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United Telephone Company of Kansas, United Telephone Company of Eastern Kansas and Twin Valley Telephone, Inc

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Released: February 2, 2010

Federal Communications Commission

FCC 10-26

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

United Telephone Company of Kansas
)
United Telephone Company of Eastern Kansas
)
CC Docket No. 96-45
)
and
)
)

Twin Valley Telephone, Inc.
)
)

Joint Petition for Waiver of the Definition of
)
“Study Area” Contained in Part 36 of the
)
Commission’s Rules; Petition for Waiver of
)
Section 69.3(e)(11) of the Commission’s Rules
)
)

Petition for Clarification or Waiver of Section
)
54.305 of the Commission’s Rules
)

ORDER

Adopted: February 1, 2010

Released: February 2, 2010

By the Commission:

I.

INTRODUCTION

1.
In this order, in response to a referral from the United States District Court for the
District of Kansas pursuant to the primary jurisdiction doctrine,1 we clarify the effective date of the
Wireline Competition Bureau’s (Bureau’s) order granting Twin Valley Telephone, Inc. (Twin Valley)
waivers of the study area boundary freeze and section 69.3(e)(11) of the Commission’s rules.2 We find
that the waivers granted in the Twin Valley Order became effective upon release of that order.

II.

BACKGROUND

2.
On September 11, 2006, pursuant to its delegated authority the Bureau granted a joint
request from Twin Valley and United Telephone Company of Kansas and United Telephone Company of


1 See United Telephone Company of Kansas, United Telephone of Eastern Kansas, and Twin Valley Telephone,
Inc., Joint Petition for Waiver of the Definition of “Study Area” Contained in Part 36 of the Commission’s Rules;
Petition for Waiver of Section 69.3(e)(11) of the Commission’s Rules, Petition for Clarification or Waiver of
Section 54.305 of the Commission’s Rules, CC Docket No. 96-45, Notice of Referral (filed Nov. 16, 2007) (Referral
Notice); see also id., Appendix 1, Twin Valley Telephone, Inc. v. Universal Service Administrative Co., et al., No.
07-2172-CM (D. Kan. Oct. 15, 2007) (District Court Order).
2 See United Telephone Company of Kansas, United Telephone of Eastern Kansas, and Twin Valley Telephone, Inc.,
Joint Petition for Waiver of the Definition of “Study Area” Contained in Part 36 of the Commission’s Rules
;
Petition for Waiver of Section 69.3(e)(11) of the Commission’s Rules, Petition for Clarification or Waiver of Section
54.305 of the Commission’s Rules
, CC Docket No. 96-45, Order, 21 FCC Rcd 10111 (Wireline Comp. Bur. 2006)
(Twin Valley Order).

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FCC 10-26

Eastern Kansas (collectively, United) for a waiver of the study area boundary freeze codified in the
Appendix-Glossary of Part 36 of the Commission’s rules.3 The study area waiver permitted United to
remove thirteen exchanges comprising approximately 5,300 access lines from two of its Kansas study
areas, and permitted Twin Valley to add these exchanges to its existing Kansas study area.4 The Bureau
also granted Twin Valley a waiver of section 69.3(e)(11) of the Commission’s rules to allow it to use the
National Exchange Carrier Association (NECA) as its tariff pool administrator for the acquired exchanges
before the effective date of the next annual access filing deadline.5
3.
On October 10, 2006, Twin Valley filed a petition for clarification that March 1, 2006,
the date Twin Valley and United closed on their contract for the purchase of the exchanges, is the
effective date of the Bureau’s order granting it waivers of the study area boundary freeze and section
69.3(e)(11).6 On April 26, 2007, Twin Valley filed a request to withdraw the petition for clarification,
which the Bureau granted.7
4.
Twin Valley subsequently filed suit against the Universal Service Administrative
Company (USAC) and NECA in federal district court in Kansas.8 Twin Valley claims that the Bureau’s
order authorized retroactive waivers, and that USAC and NECA have improperly recognized the waivers
only as of the date of the Bureau’s order.9 NECA filed a motion to refer the case to the Commission on
primary jurisdiction grounds, and USAC moved to dismiss the complaint on primary jurisdiction grounds
and the failure of Twin Valley to exhaust administrative remedies.10 The court granted NECA’s motion,


3 See Twin Valley Order, 21 FCC Rcd 10111; see also 47 C.F.R. Part 36 App.; Twin Valley Telephone, Inc., and
United Telephone Company of Kansas, United Telephone of Eastern Kansas, Joint Petition for Waiver of the
Definition of “Study Area” of the Appendix-Glossary of Part 36 of the Commission’s Rules, CC Docket No. 96-45,
(filed Oct. 26, 2005) (Study Area Petition). The petition also included a request by Twin Valley for waiver of
section 69.3(e)(11) of the Commission’s rules. Study Area Petition at 1-2, 7-8.
4 See Twin Valley Order, 21 FCC Rcd at 10111-12, para. 1 n.2. A study area is a geographic segment of an
incumbent local exchange carrier’s (LEC) telephone operations. Because the Commission froze all study area
boundaries effective November 15, 1984, a carrier must apply to the Commission for a waiver of the study area
boundary freeze if it wishes to exclude sold exchanges from, or include purchased exchanges in, its study area for
purposes of calculating universal service support. See id. at 10112, para. 2.
5 See Twin Valley Order, 21 FCC Rcd at 10115-16, paras. 10-11. To minimize the complexity of administering
NECA’s common line pool, any change in NECA common line tariff participation resulting from a merger or
acquisition of telephone properties is effective on the next annual access tariff filing effective date following the
merger or acquisition. See 47 C.F.R. § 69.3(e)(11).
6 United Telephone Company of Kansas, United Telephone of Eastern Kansas, and Twin Valley Telephone, Inc.,
Joint Petition for Waiver of the Definition of “Study Area” Contained in Part 36 of the Commission’s Rules, Petition
for Waiver of Section 69.3(e)(11) of the Commission’s Rules, CC Docket No. 96-45, Petition for Clarification (filed
Oct. 10, 2006).
7 See United Telephone Company of Kansas, United Telephone of Eastern Kansas, and Twin Valley Telephone,
Inc., Joint Petition for Waiver of the Definition of “Study Area” Contained in Part 36 of the Commission’s Rules;
Petition for Waiver of Section 69.3(e)(11) of the Commission’s Rules, CC Docket No. 96-45, Request to Withdraw
Petition for Clarification (filed Apr. 26, 2007); United Telephone Company of Kansas, United Telephone of Eastern
Kansas, and Twin Valley Telephone, Inc., Joint Petition for Waiver of the Definition of “Study Area” Contained in
Part 36 of the Commission’s Rules
; Petition for Waiver of Section 69.3(e)(11) of the Commission’s Rules, Petition
for Clarification or Waiver of Section 54.305 of the Commission’s Rules
, CC Docket No. 96-45, Order, 22 FCC Rcd
9442 (Wireline Comp. Bur. 2007).
8 See Referral Notice at 5.
9 See District Court Order at 1.
10 See Referral Notice at 5.
2

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FCC 10-26

concluding that it was appropriate to stay the court’s proceedings and refer the case to the Commission
“for clarification of its order as to whether the waivers granted apply retroactively to the closing date.”11

III.

DISCUSSION

5.
We find that the waivers of the study area boundary freeze and section 69.3(e)(11) of the
Commission’s rules granted to Twin Valley became effective September 11, 2006, the release date of the
Bureau’s Twin Valley Order, and do not apply retroactively. Pursuant to the Commission’s rules, orders
in non-rulemaking proceedings issued pursuant to delegated authority become effective the date the order
is released.12 In the limited number of cases in which the Bureau has granted study area waivers
retroactively, it has done so explicitly and specifically identified an earlier effective date.13 Consistent
with that approach, when the Bureau has granted waivers of sections 36.611 and 36.612 of the
Commission’s rules to accelerate the provision of high-cost loop support to new carriers initiating or
extending service in predominantly unserved areas, it likewise has specified the date when the carrier
should begin receiving support, if the date predates the release date of the order.14 In the Twin Valley
Order
there is no reference by the Bureau to retroactive effect and no mention of a specific date on which
Twin Valley should begin receiving universal service support; therefore, by operation of the
Commission’s rules the effective date of the waivers is the release date of the order.
6.
Twin Valley contends that it requested and the Commission granted a waiver of section
69.3(e)(11) of the Commission’s rules effective March 1, 2006.15 In support of this contention, Twin


11 See District Court Order at 5. The court denied as moot USAC’s motion to dismiss without prejudice. See id. at
6.
12 See 47 C.F.R. § 1.102(b)(1).
13 See e.g., ALLTEL Service Corporation on behalf of Texas ALLTEL, Inc. and ALLTEL Texas, Inc., Petition for
Waiver of the Definition of “Study Area” contained in Part 36, Appendix-Glossary, of the Commission’s Rules
,
AAD 94-29, Memorandum Opinion and Order, 9 FCC Rcd 4450, 4451, para. 8 (Com. Car. Bur. 1994) (finding that
“ALLTEL has shown good cause for the requested retroactive effective date of January 1, 1994”); Petition for
Waiver Filed by Vermont Telephone Company, Inc. Concerning the Definition of “Study Area” in the Part 36
Appendix-Glossary of the Commission’s Rules
, AAD 95-30, Order on Reconsideration, 14 FCC Rcd 826, 828, para.
6 (Com. Car. Bur. 1998) (finding that “Vermont Telephone has shown good cause for the requested retroactive
effective date of January 1, 1996”); Petitions for Waiver and Reconsideration Concerning Sections 36.611, 36.612,
61.41(c)(2), 69.605(c), 69.3(e)(11) and the Definition of Study Area Contained in Part 36 Appendix-Glossary of the
Commission’s Rules
, Filed by Copper Valley Telephone Inc., et al., AAD 93-93, AAD 95-72, AAD 95-30, AAD 97-
21, AAD 97-23, AAD 97-117, AAD, 98-44, AAD 98-53, Memorandum Opinion and Order, 1999 WL 700555, para.
25 (Com. Car. Bur. 1999) (granting request that “study area changes be made effective on January 1, 1996, instead
of June 14, 1996, the release date of the Memorandum Opinion and Order granting the study area waivers”). As
part of a Commission restructuring in 2002, the Common Carrier Bureau was renamed the Wireline Competition
Bureau. Federal Communications Commission's Common Carrier Bureau Reorganized Along Functional Lines,
News Release (Mar. 8, 2002), available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-220644A1.pdf.
14 See, e.g., Mescalero Apache Telecom, Inc., GTE Southwest Incorporated, and Valor Telecommunications of New
Mexico, LLC, Joint Petition for Waiver of the Definition of “Study Area” Contained in the Part 36, Appendix
Glossary of the Commission’s Rules, Mescalero Apache Telecom, Inc., Waiver of Sections 61.41(c)(2), 69.3(e)(11),
36.611, and 36.612 of the Commission’s Rules
, CC Docket No. 96-45, Order, 16 FCC Rcd 3813, 3825, para. 30
(Com. Car. Bur. 2001) (granting Mescalero a waiver “to permit it to receive high-cost loop support for the period
January 1, 2001 through December 31, 2002”); Adak Eagle Enterprises, LLC d/b/a Adak Telephone Utility, Petition
for Waiver of Sections 36.611, 36.612, 54.301(b), 54.314(d), 54.903(a)(3), 69.2(hh) and 69.3(e)(6) of the
Commission’s Rules
, CC Docket No. 96-45, Order, 20 FCC Rcd 20543, 20547, para. 10 (Wireline Comp. Bur.
2005) (granting Adak Telephone a waiver “to permit it to receive high-cost loop support for the period beginning
May 25, 2005”).
15 Referral Notice at 5.
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Valley points to a sentence in the background section of the order stating that the requested waiver
“would enable Twin Valley to include the acquired access lines in the NECA carrier common line tariff
upon the closing date of its acquisition transaction with United.”16 Although this statement accurately
reflects the waiver that Twin Valley requested before it knew whether the transaction would close before
or after the Commission granted its study area waiver, the order does not specifically grant a waiver
effective on the actual closing date.17 Moreover, study area and related waivers typically become
effective upon release of the order granting them, and the discussion of the section 69.3(e)(11) waiver in
those orders typically refers to the next applicable July 1 annual access filing date following the effective
date of the waiver.18 In the Twin Valley Order the Bureau stated that “the next annual access filing
effective date . . . is July 1, 2007.”19 We therefore find that the Bureau, by identifying the next applicable
annual access filing date as July 1, 2007 and not July 1, 2006, clearly did not intend for the waiver to
apply retroactively. If it had so intended, the Bureau could have mentioned the actual closing date,
referencing July 1, 2006 as the applicable annual access filing effective date, or otherwise made its intent
known.20
7.
Twin Valley argues that it had obtained “the primary regulatory approvals” for the
acquisition in the section 214 process and that, between the closing date and release date of the order, it
invested significant money to upgrade the acquired exchanges “in reliance upon receipt of USF funds.”21
An application for transfer of control pursuant to section 214 of the Communications Act of 1934, as
amended, and a petition for waiver of the definition of “study area” in part 36 of the Commission’s rules


16 Twin Valley Order, 21 FCC Rcd at 10115, para. 10; Referral Notice at 5-6. Twin Valley also points to language
in its waiver petition requesting to add the newly-acquired exchanges “to its current study area” and include them in
the NECA tariff “upon the closing date of this acquisition.” Id. at 6.
17 In fact, the order does not mention the actual closing date. In an August 2006 ex parte meeting, Twin Valley
requested that the Commission take action on its study area waiver as soon as possible and “that it be effective as of
the March 1, 2006 acquisition of the exchanges.” Letter from David Cosson, Counsel to Twin Valley Telephone,
Inc., to Marlene H. Dortch, Secretary, FCC, CC Docket No. 96-45, 1 (dated Aug. 24, 2006) (August 24, 2006 Ex
Parte
Letter).
18 See, e.g., Partner Communications Cooperative and Iowa Telecommunications Services, Inc., d/b/a Iowa
Telecom; Joint Petition for Waiver of the Definition of “Study Area” Contained in Part 36, Appendix-Glossary of
the Commission’s Rules
, Petition for Waiver of Sections 69.3(e)(11) and 69.605(c) of the Commission’s Rules, CC
Docket No. 96-45, Order, 21 FCC Rcd 4404, 4410, para. 17 (Wireline Comp. Bur. 2006); Lost Nation-Elwood
Telephone Company and Iowa Telecommunications Services, Inc., d/b/a Iowa Telecom Joint Petition for Waiver of
the Definition of “Study Area” Contained in Part 36, Appendix-Glossary of the Commission’s Rules, Petition for
Waiver of Section 69.3(e)(11) of the Commission’s Rules
, CC Docket No. 96-45, Order, 21 FCC Rcd 4417, 4422,
para. 16 (Wireline Comp. Bur. 2006); Rural Telephone Service Company, Inc., Nex-Tech, Inc., United Telephone
Company of Kansas, and United Telephone Company of Eastern Kansas
, Joint Petition for Waiver of the Definition
of “Study Area” Contained in Part 36, Appendix-Glossary of the Commission’s Rules; Petition for Waiver of
Section 69.3(e)(11) of the Commission’s Rules
, CC Docket No. 96-45, Order, 21 FCC Rcd 11964, 11970, para. 15
(Wireline Comp. Bur. 2006); Gorham Telephone Company, Inc., and Rural Telephone Service Company, Inc., Joint
Petition for Waiver of the Definition of “Study Area” Contained in Part 36, Appendix-Glossary of the Commission’s
Rules, Petition for Waiver of Section 69.3(e)(11) of the Commission’s Rules
, CC Docket No. 96-45, Order, 21 FCC
Rcd 11972, 11976, para. 12 (Wireline Comp. Bur. 2006); SRT Communications, Inc. and North Dakota Telephone
Company, Joint Petition for Waiver of the Definition of “Study Area” Contained in Part 36, Appendix-Glossary of
the Commission’s Rules; Petition for Waiver of Sections 69.3(e)(11) and 69.605(c) of the Commission’s Rules
, CC
Docket No. 96-45, Order, 22 FCC Rcd 6699, 6704, para. 13 (Wireline Comp. Bur. 2007).
19 Twin Valley Order, 21 FCC Rcd at 10115, para. 10.
20 For example, if the Bureau had intended to grant Twin Valley’s request for an effective date of March 1, 2006, it
could have cited to that specific request in the August 24, 2006 Ex Parte Letter, which was filed shortly before the
Bureau’s order was released. See supra note 17; see also supra para. 5 and notes 13-14.
21 Referral Notice at 2-3, 4.
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FCC 10-26

are separate proceedings under the Commission’s rules.22 In evaluating petitions seeking a waiver of the
rule freezing study area boundaries, the Commission applies a three-prong standard, the first of which is
that the change in study area boundaries must not adversely affect the universal service fund.23 Twin
Valley therefore had no reasonable basis for relying upon the receipt of universal service support before
the Commission had considered the effect of the acquisition on the universal service fund in the study
area waiver proceeding.24

IV.

ORDERING CLAUSES

8.
Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i), 5(c), 214, and 254 of the
Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 155(c), 214, and 254, that this order
IS ADOPTED.
9.
IT IS FURTHER ORDERED that, pursuant to sections 1.103(a) and 1.4(b)(2) of the
Commission's rules, 47 C.F.R. §§1.103(a), 1.4(b)(2) this order SHALL BE EFFECTIVE upon release.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary


22 See 47 U.S.C. § 214; 47 C.F.R. §§ 63.03, 63.04 and Part 36, App. (defining study area).
23 Twin Valley Order, 21 FCC Rcd at 10113, para. 5 (citing US WEST Communications, Inc., and Eagle
Telecommunications, Inc., Joint Petition for Waiver of the Definition of “Study Area” Contained in Part 36,
Appendix-Glossary of the Commission’s Rules,
AAD 94-27, Memorandum Opinion and Order, 10 FCC Rcd 1771,
1772, para. 5 (1995)).
24 Twin Valley is aware that under the Commission’s current procedures “the Section 214 application is typically
granted well before the determination of a waiver request.” Referral Notice at 8. Twin Valley also claims, however,
that the Commission suggested that study area waivers should be granted within 60 days. Referral Notice at 7 n.13.
To support this claim, Twin Valley cites the Commission’s 1990 proposal to adopt streamlined procedures for
allowing changes in study area boundaries that result from sales of exchanges. After notification that the state
commission has approved or does not object to the changes, under that proposal the change in study area boundaries
would have taken effect if the Bureau “does not stay, reject, modify, or condition such change within 60 days from
receiving notice of the proposal.” Amendment of Part 36 of the Commission’s Rules and Establishment of a Joint
Board
, CC Docket No. 80-286, Notice of Proposed Rulemaking, 5 FCC Rcd 5974, 5976, para. 19. This proposal
was referred to the Federal-State Joint Board on Separations but was never adopted by the Commission.
5

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