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Case Background
Rule 25-4.020, Florida Administrative Code (F.A.C),
Location and Preservation of Records, requires telecommunications companies to,
among other things, keep their records at their offices within the state unless
otherwise authorized by the Commission, and to preserve them in their original
form for a specified period of time or utilize a storage and retrieval system
that ensures the authenticity of documents and the completeness of records.
Moreover, the rule requires companies to reimburse the Commission for reasonable
travel expenses incurred during a Commission review of a company’s records that
are located out of state, but waives that requirement for a company whose
records are located within 50 miles of the state line.
Rule 25-4.0201, F.A.C., Audit Access to Records, addresses
the reasonable access to the records of telecommunications companies, and to
the records of their affiliates, which access was provided by section
364.183(1), F.S.
Staff is recommending the removal of the waiver language
from the requirement in Rule 25-4.020, F.A.C., for telecommunications companies
to reimburse the Commission for travel when their records are located within 50
miles of the Florida state line. However, staff does not believe the removal
of the waiver language would impact any of the telecommunications companies. In
addition, the 2011 Legislature eliminated from section 364.183(1), F.S., the
Commission’s authority to access the records of telecommunications company
affiliates. Therefore, staff is recommending that the Commission propose to
amend Rule 25-4.0201, F.A.C., accordingly.
The Commission’s Notice of Development of Rulemaking was published
on October 28, 2011, in Volume 37, Number 43, of the Florida Administrative
Weekly. No rule development workshop was requested. The Commission has
jurisdiction pursuant to Sections 120.54, 350.127(2), 364.016, and 364.183,
F.S.
Discussion
of Issues
Issue 1:
Should the Commission propose the amendment of Rule
25-4.020, F.A.C., Location and Preservation of Records, and of Rule 25-4.0201,
F.A.C., Audit Access to Records?
Recommendation:
Yes, the Commission should propose the amendment of
Rules 25-4.020 and 25-4.0201, F.A.C., as set forth in Attachment A of this
recommendation. (Gervasi, Mailhot, Salak)
Staff Analysis:
Rule 25-4.020, F.A.C.
Rule 25-4.020(1), F.A.C., requires telecommunications
companies to keep their records at their offices within the state unless
otherwise authorized by the Commission. This rule only applies to incumbent
local exchange companies (ILECs), most of which have already received
permission to move their books out of state. With the advent of electronic
communications and the requirement for companies to reimburse the Commission
for reasonable travel expenses incurred during any review of out-of-state
records under Rule 25-4.020(2), F.A.C., this rule provision is no longer
necessary. Moreover, since this provision only applies to the ILECs, striking
it from the rule will result in equal treatment for the ILECs and the
competitive local exchange carriers (CLECs). Staff recommends that paragraph
(1) should be stricken, as shown on Attachment A, page 6, lines 16-18.
Rule 25-4.020(1)(b)2., F.A.C., waives the requirement for
a company to reimburse the Commission for reasonable travel expenses incurred
during a Commission review of a company’s records that are located within 50
miles of the state line. This waiver language is obsolete, as it has not been
utilized by a company since 1997, when Florala Telephone Company, Inc., an Alabama company, was acquired by GTC, Inc., and its records were relocated. Staff recommends
that this language be stricken, as shown on Attachment A, page 7, line 14.
Rule 25-4.020(3), F.A.C., requires that the ILECs’ records
be preserved in their original form for a minimum of three years, or for a
lesser period of time as specified in Form PSC/ECR/17-T (5/93), entitled
“Schedule of Records and Periods of Retention.” Alternatively, Rule
25-4.020(3)(a) and (b) allow companies to utilize a storage and retrieval
system that ensures record authenticity and completeness. Due to improved technology,
these requirements are no longer necessary. Finally, staff notes that since
this provision only applies to the ILECs, striking it from the rule will result
in equal treatment for the ILECs and CLECs. Staff recommends that these
provisions of the rule should be stricken, as shown on Attachment A, page 7,
line 15 through page 8, line 9.
Rule 25-4.0201, F.A.C.
Rule 25-4.0201, F.A.C., Audit Access to Records, addresses
the reasonable access to the records of telecommunications companies, and to
the records of their affiliates. The 2011 Legislature eliminated from section
364.183(1), F.S., the Commission’s authority to access the records of
telecommunications company affiliates. Accordingly, staff recommends that Rule
25-4.0201, F.A.C., be amended to eliminate all references to Commission access
to affiliate company records, as shown on Attachment A, page 9, lines 2, 19,
and 22. Moreover, staff recommends that all references to “utility” should be
changed to “company,” in keeping with the statutory references to
telecommunications companies in section 364.183, F.S. See Attachment A, page
9, lines 2, 10, 12, 13, 15, 19, and 21.
Statement of Estimated
Regulatory Costs
The Florida
Administrative Procedure Act encourages an agency to prepare a Statement of Estimated
Regulatory Costs (SERC). Section 120.54(3)(b), F.S. An agency must prepare a
SERC if the proposed rule is likely to directly or indirectly increase
regulatory costs in excess of $200,000 in the aggregate within one year after
implementation of the rule, and shall consider the impact of the rule on small
businesses, small counties, and small cities. Id.
Section 120.541(2)(a), F.S., requires a SERC to include an
economic analysis showing whether the rule, directly or indirectly, is likely
to: 1) have an adverse impact on economic growth, private sector job creation,
employment, or investment; 2) have an adverse impact on business
competitiveness; or 3) increase regulatory costs; in excess of $1 million in
the aggregate within five years after the implementation of the rule. Section
120.541(3), F.S., requires that if the adverse impact or regulatory costs of
the rule exceed any of those criteria, the rule shall be submitted to the
President of the Senate and Speaker of the House, and may not take effect until
it is ratified by the Legislature.
The SERC prepared by staff is included as Attachment B to
this recommendation. It indicates that economic growth, private job sector
employment, investment, and business competitiveness are not expected to be adversely
impacted during the five-year period following implementation of the rule
amendments because the intent of the amendments to Rule 25-4.020, F.A.C., is to
eliminate the timeframe for the preservation of records, and because no
companies are expected to be affected by the elimination of the waiver language
regarding company reimbursement for records located within 50 miles of the
state line. Moreover, the amendments to Rule 25-4.0201, F.A.C., to eliminate
required access to affiliate records represents a lower level of regulatory
requirement. Based on the SERC, the rule amendments will not require
legislative ratification.
Attachment B also contains the estimated number of
individuals and entities likely to be required to comply with the rules, the
estimated cost of implementing and enforcing the rules, the estimated
transactional costs likely to be incurred by individuals and entities required
to comply with the rules, and an analysis of the impact on small businesses,
small counties, and small cities. Section 120.541(2)(b)-(e), F.S., requires
that a SERC include these considerations.
Issue 2:
Should this docket be closed?
Recommendation:
Yes, if no requests for hearing or comments are filed,
the rule amendments as proposed should be filed for adoption with the Secretary
of State and the docket should be closed. (Gervasi)
Staff Analysis:
Unless comments or requests for hearing are filed,
the rules as proposed may be filed with the Secretary of State without further
Commission action. The docket may then be closed.
25-4.020 Location and Preservation of Records.
(1) Any company that keeps its records outside the State shall
reimburse the Commission for the reasonable travel expense incurred by each
Commission representative during any review of the out-of-state records of the
company or its affiliates. Reasonable travel expenses are those travel expenses
that are equivalent to travel expenses paid by the Commission in the ordinary
course of its business.
(a) The company shall remit reimbursement for out-of-state
travel expenses within 30 days from the date the Commission mails the invoice.
(b) The reimbursement requirement in subsection (1) shall be
waived for any company that makes its out-of-state records available at the
company’s office located in Florida or at another mutually agreed upon location
in Florida within 10 working days from the Commission’s initial request. If 10
working days is not reasonable because of the complexity and nature of the
issues involved or the volume and type of material requested, the Commission
may establish a different time frame for the company to bring records into the
state. For individual data requests made during an audit, the response time
frame established in Rule 25-4.0201, F.A.C., shall control. All records
that a company is required to keep, by reason of these or other rules
prescribed by the Commission, shall be kept at the office or offices of the
company within the State unless otherwise authorized by the Commission.
(2) During any audit or review of records, the company shall
provide Commission staff with adequate and comfortable working and filing
space, consistent with the prevailing conditions and climate, and comparable
with the accommodations provided the company’s outside auditors. Any
company that keeps its records outside the State shall reimburse the Commission
for the reasonable travel expense incurred by each Commission representative
during any review of the out-of-state records of the company or its affiliates.
Reasonable travel expenses are those travel expenses that are equivalent to
travel expenses paid by the Commission in the ordinary course of its business.
(a) The company shall remit reimbursement for out-of-state
travel expenses within 30 days from the date the Commission mails the invoice.
(b) The reimbursement requirement in subsection (2) shall be
waived:
1. For any company that makes its out-of-state records
available at the company’s office located in Florida or at another mutually
agreed upon location in Florida within 10 working days from the Commission’s
initial request. If 10 working days is not reasonable because of the complexity
and nature of the issues involved or the volume and type of material requested,
the Commission may establish a different time frame for the company to bring
records into the state. For individual data requests made during an audit, the
response time frame established in Rule 25-4.0201, F.A.C., shall control; or
2. For a company whose records are located within 50 miles of
the Florida state line.
(3) All records shall be preserved for the period of time
specified in Form PSC/ECR/17-T (5/93), entitled “Schedule of Records and
Periods of Retention” which is incorporated by reference into this rule, and
may be obtained from the Director, Division of Economic Regulation, Florida
Public Service Commission.
(a) However, all source documents retained as required by
subsection 25-4.020(3), F.A.C., shall be maintained in their original form for
a minimum of three years, or for any lesser period of time specified for that
type of record in Form PSC/ECR/17-T, after the date the document was created or
received by the company. This paragraph does not require the company to create
paper copies of documents where the company would not otherwise do so in the
ordinary course of its business. The Commission may waive the requirement that
documents be retained in their original form upon a showing by a company that
it employs a storage and retrieval system that consistently produces clear,
readable copies that are substantially equivalent to the originals, and clearly
reproduces handwritten notations on documents.
(b) The company shall maintain written procedures governing
the conversion of source documents to a storage and retrieval system, which
procedures ensure the authenticity of documents and the completeness of
records. Records maintained in the storage and retrieval system must be easy to
search and easy to read.
(4) During any audit or review of records, the company shall
provide Commission staff with adequate and comfortable working and filing
space, consistent with the prevailing conditions and climate, and comparable
with the accommodations provided the company’s outside auditors.
Rulemaking Authority 350.127(2), 364.016, 364.17, 364.18,
364.183, 364.185 FS. Law Implemented 364.016, 364.17, 364.18,
364.183, 364.185 FS. History–Revised 12-1-68, Amended 3-31-76, Formerly
25-4.20, Amended 6-23-93, 11-13-95, 1-25-09, XX-XX-XX.
25-4.0201 Audit Access to Records.
This rule addresses the reasonable access to company utility
and affiliate records provided by Section 364.183(1), F.S., for the
purposes of management and financial audits.
(1) The audit scope, audit program and objectives, and audit
requests are not constrained by relevancy standards narrower than those
provided by Section 364.183(1), F.S.
(2) Reasonable access means that company responses to audit
requests for access to records shall be fully provided within the time frame
established by the auditor. In establishing a due date, the auditor shall
consider the location of the records, the volume of information requested, the
number of pending requests, the amount of independent analysis required, and
reasonable time for the company utility to review its response
for possible claims of confidentiality or privilege.
(3) In those instances where the company utility
disagrees with the auditor’s assessment of a reasonable response time to the
request, the company utility shall first attempt to discuss the
disagreement with the auditor and reach an acceptable revised date. If
agreement cannot be reached, the company utility shall discuss
the issue with successive levels of supervisors at the Commission until an
agreement is reached. If necessary, a final decision shall be made by the
Prehearing Officer. If the audit is related to an undocketed case, the Chairman
shall make the decision.
(4) The company utility and its affiliates
shall have the opportunity to safeguard its their records by
copying them or logging them out, provided, however, that safeguard measures
shall not be used to prevent reasonable access by Commission auditors to company
utility or affiliate records.
(5) Reasonable access to records includes reasonable access to
personnel to obtain testimonial evidence in response to inquiries or through
interviews.
(6) Nothing in this rule shall preclude Commission auditors from
making copies or taking notes. In the event these notes relate to documents for
which the company has asserted confidential status, such notes shall also be
given confidential status.
(7) Form PSC/APA 6 (2/95), entitled “Audit Document and Record
Request/Notice of Intent” is incorporated by reference into this rule. This
form is used by auditors when requests are formalized. This form documents
audit requests, the due dates for responses, and all Notices of Intent to Seek
Confidential Classification.
Rulemaking Authority 350.127(2) FS. Law Implemented 364.183(1)
FS. History–New 3-1-95, Amended XX-XX-XX.
State of Florida
Public Service Commission
Capital Circle Office Center ● 2540 Shumard Oak Boulevard
Tallahassee, Florida 32399-0850
-M-E-M-O-R-A-N-D-U-M-
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DATE:
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March 14, 2012
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TO:
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Rosanne Gervasi, Senior Attorney,
Office of the General Counsel
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FROM:
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William B. McNulty, Economic
Analyst, Division of Economic Regulation
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RE:
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Statement of Estimated Regulatory
Costs for Proposed Rule Amendments to Rule 25-4.020, F.A.C., Location and
Preservation of Records, and Rule 25-4.0201, F.A.C., Audit Access to Records
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Summary of Rules
Rule 25-4.020, Florida Administrative Code
(F.A.C), Location and Preservation of Records, requires incumbent local
exchange companies to keep all required records at its offices within the State
of Florida, except in cases where the Commission authorizes records to be kept
at locations outside the state. Telecommunications companies are required to
reimburse the Commission for reasonable travel expenses associated with
out-of-state Commission review of records, but the reimbursement requirement is
waived if the company provides the information at a mutually agreeable location
in Florida within 10 working days of the Commission’s initial request or if the
records are located within 50 miles of the Florida state line. The rule also
specifies that incumbent local exchange company records shall be retained for a
period of time identified in Form PSC/ECR/17-T (5/93), entitled “Schedule of
Records and Periods of Retention.”. The draft rule would eliminate the
required time-specific retention of records referenced in Form
PSC/ECR/17-T(5/93). Also, the draft rule would also eliminate the waiver of
the reimbursement requirement for telecommunications companies whose records
are located within 50 miles of the Florida state line.
Rule 25-4.0201, F.A.C., Audit Access
to Records, requires incumbent local exchange companies to allow reasonable
access to utility and affiliate records for purposes of management and
financial audits. The draft rule would eliminate required access to
affiliate records. Also, the draft rule proposes to change all references to
the term “utility” to “company”.
Economic Analysis Showing Whether the Rules Are Likely to
Have an Adverse Impact on Either Economic Growth or Business Competitiveness In
Excess of $1 Million Within 5 Years.
Subparagraph 120.541(2)(a)1, Florida
Statutes (F.S.), requires an economic analysis showing whether the draft rule
directly or indirectly is likely to have an adverse impact on economic growth,
private sector job creation or employment, or private sector investment in
excess of $1 million in the aggregate within 5 years after the implementation
of the rule. Similarly, Subparagraph 120.541(2)(a)2, F.S., requires an
economic analysis showing whether the draft rule directly or indirectly is
likely to have an adverse impact on business competitiveness in excess of $1
million in the aggregate within 5 years after the implementation of the rule.
Since the intent of the draft change to Rule 25-4.020, F.A.C, is to eliminate
the time frame for the preservation of records by incumbent local exchange
companies, this proposed reduction in regulatory requirements is not expected
to adversely impact economic growth, private job sector employment, private
sector investment, and business competitiveness during the five year period
identified in the statute.
While the rule’s waiver language
regarding telecommunications companies’ reimbursement for records located
within 50 miles of the Florida state line would be eliminated with the proposed
rule change, there is no statutory requirement for the waiver and no companies
are expected to be affected by the proposed change. The rule waiver has
benefitted such companies as Florala Telephone Company, Inc. (Florala) and Southland
Telephone Company, two Alabama companies which kept their records within 50
miles of the state line. Florala was acquired in September 1997 by GTC, Inc.
d/b/a Fairpoint Communications and its records have been relocated. Southland
Telephone Company was acquired and moved its records in the early 1990’s. No
record reviews of local exchange companies by the Commission have taken place
within the geographic zone in question since the acquisition of Florala. On
the other hand, the waiver language contained in Rule 25-4.020(2)(b)1, F.A.C.,
allowing companies to make out-of-state records available within 10 working
days from the Commission’s request at an in-state location is commonly used.
The draft rule change to Rule
25-4.0201, F.A.C., to eliminate required access to affiliate records represents
a lower level of regulatory requirement. For this reason, it is not expected
to adversely impact economic growth, private job sector employment, private
sector investment, and business competitiveness during the five year period
identified in the statute.
Economic Analysis Showing Whether the Rules Are Likely to
Increase Regulatory Costs In Excess of $1 Million Within 5 Years
Subparagraph 120.541(2)(a)3, F.S., requires an
economic analysis showing whether the draft rule directly or indirectly is
likely to increase regulatory cost, including any transactional costs, in
excess of $1 million in the aggregate within 5 years after the implementation
of the rule. Since the intent of both Rule 25-4.020, F.A.C., and Rule
25-4.0201, F.A.C., is to decrease regulatory requirements, regulatory costs
should likewise decrease.
Estimated Number of Entities
Required to Comply and General Description of Individuals Affected
Subparagraph
120.541.(2)(b), F.S., requires a good faith estimate of the number of
individuals and entities likely to be required to comply with the rule,
together with a general description of the types of individuals anticipated to
be affected by the rule. The number of telecommunications companies which are
required to comply with subsections (1), (3), and (4) of Rule 25-4.020, F.A.C.,
includes 10 incumbent local exchange companies. Subsection (1) addresses
location of records, subsection (3) addresses time period for the preservation
of records, and subsection (4) addresses adequate accommodations during
audits. The number of telecommunications companies that are required to comply
with subsection (2) of Rule 25-4.020, F.A.C., includes 436 companies (comprised
of 305 local exchange companies, 95 pay telephone companies, 20 shared tenant
service providers, and 16 alternate access vendors). Subsection (2) addresses
reimbursement of state travel expenses. The number of telecommunications
companies which are required to comply with the Rule 25-4.0201, F.A.C.,
includes 10 incumbent local exchange companies.
Rule Implementation and Enforcement
Costs and Impact on Revenues For The Agency and Other State and Local
Government Entities
Section
120.541(2)(c), F.S., requires a good faith estimate of the cost to the agency,
and to any other state and local government entities, of implementing and
enforcing the proposed rule, and any anticipated effect on state or local
revenues. Since draft changes to Rule 25-4.020(3), F.A.C., would remove the
currently required preservation of a wide range of specified records, there is
not expected to be any cost to the Commission of implementing and enforcing the
draft rule change. There would be no impact on revenues to the Commission or
other state and local government entities. Draft changes to Rule 25-4.0201,
F.A.C. would not impact the cost or revenue to the Commission since audits of
affiliate records are non-existent today and would remain so under the proposed
rule.
Estimated Transactional Costs
to Individuals and Entities
Section
120.541(2)(d), F.S., requires a good faith estimate of the transactional costs
likely to be incurred by individuals and entities, including local government
entities, required to comply with the requirements of the rule. The likely
impact of the draft rule changes on incumbent local exchange companies is a
reduction in regulatory costs. Regarding Rule 25-4.020(3), F.A.C., the
companies will incur lower costs for record retention since many required
documents will no longer have to be maintained for the time periods established
by reference in the current rule. The draft changes to Rule 25-4.020(2) are
expected to have no impact on any telecommunications companies. Regarding Rule
25-4.0201, F.A.C., the incumbent local exchange companies are not likely to
have a significant change in costs incurred to accommodate Commission access to
affiliate records since Commission auditors have not requested an audit of
affiliate records for many years.
It is not known
whether companies’ lower costs associated with record retention under the
proposed changes to Rule 25-4.020(3), F.A.C., would be flowed through, in whole
or in part, to consumers, including individuals and local government entities. Draft
changes to Rule 25-4.0201, F.A.C., would not impact the transactional costs to
individuals or local government entities since audits of affiliate records are
non-existent today and would remain so under the proposed rule.
Impact On Small Businesses, Small Cities, Or Small Counties
Section
120.541.(2)(e), F.S., requires an analysis of the impact of the proposed
changes on small businesses as defined by Section 288.703, F.S., and an
analysis of the impact on small counties and small cities as defined in Section
120.52, F.S. In the event incumbent local exchange companies’ lower costs
associated with record retention under the proposed changes to Rule 25-4.020,
F.A.C., are flowed through, in whole or in part, to small businesses, small
cities, and small counties, in the form of lower rates, those entities would be
benefitted. Draft changes to Rule 25-4.0201, F.A.C. would have no impact on
small businesses, small cities, or small counties.
Additional Information Deemed
Useful By The Agency
None.
cc: Braulio Baez
Beth Salak
Dale Mailhot
Marshall Willis