[Federal Register Volume 61, Number 96 (Thursday, May 16, 1996)]
[Proposed Rules]
[Pages 24743-24749]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11964]



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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[GC Docket No. 96-101, FCC 96-192]


In the Matter of Implementation of Section 34(a)(1) of the Public 
Utility Holding Company Act of 1935, as Added by the Telecommunications 
Act of 1996

agency: Federal Communications Commission.

action: Proposed rule.

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summary: This notice of proposed rulemaking (NPRM) seeks comment on 
proposed regulations which implement new section 34(a)(1) of the Public 
Utility Holding Company Act of 1935 (PUHCA), as added by section 103 of 
the Telecommunications Act of 1996. Under new section 34, registered 
public utility

[[Page 24744]]

holding companies may now enter the telecommunications industry without 
prior Securities and Exchange Commission (``SEC'') approval by 
acquiring or maintaining an interest in an ``exempt telecommunications 
company'' (``ETC''). Moreover, exempt public utility holding companies, 
by owning or acquiring an interest in an ETC, may now acquire a ``safe 
harbor'' from potential SEC regulation under PUHCA section 3(a). 
Section 34(a)(1) requires the Commission to promulgate rules 
implementing the procedure of determining ETC status within one year of 
the date of enactment of the Telecommunications Act of 1996.

DATES: Interested parties may file comments on or before June 17, 1996 
and reply comments on or before July 5, 1996. Written comments by the 
public on the proposed and/or modified information collections are due 
June 17, 1996. Written comments must be submitted by the Office of 
Management and Budget (OMB) on the proposed and/or modified information 
collections on or before July 15, 1996.

ADDRESSES: Comments and reply comments should be sent to the office of 
the Secretary, Federal Communications Commission, 1919 M Street NW., 
Washington, DC 20554, with a copy to Lawrence J. Spiwak, Competition 
Division, Office of General Counsel, Federal Communications Commission, 
1919 M Street NW., Washington, DC 20554. Parties should also file one 
copy of any documents filed in this docket with the Commission's copy 
contractor, International Transcription Services, Inc., 2100 M Street 
NW., Suite 140, Washington, DC 20037. Comments and reply comments will 
be available for public inspection during regular business hours in the 
FCC Reference Center, 1919 M Street NW., Room 239, Washington, DC 
20554.
    In addition to filing comments with the Secretary, a copy of any 
comments on the information collections contained herein should be 
submitted to Dorothy Conway, Federal Communications Commission, Room 
234, 1919 M Street NW., Washington, DC 20554, or via the Internet to 
[email protected], and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 
17th Street NW., Washington, DC 20503 or via the Internet to 
[email protected].

FOR FURTHER INFORMATION CONTACT: Lawrence J. Spiwak, Competition 
Division, Office of General Counsel. (202) 418-1870. For additional 
information concerning the information collections contained in this 
NPRM contact Dorothy Conway at 202-418-0217, or via the Internet at 
[email protected].

SUPPLEMENTARY INFORMATION: This NPRM contains proposed or modified 
information collections subject to the Paperwork Reduction Act of 1995 
(PRA). It has been submitted to the Office of Management and Budget 
(OMB) for review under the PRA. OMB, the general public, and other 
Federal agencies are invited to comment on the proposed or modified 
information collections contained in this proceeding.

Paperwork Reduction Act

    This NPRM contains either a proposed or modified information 
collection. The Commission, as part of its continuing effort to reduce 
paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collections 
contained in this NPRM, as required by the Paperwork Reduction Act of 
1995, Pub. L. No. 104-13. Public and agency comments are due at the 
same time as other comments on this NPRM; OMB notification of action is 
due 60 days from date of publication of this NPRM in the Federal 
Register. Comments should address: (a) whether the proposed collection 
of information is necessary for the proper performance of the functions 
of the Commission, including whether the information shall have 
practical utility; (b) the accuracy of the Commission's burden 
estimates; (c) ways to enhance the quality, utility, and clarity of the 
information collected; and (d) ways to minimize the burden of the 
collection of information on the respondents, including the use of 
automated collection techniques or other forms of information 
technology.
    OMB Approval Number: None.
    Title: In the Matter of Implementation of Section 34(a)(1) of the 
Public Utility Holding Company Act of 1935, as amended by the 
Telecommunications Act of 1996, Notice of Proposed Rulemaking.
    Type of Review: New collection.
    Respondents: 15. There are fifteen registered public utility 
holding companies.
    Number of Respondents: 15. We anticipate that each registered 
public utility holding company will make at least one application 
annually.
    Estimated Time Per Response: We estimate that each application will 
take 16 hours to prepare. However, the Commission estimates that 
respondents will hire attorneys to prepare information. The time for 
coordinating the submission is ten hours per respondent.
    Total Annual Burden: 150 hours.
    Estimated costs per respondent: We estimate that the cost to each 
respondent will be approximately $3,200, assuming 16 hours at $200/hour 
for outside counsel.
    Needs and Uses: The information will be used by the Commission to 
determine whether persons satisfy the statutory criteria for ``exempt 
telecommunications company'' status. Without such information, the 
Commission could not determine whether persons satisfied the requisite 
statutory criteria and therefore fulfill its responsibility under 
section 34(a)(1) of PUHCA, as amended.

I. Introduction

    1. This notice of proposed rulemaking (NPRM) seeks comment on 
proposed regulations which implement new section 34(a)(1) of the Public 
Utility Holding Company Act of 1935 (PUHCA), 15 U.S.C. 79 et seq., as 
added by section 103 of the Telecommunications Act of 1996, Pub. L. No. 
104-104, 110 Stat. 56 (1996).\1\ Under new section 34, registered 
public utility holding companies may now enter the telecommunications 
industry without prior Securities and Exchange Commission (``SEC'') 
approval by acquiring or maintaining an interest in an ``exempt 
telecommunications company'' (``ETC'').\2\ Moreover, exempt public 
utility holding companies, by owning or acquiring an interest in an 
ETC, may now acquire a ``safe harbor'' from potential SEC regulation 
under PUHCA section 3(a).\3\ The new law vests the Commission with 
jurisdiction to determine whether a company warrants ETC status based 
on specific statutory criteria.
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    \1\ The Telecommunications Act was enacted on February 8, 1996.
    \2\ See PUHCA section 34(d).
    \3\ See PUHCA section 34(c).
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    2. As explained below, we propose to implement section 34(a)(1) by 
providing for a simple procedure for ETC determination, under which 
applicants briefly describe their planned activities and certify that 
they satisfy the specific statutory requirements and any applicable 
Commission regulations. The Commission believes that its 
responsibilities under section 34(a)(1) are limited to whether the 
applicant meets the express statutory criteria for ETC status. Thus, we 
believe that an ETC determination should not involve an inquiry into 
the public interest merits of entry by the applicant. Nor would the 
public interest or the intent of Congress be served if this process 
became a regulatory barrier to

[[Page 24745]]

significant new entry into the telecommunications industry. 
Accordingly, the proposed rules are limited to the filing requirements 
and procedures for persons seeking exempt telecommunications company 
status.\4\ We believe that this approach is the best mechanism to 
expedite Congress's policy to allow holding companies to become 
vigorous competitors in the telecommunications industry in order to 
promote the public interest.\5\
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    \4\ The proposed rules would create a new subpart S, part 1 
under title 47, chapter I of the Code of Federal Regulations.
    \5\ See Report of the Committee on Commerce, Science and 
Transportation on S. 652, S. Rep. No. 104-23, 104th Cong., 1st Sess. 
at 8 (1995) (``Senate Report'').
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    3. The Commission invites interested parties to comment on the 
matters raised in the proposed rules.

II. Background

    4. PUHCA was designed to prevent financial abuse among public 
utility holding companies and their affiliates.\6\ PUHCA accomplished 
this goal by, among other things, restricting the activities and 
investments that holding companies are permitted to make outside of 
their core public utility businesses. Prior to the Telecommunications 
Act of 1996, the provisions of PUHCA strongly deterred entry by 
registered public utility holding companies into the telecommunications 
industry.\7\ Somewhat anomalously, however, utilities that are not 
public utility holding companies have always been free to enter the 
telecommunications industry without prior SEC approval, regardless of 
their size or scope.
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    \6\ See Arcadia, Ohio v. Ohio Power, 498 U.S. 73, 87, 111 S.Ct. 
415, 423 (1990) (Stevens, J. concurring) (citations omitted).
    \7\ See PUHCA sections 3(a), 11(b)(1).
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    5. Section 103 of the Telecommunications Act of 1996, which adds 
new PUHCA section 34(a)(1), ends this disparate treatment by allowing 
previously restricted holding companies to enter telecommunications 
industries without prior SEC permission by acquiring or maintaining an 
interest in an ``exempt telecommunications company.'' Under section 
34(a)(1), an ETC is any person determined by the Commission to be 
engaged directly or indirectly, wherever located, through one or more 
affiliates (as defined in section 2(a)(11)(B) of PUHCA \8\), and 
exclusively in the business of providing: (A) telecommunications 
services \9\; (B) information services \10\; (C) other services or 
products subject to the jurisdiction of the Commission; or (D) products 
or services that are related or incidental to the provision of a 
product or service described in (A), (B), or (C).
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    \8\ PUHCA section 2(a)(11)(B) defines ``affiliate'' as ``any 
company 5 per centum or more of whose outstanding voting securities 
are owned, controlled, or held with power to vote, directly or 
indirectly, by such specified company.''
    \9\ See Communications Act of 1934 section (3)(51), as added by 
the Telecommunications Act of 1996, which provides that the term 
``telecommunications service'' means the ``offering of 
telecommunications for a fee directly to the public, or to such 
classes of users as to be effectively available directly to the 
public, regardless of the facilities used to transmit the 
telecommunications service.''
    \10\ See Communications Act of 1934 section (3)(41), as added by 
the Telecommunications Act of 1996, which provides that the term 
``information service'' means the ``offering of a capability for 
generating, acquiring, storing, transforming, processing, 
retrieving, utilizing, or making available information via 
telecommunications, and includes electronic publishing, but does not 
include any use of any such capability for the management, control, 
or operation of a telephone system or the management of a 
telecommunications service.''
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    6. Section 34(a)(1) provides that an applicant who has applied in 
good faith for a determination of ETC status is deemed an ETC until the 
Commission makes such a determination. Section 34(a)(1) requires the 
Commission to render its determination of whether a person is an ETC 
within 60 days of the receipt of an application. Section 34(a)(1) also 
requires the Commission to notify the Securities and Exchange 
Commission (SEC) whenever it determines that a person is an ETC. 
Finally, Section 34(a)(1) requires the Commission to promulgate rules 
implementing the procedure of determining ETC status within one year of 
the date of enactment of the Telecommunications Act of 1996.
    7. By obtaining ETC status, holding companies can now be vigorous 
competitors in the telecommunications industry, and, with such 
competition, bring more benefits to consumers.11 Indeed, Congress 
recognized that utilities in general have experience in 
telecommunications operations, as these companies already operate 
telecommunications systems for the operation and monitoring of electric 
generation, transmission and distribution for reliability 
purposes.12 Moreover, Congress recognized that holding companies 
have sufficient size and capital to be effective competitors to 
incumbent telecommunications companies.13 Finally, Congress also 
found that electric utilities, by entering into telecommunications, can 
provide more efficient and more ecologically-sound energy service in 
the form of ``peak-shaving'' and real-time energy management.14
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    \11\ See Senate Report at 7-8.
    \12\ Id.
    \13\ Id.
    \14\ Id.
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III. Discussion

A. Commission Responsibilities

    8. We have previously held that the Commission's responsibilities 
under section 34(a)(1) do not appear to extend beyond a determination 
of whether an applicant complies with the relatively narrow 
certification criteria enumerated above.15 This is evident not 
only from the unambiguous language of section 34(a)(1), but from other 
provisions of section 34, which preserve other statutory provisions 
where the merits of ETC entry can be evaluated. For example, section 
34(n) preserves this Commission's and applicable states' authority to 
regulate the activities of an ETC under provisions of the 
Communications Act of 1934 and any applicable state laws. In addition, 
section 34(j) retains the jurisdiction of the Federal Energy Regulatory 
Commission (FERC) and state commissions to determine whether a public 
utility company may recover in its rates the costs of products or 
services purchased from or sold to an associate or affiliate company 
that is an ETC, regardless of whether such costs are incurred through 
the direct or indirect purchase or sale of products or services from 
the affiliate or associate company. Finally, section 34(m) provides 
state commissions the authority to conduct independent audits of public 
utility holding companies and their affiliates. We request comment on 
whether our existing interpretation of the scope of our inquiry under 
section 34(a)(1) is correct.
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    \15\ See Entergy Technology Company, (FCC 96-163, released April 
12, 1996) (Entergy Technology).
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B. Filing Requirements

    9. We note that PUHCA section 34(a)(1) is similar to the ``exempt 
wholesale generator'' paradigm of PUHCA section 32 which permits, inter 
alia, public utility holding companies to enter into the independent 
power production business.16 FERC, the agency responsible for 
implementing PUHCA section 32, interpreted that statute as intended to 
give it only narrowly circumscribed authority, and therefore 
implemented a procedure whereby an applicant need only briefly describe 
its planned activities and certify that it satisfies the requisite 
statutory criteria.17

[[Page 24746]]

We believe that similar filing requirements should be required under 
section 34(a)(1).
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    \16\  See PUHCA section 32, as added by section 711 of the 
Energy Policy Act of 1992. 15 U.S.C. 79z-5a.
    \17\ See Filing and Ministerial Procedures for Persons Seeking 
Exempt Wholesale Generator Status, Order No. 550, 58 FR 8897 
(February 18, 1993); order on reh'g, Order No. 550-A, 58 FR 21250 
(April 20, 1993); see also 18 CFR 365.1 through 365.7.
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    10. Accordingly, for the company or companies which are eligible 
companies owned and/or operated by the applicant, the proposed rules 
would first require the applicant to provide a brief description of the 
planned activities of the company or companies which are eligible 
companies owned and/or operated by the applicant. Second, the proposed 
rules would require a person seeking ETC status (applicant) to file a 
sworn statement, by a representative legally authorized to bind the 
applicant, attesting to any facts or representations presented to 
demonstrate eligibility for ETC status, including a representation that 
the applicant is engaged directly, or indirectly, wherever located, 
through one or more affiliates (as defined in section 2(a)(11)(B) of 
the Public Utility Holding Company Act of 1935), and exclusively in the 
business of providing: (A) telecommunications services; (B) information 
services; (C) other services or products subject to the jurisdiction of 
the Commission; or (D) products or services that are related or 
incidental to the provision of a product or service described in (A), 
(B), or (C). Finally, the proposed rules would require an applicant to 
provide a sworn statement, by a representative legally authorized to 
bind the applicant, certifying that the applicant satisfies Part 1, 
Subpart P, of the Commission's regulations, 47 CFR 1.2001 through 
1.2003r, regarding the Anti-Drug Abuse Act of 1988, 21 U.S.C. 862. The 
application would then be placed on public notice for comment on the 
adequacy or accuracy of the representations contained therein.18 
The Commission would review the application and any comments to 
determine whether the application meets the statutory requirements for 
ETC status. This analysis would be the extent of the Commission's 
inquiry. To the extent parties believe that our inquiry should either 
be more expansive or narrow, we invite them to comment on this issue.
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    \18\ See Section III.C.
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    11. We also seek comment on whether we should adopt rules governing 
applications seeking ETC status filed by different entities that are 
affiliates of a common holding company parent. While the Act apparently 
contemplates that every entity seeking ETC status must apply to the 
Commission,19 we see no reason why this should require separate 
entities affiliated with the same holding company parent to seek ETC 
status through separate applications and proceedings. Such a process 
seems administratively wasteful and duplicative.20 Accordingly we 
propose to allow multiple entities seeking ETC status, which are 
affiliated with the same public utility holding company parent, to seek 
a determination for all such entities through a single consolidated 
application. In such a case, the application should contain for each 
affiliate sufficient information as required by our rules to make a 
separate ETC determination for that affiliate. We seek comment on this 
proposal.
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    \19\ Section 34(a) provides that ``No person shall be deemed to 
be an exempt telecommunications company under this section unless 
such person has applied to the [Commission] for a determination 
under this paragraph.''
    \20\ For example, six affiliates of a single public utility 
holding company recently filed six separate applications for 
determination of ETC status.
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    12. The proposed rules also require applicants to serve a copy of 
the ETC application on the SEC and affected State commissions. An 
affected State commission is defined as the State commission of each 
state in which the ETC will be located or doing business. Although 
service of applications on the SEC and State commissions is not 
required by law, section 34 of PUHCA specifically contemplates a role 
for the SEC and State commissions insofar as certain eligible companies 
are concerned. It also contemplates that the SEC be aware of ETC 
determinations. The Commission sees no reason not to inform these 
agencies of pending ETC applications at an early stage, particularly 
since the copying and mailing costs associated with serving filings on 
the SEC and affected State commissions will be minimal. We note that 
FERC took a similar approach in its analogous rules.21 We invite 
parties to comment on this proposal.
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    \21\ See 18 CFR Sec. 365.3.
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C. Notice and Comment

    13. As of April 25, 1995, the Commission has received 11 
applications for ETC status, three of which have been granted.22 
While staff placed these applications on public notice for comment, 
there is no requirement in the Telecommunications Act that the 
Commission do so. On the other hand, neither is there any prohibition 
on the Commission's discretion to do so. The proposed rules would 
provide for public notice and comment on ETC applications, but would 
limit consideration of any submissions that might be made in response 
to such public notices to the narrow purpose of determining the 
adequacy or accuracy of the certification made to satisfy the statutory 
criteria. Given the limited focus of the Commission's inquiry under 
section 34(a)(1), we do not believe that it would be appropriate to 
allow persons to raise issues that fall outside the purview of the 
statutorily fixed determination, and that go to the public interest 
merits of an applicant's proposed entry. Accordingly, the proposed 
rules specify that parties may file comments on a proposed application, 
but that any comments must be limited to the adequacy and accuracy of 
the representations contained therein. Comments on the adequacy of the 
representations may include whether the application is within the scope 
of the ETC criteria, e.g., the extent to which applicant's services 
constitute telecommunications, information or related services. 
Applicants would then have the opportunity to respond to any comments 
filed. The Commission requests comments on the tentative conclusion to 
allow comments, but to limit such comments to the accuracy and adequacy 
of the representations contained in the applications. We also request 
comments on the length of the time period which should be set for such 
comments.
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    \22\ See CSW Communications, Inc., (FCC 96-152, released April 
4, 1996); Entergy Technology, supra n. 15; Entergy Technology 
Holding Company, (FCC 96-162, released April 12, 1996).
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D. Implementation

    14. The proposed rules specify that the Commission must act within 
60 days of receipt of an application. Applications that do not meet the 
requirements of the proposed rule set forth in proposed 1.4002 will be 
rejected. Under the proposed rules, if the Commission does not act 
within 60 days, the application is deemed to have been granted.
    15. Proposed Sec. 1.4005 requires the Secretary of the Commission 
to notify the SEC whenever an application for ETC status is granted, as 
explicitly required by section 34(a)(1) of PUHCA.

E. Change in Circumstances

    16. An ETC determination is based on the facts that are presented 
to the Commission. Any material variation from those facts may render 
an ETC determination invalid. Accordingly, proposed section 1.4006 
requires ETCs, within 30 days of any material change in facts that may 
affect an ETC's eligibility for ETC status under section 34(a)(1) of 
the Public Utility Holding Company Act of 1935, to either: (a)

[[Page 24747]]

apply to the Commission for a new determination of ETC status; (b) file 
a written explanation with the Commission of why the material change in 
facts does not affect the ETC's status; or (c) notify the Commission 
that it no longer seeks to maintain ETC status. To the extent persons 
other than the ETC applicant inform the Commission of a material change 
of circumstances, the ETC will be given the opportunity to respond and 
the Commission will take further action as appropriate. The Commission 
requests comments on this proposed rule.

IV. Procedural Matters

A. Regulatory Flexibility Act

    17. As required by Section 603 of the Regulatory Flexibility Act, 
the Commission has prepared an Initial Regulatory Flexibility Analysis 
(IRFA) of the expected impact on small entities of the proposals 
suggested in the document. The IRFA is set forth below. Written public 
comments are requested on the IRFA. These comments must be filed in 
accordance with the same filing deadlines as comments on the rest of 
the NPRM, but they must have a separate and distinct heading 
designating them as responses to the Initial Regulatory Flexibility 
Analysis. The Secretary shall send a copy of the NPRM, including the 
IRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration in accordance with section 603(a) of the Regulatory 
Flexibility Act.23
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    \23\ Pub. L. No. 96-354, 94 Stat. 1164, 5 U.S.C. 601 et seq. 
(1981).
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B. Ex Parte Rules--Non-Restricted Proceeding

    18. This is a non-restricted notice and comment rulemaking 
proceeding. Ex parte presentations are permitted except during the 
Sunshine Agenda period, provided they are disclosed as provided in the 
Commission's rules.24
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    \24\ See generally 47 CFR 1.1202, 1.1203, and 1.1206(a).
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C. Comment Dates

    19. Pursuant to applicable procedures set forth in Secs. 1.415 and 
1.419 of the Commission's rules, interested parties may file comments 
on or before June 17, 1996, and reply comments on or before July 5, 
1996.25 To file formally in this proceeding, parties must file an 
original and four copies of all comments, reply comments, and 
supporting comments. If parties want each Commissioner to receive a 
personal copy of their comments, parties must file an original plus 
nine copies. Parties should send comments and reply comments to Office 
of the Secretary, Federal Communications Commission, 1919 M Street NW. 
Washington, D.C., 20554. Comments and reply comments will be available 
for public inspection during regular business hours in the Reference 
Center of the Federal Communications Commission, Room 239, 1919 M 
Street NW., Washington, D.C. 20554.
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    \25\ See 47 CFR 1.415 and 1.419.
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D. Paperwork Reduction Act

    20. This NPRM contains either a proposed or modified information 
collection. The Commission, as part of its continuing effort to reduce 
paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collections 
contained in this NPRM, as required by the Paperwork Reduction Act of 
1995, Pub. L. No. 104-13. Public and agency comments are due at the 
same time as other comments on this NPRM; OMB comments are due 60 days 
from date of publication of this NPRM in the Federal Register. Comments 
should address: (a) whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology.
    21. Written comments by the public on the proposed and/or modified 
information collection are due on or before June 17, 1996 and reply 
comments on or before July 5, 1996. Written comments must be submitted 
by the Office of Management and Budget (OMB) on the proposed and/or 
modified information collections on or before 60 days after date of 
publication in the Federal Register. In addition to filing comments 
with the Secretary, a copy of any comments on the information 
collection contained herein should be submitted to Dorothy Conway, 
Federal Communications Commission, Room 234, 1919 M Street NW., 
Washington, DC 20554, or via the Internet to [email protected] and to 
Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 - 17th Street NW., 
Washington, DC 20503 or via the Internet to [email protected].

E. Legal Authority

    22. Authority for issuance of this NPRM is contained in section 
34(a)(1) of the Public Utility Holding Company Act of 1935 (PUHCA), as 
amended by section 103 of the Telecommunications Act of 1996, Pub. L. 
No. 104-104, 110 Stat. 56 (1996), and sections 4(i), 4(j) and 303(r) of 
the Communications Act of 1934, as amended, 47 U.S.C. Secs. 154(i), 
154(j), and 303(r).

F. Further Information

    23. For further information concerning this proceeding, contact 
Lawrence J. Spiwak, Competition Division, Office of General Counsel at 
(202) 418-1870.

Initial Regulatory Flexibility Analysis

    As required by Section 603 of the Regulatory Flexibility Act, the 
Commission has prepared an Initial Regulatory Flexibility Analysis 
(IRFA) of the expected impact on small entities of the policies and 
rules proposed in this Notice of Proposed Rule Making (NPRM). Written 
public comments are requested on the IRFA.
    Reason for Action: This rulemaking proceeding was initiated to 
secure comment on proposals for establishing filing requirements and 
procedures for implementing section 34(a)(1) of the Public Utility 
Holding Company Act of 1935 (PUHCA), as amended by section 103 of the 
Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 
(1996), and sections 4(i), 4(j) and 303(r) of the Communications Act of 
1934, as amended, 47 U.S.C. 154(i), 154(j), and 303(r).
    Objectives: The proposed rules, if adopted, would provide filing 
requirements and procedures to expedite public utility holding company 
entry into the telecommunications industry. To achieve this goal, the 
proposed regulations require persons seeking a determination of ETC 
status to file in good faith for a determination by the Commission. 
Applicants would be required to file with the Commission a brief 
description of their planned activities, and a sworn statement 
attesting to any facts presented to demonstrate eligibility for ETC 
status and attesting to any representation otherwise offered to 
demonstrate eligibility for ETC status. Applicants would also be 
required to submit sworn statements certifying that they complied with 
part 1, subpart P, of the Commission's regulations, 47 CFR 1.2001 
through 1.2003, regarding implementation of the Anti-Drug Abuse Act of 
1988, 21 U.S.C. 862. Finally, applicants would be required to serve 
copies of their application with the SEC and affected state 
commissions.
    Legal Basis: The proposed action is authorized by section 34(a)(1) 
of the Public Utility Holding Company Act of 1935 (PUHCA), as amended 
by section

[[Page 24748]]

103 of the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 
Stat. 56 (1996), and sections 4(i), 4(j) and 303(r) of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j) and 
303(r).
    Reporting, Recordkeeping, and Other Compliance Requirements: Under 
the proposal contained in the NPRM, within thirty days of any change in 
material fact that may affect ETC status, persons who received ETC 
status have an affirmative duty to either: (a) apply to the Commission 
for a new determination of ETC status; (b) file a written explanation 
with the Commission of why the material change in facts does not affect 
the ETC's status; or (c) notify the Commission that it no longer seeks 
to maintain ETC status.
    Federal Rules Which Overlap, Duplicate or Conflict With These 
Rules: None.
    Description, Potential Impact, and Number of Small Entities 
Involved: The proposed rules are designed to provide an expedited 
procedural process as contemplated in the Section 34(a)(1) of PUHCA. 
The proposed rules should therefore increase the flexibility of small 
businesses with minimal administrative burden. After evaluating 
comments filed in response to the NPRM, the Commission will examine 
further the impact of all rule changes on small entities and set forth 
its findings in the Final Regulatory Flexibility Analysis.
    Significant Alternatives Minimizing the Impact on Small Entities 
Consistent with the Stated Objectives: This NPRM solicits comment on a 
variety of alternatives. Any additional significant alternatives 
presented in the comments will also be considered.
    IRFA Comments: We request written public comment on the foregoing 
Initial Regulatory Flexibility Analysis. Comments must have a separate 
and distinct heading designating them as responses to the IRFA and must 
be filed by the comment deadlines set forth in this NPRM.

List of Subjects in 47 CFR Part 1

    Administrative practice and procedure, Telecommunications.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Rule Changes

    Part 1 of title 47 of the Code of Federal Regulations is proposed 
to be amended as follows:

PART 1--PRACTICE AND PROCEDURE

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

    Authority: 47 U.S.C. 151, 154, 303, and 309(j) unless otherwise 
noted.

    2. A new subpart S is added to part 1 to read as follows:

Subpart S--Exempt Telecomunications Companies

Sec.
1.4000  Purpose.
1.4001  Definitions.
1.4002  Contents of application and procedure for filing.
1.4003  Effect of filing.
1.4004  Commission action.
1.4005  Notification of Commission action to the Securities and 
Exchange Commission.
1.4006  Procedure for notifying Commission of material change in 
facts.
1.4007  Comments.

Subparts--Exempt Telecommunications Companies


Sec. 1.4000  Purpose.

    The purpose of part 1, subpart S, is to implement section 34(a) of 
the Public Utility Holding Company Act of 1935, 15 U.S.C. 79 through 
79z-56 as added by section 103 of the Telecommunications Act of 1996, 
Public Law No. 104-104, 110 Stat. 56.


Sec. 1.4001  Definitions.

    (a) For the purpose of this part, the terms telecommunications 
services and information services shall have the same meanings as 
provided in the Communications Act of 1934, as amended;
    (b) Commission shall be defined as the Federal Communications 
Commission; and
    (c) ETC shall be defined as an exempt telecommunications company.


Sec. 1.4002  Contents of application and procedure for filing.

    A person seeking status as an exempt telecommunications company 
(applicant) must file with the Commission with respect to the company 
or companies which are eligible companies owned and/or operated by the 
applicant, and serve on the Securities and Exchange Commission and any 
affected State commission, the following:
    (a) A brief description of the planned activities of the company or 
companies which are or will be eligible companies owned and/or operated 
by the applicant;
    (b) A sworn statement, by a representative legally authorized to 
bind the applicant, attesting to any facts or representations presented 
to demonstrate eligibility for ETC status, including a representation 
that the applicant is engaged directly, or indirectly, wherever 
located, through one or more affiliates (as defined in section 
2(a)(11)(B) of the Public Utility Holding Company Act of 1935), and 
exclusively in the business of providing:
    (1) Telecommunications services;
    (2) Information services;
    (3) Other services or products subject to the jurisdiction of the 
Commission; or
    (4) Products or services that are related or incidental to the 
provision of a product or service described in paragraphs (b)(1), (2), 
or (3) of this section; and
    (c) A sworn statement, by a representative legally authorized to 
bind the applicant, certifying that the applicant satisfies part 1, 
subpart P, of the Commission's regulations, 47 CFR 1.2001 through 
1.2003, regarding implementation of the Anti-Drug Abuse Act of 1988, 21 
U.S.C. 862.


Sec. 1.4003  Effect of filing.

    A person applying in good faith for a Commission determination of 
exempt telecommunications company status will be deemed to be an exempt 
telecommunications company from the date of receipt of the application 
until the date of Commission action pursuant to Sec. 1.4004.


Sec. 1.4004  Commission action.

    If the Commission has not issued an order granting or denying an 
application within 60 days of receipt of the application, the 
application will be deemed to have been granted as a matter of law.


Sec. 1.4005  Notification of Commission action to the Securities and 
Exchange Commission.

    The Secretary of the Commission will notify the Securities and 
Exchange Commission whenever a person is determined to be an exempt 
telecommunications company.


Sec. 1.4006  Procedure for notifying commission of material change in 
facts.

    If there is any material change in facts that may affect an ETC's 
eligibility for ETC status under section 34(a)(1) of the Public Utility 
Holding Company Act of 1935, the ETC must, within 30 days of the change 
in fact, either:
    (a) Apply to the Commission for a new determination of ETC status;
    (b) File a written explanation with the Commission of why the 
material change in facts does not affect the ETC's status; or

[[Page 24749]]

    (c) Notify the Commission that it no longer seeks to maintain ETC 
status.


Sec. 1.4007  Comments.

    (a) Any person wishing to be heard concerning an application for 
ETC status may file comments with the Commission within fifteen (15) 
days from the release date of a public notice regarding the 
application, or such other period of time set by the Commission. Any 
comments must be limited to the adequacy or accuracy of the 
application.
    (b) Any person who files comments with the Commission must also 
serve copies of all comments on the applicant.
    (c) An applicant has seven (7) days to reply to any comments filed 
regarding the adequacy and accuracy of its application, or such other 
period of time as set by the Commission. Such reply shall be served on 
the commenters.

[FR Doc. 96-11964 Filed 5-15-96; 8:45 am]
BILLING CODE 6712-01-P