§ 54.1310   Expense adjustment.

   (a) Until June 30, 2015, for study areas reporting 200,000 or fewer working
   loops pursuant to § 54.1305(h), the expense adjustment (additional interstate
   expense allocation) is equal to the sum of paragraphs (a)(1) and (2) of this
   section.

   (1) Sixty-five percent of the study area average unseparated loop cost per
   working loop as calculated pursuant to § 54.1309(b) in excess of 115 percent
   of the national average for this cost but not greater than 150 percent of
   the national average for this cost as calculated pursuant to § 54.1309(a)
   multiplied by the number of working loops reported in § 54.1305(h) for the
   study area; and

   (2) Seventy-five percent of the study area average unseparated loop cost per
   working loop as calculated pursuant to § 54.1309(b) in excess of 150 percent
   of the national average for this cost as calculated pursuant to § 54.1309(a)
   multiplied by the number of working loops reported in § 54.1305(h) for the
   study area.

   (b) Beginning July 1, 2015, the expense adjustment for each study area
   calculated pursuant to paragraph (a) of this section will be adjusted as
   follows:

   (1) If the aggregate expense adjustments for all study areas exceed the
   maximum rural incumbent local exchange carrier portion of nationwide loop
   cost expense adjustment allowable pursuant to § 54.1302(a) (the HCLS cap),
   then each study area's expense adjustment will be reduced by multiplying it
   by the ratio of the HCLS cap to the aggregate expense adjustments for all
   study areas.

   (2) If the aggregate expense adjustments for all study areas are less than
   the HCLS cap set pursuant to § 54.1302(a), then the expense adjustments for
   all  study  areas  pursuant  to paragraph (a) of this section shall be
   recalculated using a cost per loop calculated to produce an aggregate amount
   equal to the HCLS cap in place of the national average cost per loop.

   (c) The expense adjustment calculated pursuant to paragraphs (a) and (b) of
   this section shall be adjusted each year to reflect changes in the amount of
   high-cost loop support resulting from adjustments calculated pursuant to
   § 54.1306(a) made during the previous year. If the resulting amount exceeds
   the previous year's fund size, the difference will be added to the amount
   calculated  pursuant to paragraphs (a) and (b) of this section for the
   following year. If the adjustments made during the previous year result in a
   decrease in the size of the funding requirement, the difference will be
   subtracted from the amount calculated pursuant to paragraphs (a) and (b) of
   this section for the following year.

   [ 80 FR 4479 , Jan. 27, 2015]

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