82_FR_25640 82 FR 25535 - Jurisdictional Separations and Referral to the Federal-State Joint Board

82 FR 25535 - Jurisdictional Separations and Referral to the Federal-State Joint Board

FEDERAL COMMUNICATIONS COMMISSION

Federal Register Volume 82, Issue 105 (June 2, 2017)

Page Range25535-25538
FR Document2017-11418

In this document, the Commission extends the existing freeze of jurisdictional separations rules. The current extension allows the Commission, in cooperation with the Federal-State Joint Board, to consider further changes to the separations process in light of changes taking place in the telecommunications market place. The freeze also serves to ease the burdens of regulatory compliance and uncertainty for Local Exchange Carriers.

Federal Register, Volume 82 Issue 105 (Friday, June 2, 2017)
[Federal Register Volume 82, Number 105 (Friday, June 2, 2017)]
[Rules and Regulations]
[Pages 25535-25538]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-11418]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 36

[CC Docket 80-286; FCC 17-55]


Jurisdictional Separations and Referral to the Federal-State 
Joint Board

AGENCY: Federal Communications Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: In this document, the Commission extends the existing freeze 
of jurisdictional separations rules. The current extension allows the 
Commission, in cooperation with the Federal-State Joint Board, to 
consider further changes to the separations process in light of changes 
taking place in the telecommunications market place. The freeze also 
serves to ease the burdens of regulatory compliance and uncertainty for 
Local Exchange Carriers.

DATES: Effective June 2, 2017.

ADDRESSES: Federal Communications Commission, 445 12th Street SW., 
Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Rhonda Lien, Pricing Policy Division, 
Wireline Competition Bureau, at (202) 418-1540 or at 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order, FCC 17-55 released May 15, 2017. The full text of this 
document is available for public inspection during regular business 
hours in the FCC Reference Center, Room CY-A257, 445 12th Street SW., 
Washington, DC 20554. The full-text copy of this document can also be 
found at the following internet address: https://apps.fcc.gov/edocs_public/attachmatch/FCC-17-55A1.docx.

Synopsis

I. Background

    1. Historically, incumbent LECs (ILECs) were subject to rate-of-
return rate regulation at both the federal and state levels. After the 
adoption of the 1996 Telecommunications Act (1996 Act), the Commission 
initiated a proceeding to comprehensively reform the part 36 
separations procedures to ensure compliance with the objectives of the 
1996 Act, and to address statutory, technological, and market changes 
in the telecommunications industry.
    2. Jurisdictional separations is the third step in a four-step 
regulatory process that begins with a carrier's accounting system and 
ends with the establishment of tariffed rates for the ILEC's interstate 
and intrastate regulated services. First, carriers record their costs

[[Page 25536]]

into various accounts in accordance with the Uniform System of Accounts 
for Telecommunications Companies (USOA) prescribed by part 32 of our 
rules. Second, carriers divide the costs in these accounts between 
regulated and nonregulated activities in accordance with part 64 of our 
rules. This division ensures that the costs of nonregulated activities 
will not be recovered in regulated interstate service rates. Third, 
carriers separate the regulated costs between the intrastate and 
interstate jurisdictions in accordance with our part 36 separations 
rules. In certain instances, costs are further disaggregated among 
service categories. Finally, carriers apportion the interstate 
regulated costs among the interexchange services and rate elements that 
form the cost basis for their exchange access tariffs. For carriers 
subject to rate-of-return regulation, this apportionment is performed 
in accordance with part 69 of our rules.
    3. In 1997, the Commission initiated a proceeding seeking comment 
on the extent to which legislative, technological, and market changes 
warranted comprehensive reform of the separations process. In the 2001 
Separations Freeze Order, the Commission froze, on an interim basis, 
the part 36 jurisdictional separation rules for a five-year period 
beginning July 1, 2001, or until the Commission completed comprehensive 
separations reform, whichever came first. Specifically, the Commission 
adopted a freeze of all part 36 category relationships and allocation 
factors for price cap carriers, and a freeze of all allocation factors 
for rate-of-return carriers. The Commission concluded that several 
issues, including the separations treatment of Internet traffic, should 
be addressed in the context of comprehensive separations reform. The 
Commission further concluded that the freeze would provide stability 
and regulatory certainty for ILECs by minimizing any impacts on 
separations results that might occur due to circumstances not 
contemplated by the Commission's part 36 rules, such as growth in local 
competition and new technologies. The Commission also found that a 
freeze of the separations process would reduce regulatory burdens on 
ILECs during the transition from a regulated monopoly to a deregulated, 
competitive environment in the local telecommunications marketplace.
    4. Price cap carriers have since received conditional forbearance 
from the part 36 jurisdictional separations rules. As a result, the 
freeze primarily impacts rate-of-return carriers who were only required 
to freeze their allocation factors, but were given the option of also 
freezing their category relationships at the outset of the freeze. 
Those that have chosen to freeze relationships calculate: (1) The 
relationships between categories of investment and expenses within part 
32 accounts; and (2) the jurisdictional allocation factors, as of a 
specific point in time, and then lock or ``freeze'' those category 
relationships and allocation factors in place for a set period of time. 
The carriers use the ``frozen'' category relationships and allocation 
factors for their calculations of separations results and therefore are 
not required to conduct separations studies for the duration of the 
freeze.
    5. Over time, the Commission has repeatedly extended the freeze, 
which is currently set to expire on June 30, 2017. The Commission has 
consistently consulted with the Joint Board about separations reform, 
pursuant to the Act's requirement that the Commission refer to the 
Joint Board proceedings regarding ``the jurisdictional separations of 
common carrier property and expenses between interstate and intrastate 
operations.'' The Joint Board recommended the initial freeze and has 
made a number of recommendations to the Commission about how best to 
proceed with reform of the separations rules. The state members of the 
Joint Board made their most recent recommendations in 2011.
    6. Since the Joint Board's recommendations, the Commission 
comprehensively reformed its universal service and intercarrier 
compensation systems and proposed additional reforms. On March 30, 
2016, the Commission adopted the Rate-of-Return Reform Order, which 
instituted significant reforms to the rules governing the provision of 
universal service support to rate-of-return LECs. On February 23, 2017, 
we completed our review of the part 32 Uniform System of Accounts 
(USOA) rules and streamlined various accounting requirements for all 
carriers and eliminated certain accounting requirements for large 
carriers.
    7. On March 20, 2017, in a Further Notice of Proposed Rulemaking 
(2017 FNPRM), 82 FR 16152-01, April 3, 2017, we proposed and sought 
comment on a further eighteen month extension of the separations freeze 
while we continue to work with the Joint Board. Comments were received 
from eight parties. On April 24, 2017, the Joint Board signaled its 
intent to move forward by releasing two public notices seeking comment 
on issues related to comprehensive permanent separations reform, and 
separations reform in light of recent reforms to part 32 rules. As we 
explained in the 2017 FNPRM, we anticipate that the Joint Board will 
meet in July 2017 to consider reform of the separations process and we 
expect to receive the Joint Board's recommendations for comprehensive 
separations reform within nine months thereafter.

II. Discussion

    8. To allow us to move forward with orderly reform of the 
separations rules, based on the record before us, we extend through 
December 31, 2018, the freeze on part 36 category relationships and 
jurisdictional cost allocation factors that the Commission adopted in 
the 2001 Separations Freeze Order. As a result of the extension, price 
cap carriers that have not availed themselves of conditional 
forbearance from the part 36 rules will use the same relationships 
between categories of investment and expenses within part 32 accounts 
and the same jurisdictional allocation factors that have been in place 
since the inception of the current freeze on July 1, 2001. Rate-of-
return carriers will use the same frozen jurisdictional allocation 
factors, and will, absent a waiver, use the same frozen category 
relationships if they had opted in 2001 to freeze those.
    9. The issues involved with modernizing separations are broad and 
complex. As commenters point out, the policy changes the Commission has 
adopted in recent years, particularly those arising from the 
Commission's fundamental reform of the high cost universal service 
support program, the intercarrier compensation systems, and the part 32 
accounting rules, will significantly affect our analysis of interim and 
comprehensive separations reform, as well as that of the Joint Board. 
Extending the freeze provides time for the Joint Board to consider the 
impact of our recent reforms on the separations rules and gives us the 
time necessary to tackle rule changes informed by the Joint Board's 
recommendations. We strongly urge interested parties to provide 
detailed and constructive feedback about how best to revise or 
eliminate the separations process as we work towards separations reform 
with the Joint Board.
    10. We agree with those commenters that argue that allowing the 
existing freeze to lapse and frozen separations rules to be reinstated 
during the pendency of our work with the Joint Board would create undue 
instability and administrative burdens on affected carriers. As WTA has 
explained, reinstating these long-unused separations rules, many of 
which are

[[Page 25537]]

now outmoded, would not only require substantial training and 
investment by rural LECs, but also could cause significant disruptions 
in their regulated rates, cost recovery and other operating conditions. 
If we were to allow the freeze to expire, carriers would have to 
reinstitute their former separations processes, even those that no 
longer have the necessary employees and systems in place to comply with 
the separations rules. Many carriers likely would have to hire or 
reassign and train employees and redevelop systems for collecting and 
analyzing the data necessary to perform separations in the prior 
manner. Requiring carriers to reinstate their separations systems 
``would be unduly burdensome when there is a significant likelihood 
that there would be no lasting benefit to doing so.''
    11. Two commenters, a group of concerned individuals called the 
Irregulators and Terral Telephone Company, Inc. (Terral), oppose the 
extension of the freeze. According to the Irregulators, the freeze is 
being used to deliberately hide ``massive financial cross subsidies and 
data manipulation.'' However, the evidence offered does not support 
this claim. We thus find the harm alleged by the Irregulators to be 
speculative and insufficient to outweigh the clear benefits that will 
result from granting a further extension. Terral opposes the extension 
as it applies to Terral and then uses its comments to ask the 
Commission to grant its pending petition for waiver of the categories 
of frozen separations. We decline, however, to substantively address 
individual requests for relief or a waiver of the separations rules in 
this Order as those requests are beyond the scope of this proceeding. 
We do welcome the input of these commenters as we move toward full 
consideration of how best to reform the separations rules and note that 
the decision to extend the freeze does not affect the Commission's 
ability to address pending or future waiver petitions.
    12. Separately, we deny the request of USTelecom to modify frozen 
category relationships for carriers electing the Alternative Connect 
America Cost Model and to make other changes to the separations 
process. These issues fall within the pending referral to the Joint 
Board and may be addressed in the Joint Board's recommended decision. 
We will therefore not grant USTelecom's request here.
    13. With regard to the length of the extension, the majority of 
commenters support extending the freeze for at least eighteen months. 
Some argue that the freeze should be longer, and should be tied to the 
completion of a comprehensive rulemaking. Some stakeholders have 
expressed concern about the amount of time needed to operationalize any 
changes we ultimately make to the separations rules. While those 
concerns are legitimate, they are premature at this point in the 
process, and would be more appropriately raised and addressed when 
considering the implementation of any reform measures as part of the 
on-going, comprehensive rulemaking proceeding.
    14. We find that extending the freeze by eighteen months, the 
length of time proposed in the 2017 FNPRM, is appropriate. We fully 
agree with NASUCA that the freeze should not continue indefinitely. 
While we recognize that an eighteen-month freeze extension is shorter 
than those the Commission previously adopted, as we explained in the 
2017 FNPRM, ``now is the time to address the separations rules.'' We 
are committed to moving this process forward and believe that eighteen 
months is a sufficient amount of time to carefully consider the issues 
in the record and work with the Joint Board toward meaningful 
separations reform. We intend to work diligently with the Joint Board 
toward that goal.

III. Procedural Matters

    15. Final Regulatory Flexibility Certification. The Regulatory 
Flexibility Act of 1980, as amended (RFA), requires that a regulatory 
flexibility analysis be prepared for notice-and-comment rulemaking 
proceedings, unless the agency certifies that ``the rule will not, if 
promulgated, have a significant economic impact on a substantial number 
of small entities.'' The RFA generally defines the term ``small 
entity'' as having the same meaning as the terms ``small business,'' 
``small organization,'' and ``small governmental jurisdiction.'' In 
addition, 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 that: (1) Is independently owned and 
operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the Small Business 
Administration (SBA).
    16. As discussed above, in 2001 the Commission adopted a Joint 
Board recommendation to impose an interim freeze of the part 36 
category relationships and jurisdictional cost allocation factors, 
pending comprehensive reform of the part 36 separations rules. The 
Commission ordered that the freeze would be in effect for a five-year 
period beginning July 1, 2001, or until the Commission completed 
comprehensive separations reform, whichever came first. On May 16, 
2006, concluding that more time was needed to implement comprehensive 
separations reform, the Commission extended the freeze for three years 
or until such comprehensive reform could be completed, whichever came 
first. On May 15, 2009, the Commission extended the freeze through June 
30, 2010; on May 24, 2010, extended the freeze through June 30, 2011; 
on May 3, 2011, extended the freeze through June 30, 2012; on May 8, 
2012, extended the freeze through June 30, 2104; and on June 12, 2014, 
extending the freeze through June 30, 2017.
    17. The purpose of the current extension of the freeze is to allow 
the Commission and the Joint Board additional time to consider changes 
that may need to be made to the separations 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.
    18. 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. Therefore, we certify that the 
requirement of the report and order will not have a significant 
economic impact on a substantial number of small entities.
    19. The Commission will send a copy of the report and order, 
including a copy of this Final Regulatory Flexibility Certification, in 
a report to Congress pursuant to the Congressional Review Act. In 
addition, the report and order and this final certification will be 
sent to the Chief Counsel for Advocacy of the SBA, and will be 
published in the Federal Register.
    20. Paperwork Reduction Act Analysis. This Report and Order does 
not contain new, modified, or proposed information collections subject 
to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In 
addition, therefore, it does not contain any new, modified, or proposed 
information collection burden for small business

[[Page 25538]]

concerns with fewer than 25 employees, pursuant to the Small Business 
Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 
3506(c)(4).
    21. Congressional Review Act. The Commission will 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, see 5 U.S.C. 801(a)(1)(A).
    22. Effective Date. We find good cause to make these rule changes 
effective June 2, 2017. As explained above, the current freeze is 
scheduled to expire on June 30, 2017. To avoid unnecessary disruption 
to carriers subject to these rules, we preserve the status quo by 
making the extension of the freeze effective before the scheduled 
expiration date.

IV. Ordering Clauses

    23. Accordingly, it is ordered, pursuant to sections 1, 2, 4(i), 
201-05, 215, 218, 220, and 410 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151, 152, 154(i), 201-205, 215, 218, 220, and 410, 
that this Report and Order is adopted.
    24. 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.
    25. It is further ordered, pursuant to section 553(d)(3) of the 
Administrative Procedure Act, 5 U.S.C. 553(d)(3), and sections 
1.4(b)(1) and 1.427(b) of the Commission's rules, 47 CFR 1.4(b)(1), 
1.427(b), that this Report and Order shall be effective June 2, 2017.

List of Subjects in 47 CFR Part 36

    Communications common carriers, Reporting and recordkeeping 
requirements, Telephone, Uniform System of Accounts.

Federal Communications Commission.
Katura Jackson,
Federal Register Liaison Officer, Office of the 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

0
1. The authority citation for part 36 continues to read as follows:

    Authority:  47 U.S.C. 151, 154(i) and (j), 205, 221(c), 254, 
303(r), 403, 410 and 1302 unless otherwise noted.


Sec. Sec.  36.3, 36.123, 36.124, 36.125, 36.126, 36.141, 36.142, 
36.152, 36.154, 36.155, 36.157, 36.191, 36.212, 36.214, 36.372, 36.374, 
36.375, 36.377, 36.378, 36.379, 36.380, 36.381, and 36.382   [Amended]

0
2. In 47 CFR part 36, remove the date ``June 30, 2017'' and add, in its 
place, the date ``December 30, 2018'' in the following places:
0
a. Section 36.3(a) through (c), (d) introductory text, and (e);
0
b. Section 36.123(a)(5) and (6);
0
c. Section 36.124(c) and (d);
0
d. Section 36.125(h) and (i);
0
e. Section 36.126(b)(6), (c)(4), (e)(4), and (f)(2);
0
f. Section 36.141(c);
0
g. Section 36.142(c);
0
h. Section 36.152(d);
0
i. Section 36.154(g);
0
j. Section 36.155(b);
0
k. Section 36.156(c);
0
l. Section 36.157(b);
0
m. Section 36.191(d);
0
n. Section 36.212(c);
0
o. Section 36.214(a);
0
p. Section 36.372;
0
q. Section 36.374(b) and (d);
0
r. Section 36.375(b)(4) and (5);
0
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);
0
t. Section 36.378(b)(1);
0
u. Section 36.379(b)(1) and (2);
0
v. Section 36.380(d) and (e);
0
w. Section 36.381(c) and (d); and
0
x. Section 36.382(a).

[FR Doc. 2017-11418 Filed 6-1-17; 8:45 am]
 BILLING CODE 6712-01-P



                                                                   Federal Register / Vol. 82, No. 105 / Friday, June 2, 2017 / Rules and Regulations                                           25535

                                             provide meaningful and timely input.                      Authority: 33 U.S.C. 1345(d) and (e); 42             FEDERAL COMMUNICATIONS
                                             Between May 1, 2011, and February 9,                    U.S.C. 6902(a), 6907, 6912(a), 6944, 6945(c),          COMMISSION
                                             2016, technical issues were raised and                  6949a(c) and 6981(a).
                                             addressed by the EPA concerning the                                                                            47 CFR Part 36
                                                                                                     Subpart F—Closure and Post-Closure
                                             City of Wolf Point’s proposal. The EPA’s                Care                                                   [CC Docket 80–286; FCC 17–55]
                                             consultation with the Tribes culminated
                                             in a May 19, 2016 letter from the Tribes                ■ 2. Section 258.62 is amended by                      Jurisdictional Separations and Referral
                                             in which they stated that they have no                  adding paragraph (c) to read as follows:               to the Federal-State Joint Board
                                             issues with the Wolf Point proposal.                    *     *    *     *      *
                                             The EPA specifically solicits any                                                                              AGENCY:  Federal Communications
                                             additional comment on this                              § 258.62 Approval of site-specific flexibility         Commission.
                                             determination from Tribal officials of                  requests in Indian country.                            ACTION: Final rule.
                                             the Assiniboine and Sioux Tribes.                          (c) City of Wolf Point Municipal
                                                                                                     Landfill final cover requirements.                     SUMMARY:   In this document, the
                                                Section 12(d) of the National
                                                                                                     Paragraph (c) of this section applies to               Commission extends the existing freeze
                                             Technology Transfer and Advancement
                                                                                                     the City of Wolf Point Landfill Phase 2,               of jurisdictional separations rules. The
                                             Act of 1995 (15 U.S.C. 272 note) directs
                                                                                                     a municipal solid waste landfill owned                 current extension allows the
                                             the EPA to use voluntary consensus
                                                                                                     and operated by the City of Wolf Point                 Commission, in cooperation with the
                                             standards in its regulatory activities
                                                                                                     on the Assiniboine and Sioux Tribes’                   Federal-State Joint Board, to consider
                                             unless doing so would be inconsistent
                                                                                                     Fort Peck Reservation in Montana. The                  further changes to the separations
                                             with applicable law or otherwise
                                                                                                     facility owner and/or operator may close               process in light of changes taking place
                                             impractical. Voluntary consensus
                                                                                                     the facility in accordance with this                   in the telecommunications market
                                             standards are technical standards, (e.g.,
                                                                                                     application, including the following                   place. The freeze also serves to ease the
                                             materials specification, test methods,
                                                                                                     activities more generally described as                 burdens of regulatory compliance and
                                             sampling procedures, and business
                                                                                                     follows:                                               uncertainty for Local Exchange Carriers.
                                             practices) that are developed or adopted
                                                                                                        (1) The owner and operator may                      DATES: Effective June 2, 2017.
                                             by voluntary consensus standard bodies.
                                             The NTTAA directs the EPA to provide                    install an evapotranspiration system as                ADDRESSES: Federal Communications
                                             Congress, through OMB, explanations                     an alternative final cover for the 3.5-acre            Commission, 445 12th Street SW.,
                                             when the agency decides not to use                      Phase 2 area.                                          Washington, DC 20554.
                                             available and applicable voluntary                         (2) The final cover system shall                    FOR FURTHER INFORMATION CONTACT:
                                             consensus standards.                                    consist of a 4-foot-thick multi-layer                  Rhonda Lien, Pricing Policy Division,
                                                The technical standards included in                  cover system comprised of the following                Wireline Competition Bureau, at (202)
                                             the application were proposed by the                    from bottom to top: A 12-inch                          418–1540 or at Rhonda.Lien@fcc.gov.
                                             City of Wolf Point. Given the EPA’s                     intermediate layer, a 24-inch native
                                                                                                                                                            SUPPLEMENTARY INFORMATION: This is a
                                             obligations under Executive Order                       silty-clay till layer, and a 12-inch native
                                                                                                                                                            summary of the Commission’s Report
                                             13175 (see above), the agency has, to the               topsoil layer, as well as seeding and
                                                                                                                                                            and Order, FCC 17–55 released May 15,
                                             extent appropriate, applied the                         erosion control.
                                                                                                        (3) The final cover system shall be                 2017. The full text of this document is
                                             standards established by Wolf Point and                                                                        available for public inspection during
                                                                                                     constructed to achieve an equivalent
                                             accepted by the Tribes. In addition, the                                                                       regular business hours in the FCC
                                                                                                     reduction in infiltration as the
                                             agency evaluated the proposal’s design                                                                         Reference Center, Room CY–A257, 445
                                                                                                     infiltration layer specified in
                                             against the engineering design and                                                                             12th Street SW., Washington, DC 20554.
                                                                                                     § 258.60(a)(1) and (a)(2), and provide an
                                             construction criteria contained in the                  equivalent protection from wind and                    The full-text copy of this document can
                                             EPA draft guidance document, ‘‘Water                    water erosion as the erosion layer                     also be found at the following internet
                                             Balance Covers for Waste Containment:                   specified in paragraph (a)(3) of this                  address: https://apps.fcc.gov/edocs_
                                             Principles and Practice (2009).’’                       section.                                               public/attachmatch/FCC-17-55A1.docx.
                                               Authority: Sections 1008, 2002, 4004, and                (4) In addition to meeting the                      Synopsis
                                             4010 of the Solid Waste Disposal Act, as                specifications of ‘‘The City of Wolf Point
                                             amended, 42 U.S.C. 6907, 6912, 6944, and                Landfill License #3—Phase 2                            I. Background
                                             6949a.                                                  Alternative Final Cover Demonstration                     1. Historically, incumbent LECs
                                             List of Subjects in 40 CFR Part 258                     (Revised)’’ application of February 9,                 (ILECs) were subject to rate-of-return
                                                                                                     2016, the owner and operator shall:                    rate regulation at both the federal and
                                               Environmental protection,                                (i) At finalization, submit to the EPA              state levels. After the adoption of the
                                             Incorporation by reference, Municipal                   for approval final cover plans and                     1996 Telecommunications Act (1996
                                             landfills, Reporting and recordkeeping                  specifications, including the final                    Act), the Commission initiated a
                                             requirements, Waste treatment and                       Construction Quality Assurance/Quality                 proceeding to comprehensively reform
                                             disposal.                                               Control Plan and final Closure/Post-                   the part 36 separations procedures to
                                               Dated: April 17, 2017.                                Closure Plan; and                                      ensure compliance with the objectives
                                             Debra H. Thomas,                                           (ii) Achieve re-vegetation rates greater            of the 1996 Act, and to address
                                             Acting Regional Administrator, Region 8.                than 75% by the end of the third year                  statutory, technological, and market
                                                                                                     after revegetation.                                    changes in the telecommunications
                                               For the reasons stated in the                            (5) The owner and operator shall
                                             preamble, 40 CFR part 258 is amended                                                                           industry.
                                                                                                     place documentation demonstrating                         2. Jurisdictional separations is the
nlaroche on DSK30NT082PROD with RULES




                                             as follows:                                             compliance with the provisions of this                 third step in a four-step regulatory
                                             PART 258—CRITERIA FOR MUNICIPAL                         section in the operating record.                       process that begins with a carrier’s
                                                                                                        (6) All other applicable provisions of              accounting system and ends with the
                                             SOLID WASTE LANDFILLS
                                                                                                     40 CFR part 258 remain in effect.                      establishment of tariffed rates for the
                                             ■ 1. The authority citation for part 258                [FR Doc. 2017–11227 Filed 6–1–17; 8:45 am]             ILEC’s interstate and intrastate regulated
                                             continues to read as follows:                           BILLING CODE 6560–50–P                                 services. First, carriers record their costs


                                        VerDate Sep<11>2014   13:07 Jun 01, 2017   Jkt 241001   PO 00000   Frm 00033   Fmt 4700   Sfmt 4700   E:\FR\FM\02JNR1.SGM   02JNR1


                                             25536                 Federal Register / Vol. 82, No. 105 / Friday, June 2, 2017 / Rules and Regulations

                                             into various accounts in accordance                     only required to freeze their allocation               of recent reforms to part 32 rules. As we
                                             with the Uniform System of Accounts                     factors, but were given the option of also             explained in the 2017 FNPRM, we
                                             for Telecommunications Companies                        freezing their category relationships at               anticipate that the Joint Board will meet
                                             (USOA) prescribed by part 32 of our                     the outset of the freeze. Those that have              in July 2017 to consider reform of the
                                             rules. Second, carriers divide the costs                chosen to freeze relationships calculate:              separations process and we expect to
                                             in these accounts between regulated and                 (1) The relationships between categories               receive the Joint Board’s
                                             nonregulated activities in accordance                   of investment and expenses within part                 recommendations for comprehensive
                                             with part 64 of our rules. This division                32 accounts; and (2) the jurisdictional                separations reform within nine months
                                             ensures that the costs of nonregulated                  allocation factors, as of a specific point             thereafter.
                                             activities will not be recovered in                     in time, and then lock or ‘‘freeze’’ those
                                                                                                                                                            II. Discussion
                                             regulated interstate service rates. Third,              category relationships and allocation
                                             carriers separate the regulated costs                   factors in place for a set period of time.                8. To allow us to move forward with
                                             between the intrastate and interstate                   The carriers use the ‘‘frozen’’ category               orderly reform of the separations rules,
                                             jurisdictions in accordance with our                    relationships and allocation factors for               based on the record before us, we
                                             part 36 separations rules. In certain                   their calculations of separations results              extend through December 31, 2018, the
                                             instances, costs are further                            and therefore are not required to                      freeze on part 36 category relationships
                                             disaggregated among service categories.                 conduct separations studies for the                    and jurisdictional cost allocation factors
                                             Finally, carriers apportion the interstate              duration of the freeze.                                that the Commission adopted in the
                                             regulated costs among the interexchange                    5. Over time, the Commission has                    2001 Separations Freeze Order. As a
                                             services and rate elements that form the                repeatedly extended the freeze, which is               result of the extension, price cap
                                             cost basis for their exchange access                    currently set to expire on June 30, 2017.              carriers that have not availed
                                             tariffs. For carriers subject to rate-of-               The Commission has consistently                        themselves of conditional forbearance
                                             return regulation, this apportionment is                consulted with the Joint Board about                   from the part 36 rules will use the same
                                             performed in accordance with part 69 of                 separations reform, pursuant to the                    relationships between categories of
                                             our rules.                                              Act’s requirement that the Commission                  investment and expenses within part 32
                                                3. In 1997, the Commission initiated                 refer to the Joint Board proceedings                   accounts and the same jurisdictional
                                             a proceeding seeking comment on the                     regarding ‘‘the jurisdictional separations             allocation factors that have been in
                                             extent to which legislative,                            of common carrier property and                         place since the inception of the current
                                             technological, and market changes                       expenses between interstate and                        freeze on July 1, 2001. Rate-of-return
                                             warranted comprehensive reform of the                   intrastate operations.’’ The Joint Board               carriers will use the same frozen
                                             separations process. In the 2001                        recommended the initial freeze and has                 jurisdictional allocation factors, and
                                             Separations Freeze Order, the                           made a number of recommendations to                    will, absent a waiver, use the same
                                             Commission froze, on an interim basis,                  the Commission about how best to                       frozen category relationships if they had
                                             the part 36 jurisdictional separation                   proceed with reform of the separations                 opted in 2001 to freeze those.
                                             rules for a five-year period beginning                  rules. The state members of the Joint                     9. The issues involved with
                                             July 1, 2001, or until the Commission                   Board made their most recent                           modernizing separations are broad and
                                             completed comprehensive separations                     recommendations in 2011.                               complex. As commenters point out, the
                                             reform, whichever came first.                              6. Since the Joint Board’s                          policy changes the Commission has
                                             Specifically, the Commission adopted a                  recommendations, the Commission                        adopted in recent years, particularly
                                             freeze of all part 36 category                          comprehensively reformed its universal                 those arising from the Commission’s
                                             relationships and allocation factors for                service and intercarrier compensation                  fundamental reform of the high cost
                                             price cap carriers, and a freeze of all                 systems and proposed additional                        universal service support program, the
                                             allocation factors for rate-of-return                   reforms. On March 30, 2016, the                        intercarrier compensation systems, and
                                             carriers. The Commission concluded                      Commission adopted the Rate-of-Return                  the part 32 accounting rules, will
                                             that several issues, including the                      Reform Order, which instituted                         significantly affect our analysis of
                                             separations treatment of Internet traffic,              significant reforms to the rules                       interim and comprehensive separations
                                             should be addressed in the context of                   governing the provision of universal                   reform, as well as that of the Joint
                                             comprehensive separations reform. The                   service support to rate-of-return LECs.                Board. Extending the freeze provides
                                             Commission further concluded that the                   On February 23, 2017, we completed                     time for the Joint Board to consider the
                                             freeze would provide stability and                      our review of the part 32 Uniform                      impact of our recent reforms on the
                                             regulatory certainty for ILECs by                       System of Accounts (USOA) rules and                    separations rules and gives us the time
                                             minimizing any impacts on separations                   streamlined various accounting                         necessary to tackle rule changes
                                             results that might occur due to                         requirements for all carriers and                      informed by the Joint Board’s
                                             circumstances not contemplated by the                   eliminated certain accounting                          recommendations. We strongly urge
                                             Commission’s part 36 rules, such as                     requirements for large carriers.                       interested parties to provide detailed
                                             growth in local competition and new                        7. On March 20, 2017, in a Further                  and constructive feedback about how
                                             technologies. The Commission also                       Notice of Proposed Rulemaking (2017                    best to revise or eliminate the
                                             found that a freeze of the separations                  FNPRM), 82 FR 16152–01, April 3,                       separations process as we work towards
                                             process would reduce regulatory                         2017, we proposed and sought comment                   separations reform with the Joint Board.
                                             burdens on ILECs during the transition                  on a further eighteen month extension                     10. We agree with those commenters
                                             from a regulated monopoly to a                          of the separations freeze while we                     that argue that allowing the existing
                                             deregulated, competitive environment                    continue to work with the Joint Board.                 freeze to lapse and frozen separations
                                                                                                     Comments were received from eight                      rules to be reinstated during the
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                                             in the local telecommunications
                                             marketplace.                                            parties. On April 24, 2017, the Joint                  pendency of our work with the Joint
                                                4. Price cap carriers have since                     Board signaled its intent to move                      Board would create undue instability
                                             received conditional forbearance from                   forward by releasing two public notices                and administrative burdens on affected
                                             the part 36 jurisdictional separations                  seeking comment on issues related to                   carriers. As WTA has explained,
                                             rules. As a result, the freeze primarily                comprehensive permanent separations                    reinstating these long-unused
                                             impacts rate-of-return carriers who were                reform, and separations reform in light                separations rules, many of which are


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                                                                   Federal Register / Vol. 82, No. 105 / Friday, June 2, 2017 / Rules and Regulations                                         25537

                                             now outmoded, would not only require                    tied to the completion of a                            July 1, 2001, or until the Commission
                                             substantial training and investment by                  comprehensive rulemaking. Some                         completed comprehensive separations
                                             rural LECs, but also could cause                        stakeholders have expressed concern                    reform, whichever came first. On May
                                             significant disruptions in their regulated              about the amount of time needed to                     16, 2006, concluding that more time was
                                             rates, cost recovery and other operating                operationalize any changes we                          needed to implement comprehensive
                                             conditions. If we were to allow the                     ultimately make to the separations rules.              separations reform, the Commission
                                             freeze to expire, carriers would have to                While those concerns are legitimate,                   extended the freeze for three years or
                                             reinstitute their former separations                    they are premature at this point in the                until such comprehensive reform could
                                             processes, even those that no longer                    process, and would be more                             be completed, whichever came first. On
                                             have the necessary employees and                        appropriately raised and addressed                     May 15, 2009, the Commission extended
                                             systems in place to comply with the                     when considering the implementation                    the freeze through June 30, 2010; on
                                             separations rules. Many carriers likely                 of any reform measures as part of the                  May 24, 2010, extended the freeze
                                             would have to hire or reassign and train                on-going, comprehensive rulemaking                     through June 30, 2011; on May 3, 2011,
                                             employees and redevelop systems for                     proceeding.                                            extended the freeze through June 30,
                                             collecting and analyzing the data                          14. We find that extending the freeze               2012; on May 8, 2012, extended the
                                             necessary to perform separations in the                 by eighteen months, the length of time                 freeze through June 30, 2104; and on
                                             prior manner. Requiring carriers to                     proposed in the 2017 FNPRM, is                         June 12, 2014, extending the freeze
                                             reinstate their separations systems                     appropriate. We fully agree with                       through June 30, 2017.
                                             ‘‘would be unduly burdensome when                       NASUCA that the freeze should not                         17. The purpose of the current
                                             there is a significant likelihood that                  continue indefinitely. While we                        extension of the freeze is to allow the
                                             there would be no lasting benefit to                    recognize that an eighteen-month freeze                Commission and the Joint Board
                                             doing so.’’                                             extension is shorter than those the                    additional time to consider changes that
                                                11. Two commenters, a group of                       Commission previously adopted, as we                   may need to be made to the separations
                                             concerned individuals called the                        explained in the 2017 FNPRM, ‘‘now is                  process in light of changes in the law,
                                             Irregulators and Terral Telephone                       the time to address the separations                    technology, and market structure of the
                                             Company, Inc. (Terral), oppose the                      rules.’’ We are committed to moving this               telecommunications industry without
                                             extension of the freeze. According to the               process forward and believe that                       creating the undue instability and
                                             Irregulators, the freeze is being used to               eighteen months is a sufficient amount                 administrative burdens that would
                                             deliberately hide ‘‘massive financial                   of time to carefully consider the issues               occur were the Commission to eliminate
                                             cross subsidies and data manipulation.’’                in the record and work with the Joint                  the freeze.
                                             However, the evidence offered does not                  Board toward meaningful separations                       18. Implementation of the freeze
                                             support this claim. We thus find the                    reform. We intend to work diligently                   extension will ease the administrative
                                             harm alleged by the Irregulators to be                  with the Joint Board toward that goal.                 burden of regulatory compliance for
                                             speculative and insufficient to outweigh                                                                       LECs, including small incumbent LECs.
                                                                                                     III. Procedural Matters                                The freeze has eliminated the need for
                                             the clear benefits that will result from
                                             granting a further extension. Terral                       15. Final Regulatory Flexibility                    all incumbent LECs, including
                                             opposes the extension as it applies to                  Certification. The Regulatory Flexibility              incumbent LECs with 1500 employees
                                             Terral and then uses its comments to                    Act of 1980, as amended (RFA), requires                or fewer, to complete certain annual
                                             ask the Commission to grant its pending                 that a regulatory flexibility analysis be              studies formerly required by the
                                             petition for waiver of the categories of                prepared for notice-and-comment                        Commission’s rules. The effect of the
                                             frozen separations. We decline,                         rulemaking proceedings, unless the                     freeze extension is to reduce a
                                             however, to substantively address                       agency certifies that ‘‘the rule will not,             regulatory compliance burden for small
                                             individual requests for relief or a waiver              if promulgated, have a significant                     incumbent LECs, by abating the
                                             of the separations rules in this Order as               economic impact on a substantial                       aforementioned separations studies and
                                             those requests are beyond the scope of                  number of small entities.’’ The RFA                    providing these carriers with greater
                                             this proceeding. We do welcome the                      generally defines the term ‘‘small                     regulatory certainty. Therefore, we
                                             input of these commenters as we move                    entity’’ as having the same meaning as                 certify that the requirement of the report
                                             toward full consideration of how best to                the terms ‘‘small business,’’ ‘‘small                  and order will not have a significant
                                             reform the separations rules and note                   organization,’’ and ‘‘small governmental               economic impact on a substantial
                                             that the decision to extend the freeze                  jurisdiction.’’ In addition, the term                  number of small entities.
                                             does not affect the Commission’s ability                ‘‘small business’’ has the same meaning                   19. The Commission will send a copy
                                             to address pending or future waiver                     as the term ‘‘small business concern’’                 of the report and order, including a copy
                                             petitions.                                              under the Small Business Act. A ‘‘small                of this Final Regulatory Flexibility
                                                12. Separately, we deny the request of               business concern’’ is one that: (1) Is                 Certification, in a report to Congress
                                             USTelecom to modify frozen category                     independently owned and operated; (2)                  pursuant to the Congressional Review
                                             relationships for carriers electing the                 is not dominant in its field of operation;             Act. In addition, the report and order
                                             Alternative Connect America Cost                        and (3) satisfies any additional criteria              and this final certification will be sent
                                             Model and to make other changes to the                  established by the Small Business                      to the Chief Counsel for Advocacy of the
                                             separations process. These issues fall                  Administration (SBA).                                  SBA, and will be published in the
                                             within the pending referral to the Joint                   16. As discussed above, in 2001 the                 Federal Register.
                                             Board and may be addressed in the Joint                 Commission adopted a Joint Board                          20. Paperwork Reduction Act
                                             Board’s recommended decision. We will                   recommendation to impose an interim                    Analysis. This Report and Order does
                                                                                                     freeze of the part 36 category                         not contain new, modified, or proposed
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                                             therefore not grant USTelecom’s request
                                             here.                                                   relationships and jurisdictional cost                  information collections subject to the
                                                13. With regard to the length of the                 allocation factors, pending                            Paperwork Reduction Act of 1995
                                             extension, the majority of commenters                   comprehensive reform of the part 36                    (PRA), Public Law 104–13. In addition,
                                             support extending the freeze for at least               separations rules. The Commission                      therefore, it does not contain any new,
                                             eighteen months. Some argue that the                    ordered that the freeze would be in                    modified, or proposed information
                                             freeze should be longer, and should be                  effect for a five-year period beginning                collection burden for small business


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                                             25538                 Federal Register / Vol. 82, No. 105 / Friday, June 2, 2017 / Rules and Regulations

                                             concerns with fewer than 25 employees,                    25. It is further ordered, pursuant to               §§ 36.3, 36.123, 36.124, 36.125, 36.126,
                                             pursuant to the Small Business                          section 553(d)(3) of the Administrative                36.141, 36.142, 36.152, 36.154, 36.155,
                                             Paperwork Relief Act of 2002, Public                    Procedure Act, 5 U.S.C. 553(d)(3), and                 36.157, 36.191, 36.212, 36.214, 36.372,
                                             Law 107–198, see 44 U.S.C. 3506(c)(4).                  sections 1.4(b)(1) and 1.427(b) of the                 36.374, 36.375, 36.377, 36.378, 36.379,
                                                                                                                                                            36.380, 36.381, and 36.382 [Amended]
                                                21. Congressional Review Act. The                    Commission’s rules, 47 CFR 1.4(b)(1),
                                             Commission will send a copy of this                     1.427(b), that this Report and Order                   ■  2. In 47 CFR part 36, remove the date
                                             Report and Order in a report to be sent                 shall be effective June 2, 2017.                       ‘‘June 30, 2017’’ and add, in its place,
                                             to Congress and the Government                                                                                 the date ‘‘December 30, 2018’’ in the
                                                                                                     List of Subjects in 47 CFR Part 36                     following places:
                                             Accountability Office pursuant to the
                                             Congressional Review Act, see 5 U.S.C.                                                                         ■ a. Section 36.3(a) through (c), (d)
                                                                                                       Communications common carriers,
                                             801(a)(1)(A).                                           Reporting and recordkeeping                            introductory text, and (e);
                                                22. Effective Date. We find good cause                                                                      ■ b. Section 36.123(a)(5) and (6);
                                                                                                     requirements, Telephone, Uniform
                                             to make these rule changes effective                                                                           ■ c. Section 36.124(c) and (d);
                                                                                                     System of Accounts.
                                             June 2, 2017. As explained above, the                                                                          ■ d. Section 36.125(h) and (i);
                                                                                                     Federal Communications Commission.                     ■ e. Section 36.126(b)(6), (c)(4), (e)(4),
                                             current freeze is scheduled to expire on
                                                                                                     Katura Jackson,                                        and (f)(2);
                                             June 30, 2017. To avoid unnecessary
                                             disruption to carriers subject to these                 Federal Register Liaison Officer, Office of the        ■ f. Section 36.141(c);
                                             rules, we preserve the status quo by                    Secretary.                                             ■ g. Section 36.142(c);
                                             making the extension of the freeze                                                                             ■ h. Section 36.152(d);
                                                                                                     Final Rules
                                             effective before the scheduled                                                                                 ■ i. Section 36.154(g);
                                             expiration date.                                          For the reasons discussed in the                     ■ j. Section 36.155(b);
                                                                                                     preamble, the Federal Communications                   ■ k. Section 36.156(c);
                                             IV. Ordering Clauses                                    Commission amends 47 CFR part 36 as                    ■ l. Section 36.157(b);
                                               23. Accordingly, it is ordered,                       follows:                                               ■ m. Section 36.191(d);
                                             pursuant to sections 1, 2, 4(i), 201–05,                                                                       ■ n. Section 36.212(c);
                                             215, 218, 220, and 410 of the                           PART 36—JURISDICTIONAL                                 ■ o. Section 36.214(a);
                                             Communications Act of 1934, as                          SEPARATIONS PROCEDURES;                                ■ p. Section 36.372;
                                             amended, 47 U.S.C. 151, 152, 154(i),                    STANDARD PROCEDURES FOR                                ■ q. Section 36.374(b) and (d);
                                             201–205, 215, 218, 220, and 410, that                   SEPARATING                                             ■ r. Section 36.375(b)(4) and (5);
                                             this Report and Order is adopted.                       TELECOMMUNICATIONS PROPERTY                            ■ s. Section 36.377(a) introductory text,
                                               24. It is further ordered that the                    COSTS, REVENUES, EXPENSES,                             (a)(1)(ix), (a)(2)(vii), (a)(3)(vii),
                                             Commission’s Consumer and                               TAXES AND RESERVES FOR                                 (a)(4)(vii), (a)(5)(vii), and (a)(6)(vii);
                                             Governmental Affairs Bureau, Reference                  TELECOMMUNICATIONS COMPANIES                           ■ t. Section 36.378(b)(1);
                                             Information Center, shall send a copy of                                                                       ■ u. Section 36.379(b)(1) and (2);
                                             this Report and Order, including the                    ■ 1. The authority citation for part 36                ■ v. Section 36.380(d) and (e);
                                             Final Regulatory Flexibility                            continues to read as follows:                          ■ w. Section 36.381(c) and (d); and
                                             Certification, to the Chief Counsel for                                                                        ■ x. Section 36.382(a).
                                                                                                       Authority: 47 U.S.C. 151, 154(i) and (j),
                                             Advocacy of the Small Business                          205, 221(c), 254, 303(r), 403, 410 and 1302            [FR Doc. 2017–11418 Filed 6–1–17; 8:45 am]
                                             Administration.                                         unless otherwise noted.                                BILLING CODE 6712–01–P
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Document Created: 2017-06-02 00:37:49
Document Modified: 2017-06-02 00:37:49
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule.
DatesEffective June 2, 2017.
ContactRhonda Lien, Pricing Policy Division, Wireline Competition Bureau, at (202) 418-1540 or at [email protected]
FR Citation82 FR 25535 
CFR AssociatedCommunications Common Carriers; Reporting and Recordkeeping Requirements; Telephone and Uniform System of Accounts

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