Rules and Regulations. Final rule; notice of stay
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/register/2007/11/23/07-5802·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
BILLING CODE 4910-13-P COMMODITY FUTURES TRADING COMMISSION 17 CFR Part 38 RIN 3038-AC28 Conflicts of Interest in Self-Regulation and Self-Regulatory Organizations AGENCY: Commodity Futures Trading Commission (“Commission”) ACTION: Final rule; notice of stay. SUMMARY: On January 31, 2007, the Commission adopted Acceptable Practices for Section 5(d)(15) (“Core Principle 15”) of the Commodity Exchange Act. The new Acceptable Practices were published in the **Federal Register** on February 14, 2007, and became effective on March 16, 2007.
On March 26, 2007, the Commission published certain proposed amendments to the Acceptable Practices in an effort to clarify the definition of “public director” contained therein. 1 The Commission has yet to act upon the proposed amendments, which are central to every element of the Acceptable Practices. Accordingly, the Commission hereby notifies all designated contract markets (“DCMs”) that, until further notice, the Acceptable Practices contained in paragraph
(b)of Core Principle 15 in Appendix B to 17 CFR part 38 are stayed indefinitely. 1 Under the Acceptable Practices, the definition of “public director” is also relevant to members of DCM regulatory oversight committees (all of whom must be public directors) and to members of DCM disciplinary panels (panelists need not be directors, but must include at least one member who meets certain elements of the definition of public director). DATES: Effective November 23, 2007, paragraph
(b)of Core Principle 15 in Appendix B to 17 CFR part 38 is stayed indefinitely. The Commission will publish a new **Federal Register** document lifting the stay on a future date. FOR FURTHER INFORMATION CONTACT: Rachel F. Berdansky, Acting Deputy Director for Market Compliance, 202-418-5429, or Sebastian Pujol Schott, Special Counsel, 202-418-5641, Division of Market Oversight, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, Washington, DC 20581. SUPPLEMENTARY INFORMATION: On January 31, 2007 the Commission adopted its first Acceptable Practices for Core Principle 15. The Acceptable Practices are structured in four parts, including three operational provisions. The operational provisions include:
(1)DCM boards of directors composed of at least 35% public directors;
(2)board-level regulatory oversight committees (“ROC”) consisting exclusively of public directors; and
(3)disciplinary panels including at least one public person. The Acceptable Practices also include an important fourth provision which defines “public director” and also impacts ROC members and disciplinary panel members. All three operational provisions of the Acceptable Practices are dependent upon the definition of public director. The Acceptable Practices were published in the **Federal Register** on February 14, 2007, with an effective date of March 16, 2007. The Commission stated at that time that it would survey all DCMs within six months to evaluate their plans for compliance with Core Principle 15. The Commission further stated that all DCMs would be granted the lesser of two years or two regularly scheduled board elections to fully implement the new Acceptable Practices or otherwise demonstrate full compliance with Core Principle 15. On March 26, 2007, the Commission published proposed amendments to the definition of DCM “public director,” which, as noted above, also impacts ROC and disciplinary panel members. The comment period for the proposed amendments ended on April 25, 2007. Six comment letters were received, including letters from the National Futures Association; the Futures Industry Association; the CBOE Futures Exchange; the Chicago Board of Trade; the Chicago Mercantile Exchange and Kansas City Board of Trade writing jointly; and Mr. Dennis Gartman. The comments received were studied carefully and are under advisement by the Commission. However, the Commission has yet to take final action on the proposed amendments. Until such time as the definition of “public director” is finalized, the operational provisions of the Acceptable Practices, which are dependent on the definition, cannot be properly applied by DCMs or enforced by the Commission. Recognizing this fact, and in order to carefully consider its next steps, the Commission has determined to stay the Acceptable Practices for Core Principle 15 adopted on January 31, 2007. Accordingly, the two-year compliance period is also stayed. Related Matters A. Cost-Benefit Analysis Section 15(a) of the Act requires the Commission to consider the costs and benefits of its actions in advance of issuing any new regulation or order. 2 More specifically, Section 15(a) states that the costs and benefits of a proposed rule or order shall be evaluated with regard to five broad areas of market and public concern:
(1)Protection of market participants and the public;
(2)efficiency, competitiveness, and financial integrity of futures markets;
(3)price discovery;
(4)sound risk management practices; and
(5)other public interest considerations. In conducting its analysis, the Commission may give greater weight to any one of the five enumerated areas of market and public concern and determine, notwithstanding potential costs, that the implementation of a particular rule or order is necessary or appropriate to protect the public's interest or to effectuate or accomplish any of the provisions or purposes of the Act. 3 2 7 U.S.C. 19(a). 3 *Fishermen's Dock Co-op., Inc.* v. *Brown* , 75 F.3d 164 (4th Cir. 1996); *Center for Auto Safety* v. *Peck* , 751 F.2d 1336 (D.C. Cir. 1985) (agency has discretion to weigh factors in undertaking costs-benefits analyses). On February 14, 2007, the Commission published its first Acceptable Practices for Core Principle 15. The four-part Acceptable Practices, described above, were designed to facilitate the reduction of conflicts of interest in DCMs' decision making processes. 4 Although the Acceptable Practices became effective on March 16, 2007, the Commission established a phase-in period for DCMs to implement the Acceptable Practices or to otherwise come into full compliance with Core Principle 15. The phase-in period extended well beyond the date of effectiveness and consisted of the lesser of two years or two regularly scheduled board elections. 4 72 FR 6936 (February 14, 2007). On March 26, 2007, the Commission published proposed amendments to one element of the new Acceptable Practices—the definition of “public director.” To date, the Commission has yet to act upon the proposed amendments. The Commission recognizes that the operational provisions of Acceptable Practices cannot be properly applied by DCMs until the definition of “public director” is resolved. Accordingly, the Commission has determined, for the purpose of regulatory clarity, to stay the Acceptable Practices for Core Principle 15 and thereby lift any potential compliance costs associated with those Acceptable Practices. B. Paperwork Reduction Act of 1995 The stay of the effective date of the Acceptable Practices for Core Principle 15 reduces the information collection burden to levels previously approved by the Office of Management and Budget (OMB). The OMB control number for this collection is 3038-0052. The Commission has submitted the required Paperwork Reduction Act Change Worksheet (OMB-83C) to OMB to reflect the change. C. Regulatory Flexibility Act The Regulatory Flexibility Act, 5 U.S.C. 601 *et seq.* , requires federal agencies, in promulgating rules, to consider the impact of those rules on small entities. The stay of the effective date for the Acceptable Practices for Core Principle 15 affects DCMs. The Commission has previously determined that DCMs are not small entities for purposes of the Regulatory Flexibility Act. 5 Accordingly, the acting Chairman, on behalf of the Commission, hereby certifies pursuant to 5 U.S.C. 605(b) that the stay of the Acceptable Practices will not have a significant economic impact on a substantial number of small entities. 5 *See* Policy Statement and Establishment of Definitions of “Small Entities” for Purposes of the Regulatory Flexibility Act, 47 FR 18618, 18619 (Apr. 30, 1982). Therefore, paragraph
(b)of Core Principle 15 in Appendix B to 17 CFR part 38 is stayed indefinitely. Issued in Washington, DC, on November 16, 2007, by the Commission. David Stawick, Secretary of the Commission. [FR Doc. E7-22878 Filed 11-21-07; 8:45 am] BILLING CODE 6351-01-P DEPARTMENT OF ENERGY Federal Energy Regulatory Commission 18 CFR Parts 375 and 385 [Docket No. RM07-16-000; Order No. 703] Filing Via the Internet Issued November 15, 2007. AGENCY: Federal Energy Regulatory Commission, DOE. ACTION: Final rule. SUMMARY: The Commission is revising its regulations to provide that all documents will be eligible for filing by means of the Commission's eFiling system, with exceptions to be posted by the Secretary of the Commission on the Commissions Web site. DATES: *Effective Date:* This rule will become effective December 24, 2007. Changes made by this rule to the Commission's eFiling system will be implemented at a later date, to be announced by the Secretary of the Commission. FOR FURTHER INFORMATION CONTACT: Wilbur Miller, Office of General Counsel, 888 First Street, NE., Washington, DC 20426,
(202)502-8953. *wilbur.miller@ferc.gov.* SUPPLEMENTARY INFORMATION: Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G. Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff. I. Background 1. On July 23, 2007, the Commission issued a Notice of Proposed Rulemaking
(NOPR)seeking comments on proposed revisions to its regulations that will enable the implementation of the next version of its system for filing documents via the Internet, eFiling 7.0. *Filing Via the Internet* , 72 FR 42330 (July 23, 2007), FERC Stats. & Regs. ¶ 32,621 (2007). The NOPR proposed to allow the option of filing all documents in Commission proceedings through the eFiling interface except for specified exceptions. The NOPR also sought comments on the possibility of shifting its deadline for filings through the eFiling system from close of business to midnight, and of utilizing online forms to allow “documentless” interventions in all filings and quick comments in P (Hydropower Project), PF (Pre-Filing NEPA activities for proposed gas pipelines), and CP (Certificates for Interstate Natural Gas Pipelines) proceedings. Finally, the NOPR asked for input on a number of technical issues that will be covered in the instructions for eFiling that will be issued by the Secretary of the Commission. These issues also were the subject of a technical conference that took place on August 22, 2007. 2. This Final Rule adopts the NOPR's proposal to amend the Commission's regulations 1 to provide that all documents filed with the Commission may be submitted through the eFiling interface except for documents specified by the Secretary. This reverses the existing presumption, as the current regulations allow eFiling only of documents specified by the Secretary. The changes we are implementing in this Final Rule mean that categories such as oversized documents and most confidential documents will be accepted via eFiling. At this time, the principal exceptions, as noted in the NOPR, will be tariffs, tariff revisions and rate change applications; some forms; 2 and documents that are subject to protective orders. As stated in the NOPR, for the time being, the Secretary's instructions will specify that submitters file paper copies of oversized and some other documents 3 in addition to the electronic documents. 1 Rule 2003(c) of the Commission's Rules of Practice and Procedure, 18 CFR 385.2003(c). 2 The following will continue to be submitted through eForms: FERC Form No.1, FERC Form No. 2, FERC Form No. 2-A, FERC Form No. 3-Q, FERC Form No. 6, FERC Form No. 6-Q, Form 60, Form 714, and Electric Quarterly Reports. FERC Form 1-F is currently not included in eForms, so it may be efiled. Open Access Transmission Tariff
(OATT)filings may also be efiled. 3 A list of examples of documents for which the Commission will require paper copies is contained in the Appendix to the NOPR. 3. This rulemaking will become effective 30 days after publication in the **Federal Register** , but implementation of eFiling 7.0 will occur at a later date. The Secretary will announce the implementation of the upgrade in advance and will also at that time post filing instructions, as discussed below. 4. This Final Rule implements the proposals, discussed in the NOPR, to institute online forms that would permit optional “documentless” intervention in all proceedings and “quick comments” in P (Hydropower Project), PF (Pre-Filing NEPA activities for proposed gas pipelines), and CP (Certificates for Interstate Natural Gas Pipelines) proceedings. It should be noted that the quick comment and documentless intervention features will not require revisions to the Commission's regulations. We are not at this time implementing the proposal to move the filing deadline to midnight. 5. Prior to the release of eFiling 7.0, the Secretary will issue instructions specifying formats and other technical parameters, as well as instances in which paper copies will be required. As noted in the NOPR, the Commission has already issued instructions specifying acceptable file formats for filings submitted on CD-ROM, DVD and other electronic media. These can be found at *http://www.ferc.gov/help/submission-guide/electronic-media.asp* . In addition, in some cases Commission staff has issued instructions applying to specific types of filings. Where there are no specifications for a particular type of filing, users must follow the Secretary's instructions. The Commission received useful input on formatting issues both in the comments on the NOPR and in the technical conference. Users of eFiling should bear in mind that changes will inevitably take place as staff implements improvements and technology changes. Staff also receives feedback from users on an informal basis, which it uses to continue improving the system. 6. At this time, the eFiling system will accept documents in their native formats. This will include both text or word processing documents, and other more specialized documents such as spreadsheets and maps. It will also accept text documents in searchable formats, including scanned documents that have been saved in searchable form. As noted above, the Secretary has issued a list of acceptable formats for CD-ROM, DVD and other electronic media, available at *http://www.ferc.gov/help/submission-guide/electronic-media.asp* . This same list will serve as the list of acceptable formats for eFiling 7.0. Submitters will be able to choose a suitable format from that list unless they are instructed otherwise in specific instances by regulation or by direction from Commission staff. Audio and video files will be accepted only in waveform audio format (.wav) for audio content and either audio-video interleave (.avi) or quicktime (.mov) files for video content, except where submitters are specifically instructed otherwise. 7. The NOPR requested comments on the possibility of discontinuing the practice of posting PDF versions of filings in eLibrary that are created by Commission staff. For the time being, we will continue this practice. As discussed in the NOPR, however, users should note that PDF conversions are not always accurate or complete and should not be considered authoritative. Some documents are not susceptible to conversion at all. The PDF versions will be provided on a “best efforts” basis, so in some cases no PDF version may appear in eLibrary, or there may only be a placeholder file indicating that a PDF version could not be generated. 8. Finally, the NOPR requested comments on whether the Secretary should require documents created electronically by the filer using word processing software be filed in native applications or print-to-PDF format rather than an unsearchable, scanned format. The Secretary's instructions will adopt this proposal. Scanned, non-searchable formats may be used only for documents that cannot, as a practical matter, be put into searchable formats. II. Discussion A. Expansion of eFiling 9. As stated above, upon implementation of eFiling 7.0 the Commission will accept the electronic filing of all documents through the eFiling interface except for tariff filings, some forms 4 and documents submitted under protective orders. The comments received by the Commission on the expansion of eFiling were uniformly favorable. Some commenters urged us to continue to expand the range of submissions acceptable through eFiling. In some cases, commenters 5 urged us to accept tariff filings through the eFiling gateway, either on a permanent basis or on a temporary basis pending the institution of eTariff, which is the subject of a separate proceeding. 6 4 *See* Note 2 *infra* . 5 Edison Electric Institute (EEI), pp. 4-6; Arizona Public Service Company (APSC), p. 3; Nevada Power Company & Sierra Pacific Power Company (Nevada/Sierra), p. 3. 6 *Electronic Tariff Filings* , Docket No. RM01-5-000, FERC Stats. and Regs. ¶ 35,551 (2005). 10. We intend, as far as practicable, to continue decreasing our reliance on paper documents and to continue to upgrade eFiling capabilities in furtherance of the Commission's responsibilities under the Government Paperwork Elimination Act. 7 At this time, however, the Commission will not accept tariff filings through the eFiling system. The eTariff rulemaking will remain the forum for addressing the electronic submission of tariff filings with tariff material. However, eFiling may be used to file material in tariff proceedings provided the filing does not contain tariff material. Examples include testimony filed as part of the hearing, Schedules G-1 through G-6, 8 and updated statements such as required by section 154.311 of the Commission's regulations. 9 Also, Natural Gas Act Section 7 certificate filings with *pro forma* tariff sheets may be filed under this version of eFiling 7.0. 10 7 Pub. L. No. 105-277, § 1704, 112 Stat. 2681, 2681-750 (1998). 8 18 CFR 154.313(j)(2) (2007). 9 18 CFR 154.311 (2007). 10 Interstate Natural Gas Association of America (INGAA), Appendix A, pp. 2 and 3, requests clarification of which part of certificate and tariff filings would be filed utilizing eFiling 7.0, and which part would be filed under the eTariff procedures. The eTariff requirements are not complete, thus it is premature to speculate as to what the electronic filing process for filings with tariffs will be. At this time, however, tariff filings cannot be split between electronic and paper filings. No part of a tariff filing will be accepted through eFiling 7.0. 11. Some commenters 11 expressed caution about the submission of confidential documents, including a desire for more detail about that function. There was some concern about the ability to alter a document's security designation after it is filed. 12 Some commenters also requested clarification on the procedures for filing protected documents, 13 including the procedures for documents submitted together with requests for protective orders. 14 11 EEI, pp. 6-7; Enbridge Energy Partners, L.P. and Enbridge, Inc. (Enbridge), pp. 3-5; Midwest Independent Transmission System Operator, Inc. (MISO), pp. 2-3; Southern California Edison Company (SoCal), pp. 2-3; Williston Basin Interstate Pipeline Company (Williston Basin), p. 6. 12 American Rivers, pp. 1-2. 13 INGAA, p. 3; MISO, pp. 2-3; Williston Basin, pp. 6-7. 14 EEI, pp. 6-7. 12. The anticipated procedure for the submission of confidential documents is as follows: When a user accesses the File Upload screen, the user will see tabs for three submission categories: Public, CEII and Privileged. The files uploaded to each of these tabs will automatically receive an accession number and be marked as Public, CEII or Privileged. The entire eFiling session will be secured so the documents during transmission will be encrypted. The following system checks will be performed during the eFiling process: • The file size will be checked to ensure the size is not greater than 50MB. • The file format will be checked to ensure it is a format that FERC can support. The acceptable file format list can be found at the following location: *http://www.ferc.gov/help/submission-guide/electronic-media.asp* . • Files will be checked for viruses. • The file name will be checked to ensure it is less than 60 characters including the period, spaces, and file extension (.doc, .xls, .pps, etc.). If for any reason, the files that have been uploaded fail to pass any one of the checks above, a message will be displayed identifying the issue and the user will not be permitted to proceed with the filing process. 13. It will not be possible for a user, through eFiling, to change the designation of a file as public, privileged, or CEII after submission of the document. This will only be possible *before* submission, in case the user changes her mind or finds a mistake. Any subsequent redesignation request will have to be made by calling FERC Online Support or the eFiling Help Line. Users should continue to follow the Commission's regulations governing submission of confidential documents. 15 If a user needs to submit both a redacted and a privileged form of a document, the latter should be submitted as privileged and the former as public. 15 18 CFR 388.112. 14. In some instances, a document may contain portions that are privileged and other portions that constitute CEII. In such an instance, the CEII portions would be filed as CEII and the privileged portions would be filed separately and designated as privileged. If a portion of a document was both privileged and CEII, it would be filed as privileged because that is the higher security classification. 15. Some parties request the ability to file privileged or CEII material in paper-only format. The Commission notes that this Final Rule only provides filers the option to use eFiling to make filings with the Commission. Filers who do not wish to use eFiling need not do so. To the extent that these commenters are requesting that the Commission permit filers to split their filings into an electronic component and a paper component, the Commission rejects this request. The Commission does not want to assume the responsibility of finding the paper and electronic components of a single filing and reassembling those components for uploading into eLibrary or internal distribution and analysis. Dual format filings create significant potential for errors and delays. 16 16 The Commission notes that filers can make separate, free-standing, paper-only and electronic only filings in the same proceeding. 16. To clarify, materials subject to protective orders should not be eFiled because the Secretary's office does not put protected material into eLibrary, as opposed to material filed pursuant to Section 388.112 of the Commission's regulations. The same restriction applies to confidential materials filed with a request for a protective order. B. Paper Copies 17. The NOPR proposed to continue to require paper copies of filings submitted electronically through eFiling 7.0, for instance, oversized documents such as maps, diagrams and drawings. The NOPR explained that due to the size of standard monitors and other hardware and software limitations, it was impractical at this time for the Commission to review certain documents in electronic form. The NOPR also raised the possibility of requiring paper copies for documents over a certain length, such as 500 pages. Some commenters requested that “oversized documents” or “large documents” be defined as those documents larger than 8.5″ x 11″, 17 8.5″ x 14″, 18 or 8.5″ x 17″. 19 Others asked for further clarifications, such as whether the paper requirement applies only to the oversized portions of documents that also have standard dimensions. 20 Commenters were not in favor of requiring paper copies of long documents. 21 17 Williston Basin, p. 7. 18 Pacific Gas & Electric Company (PG&E), p. 4. 19 INGAA, p. 5. 20 MISO, p. 3. PG&E, p. 3, asked for clarification of the timeframe and dimensions, while INGAA, pp. 4-5, asked that the paper copies be due after an accession number is assigned. SoCal, pp. 3-4, urged that eFiling not be required where paper copies are submitted. This will necessarily be the case, because the Commission is not at this time making eFiling mandatory. 21 INGAA, pp. 5-6; SoCal, p. 3; Nevada/Sierra, p. 5; PG&E, pp. 4-5; Williston Basin, pp. 7-8. 18. The Secretary's instructions will require paper copies in a specified number of documents larger than 11″ × 17″. This is a standard dimension for “oversized” documents. If a document contains both oversized and standard dimensions, only the former need be filed on paper. Paper copies of long documents, *i.e.* , documents longer than a specified number of pages, will not be required. Further specifics will be contained in the instructions to be issued by the Secretary. Over time, as we upgrade our capabilities, we expect to be able to reduce the necessity of filing paper copies. 22 22 *See* comments of Nevada/Sierra, p. 4. 19. In response to the comments about the timing of submission of paper copies, we wish to state clearly the roles played by the paper and electronic copies. The revisions made in this Final Rule, in 18 CFR 385.2003(c)(1), will provide that “filing via the Internet is in lieu of other methods of filing.” Thus, the electronic copy will be the “filed” copy. This will be the copy to which the Commission looks for matters such as determining timeliness. Paper copies will be required in some instances because they are currently necessary for FERC staff to carry out its functions. The Secretary's instructions will specify the time by which the paper copies must be submitted. C. File Formats 20. The NOPR raised the possibility of discontinuing our practice of creating PDF versions of documents in eLibrary. 23 In conjunction with this possibility, the NOPR requested comments on several alternative requirements for file formats of documents submitted through eFiling. The three alternatives noted were: Requiring that all word processing filings be made in open file formats, such as text, html, rtf, or possibly PDF; permitting filings in open file formats as well as in certain Microsoft Office formats; and requiring that documents created with proprietary software be filed in the proprietary software along with an open source format. The NOPR also discussed the possibility of prohibiting the practice of filing non-searchable, scanned versions of documents created in native formats. 23 Some commenters referred to FERC-created Text documents as well as PDF documents. Users should note that FERC creates Text versions only of Commission issuances. It does not create such versions of documents submitted through eFiling. 21. Generally speaking, commenters opposed any requirement that documents be filed in more than one format. 24 Some commenters favored retention of FERC-created PDFs 25 or otherwise expressed a preference for some sort of open file format to maximize accessibility of documents to the public. 26 Preferences between native and converted formats varied. Some commenters favored prohibiting the practice of scanning documents and filing them in non-searchable formats. 27 Some noted that data-oriented documents such as spreadsheets lose much of their utility if not filed in their native formats. 28 Others expressed a preference for filing scanned, non-searchable documents, in PDF format, in some cases out of concern that the documents could be manipulated. 29 24 American Gas Association (AGA), p. 1 (word processing documents); EEI, pp. 7-8; FirstEnergy Companies (FirstEnergy), pp. 6-7; Nevada/Sierra, pp. 6-7; SoCal, p. 4; Williston Basin, pp. 8-9; INGAA, p. 8; Enbridge, pp. 7-8. 25 AGA, pp. 5-6; EEI, pp. 7-9; Bonneville Power Administration (Bonneville), p. 2; PG&E, pp. 5-6; American Rivers, pp. 2-3; U.S. Department of the Interior (Interior), p. 1; INGAA, p. 7; Nevada/Sierra, p. 6. 26 American Rivers, pp. 3-4. 27 AGA, p. 5; American Rivers, p. 4; Nevada/Sierra, p. 7; MISO, p. 4; SoCal, p. 4; EEI, p. 8. 28 American Rivers, pp. 3-4. 29 PJM Interconnection, L.L.C. (PJM), p. 2; MISO, p. 4; Interior, p. 1. 22. Based on the comments received, we will continue to create PDF versions of submitted documents in eLibrary on a “best efforts” basis. This practice assures that users who may lack specific proprietary software will be able to access documents most of the time. As noted above, however, some documents cannot be converted to PDF successfully and thus some conversions will not be entirely accurate or complete. The FERC-created PDFs should not be considered authoritative. Persons submitting documents through eFiling will have the option of filing in any format listed as acceptable by the Secretary. 23. The Secretary's instructions will require PDF files that are submitted to be produced in a manner that retains the ability to search the document (“print-to-PDF”), except in cases where it is impracticable for the filer to do otherwise. This is often the case with exhibits, for example. The search feature provides the Commission and the public access to tools that permit faster searches, increased accuracy, and enhanced analytical and processing capabilities that modern software technology provides. 30 30 The Commission notes that PG&E's PDF posting is an excellent example of such a document: *http://elibrary.ferc.gov/idmws/doc_info.asp?document_id=13543136* . 24. Submission of text documents will be permissible in native or in searchable format. We will not require submission of text documents in both native and open formats. In most cases, submission of text documents in their native formats is the simplest option. Not all users possess the same degree of technical knowledge. Requiring conversion of documents to open formats might serve as a barrier to the use of the eFiling system for some users, a possibility that runs counter to the underlying purpose of the system. 25. Submission of spreadsheets in native format will be required. Some commenters expressed concern that spreadsheets in native format may contain formulas and other data that are confidential. 31 One commenter argues further that formula and data may contain proprietary information, and that a native format requirement may contravene the Interstate Commerce Act prohibition against disclosing individual shipper information. That commenter believes the requirement to provide formulas may lead to less publicly available data. 32 31 MISO, p. 4; PJM Interconnection, p. 3; Enbridge, p. 8. 32 32 Enbridge, p. 8. 26. The Commission addressed these issues before. In Order No. 582, the Commission required pipelines filing rate cases pursuant to Part 154 of the Commission's regulations to file data and allocation and rate design formulas in electronic formats. The Commission found that formulas facilitate an understanding of the applicant's positions and reduce the requirement for subsequent data requests. The Commission went on to note that the requirement was not to submit the whole rate case in spreadsheet format. 33 The same will be true here. The Commission is simply providing a different means by which data requirements may be submitted, not changing the requirements themselves. A filer still may request confidential treatment. In such cases, the data sets and spreadsheets should be submitted in both privileged, unredacted form and in public, redacted form, pursuant to 18 CFR 388.112. 34 Depending on the application and the information being redacted, a redaction might be accomplished by filing a print to PDF or a scanned, searchable document, by converting a spreadsheet to values-only form, or by some other means. It would be up to the filer to choose an appropriate means of protecting its information in requesting confidential treatment under the Commission's regulations. 33 *Filing and Reporting Requirements for Interstate Natural, Gas Company Rate Schedules and Tariffs,* Order No. 582, FERC Stats. and Regs., ¶ 31,025, p. 31,435 (1995). 34 *See* Order No. 582 at pp. 31,412-413, 31,435. 27. We do not agree with the concerns that documents may be altered. There is no reason to believe that users will be able to compromise the Commission's system and alter files in eLibrary. Furthermore, if a user downloads a document from eLibrary and alters it for the user's own purposes, the authoritative document will remain in eLibrary to refute the alteration. We also do not believe that the desire to include a scanned signature is sufficient to outweigh the greater usefulness of searchable documents. As stated in the NOPR, the Commission's regulations provide for electronic signatures, so an image of a signature is not necessary for purposes of verification. For submitters who still see a need for an image of a handwritten signature, we note that it is possible to insert an image into a Word document. Moreover, filers that previously scanned documents into PDF format can produce a print-to-PDF searchable document and attach a single scanned signature page. D. Quick Comment and Documentless Intervention 28. The NOPR's proposal to implement online forms that would allow users to intervene in Commission proceedings without filing separate documents and to submit comments easily in P (Hydropower Project), PF (Pre-Filing NEPA activities for proposed gas pipelines), and CP (Certificates for Interstate Natural Gas Pipelines) proceedings drew support from some commenters 35 and opposition from a smaller number. Some commenters objected to these features as unneeded. 36 Some commenters expressed concern that there should be some provision for prompt service of interventions and comments submitted through the proposed online forms. 37 One commenter requested that users submitting quick comments be required to provide mailing addresses and other information. 38 Another suggested that the quick comment feature be extended to include electric matters and rulemakings. 39 35 AGA, p. 4; American Rivers, pp. 4-5; Enbridge, p. 11; PG&E, pp. 7-8; Spectra Energy Transmission, LLC (Spectra) (quick comment only), p. 3; INGAA, pp. 9-10. 36 FirstEnergy (quick comment only), pp. 3-5; Nevada/Sierra, pp. 7-8; EEI, pp. 14-16. 37 EEI, p. 15; Enbridge, p. 11; SoCal, p. 5. 38 INGAA, p. 10. 39 PG&E, p. 7. 29. Both features are sufficiently useful to justify their implementation. Documentless intervention, which will be available for all proceedings, will provide a simple method of intervening. The filer and text for all documentless interventions will be placed on eLibrary to permit challenges to intervention. We believe that the quick comment feature will make it easier for individuals who are not intimately familiar with Commission procedures to submit comments. This added convenience should primarily impact proceedings in which landowners may wish to comment, which is the reason we will restrict this feature to the proceedings listed in the preceding paragraph. We will consider expanding the availability of the feature in the future. We will not require quick comment submitters to include mailing addresses, a potential invasion of privacy that is not warranted. With respect to service of interventions and comments, these features will not involve changes to the Commission's regulations. Any regulations governing service will continue to apply. Furthermore, the use of eSubscription should suffice to ensure that interested persons receive prompt notice of these submissions. E. Midnight Filing 30. Comments were mixed on whether to regard documents submitted through eFiling as having been filed on a specific day as long as the document is received on or before midnight Eastern Standard Time of that day. While some commenters favored the change, 40 a larger number either favored it only under specified conditions or opposed it altogether. 41 The objections included the personal hardship of late-hour filing, unfairness to paper filers, and the possibility that some filers would use the opportunity to file improper reply comments in response to comments filed earlier in the day. Some commenters suggested that if we moved the deadline, we should ensure that comments would not be visible to the public in eLibrary until the next day. Others were concerned that the eFiling system could be unavailable to a user facing a deadline after it was too late to make a paper filing. We also received suggestions that move the deadline to an intermediate hour, 42 such as 8 p.m. Eastern Time, as an accommodation to users in Western time zones. 40 APSC, p. 3; Bonneville, p. 2; Spectra, p. 4. 41 AGA, pp. 6-8; INGAA, pp. 11-12; FirstEnergy, pp. 2-3; Mill, Balis & O'Neil, P.C., pp. 1-4; Phillip Marston, p. 1; PJM Interconnection, p. 3-4; PJM Transmission Owners, pp. 2-6; Nevada/Sierra, p. 8; MISO, p. 5; Williston Basin, pp. 9-12; Enbridge, pp. 11-13; EEI, pp. 16-17. 42 PJM Transmission Owners, p. 6; SoCal, pp. 5-6. 31. Based on the concerns raised in the comments, we will not at this time alter the filing deadline. It will remain at close of business, i.e., 5 p.m. Eastern Time. F. Miscellaneous Comments 32. On August 22, 2007, the Commission hosted a technical conference that discussed the proposed changes to electronic filing and electronic file and document format instructions that are associated with this proceeding. The conference was conducted in two sessions. Session 1 presented an overview of the electronic filing submission instructions that will apply universally. Session 2 was divided into sections that discussed information that is specific to each industry. 33. We received some comments on various technical aspects of documents submitted through eFiling, many of which were discussed during the technical conference. 43 These comments will be taken into account by Commission staff 44 in developing and revising the filing instructions that the Secretary will issue. The instructions for eFiling are an ongoing process, as staff often receives feedback on the system from users, including comments received informally during outreach efforts that give users an introduction to various aspects of FERC Online. 45 The delegated authority the Commission is giving the Secretary to make changes to the various requirements to make an electronic filing through the notice process will permit these instructions to be updated in a timely manner in response to user needs and changes in FERC's technological capabilities. 46 43 PG&E, pp. 6-7; PJM, p. 3; EEI, pp. 11-14. 44 The Appendix contains the comments on the draft document manual that was discussed at the technical conference, as well as the Commission's responses. 45 One commenter, Enbridge, pp. 10-11, expressed concern about file naming conventions. Users should be aware that naming conventions will change with eFiling 7.0, a change that will be spelled out in the Secretary's instructions. 46 Williston, p. 5. 34. INGAA proposes that the pipeline's Index of Customers report, already an electronic-only filing, be made through eFiling 7.0. 47 The Commission agrees. 47 INGAA, App. A, p. 5. 35. INGAA and PG&E 48 request that the Commission hold additional technical conferences to review both the proposed instructions applicable to electronic documents in general and existing electronic document instructions, and software techniques that may assist filers in creating documents that satisfy the filers' objectives. Further conferences should not be necessary. The Secretary engages in outreach with the public to review new or existing electronic document or submission instructions. This outreach often generates feedback that Commission staff takes into account in managing the system. 48 INGAA, pp. 2-3, App. A, pp. 4-8; PG&E, pp. 6-7. 36. Some commenters made suggestions for improvements in the Commission's online systems. These included requests that we take steps to ensure that each entity in the eRegistration system has only one registration 49 and that we institute an automated service feature for service among participants. 50 The problem of multiple registrations, specifically with entities being registered more than once under slightly different names, is an issue that we hope to address in the future. Similarly, an automated service feature would add value for users and we hope to be able to institute such a feature as we upgrade the system. 49 Enbridge, pp. 6-7. 50 EEI, pp. 10-11. III. Information Collection Statement 37. Office of Management and Budget
(OMB)regulations require OMB to approve certain information collection requirements imposed by agency rule. 51 This Final Rule does not contain any information collection requirements and compliance with the OMB regulations is thus not required. 51 5 CFR 1320.12. IV. Environmental Analysis 38. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment. 52 Issuance of this Final Rule does not represent a major federal action having a significant adverse effect on the quality of the human environment under the Commission's regulations implementing the National Environmental Policy Act. Part 380 of the Commission's regulations lists exemptions to the requirement to draft an Environmental Analysis or Environmental Impact Statement. Included is an exemption for procedural, ministerial or internal administrative actions. 53 This rulemaking is exempt under that provision. 52 Order No. 486, *Regulations Implementing the National Environmental Policy Act* , 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. Preambles 1986-1990 ¶ 30,783 (1987). 53 18 CFR 380.4(1) and (5). V. Regulatory Flexibility Act 39. The Regulatory Flexibility Act of 1980
(RFA)54 generally requires a description and analysis of final rules that will have significant economic impact on a substantial number of small entities. This Final Rule concerns procedural matters and is expected to increase the ease and convenience of filing. The Commission certifies that it will not have a significant economic impact upon participants in Commission proceedings. An analysis under the RFA is not required. 54 5 U.S.C. 601-612. VI. Document Availability 40. In addition to publishing the full text of this document in the **Federal Register** , the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through the Commission's Home Page ( *http://www.ferc.gov* ) and in the Commission's Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426. 41. From the Commission's Home Page on the Internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field. 42. User assistance is available for eLibrary and the Commission's Web site during normal business hours from FERC Online Support at 202-502-6652 (toll free at 1-866-208-3676) or e-mail at *ferconlinesupport@ferc.gov* , or the Public Reference Room at
(202)502-8371, TTY
(202)502-8659. E-mail the Public Reference Room at *public.referenceroom@ferc.gov* . VII. Effective Date and Congressional Notification 43. These revisions are effective December 24, 2007. Changes made by this Final Rule to the Commission's eFiling system will be implemented at a later date to be announced by the Secretary. 44. The provisions of 5 U.S.C. 801 regarding Congressional review of Final Rules do not apply to this Final Rule because the rule concerns agency procedure and practice and will not substantially affect the rights of non-agency parties. List of Subjects 18 CFR Part 375 Authority delegations (Government agencies), Seals and insignia, Sunshine Act. 18 CFR Part 385 Administrative practice and procedure, Electric utilities, Penalties, Pipelines, Reporting and recordkeeping requirements. By direction of the Commission. Kimberly D. Bose, Secretary. In consideration of the foregoing, the Commission amends Parts 375 and 385, Chapter I, Title 18, *Code of Federal Regulations* , as follows. PART 375—THE COMMISSION 1. The authority citation for part 375 continues to read as follows: Authority: 5 U.S.C. 551-557; 15 U.S.C. 717-717w, 3301-3432; 16 U.S.C. 791-825r, 2601-2645; 42 U.S.C. 7101-7352, 16451-16463. 2. Section 375.302 is amended by revising paragraph
(z)to read as follows: § 375.302 Delegations to the Secretary.
(z)Issue instructions pertaining to allowable electronic file and document formats, the filing of complex documents, whether paper copies are required, and procedural guidelines for submissions via the Internet, on electronic media or via other electronic means. PART 385—RULES OF PRACTICE AND PROCEDURE 3. The authority citation for part 385 continues to read as follows: Authority: 5 U.S.C. 551-557; 15 U.S.C. 717-717z, 3301-3432; 16 U.S.C. 791a-825v, 2601-2645; 28 U.S.C. 2461; 31 U.S.C. 3701, 9701; 42 U.S.C. 7101-7352, 16441, 16451-16463; 49 U.S.C. 60502; 49 App. U.S.C. 1-85 (1988). 4. Section 385.2001 is amended by revising paragraph (a)(1)(iii) to read as follows: § 385.2001 Filings (Rule 2001).
(a)*Filings with the Commission.*
(1)* * *
(iii)By filing via the Internet pursuant to Rule 2003 through the links provided at *http://www.ferc.gov* . 5. Section 385.2003 is amended by revising paragraphs (c)(1) and (c)(2) to read as follows: § 385.2003 Specifications (Rule 2003).
(c)*Filing via the Internet.*
(1)All documents filed under this Chapter may be filed via the Internet except those listed by the Secretary. Except as otherwise specifically provided in this Chapter, filing via the Internet is in lieu of other methods of filing. Internet filings must be made in accordance with instructions issued by the Secretary and made available online at *http://www.ferc.gov* . Provisions of this chapter or directions from the Commission containing requirements as to the content and format of specific types of filings remain applicable.
(2)The Secretary will make available on the Commission's Web site a list of document types that may not be filed via the Internet, as well as instructions pertaining to allowable electronic file and document formats, the filing of complex documents, whether paper copies are required, and procedural guidelines. Note: The following Appendix will not appear in the Code of Federal Regulations. Appendix Comments on Document Manual No. Commenter Manual ¶ Comment Response 1 EEI, p. 12 INGAA, App. A, p. 5 4.B and 4.E.c Consistent with Staff's comments at the technical conference, the instructions should be read as not requiring, but only encouraging, the use of automatic table of contents and booking marking functions, and that not using these features will not result in rejection of the filing. The Commission agrees with regard to the general instructions. However, to the extent that there are regulations that require table of contents in a document, then these software features should be used. 2 EEI, p. 12 4.C EEI requests clarification that spreadsheets do not need to be submitted in native file format if no formulas are included. The Commission clarifies that the instruction is written broadly. EEI's proposal could be implemented in a manner that could inhibit the ability to view and analyze the data. The Commission will permit such submissions, but will monitor the manner in which filers use this flexibility. 3 EEI, p. 12 4.D This instruction should be corrected to include both spreadsheets and text files in the list of exceptions, as they are covered by other instructions. EEI is correct. 4 INGAA, App. A, p. 6 4.E Clarify that it is acceptable to use the “Insert” feature of PDF applications during the creation of an electronic file. The Adobe “Document/Insert” function is acceptable. 5 EEI, p. 13 5 There is no need to include a transmittal letter and, indeed, it should be discouraged, when a single document filing is made. Further, the Commission should encourage the use of a single electronic document file and require the use of the label “Transmittal Letter” only when multiple and separate electronic documents are filed. The Commission clarifies that the term “Transmittal Letter” as used in the instructions is solely for the purpose of the eFiling software to identify the requisite lead public document for filings consisting of several documents. It does not have the same definition as used in several sections of the Commission regulations. The contents of the “Transmittal Letter” electronic file can go beyond the content requirements of a transmittal letter as provided for in the regulations. 6 Enbridge, pp. 10-11 5-10 The Commission should clarify the effect that the file naming conventions will have on existing file naming conventions. The example provided by Enbridge is related to the Index of Customers. Consistent with finding that the Index of Customers may be eFiled, the Secretary will modify the acceptable electronic file list. 7 EEI, p. 13 6 The word “tariff” should be removed from the instruction. It will be corrected. 8 Enbridge, p. 10; INGAA, App. A, p. 6 6 The proposed 60 character limit needs to be reflected in other eFiling documents, and the Commission should clarify whether characters other than alpha-numeric are permitted in file names. The Secretary will update other eFiling documentation to reflect this and other changes. 9 EEI, p. 13 6 and 8 The DOS file name character limit should be followed only by persons using DOS. Otherwise, more user-friendly names should be used. No change is necessary. 10 EEI, p. 13 11 and 14 The instructions should be modified to reflect the format requirements of § 385.2003. If the intent is to relax these regulations, then the regulations should be rewritten. If there are any documents to which § 385.2003 does not apply, the instructions should note them. There are hundreds of different types of documents filed with the Commission. The instructions are meant to be flexible and not prescriptive for all possible documents. The Commission will monitor how filers' documents appear and their utility. If changes to either the instructions or regulations are necessary, either the Secretary or the Commission will propose the necessary modifications. 11 EEI, p. 14 12 Instruction should note that it does not apply to text filings, nor testimony or exhibits where the ALJ typically dictates header format. The Commission clarifies that the required information should be shown at least once at the beginning of every document. Readers should not have to rely on the Commission's eLibrary to determine the source of the document. ALJs may impose additional requirements. 12 EEI, p. 14 12 The use of “et al.” should be permitted with the company name. The Commission so clarifies. 13 Enbridge, p. 10 12 With regard to the location of data in the headers and footers, clarify that if there is no specific instruction for the data's location, it may be placed in any location in the header. See item 11 above. 14 Enbridge, p. 10; INGAA, App. A, pp. 7-8 13 Clarify the meaning of “hard-keyed” headers or footers in tab-delimited or native format data files, and whether this requirement is applicable to headers and footers created by text programs such as Word. Most native format data files and some spreadsheet files should not have hard-keyed headers or footers, as they disrupt the analysis and manipulation of the contents. The instruction is not relevant for text files, where the word processor normally manages headers and footers separate from the text content. 15 EEI, p. 14 PJM, p. 3 17 EEI notes that the last sentence is in error and should be deleted; whereas PJM is concerned about the implications this instruction may have with regard to access to its internal data. EEI is correct, the last sentence should be struck. This moots PJM's concern. 16 EEI, p. 14 INGAA, App. A, p. 5-6 28.d Clarify the use and appearance of hyperlinks in an electronic document, and whether their use will result in a rejection of the filing. The Commission clarifies that parties may not use hyperlinks as a means to include items as part of the record they intend to rely upon. Hyperlinks may be used as part of citations, and word processor conversions into hyperlinks were not the focus of this instruction. 17 INGAA, App. A, p. 3 passim INGAA notes that the Commission's Part 154 electronic document instructions date from 1977[ *sic* ]. INGAA requests that those instructions be updated to reflect some of the flexibility offered by the new general instructions for electronic documents. While beyond the scope of this proceeding, INGAA should contact the Secretary with a list of suggested changes and procedures. [FR Doc. E7-22799 Filed 11-21-07; 8:45 am] BILLING CODE 6717-01-P DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 558 New Animal Drugs For Use in Animal Feeds; Ractopamine AGENCY: Food and Drug Administration, HHS. ACTION: Final rule. SUMMARY: The Food and Drug Administration
(FDA)is amending the animal drug regulations to reflect approval of a supplemental new animal drug application
(NADA)filed by Elanco Animal Health. The supplemental NADA provides for an increased level of monensin in two-way combination Type B and Type C medicated feeds containing ractopamine hydrochloride and monensin for cattle fed in confinement for slaughter. DATES: This rule is effective November 23, 2007. FOR FURTHER INFORMATION CONTACT: Daniel A. Benz, Center for Veterinary Medicine (HFV-126), Food and Drug Administration, 7500 Standish Pl., Rockville, MD 20855, 301-827-0223, e-mail: *daniel.benz@fda.hhs.gov* . SUPPLEMENTARY INFORMATION: Elanco Animal Health, A Division of Eli Lilly & Co., Lilly Corporate Center, Indianapolis, IN 46285, filed a supplement to NADA 141 225 that provides for use of OPTAFLEXX (ractopamine hydrochloride) and RUMENSIN (monensin USP) Type A medicated articles to make dry and liquid two-way combination medicated feeds for cattle fed in confinement for slaughter. The supplemental NADA provides for an increased level of monensin in combination Type B and Type C medicated feeds. The supplemental NADA is approved as of October 30, 2007, and the regulations in 21 CFR 558.500 are amended to reflect the approval. In accordance with the freedom of information provisions of 21 CFR part 20 and 21 CFR 514.11(e)(2)(ii), a summary of safety and effectiveness data and information submitted to support approval of this application may be seen in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday. The agency has determined under 21 CFR 25.33(a)(2) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor environmental impact statement is required. This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808. List of Subjects in 21 CFR Part 558 Animal drugs, Animal feeds. Therefore, under the Federal Food, Drug, and Cosmetic Act and under the authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR part 558 is amended as follows: PART 558—NEW ANIMAL DRUGS FOR USE IN ANIMAL FEEDS 1. The authority citation for 21 CFR part 558 continues to read as follows: Authority: 21 U.S.C. 360b, 371. 2. In § 558.500, in the table in paragraph (e)(2), revise paragraphs (e)(2)(ii) and (e)(2)(vii) to read as follows: § 558.500 Ractopamine.
(e)* * *
(2)* * * Ractopamine grams/ton Combination grams/ton Indications for use Limitations Sponsor * * * * * * *
(ii)8.2 to 24.6 Monensin 10 to 40 to provide 0.14 to 0.42 mg monensin/lb of body weight, depending on severity of coccidiosis challenge, up to 480 mg/head/day Cattle fed in confinement for slaughter: As in paragraph (e)(2)(i) of this section; for prevention and control of coccidiosis due to *Eimeria bovis* and *E zuernii* . As in paragraph (e)(2)(i) of this section; see paragraph §§ 558.355(d) of this chapter. 000986 * * * * * * *
(vii)9.8 to 24.6 Monensin 10 to 40 to provide 0.14 to 0.42 mg monensin/lb of body weight, depending on severity of coccidiosis challenge, up to 480 mg/head/day Cattle fed in confinement for slaughter: As in paragraph (e)(2)(vi) of this section; for prevention and control of coccidiosis due to *Eimeria bovis* and *E zuernii* . As in paragraph (e)(2)(vi) of this section; see paragraph §§ 558.355(d) of this chapter. 000986 * * * * * * * Dated: November 8, 2007. Bernadette Dunham, Deputy Director, Center for Veterinary Medicine. [FR Doc. E7-22882 Filed 11-21-07; 8:45 am] BILLING CODE 4160-01-S DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9366] RIN 1545-BG38 Notification Requirement for Tax-Exempt Entities Not Currently Required to File; Correction AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Correction to temporary regulations. SUMMARY: This document contains a correction to temporary regulations (TD 9366) that was published in the **Federal Register** on Thursday, November 15, 2007 (72 FR 64147) describing the time and manner in which certain tax-exempt organizations not currently required to file an annual information return under section 6033(a)(1) are required to submit an annual electronic notice including certain information required by section 6033(i)(1)(A) through (F). DATES: The correction is effective November 23, 2007. FOR FURTHER INFORMATION CONTACT: Monice Rosenbaum at
(202)622-6070 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background The temporary regulations that are the subject of this correction are under section 6033 of the Internal Revenue Code. Need for Correction As published, the temporary regulations (TD 9366) contain an error that may prove to be misleading and is in need of clarification. Correction of Publication Accordingly, the publication of the temporary regulations (TD 9366), which was the subject of FR Doc. E7-22299, is corrected as follows: On page 64149, column 1, second paragraph of the column, in the preamble, under the paragraph heading “ *Organizations Required To File Returns or Submit Electronic Notice* ”, line 5, the language “an organization exemption from” is corrected to read “an organization exempt from”. LaNita Van Dyke, Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure and Administration). [FR Doc. E7-22892 Filed 11-21-07; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF DEFENSE Department of the Army, Corps of Engineers 33 CFR Part 334 Department of the Navy, Chesapeake Bay, in Vicinity of Bloodsworth Island, MD AGENCY: United States Army Corps of Engineers, Department of Defense. ACTION: Final rule. SUMMARY: The Corps of Engineers is amending its regulations to modify an existing danger zone, in waters of the United States in the vicinity of Bloodsworth Island, Maryland. The amendment reflects the current operational and safety procedures at the Bloodsworth Island Range and highlights a change in the enforcement authority from the Commander, Naval Base Norfolk, Virginia to the Commander, Naval Air Station Patuxent River, Maryland. The regulations are necessary to safeguard United States Navy vessels and United States Government facilities/installations from sabotage and other subversive acts, accidents, or incidents of a similar nature. These regulations are also necessary to protect the public from potentially hazardous conditions which may exist as a result from use of the areas by the United States Navy. DATES: *Effective Date:* December 24, 2007. ADDRESSES: U.S. Army Corps of Engineers, Attn: CECW-CO (David B. Olson), 441 G Street, NW., Washington, DC 20314-1000. FOR FURTHER INFORMATION CONTACT: Mr. David Olson, Headquarters, U.S. Army Corps of Engineers, Operations and Regulatory Community of Practice, Washington, DC at 202-761-4922, or Mr. Steve Elinsky, U.S. Army Corps of Engineers, Baltimore District, Regulatory Branch, at 410-962-4503. SUPPLEMENTARY INFORMATION: Pursuant to its authorities in Section 7 of the Rivers and Harbors Act of 1917 (40 Stat. 266; 33 U.S.C. 1) and Chapter XIX of the Army Appropriations Act of 1919 (40 Stat. 892; 33 U.S.C. 3), the Corps is amending the danger zone regulations at 33 CFR 334.190 to reflect current operational and safety procedures at the Bloodsworth Island Range and highlight a change in the enforcement authority from the Commander, Naval Base Norfolk, Virginia to the Commander, Naval Air Station Patuxent River, Maryland. The amendment provides more detailed times, dates, and extents of restrictions. The proposed rule was published in the **Federal Register** on February 26, 2007 (72 FR 8325). No comments were received in response to the proposed rule. Procedural Requirements a. *Review under Executive Order 12866.* This rule is issued with respect to a military function of the Defense Department and the provisions of Executive Order 12866 do not apply. b. *Review under the Regulatory Flexibility Act.* This rule has been reviewed under the Regulatory Flexibility Act (Pub. L. 96-354) which requires the preparation of a regulatory flexibility analysis for any regulation that will have a significant economic impact on a substantial number of small entities (i.e., small businesses and small governments). The Corps determined that the modification of this danger zone would have practically no economic impact on the public, or result in no anticipated navigational hazard or interference with existing waterway traffic. This rule will have no significant economic impact on small entities. c. *Review under the National Environmental Policy Act.* Due to the administrative nature of this action and because there is no intended change in the use of the area, the Corps determined that this rule will not have a significant impact to the quality of the human environment and, therefore, preparation of an environmental impact statement is not required. An environmental assessment with a Finding of No Significant Impact has been prepared for this action in accordance with applicable regulations. It may be reviewed at the District office listed at the end of FOR FURTHER INFORMATION CONTACT , above. d. *Unfunded Mandates Act.* This rule does not impose an enforceable duty among the private sector and, therefore, it is not a Federal private sector mandate and it is not subject to the requirements of either Section 202 or Section 205 of the Unfunded Mandates Act. We have also found under Section 203 of the Act, that small governments will not be significantly and uniquely affected by this rulemaking. e. *Submission to Congress and the General Accountability Office.* Pursuant to Section 801(a)(1)(A) of the Administrative Procedure Act, as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, the Corps has submitted a report containing this rule to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the General Accountability Office. This rule is not a major rule within the meaning of Section 804(2) of the Administrative Procedure Act, as amended. List of Subjects in 33 CFR Part 334 Danger zones, Marine safety, Navigation (water), Restricted areas, Waterways. For the reasons set out in the preamble, the Corps amends 33 CFR part 334 as follows: PART 334—DANGER ZONE AND RESTRICTED AREA REGULATIONS 1. The authority citation for 33 CFR part 334 continues to read as follows: Authority: 40 Stat. 266 (33 U.S.C. 1) and 40 Stat. 892 (33 U.S.C. 3). 2. Section 334.190 is revised to read as follows: § 334.190 Chesapeake Bay, in vicinity of Bloodsworth Island, MD, U.S. Navy.
(a)*The areas* —(1) *Prohibited area.* All waters within a circle 0.5 miles in radius with its center at latitude 38°10′00″, longitude 76°06′00″; Bloodsworth Island, Pone Island, Northeast Island, and Adams Island.
(2)*The danger zone.* All waters of Chesapeake Bay and Tangier Sound within an area bounded as follows: Beginning at latitude 38°08′15″, longitude 76°10′00″; thence to latitude 38°12′00″, longitude 76°10′00″; thence to latitude 38°12′00″, longitude 76°07′00″; thence to latitude 38°13′00″, longitude 76°06′00″; thence to latitude 38°13′00″, longitude 76°04′00″; thence to latitude 38°12′00″, longitude 76°02′00″; thence to latitude 38°12′00″, longitude 76°00′00″; thence to latitude 38°08′15″, longitude 76°00′00″; thence to the point of beginning, excluding the prohibited area described in paragraph (a)(1) of this section.
(b)*The regulations.*
(1)No person, vessel or other craft shall approach closer than 75 yards to the beaches, shoreline, or piers of Bloodsworth Island, Pone Island, Northeast Island, Adams Island, or any Patuxent River Naval Air Station property at any time unless authorized to do so by the enforcing agency. No person, vessel or other craft shall approach rafts, barges, or platforms closer than 100 yards.
(2)No person, vessel, or other craft shall enter or remain in the danger zone when notified by the enforcing authority to keep clear. Any watercraft under way or at anchor, upon being so warned, shall immediately vacate the area and shall remain outside the area until conclusion of potentially hazardous test or training events.
(3)The area will be in use intermittently throughout the year.
(4)Prior to the commencement of any potentially hazardous test or training event that requires clearing of non-participant boats from the danger zone, surface or air search of the entire area will be made for the purpose of locating and warning all craft and persons not connected with the test or training event, and a patrol will be maintained throughout the duration of the event.
(5)All persons, vessels, or other craft shall clear the area when warned by patrol vessels.
(6)Patrol vessels will provide warning that a potentially hazardous test or training event is in progress or is about to commence; when so warned, fishing or oystering vessels or other craft not directly connected with the event shall not navigate within the danger zone. Deep-draft vessels proceeding in established navigation channels normally will be permitted to traverse the area upon coordination with range patrol vessels. The patrol vessels will ensure safe separation between all non-participant vessels and potentially hazardous operations.
(7)When potentially hazardous testing or training is not in progress or is not about to commence, oystering and fishing boats and other craft may operate within the danger zone.
(8)All potentially hazardous test or training events will be performed in such a way as to contain the hazard footprint to the established danger zone described in paragraph
(a)of this section. Naval authorities will not be responsible for damage to nets, traps, buoys, pots, fish pounds, stakes, or other equipment that may be located within the danger zone.
(9)Nothing in this regulation shall be intended to prevent the lawful use of approved waterfowl hunting blinds along the shorelines of Bloodsworth Island range complex, provided that all necessary licenses and permits have been obtained from the Maryland Department of Natural Resources and the completed copy of the permit has been submitted to the Conservation Division Director at NAS Patuxent River. Waterfowl hunters must observe all warnings and range clearances, as noted herein.
(10)The regulations in this section shall be enforced by the Commander, Naval Air Station Patuxent River, Maryland, and such agencies as he/she may designate. Dated: November 16, 2007. Lawrence A. Lang, Deputy, Operations, Directorate of Civil Works. [FR Doc. E7-22845 Filed 11-21-07; 8:45 am] BILLING CODE 3710-92-P DEPARTMENT OF DEFENSE Department of the Army, Corps of Engineers 33 CFR Part 334 United States Army Restricted Area, Kuluk Bay, Adak, AK AGENCY: U.S. Army Corps of Engineers, DoD. ACTION: Final rule. SUMMARY: The Corps of Engineers is issuing a final rule establishing a restricted area within Kuluk Bay, Adak, Alaska. The purpose of this restricted area is to ensure the security and safety of the Sea Based Radar, its crew, and other vessels transiting the area. The restricted area is within an established moorage restriction area for the U.S. Navy. The restricted area will be marked on navigation charts to ensure security and safety for the public. DATES: *Effective Date:* December 24, 2007. ADDRESSES: U.S. Army Corps of Engineers, Attn: CECW-CO (David B. Olson), 441 G Street, NW, Washington, DC 20314-1000. FOR FURTHER INFORMATION CONTACT: Mr. David Olson, Headquarters, Operations and Regulatory Community of Practice, Washington, DC at
(202)761-4922, or Mr. Leroy Phillips, Corps of Engineers, Alaska District, Regulatory Branch, at
(907)753-2828. SUPPLEMENTARY INFORMATION: In the July 30, 2007, issue of the **Federal Register** (72 FR 41470), the Corps published a proposed rule to establish a restricted area in Kuluk Bay, Adak, Alaska. No comments were received in response to the proposed rule. Pursuant to its authorities in Section 7 of the Rivers and Harbors Act of 1917 (40 Stat. 266; 33 U.S.C.1) and Chapter XIX, of the Army Appropriations Act of 1919 (40 Stat. 892; 33 U.S.C.3), the Corps is amending the restricted area regulations in 33 CFR 334 by adding § 334.1325 as a restricted area within Kuluk Bay, Adak, Alaska as described below. The restricted area is completely within an existing restricted area for the United States Navy in Kuluk Bay, Adak, Alaska, which was established at 33 CFR 334.1320 and designated on NOAA chart 16475. Procedural Requirements a. *Review under Executive Order 12866.* This rule is issued with respect to a military function of the Defense Department and the provisions of Executive Order 12866 do not apply. b. *Review under the Regulatory Flexibility Act.* This rule has been reviewed under the Regulatory Flexibility Act (Pub. L. 96-354) which requires the preparation of a regulatory flexibility analysis for any regulation that will have a significant economic impact on a substantial number of small entities (i.e., small businesses and small governments). The Corps has determined that the establishment of this restricted area would have practically no economic impact on the public and no anticipated navigational hazard or interference with existing waterway traffic. Accordingly, the Corps certifies that this regulation will have no significant economic impact on small entities. c. *Review under the National Environmental Policy Act.* Due to the administrative nature of this action and because there is no intended change in the use of the area, the Corps has determined that this regulation will not have a significant impact to the quality of the human environment and, therefore, preparation of an environmental impact statement is not required. An environmental assessment has been prepared. It may be reviewed at the district office listed at the end of FOR FURTHER INFORMATION CONTACT , above. d. *Unfunded Mandates Act.* This rule does not impose an enforceable duty among the private sector and, therefore, it is not a Federal private sector mandate and it is not subject to the requirements of either Section 202 or Section 205 of the Unfunded Mandates Act. We have also found under Section 203 of the Act, that small Governments will not be significantly and uniquely affected by this rulemaking. e. *Submission to Congress and the General Accountability Office.* Pursuant to Section 801(a)(1)(A) of the Administrative Procedure Act, as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, the Corps has submitted a report containing this rule to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the General Accountability Office. This rule is not a major rule within the meaning of section 804(2) of the Administrative Procedure Act, as amended. List of Subjects in 33 CFR Part 334 Danger zones, Marine safety, Navigation (water), Restricted areas, Waterways. For the reasons set out in the preamble, the Corps amends part 334 as follows: PART 334—DANGER ZONE AND RESTRICTED AREA REGULATIONS 1. The authority citation for 33 CFR part 334 continues to read as follows: Authority: 40 Stat. 266 (33 U.S.C. 1) and 40 Stat. 892 (33 U.S.C. 3). 2. Add § 334.1325 to read as follows: § 334.1325 United States Army Restricted Area, Kuluk Bay, Adak, Alaska.
(a)*The area.* The area within a radius 1,000 yards around the Sea Base Radar mooring site in all directions from latitude 51°53′05.4″ N, longitude 176°33′47.4″ W (NAD 83).
(b)*The regulation.*
(1)No vessel, person, or other craft shall enter or remain in the restricted area except as may be authorized by the enforcing agency.
(2)A ring of eight lighted and marked navigation buoys marking the perimeter of the mooring anchor system will provide a visible distance reference at a radius of approximately 800 yards from latitude 51°53′05.4″ N, longitude 176°33′47.4″ W (NAD 83). Each buoy has a white light, flashing at 3 second intervals with a 2 nautical mile range. Vessels, persons or other craft must stay at least 200 yards outside the buoys.
(3)The regulation in this section shall be enforced by personnel attached to the Missile Defense Agency and/or by such other agencies as the Director, MDA-AK, Fort Richardson, Alaska, may designate. Dated: November 16, 2007. Lawrence A. Lang, Deputy, Operations, Directorate of Civil Works. [FR Doc. E7-22876 Filed 11-21-07; 8:45 am] BILLING CODE 3710-92-P FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 76 [MB Docket No. 05-311; FCC 07-190] Implementation of Section 621(a)(1) of the Cable Communications Policy Act of 1984 as Amended by the Cable Television Consumer Protection and Competition Act of 1992 AGENCY: Federal Communications Commission. ACTION: Final rule. SUMMARY: In this document, the Commission adopts rules and provides guidance to implement section 621(a)(1) of the Communications Act. The Commission solicited and reviewed comments on this section and found that to promote the federal goals of enhanced cable competition and accelerated broadband development, the Commission's rules regarding the local franchising process should be extended to incumbent cable operators. The Commission adopts measures to address a variety of means by which local franchising authorities are unreasonably refusing to award competitive franchises. The rules and guidance will facilitate enhanced cable competition and accelerated broadband development. DATES: The rules contained in this Second Report and Order *(Second Report and Order)* will become effective December 24, 2007. FOR FURTHER INFORMATION CONTACT: For additional information on this proceeding, contact Holly Saurer, *Holly.Saurer@fcc.gov* or Brendan Murray, *Brendan.Murray@fcc.gov* of the Media Bureau, Policy Division,
(202)418-2120. SUPPLEMENTARY INFORMATION: This is a summary of the Commission's *Second Report and Order,* FCC 07-190, adopted on October 31, 2007, and released on November 6, 2007. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street, SW., CY-A257, Washington, DC 20554. These documents will also be available via ECFS *(http://www.fcc.gov/cgb/ecfs/)* . (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) The complete text may be purchased from the Commission's copy contractor, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. To request this document in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to *fcc504@fcc.gov* or call the Commission's Consumer and Governmental Affairs Bureau at
(202)418-0530 (voice),
(202)418-0432 (TTY). Summary of the Report and Order I. Introduction 1. In this *Second Report and Order,* we provide further guidance on the operation of the local franchising process. To promote the federal goals of enhanced cable competition and accelerated broadband development, we extend a number of the rules promulgated in this docket's preceding First Report and Order *(First Report and Order)* , 72 FR 13189, March 21, 2007, to incumbents as well as new entrants. We also decline to preempt state or local customer service laws that exceed the Commission's standards. II. Background 2. New competitors are entering markets for the delivery of services historically offered by monopolists: traditional phone companies are entering the multichannel video market, while traditional cable companies are competing in the telephone market. Ultimately, both types of companies are projected to offer customers a “triple play” of voice, high-speed Internet access, and video services over their respective networks. These entities also face competition from other new providers of bundled services, including overbuilders and utility companies. We believe this competition for the delivery of bundled services will benefit consumers by reducing prices and improving the quality of service offerings. In the *First Report and Order* , we stated our concerns that competitive applicants seeking to enter the video market faced unreasonable regulatory obstacles, to the detriment of competition generally and cable subscribers in particular. 3. Specifically, in the *First Report and Order* , we adopted rules and provided guidance to implement section 621(a)(1) of the Communications Act of 1934, as amended (the Act), which prohibits franchising authorities from unreasonably refusing to award competitive franchises for the provision of cable services. The record in the *First Report and Order* showed that new entrants eager to provide video service are often delayed, and in some cases derailed, by the unreasonable demands made by local franchising authorities
(LFAs)during the franchising process. The *First Report and Order* found that these delays contravened the dual congressional goals of enhancing cable competition and accelerating broadband deployment. As such, the Commission found that the operation of the local franchising process in many jurisdictions constituted an unreasonable barrier to entry. 4. To eliminate unreasonable barriers to entry into the cable market, and to encourage investment in broadband facilities, we found in the *First Report and Order* that:
(1)An LFA's failure to issue a decision on a competitive application within the timeframes specified in the order constitutes an unreasonable refusal to award a competitive franchise within the meaning of section 621(a)(1);
(2)an LFA's refusal to grant a competitive franchise because of an applicant's unwillingness to agree to unreasonable build-out mandates constitutes an unreasonable refusal to award a competitive franchise within the meaning of section 621(a)(1);
(3)an LFA's refusal to grant a competitive franchise because of an applicant's unwillingness to agree to a variety of franchise fee requirements that are impermissible under section 622 of the Act constitutes an unreasonable refusal to award a competitive franchise within the meaning of section 621(a)(1);
(4)it would be an unreasonable refusal to award a competitive franchise if the LFA denied an application based upon a new entrant's refusal to undertake certain obligations relating to public, educational, and government channels
(PEG)and institutional networks (I-Nets); and
(5)it is unreasonable under section 621(a)(1) for an LFA to refuse to grant a franchise based on issues related to non-cable services or facilities. 5. Some of the Commission's findings in the *First Report and Order* relied, in part, on statutory provisions that do not distinguish between incumbent providers and new entrants; however, in light of the fact that the NPRM in this proceeding focused on competitive entrants, the findings were made applicable only to new entrants. At the same time that we adopted the *First Report and Order* , we therefore issued a *Further Notice of Proposed Rulemaking* (FNPRM), 72 FR 13230, March 21, 2007, to provide interested parties with the opportunity to provide comment on which of those findings should be made applicable to incumbent providers and how that should be done. 6. This *FNPRM* tentatively concluded that the findings in the *First Report and Order* should apply to incumbent cable operators as they negotiate renewal of their existing agreements with LFAs. We noted that two of the statutory provisions that we discussed in the *First Report and Order* , sections 611(a) and 622(a), do not distinguish between incumbents and new entrants or franchises issued to incumbents versus franchises issued to new entrants. We sought comment on that tentative conclusion, and also on the Commission's authority to implement this finding. We also sought comment on what effect, if any, the findings in the *First Report and Order* have on most favored nation
(MFN)clauses that may be included in existing franchises. Finally, we asked about the Commission's authority to preempt state or local customer service laws that exceed the Commission's standards. We examined the statutory language of section 632(d)(2) and tentatively concluded that we can neither preempt state or local customer service laws that exceed the Commission's standards, nor prevent LFAs and cable operators from agreeing to more stringent standards. III. Discussion A. Incumbent Treatment 7. Based on the comments filed in response to this *Second Report and Order* , we agree, as detailed below, that many of the findings in the sections of the *First Report and Order* addressing franchise fees, PEG and I-Net obligations, and non-cable related services and facilities should be applicable to incumbent operators. We also conclude, however, that the findings in the *First Report and Order* involving timing and build-out should not be applicable to incumbent operators. Accordingly, we extend the applicable findings from the *First Report and Order* to incumbents as discussed below. 8. *Time Limits.* The “Time Limit for Franchise Negotiations” section of the *First Report and Order* is not applicable to incumbents. Many commenters argue that this section of the *First Report and Order* should not be applicable to incumbents. They point out that section 626 of the Act, which concerns renewals, clearly delineates the process and timeline for renewal negotiations. We agree. The time limits established in the *First Report and Order* for negotiating initial agreements cannot apply to incumbent renewals because those limits are not consistent with the 36-month renewal procedure set forth in section 626 of the Act. Moreover, the underlying rationale for the time limits—that is, preventing unreasonable entry delays—is inapplicable to incumbents. Although new entrants are barred from providing service until they obtain a franchise, incumbents are able to continue providing service during renewal negotiations. Accordingly, the rationale for the time limits set forth in the *First Report and Order* does not apply to the renewal context. 9. *Build-Out.* The “Build-Out” section of the *First Report and Order* is also not applicable to incumbents. Again, many commenters argue that the findings in this section of the *First Report and Order* should not be applicable to incumbents. In particular, they contend that eliminating build-out requirements has no relevance for incumbents (and might prompt efforts to shrink existing service areas). We agree that the findings in the *First Report and Order* concerning build-out should not apply to incumbents. Our findings regarding build-out requirements were squarely based on section 621(a)(1) of the Act, a provision that plainly does not apply to incumbent providers. While we did indicate in the *First Report and Order* that section 621(a)(4)(A) of the Act did not limit our authority to restrict unreasonable build-out demands made on competitive applicants pursuant to section 621(a)(1), our findings clearly were not based on that provision. As we stated at the time, “[s]ection 621(a)(4)(A) does not address the central question here.” We also find there is no basis for applying the build-out rationale in the *First Report and Order* to incumbents, because the underlying rationale—that build-out requirements can serve as a barrier to new entrants—is inapplicable to incumbents. Incumbents by definition are not barred from entry, and allowing incumbents to retract the boundaries of their own franchise areas may create disruptions that would hinder the statutory goal of broadband deployment. Moreover, the *First Report and Order* discussed the differential impact of build-out requirements on incumbents and new entrants. 10. *Franchise Fees.* The “Franchise Fees” section of the *First Report and Order* applies equally to incumbents and new entrants. Most commenters agree that our findings regarding franchise fees from the *First Report and Order* should apply to incumbents. In that section of the *First Report and Order* , we determined that an LFA's refusal to grant a competitive franchise because of an applicant's unwillingness to agree to a variety of franchise fee requirements that are impermissible under section 622 of the Act constitutes an unreasonable refusal to award a competitive franchise within the meaning of section 621(a)(1). Commenters argue that section 622 of the Act does not differentiate between new entrants and incumbents, and that when Congress intended to treat various providers differently, it was explicit when doing so. NCTA argues that absent a Congressional mandate otherwise, the Commission has defined its role as establishing a uniform franchising regime, and uniformity requires equal treatment. Some LFAs argue that the Commission was incorrect in its interpretation of section 622, and it should not extend its interpretation. NATOA states that incumbents have been renewing franchises for years with full knowledge of the Cable Act, and the FNRPM's proposal to extend the franchise fee aspects of the *First Report and Order* to incumbents is a solution in search of a problem. 11. We agree that our findings interpreting section 622 should apply equally to incumbent operators and new entrants. Section 622 does not distinguish between incumbent providers and new entrants. As a result, to the extent that a franchise-fee requirement is found to be impermissible under section 622, that statutory interpretation applies to both incumbent operators and new entrants. The relevant findings from the *First Report and Order* that apply to incumbent providers include the following:
(1)Our clarification that a cable operator is not required to pay cable franchise fees on revenues from non-cable services;
(2)our finding that the term “incidental” in section 622(g)(2)(D) should be limited to the list of incidentals in the statutory provision, as well as other minor expenses, and that certain fees are not to be regarded as “incidental” and therefore must count toward the 5 percent franchise fee cap;
(3)our clarification that any municipal projects requested by LFAs unrelated to the provision of cable services that do not fall within the exempted categories in section 622(g)(2) are subject to the statutory 5 percent franchise fee cap; and
(4)our finding that payments made to support the operation of PEG access facilities are considered franchise fees and are subject to the 5 percent cap, unless they are capital costs, which are excluded from franchise fees under section 622(g)(2)(C). 12. *PEG/I-Nets.* Much of the “PEG/I-Nets” section of the *First Report and Order* applies equally to incumbents and new entrants. Many commenters argue that our findings regarding PEG and I-Net issues from the *First Report and Order* should apply equally to incumbents because the statutory provisions discussed do not distinguish among differing providers. LFAs, on the other hand, argue that the findings regarding PEG and I-Nets should not be extended to incumbents. They contend that doing so would freeze PEG support at current contribution levels without the possibility for future modification, which would result in either substantially reduced PEG access facility support or decreased general fund monies. They also contend that they would lose the ability to benefit from an affordable I-Net, which cable operators can offer for no net costs. LFAs also assert that I-Nets provide numerous benefits to the community and are vital to government functions, and the Commission may not take any action that would inhibit an LFA's ability to require a cable operator to build an I-Net. LFAs further argue that some PEG and I-Net obligations are undertaken as part of a settlement agreement against an operator, and these contracts cannot be invalidated. 13. We determine that some of the findings related to PEG and I-Nets should apply to incumbent providers while others should not. Specifically, the finding, discussed above, that the non-capital costs of PEG requirements must be offset from the cable operator's franchise fee payments is applicable to incumbents because it was based upon our statutory interpretation of section 622 of the Act. Again, nothing in the language or structure of that provision distinguishes between different classes of providers, and thus our interpretation applies to all providers. Similarly, both our refusal to adopt standard terms for PEG channels for new entrants as well as our refusal to hold that it is per se unreasonable for LFAs to require the payment of ongoing costs to support PEG by new entrants (so long as such support costs as applicable are subject to the franchise fee cap) apply to incumbents as well. 14. We conclude, however, that other findings pertaining to PEG and I-Nets should not apply to incumbents. In particular, our findings that it would be unreasonable for an LFA to impose on a new entrant more burdensome PEG carriage obligations than it has imposed upon the incumbent cable operator and that it would be unreasonable for an LFA to require a new entrant to provide PEG support that is in excess of the incumbent cable operator's obligations, by their terms, do not provide relief for incumbents. Neither do we believe that we can similarly conclude that it would be per se unreasonable for an LFA to impose less burdensome PEG carriage obligations on a new entrant than it has imposed on an incumbent cable operator or per se unreasonable for an LFA to require a new entrant to provide less PEG support than the incumbent cable provider. Requiring an established incumbent operator to have a greater PEG carriage obligation or provide greater PEG support than a fledgling new entrant may very well be reasonable under the circumstances, and we see no statutory provision that categorically precludes such an approach. We note that in the *First Report and Order* we found that a pro rata cost sharing approach between incumbents and new entrants is per se reasonable. In doing so, we also cited § 76.1505 of the Commission's rules, which requires an open video system operator to match an incumbent cable operator's PEG obligations. Under a matching approach, the open video system operator and incumbent cable operator make equal contributions. In a pro rata cost sharing approach, the new entrant would make PEG contributions based on the ratio of its subscribership as compared to the incumbent operator's subscribership. While we did not find a matching arrangement per se reasonable, we did not find it per se unreasonable either. Section 653(c)(2)(A) of the Act requires that open video system PEG obligations be “no greater or lesser” than obligations imposed on incumbent operators, but the Act makes no such requirement with respect to new cable operator entrants. Finally, in the *First Report and Order* , we found that “completely duplicative PEG and I-Net requirements imposed by LFAs would be unreasonable,” and that it was unreasonable for an LFA to refuse to award a competitive franchise unless the applicant agrees to pay the face value of an I-Net that will not be constructed. The problems that these two determinations were designed to address—the required construction of duplicative networks and required payments in lieu of the construction of a duplicative network—are issues that face competitive entrants, and it is not clear to us how these findings would be of practical relevance to incumbents. We therefore do not apply them to incumbents at this time. However, incumbent providers are free in the future to present the Commission with evidence that these findings are of practical relevance to incumbents and therefore should be applied to them in an appropriate form. When doing so, incumbent providers should identify the particular problems that applying some variation of these findings to them would address. 15. We disagree with comments arguing that any changes to the PEG structure means that PEG support would be frozen at current contribution levels without the possibility for future modification to reflect the community's needs at that time. Sections 611 and 626 provide a process for requiring PEG carriage and determining a community's future cable-related needs and interests. Section 626 requires that an LFA identify “future cable-related community needs and interests” prior to the consideration of a franchise renewal proposal. Therefore, LFAs are to evaluate their current and future PEG needs at the time of an incumbent provider's renewal, and are allowed to request such PEG support from their providers, within the limits of the Act and the Commission's statutory interpretation. Our findings here and in the *First Report and Order* have no bearing on these renewal requirements. 16. *Mixed-Use Networks.* The “Mixed-Use Networks” section of the *First Report and Order* also applies equally to incumbents and new entrants. Consistent with their position on other provisions, a number of commenters argue that the Commission's mixed-use network findings in the *First Report and Order* are based upon a statutory interpretation of section 602(7)(C), and the statute's failure to distinguish among differing providers requires that it applies uniformly to all. LFAs argue that the mixed-use findings presume the competitor is a telecommunications provider, and that the findings do not speak to an incumbent cable provider that already is using its network to provide cable services. 17. Because our findings on mixed-use networks in the *First Report and Order* depended upon our statutory interpretation of section 602, which does not distinguish between incumbent providers and new entrants, we agree that the findings in this section should be applicable to incumbent providers. Specifically, we clarify that LFAs' jurisdiction under Title VI over incumbents applies only to the provision of cable services over cable systems and that an LFA may not use its franchising authority to attempt to regulate non-cable services offered by incumbent video providers. For example, the provision of video services pursuant to a cable franchise agreement does not provide a basis for customer service regulation by local law or franchise agreement of a cable operator's entire network, or any services beyond cable services. 18. *Timing* . The Commission tentatively concluded that the findings in the *First Report and Order* should apply to cable operators at the time of renewal: [t]he findings in [the *First Report and Order* ] should apply to cable operators that have existing franchise agreements as they negotiate renewal of those agreements with LFAs. We note that section 611(a) states “A franchising authority may establish requirements in a franchise with respect to the designation or use of channel capacity for public, educational, or governmental use” and section 622(a) provides “any cable operator may be required under the terms of any franchise to pay a franchise fee.” These statutory provisions do not distinguish between incumbents and new entrants or franchises issued to incumbents versus franchises issued to new entrants. Many commenters agreed with our tentative conclusion. However, some incumbent providers argue that regulatory parity requires that the Commission extend the *First Report and Order* immediately to incumbent providers, and not wait until renewal. Specifically, incumbent providers argue that some of the findings in the *First Report and Order* , including franchise fees, PEG/I-Nets, and mixed use networks, were not made solely pursuant to section 621, but also other sections of the Act that are applicable to all operators, not just new entrants, and that those provisions should be immediately applicable to all providers. Further, a small number of incumbent competitive providers argue that to avoid penalizing them for being the first to risk competitive entry, the *Second Report and Order* should be applicable to such “legacy” competitive providers immediately or upon entrance of a new competitive provider. They argue that if the Commission adopts the tentative conclusion to apply the decisions in the *First Report and Order* at renewal, it is conceivable, where an incumbent's franchise is up for renewal before a competitive entrant's franchise, that a new competitive entrant and an incumbent would receive the regulatory relief of the *First Report and Order* before the incumbent competitive provider. LFAs, by contrast, argue that if findings from the *First Report and Order* are found to be applicable to incumbents, they should be effective only at the time of renewal. These commenters argue that the Commission does not have the authority to void existing agreements, and that to do so would violate LFAs' contractual rights. 19. We believe that neither of the principal views expressed by commenters is entirely correct. The statutory interpretations set forth above represent the Commission's view as to the meaning of various statutory provisions, such as section 622, and these interpretations are valid immediately. We do not see, for example, how section 622 could mean different things in different sections of the country depending on when various incumbents' franchise agreements come up for renewal. We recognize, however, that franchise agreements involve contractual obligations and also note that some terms may have been implemented as part of a settlement agreement regarding rate disputes or past performance by the franchisee. As a result, we believe that the facts and circumstances of each situation must be assessed on a case-by-case basis under applicable law to determine whether our statutory interpretation should alter the incumbent's existing franchise agreement. This *Second Report and Order* should in no way be interpreted as giving incumbents a unilateral right to breach their existing contractual obligations. Instead, if an incumbent asserts that the terms of its franchise should be amended as a result of this *Second Report and Order* , we encourage LFAs and incumbents to work cooperatively to address those issues. Should such efforts fail, we recognize that particular disputes eventually may make their way to court but note that there are other means of addressing existing contract provisions. As further described below, incumbent providers may pursue avenues for pre-renewal modifications, including contractual most favored nation clauses, which may allow franchisees to take advantage of the franchise provisions of new competitive entrants. Parties may also make adjustments to franchise terms pursuant to compliance with law provisions within the franchise or contract. Statutory relief is also available in the form of the franchise modification provision in section 625 of the Act. 20. *Most Favored Nations
(MFN)Clauses* . The *First Report and Order* does not have any effect on existing MFN clauses. In the *FNPRM* , we sought comment on “what effect, if any, the findings in this *Second Report and Order* have on MFN clauses that may be included in existing franchises.” While provisions differ, MFN clauses generally allow franchisees to adjust their obligations if and when an LFA grants a competing provider any franchise provisions that are more favorable than the provisions in the incumbent's franchise agreement. Some providers state that an incumbent with existing MFN provisions should be able to amend its franchise to reflect the requirements applicable to the new entrant, in order to encourage regulatory parity. Others state that the proceeding should have no effect on MFN clauses, as they do not impose any barriers to entry. They also argue that MFN clauses are negotiated in order to adjust obligations when a new competitor enters the market, and the Commission has no basis to interfere with these contractual provisions. To the extent that the *First Report and Order* allows competitive providers to enter markets with franchise provisions more favorable than those of the incumbent provider, we expect that MFN clauses, pursuant to the operation of their own design, will provide some franchisees the option and ability to change provisions of their existing agreements. Otherwise, we do not believe that our *First Report and Order* has any effect on MFN clauses. B. Other Issues 21. *Franchise Modification* . We agree with commenters that the modification provision of the Cable Act will provide some franchisees the option and ability to change their existing agreements. Section 625 of the Act provides that a cable operator may obtain a franchise modification from an LFA:
(1)In the case of any requirements for facilities or equipment (including PEG access) where the provider can show that it is “commercially impracticable” to comply with a requirement; or
(2)in the case of any requirements for services, if the cable operator demonstrates that the mix, quality, and level of services required by the franchise at the time it was granted will be maintained after any proposed modification. 22. Commenters argue that incumbents without an MFN provision should be allowed to seek modification through section 625 when a competitor enters the franchise area. They assert that the Commission should find an incumbent's compliance with more burdensome franchise provisions than a new competitor “commercially impracticable” because of the possibility of higher costs. Some LFAs and Verizon agree that section 625 may be applicable in some circumstances, provided that the incumbent can meet the commercially impracticable test, but contend that there should not be an assumption that all providers can meet this test. NATOA argues that the Commission does not have jurisdiction to construe or enforce this provision under section 625(b)(1), which provides for review of modification decisions in state or federal district court under section 635, and that the Commission cannot issue any blanket statements about modifications, as any determinations are fact specific, and cannot be shown merely by the presence of a new competitor. We agree that the *First Report and Order* and this *Second Report and Order* , to the extent applicable, can be taken into consideration if an incumbent seeks modification of a franchise when a competitor enters the franchise area, within the processes set forth under section 625. However, it is up to the incumbent to make to the relevant franchising authority the requisite showing of “commercial impracticability.” 23. *Generally Accepted Accounting Principles* . We decline to adopt a requirement that an operator's gross income be determined under Generally Accepted Accounting Principles (GAAP). Time Warner asks the Commission to mandate that the calculation of an operator's gross income under section 622 be determined in accordance with GAAP. Time Warner argues that the Commission has authority from Congress to mandate that uniform federal standards be used to govern franchise fee calculations. Some franchising authorities reject this assertion and argue that GAAP will not produce the clarity and uniformity Time Warner is seeking, because GAAP does not create rules but rather functions as a set of guidelines interpreted by professionals. They also state that GAAP was established by the financial community to govern disclosures to investors and stockholders, not to determine franchise fee payments, and these differing purposes may result in characterization of revenues that are not applicable to cable operations. Finally, they argue this has nothing to do with competitive entry, and a separate NPRM must be issued to consider it. Given the paucity of comments on the matter, and conflicting information of the applicability of GAAP to the franchising process, we do not believe that there is a sufficient record supporting the requested regulation. We therefore decline to adopt such a requirement here. 24. *Fresh Look* . We reject RCN's request that we invoke the fresh look doctrine. The fresh look doctrine is used to re-open contracts. The Commission utilizes it sparingly, when it is “necessary to promote consumer choice and eliminate barriers to competition.” RCN urges the Commission to invoke its “fresh look” doctrine to require that LFAs reconsider existing franchises when a new entrant enters the franchise area and, in markets where there is more than one franchised operator, when the first existing franchise comes up for renewal. RCN suggests that when a new provider files an application to provide service, the LFA should provide notice to existing franchisees and allow them to terminate their franchise and negotiate a new one reflecting the rules in the *First Report and Order* . Similarly, the Broadband Service Providers Association asks that if one cable operator in a competitive market is able to eliminate franchise requirements deemed unlawful by the *First Report and Order* , other operators in that LFA should be able to submit a renewal proposal at any time that would allow that operator to conform its franchise to the rules in the *First Report and Order* . RCN argues that this proceeding is consistent with other contexts where the Commission adopted the fresh look doctrine, because the entity holding the long-term contracts has market power, that entity has exercised that power to create long-term contracts to “lock up” the market in a way that creates unreasonable barriers to competition, and the contractual obligations can be nullified without harm to the public interest. 25. We do not believe that it is necessary to invoke the fresh look doctrine here. As indicated above, we believe that any contractual issues arising from today's *Second Report and Order* should be decided on a case-by-case basis. The fresh look doctrine was developed to allow customers to take advantage of competition, not to protect incumbent service providers when competitors enter the market. The case precedent is thus distinguishable from the circumstances addressed here. C. Customer Service 26. We find that the explicit statutory language of section 632 of the Act prohibits the Commission's preemption of state or local cable customer service laws that exceed the Commission's standards. The Commission previously sought comment on whether customer service requirements should be allowed to vary greatly between jurisdictions. Commenters urged the Commission to adopt a number of rules limiting LFA authority to adopt local customer service regulations. After reviewing those comments, we sought additional comment on our tentative conclusion that section 632(d)(2) of the Act prevents us from preempting state or local customer service laws exceeding Commission standards, and allows LFAs and cable operators to agree to more extensive customer service requirements. 27. Section 632 of the Communications Act sets out the regulatory framework for cable customer service. It authorizes LFAs to establish and enforce customer service requirements and directs the Commission to establish standards by which cable operators may fulfill these requirements. Specifically, section 632(d)(1) provides that “[n]othing in this title shall be construed to prohibit any State or any franchising authority from enacting or enforcing any consumer protection law, to the extent not specifically preempted by this title.” Further, section 632(d)(2) states that: [n]othing in this title shall be construed to prevent the establishment or enforcement of any municipal law or regulation, or any State law, concerning customer service that imposes customer service requirements that exceed the standards set by the Commission under the section, or addresses matters not addressed by the standards set by the Commission under this section. The statute's explicit language makes clear that Commission standards are a floor for customer service requirements, rather than a ceiling, and thus do not preclude LFAs from adopting stricter customer service requirements. 28. In response to the *FNPRM* , some commenters ask that we clarify certain issues surrounding customer service. Verizon recognizes that while LFAs have some discretion in the crafting of customer service regulations, they argue that this discretion is limited by the language of section 632(d)(2) to cable customer service issues. They urge the Commission to plainly state that LFAs only have authority to regulate cable customer service standards and that the Commission has the authority to preempt regulations that do not concern customer service for cable service. They argue that onerous regulations, as well as those unrelated to the provision of cable services couched as customer service rules, should be preempted because they amount to an unreasonable burden under section 621(a)(1). They suggest that customer service requirements be limited to those general types of issues recognized in section 632(b). That provision authorizes the Commission to “establish standards by which cable operators can fulfill their customer service requirements” including “(1) cable system office hours and telephone availability;
(2)installations, outages, and service calls; and
(3)communications between the cable operator and subscriber.” They assert that requirements beyond these limited categories impose unreasonable burdens on new entrants. 29. Supporters of the Commission's tentative conclusion regarding section 632(d)(2) argue that the statute expressly authorizes the establishment and enforcement of local customer service standards that go beyond those delineated by the Commission. They assert that the unreasonable refusal language of section 621(a)(1) has no application to customer service standards under section 632. In fact, they argue that the only way to read these sections together is to conclude that Congress intended that local customer service standards exceeding Commission standards do not amount to an unreasonable refusal. 30. New entrants also take issue with the local character of customer service requirements. AT&T cites difficulties created by disparate local standards and local data reporting requirements and suggested the Commission adopt uniform customer service standards because of the inefficiency inherent in varying standards. They argue that requiring new entrants to comply with these differing standards can be a potential barrier to entry. They further argue that the imposition of local data collection requirements also poses a barrier to entry. AT&T states that under their regional systems it is not currently possible to compile their data on a franchise area basis. At minimum, they ask the Commission to allow regional providers to demonstrate compliance with local standards through aggregate regional data. 31. Given the explicit language of section 632, we conclude that the Commission cannot preempt local or state cable customer service requirements, nor can it prevent LFAs and cable operators from agreeing to more stringent standards. However, an LFA's authority to implement customer service rules under section 632 is limited to the adoption of regulations that, in fact, involve customer service matters and impose customer service requirements on the provision of cable services. For instance, LFAs cannot implement a “customer service” rule requiring a six percent franchise fee payment. Furthermore, it would constitute an unreasonable refusal under section 621(a)(1) for an LFA to make the grant of a competitive franchise contingent upon a cable customer service requirement that does not, in fact, involve cable customer service. While localities may have independent authority to impose customer service requirements on a cable operator's non-cable activities, franchising authorities may not condition the exercise of their video franchising authority on an operator's agreement to such non-cable requirements because we interpret section 632 to apply only to customer service requirements related to cable service. 32. Local franchise authorities maintain that Congress made a policy judgment when it permitted individual franchising authorities to adopt local customer service standards, despite the inconvenience it may pose to new entrant compliance. They note that incumbents operating regional networks have complied with local data reporting requirements and other differing local standards. They state that local data collection requirements also are consistent with section 626 of the Act, which allows LFAs to take the quality of an operator's service into account during the franchise renewal process. They argue that limiting local data collection, as AT&T suggests, would make it impossible for LFAs to assess an operator's performance within their respective communities. 33. The language of section 632(d)(2) provides that, while the Commission may adopt standards applicable to all cable operators, it may not prohibit LFAs from imposing requirements that exceed those standards. We conclude, therefore, that we do not have authority to grant AT&T's request for uniform local customer service standards or data collection requirements. In sum, we find that the explicit statutory language of section 632 prohibits the Commission's preemption of state or local cable customer service laws that exceed the Commission's standards. IV. Procedural Matters 34. *Paperwork Reduction Act Analysis.* This document does not contain new or modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, we note that there is no new or modified “information 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 U.S.C. 3506(c)(4). 35. *Final Regulatory Flexibility Analysis.* As required by the Regulatory Flexibility Act of 1980, as amended
(RFA)an Initial Regulatory Flexibility Analysis
(IRFA)was incorporated in the *FNPRM* to this proceeding. The Commission sought written public comment on the proposals in the FNPRM, including comment on the IRFA. The Commission received one comment on the IRFA. This Final Regulatory Flexibility Analysis
(FRFA)conforms to the RFA. A. Need for, and Objectives of, the Second Report and Order 36. This *Second Report and Order* adopts rules and provides guidance to implement the findings in the *First Report and Order* dealing with section 611 and section 622 of the Communications Act of 1934, as amended (the Communications Act). The *First Report and Order* adopted rules in accordance with section 621(a) of the Communications Act to prevent Local Franchising Authorities
(LFAs)from creating unreasonable barriers to competitive entry. It also provided clarifications of section 611, restricting LFAs' authority to establish capacity and support requirements for PEG channels, and section 622, setting limits on the franchise fees LFAs may charge cable operators. Neither of these sections distinguishes between the treatment of new entrants and incumbent cable operators. The Commission extends these findings to incumbent cable operators to further the interrelated goals of enhanced cable competition and accelerated broadband deployment. The Commission also finds that it cannot preempt state or local customer service rules exceeding Commission standards. B. Summary of Significant Issues Raised by Public Comments in Response to the IRFA 37. Only one commenter, the Local Government Lawyer's Roundtable, submitted a comment that specifically responded to the IRFA. The Local Government Lawyer's Roundtable contends that the Commission should issue a revised IRFA because of the erroneous determination that the proposed rules would have a de minimis effect on small governments. They argue that the Commission has not given weight to the economic impact the rules will have on small governments, including training and hiring concerns. 38. We disagree with the Local Government Lawyer's Roundtable's assertion that our rules will have any more than a de minimis effect on small governments. LFAs today must review and decide upon competitive and renewal cable franchise applications, and will continue to perform that role. While the Local Government Lawyer's Roundtable expresses concern about additional training that may be necessary to understand these actions, and potential hiring of additional personnel to accommodate the *Second Report and Order's* requirements, we disagree that those steps will be necessary. This *Second Report and Order* simply extends existing requirements to apply to incumbent cable providers. LFAs should be familiar with those existing requirements, and therefore should not need additional training or personnel to implement the *Second Report and Order's* requirements. Moreover, modifications made to the franchising process that result from this proceeding further streamline the franchising process, lessening the economic burdens placed upon LFAs. C. Description and Estimate of the Number of Small Entities to Which the Rules Will Apply 39. The RFA directs the Commission to provide a description of and, where feasible, an estimate of the number of small entities that will be affected by the rules adopted herein. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small government 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). 40. The rules adopted by this *Second Report and Order* will streamline the local franchising process by adopting rules that provide guidance as to the applicability of prior findings in this proceeding to incumbents and the limitations on the Commission's authority regarding customer service regulations. The Commission has determined that the group of small entities directly affected by the rules adopted herein consists of small governmental entities (which, in some cases, may be represented in the local franchising process by not-for-profit enterprises). Therefore, in this FRFA, we consider the impact of the rules on small governmental entities. A description of such small entities, as well as an estimate of the number of such small entities, is provided below. 41. *Small Governmental Jurisdictions.* The term “small governmental jurisdiction” is defined generally as “governments of cities, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.” Census Bureau data for 2002 indicate that there were 87,525 local governmental jurisdictions in the United States. We estimate that, of this total, 84,377 entities were “small governmental jurisdictions.” Thus, we estimate that most governmental jurisdictions are small. 42. *Cable and Other Program Distribution.* The Census Bureau defines this category as follows: “This industry comprises establishments primarily engaged as third-party distribution systems for broadcast programming. The establishments of this industry deliver visual, aural, or textual programming received from cable networks, local television stations, or radio networks to consumers via cable or direct-to-home satellite systems on a subscription or fee basis. These establishments do not generally originate programming material.” The SBA has developed a small business size standard for Cable and Other Program Distribution, which is: All such firms having $13.5 million or less in annual receipts. According to Census Bureau data for 2002, there were a total of 1,191 firms in this category that operated for the entire year. Of this total, 1,087 firms had annual receipts of under $10 million, and 43 firms had receipts of $10 million or more but less than $25 million. Thus, under this size standard, the majority of firms can be considered small. 43. *Cable Companies and Systems.* The Commission has also developed its own small business size standards, for the purpose of cable rate regulation. Under the Commission's rules, a “small cable company” is one serving 400,000 or fewer subscribers, nationwide. Industry data indicate that, of 1,076 cable operators nationwide, all but eleven are small under this size standard. In addition, under the Commission's rules, a “small system” is a cable system serving 15,000 or fewer subscribers. Industry data indicate that, of 7,208 systems nationwide, 6,139 systems have under 10,000 subscribers, and an additional 379 systems have 10,000-19,999 subscribers. Thus, under this second size standard, most cable systems are small. 44. *Cable System Operators.* The Communications Act of 1934, as amended, also contains a size standard for small cable system operators, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” The Commission has determined that an operator serving fewer than 677,000 subscribers shall be deemed a small operator, if its annual revenues, when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the aggregate. Industry data indicate that, of 1,076 cable operators nationwide, all but ten are small under this size standard. We note that the Commission neither requests nor collects information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250 million, and therefore we are unable to estimate more accurately the number of cable system operators that would qualify as small under this size standard. 45. *Open Video Systems (OVS).* In 1996, Congress established the open video system framework, one of four statutorily recognized options for the provision of video programming services by local exchange carriers (LECs). The OVS framework provides opportunities for the distribution of video programming other than through cable systems. Because OVS operators provide subscription services, OVS falls within the SBA small business size standard of Cable and Other Program Distribution Services, which consists of such entities having $13.5 million or less in annual receipts. The Commission has certified 25 OVS operators, with some now providing service. Broadband service providers
(BSPs)are currently the only significant holders of OVS certifications or local OVS franchises. As of June, 2005, BSPs served approximately 1.4 million subscribers, representing 1.5 percent of all MVPD households. Affiliates of Residential Communications Network, Inc. (RCN), which serves about 371,000 subscribers as of June, 2005, is currently the largest BSP and 14th largest MVPD. RCN received approval to operate OVS systems in New York City, Boston, Washington, DC and other areas. The Commission does not have financial information regarding the entities authorized to provide OVS, some of which may not yet be operational. We thus believe that at least some of the OVS operators may qualify as small entities. D. Description of Projected Reporting, Recordkeeping and Other Compliance Requirements 46. The rule and guidance adopted in the *Second Report and Order* will require a de minimus additional reporting, record keeping, and other compliance requirements. LFAs will continue to perform its role of reviewing and deciding upon competitive cable franchise applications; the rules adopted in this *Second Report and Order* will decrease the procedural burdens faced by LFAs. Since the adopted rules do not apply until franchise renewal, there is no additional burden beyond what has been required during past renewals. Therefore, the rules adopted will not require any additional special skills beyond any already needed in the cable franchising context. E. Steps Taken To Minimize Significant Impact on Small Entities, and Significant Alternative Considered 47. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, why may include the following four alternatives (among others):
(1)The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities;
(2)the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities;
(3)the use of performance, rather than design, standards; and
(4)an exemption from coverage of the rule, or any part thereof, for small entities. 48. In the *FNPRM,* the Commission sought comment on the extension of its findings that do not distinguish between new entrants and incumbents in the *First Report and Order* to incumbents and its authority to do so. The Commission also invited comment on the effect, if any, the findings in the *First Report and Order* had on most favored nation clauses in existing franchises. Additionally, the Commission also sought comment on its tentative conclusion that it cannot preempt state or local customer service laws exceeding Commission standards, nor can it prevent LFAs and cable operators from agreeing to more stringent standards. The Commission tentatively concluded that any rules likely would have at most a de minimis impact on small governmental jurisdictions, and that the interrelated, high-priority federal communications policy goals of enhanced cable competition and accelerated broadband deployment necessitated the extension of its rules to incumbent cable providers. We agree with those tentative conclusions, and we believe that the rules adopted in the *Second Report and Order* will not impose a significant impact on any small entity. 49. In the *Second Report and Order,* we provide that the *First Report and Order's* findings resting upon statutory provisions that do not distinguish between new entrants and incumbents should be extended to incumbent cable operators at the time of franchise renewal. This will result in decreasing the regulatory burdens on incumbent cable operators. We declined to impose the findings of the *First Report and Order* immediately so that we do not unduly disrupt existing contracts. As an alternative, we considered not extending the *First Report and Order's* rules to incumbent cable operators at all. We conclude that the guidance we provide minimizes any adverse impact on small entities because it clarifies the terms within which parties must negotiate, and should prevent small entities from facing costly litigation over those terms. 50. *Report to Congress:* The Commission will send a copy of the *Second Report and Order,* including this FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act. In addition, the Commission will send a copy of the *Second Report and Order,* including the FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. 51. *Congressional Review Act.* The Commission will send a copy of this *Second Report and Order* in a report to be send to Congress and the Government Accountability Office pursuant to the Congressional Review Act, *see* 5 U.S.C. 801(a)(1)(A). 52. *Additional Information.* For additional information on this proceeding, please contact Holly Saurer, Policy Division, Media Bureau at
(202)418-2120, or Brendan Murray, Policy Division, Media Bureau at
(202)418-2120. V. Ordering Clauses 53. *It is ordered* that, pursuant to the authority contained in sections 1, 2, 4(i), 303, 303r, 403, 405, 602, 611, 621, 622, 625, 626, and 632 of the Communications Act of 1934, 47 U.S.C 151, 152, 154(i), 303, 303(r), 403, 405, 522, 531, 541, 542, 545, 546, and 552, this *Second Report and Order* is adopted. 54. *It is further ordered* that the *Second Report and Order* shall be effective December 24, 2007. 55. *It is further ordered* that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this *Second Report and Order,* including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. 56. *It is further ordered* that the Commission *shall send* a copy of this *Second Report and Order* in a report to be sent to Congress and the General Accounting Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A). Federal Communications Commission. Marlene H. Dortch, Secretary. [FR Doc. 07-5802 Filed 11-21-07; 8:45 am]
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U.S. Code
- Consideration of costs and benefits and antitrust laws§ 19
- Definitions§ 601
- Avoidance of duplicative or unnecessary analyses§ 605
- SHORT TITLE.§ 801
- Mode of recovery§ 2461
- Definitions and application§ 3701
- Federal Energy Regulatory Commission§ 60502
- EXPEDITED PROCESSING OF REQUESTS FOR JAPANESE IMPERIAL GOVERNMENT RECORDS.§ 804
- New animal drugs§ 360b
- Regulations by Secretary of the Army for navigation of waters generally§ 1
- Regulations to prevent injuries from target practice§ 3
- Purposes of chapter; Federal Communications Commission created§ 151
CFR
- Specifications (Rule 2003).§ 385.2003
- Schedules for minor rate changes.§ 154.313
- Updating of statements.§ 154.311
- Requests for privileged treatment for documents submitted to the Commission.§ 388.112
- Projects or actions categorically excluded.§ 380.4
- Ractopamine.§ 558.500
- Confidentiality of data and information in a new animal drug application file.§ 514.11
- Animal drugs.§ 25.33
- Chesapeake Bay, in vicinity of Bloodsworth Island, MD, U.S. Navy.§ 334.190
- Kuluk Bay, Adak, Alaska; naval restricted area.§ 334.1320
public-private-law
register
26 references not yet in our index
- 17 CFR 38
- 75 F.3d 164
- 751 F.2d 1336
- Pub. L. 105-277
- 5 CFR 1320.12
- 5 USC 601-612
- 18 CFR 375
- 18 CFR 385
- 5 USC 551-557
- 15 USC 717-717w
- 16 USC 791-825r
- 42 USC 7101-7352
- 15 USC 717-717z
- 16 USC 791a-825v
- 21 CFR 558
- 21 CFR 20
- 5 USC 801-808
- 26 CFR 1
- T.D. 9366
- 33 CFR 334
- 40 Stat. 266
- 40 Stat. 892
- Pub. L. 96-354
- 47 CFR 76
- Pub. L. 104-13
- Pub. L. 107-198
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