II 113th CONGRESS 1st Session S. 1858 IN THE SENATE OF THE UNITED STATES December 25, 2013 Mr. Begich introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation A BILL To require the Federal Communications Commission to suspend and revise portions of the Report and Order and Further Notice of Proposed Rulemaking that revised Universal Service Fund distribution to rural carriers, to encourage renewed investment by rural rate-of-return carriers in deployment of broadband infrastructure in rural areas, and for other purposes.

1. Short title This Act may be cited as the Rural Broadband Investment Act of 2013 or the RBI Act of 2013 . 2. Definitions In this Act— (1) the term applicable Federal-State Joint Board means— (A) the Federal-State Joint Board on Universal Service; and (B) if the limitations in the proposal submitted by the Commission to the Federal-State Joint Board on Universal Service under section 4(b)(1)(A) result in a revision of the jurisdictional allocation of expenses, the Federal-State Joint Board on Separations; (2) the term Commission means the Federal Communications Commission; (3) the term revised proposal for rural support means a revised proposal to establish limitations on study area total unseparated loop costs of rural rate-of-return carriers; (4) the term rural carrier means— (A) a rural rate-of-return carrier; (B) a rural wireless carrier owned by a rural rate-of-return carrier; and (C) a rural competitive local exchange carrier owned by a rural rate-of-return carrier; (5) the term rural rate-of-return carrier means a rural telephone company (as defined in section 153 of the Communications Act of 1934 ( 47 U.S.C. 153 )) that is a rate-of-return carrier (as defined in section 54.5 of title 47, Code of Federal Regulations); (6) the term study area total unseparated loop cost means the cost calculated under section 36.621 of title 47, Code of Federal Regulations; (7) the term Transformation Order means the Report and Order and Further Notice of Proposed Rulemaking of the Federal Communications Commission adopted on October 27, 2011 (FCC 11–161); and (8) the term tribal lands has the meaning given the term in section 54.400(e) of title 47, Code of Federal Regulations. 3. Findings Congress finds the following: (1) The implementation of new rules and regulations set forth in the Transformation Order has created financial uncertainty and instability for rural carriers by denying rural carriers a meaningful opportunity to recover investments and expenses incurred to provide universal service prior to 2012. (2) The implementation of the Transformation Order, including the utilization of a widely criticized regression analysis used to determine levels of universal service support, is creating significant uncertainty with respect to the sufficiency and predictability of the universal service support mechanisms, which has discouraged rural carriers from making broadband infrastructure investments to build out new broadband capabilities in high cost-to-serve rural communities throughout the United States. (3) The intent of Congress under section 254 of the Communications Act of 1934 ( 47 U.S.C. 254 ) is that the Commission— (A) consult with the Federal-State Joint Board on Universal Service before adopting changes to regulations that affect universal service high-cost fund mechanisms; and (B) adopt policies and regulations that establish and maintain specific, predictable, and sufficient support mechanisms to preserve and advance universal service. (4) The Secretary of Agriculture has warned that the implementation of the Transformation Order is having unintended consequences for rural broadband investment and deployment and for other Federal programs designed to promote rural broad­band deployment. (5) The Department of Agriculture has reported that demand for Rural Utilities Service loans for broadband buildout has plummeted in 2013, due in part to the uncertainty created by the new rules and regulations set forth in the Transformation Order. (6) Surveys of rural carriers indicate that nearly two-thirds of rural rate-of-return carriers are canceling or postponing new broadband investments, while other reports indicate that rural rate-of-return carriers are being forced to increase consumer prices and reduce staff, creating ripple effects for economies in rural areas of the United States. (7) Congressional hearings have demonstrated that the approach of the Commission to the consideration, review, and resolution of petitions for waivers from rules adopted under the Transformation Order— (A) is unduly burdensome and costly for small, rural carriers and inconsistent with the established policy and waiver standards of the Commission; and (B) is consequently discouraging small, rural carriers from requesting waivers and is creating additional business uncertainties. (8) Congressional hearings have demonstrated that the Commission can make adjustments to the Transformation Order to address the adverse impact and business uncertainties confronting small, rural carriers without affecting other categories of carriers or increasing the Universal Service Fund budget established in the Transformation Order. 4. Suspension and revision of provision of Transformation Order (a) Suspension Section 36.621(a)(5) of title 47, Code of Federal Regulations (relating to the annual limitation of study area total unseparated loop cost pursuant to a schedule announced by the Wireline Competition Bureau), shall have no force or effect. (b) Review and revision (1) Publication of revised proposal for universal service distribution to rural rate-of-return carriers (A) Requirement to submit proposal Not later than 60 days after the effective date of this Act, the Commission shall issue a notice of proposed rulemaking to adopt a revised proposal for rural support. (B) Recovery of reasonable investments and operating expenses The Commission shall ensure that the revised proposal for rural support does not deprive a rural rate-of-return carrier of the opportunity to recover reasonable investments and operating expenses incurred prior to the adoption under subparagraph (D) of the revised proposal for rural support. (C) Consultation with Joint Boards Before the Commission issues a final rule under subparagraph (D) to adopt a revised proposal for rural support, the Commission shall consult with the applicable Federal-State Joint Board to the extent that such consultation is required under the Communications Act of 1934 ( 47 U.S.C. 151 et seq. ). (D) Final rule adopting proposal Not earlier than 45 days and not later than 120 days after the date on which the Commission issues the notice of proposed rulemaking under subparagraph (A), the Commission shall issue a final rule adopting a revised proposal for rural support. (2) Report to Congress Not later than 60 days after the effective date of this Act, the Commission shall submit to the Committee on Commerce, Science, and Transportation of the Senate and the Committee on Energy and Commerce of the House of Representatives— (A) a report that contains the revised proposal for rural support published in the notice of proposed rulemaking under paragraph (1)(A); and (B) a report that— (i) describes the amount of universal service funding necessary to achieve universal service objectives during the 10-year period following the date on which the report is submitted; and (ii) includes— (I) quantitative and qualitative analysis in support of the findings of the Commission under clause (i); and (II) a specific analysis identifying the unique circumstances and resulting high-cost loop support required to provide and maintain universal service in Alaska and on tribal lands. (c) Interim limitations (1) In general Not later than 30 days after the effective date of this Act, the Commission shall establish interim limitations on study area total unseparated loop costs by— (A) determining the annual Universal Service Fund distribution for each rural rate-of-return carrier on the basis of the applicable rules that were in effect on the day before the effective date of the Transformation Order; and (B) adjusting the universal service distribution of high-cost loop support that results from the annual distribution determined under paragraph (1) to reflect— (i) the revision to section 36.605 of title 47, Code of Federal Regulations, required under section 5 of this Act; and (ii) any revisions to responses to waiver petitions required under section 6 of this Act. (2) Duration The interim limitations established under paragraph (1) shall be in effect until the date on which the final rule required under subsection (b)(1)(D) takes effect. 5. Safety net additive The Commission shall amend section 36.605(a) of title 47, Code of Federal Regulations (relating to adjustments to high-cost loop support for rural rate-of-return carriers) to provide that, beginning on January 1, 2012, the calculation of safety net additive support for a rural rate-of-return carrier shall include all just and reasonable investments made by the carrier prior to 2012. 6. Waivers (a) In general The Commission shall apply the criteria and standards under this section when considering a petition for a waiver submitted by a rural carrier negatively affected by a revision adopted in the Transformation Order. (b) Reasonable opportunity To recover costs The Commission shall grant a petition for a waiver described in subsection (a) if the Commission determines a waiver is necessary to ensure that the requesting rural carrier is afforded a reasonable opportunity to recover the costs of providing universal service, including an equitable return on the investments the rural carrier made to provide universal service. (c) Time limit for consideration of waiver petition (1) In general Not later than 90 days after the date on which the Commission receives a petition for a waiver, the Commission shall grant or deny the petition. (2) Failure to act within time limit If the Commission fails to make a determination on a petition for a waiver prior to the expiration of the time period set forth under paragraph (1), the Commission shall be deemed to have granted the petition. (3) Waiver petitions filed before effective date The Commission shall reconsider, in accordance with this section, any petition for a waiver relating to a revision to a regulation adopted in the Transformation Order that— (A) was submitted to the Commission during the period beginning on November 18, 2011, and ending on the day before the effective date of this Act; and (B) is denied by the Commission. (d) Denial of waiver petition If the Commission denies a petition for a waiver, in whole or in part, the Commission shall identify with specificity— (1) any operating expenses of the requesting carrier that the Commission determines unreasonable; (2) any investments made by the requesting carrier that the Commission determines are not used and useful in the provision of universal service; and (3) the underlying basis for any determination under paragraph (1) or (2). 7. Effective date This Act shall take effect 30 days after the date of enactment of this Act.