[Federal Register Volume 68, Number 151 (Wednesday, August 6, 2003)]
[Rules and Regulations]
[Pages 46500-46502]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-20052]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 69

[CC Docket No. 01-174; FCC 03-151]


2000 Biennial Review--Requirement Governing the NECA Board of 
Directors

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission modifies the requirements 
governing how the National Exchange Carrier Association (NECA) conducts 
elections for its board of directors (Board). The Commission eliminates 
the requirement that NECA hold annual elections and that Board members 
serve one-year terms. The Commission also liberalizes its rules 
regarding contested elections for NECA's non-telecommunications 
industry directors (Outside Directors).

DATES: Effective September 5, 2003.

FOR FURTHER INFORMATION CONTACT: Cara Voth, Attorney, 
Telecommunications Access Policy Division, Wireline Competition Bureau, 
(202) 418-7400.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order in CC Docket No. 01-174, FCC 03-151 released on July 3, 2003. 
The full text of this document is available for public inspection 
during regular business hours in the FCC Reference Center, Room CY-
A257, 445 Twelfth Street SW., Washington, DC, 20554.

I. Introduction

    1. In this Report and Order, as part of our biennial regulatory 
review under section 11 of the Communications Act of 1934, as amended 
(the Act), we modify the requirements governing how the National 
Exchange Carrier Association (NECA) conducts elections for its board of 
directors (Board). We eliminate the requirement that NECA hold annual 
elections and that Board members serve one-year terms. We also 
liberalize our rules regarding contested elections for NECA's non-
telecommunications industry directors (Outside Directors). Under the 
liberalized rules, no Outside Director may serve for more than six 
consecutive calendar years without standing for an election in which 
that director is opposed by at least one other qualified candidate. By 
modifying our election requirements for the Board, we reduce the 
regulatory burdens that the current election requirements impose on 
NECA, while furthering our goal of ensuring that NECA fulfills certain 
Commission-specified functions.

II. Discussion

    2. We find that the current election process imposes several 
unnecessary administrative burdens on NECA and therefore we eliminate 
certain election requirements for NECA's Board. We also find, however, 
that because NECA continues to perform certain functions pursuant to 
Commission rules, we have a continuing interest in ensuring that NECA 
fulfills its obligations. In retaining certain requirements, we seek

[[Page 46501]]

to ensure that NECA, as overseen by its Board, continues to comply with 
the Commission's rules. We find that the modifications to the Board 
requirements allow us to achieve our goals, yet impose minimal burdens 
on NECA.
    3. We retain the current composition of NECA's Board positions, 
which consists of five Outside Directors, two directors representing 
Subset I, two directors representing Subset II, and six directors 
representing Subset III. NECA is a unique organization that performs 
several functions pursuant to the Commission's rules, including the 
administration of the common line and traffic sensitive access tariff 
pools. The access rates established by these pools have a direct impact 
on interstate telephone rates and pursuant to section 201 of the Act, 
interstate telephone rates must be just and reasonable. We believe that 
a Board that consists of directors representing all classes of carriers 
helps to ensure that NECA prepares accurate and reasonable tariffs, 
which in turn helps to further the Commission's implementation of the 
statutory requirement that rates be just and reasonable.
    4. Although we retain our rules regarding the composition of the 
Board, we find that it is appropriate to eliminate our rule that 
requires that NECA elect its directors annually for one-year terms. As 
NECA notes, Delaware General Corporation Law (DGCL) does not require 
non-stock corporations like NECA to hold annual elections. We find it 
is no longer in the public interest to retain such requirements in our 
rules because we accept NECA's claim that the election requirements are 
overly burdensome without a concomitant benefit. Our primary policy 
goal is to ensure that NECA, as overseen by its Board, fulfills its 
Commission-specified functions. In this regard, we believe that the 
composition of the Board positions, and not how often elections are 
held or the terms of the directors, best achieves this goal. We find 
that the presence on the Board of five Outside Directors is 
particularly important to achieving our goals, including providing 
effective governance of NECA consistent with our rules. As described in 
more detail, we amend the contested election requirement for Outside 
Directors to provide NECA greater flexibility in how it elects these 
Outside Directors. With regard to the Board generally, we conclude that 
safeguards exist to ensure that NECA will adopt an appropriate election 
process, even absent specific Commission direction, because NECA must 
continue to comply with all applicable DGCL rules and regulations.
    5. We believe that it is in the public interest, as NECA proposes, 
to modify the contested election rules so that instead of every three 
years as the current rules require, Outside Directors may not serve for 
more than six consecutive calendar years without standing for an 
election in which that director is opposed by at least one other 
qualified candidate. The Commission instituted contested elections for 
Outside Directors to ``assure NECA's members an opportunity to choose 
among a range of candidates for each outside director position.'' Also, 
the overarching goal of the NECA Board Order, 60 FR 19528, April 19, 
1995, was to add Outside Directors to NECA's Board to bring independent 
perspectives to NECA's deliberations and ensure that NECA complies with 
the Commission rules. While our goals remain the same, we recognize the 
burdens associated with contested elections, and believe that this rule 
can be liberalized without impairing our achievement of those 
fundamental goals. We believe it appropriate to amend our rules so that 
contested elections for Outside Directors will occur at least every six 
years. We note that, although we are relaxing the contested election 
requirement for Outside Directors, this will not preclude contested 
elections from taking place more frequently than every six years. If it 
so chooses, NECA may allow independent parties to challenge an 
incumbent Outside Director's seat whenever that seat is subject to an 
election.
    6. The rule amendments adopted herein will be effective thirty days 
after publication in the Federal Register. We also direct NECA to 
revise its by-laws and articles of incorporation as required by 
Delaware state law and in accordance with this order, and to submit its 
revised by-laws to the Commission as soon as practicable. Finally, we 
note that NECA lists its current Board of directors on its Internet 
website. We strongly encourage NECA to continue to post this listing 
and revise it each time there is a change to the Board.

III. Procedural Issues

    7. Final Regulatory Flexibility Certification. The Regulatory 
Flexibility Act of 1980, as amended, (RFA), requires that a regulatory 
flexibility analysis be prepared for notice and comment rule making 
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 ``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 which: (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).
    8. In this Report and Order, we amend certain of our rules 
pertaining to the National Exchange Carrier Association (NECA), which 
operates pooling mechanisms to collect and distribute revenues among 
its participating carriers. In particular, we eliminate the requirement 
that NECA hold annual elections and the requirement that NECA's board 
of directors serve one-year terms. We also modify the rule requiring 
NECA to hold contested elections for its non-telecommunications 
industry directors (Outside Directors) at least every three years. 
Under the modified rule, Outside Directors may not serve more than six 
consecutive calendar years without standing for a contested election. 
In the Initial Regulatory Flexibility Certification in the Notice, we 
stated that the proposed rules, if adopted, would not have a 
significant economic impact on a substantial number of small entities. 
No comments were received concerning that initial certification.
    9. We conclude that this regulatory flexibility certification is 
appropriate for the amended rules adopted herein. NECA is a non-profit 
association created to administer the Commission's interstate access 
tariff and revenue distribution processes. Because the proposed rule 
amendments affect only NECA directly, we find that the amendments will 
not affect a substantial number of small entities. In addition, any 
economic effect that might result is positive (de-regulatory) and not 
significant. Therefore, we certify that the amended rules adopted in 
this Report and Order will not have a significant economic impact on a 
substantial number of small entities. 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 it will be published in the Federal Register.

IV. Ordering Clauses

    10. Pursuant to the authority contained in sections 1, 4(i), 11, 
201-

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205, 218-220, and 403 of the Communications Act of 1934, as amended, 47 
U.S.C. 151, 154(i), 161, 201-205, 218-220, and 403, and 5 U.S.C. 
553(d), that part 69 of the Commission's rules, is amended, and is 
effective September 5, 2003.
    11. The National Exchange Carrier Association's Petition for 
Waiver, filed January 31, 2003, is dismissed without prejudice.
    12. The Commission's Consumer Information 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.

List of Subjects in 47 CFR Part 69

    Communications common carriers, Reporting and recordkeeping 
requirements, Telephone.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Final Rules

0
For the reasons discussed in the preamble, the Federal Communications 
Commission amends 47 CFR part 69 as follows:

PART 69--ACCESS CHARGES

0
1. The authority citation for part 69 continues to read as follows:

    Authority: 47 U.S.C. 154, 201, 202, 203, 205, 218, 220, 254, 
403.


0
2. Section 69.602 is amended by revising paragraphs (c), (e), and (f), 
and by removing paragraph (i) to read as follows:


Sec.  69.602  Board of directors.

* * * * *
    (c) Two directors shall represent the first subset, two directors 
shall represent the second subset, six directors shall represent the 
third subset, and five directors shall represent all three subsets.
* * * * *
    (e) Each subset of the association membership shall select the 
directors who will represent it through elections in which each member 
of the subset shall be entitled to one vote for each director position 
within that subset.
    (f) The association membership shall select the directors who will 
represent all three subsets through an election in which each member of 
the association shall be entitled to one vote for each director 
position. No director representing all three subsets may serve for more 
than six consecutive calendar years without standing for an election in 
which that director is opposed by at least one other candidate meeting 
the qualifications in paragraph (d) of this section.
* * * * *

[FR Doc. 03-20052 Filed 8-5-03; 8:45 am]
BILLING CODE 6712-01-P