Bridging the Digital Divide for Low-Income Consumers, 71308-71329 [2019-27220]

Download as PDF 71308 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations entry ‘‘Ozone (8-Hour, 1997): Muncie, IN (Delaware County)’’; and ■ f. Removing the entry for ‘‘Terre Haute Hydrocarbon Control Strategy’’ and adding in its place the entry ‘‘Ozone (8Hour, 1997): Terre Haute, IN (Vigo County)’’. The revisions read as follows: § 52.770 * Identification of plan. * * (e) * * * * * EPA-APPROVED INDIANA NONREGULATORY AND QUASI-REGULATORY PROVISIONS Title Indiana date * * * Ozone (8-Hour, 1997): Evansville, IN (Vanderburgh and Warrick Counties). 6/20/2019 * * * Ozone (8-Hour, 1997): Fort Wayne, IN (Allen County). Ozone (8-Hour, 1997): Jackson Co., IN (Jackson County). Ozone (8-Hour, 1997): Greene Co., IN (Greene County). * 12/27/2019, [insert ister citation]. 6/20/2019 12/27/2019, [insert ister citation]. 6/20/2019 12/27/2019, [insert ister citation]. * * * Ozone (8-Hour, 1997): Muncie, IN (Delaware County). * * * Ozone (8-Hour, 1997): Terre Haute, IN (Vigo County). * * BILLING CODE 6560–50–P FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 54 [WC Docket Nos. 17–287, 11–42 and 09– 197; FCC 19–111; FRS 16302] Bridging the Digital Divide for LowIncome Consumers Federal Communications Commission. ACTION: Final rule. AGENCY: In this document, the Federal Communications Commission (Commission) acts to restore the traditional role of states in the eligible telecommunications carrier (ETC) designation process. The Commission also acts to strengthen the Lifeline program’s enrollment, recertification, and reimbursement processes so that limited Universal Service Fund (USF or Fund) dollars are directed only toward qualifying low-income consumers. DATES: Effective January 27, 2020, except for amendatory instruction 7 (§ 54.406(b)) which is effective February 25, 2020 and amendatory instruction 8 (§ 54.406(a)) which is effective March 26, 2020 and amendatory instructions 6.b. (§ 54.404(b)(12)) and 11 (§ 54.410(f)), which are delayed. The SUMMARY: VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 * * 2nd limited maintenance plan. * Federal Reg- * * 2nd limited maintenance plan. Federal Reg- 2nd limited maintenance plan. Federal Reg- 2nd limited maintenance plan. 6/20/2019 * * 12/27/2019, [insert Federal Register citation]. * * 2nd limited maintenance plan. 6/20/2019 * * 12/27/2019, [insert Federal Register citation]. * * 2nd limited maintenance plan. * * Federal Communications Commission will publish a document in the Federal Register announcing this effective date. FOR FURTHER INFORMATION CONTACT: Jodie Griffin, Wireline Competition Bureau, 202–418–7550 or TTY: 202– 418–0484. SUPPLEMENTARY INFORMATION: This is a summary of the Commission’s Fifth Report and Order, Memorandum Opinion and Order and Order on Reconsideration (Order), in WC Docket Nos. 17–287, 11–42 and 09–197; FCC 19–111 adopted October 30, 2019 and released November 14, 2019. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY–A257, 445 12th Street SW, Washington, DC 20554 or at the following internet address: https:// docs.fcc.gov/public/attachments/FCC19-111A1.pdf. Synopsis I. Introduction 1. The Commission’s Lifeline program plays a critical role in closing the digital divide for low-income Americans. Abuse of the program, however, continues to be a significant concern and undermines the Lifeline program’s integrity and effectiveness. Strengthening the accountability of the program is therefore essential to ensuring that it effectively and efficiently helps qualifying low-income PO 00000 Explanation * * 12/27/2019, [insert Federal Register citation]. 6/20/2019 * [FR Doc. 2019–27544 Filed 12–26–19; 8:45 am] jbell on DSKJLSW7X2PROD with RULES EPA approval Frm 00012 Fmt 4700 Sfmt 4700 * * Americans obtain the communications services they need to participate in the digital economy. 2. Today, the Commission continues that work to strengthen the Lifeline program’s enrollment, recertification, and reimbursement processes so that limited Universal Service Fund (USF or Fund) dollars are directed only toward qualifying low-income consumers. Specifically, restoring the states’ proper role in designating eligible telecommunications carriers (ETCs) to participate in the Lifeline program, clarify the obligations of participating carriers, and take targeted steps to improve compliance by Lifeline ETCs and reduce waste, fraud, and abuse in the program. The Commission also clarifies several of the program’s rules in response to petitions for reconsideration and requests for clarification. II. Discussion 3. In the Order, the Commission takes significant steps to promote the integrity, effectiveness, and efficiency of the Lifeline program. First, the Commission restores the traditional state role in designating ETCs and traditional ETC designation categories, while taking steps to increase transparency with states to improve oversight functions. Next, the Commission amends the Lifeline program rules to improve the integrity of providers’ enrollment and recertification processes, and also E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations establishing protections to help prevent improper payment claims before they occur. Finally, the Commission acts to improve its rules regarding Lifeline auditing practices. 4. Respecting the States’ Role in Program Administration. For the Lifeline program to be successful, the parties involved in its operations—from the Commission to the participating ETCs—must respect their particular roles and obligations under the law. To that end, in the Order, the Commission first restores longstanding recognition of the states’ primary role in the ETC designation process, as established in the Communications Act of 1934 as amended (‘‘the Act’’), and restores the traditional categories of ETC and ETC obligations consistent with section 214(e)(1)(A) of the Act. 5. Restoring States’ Traditional and Lawful Role in ETC Designations. Congress made states—not the Commission—primarily responsible for designating ETCs. And States have vigorously exercised their oversight authority to combat waste, fraud, and abuse in the Lifeline program. In some cases, states have been the first to identify waste, fraud, and abuse by ETCs—the Hawaii Public Utilities Commission first identified the issues with Blue Jay’s overclaims of Tribal subscribers, and the Oklahoma Corporation Commission ‘‘first identified fraudulent funding requests from Icon Telecom.’’ More recently, an apparent violation of the Commission’s non-usage rule was initially uncovered by an investigation by the Oregon Public Utility Commission. States have also conducted further investigations of ETCs for which the FCC first identified compliance issues. For example, in 2013, following the consent decree resolving the Commission’s investigation of Lifeline reseller TerraCom regarding intracompany duplicate subscribers, the Indiana Utility Regulatory Commission conducted its own investigation of TerraCom and identified instances of waste and abuse. States have also filtered out ineligible carriers by refusing designations to those with substandard services and weeded out bad actors by revoking designations for unlawful practices. Most recently, in May 2019, the Illinois Commerce Commission (ICC) denied wireless reseller Q Link LLC’s request for a Lifeline-only ETC designation. The ICC cited Q Link’s ‘‘inability to provide accurate, consistent and reliable information’’ as ‘‘reason enough for it to deny Q Link’s request for ETC designation,’’ and found that Q Link ‘‘failed to demonstrate it has the VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 financial and technical capability to provide service in its requested service areas.’’ States have also performed audits, addressed consumer complaints, and maintained valuable state matching programs. In doing all this, states have brought to bear personnel and resources far greater than the Commission alone could offer. 6. By contrast, Congress cast the Commission in a supporting role. For its part, the Commission merely designates carriers where states are ill suited to do so—for example, where states lack jurisdiction, or in unserved areas where no carrier is willing to provide USF services. For the two decades since Congress passed the Telecommunications Act of 1996, this is how the Commission understood its role. 7. With the 2016 Lifeline Order (FCC 16–38; 81 FR 33026 (May 24, 2016)), the Commission departed from the parameters set by statutory text and longstanding practice. First, that order created a new type of ETC—the Lifeline Broadband Provider ETC. It then purported to preempt any state authority over this new ETC, demoting states from the job they had performed well. Finally, to fill the void it had created by preempting state authority, it adopted a view of the Commission’s role under section 214(e) that was expansive enough to permit the Commission to exercise designation authority over Lifeline Broadband Provider ETCs. In the Order, the Commission finds that the actions taken by the Commission in the 2016 Lifeline Order were contrary to both statutory text and sound public policy. The Commission restores the lawful role of states in the ETC designation process. 8. Section 214 and the 2016 Lifeline Order. To obtain universal service funds for providing Lifeline service, a provider must be designated as an ‘‘eligible telecommunications carrier’’—or ‘‘ETC’’—under section 214(e) of the Act. Section 214(e)(1) of the Act establishes eligibility requirements for ETCs. These include that common carriers offer the services supported by the USF ‘‘support mechanisms’’ under section 254(c)— Lifeline is one of four such ‘‘mechanisms’’—and that they advertise the availability of those services. 9. The next paragraph—214(e)(2)— orders state commissions to designate common carriers that meet these requirements as ETCs. In relevant part, section 214(e)(2) provides that ‘‘[a] State commission shall upon its own motion or upon request designate a common carrier that meets the requirements [for eligibility in section 214(e)(1)] as an eligible telecommunications carrier for a PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 71309 service area designated by the State commission.’’ The general rule, in other words, is that state commissions are responsible for designating ETCs. 10. There are limited exceptions to the rules. Later provisions in section 214 address gaps in the ordinary designation process—areas where a state commission may be unable or ill-suited to exercise designation authority. The Commission’s limited role in designating ETCs falls within these gaps. 11. The first gap occurs where no common carrier is willing to provide supported services to all or part of an unserved community. In that case, section 214(e)(3) generally orders the Commission and states to (1) identify the common carriers best able to serve these communities and (2) require them to do so. The section divides responsibility for this task along jurisdictional lines: It orders state commissions to address the provision of intrastate services, and orders the Commission to address the provision of interstate services, as well as services in areas served by carriers outside of the jurisdiction of state commissions. 12. The second gap occurs where ‘‘a common carrier providing telephone exchange service and exchange access . . . is not subject to the jurisdiction of a State commission.’’ This provision gives the Commission designation authority over, for example, wireless carriers operating in states lacking jurisdiction over such carriers and certain Tribal carriers. Congress adopted section 214(e)(6) over a year after the passage of the Telecommunications Act to rectify the ‘‘oversight’’ that a handful of common carriers might otherwise fall outside the jurisdiction of state commissions. Without the fix of section 214(e)(6), that oversight would leave certain carriers—including most notably, Tribal carriers—wholly ineligible for universal service support. The legislative history confirms that the gap-filling section 214(e)(6) ‘‘w[ould] apply to only a limited number of carriers’’ and that it was not ‘‘intended to restrict or expand the existing jurisdiction of State commissions over any common carrier.’’ The Commission itself recognized that Congress had not intended section 214(e)(6) to ‘‘alter the basic framework of section 214(e), which gives the state commissions the principal role in designating eligible telecommunications carriers under section 214(e)(2).’’ 13. That is the extent of the Commission’s role in designating ETCs. There is no suggestion in sections 214(e)(2), (3), or (6) that the Commission can supersede the states’ designation E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES 71310 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations authority, or that the states’ designation authority is generally limited to specific services, such as intrastate services. While section 214(e)(3) limits state authority to intrastate services in unserved areas, this specific jurisdictional limitation only highlights the absence of a general jurisdictional limitation on states’ authority. Instead, the text of section 214 makes clear that Congress gave primary authority for ETC designations to the states, and that the Commission’s role is merely to fill gaps in the ordinary designation process. 14. This is how the Commission read section 214 for nearly two decades— from the passage of the Telecommunications Act until the 2016 Lifeline Order. In 2000, the Commission reviewed the text and legislative history of section 214(e) and concluded that ‘‘state commissions have primary responsibility for the designation of [ETCs] under section 214(e)(2).’’ In 2005, it affirmed this conclusion and again noted that section 214(e)(2) ‘‘provides state commissions with the primary responsibility for performing ETC designations.’’ In 2011, the Commission again found that states have ‘‘primary jurisdiction to designate ETCs,’’ and that its role was to ‘‘designate[ ] ETCs where states lack jurisdiction.’’ Even the 2015 Lifeline Order and FNPRM (FCC 15–71; 80 FR 40923 (July 14, 2015) and 80 FR 42670 (July 17, 2015)) recognized that ‘‘[s]ection 214(e)(2) assigns primary responsibility for designating ETCs to the states.’’ 15. The 2016 Lifeline Order abandoned this longstanding interpretation. That order created a new category of ETC, which offered only a single supported Lifeline service (broadband internet access service) and was subject to the Commission’s (not states’) designation authority. Arriving at this unlikely outcome required standing section 214(e) on its head: First, the 2016 Lifeline Order found that section 214(e)(1) authorized an ETC to offer only a single supported service rather than all services supported under the Lifeline program. This enabled the creation of the Lifeline Broadband Provider ETC. Next, despite the absence of any legal or factual conflict justifying preemption, the 2016 Lifeline Order preempted state commissions from designating this new type of ETC. Then—in part by forbearing from a limit on the Commission’s own authority— the 2016 Lifeline Order determined that the Commission had newfound authority to designate this new category of ETC under section 214(e)(6). 16. Restoring Traditional Designation Roles and ETC Categories. The VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 Commission eliminates the Lifeline Broadband Provider ETC category and restore the traditional state and Federal roles in designating ETCs under the Act. The Commission does this for two principal reasons. First, the Commission concludes that the 2016 rules rested on a legally insupportable construction of section 214(e). Nothing in the 2016 Lifeline Order or the record persuades the Commission otherwise. Second, the Commission concludes that the Lifeline Broadband Provider rules announced in the 2016 Lifeline Order did not serve the public interest. Instead, the Commission concludes that the record in the proceeding demonstrates that the traditional designation framework and ETC categories better serve the Commission’s direction to efficiently and responsibly promote universal service. Tampering with this framework was not sound policy, nor did it appropriately balance the interest in promoting competition or encouraging new providers to participate in the program, while also guarding the program against further waste, fraud, and abuse. 17. The Commission begins by concluding that the approach embodied in the 2016 Lifeline Order was not supported by the statute. To explain this conclusion, the Commission must retrace the long path that the 2016 Lifeline Order took around the obstacle posed by the statutory text. In brief, the steps on this path were: (1) Reinterpreting section 214(e)(1) to mean that ETCs need not offer all supported services; (2) relying on this reinterpretation to establish Lifeline broadband support as a ‘‘separate element of the Lifeline program;’’ (3) reinterpreting section 214(e)(6) to suggest that state commissions have no authority to designate ETCs with respect to supported interstate services; and (4) preempting states from designating ETCs for the separate element of Lifeline broadband support. The 2016 Lifeline Order then filled the gap in designation authority it created by (5) reinterpreting out of existence the limit on FCC authority that an FCC-designated ETC must be a ‘‘common carrier providing telephone exchange service and exchange access’’ and, (6) alternatively, forbearing from that same limit on the FCC’s authority. Each of these steps was unlawful. 18. First, ETCs must offer each of the Lifeline supported services designated by the Commission. Section 214(e)(1) requires that a ‘‘common carrier designated as an eligible telecommunications carrier’’ must, ‘‘throughout the service area for which the designation is received,’’ ‘‘offer the PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 services that are supported by Federal universal service support mechanisms’’ under section 254(c). The 2016 Lifeline Order began by interpreting section 214(e)(1)(A) not to require an ETC to offer all supported services for the mechanism for which it was designated; instead, the 2016 Lifeline Order concluded that the obligations in section 214(e)(1)(A) could be ‘‘tailored to match’’ an ETC designation. This tailoring would allow ETCs to obtain a designation to provide only one supported service, and to trim from their Lifeline offerings other services that the Commission has designated under the Lifeline mechanism. 19. The statute says otherwise. Again, section 214(e)(1)(A) requires an ETC to ‘‘offer . . . services’’ that are supported by a universal service ‘‘mechanism[ ].’’ Lifeline—one of four such mechanisms under section 254(c)—supports both voice and broadband internet access services. Participating in the Lifeline program without assuming any obligations with respect to voice service, then, conflicts with the requirement in section 214(e)(1) that ETCs ‘‘offer the services that are supported’’ by the Lifeline program. Forbearance—not interpretation—would have been the appropriate way for the Commission to refrain from enforcing what section 214(e)(1)(A) plainly requires. But the Commission did not use this mechanism here and, in any case, the conditions for forbearance were not met. Accordingly, the Commission finds that based on the language of section 214(e)(1)(A), the Lifeline program is a single, uniform support mechanism. ETCs therefore must offer all Lifeline supported services, unless the ETC qualifies for and avails itself of the forbearance granted in the 2016 Lifeline Order, which established limited forbearance from section 214(e)(1)’s service requirements, including (1) targeted forbearance from obligations to offer broadband internet access service, and (2) conditional forbearance from existing non-Lifeline only ETCs’ Lifeline voice obligations where several objective competitive criteria are met. 20. Second, and relatedly, it follows that Lifeline broadband internet access service support is not a separate ‘‘element’’ of the Lifeline program. After concluding that section 214(e)(1) service obligations could be tailored to particular services, the 2016 Lifeline Order deemed Lifeline broadband internet access service support a ‘‘separate element of the Lifeline program.’’ But again, section 214(e)(1) does not permit the a` la carte designation of services; instead, it E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations groups ETC service offerings by universal service mechanism. 21. The notion of separate, servicespecific ‘‘elements’’ has no statutory basis. The 2016 Lifeline Order patches together authority for this inventive approach by referring to sections 214(e)(3), 214(e)(1), 254(e), and the 2014 E-Rate Order (FCC 14–99; 79 FR 49160 (Aug. 19, 2014)). Standing alone, these authorities provide little support for the 2016 Lifeline Order’s novel interpretation: The three statutory provisions respectively confer designation authority in unserved areas, specify which carriers can receive universal service support, and govern how that support can be used. And they offer no more support for the notion of a universal service ‘‘element’’ when read together. Accordingly, the Commission concludes that the 2016 Lifeline Order’s distinction underlying Lifeline Broadband Provider designations fails on its own terms. 22. Third, section 214(e)(6) does not suggest that state commissions lack the authority to designate ETCs with respect to supported interstate services. The 2016 Lifeline Order found it ambiguous whether, for the Commission to have jurisdiction under section 214(e)(6), a carrier seeking ETC designation must be (1) entirely outside a state commission’s jurisdiction or (2) only outside a state commission’s jurisdiction with respect to a particular service, even if a state commission retains general jurisdiction over the carrier. Seizing on this supposed ambiguity, the 2016 Lifeline Order held that section 214(e)(6) provided the Commission the authority to take over designations where a carrier provides only a service that is jurisdictionally interstate (for example, broadband internet access service). 23. The Commission sees no such ambiguity. First, the jurisdictional nature of a particular service that a carrier offers is irrelevant for the purposes of determining whether the carrier itself is ‘‘subject to the jurisdiction of a State commission.’’ And while section 214(e)(6) may not address the situation where specific services fall outside the jurisdiction of a state commission, there is a ready explanation for that silence: Section 214(e)(1) does not countenance the separate designation of specific interstate services. Sealing this conclusion is the fact that other provisions in section 214(e) plainly contemplate states designating ETCs that provide both interstate and intrastate services. The fact that Congress expressly limited states’ designation authority under section 214(e)(3) to intrastate services VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 underscores that the states’ designation authority is not so limited under section 214(e)(2); if Congress had intended to limit states’ designation authority under 214(e)(2) to intrastate services, it would have expressly done so. 24. Fourth, the 2016 Lifeline Order’s decision to preempt states from designating Lifeline Broadband Provider ETCs was unlawful. This preemption rested largely on the ground that allowing state commissions to designate those ETCs would hinder the goals of Federal universal service and dampen broadband competition. The Commission disagrees with both justifications and find that this preemption analysis was otherwise flawed in several respects. 25. As an initial matter, no conflict with Federal law justifies preemption. As the 2016 Lifeline Order explains, ‘‘[F]ederal law preempts any conflicting state laws or regulatory actions that would prohibit a private party from complying with [F]ederal law or that ‘stand[ ] as an obstacle to the accomplishment and execution’ of [F]ederal objectives.’’ Here, while Congress established the goal of promoting broadband deployment in section 254(b), it also placed the primary responsibility for designating ETCs on state commissions in section 214(e)(2). Read together, these provisions establish that section 254(b) seeks to promote broadband deployment to the extent possible within the statefocused designation process set forth in section 214. Disregarding section 214(e)(2), the 2016 Lifeline Order found a purported ‘‘conflict[ ]’’ between state designation of Lifeline Broadband Providers and the Commission’s implementation of the goals of section 254(b). But this ‘‘conflict’’ assumes, without explanation, that the relevant goal under section 254(b) is promoting broadband deployment in the abstract, unconstrained by the state-focused designation process mandated by section 214. The Commission finds that no such conflict exists, and that the principles listed in section 254(b) may not lawfully be construed in a manner that would ignore or override other statutory provisions, including the statefocused framework of section 214(e). 26. In addition, the 2016 Lifeline Order wrongly relied on section 706 as authority for preemption. Section 706, among other things, directs the Commission to focus its efforts on removing barriers to investment in ‘‘advanced telecommunications services.’’ The 2016 Lifeline Order found that the burdens of obtaining separate designations from states ran afoul of this directive by posing ‘‘a PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 71311 barrier to investment and competition in the Lifeline marketplace.’’ 27. This reasoning stumbles from the gate because section 706 does not furnish a basis for the preemption of states’ designation authority. The Commission has previously concluded that the directives in section 706 to promote broadband deployment ‘‘are better interpreted as hortatory, and not as grants of regulatory authority.’’ But even if section 706 did confer regulatory authority, it would be trumped by the more specific grants of authority in section 214(e). ‘‘[I]t is a commonplace of statutory construction that the specific governs the general.’’ In contrast to sections 214(e)(2) and 214(e)(6), which expressly confer designation authority, section 706 merely directs the Commission and states to encourage the deployment of broadband services and generally instructs the Commission to take action to accelerate deployment if it finds advanced telecommunications capability is not being deployed in a reasonable and timely fashion. The specific grant of designation authority to states prevails over section 706’s general language regarding broadband deployment. 28. Furthermore, as a practical matter, the preemption regime instituted by the 2016 Lifeline Order created confusion and anomalies in the division of labor between the Commission and the states that the Commission’s new approach avoids. The 2016 Lifeline Order preempted states from designating Lifeline Broadband Providers, but left untouched states’ designation authority over traditional ETCs—who in some cases could effectively become Lifeline Broadband Provider ETCs without seeking FCC designation. The 2016 Lifeline Order also suggests that states could oversee federally designated Lifeline Broadband Providers in their jurisdictions vis-a`-vis consumer protection. In other words, the 2016 Lifeline Order preempted state authority to designate Lifeline Broadband Provider ETCs, but left states with uncertain residual authority to oversee and impose conditions on Lifeline Broadband Provider ETCs. The Commission finds that the arbitrariness of this result is another reason for reversing the Commission’s preemption decision. 29. Conversely, the Commission finds that the state designation process furthers Federal universal service goals—it does not ‘‘thwart’’ them. As explained further, the traditional state designation role better serves section 254(b)’s policy goals by facilitating thorough state reviews of carriers seeking ETC designations, as well as E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES 71312 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations state monitoring of carriers who have received ETC designations. This helps prevent, detect, and curb waste, fraud, and abuse in the program, which in turn promotes the efficient and responsible use of limited program funds. States’ traditional designation role also encourages states to maintain their own support programs, furthering the universal service goals. 30. The Commission notes that the reversal of the preemption decision in the 2016 Lifeline Order in no way conflicts with the Commission’s determination in other contexts—such as in the Restoring Internet Freedom Order (83 FR 7852 (Feb. 22, 2018))—that broadband internet access service is jurisdictionally interstate and that inconsistent state and local regulation may be preempted on that ground. Several commenters argue otherwise, relying on the premise that states’ ETC designation authority under section 214(e)(2) can be preempted simply because of the interstate nature of broadband internet access service. This argument ignores the fact that section 214 itself expressly confers on state commissions the primary responsibility to designate carriers that are subject to state jurisdiction. It also ignores—the absence of a conflict justifying preemption. The Commission therefore finds no inconsistency between the reversal of the unlawful preemption in the 2016 Lifeline Order and the Commission’s preemption of inconsistent state and local regulation of broadband internet access services in other contexts. 31. Fifth, the 2016 Lifeline Order unlawfully expanded the Commission’s designation authority under section 214(e)(6). Section 214(e)(6) gives the Commission designation authority only ‘‘in the case of a common carrier providing telephone exchange access service and exchange access that is not subject to the jurisdiction of a State commission.’’ The limit on the Commission’s authority is clear: The Commission’s designation authority under section 214(e)(6) is predicated, in part, on a common carrier ‘‘providing telephone exchange access service or exchange access.’’ Yet the 2016 Lifeline Order interpreted this limit on the Commission’s authority to mean (1) that the supported service need not be telephone exchange service or exchange access, (2) that the carrier itself need not provide telephone exchange service or exchange access, (3) that the carrier need not have any facilities to provide telephone exchange service or exchange access, (4) that the carrier need not have any customers for telephone exchange service or exchange access, and (5) that VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 the carrier need not provide telephone exchange service or exchange access for any length of time beyond when the carrier’s ETC application is pending at the Commission. 32. The effect is to remove the phrase ‘‘providing telephone exchange access service and exchange access’’ from the statute. By emptying the word ‘‘providing’’ of all meaning, the Commission’s interpretations violate the canon of statutory construction dictating that a statute should be interpreted in a manner that gives effect to each of its words and clauses. If Congress intended for the provision to have the overly broad meaning that the Commission ascribed to it in the 2016 Lifeline Order, Congress would have used more expansive language in section 214(e)(6). The Commission therefore finds that the 2016 Lifeline Order’s interpretations of section 214(e)(6) unlawfully expanded the Commission’s jurisdiction to designate ETCs. 33. Sixth, and finally, the 2016 Lifeline Order’s alternative forbearance from section 214(e)(6)’s requirement that carriers be providing telephone exchange service and exchange access was improper. Section 10 provides that the Commission may forbear from applying provisions of the Act to carriers and services—not that it can forbear from statutory limitations on its own authority. To read section 10 otherwise would render statutory constraints on the Commission meaningless: Take, for example, the absurdity of the Commission forbearing from the limitations imposed by the phrase ‘‘interstate or foreign’’ in the Communications Act. This would expand the Commission’s authority to all telecommunications services, obliterating the jurisdictional divide established by Congress. Clearly, Congress did not intend the Commission to use forbearance to so aggrandize itself. Here, the qualifying language ‘‘providing telephone exchange service and exchange access’’ limits the category of carriers that the Commission may designate under section 214(e)(6). It therefore constrains the Commission’s authority—not the authority of ETCs. Section 10 does not authorize the Commission to forbear from the limitation on its own authority. 34. The Traditional ETC Designation Framework Best Promotes the Goals of the Lifeline Program. In addition to lacking legal authority for the 2016 approach, the Commission independently concludes that the goals of the Lifeline program are best served when states play the primary role in ETC designations. PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 35. The traditional framework also has the advantage of providing strong state and Federal oversight of ETCs. The cooperative federalism that exists under the traditional framework provides states certainty with respect to their role in monitoring and enforcing the activities of ETCs. This in turn encourages states to devote staff and resources to thoroughly reviewing ETC designation applications and policing ETCs, providing a stronger system for promoting the efficient use of universal service funds, protecting Lifeline consumers, and reducing waste, fraud, and abuse than if states did not serve these critical roles. States have a record of more than twenty years of sound performance in their statutory role and monitoring the ETCs they designate. As NARUC has noted, states have been ‘‘crucial’’ in ‘‘policing the [F]ederal fund to eliminate bad actors.’’ Many states have robust processes for analyzing ETC designation petitions, addressing concerns with Lifeline-supported services, ensuring that the ETCs they designate satisfy the Lifeline service and other requirements, and preventing and identifying waste, fraud, and abuse in the Lifeline program. States’ traditional designation role has also encouraged the continuation of state matching programs. 36. By contrast, state commenters explain in the record that the standalone Federal Lifeline Broadband Provider ETC category ‘‘complicates administration,’’ ‘‘frustrates’’ state policies and procedures, ‘‘undermine[s] state programs,’’ and ‘‘adds an unnecessary layer of complexity to the ETC framework.’’ State commenters also express concern that the Lifeline Broadband Provider ETC designation creates uncertainty with respect to states’ role in monitoring and enforcing ETC activities, and engenders consumer confusion. 37. This burdensome creation cannot be justified on the grounds that it is necessary to promote competition, as some commenters maintain. To the contrary, the traditional state role has not resulted in a lack of competition in the Lifeline marketplace or lack of affordable broadband internet access service for Lifeline consumers. The traditional designation roles and ETC categories better allow the Commission and states to appropriately balance the interest in encouraging more providers to participate in the Lifeline program and promote competitive broadband options, innovation, and choice for Lifeline consumers, while also guarding the program against further waste, fraud, and abuse. Existing ETCs continue to participate in the Lifeline program E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations based on their traditional state designations and in some cases have expanded their Lifeline offerings to new states, and new providers continue to receive traditional state ETC designations, permitting them to participate in the Lifeline program. As of October 1, 2019, for the September data month, the National Lifeline Accountability Database (NLAD) data indicates that approximately 355 unique holding companies claimed Lifeline support for providing approximately 3.8 million Lifeline subscribers with Lifeline-supported broadband internet access service that meets the Commission’s minimum service standards. 38. Other Considerations. Importantly, the elimination of Lifeline Broadband Provider designations does not preclude new providers from entering the Lifeline program or prevent Lifeline subscribers from receiving Lifeline discounts for qualifying broadband internet access service under current rules. Providers interested in participating in the Lifeline program remain able to obtain ETC status through existing state designation processes or from the Commission where the Commission has designation authority under section 214(e)(6). Further, Lifeline customers are able to receive discounts on Lifeline service offerings that include broadband internet access service. The Commission also clarifies that while section 254(e) authorizes the Commission to provide Lifeline reimbursements only to ETCs, the statute and Lifeline program rules do not preclude ETCs from offering broadband internet access service satisfying the Lifeline minimum service standards through affiliated broadband internet access service providers that operate under the ETC’s existing designation. However, the Commission makes clear that where ETCs offer qualifying broadband internet access service to Lifeline subscribers through such affiliated entities, only the ETC is eligible to receive reimbursement from the Lifeline program, and the ETC remains legally responsible for ensuring compliance with the requirements and obligations for ETCs in the statute and in the rules, as well as all Lifeline program rules and reporting requirements. 39. Conclusion. In the 2016 Lifeline Order, the Commission interfered with a process that has functioned smoothly for over twenty years, without a compelling reason, and without the proper authority to do so. For over twenty years, state commissions have performed well in their statutory role of designating ETCs. The Commission VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 finds that there was no policy basis to depart from the framework established by Congress, and that, in any case, the Commission lacked the authority to do so. For these reasons, the Commission here concludes that the approach in the 2016 Lifeline Order is foreclosed by the plain text of section 214 and hence was contrary to law. Moreover, to the extent that the statute is ambiguous, the Commission believes that the reading of section 214 endorsed in the Order far better comports with the Act’s language, structure, and policy objectives, for the reasons stated herein, and is thus at minimum a reasonable exercise of the discretion delegated by Congress. 40. Consistent with the actions to restore states’ traditional ETC designation role, § 54.201(j) of the rules is eliminated, which precluded states from designating Lifeline Broadband Providers. The rule change will become effective January 27, 2020. In addition, because of the elimination of the Lifeline Broadband Provider designations, §§ 54.202(d)(1) through (3) and (e) and 54.205(c) of the rules are eliminated. The Commission finds that there is no need for a transition period before the rule changes take effect because, currently, no provider has a Federal Lifeline Broadband Provider designation. The rule changes will become effective January 27, 2020. 41. Increased Transparency with Stated to Improve Program Oversight. The Commission next directs the Universal Service Administrative Company (USAC) to take a number of measures intended to increase the transparency of the Lifeline program and support enforcement against program non-compliance. In the 2017 Lifeline Order and NPRM (FCC 17–155; 83 FR 2075 and 83 FR 2104 (Jan. 16, 2018)), the Commission sought comment on the types of reports USAC should make available to states and information that should be shared with the relevant state agencies to increase transparency and accountability within the Lifeline program. State agencies support the proposal that USAC notify the Commission and state agencies of suspicious ETC activity within the Lifeline program and encouraged further data sharing as an additional means for weeding out waste, fraud, and abuse in the Lifeline program. 42. In light of the support, the Commission directs USAC to compile and make available on its website program aggregate subscribership data, including data broken out at the county level and by service type. USAC shall compile and present the data in a way that will be most clear to the states and the public. USAC already makes PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 71313 program statistics and other information available on its website. Making the additional subscribership data available increases program transparency and continues to promote accountability in the Lifeline program. Better insight into the program also will provide states with another tool in detecting anomalies that might indicate wasteful and fraudulent activity in the Lifeline program. 43. The Commission also agrees with state commenters that sharing information regarding trends related to eligibility check failures, for example, will enable states to recognize compliance issues and act appropriately. The states play an important role in identifying and stopping wasteful and fraudulent activity in the Lifeline program, and the Commission finds that it is essential to the integrity of the program that evidence of suspicious activity is shared with the appropriate state officials. Therefore, the Commission instructs USAC to develop a process by which it will share with the Commission staff, the Commission’s Office of Inspector General (OIG), and relevant state agencies’ information regarding suspicious activity. To further the sharing of information regarding such activity, USAC should work with state personnel to identify appropriate state officials who should have access to these reports. USAC is instructed to make suspicious reports and trends available upon request from the state officials, and USAC is cautioned to ensure that the sharing of data, which could potentially contain sensitive information, complies with the Privacy Act and any other restrictions. The record is clear that the states value the information, and the Commission encourages the states to use the data provided in a way that furthers the integrity of the Lifeline program. 44. Improving Program Integrity in Program Enrollment and Recertification. The Commission next turns to improving the Lifeline program’s enrollment and recertification procedures to prevent waste, fraud, and abuse in the program. First, the Commission establishes new rules and limitations on ETCs’ use of enrollment representatives to remove incentives to commit fraud and abuse in the Lifeline eligibility determination process. Second, the Commission acts to improve the integrity of Lifeline enrollments and direct USAC to continue targeted reviews of enrollment documentation. Finally, the Commission requires additional documentation during the annual E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES 71314 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations recertification process for certain Lifeline subscribers. 45. Preventing Waste, Fraud, and Abuse by Enrollment Representatives. The Commission first concludes that ETCs should be prohibited from paying commissions based on the number of submitted Lifeline applications or approved enrollments to individuals who enroll Lifeline subscribers or who verify eligibility of Lifeline subscribers on behalf of ETCs. In this context, the Commission understands ‘‘commissions’’ to broadly include direct financial compensation or other incentives such as non-cash rewards and travel incentives. In addition, the Commission codifies the requirement that USAC register all Lifeline ETC enrollment representatives. For these purposes, the Commission defines an enrollment representative as an employee, agent, contractor, or subcontractor, acting on behalf of an ETC or third-party organization, who directly or indirectly provides information to USAC or a state entity administering the Lifeline Program for the purpose of eligibility verification, enrollment, recertification, subscriber personal information updates, benefit transfers, or de-enrollment. The Commission also makes clear that ETCs are ultimately responsible for ensuring that all enrollment representatives register with USAC, and ETCs will be subject to enforcement action if an individual who has not registered with USAC acts as an enrollment representative on that ETC’s behalf. The combination of (1) prohibiting ETCs from paying commissions to individuals who enroll Lifeline subscribers or who provide information for eligibility verification, recertification and changes to subscribers’ information, and (2) requiring registration of each individual enrollment representative, will help to ensure accountability and prompt ETCs to crack down on improper behavior before it happens, thereby preventing waste, fraud, and abuse in the Lifeline program. 46. Prohibiting Enrollment Representative Commissions. Much of the waste, fraud, and abuse in the Lifeline program revealed by audits, enforcement investigations, and criminal proceedings has involved noncompliance by the ETC employees and contractors charged with reviewing applicants’ eligibility documentation and enrolling new Lifeline subscribers. However, the Commission’s rules have thus far not directly addressed the common practice by ETCs of providing commissions for enrollment representatives to enroll consumers in the Lifeline program. The Commission VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 has long held that ETCs are liable for rule violations committed by their agents or representatives, but there is no specific Commission rule targeting enrollment representative misbehavior. 47. Since the 2012 Lifeline Order (FCC 12–11; 77 FR 12952 (March 2, 2012)), there have been reports of ETCs hiring enrollment representatives who did not comply with the Lifeline program rules for eligibility determinations. It is common practice for ETCs to offer commissions for agents to enroll consumers in the Lifeline program. However, even ETCs have acknowledged the mixed incentives these compensation schemes foster, with TracFone, for example, filing a petition asking the Commission to ‘‘prohibit[ ] incentive-based agent compensation.’’ Moreover, members of Congress have expressed concern to the Commission about the use of enrollment representatives who fraudulently enroll subscribers in the Lifeline program. 48. The Commission also has tangible evidence of enrollment representative impropriety leading to waste and abuse of the program. In December 2016, the Commission’s Enforcement Bureau entered into a Consent Decree with Lifeline ETC Total Call Mobile (TCM), where TCM admitted it used a commission compensation system for enrolling Lifeline subscribers that had resulted in ‘‘[h]undreds of TCM field agents [engaging] in fraudulent practices to enroll consumers who were . . . otherwise not eligible for the Lifeline program.’’ TCM had ‘‘sought and received reimbursement for tens of thousands of consumers who did not meet the Lifeline eligibility requirements,’’ and TCM agreed to pay a fine of $30 million dollars for violating the Lifeline rules. 49. Even with public reports of enrollment abuse and successful enforcement actions against Lifeline ETCs, the Commission’s insight into the day-to-day enrollment operations of all ETCs is limited. The General Accounting Office (GAO) raised concerns in 2017, when it confirmed in a report on its performance audit of the program that, after conducting extensive data review and covert investigations into ETC Lifeline enrollment practices, the Commission and USAC ‘‘have limited knowledge about potentially adverse incentives that providers might offer employees to enroll [Lifeline] subscribers’’ but noted that apparent findings of large-scale improper enrollments from enforcement investigations was cause for concern. The GAO raised similar concerns regarding the recertification process. Since that report was issued, additional PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 investigations and reports have provided more indications that enrollment representative commissions create incentives that increase the likelihood of waste, fraud, and abuse in the program. The Commission OIG’s 2018 Semiannual Report to Congress noted that a Lifeline enrollment agent ‘‘pled guilty to conspiracy to commit wire fraud’’ and was ordered to pay restitution to the Commission of over $200,000 for having enrolled ‘‘850–950 non-existent Lifeline customers in the program’’ and having received commission for those fake enrollments. 50. Finally, in October 2018, the Commission released the largest Notice of Apparent Liability for Forfeiture (NAL) to date against a Lifeline provider when it proposed a $63 million forfeiture against American Broadband & Telecommunications Company (American Broadband). American Broadband’s agents apparently repeatedly enrolled ineligible or fake subscribers and relied on master agents and sales agents paid on commission. Over 42,000 customers were apparently claimed by American Broadband over the NAL period, and many of those were claimed due to improper enrollments by the agents. 51. In the 2017 Lifeline Order and NPRM, the Commission sought comment on prohibiting an ETC from offering or providing ETC personnel with commissions based on enrollments or verification of eligibility and on codifying a requirement that ETC representatives who enroll consumers in Lifeline must register with USAC. The Commission stated its belief that prohibiting commissions related to enrolling subscribers in the Lifeline program ‘‘may benefit ratepayers by reducing waste, fraud, and abuse in the program.’’ It also noted that many ETCs use commissions as a means of compensating sales employees and contractors and that such compensation schemes ‘‘can encourage the employees and agents of ETCs to enroll subscribers in the program regardless of eligibility, enroll consumers in the program without their consent, or engage in other practices that increase waste, fraud, and abuse in the program.’’ 52. In response to the 2017 Lifeline Order and NPRM, numerous commenters supported limiting or prohibiting ETCs from offering or providing commissions to sales agents or employees who verify the eligibility of potential Lifeline subscribers. Some commenters suggested that the Commission should only address commissions for third-party sales agents or representatives. However, while an ETC may have more supervision over its E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations direct employees than third-party sales agents or representatives, the Commission does not believe that employees are immune from the financial motivation that commissions might offer to commit potentially fraudulent activity. Several commenters also suggested that any limitation on commissions was unnecessary or needed further evaluation in light of the rollout of the National Verifier. While the National Verifier plays an important role in helping to address waste, fraud, and abuse in the program, the Commission does not believe that it will eliminate the financial incentives for individuals to attempt to defraud the Lifeline program. Commissions based on the number of Lifeline applications or successful Lifeline enrollments are one such incentive, and by limiting them, the Commission removes a financial incentive for committing fraudulent activity. 53. Based on the record and to limit a potential source for fraud or abuse in the program, the Commission prohibits ETCs from offering or providing commissions to enrollment representatives and their direct supervisors based on the number of consumers who apply for or are enrolled in the Lifeline program with that eligible telecommunications carrier. This restriction applies to employees, agents, officers, or contractors working on behalf of the ETC who enroll Lifeline applicants, review eligibility documents or recertification forms, including sales and field agents, and any direct supervisors of those individuals, whether employed by the ETC or employed by a third-party contractor of the ETC. For purposes of the rule, an ETC’s payment to a third-party entity that in turn provides commissions to an enrollment representative is subject to the prohibition. This restriction is not intended to prevent ETCs from using customer service representatives to assist consumers in the Lifeline application and recertification processes. The Commission adds § 54.406(b) of the Commission’s rules to prohibit ETCs from utilizing commission structures for those enrollment representatives involved in the eligibility determination, enrollment process, or recertification process. These changes will become effective February 25, 2020. 54. The Commission expects that the targeted prohibition of certain practices by ETC employees and agents will help reduce the incentive for enrollment, customer service, and recertification employees to commit fraud against the Lifeline program. In the Commission’s investigation of American Broadband, VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 the conduct of the agents hired by the company ranged from enrolling subscribers who were apparently not eligible and apparently falsifying eligibility documentation, to apparently creating false identities and enrolling false and deceased individuals into the program. While an ETC is liable for the actions of its agents and representatives, and the Commission has the authority to recover improper reimbursements distributed to ETCs, the record demonstrates that the liability has not been sufficient to successfully deter fraud committed by employees and agents. The Commission believes prohibiting ETCs from offering commissions to certain employees or agents, along with other measures taken in the Order, will prevent improper enrollments before they happen. 55. Enrollment Representative Registration with USAC. To further prevent waste, fraud, and abuse, the Commission next requires that all ETC enrollment representatives register with USAC to access USAC’s Lifeline systems in the process of Lifeline enrollment, benefit transfers, subscriber information updates, recertification, and de-enrollment. In July 2017, USAC was directed to require enrollment representatives of ETCs to register with USAC to enable USAC to both verify the identity of individual enrollment representatives and ‘‘determine the ETC(s) he or she works for.’’ USAC was directed to provide each enrollment representative with a unique identifier to be used by the enrollment representative to interact with NLAD and to lock enrollment representatives out of the NLAD ‘‘for a set period of time after too many invalid subscriber entry attempts.’’ USAC was further directed to incorporate the data gained from the enrollment representative registration system into its audit findings and to report any suspected abuse by individual enrollment representatives to the Commission’s OIG ‘‘for evaluation as to whether civil or criminal action is appropriate and to the Enforcement Bureau for administrative action and remedies.’’ 56. The Commission then asked for public comment on codifying a rule to require enrollment representative registration in the 2017 Lifeline Order and NPRM. The Commission sought comment on having the representative registration identifiers be used when enrolling consumers via the National Verifier, as well as when interacting with the NLAD. The Commission reiterated that it is ‘‘aware of certain practices of sales representatives resulting in improper enrollments or otherwise violating the Lifeline PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 71315 rules. . . . [including] data manipulation to defeat NLAD protections, using personally identifying information of an eligible subscriber to enroll non-eligible subscribers, and obtaining false certifications from subscribers.’’ In light of recent developments, such as the American Broadband NAL where several enrollment representatives allegedly engaged in the aforementioned practices and the OIG Report citing of an enrollment representative who suffered criminal penalties for fraudulently enrolling subscribers in Lifeline, the Commission concludes that codifying in the Commission’s rules the requirement that specified ETC enrollment representatives must register with USAC would help to combat waste, fraud, and abuse. 57. Several commenters supported a Commission rule requiring that ETCs’ enrollment representatives register with USAC to submit information to the NLAD or National Verifier. The Commission agrees the requirement would provide clarity to all parties and would assist the Commission and USAC in detecting and investigating potential waste, fraud, or abuse by an ETC’s enrollment representatives. The Commission therefore amends the Commission’s rules and requires each ETC enrollment representative to register with USAC and obtain a unique representative identification number. When enrolling or recertifying individuals in the Lifeline Program, ETCs must use the Lifeline Program Application Form ‘‘in all states and territories to obtain the information necessary to evaluate whether a consumer is eligible to receive Lifeline service and to obtain the consumer’s certifications,’’ and the Lifeline Program Annual Recertification Form ‘‘in all states and territories to recertify the eligibility [of] subscribers who are receiving Lifeline service.’’ As such, an ETC will be in violation of section 54.410 of the Commission’s rules, as well as this new rule, if the ETC’s enrollment representative enrolling a consumer in Lifeline or submitting a consumer’s recertification form does not enter their representative identification number as required by the rule and by Section 5 of the Lifeline Program Application Form and Section 5 of the Lifeline Program Annual Recertification Form. ETCs are responsible for ensuring that their enrollment representatives complete this registration process. This registration process does not absolve ETCs of Commission rule or state law violations committed by their enrollment representatives or other E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES 71316 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations employees. The rule shall become effective March 26, 2020. 58. For the purposes of the ETC representative registration system, all enrollment representatives must register with USAC and receive a unique identifier. In order to register, each such ETC enrollment representative must provide information that USAC, after consultation with the Bureau and the Office of Managing Director, determines is necessary to identify and contact him or her; this information may include first and last name, date of birth, the last four digits of his or her social security number, personal email address, and residential address. It is critical that USAC confirms that individuals that interact with its systems are actually who they claim to be, and the Commission expects that this information would allow USAC to conduct a successful identity check during the registration process for the vast majority of registrants. In light of ETCs’ concerns about requiring their employees to submit the last four digits of their social security number to the registration system, the Commission permits USAC to make the submission of such information optional. However, the Commission notes that if a registrant declines to provide the last four digits of his or her social security number, that registration may be significantly less likely to be automatically validated through the third-party identity check, thus requiring the registrant to provide additional documentation confirming his or her identity to complete the registration process. Once issued, the representative identification number will be tied to a specific enrollment representative and will not be transferable. To ensure compliance, the Commission also concludes that ETCs are responsible for the proper enrollment of their representatives in this system, as an ETC’s enrollment representative needs to be registered with USAC prior to enrolling or recertifying consumers in the Lifeline program and prior to completing and submitting the Lifeline Program Application Form and Lifeline Program Annual Recertification forms. 59. The Commission recognizes the concern with collecting and retaining personal information from ETC enrollment representatives; however, such information is necessary to verify the identity of the person completing enrollment representative activities, and to assign that individual a unique identification number to access the NLAD and the National Verifier. In particular, it is essential that USAC and the Commission be able to monitor for and detect patterns of noncompliant or VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 fraudulent behavior by specific enrollment representatives, especially because it is not uncommon for enrollment representatives to be employed by multiple ETCs. The requested enrollment representative information is narrowly tailored and is no broader than necessary to verify the identity of the enrollment representative before providing him or her access to the NLAD and National Verifier and to enable USAC to monitor the activities of specific enrollment representatives. Furthermore, this information will allow USAC and others to take action against an enrollment representative who has engaged in noncompliant or fraudulent behavior and prevent such a representative from enrolling or recertifying Lifeline subscribers for any ETC. Given the sensitive nature of this information, the Commission directs USAC to comply with both the Privacy Act of 1974 and the Federal Information Security Management Act of 2002. In implementing this change, the Commission recognizes that USAC may, for administrative efficiency, consolidate the registration system codified in the Order with existing or future registration processes that it uses to allow access to its technological systems (for example, allowing authorized certifying officers to log into the Lifeline Claims System). 60. The Commission believes that these security measures and the narrowly tailored nature of the personal information that USAC is collecting address the concerns that stakeholders have recently expressed regarding a registration requirement. These stakeholders also raised concerns about the application of any registration requirement to direct ETC employees and suggested that any direct ETC employees not be required to submit the same level of personal information as agents or representatives not directly employed by an ETC. However, limiting the personal information collected for those individuals to the individual’s name and business contact information would impede USAC’s ability to independently verify the identity of registered individuals and could obscure potential duplicate registrations. Also, in addition to documenting fraudulent activity from sales agents and external representatives, the Commission has documented apparently fraudulent practices executed by direct ETC employees. A two-tiered approach to registering enrollment representatives would create an unacceptable risk of fake or duplicate accounts and could give ETCs the opportunity to improperly PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 characterize their enrollment representatives as direct employees to minimize USAC’s ability to oversee enrollment representative activity, creating an avenue for waste, fraud, and abuse. As such, the Commission believes that it is appropriate for this registration requirement to include direct ETC employees, better positioning the Commission, USAC, and even ETCs to address potentially fraudulent activity. 61. One stakeholder group specifically suggested that the Commission issue a Public Notice seeking further comment on the enrollment representative registration requirement. However, the Commission provided ample notice to stakeholders and sought comment on a range of issues impacting this effort in the 2017 Lifeline Order and NPRM. The 2017 Lifeline Order and NPRM sought comment on the codification process generally, how the Commission should define an ETC enrollment representative, what information should be solicited for this database, and what privacy and security practices should be used to safeguard this information. These are all considerations that the Commission acts on, and the suggestion that stakeholders did not have ample notice or time to comment on these issues is not supported by the factual history of this proceeding. 62. TracFone Wireless, Inc. (TracFone) also raised several proposals for addressing different aspects of the enrollment representative registration process. TracFone suggested that the Commission prohibit third party agents from representing more than one Lifeline provider at any one time. However, the Commission believes that such a prohibition would be overly broad and unsupported by the proceeding’s record. TracFone also argued that registration should only be required for individuals involved in the eligibility verification process if those individuals are compensated with commissions. However, since the Order prohibits commissions for enrollment representatives and their supervisors, applying the registration requirement only to representatives who receive commission-based compensation would render the requirement meaningless. USAC and the Commission would lose the ability to monitor enrollment representatives’ practices and to proactively address potential fraud committed by these individuals. 63. As part of the enrollment representative registration process, the Commission also requires individual enrollment representatives with direct access to USAC’s systems to sign a user agreement for NLAD and the National E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations Verifier before gaining access to NLAD or the National Verifier. The Commission directs USAC to develop a user agreement that requires these enrollment representatives to acknowledge that they will only use NLAD and the National Verifier for the specified purposes and that their access to either or both databases may be suspended or terminated for unauthorized or unlawful use. Individual enrollment representatives with direct access to these systems must re-submit the user agreements annually and must also confirm in USAC’s database that their contact information is up to date within 30 days of any change in such information. This will ensure that enrollment representatives’ information in the database remains current and that the enrollment representative is still actively using the National Verifier or the NLAD on behalf of the ETC. In operating the ETC representative registration system, USAC shall have the authority to protect the integrity of its registration system by, among other things, locking the NLAD and National Verifier accounts of ETC enrollment representatives with a prolonged inactive period (i.e., consecutive months) or a pattern of suspicious activity, such as unusual rates of invalid enrollment attempts. While a representative’s account is locked, the representative will lose the ability to enter, alter, remove, or view subscriber information in the NLAD and National Verifier systems. 64. Enrollment Process Improvement—Independent Economic Household Worksheets. Next the Commission amends the rules to limit when an ETC can record an Independent Economic Household (IEH) worksheet in the NLAD. Specifically, an ETC will be permitted to do so only where the consumer completing the worksheet shares an address with another Lifeline subscriber. This limitation will assist USAC’s efforts to detect improper duplicate addresses among Lifeline subscribers listed in the NLAD and will reduce administrative burdens on USAC. 65. The Commission’s rules limit Lifeline service to one subscription per household. There are instances, however, where multiple subscribers share the same residential address but are considered independent economic households under the Lifeline program rules. For example, multiple subscribers living in a shelter may share the same address, or multiple subscribers may provide the same apartment building address without a unit number. Alternatively, subscribers might share the same home address, but would not VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 be part of the same household if they do not contribute to and share in the household income and expenses. The IEH worksheet asks several questions that help the ETC and subscriber determine if the subscriber is an independent household in the event that another subscriber lives at the same address. The Commission’s rules require that the IEH worksheet certifying compliance with the one-subscriptionper-household rule be completed at the time of enrollment if the consumer resides at the same address as another individual receiving a Lifeline benefit and during any recertification in which the subscriber changes households, and as a result, shares an address with another Lifeline subscriber. However, an ETC often will record the collection of an IEH worksheet in the NLAD and note that the applicant is in an independent economic household, even if the subscriber does not share an address with other Lifeline subscribers. 66. In the 2017 Lifeline Order and NPRM, the Commission sought comment on the practice of collecting and recording worksheets from all subscribers, regardless of whether that subscriber shares an address with another Lifeline subscriber and asked whether that practice makes it more difficult for USAC to detect improper activity. Noting that the ‘‘[p]rophylactic use of the household worksheet can therefore subvert the duplicate address protections and may result in increased waste, fraud, and abuse,’’ the Commission asked whether it should amend its rules to permit the use of the form only in instances where the ETC has been notified that the applicant shares the same residential address as another Lifeline subscriber. 67. Some commenters argue that it is important that providers be able to collect the IEH worksheet from the applicant at the time of enrollment because providers may not receive a real time notification that the applicant shares an address with another Lifeline customer. Others are generally supportive of the Commission’s proposal to restrict the collection of the IEH worksheets. The Commission recognizes the strong preference that some ETCs have for routinely collecting the IEH worksheet at the outset from Lifeline applicants, regardless of whether that applicant shares an address with another Lifeline customer. Upon a review of the record, the Commission finds no compelling reason to prohibit the practice of collecting the IEH worksheet from all applicants, but in order to more readily identify through use of the ‘‘IEH flag’’ which subscribers share an address with PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 71317 another Lifeline subscriber, the Commission finds it necessary to restrict the recordation of the IEH worksheet in the NLAD. Accordingly, the Commission amends § 54.404(b)(3) of the Commission’s rules to permit ETCs to record an IEH worksheet in the NLAD only when the NLAD has alerted the ETC that the prospective subscriber shares the same residential address as another Lifeline subscriber is a reasonable approach to support USAC’s efforts in identifying duplicate addresses. ETCs shall not record an IEH worksheet in NLAD in any other situation. These changes shall be effective January 27, 2020. 68. Finally, the rule does not alter ETCs’ conduct in NLAD opt-out states (California, Oregon, and Texas) because the rule only covers the information that ETCs submit to the NLAD. More specifically, ETCs in NLAD opt-out states must continue to follow the relevant state laws, regulations, or agency instructions. To be clear, because this rule change impacts the recordation of IEH worksheets in the NLAD and not the use of the IEH worksheet itself, ETCs are still permitted to collect IEH worksheets prior to enrollment. ETCs may not record that subscriber’s IEH form in the NLAD, however, unless the NLAD has alerted the ETC that the subscriber shares an address with another Lifeline subscriber. 69. Deceased Subscribers. In its report, GAO identified 6,378 deceased individuals that remained enrolled in Lifeline even though they were reported as deceased for over a year before enrollment or recertification. To combat this issue, USAC was directed to deenroll the subscribers GAO identified as deceased, and going forward on a quarterly basis, to check a sample of subscribers against the Social Security Death Master File and to de-enroll subscribers and recoup reimbursements as appropriate. Since then, USAC has added a check of the Social Security Death Master File when validating a consumer’s identity, which prevents a consumer appearing on the Social Security Death Master File from enrolling in the program unless the consumer successfully disputes the automated result through documentation. In the 2017 Lifeline Order and NPRM, the Commission sought comment on whether it should codify USAC’s current practice of crosschecking a subscriber’s information against the Social Security Death Master File at the time of enrollment and recertification. Commenters agree that a codification of USAC’s current practice is a reasonable way to help control E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES 71318 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations waste, fraud, and abuse. Accordingly, the Commission adds a new rule, § 54.404(b)(12), notifying ETCs that they must not enroll a prospective Lifeline subscriber if the NLAD or National Verifier cannot identify the subscriber as living, unless that subscriber can produce documentation demonstrating his or her identity and status as living. The revised rules prohibit ETCs from claiming subscribers that are identified as deceased for purposes of requesting or receiving reimbursement from Lifeline. The changes contain new or modified information collection requirements, which will not be effective until approved by the Office of Management and Budget. The effective date will be announced in a future Federal Register document. 70. If an ETC has claimed reimbursement for a period during which a subscriber was deceased, USAC is directed to reclaim reimbursements back to the time of enrollment or recertification if the subscriber was deceased and listed on the Social Security Death Master File at the time of enrollment or recertification. The Commission also directs USAC to continue its efforts to prevent ETCs from claiming and seeking reimbursement for subscribers identified as deceased and listed on the Social Security Death Master File. Specifically, USAC shall continue sampling existing subscribers on a quarterly basis and, for any subscriber identified as deceased according to the Social Security Death Master File, USAC shall first require ETCs to provide ‘‘proof of life’’ documentation and then de-enroll any subscribers who cannot produce such documentation to successfully dispute the Social Security Death Master File match. 71. Reimbursement Process. The Commission next revises the rules to include a limitation on the subscribers for which an ETC may claim and receive reimbursement. In the 2017 Lifeline Order and NPRM, the Commission sought comment on whether it should amend its rules to require that disbursements be based on the subscribers enrolled in NLAD as a way to prevent reimbursements for fictitious or ‘‘phantom’’ subscribers that are not in NLAD and are improperly claimed by providers. Section 54.407 of the Commission’s rules provides that reimbursement for providing Lifeline service will be provided directly to the ETC ‘‘based on the number of actually qualifying low-income customers it serves directly as of the first day of the month.’’ The Commission now codifies the requirement that the number of eligible subscribers an ETC may claim VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 for reimbursement must be no more than the number of qualifying subscribers the ETC directly serves as of the snapshot date as indicated by the data in the NLAD. In the three NLAD opt-out states, ETCs may also base claims for reimbursement on any reports or information the state administrator provides to the ETC concerning which subscribers can be claimed. The Commission directs USAC to continue to base its Lifeline claims and reimbursement process on the number of qualifying subscribers the ETC serves on the snapshot date. USAC shall base the reimbursement on data available in NLAD, future USAC systems that record program enrollment, or on data provided by a state administrator for the NLAD opt-out states. Section 54.407(a) is amended to reflect the requirement. The rule change will become effective January 27, 2020. 72. Recertification—Improving Recertification Integrity. The Commission next amends the Commission’s rules to require ETCs to collect eligibility documentation from the subscriber at the time of recertification in certain circumstances. In the 2017 Lifeline Order and NPRM, the Commission acknowledged that the current rules allow a subscriber to selfcertify that he or she continues to be eligible for the Lifeline program, even if a database indicates that the subscriber’s participation in a qualifying program has changed and his or her eligibility cannot be determined by querying any available state or Federal eligibility or income database. The Commission asked for comment ‘‘on prohibiting subscribers from self-certifying their continued eligibility during the Lifeline program’s annual recertification process if the consumer is no longer participating in the program they used to demonstrate their initial eligibility for the program.’’ 73. To help ensure the integrity of the recertification process, the Commission amends the Commission’s rules to require ETCs to collect eligibility documentation from the subscriber at the time of recertification if the subscriber’s eligibility was previously verified through a state or Federal eligibility or income database and the subscriber’s continued eligibility can no longer be verified through that same database or another eligibility database. The rule change creates a more rigorous and verifiable recertification process and is tailored to provide additional focus on subscribers who have changes in their eligibility from year to year. The Commission also amends the rules to accommodate this process in the National Verifier. If the ETC is unable to PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 re-certify the subscriber’s eligibility or is notified by the National Verifier or the relevant state administrator that the subscriber is unable to be re-certified, the ETC shall proceed with the deenrollment requirements in § 54.405(e)(4) of the rules. 74. Amending the Commission’s rules to require this additional recertification step closes off another avenue for waste, fraud, and abuse within the Lifeline program by requiring additional documentation from subscribers whose eligibility was previously confirmed through an eligibility database but are no longer included in any eligibility database. This change balances the need to increase the integrity of the Lifeline program by ensuring that subscribers continue to demonstrate eligibility each year, with the limited burden of providing additional documentation only when the situation warrants it. The proposal is supported by state agency commenters, many of whom noted the importance of verifying eligibility in situations where a subscriber’s eligibility cannot be determined through a check of a database. The National Lifeline Association and ETCs also note their support for the requirement. 75. Some commenters express concern that this requirement would be burdensome for low-income subscribers because it would require them to produce additional documentation. Smith Bagley, Inc. (SBI) also argues that subscribers aged 60 years or older and residing on Tribal lands should be exempt from the requirement to produce additional documentation if their eligibility cannot be first determined through a database check. SBI contends that if such a customer can no longer be verified as a Medicaid participant in a database, ‘‘it is statistically likely that they also qualify via household income or [Supplemental Security Income]’’ because, among SBI’s Lifeline customers aged 60 years or older, ‘‘approximately 39% qualified via household income compared to 12% of its entire Lifeline base.’’ SBI contends that for this subset of subscribers, requiring the submission of eligibility documentation would be particularly burdensome because of mobility restrictions and other difficulties. The Commission is cognizant of the burdens that providing additional documentation can have on some low-income consumers, including those over the age of 60, and so the rule is tailored to only require supporting documentation when eligibility was confirmed through a database check, the subscriber is no longer included in that database, and eligibility cannot otherwise be verified through a check of another state or Federal eligibility or E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations income database. Accordingly, the Commission declines to implement SBI’s suggestion to permit Lifeline subscribers on Tribal lands over the age of 60 to self-certify their eligibility when they cannot otherwise be verified through a database. Recognizing that it may be a challenge for some to submit documentation in accordance with this rule, but this yearly requirement balances the need to maintain the integrity of the Lifeline program while minimizing the burden on individual subscribers. Also declining to implement the recommendation of the Oklahoma Corporation Commission’s Public Utility Division to eliminate all self-certifications, as finding that the self-certification process at the time of recertification strikes a balance by limiting administrative burdens on program participants while still maintaining the integrity of the Lifeline program by enforcing a verifiable process by which to confirm eligibility. 76. The Commission therefore amends § 54.410(f) of the Commission’s rules to reflect these changes, and directs USAC to update the recertification forms as necessary to reflect these changes. The changes contain new or modified information collection requirements, which will not be effective until approved by the Office of Management and Budget. The effective date will be announced in a future Federal Register document. Any recertification initiated on or after the effective date must comply with the amended rules. 77. Risk-Based Auditing. The Commission next modifies the Lifeline program’s audit requirements to better target potential non-compliance and reduce burdens on some ETCs. Participants in the Lifeline program are subject to substantial oversight and compliance reviews. With oversight from the Commission’s Office of the Managing Director (OMD), USAC is responsible for conducting, either itself or through third parties, Beneficiary and Contributor Audit Program (BCAP) audits and Payment Quality Assurance (PQA) reviews of program participants. More recently, USAC has conducted additional reviews as requested in the July 2017 Letter to USAC. Additionally, under the Commission’s Biennial Audit framework, ETCs receiving $5 million or more in reimbursements from the Lifeline program are required to obtain an independent audit that is intended ‘‘to assess the ETC’s overall compliance with the program’s requirements.’’ In the 2017 Lifeline Order and NPRM, the Commission sought comment on its proposal to modify the Biennial Audit requirements from a $5 million VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 reimbursement threshold to a purely risk-based model. 78. Finding that targeted tools are necessary to identify abusers of the program and to ensure that USAC’s procedures are sufficient to properly administer the Lifeline program, the Commission adopts a new approach that will use risk-based factors—rather than the level of Lifeline disbursements—to identify ETCs that must complete Biennial Audits pursuant to § 54.420(a) of the Commission’s rules. As one commenter argues, ‘‘the number of subscribers served by a provider,’’ and thus the level of reimbursements made to the provider, ‘‘is not indicative of its risk profile.’’ The Commission agrees that the amount of reimbursements should not be the only factor to consider in determining when a Biennial Audit is necessary under § 54.420(a) of the rules. Accordingly, the Commission directs USAC to develop and submit for approval by OMD and the Bureau a list of proposed risk-based factors that would trigger a Biennial Audit under § 54.420(a) of the Commission’s rules in accordance with the guidance provided in the GAO’s Yellow Book and the Office of Management and Budget (OMB) Circular No. A–123, Management’s Responsibility for Internal Control. A risk-based approach for biennial audits will incorporate a wider range of risk factors that will better identify waste, fraud, and abuse in the program because these factors will target potential violations rather than only companies that happen to receive a certain level of Lifeline reimbursements. To ensure the efficient and effective implementation of the approach, the Commission directs OMD and the Bureau, in conjunction with USAC, to update the Biennial Audit Plan as necessary to reflect the changes made herein and otherwise implemented since the development and release of the last Biennial Audit Plan. Commenters generally welcome this move to a targeted, risk-based approach, noting that this approach will be much more effective at weeding out waste, fraud, and abuse than the current method. The move also would likely result in cost savings for ETCs that were targeted simply due to their size. Riskbased audits will direct resources to where they are needed more—the monitoring of providers that exhibit certain risk factors that warrant further investigation through an audit. 79. ETC commenters request that the Commission work with stakeholders in developing the risk register. While the Commission appreciates ETCs’ interest in developing risk-based factors, it is important that the Commission receive PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 71319 recommendations from USAC, including any experts it may hire, based on standard methodologies for identifying risk-based factors and developing risk registers. As such, the Commission declines to direct OMD or USAC to seek comment on the risk register from any particular stakeholders, but instead anticipate that OMD and the Bureau will direct USAC to use auditing best practices, including the GAO Yellow Book, for identifying risk-based factors and developing the recommendations for the risk register. The Commission expects that such efforts by USAC to develop the risk register will follow relevant Federal guidance on evaluating and managing risk. The Commission highlights that the approach is designed to maintain the integrity of the audit process such that the risk register will serve its intended purpose of aiding in the detection and prevention of fraud, waste, and abuse in the program. The Commission notes that it already uses the approach for other Lifeline audit plans. For example, the FCC and USAC do not share the annual risk analyses used to select auditees pursuant to the Beneficiary and Contributor Audit Program. The Commission further notes that, pursuant to the guidance in OMB Circular A–123, it is within the Commission’s discretion to adopt an approach ‘‘that will ensure the greatest financial benefit for the government,’’ and the Commission believes that this risk-based approach will do so by directing resources toward audits where instances of waste, fraud, and abuse are more likely to be revealed. Finally, the approach will ensure that the development of the risk register will remain flexible so that USAC can adjust the risk register to meet any changes in the Lifeline program. The changes will become effective January 27, 2020. 80. The Commission also addresses several outstanding petitions to resolve pending questions pertaining to the rules and oversight of the Lifeline program and to provide clarity to program participants. The Commission addresses USTelecom’s petition for reconsideration and clarification of the 2016 Lifeline Order; the National Association of State Utility Consumer Advocates (NASUCA) petition for reconsideration of the 2016 Lifeline Order; the petitions of USTelecom and General Communication, Inc. (GCI) and the joint petition of NTCA—the Rural Broadband Association (NTCA) and WTA—Advocates for Rural Broadband (WTA) seeking reconsideration of the 2016 Lifeline Order; the National Lifeline Association (NaLA) 2018 E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES 71320 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations petition for declaratory ruling that the Commission allow ETCs to seek reimbursement for eligible subscribers during the non-usage cure period; and TracFone’s 2012 petition for declaratory ruling and interim relief regarding actions taken by the Puerto Rico Telecommunications Regulatory Board to address duplicate Lifeline subscribers identified by the Board. The Commission partially grants the petitions of USTelecom and GCI and the joint petition of NTCA and WTA and the Commission dismisses as moot or denies the other petitions. 81. ETC Service Obligations. Pending before the Commission is USTelecom’s Petition for Reconsideration and Clarification of the 2016 Lifeline Order. The Commission dismisses as moot USTelecom’s requests that the Commission (1) extend the effective date for the requirement to offer Lifeline-supported broadband internet access service, and (2) apply to nonLifeline Broadband Providers the Commission’s clarification that for Lifeline Broadband Providers, ‘‘media of general distribution’’ in section 214(e)(1)(B)’s advertising requirement means media reasonably calculated to reach ‘‘the specific audience that makes up the demographic for a particular service offering.’’ The requirement to offer Lifeline-supported broadband internet access service took effect on December 2, 2016. The Fifth Report and Order, eliminates the Lifeline Broadband Provider category. As a result, the Commission’s clarification concerning the advertising requirements for Lifeline Broadband Providers no longer applies to any ETC. Accordingly, the Commission dismisses the requests as moot. 82. The Commission denies USTelecom’s request for reconsideration of the requirement that the last ETC in a Census block continue to offer Lifeline stand-alone voice service. USTelecom argues that this requirement is ‘‘arbitrary and capricious’’ and is inconsistent with the Commission’s decision to shift Lifeline support from voice service to broadband internet access service. Two parties filed comments opposing USTelecom’s request for reconsideration of this requirement. 83. USTelecom’s arguments do not warrant reconsideration of this requirement. The Commission adopted the requirement in the 2016 Lifeline Order, notwithstanding its conclusion that the Lifeline program should transition to focus more on broadband internet access services, after considering (1) the historical importance of voice service, (2) that VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 consumer migrations to new technologies are not always uniform, and (3) that measures to continue addressing the affordability of voice service may still be appropriate consistent with the objectives of sections 254(b)(1), (b)(3), and 254(i) of the Act. Based on its consideration of these factors, the Commission concluded that, consistent with its ‘‘responsibility to be a prudent guardian of the public’s resources,’’ continued support for voice services should prioritize in an ‘‘administrable way, those areas where the Commission anticipates there to be the greatest likely need for doing so,’’ and that it made the most sense to provide any continued support for stand-alone voice to the last ETC serving the Census block. The Commission acknowledged that this support could be targeted in other ways (e.g., based on other geographies, or demographic criteria), but was not persuaded that these other approaches would be easily administrable. The Commission also determined that it made the most sense to provide this continued support to the single, existing ETC serving the Census block rather than requiring the designation of a new provider for this purpose. 84. Finding that the Commission’s decision to require the last ETC serving a Census block to continue offering Lifeline-supported voice service is not inconsistent with the decision and supporting rationale for shifting Lifeline dollars from voice service to broadband internet access service. As explained in the 2016 Lifeline Order, the Commission adopted this requirement after considering a number of factors, including the objectives of section 254(b), and also narrowly tailored this approach to meet the needs of areas where the Commission anticipated the greatest likely need for addressing the affordability of stand-alone voice services. USTelecom has not demonstrated that the Commission erred in considering these factors or adopting a narrowly tailored solution to address them. 85. While USTelecom argues that the existence of one ETC does not correlate to the absence of multiple voice providers, and that the rates of non-ETC voice providers would not be higher in Census blocks where there is only one ETC, USTelecom’s petition fails to provide any specific evidence to support those arguments. USTelecom also has not demonstrated that the Commission erred in determining that focusing on Census blocks with one ETC was the most readily administrable approach, or that it made the most sense to require the single existing ETC PO 00000 Frm 00024 Fmt 4700 Sfmt 4700 already serving the Census block to continue to provide stand-alone Lifeline voice service. Accordingly, the Commission denies USTelecom’s request for reconsideration of the requirement that the last ETC in a Census block continue offering Lifeline standalone-voice service. 86. Backup Power. The Commission next addresses a June 23, 2016, NASUCA petition for reconsideration of the 2016 Lifeline Order arguing that, among other issues, the Order did not ‘‘require that payment arrangements be offered for back-up power for Lifeline customers.’’ NASUCA requests that the Commission ‘‘at the very least require Lifeline ETCs to offer [Lifeline subscribers] extended payment plans for the back-up power option’’ or permit ‘‘back-up power [to] be provided at no additional cost to the Lifeline consumer.’’ CenturyLink, GVNW and USTelecom opposed this portion of NASUCA’s petition for reconsideration and argue that the Commission should reject or decline to consider NASUCA’s back-up power proposals for Lifeline consumers. The Commission declines to grant NASUCA’s request. 87. NASUCA’s arguments concerning Lifeline support for backup power arrangements do not warrant reconsideration of the 2016 Lifeline Order. NASUCA’s petition does not point to any errors of fact or law in the 2016 Lifeline Order. Instead, NASUCA’s petition reprises the same arguments that NASUCA made in its comments responding to the 2015 Lifeline Order and FNPRM and requests a change in the Commission’s policies that would allow Lifeline support for backup power. The Commission’s current rules do not require Lifeline providers to allow Lifeline consumers to make installment payments for backup power and do not provide Lifeline support for backup power options. The approach is consistent with the Commission’s determination in 2015 and 2016 that backup power is a matter of consumer choice and should be funded by individual consumers. Specifically, in the Ensuring Continuity of 911 Communications Reconsideration Order (FCC 15–98; 80 FR 62470 (Oct. 16, 2015)), the Commission recognized the importance of ‘‘ensur[ing] that all (including low-income) consumers have the ability to communicate during a power outage,’’ but ultimately found that its previous conclusion that backup power is a matter of consumer choice to be funded by individual consumers ‘‘appropriately balanced competing interests in ensuring that consumers had the ability to purchase backup power.’’ Given the Commission’s prior, thorough E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations consideration of backup power issues for all consumers, including low-income consumers, the fact that the 2016 Lifeline Order does not adopt NASUCA’s backup power proposals for Lifeline consumers does not warrant reconsideration of the 2016 Lifeline Order. 88. Rolling Recertification. The Commission next partially grants the petitions of USTelecom and GCI and the joint petition of NTCA and WTA (collectively, Petitioners) that request reconsideration of the 2016 decision to implement rolling recertification prior to the implementation of the National Verifier. Petitioners argue that the Commission failed to provide sufficient notice of the rule change prior to adoption in the 2016 Lifeline Order. The Petitioners raise strong arguments that the logical outgrowth standard is not satisfied here. In light of the Petitioners’ arguments and the desire to develop a full and complete record, the Commission hereby grants the petitions for reconsideration as they apply to the discrete rule and reverses the rolling recertification requirement for ETCs pending future disposition of the issues raised. 89. In the 2016 Lifeline Order, the Commission mandated rolling recertification, which required an ETC to recertify each Lifeline customer’s eligibility every 12 months, as measured from the customer’s service initiation date, except in states where the National Verifier, state Lifeline administrator, or other state agency conducts the recertification. The Commission found that the change would create administrative efficiencies while avoiding the imposition of undue burdens on providers, USAC, or the National Verifier. Previously, ETCs were simply required to annually certify the continued eligibility of subscribers, except for those in states where the state Lifeline administrator or other state agency conducts the recertification. In the 2015 Lifeline Order and FNPRM, the Commission sought comment on the National Verifier’s role in the recertification process and other potential National Verifier functions, but did not propose or seek specific comment on changes to the recertification process in states where the National Verifier had not yet launched. 90. Petitioners contend that the language of the 2015 Lifeline Order and FNPRM did not provide adequate notice, as required by the Administrative Procedure Act (APA), that the Commission was contemplating revising § 54.410(f)(1) to implement a rolling recertification requirement for VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 providers before the National Verifier launched. On reconsideration, the Commission agrees that the 2015 Lifeline Order and FNPRM did not explicitly notice the Commission’s intent to require rolling recertification before the National Verifier launched. Although the APA does not require that the notice ‘‘specify every precise proposal which [the agency] may ultimately adopt as a rule’’ or that the final rule ‘‘be the one proposed in the NPRM,’’ the final rule must be a ‘‘‘logical outgrowth’ of its notice.’’ A rule is considered a ‘‘logical outgrowth’’ of the Notice if a party should have anticipated that the rule ultimately adopted was possible. 91. Here, the Commission agrees that a party could not be expected to have anticipated that a notice of proposed rulemaking seeking comment on the National Verifier’s role in the recertification process would result in a rule requiring ETCs to recertify subscribers every 12 months as measured from each subscriber’s service initiation date, even in states where the National Verifier has not launched. Accordingly, the Commission reverses, solely on notice grounds, the rolling recertification requirement on ETCs. As of the effective date of the Order, ETCs will not be required to complete recertification of a Lifeline customer’s eligibility by the anniversary of that customer’s service initiation date. Instead, the recertification process must merely be completed on an annual basis pursuant to the revised § 54.410(f)(1) of the Commission’s rules. The Commission notes that ETCs, USAC, and the National Verifier may continue to use a rolling recertification approach, as that would meet the requirement for annual recertification. Recertifications for all eligible Lifeline subscribers must be completed by the end of each calendar year, unless the requirement otherwise is waived by the Bureau or Commission. All other Commission guidance and rules with respect to the recertification process remain in effect. 92. Reimbursement Under the Usage Requirement. The Commission next denies the Petition for Declaratory Ruling filed by NaLA asking the Commission to permit ETCs to seek reimbursement ‘‘for all Lifeline eligible subscribers served as of the first day of the month’’ pursuant to the Commission’s non-usage rules, ‘‘including those subscribers that are in an applicable 15-day cure period following 30 days of non-usage.’’ 93. In the 2012 Lifeline Order, as a measure intended to reduce waste in the program, the Commission introduced a requirement that an ETC that did not PO 00000 Frm 00025 Fmt 4700 Sfmt 4700 71321 assess and collect from its subscribers a monthly charge could not receive support for subscribers who had either not activated service, or who had not used the service within a consecutive 60-day period. In this way, ETCs would only receive support for eligible lowincome subscribers who actually use the service. ETCs were also required to notify their subscribers of possible deenrollment at the end of the 60-day period if the subscriber failed to use the Lifeline supported service during the next 30 days. In the 2016 Lifeline Order, the Commission shortened the nonusage period from 60 to 30 days, along with a corresponding reduction in the time allotted for service providers to notify their subscribers of possible termination from 30 to 15 days. Per the change, ETCs must notify subscribers of possible de-enrollment on the 30th day of non-usage and de-enroll the subscriber if, during the subsequent 15 days, the subscriber has not used the service. 94. NaLA’s petition for declaratory ruling requested that the Commission permit Lifeline ETCs to seek reimbursement for all Lifeline subscribers served on the first day of the month, including those subscribers receiving free-to-the-end-user Lifeline service who are in the 15-day cure period per the Commission’s non-usage rules. NaLA states that USAC’s website changed its guidance from allowing reimbursement for Lifeline subscribers during the 15-day cure period of the non-usage rule to disallowing ETCs to claim reimbursement for subscribers during the 15-day cure period. NaLA further states that disallowing reimbursement for those subscribers enrolled during the 15-day cure period would be arbitrary and capricious because it ignores the language of § 54.407(a) and disregards ETCs’ ‘‘reasonable reliance on the initial guidance’’ provided by USAC. NaLA also asserts that disallowing reimbursement for subscribers in the 15day cure period for non-usage potentially would constitute a regulatory taking without just compensation, in violation of the United States Constitution. 95. SBI, Sprint Corporation, and Q Link Wireless all filed comments in support of NaLA’s Petition. SBI states that the Lifeline rules ‘‘entitle SBI to reimbursement for all Lifeline customers it serves directly as of the first of the month’’ making ‘‘SBI entitled to reimbursement for a customer whose ‘cure’ period includes the snapshot date.’’ It further states that nowhere do the rules require ‘‘SBI to go back after the end of the ‘cure’ period and return E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES 71322 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations the Lifeline subsidy [because] there is nothing to return since SBI was providing service during that period.’’ Sprint states that ‘‘service providers incur significant costs for accounts in mandatory cure status’’ as that subscriber’s account ‘‘remains active, and the service provider continues to incur the costs associated with an active account.’’ Both Sprint and SBI argue that inefficiencies result from an ETC not being able to claim a subscriber during the cure period but then filing for reimbursement if the subscriber ultimately ends up using the service during the cure period. Q Link reiterates NaLA’s argument that mandating Lifeline service to subscribers in a cure period but prohibiting ETCs from claiming such subscribers would effect a regulatory taking. 96. The Commission denies NaLA’s Petition requesting permission to seek reimbursement for subscribers who have not used the Lifeline supported service in 30 consecutive days. The non-usage rule states that an ETC offering free-tothe-end-user Lifeline service ‘‘shall only continue to receive universal service support reimbursement for such Lifeline service provided to subscribers who have used the service within the last 30 days . . . .’’ ETCs are further obligated to provide a subscriber who has not used her or his service within those 30 days ‘‘15 days’ notice . . . that the subscriber’s failure to use the Lifeline service within the 15-day notice period will result in service termination for non-usage.’’ Read together, the plain language of the rules does not confer any right for the ETC to receive reimbursement during the 15-day cure period. The rules expressly state that ETCs can seek reimbursement only for subscribers who use their service within a consecutive 30-day period. The 15-day cure period serves as a notification to the subscriber that she must use her service, or it will be automatically terminated at the end of the 15 days. NaLA’s argument that it should be able to seek support during the 15-day notice and cure period is intended effectively to extend the non-usage period by 50%. 97. The Commission is not persuaded by NaLA’s argument for granting the petition because it relied on informal staff guidance and USAC’s website. Commission precedent is clear that carriers must rely on the Commission’s rules and orders even in the face of conflicting informal advice or opinion from USAC or Commission staff. NaLA and others must rely on the plain language of the non-usage rules, as codified by the Commission, which state that ETCs will not be eligible to be reimbursed for those subscribers who VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 are in a 15-day non-usage cure period regardless of whether the subscriber’s 15-day cure period includes the snapshot date. Additionally, the Commission notes that a group of ETCs with at least some overlap with the current NaLA Petitioners acknowledged that the Commission’s rules require ETCs to keep Lifeline subscribers enrolled in the program during the cure period without requesting reimbursement for that service. 98. The Commission also rejects NaLA’s argument that § 54.407(a) and (c)(2) of the Commission’s rules are inconsistent and in conflict. Section 54.407(c)(2) prohibits ETCs providing free-to-the-end-user Lifeline service from claiming support for subscribers who have not used their Lifeline service in the last consecutive thirty days or who have not cured their non-usage. While § 54.407(a) of the rules generally provides for the payment of reimbursements to ETCs for qualifying subscribers in the NLAD on the first day of the month, § 54.407(c)(2) of the rules places a specific restriction on the general rule declaring which subscribers an ETC can claim for reimbursement. The specific language in a rule prevails over more general language. Because the specific language of § 54.407(c)(2) of the rules provides a limitation on the general reimbursement rule of § 54.407(a) and also clearly states that an ETC ‘‘shall only continue to receive universal service support reimbursement’’ for subscribers who have used their service within a 30 consecutive day period, it is not arbitrary for the Commission to determine that ETCs are not owed payment for the 15-day notification period required by § 54.405(c)(3) that falls beyond the 30-day non-usage period per the rule. The Commission also notes that the alternative to the 15day cure period is to require an ETC to immediately de-enroll a subscriber from the Lifeline program on day 30 of nonusage, which would result in the subscriber’s service being disconnected with no notice to the subscriber and would therefore be contrary to the public interest. 99. Finally, the Commission disagrees with NaLA’s argument that requiring ETCs to provide uncompensated service during the 15-day cure period would violate the Takings Clause of the Fifth Amendment. The Takings Clause prohibits the government from taking ‘‘private property . . . for public use, without just compensation.’’ While NaLA’s Petition does not elaborate on the argument, Q-Link explains that denying compensation during the 15day cure period would effectively PO 00000 Frm 00026 Fmt 4700 Sfmt 4700 mandate that subscribers ‘‘be permitted physically to occupy portions of the ETC’s network and airtime . . . without just compensation.’’ There is a simple problem with the argument: Any actual use of an ETC’s network—even the sending of a single text message—would establish subscriber ‘‘usage,’’ entitling the ETC to reimbursement. In other words, the Commission’s rules deny compensation only where there is no use—and therefore, under Q-Link’s formulation, no physical occupation. Where there is actual use during this 15day period, ETCs would receive compensation. 100. The potential taking, then, is merely the burden of providing a wholly unused service for fifteen days. While NaLA and other commenters provide no information on the weight of the burden, it is far from the kind of permanent condemnation of physical property that typifies a per se taking. Nor would it amount to a regulatory taking: (1) The economic impact of a 15day period of uncompensated service would be light; (2) the rule would not upend any reasonable investmentbacked expectation; and (3) any interference could not fairly be characterized as a ‘‘physical invasion by government,’’ notwithstanding Q-Link’s arguments to the contrary. 101. For these reasons, the Commission denies NaLA’s Petition. ETCs are not entitled to reimbursement during the 15-day cure period for a subscriber who has not used the service within 30 consecutive days unless the subscriber cures the non-usage, after which the ETC may seek reimbursement. 102. State Efforts to Eradicate Duplicate Claims. The Commission denies a TracFone Petition for Declaratory Ruling and Interim Relief filed in 2012 concerning actions taken by the Puerto Rico Telecommunications Regulatory Board (Board or TRB) to address duplicate Lifeline subscribers as identified by the Board. The regulations and processes enacted by the Board to address duplicative Lifeline support in Puerto Rico were valid and not subject to preemption by the Commission. Specifically, the Commission finds that the Board was not required to adopt the interim procedures concerning duplicate Lifeline subscribers outlined in the Commission’s 2011 Duplicative Payments Order (FCC 11–97; 76 FR 38040 (June 29, 2011)) because those procedures established a minimum set of requirements for USAC to use to address duplicate Lifeline subscribers that USAC identified through in-depth data validations and other similar audits. In addition, the Commission E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations finds that the Board’s de-enrollment procedures did not conflict with or serve as an obstacle to the de-enrollment procedures adopted by the Commission and, as a result, were not subject to preemption. The Commission also notes that many of the policy concerns raised by TracFone and commenters concerning the Board’s process have either been addressed by (1) changes the Board made to its duplicate policies and procedures soon after TracFone’s petition was filed, (2) the fact that the Board filed a request to opt out of the NLAD in November 2012, or (3) the fact that the NLAD now conducts duplicate checks for Puerto Rico subscribers following the Bureau’s 2015 grant of Puerto Rico’s request to opt into the NLAD. 103. According to TracFone’s Petition, the Board sent letters to TracFone and several other ETCs in January and February 2012 together with a list of duplicate subscribers, and instructed the ETCs to de-enroll these subscribers by a specified date. TracFone argues that the Board letters instructing ETCs to de-enroll the consumers violate (1) the intent of section 254(b)(3) of the Communications Act, which establishes as a core principle the goal that consumers in all regions of the Nation, ‘‘including low-income consumers,’’ have access to affordable telecommunications services, and (2) the rules and procedures governing deenrollment of ‘‘duplicates’’ established by the Commission on an interim basis in 2011 and those later adopted on a permanent basis in 2012. TracFone argues that the Board should be required to adopt the Industry Duplicate Resolution Process outlined by the Commission in its 2011 Duplicative Payments Order. TracFone also points to the opt-out process outlined in the 2012 Lifeline Order, which codified a permanent approach for addressing duplicates in the Federal rules, and argues that the Board did not follow the process, and that the Board’s process has the potential to leave residents without service, in violation of the 2012 Lifeline Order. Finally, TracFone requests that the Commission issue an order concluding that the directives to ETCs contained in the Board’s letters are unlawful and preempted. 104. Multiple commenters filed in support of TracFone’s Petition, agreeing that the Commission should issue a declaratory ruling and arguing that the Board’s actions directing TracFone and other ETCs to de-enroll duplicate subscribers were unlawful, contrary to universal service program policy and inconsistent with Federal procedures. NASUCA, in its comments, also VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 recommended that the Commission issue a ruling (1) that Puerto Rico consumers who are eligible for Lifeline be allowed to maintain one Lifeline service per household, even if they had received duplicate Lifeline service previously, and (2) clarifying that states that operate their own systems for identifying duplicates are required, as a condition of opting out of the Federal duplicate resolution process, to include safeguards to allow eligible consumers to receive one Lifeline service per household. 105. Several commenters point to the duplicates resolution measures adopted by the Commission and raise concerns that the Board process for addressing duplicates deviates from the process the FCC outlined in the 2011 Duplicative Payments Order, the 2012 Lifeline Order, and the June 2011 Guidance Letter (DA 11–1082). NASUCA, for example, argues the Commission should clarify that state systems that opt out of following the Federal approach must include both the functional capabilities and safeguards equivalent to those administered by USAC. Sprint and PRTC argue that the Board should adopt the FCC’s processes and procedures. Sprint, PRTC, and T-Mobile point to the need for nationwide consistency in addressing the duplicates issue. PR Wireless agrees with Tracfone that the Board’s processes are inconsistent with Federal procedures. Several commenters raise concerns that the process established by the Board will result in consumers being barred from receiving service for an extended period of time (from four months to a year) if they are determined to be receiving service from more than one carrier. One commenter also raises concerns regarding how the Board was addressing situations where there are multiple households at a single address. 106. The Commission has taken a number of important steps to create robust processes and procedures to address the issue of duplicative Lifeline support. In the Commission’s 2011 Duplicative Payments Order, the Commission clarified that qualifying low-income consumers may receive no more than a single Lifeline benefit and established the requirement that an ETC, upon notification from USAC, deenroll any subscriber that is receiving multiple benefits in violation of that rule. The Commission also directed the Bureau to send a letter to USAC to implement an administrative process to detect and resolve duplicative claims that was consistent with the proposed Industry Duplicate Resolution Process submitted by a group of ETCs. This was intended as an interim process, ‘‘while PO 00000 Frm 00027 Fmt 4700 Sfmt 4700 71323 the Commission considers more comprehensive resolution of this and other issues raised in the 2011 Lifeline and Link Up NPRM (FCC 11–32 [76 FR 16482 (March 23, 2011)]).’’ Then, in 2012, the Commission adopted a number of Lifeline program reforms and codified a more permanent approach to address duplicative support. Specifically, in the 2012 Lifeline Order, the Commission created and mandated the use by ETCs of the NLAD with specified features and functionalities designed to ensure that multiple ETCs do not seek and receive reimbursement for the same subscriber. 107. The Commission finds that the Board’s actions did not run afoul of the rules or the Act. Under section 254(f) of the Telecommunications Act of 1996, ‘‘[a] State may adopt regulations not inconsistent with the Commission’s rules to preserve and advance universal service.’’ In addition, ‘‘[a] State may adopt regulations to provide for additional definitions and standards to preserve and advance universal service within that State only to the extent that such regulations adopt additional specific, predictable, and sufficient mechanisms to support such definitions or standards that do not rely on or burden Federal universal service support mechanisms.’’ In the 2011 USF/ ICC Transformation Order (FCC 11–161; 76 FR 73830 (Nov. 29, 2011)), the Commission stated that section 254(f) permitted states to impose additional reporting requirements as long as they ‘‘do not create burdens that thwart achievement of the universal service reforms set forth in this Order.’’ The Commission concludes the Board’s policies and procedures did not rely on or burden Federal universal service support mechanisms. In fact, the Board’s policies were assisting the Federal universal service program by addressing the Lifeline duplicates issue, consistent with the overall objectives of the 2011 Duplicative Payments Order and were being undertaken and implemented using the Board’s own resources. The Board is responsible for regulating telecommunications services in Puerto Rico. In accordance with statutes adopted by the Puerto Rico General Assembly, the Board has a mandate to ‘‘preserve and promote universal service through predictable, specific and sufficient support mechanisms’’ and to ensure that the Lifeline subsidy is limited to ‘‘a single wireless telephone line or to a single wireless service for the family unit.’’ It was with this mandate in mind that the Board took action to address duplicate Lifeline recipients after the Board E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES 71324 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations became aware that this was a significant concern in Puerto Rico. According to the Board, based on a review of information it had requested from ETCs on a quarterly basis, ‘‘the Board became aware of many cases where the subscribed participants were receiving the service from more than one carrier.’’ 108. The actions of the Board were not in conflict with the rules and thus did not trigger the criteria for Federal preemption. When the Board sent the letters to TracFone concerning duplicate Lifeline subscribers in January and February of 2012, only the Commission’s interim procedures established in the 2011 Duplicative Payments Order were in effect. The rule regarding de-enrollment adopted in the 2011 Duplicative Payments Order specified that, ‘‘upon notification by the Administrator to any ETC’’ that a subscriber is already receiving Lifeline service from another ETC, ‘‘the ETC shall de-enroll the subscriber from participation in that ETC’s Lifeline program within 5 business days.’’ The policy adopted by the Board, however, did not relate to duplicates identified by the Administrator but, rather, to those duplicates identified by the Board. The Board regulations specified that the Board would identify duplicates and that ETCs would have no more than 10 working days (from the date the Board duplicates notice was sent) to notify consumers they were ineligible for the service. The Board also adopted other policies related to duplicates, but these policies did not conflict with or serve as an obstacle to the Commission’s rules. While the Commission stated in its 2011 Duplicative Payments Order that ‘‘these new rules would apply to ETCs in all states, regardless of that state’s status as a [F]ederal default state or a non-default state,’’ the 2011 Duplicative Payments Order did not explicitly bar states from imposing their own policies and procedures, unless such regulations were ‘‘in conflict with or serve[d] as an obstacle to implementation of the deenrollment procedures’’ adopted in the 2011 Duplicative Payments Order. The Commission finds the Board’s policies were neither in conflict with nor an obstacle to implementation of the Commission’s 2011 Duplicative Payments Order procedures. 109. Indeed, the Commission finds that the Board’s process was consistent with the overall approach that the Bureau directed USAC to follow in the June 2011 Guidance Letter. There, the Bureau directed USAC, in cases where the duplicate subscriber was the same individual at the same address, to identify duplicative subscribers and notify ETCs, identify a ‘‘default ETC,’’ VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 and notify subscribers that they had 35 days to either choose a provider or begin receiving service from only the default provider. After the 35-day timeframe, USAC was directed to notify the provider regarding the subscribers that should be de-enrolled. The Board process enabled consumers to appeal the Board decision regarding their duplicate status and, as later amended, also enabled subscribers to continue to receive service ‘‘with the service to which the subsidy was first applied.’’ As a result, the Board process allowed subscribers to dispute the Board’s findings and continue to receive service while also addressing the duplicates issue, which was in line with the overall approach the Bureau recommended for USAC to follow. 110. TracFone’s claims that the Board failed to make the required opt-out filing (claims which were made before the opt-out deadline occurred) are not accurate. At the time the Board sent the letters to TracFone concerning duplicate Lifeline subscribers, the Commission’s changes in the 2012 Lifeline Order to adopt more permanent duplicate procedures and establish the NLAD, and permit states to opt out of the NLAD, were not yet in effect. In the 2012 Lifeline Order, the Commission approvingly acknowledged that some states had already developed their own systems to check for duplicative Lifeline support, stating its intent not to inhibit state progress. The Commission also clarified that ‘‘[w]e allow states to optout of the duplicates database requirements outlined in the Order if they certify one time to the Commission that they have a comprehensive system in place to check for duplicative [F]ederal Lifeline support that is as at least as robust as the processes adopted by the Commission and that covers all ETCs operating in the state and their subscribers.’’ In October 2012, the Bureau issued a public notice outlining the process states must follow to opt out of the NLAD. The Board made a filing with the Commission seeking to opt out of the NLAD and the duplicates resolution process in November 2012 in which the Board described the system and processes it had in place to check for duplicative Lifeline support. Therefore, TracFone’s claims that the Board failed to make the required optout filing are not accurate. For all of these reasons, the Commission denies TracFone’s petition. III. Severability 111. All of the actions taken by the Commission in the Fifth Report and Order, Memorandum Opinion and Order and Order on Reconsideration are PO 00000 Frm 00028 Fmt 4700 Sfmt 4700 designed to work in unison to make voice and broadband services more affordable to low-income households and to strengthen the efficiency and integrity of the Lifeline program’s administration. However, each of the separate Lifeline reforms the Commission undertakes in the Fifth Report and Order, Memorandum Opinion, and Order and Order on Reconsideration serves a discrete function. Therefore, it is the intent that each of the rules adopted shall be severable. If any of the rules is declared invalid or unenforceable for any reason, it is the Commission’s intent that the remaining rules shall remain in full force and effect. IV. Procedural Matters A. Paperwork Reduction Act Analysis 112. The Order contains new information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104–13. It will be submitted to the OMB for review under section 3507(d) of the PRA. OMB, the general public, and other Federal agencies will be invited to comment on the revised information collection requirements contained in the proceeding. In addition, the Commission noted that pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107–198, the Commission previously sought specific comment on how it might further reduce the information collection burden on small business concerns with fewer than 25 employees. B. Congressional Review Act 113. The Commission has determined, and the Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, concurs that the rules are non-major under the Congressional Review Act, 5 U.S.C. 804(2). The Commission will send a copy of the Fifth Report and Order, Memorandum Opinion and Order and Order on Reconsideration to Congress and the Government Accountability Office pursuant to 5 U.S.C. 801(a)(1)(A). In addition, the Commission will send a copy of the Fifth Report and Order, Memorandum Opinion and Order and Order on Reconsideration, including the FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the Fifth Report and Order, Memorandum Opinion and Order and Order on Reconsideration and the FRFA (or summaries thereof) will also be published in the Federal Register. E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations C. Final Regulatory Flexibility Analysis 114. As required by the Regulatory Flexibility Act of 1980 (RFA), the Commission has prepared a Final Regulatory Flexibility Analysis (FRFA) relating to the Fifth Report and Order, and Memorandum Opinion and Order and Order on Reconsideration. The Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA. 115. Need for, and Objectives of, the Final Rules. The Commission is required by section 254 of the Communications Act of 1934, as amended, to promulgate rules to implement the universal service provisions of section 254. The Lifeline program was implemented in 1985 in the wake of the 1984 divestiture of AT&T. On May 8, 1997, the Commission adopted rules to reform its system of universal service support mechanisms so that universal service is preserved and advanced as markets move toward competition. Since the 2012 Lifeline Order, the Commission has acted to address waste, fraud, and abuse in the Lifeline program and improved program administration and accountability. In the Order, the Commission eliminates the Lifeline Broadband Provider (LBP) designation category and the Federal designation process for Lifeline Broadband Providers. The Commission also takes steps to strengthen the reliability and integrity of the Lifeline program’s enrollment, recertification, reimbursement, and audit processes. 116. Pursuant to these objectives, the Commission adopts changes to its Lifeline program rules. First, to restore the traditional categories of eligible telecommunications carriers (ETC) and ETC obligations, the Commission eliminates the Lifeline Broadband Provider ETC category and the Federal designation process for Lifeline Broadband Providers. Accordingly, the Commission eliminates § 54.201(j) of the rules, which precluded states from designating Lifeline Broadband Providers. In addition, the Commission also eliminates §§ 54.202(d)(1) through (3) and (e) and 54.205(c) of the rules. 117. To further improve the integrity of the Lifeline enrollment process, the Order prohibits ETCs from offering or paying commissions to enrollment representatives or their direct supervisors based on the number of Lifeline applications submitted or enrollments approved. Additionally, to prevent waste, fraud, and abuse in the Lifeline program, the Commission further requires all ETC enrollment representatives who provide information to USAC or a state entity administering a state Lifeline program VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 during the Lifeline enrollment process to register with USAC. The Commission amends its rules to require each ETC enrollment representative to register with USAC and obtain a unique registration number prior to accessing the NLAD or National Verifier. Ultimately, ETCs are responsible for ensuring that their enrollment representatives complete the registration process. 118. The Commission also amends its rules regarding the recordation of information related to the Independent Economic Household (IEH) Worksheet. The Commission finds that amending § 54.404(b)(3) of the Commission’s rules to permit ETCs to record an IEH worksheet in the NLAD only when the NLAD has alerted the ETC that the prospective subscriber shares the same residential address as another Lifeline subscriber is a reasonable approach to support USAC’s efforts in identifying duplicate addresses. ETCs shall not record an IEH worksheet in NLAD in any other situation. Additionally, to further combat waste, fraud, and abuse in the Lifeline program, the Commission adds a new rule, § 54.404(b)(12), notifying ETCs that they must not enroll a prospective Lifeline subscriber if the NLAD or National Verifier cannot identify the subscriber as living, unless that subscriber can produce documentation demonstrating his or her identity and status as living. The revised rule prohibits ETCs from claiming subscribers that are identified as deceased for purposes of requesting or receiving reimbursement from Lifeline. If an ETC has claimed reimbursement for a period during which a subscriber was deceased, USAC is directed to reclaim reimbursements back to the time of enrollment or recertification if the subscriber was deceased and listed on the Social Security Death Master File at the time of enrollment or recertification. 119. The Commission also modifies § 54.407 of the rules to clarify that the number of eligible subscribers that an ETC may claim for reimbursement must be the number of qualifying subscribers the ETC directly serves as of the snapshot date as indicated by the NLAD. In the case of NLAD opt-out states (California, Oregon, and Texas), ETCs may also base claims for reimbursement on any reports or information the state administrator provides to the ETC concerning the subscribers that can be claimed. The Commission amends § 54.410(f)(2)(iii) of the rules to require ETCs to collect eligibility documentation from the subscriber at the time of recertification if the subscriber’s eligibility was PO 00000 Frm 00029 Fmt 4700 Sfmt 4700 71325 previously verified through a state or Federal eligibility or income database and the subscriber’s continued eligibility can no longer be verified through that same database or another eligibility database. The rule change creates a more verifiable recertification process and is tailored to provide additional focus on subscribers who have changes in their eligibility from year to year. The Commission also amends its rules to accommodate the process in the National Verifier. If the ETC is unable to re-certify the subscriber’s eligibility or is notified by the National Verifier or the relevant state administrator that the subscriber is unable to be re-certified, the ETC shall proceed with the de-enrollment requirements in § 54.405(e)(4) of the rules. 120. The Commission also amends its recertification rules to require ETCs to collect eligibility documentation from the subscriber at the time of recertification if the subscriber’s eligibility was previously verified through a state or Federal eligibility or income database and the subscriber’s continued eligibility can no longer be verified through that same database or another one. The Commission also modifies § 54.420(a) of the rules, regarding biennial audits by removing the $5 million reimbursement threshold and implementing a purely risk-based model. 121. The Commission acts on several Petitions for Reconsideration and requests to clarify ETCs’ obligations under the Lifeline program. The Commission dismisses as moot USTelecom’s request that the Commission extend the effective date for the requirement to offer Lifelinesupported broadband internet access service and apply to non-Lifeline Broadband Providers a clarification extended to Lifeline Broadband Providers regarding an advertising requirement. The Commission also denies USTelecom’s request for reconsideration of the requirement that the last ETC in a Census block continue to offer Lifeline standalone voice service. The Commission denies the Petition for Reconsideration of the National Association of State Utility Consumer Advocates, in which the petitioners objected to the Commission’s previous decision not to require ETCs to provide back-up power payment arrangements or other options to Lifeline consumers. The Commission also clarifies when an ETC may seek reimbursement for subscribers who are within the cure period that is triggered by the non-usage rules. The Commission also grants requests for reconsideration E:\FR\FM\27DER1.SGM 27DER1 jbell on DSKJLSW7X2PROD with RULES 71326 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations of the Commission’s rolling recertification requirement filed by USTelecom, NTCA and WCA (jointly), and GCI and revises § 54.410(f)(1) of the rules by removing the rolling recertification requirement and reinstating the requirement that recertifications be completed annually. Furthermore, the Commission also denies a TracFone Petition for Declaratory Ruling and Interim Relief filed in 2012 concerning actions taken by the Puerto Rico Telecommunication Regulatory Board to address duplicate Lifeline subscribers as defined by that board. 122. Summary of Significant Issues Raised by Public Comments to the IRFA. The Commission received no comments in direct response to the IRFA contained in the 2017 Lifeline Order and NPRM. 123. Description and Estimate of the Number of Small Entities to Which Rules May Apply. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. The RFA generally defines the term ‘‘small entity’’ as having the same meaning as the terms ‘‘small business,’’ ‘‘small organization,’’ and ‘‘small governmental jurisdiction.’’ In addition, the term ‘‘small business’’ has the same meaning as the term ‘‘small business concern’’ under the Small Business Act. A small business concern is one that: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). 124. Small Businesses, Small Organizations, Small Governmental Jurisdictions. The Commission’s actions, over time, may affect small entities that are not easily categorized at present. Therefore, at the outset, three broad groups of small entities that could be directly affected herein. First, while there are industry specific size standards for small businesses that are used in the regulatory flexibility analysis, according to data from the SBA’s Office of Advocacy, in general a small business is an independent business having fewer than 500 employees. These types of small businesses represent 99.9% of all businesses in the United States which translates to 29.6 million businesses. 125. Next, the type of small entity described as a ‘‘small organization’’ is generally ‘‘any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.’’ Nationwide, as of August 2016, there were approximately 356,494 small organizations based on registration and VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 tax data filed by nonprofits with the Internal Revenue Service (IRS). 126. Finally, the small entity described as a ‘‘small governmental jurisdiction’’ is defined generally as ‘‘governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.’’ U.S. Census Bureau data from the 2012 Census of Governments indicates that there were 90,056 local governmental jurisdictions consisting of general purpose governments and special purpose governments in the United States. Of this number there were 37,132 general purpose governments (county, municipal, and town or township) with populations of less than 50,000 and 12,184 special purpose governments (independent school districts and special districts) with populations of less than 50,000. The 2012 U.S. Census Bureau data for most types of governments in the local government category show that the majority of these governments have populations of less than 50,000. Based on the data the Commission estimates that at least 49,316 local government jurisdictions fall in the category of ‘‘small governmental jurisdictions.’’ 127. The small entities that may be affected are Wireline Providers, Wireless Carriers and Service Providers and internet Service Providers. 128. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities. A number of the rule changes will result in additional reporting, recordkeeping, or compliance requirements for small entities. For all of the rule changes, the Commission has determined that the benefit the rule change will bring for the Lifeline program outweighs the burden of the increased requirements. Other rule changes decrease reporting, recordkeeping, or compliance requirements for small entities. The Commission noted the applicable rule changes impacting small entities. 129. Compliance burdens. The rules implemented impose some compliance burdens on small entities by requiring them to become familiar with the new rules to comply with them. For several of the new rules, the burden of becoming familiar with the new rule in order to comply with it is the only additional burden the rule imposes. 130. Improving Program Integrity in Program Enrollment and Recertification. The Commission modifies its rules to improve the integrity within the Lifeline program. The Order prohibits ETCs from offering or providing commissions to enrollment representatives and their PO 00000 Frm 00030 Fmt 4700 Sfmt 4700 direct supervisors based on the number of Lifeline applications submitted or enrollments approved and requires that enrollment representatives register with USAC. The Order further modifies the rules regarding the recertification process, and now requires Lifeline subscribers to provide supporting documentation to prove eligibility when the subscriber’s continued eligibility cannot be verified in a state or Federal eligibility database. While the changes will require ETCs to undertake additional steps to ensure compliance with the new rules, the rules will strengthen the Lifeline program by removing avenues for fraud. 131. Limiting the Recordation of IEH Worksheets. The Commission modifies the rules to limit the recording of an IEH worksheet in USAC’s Lifeline systems only to situations where the Lifeline subscriber resides at the same address as another Lifeline subscriber. Requiring ETCs to record the collection of an IEH worksheet only where the Lifeline subscriber resides at a duplicate address decreases the burden on the carrier by reducing the situations in which an ETC must record the worksheet. 132. Modifications to the Biennial Audit Rule. The Commission modifies its rules to require that a risk-based approach be used to identify ETCs that must complete independent audits pursuant to § 54.420(a) of the Commission’s rules rather the level of USF reimbursements. Under the new standard, which replaces the outdated threshold that limited third-party biennial audits to those providers that receive at least $5 million in Lifeline reimbursements, ETCs that receive less than $5 million in Lifeline reimbursements may now be subject to an independent audit pursuant to the rule. 133. Steps Taken to Minimize the Significant Economic Impact on Small Entities, and Significant Alternatives Considered. The RFA requires an agency to describe any significant, specifically small business, alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): ‘‘(1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities.’’ E:\FR\FM\27DER1.SGM 27DER1 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations jbell on DSKJLSW7X2PROD with RULES 134. The rulemaking could impose minimal additional burdens on small entities. In the Order, the Commission modifies certain Lifeline rules to target funding to areas where it is most needed. In developing the rules, the Commission worked to ensure the burdens associated with implementing these rules would be minimized for all service providers, including small entities. In taking these actions, the Commission considered potential impacts on service providers, including small entities. The Commission considered alternatives to the rulemaking changes that increase projected reporting, recordkeeping and other compliance requirements for small entities. The Commission’s decision to amend the rules to permit an ETC to record an IEH worksheet in NLAD only in situations where a consumer shares an address with another Lifeline subscriber allows ETCs, including small entities, to continue collecting worksheets from subscribers at the enrollment process. The Commission considered the comments urging for no change to that process and found no compelling reason to prohibit the practice. By not disturbing the practice of collecting worksheets at the outset, the Commission minimized the burden on small entities. Given the narrow and targeted scope of the changes being made, no alternative readily presents itself to limit the burdens on small business or organizations. The identified increase in burden is minimal and outweighed by the advantages in combating waste, fraud, and abuse in the program. V. Ordering Clauses 135. Accordingly, it is ordered, that pursuant to the authority contained in sections 1–4, 201, 254, and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151–154, 201, 214, 254, and 403, and § 1.2 of the Commission’s rules, 47 CFR 1.2, the Fifth Report and Order, Memorandum Opinion and Order and Order on Reconsideration is adopted and will be effective January 27, 2020, except to the extent provided herein. 136. It is further ordered, that part 54 of the Commission’s rules, 47 CFR part 54, is amended and such rule amendments shall be effective January 27, 2020, except for the amendments to § 54.406(b), which shall be effective February 25, 2020; amendments to § 54.406(a), which shall be effective March 26, 2020; and §§ 54.404(b)(12) and 54.410(f), containing new or modified information collection requirements, which will not be effective until approved by the Office of VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 Management and Budget. The Federal Communications Commission will publish a document in the Federal Register announcing the effective date. 137. It is further ordered, that, pursuant to the authority contained in sections 1–4 and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 151–154 and 254, and § 1.429 of the Commission’s rules, 47 CFR 1.429, the Petition for Reconsideration and Clarification filed by United States Telecom Association on June 23, 2016 is granted in part, dismissed in part and denied in part. 138. It is further ordered that, pursuant to the authority contained in sections 1–4 and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 151–154 and 254, and § 1.429 of the Commission’s rules, 47 CFR 1.429, the Petition for Reconsideration filed by National Association of State Utility Consumer Advocates on June 23, 2016 is denied. 139. It is further ordered that, pursuant to authority contained in sections 1–4 and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 151–154 and 254, the Petition for Declaratory Ruling filed by National Lifeline Association on February 7, 2018 is denied. 140. It is further ordered, pursuant to the authority contained in sections 1–4 and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 151–154 and 254, that the Emergency Petition for Declaratory Ruling and For Interim Relief filed by TracFone on February 22, 2012 is denied. 141. It is further ordered, pursuant to the authority contained in sections 1–4 and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 151–154 and 254, and § 1.429 of the Commission’s rules, 47 CFR 1.429, the Petition for Reconsideration and Clarification filed by NTCA—The Rural Broadband Association—and WTA— Advocates for Rural Broadband—on June 23, 2016 is granted in part. 142. It is further ordered, pursuant to the authority contained in sections 1–4 and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 151–154 and 254, and § 1.429 of the Commission’s rules, 47 CFR 1.429, the Petition for Reconsideration and/or Clarification filed by General Communication, Inc. on June 23, 2016 is granted in part. 143. It is further ordered that the Commission shall send a copy of the Fifth Report and Order, Memorandum Opinion and Order and Order on Reconsideration to the Government Accountability Office pursuant to the PO 00000 Frm 00031 Fmt 4700 Sfmt 4700 71327 Congressional Review Act, see 5 U.S.C. 801(a)(1)(A). 144. It is further ordered that the Commission’s Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of the Fifth Report and Order, Memorandum Opinion and Order and Order on Reconsideration including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. List of Subjects in 47 CFR Part 54 Communications common carriers, internet, Telecommunications, Telephone, Reporting and recordkeeping requirements. Federal Communications Commission. Marlene Dortch, Secretary. Final Rules For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 54 as follows: PART 54—UNIVERSAL SERVICE 1. The authority citation for part 54 continues to read as follows: ■ Authority: 47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220, 254, 303(r), 403, and 1302, unless otherwise noted. § 54.201 [Amended] 2. Effective January 27, 2020, amend § 54.201 by removing paragraph (j). ■ § 54.202 [Amended] 3. Effective January 27, 2020, amend § 54.202 by removing paragraphs (d) and (e). ■ § 54.205 [Amended] 4. Effective January 27, 2020, amend § 54.205 by removing paragraph (c). ■ 5. Effective January 27, 2020, amend § 54.400 by adding paragraph (p) to read as follows: ■ § 54.400 Terms and definitions. * * * * * (p) Enrollment representatives. An employee, agent, contractor, or subcontractor, acting on behalf of an eligible telecommunications carrier or third-party entity, who directly or indirectly provides information to the Universal Service Administrative Company or a state entity administering the Lifeline Program for the purpose of eligibility verification, enrollment, recertification, subscriber personal information updates, benefit transfers, or de-enrollment. ■ 6. Amend § 54.404 by: E:\FR\FM\27DER1.SGM 27DER1 71328 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations a. Effective January 27, 2020, revising paragraph (b)(3); and ■ b. Effective upon publication of a rule document in the Federal Register announcing the effective date, adding paragraph (b)(12). The revision and addition read as follows: ■ § 54.404 The National Lifeline Accountability Database. * * * * * (b) * * * (3) If the Database indicates that another individual at the prospective subscriber’s residential address is currently receiving a Lifeline service, the eligible telecommunications carrier must not seek and will not receive Lifeline reimbursement for providing service to that prospective subscriber, unless the prospective subscriber has certified, pursuant to § 54.410(d), that to the best of his or her knowledge, no one in his or her household is already receiving a Lifeline service. This certification may be collected by the eligible telecommunications carrier prior to initial enrollment, but the certification shall not be recorded in the Database unless the eligible telecommunications carrier receives a notification from the Database or state administrator that another Lifeline subscriber resides at the same address as the prospective subscriber. * * * * * (12) An eligible telecommunications carrier must not enroll or claim for reimbursement a prospective subscriber in Lifeline if the National Lifeline Accountability Database or National Verifier cannot verify the identity of the subscriber or the subscriber’s status as alive, unless the subscriber produces documentation to demonstrate his or her identity and status as alive. * * * * * ■ 7. Effective February 25, 2020, add § 54.406 to read as follows: jbell on DSKJLSW7X2PROD with RULES § 54.406 Activities of representatives of eligible telecommunications carriers. (a) [Reserved] (b) Prohibition of commissions for enrollment representatives. An eligible telecommunications carrier shall not offer or provide to enrollment representatives or their direct supervisors any commission compensation that is based on the number of consumers who apply for or are enrolled in the Lifeline program with that eligible telecommunications carrier. ■ 8. Effective March 26, 2020, § 54.406 is further amended by adding paragraph (a) to read as follows: VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 § 54.406 Activities of representatives of eligible telecommunications carriers. (a) Enrollment representative registration. An eligible telecommunications carrier must require that enrollment representatives register with the Universal Service Administrative Company before the enrollment representative can provide information directly or indirectly to the National Lifeline Accountability Database or the National Verifier. (1) As part of the registration process, eligible telecommunications carriers must require that all enrollment representatives must provide the Universal Service Administrative Company with identifying information, which may include first and last name, date of birth, the last four digits of his or her social security number, email address, and residential address. Enrollment representatives will be assigned a unique identifier, which must be used for: (i) Accessing the National Lifeline Accountability Database; (ii) Accessing the National Verifier; (iii) Accessing any Lifeline eligibility database; and (iv) Completing any Lifeline enrollment or recertification forms. (2) Eligible telecommunications carriers must ensure that enrollment representatives shall not use another person’s unique identifier to enroll Lifeline subscribers, recertify Lifeline subscribers, or access the National Lifeline Accountability Database or National Verifier. (3) Eligible telecommunications carriers must ensure that enrollment representatives shall regularly recertify their status with the Universal Service Administrative Company to maintain their unique identifier and maintain access to the systems that rely on a valid unique identifier. Eligible telecommunications carriers must also ensure that enrollment representatives shall update their registration information within 30 days of any change in such information. (4) Enrollment representatives are not required to register with the Universal Service Administrative Company if the enrollment representative operates solely in a state that has been approved by the Commission to administer the Lifeline program without reliance on the Universal Service Administrative Company’s systems. The exemption in this paragraph (a)(4) will not apply to any part of a state’s administration of the Lifeline program that relies on the Universal Service Administrative Company’s systems. * * * * * PO 00000 Frm 00032 Fmt 4700 Sfmt 4700 9. Effective January 27, 2020, amend § 54.407 by revising paragraph (a) to read as follows: ■ § 54.407 Lifeline. Reimbursement for offering (a) Universal Service support for providing Lifeline shall be provided directly to an eligible telecommunications carrier based on the number of actual qualifying low-income customers listed in the National Lifeline Accountability Database that the eligible telecommunications carrier serves directly as of the first of the month. Eligible telecommunications carriers operating in a state that has provided the Commission with an approved valid certification pursuant to § 54.404(a) must comply with that state administrator’s process for determining the number of subscribers to be claimed for each month, and in those states Universal Service support for providing Lifeline shall be provided directly to the eligible telecommunications carrier based on that number of actual qualifying low-income customers, according to the state administrator or other state agency’s process. * * * * * ■ 10. Effective January 27, 2020, amend § 54.410 by revising paragraph (g) to read as follows: § 54.410 Subscriber eligibility determination and certification. * * * * * (g) One-Per-Household Worksheet. If the prospective subscriber shares an address with one or more existing Lifeline subscribers according to the National Lifeline Accountability Database or National Verifier, the prospective subscriber must complete a form certifying compliance with the one-per-household rule upon initial enrollment. Eligible telecommunications carriers must fulfill the requirement in this paragraph (g) by using the Household Worksheet, as provided by the Wireline Competition Bureau. Where state law, state regulation, a state Lifeline administrator, or a state agency requires eligible telecommunications carriers to use state-specific Lifeline enrollment forms, eligible telecommunications carriers may use those forms in place of the Commission’s Household Worksheet. At re-certification, if there are changes to the subscriber’s household that would prevent the subscriber from accurately certifying to paragraph (d)(3)(vi) of this section, then the subscriber must complete a new Household Worksheet. Eligible telecommunications carriers must mark subscribers as having completed a E:\FR\FM\27DER1.SGM 27DER1 Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations Household Worksheet in the National Lifeline Accountability Database if and only if the subscriber shares an address with an existing Lifeline subscriber, as reported by the National Lifeline Accountability Database. * * * * * ■ 11. Effective upon publication of a rule document in the Federal Register announcing the effective date, § 54.410 is further amended by revising paragraphs (f)(1), (f)(2)(iii), and (f)(3)(iii) to read as follows: § 54.410 Subscriber eligibility determination and certification. jbell on DSKJLSW7X2PROD with RULES * * * * * (f) * * * (1) All eligible telecommunications carriers must annually re-certify all subscribers, except for subscribers in states where the National Verifier, state Lifeline administrator, or other state agency is responsible for the annual recertification of subscribers’ Lifeline eligibility. (2) * * * (iii) If the subscriber’s program-based or income-based eligibility for Lifeline cannot be determined by accessing one or more eligibility databases, then the eligible telecommunications carrier must obtain a signed certification from the subscriber confirming the subscriber’s continued eligibility. If the subscriber’s eligibility was previously confirmed through an eligibility database during enrollment or a prior recertification and the subscriber is no longer included in any eligibility database, the eligible telecommunications carrier must obtain both an Annual Recertification Form and documentation meeting the requirements of paragraph (b)(1)(i)(B) or (c)(1)(i)(B) from that subscriber to complete the process. Eligible telecommunications carriers must use the Wireline Competition Bureauapproved universal Annual Recertification Form, except where state law, state regulation, a state Lifeline administrator, or a state agency requires eligible telecommunications carriers to use state-specific Lifeline recertification forms. * * * * * (3) * * * (iii) If the subscriber’s program-based or income-based eligibility for Lifeline cannot be determined by accessing one or more eligibility databases, then the National Verifier, state Lifeline administrator, or state agency must obtain a signed certification from the subscriber confirming the subscriber’s continued eligibility. If the subscriber’s eligibility was previously confirmed VerDate Sep<11>2014 15:56 Dec 26, 2019 Jkt 250001 through an eligibility database during enrollment or a prior recertification and the subscriber is no longer included in any eligibility database, the National Verifier, state Lifeline administrator, or state agency must obtain both an approved Annual Recertification Form and documentation meeting the requirements of paragraph (b)(1)(i)(B) or (c)(1)(i)(B) from that subscriber to complete the certification process. Entities responsible for re-certification under this section must use the Wireline Competition Bureau-approved universal Annual Recertification Form, except where state law, state regulation, a state Lifeline administrator, or a state agency requires eligible telecommunications carriers to use state-specific Lifeline recertification forms, or where the National Verifier Recertification Form is required. * * * * * ■ 12. Effective January 27, 2020, amend § 54.420 by revising paragraphs (a) introductory text and (a)(1) to read as follows: § 54.420 Low income program audits. (a) Independent audit requirements for eligible telecommunications carriers. Eligible telecommunications carriers identified by USAC must obtain a thirdparty biennial audit of their compliance with the rules in this subpart. Such engagements shall be agreed upon performance attestations to assess the company’s overall compliance with the rules in this subpart and the company’s internal controls regarding the regulatory requirements in this subpart. (1) Eligible telecommunications carriers will be selected for audit based on risk-based criteria developed by USAC and approved by the Office of Managing Director and the Wireline Competition Bureau. * * * * * [FR Doc. 2019–27220 Filed 12–26–19; 8:45 am] BILLING CODE 6712–01–P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 697 RIN 0648–XV136 Atlantic Coastal Fisheries Cooperative Management Act Provisions; Atlantic Menhaden Fishery National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. AGENCY: PO 00000 Frm 00033 Fmt 4700 Sfmt 4700 71329 Notification of determination of non-compliance; declaration of a moratorium. ACTION: In accordance with the Atlantic Coastal Fisheries Cooperative Management Act (Atlantic Coastal Act), the Secretary of Commerce (Secretary) has determined that the Commonwealth of Virginia has failed to carry out its responsibilities under the Atlantic States Marine Fisheries Commission’s (Commission) Interstate Fishery Management Plan (ISFMP) for Atlantic Menhaden and that the measure Virginia has failed to implement and enforce is necessary for the conservation of the Atlantic menhaden resource. This determination is consistent with the findings of the Commission on October 31, 2019. Pursuant to the Atlantic Coastal Act, a Federal moratorium on fishing for Atlantic menhaden in Virginia state waters and possession and landing of Atlantic menhaden harvested in Virginia State waters is hereby declared and will be effective on June 17, 2020. The moratorium will be terminated when the Commission notifies the Secretary that Virginia is found to have come back into compliance with the Commission’s ISFMP for Atlantic menhaden. DATES: June 17, 2020. FOR FURTHER INFORMATION CONTACT: Derek Orner, Fishery Management Specialist, (301) 427–8567, derek.orner@noaa.gov. SUPPLEMENTARY INFORMATION: SUMMARY: Non-Compliance Statutory Background The Atlantic Coastal Act, 16 U.S.C. 5101 et seq., sets forth a non-compliance review and determination process that is triggered when the Commission finds that a State has not implemented measures specified in an ISFMP and refers that determination to the Secretary for review and potential concurrence. The Atlantic Coastal Act’s noncompliance process involves two stages of decision-making. In the first stage, the Secretary must make two findings: (1) Whether the State in question has failed to carry out its responsibility under the Commission ISFMP; and if so (2) whether the measures that the State failed to implement and enforce are necessary for the conservation of the fishery in question. These initial findings must be made within 30 days after receipt of the Commission’s noncompliance referral and consequently, this first stage of decision-making is referred to as the 30-Day Determination. A positive 30-Day Determination triggers the second stage of Atlantic E:\FR\FM\27DER1.SGM 27DER1

Agencies

[Federal Register Volume 84, Number 248 (Friday, December 27, 2019)]
[Rules and Regulations]
[Pages 71308-71329]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27220]


=======================================================================
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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket Nos. 17-287, 11-42 and 09-197; FCC 19-111; FRS 16302]


Bridging the Digital Divide for Low-Income Consumers

AGENCY: Federal Communications Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: In this document, the Federal Communications Commission 
(Commission) acts to restore the traditional role of states in the 
eligible telecommunications carrier (ETC) designation process. The 
Commission also acts to strengthen the Lifeline program's enrollment, 
recertification, and reimbursement processes so that limited Universal 
Service Fund (USF or Fund) dollars are directed only toward qualifying 
low-income consumers.

DATES: Effective January 27, 2020, except for amendatory instruction 7 
(Sec.  54.406(b)) which is effective February 25, 2020 and amendatory 
instruction 8 (Sec.  54.406(a)) which is effective March 26, 2020 and 
amendatory instructions 6.b. (Sec.  54.404(b)(12)) and 11 (Sec.  
54.410(f)), which are delayed. The Federal Communications Commission 
will publish a document in the Federal Register announcing this 
effective date.

FOR FURTHER INFORMATION CONTACT: Jodie Griffin, Wireline Competition 
Bureau, 202-418-7550 or TTY: 202-418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Fifth 
Report and Order, Memorandum Opinion and Order and Order on 
Reconsideration (Order), in WC Docket Nos. 17-287, 11-42 and 09-197; 
FCC 19-111 adopted October 30, 2019 and released November 14, 2019. The 
full text of this document is available for public inspection during 
regular business hours in the FCC Reference Center, Room CY-A257, 445 
12th Street SW, Washington, DC 20554 or at the following internet 
address: https://docs.fcc.gov/public/attachments/FCC-19-111A1.pdf.

Synopsis

I. Introduction

    1. The Commission's Lifeline program plays a critical role in 
closing the digital divide for low-income Americans. Abuse of the 
program, however, continues to be a significant concern and undermines 
the Lifeline program's integrity and effectiveness. Strengthening the 
accountability of the program is therefore essential to ensuring that 
it effectively and efficiently helps qualifying low-income Americans 
obtain the communications services they need to participate in the 
digital economy.
    2. Today, the Commission continues that work to strengthen the 
Lifeline program's enrollment, recertification, and reimbursement 
processes so that limited Universal Service Fund (USF or Fund) dollars 
are directed only toward qualifying low-income consumers. Specifically, 
restoring the states' proper role in designating eligible 
telecommunications carriers (ETCs) to participate in the Lifeline 
program, clarify the obligations of participating carriers, and take 
targeted steps to improve compliance by Lifeline ETCs and reduce waste, 
fraud, and abuse in the program. The Commission also clarifies several 
of the program's rules in response to petitions for reconsideration and 
requests for clarification.

II. Discussion

    3. In the Order, the Commission takes significant steps to promote 
the integrity, effectiveness, and efficiency of the Lifeline program. 
First, the Commission restores the traditional state role in 
designating ETCs and traditional ETC designation categories, while 
taking steps to increase transparency with states to improve oversight 
functions. Next, the Commission amends the Lifeline program rules to 
improve the integrity of providers' enrollment and recertification 
processes, and also

[[Page 71309]]

establishing protections to help prevent improper payment claims before 
they occur. Finally, the Commission acts to improve its rules regarding 
Lifeline auditing practices.
    4. Respecting the States' Role in Program Administration. For the 
Lifeline program to be successful, the parties involved in its 
operations--from the Commission to the participating ETCs--must respect 
their particular roles and obligations under the law. To that end, in 
the Order, the Commission first restores longstanding recognition of 
the states' primary role in the ETC designation process, as established 
in the Communications Act of 1934 as amended (``the Act''), and 
restores the traditional categories of ETC and ETC obligations 
consistent with section 214(e)(1)(A) of the Act.
    5. Restoring States' Traditional and Lawful Role in ETC 
Designations. Congress made states--not the Commission--primarily 
responsible for designating ETCs. And States have vigorously exercised 
their oversight authority to combat waste, fraud, and abuse in the 
Lifeline program. In some cases, states have been the first to identify 
waste, fraud, and abuse by ETCs--the Hawaii Public Utilities Commission 
first identified the issues with Blue Jay's overclaims of Tribal 
subscribers, and the Oklahoma Corporation Commission ``first identified 
fraudulent funding requests from Icon Telecom.'' More recently, an 
apparent violation of the Commission's non-usage rule was initially 
uncovered by an investigation by the Oregon Public Utility Commission. 
States have also conducted further investigations of ETCs for which the 
FCC first identified compliance issues. For example, in 2013, following 
the consent decree resolving the Commission's investigation of Lifeline 
reseller TerraCom regarding intracompany duplicate subscribers, the 
Indiana Utility Regulatory Commission conducted its own investigation 
of TerraCom and identified instances of waste and abuse. States have 
also filtered out ineligible carriers by refusing designations to those 
with substandard services and weeded out bad actors by revoking 
designations for unlawful practices. Most recently, in May 2019, the 
Illinois Commerce Commission (ICC) denied wireless reseller Q Link 
LLC's request for a Lifeline-only ETC designation. The ICC cited Q 
Link's ``inability to provide accurate, consistent and reliable 
information'' as ``reason enough for it to deny Q Link's request for 
ETC designation,'' and found that Q Link ``failed to demonstrate it has 
the financial and technical capability to provide service in its 
requested service areas.'' States have also performed audits, addressed 
consumer complaints, and maintained valuable state matching programs. 
In doing all this, states have brought to bear personnel and resources 
far greater than the Commission alone could offer.
    6. By contrast, Congress cast the Commission in a supporting role. 
For its part, the Commission merely designates carriers where states 
are ill suited to do so--for example, where states lack jurisdiction, 
or in unserved areas where no carrier is willing to provide USF 
services. For the two decades since Congress passed the 
Telecommunications Act of 1996, this is how the Commission understood 
its role.
    7. With the 2016 Lifeline Order (FCC 16-38; 81 FR 33026 (May 24, 
2016)), the Commission departed from the parameters set by statutory 
text and longstanding practice. First, that order created a new type of 
ETC--the Lifeline Broadband Provider ETC. It then purported to preempt 
any state authority over this new ETC, demoting states from the job 
they had performed well. Finally, to fill the void it had created by 
preempting state authority, it adopted a view of the Commission's role 
under section 214(e) that was expansive enough to permit the Commission 
to exercise designation authority over Lifeline Broadband Provider 
ETCs. In the Order, the Commission finds that the actions taken by the 
Commission in the 2016 Lifeline Order were contrary to both statutory 
text and sound public policy. The Commission restores the lawful role 
of states in the ETC designation process.
    8. Section 214 and the 2016 Lifeline Order. To obtain universal 
service funds for providing Lifeline service, a provider must be 
designated as an ``eligible telecommunications carrier''--or ``ETC''--
under section 214(e) of the Act. Section 214(e)(1) of the Act 
establishes eligibility requirements for ETCs. These include that 
common carriers offer the services supported by the USF ``support 
mechanisms'' under section 254(c)--Lifeline is one of four such 
``mechanisms''--and that they advertise the availability of those 
services.
    9. The next paragraph--214(e)(2)--orders state commissions to 
designate common carriers that meet these requirements as ETCs. In 
relevant part, section 214(e)(2) provides that ``[a] State commission 
shall upon its own motion or upon request designate a common carrier 
that meets the requirements [for eligibility in section 214(e)(1)] as 
an eligible telecommunications carrier for a service area designated by 
the State commission.'' The general rule, in other words, is that state 
commissions are responsible for designating ETCs.
    10. There are limited exceptions to the rules. Later provisions in 
section 214 address gaps in the ordinary designation process--areas 
where a state commission may be unable or ill-suited to exercise 
designation authority. The Commission's limited role in designating 
ETCs falls within these gaps.
    11. The first gap occurs where no common carrier is willing to 
provide supported services to all or part of an unserved community. In 
that case, section 214(e)(3) generally orders the Commission and states 
to (1) identify the common carriers best able to serve these 
communities and (2) require them to do so. The section divides 
responsibility for this task along jurisdictional lines: It orders 
state commissions to address the provision of intrastate services, and 
orders the Commission to address the provision of interstate services, 
as well as services in areas served by carriers outside of the 
jurisdiction of state commissions.
    12. The second gap occurs where ``a common carrier providing 
telephone exchange service and exchange access . . . is not subject to 
the jurisdiction of a State commission.'' This provision gives the 
Commission designation authority over, for example, wireless carriers 
operating in states lacking jurisdiction over such carriers and certain 
Tribal carriers. Congress adopted section 214(e)(6) over a year after 
the passage of the Telecommunications Act to rectify the ``oversight'' 
that a handful of common carriers might otherwise fall outside the 
jurisdiction of state commissions. Without the fix of section 
214(e)(6), that oversight would leave certain carriers--including most 
notably, Tribal carriers--wholly ineligible for universal service 
support. The legislative history confirms that the gap-filling section 
214(e)(6) ``w[ould] apply to only a limited number of carriers'' and 
that it was not ``intended to restrict or expand the existing 
jurisdiction of State commissions over any common carrier.'' The 
Commission itself recognized that Congress had not intended section 
214(e)(6) to ``alter the basic framework of section 214(e), which gives 
the state commissions the principal role in designating eligible 
telecommunications carriers under section 214(e)(2).''
    13. That is the extent of the Commission's role in designating 
ETCs. There is no suggestion in sections 214(e)(2), (3), or (6) that 
the Commission can supersede the states' designation

[[Page 71310]]

authority, or that the states' designation authority is generally 
limited to specific services, such as intrastate services. While 
section 214(e)(3) limits state authority to intrastate services in 
unserved areas, this specific jurisdictional limitation only highlights 
the absence of a general jurisdictional limitation on states' 
authority. Instead, the text of section 214 makes clear that Congress 
gave primary authority for ETC designations to the states, and that the 
Commission's role is merely to fill gaps in the ordinary designation 
process.
    14. This is how the Commission read section 214 for nearly two 
decades--from the passage of the Telecommunications Act until the 2016 
Lifeline Order. In 2000, the Commission reviewed the text and 
legislative history of section 214(e) and concluded that ``state 
commissions have primary responsibility for the designation of [ETCs] 
under section 214(e)(2).'' In 2005, it affirmed this conclusion and 
again noted that section 214(e)(2) ``provides state commissions with 
the primary responsibility for performing ETC designations.'' In 2011, 
the Commission again found that states have ``primary jurisdiction to 
designate ETCs,'' and that its role was to ``designate[ ] ETCs where 
states lack jurisdiction.'' Even the 2015 Lifeline Order and FNPRM (FCC 
15-71; 80 FR 40923 (July 14, 2015) and 80 FR 42670 (July 17, 2015)) 
recognized that ``[s]ection 214(e)(2) assigns primary responsibility 
for designating ETCs to the states.''
    15. The 2016 Lifeline Order abandoned this longstanding 
interpretation. That order created a new category of ETC, which offered 
only a single supported Lifeline service (broadband internet access 
service) and was subject to the Commission's (not states') designation 
authority. Arriving at this unlikely outcome required standing section 
214(e) on its head: First, the 2016 Lifeline Order found that section 
214(e)(1) authorized an ETC to offer only a single supported service 
rather than all services supported under the Lifeline program. This 
enabled the creation of the Lifeline Broadband Provider ETC. Next, 
despite the absence of any legal or factual conflict justifying 
preemption, the 2016 Lifeline Order preempted state commissions from 
designating this new type of ETC. Then--in part by forbearing from a 
limit on the Commission's own authority--the 2016 Lifeline Order 
determined that the Commission had newfound authority to designate this 
new category of ETC under section 214(e)(6).
    16. Restoring Traditional Designation Roles and ETC Categories. The 
Commission eliminates the Lifeline Broadband Provider ETC category and 
restore the traditional state and Federal roles in designating ETCs 
under the Act. The Commission does this for two principal reasons. 
First, the Commission concludes that the 2016 rules rested on a legally 
insupportable construction of section 214(e). Nothing in the 2016 
Lifeline Order or the record persuades the Commission otherwise. 
Second, the Commission concludes that the Lifeline Broadband Provider 
rules announced in the 2016 Lifeline Order did not serve the public 
interest. Instead, the Commission concludes that the record in the 
proceeding demonstrates that the traditional designation framework and 
ETC categories better serve the Commission's direction to efficiently 
and responsibly promote universal service. Tampering with this 
framework was not sound policy, nor did it appropriately balance the 
interest in promoting competition or encouraging new providers to 
participate in the program, while also guarding the program against 
further waste, fraud, and abuse.
    17. The Commission begins by concluding that the approach embodied 
in the 2016 Lifeline Order was not supported by the statute. To explain 
this conclusion, the Commission must retrace the long path that the 
2016 Lifeline Order took around the obstacle posed by the statutory 
text. In brief, the steps on this path were: (1) Reinterpreting section 
214(e)(1) to mean that ETCs need not offer all supported services; (2) 
relying on this reinterpretation to establish Lifeline broadband 
support as a ``separate element of the Lifeline program;'' (3) 
reinterpreting section 214(e)(6) to suggest that state commissions have 
no authority to designate ETCs with respect to supported interstate 
services; and (4) preempting states from designating ETCs for the 
separate element of Lifeline broadband support. The 2016 Lifeline Order 
then filled the gap in designation authority it created by (5) 
reinterpreting out of existence the limit on FCC authority that an FCC-
designated ETC must be a ``common carrier providing telephone exchange 
service and exchange access'' and, (6) alternatively, forbearing from 
that same limit on the FCC's authority. Each of these steps was 
unlawful.
    18. First, ETCs must offer each of the Lifeline supported services 
designated by the Commission. Section 214(e)(1) requires that a 
``common carrier designated as an eligible telecommunications carrier'' 
must, ``throughout the service area for which the designation is 
received,'' ``offer the services that are supported by Federal 
universal service support mechanisms'' under section 254(c). The 2016 
Lifeline Order began by interpreting section 214(e)(1)(A) not to 
require an ETC to offer all supported services for the mechanism for 
which it was designated; instead, the 2016 Lifeline Order concluded 
that the obligations in section 214(e)(1)(A) could be ``tailored to 
match'' an ETC designation. This tailoring would allow ETCs to obtain a 
designation to provide only one supported service, and to trim from 
their Lifeline offerings other services that the Commission has 
designated under the Lifeline mechanism.
    19. The statute says otherwise. Again, section 214(e)(1)(A) 
requires an ETC to ``offer . . . services'' that are supported by a 
universal service ``mechanism[ ].'' Lifeline--one of four such 
mechanisms under section 254(c)--supports both voice and broadband 
internet access services. Participating in the Lifeline program without 
assuming any obligations with respect to voice service, then, conflicts 
with the requirement in section 214(e)(1) that ETCs ``offer the 
services that are supported'' by the Lifeline program. Forbearance--not 
interpretation--would have been the appropriate way for the Commission 
to refrain from enforcing what section 214(e)(1)(A) plainly requires. 
But the Commission did not use this mechanism here and, in any case, 
the conditions for forbearance were not met. Accordingly, the 
Commission finds that based on the language of section 214(e)(1)(A), 
the Lifeline program is a single, uniform support mechanism. ETCs 
therefore must offer all Lifeline supported services, unless the ETC 
qualifies for and avails itself of the forbearance granted in the 2016 
Lifeline Order, which established limited forbearance from section 
214(e)(1)'s service requirements, including (1) targeted forbearance 
from obligations to offer broadband internet access service, and (2) 
conditional forbearance from existing non-Lifeline only ETCs' Lifeline 
voice obligations where several objective competitive criteria are met.
    20. Second, and relatedly, it follows that Lifeline broadband 
internet access service support is not a separate ``element'' of the 
Lifeline program. After concluding that section 214(e)(1) service 
obligations could be tailored to particular services, the 2016 Lifeline 
Order deemed Lifeline broadband internet access service support a 
``separate element of the Lifeline program.'' But again, section 
214(e)(1) does not permit the [agrave] la carte designation of 
services; instead, it

[[Page 71311]]

groups ETC service offerings by universal service mechanism.
    21. The notion of separate, service-specific ``elements'' has no 
statutory basis. The 2016 Lifeline Order patches together authority for 
this inventive approach by referring to sections 214(e)(3), 214(e)(1), 
254(e), and the 2014 E-Rate Order (FCC 14-99; 79 FR 49160 (Aug. 19, 
2014)). Standing alone, these authorities provide little support for 
the 2016 Lifeline Order's novel interpretation: The three statutory 
provisions respectively confer designation authority in unserved areas, 
specify which carriers can receive universal service support, and 
govern how that support can be used. And they offer no more support for 
the notion of a universal service ``element'' when read together. 
Accordingly, the Commission concludes that the 2016 Lifeline Order's 
distinction underlying Lifeline Broadband Provider designations fails 
on its own terms.
    22. Third, section 214(e)(6) does not suggest that state 
commissions lack the authority to designate ETCs with respect to 
supported interstate services. The 2016 Lifeline Order found it 
ambiguous whether, for the Commission to have jurisdiction under 
section 214(e)(6), a carrier seeking ETC designation must be (1) 
entirely outside a state commission's jurisdiction or (2) only outside 
a state commission's jurisdiction with respect to a particular service, 
even if a state commission retains general jurisdiction over the 
carrier. Seizing on this supposed ambiguity, the 2016 Lifeline Order 
held that section 214(e)(6) provided the Commission the authority to 
take over designations where a carrier provides only a service that is 
jurisdictionally interstate (for example, broadband internet access 
service).
    23. The Commission sees no such ambiguity. First, the 
jurisdictional nature of a particular service that a carrier offers is 
irrelevant for the purposes of determining whether the carrier itself 
is ``subject to the jurisdiction of a State commission.'' And while 
section 214(e)(6) may not address the situation where specific services 
fall outside the jurisdiction of a state commission, there is a ready 
explanation for that silence: Section 214(e)(1) does not countenance 
the separate designation of specific interstate services. Sealing this 
conclusion is the fact that other provisions in section 214(e) plainly 
contemplate states designating ETCs that provide both interstate and 
intrastate services. The fact that Congress expressly limited states' 
designation authority under section 214(e)(3) to intrastate services 
underscores that the states' designation authority is not so limited 
under section 214(e)(2); if Congress had intended to limit states' 
designation authority under 214(e)(2) to intrastate services, it would 
have expressly done so.
    24. Fourth, the 2016 Lifeline Order's decision to preempt states 
from designating Lifeline Broadband Provider ETCs was unlawful. This 
preemption rested largely on the ground that allowing state commissions 
to designate those ETCs would hinder the goals of Federal universal 
service and dampen broadband competition. The Commission disagrees with 
both justifications and find that this preemption analysis was 
otherwise flawed in several respects.
    25. As an initial matter, no conflict with Federal law justifies 
preemption. As the 2016 Lifeline Order explains, ``[F]ederal law 
preempts any conflicting state laws or regulatory actions that would 
prohibit a private party from complying with [F]ederal law or that 
`stand[ ] as an obstacle to the accomplishment and execution' of 
[F]ederal objectives.'' Here, while Congress established the goal of 
promoting broadband deployment in section 254(b), it also placed the 
primary responsibility for designating ETCs on state commissions in 
section 214(e)(2). Read together, these provisions establish that 
section 254(b) seeks to promote broadband deployment to the extent 
possible within the state-focused designation process set forth in 
section 214. Disregarding section 214(e)(2), the 2016 Lifeline Order 
found a purported ``conflict[ ]'' between state designation of Lifeline 
Broadband Providers and the Commission's implementation of the goals of 
section 254(b). But this ``conflict'' assumes, without explanation, 
that the relevant goal under section 254(b) is promoting broadband 
deployment in the abstract, unconstrained by the state-focused 
designation process mandated by section 214. The Commission finds that 
no such conflict exists, and that the principles listed in section 
254(b) may not lawfully be construed in a manner that would ignore or 
override other statutory provisions, including the state-focused 
framework of section 214(e).
    26. In addition, the 2016 Lifeline Order wrongly relied on section 
706 as authority for preemption. Section 706, among other things, 
directs the Commission to focus its efforts on removing barriers to 
investment in ``advanced telecommunications services.'' The 2016 
Lifeline Order found that the burdens of obtaining separate 
designations from states ran afoul of this directive by posing ``a 
barrier to investment and competition in the Lifeline marketplace.''
    27. This reasoning stumbles from the gate because section 706 does 
not furnish a basis for the preemption of states' designation 
authority. The Commission has previously concluded that the directives 
in section 706 to promote broadband deployment ``are better interpreted 
as hortatory, and not as grants of regulatory authority.'' But even if 
section 706 did confer regulatory authority, it would be trumped by the 
more specific grants of authority in section 214(e). ``[I]t is a 
commonplace of statutory construction that the specific governs the 
general.'' In contrast to sections 214(e)(2) and 214(e)(6), which 
expressly confer designation authority, section 706 merely directs the 
Commission and states to encourage the deployment of broadband services 
and generally instructs the Commission to take action to accelerate 
deployment if it finds advanced telecommunications capability is not 
being deployed in a reasonable and timely fashion. The specific grant 
of designation authority to states prevails over section 706's general 
language regarding broadband deployment.
    28. Furthermore, as a practical matter, the preemption regime 
instituted by the 2016 Lifeline Order created confusion and anomalies 
in the division of labor between the Commission and the states that the 
Commission's new approach avoids. The 2016 Lifeline Order preempted 
states from designating Lifeline Broadband Providers, but left 
untouched states' designation authority over traditional ETCs--who in 
some cases could effectively become Lifeline Broadband Provider ETCs 
without seeking FCC designation. The 2016 Lifeline Order also suggests 
that states could oversee federally designated Lifeline Broadband 
Providers in their jurisdictions vis-[agrave]-vis consumer protection. 
In other words, the 2016 Lifeline Order preempted state authority to 
designate Lifeline Broadband Provider ETCs, but left states with 
uncertain residual authority to oversee and impose conditions on 
Lifeline Broadband Provider ETCs. The Commission finds that the 
arbitrariness of this result is another reason for reversing the 
Commission's preemption decision.
    29. Conversely, the Commission finds that the state designation 
process furthers Federal universal service goals--it does not 
``thwart'' them. As explained further, the traditional state 
designation role better serves section 254(b)'s policy goals by 
facilitating thorough state reviews of carriers seeking ETC 
designations, as well as

[[Page 71312]]

state monitoring of carriers who have received ETC designations. This 
helps prevent, detect, and curb waste, fraud, and abuse in the program, 
which in turn promotes the efficient and responsible use of limited 
program funds. States' traditional designation role also encourages 
states to maintain their own support programs, furthering the universal 
service goals.
    30. The Commission notes that the reversal of the preemption 
decision in the 2016 Lifeline Order in no way conflicts with the 
Commission's determination in other contexts--such as in the Restoring 
Internet Freedom Order (83 FR 7852 (Feb. 22, 2018))--that broadband 
internet access service is jurisdictionally interstate and that 
inconsistent state and local regulation may be preempted on that 
ground. Several commenters argue otherwise, relying on the premise that 
states' ETC designation authority under section 214(e)(2) can be 
preempted simply because of the interstate nature of broadband internet 
access service. This argument ignores the fact that section 214 itself 
expressly confers on state commissions the primary responsibility to 
designate carriers that are subject to state jurisdiction. It also 
ignores--the absence of a conflict justifying preemption. The 
Commission therefore finds no inconsistency between the reversal of the 
unlawful preemption in the 2016 Lifeline Order and the Commission's 
preemption of inconsistent state and local regulation of broadband 
internet access services in other contexts.
    31. Fifth, the 2016 Lifeline Order unlawfully expanded the 
Commission's designation authority under section 214(e)(6). Section 
214(e)(6) gives the Commission designation authority only ``in the case 
of a common carrier providing telephone exchange access service and 
exchange access that is not subject to the jurisdiction of a State 
commission.'' The limit on the Commission's authority is clear: The 
Commission's designation authority under section 214(e)(6) is 
predicated, in part, on a common carrier ``providing telephone exchange 
access service or exchange access.'' Yet the 2016 Lifeline Order 
interpreted this limit on the Commission's authority to mean (1) that 
the supported service need not be telephone exchange service or 
exchange access, (2) that the carrier itself need not provide telephone 
exchange service or exchange access, (3) that the carrier need not have 
any facilities to provide telephone exchange service or exchange 
access, (4) that the carrier need not have any customers for telephone 
exchange service or exchange access, and (5) that the carrier need not 
provide telephone exchange service or exchange access for any length of 
time beyond when the carrier's ETC application is pending at the 
Commission.
    32. The effect is to remove the phrase ``providing telephone 
exchange access service and exchange access'' from the statute. By 
emptying the word ``providing'' of all meaning, the Commission's 
interpretations violate the canon of statutory construction dictating 
that a statute should be interpreted in a manner that gives effect to 
each of its words and clauses. If Congress intended for the provision 
to have the overly broad meaning that the Commission ascribed to it in 
the 2016 Lifeline Order, Congress would have used more expansive 
language in section 214(e)(6). The Commission therefore finds that the 
2016 Lifeline Order's interpretations of section 214(e)(6) unlawfully 
expanded the Commission's jurisdiction to designate ETCs.
    33. Sixth, and finally, the 2016 Lifeline Order's alternative 
forbearance from section 214(e)(6)'s requirement that carriers be 
providing telephone exchange service and exchange access was improper. 
Section 10 provides that the Commission may forbear from applying 
provisions of the Act to carriers and services--not that it can forbear 
from statutory limitations on its own authority. To read section 10 
otherwise would render statutory constraints on the Commission 
meaningless: Take, for example, the absurdity of the Commission 
forbearing from the limitations imposed by the phrase ``interstate or 
foreign'' in the Communications Act. This would expand the Commission's 
authority to all telecommunications services, obliterating the 
jurisdictional divide established by Congress. Clearly, Congress did 
not intend the Commission to use forbearance to so aggrandize itself. 
Here, the qualifying language ``providing telephone exchange service 
and exchange access'' limits the category of carriers that the 
Commission may designate under section 214(e)(6). It therefore 
constrains the Commission's authority--not the authority of ETCs. 
Section 10 does not authorize the Commission to forbear from the 
limitation on its own authority.
    34. The Traditional ETC Designation Framework Best Promotes the 
Goals of the Lifeline Program. In addition to lacking legal authority 
for the 2016 approach, the Commission independently concludes that the 
goals of the Lifeline program are best served when states play the 
primary role in ETC designations.
    35. The traditional framework also has the advantage of providing 
strong state and Federal oversight of ETCs. The cooperative federalism 
that exists under the traditional framework provides states certainty 
with respect to their role in monitoring and enforcing the activities 
of ETCs. This in turn encourages states to devote staff and resources 
to thoroughly reviewing ETC designation applications and policing ETCs, 
providing a stronger system for promoting the efficient use of 
universal service funds, protecting Lifeline consumers, and reducing 
waste, fraud, and abuse than if states did not serve these critical 
roles. States have a record of more than twenty years of sound 
performance in their statutory role and monitoring the ETCs they 
designate. As NARUC has noted, states have been ``crucial'' in 
``policing the [F]ederal fund to eliminate bad actors.'' Many states 
have robust processes for analyzing ETC designation petitions, 
addressing concerns with Lifeline-supported services, ensuring that the 
ETCs they designate satisfy the Lifeline service and other 
requirements, and preventing and identifying waste, fraud, and abuse in 
the Lifeline program. States' traditional designation role has also 
encouraged the continuation of state matching programs.
    36. By contrast, state commenters explain in the record that the 
stand-alone Federal Lifeline Broadband Provider ETC category 
``complicates administration,'' ``frustrates'' state policies and 
procedures, ``undermine[s] state programs,'' and ``adds an unnecessary 
layer of complexity to the ETC framework.'' State commenters also 
express concern that the Lifeline Broadband Provider ETC designation 
creates uncertainty with respect to states' role in monitoring and 
enforcing ETC activities, and engenders consumer confusion.
    37. This burdensome creation cannot be justified on the grounds 
that it is necessary to promote competition, as some commenters 
maintain. To the contrary, the traditional state role has not resulted 
in a lack of competition in the Lifeline marketplace or lack of 
affordable broadband internet access service for Lifeline consumers. 
The traditional designation roles and ETC categories better allow the 
Commission and states to appropriately balance the interest in 
encouraging more providers to participate in the Lifeline program and 
promote competitive broadband options, innovation, and choice for 
Lifeline consumers, while also guarding the program against further 
waste, fraud, and abuse. Existing ETCs continue to participate in the 
Lifeline program

[[Page 71313]]

based on their traditional state designations and in some cases have 
expanded their Lifeline offerings to new states, and new providers 
continue to receive traditional state ETC designations, permitting them 
to participate in the Lifeline program. As of October 1, 2019, for the 
September data month, the National Lifeline Accountability Database 
(NLAD) data indicates that approximately 355 unique holding companies 
claimed Lifeline support for providing approximately 3.8 million 
Lifeline subscribers with Lifeline-supported broadband internet access 
service that meets the Commission's minimum service standards.
    38. Other Considerations. Importantly, the elimination of Lifeline 
Broadband Provider designations does not preclude new providers from 
entering the Lifeline program or prevent Lifeline subscribers from 
receiving Lifeline discounts for qualifying broadband internet access 
service under current rules. Providers interested in participating in 
the Lifeline program remain able to obtain ETC status through existing 
state designation processes or from the Commission where the Commission 
has designation authority under section 214(e)(6). Further, Lifeline 
customers are able to receive discounts on Lifeline service offerings 
that include broadband internet access service. The Commission also 
clarifies that while section 254(e) authorizes the Commission to 
provide Lifeline reimbursements only to ETCs, the statute and Lifeline 
program rules do not preclude ETCs from offering broadband internet 
access service satisfying the Lifeline minimum service standards 
through affiliated broadband internet access service providers that 
operate under the ETC's existing designation. However, the Commission 
makes clear that where ETCs offer qualifying broadband internet access 
service to Lifeline subscribers through such affiliated entities, only 
the ETC is eligible to receive reimbursement from the Lifeline program, 
and the ETC remains legally responsible for ensuring compliance with 
the requirements and obligations for ETCs in the statute and in the 
rules, as well as all Lifeline program rules and reporting 
requirements.
    39. Conclusion. In the 2016 Lifeline Order, the Commission 
interfered with a process that has functioned smoothly for over twenty 
years, without a compelling reason, and without the proper authority to 
do so. For over twenty years, state commissions have performed well in 
their statutory role of designating ETCs. The Commission finds that 
there was no policy basis to depart from the framework established by 
Congress, and that, in any case, the Commission lacked the authority to 
do so. For these reasons, the Commission here concludes that the 
approach in the 2016 Lifeline Order is foreclosed by the plain text of 
section 214 and hence was contrary to law. Moreover, to the extent that 
the statute is ambiguous, the Commission believes that the reading of 
section 214 endorsed in the Order far better comports with the Act's 
language, structure, and policy objectives, for the reasons stated 
herein, and is thus at minimum a reasonable exercise of the discretion 
delegated by Congress.
    40. Consistent with the actions to restore states' traditional ETC 
designation role, Sec.  54.201(j) of the rules is eliminated, which 
precluded states from designating Lifeline Broadband Providers. The 
rule change will become effective January 27, 2020. In addition, 
because of the elimination of the Lifeline Broadband Provider 
designations, Sec. Sec.  54.202(d)(1) through (3) and (e) and 54.205(c) 
of the rules are eliminated. The Commission finds that there is no need 
for a transition period before the rule changes take effect because, 
currently, no provider has a Federal Lifeline Broadband Provider 
designation. The rule changes will become effective January 27, 2020.
    41. Increased Transparency with Stated to Improve Program 
Oversight. The Commission next directs the Universal Service 
Administrative Company (USAC) to take a number of measures intended to 
increase the transparency of the Lifeline program and support 
enforcement against program non-compliance. In the 2017 Lifeline Order 
and NPRM (FCC 17-155; 83 FR 2075 and 83 FR 2104 (Jan. 16, 2018)), the 
Commission sought comment on the types of reports USAC should make 
available to states and information that should be shared with the 
relevant state agencies to increase transparency and accountability 
within the Lifeline program. State agencies support the proposal that 
USAC notify the Commission and state agencies of suspicious ETC 
activity within the Lifeline program and encouraged further data 
sharing as an additional means for weeding out waste, fraud, and abuse 
in the Lifeline program.
    42. In light of the support, the Commission directs USAC to compile 
and make available on its website program aggregate subscribership 
data, including data broken out at the county level and by service 
type. USAC shall compile and present the data in a way that will be 
most clear to the states and the public. USAC already makes program 
statistics and other information available on its website. Making the 
additional subscribership data available increases program transparency 
and continues to promote accountability in the Lifeline program. Better 
insight into the program also will provide states with another tool in 
detecting anomalies that might indicate wasteful and fraudulent 
activity in the Lifeline program.
    43. The Commission also agrees with state commenters that sharing 
information regarding trends related to eligibility check failures, for 
example, will enable states to recognize compliance issues and act 
appropriately. The states play an important role in identifying and 
stopping wasteful and fraudulent activity in the Lifeline program, and 
the Commission finds that it is essential to the integrity of the 
program that evidence of suspicious activity is shared with the 
appropriate state officials. Therefore, the Commission instructs USAC 
to develop a process by which it will share with the Commission staff, 
the Commission's Office of Inspector General (OIG), and relevant state 
agencies' information regarding suspicious activity. To further the 
sharing of information regarding such activity, USAC should work with 
state personnel to identify appropriate state officials who should have 
access to these reports. USAC is instructed to make suspicious reports 
and trends available upon request from the state officials, and USAC is 
cautioned to ensure that the sharing of data, which could potentially 
contain sensitive information, complies with the Privacy Act and any 
other restrictions. The record is clear that the states value the 
information, and the Commission encourages the states to use the data 
provided in a way that furthers the integrity of the Lifeline program.
    44. Improving Program Integrity in Program Enrollment and 
Recertification. The Commission next turns to improving the Lifeline 
program's enrollment and recertification procedures to prevent waste, 
fraud, and abuse in the program. First, the Commission establishes new 
rules and limitations on ETCs' use of enrollment representatives to 
remove incentives to commit fraud and abuse in the Lifeline eligibility 
determination process. Second, the Commission acts to improve the 
integrity of Lifeline enrollments and direct USAC to continue targeted 
reviews of enrollment documentation. Finally, the Commission requires 
additional documentation during the annual

[[Page 71314]]

recertification process for certain Lifeline subscribers.
    45. Preventing Waste, Fraud, and Abuse by Enrollment 
Representatives. The Commission first concludes that ETCs should be 
prohibited from paying commissions based on the number of submitted 
Lifeline applications or approved enrollments to individuals who enroll 
Lifeline subscribers or who verify eligibility of Lifeline subscribers 
on behalf of ETCs. In this context, the Commission understands 
``commissions'' to broadly include direct financial compensation or 
other incentives such as non-cash rewards and travel incentives. In 
addition, the Commission codifies the requirement that USAC register 
all Lifeline ETC enrollment representatives. For these purposes, the 
Commission defines an enrollment representative as an employee, agent, 
contractor, or subcontractor, acting on behalf of an ETC or third-party 
organization, who directly or indirectly provides information to USAC 
or a state entity administering the Lifeline Program for the purpose of 
eligibility verification, enrollment, recertification, subscriber 
personal information updates, benefit transfers, or de-enrollment. The 
Commission also makes clear that ETCs are ultimately responsible for 
ensuring that all enrollment representatives register with USAC, and 
ETCs will be subject to enforcement action if an individual who has not 
registered with USAC acts as an enrollment representative on that ETC's 
behalf. The combination of (1) prohibiting ETCs from paying commissions 
to individuals who enroll Lifeline subscribers or who provide 
information for eligibility verification, recertification and changes 
to subscribers' information, and (2) requiring registration of each 
individual enrollment representative, will help to ensure 
accountability and prompt ETCs to crack down on improper behavior 
before it happens, thereby preventing waste, fraud, and abuse in the 
Lifeline program.
    46. Prohibiting Enrollment Representative Commissions. Much of the 
waste, fraud, and abuse in the Lifeline program revealed by audits, 
enforcement investigations, and criminal proceedings has involved non-
compliance by the ETC employees and contractors charged with reviewing 
applicants' eligibility documentation and enrolling new Lifeline 
subscribers. However, the Commission's rules have thus far not directly 
addressed the common practice by ETCs of providing commissions for 
enrollment representatives to enroll consumers in the Lifeline program. 
The Commission has long held that ETCs are liable for rule violations 
committed by their agents or representatives, but there is no specific 
Commission rule targeting enrollment representative misbehavior.
    47. Since the 2012 Lifeline Order (FCC 12-11; 77 FR 12952 (March 2, 
2012)), there have been reports of ETCs hiring enrollment 
representatives who did not comply with the Lifeline program rules for 
eligibility determinations. It is common practice for ETCs to offer 
commissions for agents to enroll consumers in the Lifeline program. 
However, even ETCs have acknowledged the mixed incentives these 
compensation schemes foster, with TracFone, for example, filing a 
petition asking the Commission to ``prohibit[ ] incentive-based agent 
compensation.'' Moreover, members of Congress have expressed concern to 
the Commission about the use of enrollment representatives who 
fraudulently enroll subscribers in the Lifeline program.
    48. The Commission also has tangible evidence of enrollment 
representative impropriety leading to waste and abuse of the program. 
In December 2016, the Commission's Enforcement Bureau entered into a 
Consent Decree with Lifeline ETC Total Call Mobile (TCM), where TCM 
admitted it used a commission compensation system for enrolling 
Lifeline subscribers that had resulted in ``[h]undreds of TCM field 
agents [engaging] in fraudulent practices to enroll consumers who were 
. . . otherwise not eligible for the Lifeline program.'' TCM had 
``sought and received reimbursement for tens of thousands of consumers 
who did not meet the Lifeline eligibility requirements,'' and TCM 
agreed to pay a fine of $30 million dollars for violating the Lifeline 
rules.
    49. Even with public reports of enrollment abuse and successful 
enforcement actions against Lifeline ETCs, the Commission's insight 
into the day-to-day enrollment operations of all ETCs is limited. The 
General Accounting Office (GAO) raised concerns in 2017, when it 
confirmed in a report on its performance audit of the program that, 
after conducting extensive data review and covert investigations into 
ETC Lifeline enrollment practices, the Commission and USAC ``have 
limited knowledge about potentially adverse incentives that providers 
might offer employees to enroll [Lifeline] subscribers'' but noted that 
apparent findings of large-scale improper enrollments from enforcement 
investigations was cause for concern. The GAO raised similar concerns 
regarding the recertification process. Since that report was issued, 
additional investigations and reports have provided more indications 
that enrollment representative commissions create incentives that 
increase the likelihood of waste, fraud, and abuse in the program. The 
Commission OIG's 2018 Semiannual Report to Congress noted that a 
Lifeline enrollment agent ``pled guilty to conspiracy to commit wire 
fraud'' and was ordered to pay restitution to the Commission of over 
$200,000 for having enrolled ``850-950 non-existent Lifeline customers 
in the program'' and having received commission for those fake 
enrollments.
    50. Finally, in October 2018, the Commission released the largest 
Notice of Apparent Liability for Forfeiture (NAL) to date against a 
Lifeline provider when it proposed a $63 million forfeiture against 
American Broadband & Telecommunications Company (American Broadband). 
American Broadband's agents apparently repeatedly enrolled ineligible 
or fake subscribers and relied on master agents and sales agents paid 
on commission. Over 42,000 customers were apparently claimed by 
American Broadband over the NAL period, and many of those were claimed 
due to improper enrollments by the agents.
    51. In the 2017 Lifeline Order and NPRM, the Commission sought 
comment on prohibiting an ETC from offering or providing ETC personnel 
with commissions based on enrollments or verification of eligibility 
and on codifying a requirement that ETC representatives who enroll 
consumers in Lifeline must register with USAC. The Commission stated 
its belief that prohibiting commissions related to enrolling 
subscribers in the Lifeline program ``may benefit ratepayers by 
reducing waste, fraud, and abuse in the program.'' It also noted that 
many ETCs use commissions as a means of compensating sales employees 
and contractors and that such compensation schemes ``can encourage the 
employees and agents of ETCs to enroll subscribers in the program 
regardless of eligibility, enroll consumers in the program without 
their consent, or engage in other practices that increase waste, fraud, 
and abuse in the program.''
    52. In response to the 2017 Lifeline Order and NPRM, numerous 
commenters supported limiting or prohibiting ETCs from offering or 
providing commissions to sales agents or employees who verify the 
eligibility of potential Lifeline subscribers. Some commenters 
suggested that the Commission should only address commissions for 
third-party sales agents or representatives. However, while an ETC may 
have more supervision over its

[[Page 71315]]

direct employees than third-party sales agents or representatives, the 
Commission does not believe that employees are immune from the 
financial motivation that commissions might offer to commit potentially 
fraudulent activity. Several commenters also suggested that any 
limitation on commissions was unnecessary or needed further evaluation 
in light of the rollout of the National Verifier. While the National 
Verifier plays an important role in helping to address waste, fraud, 
and abuse in the program, the Commission does not believe that it will 
eliminate the financial incentives for individuals to attempt to 
defraud the Lifeline program. Commissions based on the number of 
Lifeline applications or successful Lifeline enrollments are one such 
incentive, and by limiting them, the Commission removes a financial 
incentive for committing fraudulent activity.
    53. Based on the record and to limit a potential source for fraud 
or abuse in the program, the Commission prohibits ETCs from offering or 
providing commissions to enrollment representatives and their direct 
supervisors based on the number of consumers who apply for or are 
enrolled in the Lifeline program with that eligible telecommunications 
carrier. This restriction applies to employees, agents, officers, or 
contractors working on behalf of the ETC who enroll Lifeline 
applicants, review eligibility documents or recertification forms, 
including sales and field agents, and any direct supervisors of those 
individuals, whether employed by the ETC or employed by a third-party 
contractor of the ETC. For purposes of the rule, an ETC's payment to a 
third-party entity that in turn provides commissions to an enrollment 
representative is subject to the prohibition. This restriction is not 
intended to prevent ETCs from using customer service representatives to 
assist consumers in the Lifeline application and recertification 
processes. The Commission adds Sec.  54.406(b) of the Commission's 
rules to prohibit ETCs from utilizing commission structures for those 
enrollment representatives involved in the eligibility determination, 
enrollment process, or recertification process. These changes will 
become effective February 25, 2020.
    54. The Commission expects that the targeted prohibition of certain 
practices by ETC employees and agents will help reduce the incentive 
for enrollment, customer service, and recertification employees to 
commit fraud against the Lifeline program. In the Commission's 
investigation of American Broadband, the conduct of the agents hired by 
the company ranged from enrolling subscribers who were apparently not 
eligible and apparently falsifying eligibility documentation, to 
apparently creating false identities and enrolling false and deceased 
individuals into the program. While an ETC is liable for the actions of 
its agents and representatives, and the Commission has the authority to 
recover improper reimbursements distributed to ETCs, the record 
demonstrates that the liability has not been sufficient to successfully 
deter fraud committed by employees and agents. The Commission believes 
prohibiting ETCs from offering commissions to certain employees or 
agents, along with other measures taken in the Order, will prevent 
improper enrollments before they happen.
    55. Enrollment Representative Registration with USAC. To further 
prevent waste, fraud, and abuse, the Commission next requires that all 
ETC enrollment representatives register with USAC to access USAC's 
Lifeline systems in the process of Lifeline enrollment, benefit 
transfers, subscriber information updates, recertification, and de-
enrollment. In July 2017, USAC was directed to require enrollment 
representatives of ETCs to register with USAC to enable USAC to both 
verify the identity of individual enrollment representatives and 
``determine the ETC(s) he or she works for.'' USAC was directed to 
provide each enrollment representative with a unique identifier to be 
used by the enrollment representative to interact with NLAD and to lock 
enrollment representatives out of the NLAD ``for a set period of time 
after too many invalid subscriber entry attempts.'' USAC was further 
directed to incorporate the data gained from the enrollment 
representative registration system into its audit findings and to 
report any suspected abuse by individual enrollment representatives to 
the Commission's OIG ``for evaluation as to whether civil or criminal 
action is appropriate and to the Enforcement Bureau for administrative 
action and remedies.''
    56. The Commission then asked for public comment on codifying a 
rule to require enrollment representative registration in the 2017 
Lifeline Order and NPRM. The Commission sought comment on having the 
representative registration identifiers be used when enrolling 
consumers via the National Verifier, as well as when interacting with 
the NLAD. The Commission reiterated that it is ``aware of certain 
practices of sales representatives resulting in improper enrollments or 
otherwise violating the Lifeline rules. . . . [including] data 
manipulation to defeat NLAD protections, using personally identifying 
information of an eligible subscriber to enroll non-eligible 
subscribers, and obtaining false certifications from subscribers.'' In 
light of recent developments, such as the American Broadband NAL where 
several enrollment representatives allegedly engaged in the 
aforementioned practices and the OIG Report citing of an enrollment 
representative who suffered criminal penalties for fraudulently 
enrolling subscribers in Lifeline, the Commission concludes that 
codifying in the Commission's rules the requirement that specified ETC 
enrollment representatives must register with USAC would help to combat 
waste, fraud, and abuse.
    57. Several commenters supported a Commission rule requiring that 
ETCs' enrollment representatives register with USAC to submit 
information to the NLAD or National Verifier. The Commission agrees the 
requirement would provide clarity to all parties and would assist the 
Commission and USAC in detecting and investigating potential waste, 
fraud, or abuse by an ETC's enrollment representatives. The Commission 
therefore amends the Commission's rules and requires each ETC 
enrollment representative to register with USAC and obtain a unique 
representative identification number. When enrolling or recertifying 
individuals in the Lifeline Program, ETCs must use the Lifeline Program 
Application Form ``in all states and territories to obtain the 
information necessary to evaluate whether a consumer is eligible to 
receive Lifeline service and to obtain the consumer's certifications,'' 
and the Lifeline Program Annual Recertification Form ``in all states 
and territories to recertify the eligibility [of] subscribers who are 
receiving Lifeline service.'' As such, an ETC will be in violation of 
section 54.410 of the Commission's rules, as well as this new rule, if 
the ETC's enrollment representative enrolling a consumer in Lifeline or 
submitting a consumer's recertification form does not enter their 
representative identification number as required by the rule and by 
Section 5 of the Lifeline Program Application Form and Section 5 of the 
Lifeline Program Annual Recertification Form. ETCs are responsible for 
ensuring that their enrollment representatives complete this 
registration process. This registration process does not absolve ETCs 
of Commission rule or state law violations committed by their 
enrollment representatives or other

[[Page 71316]]

employees. The rule shall become effective March 26, 2020.
    58. For the purposes of the ETC representative registration system, 
all enrollment representatives must register with USAC and receive a 
unique identifier. In order to register, each such ETC enrollment 
representative must provide information that USAC, after consultation 
with the Bureau and the Office of Managing Director, determines is 
necessary to identify and contact him or her; this information may 
include first and last name, date of birth, the last four digits of his 
or her social security number, personal email address, and residential 
address. It is critical that USAC confirms that individuals that 
interact with its systems are actually who they claim to be, and the 
Commission expects that this information would allow USAC to conduct a 
successful identity check during the registration process for the vast 
majority of registrants. In light of ETCs' concerns about requiring 
their employees to submit the last four digits of their social security 
number to the registration system, the Commission permits USAC to make 
the submission of such information optional. However, the Commission 
notes that if a registrant declines to provide the last four digits of 
his or her social security number, that registration may be 
significantly less likely to be automatically validated through the 
third-party identity check, thus requiring the registrant to provide 
additional documentation confirming his or her identity to complete the 
registration process. Once issued, the representative identification 
number will be tied to a specific enrollment representative and will 
not be transferable. To ensure compliance, the Commission also 
concludes that ETCs are responsible for the proper enrollment of their 
representatives in this system, as an ETC's enrollment representative 
needs to be registered with USAC prior to enrolling or recertifying 
consumers in the Lifeline program and prior to completing and 
submitting the Lifeline Program Application Form and Lifeline Program 
Annual Recertification forms.
    59. The Commission recognizes the concern with collecting and 
retaining personal information from ETC enrollment representatives; 
however, such information is necessary to verify the identity of the 
person completing enrollment representative activities, and to assign 
that individual a unique identification number to access the NLAD and 
the National Verifier. In particular, it is essential that USAC and the 
Commission be able to monitor for and detect patterns of noncompliant 
or fraudulent behavior by specific enrollment representatives, 
especially because it is not uncommon for enrollment representatives to 
be employed by multiple ETCs. The requested enrollment representative 
information is narrowly tailored and is no broader than necessary to 
verify the identity of the enrollment representative before providing 
him or her access to the NLAD and National Verifier and to enable USAC 
to monitor the activities of specific enrollment representatives. 
Furthermore, this information will allow USAC and others to take action 
against an enrollment representative who has engaged in noncompliant or 
fraudulent behavior and prevent such a representative from enrolling or 
recertifying Lifeline subscribers for any ETC. Given the sensitive 
nature of this information, the Commission directs USAC to comply with 
both the Privacy Act of 1974 and the Federal Information Security 
Management Act of 2002. In implementing this change, the Commission 
recognizes that USAC may, for administrative efficiency, consolidate 
the registration system codified in the Order with existing or future 
registration processes that it uses to allow access to its 
technological systems (for example, allowing authorized certifying 
officers to log into the Lifeline Claims System).
    60. The Commission believes that these security measures and the 
narrowly tailored nature of the personal information that USAC is 
collecting address the concerns that stakeholders have recently 
expressed regarding a registration requirement. These stakeholders also 
raised concerns about the application of any registration requirement 
to direct ETC employees and suggested that any direct ETC employees not 
be required to submit the same level of personal information as agents 
or representatives not directly employed by an ETC. However, limiting 
the personal information collected for those individuals to the 
individual's name and business contact information would impede USAC's 
ability to independently verify the identity of registered individuals 
and could obscure potential duplicate registrations. Also, in addition 
to documenting fraudulent activity from sales agents and external 
representatives, the Commission has documented apparently fraudulent 
practices executed by direct ETC employees. A two-tiered approach to 
registering enrollment representatives would create an unacceptable 
risk of fake or duplicate accounts and could give ETCs the opportunity 
to improperly characterize their enrollment representatives as direct 
employees to minimize USAC's ability to oversee enrollment 
representative activity, creating an avenue for waste, fraud, and 
abuse. As such, the Commission believes that it is appropriate for this 
registration requirement to include direct ETC employees, better 
positioning the Commission, USAC, and even ETCs to address potentially 
fraudulent activity.
    61. One stakeholder group specifically suggested that the 
Commission issue a Public Notice seeking further comment on the 
enrollment representative registration requirement. However, the 
Commission provided ample notice to stakeholders and sought comment on 
a range of issues impacting this effort in the 2017 Lifeline Order and 
NPRM. The 2017 Lifeline Order and NPRM sought comment on the 
codification process generally, how the Commission should define an ETC 
enrollment representative, what information should be solicited for 
this database, and what privacy and security practices should be used 
to safeguard this information. These are all considerations that the 
Commission acts on, and the suggestion that stakeholders did not have 
ample notice or time to comment on these issues is not supported by the 
factual history of this proceeding.
    62. TracFone Wireless, Inc. (TracFone) also raised several 
proposals for addressing different aspects of the enrollment 
representative registration process. TracFone suggested that the 
Commission prohibit third party agents from representing more than one 
Lifeline provider at any one time. However, the Commission believes 
that such a prohibition would be overly broad and unsupported by the 
proceeding's record. TracFone also argued that registration should only 
be required for individuals involved in the eligibility verification 
process if those individuals are compensated with commissions. However, 
since the Order prohibits commissions for enrollment representatives 
and their supervisors, applying the registration requirement only to 
representatives who receive commission-based compensation would render 
the requirement meaningless. USAC and the Commission would lose the 
ability to monitor enrollment representatives' practices and to 
proactively address potential fraud committed by these individuals.
    63. As part of the enrollment representative registration process, 
the Commission also requires individual enrollment representatives with 
direct access to USAC's systems to sign a user agreement for NLAD and 
the National

[[Page 71317]]

Verifier before gaining access to NLAD or the National Verifier. The 
Commission directs USAC to develop a user agreement that requires these 
enrollment representatives to acknowledge that they will only use NLAD 
and the National Verifier for the specified purposes and that their 
access to either or both databases may be suspended or terminated for 
unauthorized or unlawful use. Individual enrollment representatives 
with direct access to these systems must re-submit the user agreements 
annually and must also confirm in USAC's database that their contact 
information is up to date within 30 days of any change in such 
information. This will ensure that enrollment representatives' 
information in the database remains current and that the enrollment 
representative is still actively using the National Verifier or the 
NLAD on behalf of the ETC. In operating the ETC representative 
registration system, USAC shall have the authority to protect the 
integrity of its registration system by, among other things, locking 
the NLAD and National Verifier accounts of ETC enrollment 
representatives with a prolonged inactive period (i.e., consecutive 
months) or a pattern of suspicious activity, such as unusual rates of 
invalid enrollment attempts. While a representative's account is 
locked, the representative will lose the ability to enter, alter, 
remove, or view subscriber information in the NLAD and National 
Verifier systems.
    64. Enrollment Process Improvement--Independent Economic Household 
Worksheets. Next the Commission amends the rules to limit when an ETC 
can record an Independent Economic Household (IEH) worksheet in the 
NLAD. Specifically, an ETC will be permitted to do so only where the 
consumer completing the worksheet shares an address with another 
Lifeline subscriber. This limitation will assist USAC's efforts to 
detect improper duplicate addresses among Lifeline subscribers listed 
in the NLAD and will reduce administrative burdens on USAC.
    65. The Commission's rules limit Lifeline service to one 
subscription per household. There are instances, however, where 
multiple subscribers share the same residential address but are 
considered independent economic households under the Lifeline program 
rules. For example, multiple subscribers living in a shelter may share 
the same address, or multiple subscribers may provide the same 
apartment building address without a unit number. Alternatively, 
subscribers might share the same home address, but would not be part of 
the same household if they do not contribute to and share in the 
household income and expenses. The IEH worksheet asks several questions 
that help the ETC and subscriber determine if the subscriber is an 
independent household in the event that another subscriber lives at the 
same address. The Commission's rules require that the IEH worksheet 
certifying compliance with the one-subscription-per-household rule be 
completed at the time of enrollment if the consumer resides at the same 
address as another individual receiving a Lifeline benefit and during 
any recertification in which the subscriber changes households, and as 
a result, shares an address with another Lifeline subscriber. However, 
an ETC often will record the collection of an IEH worksheet in the NLAD 
and note that the applicant is in an independent economic household, 
even if the subscriber does not share an address with other Lifeline 
subscribers.
    66. In the 2017 Lifeline Order and NPRM, the Commission sought 
comment on the practice of collecting and recording worksheets from all 
subscribers, regardless of whether that subscriber shares an address 
with another Lifeline subscriber and asked whether that practice makes 
it more difficult for USAC to detect improper activity. Noting that the 
``[p]rophylactic use of the household worksheet can therefore subvert 
the duplicate address protections and may result in increased waste, 
fraud, and abuse,'' the Commission asked whether it should amend its 
rules to permit the use of the form only in instances where the ETC has 
been notified that the applicant shares the same residential address as 
another Lifeline subscriber.
    67. Some commenters argue that it is important that providers be 
able to collect the IEH worksheet from the applicant at the time of 
enrollment because providers may not receive a real time notification 
that the applicant shares an address with another Lifeline customer. 
Others are generally supportive of the Commission's proposal to 
restrict the collection of the IEH worksheets. The Commission 
recognizes the strong preference that some ETCs have for routinely 
collecting the IEH worksheet at the outset from Lifeline applicants, 
regardless of whether that applicant shares an address with another 
Lifeline customer. Upon a review of the record, the Commission finds no 
compelling reason to prohibit the practice of collecting the IEH 
worksheet from all applicants, but in order to more readily identify 
through use of the ``IEH flag'' which subscribers share an address with 
another Lifeline subscriber, the Commission finds it necessary to 
restrict the recordation of the IEH worksheet in the NLAD. Accordingly, 
the Commission amends Sec.  54.404(b)(3) of the Commission's rules to 
permit ETCs to record an IEH worksheet in the NLAD only when the NLAD 
has alerted the ETC that the prospective subscriber shares the same 
residential address as another Lifeline subscriber is a reasonable 
approach to support USAC's efforts in identifying duplicate addresses. 
ETCs shall not record an IEH worksheet in NLAD in any other situation. 
These changes shall be effective January 27, 2020.
    68. Finally, the rule does not alter ETCs' conduct in NLAD opt-out 
states (California, Oregon, and Texas) because the rule only covers the 
information that ETCs submit to the NLAD. More specifically, ETCs in 
NLAD opt-out states must continue to follow the relevant state laws, 
regulations, or agency instructions. To be clear, because this rule 
change impacts the recordation of IEH worksheets in the NLAD and not 
the use of the IEH worksheet itself, ETCs are still permitted to 
collect IEH worksheets prior to enrollment. ETCs may not record that 
subscriber's IEH form in the NLAD, however, unless the NLAD has alerted 
the ETC that the subscriber shares an address with another Lifeline 
subscriber.
    69. Deceased Subscribers. In its report, GAO identified 6,378 
deceased individuals that remained enrolled in Lifeline even though 
they were reported as deceased for over a year before enrollment or 
recertification. To combat this issue, USAC was directed to de-enroll 
the subscribers GAO identified as deceased, and going forward on a 
quarterly basis, to check a sample of subscribers against the Social 
Security Death Master File and to de-enroll subscribers and recoup 
reimbursements as appropriate. Since then, USAC has added a check of 
the Social Security Death Master File when validating a consumer's 
identity, which prevents a consumer appearing on the Social Security 
Death Master File from enrolling in the program unless the consumer 
successfully disputes the automated result through documentation. In 
the 2017 Lifeline Order and NPRM, the Commission sought comment on 
whether it should codify USAC's current practice of cross-checking a 
subscriber's information against the Social Security Death Master File 
at the time of enrollment and recertification. Commenters agree that a 
codification of USAC's current practice is a reasonable way to help 
control

[[Page 71318]]

waste, fraud, and abuse. Accordingly, the Commission adds a new rule, 
Sec.  54.404(b)(12), notifying ETCs that they must not enroll a 
prospective Lifeline subscriber if the NLAD or National Verifier cannot 
identify the subscriber as living, unless that subscriber can produce 
documentation demonstrating his or her identity and status as living. 
The revised rules prohibit ETCs from claiming subscribers that are 
identified as deceased for purposes of requesting or receiving 
reimbursement from Lifeline. The changes contain new or modified 
information collection requirements, which will not be effective until 
approved by the Office of Management and Budget. The effective date 
will be announced in a future Federal Register document.
    70. If an ETC has claimed reimbursement for a period during which a 
subscriber was deceased, USAC is directed to reclaim reimbursements 
back to the time of enrollment or recertification if the subscriber was 
deceased and listed on the Social Security Death Master File at the 
time of enrollment or recertification. The Commission also directs USAC 
to continue its efforts to prevent ETCs from claiming and seeking 
reimbursement for subscribers identified as deceased and listed on the 
Social Security Death Master File. Specifically, USAC shall continue 
sampling existing subscribers on a quarterly basis and, for any 
subscriber identified as deceased according to the Social Security 
Death Master File, USAC shall first require ETCs to provide ``proof of 
life'' documentation and then de-enroll any subscribers who cannot 
produce such documentation to successfully dispute the Social Security 
Death Master File match.
    71. Reimbursement Process. The Commission next revises the rules to 
include a limitation on the subscribers for which an ETC may claim and 
receive reimbursement. In the 2017 Lifeline Order and NPRM, the 
Commission sought comment on whether it should amend its rules to 
require that disbursements be based on the subscribers enrolled in NLAD 
as a way to prevent reimbursements for fictitious or ``phantom'' 
subscribers that are not in NLAD and are improperly claimed by 
providers. Section 54.407 of the Commission's rules provides that 
reimbursement for providing Lifeline service will be provided directly 
to the ETC ``based on the number of actually qualifying low-income 
customers it serves directly as of the first day of the month.'' The 
Commission now codifies the requirement that the number of eligible 
subscribers an ETC may claim for reimbursement must be no more than the 
number of qualifying subscribers the ETC directly serves as of the 
snapshot date as indicated by the data in the NLAD. In the three NLAD 
opt-out states, ETCs may also base claims for reimbursement on any 
reports or information the state administrator provides to the ETC 
concerning which subscribers can be claimed. The Commission directs 
USAC to continue to base its Lifeline claims and reimbursement process 
on the number of qualifying subscribers the ETC serves on the snapshot 
date. USAC shall base the reimbursement on data available in NLAD, 
future USAC systems that record program enrollment, or on data provided 
by a state administrator for the NLAD opt-out states. Section 54.407(a) 
is amended to reflect the requirement. The rule change will become 
effective January 27, 2020.
    72. Recertification--Improving Recertification Integrity. The 
Commission next amends the Commission's rules to require ETCs to 
collect eligibility documentation from the subscriber at the time of 
recertification in certain circumstances. In the 2017 Lifeline Order 
and NPRM, the Commission acknowledged that the current rules allow a 
subscriber to self-certify that he or she continues to be eligible for 
the Lifeline program, even if a database indicates that the 
subscriber's participation in a qualifying program has changed and his 
or her eligibility cannot be determined by querying any available state 
or Federal eligibility or income database. The Commission asked for 
comment ``on prohibiting subscribers from self-certifying their 
continued eligibility during the Lifeline program's annual 
recertification process if the consumer is no longer participating in 
the program they used to demonstrate their initial eligibility for the 
program.''
    73. To help ensure the integrity of the recertification process, 
the Commission amends the Commission's rules to require ETCs to collect 
eligibility documentation from the subscriber at the time of 
recertification if the subscriber's eligibility was previously verified 
through a state or Federal eligibility or income database and the 
subscriber's continued eligibility can no longer be verified through 
that same database or another eligibility database. The rule change 
creates a more rigorous and verifiable recertification process and is 
tailored to provide additional focus on subscribers who have changes in 
their eligibility from year to year. The Commission also amends the 
rules to accommodate this process in the National Verifier. If the ETC 
is unable to re-certify the subscriber's eligibility or is notified by 
the National Verifier or the relevant state administrator that the 
subscriber is unable to be re-certified, the ETC shall proceed with the 
de-enrollment requirements in Sec.  54.405(e)(4) of the rules.
    74. Amending the Commission's rules to require this additional 
recertification step closes off another avenue for waste, fraud, and 
abuse within the Lifeline program by requiring additional documentation 
from subscribers whose eligibility was previously confirmed through an 
eligibility database but are no longer included in any eligibility 
database. This change balances the need to increase the integrity of 
the Lifeline program by ensuring that subscribers continue to 
demonstrate eligibility each year, with the limited burden of providing 
additional documentation only when the situation warrants it. The 
proposal is supported by state agency commenters, many of whom noted 
the importance of verifying eligibility in situations where a 
subscriber's eligibility cannot be determined through a check of a 
database. The National Lifeline Association and ETCs also note their 
support for the requirement.
    75. Some commenters express concern that this requirement would be 
burdensome for low-income subscribers because it would require them to 
produce additional documentation. Smith Bagley, Inc. (SBI) also argues 
that subscribers aged 60 years or older and residing on Tribal lands 
should be exempt from the requirement to produce additional 
documentation if their eligibility cannot be first determined through a 
database check. SBI contends that if such a customer can no longer be 
verified as a Medicaid participant in a database, ``it is statistically 
likely that they also qualify via household income or [Supplemental 
Security Income]'' because, among SBI's Lifeline customers aged 60 
years or older, ``approximately 39% qualified via household income 
compared to 12% of its entire Lifeline base.'' SBI contends that for 
this subset of subscribers, requiring the submission of eligibility 
documentation would be particularly burdensome because of mobility 
restrictions and other difficulties. The Commission is cognizant of the 
burdens that providing additional documentation can have on some low-
income consumers, including those over the age of 60, and so the rule 
is tailored to only require supporting documentation when eligibility 
was confirmed through a database check, the subscriber is no longer 
included in that database, and eligibility cannot otherwise be verified 
through a check of another state or Federal eligibility or

[[Page 71319]]

income database. Accordingly, the Commission declines to implement 
SBI's suggestion to permit Lifeline subscribers on Tribal lands over 
the age of 60 to self-certify their eligibility when they cannot 
otherwise be verified through a database. Recognizing that it may be a 
challenge for some to submit documentation in accordance with this 
rule, but this yearly requirement balances the need to maintain the 
integrity of the Lifeline program while minimizing the burden on 
individual subscribers. Also declining to implement the recommendation 
of the Oklahoma Corporation Commission's Public Utility Division to 
eliminate all self-certifications, as finding that the self-
certification process at the time of recertification strikes a balance 
by limiting administrative burdens on program participants while still 
maintaining the integrity of the Lifeline program by enforcing a 
verifiable process by which to confirm eligibility.
    76. The Commission therefore amends Sec.  54.410(f) of the 
Commission's rules to reflect these changes, and directs USAC to update 
the recertification forms as necessary to reflect these changes. The 
changes contain new or modified information collection requirements, 
which will not be effective until approved by the Office of Management 
and Budget. The effective date will be announced in a future Federal 
Register document. Any recertification initiated on or after the 
effective date must comply with the amended rules.
    77. Risk-Based Auditing. The Commission next modifies the Lifeline 
program's audit requirements to better target potential non-compliance 
and reduce burdens on some ETCs. Participants in the Lifeline program 
are subject to substantial oversight and compliance reviews. With 
oversight from the Commission's Office of the Managing Director (OMD), 
USAC is responsible for conducting, either itself or through third 
parties, Beneficiary and Contributor Audit Program (BCAP) audits and 
Payment Quality Assurance (PQA) reviews of program participants. More 
recently, USAC has conducted additional reviews as requested in the 
July 2017 Letter to USAC. Additionally, under the Commission's Biennial 
Audit framework, ETCs receiving $5 million or more in reimbursements 
from the Lifeline program are required to obtain an independent audit 
that is intended ``to assess the ETC's overall compliance with the 
program's requirements.'' In the 2017 Lifeline Order and NPRM, the 
Commission sought comment on its proposal to modify the Biennial Audit 
requirements from a $5 million reimbursement threshold to a purely 
risk-based model.
    78. Finding that targeted tools are necessary to identify abusers 
of the program and to ensure that USAC's procedures are sufficient to 
properly administer the Lifeline program, the Commission adopts a new 
approach that will use risk-based factors--rather than the level of 
Lifeline disbursements--to identify ETCs that must complete Biennial 
Audits pursuant to Sec.  54.420(a) of the Commission's rules. As one 
commenter argues, ``the number of subscribers served by a provider,'' 
and thus the level of reimbursements made to the provider, ``is not 
indicative of its risk profile.'' The Commission agrees that the amount 
of reimbursements should not be the only factor to consider in 
determining when a Biennial Audit is necessary under Sec.  54.420(a) of 
the rules. Accordingly, the Commission directs USAC to develop and 
submit for approval by OMD and the Bureau a list of proposed risk-based 
factors that would trigger a Biennial Audit under Sec.  54.420(a) of 
the Commission's rules in accordance with the guidance provided in the 
GAO's Yellow Book and the Office of Management and Budget (OMB) 
Circular No. A-123, Management's Responsibility for Internal Control. A 
risk-based approach for biennial audits will incorporate a wider range 
of risk factors that will better identify waste, fraud, and abuse in 
the program because these factors will target potential violations 
rather than only companies that happen to receive a certain level of 
Lifeline reimbursements. To ensure the efficient and effective 
implementation of the approach, the Commission directs OMD and the 
Bureau, in conjunction with USAC, to update the Biennial Audit Plan as 
necessary to reflect the changes made herein and otherwise implemented 
since the development and release of the last Biennial Audit Plan. 
Commenters generally welcome this move to a targeted, risk-based 
approach, noting that this approach will be much more effective at 
weeding out waste, fraud, and abuse than the current method. The move 
also would likely result in cost savings for ETCs that were targeted 
simply due to their size. Risk-based audits will direct resources to 
where they are needed more--the monitoring of providers that exhibit 
certain risk factors that warrant further investigation through an 
audit.
    79. ETC commenters request that the Commission work with 
stakeholders in developing the risk register. While the Commission 
appreciates ETCs' interest in developing risk-based factors, it is 
important that the Commission receive recommendations from USAC, 
including any experts it may hire, based on standard methodologies for 
identifying risk-based factors and developing risk registers. As such, 
the Commission declines to direct OMD or USAC to seek comment on the 
risk register from any particular stakeholders, but instead anticipate 
that OMD and the Bureau will direct USAC to use auditing best 
practices, including the GAO Yellow Book, for identifying risk-based 
factors and developing the recommendations for the risk register. The 
Commission expects that such efforts by USAC to develop the risk 
register will follow relevant Federal guidance on evaluating and 
managing risk. The Commission highlights that the approach is designed 
to maintain the integrity of the audit process such that the risk 
register will serve its intended purpose of aiding in the detection and 
prevention of fraud, waste, and abuse in the program. The Commission 
notes that it already uses the approach for other Lifeline audit plans. 
For example, the FCC and USAC do not share the annual risk analyses 
used to select auditees pursuant to the Beneficiary and Contributor 
Audit Program. The Commission further notes that, pursuant to the 
guidance in OMB Circular A-123, it is within the Commission's 
discretion to adopt an approach ``that will ensure the greatest 
financial benefit for the government,'' and the Commission believes 
that this risk-based approach will do so by directing resources toward 
audits where instances of waste, fraud, and abuse are more likely to be 
revealed. Finally, the approach will ensure that the development of the 
risk register will remain flexible so that USAC can adjust the risk 
register to meet any changes in the Lifeline program. The changes will 
become effective January 27, 2020.
    80. The Commission also addresses several outstanding petitions to 
resolve pending questions pertaining to the rules and oversight of the 
Lifeline program and to provide clarity to program participants. The 
Commission addresses USTelecom's petition for reconsideration and 
clarification of the 2016 Lifeline Order; the National Association of 
State Utility Consumer Advocates (NASUCA) petition for reconsideration 
of the 2016 Lifeline Order; the petitions of USTelecom and General 
Communication, Inc. (GCI) and the joint petition of NTCA--the Rural 
Broadband Association (NTCA) and WTA--Advocates for Rural Broadband 
(WTA) seeking reconsideration of the 2016 Lifeline Order; the National 
Lifeline Association (NaLA) 2018

[[Page 71320]]

petition for declaratory ruling that the Commission allow ETCs to seek 
reimbursement for eligible subscribers during the non-usage cure 
period; and TracFone's 2012 petition for declaratory ruling and interim 
relief regarding actions taken by the Puerto Rico Telecommunications 
Regulatory Board to address duplicate Lifeline subscribers identified 
by the Board. The Commission partially grants the petitions of 
USTelecom and GCI and the joint petition of NTCA and WTA and the 
Commission dismisses as moot or denies the other petitions.
    81. ETC Service Obligations. Pending before the Commission is 
USTelecom's Petition for Reconsideration and Clarification of the 2016 
Lifeline Order. The Commission dismisses as moot USTelecom's requests 
that the Commission (1) extend the effective date for the requirement 
to offer Lifeline-supported broadband internet access service, and (2) 
apply to non-Lifeline Broadband Providers the Commission's 
clarification that for Lifeline Broadband Providers, ``media of general 
distribution'' in section 214(e)(1)(B)'s advertising requirement means 
media reasonably calculated to reach ``the specific audience that makes 
up the demographic for a particular service offering.'' The requirement 
to offer Lifeline-supported broadband internet access service took 
effect on December 2, 2016. The Fifth Report and Order, eliminates the 
Lifeline Broadband Provider category. As a result, the Commission's 
clarification concerning the advertising requirements for Lifeline 
Broadband Providers no longer applies to any ETC. Accordingly, the 
Commission dismisses the requests as moot.
    82. The Commission denies USTelecom's request for reconsideration 
of the requirement that the last ETC in a Census block continue to 
offer Lifeline stand-alone voice service. USTelecom argues that this 
requirement is ``arbitrary and capricious'' and is inconsistent with 
the Commission's decision to shift Lifeline support from voice service 
to broadband internet access service. Two parties filed comments 
opposing USTelecom's request for reconsideration of this requirement.
    83. USTelecom's arguments do not warrant reconsideration of this 
requirement. The Commission adopted the requirement in the 2016 
Lifeline Order, notwithstanding its conclusion that the Lifeline 
program should transition to focus more on broadband internet access 
services, after considering (1) the historical importance of voice 
service, (2) that consumer migrations to new technologies are not 
always uniform, and (3) that measures to continue addressing the 
affordability of voice service may still be appropriate consistent with 
the objectives of sections 254(b)(1), (b)(3), and 254(i) of the Act. 
Based on its consideration of these factors, the Commission concluded 
that, consistent with its ``responsibility to be a prudent guardian of 
the public's resources,'' continued support for voice services should 
prioritize in an ``administrable way, those areas where the Commission 
anticipates there to be the greatest likely need for doing so,'' and 
that it made the most sense to provide any continued support for stand-
alone voice to the last ETC serving the Census block. The Commission 
acknowledged that this support could be targeted in other ways (e.g., 
based on other geographies, or demographic criteria), but was not 
persuaded that these other approaches would be easily administrable. 
The Commission also determined that it made the most sense to provide 
this continued support to the single, existing ETC serving the Census 
block rather than requiring the designation of a new provider for this 
purpose.
    84. Finding that the Commission's decision to require the last ETC 
serving a Census block to continue offering Lifeline-supported voice 
service is not inconsistent with the decision and supporting rationale 
for shifting Lifeline dollars from voice service to broadband internet 
access service. As explained in the 2016 Lifeline Order, the Commission 
adopted this requirement after considering a number of factors, 
including the objectives of section 254(b), and also narrowly tailored 
this approach to meet the needs of areas where the Commission 
anticipated the greatest likely need for addressing the affordability 
of stand-alone voice services. USTelecom has not demonstrated that the 
Commission erred in considering these factors or adopting a narrowly 
tailored solution to address them.
    85. While USTelecom argues that the existence of one ETC does not 
correlate to the absence of multiple voice providers, and that the 
rates of non-ETC voice providers would not be higher in Census blocks 
where there is only one ETC, USTelecom's petition fails to provide any 
specific evidence to support those arguments. USTelecom also has not 
demonstrated that the Commission erred in determining that focusing on 
Census blocks with one ETC was the most readily administrable approach, 
or that it made the most sense to require the single existing ETC 
already serving the Census block to continue to provide stand-alone 
Lifeline voice service. Accordingly, the Commission denies USTelecom's 
request for reconsideration of the requirement that the last ETC in a 
Census block continue offering Lifeline standalone-voice service.
    86. Backup Power. The Commission next addresses a June 23, 2016, 
NASUCA petition for reconsideration of the 2016 Lifeline Order arguing 
that, among other issues, the Order did not ``require that payment 
arrangements be offered for back-up power for Lifeline customers.'' 
NASUCA requests that the Commission ``at the very least require 
Lifeline ETCs to offer [Lifeline subscribers] extended payment plans 
for the back-up power option'' or permit ``back-up power [to] be 
provided at no additional cost to the Lifeline consumer.'' CenturyLink, 
GVNW and USTelecom opposed this portion of NASUCA's petition for 
reconsideration and argue that the Commission should reject or decline 
to consider NASUCA's back-up power proposals for Lifeline consumers. 
The Commission declines to grant NASUCA's request.
    87. NASUCA's arguments concerning Lifeline support for backup power 
arrangements do not warrant reconsideration of the 2016 Lifeline Order. 
NASUCA's petition does not point to any errors of fact or law in the 
2016 Lifeline Order. Instead, NASUCA's petition reprises the same 
arguments that NASUCA made in its comments responding to the 2015 
Lifeline Order and FNPRM and requests a change in the Commission's 
policies that would allow Lifeline support for backup power. The 
Commission's current rules do not require Lifeline providers to allow 
Lifeline consumers to make installment payments for backup power and do 
not provide Lifeline support for backup power options. The approach is 
consistent with the Commission's determination in 2015 and 2016 that 
backup power is a matter of consumer choice and should be funded by 
individual consumers. Specifically, in the Ensuring Continuity of 911 
Communications Reconsideration Order (FCC 15-98; 80 FR 62470 (Oct. 16, 
2015)), the Commission recognized the importance of ``ensur[ing] that 
all (including low-income) consumers have the ability to communicate 
during a power outage,'' but ultimately found that its previous 
conclusion that backup power is a matter of consumer choice to be 
funded by individual consumers ``appropriately balanced competing 
interests in ensuring that consumers had the ability to purchase backup 
power.'' Given the Commission's prior, thorough

[[Page 71321]]

consideration of backup power issues for all consumers, including low-
income consumers, the fact that the 2016 Lifeline Order does not adopt 
NASUCA's backup power proposals for Lifeline consumers does not warrant 
reconsideration of the 2016 Lifeline Order.
    88. Rolling Recertification. The Commission next partially grants 
the petitions of USTelecom and GCI and the joint petition of NTCA and 
WTA (collectively, Petitioners) that request reconsideration of the 
2016 decision to implement rolling recertification prior to the 
implementation of the National Verifier. Petitioners argue that the 
Commission failed to provide sufficient notice of the rule change prior 
to adoption in the 2016 Lifeline Order. The Petitioners raise strong 
arguments that the logical outgrowth standard is not satisfied here. In 
light of the Petitioners' arguments and the desire to develop a full 
and complete record, the Commission hereby grants the petitions for 
reconsideration as they apply to the discrete rule and reverses the 
rolling recertification requirement for ETCs pending future disposition 
of the issues raised.
    89. In the 2016 Lifeline Order, the Commission mandated rolling 
recertification, which required an ETC to recertify each Lifeline 
customer's eligibility every 12 months, as measured from the customer's 
service initiation date, except in states where the National Verifier, 
state Lifeline administrator, or other state agency conducts the 
recertification. The Commission found that the change would create 
administrative efficiencies while avoiding the imposition of undue 
burdens on providers, USAC, or the National Verifier. Previously, ETCs 
were simply required to annually certify the continued eligibility of 
subscribers, except for those in states where the state Lifeline 
administrator or other state agency conducts the recertification. In 
the 2015 Lifeline Order and FNPRM, the Commission sought comment on the 
National Verifier's role in the recertification process and other 
potential National Verifier functions, but did not propose or seek 
specific comment on changes to the recertification process in states 
where the National Verifier had not yet launched.
    90. Petitioners contend that the language of the 2015 Lifeline 
Order and FNPRM did not provide adequate notice, as required by the 
Administrative Procedure Act (APA), that the Commission was 
contemplating revising Sec.  54.410(f)(1) to implement a rolling 
recertification requirement for providers before the National Verifier 
launched. On reconsideration, the Commission agrees that the 2015 
Lifeline Order and FNPRM did not explicitly notice the Commission's 
intent to require rolling recertification before the National Verifier 
launched. Although the APA does not require that the notice ``specify 
every precise proposal which [the agency] may ultimately adopt as a 
rule'' or that the final rule ``be the one proposed in the NPRM,'' the 
final rule must be a ```logical outgrowth' of its notice.'' A rule is 
considered a ``logical outgrowth'' of the Notice if a party should have 
anticipated that the rule ultimately adopted was possible.
    91. Here, the Commission agrees that a party could not be expected 
to have anticipated that a notice of proposed rulemaking seeking 
comment on the National Verifier's role in the recertification process 
would result in a rule requiring ETCs to recertify subscribers every 12 
months as measured from each subscriber's service initiation date, even 
in states where the National Verifier has not launched. Accordingly, 
the Commission reverses, solely on notice grounds, the rolling 
recertification requirement on ETCs. As of the effective date of the 
Order, ETCs will not be required to complete recertification of a 
Lifeline customer's eligibility by the anniversary of that customer's 
service initiation date. Instead, the recertification process must 
merely be completed on an annual basis pursuant to the revised Sec.  
54.410(f)(1) of the Commission's rules. The Commission notes that ETCs, 
USAC, and the National Verifier may continue to use a rolling 
recertification approach, as that would meet the requirement for annual 
recertification. Recertifications for all eligible Lifeline subscribers 
must be completed by the end of each calendar year, unless the 
requirement otherwise is waived by the Bureau or Commission. All other 
Commission guidance and rules with respect to the recertification 
process remain in effect.
    92. Reimbursement Under the Usage Requirement. The Commission next 
denies the Petition for Declaratory Ruling filed by NaLA asking the 
Commission to permit ETCs to seek reimbursement ``for all Lifeline 
eligible subscribers served as of the first day of the month'' pursuant 
to the Commission's non-usage rules, ``including those subscribers that 
are in an applicable 15-day cure period following 30 days of non-
usage.''
    93. In the 2012 Lifeline Order, as a measure intended to reduce 
waste in the program, the Commission introduced a requirement that an 
ETC that did not assess and collect from its subscribers a monthly 
charge could not receive support for subscribers who had either not 
activated service, or who had not used the service within a consecutive 
60-day period. In this way, ETCs would only receive support for 
eligible low-income subscribers who actually use the service. ETCs were 
also required to notify their subscribers of possible de-enrollment at 
the end of the 60-day period if the subscriber failed to use the 
Lifeline supported service during the next 30 days. In the 2016 
Lifeline Order, the Commission shortened the non-usage period from 60 
to 30 days, along with a corresponding reduction in the time allotted 
for service providers to notify their subscribers of possible 
termination from 30 to 15 days. Per the change, ETCs must notify 
subscribers of possible de-enrollment on the 30th day of non-usage and 
de-enroll the subscriber if, during the subsequent 15 days, the 
subscriber has not used the service.
    94. NaLA's petition for declaratory ruling requested that the 
Commission permit Lifeline ETCs to seek reimbursement for all Lifeline 
subscribers served on the first day of the month, including those 
subscribers receiving free-to-the-end-user Lifeline service who are in 
the 15-day cure period per the Commission's non-usage rules. NaLA 
states that USAC's website changed its guidance from allowing 
reimbursement for Lifeline subscribers during the 15-day cure period of 
the non-usage rule to disallowing ETCs to claim reimbursement for 
subscribers during the 15-day cure period. NaLA further states that 
disallowing reimbursement for those subscribers enrolled during the 15-
day cure period would be arbitrary and capricious because it ignores 
the language of Sec.  54.407(a) and disregards ETCs' ``reasonable 
reliance on the initial guidance'' provided by USAC. NaLA also asserts 
that disallowing reimbursement for subscribers in the 15-day cure 
period for non-usage potentially would constitute a regulatory taking 
without just compensation, in violation of the United States 
Constitution.
    95. SBI, Sprint Corporation, and Q Link Wireless all filed comments 
in support of NaLA's Petition. SBI states that the Lifeline rules 
``entitle SBI to reimbursement for all Lifeline customers it serves 
directly as of the first of the month'' making ``SBI entitled to 
reimbursement for a customer whose `cure' period includes the snapshot 
date.'' It further states that nowhere do the rules require ``SBI to go 
back after the end of the `cure' period and return

[[Page 71322]]

the Lifeline subsidy [because] there is nothing to return since SBI was 
providing service during that period.'' Sprint states that ``service 
providers incur significant costs for accounts in mandatory cure 
status'' as that subscriber's account ``remains active, and the service 
provider continues to incur the costs associated with an active 
account.'' Both Sprint and SBI argue that inefficiencies result from an 
ETC not being able to claim a subscriber during the cure period but 
then filing for reimbursement if the subscriber ultimately ends up 
using the service during the cure period. Q Link reiterates NaLA's 
argument that mandating Lifeline service to subscribers in a cure 
period but prohibiting ETCs from claiming such subscribers would effect 
a regulatory taking.
    96. The Commission denies NaLA's Petition requesting permission to 
seek reimbursement for subscribers who have not used the Lifeline 
supported service in 30 consecutive days. The non-usage rule states 
that an ETC offering free-to-the-end-user Lifeline service ``shall only 
continue to receive universal service support reimbursement for such 
Lifeline service provided to subscribers who have used the service 
within the last 30 days . . . .'' ETCs are further obligated to provide 
a subscriber who has not used her or his service within those 30 days 
``15 days' notice . . . that the subscriber's failure to use the 
Lifeline service within the 15-day notice period will result in service 
termination for non-usage.'' Read together, the plain language of the 
rules does not confer any right for the ETC to receive reimbursement 
during the 15-day cure period. The rules expressly state that ETCs can 
seek reimbursement only for subscribers who use their service within a 
consecutive 30-day period. The 15-day cure period serves as a 
notification to the subscriber that she must use her service, or it 
will be automatically terminated at the end of the 15 days. NaLA's 
argument that it should be able to seek support during the 15-day 
notice and cure period is intended effectively to extend the non-usage 
period by 50%.
    97. The Commission is not persuaded by NaLA's argument for granting 
the petition because it relied on informal staff guidance and USAC's 
website. Commission precedent is clear that carriers must rely on the 
Commission's rules and orders even in the face of conflicting informal 
advice or opinion from USAC or Commission staff. NaLA and others must 
rely on the plain language of the non-usage rules, as codified by the 
Commission, which state that ETCs will not be eligible to be reimbursed 
for those subscribers who are in a 15-day non-usage cure period 
regardless of whether the subscriber's 15-day cure period includes the 
snapshot date. Additionally, the Commission notes that a group of ETCs 
with at least some overlap with the current NaLA Petitioners 
acknowledged that the Commission's rules require ETCs to keep Lifeline 
subscribers enrolled in the program during the cure period without 
requesting reimbursement for that service.
    98. The Commission also rejects NaLA's argument that Sec.  
54.407(a) and (c)(2) of the Commission's rules are inconsistent and in 
conflict. Section 54.407(c)(2) prohibits ETCs providing free-to-the-
end-user Lifeline service from claiming support for subscribers who 
have not used their Lifeline service in the last consecutive thirty 
days or who have not cured their non-usage. While Sec.  54.407(a) of 
the rules generally provides for the payment of reimbursements to ETCs 
for qualifying subscribers in the NLAD on the first day of the month, 
Sec.  54.407(c)(2) of the rules places a specific restriction on the 
general rule declaring which subscribers an ETC can claim for 
reimbursement. The specific language in a rule prevails over more 
general language. Because the specific language of Sec.  54.407(c)(2) 
of the rules provides a limitation on the general reimbursement rule of 
Sec.  54.407(a) and also clearly states that an ETC ``shall only 
continue to receive universal service support reimbursement'' for 
subscribers who have used their service within a 30 consecutive day 
period, it is not arbitrary for the Commission to determine that ETCs 
are not owed payment for the 15-day notification period required by 
Sec.  54.405(c)(3) that falls beyond the 30-day non-usage period per 
the rule. The Commission also notes that the alternative to the 15-day 
cure period is to require an ETC to immediately de-enroll a subscriber 
from the Lifeline program on day 30 of non-usage, which would result in 
the subscriber's service being disconnected with no notice to the 
subscriber and would therefore be contrary to the public interest.
    99. Finally, the Commission disagrees with NaLA's argument that 
requiring ETCs to provide uncompensated service during the 15-day cure 
period would violate the Takings Clause of the Fifth Amendment. The 
Takings Clause prohibits the government from taking ``private property 
. . . for public use, without just compensation.'' While NaLA's 
Petition does not elaborate on the argument, Q-Link explains that 
denying compensation during the 15-day cure period would effectively 
mandate that subscribers ``be permitted physically to occupy portions 
of the ETC's network and airtime . . . without just compensation.'' 
There is a simple problem with the argument: Any actual use of an ETC's 
network--even the sending of a single text message--would establish 
subscriber ``usage,'' entitling the ETC to reimbursement. In other 
words, the Commission's rules deny compensation only where there is no 
use--and therefore, under Q-Link's formulation, no physical occupation. 
Where there is actual use during this 15-day period, ETCs would receive 
compensation.
    100. The potential taking, then, is merely the burden of providing 
a wholly unused service for fifteen days. While NaLA and other 
commenters provide no information on the weight of the burden, it is 
far from the kind of permanent condemnation of physical property that 
typifies a per se taking. Nor would it amount to a regulatory taking: 
(1) The economic impact of a 15-day period of uncompensated service 
would be light; (2) the rule would not upend any reasonable investment-
backed expectation; and (3) any interference could not fairly be 
characterized as a ``physical invasion by government,'' notwithstanding 
Q-Link's arguments to the contrary.
    101. For these reasons, the Commission denies NaLA's Petition. ETCs 
are not entitled to reimbursement during the 15-day cure period for a 
subscriber who has not used the service within 30 consecutive days 
unless the subscriber cures the non-usage, after which the ETC may seek 
reimbursement.
    102. State Efforts to Eradicate Duplicate Claims. The Commission 
denies a TracFone Petition for Declaratory Ruling and Interim Relief 
filed in 2012 concerning actions taken by the Puerto Rico 
Telecommunications Regulatory Board (Board or TRB) to address duplicate 
Lifeline subscribers as identified by the Board. The regulations and 
processes enacted by the Board to address duplicative Lifeline support 
in Puerto Rico were valid and not subject to preemption by the 
Commission. Specifically, the Commission finds that the Board was not 
required to adopt the interim procedures concerning duplicate Lifeline 
subscribers outlined in the Commission's 2011 Duplicative Payments 
Order (FCC 11-97; 76 FR 38040 (June 29, 2011)) because those procedures 
established a minimum set of requirements for USAC to use to address 
duplicate Lifeline subscribers that USAC identified through in-depth 
data validations and other similar audits. In addition, the Commission

[[Page 71323]]

finds that the Board's de-enrollment procedures did not conflict with 
or serve as an obstacle to the de-enrollment procedures adopted by the 
Commission and, as a result, were not subject to preemption. The 
Commission also notes that many of the policy concerns raised by 
TracFone and commenters concerning the Board's process have either been 
addressed by (1) changes the Board made to its duplicate policies and 
procedures soon after TracFone's petition was filed, (2) the fact that 
the Board filed a request to opt out of the NLAD in November 2012, or 
(3) the fact that the NLAD now conducts duplicate checks for Puerto 
Rico subscribers following the Bureau's 2015 grant of Puerto Rico's 
request to opt into the NLAD.
    103. According to TracFone's Petition, the Board sent letters to 
TracFone and several other ETCs in January and February 2012 together 
with a list of duplicate subscribers, and instructed the ETCs to de-
enroll these subscribers by a specified date. TracFone argues that the 
Board letters instructing ETCs to de-enroll the consumers violate (1) 
the intent of section 254(b)(3) of the Communications Act, which 
establishes as a core principle the goal that consumers in all regions 
of the Nation, ``including low-income consumers,'' have access to 
affordable telecommunications services, and (2) the rules and 
procedures governing de-enrollment of ``duplicates'' established by the 
Commission on an interim basis in 2011 and those later adopted on a 
permanent basis in 2012. TracFone argues that the Board should be 
required to adopt the Industry Duplicate Resolution Process outlined by 
the Commission in its 2011 Duplicative Payments Order. TracFone also 
points to the opt-out process outlined in the 2012 Lifeline Order, 
which codified a permanent approach for addressing duplicates in the 
Federal rules, and argues that the Board did not follow the process, 
and that the Board's process has the potential to leave residents 
without service, in violation of the 2012 Lifeline Order. Finally, 
TracFone requests that the Commission issue an order concluding that 
the directives to ETCs contained in the Board's letters are unlawful 
and preempted.
    104. Multiple commenters filed in support of TracFone's Petition, 
agreeing that the Commission should issue a declaratory ruling and 
arguing that the Board's actions directing TracFone and other ETCs to 
de-enroll duplicate subscribers were unlawful, contrary to universal 
service program policy and inconsistent with Federal procedures. 
NASUCA, in its comments, also recommended that the Commission issue a 
ruling (1) that Puerto Rico consumers who are eligible for Lifeline be 
allowed to maintain one Lifeline service per household, even if they 
had received duplicate Lifeline service previously, and (2) clarifying 
that states that operate their own systems for identifying duplicates 
are required, as a condition of opting out of the Federal duplicate 
resolution process, to include safeguards to allow eligible consumers 
to receive one Lifeline service per household.
    105. Several commenters point to the duplicates resolution measures 
adopted by the Commission and raise concerns that the Board process for 
addressing duplicates deviates from the process the FCC outlined in the 
2011 Duplicative Payments Order, the 2012 Lifeline Order, and the June 
2011 Guidance Letter (DA 11-1082). NASUCA, for example, argues the 
Commission should clarify that state systems that opt out of following 
the Federal approach must include both the functional capabilities and 
safeguards equivalent to those administered by USAC. Sprint and PRTC 
argue that the Board should adopt the FCC's processes and procedures. 
Sprint, PRTC, and T-Mobile point to the need for nationwide consistency 
in addressing the duplicates issue. PR Wireless agrees with Tracfone 
that the Board's processes are inconsistent with Federal procedures. 
Several commenters raise concerns that the process established by the 
Board will result in consumers being barred from receiving service for 
an extended period of time (from four months to a year) if they are 
determined to be receiving service from more than one carrier. One 
commenter also raises concerns regarding how the Board was addressing 
situations where there are multiple households at a single address.
    106. The Commission has taken a number of important steps to create 
robust processes and procedures to address the issue of duplicative 
Lifeline support. In the Commission's 2011 Duplicative Payments Order, 
the Commission clarified that qualifying low-income consumers may 
receive no more than a single Lifeline benefit and established the 
requirement that an ETC, upon notification from USAC, de-enroll any 
subscriber that is receiving multiple benefits in violation of that 
rule. The Commission also directed the Bureau to send a letter to USAC 
to implement an administrative process to detect and resolve 
duplicative claims that was consistent with the proposed Industry 
Duplicate Resolution Process submitted by a group of ETCs. This was 
intended as an interim process, ``while the Commission considers more 
comprehensive resolution of this and other issues raised in the 2011 
Lifeline and Link Up NPRM (FCC 11-32 [76 FR 16482 (March 23, 2011)]).'' 
Then, in 2012, the Commission adopted a number of Lifeline program 
reforms and codified a more permanent approach to address duplicative 
support. Specifically, in the 2012 Lifeline Order, the Commission 
created and mandated the use by ETCs of the NLAD with specified 
features and functionalities designed to ensure that multiple ETCs do 
not seek and receive reimbursement for the same subscriber.
    107. The Commission finds that the Board's actions did not run 
afoul of the rules or the Act. Under section 254(f) of the 
Telecommunications Act of 1996, ``[a] State may adopt regulations not 
inconsistent with the Commission's rules to preserve and advance 
universal service.'' In addition, ``[a] State may adopt regulations to 
provide for additional definitions and standards to preserve and 
advance universal service within that State only to the extent that 
such regulations adopt additional specific, predictable, and sufficient 
mechanisms to support such definitions or standards that do not rely on 
or burden Federal universal service support mechanisms.'' In the 2011 
USF/ICC Transformation Order (FCC 11-161; 76 FR 73830 (Nov. 29, 2011)), 
the Commission stated that section 254(f) permitted states to impose 
additional reporting requirements as long as they ``do not create 
burdens that thwart achievement of the universal service reforms set 
forth in this Order.'' The Commission concludes the Board's policies 
and procedures did not rely on or burden Federal universal service 
support mechanisms. In fact, the Board's policies were assisting the 
Federal universal service program by addressing the Lifeline duplicates 
issue, consistent with the overall objectives of the 2011 Duplicative 
Payments Order and were being undertaken and implemented using the 
Board's own resources. The Board is responsible for regulating 
telecommunications services in Puerto Rico. In accordance with statutes 
adopted by the Puerto Rico General Assembly, the Board has a mandate to 
``preserve and promote universal service through predictable, specific 
and sufficient support mechanisms'' and to ensure that the Lifeline 
subsidy is limited to ``a single wireless telephone line or to a single 
wireless service for the family unit.'' It was with this mandate in 
mind that the Board took action to address duplicate Lifeline 
recipients after the Board

[[Page 71324]]

became aware that this was a significant concern in Puerto Rico. 
According to the Board, based on a review of information it had 
requested from ETCs on a quarterly basis, ``the Board became aware of 
many cases where the subscribed participants were receiving the service 
from more than one carrier.''
    108. The actions of the Board were not in conflict with the rules 
and thus did not trigger the criteria for Federal preemption. When the 
Board sent the letters to TracFone concerning duplicate Lifeline 
subscribers in January and February of 2012, only the Commission's 
interim procedures established in the 2011 Duplicative Payments Order 
were in effect. The rule regarding de-enrollment adopted in the 2011 
Duplicative Payments Order specified that, ``upon notification by the 
Administrator to any ETC'' that a subscriber is already receiving 
Lifeline service from another ETC, ``the ETC shall de-enroll the 
subscriber from participation in that ETC's Lifeline program within 5 
business days.'' The policy adopted by the Board, however, did not 
relate to duplicates identified by the Administrator but, rather, to 
those duplicates identified by the Board. The Board regulations 
specified that the Board would identify duplicates and that ETCs would 
have no more than 10 working days (from the date the Board duplicates 
notice was sent) to notify consumers they were ineligible for the 
service. The Board also adopted other policies related to duplicates, 
but these policies did not conflict with or serve as an obstacle to the 
Commission's rules. While the Commission stated in its 2011 Duplicative 
Payments Order that ``these new rules would apply to ETCs in all 
states, regardless of that state's status as a [F]ederal default state 
or a non-default state,'' the 2011 Duplicative Payments Order did not 
explicitly bar states from imposing their own policies and procedures, 
unless such regulations were ``in conflict with or serve[d] as an 
obstacle to implementation of the de-enrollment procedures'' adopted in 
the 2011 Duplicative Payments Order. The Commission finds the Board's 
policies were neither in conflict with nor an obstacle to 
implementation of the Commission's 2011 Duplicative Payments Order 
procedures.
    109. Indeed, the Commission finds that the Board's process was 
consistent with the overall approach that the Bureau directed USAC to 
follow in the June 2011 Guidance Letter. There, the Bureau directed 
USAC, in cases where the duplicate subscriber was the same individual 
at the same address, to identify duplicative subscribers and notify 
ETCs, identify a ``default ETC,'' and notify subscribers that they had 
35 days to either choose a provider or begin receiving service from 
only the default provider. After the 35-day timeframe, USAC was 
directed to notify the provider regarding the subscribers that should 
be de-enrolled. The Board process enabled consumers to appeal the Board 
decision regarding their duplicate status and, as later amended, also 
enabled subscribers to continue to receive service ``with the service 
to which the subsidy was first applied.'' As a result, the Board 
process allowed subscribers to dispute the Board's findings and 
continue to receive service while also addressing the duplicates issue, 
which was in line with the overall approach the Bureau recommended for 
USAC to follow.
    110. TracFone's claims that the Board failed to make the required 
opt-out filing (claims which were made before the opt-out deadline 
occurred) are not accurate. At the time the Board sent the letters to 
TracFone concerning duplicate Lifeline subscribers, the Commission's 
changes in the 2012 Lifeline Order to adopt more permanent duplicate 
procedures and establish the NLAD, and permit states to opt out of the 
NLAD, were not yet in effect. In the 2012 Lifeline Order, the 
Commission approvingly acknowledged that some states had already 
developed their own systems to check for duplicative Lifeline support, 
stating its intent not to inhibit state progress. The Commission also 
clarified that ``[w]e allow states to opt-out of the duplicates 
database requirements outlined in the Order if they certify one time to 
the Commission that they have a comprehensive system in place to check 
for duplicative [F]ederal Lifeline support that is as at least as 
robust as the processes adopted by the Commission and that covers all 
ETCs operating in the state and their subscribers.'' In October 2012, 
the Bureau issued a public notice outlining the process states must 
follow to opt out of the NLAD. The Board made a filing with the 
Commission seeking to opt out of the NLAD and the duplicates resolution 
process in November 2012 in which the Board described the system and 
processes it had in place to check for duplicative Lifeline support. 
Therefore, TracFone's claims that the Board failed to make the required 
opt-out filing are not accurate. For all of these reasons, the 
Commission denies TracFone's petition.

III. Severability

    111. All of the actions taken by the Commission in the Fifth Report 
and Order, Memorandum Opinion and Order and Order on Reconsideration 
are designed to work in unison to make voice and broadband services 
more affordable to low-income households and to strengthen the 
efficiency and integrity of the Lifeline program's administration. 
However, each of the separate Lifeline reforms the Commission 
undertakes in the Fifth Report and Order, Memorandum Opinion, and Order 
and Order on Reconsideration serves a discrete function. Therefore, it 
is the intent that each of the rules adopted shall be severable. If any 
of the rules is declared invalid or unenforceable for any reason, it is 
the Commission's intent that the remaining rules shall remain in full 
force and effect.

IV. Procedural Matters

A. Paperwork Reduction Act Analysis

    112. The Order contains new information collection requirements 
subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-
13. It will be submitted to the OMB for review under section 3507(d) of 
the PRA. OMB, the general public, and other Federal agencies will be 
invited to comment on the revised information collection requirements 
contained in the proceeding. In addition, the Commission noted that 
pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 
107-198, the Commission previously sought specific comment on how it 
might further reduce the information collection burden on small 
business concerns with fewer than 25 employees.

B. Congressional Review Act

    113. The Commission has determined, and the Administrator of the 
Office of Information and Regulatory Affairs, Office of Management and 
Budget, concurs that the rules are non-major under the Congressional 
Review Act, 5 U.S.C. 804(2). The Commission will send a copy of the 
Fifth Report and Order, Memorandum Opinion and Order and Order on 
Reconsideration to Congress and the Government Accountability Office 
pursuant to 5 U.S.C. 801(a)(1)(A). In addition, the Commission will 
send a copy of the Fifth Report and Order, Memorandum Opinion and Order 
and Order on Reconsideration, including the FRFA, to the Chief Counsel 
for Advocacy of the SBA. A copy of the Fifth Report and Order, 
Memorandum Opinion and Order and Order on Reconsideration and the FRFA 
(or summaries thereof) will also be published in the Federal Register.

[[Page 71325]]

C. Final Regulatory Flexibility Analysis

    114. As required by the Regulatory Flexibility Act of 1980 (RFA), 
the Commission has prepared a Final Regulatory Flexibility Analysis 
(FRFA) relating to the Fifth Report and Order, and Memorandum Opinion 
and Order and Order on Reconsideration. The Final Regulatory 
Flexibility Analysis (FRFA) conforms to the RFA.
    115. Need for, and Objectives of, the Final Rules. The Commission 
is required by section 254 of the Communications Act of 1934, as 
amended, to promulgate rules to implement the universal service 
provisions of section 254. The Lifeline program was implemented in 1985 
in the wake of the 1984 divestiture of AT&T. On May 8, 1997, the 
Commission adopted rules to reform its system of universal service 
support mechanisms so that universal service is preserved and advanced 
as markets move toward competition. Since the 2012 Lifeline Order, the 
Commission has acted to address waste, fraud, and abuse in the Lifeline 
program and improved program administration and accountability. In the 
Order, the Commission eliminates the Lifeline Broadband Provider (LBP) 
designation category and the Federal designation process for Lifeline 
Broadband Providers. The Commission also takes steps to strengthen the 
reliability and integrity of the Lifeline program's enrollment, 
recertification, reimbursement, and audit processes.
    116. Pursuant to these objectives, the Commission adopts changes to 
its Lifeline program rules. First, to restore the traditional 
categories of eligible telecommunications carriers (ETC) and ETC 
obligations, the Commission eliminates the Lifeline Broadband Provider 
ETC category and the Federal designation process for Lifeline Broadband 
Providers. Accordingly, the Commission eliminates Sec.  54.201(j) of 
the rules, which precluded states from designating Lifeline Broadband 
Providers. In addition, the Commission also eliminates Sec. Sec.  
54.202(d)(1) through (3) and (e) and 54.205(c) of the rules.
    117. To further improve the integrity of the Lifeline enrollment 
process, the Order prohibits ETCs from offering or paying commissions 
to enrollment representatives or their direct supervisors based on the 
number of Lifeline applications submitted or enrollments approved. 
Additionally, to prevent waste, fraud, and abuse in the Lifeline 
program, the Commission further requires all ETC enrollment 
representatives who provide information to USAC or a state entity 
administering a state Lifeline program during the Lifeline enrollment 
process to register with USAC. The Commission amends its rules to 
require each ETC enrollment representative to register with USAC and 
obtain a unique registration number prior to accessing the NLAD or 
National Verifier. Ultimately, ETCs are responsible for ensuring that 
their enrollment representatives complete the registration process.
    118. The Commission also amends its rules regarding the recordation 
of information related to the Independent Economic Household (IEH) 
Worksheet. The Commission finds that amending Sec.  54.404(b)(3) of the 
Commission's rules to permit ETCs to record an IEH worksheet in the 
NLAD only when the NLAD has alerted the ETC that the prospective 
subscriber shares the same residential address as another Lifeline 
subscriber is a reasonable approach to support USAC's efforts in 
identifying duplicate addresses. ETCs shall not record an IEH worksheet 
in NLAD in any other situation. Additionally, to further combat waste, 
fraud, and abuse in the Lifeline program, the Commission adds a new 
rule, Sec.  54.404(b)(12), notifying ETCs that they must not enroll a 
prospective Lifeline subscriber if the NLAD or National Verifier cannot 
identify the subscriber as living, unless that subscriber can produce 
documentation demonstrating his or her identity and status as living. 
The revised rule prohibits ETCs from claiming subscribers that are 
identified as deceased for purposes of requesting or receiving 
reimbursement from Lifeline. If an ETC has claimed reimbursement for a 
period during which a subscriber was deceased, USAC is directed to 
reclaim reimbursements back to the time of enrollment or 
recertification if the subscriber was deceased and listed on the Social 
Security Death Master File at the time of enrollment or 
recertification.
    119. The Commission also modifies Sec.  54.407 of the rules to 
clarify that the number of eligible subscribers that an ETC may claim 
for reimbursement must be the number of qualifying subscribers the ETC 
directly serves as of the snapshot date as indicated by the NLAD. In 
the case of NLAD opt-out states (California, Oregon, and Texas), ETCs 
may also base claims for reimbursement on any reports or information 
the state administrator provides to the ETC concerning the subscribers 
that can be claimed. The Commission amends Sec.  54.410(f)(2)(iii) of 
the rules to require ETCs to collect eligibility documentation from the 
subscriber at the time of recertification if the subscriber's 
eligibility was previously verified through a state or Federal 
eligibility or income database and the subscriber's continued 
eligibility can no longer be verified through that same database or 
another eligibility database. The rule change creates a more verifiable 
recertification process and is tailored to provide additional focus on 
subscribers who have changes in their eligibility from year to year. 
The Commission also amends its rules to accommodate the process in the 
National Verifier. If the ETC is unable to re-certify the subscriber's 
eligibility or is notified by the National Verifier or the relevant 
state administrator that the subscriber is unable to be re-certified, 
the ETC shall proceed with the de-enrollment requirements in Sec.  
54.405(e)(4) of the rules.
    120. The Commission also amends its recertification rules to 
require ETCs to collect eligibility documentation from the subscriber 
at the time of recertification if the subscriber's eligibility was 
previously verified through a state or Federal eligibility or income 
database and the subscriber's continued eligibility can no longer be 
verified through that same database or another one. The Commission also 
modifies Sec.  54.420(a) of the rules, regarding biennial audits by 
removing the $5 million reimbursement threshold and implementing a 
purely risk-based model.
    121. The Commission acts on several Petitions for Reconsideration 
and requests to clarify ETCs' obligations under the Lifeline program. 
The Commission dismisses as moot USTelecom's request that the 
Commission extend the effective date for the requirement to offer 
Lifeline-supported broadband internet access service and apply to non-
Lifeline Broadband Providers a clarification extended to Lifeline 
Broadband Providers regarding an advertising requirement. The 
Commission also denies USTelecom's request for reconsideration of the 
requirement that the last ETC in a Census block continue to offer 
Lifeline standalone voice service. The Commission denies the Petition 
for Reconsideration of the National Association of State Utility 
Consumer Advocates, in which the petitioners objected to the 
Commission's previous decision not to require ETCs to provide back-up 
power payment arrangements or other options to Lifeline consumers. The 
Commission also clarifies when an ETC may seek reimbursement for 
subscribers who are within the cure period that is triggered by the 
non-usage rules. The Commission also grants requests for 
reconsideration

[[Page 71326]]

of the Commission's rolling recertification requirement filed by 
USTelecom, NTCA and WCA (jointly), and GCI and revises Sec.  
54.410(f)(1) of the rules by removing the rolling recertification 
requirement and reinstating the requirement that recertifications be 
completed annually. Furthermore, the Commission also denies a TracFone 
Petition for Declaratory Ruling and Interim Relief filed in 2012 
concerning actions taken by the Puerto Rico Telecommunication 
Regulatory Board to address duplicate Lifeline subscribers as defined 
by that board.
    122. Summary of Significant Issues Raised by Public Comments to the 
IRFA. The Commission received no comments in direct response to the 
IRFA contained in the 2017 Lifeline Order and NPRM.
    123. Description and Estimate of the Number of Small Entities to 
Which Rules May Apply. The RFA directs agencies to provide a 
description of and, where feasible, an estimate of the number of small 
entities that may be affected by the proposed rules, if adopted. The 
RFA generally defines the term ``small entity'' as having the same 
meaning as the terms ``small business,'' ``small organization,'' and 
``small governmental jurisdiction.'' In addition, the term ``small 
business'' has the same meaning as the term ``small business concern'' 
under the Small Business Act. A small business concern is one that: (1) 
Is independently owned and operated; (2) is not dominant in its field 
of operation; and (3) satisfies any additional criteria established by 
the Small Business Administration (SBA).
    124. Small Businesses, Small Organizations, Small Governmental 
Jurisdictions. The Commission's actions, over time, may affect small 
entities that are not easily categorized at present. Therefore, at the 
outset, three broad groups of small entities that could be directly 
affected herein. First, while there are industry specific size 
standards for small businesses that are used in the regulatory 
flexibility analysis, according to data from the SBA's Office of 
Advocacy, in general a small business is an independent business having 
fewer than 500 employees. These types of small businesses represent 
99.9% of all businesses in the United States which translates to 29.6 
million businesses.
    125. Next, the type of small entity described as a ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 
Nationwide, as of August 2016, there were approximately 356,494 small 
organizations based on registration and tax data filed by nonprofits 
with the Internal Revenue Service (IRS).
    126. Finally, the small entity described as a ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, 
counties, towns, townships, villages, school districts, or special 
districts, with a population of less than fifty thousand.'' U.S. Census 
Bureau data from the 2012 Census of Governments indicates that there 
were 90,056 local governmental jurisdictions consisting of general 
purpose governments and special purpose governments in the United 
States. Of this number there were 37,132 general purpose governments 
(county, municipal, and town or township) with populations of less than 
50,000 and 12,184 special purpose governments (independent school 
districts and special districts) with populations of less than 50,000. 
The 2012 U.S. Census Bureau data for most types of governments in the 
local government category show that the majority of these governments 
have populations of less than 50,000. Based on the data the Commission 
estimates that at least 49,316 local government jurisdictions fall in 
the category of ``small governmental jurisdictions.''
    127. The small entities that may be affected are Wireline 
Providers, Wireless Carriers and Service Providers and internet Service 
Providers.
    128. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities. A number of the rule 
changes will result in additional reporting, recordkeeping, or 
compliance requirements for small entities. For all of the rule 
changes, the Commission has determined that the benefit the rule change 
will bring for the Lifeline program outweighs the burden of the 
increased requirements. Other rule changes decrease reporting, 
recordkeeping, or compliance requirements for small entities. The 
Commission noted the applicable rule changes impacting small entities.
    129. Compliance burdens. The rules implemented impose some 
compliance burdens on small entities by requiring them to become 
familiar with the new rules to comply with them. For several of the new 
rules, the burden of becoming familiar with the new rule in order to 
comply with it is the only additional burden the rule imposes.
    130. Improving Program Integrity in Program Enrollment and 
Recertification. The Commission modifies its rules to improve the 
integrity within the Lifeline program. The Order prohibits ETCs from 
offering or providing commissions to enrollment representatives and 
their direct supervisors based on the number of Lifeline applications 
submitted or enrollments approved and requires that enrollment 
representatives register with USAC. The Order further modifies the 
rules regarding the recertification process, and now requires Lifeline 
subscribers to provide supporting documentation to prove eligibility 
when the subscriber's continued eligibility cannot be verified in a 
state or Federal eligibility database. While the changes will require 
ETCs to undertake additional steps to ensure compliance with the new 
rules, the rules will strengthen the Lifeline program by removing 
avenues for fraud.
    131. Limiting the Recordation of IEH Worksheets. The Commission 
modifies the rules to limit the recording of an IEH worksheet in USAC's 
Lifeline systems only to situations where the Lifeline subscriber 
resides at the same address as another Lifeline subscriber. Requiring 
ETCs to record the collection of an IEH worksheet only where the 
Lifeline subscriber resides at a duplicate address decreases the burden 
on the carrier by reducing the situations in which an ETC must record 
the worksheet.
    132. Modifications to the Biennial Audit Rule. The Commission 
modifies its rules to require that a risk-based approach be used to 
identify ETCs that must complete independent audits pursuant to Sec.  
54.420(a) of the Commission's rules rather the level of USF 
reimbursements. Under the new standard, which replaces the outdated 
threshold that limited third-party biennial audits to those providers 
that receive at least $5 million in Lifeline reimbursements, ETCs that 
receive less than $5 million in Lifeline reimbursements may now be 
subject to an independent audit pursuant to the rule.
    133. Steps Taken to Minimize the Significant Economic Impact on 
Small Entities, and Significant Alternatives Considered. The RFA 
requires an agency to describe any significant, specifically small 
business, alternatives that it has considered in reaching its proposed 
approach, which may include the following four alternatives (among 
others): ``(1) the establishment of differing compliance or reporting 
requirements or timetables that take into account the resources 
available to small entities; (2) the clarification, consolidation, or 
simplification of compliance and reporting requirements under the rule 
for such small entities; (3) the use of performance rather than design 
standards; and (4) an exemption from coverage of the rule, or any part 
thereof, for such small entities.''

[[Page 71327]]

    134. The rulemaking could impose minimal additional burdens on 
small entities. In the Order, the Commission modifies certain Lifeline 
rules to target funding to areas where it is most needed. In developing 
the rules, the Commission worked to ensure the burdens associated with 
implementing these rules would be minimized for all service providers, 
including small entities. In taking these actions, the Commission 
considered potential impacts on service providers, including small 
entities. The Commission considered alternatives to the rulemaking 
changes that increase projected reporting, recordkeeping and other 
compliance requirements for small entities. The Commission's decision 
to amend the rules to permit an ETC to record an IEH worksheet in NLAD 
only in situations where a consumer shares an address with another 
Lifeline subscriber allows ETCs, including small entities, to continue 
collecting worksheets from subscribers at the enrollment process. The 
Commission considered the comments urging for no change to that process 
and found no compelling reason to prohibit the practice. By not 
disturbing the practice of collecting worksheets at the outset, the 
Commission minimized the burden on small entities. Given the narrow and 
targeted scope of the changes being made, no alternative readily 
presents itself to limit the burdens on small business or 
organizations. The identified increase in burden is minimal and 
outweighed by the advantages in combating waste, fraud, and abuse in 
the program.

V. Ordering Clauses

    135. Accordingly, it is ordered, that pursuant to the authority 
contained in sections 1-4, 201, 254, and 403 of the Communications Act 
of 1934, as amended, 47 U.S.C. 151-154, 201, 214, 254, and 403, and 
Sec.  1.2 of the Commission's rules, 47 CFR 1.2, the Fifth Report and 
Order, Memorandum Opinion and Order and Order on Reconsideration is 
adopted and will be effective January 27, 2020, except to the extent 
provided herein.
    136. It is further ordered, that part 54 of the Commission's rules, 
47 CFR part 54, is amended and such rule amendments shall be effective 
January 27, 2020, except for the amendments to Sec.  54.406(b), which 
shall be effective February 25, 2020; amendments to Sec.  54.406(a), 
which shall be effective March 26, 2020; and Sec. Sec.  54.404(b)(12) 
and 54.410(f), containing new or modified information collection 
requirements, which will not be effective until approved by the Office 
of Management and Budget. The Federal Communications Commission will 
publish a document in the Federal Register announcing the effective 
date.
    137. It is further ordered, that, pursuant to the authority 
contained in sections 1-4 and 254 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151-154 and 254, and Sec.  1.429 of the Commission's 
rules, 47 CFR 1.429, the Petition for Reconsideration and Clarification 
filed by United States Telecom Association on June 23, 2016 is granted 
in part, dismissed in part and denied in part.
    138. It is further ordered that, pursuant to the authority 
contained in sections 1-4 and 254 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151-154 and 254, and Sec.  1.429 of the Commission's 
rules, 47 CFR 1.429, the Petition for Reconsideration filed by National 
Association of State Utility Consumer Advocates on June 23, 2016 is 
denied.
    139. It is further ordered that, pursuant to authority contained in 
sections 1-4 and 254 of the Communications Act of 1934, as amended, 47 
U.S.C. 151-154 and 254, the Petition for Declaratory Ruling filed by 
National Lifeline Association on February 7, 2018 is denied.
    140. It is further ordered, pursuant to the authority contained in 
sections 1-4 and 254 of the Communications Act of 1934, as amended, 47 
U.S.C. 151-154 and 254, that the Emergency Petition for Declaratory 
Ruling and For Interim Relief filed by TracFone on February 22, 2012 is 
denied.
    141. It is further ordered, pursuant to the authority contained in 
sections 1-4 and 254 of the Communications Act of 1934, as amended, 47 
U.S.C. 151-154 and 254, and Sec.  1.429 of the Commission's rules, 47 
CFR 1.429, the Petition for Reconsideration and Clarification filed by 
NTCA--The Rural Broadband Association--and WTA--Advocates for Rural 
Broadband--on June 23, 2016 is granted in part.
    142. It is further ordered, pursuant to the authority contained in 
sections 1-4 and 254 of the Communications Act of 1934, as amended, 47 
U.S.C. 151-154 and 254, and Sec.  1.429 of the Commission's rules, 47 
CFR 1.429, the Petition for Reconsideration and/or Clarification filed 
by General Communication, Inc. on June 23, 2016 is granted in part.
    143. It is further ordered that the Commission shall send a copy of 
the Fifth Report and Order, Memorandum Opinion and Order and Order on 
Reconsideration to the Government Accountability Office pursuant to the 
Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).
    144. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of the Fifth Report and Order, Memorandum Opinion and Order and 
Order on Reconsideration including the Final Regulatory Flexibility 
Analysis, to the Chief Counsel for Advocacy of the Small Business 
Administration.

List of Subjects in 47 CFR Part 54

    Communications common carriers, internet, Telecommunications, 
Telephone, Reporting and recordkeeping requirements.


Federal Communications Commission.
Marlene Dortch,
Secretary.

Final Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 54 as follows:

PART 54--UNIVERSAL SERVICE

0
1. The authority citation for part 54 continues to read as follows:

    Authority: 47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220, 
254, 303(r), 403, and 1302, unless otherwise noted.


Sec.  54.201  [Amended]

0
2. Effective January 27, 2020, amend Sec.  54.201 by removing paragraph 
(j).


Sec.  54.202  [Amended]

0
3. Effective January 27, 2020, amend Sec.  54.202 by removing 
paragraphs (d) and (e).


Sec.  54.205  [Amended]

0
4. Effective January 27, 2020, amend Sec.  54.205 by removing paragraph 
(c).

0
5. Effective January 27, 2020, amend Sec.  54.400 by adding paragraph 
(p) to read as follows:


Sec.  54.400  Terms and definitions.

* * * * *
    (p) Enrollment representatives. An employee, agent, contractor, or 
subcontractor, acting on behalf of an eligible telecommunications 
carrier or third-party entity, who directly or indirectly provides 
information to the Universal Service Administrative Company or a state 
entity administering the Lifeline Program for the purpose of 
eligibility verification, enrollment, recertification, subscriber 
personal information updates, benefit transfers, or de-enrollment.

0
6. Amend Sec.  54.404 by:

[[Page 71328]]

0
a. Effective January 27, 2020, revising paragraph (b)(3); and
0
 b. Effective upon publication of a rule document in the Federal 
Register announcing the effective date, adding paragraph (b)(12).
    The revision and addition read as follows:


Sec.  54.404  The National Lifeline Accountability Database.

* * * * *
    (b) * * *
    (3) If the Database indicates that another individual at the 
prospective subscriber's residential address is currently receiving a 
Lifeline service, the eligible telecommunications carrier must not seek 
and will not receive Lifeline reimbursement for providing service to 
that prospective subscriber, unless the prospective subscriber has 
certified, pursuant to Sec.  54.410(d), that to the best of his or her 
knowledge, no one in his or her household is already receiving a 
Lifeline service. This certification may be collected by the eligible 
telecommunications carrier prior to initial enrollment, but the 
certification shall not be recorded in the Database unless the eligible 
telecommunications carrier receives a notification from the Database or 
state administrator that another Lifeline subscriber resides at the 
same address as the prospective subscriber.
* * * * *
    (12) An eligible telecommunications carrier must not enroll or 
claim for reimbursement a prospective subscriber in Lifeline if the 
National Lifeline Accountability Database or National Verifier cannot 
verify the identity of the subscriber or the subscriber's status as 
alive, unless the subscriber produces documentation to demonstrate his 
or her identity and status as alive.
* * * * *

0
7. Effective February 25, 2020, add Sec.  54.406 to read as follows:


Sec.  54.406  Activities of representatives of eligible 
telecommunications carriers.

    (a) [Reserved]
    (b) Prohibition of commissions for enrollment representatives. An 
eligible telecommunications carrier shall not offer or provide to 
enrollment representatives or their direct supervisors any commission 
compensation that is based on the number of consumers who apply for or 
are enrolled in the Lifeline program with that eligible 
telecommunications carrier.

0
8. Effective March 26, 2020, Sec.  54.406 is further amended by adding 
paragraph (a) to read as follows:


Sec.  54.406  Activities of representatives of eligible 
telecommunications carriers.

    (a) Enrollment representative registration. An eligible 
telecommunications carrier must require that enrollment representatives 
register with the Universal Service Administrative Company before the 
enrollment representative can provide information directly or 
indirectly to the National Lifeline Accountability Database or the 
National Verifier.
    (1) As part of the registration process, eligible 
telecommunications carriers must require that all enrollment 
representatives must provide the Universal Service Administrative 
Company with identifying information, which may include first and last 
name, date of birth, the last four digits of his or her social security 
number, email address, and residential address. Enrollment 
representatives will be assigned a unique identifier, which must be 
used for:
    (i) Accessing the National Lifeline Accountability Database;
    (ii) Accessing the National Verifier;
    (iii) Accessing any Lifeline eligibility database; and
    (iv) Completing any Lifeline enrollment or recertification forms.
    (2) Eligible telecommunications carriers must ensure that 
enrollment representatives shall not use another person's unique 
identifier to enroll Lifeline subscribers, recertify Lifeline 
subscribers, or access the National Lifeline Accountability Database or 
National Verifier.
    (3) Eligible telecommunications carriers must ensure that 
enrollment representatives shall regularly recertify their status with 
the Universal Service Administrative Company to maintain their unique 
identifier and maintain access to the systems that rely on a valid 
unique identifier. Eligible telecommunications carriers must also 
ensure that enrollment representatives shall update their registration 
information within 30 days of any change in such information.
    (4) Enrollment representatives are not required to register with 
the Universal Service Administrative Company if the enrollment 
representative operates solely in a state that has been approved by the 
Commission to administer the Lifeline program without reliance on the 
Universal Service Administrative Company's systems. The exemption in 
this paragraph (a)(4) will not apply to any part of a state's 
administration of the Lifeline program that relies on the Universal 
Service Administrative Company's systems.
* * * * *

0
9. Effective January 27, 2020, amend Sec.  54.407 by revising paragraph 
(a) to read as follows:


Sec.  54.407  Reimbursement for offering Lifeline.

    (a) Universal Service support for providing Lifeline shall be 
provided directly to an eligible telecommunications carrier based on 
the number of actual qualifying low-income customers listed in the 
National Lifeline Accountability Database that the eligible 
telecommunications carrier serves directly as of the first of the 
month. Eligible telecommunications carriers operating in a state that 
has provided the Commission with an approved valid certification 
pursuant to Sec.  54.404(a) must comply with that state administrator's 
process for determining the number of subscribers to be claimed for 
each month, and in those states Universal Service support for providing 
Lifeline shall be provided directly to the eligible telecommunications 
carrier based on that number of actual qualifying low-income customers, 
according to the state administrator or other state agency's process.
* * * * *

0
10. Effective January 27, 2020, amend Sec.  54.410 by revising 
paragraph (g) to read as follows:


Sec.  54.410  Subscriber eligibility determination and certification.

* * * * *
    (g) One-Per-Household Worksheet. If the prospective subscriber 
shares an address with one or more existing Lifeline subscribers 
according to the National Lifeline Accountability Database or National 
Verifier, the prospective subscriber must complete a form certifying 
compliance with the one-per-household rule upon initial enrollment. 
Eligible telecommunications carriers must fulfill the requirement in 
this paragraph (g) by using the Household Worksheet, as provided by the 
Wireline Competition Bureau. Where state law, state regulation, a state 
Lifeline administrator, or a state agency requires eligible 
telecommunications carriers to use state-specific Lifeline enrollment 
forms, eligible telecommunications carriers may use those forms in 
place of the Commission's Household Worksheet. At re-certification, if 
there are changes to the subscriber's household that would prevent the 
subscriber from accurately certifying to paragraph (d)(3)(vi) of this 
section, then the subscriber must complete a new Household Worksheet. 
Eligible telecommunications carriers must mark subscribers as having 
completed a

[[Page 71329]]

Household Worksheet in the National Lifeline Accountability Database if 
and only if the subscriber shares an address with an existing Lifeline 
subscriber, as reported by the National Lifeline Accountability 
Database.
* * * * *

0
11. Effective upon publication of a rule document in the Federal 
Register announcing the effective date, Sec.  54.410 is further amended 
by revising paragraphs (f)(1), (f)(2)(iii), and (f)(3)(iii) to read as 
follows:


Sec.  54.410  Subscriber eligibility determination and certification.

* * * * *
    (f) * * *
    (1) All eligible telecommunications carriers must annually re-
certify all subscribers, except for subscribers in states where the 
National Verifier, state Lifeline administrator, or other state agency 
is responsible for the annual re-certification of subscribers' Lifeline 
eligibility.
    (2) * * *
    (iii) If the subscriber's program-based or income-based eligibility 
for Lifeline cannot be determined by accessing one or more eligibility 
databases, then the eligible telecommunications carrier must obtain a 
signed certification from the subscriber confirming the subscriber's 
continued eligibility. If the subscriber's eligibility was previously 
confirmed through an eligibility database during enrollment or a prior 
recertification and the subscriber is no longer included in any 
eligibility database, the eligible telecommunications carrier must 
obtain both an Annual Recertification Form and documentation meeting 
the requirements of paragraph (b)(1)(i)(B) or (c)(1)(i)(B) from that 
subscriber to complete the process. Eligible telecommunications 
carriers must use the Wireline Competition Bureau-approved universal 
Annual Recertification Form, except where state law, state regulation, 
a state Lifeline administrator, or a state agency requires eligible 
telecommunications carriers to use state-specific Lifeline 
recertification forms.
* * * * *
    (3) * * *
    (iii) If the subscriber's program-based or income-based eligibility 
for Lifeline cannot be determined by accessing one or more eligibility 
databases, then the National Verifier, state Lifeline administrator, or 
state agency must obtain a signed certification from the subscriber 
confirming the subscriber's continued eligibility. If the subscriber's 
eligibility was previously confirmed through an eligibility database 
during enrollment or a prior recertification and the subscriber is no 
longer included in any eligibility database, the National Verifier, 
state Lifeline administrator, or state agency must obtain both an 
approved Annual Recertification Form and documentation meeting the 
requirements of paragraph (b)(1)(i)(B) or (c)(1)(i)(B) from that 
subscriber to complete the certification process. Entities responsible 
for re-certification under this section must use the Wireline 
Competition Bureau-approved universal Annual Recertification Form, 
except where state law, state regulation, a state Lifeline 
administrator, or a state agency requires eligible telecommunications 
carriers to use state-specific Lifeline recertification forms, or where 
the National Verifier Recertification Form is required.
* * * * *

0
12. Effective January 27, 2020, amend Sec.  54.420 by revising 
paragraphs (a) introductory text and (a)(1) to read as follows:


Sec.  54.420   Low income program audits.

    (a) Independent audit requirements for eligible telecommunications 
carriers. Eligible telecommunications carriers identified by USAC must 
obtain a third-party biennial audit of their compliance with the rules 
in this subpart. Such engagements shall be agreed upon performance 
attestations to assess the company's overall compliance with the rules 
in this subpart and the company's internal controls regarding the 
regulatory requirements in this subpart.
    (1) Eligible telecommunications carriers will be selected for audit 
based on risk-based criteria developed by USAC and approved by the 
Office of Managing Director and the Wireline Competition Bureau.
* * * * *
[FR Doc. 2019-27220 Filed 12-26-19; 8:45 am]
 BILLING CODE 6712-01-P