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

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

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

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

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

   (1) Interim build-out milestones. Upon notification that an eligible
   telecommunications carrier has defaulted on an interim build-out
   milestone after it has begun receiving high-cost support, the Wireline
   Competition Bureau—or Wireless Telecommunications Bureau in the case of
   mobile carrier participants—will issue a letter evidencing the default.
   For purposes of determining whether a default has occurred, a carrier
   must be offering service meeting the requisite performance obligations.
   The issuance of this letter shall initiate reporting obligations and
   withholding of a percentage of the eligible telecommunication carrier's
   total monthly high-cost support, if applicable, starting the month
   following the issuance of the letter:

   (i) Tier 1. If an eligible telecommunications carrier has a compliance
   gap of at least five percent but less than 15 percent of the number of
   locations that the eligible telecommunications carrier is required to
   have built out to or, in the case of Alaska Plan mobile-carrier
   participants, population covered by the specified technology, middle
   mile, and speed of service in the carrier's approved performance plan,
   by the interim milestone, the Wireline Competition Bureau or Wireless
   Telecommunications Bureau, will issue a letter to that effect. Starting
   three months after the issuance of this letter, the eligible
   telecommunications carrier will be required to file a report every
   three months identifying the geocoded locations to which the eligible
   telecommunications carrier has newly deployed facilities capable of
   delivering broadband meeting the requisite requirements with Connect
   America support in the previous quarter, or, in the case of Alaska Plan
   mobile-carrier participants, the populations to which the competitive
   eligible telecommunications carrier has extended or upgraded service
   meeting their approved performance plan and obligations. Eligible
   telecommunications carriers that do not file these quarterly reports on
   time will be subject to support reductions as specified in § 54.313(j).
   The eligible telecommunications carrier must continue to file quarterly
   reports until the eligible telecommunications carrier reports that it
   has reduced the compliance gap to less than five percent of the
   required number of locations (or population, if applicable) for that
   interim milestone and the Wireline Competition Bureau or Wireless
   Telecommunications Bureau issues a letter to that effect.

   (ii) Tier 2. If an eligible telecommunications carrier has a compliance
   gap of at least 15 percent but less than 25 percent of the number of
   locations that the eligible telecommunications carrier is required to
   have built out to or, in the case of Alaska Plan mobile-carrier
   participants, population covered by the specified technology, middle
   mile, and speed of service in the carrier's approved performance plan,
   by the interim milestone, USAC will withhold 15 percent of the eligible
   telecommunications carrier's monthly support for that state and the
   eligible telecommunications carrier will be required to file quarterly
   reports. Once the eligible telecommunications carrier has reported that
   it has reduced the compliance gap to less than 15 percent of the
   required number of locations (or population, if applicable) for that
   interim milestone for that state, the Wireline Competition Bureau or
   Wireless Telecommunications Bureau will issue a letter to that effect,
   USAC will stop withholding support, and the eligible telecommunications
   carrier will receive all of the support that had been withheld. The
   eligible telecommunications carrier will then move to Tier 1 status.

   (iii) Tier 3. If an eligible telecommunications carrier has a
   compliance gap of at least 25 percent but less than 50 percent of the
   number of locations that the eligible telecommunications carrier is
   required to have built out to by the interim milestone, or, in the case
   of Alaska Plan mobile-carrier participants, population covered by the
   specified technology, middle mile, and speed of service in the
   carrier's approved performance plan, USAC will withhold 25 percent of
   the eligible telecommunications carrier's monthly support for that
   state and the eligible telecommunications carrier will be required to
   file quarterly reports. Once the eligible telecommunications carrier
   has reported that it has reduced the compliance gap to less than 25
   percent of the required number of locations (or population, if
   applicable) for that interim milestone for that state, the Wireline
   Competition Bureau or Wireless Telecommunications Bureau will issue a
   letter to that effect, the eligible telecommunications carrier will
   move to Tier 2 status.

   (iv) Tier 4. If an eligible telecommunications carrier has a compliance
   gap of 50 percent or more of the number of locations that the eligible
   telecommunications carrier is required to have built out to or, in the
   case of Alaska Plan mobile-carrier participants, population covered by
   the specified technology, middle mile, and speed of service in the
   carrier's approved performance plan, by the interim milestone:

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

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

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

   (2) Final milestone. Upon notification that the eligible
   telecommunications carrier has not met a final milestone, the eligible
   telecommunications carrier will have twelve months from the date of the
   final milestone deadline to come into full compliance with this
   milestone. If the eligible telecommunications carrier does not report
   that it has come into full compliance with this milestone within twelve
   months, the Wireline Competition Bureau—or Wireless Telecommunications
   Bureau in the case of mobile carrier participants—will issue a letter
   to this effect. In the case of Alaska Plan mobile carrier participants,
   USAC will then recover the percentage of support that is equal to 1.89
   times the average amount of support per location received by that
   carrier over the 10-year term for the relevant percentage of
   population. For other recipients of high-cost support, USAC will then
   recover the percentage of support that is equal to 1.89 times the
   average amount of support per location received in the state for that
   carrier over the term of support for the relevant number of locations
   plus 10 percent of the eligible telecommunications carrier's total
   relevant high-cost support over the support term for that state.

   (3) Compliance reviews. If subsequent to the eligible
   telecommunications carrier's support term, USAC determines in the
   course of a compliance review that the eligible telecommunications
   carrier does not have sufficient evidence to demonstrate that it is
   offering service to all of the locations required by the final
   milestone or, in the case of Alaska Plan participants, did not provide
   service consistent with the carrier's approved performance plan, USAC
   shall recover a percentage of support from the eligible
   telecommunications carrier as specified in paragraph (d)(2) of this
   section.

   [ 76 FR 73876 , Nov. 29, 2011, as amended at  80 FR 4478 , Jan. 27, 2015;
    81 FR 69714 , Oct. 7, 2016]

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

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