S.B. No. 583

	AN ACT
	relating to eligibility for support from the universal service
	fund.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 56.023, Utilities Code, is amended by
	amending Subsection (b) and adding Subsections (f), (g), (h), (i),
	(j), (k), (l), (m), (n), (o), (p), and (q) to read as follows:
	(b)  The eligibility criteria must require that a
	telecommunications provider, in compliance with the commission's
	quality of service requirements:
	(1)  offer service to each consumer within an exchange
	in the company's certificated area for which the incumbent local
	exchange company receives support under a plan established under
	Section 56.021(1) and to any permanent residential or business
	premises to which the company is designated to provide services
	under Subchapter F; and
	(2)  render continuous and adequate service within an
	exchange in the company's certificated area for which the incumbent
	local exchange company receives support under a plan established
	under Section 56.021(1) and to any permanent residential or
	business premises to which the company is designated to provide
	services under Subchapter F.
	(f)  Except as provided by Subsection (g), for an incumbent
	local exchange company or cooperative that served greater than
	31,000 access lines in this state on September 1, 2013, or a company
	or cooperative that is a successor to such a company or cooperative,
	the support that the company or cooperative is eligible to receive
	on December 31, 2016, under a plan established under Section
	56.021(1)(A) is reduced:
	(1)  on January 1, 2017, to 75 percent of the level of
	support the company or cooperative is eligible to receive on
	December 31, 2016;
	(2)  on January 1, 2018, to 50 percent of the level of
	support the company or cooperative is eligible to receive on
	December 31, 2016; and
	(3)  on January 1, 2019, to 25 percent of the level of
	support the company or cooperative is eligible to receive on
	December 31, 2016.
	(g)  After the commission has adopted rules under Subsection
	(j), an incumbent local exchange company or cooperative that is
	subject to Subsection (f) may petition the commission to initiate a
	contested case proceeding as necessary to determine the eligibility
	of the company or cooperative to receive support under a plan
	established under Section 56.021(1)(A).  A company or cooperative
	may not file more than one petition under this subsection. On
	receipt of a petition under this subsection, the commission shall
	initiate a contested case proceeding to determine the eligibility
	of the company or cooperative to receive continued support under a
	plan established under Section 56.021(1)(A) for service in the
	exchanges that are the subject of the petition. To be eligible to
	receive support for service in an exchange under this subsection,
	the company or cooperative must demonstrate that it has a financial
	need for continued support.  The commission must issue a final order
	on the proceeding not later than the 330th day after the date the
	petition is filed with the commission. Until the commission issues
	a final order on the proceeding, the company or cooperative is
	entitled to receive the total amount of support the company or
	cooperative was eligible to receive on the date the company or
	cooperative filed the petition. A company or cooperative that
	files a petition under this subsection is not subject to Subsection
	(f) after the commission issues a final order on the proceeding. If
	the commission determines that a company or cooperative has
	demonstrated financial need for continued support under this
	subsection, it shall set the amount of support in the same
	proceeding.  The amount of support set by the commission for an
	exchange under this subsection may not exceed:
	(1)  100 percent of the amount of support that the
	company or cooperative will be eligible to receive on December 31,
	2016, if the petition is filed before January 1, 2016;
	(2)  75 percent of the amount of support that the
	company or cooperative will be eligible to receive on December 31,
	2016, if the petition is filed on or after January 1, 2016, and
	before January 1, 2017;
	(3)  50 percent of the amount of support the company or
	cooperative is eligible to receive on December 31, 2016, if the
	petition is filed on or after January 1, 2017, and before January 1,
	2018; or
	(4)  25 percent of the amount of support that the
	company or cooperative is eligible to receive on December 31, 2016,
	if the petition is filed on or after January 1, 2018, and before
	January 1, 2019.
	(h)  Except as provided by Subsection (i), for an incumbent
	local exchange company that is an electing company under Chapter 58
	or 59 or a cooperative that served greater than 31,000 access lines
	in this state on September 1, 2013, or a company or cooperative that
	is a successor to such a company or cooperative, the support that
	the company or cooperative is eligible to receive on December 31,
	2017, under a plan established under Section 56.021(1)(B) is
	reduced:
	(1)  on January 1, 2018, to 75 percent of the level of
	support the company or cooperative is eligible to receive on
	December 31, 2017;
	(2)  on January 1, 2019, to 50 percent of the level of
	support the company or cooperative is eligible to receive on
	December 31, 2017; and
	(3)  on January 1, 2020, to 25 percent of the level of
	support the company or cooperative is eligible to receive on
	December 31, 2017.
	(i)  After the commission has adopted rules under Subsection
	(j), an incumbent local exchange company or cooperative that is
	subject to Subsection (h) may petition the commission to initiate a
	contested case proceeding as necessary to determine the eligibility
	of the company or cooperative to receive support under a plan
	established under Section 56.021(1)(B).  A company or cooperative
	may not file more than one petition under this subsection. On
	receipt of a petition under this subsection, the commission shall
	initiate a contested case proceeding to determine the eligibility
	of the company or cooperative to receive continued support under a
	plan established under Section 56.021(1)(B) for service in the
	exchanges that are the subject of the petition. To be eligible to
	receive support for service in an exchange under this subsection,
	the company or cooperative must demonstrate that it has a financial
	need for continued support.  The commission must issue a final order
	on the proceeding no later than the 330th day after the date the
	petition is filed with the commission. Until the commission issues
	a final order on the proceeding, the company or cooperative shall
	continue to receive the total amount of support it was eligible to
	receive on the date the company or cooperative filed a petition
	under this subsection. A company or cooperative that files a
	petition under this subsection is not subject to Subsection (h)
	after the commission issues a final order on the proceeding. If the
	commission determines that a company or cooperative has
	demonstrated financial need for continued support under this
	subsection, it shall set the amount of support in the same
	proceeding. The amount of support set by the commission for an
	exchange under this subsection may not exceed:
	(1)  100 percent of the amount of support that the
	company or cooperative will be eligible to receive on December 31,
	2017, if the petition is filed before January 1, 2017;
	(2)  75 percent of the amount of support that the
	company or cooperative will be eligible to receive on December 31,
	2017, if the petition is filed on or after January 1, 2017, and
	before January 1, 2018;
	(3)  50 percent of the amount of support that the
	company or cooperative is eligible to receive on December 31, 2017,
	if the petition is filed on or after January 1, 2018, and before
	January 1, 2019; or
	(4)  25 percent of the amount of support that the
	company or cooperative is eligible to receive on December 31, 2017,
	if the petition is filed on or after January 1, 2019, and before
	January 1, 2020.
	(j)  The commission by rule shall establish the standards and
	criteria for an incumbent local exchange company or cooperative to
	demonstrate under Subsection (g) or (i) that the company or
	cooperative has a financial need for continued support for
	residential and business lines under a plan established under
	Section 56.021(1).
	(k)  Subsections (g) and (i) do not authorize the commission
	to initiate a contested case hearing concerning a local exchange
	company that has elected to participate in a total support
	reduction plan under 16 T.A.C. Section 26.403 that requires the
	company to forego funding under a plan established under Section
	56.021(1) after January 1, 2017. This section does not affect any
	obligation of a local exchange company subject to such a total
	support reduction plan.
	(l)  Subsections (f), (g), (h), and (i) do not apply to an
	incumbent local exchange company that elects, not later than March
	1, 2014, to eliminate, not later than September 1, 2018, the support
	it receives under a plan established under Section 56.021(1).
	(m)  Nothing in this chapter relieves any party of an
	obligation entered into in the commission's Docket No. 40521.
	(n)  Nothing in this section is intended to affect the rate
	rebalancing proceeding in the commission's Docket No. 41097.
	(o)  Notwithstanding the provisions of this chapter, the
	commission has no authority, except as provided by Subsections (f),
	(g), (h), (i), (j), (k), (m), and (n) to reduce support provided to
	an incumbent local exchange company that is an electing company
	under Chapter 58 or 59 or is a cooperative that served greater than
	31,000 access lines in this state on September 1, 2013:
	(1)  under a plan established under Section
	56.021(1)(A) before January 1, 2019; or
	(2)  under a plan established under Section
	56.021(1)(B) before January 1, 2020. This subsection expires on
	January 2, 2020.
	(p)  If an incumbent local exchange company or cooperative is
	ineligible for support under a plan established under Section
	56.021(1) for services in an exchange, a plan established under
	Section 56.021(1) may not provide support to any other
	telecommunications providers for services in that exchange, except
	that an eligible telecommunications provider that is receiving
	support under Section 56.021(1)(A) in that exchange shall continue
	to receive such support for a 24-month period following the date the
	incumbent local exchange provider or cooperative ceases receiving
	support in that exchange.  The support received by the eligible
	telecommunications provider during the 24-month period shall be at
	the same monthly per line support level in effect for that exchange
	as of the date the incumbent local exchange provider or cooperative
	ceases receiving funding in that exchange.
	(q)  Notwithstanding the period for continued support
	specified by Subsection (p), if the eligible telecommunications
	provider receiving continued support under that subsection is a
	cooperative or an affiliate of a cooperative, the
	telecommunications provider is entitled to continued support
	through December 31, 2017, at the same monthly per-line support
	amount as the provider is receiving as of the date the support
	ceases for that exchange for the incumbent local exchange company
	or cooperative.  Support authorized under this subsection ceases
	December 31, 2017.
	SECTION 2.  Section 56.024, Utilities Code, is amended by
	amending Subsection (b) and adding Subsections (c) and (d) to read
	as follows:
	(b)  A report or information the commission requires a
	telecommunications provider to provide under Subsection (a) is
	confidential and not subject to disclosure under Chapter 552,
	Government Code.
	(c)  A telecommunications provider shall file with the
	commission the provider's annual earnings report if the provider:
	(1)  is not a local exchange company subject to a total
	support reduction plan under 16 T.A.C. Section 26.403 or that has
	made an election under Section 56.023(l);
	(2)  serves greater than 31,000 access lines; and
	(3)  receives support under a plan established under
	Section 56.021(1).
	(d)  A report filed under Subsection (c) is confidential and
	not subject to disclosure under Chapter 552, Government Code.
	SECTION 3.  Section 56.025, Utilities Code, is amended by
	amending Subsection (a) and adding Subsection (g) to read as
	follows:
	(a)  In addition to the authority provided by Section 56.021:
	(1)  [,] for each local exchange company that serves
	fewer than 31,000 access lines and each cooperative, the
	commission[:
	[(1)]  may adopt a mechanism necessary to maintain
	reasonable rates for local exchange telephone service; and
	(2)  for each local exchange company and each
	cooperative that serves 31,000 or fewer access lines and that on
	June 1, 2013, is not an electing company under Chapter 58 or 59, the
	commission shall adopt rules to expand the universal service fund
	in the circumstances prescribed by this section.
	(g)  Notwithstanding any other provision of this section,
	after December 31, 2013, the commission may not distribute support
	granted under this section, including any support granted before
	that date, to a local exchange company or cooperative that serves
	greater than 31,000 access lines or that is an electing company
	under Chapter 58 or 59 on June 1, 2013.
	SECTION 4.  Section 56.026, Utilities Code, is amended to
	read as follows:
	Sec. 56.026.  PROMPT AND EFFICIENT [UNIVERSAL SERVICE FUND]
	DISBURSEMENTS. [(a)     A revenue requirement showing is not required
	for a disbursement from the universal service fund under this
	subchapter.
	[(b)]  The commission shall make each disbursement from the
	universal service fund promptly and efficiently so that a
	telecommunications provider does not experience an unnecessary
	cash-flow change as a result of a change in governmental policy.
	SECTION 5.  Subsections (b), (c), (d), (e), (f), and (h),
	Section 56.032, Utilities Code, as added by Chapter 535 (H.B.
	2603), Acts of the 82nd Legislature, Regular Session, 2011, are
	amended to read as follows:
	(b)  Except as provided by Subsections [(c),] (d) and[,] (e),
	[and (f),] the commission may revise the monthly support amounts to
	be made available from the Small and Rural Incumbent Local Exchange
	Company Universal Service Plan by any mechanism, including support
	reductions resulting from rate rebalancing approved by the
	commission, [by revising the monthly per line support amounts,]
	after notice and an opportunity for hearing.  In determining
	appropriate monthly [per line] support amounts, the commission
	shall consider the adequacy of basic rates to support universal
	service.
	(c)  A [On the written request of a small or rural incumbent
	local exchange] company that receives frozen monthly [per line]
	support amounts as prescribed by a final order issued by the
	commission in the commission's Docket No. 39643 is entitled to
	continue to receive that monthly support until the support is
	revised under Subsection (b)[, the commission shall disburse funds
	to the company in fixed monthly amounts based on the company's
	annualized amount of recovery for the calendar year ending on
	December 31, 2010.   A company may submit only one request under this
	subsection and must submit the request on or before December 31,
	2011].
	(d)  For each [On the written request of a] small or rural
	incumbent local exchange company that is not receiving frozen
	support amounts as described by Subsection (c) and is not an
	electing company under Chapter 58 or 59, the commission annually
	shall set the company's monthly support amounts for the following
	12 months by dividing by 12 the annualized support amount
	calculated under this subsection.  The commission shall calculate
	the annualized amount:
	(1)  for the initial 12-month period for which a
	company makes an election under this subsection, by[:
	[(A)]  determining the annualized support amount
	received by the company as of January 1, 2013 [calculated for the
	requestor in the final order issued by the commission in Docket No.
	18516; and
	[(B)     adjusting the support amount determined
	under Paragraph (A) at the beginning of each calendar year by a
	factor equal to the most recent consumer price index published at
	that time, beginning with the 1999 calendar year and ending in the
	year the company makes an election under this subsection]; and
	(2)  for [the 12-month period following the initial
	period for which a company made an election under this subsection
	and for] subsequent 12-month periods, by adjusting the most recent
	annualized support amount calculated by the commission by a factor
	equal to the percentage change in the consumer price index for the
	most recent 12-month period.
	(e)  The [If a company elects to receive monthly support
	amounts under Subsection (d), the] commission, on its own motion or
	on the written request of the company, may initiate a proceeding to
	recalculate the most recent annualized support amount to be used as
	the basis for adjustment for a subsequent 12-month period under
	Subsection (d)(2).  If, based on the recalculation, the commission
	by order adjusts a company's most recent annualized support amount,
	the adjusted support amount supersedes the annualized support
	amount calculated in accordance with Subsection (d).
	(f)  [The commission shall administratively review requests
	filed under Subsections (c) and (d).]  Except for good cause, the
	commission shall establish monthly support amounts under
	Subsection (d) [approve the request] not later than the 60th day
	after the date the commission determines the company is eligible
	[and has met all the procedural requirements under this
	subchapter].
	(h)  Subsections (a), (c), (d), (e), and (f) [This section]
	and any monthly support amount approved under those subsections
	[this section] expire [on] September 1, 2017 [2013].
	SECTION 6.  Section 3, Chapter 535 (H.B. 2603), Acts of the
	82nd Legislature, Regular Session, 2011, which amended Section
	56.031, Utilities Code, is repealed.
	SECTION 7.  The Public Utility Commission of Texas shall
	adopt rules under Subsection (j), Section 56.023, Utilities Code,
	as added by this Act, not later than December 1, 2014. The
	commission shall initiate the rulemaking proceeding not later than
	January 1, 2014.
	SECTION 8.  This Act takes effect June 1, 2013, if it
	receives a vote of two-thirds of all the members elected to each
	house, as provided by Section 39, Article III, Texas Constitution.
	If this Act does not receive the vote necessary to take effect on
	that date, this Act takes effect on the 91st day after the last day
	of the legislative session.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I hereby certify that S.B. No. 583 passed the Senate on
	April 17, 2013, by the following vote: Yeas 30, Nays 1; and that
	the Senate concurred in House amendment on May 20, 2013, by the
	following vote: Yeas 31, Nays 0.
	______________________________
	Secretary of the Senate
	I hereby certify that S.B. No. 583 passed the House, with
	amendment, on May 15, 2013, by the following vote: Yeas 146,
	Nays 0, two present not voting.
	______________________________
	Chief Clerk of the House
	Approved:
	______________________________
	Date
	______________________________
	Governor