[Federal Register Volume 79, Number 123 (Thursday, June 26, 2014)]
[Rules and Regulations]
[Pages 36232-36239]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-14864]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 36

[CC Docket No. 80-286; FCC 14-91]


Jurisdictional Separations Process

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) extends the freeze of jurisdictional separations category 
relationships and cost allocation factors in the Commission's rules for 
three years, through June 30, 2017.

DATES: This final rule is effective on June 26, 2014.

FOR FURTHER INFORMATION CONTACT: Greg Haledjian, Wireline Competition 
Bureau, Pricing Policy Division, (202) 418-1520 or 
gregory.haledjian@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order in CC Docket No. 80-286, adopted on June 12, 2014 and 
released on June 13, 2014. The full text of this document is available 
for public inspection during regular business hours in the Commission's 
Reference Center, 445 12th Street SW., Room CY-A257, Washington, DC, 
20554. The full text of this document may be downloaded at the 
following Internet address: http://www.fcc.gov/documents. The complete 
text may be purchased

[[Page 36233]]

from Best Copy and Printing, Inc., 445 12th Street SW., Room CY-B402, 
Washington DC, 20554. To request alternative formats for persons with 
disabilities (e.g., accessible format documents, sign language, 
interpreters, CARTS, etc.), send an email to fcc504@fcc.gov or call the 
Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 
or (202) 418-0432 (TTY).

I. Introduction

    1. This Report and Order (Order) extends, through June 30, 2017, 
the existing freeze of the Federal Communications Commission's 
(Commission) rules regarding jurisdictional separations. Specifically, 
the Commission extends the existing freeze of Part 36 category 
relationships and jurisdictional cost allocation factors.

II. Background

    2. Jurisdictional separations is the process by which incumbent 
LECs apportion regulated costs between the intrastate and interstate 
jurisdictions. Incumbent LECs record their costs pursuant to part 32 of 
the Commission's regulations. These costs are then divided between 
regulated and unregulated costs pursuant to Part 64 of the Commission's 
regulations. Incumbent LECs then perform the jurisdictional separations 
process pursuant to part 36 of the Commission's rules.
    3. The jurisdictional separations process itself has two parts. 
First, incumbent LECs assign regulated costs to various categories of 
plant and expenses. In certain instances, costs are further 
disaggregated among service categories. Second, the costs in each 
category are apportioned between the intrastate and interstate 
jurisdictions. These jurisdictional apportionments of categorized costs 
are based upon either a relative use factor, a fixed allocator, or, 
when specifically allowed in the part 36 rules, by direct assignment.
    4. The statute requires the Commission to refer to the Federal-
State Joint Board on Jurisdictional Separations (Joint Board) any 
proceeding regarding ``the jurisdictional separations of common carrier 
property and expenses between interstate and intrastate operations'' 
that the Commission institutes pursuant to a notice of proposed 
rulemaking. 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. The 
Commission also invited the State Members of the Joint Board to develop 
a report that would identify additional issues that should be addressed 
by the Commission in its comprehensive separations reform effort. The 
State Members filed a report setting forth additional issues that they 
believed should be addressed by the Joint Board and proposing an 
interim freeze, among other things, to reduce the impact of changes in 
telephone usage patterns and resulting cost shifts from year to year. 
The Commission noted that the current network infrastructure was vastly 
different from the network and services used to define the cost 
categories appearing in the Commission's Part 36 rules.
    5. On July 21, 2000, the Joint Board issued its 2000 Separations 
Recommended Decision, recommending that, until comprehensive reform 
could be achieved, the Commission: (i) freeze Part 36 category 
relationships and jurisdictional allocation factors for incumbent LECs 
subject to price cap regulation (price cap incumbent LECs); and (ii) 
freeze the allocation factors for incumbent LECs subject to rate-of-
return regulation (rate-of-return incumbent LECs). In the 2001 
Separations Freeze Order, the Commission generally adopted the Joint 
Board's recommendation. The Commission concluded that the freeze would 
provide stability and regulatory certainty for incumbent LECs 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. Further, the 
Commission found that a freeze of the separations process would reduce 
regulatory burdens on incumbent LECs during the transition from a 
regulated monopoly to a deregulated, competitive environment in the 
local telecommunications marketplace. Under the freeze, price cap 
incumbent LECs 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. Rate-of-
return incumbent LECs are only required to freeze their allocation 
factors, but were given the option of also freezing their category 
relationships at the outset of the freeze.
    6. 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. In 
addition, the Commission stated that, prior to the expiration of the 
separations freeze, the Commission would, in consultation with the 
Joint Board, determine whether the freeze period should be extended. 
The Commission further stated that any decision to extend the freeze 
beyond the five-year period in the 2001 Separations Freeze Order would 
be based ``upon whether, and to what extent, comprehensive reform of 
separations has been undertaken by that time.''
    7. On May 16, 2006, in the 2006 Separations Freeze Extension and 
Further Notice, 71 FR 29882, the Commission extended the freeze for 
three years or until comprehensive reform could be completed, whichever 
came first. The Commission concluded that extending the freeze would 
provide stability to LECs that must comply with the Commission's 
jurisdictional separations rules pending further Commission action to 
reform the part 36 rules, and that more time was needed to study 
comprehensive reform. The freeze was subsequently extended by one year 
in 2009, 2010, and 2011 and by two years in 2012.
    8. When it extended the freeze in 2009, the Commission referred a 
number of issues to the Joint Board and asked the Joint Board to 
prepare a recommended decision. The Commission asked the Joint Board to 
consider comprehensive jurisdictional separations reform, as well as an 
interim adjustment of the current jurisdictional separations freeze, 
and whether, how, and when the Commission's jurisdictional separations 
rules should be modified. On March 30, 2010, the State Members of the 
Joint Board released a proposal for interim and comprehensive 
separations reform. The Joint Board sought comment on the proposal. On 
September 24, 2010, the Joint Board held a roundtable meeting with 
consumer groups, industry representatives, and state regulators to 
discuss interim and comprehensive jurisdictional separations reform. 
The Joint Board staff conducted an extensive analysis of various 
approaches to separations reform, and the Joint Board is evaluating 
that analysis.
    9. In addition, in 2011, the Commission comprehensively reformed 
the universal service and intercarrier compensation systems and 
proposed additional reforms. The Joint Board is

[[Page 36234]]

considering the impact of the reforms proposed by the USF/ICC 
Transformation Order and any subsequent changes on its analysis of the 
various approaches to separations reform. On March 27, 2014, the 
Commission sought comment on extending the freeze once more.

III. Extending the Freeze

    10. We extend through June 30, 2017, 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, 
price cap carriers 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.
    11. We conclude that extending the freeze will provide stability to 
carriers that must comply with the Commission's jurisdictional 
separations rules while the Joint Board continues its analysis of the 
jurisdictional separations process. The majority of commenters support 
extending the freeze for at least three years. Significantly, the State 
Members of the Federal-State Board on Jurisdictional Separations agree 
with the proposed extension, ``based upon our understanding that under 
the Commission's orders on various forbearance petitions, the States 
retain the ability to adopt any reasonable allocation of costs between 
the intrastate and interstate jurisdictions for State ratemaking and 
other purposes.''
    12. NASUCA asserts that extending the freeze, rather than 
substantively reforming the separations rules, is not in the public 
interest. Although NASUCA does not support the freeze, per se, it does 
not advocate for returning to pre-freeze regulations, which would be 
the consequence of permitting the freeze to expire before new 
separations rules are in effect. The Joint Board is considering 
comprehensive separations reform. We find that an extension of the 
freeze is necessary in the interim to avoid regulatory instability and 
substantial administrative burdens on carriers. If the Commission 
allowed the earlier separations rules to return to force, carriers 
would be required to reinstitute their former separations processes 
even though many carriers no longer have the necessary employees and 
systems in place to comply with the old jurisdictional separations 
process and 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. To require carriers to 
reinstitute their separations systems ``would be unduly burdensome when 
there is a significant likelihood that there would be no lasting 
benefit to doing so.'' Therefore, we find that a three-year extension 
is appropriate.
    13. The Small Company Coalition recommends a longer extension, 
until the transition to bill and keep for terminating access is 
complete, in July 2020. USTelecom recommends an indefinite extension of 
the freeze, arguing that separations requirements are increasingly 
irrelevant, and GVNW argues for an unspecified longer extension. We 
decline to extend the freeze for more than three years, because the 
Joint Board may recommend specific reforms and the Commission may be 
able to substantively address separations rule reform well before the 
bill and keep transition is complete.
    14. Pioneer Telephone Cooperative, which has requested a waiver of 
its cost category relationship freeze, expresses concern that the grant 
of the freeze extension without simultaneously granting Pioneer's 
waiver will only perpetuate the misallocation of its expenses and 
investment. As explained above, we conclude that allowing the freeze to 
expire would create unnecessary burdens and disruption for carriers. 
The decision to extend the freeze does not affect the Commission's 
ability to address pending or future waiver petitions.
    15. In the 2014 Separations Freeze Extension FNPRM, we also sought 
comment on whether to open a filing ``window'' for rate-of-return 
incumbent LECs to file waiver requests to unfreeze their jurisdictional 
separations category relationships. We do not address that in this 
Order.

IV. Severability

    16. All of the rules that are adopted in this Order are designed to 
work in unison to ensure just, reasonable, and fair regulation of 
jurisdictional separations. However, each of the reforms we undertake 
in this order serves a particular function toward this goal. Therefore, 
it is our intent that each of the rules adopted herein shall be 
severable. If any of the rules are declared invalid or unenforceable 
for any reason, it is our intent that the remaining rules shall remain 
in full force and effect.

V. Procedural Matters

A. Final Regulatory Flexibility Certification

    17. 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).
    18. 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, and on May 
8, 2012, extended the freeze through June 30, 2104.
    19. 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.
    20. Implementation of the freeze extension will ease the 
administrative burden of regulatory compliance for LECs, including 
small incumbent LECs.

[[Page 36235]]

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.
    21. 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.

B. Paperwork Reduction Act Analysis

    22. 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 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).

C. Congressional Review Act

    23. 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.

D. Effective Date

    24. We find good cause to make these rule changes effective 
immediately upon publication in the Federal Register. As explained 
above, the current freeze is scheduled to expire on June 30, 2014. 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.

E. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    25. None.

VI. Ordering Clauses

    26. 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.
    27. 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.
    28. 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 on the date of 
publication in the Federal Register.

List of Subjects in 47 CFR Part 36

    Jurisdictional separations procedures, Telecommunications.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

    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. Secs. 151, 154(i) and (j), 205, 221(c), 
254, 403, --.410, and 1302 unless otherwise noted.

Subpart A--General

0
2. Amend Sec.  36.3 by revising paragraphs (a), (b), (c), (d) 
introductory text, and (e) to read as follows:


Sec.  36.3  Freezing of jurisdictional separations category 
relationships and/or allocation factors.

    (a) Effective July 1, 2001, through June 30, 2017, all local 
exchange carriers subject to part 36 rules shall apportion costs to the 
jurisdictions using their study area and/or exchange specific 
jurisdictional allocation factors calculated during the twelve month 
period ending December 31, 2000, for each of the categories/sub-
categories as specified herein. Direct assignment of private line 
service costs between jurisdictions shall be updated annually. Other 
direct assignment of investment, expenses, revenues or taxes between 
jurisdictions shall be updated annually. Local exchange carriers that 
invest in telecommunications plant categories during the period July 1, 
2001, through June 30, 2017, for which it had no separations allocation 
factors for the twelve month period ending December 31, 2000, shall 
apportion that investment among the jurisdictions in accordance with 
the separations procedures in effect as of December 31, 2000 for the 
duration of the freeze.
    (b) Effective July 1, 2001, through June 30, 2017, local exchange 
carriers subject to price cap regulation, pursuant to Sec.  61.41 of 
this chapter, shall assign costs from the part 32 accounts to the 
separations categories/sub-categories, as specified herein, based on 
the percentage relationships of the categorized/sub-categorized costs 
to their associated part 32 accounts for the twelve month period ending 
December 31, 2000. If a part 32 account for separations purposes is 
categorized into more than one category, the percentage relationship 
among the categories shall be utilized as well. Local exchange carriers 
that invest in types of telecommunications plant during the period July 
1, 2001, through June 30, 2017, for which it had no separations 
category investment for the twelve month period ending December 31, 
2000, shall assign such investment to separations categories in 
accordance with the separations procedures in effect as of December 31, 
2000. Local exchange carriers not subject to price cap regulation, 
pursuant to Sec.  61.41 of this chapter, may elect to be subject to the 
provisions of paragraph (b) of this section. Such election must be made 
prior to July 1, 2001. Local exchange carriers electing to become 
subject to paragraph (b) shall not be eligible to withdraw from such 
regulation for the duration of the freeze. Local exchange carriers 
participating in Association tariffs, pursuant to Sec.  69.601 et seq., 
shall notify the Association prior to July 1, 2001, of such intent to 
be subject to the provisions of paragraph (b). Local exchange carriers 
not participating in Association tariffs shall notify the Commission 
prior to July 1, 2001, of such intent to be subject to the provisions 
of paragraph (b).
    (c) Effective July 1, 2001, through June 30, 2017, any local 
exchange carrier that sells or otherwise transfers exchanges, or parts 
thereof, to another carrier's study area shall continue to utilize the 
factors and, if applicable, category relationships as specified in 
paragraphs (a) and (b) of this section.

[[Page 36236]]

    (d) Effective July 1, 2001, through June 30, 2017, any local 
exchange carrier that buys or otherwise acquires exchanges or part 
thereof, shall calculate new, composite factors and, if applicable, 
category relationships based on a weighted average of both the seller's 
and purchaser's factors and category relationships calculated pursuant 
to paragraphs (a) and (b) of this section. This weighted average should 
be based on the number of access lines currently being served by the 
acquiring carrier and the number of access lines in the acquired 
exchanges.
* * * * *
    (e) Any local exchange carrier study area converting from average 
schedule company status, as defined in Sec.  69.605(c) of this chapter, 
to cost company status during the period July 1, 2001, through June 30, 
2017, shall, for the first twelve months subsequent to conversion 
categorize the telecommunications plant and expenses and develop 
separations allocation factors in accordance with the separations 
procedures in effect as of December 31, 2000. Effective July 1, 2001 
through June 30, 2017, such companies shall utilize the separations 
allocation factors and account categorization subject to the 
requirements of paragraphs (a) and (b) of this section based on the 
category relationships and allocation factors for the twelve months 
subsequent to the conversion to cost company status.

Subpart B--Telecommunications Property

Central Office Equipment

0
3. Amend Sec.  36.123 by revising paragraphs (a)(5) and (6) to read as 
follows:


Sec.  36.123  Operator systems equipment--Category 1.

    (a) * * *
    (5) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the average balance of Account 2220, Operator 
Systems, to the categories/subcategories, as specified in paragraph 
(a)(1) of this section, based on the relative percentage assignment of 
the average balance of Account 2220 to these categories/subcategories 
during the twelve month period ending December 31, 2000.
    (6) Effective July 1, 2001 through June 30, 2017, all study areas 
shall apportion the costs assigned to the categories/subcategories, as 
specified in paragraph (a)(1) of this section, among the jurisdictions 
using the relative use measurements for the twelve month period ending 
December 31, 2000 for each of the categories/subcategories specified in 
paragraphs (b) through (e) of this section.
* * * * *

0
4. Amend Sec.  36.124 by revising paragraphs (c) and (d) to read as 
follows:


Sec.  36.124  Tandem switching equipment--Category 2.

* * * * *
    (c) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the average balances of Accounts 2210, 2211, and 
2212 to Category 2, Tandem Switching Equipment based on the relative 
percentage assignment of the average balances of Account 2210, 2211, 
2212, and 2215 to Category 2, Tandem Switching Equipment during the 
twelve month period ending December 31, 2000.
    (d) Effective July 1, 2001, through June 30, 2017, all study areas 
shall apportion costs in Category 2, Tandem Switching Equipment, among 
the jurisdictions using the relative number of study area minutes of 
use, as specified in paragraph (b) of this section, for the twelve 
month period ending December 31, 2000. Direct assignment of any 
subcategory of Category 2 Tandem Switching Equipment between 
jurisdictions shall be updated annually.

0
5. Amend Sec.  36.125 by revising paragraphs (h), (i), and (j) to read 
as follows:


Sec.  36.125  Local switching equipment--Category 3.

* * * * *
    (h) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the average balances of Accounts 2210, 2211, and 
2212 to Category 3, Local Switching Equipment, based on the relative 
percentage assignment of the average balances of Account 2210, 2211, 
2212 and 2215 to Category 3, during the twelve month period ending 
December 31, 2000.
    (i) Effective July 1, 2001, through June 30, 2017, all study areas 
shall apportion costs in Category 3, Local Switching Equipment, among 
the jurisdictions using relative dial equipment minutes of use for the 
twelve month period ending December 31, 2000.
    (j) If the number of a study area's access lines increases such 
that, under paragraph (f) of this section, the weighted interstate DEM 
factor for 1997 or any successive year would be reduced, that lowered 
weighted interstate DEM factor shall be applied to the study area's 
1996 unweighted interstate DEM factor to derive a new local switching 
support factor. If the number of a study area's access lines decreases 
or has decreased such that, under paragraph (f) of this section, the 
weighted interstate DEM factor for 2010 or any successive year would be 
raised, that higher weighted interstate DEM factor shall be applied to 
the study area's 1996 unweighted interstate DEM factor to derive a new 
local switching support factor.

0
6. Amend Sec.  36.126 by adding paragraph (b)(6) and revising 
paragraphs (c)(4), (e)(4), and (f)(2) to read as follows:


Sec.  36.126  Circuit equipment--Category 4.

* * * * *
    (b) * * *
    (6) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the average balances of Accounts 2230 through 
2232 to the categories/subcategories as specified in paragraphs (b)(1) 
through (4) of this section based on the relative percentage assignment 
of the average balances of Accounts 2230 through 2232 costs to these 
categories/subcategories during the twelve month period ending December 
31, 2000.
    (c) * * *
    (4) Effective July 1, 2001, through June 30, 2017, all study areas 
shall apportion costs in the categories/subcategories, as specified in 
paragraphs (b)(1) through (4) of this section, among the jurisdictions 
using the relative use measurements or factors, as specified in 
paragraphs (c)(1) through (3) of this section for the twelve month 
period ending December 31, 2000. Direct assignment of any subcategory 
of Category 4.1 Exchange Circuit Equipment to the jurisdictions shall 
be updated annually.
* * * * *
    (e) * * *
    (4) Effective July 1, 2001, through June 30, 2017, all study areas 
shall apportion costs in the categories/subcategories specified in 
paragraphs (e)(1) through (3) of this section among the jurisdictions 
using relative use measurements or factors, as specified in paragraphs 
(e)(1) through (3) for the twelve month period ending December 31, 
2000. Direct assignment of any subcategory of Category 4.2 
Interexchange Circuit Equipment to the jurisdictions shall be updated 
annually.
    (f) * * *
    (2) Effective July 1, 2001, through June 30, 2017, all study areas 
shall

[[Page 36237]]

apportion costs in the subcategory specified in paragraph (f)(1) of 
this section among the jurisdictions using the allocation factor, as 
specified in paragraph (f)(1)(i) of this section, for this subcategory 
for the twelve month period ending December 31, 2000. Direct assignment 
of any Category 4.3 Host/Remote Message Circuit Equipment to the 
jurisdictions shall be updated annually.

Information Origination/Termination Expenses

0
7. Amend Sec.  36.141 by revising paragraph (c) to read as follows:


Sec.  36.141  General.

* * * * *
    (c) Effective July 1, 2001, through June 30, 2017, local exchange 
carriers subject to price cap regulation, pursuant to Sec.  61.41 of 
this chapter, shall assign the average balance of Account 2310 to the 
categories, as specified in paragraph (b) of this section, based on the 
relative percentage assignment of the average balance of Account 2310 
to these categories during the twelve month period ending December 31, 
2000.

0
8. Amend Sec.  36.142 by revising paragraph (c) to read as follows:


Sec.  36.142  Categories and apportionment procedures.

* * * * *
    (c) Effective July 1, 2001, through June 30, 2017, all study areas 
shall apportion costs in the categories, as specified in Sec.  
36.141(b), among the jurisdictions using the relative use measurements 
or factors, as specified in paragraph (a) of this section, for the 
twelve month period ending December 31, 2000. Direct assignment of any 
category of Information Origination/Termination Equipment to the 
jurisdictions shall be updated annually.

Cable and Wire Facilities

0
9. Amend Sec.  36.152 by revising paragraph (d) to read as follows:


Sec.  36.152  Categories of Cable and Wire Facilities (C&WF).

* * * * *
    (d) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the average balance of Account 2410 to the 
categories/subcategories, as specified in paragraph (a) through (c) of 
this section based on the relative percentage assignment of the average 
balance of Account 2410 to these categories/subcategories during the 
twelve month period ending December 31, 2000.

0
10. Amend Sec.  36.154 by revising paragraph (g) to read as follows:


Sec.  36.154  Exchange Line Cable and Wire Facilities (C&WF)--Category 
1--apportionment procedures.

    (g) Effective July 1, 2001, through June 30, 2017, all study areas 
shall apportion Subcategory 1.3 Exchange Line C&WF among the 
jurisdictions as specified in paragraph (c) of this section. Direct 
assignment of subcategory Categories 1.1 and 1.2 Exchange Line C&WF to 
the jurisdictions shall be updated annually as specified in paragraph 
(b) of this section.

0
11. Amend Sec.  36.155 by revising paragraph (b) to read as follows:


Sec.  36.155  Wideband and exchange trunk (C&WF)--Category 2--
apportionment procedures.

* * * * *
    (b) Effective July 1, 2001, through June 30, 2017, all study areas 
shall apportion Category 2 Wideband and exchange trunk C&WF among the 
jurisdictions using the relative number of minutes of use, as specified 
in paragraph (a) of this section, for the twelve-month period ending 
December 31, 2000. Direct assignment of any Category 2 equipment to the 
jurisdictions shall be updated annually.

0
12. Amend Sec.  36.156 by revising paragraph (c) to read as follows:


Sec.  36.156  Interexchange Cable and Wire Facilities (C&WF)--Category 
3--apportionment procedures.

* * * * *
    (c) Effective July 1, 2001, through June 30, 2017, all study areas 
shall directly assign Category 3 Interexchange Cable and Wire 
Facilities C&WF where feasible. All study areas shall apportion the 
non-directly assigned costs in Category 3 equipment to the 
jurisdictions using the relative use measurements, as specified in 
paragraph (b) of this section, during the twelve-month period ending 
December 31, 2000.

0
13. Amend Sec.  36.157 by revising paragraph (b) to read as follows:


Sec.  36.157  Host/remote message Cable and Wire Facilities (C&WF)--
Category 4--apportionment procedures.

* * * * *
    (b) Effective July 1, 2001, through June 30, 2017, all study areas 
shall apportion Category 4 Host/Remote message Cable and Wire 
Facilities C&WF among the jurisdictions using the relative number of 
study area minutes-of-use kilometers applicable to such facilities, as 
specified in paragraph (a)(1) of this section, for the twelve month 
period ending December 31, 2000. Direct assignment of any Category 4 
equipment to the jurisdictions shall be updated annually.

Equal Access Equipment

0
14. Amend Sec.  36.191 by revising paragraph (d) to read as follows:


Sec.  36.191  Equal access equipment.

* * * * *
    (d) Effective July 1, 2001, through June 30, 2017, all study areas 
shall apportion Equal Access Equipment, as specified in paragraph (a) 
of this section, among the jurisdictions using the relative state and 
interstate equal access traffic, as specified in paragraph (c) of this 
section, for the twelve month period ending December 31, 2000.

Subpart C--Operating Revenues and Certain Income Accounts Operating 
Revenues

0
15. Amend Sec.  36.212 by revising paragraph (c) to read as follows:


Sec.  36.212  Basic local services revenue--Account 5000 (Class B 
telephone companies); Basic area revenue--Account 5001 (Class A 
telephone companies).

* * * * *
    (c) Wideband Message Service revenues from monthly and 
miscellaneous charges, service connections, move and change charges, 
are apportioned between state and interstate operations on the basis of 
the relative number of minutes-of-use in the study area. Effective July 
1, 2001, through June 30, 2017, all study areas shall apportion 
Wideband Message Service revenues among the jurisdictions using the 
relative number of minutes of use for the twelve-month period ending 
December 31, 2000.
* * * * *

0
16. Amend Sec.  36.214 by revising paragraph (a) to read as follows:


Sec.  36.214  Long distance message revenue--Account 5100.

    (a) Wideband message service revenues from monthly and 
miscellaneous charges, service connections, move and change charges, 
are apportioned between state and interstate operations on the basis of 
the relative number of minutes-of-use in the study area. Effective July 
1, 2001, through June 30, 2017, all study areas shall apportion 
Wideband Message Service revenues among the jurisdictions using the 
relative number of minutes of use for the twelve-month period ending 
December 31, 2000.
* * * * *

[[Page 36238]]

Subpart D--Operating Expenses and Taxes

Customer Operations Expenses

0
17. Revise Sec.  36.372 to read as follows:


Sec.  36.372  Marketing--Account 6610 (Class B telephone companies); 
Accounts 6611 and 6613 (Class A telephone companies).

    The expenses in this account are apportioned among the operations 
on the basis of an analysis of current billing for a representative 
period, excluding current billing on behalf of others and billing in 
connection with intercompany settlements. Effective July 1, 2001, 
through June 30, 2017, all study areas shall apportion expenses in this 
account among the jurisdictions using the analysis during the twelve-
month period ending December 31, 2000.

0
18. Amend Sec.  36.374 by revising paragraphs (b) and (d) to read as 
follows:


Sec.  36.374  Telephone-operator-services.

* * * * *
    (b) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the balance of Account 6620-Services to the 
Telephone operator expense classification based on the relative 
percentage assignment of the balance of Account 6620 to this 
classification during the twelve month period ending December 31, 2000.
* * * * *
    (d) Effective July 1, 2001, through June 30, 2017, all study areas 
shall apportion Telephone operator expenses among the jurisdictions 
using the relative number of weighted standard work seconds, as 
specified in paragraph (c) of this section, during the twelve-month 
period ending December 31, 2000.

0
19. Amend Sec.  36.375 by revising paragraphs (b)(4) and (5) to read as 
follows:


Sec.  36.375  Published directory listing.

* * * * *
    (b) * * *
    (4) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the balance of Account 6620-Services to the 
classifications, as specified in paragraphs (b)(1) through (4) of this 
section, based on the relative percentage assignment of the balance of 
Account 6620 to these classifications during the twelve month period 
ending December 31, 2000.
    (5) Effective July 1, 2001, through June 30, 2017, all study areas 
shall apportion Published directory listing expenses using the 
underlying relative use measurements, as specified in paragraphs (b)(1) 
through (4) of this section, during the twelve-month period ending 
December 31, 2000. Direct assignment of any Publishing directory 
listing expense to the jurisdictions shall be updated annually.

0
20. Amend Sec.  36.377 by revising paragraphs (a) introductory text, 
(a)(1)(ix), (a)(2)(vii), (a)(3)(vii), (a)(4)(vii), (a)(5)(vii), and 
(a)(6)(vii) to read as follows:


Sec.  36.377  Category 1--Local business office expense.

    (a) The expense in this category for the area under study is first 
segregated on the basis of an analysis of job functions into the 
following subcategories: End user service order processing; end user 
payment and collection; end user billing inquiry; interexchange carrier 
service order processing; interexchange carrier payment and collection; 
interexchange carrier billing inquiry; and coin collection and 
administration. Effective July 1, 2001, through June 30, 2017, study 
areas subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the balance of Account 6620-Services to the 
subcategories, as specified in this paragraph (a), based on the 
relative percentage assignment of the balance of Account 6620 to these 
categories/subcategories during the twelve month period ending December 
31, 2000.
    (1) * * *
    (ix) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the balance of Account 6620-Services to the 
categories/subcategories, as specified in paragraphs (a)(1)(i) through 
(viii) of this section, based on the relative percentage assignment of 
the balance of Account 6620 to these categories/subcategories during 
the twelve month period ending December 31, 2000. Effective July 1, 
2001, through June 30, 2017, all study areas shall apportion TWX 
service order processing expense, as specified in paragraph 
(a)(1)(viii) of this section among the jurisdictions using relative 
billed TWX revenues for the twelve-month period ending December 31, 
2000. All other subcategories of End-user service order processing 
expense, as specified in paragraphs (a)(1)(i) through (viii) shall be 
directly assigned.
    (2) * * *
    (vii) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the balance of Account 6620-Services to the 
subcategories, as specified in paragraphs (a)(2)(i) through (vi) of 
this section, based on the relative percentage assignment of the 
balance of Account 6620 to these categories/subcategories during the 
twelve month period ending December 31, 2000. All other subcategories 
of End User payment and collection expense, as specified in paragraphs 
(a)(2)(i) through (v) of this section, shall be directly assigned.
    (3) * * *
    (vii) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the balance of Account 6620-Services to the 
subcategories, as specified in paragraphs (a)(3)(i) through (vi) of 
this section, based on the relative percentage assignment of the 
balance of Account 6620 to these subcategories during the twelve month 
period ending December 31, 2000. All other subcategories of End user 
billing inquiry expense, as specified in paragraphs (a)(2)(i) through 
(vi) shall be directly assigned.
    (4) * * *
    (vii) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the balance of Account 6620-Services to the 
subcategories, as specified in paragraphs (a)(4)(i) through (vi) of 
this section, based on the relative percentage assignment of the 
balance of Account 6620 to these subcategories during the twelve month 
period ending December 31, 2000. All subcategories of Interexchange 
carrier service order processing expense, as specified in paragraphs 
(a)(2)(i) through (vi), shall be directly assigned.
    (5) * * *
    (vii) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the balance of Account 6620-Services to the 
subcategories, as specified in paragraphs (a)(5)(i) through (vi) of 
this section, based on the relative percentage assignment of the 
balance of Account 6620 to these subcategories during the twelve month 
period ending December 31, 2000. All subcategories of Interexchange 
carrier payment expense, as specified in paragraphs (a)(2)(i) through 
(vi) shall be directly assigned.
    (6) * * *
    (vii) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the balance of Account 6620-Services to the 
subcategories, as specified in paragraphs (a)(6)(i) through (vi) of 
this section,

[[Page 36239]]

based on the relative percentage assignment of the balance of Account 
6620 to these subcategories during the twelve month period ending 
December 31, 2000. All subcategories of Interexchange carrier billing 
inquiry expense, as specified in paragraphs (a)(2)(i) through (vi), 
shall be directly assigned.
* * * * *

0
21. Amend Sec.  36.378 by revising paragraph (b)(1) to read as follows:


Sec.  36.378  Category 2--Customer services (revenue accounting).

* * * * *
    (b) * * *
    (1) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the balance of Account 6620-Services to the 
classifications, as specified in paragraph (b) of this section, based 
on the relative percentage assignment of the balance of Account 6620 to 
those classifications during the twelve month period ending December 
31, 2000.
* * * * *

0
22. Amend Sec.  36.379 by revising paragraphs (b)(1) and (2) to read as 
follows:


Sec.  36.379  Message processing expense.

    * * ** *
    (b) * * *
    (1) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the balance of Account 6620-Services to the 
subcategories, as specified in this paragraph (b), based on the 
relative percentage assignment of the balance of Account 6620 to those 
subcategories during the twelve month period ending December 31, 2000.
    (2) Effective July 1, 2001, through June 30, 2017, all study areas 
shall apportion Toll Ticketing Processing Expense among the 
jurisdictions using the relative number of toll messages for the 
twelve-month period ending December 31, 2000. Local Message Process 
Expense is assigned to the state jurisdiction.

0
23. Amend Sec.  36.380 by revising paragraphs (d) and (e) to read as 
follows:


Sec.  36.380  Other billing and collecting expense.

* * * * *
    (d) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the balance of Account 6620-Services to the Other 
billing and collecting expense classification based on the relative 
percentage assignment of the balance of Account 6620 to those 
subcategory during the twelve month period ending December 31, 2000.
    (e) Effective July 1, 2001, through June 30, 2017, all study areas 
shall apportion Other billing and collecting expense among the 
jurisdictions using the allocation factor utilized, pursuant to 
paragraph (b) or (c) of this section, for the twelve month period 
ending December 31, 2000.

0
24. Amend Sec.  36.381 by revising paragraphs (c) and (d) to read as 
follows:


Sec.  36.381  Carrier access charge billing and collecting expense.

* * * * *
    (c) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the balance of Account 6620-Services to the 
Carrier access charge billing and collecting expense classification 
based on the relative percentage assignment of the balance of Account 
6620 to that classification during the twelve month period ending 
December 31, 2000.
    (d) Effective July 1, 2001, through June 30, 2017, all study areas 
shall apportion Carrier access charge billing and collecting expense 
among the jurisdictions using the allocation factor, pursuant to 
paragraph (b) of this section, for the twelve-month period ending 
December 31, 2000.
* * * * *

0
25. Amend Sec.  36.382 by revising paragraph (a) to read as follows:


Sec.  36.382  Category 3--All other customer services expense.

    (a) Effective July 1, 2001, through June 30, 2017, study areas 
subject to price cap regulation, pursuant to Sec.  61.41 of this 
chapter, shall assign the balance of Account 6620-Services to this 
category based on the relative percentage assignment of the balance of 
Account 6620 to this category during the twelve month period ending 
December 31, 2000.
* * * * *
[FR Doc. 2014-14864 Filed 6-25-14; 8:45 am]
BILLING CODE 6712-01-P