[Federal Register Volume 68, Number 47 (Tuesday, March 11, 2003)]
[Notices]
[Pages 11551-11553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-5651]


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FEDERAL COMMUNICATIONS COMMISSION

[CC Docket No. 94-157, CC Docket No. 94-65, CC Docket No. 93-193, DA 
03-488]


Stale or Moot Docketed Proceedings; Bell Atlantic Telephone 
Companies Tariff F.C.C. No. 1, Transmittal No. 690 and NYNEX Telephone 
Companies Tariff F.C.C No. 1, Transmittal No. 328; 1994 Annual Access 
Tariff Filings; 1993 Annual Access Tariff Filings Phase I; AT&T 
Communications Tariff F.C.C. Nos. 1 and 2, Transmittal Nos. 5460, 5461, 
5462, and 5464 Phase II

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: By this document, the Federal Communications Commission's 
Wireline Competition Bureau reinstates CC Docket No. 94-157 to address 
two outstanding ``other postretirement employee benefits'' (OPEB) 
related issues. Interested parties should inform the Bureau of any 
other OPEB-related issue that remains open. If no timely comments are 
received in response to this document, the Bureau will terminate its 
OPEB investigation in CC Docket No. 94-65, and CC Docket No. 93-193 
without further action. Finally, the Bureau directs Verizon 
Communications to submit its direct case to demonstrate that OPEB 
related costs incurred prior to January 1, 1993 are eligible for 
exogenous treatment.

DATES: Comments are due on or before April 8, 2003; Reply comments are 
due on or before April 22, 2003.

ADDRESSES: Federal Communications Commission, 445 12th Street, SW., 
Washington, DC 20554. See Supplementary Information for filing 
instructions.

FOR FURTHER INFORMATION CONTACT: Josh Swift, Pricing Policy Division, 
Wireline Competition Bureau, FCC (202) 418-2019.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order, 
Notice, and Erratum; CC Docket Nos. 93-193 and 94-157; adopted and 
released February 25, 2003. In December 1990, the Financial Accounting 
Standards Board (FASB) adopted SFAS-106. For companies that follow 
generally accepted accounting principles, SFAS-106 established new 
financial accounting and reporting requirements for accounting periods 
beginning after December 15, 1992, for any employer offering 
postretirement benefits other than pensions to its employees. This 
category of benefits, OPEBs, typically consists of health and dental 
care benefits and life insurance.
    On May 4, 1992, the Bureau released Responsible Accounting Officer 
Letter No. 20 (RAO 20) (7 FCC Rcd 2872) to provide carriers with 
accounting and ratemaking instructions for OPEBs in a manner consistent 
with SFAS-106. RAO 20 directed the LECs to exclude accrued OPEB 
liabilities recorded in USOA Account 4310 from their interstate rate 
base and to include prepaid OPEB benefits recorded in USOA Account 1410 
in their interstate rate base.
    After the Bureau required AT&T and the LECs to conform their 
regulatory accounting practices to SFAS-106, several LECs subject to 
price cap regulation filed tariff transmittals in 1992 that sought 
exogenous treatment for the change in OPEB costs. The Bureau suspended 
the 1992 transmittals for five months and set them for investigation. 
(See 7 FCC Rcd 2724 (1992)) The Bureau made all price cap regulated 
LECs subject to this investigation. On January 22, 1993, in its OPEB 
Order (8 FCC Rcd 1024 (1993)), the Commission terminated the 
investigation and denied the LECs' requests for exogenous treatment of 
OPEBs.
    On July 12, 1994, the U.S. Court of Appeals for District of 
Columbia Circuit reversed and remanded the OPEB Order, concluding that 
changes in LEC OPEB costs caused by the implementation of SFAS-106 were 
eligible for exogenous treatment under the Commission's then existing 
rules. (See Southwestern Bell Telephone Company v. FCC, 28 F.3d 165 
(D.C. Cir. 1994)). Because the carriers had withdrawn the tariffs that 
were the subject of the OPEB Order, and no tariffs remained pending in 
the remanded CC Docket No. 92-101, the Commission vacated the OPEB 
Order and terminated the CC Docket No. 92-101 proceeding. (See 10 FCC 
Rcd 11821 (1995)). The SFAS-106 created two categories of OPEB 
expenses, ``ongoing amounts'' and the ``transitional benefit 
obligation'' (TBO). The ``ongoing amount'' represents the yearly 
expense that a firm recognizes as its current employees earn benefits 
that will be paid after they retire. SFAS-106 also requires companies 
to recognize on their financial records the amount of their unfunded 
obligation for OPEBs to

[[Page 11552]]

retirees and to active employees existing as of the date of their 
implementation of SFAS-106. This unfunded obligation, referred to as 
the TBO, reflects the amount that a company would have accrued on its 
books as of the effective date of the accounting change if it had been 
operating under the accrual method.
    In the 1993 annual access tariff filings, several LECs included 
adjustments to their price cap indices and rates based on exogenous 
treatment of certain TBO amounts. Effective July 1, 1993, AT&T also 
revised its price cap indices to reflect the LECs' proposed changes in 
access prices and to include adjustments for exogenous treatment of its 
own TBO amounts. The Commission suspended both the LECs' and AT&T's 
transmittals for one day and imposed an accounting order. In addition, 
in 1994, the Bell Atlantic Telephone Companies and NYNEX Telephone 
Companies filed tariff revisions that sought exogenous treatment of 
SFAS-106 amounts that they had not previously claimed. (See 10 FCC Rcd 
1594 (1994)). The Bureau suspended these tariffs for one day, imposed 
an accounting order, and initiated an investigation. On June 30, 1995, 
the Bureau consolidated these pending investigations of exogenous 
claims (in CC Docket No. 93-193 and CC Docket No. 94-157) into a single 
proceeding, designating CC Docket No. 94-157 as the docket number for 
this investigation. (See Combined OPEB Investigations Order, 10 FCC Rcd 
11804 (1995)).
    On March 7, 1996, the Commission rescinded the portion of RAO 20 
that addressed the rate base treatment of OPEB related costs. (See RAO 
Rescission Order, 11 FCC Rcd 2957 (1996)) The Commission found that RAO 
20 exceeded the Bureau's delegated authority under 47 CFR 32.17 to the 
extent that it directed exclusions from, and additions to, a LEC's 
interstate rate base that are not specifically authorized by Part 65 of 
the Commission's rules. The Commission specifically emphasized that its 
decision to order such rescission was based on procedural grounds and 
not on the substantive merits of the ratemaking practices at issue. In 
response to the RAO Rescission Order, the LECs proposed to increase 
their price cap indices (PCIs) for the 1996-1997 tariff period by 
adjusting their rate base treatment of OPEBs for certain prior years, 
resulting in reduced sharing obligations for those periods. (See 11 FCC 
Rcd at 7568) Thus, in filing their 1996 annual access tariffs, 
Ameritech, Bell Atlantic, BellSouth, Nevada Bell, Pacific Bell, 
Southwestern Bell, U S West, Lincoln Telephone, GTE, and Sprint LTCs 
amended their Price Cap Regulation Rate of Return Monitoring Report 
(FCC Form 492A) to include accrued OPEB costs in their interstate rate 
bases. The inclusion of accrued OPEB costs increased the LECs' 
interstate rate bases, thereby lowering the reported rates of return 
and decreasing their calculated price cap sharing obligations. Reduced 
sharing obligations resulted in higher PCIs. In a June 24, 1996 order, 
the Bureau found that ``the LECs'' rate base treatment of OPEBs raises 
a substantial question of lawfulness under existing rules that warrants 
investigation. (See 1996 Tariff Order, 11 FCC Rcd 7573). Accordingly, 
the Bureau suspended the LEC tariffs, imposed an accounting order, and 
initiated an investigation.
    After a period of inactivity in CC Docket No. 94-157, on December 
21, 2001, the Commission adopted an order that terminated stale or moot 
docketed proceedings, including the combined OPEB investigation in CC 
Docket No. 94-157. (See Termination Order, 67 FR 3617, Jan. 25, 2002). 
The Bureau finds that at least one issue, issue B in the Combined OPEB 
Investigations Order (i.e., whether LECs may treat as exogenous the 
SFAS-106 costs they incurred prior to January 1, 1993, the Commission's 
date for mandatory compliance) remains in dispute. The issues regarding 
rate base treatment of OPEBs discussed in the 1996 Tariff Order also 
remain unresolved. Because these issues remain unresolved, the Bureau 
concludes that the inclusion of CC Docket 94-157 in the appendix of the 
Termination Order was an inadvertent technical error, and the 
Commission never intended to terminate the OPEB tariff investigation in 
this docket. Accordingly, the Bureau reinstates the investigation in CC 
Docket No. 94-157 to address the issue B in the Combined OPEB 
Investigations Order, as well as OPEB-related issues discussed in the 
1996 Tariff Order. Because the record may be stale, the Bureau seeks to 
refresh the record. Considering that some of the parties subject to 
this investigation have merged, the Bureau notes that the old record 
may not accurately reflect the successor parties' current positions. In 
addition, the Bureau wants to give interested parties the opportunity 
to provide new evidence, as appropriate, in light of the time that has 
passed. Accordingly, parties should state in full their arguments on 
these issues, rather than merely incorporating by reference arguments 
stated in their earlier filings in this once terminated docket. Parties 
should also identify clearly the portions of their previous filings 
that are no longer relevant, as well as those that remain relevant, and 
why.
    With respect to issue B, the Bureau directs Verizon Communications 
to submit its direct case and studies upon which it relies to 
demonstrate that OPEB-related costs incurred prior to January 1, 1993 
are eligible for exogenous treatment. Verizon should state in full its 
arguments, rather than merely incorporating by reference arguments 
stated in Bell Atlantic's earlier filings. Parties should also identify 
clearly the portions of their previous filings that are no longer 
relevant, as well as those that remain relevant, and why.
    With respect to issues regarding rate base treatment of OPEBs 
discussed in the 1996 Tariff Order, interested parties may file 
comments in response to this Order, Notice, and Erratum to refresh the 
record. Parties should also identify clearly the portions of their 
previous filings that are no longer relevant, as well as those that 
remain relevant, and why. The Bureau notes that the specific issues 
that will be the subject of the investigation will be identified in a 
future designation order. The Bureau may also identify issues in that 
order that do not warrant further investigation.
    Finally, with respect to other OPEB issues under investigation in 
CC Docket No. 94-157, CC Docket No. 94-65, and CC Docket No. 93-193, 
the Bureau requests that parties with interest in such issues (whether 
or not described above) inform the Bureau of any issue that remains 
open. If no timely comments are received in response to this order, the 
OPEB investigation in CC Docket No. 94-65 and CC Docket No. 93-193 will 
be terminated without further action. Additionally, absent timely 
comments in response to this order, any further action in Docket No. 
94-157 will be limited to the two specific issues: (1) The issue B in 
the Combined OPEB Investigations Order (10 FCC Rcd 11804 (1995)) 
(whether LECs may treat as exogenous the SFAS-106 costs they incurred 
prior to January 1, 1993); (2) the issues regarding rate base treatment 
of OPEBs discussed in the 1996 Tariff Order (11 FCC Rcd 7564 (1996)). 
Finally the Bureau seeks to refresh the record on issues regarding rate 
base treatment of OPEBs discussed in the 1996 Tariff Order.

Filing Dates

    This Order, Notice, and Erratum combines all OPEB investigations 
into one investigation and this investigation is designated CC Docket 
No. 94-157.

[[Page 11553]]

    Verizon shall file its direct case on issue B, designated in the 
Combined OPEB Investigations Order by April 11, 2003. Pleadings 
responding to the direct case must be captioned ``Opposition to Direct 
Case'' or ``Comments on Direct Case'' and may be filed by May 12, 2003. 
Verizon may file a ``rebuttal'' to oppositions by May 27, 2003.
    Interested parties may file comments on other OPEB issues including 
issues regarding rate base treatment of OPEBs discussed in the 1996 
Tariff Order, no later than April 8, 2003. Reply comments are due no 
later than April 22, 2003.

Additional Filing Information

    An original and four copies of all pleadings shall be filed with 
the Secretary of the Federal Communications Commission. In addition, 
parties shall serve with three copies: Pricing Policy Division, 
Wireline Competition Bureau, 445 12th Street, SW., Room 5A-333, 
Washington, DC 20554. Parties shall also serve with one copy: Qualex 
International, Portals II, 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554, (202) 863-2893. Members of the general public who 
wish to express their views in an informal manner regarding the issues 
in this Order, Notice, and Erratum may do so by submitting one copy of 
their comments to the Office of the Secretary, FCC, 445 12th Street, 
SW., Room TW-A325, Washington, DC 20554. Such comments should specify 
the docket number of this proceeding, CC Docket No. 94-157. Parties are 
also strongly encouraged to submit their pleadings via the Internet 
through the Electronic Comment Filing System at <http://www.fcc.gov/e-file/ecfs.html. Generally, only one copy of an electronic 
submission must be filed. In completing the transmittal screen, 
commenters should include their full name, Postal Service mailing 
address, and the applicable docket number, which in this instance is CC 
Docket No. 94-157. Parties may also submit an electronic comment via 
Internet e-mail. To get filing instructions for e-mail comments, 
commenters should send an e-mail to <[email protected], and 
should include the following words in the body of the message: ``get 
form .'' A sample form and directions 
will be sent in reply.
    Interested parties who wish to file comments via hand-delivery are 
also notified that, the FCC will only receive such deliveries weekdays 
from 8 a.m. to 7 p.m., via its contractor, Vistronix, Inc., located at 
236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The FCC 
no longer accepts these filings at 9300 East Hampton Drive, Capitol 
Heights, MD 20743. Please note that all hand deliveries must be held 
together with rubber bands or fasteners, and envelopes must be disposed 
of before entering the building. In addition, this is a reminder that 
the FCC no longer accepts hand-delivered or messenger-delivered filings 
at its headquarters at 445 12th Street, SW., Washington, DC 20554. 
Messenger-delivered documents (e.g., FedEx), including documents sent 
by overnight mail (other than United States Postal Service (USPS) 
Express and Priority Mail), must be addressed to 9300 East Hampton 
Drive, Capitol Heights, MD 20743. This location is open weekdays from 8 
a.m. to 5:30 p.m. USPS First-Class, Express, and Priority Mail should 
be addressed to the Commission's headquarters at 445 12th Street, SW., 
Washington, DC 20554.

Federal Communications Commission.
William F. Maher, Jr.,
Chief, Wireline Competition Bureau.
[FR Doc. 03-5651 Filed 3-10-03; 8:45 am]
BILLING CODE 6712-01-P