Federal Communications Commission.
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.
Comments are due on or before April 8, 2003; Reply comments are due on or before April 22, 2003.
Federal Communications Commission, 445 12th Street, SW., Washington, DC 20554. See Supplementary Information for filing instructions.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Josh Swift, Pricing Policy Division, Wireline Competition Bureau, FCC (202) 418-2019.End Further Info End Preamble Start Supplemental 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 Start Printed Page 11552retirees 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.
This Order, Notice, and Erratum combines all OPEB investigations into one investigation and this investigation is designated CC Docket No. 94-157. Start Printed 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 <firstname.lastname@example.org>, and should include the following words in the body of the message: “get form <your e-mail address>.” 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.Start Signature
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