§ 54.320   Compliance and recordkeeping for the high-cost program.

   (a) Eligible telecommunications carriers authorized to receive universal
   service high-cost support are subject to random compliance audits and other
   investigations to ensure compliance with program rules and orders.

   (b)  All eligible telecommunications carriers shall retain all records
   required to demonstrate to auditors that the support received was consistent
   with the universal service high-cost program rules. This documentation must
   be maintained for at least ten years from the receipt of funding. All such
   documents shall be made available upon request to the Commission and any of
   its Bureaus or Offices, the Administrator, and their respective auditors.

   (c) Eligible telecommunications carriers authorized to receive high-cost
   support that fail to comply with public interest obligations or any other
   terms  and  conditions may be subject to further action, including the
   Commission's existing enforcement procedures and penalties, reductions in
   support amounts, potential revocation of ETC designation, and suspension or
   debarment pursuant to § 54.8.

   (d)  Eligible telecommunications carriers subject to defined build-out
   milestones must notify the Commission and USAC, and the relevant state, U.S.
   Territory, or Tribal government, if applicable, within 10 business days
   after  the applicable deadline if they have failed to meet a build-out
   milestone.

   (1)  Interim  build-out milestones. Upon notification that an eligible
   telecommunications carrier has defaulted on an interim build-out milestone
   after it has begun receiving high-cost support, the Wireline Competition
   Bureau will issue a letter evidencing the default. The issuance of this
   letter shall initiate reporting obligations and withholding of a percentage
   of the eligible telecommunication carrier's total monthly high-cost support,
   if applicable, starting the month following the issuance of the letter:

   (i) Tier 1. If an eligible telecommunications carrier has a compliance gap
   of at least five percent but less than 15 percent of the number of locations
   that the eligible telecommunications carrier is required to have built out
   to by the interim milestone, the Wireline Competition Bureau will issue a
   letter to that effect. Starting three months after the issuance of this
   letter, the eligible telecommunications carrier will be required to file a
   report every three months identifying the geocoded locations to which the
   eligible telecommunications carrier has newly deployed facilities capable of
   delivering broadband meeting the requisite requirements with Connect America
   support in the previous quarter. Eligible telecommunications carriers that
   do not file these quarterly reports on time will be subject to support
   reductions as specified in § 54.313(j). The eligible telecommunications
   carrier  must  continue  to  file quarterly reports until the eligible
   telecommunications carrier reports that it has reduced the compliance gap to
   less than five percent of the required number of locations for that interim
   milestone  and the Wireline Competition Bureau issues a letter to that
   effect.

   (ii) Tier 2. If an eligible telecommunications carrier has a compliance gap
   of at least 15 percent but less than 25 percent of the number of locations
   that the eligible telecommunications carrier is required to have built out
   to by the interim milestone, USAC will withhold 15 percent of the eligible
   telecommunications carrier's monthly support for that state and the eligible
   telecommunications carrier will be required to file quarterly reports. Once
   the eligible telecommunications carrier has reported that it has reduced the
   compliance gap to less than 15 percent of the required number of locations
   for that interim milestone for that state, the Wireline Competition Bureau
   will issue a letter to that effect, USAC will stop withholding support, and
   the eligible telecommunications carrier will receive all of the support that
   had been withheld. The eligible telecommunications carrier will then move to
   Tier 1 status.

   (iii) Tier 3. If an eligible telecommunications carrier has a compliance gap
   of at least 25 percent but less than 50 percent of the number of locations
   that the eligible telecommunications carrier is required to have built out
   to by the interim milestone, USAC will withhold 25 percent of the eligible
   telecommunications carrier's monthly support for that state and the eligible
   telecommunications carrier will be required to file quarterly reports. Once
   the eligible telecommunications carrier has reported that it has reduced the
   compliance gap to less than 25 percent of the required number of locations
   for that interim milestone for that state, the Wireline Competition Bureau
   will issue a letter to that effect, the eligible telecommunications carrier
   will move to Tier 2 status.

   (iv) Tier 4. If an eligible telecommunications carrier has a compliance gap
   of  50  percent  or  more of the number of locations that the eligible
   telecommunications carrier is required to have built out to by the interim
   milestone:

   (A)  USAC  will withhold 50 percent of the eligible telecommunications
   carrier's   monthly   support   for   that  state,  and  the  eligible
   telecommunications carrier will be required to file quarterly reports. As
   with the other tiers, as the eligible telecommunications carrier reports
   that it has lessened the extent of its non-compliance, and the Wireline
   Competition Bureau issues a letter to that effect, it will move down the
   tiers until it reaches Tier 1 (or no longer is out of compliance with the
   relevant interim milestone).

   (B) If after having 50 percent of its support withheld for six months the
   eligible telecommunications carrier has not reported that it is eligible for
   Tier 3 status (or one of the other lower tiers), USAC will withhold 100
   percent of the eligible telecommunications carrier's monthly support and
   will commence a recovery action for a percentage of support that is equal to
   the eligible telecommunications carrier's compliance gap plus 10 percent of
   the ETC's support that has been disbursed to that date.

   (v) If at any point during the support term, the eligible telecommunications
   carrier reports that it is eligible for Tier 1 status, it will have its
   support fully restored, USAC will repay any funds that were recovered or
   withheld, and it will move to Tier 1 status.

   (2)  Final  build-out  milestone.  Upon notification that the eligible
   telecommunications carrier has not met a final build-out milestone, the
   eligible telecommunications carrier will have twelve months from the date of
   the final build-out milestone deadline to come into full compliance with
   this milestone. If the eligible telecommunications carrier does not report
   that it has come into full compliance with this milestone within twelve
   months, the Wireline Competition Bureau will issue a letter to this effect.
   USAC will then recover the percentage of support that is equal to 1.89 times
   the average amount of support per location received in the state over the
   six-year term for the relevant number of locations plus 10 percent of the
   eligible  telecommunications carrier's total Phase II support over the
   six-year term for that state.

   (3) Compliance reviews. If subsequent to the eligible telecommunications
   carrier's support term, USAC determines in the course of a compliance review
   that  the eligible telecommunications carrier does not have sufficient
   evidence  to demonstrate that it has built out to all of the locations
   required by the final build-out milestone, USAC shall recover a percentage
   of support from the eligible telecommunications carrier as specified in
   paragraph (d)(2) of this section.

   [ 76 FR 73876 , Nov. 29, 2011, as amended at  80 FR 4478 , Jan. 27, 2015]

   Effective Date Note: At  80 FR 4478 , Jan. 27, 2015, § 54.320 was amended by
   adding paragraph (d). This paragraph contains information collection and
   recordkeeping requirements and will not become effective until approval has
   been given by the Office of Management and Budget.

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Subpart E—Universal Service Support for Low-Income Consumers

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54.400   Terms and definitions.

   As used in this subpart, the following terms shall be defined as follows:

   (a) Qualifying low-income consumer. A “qualifying low-income consumer” is a
   consumer who meets the qualifications for Lifeline, as specified in § 54.409.

   (b) Toll blocking service. “Toll blocking service” is a service provided by
   an eligible telecommunications carrier that lets subscribers elect not to
   allow the completion of outgoing toll calls from their telecommunications
   channel.

   (c) Toll control service. “Toll control service” is a service provided by an
   eligible telecommunications carrier that allows subscribers to specify a
   certain   amount   of  toll  usage  that  may  be  incurred  on  their
   telecommunications channel per month or per billing cycle.

   (d) Toll limitation service. “Toll limitation service” denotes either toll
   blocking service or toll control service for eligible telecommunications
   carriers  that  are incapable of providing both services. For eligible
   telecommunications carriers that are capable of providing both services,
   “toll  limitation service” denotes both toll blocking service and toll
   control service.

   (e) Eligible resident of Tribal lands. An “eligible resident of Tribal
   lands” is a “qualifying low-income consumer,” as defined in paragraph (a) of
   this section, living on Tribal lands. For purposes of this subpart, “Tribal
   lands” include any federally recognized Indian tribe's reservation, pueblo,
   or colony, including former reservations in Oklahoma; Alaska Native regions
   established pursuant to the Alaska Native Claims Settlement Act (85 Stat.
   688); Indian allotments; Hawaiian Home Lands—areas held in trust for Native
   Hawaiians by the state of Hawaii, pursuant to the Hawaiian Homes Commission
   Act, 1920 July 9, 1921, 42 Stat. 108, et. seq., as amended; and any land
   designated as such by the Commission for purposes of this subpart pursuant
   to the designation process in § 54.412.

   (f) Income. “Income” is all income actually received by all members of a
   household.  This  includes  salary before deductions for taxes, public
   assistance  benefits, social security payments, pensions, unemployment
   compensation, veteran's benefits, inheritances, alimony, child support
   payments, worker's compensation benefits, gifts, lottery winnings, and the
   like. The only exceptions are student financial aid, military housing and
   cost-of-living allowances, irregular income from occasional small jobs such
   as baby-sitting or lawn mowing, and the like.

   (g)  Duplicative support. “Duplicative support” exists when a Lifeline
   subscriber is receiving two or more Lifeline services concurrently or two or
   more subscribers in a household are receiving Lifeline services or Tribal
   Link Up support concurrently.

   (h) Household. A “household” is any individual or group of individuals who
   are living together at the same address as one economic unit. A household
   may include related and unrelated persons. An “economic unit” consists of
   all adult individuals contributing to and sharing in the income and expenses
   of a household. An adult is any person eighteen years or older. If an adult
   has no or minimal income, and lives with someone who provides financial
   support  to  him/her, both people shall be considered part of the same
   household. Children under the age of eighteen living with their parents or
   guardians are considered to be part of the same household as their parents
   or guardians.

   (i) National Lifeline Accountability Database or Database. The “National
   Lifeline Accountability Database” or “Database” is an electronic system,
   with associated functions, processes, policies and procedures, to facilitate
   the detection and elimination of duplicative support, as directed by the
   Commission.

   (j) Qualifying assistance program. A “qualifying assistance program” means
   any of the federal, state, or Tribal assistance programs participation in
   which, pursuant to § 54.409(a) or (b), qualifies a consumer for Lifeline
   service, including Medicaid; Supplemental Nutrition Assistance Program;
   Supplemental Security Income; Federal Public Housing Assistance (Section 8);
   Low-Income Home Energy Assistance Program; National School Lunch Program's
   free lunch program; Temporary Assistance for Needy Families; Bureau of
   Indian  Affairs  general  assistance;  Tribally administered Temporary
   Assistance  for  Needy  Families (Tribal TANF); Head Start (only those
   households meeting its income qualifying standard); or the Food Distribution
   Program on Indian Reservations (FDPIR), and with respect to the residents of
   any particular state, any other program so designated by that state pursuant
   to § 54.409(a).

   (k)  Direct service. As used in this subpart, direct service means the
   provision of service directly to the qualifying low-income consumer.

   [ 77 FR 12966 , Mar. 2, 2012, as amended at  80 FR 40935 , July 14, 2015]

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