Report No. CC 95-36                                                   COMMON CARRIER ACTION           June 15, 1995
     
                             FCC VACATES OPEB ORDER
     
         The Commission vacated its Order denying exogenous cost treatment of local
     exchange carriers' (LECs') expenses for accounting changes for other postretirement
     employment benefits and terminated the CC Docket No. 92-101 proceeding.
     
         In December 1990, the Financial Accounting Standards Board (FASB) adopted
     SFAS-106, which changes the way businesses following Generally Accepted
     Accounting Principles (GAAP) must account for postretirement benefits other than
     pensions (OPEBs) that are provided to retired employees.  These are typically medical
     benefits.   Regulated LECs and AT&T historically accounted for these benefits on a
     "pay-as-you-go" basis, recognizing the amounts actually paid to retired employees
     each year.  SFAS-106, however, requires accounting recognition of these benefits as
     they are earned by employees during their working years.  
     
         In 1992, Bell Atlantic, Pacific Bell and US West, LECs subject to price cap
     regulation, filed tariffs that sought permission to treat the accounting change for
     OPEBs as exogenous costs.  The Bureau suspended and investigated these transmittals
     in this docket, CC Docket No. 92-101.  On January 22, 1993, the Commission
     adopted an Order denying the LECs' request for exogenous treatment of OPEBs.  
     
         On July 12, 1994, the United States Court of Appeals for the District of
     Columbia Circuit reversed and remanded the Commission's OPEB Order.  The court
     held, inter alia, that the Commission failed to adhere to its exogenous cost rule when
     it refused to grant the LECs exogenous treatment for their accrual of OPEB expenses. 
     The carriers withdrew the tariffs that were the subject of the Commission's OPEB
     Order.  No tariffs are pending in the remanded docket.  Therefore, the Commission
     vacated the OPEB Order and terminated the CC Docket No. 92-101 proceeding.
     
         Action by the Commission June 7, 1995, by Memorandum Opinion and Order
     (FCC 95-219).  Chairman Hundt, Commissioners Quello, Barrett, Ness and Chong.
                                    - FCC -
     
     News Media contact:  Susan Lewis Sallet at (202) 418-1500.
     Common Carrier Bureau contacts:  Suzan Friedman or Katherine Schroder at (202)
     418-1530, or Geraldine A. Matise at (202) 418-1520.