[Federal Register Volume 72, Number 184 (Monday, September 24, 2007)]
[Rules and Regulations]
[Pages 54214-54219]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-18711]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 05-195, CC Docket No. 96-45, CC Docket No. 02-6, WC 
Docket No. 02-60, WC Docket No. 03-109, CC Docket No. 97-21; FCC 07-
150]


Measures To Safeguard the Universal Service Fund From Waste, 
Fraud, and Abuse as Well as Measures To Improve the Management, 
Administration, and Oversight of the Universal Service Fund

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In the Report and Order, the Commission adopted measures to 
safeguard the Universal Service Fund (``USF'') from waste, fraud, and 
abuse. The intended effect of the measures adopted is to improve the 
management, administration, and oversight of the USF.

DATES: Effective October 24, 2007 except for the amendments to 
Sec. Sec.  54.202, 54.417, 54.619, and 54.706, which contain 
information collection requirements that are not effective until 
approved by the Office of Management and Budget. The FCC will publish a 
document in the Federal Register announcing the effective date for 
those sections. Additionally, the Commission will send, as a minor 
rule, a copy of this

[[Page 54215]]

Report and Order to Congress and the Government Accountability Office 
pursuant to the Congressional Review Act, 5 U.S.C. 801(a)(1)(A).

FOR FURTHER INFORMATION CONTACT: Mika Savir at (202) 418-0384, 
[email protected], Office of Managing Director, Federal Communications 
Commission, 445 12th Street, SW., Washington, DC 20554. In addition, a 
copy of any comments on the Paperwork Reduction Act information 
collection requirements contained herein should be submitted to Leslie 
Smith, Federal Communications Commission, 445 12th Street, SW., 
Washington, DC 20554, or via the Internet to [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order adopted August 22, 2007 and released August 29, 2007. The 
full text of this Report and Order is available for public inspection 
on the Commission's Internet site at http://www.fcc.gov. It is also 
available for inspection and copying during regular business hours in 
the FCC Reference Center (Room CY-A257), 445 12th Street, SW., 
Washington, DC 20554. The full text of this document also may be 
purchased from the Commission's duplication contractor, Best Copy and 
Printing Inc., Portals II, 445 12th St., SW., Room CY-B402, Washington, 
DC 20554; telephone (202) 488-5300; fax (202) 488-5563; e-mail 
[email protected].
    The Universal Service Fund (``USF'') was created by Congress in 
1996 as part of its passage of the Telecommunications Act of 1996. The 
purpose of the fund is to help provide affordable telecommunications 
services to consumers, libraries, rural health care facilities, and 
schools. Today, the USF consists of four programs: (1) The universal 
service mechanism for high-cost areas, providing financial support to 
eligible telecommunications carriers serving high-cost areas; (2) the 
universal service mechanism for schools and libraries, providing for 
discounted services (telecommunications services, Internet access, and 
internal connections) to eligible schools and libraries; (3) the 
universal service mechanism for assisting low-income consumers with 
discounted installation and monthly telephone services; and (4) the 
universal service mechanism for rural health care, providing discounted 
telecommunications and information services to rural health care 
providers. These funds are managed, on behalf of the Commission, by the 
Universal Service Administrative Company (``USAC'' or 
``Administrator'').
    The goal of the proceeding, initiated on June 14, 2005, was to 
improve these four universal service programs, to make these programs 
more effective and efficient, and to continue the Commission's efforts 
to deter waste, fraud, and abuse of Universal Service funds.
    In conducting the proceeding, input was sought from all interested 
parties, including USF participants. Eighty-four comments were received 
and considered as the Commission came to its decisions on how to 
improve the management, administration, and oversight of the USF.

Synopsis

    On June 14, 2005, the Commission initiated a broad inquiry into the 
management, administration, and oversight of the USF. That inquiry 
asked whether: (a) The Commission should adopt rules requiring timely 
payments and assessing penalties or interest for late payments to the 
USF programs; (b) the Commission should institute a targeted 
independent audit requirement to safeguard the USF programs from waste, 
fraud, and abuse; (c) the Commission should put in place document 
retention requirements for applicants and service providers; (d) the 
Commission should establish time limits for making determinations about 
whether violations have occurred among USF program recipients; (e) the 
Commission should adopt specific sanctions to address instances in 
which a USF beneficiary may not have used funds in accordance with 
program procedures; (f) the Commission should institute aggressive 
debarment procedures for anyone who defrauds or otherwise deliberately 
harms the integrity of the USF programs; and (g) the Commission should 
require USAC to report on certain efficiency, effectiveness, accuracy, 
and timeliness performance measures.
    (a) Decision regarding timely payments--since the USF is supported 
by contributions from telecommunications carriers providing interstate 
services as well as contributions by certain providers of interstate 
telecommunications, including providers of Interconnected Voice over 
Internet Protocol (``Interconnected VoIP'') services, the Commission 
determined that it should adopt tougher rules requiring timely payments 
and assessing penalties or interest for late payments.
    Thus, the Commission decided that it would replace the existing 
late-filing charge, as well as the late-payment charges; with a new 
``rate of interest'' charge that reflects the consequences of failing 
to pay in a timely manner. Henceforth, if a contributor is more than 30 
days delinquent in paying its contribution to the USF, USAC shall 
assess a single rate of interest, that will apply to the debt from the 
date of the delinquency until date of payment (or in the case of a 
promissory note the date of maturity of the note), at an annual rate 
equal to the U.S. prime rate on the date of delinquency plus 3.5 
percent.
    Likewise, if a contributor is more than 30 days delinquent in 
filing an FCC Form 499-A or 499-Q, the USAC Administrator shall also 
use the U.S. prime rate plus 3.5 percent in assessing a remedial 
sanction. The sanction will be the greater of $100 per month or the 
amount derived when a rate of interest equal to the U.S. prime rate 
plus 3.5 percent is assessed on the amount due per the USAC 
Administrator's invoice or calculations (if no invoice was provided).
    In the event a contributor company is delinquent in filing an FCC 
Form 499-A or 499-Q, and within the 30 day period following 
delinquency, is also delinquent in paying its contribution, interest 
will be assessed on a single greater amount from the date of the first 
delinquency.
    USAC is now required to add information to the monthly invoice sent 
to contributors and in debt collection correspondence to explain the 
applicable sanction and administrative charges for late payment.
    (b) Decision regarding independent audits--audits are a tool the 
Commission and USAC use to ensure program integrity and to detect 
violations of the Act or the Commission's rules and to deter waste, 
fraud, and abuse.
    Current Commission rules already authorize the USAC Administrator 
to conduct audits of contributors to the universal service support 
mechanisms. In addition, the Commission's OIG annually oversees more 
than 400 audits of contributors and beneficiaries of the high-cost, 
low-income, rural health care, and schools and libraries programs.
    The Commission has decided that additional audit requirements are 
unnecessary at this time. The Commission will closely watch the data 
emerging from existing audits to determine if additional or targeted 
audits should be conducted in the future.
    (c) Decision regarding document retention--proper record-keeping 
helps prevent waste, fraud, and abuse. Proper record-keeping 
additionally protects applicants and service providers in the event of 
vendor disputes. The Commission concluded that, following

[[Page 54216]]

OMB approval of these Paperwork Reduction Act information collection 
requirements, the following record-keeping will be required:
    (1) High-cost program--the Commission will require recipients of 
universal service high-cost support to retain, for five years, all 
records that they may require to demonstrate to auditors that the 
support they received was consistent with the Communications Act of 
1934, as amended, and the Commission's rules. These records must 
include the following: Data supporting line count filings; historical 
customer records; fixed asset property accounting records; general 
ledgers; invoice copies for the purchase and maintenance of equipment; 
maintenance contracts for the upgrade or equipment; and any other 
relevant documentation. The Commission also clarified that 
beneficiaries must make available all such documents and records that 
pertain to them, including those of NECA, contractors, and consultants 
working on behalf of the beneficiaries to the Commission's OIG, to the 
USAC Administrator, and to their auditors. To the extent other rules or 
any other law require or necessitate documents be kept for longer 
periods of time (e.g., to support the account balances in the Part 32 
Uniform System of Accounts, continuing property records, pole 
attachment calculations, plant equipment age, cost, or useful life, 
depreciation rates), the Commission did not alter, amend, or supplant 
such rules or laws.
    (2) Low-income program--with respect to the Lifeline and Link-Up 
programs, the Commission concluded that a ``service-plus three'' 
document retention requirement will be retained. The Commission did not 
believe it to be unnecessarily burdensome to require participating 
service providers to retain eligibility-determination records for the 
time period during which the service is provided and then for three 
years after the service is terminated. Additionally, the Commission 
removed the clause that waived the document retention requirement after 
an audit is completed. The Commission also clarified that beneficiaries 
must make available all documents and records that pertain to them, 
including those of contractors and consultants working on their behalf, 
to the Commission's OIG, to the USAC Administrator, and to auditors 
working on their behalf.
    (3) Rural Health Care and Schools and Libraries programs--the 
Commission decided to retain the five year requirement for schools and 
libraries to retain records evidencing that the funding they received 
was proper. The Commission also decided to expand this requirement to 
rural health care service providers. This Report and Order additionally 
clarified that beneficiaries must make available all documents and 
records that pertain to them, including those of contractors and 
consultants working on their behalf, to the Commission's OIG, to the 
USAC Administrator, and to their auditors.
    (4) Contributors--the Commission also required contributors to the 
USF to retain all documents and records necessary to demonstrate to 
auditors that their contributions were made in compliance with the 
program rules, assuming that the audits are conducted within five years 
of such contribution. The Commission clarified that contributors must 
make available all documents and records that pertain to them, 
including those of contractors and consultants working on their behalf, 
to the Commission's OIG, to the USAC Administrator, and to their 
auditors. These documents and records should include without limitation 
the following: financial statements and supporting documentation; 
accounting records; historical customer records; general ledgers; and 
any other relevant documentation.
    (d) Decision regarding time limits for determining violations--the 
Commission will adopt a five-year administrative limitations period for 
all funds. During these five years the Commission or the USAC 
Administrator may determine that a violation has occurred among 
recipients of the funds. This five year limit, which currently applies 
only to recipients of the schools and libraries fund, will now apply to 
recipients of all USF programs. This time period appropriately balances 
the beneficiary's need for finality with the Commission statutory 
obligation to safeguard the USF programs from waste, fraud, and abuse. 
This five-year time period is not a statute of limitations.
    (e) Decision regarding sanctions for misuse of funds--consistent 
with a prior Commission conclusion regarding the schools and libraries 
program, the Commission determined that funds disbursed from the high-
cost, low-income, and rural health care support mechanisms that are 
disbursed or used in violation of a Commission rule that implements the 
statute or a substantive program goal should be recovered. The 
Commission has determined that sanctions, including enforcement action, 
are appropriate in cases of waste, fraud, and abuse, but not in cases 
of clerical or ministerial errors.
    (f) Decision regarding debarment for actions that harm the 
integrity of the program--there have been several well-publicized cases 
of fraud against the schools and libraries program. In order to prevent 
further fraud, and to prevent bad actors from continuing to participate 
in this program, the Commission earlier adopted a three year debarment 
rule for the schools and libraries program that suspends and debar 
parties who are convicted of criminal violations or held civilly liable 
for acts arising out of participation in the schools and libraries 
program, absent extraordinary circumstances.
    The Commission now applies these debarment procedures to all 
Universal Service programs. Henceforth, any party convicted of or held 
civilly liable for the commission or attempted commission of fraud and 
similar offenses will be debarred from participation in the program for 
a period of three years. Additionally, the Commission and the USAC 
Administrator will publish the names of these debarred entities on 
their respective Internet websites. The USAC Administrator will also 
provide a link from its website to the Bureau and Commission debarment 
orders.
    (g) Decision regarding performance measures--following the 
requirements of the Government Performance and Results Act, the 
Commission established the following performance measures:
    (1) Schools and Libraries--since nearly 100 percent connectivity to 
the Internet already exists for public schools and the Commission is 
not in a position to evaluate either the impact of schools and 
libraries funds on connectivity as compared to other funding sources or 
the impact of Internet connectivity on educational outcomes, the 
Commission decided on group of policy, productivity, and efficiency 
performance measures.
    In the policy arena, the USAC Administrator is to collect 
information during interviews with schools and libraries about the 
different types or capacities of broadband services that are supported 
through the school and libraries program. The Commission further 
requires the USAC Administrator to work with the Wireline Competition 
Bureau (``Bureau'') to modify the relevant FCC forms or to create 
additional questions for program participants to more accurately 
determine how schools and libraries connect to the Internet and their 
precise levels of connectivity. The collections of such additional 
information, after approval by OMB under the terms of the Paperwork 
Reduction Act, will enable the Commission to identify the specific 
products, services, and capabilities (e.g., T-1s, DS-3s) at specific 
quantities

[[Page 54217]]

provided by the schools and libraries program.
    The Commission also requires the USAC Administrators to cross-
reference participating school districts with a full listing of school 
districts to identify the public schools that are not participating in 
the schools and libraries program in order to focus outreach on these 
schools. The USAC Administrator should determine why these schools and 
libraries choose not to participate and assist them, if necessary, in 
the beginning of the application process. The USAC Administrator should 
report its conclusions to the Commission annually.
    In the productivity arena, the Commission is requiring the USAC 
Administrator to provide data, on a funding year basis, reporting the 
number of applications and funding request numbers (``FRNs'') 
submitted, the number of applications and FRNs rejected, the number of 
applications and FRNs granted, and the processing time for applications 
and FRNs. The USAC Administrator is also required to document the 
amount of time it takes to make a payment to the service provider, from 
the date the proper form is submitted. The Commission recognizes that 
the USAC Administrator could reject more invoices in order to improve 
the amount of time it takes to make payments. For this reason, the 
Commission also requires the USAC Administrator to provide the number 
of paid invoices and the number of rejected invoices.
    In the efficiency arena, the Commission is directing the USAC 
Administrator to determine the percentage of appeals that are resolved 
by the USAC Administrator within 90 days from the date of appeal. The 
USAC Administrator will also provide information on how long it takes 
to process 50 percent, 75 percent, and 100 percent of the pending 
appeals from the schools and libraries division.
    (2) Low-income--the Commission currently lacks the baseline 
information necessary to make an assessment of whether the program is 
accomplishing its goal. Therefore the Commission has directed the USAC 
Administrator to provide the following baseline information: (a) Number 
of program beneficiaries (i.e., carriers); (b) number of low-income 
customers for which each carrier receives low-income support; (c) 
number of connections supported; (d) time to process support payments 
and authorize disbursements; (e) average (mean) dollar amount awarded 
and median dollar amount awarded, per carrier; and (f) total amount 
disbursed. This baseline information will assist the Commission in 
setting performance measures in the future.
    In addition, to further expand its baseline knowledge, the 
Commission requires the USAC Administrator to provide the Commission 
with specified information from a survey that is taken by service 
providers of the customers in the Lifeline benefits program. The 
information to be provided to the Commission includes: (a) The number 
of Lifeline customers surveyed by the service providers; (b) the Number 
of Lifeline customers found to be ineligible; and (c) the Number of 
Lifeline customers who did not respond to the service provider survey. 
The Commission may revisit this issue at a later time and request 
further information from the Lifeline survey.
    (3) Rural Health Care--the Commission requires the USAC 
Administrator to provide the following performance information: time to 
process applications; time to pay invoices; and time to determine 
appeals. These data will provide a baseline against which subsequent 
goals can be implemented in the future.
    Additionally, except for the rural health care pilot program, the 
USAC Administrator is to provide the Commission with specified 
productivity and efficiency performance data in regard to its 
application processing, invoice processing, and handling of appeals.
    (4) High-cost--because it does not have sufficient data at this 
time to establish performance goals; the Commission directs the USAC 
Administrator to provide baseline information against which goals can 
be implemented in the future. The information to be provided includes 
the: (a) Number of program beneficiaries per study area and per wire 
center; (b) number of lines, per study area and per wire center (c) 
number of requests for support payments; (d) mean dollar amount of 
support and median dollar amount of support for each line; (d) total 
amount disbursed; (e) time to process 50 percent, 75 percent, and 100 
percent of the high-cost support requests and authorize disbursements; 
and (f) rates of telephone subscribership in urban versus rural areas.
    (5) USAC Administrative Performance Measures--the Commission 
additionally adopted a requirement that the USAC Administrator provide 
some general, not program-specific, performance data. The required 
performance data include: (a) The amount of payments determined to be 
improper payments and the error rate (i.e., the percentage of total 
payments that are determined to be improper payments); (b) the amount 
of improper payments subsequently recovered from the beneficiaries by 
the USAC Administrator; (c) data on USAC administrative costs, per 
program, and general administrative costs (not program-specific); (d) 
the amount of payments determined to be improper payments and the error 
rate (i.e., the percentage of total payments that are determined to be 
improper payments), per program; (e) the amount of improper payments 
subsequently recovered from the beneficiaries by the USF Administrator, 
per program; (f) the number of corrections or true-ups due to errors by 
the USAC Administrator, per program; (g) the number of USF 
contributors; number of USF contributors 90 days or more delinquent in 
payments; (h) the total amount of delinquencies or past due payments; 
(i) the total number of contributors assessed late fees or penalties; 
(j) the total amount of late fees or penalties; (k) the total amount of 
contributions to the USF; and (l) the total amount of disbursements.

List of Subjects in 47 CFR Part 54

    Communications common carriers, Health facilities, Infants and 
children, Libraries, Reporting and recordkeeping requirements, Schools, 
Telecommunications, Telephone.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Final Rules

0
For the reasons discussed in the preamble, the Federal Communications 
Commission amends 47 CFR part 54 as follows:
0
1. The authority citation for part 54 continues to read as follows:

    Authority: Secs. 5, 48 Stat. 1068, as amended; 47 U.S.C. 155.


0
2. Section 54.202 is amended by adding paragraph (e) to read as 
follows:


Sec.  54.202  Additional requirements for Commission designation of 
eligible telecommunications carriers.

* * * * *
    (e) All eligible telecommunications carriers shall retain all 
records required to demonstrate to auditors that the support received 
was consistent with the universal service high-cost program rules. 
These records should include the following: data supporting line count 
filings; historical customer records; fixed asset property accounting 
records; general ledgers; invoice copies for the purchase and 
maintenance of equipment; maintenance contracts for the upgrade or 
equipment; and any other relevant documentation. This

[[Page 54218]]

documentation must be maintained for at least five years from the 
receipt of funding.

0
3. Section 54.417(a) is amended by revising the undesignated paragraph 
to read as follows:


Sec.  54.417  Recordkeeping requirements.

    (a) * * *
    Notwithstanding the preceding sentence, eligible telecommunications 
carriers must maintain the documentation required in Sec.  Sec.  
54.409(d) and 54.410(b)(3) for as long as the consumer receives 
Lifeline service from that eligible telecommunications carrier
* * * * *

0
4. Redesignate Sec.  54.521 as Sec.  54.8 and revise pargraphs (a)(1), 
(a)(5), (a)(7), (c), (d), (e)(2)(i), (e)(3), (e)(4), and (g) to read as 
follows:


Sec.  54.8  Prohibition on participation: Suspension and debarment.

    (a) Definitions--(1) Activities associated with or related to the 
schools and libraries support mechanism, the high-cost support 
mechanism, the rural health care support mechanism, and the low-income 
support mechanism. Such matters include the receipt of funds or 
discounted services through one or more of these support mechanisms, or 
consulting with, assisting, or advising applicants or service providers 
regarding one or more of these support mechanisms.
* * * * *
    (5) Debarment. Any action taken by the Commission in accordance 
with these regulations to exclude a person from activities associated 
with or relating to the schools and libraries support mechanism, the 
high-cost support mechanism, the rural health care support mechanism, 
and the low-income support mechanism. A person so excluded is 
``debarred.''
* * * * *
    (7) Suspension. An action taken by the Commission in accordance 
with these regulations that immediately excludes a person from 
activities associated with or relating to the schools and libraries 
support mechanism, the high-cost support mechanism, the rural health 
care support mechanism, and the low-income support mechanism for a 
temporary period, pending completion of the debarment proceedings. A 
person so excluded is ``suspended.''
* * * * *
    (c) Causes for suspension and debarment. Causes for suspension and 
debarment are conviction of or civil judgment for attempt or commission 
of criminal fraud, theft, embezzlement, forgery, bribery, falsification 
or destruction of records, making false statements, receiving stolen 
property, making false claims, obstruction of justice and other fraud 
or criminal offense arising out of activities associated with or 
related to the schools and libraries support mechanism, the high-cost 
support mechanism, the rural health care support mechanism, and the 
low-income support mechanism.
    (d) Effect of suspension and debarment. Unless otherwise ordered, 
any persons suspended or debarred shall be excluded from activities 
associated with or related to the schools and libraries support 
mechanism, the high-cost support mechanism, the rural health care 
support mechanism, and the low-income support mechanism. Suspension and 
debarment of a person other than an individual constitutes suspension 
and debarment of all divisions and/or other organizational elements 
from participation in the program for the suspension and debarment 
period, unless the notice of suspension and proposed debarment is 
limited by its terms to one or more specifically identified 
individuals, divisions, or other organizational elements or to specific 
types of transactions.
    (e) * * *
    (2) * * *
    (i) Give the reasons for the proposed debarment in terms sufficient 
to put a person on notice of the conduct or transaction(s) upon which 
it is based and the cause relied upon, namely, the entry of a criminal 
conviction or civil judgment arising out of activities associated with 
or related to the schools and libraries support mechanism, the high-
cost support mechanism, the rural health care support mechanism, and 
the low-income support mechanism;
* * * * *
    (3) A person subject to proposed debarment, or who has an existing 
contract with a person subject to proposed debarment or intends to 
contract with such a person to provide or receive services in matters 
arising out of activities associated with or related to the schools and 
libraries support mechanism, the high-cost support mechanism, the rural 
health care support mechanism, and the low-income support mechanism may 
contest debarment or the scope of the proposed debarment. A person 
contesting debarment or the scope of proposed debarment must file 
arguments and any relevant documentation within thirty (30) calendar 
days of receipt of notice or publication in the Federal Register, 
whichever is earlier.
    (4) A person subject to proposed debarment, or who has an existing 
contract with a person subject to proposed debarment or intends to 
contract with such a person to provide or receive services in matters 
arising out of activities associated with or related to the schools and 
libraries support mechanism, the high-cost support mechanism, the rural 
health care support mechanism, and the low-income support mechanism may 
also contest suspension or the scope of suspension, but such action 
will not ordinarily be granted. A person contesting suspension or the 
scope of suspension must file arguments and any relevant documentation 
within thirty (30) calendar days of receipt of notice or publication in 
the Federal Register, whichever is earlier.
* * * * *
    (g) Time period for debarment. A debarred person shall be 
prohibited from involvement with the schools and libraries support 
mechanism, the high-cost support mechanism, the rural health care 
support mechanism, and the low-income support mechanism for three (3) 
years from the date of debarment. The Commission may, if necessary to 
protect the public interest, set a longer period of debarment or extend 
the existing period of debarment. If multiple convictions or judgments 
have been rendered, the Commission shall determine based on the facts 
before it whether debarments shall run concurrently or consecutively.

0
5. Section 54.619 is amended by adding paragraph (d) to read as 
follows:


Sec.  54.619  Audits and recordkeeping.

* * * * *
    (d) Service providers. Service providers shall retain documents 
related to the delivery of discounted telecommunications and other 
supported services for at least 5 years after the last day of the 
delivery of discounted services. Any other document that demonstrates 
compliance with the statutory or regulatory requirements for the rural 
health care mechanism shall be retained as well.

0
6. Section 54.702 is amended by adding paragraph (o) to read as 
follows:


Sec.  54.702  Administrator's functions and responsibilities.

* * * * *
    (o) The Administrator shall provide performance measurements 
pertaining to the universal service support mechanisms as requested by 
the Commission by order or otherwise.

0
7. Section 54.706 is amended by adding paragraph (e) to read as 
follows:

[[Page 54219]]

Sec.  54.706  Contributions.

* * * * *
    (e) Any entity required to contribute to the federal universal 
service support mechanisms shall retain, for at least five years from 
the date of the contribution, all records that may be required to 
demonstrate to auditors that the contributions made were in compliance 
with the Commission's universal service rules. These records shall 
include without limitation the following: Financial statements and 
supporting documentation; accounting records; historical customer 
records; general ledgers; and any other relevant documentation. This 
document retention requirement also applies to any contractor or 
consultant working on behalf of the contributor.

0
8. Section 54.713 is revised to read as follows:


Sec.  54.713  Contributors' failure to report or to contribute.

    (a) A contributor that fails to file a Telecommunications Reporting 
Worksheet and subsequently is billed by the Administrator shall pay the 
amount for which it is billed. The Administrator may bill a contributor 
a separate assessment for reasonable costs incurred because of that 
contributor's filing of an untruthful or inaccurate Telecommunications 
Reporting Worksheet, failure to file the Telecommunications Reporting 
Worksheet, or late payment of contributions. Failure to file the 
Telecommunications Reporting Worksheet or to submit required quarterly 
contributions may subject the contributor to the enforcement provisions 
of the Act and any other applicable law. The Administrator shall advise 
the Commission of any enforcement issues that arise and provide any 
suggested response. Once a contributor complies with the 
Telecommunications Reporting Worksheet filing requirements, the 
Administrator may refund any overpayments made by the contributor, less 
any fees, interest, or costs.
    (b) If a universal service fund contributor fails to make full 
payment on or before the date due of the monthly amount established by 
the contributor's applicable Form 499-A or Form 499-Q, or the monthly 
invoice provided by the Administrator, the payment is delinquent. All 
such delinquent amounts shall incur from the date of delinquency, and 
until all charges and costs are paid in full, interest at the rate 
equal to the U.S. prime rate (in effect on the date of the delinquency) 
plus 3.5 percent, as well as administrative charges of collection and/
or penalties and charges permitted by the applicable law (e.g., 31 
U.S.C. 3717 and implementing regulations).
    (c) If a universal service fund contributor is more than 30 days 
delinquent in filing a Telecommunications Reporting Worksheet Form 499-
A or 499-Q, the Administrator shall assess an administrative remedial 
collection charge equal to the greater of $100 or an amount computed 
using the rate of the U.S. prime rate (in effect on the date the 
applicable Worksheet is due) plus 3.5 percent, of the amount due per 
the Administrator's calculations. In addition, the contributor is 
responsible for administrative charges of collection and/or penalties 
and charges permitted by the applicable law (e.g., 31 U.S.C. 3717 and 
implementing regulations). The Commission may also pursue enforcement 
action against delinquent contributors and late filers, and assess 
costs for collection activities in addition to those imposed by the 
Administrator.
    (d) In the event a contributor fails both to file the Worksheet and 
to pay its contribution, interest will accrue on the greater of the 
amounts due, beginning with the earlier of the date of the failure to 
file or pay.
    (e) If a universal service fund contributor pays the Administrator 
a sum that is less than the amount due for the contributor's universal 
service contribution, the Administrator shall adhere to the ``American 
Rule'' whereby payment is applied first to outstanding penalty and 
administrative cost charges, next to accrued interest, and third to 
outstanding principal. In applying the payment to outstanding 
principal, the Administrator shall apply such payment to the 
contributor's oldest past due amounts first.

[FR Doc. E7-18711 Filed 9-21-07; 8:45 am]
BILLING CODE 6712-01-P