tion mechanism so that compliance with the re-
quirements of section 3679 of the Revised Stat-
utes (31 U.S.C. 1341; commonly known as the 
Anti-Deficiency Act) will not cause a disruption 
in the administration of universal service sup-
port. 
‘‘(B) REPORT
TO
CONGRESSIONAL
COM-
MITTEES.—The Commission shall determine the 
earliest time that complying with such section 
will not cause a disruption in the administration 
of universal service support, and the Commis-
sion shall report that determination promptly to 
the Committee on Energy and Commerce of the 
House of Representatives and the Committee 
on Commerce, Science, and Transportation of 
the Senate. 
‘‘(e) UNIVERSAL SERVICE SUPPORT.— 
‘‘(1) IN GENERAL.— 
‘‘(A) After the date specified in subpara-
graph (B), only an eligible telecommunications 
provider designated under section 214(e), as 
such section is amended by the Universal Serv-
ice Reform, Accountability, and Efficiency Act 
of 2008, shall be eligible to receive specific Fed-
eral universal service support for the provision 
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of voice communications service in high cost 
areas. 
‘‘(B) The date specified in this subpara-
graph is the date on which the first set of auc-
tions required under subsection (m) is com-
pleted. 
‘‘(2) EXCEPTION TO UNIVERSAL SERVICE SUP-
PORT.—The Commission shall develop a mechanism 
to prohibit the receipt of universal service support 
for the provision of voice communications services to 
consumers in households in high cost areas where 
the Commission determines, based on publicly avail-
able information, that a service area has a substan-
tially high percentage of households with income at 
or above the 95th percentile of national household 
income levels or develops an equivalent measure-
ment.’’. 
(b) IMPLEMENTATION OF REFORM MEASURES.—Sec-
tion 254(a) of such Act (47 U.S.C. 254(a)) is amended 
by adding at the end the following new paragraph: 
‘‘(3) PROCEDURES
TO
REFORM
UNIVERSAL 
SERVICE SUPPORT SYSTEM.—Notwithstanding para-
graphs (1) and (2), within 9 months after the date 
of enactment of the Universal Service Reform, Ac-
countability, and Efficiency Act of 2008, the Com-
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mission shall implement reform of the universal 
service system in accordance with this section, as 
amended by such Act, and section 4 of such Act. 
The Federal-State Joint Board may submit com-
ments in any proceeding carried out by the Commis-
sion pursuant to this section.’’. 
(c) STATE UNIVERSAL SERVICE PROGRAMS NOT 
PREEMPTED.— 
(1) IN GENERAL.—Nothing in this Act, or in 
any of the amendments made by this Act, shall pre-
empt or be construed to preempt any State from 
adopting laws, rules, or regulations to ensure that 
voice communications service, as defined by section 
254(c)(1)(B)(ii) of the Communications Act of 1934 
(as amended by subsection (a) of this Act), are uni-
versally available to all low-income households and 
households in high cost areas at affordable rates, so 
long as such laws, rules, or regulations are con-
sistent with, and not in violation of, the principles 
established under the applicable provisions of this 
Act and the amendments made by this Act. 
(2) STATES ARE PREEMPTED FROM ASSESSING 
INTERSTATE
SERVICES.—Notwithstanding 
para-
graph (1), a State may not assess interstate serv-
ices, including interstate telecommunications serv-
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ices, information services, or voice communications 
services, in order to fund a State’s universal service 
program. 
SEC. 3. DISTRIBUTION MECHANISM REFORM FOR HIGH 
COST SUPPORT. 
(a) IN GENERAL.—Section 254 of the Communica-
tions Act of 1934 (47 U.S.C. 254) is further amended by 
adding at the end the following: 
‘‘(m) DISTRIBUTION MECHANISM FOR HIGH COST 
SUPPORT.— 
‘‘(1) ESTABLISHMENT
OF
REVERSE
AUCTION 
DESIGN.— 
‘‘(A) IN
GENERAL.—Not later than 9 
months after the date of enactment of the Uni-
versal Service Reform, Accountability, and Effi-
ciency Act of 2008, the Commission shall de-
velop, and shall promulgate regulations to im-
plement, a reverse auction plan to be used to 
distribute universal service support for voice 
communications service in high cost areas, in 
which each auction winner shall have the privi-
leges and obligations of a provider-of-last-re-
sort, as determined by the Commission. 
‘‘(B) AUCTION DESIGN PARAMETERS.—In 
carrying out the requirements of subparagraph 
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(A), the Commission shall ensure that the auc-
tion design provides for— 
‘‘(i) the provision of quality voice com-
munications service, as defined by the 
Commission by regulation prescribed after 
the date of enactment of the Universal 
Service Reform, Accountability, and Effi-
ciency Act of 2008, consistent with clause 
(iv); 
‘‘(ii) cost-constraining benefits; 
‘‘(iii) competitive neutrality; 
‘‘(iv) technological neutrality; 
‘‘(v) incentives for providers of voice 
communications service to become more ef-
ficient; 
‘‘(vi) conducting the auctions at ap-
propriately gauged intervals that take into 
account new information about changes in 
the marketplace, so that universal service 
support based on current technology does 
not become a barrier to entry for service 
providers using new technologies; 
‘‘(vii) in the first set of auctions, 
which shall be conducted not later than 15 
months after the date of enactment of the 
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