratic 

control by the members; and (3) the 

vesting in and the allocation among the 

members of the excess of the operating 

revenues over the costs incurred in 

generating those revenues, and that this 

occur in proportion to the members’

active participation in the cooperative 

endeavor. The IRS has regarded the 

Puget Sound principles as ‘‘fundamental 

to cooperative operation’’ and has 

subsequently incorporated these 

principles into analysis of the tax 

treatment of rural telephone 

cooperatives. 

13. The Commission finds these 

principles of cooperative organization 

and operation are useful criteria for 

determining whether a rural telephone 

cooperative is a bona fide cooperative. 

The Commission believes that this 

change will ensure that the benefits of 

this exemption are limited to bona fide 

rural telephone cooperatives while 

providing such entities with the 

flexibility to further the public interest 

in expanding telecommunications and 

other advanced services to the public in 

rural areas. This revision may enhance 

the ability of rural telephone 

cooperatives to participate in spectrum 

auctions, which, in turn, will promote 

the deployment of advanced 

telecommunications services in rural 

areas as Congress mandated in section 

309(j). Therefore, the Commission 

amends §§ 1.2110(b)(3)(iii)(A)(3) and 

1.2112(b)(2)(iv) to require that an 

applicant (or its controlling interest) 

that seeks to exempt the gross revenues 

(or, if applicable for purposes of 

determining entrepreneur eligibility 

pursuant to §§ 1.2110(b)(1)(ii) and 

24.709, the total assets) of its officers or 

directors from attribution under 

§ 1.2110(c) of the rules must 

demonstrate either that it is eligible for 

tax-exempt status under the Internal 

Revenue Code or that it operates 

pursuant to the cooperative principles 

set forth in Puget Sound. 

14. Consistent with the Commission’s 

approach in the Part 1 Reconsideration 

Order and the Commission’s decision 

here, the Commission grant three 

pending waiver requests filed by rural 

telephone cooperative applicants in 

Auction No. 49. 

B. Showing of Cooperative Organization 

in the Absence of State Certification 

15. Among the eligibility criteria for 

the exemption to the Commission’s 

attribution rules for rural telephone 

cooperatives is the requirement that the 

applicant for the exemption (or its 

controlling interest) be validly 

organized as a cooperative pursuant to 

state law. Petitioners point out that the 

Puget Sound cooperative principles are 

not duplicative of this first element of 

the three-part qualification test because 

the validity of a cooperative as a legal 

entity is independent of the structural 

factors that make it highly unlikely that 

rural telephone cooperatives could 

engage in the kinds of sham transaction 

that the attribution rule is designed to 

protect against. 

16. Upon further review, the 

Commission clarifies how the 

Commission intends to apply this first 

element of § 1.2110(b)(3)(iii)(A) where 

there is no state incorporation statute 

specifically for cooperatives. In these 

circumstances, the applicant (or the 

controlling interest) must at the auction 

short-form application stage certify that 

it is validly organized under the most 

closely applicable organizing statute, 

and that such organization is reflected 

in its articles of incorporation, by-laws, 

and/or other relevant organic 

documents. Copies of all such relevant 

documents must be submitted to the 

Commission by winning bidders relying 

on this exemption in connection with 

its long-form license application in 

order to receive a license. The 

Commission believes that this 

clarification will provide flexibility for 

bona fide cooperatives to demonstrate 

their status in the absence of the 

possibility of state certification. 

IV. Procedural Matters 

A. Regulatory Flexibility Analysis 

17. As required by the Regulatory 

Flexibility Act, 5 U.S.C. 604, the 

Commission has prepared a 

Supplemental Final Regulatory 

Flexibility Analysis for this Second Part 

1 Reconsideration Order. 

B. Paperwork Reduction Act Analysis 

18. The Second Order on 

Reconsideration of the Part 1 Fifth 

Report and Order contains new or 

modified information collection(s) 

subject to the Paperwork Reduction Act 

of 1995 (PRA), Pub. Law 104–13. It will 

be submitted to the Office of 

Management and Budget (OMB) for 

review under section 3507(d) of the 

PRA. OMB, the general public and other 

Federal agencies are invited to comment 

on the new or modified collection(s) 

contained in the proceeding. 

V. Supplemental Final Regulatory 

Flexibility Analysis (Second Order on 

Reconsideration of the Part 1 Fifth 

Report and Order) 

19. As required by the Regulatory 

Flexibility Act of 1980, as amended 

(RFA), a Final Regulatory Flexibility 

Analysis (FRFA) was incorporated into 

the report and order section of the Part 

1 Fifth Report and Order in WT Docket 

No. 97–82. In addition, a Supplemental 

FRFA was incorporated into the Part 1 

Reconsideration Order. The 

Commission received two petitions for 

reconsideration in response to the Part 

1 Reconsideration Order. This present 

second supplemental FRFA conforms to 

the RFA. 

A. Need for, and Objectives of, the 

Second Order on Reconsideration of the 

Part 1 Fifth Report and Order 

20. In May 2003, the Commission 

released its Part 1 Reconsideration 

Order, which addressed petitions 

received in response to the Part 1 Fifth 

Report and Order regarding the 

amendment of general competitive 

bidding rules for all auctionable 

services. Most pertinent for purposes of 

this Second Order on Reconsideration of 

the Part 1 Fifth Report and Order, the 

Commission in the Part 1 

Reconsideration Order adopted a 

limited exemption from its general 

attribution rules for rural telephone 

cooperatives that meet specific 

conditions. 

21. Based on the petitions and 

comments received in response to the 

Part 1 Fifth Report and Order, the 

Commission in its Part 1 

Reconsideration Order adopted a 

narrow exemption for the officers and 

directors of a rural telephone 

cooperative so that the gross revenues of 

the affiliates of a rural telephone 

cooperative’s officers and directors need 

not be attributed to the applicant. 

Specifically, the exemption provided 

that the gross revenues of the affiliates 

of an applicant’s officers and directors 

would not be attributed if either the 

applicant or a controlling interest, as the 

case may be, meets all of the following 

conditions: (1) The applicant (or the 

controlling interest) is validly organized 

as a cooperative pursuant to state law; 

(2) the applicant (or the controlling 

interest) is a ‘‘rural telephone 

cooperative’’ as defined by the 

Communications Act; and (3) the 

applicant (or the controlling interest) is 

eligible for tax-exempt status under the 

57186 Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 

Internal Revenue Code. However, the 

exemption would not apply if the gross 

revenues or other financial and 

management resources of the affiliates 

of the applicant’s officers and directors 

(or the controlling interest’s officers and 

directors) are available to the applicant. 

22. The Commission received two 

petitions for reconsideration of the Part 

1 Reconsideration Order. Petitioners 

request reconsideration of the taxexempt criteria that the Commission 

uses to determine eligibility for the 

attribution rule exemption. Specifically, 

petitioners seek removal of the 

requirement that rural telephone 

cooperatives have tax-exempt status 

pursuant to section 501(c)(12) of the 

Internal Revenue Code. Petitioners 

suggest that this prerequisite be 

replaced by the requirement that the 

rural telephone cooperative applicant 

(or its controlling interest) adheres to 

the cooperative principles articulated by 

the U.S. Tax Court in Puget Sound. In 

the Second Order on Reconsideration of 

the Part 1 Fifth Report and Order the 

Commission resolves the petitions for 

reconsideration filed in response to the 

Part 1 Reconsideration Order. 

23. Based upon the petitions for 

reconsideration, we will permit a rural 

telephone cooperative applicant (or its 

controlling interest) to demonstrate that 

the rural telephone cooperatives in 

question is eligible for tax-exempt status 

pursuant to section 501(c)(12) of the 

Internal Revenue Code or that it (or its 

controlling interest) adheres to the 

cooperative principles articulated in 

Puget Sound. The purpose of the 

exemption for rural telephone 

cooperatives, which is to identify the 

bona fide small businesses among rural 

telephone cooperatives and prevent 

sham small businesses rural telephone 

cooperatives from obtaining designated 

entity preferences. The Commission has 

determined that a requirement that rural 

telephone cooperative be section 

501(c)(12) tax-exempt organizations may 

inadvertently exclude bona fide rural 

telephone cooperatives in some cases 

and may therefore undercut the purpose 

of the exemption. 

24. Also, on its own motion, the 

Commission has decided that if the 

applicant is organized in a state that 

does not have rules or regulations 

specific to organizing an entity as a 

cooperative, the applicant may use its 

by-laws or other relevant documents to 

demonstrate that it is a cooperative. 

This new provision provides a means by 

which applicants can demonstrate 

organization as a bona fide cooperative 

even if organized in a state that does not 

designate specific conditions for 

cooperative organization. 

B. Description and Estimate of the 

Number of Small Entities to Which 

Rules Will Apply 

25. The RFA directs agencies to 

provide a description of and, where 

feasible, an estimate of the number of 

small entities that may be affected by 

the proposed rules, if adopted. The RFA 

generally defines the term ‘‘small 

entity’’ as having the same meaning as 

the terms ‘‘small organization,’’ ‘‘small 

business’’ and ‘‘small governmental 

jurisdiction.’’ The term ‘‘small 

business’’ has the same meaning as the 

term ‘‘small business concern’’ under 

the Small Business Act. 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 SBA. 

26. The rule modifications and 

clarifications adopted in the Part 1 

Reconsideration Order are of general 

applicability to all services and do not 

apply on a service-specific basis. 

Therefore, this SFRFA provides a 

general analysis of the impact of the 

revised part 1 rule on small businesses 

rather than a service by service analysis. 

Accordingly, the revised rules will 

apply to all entities that apply to 

participate in Commission auctions, 

including both small and large entities. 

The number of entities that may apply 

to participate in future Commission 

auctions is unknown. The number of 

small businesses that have participated 

in prior auctions has varied. In all of our 

auctions held to date, 1899 out of a total 

of 2432 qualified bidders have either 

claimed eligibility for small business 

bidding credits or self-reported status as 

a small business as that term has been 

defined under rules adopted by the 

Commission for specific services. (These 

figures do not generally include 

applicants for auctions of broadcast 

licenses where sized-based bidding 

preferences have not been available). 

C. Description of the Projected 

Reporting, Record-keeping, and Other 

Compliance Requirements 

27. All license applicants that are 

rural telephone cooperative seeking an 

exemption from the attribution rules 

that are part of the Commission’s 

general competitive bidding rules found 

in part 1 of the Commission’s rules are 

subject to the reporting and recordkeeping requirements associated with 

qualifying for the exemption. These 

requirements apply in the same way to 

both large and small entities. 

Furthermore, applicants are required to 

apply for spectrum auctions by filing a 

short-form application (FCC Form 175) 

prior to the auction. Applicants are also 

required to file a long-form application 

(FCC Form 601) at the conclusion of the 

auction. Specifically, entities seeking 

status as a small business must disclose 

on their FCC Form 175s, FCC Form 

601s, and on their application for 

assignment or transfer of control (FCC 

Form 603), separately and in the 

aggregate, the gross revenues of the 

applicant (or licensee), its affiliates, its 

controlling interests and affiliates of the 

applicant’s controlling interests for each 

of the previous three years. 

28. As a result of the actions taken in 

the, rural telephone cooperative auction 

applicants, or those controlled by rural 

telephone cooperatives, seeking an 

exemption from the requirement that 

the gross revenues of entities controlled 

by an applicant’s officers and directors 

are attributed to the applicant must 

establish eligibility for this exemption 

based upon the factors listed above, 

which have been modified, in part, by 

the Second Order on Reconsideration of 

the Part 1 Fifth Report and Order. 

D. Steps Taken to Minimize the 

Economic Impact on Small Entities, and 

Significant Alternatives Considered 

29. The RFA requires an agency to 

describe any significant alternatives that 

it has considered in reaching its 

proposed approach, which may include 

the following four alternatives (among 

others): (1) The establishment of 

differing compliance or reporting 

requirements or timetables that take into 

account the resources available to small 

entities; (2) the clarification, 

consolidation, or simplification of 

compliance or reporting requirements 

under the rule for small entities; (3) the 

use of performance, rather than design, 

standards; and (4) an exemption from 

coverage of the rule or any part thereof 

for small entities. The Commission has 

considered the economic impact on 

small entities of the following 

modifications and clarifications adopted 

in the Second Order on Reconsideration 

of the Part 1 Fifth Report and Order and 

has taken steps to minimize the burdens 

on small entities. 

30. Application of attribution rule to 

rural telephone cooperatives. Based on 

the petitions and comments received in 

response to the Second Order on 

Reconsideration of the Part 1 Fifth 

Report and Order the Commission 

modifies a narrow exemption for the 

officers and directors of a rural 

telephone cooperative that it adopted so 

that the rural telephone cooperative 

does not have to be tax-exempt entity 

pursuant to section 501(c)(12) of the 

Internal Revenue Code in order to 

qualify for the exemption from the 

Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 57187 

attribution rules for the Commission 

part 1 competitive bidding rule. 

Specifically, the gross revenues of the 

affiliates of an applicant’s officers and 

directors will not be attributed if either 

the applicant or a controlling interest, as 

the case may be, meets all of the 

following conditions: (1) The applicant 

(or the controlling interest) is validly 

organized as a cooperative pursuant to 

state law or, where there is no state law, 

the applicant must certify that it is 

organized according to commonly 

accepted cooperative principles as 

demonstrated by its by-laws, charter, or 

any other relevant document(s); (2) the 

applicant (or the controlling interest) is 

a ‘‘rural telephone company’’ as defined 

by the Communications Act; and (3) the 

applicant (or the controlling interest) 

demonstrates either that it is eligible for 

tax-exempt status under the Internal 

Revenue Code or that it adheres to the 

cooperative principles articulated in 

Puget Sound. However, the exemption 

will not apply if the gross revenues or 

other financial and management 

resources of the affiliates of the 

applicant’s officers and directors (or the 

controlling interest’s officers and 

directors) are available to the applicant. 

31. The Commission believes that this 

action will increase the number of rural 

telephone cooperatives that are eligible 

for small business status (and the 

corresponding bidding credits). Such a 

result will enhance the ability of rural 

telephone cooperatives to participate in 

spectrum auctions. This, in turn, will 

promote the deployment of advanced 

telecommunications services in rural 

areas as Congress mandated in section 

309(j). 

E. Report to Congress 

32. The Commission will send a copy 

of the Second Order on Reconsideration 

of the Fifth Report and Order, including 

this SFRFA, in a report to be sent to 

Congress pursuant to the Congressional 

Review Act. In addition, the 

Commission will send a copy of the 

Second Order on Reconsideration of the 

Fifth Report and Order, including this 

SFRFA, to the Chief Counsel for 

Advocacy of the Small Business 

Administration. A copy of the Second 

Order on Reconsideration of the Third 

Report and Order and SFRFA (or 

summaries thereof) will also be 

published in the Federal Register. 

VI. Ordering Clauses 

33. Accordingly, it is ordered that, 

pursuant to the authority granted in 

sections 4(i), 303(r) and 309(j) of the 

Communications Act of 1934, as 

amended, 47 U.S.C. 154(i), 303(r) and 

309(j), the petitions for reconsideration 

of the Part 1 Reconsideration Order filed 

by a group comprising National 

Telecommunications Cooperative 

Association, the Rural 

Telecommunications Group, the law 

firm of Blooston, Mordkofsky, Dickens, 

Duffy & Prendergast, and the law firm of 

Kraskin, Lesse & Cosson, and a group 

comprising Cable & Communications 

Corporation, Northeast Nebraska 

Telephone Company, and Poka Lambro 

Telecommunications, Ltd. ARE, to the 

extent they are addressed herein, 

granted. 

34. It is further ordered that pursuant 

to the authority granted in sections 4(i), 

5(b), 5(c)(1), 303(r), and 309(j) of the 

Communications Act of 1934, as 

amended, 47 U.S.C. 154(i), 155(b), 

155(c)(1), 303(r), and 309(j), the Second 

Order on Reconsideration of the Part 1 

Fifth Report and Order, is hereby 

adopted and part 1, subpart Q of the 

Commission’s rules is amended as set 

forth in Appendix A of the Second 

Order on Reconsideration of the Part 1 

Fifth Report and Order, effective 60 

days after publication in the Federal 

Register. The information collection 

contained in these rules will become 

effective 70 days after publication in the 

Federal Register, following Office of 

Management and Budget approval, 

unless a notice published in the Federal 

Register stating otherwise. 

35. It is further ordered that the 

requests of Adams Telecom, Inc., Cable 

and Communications Corporation, 

Grand River Communications, Inc., 

Northeast Nebraska Telephone 

Company, Poka Lambro 

Telecommunications, Ltd., S.E.I. Data, 

Inc., and WCTA Wireless, Inc. for 

waiver of § 1.2110(c)(2)(ii)(F) as 

presented in their Applications to 

Participate in an FCC Auction (FCC 

Form 175) for Auction No. 49 are 

granted, conditioned upon the 

submission to the Commission of 

information demonstrating compliance 

with 47 CFR 1.2112(b)(2)(iv), as revised 

herein, and petitioners Cable and 

Communications Corporation, Northeast 

Nebraska Telephone Company, and 

Poka Lambro Telecommunications, Ltd. 

will also be permitted to qualify for this 

exemption by submitting to the 

Commission information demonstrating 

the applicant’s compliance with 47 CFR 

1.2112(b)(2)(vi), as revised herein. 

36. It is further ordered that, pursuant 

to 47 U.S.C. 155(c) and 47 CFR 0.331, 

the Chief of the Wireless 

Telecommunications Bureau is granted 

delegated authority to prescribe and set 

forth procedures for the implementation 

of the provisions adopted herein. 

List of Subjects in 47 CFR Part 1 

Communications common carriers. 

Federal Communications Commission. 

Marlene H. Dortch, 

Secretary. 

Final Rules 

■ Part 1 of Title 47 of the Code of 

Federal Regulations is amended to read 

as follows: 

PART 1—PRACTICE AND 

PROCEDURE 

■ 1. The authority citation for part 1 

continues to read as follows: 

Authority: 15 U.S.C. 79 et seq.; 47 U.S.C. 

151, 154(i), 154(j), 155, 157, 225, and 303(r). 

■ 2. Amend § 1.2110 by revising 

paragraph (b)(3)(iii)(A) to read as 

follows: 

§ 1.2110 Designated entities 

* * * * * 

(b) * * * 

(3) * * * 

(iii) * * * 

(A)(1) An applicant will be exempt 

from § 1.2110(c)(2)(ii)(F) for the purpose 

of attribution in § 1.2110(b)(1), if the 

applicant or a controlling interest in the 

applicant, as the case may be, meets all 

of the following conditions: 

(i) The applicant (or the controlling 

interest) is organized as a cooperative 

pursuant to state law; 

(ii) The applicant (or the controlling 

interest) is a ‘‘rural telephone company’’

as defined by the Communications Act; 

and 

(iii) The applicant (or the controlling 

interest) demonstrates either that it is 

eligible for tax-exempt status under the 

Internal Revenue Code or that it adheres 

to the cooperative principles articulated 

in Puget Sound Plywood, Inc. v. 

Commissioner of Internal Revenue, 44 

T.C. 305 (1965). 

(2) If the condition in paragraph 

(b)(3)(iii)(A)(1)(i) above cannot be met 

because the relevant jurisdiction has not 

enacted an organic statute that specifies 

requirements for organization as a 

cooperative, the applicant must show 

that it is validly organized and its 

articles of incorporation, by-laws, and/ 

or other relevant organic documents 

provide that it operates pursuant to 

cooperative principles. 

* * * * * 

3. Amend § 1.2112 by revising 

paragraph (b)(2)(vi) to read as follows: 

§ 1.2112 Ownership disclosure 

requirements for applications. 

* * * * * 

(b) * * * 

(2) * * * 

57188 Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 

(vi) List and summarize, if seeking the 

exemption for rural telephone 

cooperatives pursuant to § 1.2110, all 

documentation to establish eligibility 

pursuant to the factors listed under 

§ 1.2110(b)(3)(iii)(A). 

[FR Doc. 05–19519 Filed 9–29–05; 8:45 am] 

BILLING CODE 6712–01–P 

DEPARTMENT OF DEFENSE 

48 CFR Parts 204, 212, 213, and 252 

[DFARS Case 2003–D040] 

Defense Federal Acquisition 

Regulation Supplement; Central 

Contractor Registration 

AGENCY: Department of Defense (DoD). 

ACTION: Final rule. 

SUMMARY: DoD has adopted as final, 

with changes, an interim rule amending 

the Defense Federal Acquisition 

Regulation Supplement (DFARS) to 

remove policy on Central Contractor 

Registration (CCR) that duplicated 

policy found in the Federal Acquisition 

Regulation (FAR). The rule also 

addresses requirements for use of 

Commercial and Government Entity 

(CAGE) codes in DoD contracts. 

EFFECTIVE DATE: September 30, 2005. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Deborah Tronic, Defense Acquisition 

Regulations Council, 

OUSD(AT&L)DPAP(DAR), IMD 3C132, 

3062 Defense Pentagon, Washington, DC 

20301–3062. Telephone (703) 602–0289; 

facsimile (703) 602–0350. Please cite 

DFARS Case 2003–D040. 

SUPPLEMENTARY INFORMATION: 

A. Background 

DoD published an interim rule at 68 

FR 64557 on November 14, 2003, to 

remove DFARS requirements for 

contractors to register in the CCR 

database, since policy on this subject 

had been added to the FAR. The interim 

rule also addressed requirements for 

inclusion of CAGE codes on contracts 

and in the CCR database to 

accommodate DoD payment systems. 

Three sources submitted comments 

on the interim DFARS rule. A 

discussion of the comments is provided 

below. 

1. Comment: Provision of DUNS 

numbers and CAGE codes. One 

respondent stated that the interim rule 

appeared to require contracting officers 

to provide both a DUNS number and a 

CAGE code on contractual documents 

submitted to the payment office, 

whereas the previous DFARS coverage 

required either a DUNS number or a 

CAGE code. 

DoD Response: The final rule revises 

DFARS 204.1103(e) to clarify that 

contracting officers must include the 

contractor’s CAGE code on contractual 

documents transmitted to the payment 

office, instead of the DUNS number. 

2. Comment: Timely assignment of 

CAGE codes. One respondent 

recommended adding a statement to the 

rule to address the need for the Defense 

Logistics Information Service to assign 

CAGE codes in a timely manner, to 

avoid payment delays and payment of 

interest. 

DoD Response: DoD agrees that timely 

assignment of CAGE codes is important. 

However, such a statement is 

considered unnecessary for inclusion in 

the DFARS. 

3. Comment: Contractor failure to 

provide correct or current CCR 

information. One respondent provided 

an example of a contractor’s failure to 

maintain current information in the CCR 

database. 

DoD Response: Contractors are 

responsible for maintaining CCR 

information and are required to review 

and update their information annually 

to ensure it is current, accurate, and 

complete. 

This rule was not subject to Office of 

Management and Budget review under 

Executive Order 12866, dated 

September 30, 1993. 

B. Regulatory Flexibility Act 

DoD certifies that this final rule will 

not have a significant economic impact 

on a substantial number of small entities 

within the meaning of the Regulatory 

Flexibility Act, 5 U.S.C. 601, et seq., 

because the rule adds no new 

requirements for contractors. The rule 

removes DFARS text on Central 

Contractor Registration that has become 

obsolete as a result of policy that was 

added to the FAR, and retains existing 

requirements for use of Commercial and 

Government Entity codes in DoD 

contracts. 

C. Paperwork Reduction Act 

The Paperwork Reduction Act does 

not apply because the rule does not 

impose any information collection 

requirements that require the approval 

of the Office of Management and Budget 

under 44 U.S.C. 3501, et seq. 

List of Subjects in 48 CFR Part 204, 212, 

213, and 252 

Government procurement. 

Michele P. Peterson, 

Editor, Defense Acquisition Regulations 

System. 

Accordingly, the interim rule 

amending 48 CFR parts 204, 212, 213, 

and 252, which was published at 68 FR 

64557 on November 14, 2003, is 

adopted as a final rule with the 

following change: 

PART 204–ADMINISTRATIVE 

MATTERS 

■ 1. The authority citation for 48 CFR 

part 204 continues to read as follows: 

Authority: 41 U.S.C. 421 and 48 CFR 

Chapter 1. 

■ 2. Section 204.1103 is revised to read 

as follows: 

204.1103 Procedures. 

■ (e) On contractual documents 

transmitted to the payment office, 

provide the Commercial and 

Government Entity code, instead of the 

DUNS number or DUNS+4 number, in 

accordance with agency procedures. 

[FR Doc. 05–19464 Filed 9–29–05; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

48 CFR Parts 209, 217, and 246 

[DFARS Case 2003–D101] 

Defense Federal Acquisition 

Regulation Supplement; Quality 

Control of Aviation Critical Safety 

Items and Related Services 

AGENCY: Department of Defense (DoD). 

ACTION: Final rule. 

SUMMARY: DoD has adopted as final, 

with changes, an interim rule amending 

the Defense Federal Acquisition 

Regulation Supplement (DFARS) to 

implement Section 802 of the National 

Defense Authorization Act for Fiscal 

Year 2004. Section 802 requires DoD to 

establish a quality control policy for the 

procurement of aviation critical safety 

items and the modification, repair, and 

overhaul of those items. 

EFFECTIVE DATE: September 30, 2005. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Robin Schulze, Defense Acquisition 

Regulations Council, OUSD (AT&L) 

DPAP (DAR), IMD 3C132, 3062 Defense 

Pentagon, Washington, DC 20301–3062. 

Telephone (703) 602–0326; facsimile 

(703) 602–0350. Please cite DFARS Case 

2003–D101.