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Yl- x-FCC, 106 S. Ct. 1890 (1986) (LPSC)). This decision has prompted a number of inquiries on  xthe proper accounting treatment for depreciation under Parts 31 and 33 when state-mandated  xYdepreciation practices differ from those prescribed by the FCC. Because of the volume of these  xinquiries, we believe some formal clarification is necessary, both with respect to our reading of the decision and our handling of the depreciation differences that may result.   xIn its decision, the Supreme Court noted that conflicting arguments had been advanced  xregarding the authority conferred on the Commission by Section 220 of the Communications Act  xof 1934, as amended. However, the Supreme Court found it unnecessary to "define fully the  Y- xscope" of Section 220 "in order to decide this case." LPSC, supra, at 1903. Rather, the Court  Y- xjheld "only that Section 220 does not operate to pre-empt state depreciation regulation for  Yo- xintrastate ratemaking purposes." (Emphasis added and footnote omitted). Id. Since the Court  xjchose not to define the scope of Section 220 for accounting purposes, we do not read the  xjdecision as affecting this Commission's ability to prescribe and administer the accounting  xsystems to be maintained by carriers subject to its jurisdiction. We view that ability as extending  xto the computation of depreciation for accounting purposes. Thus, the core books maintained by  xthe carriers' should reflect the depreciation rates prescribed by the FCC with various state  xjurisdictional depreciation maintained on a "side record" basis. This is necessary to enable the  xFCC to oversee the rates charged by carriers for interstate services. For example, were the  x-carriers' core books to reflect state prescribed depreciation rates, the FCC would be greatly  Y#- xjhindered 3'3'Standard3'3'StandardrJet IIISimp( in performing the separations analysis necessary to evaluate tariffs for interstate  xservices. The interpretation rendered in this letter is in no way intended to intrude on the states' legitimate role in evaluating rates for intrastate services.   MxWhen the new Part 32 Uniform System of Accounts becomes operational, differences  xattributable to state treatment of items like depreciation will be reflected in accounts for  xjurisdictional differences. Parts 31 and 33, which will remain in effect through December 31,")0*0*0*]*"  (!!1987, provide no jurisdictional accounts. In the interim, we are requiring carriers to report these  (!!differences as footnote disclosures in Form M, as shown in the attached example, and attributed  (!X to the specific state. For carriers affected by state represcriptions, this disclosure would begin with calendar year 1986. dYour cooperation in this matter will be appreciated. d` `  hh ,ppMSincerely, Xd(# d` `  hh ,ppMAlbert Halprin(#p d` `  hh ,ppMChief, Common Carrier Bureau(#p " 0*0*0*0 "  Y< 3'3'StandardrJet IIISimp'3Standard - Dup Long'3Standard - Dup LongSimp ]EXAMPLE OF FOOTNOTE DISCLOSURE OF JURISDICTIONAL DEPRECIATION DIFFERENCES A. Underlying Assumptions: Cost of Asset - $100,000 d` `  ` Depreciation Method - Straight Line for both FCC and State purposes. d` `  ` Depreciable Life - 5 year life for FCC. d` `  hh  10 year life for State. d` `  ` Separation between interstate and intrastate business is 30% and 70%, respectively. X` hp x (#%'0*,.8135@8:  `F (#P6X@DQw@##` PjQ{P#100,000_ 40000}60000" " 30000 12000 18000hh 70000  28000,42000ppM14000n  20000xx6000 14000(#(#<7000>  `F (100,000_ 60000}40000" " 30000 18000 12000hh 70000  42000,28000ppM21000n  20000xx6000 14000(#(#<7000>  `F+(100,000_ 80000}20000" " 30000 24000 6000hh 70000  56000,14000ppM28000n  20000xx6000 14000(#(#<7000>  `F(100,000_100000} 0" " 30000 30000 0hh 70000  70000, 0ppM35000n  20000xx6000 14000(#(#<7000>  `Fw(_}" "  hh ,ppM28000n  xx (#(# 7000%%  `F(_}" "  hh ,ppM21000n  xx (#(# 7000  `F(_}" "  hh ,ppM14000n  xx (#(# 7000  `Fi(_}" "  hh ,ppM7000n  xx (#(# 7000  `F(_}" "  hh ,ppM 0n  xx (#(# 7000%%"xxx"  Y<#XP\  P6Q[hXP#B. Footnote Disclosure Year 2 _The state-mandated depreciation practices of several states differ from those prescribed by the FCC . If these jurisdictional differences were aggregated, the financial effect of this jurisdictional ratemaking variation would increase intrastate assets for the current year by $7,000 and there would be a corresponding $7,000 decrease in intrastate operating expenses. The cumulative impact of this jurisdictional ratemaking practice has been a $14,000 increase in assets as shown below by state.   Y <_}PrevioushhCurrent Year  Y <_}Years" "  Total  Y <State 1}****" "  ****  Y{ <State 2}****" "  ****  Yd <State 3}****" "  ****