[Federal Register Volume 91, Number 167 (Monday, August 31, 2026)]
[Proposed Rules]
[Pages 55826-55835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-17761]
[[Page 55826]]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[WC Docket No. 26-173; FCC No. 26-52; FR ID 364115]
Maximizing Efficiencies in Universal Service Administration
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Federal Communications Commission
(Commission) seeks to improve the administration of the Universal
Service Fund (USF or Fund) by seeking comment on four areas related to
USF administration: current USF administration processes, i.e., the
processes used by Universal Service Administrative Company (USAC) to
administer the USF and the Commission's oversight of those processes;
the structure of USF administration, that is, USAC's role and
responsibilities related to USF administration; operating costs
associated with USF administration; and the impact of USAC's Board of
Directors on USF administration.
DATES: Comments are due on or before September 30, 2026 and reply
comments are due on or before October 30, 2026. If you anticipate that
you will be submitting comments but find it difficult to do so within
the period of time allowed by this document, you should advise the
contact listed below as soon as possible.
ADDRESSES: Pursuant to Sec. Sec. 1.415 and 1.419 of the Commission's
rules, 47 CFR 1.415, 1.419, interested parties may file comments and
reply comments on or before the dates indicated in the DATES section of
this document. You may submit comments identified by WC Docket No. 26-
173, by any of the following methods:
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 docket
or rulemaking number appears in the caption of a proceeding, the
Commission's rules require paper filers to submit two additional copies
for each additional docket or rulemaking number.
Filings can be sent by hand or messenger delivery, by
commercial overnight courier, or by first-class or overnight U.S.
Postal Servicemail. All filings must be addressed to the Commission's
Secretary, Office of the Secretary, Federal Communications Commission.
Hand-delivered or messenger-delivered paper filings for
the Commission's Secretary are accepted between 8:00 a.m. and 4:00 p.m.
by the FCC's mailing contractor at 9050 Junction Drive, Annapolis
Junction, MD 20701. 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 45 L Street NE, Washington, DC
20554.
Filings sent by U.S. Postal Service First-Class Mail,
Priority Mail, and Priority Mail Express must be sent to 45 L Street
NE, 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).
FOR FURTHER INFORMATION CONTACT: Stephanie Minnock
[email protected], Telecommunications Access Policy Division,
Wireline Competition Bureau, 202-418-7400 or TTY: 202-418-0484.
Requests for accommodations should be made as soon as possible in order
to allow the agency to satisfy such requests whenever possible. Send an
email to [email protected] or call the Consumer and Governmental Affairs
Bureau at (202) 418-0530.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Notice of Proposed Rulemaking (NPRM) in WC Docket No. 26-173; FCC No.
26-52, adopted on August 6, 2026 and released on August 7, 2026. The
full text of this document is available for public inspection during
regular business hours at Commission's headquarters 45 L Street NE,
Washington, DC 20554 or at the following internet address: https://docs.fcc.gov/public/attachments/FCC-26-52A1.pdf.
Synopsis
I. Discussion
At the outset, we seek comment broadly on ways to strengthen the
administration, management, and oversight of the Fund. Efficient,
accountable, and timely administration of the (Universal Service Fund
(USF or Fund) is necessary to achieve Congress's direction to the
Commission in Section 254 of the Communications Act (Act). However,
poor management of those administrative tasks could lead to increased
administrative costs, drawn-out application and audit processes, and
unchecked waste, fraud, and abuse--all paid for by contributors and
their rate-paying customers. As the steward of the Fund, and to ensure
that USF administration is effective, efficient, and competitively
neutral, we seek broad comment below on the operations, structure,
costs, and management of the USF administrator. Are there additional
measures that the Commission can implement to safeguard the USF from
waste, fraud, and abuse? Are there ways to better effectuate the USF's
statutory purpose of making access to affordable telecommunications
services available to Americans nationwide? Commenters should provide
specific recommendations for change and discuss the costs and benefits
of their proposals in specific, rather than general, terms. Commenters
should also note whether their recommendations require changes to the
Commission's rules.
A. Program Governance To Ensure the Efficient Use of Finite USF Funds
for USF Administration
The Commission has a responsibility to ensure the efficient use of
finite USF funds. In this section, we explore the current state of
USAC's operations and the Commission's oversight of those operations,
with particular emphasis on improvements to the audit and recovery
processes, enhancing the speed of operations, and streamlining other
internal USAC processes. Based on stakeholder feedback on the USAC
Reform Public Notice, DA 26-367, released April 15, 2026, we seek
comment on ways the Commission can create efficiencies in USAC's
administration of the USF.
1. Efficiencies in USF Operations
We seek comment on which USAC processes need streamlining or other
improvements to promote transparency, accountability, and cost
effectiveness in USF administration. In what situations does a lack of
transparency increase burdens on participating providers, or cause
unnecessary confusion in program administration? What additional
accountability measures could the Commission implement to support our
efforts to ensure that USF administration is efficient and effective?
In addition to those general questions, we seek specific comment on
whether additional requirements for USAC
[[Page 55827]]
decision documents could improve transparency and accountability. For
example, should the Commission direct USAC to make written decisions
resolving appeals publicly available on its website? Currently, when
USAC denies a stakeholder appeal, that stakeholder might seek
Commission review of USAC's decision, thereby bringing an issue, and
USAC's application of the Commission's rules on that issue, to the
Commission's attention. Conversely, when USAC grants a stakeholder's
appeal, that stakeholder is not likely to seek Commission review of
USAC's decision. Would public availability of USAC appeal decisions
mitigate the risk that stakeholders would be taken by surprise by a
subsequent change in course by USAC in response to Commission
direction? Would making USAC's decisions of stakeholder appeals
publicly available help improve transparency for stakeholders? Given
that USAC cannot make policy decisions and is bound by Commission
direction regarding the interpretation of the Communications Act and
Commission rules and precedent, how could the Commission best ensure
that publicly available USAC appeal decisions are not perceived as
binding precedent? Would there be confidentiality issues associated
with making USAC appeal decisions publicly available, and, if so, how
could they be addressed?
We also seek comment on whether to codify a requirement that USAC
appeal decisions include citation to the Act, Commission rules, and/or
Commission precedent. USAC currently provides citations to the Act, the
Commission's rules, and relevant Commission precedent to support its
decisions to grant or deny stakeholder appeals. Should the Commission
codify this practice, e.g., formally require USAC to include citations
in its analysis in its written decisions resolving stakeholder appeals?
Codifying this practice could help ensure transparency for stakeholders
and sufficient notice of unfavorable USAC decisions. However, USAC's
failure to meet this citation requirement in a given instance would
not, standing alone, itself be grounds for reversal or any other
consequence.
We seek comment on whether there are any changes that can be made
to USAC's current outreach processes in its administration of the USF
programs to enhance the efficiency of that outreach. We seek comment on
whether and how USAC outreach to support applicants also should be
provided to relevant service providers. In the case of general outreach
to applicants as a whole, is sufficient information already available
on USAC's website to also inform interested service providers, or would
there be benefits to making additional information available? In the
case of information requests or similar engagement between USAC and a
specific applicant in the case of a pending application, an audit, or
the like, should such engagement also include any relevant service
provider(s) to help facilitate faster information gathering and
responses? For example, when USAC is conducting outreach regarding a
pending application or an audit, should applicants be given the option
to identify certain service providers to be copied, or made aware of,
certain correspondence with USAC to facilitate faster information
gathering? Similarly, should service providers also be given the option
to identify certain applicants to be copied on its correspondence with
USAC? If so, how would such a process work? Are there potential
downsides to increasing the number of recipients of USAC outreach and
do those outweigh the potential benefits of faster response times? Are
there other changes to USAC's current outreach processes that the
Commission should consider? Is there information regarding applications
that could be shared on the open data platform to provide service
providers or applicants with greater insight into the status of the
review?
We seek comment as to whether a high-level performance review of
USAC's administration, beyond current Commission oversight processes,
would be beneficial to ensure USAC is administering the universal
service support mechanisms in an efficient, effective, and
competitively neutral manner. When the Commission appointed USAC the
permanent administrator, it determined that a review of USAC's
performance would help ``ensure that it is administering universal
service in an efficient, effective, and competitively neutral manner,''
but a formal review has never been conducted. Should such a review be
conducted regularly, going forward? Under what time frames should such
review take place? We seek comment as to whether such review should
include an opportunity for stakeholder input. We also seek comment on
the costs to conduct such a review, including funds used by USAC to
respond to the review.
Should the Commission establish additional mechanisms by which
stakeholders can raise concerns regarding the impact of USAC's
processes on the efficient, effective and competitively neutral
administration of the universal services support mechanisms? Currently,
stakeholders have various avenues to raise issues with the Commission
or USAC, including, but not limited to, utilizing USAC's program-
specific customer service resources, filing an appeal with USAC,
sending a letter to the Commission, and/or requesting a meeting with
Commission staff. If we were to establish an informal stakeholder
forum, what should be the critical components and anticipated outcomes
of such a process? Should an informal stakeholder forum be held on a
regular basis, for example, biennially? Should these forums be used,
among other things, as a mechanism to provide guidance to and engage
with stakeholders on technical aspects of the electronic systems used
in USF programs before undertaking technical changes to those systems?
Should such coordination be limited to instances in which the
Commission has directed USAC to implement large-scale system changes?
USF stakeholders regularly interact with USAC on issues related to the
administration of the USF support mechanisms. Would a process that more
directly involves Commission staff increase program administration
costs or add layers of review that could slow down efforts to improve
day-to-day operation of the USF support mechanisms? Similarly, we
invite commenters to discuss whether their experience with the
administration of other government funding programs, such as state
universal service programs or other federal or state broadband grant
programs, could be beneficial examples to inform the administration of
the USF. Are there examples of operational efficiencies in other
government funding programs that could be applied to the administration
of the USF?
Are there operational inefficiencies that could be improved using
artificial intelligence (AI)? What processes could be improved with AI,
if any? Should AI be used to reduce operational turnaround times and
costs? In what ways should it be used? Would efficiency in stakeholder
engagement be improved with using AI resources to respond to
stakeholder questions? How should any privacy and information security
concerns be balanced with potential benefits of using AI in relation to
our USF programs? What would be the financial impact of incorporating
AI into the administration of USF? If AI is incorporated, what
safeguards need to be put in place to ensure data integrity,
governance, and quality assurance?
2. Speed of Operations
In the USAC Reform Public Notice, WCB and OMD sought comment on
[[Page 55828]]
changes that could improve USAC processes and reduce undue delays.
Several stakeholders have commented that clear deadlines and shot
clocks for various USAC operations would increase efficiency and
transparency regarding the timing of decisions. We propose to require
USAC to publicly report turnaround times or other metrics regarding
responsiveness to add transparency around decision-making, and we seek
comment on that proposal. What metrics on USAC decision-making and
processes would stakeholders find helpful to have publicly available,
beyond what is already provided through USAC's Open Data platform?
Should such public reporting be included in existing USAC quarterly
reports and appendices, or in separate reporting dashboards? We also
propose to require USAC to monitor upcoming filing deadlines and the
filing status of parties impacted by those deadlines and communicate to
individual stakeholders regarding their filing status prior to the
deadlines. We remind stakeholders that it is their responsibility to
ensure timely compliance with all filing deadlines. Stakeholders will
continue to have this responsibility even if the Commission requires
USAC to provide the proposed additional notice to program participants;
a lack of notice from USAC will not excuse or cure a failure to timely
file a form or provide other required information.
To reduce undue delays in USF administration, would it be
beneficial for the Commission to establish deadlines or ``shot clocks''
for specific USAC processes? For example, the Commission could require
USAC to follow a timeline for certain processes like application
review, similar to how the Commission has a timeline of 180 days for
its consideration of applications for transfers or assignments of
licenses or authorizations relating to mergers. If the Commission took
this approach, which specific USAC processes might benefit from a shot
clock? Should we apply a shot clock only to workable applications,
excepting those that require further information from applications or
additional guidance from the Commission? How will actions taken when a
shot clock expires affect future audits or recovery proceedings? If
USAC fails to meet shot clock deadlines or if such deadlines expire,
what consequences should there be? What are the cost and benefits of
those consequences, including administrative costs incurred by USAC?
Considering that gathering additional information from stakeholders
can sometimes delay a review or approval process, how does the
gathering of additional information affect a potential shot clock
deadline? Under what circumstances could USAC or the Commission pause
the shot clock?
What other ways could the Commission ensure timely administrative
functions while preventing administrative errors and waste, fraud, and
abuse in the USF programs? Would using artificial intelligence (AI)
tools to review applications, audits, and appeal review processes help
reduce delays while maintaining accurate results?
We invite commenters to provide specific examples of USAC processes
that cause undue delay or burden on USF program participants. We also
seek comment on successes USAC has had in improving its operations.
What are examples of efficiencies that USAC has put in place that
reduced delay or burdens on USF program participants? How could the
Commission implement those positive steps elsewhere in USF operations?
3. Audits and Recoveries
First, we explore ways to improve the efficiency of audits of USF
program beneficiaries, and ways to ensure that the Commission is able
to recover all improperly disbursed funding. Under the Payment
Integrity Information Act of 2019 (PIIA), and related guidance from The
Office of Management and Budget (OMB), the Commission is required to
implement compliance audits to identify, estimate, report (e.g., in
OMB's Annual Data Call), and reduce improper payments in its programs.
The Federal Managers' Financial Integrity Act (FMFIA) and OMB Circular
A-123 require that the Commission report on the effectiveness of
internal controls and certify, in its Annual Financial Reports, whether
these controls effectively protect Commission programs from waste,
fraud, and abuse.
As a result of this framework, recipients of USF funds are subject
to both random and risk-based compliance audits and other
investigations and similar reviews to confirm compliance with program
rules, which result in monetary recoveries for the USF when
appropriate. In order to identify and assess the level of improper
payments as well as test beneficiary compliance with Commission rules,
in 2010, the Commission directed USAC to conduct Payment Quality
Assurance (PQA) assessments and Beneficiary and Contributor Audit
Program (BCAP) audits. BCAP is an annual compliance program designed to
evaluate the compliance of USF beneficiaries and contributors with the
Commission's USF rules. BCAP audits adhere to the Generally Accepted
Government Auditing Standards (GAGAS), and in Commission-approved
procedures, USAC tailors its audit samples to program-specific elements
such as risk areas, size of disbursements, and beneficiary types. The
PQA program is used to determine the baseline improper payment rate for
each Commission program in accordance with the PIIA and the practices
of other federal agencies. Because PQA assessments are designed to
assess and report on improper payment rates on an annual deadline, PQA
assessments are limited in scope and typically request information that
can be gathered easily in a one-time request. Both types of reviews
play an essential role in meeting the Commission's reporting
obligations, reducing waste, fraud, and abuse in the USF programs. For
example, in 2025 the Bureau issued six orders affirming USAC audit
findings, which saved ratepayers over $9 million.
Each USF program has its own BCAP audit requirements and USAC's
processes for audit-related recovery letters, non-audit-related
recovery letters, and appeal decision letters vary across the USF
programs. Should the Commission consider revisions to its rules to
standardize these processes to create uniformity across the programs,
or does it make sense for different programs to have different
processes? In addition, commenters have raised concerns about
maintaining consistent standards during audits. How can the Commission
clarify audit procedures and definitions prior to the commencement of
individual audits while protecting the integrity of the audit
processes? Should the Commission direct USAC to establish a
communication channel for stakeholders to ask clarifying questions on
requests for additional information during an audit? Are there BCAP
audit approaches or mechanisms from other government programs that the
Commission should consider implementing in USF audits? If commenters
suggest any changes, they should indicate what, if any, changes are
required to the existing rules in Subpart H of Part 54 as they pertain
to audits or Subpart I of Part 54 as they pertain to review of
decisions issued by USAC.
Some commenters have suggested that we should adopt a de minimis
exemption to random audit requirements such that USF support recipients
receiving less than a certain amount of support per year would be
exempt from random audits. Should we adopt this de minimis exemption?
What should be the dollar amount of USF
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support received to qualify for a de minimis exemption? Should the
dollar amount of support received accumulate across USF programs or be
program specific to qualify for a de minimis exemption from random
audits? Do other federal programs employ such exemptions and if so, is
it pursuant to a specific statutory exemption? Are there any legal
barriers to the Commission adopting such an exemption? Would doing so
impact our compliance with government-wide financial requirements? What
other considerations should determine whether a carrier qualifies for a
de minimis exemption? How can the Commission ensure no waste, fraud, or
abuse of USF support for carriers exempted from random audits? Without
random audits of these support recipients, how can we uncover risk
areas that may not already be known?
Audits Procedures and Methodology. Additionally, we propose to
amend Sec. 54.707 of the Commission's rules to clarify the
administrator's ability to audit non-service provider beneficiaries of
USF programs. We propose modifying Sec. 54.707 of the Commission's
rules to explicitly include non-carrier beneficiaries (i.e., schools,
libraries, health care providers) within USAC's audit authority.
Beneficiaries may be audited pursuant to their application to and
participation in USF programs, and audits are an important tool in
rooting out waste, fraud, and abuse, regardless of where the non-
compliance originates. The current text of Sec. 54.707 of the
Commission's rules, however, only explicitly mentions ``contributors
and carriers.'' We seek comment on amending Sec. 54.707 of the
Commission's rules to explicitly encompass non-carrier beneficiaries.
Are there any other types of entities we should include in Sec. 54.707
of the Commission's rules, and why?
We further propose to modify Sec. 54.707 of the Commission's rules
governing audit controls to codify USAC's ability to calculate
recoveries by extrapolating from a statistically representative sample
of the auditee's disbursements rather than seeking recovery for only
the violations identified in the sample. Under this proposal, the
statistically representative sample for the disbursements under audit
would require a 90-95 percent confidence level and a 4-6 percent margin
of error for samples. Codifying the use of extrapolations of recoveries
based on a statistically representative sample could save audit costs
for USAC and auditees by limiting audit inquiries only to the sample
size needed to determine the appropriate recovery for the whole
population of claims or activity by the auditee. Should USAC provide
the recipient an opportunity to present additional evidence before
withholding or recovering support? Should USAC also provide notice to
the support recipient before any withholding or recovery, or would the
opportunity to present additional evidence constitute sufficient notice
to auditees?
We seek comment on codifying the calculation of recoveries based on
a statistically representative sample of disbursements. If the
Commission were to adopt this codification, what other guardrails
should be in place to ensure that the sample is representative and has
the desired statistical properties? Should the methodology used by USAC
to determine any given sample be made available for review and
challenge by auditee? Should auditees be given the opportunity to
demonstrate that the proportion of improper disbursements outside of
the sample was less than the proportion in the sample? Commenters to
the USAC Reform Public Notice urged that the Commission exercise
caution before broadly applying sampling and extrapolation measures.
Are there ways the Commission could address these concerns to ensure
that extrapolation of audit results is reliable?
We also seek comment on any program-specific issues related to
extrapolation. Currently, the High Cost program's verifications of
broadband deployment and the High Cost program's improper payment rates
use extrapolation based on statistically representative samples. Should
the Commission direct USAC to use extrapolation based on statistically
representative samples to estimate support recovery amounts across all
USF programs, not just the High Cost program? Are there programs for
which extrapolation of audit results to determine recoveries may be
more or less viable? For example, should extrapolations across
different procurements be permitted in the E-Rate and RHC programs,
even though each procurement is based on a different competitive
bidding process?
We seek comment on how USAC would select a statistically
representative sample for the E-Rate, RHC, and Lifeline programs. To
determine an appropriate sample size requires, at a minimum, specifying
a desired confidence level and margin of error, and assuming an
estimate for the unknown population standard deviation. Should the
Commission specify either a uniform confidence level or a minimum
confidence level (e.g., 95%)? Similarly, should the Commission specify
a uniform or minimum margin of error (e.g., 5%)? To give auditees
greater assurances that estimated recovery amounts will accurately
reflect actual improper payments, should the Commission specify even
more stringent uniform or minimum values for the confidence level
(e.g., 99%) and margin of error (e.g., 1%)? Furthermore, how should the
Commission estimate the unknown population standard deviation in each
case to determine the appropriate sample size? Should it be allowed to
assume a particular value or should it estimate the standard deviation
based on a prior sample of disbursements?
What other statistical issues may arise in choosing a statistically
representative sample that should be accounted for? For example, if the
observations are not statistically independent (e.g., correlated), such
as may be the case with payments within the same state or Lifeline
subscriptions within a household over time, the required sample size to
achieve a given confidence level and margin of error would generally be
greater. Should the Commission provide any guidance on choosing the
correct sampling frame and selecting observations from that frame
(e.g., stratified vs. simple random sampling)? Additionally, we seek
comment on what dimensions, or variables, the Commission should use to
stratify its sample.
Recovery Timing. After USAC issues an audit finding or recovery, a
party has 60 days to appeal USAC's decision to the Commission. We seek
comment on the appropriate time after the issuance of an audit finding
or initiation of other recovery action for the Commission to recover
funds improperly disbursed. For USF contributions, providers must
follow a pay-and-dispute procedure by which a provider pays the invoice
in full by the due date or incurs interest, penalties, and potential
Debt Collection Improvement Act (DCIA) proceedings regardless of any
timely filed appeal. If USAC determines that a billing error was made,
the contributor receives a refund.
In other programs, however, the filing of an appeal currently stays
a recovery. This approach delays the return of improperly disbursed
funds. To create a more efficient process and obviate the delay of
repayment of improperly disbursed funding, we seek comment on adopting
a pay-and-dispute model for all USF programs whereby beneficiaries and
service providers would be required to pay a recovery to USAC
notwithstanding the filing of an appeal, such as a petition for
reconsideration, so long as there has been a relevant Bureau or
Commission-level decision.
[[Page 55830]]
We also seek comment on what rules the Commission would need to
alter to adopt a pay-and-dispute model. Should the Commission exempt
USF debts from Sec. 1.1910(b)(3)(i) of the Commission's rules, which
allows timely appeals and judicial proceedings to stay certain DCIA
proceedings? Alternatively, should we modify 47 CFR 1.1910(b)(3)(i) to
codify a pay-and-dispute policy, or clarify that payment is due after
the Bureau issues an order upholding USAC's finding of improper
payment, in the context of USF debts, even if the party subsequently
files an application for review? Should the Commission clarify in its
rules that an uncontested USAC decision satisfies the requirement that
an affected party has been afforded an opportunity for review within
the Commission as required by 47 CFR 1.1912? We seek comment on these
options.
Other Best Practices. Currently, USAC uses audit and other program-
specific reviews to detect improper disbursements, general program
compliance, and to identify instances of waste, fraud, and abuse. When
there are either known or highly suspected instances of alleged misuse
of funds, failure to comply with program rules, or other potential
waste, fraud, or abuse of funds, are there practices and policies that
the Commission should consider adopting, consistent with federal law,
beyond our existing mechanisms to combat waste, fraud, and abuse? For
example, should the Commission establish additional procedures by which
the Administrator must hold funding pending confirmation that the
disbursement would comply with Commission rules? Are there practices
and policies used by other federal agencies to mitigate acts of
misconduct and prevent waste or misuse of federal funds that the
Commission should consider adopting? Should the administrator expand
use of AI in its document review for audits and program compliance?
Are there other changes to the audit and recovery process, in
addition to those proposed here or in the alternative to these
proposals, that may streamline or make the audit and funding recovery
process more efficient?
Finally, we seek comment on whether USAC's auditors, whether
internal USAC staff or third-party contractors, receive adequate
training. To the extent that stakeholders think that additional
training of USAC auditors is necessary, what kind of additional
training should be provided? Should auditors receive additional
training related to federal funding oversight? If so, what should that
training include?
B. Operating Costs of Current USF Administration
Next, we turn to USAC's operational costs and ways to minimize
administrative costs involved in USF administration. USAC's budget
includes expenses related to program operations, corporate costs (e.g.,
software), and professional expenses (e.g., staff salaries). USAC's
annual operating budget is approved by the Commission and reviewed on a
quarterly basis. The process begins with USAC setting an annual
operating budget for administering the USF programs. USAC develops its
annual budget by analyzing USAC's expenditures for the last five years
and seeking input about anticipated costs from each of the program
managers. This proposed budget then undergoes review by USAC
executives. Once the annual operating budget is internally reviewed and
approved, it is submitted to OMD and the USAC Board for review and
feedback. USAC incorporates this feedback, and the Board reviews and
approves the anticipated annual budget. Then, on a quarterly basis,
USAC reviews and revises its operating budget. Then the quarterly
budget, which may include revisions for administrative expense
projections and expenditures from the last quarter, is sent to the
Commission for review. The Commission provides feedback and may direct
USAC to revise the quarterly budget to incorporate that feedback. At
the end of every year, USAC reports its annual financial statement to
the Commission; this statement is subject to change based on the
completion of USAC's financial audit the following year.
Budget. To streamline USAC's operational costs and ensure the
responsible stewardship of USF funds, we seek comment on whether USAC's
budget should be subject to a cap. In 2025, USAC's total operation
expenses were $266,603,608. If USAC's budget is subject to a cap,
should that cap be a fixed amount, a proportion of disbursed or
projected support, or something else? If the cap is a fixed amount,
what should that fixed amount be and should it be automatically
adjusted each year for inflation? Should inflation adjustments be based
on the Gross Domestic Product Chain-type Price Index used for E-Rate
and RHC program inflation adjustments, or something else? If a cap is
based on a proportion of operating expenses and disbursements, what
should that proportion be? In 2025, USAC's operating expenses were
3.06% of operating expenses plus disbursements. Based on that
information, is there a specific proportion of operating expenses plus
disbursements that could serve as a USAC budgetary cap? Finally, are
there any other mechanisms that could be used to establish a USAC
budget cap?
We also seek comment on caps for specific purposes within USAC's
budget. Should there be guidelines or limits on what percentage of the
budget can be spent on specific resources? How much of USAC's budget
should be dedicated towards, for example, information technology,
outreach, contractors, and audits? Should USAC's administrative budget
be reduced or limited? Would a reduction in the number of USAC staff in
certain areas impair USAC's ability to successfully administer the USF?
Are there any administrative functions and costs that should be cut or
performed by Commission staff? Should USAC staff salaries and benefits
be reevaluated? What percentage of USAC's budget should be dedicated to
staff salaries? Should the Commission modify its MOU to memorialize the
process by which USAC transmits its proposed annual budget to the
Commission, which would include any foreseeable increase in outside
vendor costs and new full-time employees to improve USAC's
accountability on cost and how it allocates resources? If so, should an
exception be carved out for Commission adoption of new rules or
guidance requiring significant changes in the administration of the
programs.
USAC has external contracts with a variety of third parties for USF
administration tasks, including tasks like audits of contributions and
the USF programs, call center operations, certain application reviews,
and IT development and maintenance. The Commission oversees USAC's
procurements, and procurement processes are governed by the USAC MOU.
We seek comment on stakeholders' experience working with contractors of
USAC as compared to working with USAC staff. Are contractors
knowledgeable enough about the USF contributions and program rules to
effectively audit USF contributors and program participants? Does
USAC's use of contractors result in inconsistent results in audits,
reviews, and customer service inquiries?
Reporting. The Commission requires USAC to file with the Commission
and with Congress an annual report by March 31 of each year detailing
its operations, activities, and accomplishments for the prior year,
including actions performed to prevent waste, fraud, and abuse of
universal
[[Page 55831]]
service funds. Additionally, the Commission requires USAC, on an annual
basis, to retain an independent auditor to examine its operations and
books of account to determine whether it is properly administering the
Fund. We also note that the Commission requires USAC to maintain its
books of account in accordance with generally accepted accounting
principles (GAAP), to account for the financial transactions of the USF
in accordance with government generally accepted accounting principles
(GovGAAP), and to maintain the accounts of the USF in accordance with
the U.S. Government Standard General Ledger (USGSGL). Moreover, the
USAC MOU requires an agreed-upon procedures review (AUP), which is
conducted annually by a third party procured by USAC.
We seek comment on what changes to these reporting obligations
should be made to better enable the Commission to evaluate USAC's
ability to efficiently administer the USF. Are there changes to the
USAC annual report or independent financial audit that would be
beneficial? Are there other ways to analyze USAC's administrative costs
that are not presented by either the annual report or the independent
financial audit? Should the Commission amend Sec. 54.717 of the
Commission's rules to include other types of review? For example,
should the Commission require the external review of the matters
generally covered by the AUP to be codified in Sec. 54.717 of the
Commission's rules? Or should the Commission retain the flexibility to
designate matters subject to the AUP? Should the Commission
periodically require external review, through a consultant report, of
whether USAC efficiently allocates resources, whether such operations
are cost-effective, and ways to improve communications among USAC staff
and management to improve implementation and administration of USF
programs? If so, and the external review finds that USAC's operations
are not cost-effective, what remediation process should the Commission
require? How should USAC be required to report on that remediation to
the Commission? Are there any other ways to make USAC's operations more
cost effective?
Board of Director Costs. Finally, we seek comment on administrative
costs related to USAC's Board of Directors. Currently, the 20-person
Board is reimbursed for the costs of travel, lodging, and meals when
attending USAC's quarterly board meetings. We seek comment on whether
there are more efficient ways to conduct board meetings that do not
require such expenditures. We seek comment on the benefit of requiring
meetings to be held in-person in Washington DC, as compared to
conducting meetings online. We propose modifying Sec. 54.703(e) of the
Commission's rules to remove the requirement that all USAC board
meetings be held in Washington, DC, and seek comment on that proposal.
Would this enable Board meetings to be conducted in a more cost-
effective manner?
C. Structure of USF Administration
USAC has been the administrator of the USF programs since shortly
after the Telecommunications Act of 1996 passed. As previous
Commissions have done during periodic reviews of USF administration, we
seek comment on the utility of maintaining a permanent administrator of
the USF, and the effect of that choice on USF administrative expenses.
What would be the benefits and drawbacks of moving away from having a
permanent administrator? Are there other alternatives to a permanent
administrator that would increase efficiency, cut costs, and streamline
USF administration? If so, what are those alternatives? Should
Commission staff handle portions of USF administration directly? Does
the Commission's staff have sufficient expertise and capacity to handle
portions of USF administration? How would bringing portions of USF
administration in-house impact the Commission's budget?
We seek comment on whether there is any benefit to having the
Commission handle specific functions of USF administration. We ask
commenters to identify both the function and the benefit provided by
having the Commission bring a particular administrative function ``in-
house.'' In response to the USAC Reform Public Notice, one commenter
suggested eliminating USAC's role in billing and collection for USF
contributions and instead bringing all contributions functions inside
the Commission. The billing and collection function was assigned to
USAC at its creation during a time when the funds were held outside the
Treasury in a private bank account. Since that time, the Commission has
moved the Universal Service Fund to the U.S. Treasury. Given that any
payment out of the Treasury requires approval by a certifying officer
at the Commission, currently USAC only makes payment recommendations.
We propose updating our rules to remove any obsolete language and
accurately reflect how USF funds are held.
If the Commission does retain a permanent administrator, should
that administrator continue to be USAC or should other candidates be
considered? What issues and criteria should the Commission consider in
determining whether to explore a different administrator? What should
be the basis for revoking the role of permanent administrator, if an
entity is named as one and proves not to be a good steward? What other
organizations currently have the expertise and infrastructure to
administer the USF? Commenters should discuss the advantages and
disadvantages of selecting a new administrator, as well as the minimum
qualifications for potential administrators and the optimal agreement
duration, including any option years, for a new administrator. Should
potential administrators be limited to not-for-profit corporations? How
would a change in the administrative structure affect the neutrality of
USF administration?
D. USAC's Board of Directors
The USAC Board of Directors (Board) was established to ensure
significant, meaningful representation from a balanced cross-section of
industry and beneficiaries of and contributors to the USF support
mechanisms that would enable USAC to implement the USF support
mechanisms in a neutral and efficient manner. Although the Commission
emphasized the importance of broad representation of stakeholder
interests on the Board, it noted that the Board should not be so large
that it is unable to give USAC the prompt and effective guidance needed
to undertake its responsibilities.
The Commission's rules specify that USAC shall have a twenty-member
Board of Directors, which includes the CEO, and mandate three-year
Board member terms. Except for the CEO, each of the Board members
represents a specific constituency--including beneficiaries of or
contributors to--the USF. The Commission's rules contemplate that each
Board member will be nominated by its peers, so that each seat on the
Board reflects specific stakeholder interests. The Commission Chair
reviews the nominations and selects each member of the Board.
In response to the USAC Reform Public Notice, stakeholders
suggested that changes to the Board structure would be beneficial to
USF administration. We seek comment on some of these recommendations,
as well as Board-related matters including conflicts of interest, board
composition, Board member terms, and Board committees.
[[Page 55832]]
Conflicts of Interest. First, we seek comment on ways that we can
ensure that Board members, who represent the companies and
organizations most likely to benefit from universal service funding,
can avoid conflicts of interest. The MOU between the Commission and
USAC states that USAC's Board members ``shall avoid any organizational
or personal conflicts of interest or the appearance of a conflict of
interest in any aspect of the management of the USF, including the USF
programs, and the operations of USAC.'' A conflict of interest is
defined as a situation in which a Board member ``has a financial
interest, personal interest, or relationship that could impair that
person's ability to act impartially and in the best interest of the USF
when performing their assigned role, or is engaged in self-dealing.''
USAC requires Board members to annually disclose personal and
familial financial interests in entities with which USAC has a
relationship (e.g., USF beneficiaries or recipients, or a party to
legal action against USAC), which is consistent with Commission
requirements. Board members are also required to annually complete an
ethics and confidentiality training module. Despite these measures,
Board members are required to be representatives of USF contributors
and beneficiaries. Since these members are responsible both to their
employers and to USAC, the GAO 2024 USAC Report, publicly released
August 22, 2024, noted that this structure leads to the appearance of
conflicts of interest.
We propose to update and improve the Commission's rules regarding
conflicts of interest for all USAC Board members. Does having Board
members acknowledge and accept their responsibilities and agree to
comply with the provisions within the Board's ethics policy suffice to
mitigate potential conflicts of interest? Are there other ways in which
the Commission could mitigate potential conflicts?
We propose to require Board members to sign USAC's ethics policy
annually. Should Commission rules, and not just USAC's ethics policy,
require USAC Board members, when acting in their capacity as Board
members, to represent the overall interests of USAC as the
administrator of the Fund, and not just the interests of the Board
member's personal employer or the constituency represented by their
seat on the Board? If so, how should the Commission define a conflict
of interest for this purpose?
Should the Commission adopt additional conflict of interest rules
that apply only to USAC Board members? Should Board members be
prohibited from inquiring into matters that could benefit their
employer or the constituency represented by their seat on the Board? We
seek comment on how this would impact individuals' willingness to serve
on the USAC Board. Should we exclude certain categories of individuals,
such as USF program or contributions consultants, from serving on the
USAC Board altogether?
Reducing the Number of USAC Board Members. Should the Commission
reduce the size of USAC's Board? Specifically, we seek comment on
reducing the size of the USAC Board from 20 to 13 members. Commenters
have advocated for a reduction in the size of USAC's Board, suggesting
a reduction of the Board to no fewer than five members and no more than
15 members. We invite comment on this proposal. Would reducing the size
of USAC's Board improve efficiency in the management of USAC?
Modifying USAC Board Composition. In response to the USAC Reform
Public Notice, we received recommendations to modify the composition of
the USAC Board to ensure that Board members have expertise in
administrative areas such as financial management, audits, information
security, and program administration. Because the USAC Board may
benefit from having members of the Board that have expertise in
financial management, audits, information security, and program
administration, we seek comment on whether to modify the composition of
the USAC Board.
What are the benefits and drawbacks of modifying the composition of
the board so that half the members have expertise in one or more USF
programs (e.g., representatives from schools, libraries, or rural
areas, service providers, consumer advocates, or state
representatives), and the other half of the Board is comprised of
individuals not affiliated with any USF stakeholders but that instead
have specific substantive areas of administrative expertise (e.g.,
corporate management, accounting, grant management, auditing,
procurement expertise, and information technology)? Should we require
that some Board members have expertise in federal oversight? Should the
current constituency categories be merged? Are there any that should be
eliminated? What criteria should be used to determine what categories
should be modified? Should the categories be eliminated? Is the current
level of stakeholder representation necessary for the proper management
of USF programs, as one commenter suggested? How should the Commission
compare the benefits of that representation with the potential ethical
issues of having representatives with financial interests in the USF
participate in oversight of USAC? Is expertise in the USF programs
alone enough to provide adequate representation on the Board? What
level of administrative experience should Board members have?
We also seek comment on other approaches to modifying the
composition of the Board, such as selecting Board members based solely
on qualifications that would support USAC's administration of the USF.
Should we modify the Commission's rules to allow any interested member
of the public the opportunity to nominate a USAC Board member? This
could broaden the candidate pool and provide Commission leadership the
ability to select Board members from among all qualified nominations
received.
Terms for USAC Board Members. Given that staggered terms reduce the
likelihood that there will be multiple vacancies pending appointment of
replacement Board members, we propose to maintain the staggered three-
year terms and seek comment on this approach. We seek comment on
whether USAC board members should be subject to term limits and, if so,
how many terms should be permitted for each individual. We also seek
comment on under what circumstances a USAC Board member may be removed
prior to the end of their term.
Updating USAC Board Committees. The Commission's rules establish
three USAC Board Programmatic Committees with responsibility for
different USF programs: (1) the High Cost and Low Income Committee; (2)
the Schools and Libraries Committee; and (3) the Rural Health Care
Committee. There is also an Audit Committee and an Executive Committee.
Each of the Programmatic Committees is ``vested with the powers and
authority necessary to maintain the unique missions and functions of
the schools and libraries, rural health care, and high cost and low
income support mechanisms, respectively.''
We seek comment on the extent to which the Board Programmatic
Committees are influencing and improving USAC's administration of the
four USF programs. We seek comment on whether the Commission should
create a committee, with members appointed by the Commission Chair, to
provide oversight over USAC's internal administration (e.g., management
of IT systems and projects, functions shared across USF programs, and
USAC administrative and procurement expenses), to ensure efficient and
cost-effective administration of the USF. In
[[Page 55833]]
light of the proposed reduction to the size of the USAC Board, we also
seek comment on how this would impact Board committees. We seek comment
on modifying our rules to eliminate Board Programmatic Committees and
create committees focused only on audits and on USAC governance and
risk. We seek comment on amending the Commission's rules to require
each committee of the USAC Board to implement measures to improve the
efficiency and effectiveness of the administration of their respective
programs. What measures should we adopt to meet this goal? We also seek
comment on whether the Commission should promulgate additional rules
setting forth responsibilities for Board committees and clarify how
these committees are subject to Commission oversight.
II. Procedural Matters
Paperwork Reduction Act Analysis. This document does not contain
proposed information collection(s) subject to the Paperwork Reduction
Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does
not contain any new or modified information collection burden for small
business concerns with fewer than 25 employees, pursuant to the Small
Business Paperwork Relief Act of 2002, Public Law 107-198, see 44
U.S.C. 3506(c)(4).
Regulatory Flexibility Act. The Regulatory Flexibility Act of 1980,
as amended (RFA), requires that an agency prepare a regulatory
flexibility analysis for notice and comment rulemakings, unless the
agency certifies that ``the rule will not, if promulgated, have a
significant economic impact on a substantial number of small
entities.'' Accordingly, the Commission has prepared an Initial
Regulatory Flexibility Analysis (IRFA) concerning the possible impact
of potential rule and/or policy changes contained in this NPRM. The
Commission invites the general public, in particular small businesses,
to comment on the IRFA. Comments must be filed by the deadlines for
comments on the NPRM indicated in the DATES section of this document
and must have a separate and distinct heading designating them as
responses to the IRFA.
Ex Parte Presentations. 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 Commission rule 1.1206(b). In proceedings
governed by Commission 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.
Providing Accountability Through Transparency Act: Consistent with
the Providing Accountability Through Transparency Act, Public Law 118-
9, a summary of this document will be available on https://www.fcc.gov/proposed-rulemakings.
III. Initial Regulatory Flexibility Analysis
As required by the Regulatory Flexibility Act of 1980, as amended
(RFA), the Commission has prepared this IRFA of the policies and rules
proposed in the NPRM assessing the possible significant economic impact
on a substantial number of small entities. In addition, the NPRM and
IRFA (or summaries thereof) will be published in the Federal Register.
A. Need for, and Objectives of, the Proposed Rules
The NPRM seeks comment on ways to strengthen the administration,
management, and oversight of the Universal Service Fund (USF or Fund)
and its administrator, the Universal Service Administrative Company
(USAC). The Commission is required by section 254 of the Communications
Act of 1934, as amended, to promulgate rules to implement the universal
service provisions of section 254, which allow for the availability of
affordable telecommunications services to consumers living in high-cost
areas, low-income consumers, eligible schools and libraries, and rural
health care providers. On May 8, 1997, the Commission adopted rules
that reformed its system of universal service support mechanisms so
that universal service is preserved and advanced as markets move toward
competition. USAC is responsible for administration of the USF
programs, including activities related to collection and disbursement
of program support, and producing timely and relevant data and analysis
to inform the Commission's policymaking and oversight of the USF and
the USF programs. Since the appointment of USAC as the permanent
administrator of USF in 1998, no major review of USAC has been
conducted. Given the passage of time since the Commission last
conducted a wide-ranging review of USAC and its relevant processes, we
seek comment on strengthening USAC's internal processes and improving
its management structure to increase efficiency in the administration
of USF programs. As part of our ongoing commitment that our standards
continue to serve the public interest, we also seek comment on whether
the Commission's oversight framework for USAC implements best
practices, including standards for accountability and transparency.
B. Legal Basis
The proposed action is authorized under sections 1, 2, 4(i)-(j),
254, 201(b), 303(r), and 403 of the Communications Act of 1934, as
amended, of the Telecommunications Act of 1996, as amended, 47 U.S.C.
151, 152, 154(i)-(j), 201(b), 254, 303(r), and 403.
C. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply
The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted. The RFA generally defines
the term ``small entity'' as having the same meaning as the terms
``small business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term
[[Page 55834]]
``small business concern'' under the Small Business Act. A ``small
business concern'' is one which: (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. The SBA
establishes small business size standards that agencies are required to
use when promulgating regulations relating to small businesses;
agencies may establish alternative size standards for use in such
programs, but must consult and obtain approval from SBA before doing
so.
Our actions, over time, may affect small entities that are not
easily categorized at present. We therefore describe three broad groups
of small entities that could be directly affected by our actions. 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 34.75 million
businesses. Next, ``small organizations'' are not-for-profit
enterprises that are independently owned and operated and not dominant
in their field. While we do not have data regarding the number of non-
profits that meet that criteria, over 99 percent of nonprofits have
fewer than 500 employees. Finally, ``small governmental jurisdictions''
are defined as cities, counties, towns, townships, villages, school
districts, or special districts with populations of less than fifty
thousand. Based on the 2022 U.S. Census of Governments data, we
estimate that at least 48,724 out of 90,835 local government
jurisdictions have a population of less than 50,000.
The rules proposed in the NPRM will apply to small entities in the
industries identified in the chart below by their six-digit North
American Industry Classification System (NAICS) codes and corresponding
SBA size standard. Where available, we also provide additional
information regarding the number of potentially affected entities in
the industries identified in Table 1 (2022 U.S. Census Bureau Data by
NAICS Code), Table 2 (Telecommunications Services Provider Data and
Table 3 (E-Rate Funding Data.
D. Description of Economic Impact and Projected Reporting,
Recordkeeping, and Other Compliance Requirements for Small Entities
The RFA directs agencies to describe the economic impact of
proposed rules on small entities, as well as projected reporting,
recordkeeping and other compliance requirements, including an estimate
of the classes of small entities which will be subject to the
requirements and the type of professional skills necessary for
preparation of the report or record.
The NPRM seeks comment on changes that would improve USAC's
operations and management functions, audits and recovery processes, and
efficiency of the USAC annual audit. The NPRM proposes to explicitly
include non-carrier beneficiaries, such as participating schools,
libraries, and health care providers, within USAC's audit authority.
The NPRM also seeks comment on USAC's board reorganization and
streamlining of USAC's budget. Changes to the rules may be associated
with new or additional costs to adjust to new compliance obligations,
associated audits, collections, evaluation, and appeals for small
service providers that voluntarily choose to participate in the USF
programs. Small entities may need to hire professionals to comply with
the requirements that may be adopted as a result of the proposals and
matters discussed in the NPRM. Changes in rules may be associated with
cost to adjust to new compliance rules associated audits, collections,
evaluation, and appeals.
In accordance with our requests for comments in the NPRM mall
entities are encouraged to provide specific information pertaining to
the costs, benefits, and impacts of any potential reporting,
recordkeeping, or compliance requirements we discuss. We expect the
comments we receive to include information on the costs and benefits,
and other pertinent matters that should help us identify and evaluate
relevant issues for small entities, including compliance costs and
other burdens (as well as countervailing benefits), so that we may
develop final rules that minimize such costs and address such issues to
the extent possible.
E. Discussion of Significant Alternatives Considered That Minimize the
Significant Economic Impact on Small Entities
The RFA directs agencies to provide a description of any
significant alternatives to the proposed rules that would accomplish
the stated objectives of applicable statutes, and minimize any
significant economic impact on small entities. The discussion is
required to include alternatives such as: ``(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.''
The NPRM seeks comment throughout on the ways in which operational
changes to USAC might impact USF program stakeholders, and on the
burdens of those proposed rule changes, and any alternatives, on
providers, which includes small providers and beneficiaries
participating in the USF programs. For example, the Commission seeks
comment on whether to adopt an exemption to the proposed audit
requirements for recipients that receive less than a certain amount of
USF support, and seeks comment on what amount of support should allow
providers or recipients to qualify for this exemption. In considering
whether and how to update rules to recover improperly disbursed funds,
the NPRM seeks comment on whether to adopt a revised pay-and-dispute
model for all USF programs, which may allow the Commission to recover
funds from some providers earlier than required under the current
rules.
The Commission expects to more fully consider the economic impact
and alternatives for small entities following the review of comments
filed in response to the NPRM, including cost and benefit analyses.
Having data on the costs and economic impact of proposals and possible
approaches we discuss will allow the Commission to better evaluate
options and alternatives to minimize any significant economic impact on
small entities that may result from the proposals and approaches, if
adopted. The Commission's evaluation of this information will shape the
final alternatives it considers to minimize any significant economic
impact that may occur on small entities, the final conclusions it
reaches and any final rules it promulgates in this proceeding.
F. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
None.
IV. Ordering Clauses
Accordingly, It is ordered that, pursuant to sections 1, 2, 4(i)-
(j), 201(b), 254, 303(r), and 403 of the Communications Act of 1934, as
amended, and section 706 of the Telecommunications Act of 1996, as
amended, 47 U.S.C. 151, 152, 154(i)-(j), 201(b), 254, 303(r), 403, and
1302, this Notice of Proposed Rulemaking is adopted.
It is further ordered that, pursuant to applicable procedures set
forth in Sec. Sec. 1.415 and 1.419 of the Commission's
[[Page 55835]]
rules, 47 CFR 1.415, 1.419, interested parties may file comments on
this Notice of Proposed Rulemaking on or before September 30, 2026 and
reply comments are due on or before October 30, 2026.
List of Subjects in 47 CFR Part 54
Communications common carriers, Reporting and recordkeeping
requirements, Telecommunications, Telephone.
Federal Communications Commission.
Marlene Dortch,
Secretary.
Proposed Rules
For the reasons discussed in the preamble, the Federal
Communications Commission proposes to amend 47 CFR part 54 as follows:
PART 54--UNIVERSAL SERVICE
0
1. The authority citation for part 54 continues to read as follows:
Authority: 47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220,
229, 254, 303(r), 403, 1004, 1302, 1601-1609, and 1752, unless
otherwise noted.
0
2. Amend Sec. 54.703 by revising paragraph (e) to read as follows:
Sec. 54.703 The Administrator's Board of Directors.
* * * * *
(e) All meetings of the Administrator's Board of Directors shall be
open to the public.
* * * * *
0
3. Amend Sec. 54.707 by revising paragraph (a) and adding paragraph
(d) to read as follows:
Sec. 54.707 Audit controls.
(a) The Administrator shall have the authority to audit
contributors, and carriers, and beneficiaries (including participating
schools, libraries, and health care providers) reporting data to the
Administrator. The Administrator shall establish procedures to verify
discounts, offsets and support amounts provided by the universal
service support programs, and may suspend or delay discounts, offsets,
and support amounts provided to a carrier if the contributor, carrier,
or beneficiary fails to provide adequate verification of discounts,
offsets, or support amounts provided upon reasonable request, or if
directed by the Commission to do so. The Administrator shall not
provide reimbursements, offsets or support amounts pursuant to subparts
D, K, L and M of this part to a carrier until the carrier has provided
to the Administrator a true and correct copy of the decision of a state
commission designating that carrier as an eligible telecommunications
carrier in accordance with Sec. 54.202.
* * * * *
(d) The Administrator shall have the authority when conducting an
audit to calculate a recovery based on extrapolation of a statistically
representative sample of disbursements at issue in the audit.
[FR Doc. 2026-17761 Filed 8-28-26; 8:45 am]
BILLING CODE 6712-01-P