[Federal Register Volume 85, Number 9 (Tuesday, January 14, 2020)]
[Proposed Rules]
[Pages 2078-2101]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-28490]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 16

[GN Docket No. 19-309; FCC 19-120]


Modernizing Suspension and Debarment

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission (the 
FCC or Commission) proposes to adopt new rules consistent with Office 
of Management and Budget Guidelines to Agencies on Government Debarment 
and Suspension (Nonprocurement)(the Guidelines). The Commission 
proposes that such new rules be applied to transactions under the 
Universal Service Fund (USF) and Telecommunications Relay Services 
(TRS) programs and the National Deaf-Blind Equipment Distribution 
Program (NDBEDP). The Commission also proposes certain modifications to 
the Guidelines, including as appropriate transitional mechanisms for 
situations in which the suspended or debarred entity may be the sole 
source for the service involved. The Commission proposes that any new 
rules for suspension and debarment be put into a new Part 16 in title 
47 of the Code of Federal Regulations.

DATES: 
    Comments Due: February 13, 2020.
    Reply Comments Due: March 16, 2020.

ADDRESSES: Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS: https://www.fcc.gov/ecfs/. 
Paper Filers: All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission. 
All hand-delivered or messenger-delivered paper filings for the 
Commission's Secretary must be delivered to FCC Headquarters at 445 
12th St. SW, Room TW-A325, Washington, DC 20554. The filing hours are 
8:00 a.m. to 7:00 p.m. Commercial overnight mail (other than U.S. 
Postal Service Express Mail and Priority Mail) must be sent to 9050 
Junction Drive, Annapolis Junction, MD 20701. U.S. Postal Service 
first-class, Express, and Priority mail must be addressed to 445 12th 
Street SW, Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Paula Silberthau, Attorney-Advisor, 
Administrative Law Division, Office of General Counsel, (202) 418-1874 
or [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking, FCC 19-102, adopted on November 22, 2019 and 
released on November 25, 2019. The complete text of this document is 
available for inspection and copying during normal business hours in 
the FCC Reference Information Center, Portals II, 445 12th Street SW, 
Room CY-A257, Washington, DC 20554. To request materials in accessible 
formats for people with disabilities (Braille, large print, electronic 
files, audio format), send an email to [email protected] or call the 
Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 
418-0432 (TTY). The complete text of the order also is available on the 
Commission's website at https://www.fcc.gov.

Synopsis

I. Introduction

    1. The Commission oversees a number of critical support programs, 
including the Universal Service Fund (USF) programs, the 
Telecommunications Relay Services (TRS) programs, and the National 
Deaf-Blind Equipment Distribution Program (NDBEDP). Part of the 
Commission's role in overseeing these programs is protecting them from 
fraud, waste, and abuse. One important way the Commission does this is 
by identifying and barring from participation those who have abused or 
are likely to abuse these programs. This is why the Commission has, for 
its USF programs, implemented rules that suspend or debar those 
convicted of or found civilly liable for certain misconduct related to 
these programs.
    2. While these rules have positive effects, this proceeding 
explores whether there is more that the Commission can do. 
Specifically, we propose to adopt new rules consistent with the Office 
of Management and Budget Guidelines to Agencies on Government Debarment 
and Suspension (Nonprocurement) (the Guidelines). The Guidelines 
provide additional tools--adopted by a number of other federal agencies 
across the government--that could enhance the Commission's ability to 
root out bad actors from participation in its support programs. If 
adopted, these measures could not only help the Commission to fulfill 
its responsibility of ensuring that the USF and TRS funds are well 
managed, efficient, and fiscally responsible, but may also assist us in 
bridging the digital divide by ensuring that fund expenditures, 
including support for expanded broadband deployment, are directed in 
the first instance to good actors who will use them only for their 
intended purpose. For these reasons, this document proposes to adopt 
new rules consistent with the Guidelines in lieu of the Commission's 
current rules, and to apply these new rules to the four USF programs, 
as well as to the Commission's TRS programs \1\ and to the NDBEDP.\2\
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    \1\ For purposes of this document, the term ``TRS programs'' 
means all programs described in Chapter 64, subpt. F, of the 
Commission's rules, including without limitation telecommunications 
relay services, speech-to-speech relay services, and video relay 
services. TRS enables an individual who is deaf, hard of hearing, 
deaf-blind, or who has a speech disability to communicate by 
telephone or other device through the telephone system. TRS is 
provided in a variety of ways. Currently, interstate TRS calls and 
all internet Protocol (IP) based TRS calls, both intrastate and 
intrastate, are supported by the Fund.
    \2\ The NDBEDP provides equipment needed to make 
telecommunications, advanced communications, and the internet 
accessible to low-income individuals who are deaf-blind. For 
purposes of this document, we refer to the TRS program and the 
NDBEDP separately because they are certified and operated in 
different ways.
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II. Background

    3. Most federal agencies have implemented the Guidelines--either 
wholesale or with modifications. The Commission stands apart from these 
agencies with its own rules for reasons that are largely historical. In 
2003, when the Commission adopted its own suspension and debarment 
rules for certain USF programs, independent regulatory agencies like 
the Commission were expressly excluded from coverage under the 
Guidelines for Nonprocurement Debarment and Suspension that preceded 
the current Guidelines.\3\ But when OMB adopted in 2005 the interim 
final changes to what have become known as the Guidelines, OMB modified 
this long-standing definition to remove the exclusion for independent 
agencies. As a result, independent regulatory agencies such as the 
Commission may participate in the

[[Page 2079]]

government-wide suspension and debarment system by adopting the 
Guidelines. With that history in mind, we here briefly summarize these 
two debarment mechanisms and explain some of the key differences 
between them.
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    \3\ These earlier guidelines, typically referred to as the 
``Common Rules,'' were implemented through rules promulgated by 
executive agencies other than independent agencies. The Commission's 
exclusion was echoed in the subsequent OMB Notice of Proposed 
Rulemaking proposing revisions to those earlier guidelines.
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A. The Commission's Current Suspension and Debarment Rules

    4. The Commission's current rules addressing suspension and 
debarment apply only to the USF programs.\4\ In general, these rules 
cover a relatively narrow range of conduct and are clear-cut, 
mandatory, and virtually self-executing. The rules are non-
discretionary and require the Commission to suspend or disbar any 
``person'' \5\ convicted (by plea or judgment) of, or found civilly 
liable for, the ``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.'' A suspension or debarment of an entity applies to 
all organizational units of the entity unless the order specifies 
otherwise. A suspension immediately excludes a person from activities 
related to the USF programs, but only for a temporary period pending 
completion of the debarment proceedings. The debarment runs for the 
period specified by Commission order, generally three years.
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    \4\ We note that a few Commission rules also mention 
``disqualification'' from program participation as a possible remedy 
for unlawful conduct. The TRS program and NDBEDP provide for 
``suspension'' or ``revocation'' of certification under sections 
64.606(e) and 64.6207(h) of the Commission's rules. However, section 
54.8 of the Commission's rules is the only provision that expressly 
provides for ``suspension'' and ``debarment.''
    \5\ Under section 54.8, a ``person'' is ``[a]ny individual, 
group of individuals, corporation, partnership, association, unit of 
government or legal entity, however organized.''
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    5. Proceedings begin with a notice of suspension and proposed 
debarment issued by the Commission. The person subject to the 
suspension and proposed debarment has 30 days from the earlier of 
receipt of notice or publication in the Federal Register to challenge 
the Commission's action. The Commission must make a final ruling, 
overturning the original decision only in light of ``extraordinary 
circumstances,'' no later than 90 days after receipt of a petitioner's 
arguments. While a suspension or debarment is in effect, the Commission 
may, on motion by the affected party or sua sponte, reverse such a 
finding or limit its effect in light of extraordinary evidence. The 
default period for debarment is three years, though the Commission may, 
if it serves the public interest, set a longer period at the beginning 
or extend the period during which it is in effect.

B. The OMB Guidelines

    6. The Guidelines establish the framework for a government-wide 
debarment and suspension system for nonprocurement programs.\6\ The 
Guidelines generally provide for suspension or debarment based on a 
range of misconduct. This range includes not only convictions of or 
civil judgments for fraud or certain criminal offenses, but also 
violations of the requirements of public transactions ``so serious as 
to affect the integrity of an agency program'' (including willful or 
repeated violations).\7\ In addition, the Guidelines provide that 
suspension or debarment could be warranted for ``[f]ailure to pay a 
single substantial debt, or a number of outstanding debts . . . owed to 
any Federal agency. . . .'' Finally, the Guidelines provide the 
discretion to suspend or debar for ``[a]ny other cause of so serious or 
compelling a nature that it affects [the party's] present 
responsibility.''
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    \6\ Section 180.970 of the Guidelines defines ``non-procurement 
transaction'' as ``any transaction, regardless of type (except 
procurement contracts),'' including but not limited to grants, 
cooperative agreements, scholarships, fellowships, contracts of 
assistance, loans, loan guarantees, subsidies, insurances, payments 
for specified uses, and donation agreements.'' Suspension and 
debarment rules for federal procurement contracts are contained in 
part 9 of the Federal Acquisition Regulation (FAR).
    \7\ The Guidelines also provide that the suspending officer may 
impose suspension only when immediate action is necessary to protect 
the public interest, and that official determines either that (1) 
the participant has been indicted for, or there is adequate evidence 
to suspect, an offense listed in section 180.800(a) of the 
Guidelines; or (2) there is adequate evidence to suspect the 
existence of any other cause for debarment listed in sections 
180.800(b)-(d)) of the Guidelines.
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    7. Suspensions under the Guidelines have prospective but immediate 
effect, and debarments are effective following a 30-day opportunity for 
a party to respond to a debarment notice. Once effective, an action to 
suspend or debar serves to automatically exclude the suspended or 
debarred party from new covered transactions government-wide, whether 
in procurement or nonprocurement programs or activities. For ongoing 
activities, ``a participant may continue to use the services of an 
excluded person as a principal'' if the participant was ``using the 
services of that person in the transaction before the person was 
excluded.'' The participant also has the option of discontinuing the 
excluded person's services and finding an alternative provider.

C. Differences Between the Guidelines and the Commission's Rules

    8. The Commission's rules differ from the Guidelines in several key 
respects. The Commission's rules are clear-cut and mandatory, with 
little room for discretion and a targeted focus on a narrow set of 
misconduct; the Guidelines, by contrast, address a broader range of 
misconduct and provide federal agencies with substantial discretion to 
suspend and debar entities based on consideration of numerous factors. 
Here, we briefly review some of the key differences between these two 
debarment mechanisms.
    9. First, the rules differ in scope and reach. While the 
Commission's rules apply only to its four USF programs, the Guidelines 
broadly cover all nonprocurement transactions (unless otherwise 
modified by agency-specific rules) including subsidies, grants, loans, 
or other ``payments for specified uses.'' The Guidelines also reach 
further down the supply chain, requiring that, before a primary tier 
participant enters into a covered transaction with another person at 
the next lower tier--for example, a subcontractor--the participant must 
verify that the person with whom it intends to do business is not 
excluded or disqualified.\8\
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    \8\ ``Exclusion'' generally refers to being suspended or 
debarred, as discussed in this Notice. ``Disqualification'' means 
that a person is prohibited from participating in specified Federal 
procurement or nonprocurement transactions as required under a 
statute, Executive order (other than Executive Orders 12549 and 
12689) or other authority. The Guidelines allow for the inclusion of 
disqualified persons in the System for Award Management Exclusions 
and state the responsibilities of federal agencies and participants 
to check for disqualified persons before entering into covered 
transactions. The Guidelines do not, however, specify the 
transactions for which a disqualified person is ineligible, the 
entities to which a disqualification applies, or the process that a 
federal agency uses to disqualify a person, as those factors are 
dependent on the underlying statute, Executive order or regulation 
that caused the disqualification.
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    10. Second, the Guidelines provide greater discretion to agencies 
in determining which entity to debar and for what misconduct. As 
described above, the Guidelines consider a broader range of misconduct 
than the Commission's rules. They also do not require a prior court 
judgment or conviction. Thus, in contrast to the FCC's current rules, 
suspension or

[[Page 2080]]

debarment actions under the Guidelines do not have to await completion 
of criminal or civil proceedings.\9\ The Guidelines also allow an 
agency to impute conduct from an individual to an organization; from an 
organization to an individual or between individuals; or from one 
organization to another. Thus, action could be taken against an 
organization, not just a principal, or the reverse, in appropriate 
circumstances.
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    \9\ Under the Guidelines the suspending official must (1) have 
adequate evidence that there may be a cause for debarment of a 
person and (2) conclude that immediate action is necessary to 
protect the federal interest. The Guidelines also provide that 
``[i]n deciding whether immediate action is needed to protect the 
public interest, the suspending official has wide discretion.'' If 
legal or debarment proceedings are initiated at the time of, or 
during suspension, the suspension may continue until the conclusion 
of those proceedings. Otherwise, a suspension may not exceed 12 
months. The Guidelines define ``legal proceedings'' to mean ``any 
criminal proceeding or any civil judicial proceeding, including a 
proceeding under the Program Fraud Civil Remedies Act, to which the 
Federal Government or a State or local government or 
quasigovernmental authority is a party. The term also includes 
appeals from those proceedings.'' In addition, if the legal standard 
is satisfied, the agency may suspend a party during an 
investigation.
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    11. Third, the Guidelines provide greater flexibility in fashioning 
the terms of a suspension or debarment. The Guidelines afford a federal 
agency substantial discretion to suspend, based on adequate evidence, 
or debar, based on a preponderance of evidence, as determined in the 
discretion of the designated suspending or debarring official. The 
Guidelines also give a suspending official ``wide discretion'' to 
determine whether immediate action is necessary to protect the public 
interest.'' As a result, an agency may immediately prevent the 
suspended party from entering into additional transactions under its 
programs. The Guidelines also allow an agency head to grant an 
``exception'' to allow an excluded person to participate in a 
particular transaction.
    12. Fourth, the Guidelines establish a government-wide debarment 
system. While determinations under the Commission's rules apply only to 
the Commission, the Guidelines provide for a government-wide system 
with reciprocity among federal agencies that adopt rules consistent 
with the Guidelines. This means that a party that has been suspended or 
debarred by another agency and placed on the government-wide System for 
Award Management Exclusions (commonly known as the ``SAM Exclusions'') 
maintained by the General Services Administration (GSA) \10\ would be 
barred from participation in covered transactions unless an exception 
were granted for good cause by the agency head.\11\ To effect this 
reciprocity, the Guidelines impose affirmative disclosure requirements 
on ``participants'' in government programs or other covered 
transactions.\12\ Before entering into a covered transaction, 
participants must notify the agency if they are presently excluded or 
disqualified. Those who are excluded from government programs will be 
listed on the System for Award Management Exclusions. In addition, 
primary tier participants (i.e., generally those participants who 
transact business directly with a federal agency) must advise the 
agency whether they have been convicted of certain offenses within 
three years, indicted, or terminated from public transactions. Further, 
under the Guidelines, a federal agency must check to see whether a 
person is excluded or disqualified before entering directly into a 
covered transaction or approving a principal in that transaction, and 
before approving any lower tier participant or principal thereof (if 
agency approval is required).
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    \10\ The System for Award Management records for an entity, 
including its exclusion status, can be searched at https://www.sam.gov/SAM/pages/public/searchRecords/search.jsf.
    \11\ As proposed in this Notice, covered transactions would be 
those under the USF or TRS programs or the NDBEDP.
    \12\ A participant is broadly defined as ``any person who 
submits a proposal for or who enters into a covered transaction, 
including an agent or representative of a participant.'' The 
Guidelines refer to two categories of ``covered transactions''--
those which are in the ``primary tier, between a Federal agency and 
a person'' and those in a ``lower tier, between a participant in a 
covered transaction and another person.'' Obligations under the 
Guidelines may vary depending upon whether a party is a primary tier 
participant or lower tier participant. Therefore, we propose below 
clarifications for several Commission programs to identify which 
persons would be considered ``primary tier'' participants within the 
meaning of any new rules.
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    13. This is not an exhaustive list of the differences between the 
Guidelines and the Commission's rules. We strongly encourage interested 
parties to review the OMB Guidelines, which can be found at 2 CFR part 
180, in addition to this document.

III. Discussion

    14. We propose to adopt new rules consistent with the Guidelines. 
Doing so would impose the following new mechanisms and obligations, 
among others: (1) New procedural requirements that would allow the 
agency to respond quickly to evidence of misconduct through a 
suspension mechanism prior to any debarment, while providing for a 
later evidentiary proceeding that will permit the Commission to 
consider a broader range of wrongful conduct than is now considered; 
(2) requirements that program participants confirm that those with whom 
they do business are not already excluded or disqualified from 
government activities; and (3) reciprocity within the Government-wide 
system preventing a party that is suspended or debarred by another 
agency from participation in covered Commission transactions unless the 
Commission grants an exception for good cause. We seek comment on this 
proposal.
    15. We propose to adopt new debarment and suspension rules for 
several reasons. First, adopting the Guidelines would allow the 
Commission to take remedial action before the issuance of a judgment or 
conviction, based on a broader range of factors. As explained above, 
under our current rules suspension and debarment are triggered only by 
a final conviction or civil judgment showing malfeasance arising from 
or related to USF programs. The Commission's current rules allow an 
entity to be subject to a Notice of Apparent Liability (NAL) supported 
by substantial evidence, or to enter into an executed Consent Decree 
with an admission of liability. However, even undisputed evidence 
supporting an NAL or Consent Decree, no matter how egregious, would not 
constitute sufficient grounds for a suspension or debarment under our 
rules, which require a judgment or conviction related to USF programs. 
In addition, many False Claims Act lawsuits arising from alleged 
wrongdoing in USF programs settle before final judgment, removing those 
cases from the reach of the Commission's suspension and debarment 
rules. Even if a conviction or civil judgment is pursued for 
malfeasance in a USF program, the litigation typically takes many 
years, and our current rules preclude a suspension or debarment while 
litigation is pending. Thus, while the Commission anticipated that the 
mandatory nature of the current debarment rules would be a strong tool 
to prevent fraud in the USF programs, the narrow trigger for suspension 
and debarment appears to be a significant constraint on the 
Commission's authority to protect the USF through those rules, in 
contrast to the more flexible approach under the Guidelines.\13\ 
Finally, as noted above,

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malfeasance in other government programs or even criminal convictions 
outside the realm of the USF are not factors that the Commission may 
consider under the current rules. These and other limitations on our 
suspension and debarment procedures would be eliminated by adopting new 
rules consistent with the Guidelines.
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    \13\ After the adoption of our current suspension and debarment 
rules in 2003, the Commission to date has debarred 49 persons or 
entities, with only one remaining currently debarred. Of those 
debarred, 46 have been debarred for activities pertaining to the E-
rate program and 3 for activities under the Lifeline program. 
Despite numerous active investigations of wrongdoing in Commission 
programs, including several cases implicating the False Claims Act, 
there have been no debarments since 2015, in large measure due to 
the constraints imposed by our current rules requiring a judgment or 
conviction as a prerequisite to a Commission suspension or 
debarment.
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    16. Second, the Guidelines require that persons make advance 
disclosures regarding their exclusion or disqualification status prior 
to entering into covered transactions with federal agencies and 
participants in federal programs. More specifically, a person who 
enters into a covered transaction with a federal agency must disclose: 
Whether they are presently excluded or disqualified; recent 
convictions, civil judgments, indictments, or civil charges; and recent 
defaults on public transactions. Lower tier transactions (e.g., between 
a program participant and a consultant) require only a disclosure of 
exclusion or disqualification status. These disclosures afford 
participants in transactions more information by which to evaluate 
whether it is appropriate or prudent to do business with the person 
making the unfavorable disclosures.
    17. Third, under the Guidelines, the Commission would have 
authority, like other government agencies, to evaluate the wrongful or 
fraudulent conduct of companies or individuals in other dealings with 
the government, and to use the possibility of government-wide, rather 
than program-specific, suspension or debarment as a deterrent to bad 
actors. In contrast, under the Commission's current rules, even a 
company or individual debarred government-wide for criminal or other 
unlawful conduct currently could not be barred from participation in 
the Commission's USF programs without a prior judgment or conviction 
related to a USF program. Furthermore, a party suspended or debarred 
from the USF programs under our current rules could still participate 
in other Commission programs such as TRS or NDBEDP; bid for procurement 
contracts with the Commission; and participate in both procurement and 
nonprocurement programs with other government agencies.
    18. We seek comment on the analysis above. Would adopting 
suspension and debarment rules consistent with the Guidelines offer the 
benefits described? Are there costs associated with adopting such 
rules--for example, that broader rules allowing for more agency greater 
discretion might be create regulatory uncertainty or be more difficult 
to administer--that might outweigh these benefits? Would adopting these 
rules result in unintended consequences not discussed here? We seek 
comment on these questions, as well as our proposal to adopt suspension 
and debarment rules consistent with the Guidelines.
    19. Following the practice of other agencies, we propose to adopt 
rules consistent with the Guidelines by reference to the codified 
Guidelines, and to supplement the Guidelines through FCC-specific 
regulations, including rules addressing those matters for which the 
Guidelines give each agency discretion. We note that other federal 
agencies have adopted the bulk of the Guidelines with limited changes, 
and we propose to do the same here. In the remainder of this document, 
we propose supplemental rules and seek comment on how to implement the 
Guidelines in a manner that accommodates concerns that may be unique to 
the Commission's programs.

A. Overview of Supplemental Rules

    20. Our supplemental proposals fall into three areas. First, we 
propose to apply the suspension and debarment rules to a broader 
category of entities than are now covered, by defining ``covered 
transactions'' as including conduct taken by participants in the USF 
and TRS programs and the NDBEDP, and by including as covered 
transactions additional tiers of contracts involving contractors, 
subcontractors, suppliers, consultants, or their agents or 
representatives that are participating in these programs. For the 
reasons discussed below, we propose that all other agency programs or 
transactions be exempted from the rules at this time.
    21. Second, we propose to adopt requirements that program 
participants confirm that those with whom they do business are not 
already excluded or disqualified from government activities. We note 
that such confirmation is consistent with the Guidelines and many 
entities who participate in federal grant programs or seek federal 
contracts should already be familiar with the process. We also seek 
comment on possible exceptions and how to implement the principle of 
reciprocity, which would prevent a party that is suspended or debarred 
by another agency from participation in covered Commission 
transactions.
    22. Third, again consistent with the Guidelines, we propose new 
procedural requirements that would allow the agency to respond quickly 
to evidence of misconduct through a suspension mechanism, while 
providing for an evidentiary proceeding, evaluating a broader range of 
wrongful conduct than is now considered,\14\ prior to any disbarment.
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    \14\ The Guidelines provide federal agencies with substantial 
discretion to suspend and debar participants based on consideration 
of numerous factors. Moreover, through imputation rules, action 
could be taken against an organization, not just a principal, or the 
reverse, in appropriate circumstances. The imputation rules too 
would plug a gap in the Commission's current suspension and 
debarment mechanism.
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    23. We seek comment on these supplemental proposals. We also seek 
comment generally on any policies or procedures that we should adopt if 
we were to implement the Guidelines, and in particular what procedures 
would be ``consistent with the [OMB] guidance.'' We seek comments about 
any other changes to our rules that might be appropriate should we 
choose to adopt rules consistent with the Guidelines, including our 
proposed supplemental rules, particularly any conforming changes that 
may be necessary, including modifications of forms for Commission 
programs, inclusion of additional certifications, and such other 
changes that may be necessary or helpful in implementing any new 
suspension and debarment rules. In particular, we seek comment on any 
changes required with respect to our rules for the contents of 
applications to participate in competitive bidding to receive auctioned 
support through covered transactions.
    24. We also invite comment on the experiences of other agencies 
responsible for overseeing large programs that have applied the 
Guidelines. Have other agencies adopted the Guidelines largely intact, 
or are modifications commonly adopted so that suspension and debarment 
processes reflect the unique nature of the programs and missions the 
agencies oversee? Are there lessons learned by other agencies that 
could inform the Commission's adoption of expanded suspension and 
debarment rules consistent with the Guidelines?
    25. While this document focuses on areas where we propose to 
supplement or deviate from the Guidelines, interested parties who 
believe the Commission should consider other changes to the Guidelines 
in its supplemental regulations should set forth their proposals, and 
the rationales supporting the proposed change, with specificity.

[[Page 2082]]

B. Covered Transactions and Disclosure Requirements

    26. Generally. The Guidelines define ``non-procurement 
transactions'' as ``any transaction, regardless of type (except 
procurement contracts),'' including but not limited to grants, 
cooperative agreements, scholarships, fellowships, contracts of 
assistance, loans, loan guarantees, subsidies, insurances, payments for 
specified uses, and donation agreements. Notwithstanding this 
definition, the Guidelines provide flexibility to agencies to determine 
which non-procurement transactions should be covered by their 
suspension and debarment rules. For example, the Guidelines 
specifically exclude from their scope any non-procurement transaction 
that is exempted by a federal agency's regulation. The Guidelines also 
exclude by default any ``permit, license, certificate, or similar 
instrument issued as a means to regulate public health, safety, or the 
environment,'' unless a federal agency specifically designates it to be 
a covered transaction.
    27. If the Commission implements the Guidelines, should all 
transactions covered by the OMB definitions be included within the 
suspension and debarment regime? Are there additional types of 
transactions that should be included in addition to the examples 
provided in the Guidelines? Are there additional program-specific 
clarifications that should be made--for example, should the Commission 
clarify that Lifeline enrollment representatives who enroll individuals 
in the Lifeline program are executing covered transactions because 
enrollment is required before the service provider can claim a subsidy, 
or is that sufficiently clear from the Guidelines? Conversely, are 
there specific Commission nonprocurement transactions or programs that 
should be exempted from coverage? \15\ For example, are there some 
programs or activities that should be exempted because remedies other 
than suspension or debarment (e.g., license revocation) may be more 
appropriate? Commenters should identify specific transactions that 
should be included as covered transactions or exempted from the 
proposed suspension and debarment rules and provide the rationale for 
that recommendation.
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    \15\ We note that procurement contracts awarded directly by a 
federal agency would not be considered ``covered transactions'' 
under the nonprocurement government-wide guidance for suspension and 
debarment. However, where non-federal participants in nonprocurement 
transactions award contracts for goods or services, such contracts 
would be deemed to be covered transactions if the amount of the 
contract equals or exceeds $25,000.
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    28. USF, TRS, and NBDEDP as covered transactions. The Commission's 
primary permanent nonprocurement programs are the USF and TRS programs. 
In 2018, disbursements totaled $8.33 billion for USF programs and $1.4 
billion \16\ for TRS. We propose that all transactions under the USF 
and TRS programs be considered covered transactions under any new 
rules, as well as transactions under the NDBEDP, and that all other 
Commission transactions be exempt from those rules.\17\ We tentatively 
conclude that application of the suspension and debarment rules to 
these programs will improve the sustainability of their funding for the 
benefit of those whom the programs serve. We seek comment on this 
proposal, as well as this tentative conclusion. More specifically, 
under the TRS programs and NDBEDP, the Commission grants TRS and NDBEDP 
participants authorization to provide services and equipment pursuant 
to certifications and reimburses TRS providers and NDBEDP certified 
programs for services and equipment provided to beneficiaries. We 
invite comment on the benefits of applying the suspension and debarment 
rules to the TRS programs and to the NDBEDP.
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    \16\ Total disbursements for the NDBEDP, which come from the 
interstate TRS Fund, are limited to $10 million annually.
    \17\ In its most recent audit of the Commission's compliance 
with the Improper Payments Elimination and Recovery Improvement Act, 
the FCC's Inspector General listed nine programs that make 
disbursements under the direction of the Commission and its 
administrators: The four USF programs; the administrative costs of 
the Universal Service Administrative Company (USAC), the USF 
administrator; TRS; the North American Numbering Plan; payments 
related to the broadcast incentive auction (the TV Broadcaster 
Relocation Fund); and FCC operating expenses generally. In the 
report, OIG noted that the Commission had identified three of the 
USF programs and the TRS program as being susceptible to the risk of 
significant improper payments.
---------------------------------------------------------------------------

    29. General exemption for all other transactions, including 
authorizations and licenses. The Guidelines primarily, but not 
exclusively, focus on transactions that involve a transfer of Federal 
funds to a non-Federal entity.\18\ The Guidelines also exclude by 
default from the definition of ``covered transaction'' any ``permit, 
license, certificate, or similar instrument issued as a means to 
regulate public health, safety, or the environment,'' unless a federal 
agency specifically designates it to be a covered transaction. 
Consistent with the framework in the Guidelines, we propose to exclude 
all transactions other than those involving the USF, TRS, and NDBEDP 
from the scope of our proposed rules, such as applications for section 
214 authorizations, equipment authorizations, and broadcast and 
spectrum licenses issued by the Commission. The Communications Act of 
1934, as amended (Communications Act) and the Commission's implementing 
regulations govern the qualifications of applicants for such licenses 
and authorizations and the standards for revocation of the same. 
Similarly, we propose to exclude all transactions to or from licensees 
and those with spectrum usage rights (excluding, of course, those USF, 
TRS, and NDBEDP transactions where such an entity happens to be a 
participant), such as incentive auction payments or repacking 
payments.\19\ Such payments should not be ``covered transactions'' that 
might be stopped by suspension or debarment rules as the public 
interest is best served by facilitating spectrum usage right 
relinquishments or repacking in such circumstances--and the statutes 
and rules regarding the collection of any outstanding debts still apply 
and provide more appropriate remedies to protect these payments.\20\ We 
seek comment on this proposal.
---------------------------------------------------------------------------

    \18\ The guidelines define ``nonprocurement transaction'' to 
include, among other things, grants, loans, loan guarantees, and 
subsidies. However, it is not necessary that a nonprocurement 
transaction include a transfer of Federal funds.
    \19\ As noted, this exclusion, of course, would not apply to 
those USF, TRS, and NDBEDP transactions where such an entity is a 
participant.
    \20\ Thus, other provisions protect against payments to parties 
with existing debts to the Commission and other federal government 
entities.
---------------------------------------------------------------------------

    30. The Guidelines, unless otherwise expanded by agency rule, apply 
to two categories of transactions: A ``primary tier between a federal 
agency and a person''; and a ``lower tier, between a participant in a 
covered transaction and another person.'' Both primary tier and lower 
tier participants must disclose whether they, or any of their 
principals, are excluded or disqualified. Primary tier participants, 
however, must also disclose to the federal agency certain convictions, 
civil judgments, indictments, other criminal or civil charges, or 
defaults on public transactions of the participant or any of their 
principals.
    31. Agencies have some discretion within the parameters of the 
Guidelines to designate primary versus lower tier participants, and to 
expand the tiers that would be considered to be ``lower tier.'' \21\ In 
this section, we propose to

[[Page 2083]]

designate certain actors in the USF and TRS programs and the NDBEDP as 
primary tier participants, and others as lower tier participants. We 
also propose, consistent with the Guidelines, to designate certain 
entities who do not directly contract with the primary tier participant 
(for example, subcontractors) as lower tier participants if they meet 
certain criteria.\22\ Before we do so, however, we set forth our 
proposals on what would constitute a ``principal.''
---------------------------------------------------------------------------

    \21\ More specifically, the Guidelines also include as ``covered 
transactions'' any contract for goods and services awarded by a 
participant in a nonprocurement transaction covered under Sec.  
180.210 that is expected to equal or exceed $25,000, or any contract 
requiring the consent of an official of a federal agency.
    \22\ Sections 180.25(b)(2) and 180.220(c) of the Guidelines 
provide agencies with the option to include as ``covered 
transactions an additional tier of contracts awarded under covered 
nonprocurement transactions.'' The Guidelines also contain an 
Appendix-Covered Transactions, with diagrams illustrating tiers of 
covered transactions.
---------------------------------------------------------------------------

    32. Definition of ``principal.'' The Guidelines define 
``principal'' to mean (a) an ``officer, director, owner, partner, 
principal, investigator, or other person . . . with management or 
supervisory responsibilities'' or (b) a ``consultant or other person, 
whether or not employed by the participant or paid with Federal funds, 
who (1) [i]s in a position to handle Federal funds; (2) [i]s in a 
position to influence or control the use of those funds; or (3) 
[o]ccupies a technical or professional position capable of 
substantially influence the development or outcome of an activity [in a 
transaction].'' The Guidelines further state that an agency may 
``[i]dentify specific examples of types of individuals who would be 
`principals' under the Federal agency's nonprocurement programs and 
transactions, in addition to the types of individuals specifically 
identified above.''
    33. We propose that in addition to those persons defined as 
principals under the Guidelines, the term ``principal'' shall also mean 
``any person who has a critical influence on, or substantive control 
over, a covered transaction, whether or not employed by the 
participant.'' Persons who may have a critical influence on, or 
substantive control over, a covered transaction could include without 
limitation: management and marketing agents, accountants, consultants, 
investment bankers, engineers, attorneys, and other professionals who 
are in a business relationship with participants in connection with a 
covered transaction under an FCC program.\23\ We propose this expansion 
of the definition to ensure that all persons who have substantial 
influence on or control over a covered transaction may be considered 
``principals'' even if they do not satisfy any of the three prongs in 
the Guidelines. For example, a person that causes violations of rules 
applicable to a party's competitive bidding evaluation might not be 
``influenc[ing] the development or outcome of an activity required to 
perform the covered transaction'', yet that person could merit a 
debarment. This broadened definition of ``principal'' would afford the 
Commission the authority to consider such conduct. Commenters should 
identify any other categories of persons who should be considered 
``principals'' in addition to those discussed above.
---------------------------------------------------------------------------

    \23\ This expanded definition of the term ``Principal'' draws 
upon a supplement to the government-wide definition adopted by the 
Department of Housing and Urban Development (HUD).
---------------------------------------------------------------------------

    34. Primary and lower tier participants for the USF and TRS 
programs and the NDBEDP--summary. Our proposed designations for the 
programs are summarized in the chart below.

----------------------------------------------------------------------------------------------------------------
                                           Primary tier participants            Lower tier participants
----------------------------------------------------------------------------------------------------------------
High-Cost...............................  Carriers...................  Contractors, subcontractors,\24\
                                                                        suppliers, consultants or their agents
                                                                        or representatives for High-Cost-
                                                                        supported transactions, if:
                                                                       (1) such person has a material role
                                                                        relating to, or significantly affecting,
                                                                        claims for disbursements related to the
                                                                        program;
                                                                       (2) such party is considered a
                                                                        ``principal''; or
                                                                       (3) the amount of the transaction is
                                                                        expected to be at least $25,000.
Lifeline................................  Carriers...................  Any participant in the Lifeline program
                                                                        (except for the primary tier carrier),
                                                                        regardless of tier or dollar value, that
                                                                        is reimbursed based on the number of
                                                                        Lifeline subscribers enrolled,
                                                                        commissions, or any combination thereof.
                                                                        Contractors, subcontractors, suppliers,
                                                                        consultants, or their agents or
                                                                        representatives and third-party
                                                                        marketing organizations for Lifeline-
                                                                        supported transactions, if
                                                                       (1) such person has a material role
                                                                        relating to, or significantly affecting,
                                                                        claims for disbursements related to the
                                                                        program;
                                                                       .........................................
                                                                       (2) such party is considered a
                                                                        ``principal''; or
                                                                       (3) the amount of the transaction is
                                                                        expected to be at least $25,000.
E-Rate..................................  Schools and Libraries Form   Contractors, subcontractors, suppliers,
                                           471 Service Providers.       consultants, or their agents or
                                                                        representatives for E-Rate-supported
                                                                        transactions, if
                                                                       (1) such person has a material role
                                                                        relating to, or significantly affecting,
                                                                        claims for disbursements related to the
                                                                        program;
                                                                       (2) such person is considered a
                                                                        ``principal''; or
                                                                       (3) the amount of the transaction is
                                                                        expected to be at least $25,000.
RHC.....................................  Health Care Providers Form   Contractors, subcontractors, suppliers,
                                           462/466 Service Providers.   consultants, or their agents or
                                                                        representatives for RHC-supported
                                                                        transactions, if
                                                                       (1) such person has a material role
                                                                        relating to, or significantly affecting,
                                                                        claims for disbursements related to the
                                                                        program;
                                                                       (2) if such party is considered a
                                                                        ``principal''; or
                                                                       (3) the amount of the transaction is
                                                                        expected to be at least $25,000.
TRS.....................................  Service Providers..........  Contractors, subcontractors, suppliers,
NDBEDP..................................                                consultants, or their agents or
                                                                        representatives for TRS- or NDBEDP-
                                                                        supported transactions, if:
                                                                       (1) such person has a material role
                                                                        relating to, or significantly affecting,
                                                                        claims for disbursements related to the
                                                                        program;
                                                                       (2) such person is considered a
                                                                        ``principal''; or
                                                                       (3) the amount of the transaction is
                                                                        expected to be at least $25,000.
----------------------------------------------------------------------------------------------------------------


[[Page 2084]]

    35. Primary and lower tiers--High-Cost Programs. For the High-Cost 
programs, we propose that the primary tier participant will be the 
carrier receiving support. We propose that lower tier participants 
include contractors, subcontractors, suppliers, consultants, or their 
agents or representatives for High-Cost-supported transactions, 
regardless of the dollar value of the contract or agreement, if (1) 
such person has a material role relating to, or significantly 
affecting, claims for disbursements related to the High-Cost program, 
or (2) such person is considered a ``principal.'' \25\ We also propose 
that contractors, subcontractors, suppliers, consultants, or their 
agents or representatives be treated as lower tier participants for all 
USF-supported transactions, including High-Cost-supported transactions, 
if the amount of the transaction is expected to be at least $25,000.
---------------------------------------------------------------------------

    \24\ Under the Guidelines, subcontractors include suppliers of 
goods and services.
    \25\ Our proposed new rules would provide: ``The term 
`Principal' means, in addition to those individuals described at 2 
CFR 180.995, any person who has a critical influence on, or 
substantive control over, a covered transaction, whether or not 
employed by the participant or paid with federal funds. Persons who 
have a critical influence on, or substantive control over, a covered 
transaction may include, but are not limited to: Management and 
marketing agents, accountants, consultants, investment bankers, 
engineers, attorneys, and other professionals who are in a business 
relationship with participants in connection with a covered 
transaction under an FCC program'').
---------------------------------------------------------------------------

    36. Primary and lower tiers--Lifeline Program. Under the Lifeline 
program, carriers can submit consumer Lifeline applications to the 
National Verifier and are in the best position to have up-to-date 
information on customer activation and use of their Lifeline service. 
In addition, the carrier submits requests for payment to the USF 
Administrator and is in the best position to carry out the obligations 
of primary tier participants under the Guidelines. In contrast, the 
direct interaction of low-income consumers with the Commission or the 
USF Administrator is incidental. We propose that these beneficiaries 
not be considered primary or lower tier participants. Therefore, in the 
Lifeline program, we propose that the primary tier participant will be 
the carrier receiving support.
    37. We propose three categories of lower tier participants in the 
Lifeline program. First, we propose to include parties (except for the 
primary tier Lifeline carrier) to any contract or award in which a 
person is reimbursed based on the number of Lifeline subscribers 
enrolled, by commission, or any combination thereof, regardless of tier 
or dollar value. Second, we propose that lower tier participants would 
include contractors, subcontractors, suppliers, consultants, or their 
agents or representatives and third-party marketing organizations for 
Lifeline-supported transactions, regardless of the dollar value of the 
contract or agreement, if (1) such person has a material role relating 
to, or significantly affecting, claims for disbursements related to the 
Lifeline program, or (2) such person is considered a ``principal.'' 
Finally, we propose that contractors, subcontractors, suppliers, 
consultants, or their agents or representatives and third-party 
marketing organizations be treated as lower tier participants for 
Lifeline-supported transactions, if the amount of the transaction is 
expected to be at least $25,000.
    38. Primary and lower tiers--E-Rate Program. In the E-Rate program, 
after a school, library, or consortium enters into a signed contract or 
other legally binding agreement for services eligible for E-Rate 
discounts, the school, library, or consortium will identify the 
selected service provider using FCC Form 471. For the E-Rate program, 
we propose that both the program applicant (the school, library, or 
consortium) and the service provider(s) selected by the applicant (as 
indicated on FCC Form 471) be designated as primary tier participants. 
Extending the primary tier designation to applicants will allow us to 
obtain the more extensive primary tier disclosures from the applicants 
themselves, while also ensuring that the applicants will verify during 
their selection process that a service provider is not excluded or 
disqualified. We also propose that the service providers selected by 
the applicant schools, libraries, and consortia also be considered 
primary tier participants, regardless of whether they submit invoices 
directly to USAC. The experience of the Commission is that service 
providers may often be responsible for waste, fraud, and abuse, and 
therefore the imposition of the more substantial primary tier 
obligations (particularly disclosure requirements) on these entities 
would best achieve the Commission's goals of protecting federal funds. 
We seek comment on this proposal.
    39. Under the E-Rate programs, schools and libraries may create 
``consortia'' that can seek competitive bids or E-rate funding on 
behalf of all their members. When schools and libraries act through 
consortia, we propose that the consortium itself, acting through its 
lead member, would be a primary tier participant, along with the member 
schools or libraries. However, in considering any proposed suspension 
or debarment action, we anticipate that the suspension and debarring 
officer should evaluate which particular school or library consortium 
member was responsible for the bad conduct (in many cases, this may be 
the lead member) and direct the suspension and debarment orders to 
those responsible for the bad acts, rather than to all consortium 
members. We seek comment on this proposal and how best to implement the 
Guidelines in this context.
    40. Finally, we propose that lower tier participants for the E-Rate 
program include contractors, subcontractors, suppliers, consultants, or 
their agents or representatives (with the exception of the service 
provider(s) designated on FCC Form 471, which would be treated as a 
primary tier participant) for USF-supported E-Rate transactions. We 
propose that all such persons be treated as lower tier participants, 
regardless of the dollar value of their contract or agreement, if (1) 
they have a material role relating to, or significantly affecting, 
claims for disbursements related to the E-Rate program, or (2) they are 
considered a ``principal.'' We also propose that such persons be 
treated as lower tier participants for all other E-Rate-supported 
transactions if the amount of the transaction is expected to be at 
least $25,000.
    41. Primary and lower tiers--Rural Health Care Program. We propose 
a structure for the RHC program that is substantially similar to the E-
Rate program. After an individual health care provider (HCP) or a 
consortium enters into a signed contract or other legally binding 
agreement for services eligible for RHC support, the HCP or consortium 
will identify the selected service provider using FCC Form 462 or 466. 
As with the E-Rate program, we propose that both the program applicant 
and the service provider(s) selected by the applicant (as indicated on 
FCC Form 462 or 466) be designated as primary tier participants, for 
the reasons discussed above.
    42. Similarly, we propose that a consortium applicant, acting 
through its lead entity, would be the primary tier participant, along 
with its member HCPs, but that the suspension and debarring officer 
should evaluate which particular consortium member (for example, the 
lead entity) was responsible for the bad conduct and direct the 
suspension and debarment orders to those responsible for the bad acts, 
rather than to all consortium members.
    43. Finally, as with the E-Rate program, we propose that lower tier 
participants for the RHC program include contractors, subcontractors, 
suppliers, consultants, or their agents or

[[Page 2085]]

representatives (with the exception of the service provider(s) 
designated on FCC Forms 462 or 466, which would be treated as a primary 
tier participant) for USF-supported RHC program transactions. We 
propose that all such persons be treated as lower tier participants, 
regardless of the dollar value of their contract or agreement, if (1) 
they have a material role relating to, or significantly affecting, 
claims for disbursements related to the RHC program, or (2) they are 
considered a ``principal.'' We also propose that contractors (except 
for the service provider designated on FCC Forms 462 or 466), 
subcontractors, suppliers, consultants, or their agents or 
representatives be treated as lower tier participants for all other 
RHC-supported transactions if the amount of the transaction is expected 
to be at least $25,000. We seek comment on this proposal and how best 
to implement the Guidelines in this context.
    44. Primary and lower tiers--TRS programs and NDBEDP. We propose 
that in the TRS programs and the NDBEDP, the service and equipment 
providers receiving payments shall be deemed the primary tier 
participants. In these programs, the service and equipment providers 
evaluate the qualifications of customers to participate in the 
programs. In addition, the service (or equipment) providers submit 
requests for payment to the program administrators and are in the best 
position to carry out the obligations of primary tier participants 
under the Guidelines. For the TRS programs (other than TRS that is 
provided through state programs) and the NDBEDP, the primary tier 
participants would be the certificated entities that are reimbursed by 
the Commission and the TRS Fund administrator for providing services 
and equipment under the covered transactions. For TRS that is provided 
through state TRS programs, the primary tier participants would be the 
TRS providers that are authorized by each state to provide intrastate 
TRS under the state program and that, accordingly, are compensated by 
the TRS Fund for the provision of interstate TRS. For these programs, 
are there certain types of participants that the rules should treat 
differently? We note that, for the NDBEDP, some participants are state 
or local governments, and others are non-profits. Are there reasons why 
participants that are state or local governments or non-profit entities 
would require different treatment under the Guidelines and the rules we 
propose in this document? In contrast to the service providers, the 
direct interaction of TRS and NDBEDP beneficiaries (i.e., individuals 
with disabilities) with the FCC or the administrators is incidental. 
Moreover, because beneficiaries (i.e., individuals with disabilities) 
in the TRS program and NDBEDP do not directly submit applications to 
the program administrators, we propose that these beneficiaries not be 
considered either primary or lower tier participants, and not be 
subject to the debarment rules. We also note that the burden of 
imposing lower tier obligations on these individual beneficiaries would 
be substantial and their obligations under the rules, if they were 
considered participants, could well be beyond their ability or 
resources to carry out.
    45. Consistent with the USF programs, we propose that lower tier 
participants for the TRS programs and the NDBEDP include contractors, 
subcontractors, suppliers, consultants, or their agents or 
representatives for TRS- or NDBEDP-supported transactions. We propose 
that all such persons be treated as lower tier participants, regardless 
of the dollar value of their contract or agreement with the service 
provider, if (1) they have a material role relating to, or 
significantly affecting, claims for disbursements related to the TRS or 
NDBEDP programs, or (2) they are considered a ``principal.'' We also 
propose that contractors, subcontractors, suppliers, consultants, or 
their agents or representatives be treated as lower tier participants 
for all other TRS- or NDBEDP-supported transactions if the amount of 
the transaction is expected to be at least $25,000. We seek comment on 
this proposal.
    46. Transactions with the USF, TRS Fund, and NDBEDP Administrators. 
We also propose adoption of a clarification to section 180.200 of the 
Guidelines explaining that covered transactions include not only 
transactions between a person and the Commission, but also any 
transactions between a person and the administrators of the USF and TRS 
programs and the NDBEDP, when those entities are acting as agents of 
the Commission for purposes of administering the programs. We seek 
comment on this proposal.
    47. As noted, the Guidelines impose important disclosure 
requirements on both primary and lower tier participants. In addition 
to the discussion in this section, we refer interested parties to the 
Guidelines in 2 CFR part 180, subpart C (Responsibilities of 
Participants Regarding Transactions Doing Business with Other Persons). 
We note that entities who participate in federal grant programs (e.g., 
schools, libraries, or rural health care providers) or seek federal 
contracts (e.g., service providers) should already be familiar with 
similar requirements. As noted above, we propose to exclude individual 
beneficiaries in the Lifeline and TRS programs and the NDBEDP (i.e., 
low-income individuals and individuals with disabilities) from these 
requirements.
    48. Primary tier participants. Disclosures required of primary tier 
participants (i.e., those who deal directly with the agency or its 
agents by submitting a proposal for, or entering into, a covered 
transaction) are extensive. They must not only advise the agency if 
they are presently excluded or disqualified, but must also state 
whether the participant or any of its principals for the transaction 
``have been convicted within the preceding three years of any of the 
offenses listed in Sec.  180.800(a) or had a civil judgment rendered 
against [them] for one of those offenses within that time period,'' 
``are presently indicted for or otherwise criminally or civilly charged 
by a governmental entity (Federal, State or local) with commission of 
any of the offenses listed in Sec.  180.800(a),'' or ``[h]ave had one 
or more public transactions . . . terminated within the preceding three 
years for cause or default.''
    49. We anticipate that disclosure requirements could be implemented 
through changes to existing program forms and certification rules and 
seek comment on how to implement such requirements in a manner that 
minimizes burdens on primary tier participants. We also seek comment on 
what changes to our rules and form instructions may be required to 
further communicate disclosure requirements to primary tier 
participants. Finally, we propose clarifying the disclosure rules to 
require that such disclosures by primary tier participants be made not 
only to the USF, TRS, and NDBEDP administrators, as the Commission's 
agents for the covered transactions, but also to the Commission (with 
disclosures to be submitted to the attention of the applicable 
bureaus). We seek comment on these proposals.
    50. Lower tier participants. The Guidelines disclosure requirements 
for lower tier participants are less extensive; these parties need only 
disclose whether they are excluded or disqualified from participating 
in covered transactions. As a further protection for agency 
transactions, should any implementing rules adopted by the Commission 
require that participants at all or some of the lower tiers also 
disclose the information

[[Page 2086]]

applicable to primary tier participants to both the Commission and to 
the higher tier participant with which they seek to conduct business? 
For example, in the E-Rate program, a service provider would be 
required to disclose the primary tier information to the Commission, 
but the program beneficiaries (the schools and libraries) might also 
find that information useful in evaluating the services offered by 
their potential service providers.
    51. We note that under the Guidelines, a disclosure of unfavorable 
information by a primary tier participant would not necessarily cause 
the federal agency to deny participation (except for instances of 
exclusion or disqualification), and our proposal would extend this 
protection to disclosures by lower tier participants. However, it would 
allow the agency and the higher tier participant to whom the disclosure 
was made the opportunity to consider this information to better 
determine whether participation seems appropriate under the 
circumstances presented. The requirement to notify lower tier 
participants of such additional disclosure obligations could be an 
additional duty for both primary and lower tier program participants 
under any new rules. We seek comment on this proposal and any 
alternatives.
    52. Subpart C of the Guidelines describes the responsibilities of 
participants in lower tier transactions, and specifically requires such 
participants to pass down the requirements to persons at lower tiers 
with whom they intend to do business. We propose that primary and lower 
tier participants include a term or condition in their transactions 
with the next lower tier participants requiring compliance with 2 CFR 
part 180, subpart C, as supplemented by any Commission rules.
    53. Lifeline and other participant disclosures. As proposed in this 
document, under the Lifeline program, eligible telecommunications 
carriers (ETCs), their agents, and subagents would be subject to 
disclosure obligations. We seek comment on how those disclosure 
obligations should be accomplished. Should the disclosure rules require 
all primary and lower tier participants in the Lifeline program to file 
disclosure statements, upon penalty of perjury, reporting all required 
disclosures or certifying that they have no reportable disclosures to 
make? For eligible telecommunications carriers, are there existing 
forms or submissions to which this disclosure should be added? \26\ How 
often should such disclosure statements be required to be filed? For 
individuals who have registered with USAC for access to the Lifeline 
National Verifier or National Lifeline Accountability Database systems, 
should we require such disclosure statements to be filed upon 
registration and every subsequent recertification? Should ETCs be 
required to maintain such disclosure statements as part of their record 
retention requirements? What remedies should be available if 
participants fail to disclose the required information? We seek comment 
on these matters and on similar issues related to the implementation of 
disclosures for the other programs that may be made subject to the 
suspension and debarment rules, as proposed in this document.
---------------------------------------------------------------------------

    \26\ For example, in the case of Lifeline, this could be 
effected through Form 555, reimbursement claims, or registration in 
the Representative Accountability Database.
---------------------------------------------------------------------------

    54. USF competitive bidding short forms. In some instances, the 
Commission conducts competitive bidding to determine recipients of 
universal service support, as in the Connect America Fund auctions. We 
consider here the Commission's own processes for auctioning support, 
rather than the competitive bidding that schools, libraries, and health 
care providers must conduct prior to selecting a service provider in 
the E-Rate and RHC programs. In the Commission's competitive bidding 
process, an applicant for support first files a ``short-form'' 
application to participate in bidding. Having a simpler standard for 
``short-form'' applications as opposed to ``long-form'' applications 
streamlines the competitive bidding process and encourages 
participation by keeping participation as simple as possible. Thus, at 
the short-form stage an applicant to participate in bidding for 
universal service support is only required to certify ``that the 
applicant is in compliance with all statutory and regulatory 
requirements for receiving the universal service support that the 
applicant seeks, or, if expressly allowed by the rules specific to a 
high-cost support mechanism, . . . that the applicant . . . must be in 
compliance with such requirements before being authorized to seek 
support,'' and is not required to demonstrate fully its qualifications 
and compliance. Only after becoming a winning bidder must an applicant 
file a ``long-form'' application demonstrating in detail the 
applicant's qualification to receive the support. For example, auction 
participants need not demonstrate eligible telecommunications carrier 
(ETC) qualifications until the long-form stage.
    55. Primary tier participants would at a minimum provide all 
required disclosures with their long-form applications. As discussed 
above, the Guidelines require primary tier participants not only to 
disclose whether they are presently excluded or disqualified, but to 
make several additional disclosures that could assist the agency in 
evaluating whether to enter into the transaction with that person. The 
Guidelines give the agency discretion to consider the disclosed 
information before determining whether or not to enter into the covered 
transaction. We recognize that requiring all of the disclosures and 
evaluations at the short-form stage could slow the auction process. On 
the other hand, a problem would be created in situations where an 
entity participates in an auction, wins, and then is disqualified from 
receiving support. This problem may weigh in favor of more requiring 
more disclosure in the short-form application. Accordingly, we seek 
comment on the appropriate balance at the short-form stage between 
requiring helpful disclosures while preserving the simplicity and speed 
of applying to participate in the competitive bidding process, and more 
specifically on the three options discussed below or any other 
alternatives that commenters want to propose.
    56. At the short-form application stage, the Commission could limit 
the application of the Guidelines to a review of the status of the 
applicant and wait until a winning bidder files a long-form application 
to have the applicant disclose additional parties and conduct further 
review. As noted, in a short-form application in connection with 
universal service support, an applicant must certify that it is ``in 
compliance with all . . . regulatory requirements for receiving the 
universal service support.'' Therefore, a presently excluded applicant 
could not make the required certification and could not successfully 
submit a complete short-form application. This approach permits the 
Commission to process applications to participate in competitive 
bidding more quickly and minimizes the disclosures required of 
potential participants. The applicant would bear the risk that required 
disclosures in its long-form application could result in its 
disqualification from support and a default on its application.
    57. Alternatively, a second approach would be to require at the 
short-form stage that applicants disclose just

[[Page 2087]]

whether the applicant or any of its principals are presently excluded 
or disqualified.\27\ As under the first approach, a presently excluded 
or disqualified applicant could not make the required certification and 
would be unable to submit successfully a complete short-form 
application. In addition, under this second approach, an applicant with 
a principal that is presently excluded or disqualified would have to 
address those circumstances and come into compliance in the event it 
should become a winning bidder. If it failed to do so adequately, it 
could not successfully submit a complete short-form application. This 
approach seeks to balance requiring the most critical disclosures at 
this stage and maintaining an expeditious competitive bidding process.
---------------------------------------------------------------------------

    \27\ Thus, the applicant to participate in competitive bidding 
would be required to disclose the same information required of lower 
tier participants under the Guidelines.
---------------------------------------------------------------------------

    58. Finally, a third approach would be to require applicants to 
make all disclosures required of a primary tier participant at the 
short-form stage, as well as the long-form stage. This would allow the 
Commission to review the disclosures and resolve any issues prior to 
the bidding. However, it also would significantly delay the competitive 
bidding process and the ultimate award of support. Furthermore, it 
would not eliminate the need for considering additional disclosures and 
assessments at the long-form stage, as an applicant might have 
additional disclosures to make due to developments during the course of 
competitive bidding. We seek comment on all these options and any other 
alternatives commenters may feel are appropriate at the short-form 
stage.
    59. Primary tier participants. If a primary tier participant 
discloses unfavorable information (other than an exclusion or 
disqualification) to the Commission (or the Administrators) before it 
enters into a transaction (such as an E-Rate funding commitment), one 
possible way for the Commission to prevent the transaction is to 
institute and complete a suspension and/or debarment proceeding before 
the transaction is approved or concluded.
    60. We seek comment on whether our rules should include less 
drastic remedies. For example, should the Commission adopt specific 
rules to afford itself (in consultation with the Administrators) the 
discretion to merely preclude the participant from entering into the 
transaction at hand, prior to or in lieu of suspending or debarring the 
participant? Or should rules permit the agency to choose to not enter 
into covered transactions with that party (for example, a service 
provider who is a primary tier participant) for some specified period, 
akin to the ``limited denial of participation'' process described 
further below? Should our rules be modified to permit the Commission to 
consider this unfavorable information in TRS or NDBEDP certification 
proceedings and, if so what modification to our certification rules 
would be appropriate to ensure that the Commission could take 
appropriate action to reflect such information? \28\ If the agency 
should be afforded discretion not to enter into the covered transaction 
based on the unfavorable information without using a suspension or 
debarment mechanism, what procedures should be provided to ensure due 
process for the party or parties affected by that decision?
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    \28\ The TRS certification rules are quite specific on what 
constitutes grounds for granting certification.
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    61. Lower tier participants. If the Commission adopts rules 
requiring lower tier participants, such as an E-Rate or Rural Health 
Care consultant or a TRS subcontractor, to disclose unfavorable 
information currently only required to be disclosed by primary tier 
participants (i.e., convictions, etc.), the current Guidelines would 
not provide a mechanism for the Commission or the Administrators to 
reject a related primary tier participant's application solely because 
of that lower tier participant's disclosure. For example, if a school 
is utilizing an E-Rate consultant who has been convicted of fraud in 
another government program but has not yet been debarred, the 
Guidelines do not provide a mechanism for the rejection of the school's 
E-Rate application. However, requiring disclosure of additional 
information (in this example, the conviction) would give the Commission 
the opportunity to advise the program administrators to closely monitor 
the lower tier participant and, if appropriate, would enable the agency 
to initiate a suspension/debarment proceeding against the lower tier 
participant (if the disclosures are so significant that suspension or 
debarment is warranted).
    62. We seek comment on whether the Commission should adopt rules 
that would allow the Commission, or the Administrators, to reject a 
nonprocurement transaction (e.g., an application for USF funding, or a 
request for TRS compensation) where the Commission or the 
Administrators consider the disclosure of unfavorable information 
relating to the lower tier participant so significant that the 
transaction should be denied, even without initiation of a suspension 
or debarment proceeding. What factors should be considered in such a 
determination? For example, should the primary tier participant first 
be given the opportunity to terminate its relationship with the lower 
tier participant? We believe that providing the Commission, or the 
Administrators as its agents, the discretion to reject such primary 
participant transactions based on unfavorable information disclosed by 
lower tier participants would provide the Commission with maximum 
flexibility to protect the USF and TRS funds, and seek comment on this 
proposal.
    63. Under the Guidelines, an agency head may grant an ``exception'' 
to allow an excluded person to participate in a transaction.\29\ Should 
any Commission rules implementing the Guidelines spell out factors for 
invoking such an ``exception'' or should that determination be left 
solely to the discretion of the full Commission or the Chairman? If any 
factors are enumerated, we tentatively propose that one consideration 
be whether the provider of services--whether primary tier or lower 
tier--may be the sole source of services in the area, such that its 
exclusion could place consumers and-or beneficiaries at risk of losing 
service and more broadly the extent to which the exclusion would 
substantially impair delivery of services to customers and 
beneficiaries. Are there additional factors that should be identified 
as relevant to this determination? In addition, should the agency head 
alone be given authority to grant exceptions, or should the Commission 
consider a delegation of authority to the bureaus overseeing the 
programs (or perhaps to those bureaus in combination with the 
Enforcement Bureau) to grant such exceptions where the sole provider 
question is raised?
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    \29\ Section 180.135 provides that an agency head ``may grant an 
exception permitting an excluded person to participate in a 
particular covered transaction.'' Such an exception ``must be in 
writing and state the reason(s) for deviating from the government-
wide policy in Executive Order 12549.''
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    64. At least one other federal agency, the Department of Housing 
and Urban Development (HUD), specifically provides for a ``limited 
denial of participation'' for up to twelve months under its rules as a 
parallel mechanism to debarment. Many of the procedures under this 
mechanism resemble those under the Guidelines, including due process 
protections. However, HUD's limited denial of participation process 
does not trigger inter-agency reciprocity

[[Page 2088]]

because that process is deemed to be outside the government-wide 
suspension and debarment system. Therefore, invoking a limited denial 
of participation would prevent a bad actor from continuing to 
participate in the particular agency program that triggered the limited 
debarment, but would not result in the party's exclusion on the System 
for Award Management exclusion list so as to trigger reciprocal 
exclusions government-wide.
    65. Under the HUD rules, if at any time after invoking the limited 
debarment process the agency determines that a suspension and debarment 
is the more appropriate mechanism, the agency may initiate either 
suspension or debarment proceedings. Adopting such a mechanism as part 
of the Commission's rules would allow the agency to protect its 
programs from conduct of bad actors for a shorter period than a 
suspension or debarment, while affording the party the opportunity to 
come into compliance expeditiously, without causing the wrongdoer to be 
automatically excluded across all agency programs or government-wide. 
We seek comment on whether adopting this mechanism could be a useful 
tool for the Commission to employ and, if so, what standards might be 
appropriate for triggering this remedy. Should such a mechanism be 
employed primarily to ensure that a program participant responds to 
information requests and other Commission directives, but not be 
employed where there is evidence of fraud or other substantial 
wrongdoing that would warrant debarment? Or would a limited denial of 
participation be appropriate where a bureau or the Commission wanted to 
recommend exclusion of a party from one agency program due to 
malfeasance, but not from all covered agency transactions? In what 
other circumstances might such a mechanism be appropriate or 
inappropriate?

C. Suspension and Debarment Process

    66. The default procedural requirements applicable to suspension 
and debarment actions are set forth in subparts F, G, and H of the 
Guidelines. We seek comment on Commission-specific modifications to 
those procedures. We also invite comment on any other changes that 
parties believe should be made to the default procedures. Commenters 
should set forth their proposals, and the rationales supporting the 
proposed change, with specificity.
    67. Under the Guidelines, agencies look to individual circumstances 
and factors in rendering suspension and debarment determinations. Some 
of the grounds for suspension or debarment are described in the 
Guidelines, but each agency can modify that list.\30\ If the Commission 
adopts rules consistent with the Guidelines, are there specific 
additional suspension and/or debarment factors that should be expressly 
taken into consideration? We tentatively propose that additional 
factors that would militate in favor of suspension or debarment should 
include: Repeat offenders of Commission rules; habitual non-payment or 
under-payment of Commission regulatory fees and/or contributions to the 
USF and TRS programs and NDBEDP; willful violation of USF, TRS, and 
NDBEDP rules; the willful submission of FCC forms or statements made to 
the FCC or to the Administrators that result in or could result in 
overpayments of federal funds to the recipients, including the willful 
submission of false documentation to obtain USF or TRS funds; and the 
failure to respond to requests made by the FCC or the Administrators 
for additional information to justify payment or continued operation 
under their certifications.
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    \30\ Grounds for suspension or debarment are set forth in 
section 180.800 of the Guidelines, and include not only convictions 
of or civil judgments for fraud or certain criminal offenses, 
including any ``offense indicating a lack of business integrity,'' 
but also violations of the requirements of public transactions ``so 
serious as to affect the integrity of an agency program'' (including 
willful or repeated violations). In addition, the Guidelines provide 
that suspension or debarment could be warranted for ``[f]ailure to 
pay a single substantial debt, or a number of outstanding debts . . 
. owed to any Federal agency.'' Finally, the Guidelines provide the 
discretion to suspend or debar for ``[a]ny other cause of so serious 
or compelling a nature that it affects [the party's] present 
responsibility.''
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    68. We also tentatively propose as an additional factor the willful 
violation of a statutory or regulatory provision applicable or related 
to any submission made to obtain USF or TRS funds, or such a violation 
caused by gross negligence. For example, within the High-Cost program, 
we seek comment on whether the following should constitute grounds for 
debarment: Willful (or grossly negligent) violation: Improper cost 
accounting, including putting expenses not supported by the universal 
service fund in the carrier's revenue requirement; using high-cost 
support for non-supported expenses; and allocating non-regulated 
expenses to the regulated entity. Further, we tentatively propose to 
define the term ``public agreement or transaction,'' as used in section 
180.800(b) of the Guidelines relating to causes for debarment, as 
encompassing contracts between USF applicants and their selected 
service providers and/or consultants.
    69. The Guidelines also list numerous mitigating and aggravating 
factors that may influence the debarring official's decision.\31\ We 
have sought comment on whether the Commission should consider granting 
an exception to an excluded service provider if that provider is the 
sole source of services in an area. More generally, during a debarment 
proceeding, should the Commission consider the impact that debarment 
would have on the provision of services to customers under agency 
programs, whether the TRS program, the NDBEDP, or the various USF 
programs? How would the Commission determine whether the person subject 
to suspension and/or debarment proceedings would be the sole provider 
of services, and to what extent should that influence the outcome of a 
suspension and debarment proceeding? Should debarment of an entity that 
appears to be the sole provider of services in an area be subject to a 
more extended transition period to permit customers or the agency to 
search for alternative sources of services? Where an entity is the sole 
source provider, should the Commission's rules provide for a remedy 
other than debarment, perhaps in the form of either a settlement 
agreement or a ``consent decree'' permitting continued service but 
subject to an appropriate compliance plan and strict oversight? What 
other vehicles or regulations might best accomplish the goal of 
protecting the USF and TRS programs and the NDBEDP from fraud or abuse 
without disrupting service to customers?
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    \31\ The list of factors is extensive and includes, by way of 
example, the actual or potential harm or impact that results or may 
result from the wrongdoing, and the frequency of incidents and/or 
duration of the wrongdoing.
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    70. Finally, we note that a program participant may choose to 
continue with an excluded entity ``if the transactions were in 
existence when the agency excluded the person.'' \32\ To what extent 
should continuation be permitted under those programs in which 
beneficiaries are receiving services on a month to month (or similarly 
short term) basis? For example, if a school or library receives E-Rate 
services by tariff on a month-to-month basis, should the school or 
library be required to transition to a different provider if the 
initial service provider is suspended or

[[Page 2089]]

debarred since the school or library is not under a binding long-term 
contract with that carrier? Or should we construe the term 
``transactions . . . in existence'' to cover these monthly purchases? 
Should those beneficiaries receiving services for an indefinite term be 
required to seek a different service provider and, if so, what length 
of transition period would be appropriate? We seek comment on all these 
considerations and proposals, in addition to the other factors set 
forth in the Guidelines.
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    \32\ We recognize that adoption of this provision would 
constitute a change of course from policies currently in effect for 
the E-Rate program that now preclude the distribution of any USF 
funds to debarred entities and would require appropriate changes to 
our rules.
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    71. The Guidelines for suspension require ``adequate evidence,'' 
defined as ``information sufficient to support the reasonable belief 
that a particular act or omission has occurred.'' Under the Guidelines 
the suspending official first imposes the suspension, and then promptly 
notifies the suspended person, who is then afforded an opportunity to 
contest the suspension. Debarment in contrast requires a 
``preponderance of the evidence'' and an opportunity for the target 
entity to respond before it goes into effect.
    72. We seek comment on whether the Commission should adopt these 
evidentiary standards. Should the Commission adopt any suspension and 
debarment rules that include additional factors relating to the 
evidentiary standards (with particular attention as to what constitutes 
``adequate evidence'')?
    73. The typical debarment period is not more than three years, but 
that period may be adjusted based on the ``seriousness of the causes'' 
for debarment and evaluation of the factors listed in the Guidelines. 
Further, a debarred person may ask the debarring official to reconsider 
the decision or to reduce the time period or scope of the debarment. 
Are there additional mitigating factors beyond those set forth in the 
Guidelines that may warrant a reduction in the debarment period in 
response to a request for reconsideration?
    74. Should the absence of an alternative service provider be a 
mitigating factor? Should the Commission adopt a mechanism that would 
permit a debarred person that is the sole provider of services to 
request, after the first year of debarment, a reduction in the 
debarment period? Should other participants have an opportunity to 
petition for a reduction of their debarment period by demonstrating 
that they have instituted compliance measures with training and 
oversight that will facilitate program compliance? In the context of 
the E-Rate and Rural Health Care programs, should the Commission treat 
applicant schools, libraries, and health care providers differently 
than other parties (either for determining the period of debarment, or 
in the review of applicable factors) and, if so, under what 
circumstances? Should the Commission provide for an additional 
requirement that supplements the Guidelines to require debarred parties 
to petition for readmission into FCC programs after the debarment 
period? If so, should the burden be on the petitioner to demonstrate 
that it has taken remedial actions to avoid future violations? Should 
any such petition be resolved by the bureau responsible for program 
oversight, by the debarring official, or by the Chairman or full 
Commission?
    75. Should the debarring official have authority to tailor 
debarments for particular circumstances or propose remedies in lieu of 
suspension and debarment? \33\ Should any such determinations be made 
only after input from appropriate bureau staff who are likely to have 
the best knowledge of how entities are certified (in the case of TRS or 
NDBEDP) or how alternative remedies might impact delivery of services 
to beneficiaries? What types of alternative remedies might be 
appropriate for the USF and TRS programs and the NDBEDP? Should 
alternative remedies be fashioned in a different way from consent 
decrees in Enforcement Bureau enforcement actions? For example, should 
the official be afforded authority to negotiate a settlement under 
which the respondent would agree to the repayment of funds or a 
reduction in program support, rather than suspension or debarment? 
Under what circumstances would such a resolution be appropriate? Are 
there other alternative remedies that the agency should consider?
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    \33\ One possibility is to allow the debarring official to issue 
a limited denial of participation similar to that utilized by HUD.
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    76. We seek comment on several significant process questions to 
ensure that implementation of any new rules be efficient and fair.
    77. One issue is who should present the evidence supporting 
suspension or debarment to the suspending or debarring official. If the 
Office of the Inspector General (OIG) has conducted the underlying 
investigation supporting the suspension and debarment, we would propose 
that the OIG have primary responsibility for presenting the evidence to 
the suspending or debarring official because it would be the entity 
most familiar with the underlying facts. In other situations, however, 
it may be appropriate for the presentation to be made by the other 
units within the Commission that may have conducted the investigation, 
such as the Enforcement Bureau. In addition, the Commission may want to 
develop coordination procedures to permit the bureaus most responsible 
for the implementation of its USF and TRS programs and the NDBEDP to 
make presentations in the proceedings because they are likely to have 
insights on ways to implement suspension or debarment without adversely 
impacting the persons or entities the programs are designed to assist. 
We seek comment on these options.
    78. A second consideration is the mechanisms for appeal and review 
of any suspending or debarring action. We propose that a determination 
by the suspending or debarring official would be an action on which 
reconsideration could be sought under section 405 of the Communications 
Act or an application for review filed under section 155(c)(4) of the 
Communications Act. Would it be appropriate or necessary to adopt any 
supplemental rules applicable to applications for review or petitions 
for reconsideration of such actions, or are existing rules and 
procedures sufficient and appropriate to handle such petitions? If 
reconsideration could be sought or an application for review filed, as 
proposed, would it be appropriate for the Commission to adopt rules 
providing that the suspending or debarring official or Commission, as 
the case may be, would make every effort to act on such motions or 
applications within 180 days? Would some other time frame be more 
reasonable? Should we consider supplemental rules providing guidance 
for what constitutes ``good cause'' under section 1.106(n) of our rules 
for granting a stay of any suspension or debarment action taken by the 
Commission en banc, pending a decision on a petition for 
reconsideration? If a stay of a suspension or debarment is granted, we 
propose that any such stay not exceed 120 days to ensure that expedited 
review of the suspending or debarring action is provided. We also seek 
comment on whether the initial suspending or debarring actions, taken 
pursuant to delegated authority, should be subject to the procedures 
under section 1.102(a) or section 1.102(b) of our rules. If such 
actions would otherwise subject to section 1.102(a), which provides for 
automatic stays of hearing orders pending an application for review, we 
propose that suspension or debarment orders be exempt from such stays. 
We seek comment on all these proposals and on any other procedures 
governing the appeal and

[[Page 2090]]

review of determinations by the suspending or debarring official. If an 
interested party proposes such procedures, it should set forth that 
proposal and any supporting rationales with specificity.
    79. A third procedural consideration is the designation of the 
``suspending official'' and the ``debarring official'' who shall 
conduct fact finding for FCC suspensions and debarments. Currently, the 
Enforcement Bureau has authority to resolve universal service 
suspension and debarment proceedings.\34\ We seek comment on whether we 
should revisit that determination given our proposal to significantly 
expand the scope of the Commission's suspension and debarment rules 
beyond the current non-discretionary USF suspensions and debarments.
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    \34\ Section 54.8 was originally adopted as 54.521 and 
redesignated in 2007.
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    80. We recognize that officials who conduct suspension and 
debarment proceedings should be neutral. Although suspension and 
debarment proceedings are not formal adjudications subject to APA 
formal hearing provisions that prohibit agency staff from performing 
both prosecutorial and decisional activities, we believe that the 
agency's appointment of suspending and debarring officials should 
reflect the ``separation of functions'' principle that shields agency 
decisionmakers from off-record presentations by staff who have 
presented evidence or argument on behalf of or against a party to a 
proceeding and prohibits such staff from participating in the decision. 
The separation of functions requirement in section 409(c)(1) of the 
Communications Act, which applies to both formal and informal 
adjudications that have been designated for hearing, prevents a person 
who has participated in the presentation of a case at a hearing or upon 
review from making any additional presentation respecting such case to 
the presiding officer or to any authority within the Commission 
performing a review function, absent notice and opportunity for all 
parties to participate.\35\
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    \35\ Consistent with this, the Administrative Conference 
recommends that agencies require internal separation of decisional 
and adversarial personnel in adjudications that are not subject to 
formal APA hearing requirements.
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    81. Consistent with these principles, if the Commission found that 
the Chief, Enforcement Bureau (or his or her designee) would be the 
most appropriate person to serve as the suspending official and 
debarring official, would it be appropriate for that person to conduct 
proceedings in which staff of the Enforcement Bureau identified the 
alleged misconduct that forms the basis for the proceeding, 
participated in the investigation or prosecution of the case, or are 
expected to be involved in any capacity in any appeal or review of the 
suspending or debarring official's determination? If not, should the 
Commission designate more than one suspending or debarring official to 
ensure that cases involving the Enforcement Bureau are resolved by a 
person not associated with that Bureau? Or would it be sufficient that 
any suspending or debarring official within the Enforcement Bureau not 
be involved in any way with the case presented by the Enforcement 
Bureau to the official? We seek comments on these questions. Should 
persons other than Enforcement Bureau personnel be considered for 
appointment as the suspending or debarring official, and, if so, what 
should be their qualifications? Would, for example, the Managing 
Director be a more appropriate person for this authority, since the 
Office of Managing Director is responsible for oversight of the USF and 
TRS funds and for the agency's financial management? Should the 
suspending and debarring official be subject to appointment for a 
specific term, or may that person be subject to removal by the 
Commission at will? What is the relevance to these questions, if any, 
of the Appointments Clause to the U.S. Constitution and the Supreme 
Court's decision in Lucia v. SEC? We seek comment on these and all 
other issues related to the designation of such officials.
    82. We seek comment on whether any persons or entities that 
currently participate in the Commission's programs would be debarred 
through the application of reciprocity and, if so, seek comment on 
whether they seek any modifications to the Guidelines to allow them to 
continue to participate in Commission programs.\36\ Should Commission 
rules further provide that when an entity or person is excluded by 
another agency, that entity or person should immediately advise the 
Commission's debarring officer whenever it believes it is the sole 
provider of services for particular consumers under covered 
transactions? This would afford the agency head (or other official with 
delegated authority) an opportunity to grant a temporary exception for 
good cause while the agency evaluates the effect of the exclusion on 
program beneficiaries. If we adopt such a provision, should the 
Commission be required to act within a certain period, such as 90 days? 
Should the rules further specify that in appropriate cases, the agency 
head, full Commission, or other official with delegated authority could 
``except'' the excluded party from reciprocity affecting participation 
in one or more FCC covered transactions subject, if appropriate, 
through a negotiated agreement that would include provisions such as 
mandatory independent audits, additional reporting requirements, or 
similar forms of oversight? We seek comment on these options, as well 
as other mechanism that might afford flexibility in protecting program 
funds while also ensuring that consumers are not without program 
services.
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    \36\ Under the Guidelines, a program participant may continue 
receiving services from an excluded person under an existing 
contract, but may not renew or extend the contract (other than no-
cost time extensions) without an exception from the agency.
---------------------------------------------------------------------------

    83. We note that suspension and debarment could present a 
particularly difficult situation if a TRS provider were excluded based 
on the action of another agency, through reciprocity, causing potential 
immediate adverse consequences to consumers who rely on TRS to meet 
their communications needs. Because TRS providers do not have contracts 
with their TRS customers, each service provided to customers could be 
viewed as a new ``covered transaction.'' Without an exception, an 
excluded TRS provider could be barred from receiving payments for any 
services provided after the date it was suspended or debarred. We 
propose that any excluded TRS provider would be required to immediately 
notify the TRS Fund administrator when it is placed on the System for 
Award Management exclusion list, and that it could request and obtain a 
temporary exception for the 30-day period following its suspension or 
debarment to allow for a smooth transition for consumers. We propose 
further that the excluded TRS provider may file with the Commission a 
request for a longer exception within 30 days after the date of its 
suspension or debarment by another government agency. Such a request, 
if timely filed, would serve as a stay of the government-wide 
suspension and debarment for purposes of the TRS program for not more 
than 6 months or until issuance of a decision on the exception request, 
whichever occurs first. Such a grace period would permit the Commission 
to determine whether a longer exception would be appropriate and would 
afford customers (as well as agencies running the certified state 
programs) the opportunity to transition to a new provider. We seek 
comment on this proposal. We also seek comment about

[[Page 2091]]

whether for the NDBEDP special exceptions to any suspension and 
debarment might be fashioned to address similar service disruption 
concerns.
    84. Finally, we seek comment on what steps we would need to take to 
provide information regarding entities suspended or debarred by the 
Commission to the government-wide System for Award Management. While 
the Commission already uses this system for purposes of its agency 
procurements, and many participants in the USF and TRS programs and the 
NDBEDP are registered in the System for Award Management for other 
purposes, the Commission does not currently require persons to register 
before participating in its USF and other programs. Should the 
Commission require a party that is not already registered to do so when 
it initiates a suspension or debarment proceeding, or when it makes a 
final decision to suspend or debar the entity? How can we best 
implement our goal of reflecting future suspensions or debarments in 
the System for Award Management?
    85. The rules under several USF-related programs, Mobility Fund I 
and II, and Rural Broadband Experiments under the Connect America Fund, 
already provide for the remedy of disqualification for recipients of 
support who fail to meet their obligations.\37\ The Guidelines allow 
agencies to consider whether persons ``disqualified'' from specified 
nonprocurement transactions pursuant to a specific statute, executive 
order or legal authority other than the suspension and debarment 
process should be listed as excluded in the System for Award Management 
Exclusions (effectively debarring the disqualified person government-
wide). Under our USF rules, disqualification only applies to 
participation in the USF program. Therefore, we propose that a 
disqualified person should be referred to the suspending and debarring 
official for a full suspension and/or debarment proceeding and would be 
listed by the Commission as excluded in the government-wide system only 
after an adverse determination in that proceeding. Alternatively, 
should we provide for automatic suspension or debarment of any entity 
disqualified under our USF rules?
    86. In the case of the TRS program, a certification can be 
suspended or revoked for failure to meet any number of mandatory 
minimum standards, only some of which relate to fraudulent practices. 
In the case of the NDBEDP, many of the qualifications for certification 
of a state program relate to factors unrelated to fraudulent practices, 
and such certification can be suspended or revoked for failure to meet 
such qualifications. In other words, for both of these programs, it 
appears that causes for suspension and revocation under the existing 
procedures overlap with, but are not the same as, the proposed new 
suspension and debarment rules. We therefore propose that the 
procedures proposed in this document, if adopted, would be in addition 
to the existing program procedures, and seek comment on these 
proposals.
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    \37\ In addition, under section 54.320(c) of our rules, eligible 
telecommunication carriers in the High-Cost program that fail to 
comply with public interest obligations or any other terms and 
conditions may be subject to reductions in support amounts, 
potential revocation of ETC designation, and suspension or debarment 
pursuant to current section 54.8 of our rules.
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D. Application of Revised Rules To Conduct Occurring Prior to Their 
Effective Date

    87. We propose, in appropriate cases, to authorize the suspending 
or debarring officer to apply any revised suspension and debarment 
rules to conduct in Commission programs that occurred before the 
effective date of such rules where expeditious suspension or debarment 
would be in the public interest to prevent or deter further harm to 
Commission programs. However, where that conduct has already resulted 
in settlements with the Commission by a party responsible for the 
alleged misconduct, no suspension or debarment of that party based on 
such antecedent conduct would be authorized if such party has and 
continues to comply with the settlement terms. We seek comment on this 
proposal.
    88. We further seek comment on whether the ineligibility to 
participate in Commission programs based on inclusion on the System for 
Award Management exclusion list should be applicable to those 
exclusions made by another federal agency (whether for nonprocurement 
transactions or procurement transactions) only on or after the 
effective date of any revised Commission rules. If such a rule were 
adopted, would program participants who are required to check the 
System for Award Management exclusion list before entering into 
contracts be able to determine the date an exclusion was made and, if 
that information were not readily ascertainable, what alternative 
mechanisms would afford participants (or the Commission) the ability to 
distinguish whether an exclusion by another agency would trigger 
reciprocity or not by the Commission, based on when it went into 
effect?
    89. Alternatively, if such exclusions were made by another federal 
agency before the effective date of revised Commission rules, should 
the Commission provide for ineligibility for Commission programs as a 
default, subject to review? For example, the Commission could provide 
for a transitional mechanism for three years or less \38\ that would 
allow persons debarred by other federal agencies before the effective 
date of the Commission's revised rules to seek expeditious review to 
determine whether an exception to the exclusion is warranted. We seek 
comment on this approach. Under this approach, if the Commission 
authorized exceptions to suspension and debarment, should it attach 
(where appropriate) conditions such as a compliance plan or audit 
mechanisms, at the discretion of the suspending or debarring officer? 
What special standards, if any, should be applied during such any 
transitional period to evaluate whether an exception to reciprocal 
suspension or debarment would be warranted?
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    \38\ The standard debarment period under the Guidelines is three 
years.
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    90. Conversely, after any revised suspension and debarment rules 
become effective, would it be appropriate for the Commission to refer 
any entities suspended or debarred under current section 54.8 to GSA 
for inclusion on the government-wide System for Award Management 
exclusion list? We seek comment on this question. If the Commission 
determines that such referrals would be inappropriate, in whole or in 
part, then we propose that the Commission maintain its current separate 
listing of suspensions and debarments that predate any new rules (at 
least until such time as the applicable suspension and debarment 
periods have terminated), and propose that the term ``excluded or 
exclusion'' in the Guidelines shall include those individuals and 
entities previously suspended or debarred by the Commission, in 
addition to those included on the System for Award Management exclusion 
list. We would also propose to modify the obligations of participants 
to ensure that before entering into a covered transaction with persons 
at the next lower tier, the participant check both the Commission's 
listings of suspensions and debarments and the System for Award 
Management exclusions. We seek comment on this proposal. We also seek 
comments on any additional modifications that would be required to

[[Page 2092]]

ensure that persons debarred or suspended by the Commission before the 
effective date of any new rules be deemed to be excluded persons.

E. Preclusion of Excluded Persons From Serving on Commission Advisory 
Committees

    91. The appointment of members to federal advisory committees rests 
within the discretion of the Commission as the appointing authority. We 
propose that any persons or entities that are debarred or suspended be 
barred (during their period of debarment or suspension, as shown by 
inclusion on the government-wide exclusion list) from serving on the 
Commission's advisory committees or comparable Commission groups or 
task forces established by the Commission. If a person or entity that 
is already a member of such an advisory group is suspended or debarred 
after an initial appointment to a Commission advisory group, we propose 
that such person or entity be removed from that position. We seek 
comment on these proposals.

IV. Procedural Matters

    92. Ex Parte Rules--Permit-but-Disclose. This proceeding shall be 
treated as a ``permit-but-disclose'' proceeding in accordance with the 
Commission's ex parte rules. Persons making ex parte presentations must 
file a copy of any written presentation or a memorandum summarizing any 
oral presentation within two business days after the presentation 
(unless a different deadline applicable to the Sunshine period 
applies). Persons making oral ex parte presentations are reminded that 
memoranda summarizing the presentation must (1) list all persons 
attending or otherwise participating in the meeting at which the ex 
parte presentation was made, and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with rule 1.1206(b). In proceedings governed by 
rule 1.49(f) or for which the Commission has made available a method of 
electronic filing, written ex parte presentations and memoranda 
summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format (e.g., 
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding 
should familiarize themselves with the Commission's ex parte rules.
    93. Comment Period and Filing Procedures. Pursuant to sections 
1.415 and 1.419 of the Commission's rules, 47 CFR Sec. Sec.  1.415, 
1.419, interested parties may file comments and reply comments on or 
before the dates indicated on the first page of this document. Comments 
may be filed using the Commission's Electronic Comment Filing System 
(ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 
63 FR 24121 (1998).
     Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS: https://www.fcc.gov/ecfs/.
     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing. If more than one active 
docket or rulemaking number appears in the caption of this proceeding, 
filers must submit two additional copies for each additional docket or 
rulemaking number.
    94. Filings can be sent by hand or messenger delivery, by 
commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail. All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
     All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th St. SW, Room TW-A325, Washington, DC 20554. The filing hours 
are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together 
with rubber bands or fasteners. Any envelopes and boxes must be 
disposed of before entering the building.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9050 Junction Drive, 
Annapolis Junction, MD 20701.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 445 12th Street SW, Washington, DC 20554.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (Braille, large print, electronic 
files, audio format), send an email to [email protected] or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
    95. Availability of Documents. Comments, reply comments, and ex 
parte submissions will be available for public inspection during 
regular business hours in the FCC Reference Center, Federal 
Communications Commission, 445 12th Street SW, Room CY-A257, 
Washington, DC These documents will also be available via ECFS. 
Documents will be available electronically in ASCII, Microsoft Word, 
and/or Adobe Acrobat.
    96. Initial Regulatory Flexibility Analysis. As required by the 
Regulatory Flexibility Act of 1980, as amended (RFA), the Commission 
has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the 
possible significant economic impact on small entities of the policies 
and rules addressed in this document. The IRFA is set forth in Appendix 
B of the NPRM and is summarized in Part V below. Written public 
comments are requested on the IRFA. These comments must be filed in 
accordance with the same filing deadlines for comments on the NPRM, and 
should have a separate and distinct heading designating them as 
responses to the IRFA. The Commission will send a copy of the Notice of 
Proposed Rulemaking, including the IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration (SBA).
    97. Paperwork Reduction Act Analysis. This document contains 
proposed new or modified information collection requirements. The 
Commission, as part of its continuing effort to reduce paperwork 
burdens, invites the general public and the Office of Management and 
Budget (OMB) to comment on the information collection requirements 
contained in this document, as required by the Paperwork Reduction Act 
of 1995, Public Law 104-13. In addition, pursuant to the Small Business 
Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 
3506(c)(4), we seek specific comment on how we might further reduce the 
information collection burden for small business concerns with fewer 
than 25 employees.
    98. Further Information. For additional information on this 
proceeding, contact Paula Silberthau of the Office of General Counsel 
at [email protected] or (202) 418-1874.
    99. Statement of Authority: This NPRM is authorized by sections 
4(i), 4(j), 225, 254, and 719 of the Communications Act of 1934, as 
amended, 47 U.S.C. 154(i), 154(j), 225, 254, 620.

[[Page 2093]]

V. Initial Regulatory Flexibility Analysis

    100. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared an Initial Regulatory 
Flexibility Analysis (IRFA) of the possible significant economic impact 
on a substantial number of small entities by the policies and rules 
proposed in the Notice of Proposed Rulemaking (Notice). Written 
comments are requested on this IRFA. Comments must be identified as 
responses to the IRFA.

A. Need for, and Objectives of, the Proposed Rules

    101. The Commission oversees a number of critical support programs 
such as the Universal Service Fund (USF) programs, the 
Telecommunications Relay Services (TRS) programs, and the National 
Deaf-Blind Equipment Distribution Program (NDBEDP). As part of its 
oversight role, the Commission seeks to protect these programs from 
waste, fraud, and abuse to ensure that government funds are efficiently 
used for their intended purposes. To date, in the USF context, the 
Commission's rules allows it to suspend and debar those against whom 
there has been a conviction or civil judgment arising from or related 
to USF programs.
    102. In the Notice, the Commission has proposed to expand its 
arsenal of tools to root out bad actors more effectively and 
expeditiously by adopting new rules consistent with the Office of 
Management and Budget Guidelines to Agencies on Government Debarment 
and Suspension (Nonprocurement), 2 CFR part 180 (OMB Guidelines). The 
Commission proposes to apply any new suspension and debarment rules to 
transactions under the USF and TRS programs, which are its primary 
permanent nonprocurement programs, as well as to transactions under the 
NDBEDP. Other Commission nonprocurement programs would be exempt. 
Significantly, under the OMB Guidelines, the Commission would have 
authority, like other government agencies, to evaluate the wrongful or 
fraudulent conduct of companies or individuals in other dealings with 
the government and to take remedial action before the issuance of a 
judgment or conviction. The Commission believes that adopting rules 
consistent with the OMB Guidelines will provide a more advantageous 
mechanism for deterring and stopping wrongdoing affecting agency 
programs.
    103. The Commission's proposals in the Notice fall into three 
areas. First, the Commission proposes to apply the suspension and 
debarment rules to a broader category of entities than are now covered, 
by defining ``covered transactions'' as including conduct taken by 
participants in the USF, TRS, and NDBEDP programs, and by defining 
covered ``tiers'' of transactions, including those involving 
contractors of service providers in these programs. Second, the 
Commission proposes to adopt requirements that program participants 
confirm that those with whom they do business are not already excluded 
or disqualified from government activities. Such confirmation is 
consistent with the OMB Guidelines and many entities who participate in 
federal grant programs or seek federal contracts should already be 
familiar with the process. We seek comment on possible exceptions and 
how to implement the principle of reciprocity, which would prevent a 
party that is suspended or debarred by another agency from 
participation in covered Commission transactions. Third, again 
consistent with the OMB Guidelines, the Commission proposes new 
procedural requirements that would allow the agency to respond quickly 
to evidence of misconduct through a suspension mechanism, while 
providing for an evidentiary proceeding, evaluating a broader range of 
wrongful conduct than is now considered,\39\ prior to any disbarment.
---------------------------------------------------------------------------

    \39\ The OMB Guidelines provide federal agencies with 
substantial discretion to suspend and debar participants based on 
consideration of numerous factors. Moreover, through imputation 
rules, action could be taken against an organization, not just a 
principal, or the reverse, in appropriate circumstances. The 
imputation rules too would plug a gap in the Commission's current 
suspension and debarment mechanism.
---------------------------------------------------------------------------

B. Description of the Small Entities to Which Proposed Rules Would 
Apply

    104. 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 rule changes. 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 SBA.
    105. Small Businesses, Small Organizations, Small Governmental 
Jurisdictions. The Commission's actions, over time, may affect small 
entities that are not easily categorized at present. We therefore 
describe here, 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 28.8 million businesses.
    106. 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).
    107. 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.'' \40\ U.S. 
Census Bureau data from the 2012 Census of Governments \41\ 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 this data we 
estimate that at least 49,316 local government jurisdictions fall in 
the category of ``small governmental jurisdictions.''
---------------------------------------------------------------------------

    \40\ 5 U.S.C. 601(5).
    \41\ See 13 U.S.C. 161. The Census of Government is conducted 
every five (5) years compiling data for years ending with ``2'' and 
``7''. See also Program Description, Census of Governments, https://factfinder.census.gov/faces/affhelp/jsf/pages/metadata.xhtml?lang=en&type=program&id=program.en.COG#.
---------------------------------------------------------------------------

    108. Small entities potentially affected by the proposals herein 
include eligible schools and libraries, eligible rural non-profit and 
public health care

[[Page 2094]]

providers, and the eligible service providers offering them services, 
including telecommunications service providers, internet Service 
Providers (ISPs), and vendors of the services and equipment used for 
telecommunications and broadband networks.
1. Schools and Libraries
    109. As noted, ``small entity'' includes non-profit and small 
government entities. Under the schools and libraries universal service 
support mechanism, which provides support for elementary and secondary 
schools and libraries, an elementary school is generally ``a non-profit 
institutional day or residential school, that provides elementary 
education, as determined under state law.'' A secondary school is 
generally defined as ``a non-profit institutional day or residential 
school, that provides secondary education, as determined under state 
law,'' and not offering education beyond grade 12. A library includes 
``(1) a public library, (2) a public elementary school or secondary 
school library, (3) an academic library, (4) a research library . . . , 
and (5) a private library, but only if the state in which such private 
library is located determines that the library should be considered a 
library for the purposes of this definition.'' For-profit schools and 
libraries, and schools and libraries with endowments in excess of 
$50,000,000, are not eligible to receive discounts under the program, 
nor are libraries whose budgets are not completely separate from any 
schools. Certain other statutory definitions apply as well. The SBA has 
defined for-profit, elementary and secondary schools and libraries 
having $6 million or less in annual receipts as small entities. In 
funding year 2007, approximately 105,500 schools and 10,950 libraries 
received funding under the schools and libraries universal service 
mechanism. Although we are unable to estimate with precision the number 
of these entities that would qualify as small entities under SBA's size 
standard, we estimate that fewer than 105,500 schools and 10,950 
libraries might be affected annually by our action, under current 
operation of the program.
2. Healthcare Providers
    110. The healthcare providers that could be affected by the 
proposed rules in the NPRM include the following: Office of Physicians 
(except Mental Health Specialists); Offices of Physicians, Mental 
Health specialists; Offices of Dentists; Offices of Chiropractors; 
Offices of Optometrists; Offices of Mental Health Practitioners (except 
physicians); Offices of Physical, Occupational and Speech Therapists 
and Audiologists; Offices of Podiatrists; Office of all Other 
Miscellaneous Health Practitioners; Family Planning Centers; Outpatient 
Mental Health and Substance Abuse Centers; HMO Medical Centers; 
Freestanding Ambulatory Surgical and Emergency Centers; All other 
Outpatient Care Centers; Blood and Organ Banks; All Other Miscellaneous 
Ambulatory Health Care Services; Medical Laboratories; Diagnostic 
Imaging Centers; Home Health Care Services; Ambulance Services; Kidney 
Dialysis Centers; General Medical and Surgical Hospitals; Psychiatric 
and Substances Abuse Hospitals; Specialty (Except Psychiatric and 
Substances Abuse) Hospitals; and Emergency and Other Relief Services.
3. Providers of Telecommunications and Other Services
    111. The telecommunications service providers that could be 
affected by the proposed rules include the following categories: 
Incumbent Local Exchange Carriers (LECs); Interexchange Carriers 
(IXCs); Competitive Access Providers; Operator Service Providers 
(OSPs);Local Resellers; Toll Resellers; Telecommunications Resellers; 
Wired Telecommunications Carriers; Wireless Telecommunications Carriers 
(except Satellite); Common Carrier Paging; Wireless Telephony (for 
which the closest applicable SBA category is Wireless 
Telecommunications Carriers (except Satellite); Satellite 
Telecommunications; All Other Telecommunications.
    112. The internet Service Providers that could be affected by the 
proposed rules including the following categories: Internet Service 
Providers (Broadband); and internet Service Providers (Non-Broadband).
    113. The Vendors and Equipment Manufacturers that could be affected 
by the proposed rules include the following categories: Vendors of 
Infrastructure Development or ``Network Buildout''; Telephone Apparatus 
Manufacturing; Radio and Television Broadcasting and Wireless 
Communications Equipment Manufacturing; Other Communications Equipment 
Manufacturing; Administrative Management and General Management 
Consulting Services; Marketing Consulting Services; and Other 
Management Consulting Services.

C. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities

    114. The Notice proposes to adopt new rules consistent with the OMB 
Guidelines in 2 CFR part 180 in order to obtain additional tools to 
prevent fraud, waste, and abuse. The Commission proposes to apply any 
new suspension and debarment rules to transactions under the USF and 
TRS programs, its primary permanent nonprocurement programs, as well as 
transactions under the NDBEDP. Adopting such rules would impose certain 
new obligations on program participants, including: (1) Requirements 
that program participants confirm that those with whom they do business 
are not already excluded or disqualified from government activities 
(which can be accomplished by checking the Government wide System for 
Award Management Exclusions (SAM exclusion list), by a certification, 
or by addition of terms to the applicable transaction); and (2) 
mandatory disclosures for participants that may include (i) 
notification to the Commission and its program agents of whether any of 
the participants' principals have been either convicted, indicted or 
civilly charged by any government entity for certain offenses during 
the past three years, and (ii) notification of whether the participants 
are excluded or disqualified from participating in covered 
transactions. Any person suspended or debarred by a Commission order 
would be excluded from participation in any Commission programs (not 
just the program in which the bad actions occurred) and would be placed 
on the Government wide System for Award Management Exclusions, 
triggering reciprocity barring that person from participating in other 
government programs (including procurement transactions) unless the 
person were granted an exemption by another agency.
    115. At this time, the Commission is not in a position to determine 
whether, if adopted, the potential rule changes raised in the Notice 
will require small entities to hire attorneys, engineers, consultants, 
or other professionals and cannot quantify the cost of compliance with 
the potential rule changes raised herein. The Notice seeks comment on 
these proposals, including the benefits and any adverse effects from 
joining the government-wide nonprocurement suspension and debarment 
system, as well as on alternative approaches and any other steps we 
should consider taking. The Notice also seeks comment on how broadly 
this proposed rule should apply in terms of program transactions and 
persons covered, and how it should be implemented. We expect the 
information we receive in comments on our proposals to help the

[[Page 2095]]

Commission identify and evaluate relevant matters for small entities, 
including compliance costs and other burdens that may result from the 
matters raised in the Notice.

D. Steps Taken To Minimize the Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    116. 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.''
    117. The Commission has taken several steps that may minimize the 
economic impact for small entities if the proposals in the Notice are 
adopted. We ask whether short-form applications to participate in 
competitive bidding for USF support should be excluded from the scope 
of covered transactions for purposes of suspension and debarment rules 
or possibly be subject to different participant disclosure rules. We 
also propose to exempt incentive auction payments associated with the 
auction of new spectrum licenses from the scope of ``covered 
transactions'' subject to suspension and debarment rules. Similarly, 
the Commission proposes to exempt payments related to the broadcast 
incentive auctions, including reimbursement payments from any 
suspension and debarment rules that are adopted. With regard to the 
disclosure requirements that would be applicable if the OMB Guidelines 
are adopted, we anticipate that these requirements can be implemented 
with modifications to existing program forms and certification rules 
rather than fashioning new and additional forms which could increase 
the administrative burden for small entities.
    118. The economic impact for small entities may also be minimized 
as a result of the Commission's proposal to adopt a minimum dollar 
value threshold for certain transactions in order for suspension and 
debarment rules to apply. More specifically, the NPRM proposes that the 
suspension and debarment rules should apply to all contractors, 
subcontractors, suppliers, consultants or any agent or representative 
thereof for USF, TRS, or NDBEDP transactions only where those 
transactions are expected to equal or exceed $25,000, subject to 
certain exceptions. Therefore, small entities that do not meet the 
transaction threshold amount may be able to avoid application of any 
adopted suspension and debarment requirements provided they do not fall 
into one of the threshold exceptions. The Notice proposes that the 
$25,000 threshold not be applicable where a party to the transaction 
would have a material role affecting claims for reimbursement under the 
Commission programs or if the party is a ``principal'' to the 
transaction. An exception to the threshold amount is also proposed for 
contracts or awards under the Lifeline program for those transactions 
in which a person is reimbursed based on commission or by Lifeline 
subscribers enrolled. The Notice seeks comment on these proposals.
    119. To assist in the Commission's evaluation of the economic 
impact on small entities, and to better explore options and 
alternatives, the Commission has sought comment from the parties on the 
above proposals and other matters discussed in the Notice. We expect to 
more fully consider the economic impact on small entities following our 
review of comments filed in response to the Notice in reaching our 
final conclusions and promulgating rules in this proceeding.

E. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    120. If the Commission adopts rules consistent with the OMB 
Guidelines, such rules would replace those Commission rules that 
currently provide for different suspension and debarment procedures. At 
present, the Commission rules addressing suspension and debarment are 
codified in 47 CFR 54.8 and apply only to USF programs. If the 
Commission adopts new rules as proposed in the Notice, we anticipate 
that the Commission would repeal the existing suspension and debarment 
rules in section 54.8. If commenters suggest that any other rules now 
in effect duplicate, overlap, or conflict with the rules proposed in 
the Notice, the Commission will closely review and consider those 
situations.

List of Subjects in 47 CFR Part 16

    Administrative practice and procedure, Common carriers, 
Communications, Communications common carriers, Communications 
equipment, Subsidies, Telecommunications, Telephone.

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to add a new part 16 to chapter I, 
subchapter A of title 47 of the Code of Federal Regulations:

PART 16--NONPROCUREMENT DEBARMENT AND SUSPENSION

0
1. Add part 16 to read as follows:
Subpart A--General
Sec.
16.1 Supplemental definitions.
16.105 What does this part do?
16.110 Does this part apply to me?
16.115 What policies and procedures must I follow?
16.120 Who in the Commission may grant an exception to let an 
excluded person participate in a covered transaction? And what 
considerations should be relevant?
16.125 What are exempted Commission transactions?
Subpart B--Covered Transactions
16.200 What additional transactions are covered transactions?
16.220 What contracts and subcontracts, in addition to those listed 
in 2 CFR 180.220, are covered transactions?
Subpart C--Responsibilities of Participants Regarding Transactions 
Doing Business With Other Persons
16.300 What must I do before I enter into a covered transaction with 
another person at the next lower tier? (FCC supplement to 2 CFR 
180.300)
16.330 What methods must I use to pass requirements down to 
participants at lower tiers with whom I intend to do business?
16.335 Additional information disclosures for lower tier 
participants
16.340 Clarification of tiers related to Commission programs
Subpart D--Responsibilities of Federal Agency Officials Regarding 
Transactions
16.435 What method should the Commission or participants use to 
implement the requirements described in the Guidelines at 2 CFR 
180.435?
16.440 Who conducts fact finding for FCC suspensions?
16.445 Who conducts fact finding for FCC debarments?
16.450 What additional factors should the Commission consider for 
suspension or debarment determinations?
16.455 What Commission alternatives to suspension or debarment may 
be appropriate?
16.460 What must I do to be reinstated after my period of debarment 
is over?
Subpart E--Limited Denial of Participation
16.501 What is a limited denial of participation?
16.503 Who may issue a limited denial of participation?
16.505 When may a Commission official issue a limited denial of 
participation?
16.507 When does a limited denial of participation take effect?

[[Page 2096]]

16.509 How long may a limited denial of participation last?
16.511 How does a limited denial of participation start?
16.513 How may I contest my limited denial of participation?
16.515 Do Federal agencies coordinate limited denial of 
participation actions?
16.517 What is the scope of a limited denial of participation?
16.519 May the FCC impute the conduct of one person to another in a 
limited denial of participation?
16.521 What is the effect of a suspension or debarment on a limited 
denial of participation?
16.523 What is the effect of a limited denial of participation on a 
suspension or a debarment?
16.525 May a limited denial of participation be terminated before 
the term of the limited denial of participation expires?
16.527 How is a limited denial of participation reported?

    Authority:  47 U.S.C. 154, 225, 254, 620; Sec. 2455, Pub. L. 
103-355, 108 Stat. 3327 (31 U.S.C. 6101 note); E.O. 11738 (3 CFR, 
1973 Comp., p. 799); E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O. 
12689 (3 CFR, 1989 Comp., p. 235)

Subpart A--General


Sec.  16.100  Supplemental definitions.

    In addition to the definitions set forth in subpart I of 2 CFR part 
180, for purposes of this part,
    (a) The term ``E-Rate Program'' means the program providing 
universal service support for schools and libraries, as set forth in 
part 54, subparts A and F of the Commission's rules.
    (b) The term ``Eligible Telecommunications Carrier'' means an 
Eligible Telecommunications Carrier as defined in section 54.5 of the 
Commission's rules.
    (c) The term ``Guidelines'' means the OMB Guidelines to Agencies on 
Governmentwide Debarment and Suspension (Nonprocurement), as set forth 
in 2 CFR part 180.
    (d) The term ``High-Cost Program'' means the programs providing 
universal service support for rural, insular, and high cost areas, as 
set forth in part 54, subparts A, B, C, D, J, K, L, M, and O of the 
Commission's rules.
    (e) The term ``Lifeline Program'' means the program providing 
universal service support for low-income consumers set forth in part 
54, subparts A, B, C and E of the Commission's rules.
    (f) The term ``NDBEDP'' means the National Deaf-Blind Equipment 
Distribution Program, under which payments from the TRS Fund are made 
to support programs distributing communications equipment to low-income 
individuals who are deaf-blind, pursuant to Chapter 64, subpart GG of 
the Commission's rules, 47 CFR 64.6201 et seq.
    (g) The term ``NDBEDP Administrator'' means the administrator of 
the NDBEDP.
    (h) The term ``Principal'' means, in addition to those individuals 
described at 2 CFR 180.995, any person who has a critical influence on, 
or substantive control over, a covered transaction, whether or not 
employed by the participant or paid with federal funds. Persons who 
have a critical influence on, or substantive control over, a covered 
transaction may include, but are not limited to: Management and 
marketing agents, accountants, consultants, investment bankers, 
engineers, attorneys, and other professionals who are in a business 
relationship with participants in connection with a covered transaction 
under an FCC program.
    (i) The term ``Rural Health Care Program'' means the program 
providing universal service support for health care providers set forth 
in part 54, subparts A and G of the Commission's rules.
    (j) The term ``SAM Exclusions'' means the System for Award 
Management Exclusions, which is a widely available source of the most 
current information about persons who are excluded or disqualified from 
covered transactions, as further described in subpart E of 2 CFR part 
180.
    (k) The term ``TRS Programs'' means all programs described in 
Chapter 64, subpart F of the Commission's rules.
    (l) The term ``TRS Fund Administrator'' means the entity selected 
as the administrator of the Telecommunications Relay Services Fund 
pursuant to 47 CFR 64.604(c)(5)(iii).
    (m) The term ``USF Programs'' means the programs implementing the 
Universal Service Fund pursuant to section 254 of the Communications 
Act of 1934, as amended, 47 U.S.C. 254.
    (n) The term ``USF Administrator'' means the administrator of the 
universal service mechanisms appointed pursuant to section 54.701 of 
the Commission's rules, 47 CFR 54.701.


Sec.  16.105  What does this part do?

    In this part, the Federal Communications Commission (``FCC'' or 
``Commission'') adopts, as Commission policies, procedures, and 
requirements for nonprocurement debarment and suspension, the 
Guidelines in subparts A through I of 2 CFR part 180, as supplemented 
by this part. This adoption thereby gives regulatory effect for the FCC 
to the Guidelines, as supplemented by this part. All persons affected 
by these rules should consult the Guidelines in subparts A through I of 
2 CFR part 180 in order to be informed of all the provisions of the 
suspension and debarment rules (as supplemented by this part).


Sec.  16.110  Does this part apply to me?

    This part and, through this part, pertinent portions of subparts A 
through I of 2 CFR part 180 (see table at 2 CFR 180.100(b)), apply to 
you if you are a--
    (a) ``Participant'' or ``principal'' in a ``covered transaction'' 
under subpart B of 2 CFR part 180, as supplemented by this part;
    (b) Respondent in a Commission suspension or debarment action;
    (c) Commission debarment or suspension official; or
    (d) Commission official, or agent, authorized to enter into any 
type of nonprocurement transaction that is a covered transaction.


Sec.  16.115  What policies and procedures must I follow?

    The Commission policies and procedures that you must follow are the 
policies and procedures specified in each applicable section of the 
Guidelines in subparts A through I of 2 CFR part 180, as that section 
is supplemented by this part. The transactions that are covered 
transactions, for example, are specified by section 220 of the 
Guidelines (i.e., 2 CFR 180.220), as supplemented by section 16.220 in 
this part. For any section of Guidelines in subparts A through I of 2 
CFR 180.5 that has no corresponding section in this part, Commission 
policies and procedures are those in the Guidelines.


Sec.  16.120  Who in the Commission may grant an exception to let an 
excluded person participate in a covered transaction? And what 
considerations should be relevant?

    (a) The Chairman of the Commission or designee may grant an 
exception permitting an excluded person to participate in a particular 
covered transaction. If the Chairman or a designee grants an exception, 
the exception must be in writing and state the reason(s) for deviating 
from the governmentwide policy in Executive Order 12549.
    (b) In evaluating whether to grant an exception, the Chairman or 
designee shall consider whether the excluded person, if a provider of 
services under any Commission program, may be the sole source of 
services in any affected areas and whether, as a result, the exclusion 
of that person could put consumers and/or program beneficiaries at risk 
of losing services. The Chairman

[[Page 2097]]

or designee may exercise their discretion in considering any other 
factors that may be relevant to the exception determination, and if an 
exception is granted, shall explain those considerations in any 
exception decision.
    (c) When a person is excluded by another agency, the Chairman or 
designee may also grant an exception for a limited time period to 
afford the Commission an opportunity to evaluate the effect of the 
exclusion on program beneficiaries.
    (d) Any exception granted under this section may also be subject to 
appropriate conditions, such as the agreement by the excepted person to 
mandatory audits, additional reporting requirements, compliance plans 
or monitoring, or similar forms of oversight in addition to those 
otherwise provided by the FCC programs.


Sec.  16.125  What are exempted Commission transactions?

    Any transactions involving the Commission that are not related to 
or do not arise in connection with the USF Programs, the TRS Programs, 
or the NDBEDP shall be exempted transactions under this part.

Subpart B--Covered Transactions


Sec.  16.200  What additional transactions are covered transactions?

    For purposes of determining what is a covered transaction under 2 
CFR 180.200 of the Guidelines, this part applies to any transaction at 
the primary tier between a person and the Commission or any agents of 
the Commission, including the USF Administrator, which administers the 
USF programs as agent for the Commission, the TRS Fund Administrator, 
which administers the TRS programs as agent for the Commission, and the 
NDBEDP Administrator, which administers the NDBEDP, as agent for the 
Commission. For purposes of 2 CFR 180.200, any transactions between two 
primary tier participants (as clarified by section 16.340 in this 
part), other than the Commission, shall be considered to be a 
transaction at a lower tier within the meaning of subsection (b) of 2 
CFR 180.200.


Sec.  16.220  What contracts and subcontracts, in addition to those 
listed in 2 CFR 180.220, are covered transactions?

    In addition to the contracts covered under 2 CFR 180.220 of the 
Guidelines, this part applies to additional lower tiers of transactions 
supported by the Commission's programs involving the participants 
described below. This rule extends the coverage of the Commission 
nonprocurement suspension and debarment requirements to all lower tiers 
of contracts or subcontracts (regardless of tier) awarded under covered 
nonprocurement transactions, as permitted under the Guidelines at 2 CFR 
180.220(c) (see optional lower tier coverage in the figure in the 
appendix to 2 CFR part 180).
    (a) For the High-Cost Program, contractors, subcontractors, 
suppliers, consultants, or their agents or representatives for High-
Cost supported transactions, if:
    (1) Such person has a material role relating to, or significantly 
affecting, claims for disbursements related to the program;
    (2) Such person is considered a ``principal''; or
    (3) The amount of the transaction is expected to be at least 
$25,000.
    (b) For the Lifeline Program:
    (1) Any participant in the Lifeline program (except for the primary 
tier carrier), regardless of tier or dollar value, that is reimbursed 
based on the number of Lifeline subscribers enrolled, commissions, or 
any combination thereof; and
    (2) Contractors, subcontractors, suppliers, consultants, or their 
agents or representatives and third-party marketing organizations for 
Lifeline-supported transactions, if
    (i) Such person has a material role relating to, or significantly 
affecting, claims for disbursements related to the program;
    (ii) Such person is considered a ``principal''; or
    (iii) The amount of the transaction is expected to be at least 
$25,000.
    (c) For the E-Rate Program, contractors, subcontractors, suppliers, 
consultants, or their agents or representatives for E-Rate-supported 
transactions if:
    (1) Such person has a material role relating to, or significantly 
affecting, claims for disbursements related to the program;
    (2) Such person is considered a ``principal''; or
    (3) The amount of the transaction is expected to be at least 
$25,000.
    (d) For the RHC Program, contractors, subcontractors, suppliers, 
consultants, or their agents or representatives for RHC-supported 
transactions if:
    (1) Such person has a material role relating to, or significantly 
affecting, claims for disbursements related to the program;
    (2) Such person is considered a ``principal''; or
    (3) The amount of the transaction is expected to be at least 
$25,000.
    (e) For the TRS Programs and the NDBEDP, contractors, 
subcontractors, suppliers, consultants, or their agents or 
representatives for TRS- or NDBEDP-supported transactions, if:
    (1) Such person has a material role relating to, or significantly 
affecting, claims for disbursements related to the program;
    (2) Such person is considered a ``principal''; or
    (3) The amount of the transaction is expected to be at least 
$25,000. For the TRS programs (other than TRS that is provided through 
state programs) and the NDBEDP, the service providers are the 
certificated entities that are reimbursed by the Commission and the TRS 
Fund administrator for providing services and equipment under the 
covered transactions. For TRS that is provided through state TRS 
programs, the service providers are the TRS providers that are 
authorized by each state to provide intrastate TRS under the state 
program and that, accordingly, are compensated by the TRS Fund for the 
provision of interstate TRS.

Subpart C--Responsibilities of Participants Regarding Transactions 
Doing Business With Other Persons


Sec.  16.300  What must I do before I enter into a covered transaction 
with another person at the next lower tier? (FCC supplement to 2 CFR 
180.300)

    (a) You, as a participant, are responsible for determining whether 
you are entering into a covered transaction with an excluded or 
disqualified person. You may decide the method by which you do so using 
any of the methods described in 2 CFR 180.300.
    (b) In the case of an employment contract, the FCC does not require 
employers to check the SAM Exclusions before making salary payments 
pursuant to that contract.


Sec.  16.330  What methods must I use to pass requirements down to 
participants at lower tiers with whom I intend to do business?

    To communicate the requirements to lower tier participants, you 
must include a term or condition in the transaction requiring 
compliance with subpart C of the Guidelines in 2 CFR part 180, as 
supplemented by this subpart.


Sec.  16.335  Additional information disclosures for lower tier 
participants.

    (a) Before entering into a covered transaction at any lower tier, 
all lower tier participants shall be obligated to notify and disclose 
to the higher tier participant with whom it is doing business the 
information described in 2

[[Page 2098]]

CFR 180.335 (pertaining to disclosures by primary tier participants). 
If the lower tier participant is participating in competitive bidding 
to provide services to the higher tier participant, such information 
must be disclosed at the time the bid is submitted. Any such 
disclosures must be simultaneously submitted to the USF Administrator 
(for transactions related to or arising in connection with USF 
programs), to the TRS Fund Administrator (for transactions relating to 
TRS programs), to the NDBEDP Administrator (for transactions relating 
to the NDBEDP) and to the FCC (at the addresses identified in paragraph 
(b) of this section). Any disclosures made under this rule will not 
necessarily cause other participants to deny your participation in the 
covered transaction, but will be considered a relevant factor in 
evaluating the transaction. The provisions of 2 CFR 180.345 shall be 
applicable to any failures to disclose under this rule and, in 
addition, any such failure to disclose shall permit the higher tier 
participant (with whom the lower tier participant is doing business) to 
terminate the transaction for failure to comply with its terms and 
condition, or to pursue any other available remedies. Participants 
subject to this rule shall also comply with 2 CFR 180.350, requiring 
notifications upon learning new information, and such notifications 
shall be provided not only to the USF Administrator, the TRS Fund 
Administrator, the NDBEDP Administrator, and to the FCC, but also to 
the higher tier participant (with whom the lower tier participant is 
doing business).
    (b) The disclosures required by 2 CFR 180.335 through 180.350 of 
the Guidelines shall be made not only to the Commission, but also to 
the USF Administrator (for transactions related to or arising in 
connection with USF Programs), to the TRS Fund Administrator (for 
transactions relating to TRS Programs), and to the NDBEDP Administrator 
(for transactions relating to the NDBEDP). Disclosures to the 
Commission regarding the USF Program shall be submitted via email to 
[address] or via mail to the Federal Communications Commission, 
Telecommunications Access Policy Division, Wireline Competition Bureau, 
at the Commission's address specified in 47 CFR 0.401(a). Disclosures 
to the USF Administrator shall be submitted via email to [address] or 
via mail to: Universal Service Administrative Co., 700 12th Street NW, 
Suite 900, Washington, DC 20005. Disclosures to the TRS Fund 
Administrator shall be submitted via email to [address] or to: TRS Fund 
Administrator, 4450 Crums Mill Road, Suite 303, Harrisburg, PA 17110. 
Disclosures to the NDBEDP Administrator shall be submitted via email to 
[address] or to: NDBEDP Administrator, Federal Communications 
Commission, Disability Rights Office, at the Commission's address 
specified in 47 CFR 0.401(a).


Sec.  16.340  Clarification of tiers related to Commission programs.

    (a) For the E-Rate Program and the Rural Health Care Program, the 
primary tier participants shall be both the schools or libraries (or 
consortia) that submit applications to the USF Administrator (for the 
E-Rate program) or the health care providers (including consortia) that 
submit applications to the USF Administrator (for the Rural Health Care 
Program), as well as the service providers selected by these 
applicants.
    (b) For the High-Cost Program, the Lifeline Program, and the TRS 
Programs, the primary tier participants shall be the service providers 
that request and receive support from the USF Administrator and TRS 
Fund Administrator, respectively.
    (c) For the NDBEDP, the primary tier participants shall be the 
certified programs that request and receive reimbursements from the 
NDBEDP Administrator.

Subpart D--Responsibilities of Federal Agency Officials Regarding 
Transactions


Sec.  16.435  What method should the Commission or participants use to 
implement the requirements described in the Guidelines at 2 CFR 
180.435?

    To implement the requirements described in 2 CFR 180.435, the 
Commission may require as a condition of participation in the USF or 
TRS programs or the NDBEDP that participants:
    (a) Comply with subpart C of 2 CFR part 180, as supplemented by 
this part, and
    (b) Communicate the requirement to comply with subpart C of 2 CFR 
part 180, as supplemented by this part, to persons at the next lower 
tier with whom the participant enters into covered transactions. The 
Commission, or the USF, TRS Fund, or NDBEDP Administrators, may also 
obtain an assurance or certification of compliance at the time of 
application for approval of the covered transaction or upon submission 
of an invoice for payment.


Sec.  16.440  Who conducts fact finding for FCC suspensions?

    In all FCC suspensions, the official designated as the Suspending 
Official shall be responsible for conducting additional proceedings 
where disputed material facts are challenged unless another person is 
designated to serve as fact finder by the Chairman of the Commission.


Sec.  16.445  Who conducts fact finding for FCC debarments?

    In all FCC debarments, the official designated as the Debarring 
Official shall be responsible for conducting additional proceedings 
where disputed material facts are challenged unless another person is 
designated to serve as fact finder by the Chairman of the Commission.


Sec.  16.450  What additional factors should the Commission consider 
for suspension or debarment determinations?

    (a) In addition to the causes for debarment described under the 
Guidelines at 2 CFR 180.800 (which are also applicable to suspension 
determinations under 2 CFR 180.700), the suspending or debarment 
official may also take the following factors into consideration: 
Whether the person is a repeat offender of Commission rules; habitual 
non-payment or under-payment of Commission regulatory fees or of 
required contributions to FCC programs such as USF or TRS; the willful 
or grossly negligent submission of FCC forms or statements or other 
documentation to the FCC or to the USF Administrator, TRS Fund 
Administrator, or NDBEDP Administrator that result in or could result 
in overpayments of federal funds to the recipients; the willful or 
grossly negligent violation of a statutory or regulatory provision 
applicable to the USF programs, TRS program or the NDBEDP; and the 
willful or habitual failure to respond to requests made by the FCC or 
the USF, TRS Fund, or NDBEDP administrators for additional information 
to justify payment or continued operation under their certifications.
    (b) As used in the Guidelines at 2 CFR 180.800(b), the term 
``public agreement or transaction'' shall encompass contracts between 
USF program applicants and their selected service providers and/or 
consultants or other principals.


Sec.  16.455  What Commission alternatives to suspension or debarment 
may be appropriate?

    If the suspending or debarment official determines that 
circumstances justify an alternative to suspension or

[[Page 2099]]

debarment, such as when a participant's suspension or debarment could 
have a substantial detrimental impact on the provision of services 
under a Commission program, then the official, in his or her 
discretion, may temporarily suspend the suspension or debarment 
proceedings and refer the case to [the Chief, Enforcement Bureau]. The 
[Chief] shall have discretion to evaluate and decide whether, in lieu 
of suspension or debarment, the [Enforcement Bureau] or Commission 
should condition the participant's continued participation upon 
agreement to additional requirements on the transaction that may 
include, among other things, transitioning beneficiaries to other 
providers, replacing principals, or agreeing to an appropriate 
compliance plan (with strict oversight and audits).


Sec.  16.460  What must I do to be reinstated after my period of 
debarment is over?

    A debarment official may determine that a person's conduct is so 
egregious that the debarred party must petition for readmission into 
FCC programs after the debarment period is over. In that case, the 
debarred party as petitioner must demonstrate that it has taken 
sufficient remedial actions to avoid future program violations. In the 
absence of such a determination in the debarment decision, 
reinstatement will be automatic once the debarment period is over.

Subpart E--Limited Denial of Participation


Sec.  16.501  What is a limited denial of participation?

    A limited denial of participation excludes a specific person from 
participating in a specific FCC program or programs for a specific 
period of time. The decision to impose a limited denial of 
participation is discretionary and based on the best interests of the 
federal government. For purposes of this subpart, the term ``person'' 
shall have the same meaning as set forth in 2 CFR 180.985.


Sec.  16.503  Who may issue a limited denial of participation?

    The Chairperson designates FCC officials who are authorized to 
impose a limited denial of participation affecting any participant, or 
their affiliates, or both. A limited denial of participation is 
normally issued by the chief of a bureau responsible for administering 
an FCC program.


Sec.  16.505  When may a Commission official issue a limited denial of 
participation?

    (a) An authorized FCC official may issue a limited denial of 
participation against a person, based upon adequate evidence of any of 
the following causes:
    (1) Approval of an applicant for a USF Program, a TRS Program, or 
the NDBEDP would constitute an unsatisfactory risk;
    (2) There are irregularities in a person's current and/or past 
performance in an FCC program;
    (3) The person has failed to honor contractual obligations or abide 
by FCC regulations associated with an FCC program;
    (4) The person has documented deficiencies in ongoing FCC programs;
    (5) The person has made a false certification in connection with 
any FCC program, whether or not the certification was made directly to 
the FCC;
    (6) The person has committed any act or omission that would be 
cause for debarment under 2 CFR 180.800;
    (7) The person has violated any law, regulation, or procedure 
relating to an FCC program; or
    (8) The person has made or procured to be made any false statement 
for the purpose of influencing in any way an action of the Commission.
    (b) Filing of a criminal indictment or information shall constitute 
adequate evidence for the purpose of limited denial of participation 
actions. The indictment or information need not be based on offenses 
against the Commission.
    (c) Imposition of a limited denial of participation related to any 
other FCC program shall constitute adequate evidence for a concurrent 
limited denial of participation for another FCC program. Where such a 
concurrent limited denial of participation is imposed, participation 
may be restricted on the same basis without the need for an additional 
conference or further hearing.
    (d) An affiliate or organizational element may be included in a 
limited denial of participation solely on the basis of its affiliation, 
and regardless of its knowledge of or participation in the acts 
providing cause for the sanction. The burden of proving that a 
particular affiliate or organizational element is not controlled by the 
primary sanctioned party (or by an entity that itself is controlled by 
the primary sanctioned party) is on the affiliate or organizational 
element. For purposes of this subsection, the term ``affiliate'' shall 
have the same meaning as provided by 2 CFR 180.905.


Sec.  16.507  When does a limited denial of participation take effect?

    A limited denial of participation is effective immediately upon 
issuance of the notice unless the notice otherwise specifies.


Sec.  16.509  How long may a limited denial of participation last?

    A limited denial of participation may remain in effect up to 12 
months.


Sec.  16.511  How does a limited denial of participation start?

    A limited denial of participation is made effective by providing 
the person, and any specifically named affiliate, with notice:
    (a) That the limited denial of participation is being imposed;
    (b) Of the cause(s) under Sec.  16.505 of this part for the 
sanction;
    (c) Of the potential effect of the sanction, including the length 
of the sanction and the FCC program(s) and geographic area (if 
relevant) affected by the sanction;
    (d) Of the right to request, in writing, within 30 days of receipt 
of the notice, a conference under Sec.  16.513(a) of this part; and
    (e) Of the right to contest the limited denial of participation 
under Sec.  16.513 of this part.


Sec.  16.513  How may I contest my limited denial of participation?

    (a) Within 30 days after receiving a notice of limited denial of 
participation, you may request a conference with the official who 
issued such notice. The conference shall be held within 15 days after 
the Commission's receipt of the request for a conference, unless you 
waive this time limit. The official or designee who imposed the 
sanction shall preside. At the conference, you may appear with a 
representative and may present all relevant information and materials 
to the official or designee. Within 20 days after the conference, or 
within 20 days after any agreed-upon extension of time for submission 
of additional materials, the official or designee shall, in writing, 
advise you of the decision to terminate, modify, or affirm the limited 
denial of participation. If all or a portion of the remaining period of 
exclusion is affirmed, the notice of affirmation shall advise you of 
the opportunity to contest the notice and to request a hearing before 
an attorney within the Enforcement Bureau so designated for this 
function by the Chairman of the Commission. You have 30 days after 
receipt of the notice of affirmation to request this hearing.
    (b) You may skip the conference with the official and you may 
request a hearing before an attorney within the Enforcement Bureau so 
designated for this function by the Chairman of the Commission. This 
must also be done

[[Page 2100]]

within 30 days after receiving a notice of limited denial of 
participation. If you opt to have a hearing before an attorney within 
the Enforcement Bureau, you must submit your request to [address]. The 
designated attorney within the Enforcement Bureau will issue findings 
of fact and make a recommended decision. The sanctioning official who 
issued the initial notice will then make a final decision, as promptly 
as possible, after the recommended decision is issued. The sanctioning 
official may reject the recommended decision or any findings of fact, 
only after specifically determining that the decision or any of the 
facts are arbitrary, capricious, or clearly erroneous.
    (c) In deciding whether to terminate, modify, or affirm a limited 
denial of participation, the Commission official or designee may 
consider the factors listed at 2 CFR 180.860. The designated attorney 
within the Enforcement Bureau may also consider the factors listed at 2 
CFR 180.860 in making any recommended decision.


Sec.  16.515  Do Federal agencies coordinate limited denial of 
participation actions?

    Federal agencies do not coordinate limited denial of participation 
actions. As stated in Sec.  16.501 of this part, a limited denial of 
participation is an FCC-specific action and applies only to FCC 
activities.


Sec.  16.517  What is the scope of a limited denial of participation?

    The scope of a limited denial of participation is as follows:
    (a) A limited denial of participation generally extends only to 
participation in the program(s) under which the cause arose. A limited 
denial of participation may, at the discretion of the authorized 
official, extend to other programs, initiatives, or functions within 
the jurisdiction of the FCC. The authorized official, however, may 
determine that where the sanction is based on an indictment or 
conviction, the sanction shall apply to all programs throughout the 
FCC.
    (b) For purposes of this subpart, participation includes receipt of 
any benefit or financial assistance through subsidies, grants, or 
contractual arrangements; benefits or assistance in the form of any 
loan guarantees or insurance; awards of procurement contracts; or any 
other arrangements that benefit a participant in a covered transaction.
    (c) The sanction may be imposed for a period not to exceed 12 
months, and may be imposed on either a nationwide or a more restricted 
basis.


Sec.  16.519  May the FCC impute the conduct of one person to another 
in a limited denial of participation?

    For purposes of determining a limited denial of participation, the 
Commission may impute conduct as follows:
    (a) Conduct imputed from an individual to an organization. The 
Commission may impute the fraudulent, criminal, or other improper 
conduct of any officer, director, shareholder, partner, employee, or 
other individual associated with an organization, to that organization 
when the improper conduct occurred in connection with the individual's 
performance of duties for or on behalf of that organization, or with 
the organization's knowledge, approval, or acquiescence. The 
organization's acceptance of the benefits derived from the conduct is 
evidence of knowledge, approval, or acquiescence.
    (b) Conduct imputed from an organization to an individual or 
between individuals. The Commission may impute the fraudulent, 
criminal, or other improper conduct of any organization to an 
individual, or from one individual to another individual, if the 
individual to whom the improper conduct is imputed participated in, had 
knowledge of, or had reason to know of the improper conduct.
    (c) Conduct imputed from one organization to another organization. 
The Commission may impute the fraudulent, criminal, or other improper 
conduct of one organization to another organization when the improper 
conduct occurred in connection with a partnership, joint venture, joint 
application, association, or similar arrangement, or when the 
organization to whom the improper conduct is imputed has the power to 
direct, manage, control, or influence the activities of the 
organization responsible for the improper conduct. Acceptance of the 
benefits derived from the conduct is evidence of knowledge, approval, 
or acquiescence.


Sec.  16.521  What is the effect of a suspension or debarment on a 
limited denial of participation?

    If you have submitted a request for a hearing pursuant to Sec.  
16.513(b) of this part, and you also receive, pursuant to subpart A of 
this part, a notice of proposed debarment or suspension that is based 
on the same transaction(s) or the same conduct as the limited denial of 
participation, as determined by the debarring or suspending official, 
the following rules shall apply:
    (a) During the 30-day period after you receive a notice of proposed 
debarment or suspension, during which you may elect to contest the 
debarment under 2 CFR 180.815, or the suspension pursuant to 2 CFR 
180.720, all proceedings in the limited denial of participation, 
including discovery, are automatically stayed.
    (b) If you do not contest the proposed debarment pursuant to 2 CFR 
180.815, or the suspension pursuant to 2 CFR 180.720, the final 
imposition of the debarment or suspension shall also constitute a final 
decision with respect to the limited denial of participation, to the 
extent that the debarment or suspension is based on the same 
transaction(s) or conduct as the limited denial of participation.
    (c) If you contest the proposed debarment pursuant to 2 CFR 
180.815, or the suspension pursuant to 2 CFR 180.720, then:
    (1) Those parts of the limited denial of participation and the 
debarment or suspension based on the same transaction(s) or conduct, as 
determined by the debarring or suspending official, shall be 
immediately consolidated before the debarring or suspending official.
    (2) Proceedings under the consolidated portions of the limited 
denial of participation shall be stayed before the hearing officer 
until the suspending or debarring official makes a determination as to 
whether the consolidated matters should be referred to a hearing 
officer. Such a determination must be made within 90 days of the date 
of the issuance of the suspension or proposed debarment, unless the 
suspending/debarring official extends the period for good cause.
    (3) If the suspending or debarring official determines that there 
is a genuine dispute as to material facts regarding the consolidated 
matter, the entire consolidated matter will be referred to the 
designated hearing official within the Enforcement Bureau hearing the 
limited denial of participation, for additional proceedings pursuant to 
2 CFR 180.750 or 180.845.
    (4) If the suspending or debarring official determines that there 
is no dispute as to material facts regarding the consolidated matter, 
jurisdiction of the designated attorney within the Enforcement Bureau 
to hear those parts of the limited denial of participation based on the 
same transaction[s] or conduct as the debarment or suspension, as 
determined by the debarring or suspending official, will be transferred 
to the debarring or suspending official, and the hearing officer 
responsible for hearing the limited denial of participation shall 
transfer the administrative record to the debarring or suspending 
official.

[[Page 2101]]

    (5) The suspending or debarring official shall hear the entire 
consolidated case under the procedures governing suspensions and 
debarments, and shall issue a final decision as to both the limited 
denial of participation and the suspension or debarment.


Sec.  16.523  What is the effect of a limited denial of participation 
on a suspension or a debarment?

    The imposition of a limited denial of participation does not affect 
the right of the Commission to suspend or debar any person under this 
part.


Sec.  16.525  May a limited denial of participation be terminated 
before the term of the limited denial of participation expires?

    If the cause for the limited denial of participation is resolved 
before the expiration of the 12-month period, the official who imposed 
the sanction may terminate it.


Sec.  16.527  How is a limited denial of participation reported?

    When a limited denial of participation has been made final, or the 
period for requesting a conference pursuant to section 16.513(a) has 
expired without receipt of such a request, the official imposing the 
limited denial of participation shall notify the Enforcement Bureau and 
the USF Administrator, the TRS Fund Administrator and the NDBEDP 
Administrator of the scope of the limited denial of participation.

Federal Communications Commission.
Katura Jackson,
Federal Register Liaison Officer.
[FR Doc. 2019-28490 Filed 1-13-20; 8:45 am]
 BILLING CODE 6712-01-P