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  85R6959 JXC-F
 
  By: Perry S.B. No. 586
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the distribution of universal service funds to certain
  small and rural incumbent local exchange companies.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 56.032, Utilities Code, as effective
  September 1, 2017, is amended to read as follows:
         Sec. 56.032.  ADJUSTMENTS: SMALL AND RURAL INCUMBENT LOCAL
  EXCHANGE COMPANY UNIVERSAL SERVICE PLAN.  (a)  In this section:
               (1)  "Rate of return" means the Federal Communications
  Commission's prescribed rate of return as of the date of any
  determination, review, or adjustment under this section.
               (2)  "Small provider" means:
                     (A)  an incumbent local exchange company or
  cooperative that, on September 1, 2013, together with all local
  exchange companies affiliated with the company or cooperative on
  that date, served 31,000 or fewer access lines in this state; or
                     (B)  a company or cooperative that is a successor
  to a company or cooperative described by Paragraph (A).
         (b)  Except as provided by Subsections (d) through (i) [and
  (e)], 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, after notice and an opportunity for hearing.  In
  determining appropriate monthly support amounts, the commission
  shall consider the adequacy of basic rates to support universal
  service.
         (c)  On the written request of a small provider that is not an
  electing company under Chapter 58 or 59, the commission shall
  determine and disburse support to the small provider in fixed
  monthly amounts based on an annualized support amount the
  commission determines to be sufficient, when combined with
  regulated revenues, to permit the small provider the opportunity to
  earn a reasonable return in accordance with Section 53.051. A small
  provider that makes a request under this section shall continue to
  receive the same level of support it was receiving on the date of
  the written request until the commission makes a determination or
  adjustment through the mechanism described by Subsection (d).
         (d)  Not later than January 1, 2018, the commission shall
  initiate rulemaking proceedings to develop and implement a
  mechanism to determine the annualized support amount to be
  disbursed under this section. The mechanism must:
               (1)  require the annual filing of a report by each small
  provider that submits a request under Subsection (c) for the
  purpose of:
                     (A)  establishing a continued level of support for
  the provider or the eligibility of the provider for support
  adjustment filings for the purposes of Subsections (f), (g), and
  (h); and 
                     (B)  determining whether support levels, when
  combined with regulated revenues, provide the provider an
  opportunity to earn a reasonable return as described in Subsection
  (f);
               (2)  provide requirements for the annual filing, which
  may include annual earnings reports filed with the commission under
  16 T.A.C. Section 26.73 and any underlying data that, during the
  rulemaking process, the commission determines to be reasonably
  necessary for the purposes of Subdivision (1); and
               (3)  provide requirements and procedures for
  adjustment proceedings that are consistent with Subsections (g) and
  (h).
         (e)  In a proceeding to adjust support levels using the
  mechanism described by Subsection (d), the commission may consider
  the small provider's data for a period not to exceed three fiscal
  years before the date the proceeding is initiated.
         (f)  For purposes of the mechanism described by Subsection
  (d), a return that is within three percentage points of the rate of
  return is deemed reasonable and a support adjustment may not be made
  for a small provider whose return falls in that range for the
  previous fiscal year.
         (g)  A small provider whose return is more than three
  percentage points below the rate of return may file an application
  that is eligible for administrative review or informal disposition
  to adjust support to a level that would bring the small provider's
  return into the range that would be deemed reasonable under
  Subsection (f). Except for good cause, a small provider that files
  an application for adjustment under this subsection may not file a
  subsequent application for adjustment before the third anniversary
  of the date on which the small provider's most recent application
  for adjustment is initiated.
         (h)  There is no presumption that the return is unreasonable
  for a small provider whose return is more than three percentage
  points above the rate of return. However, on its own motion, the
  commission may initiate a proceeding to review the small provider's
  support level and after notice and an opportunity for a hearing,
  reduce the provider's level of support, if appropriate. Except for
  good cause, the commission may not initiate a subsequent adjustment
  proceeding for a small provider under this subsection before the
  third anniversary of the date on which the small provider's most
  recent adjustment proceeding is initiated.
         (i)  A small provider that is eligible to have support
  determined and distributed under this section shall continue to
  receive the same level of support it was receiving on August 31,
  2017, until the earlier of:
               (1)  the date on which the commission makes a
  determination or adjustment through the mechanism described by
  Subsection (d); or
               (2)  the 61st day after the date the commission adopts
  the mechanism described by Subsection (d).
         (j)  A report or information the commission requires a small
  provider to provide under this section is confidential and is not
  subject to disclosure under Chapter 552, Government Code. In any
  proceeding related to Subsection (d), a third party's access to
  confidential information is subject to an appropriate protective
  order.
         (k) [(g)]  This section does not affect the commission's
  authority under Chapter 53 or this chapter.
         [(h)     Subsections (a), (c), (d), (e), and (f) and any monthly
  support amount approved under those subsections expire September 1,
  2017.]
         SECTION 2.  This Act takes effect September 1, 2017.