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  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