§  54.1016   Letter of credit.

   (a) Before being authorized to receive Mobility Fund Phase II support,
   a winning bidder shall obtain an irrevocable standby letter of credit
   which shall be acceptable in all respects to the Commission.

   (1) Each recipient authorized to receive Mobility Fund Phase II support
   shall maintain the standby letter of credit or multiple standby letters
   of credit in an amount equal to at a minimum the amount of Mobility
   Fund Phase II auction support that has been disbursed and that will be
   disbursed in the coming year, until the Universal Service
   Administrative Company has verified that the recipient met the final
   service milestone as described in § 54.1015(d) of this chapter.

   (i) Once the recipient has met its 60 percent service milestone as
   described in § 54.1015(b) of this chapter, it may, subject to the
   consent of the Universal Service Administrative Company, obtain a new
   letter of credit or renew its existing letter of credit so that it is
   valued at a minimum at 90 percent of the total support amount already
   disbursed plus the amount that will be disbursed in the coming year.

   (ii) Once the recipient has met its 80 percent service milestone as
   described in § 54.1015(c) of this chapter, it may, subject to the
   consent of the Universal Service Administrative Company, obtain a new
   letter of credit or renew its existing letter of credit so that it is
   valued at a minimum at 60 percent of the total support amount already
   disbursed plus the amount that will be disbursed in the coming year.

   (2) The bank issuing the letter of credit shall be acceptable to the
   Commission. A bank that is acceptable to the Commission is:

   (i) Any United States Bank--

   (A) Whose deposits are insured by the Federal Deposit Insurance
   Corporation; and

   (B) That has a Weiss bank safety rating of B- or higher, or

   (ii) CoBank, ACB--

   (A) As long as it maintains assets that would place it among the
   top-100 U.S. banks in terms of the amount of assets, determined on the
   basis of total assets as of the end of the calendar year immediately
   preceding the issuance of the letter of credit;

   (B) Its obligations are insured by the Farm Credit System Insurance
   Corporation; and

   (C) It has a long-term unsecured credit rating of BBB- or better from
   Standard & Poor's (or the equivalent from a nationally-recognized
   credit rating agency); or

   (iii) The National Rural Utilities Cooperative Finance Corporation--

   (A) As long as it maintains assets that would place it among the
   top-100 U.S. banks in terms of the amount of assets, determined on the
   basis of total assets as of the end of the calendar year immediately
   preceding the issuance of the letter of credit; and

   (B) It has a long-term unsecured credit rating of BBB- or better from
   Standard & Poor's (or the equivalent from a nationally-recognized
   credit rating agency); or

   (iv) Any non-U.S. bank that--

   (A) Is among the 100 largest non-U.S. banks in the world, determined on
   the basis of total assets as of the end of the calendar year
   immediately preceding the issuance of the letter of credit (determined
   on a U.S. dollar equivalent basis as of such date);

   (B) Has a branch office in the District of Columbia or such other
   branch office agreed to by the Commission;

   (C) Maintains a credit rating of BBB- or better from Standard & Poor's
   (or the equivalent from a nationally-recognized credit rating agency);
   and

   (D) Issues the letter of credit payable in United States dollars.

   (b) Before being authorized to receive Mobility Fund Phase II support,
   a winning bidder shall provide with its letter of credit an opinion
   letter from legal counsel clearly stating, subject only to customary
   assumptions, limitations, and qualifications, that in a proceeding
   under Title 11 of the United States Code, 11 U.S.C. 101 et seq. (the
   "Bankruptcy Code"), the bankruptcy court would not treat the letter of
   credit or proceeds of the letter of credit as property of the winning
   bidder's bankruptcy estate, or the bankruptcy estate of any other
   bidder-related entity requesting issuance of the letter of credit,
   under section 541 of the Bankruptcy Code.

   (c) Authorization to receive Mobility Fund Phase II support is
   conditioned upon full and timely performance of all the requirements
   set forth in this section, § 54.1015, and any additional terms and
   conditions upon which the support was granted.

   (1) If a Mobility Fund Phase II recipient has triggered a recovery
   action by USAC as set out in § 54.1017 and has failed to repay the
   requisite amount of support within six (6) months, USAC will be
   entitled to draw the entire amount of the letter of credit and may
   disqualify the Mobility Fund Phase II recipient from the receipt of
   Mobility Fund Phase II auction support or additional universal service
   support.

   (2) The default will be evidenced by a letter issued by the Chief of
   either the Wireless Telecommunications Bureau or Wireline Competition
   Bureau or their respective designees, which letter, describing the
   performance default and attached to a standby letter of credit draw
   certificate, shall be sufficient for a draw on the standby letter of
   credit.

   [ 82 FR 15450 , Mar. 28, 2017, as amended at  82 FR 16297 , Apr. 4, 2017]

   Effective Date Notes: 1. At  82 FR 15450 , Mar. 28, 2017, § 54.1016 was
   added. This section contains information collection and recordkeeping
   requirements and will not become effective until approval has been
   given by the Office of Management and Budget.

   2. At  83 FR 17942 , Apr. 25, 2018, § 54.1016 was amended by revising
   paragraph (a)(1)(ii) and will not become effective until approval has
   been given by the Office of Management and Budget.