19526 Federal Register / Vol. 60, No. 75 / Wednesday, April 19, 1995 / Rules and Regulations

rival locators over possessory rights

since Congress has provided for such

determination in local courts.

Dated: April 4, 1995.

Bob Armstrong,

Assistant Secretary of the Interior.

[FR Doc. 95–9581 Filed 4–18–95; 8:45 am]

BILLING CODE 4310–40–P

43 CFR Public Land Order 7135

[AK–932–1430–01; J–011940]

Revocation of Public Land Order No.

2546; Alaska

AGENCY: Bureau of Land Management,

Interior.

ACTION: Public Land Order.

SUMMARY: This order revokes a public

land order in its entirety as it affects

approximately 6.86 acres of National

Forest System land withdrawn for use

by the Forest Service, Department of

Agriculture, for the North Douglas

Administrative Site. The land is no

longer needed for the purpose for which

it was withdrawn. This action also

allows the conveyance of the land to the

State of Alaska, if such land is otherwise

available. Any land described herein

that is not conveyed to the State is

opened and will be subject to the terms

and conditions of the national forest

reservation and any other withdrawal of

record.

EFFECTIVE DATE: April 19, 1995.

FOR FURTHER INFORMATION CONTACT: Sue

A. Wolf, BLM Alaska State Office, 222

W. 7th Avenue, No. 13, Anchorage,

Alaska 99513–7599, 907–271–5477.

By virtue of the authority vested in

the Secretary of the Interior by Section

204 of the Federal Land Policy and

Management Act of 1976, 43 U.S.C.

1714 (1988), it is ordered as follows:

1. Public Land Order No. 2546, which

withdrew lands for use by the Forest

Service as administrative sites, is hereby

revoked as it affects the following

described land:

Copper River Meridian

Tongass National Forest

A parcel of land located within lot 4 of sec.

17, in partially surveyed T. 41 S., R. 66 E.,

more particularly described as:

Beginning at a point N. 10°29′ E., 102.81

chains from Corner No. 2 of U.S.S. No. 1555

and also N. 63° W., 0.14 chain from Station

P–569+00 on the P-Line of B.P.R. North

Douglas Forest Highway Extension No. 30;

Thence West, 8.0 chains;

North, 8.04 chains to the line of mean high

water;

Easterly, 10.19 chains with the line of

mean high water;

S. 9° W., 9.96 chains to the point of

beginning.

The area described contains approximately

6.86 acres.

2. The State of Alaska application for

selection made under Section 6(a) of the

Alaska Statehood Act of July 7, 1958, 48

U.S.C. note prec. 21 (1988), and under

Section 906(e) of the Alaska National

Interest Lands Conservation Act, 43

U.S.C. 1635(e) (1988), becomes effective

without further action by the State upon

publication of this public land order in

the Federal Register, if such land is

otherwise available. Land not conveyed

to the State is opened and will be

subject to the terms and conditions of

the Tongass National Forest reservation

and any other withdrawal of record.

Dated: April 4, 1995.

Bob Armstrong,

Assistant Secretary of the Interior.

[FR Doc. 95–9580 Filed 4–18–95; 8:45 am]

BILLING CODE 4310–JA–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 61

[CC Docket No. 94–1; FCC 95–132]

Price Cap Performance Review for

Local Exchange Carriers

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: On March 30, 1995, the

Federal Communications Commission

adopted a First Report and Order

revising its price cap regulations

applicable to local exchange carriers

(LECs). The Commission adopted these

Rule revisions as a result of a

performance review of LEC price cap

regulation, which the Commission

scheduled when it originally adopted

LEC price cap regulation in 1990, to

evaluate the price cap system as

implemented and LEC performance

under that system. The Commission’s

rule revisions increase value of the

productivity offset factor in the price

cap formula, provide three options for

the productivity offset factor, revise the

rules governing sharing obligations, and

require a one-time reduction in the

LECs’ price cap indexes. The

Commission also limits the number of

cost changes resulting from changes in

accounting rules that are eligible for

exogenous cost treatment, and extends

exogenous cost treatment to cost

changes resulting from the sales or

swaps of exchanges. In addition, the

Commission states its intention to issue

a further notice of proposed rulemaking

in the near future, to consider adopting

other rule changes on a long-term basis.

Finally, the Commission delegates

authority to the Common Carrier Bureau

to determine appropriate adjustments

for LECs to make appropriate

adjustments to their price cap indexes,

to account for these effects caused by

rescheduling their 1995 annual access

filings.

EFFECTIVE DATE: May 19, 1995.

FOR FURTHER INFORMATION CONTACT:

Joanne F. Wall or Steven Spaeth, Tariff

Division, Common Carrier Bureau, (202)

418–1530.

SUPPLEMENTARY INFORMATION: This is a

summary of the Commission’s First

Report and Order adopted March 30,

1995, and released April 7, 1995. The

full text of this Commission decision is

available for inspection and copying

during normal business hours in the

FCC Public Reference Room (Room

230), 1919 M. St., N.W., Washington,

D.C. The complete text of this decision

may also be purchased from the

Commission’s copy contractor,

International Transcription Service,

Suite 140, 2100 M Street, N.W.,

Washington, D.C. 20037.

Regulatory Flexibility Analysis

We have determined that Section

605(b) of the Regulatory Flexibility Act

of 1980, 5 U.S.C. § 605(b), does not

apply to these rules because they do not

have a significant economic impact on

a substantial number of small entities.

The definition of a ‘‘small entity’’ in

Section 3 of the Small Business Act

excludes any business that is dominant

in its field operation. Local exchange

carriers do not qualify as small entities

because they have a nationwide

monopolicy on ubiquitous access to the

subscribers in their service area. The

Commission also has found all exchange

carriers to be dominant in its

competitive carrier proceeding. See 85

FCC 2d 1, 23–24 (1980).

To the extent that small telephone

companies will be affected by these

rules, we hereby certify that these rules

will have a significant effect on a

substantial number of ‘‘small entities.’’

Summary of Report and Order

In this Order, we adopted revisions to

the productivity offset factor, or ‘‘XFactor,’’ of the price cap index formula.

In the formula, the X-Factor, which

represents the amount by which local

exchange carriers have been more

productive than the economy as a

whole, is subtracted from the Gross

National Product Price Index (GNP–PI),

a measure of inflation. In general, LEC

prices are not permitted to increase

more than the rate established by the
Federal Register / Vol. 60, No. 75 / Wednesday, April 19, 1995 / Rules and Regulations 19527

cap. Three X-Factor options are

provided: 4.0, 4.7 and 5.3 percent.

We also adopt revisions to the LECs’

sharing obligations, which are treated as

downward adjustments of the price cap.

Specifically, the 50–50 sharing zone for

the 4.0 percent X-Factor option ranges

from 12.25 to 13.25 percent rate return;

the 100 percent sharing zone for this

option begins at 13.25 percent. The

sharing obligations for the 4.7 percent

X-Factor requires 50–50 sharing for

LECs with rates of return between 12.25

and 16.25 percent, and 100 percent

sharing for LECs with rates of return

above 16.25 percent. We have

eliminated sharing obligations for LECs

electing the high-options X-Factor, 5.3

percent.

We also conclude that the current 3.3

percent X-Factor was 0.7 percent too

low during the first four years of price

cap regulations. Accordingly, we require

LECs to adjust their price cap indexes

downward by 0.7 percent for each year

from 1990 to 1994 that they elected the

3.3 percent productivity offset factor.

We also revise our rules governing

exogenous costs in two ways.

Exogenous costs are treated as either

downward or upward adjustments to

the price cap. First, we will allow

exogenous cost adjustments for

accounting changes only to the extent

those accounting revisions result in

economic cost changes, e.g., they affect

the discounted cash flow of the carrier.

We consider accounting rule changes as

economic cost changes only to the

extent those changes affect the

discounted cash flow of the carrier.

Second, we establish procedures for

LECs to follow when seeking exogenous

treatment for cost changes. Parties will

be required to raise the issue of whether

to treat any cost change exogenously in

a petition for rulemaking, petition for

declaratory ruling, or petition for

waiver.

Finally, we adopt a number of minor

revisions to the LEC price cap plan. We

find that there is sufficient evidence to

allow carriers greater flexibility to lower

prices within service bands without

risking predation or cross-subsidization.

Therefore, we expand the lower pricing

bands that apply to the service

categories within the traffic sensitive

and trunking baskets and to density

pricing zones by 5 percent. We also will

require LECs to treat cost reductions

resulting from sales or swaps of

exchanges to be treated exogenously as

a condition placed on the grant of any

waiver of the study area boundary rules.

Finally, we change the inflation

measure in the price cap index formula

from Gross National Product Price Index

(GNP–PI) to Gross Domestic Product

Price Index (GDP–PI).

Ordering Clauses

Accordingly, it is ordered, pursuant to

authority contained in Sections 4(i), 4(j),

201–205, 303(r), and 403 of the

Communications Act of 1934, as

amended, 47 U.S.C. 154(i), 154(j), 201–

205, 303(r), 403, and Section 553 of

Title 5, United States Code, that Part 61

of the Commission’s Rules, 47 C.F.R.

Part 61 is amended as set forth below.

It is further ordered that authority is

delegated to the Chief, Common Carrier

Bureau, to determine that adjustments

are necessary to the price cap indexes,

actual price indexes, and service band

indexes of local exchange carriers, to

account for the effects of the revised

effective date of the 1995 annual access

filings of local exchange carriers under

price cap regulation, and to establish a

pleading cycle for review of those

tariffs.

It is further ordered that the

provisions in this Report and Order will

be effective 30 days after Federal

Register publication.

List of Subjects in 47 CFR Part 61

Communications common carriers,

Tariffs.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Part 61 of Title 47 of the CFR is

amended as follows:

PART 61—TARIFFS

1. The authority citation continues to

read as follows:

Authority: Secs. 1, 4(i), 4(j), 201–205, and

403 of the Communications Act of 1934, as

amended; 47 U.S.C. 151, 154(i), 154(j), 201–

205, and 403, unless otherwise noted.

2. Section 61.3 is amended by

redesignating paragraphs (p) through (ll)

as (q) through (mm), and by adding a

new paragraph (p) to read as follows:

§ 61.3 Definitions.

* * * * *

(p) GDP Price Index (GDP–PI). The

estimate of the ‘‘Fixed Weight Price

Index for Gross Domestic Product, 1987

Weights’’ published by the United

States Department of Commerce, which

the Commission designates by Order.

* * * * *

3. Section 61.45 is amended by

revising paragraphs (b) and (c), the

introductory text of paragraphs (d) and

(d)(1) and paragraphs (d)(1)(ii), (d)(1)

(vi) and (e) to read as follows:

§ 61.45 Adjustments to the PCI for Local

Exchange Carriers.

* * * * *

(b) Adjustments to local exchange

carrier PCIs for the baskets designated in

§ 61.42(d) (2), (3) and (4) shall be made

pursuant to the formula set forth in

§ 61.44(b), and as further explained in

§§ 61.44 (e), (f), (g), and (h).

(1) Notwithstanding the value of X

defined in § 61.44(b), the X value

applicable to the baskets specified in

§ 61.42(d) (2) and (3) shall be 4.0%, or

4.7%, or 5.3%, as the carrier elects.

(2) For the basket specified in

§ 61.42(d)(4), the value of X shall be

3.0%, or 3.7%, or 4.3%, as the carrier

elects.

(c) Subject to paragraph (e) of this

section, adjustments to local exchange

carrier PCIs for the basket designated in

§ 61.42(d)(1) shall be made pursuant to

the following formula:

PCI1=PCIt¥1[1+w[(GDP–PI–X–(g/2))/

(1+(g/2))]+∆Z/R]

where

GDP–PI=the percentage change in the

GDP–PI between the quarter ending

six months prior to the effective

date of the new annual tariff and

the corresponding quarter of the

previous year,

X=productivity factor of 4.0%, or 4.7%,

or 5.3% if the carrier so elects,

g=the ratio of minutes of use per access

line during the base period, to

minutes of use per access line

during the previous base period,

minus 1,

∆Z=the dollar effect of current

regulatory changes when compared

to the regulations in effect at the

time the PCI was updated to PCIt¥1,

measured at base period level of

operations,

R=base period quantities for each rate

element ‘‘i’’, multiplied by the price

for each rate element ‘‘i’’ at the time

the PCI was updated to PCIt¥1,

w=R+∆Z, all divided by R,

PCIt=the new PCI value, and

PCIt¥1=the immediately preceding PCI

value.

(d) The exogenous cost changes

represented by the term ‘‘∆Z’’ in the

formula detailed in paragraphs (b) and

(c) of this section shall be limited to

those cost changes that the Commission

shall permit or require by rule, rule

waiver, or declaratory ruling.

(1) Subject to further order of the

Commission, those exogenous changes

shall include cost changes caused by:

* * * * *

(ii) Such changes in the Uniform

System of Accounts, including changes

in the Uniform System of Accounts

requirements made pursuant to § 32.16
19528 Federal Register / Vol. 60, No. 75 / Wednesday, April 19, 1995 / Rules and Regulations

of this chapter, as the Commission shall

permit or require be treated as

exogenous by rule, rule waiver, or

declaratory ruling.

* * * * *

(vi) Such tax law changes and other

extraordinary cost changes as the

Commission shall permit or require be

treated as exogenous by rule, rule

waiver, or declaratory ruling.

* * * * *

(e) The ‘‘w[(GDP–PI–X–[g/2))/(1+(g/

2))]’’ component of the PCI formula

contained in paragraph (c) of this

section shall be employed only in the

adjustment made in connection with the

annual price cap filing.

* * * * *

7. Section 61.47 is amended by

revising paragraphs (e), (g)(1), (g)(2),

(g)(4), and (h)(2) to read as follows:

§ 61.47 Adjustments to the SBI; pricing

bands.

* * * * *

(e) Pricing bands shall be established

each tariff year for each service category

and subcategory within a basket. Except

as provided in paragraphs (f), (g), and

(h) of this section, each band shall limit

the pricing flexibility of the service

category or subcategory, as reflected in

the SBI, to an annual increase of five

percent or an annual decrease of ten

percent, relative to the percentage

change in the PCI for that basket,

measured from the levels in effect on

the last day of the preceding tariff year.

* * * * *

(g) (1) Local Exchange Carriers—

Service categories and subcategories.

Local exchange carriers subject to price

cap regulation as that term is defined in

§ 61.3(w) shall use the methodology set

forth in paragraphs (a) through (d) of

this section to calculate two separate

subindexes: One for the DS1 services

offered by such carriers and the other

for the DS3 services offered by such

carriers. The annual pricing flexibility

for each of these two subindexes shall

be limited to an annual increase of five

percent or an annual decrease of ten

percent, relative to the percentage

change in the PCI for the special access

services basket, measured from the last

day of the preceding tariff year.

(2) The upper pricing band for the

tandem-switched transport service

category shall limit the annual upward

pricing flexibility for this service

category, as reflected in its SBI, to two

percent, relative to the percentage

change in the PCI for the trunking

basket, measured from the levels in

effect on the last day of the preceding

tariff year. The lower pricing band for

the tandem-switched transport service

category shall limit the annual

downward pricing flexibility for this

service category, as reflected in its SBI,

to ten percent, relative to the percentage

change in the PCI for the trunking

basket, measured from the levels in

effect on the last day of the preceding

tariff year.

* * * * *

(4) Local exchange carriers subject to

price cap regulation as that term is

defined in § 61.3(v) shall use the

methodology set forth in paragraphs (a)

through (d) of this section to calculate

a separate subindex for the 800 data

base vertical features offered by such

carriers. The annual pricing flexibility

for this subindex shall be limited to an

annual increase of five percent or an

annual decrease of ten percent, relative

to the percentage change in the PCI for

the traffic sensitive basket, measured

from the last day of the preceding tariff

year.

* * * * *

(h) * * *

(2) The annual pricing flexibility for

each of the subindexes specified in

paragraph (h)(1) of this section shall be

limited to an annual increase of five

percent or an annual decrease of fifteen

percent, relative to the percentage

change in the PCI for the trunking

basket, measured from the levels in

effect on the last day of the proceeding

tariff year.

12. Section 61.48 is amended by

revising paragraphs (h)(3)(ii)(B),

(h)(5)(i), (i)(3)(ii)(B), and (i)(4)(ii) to read

as follows:

§ 61.48 Transition rules for price cap

formula calculations.

* * * * *

(h) * * *

(3) * * *

(ii) * * *

(B) 0.90 times the SBI value for the

special access services included in the

category or subcategory on the day

preceding the transport restructure date,

weighted by the revenue weight of the

transport services included in the

category or subcategory.

* * * * *

(5) * * *

(i) The upper pricing band for the

tandem-switched transport service

category shall limit the upward pricing

flexibility for this service category, as

reflected in its SBI, to two percent,

measured from the initial restructured

rates for tandem-switched transport.

The lower pricing band for the tandemswitched transport service category

shall limit the downward pricing

flexibility for this service category, as

reflected in its SBI, to ten percent,

measured from the initial restructured

rates for tandem-switched transport.

* * * * *

(i) * * *

(3) * * *

(ii) * * *

(B) 0.85 times the SBI value for the

services included in the zone category

on the day preceding the later date,

weighted by the revenue weight of the

later services included in the zone

category.

* * * * *

(4) * * *

(ii) From the later date through the

end of the following tariff year, the

annual pricing flexibility for each of the

subindexes specified in paragraph

(i)(4)(i) of this section shall be limited

to an annual increase of five percent or

an annual decrease of fifteen percent,

relative to the percentage change in the

PCI for the trunking basket, measured

from the levels in effect on the last day

of the tariff year preceding the tariff year

in which the later date occurs.

* * * * *

[FR Doc. 95–9571 Filed 4–18–95; 8:45 am]

BILLING CODE 6712–01–M

47 CFR Part 69

[CC Docket No. 93–6; FCC 95–94]

Safeguards To Improve Administration

of the Interstate Access Tariff and

Revenue Distribution Processes

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: The Federal Communications

Commission (‘‘FCC’’ or ‘‘Commission’’)

has adopted a Report and Order and

Order to Show Cause (‘‘Order’’)

adopting new rules to reform the

interstate access tariff and revenue

distribution processes administered by

the National Exchange Carrier

Association, Inc. (‘‘NECA’’). The Order

amends the rules to include five

directors from outside the local

exchange carrier (‘‘LEC’’) industry on

NECA’s Board of Directors. The Order

adopts additional measures to increase

NECA and LEC accountability to the

FCC, and strengthen NECA’s internal

operations. In addition, the Order

directs NECA to show cause why it

should not be required to amend its

incentive compensation plan to

eliminate any incentive based upon

common line or traffic sensitive pool

earnings, or that might otherwise induce

NECA officers or employees to violate

Commission requirements. The FCC

adopted this Order to assure that NECA