California Legislature—2015–16 Regular Session

Assembly BillNo. 1262


Introduced by Assembly Member Wood

February 27, 2015


An act to amend Section 281 of the Public Utilities Code, relating to telecommunications, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 1262, as introduced, Wood. Telecommunications: universal service: California Advanced Services Fund.

Existing law, the federal Telecommunications Act of 1996, establishes a program of cooperative federalism for the regulation of telecommunications to attain the goal of local competition, while implementing specific, predictable, and sufficient federal and state mechanisms to preserve and advance universal service, consistent with certain universal service principles. The universal service principles include the principle that consumers in all regions of the nation, including low-income consumers and those in rural, insular, and high-cost areas, should have access to telecommunications and information services, including interexchange services and advanced telecommunications and information services, that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas. The act authorizes each state to adopt regulations to provide for additional definitions and standards to preserve and advance universal service within the state, only to the extent that they adopt additional specific, predictable, and sufficient mechanisms that do not rely on or burden federal universal service support mechanisms.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including telephone corporations, as defined. Existing law establishes the California Advanced Services Fund, referred to as the CASF, in the State Treasury. Existing law requires the commission to develop, implement, and administer the CASF to encourage deployment of high-quality advanced communications services to all Californians that will promote economic growth, job creation, and substantial social benefits of advanced information and communications technologies, as provided in specified decisions of the commission and in the CASF statute. Existing law establishes 4 accounts, the Broadband Infrastructure Grant Account, the Rural and Urban Regional Broadband Consortia Grant Account, the Broadband Infrastructure Revolving Loan Account, and the Broadband Public Housing Account within the CASF. Existing law requires that of the moneys collected for CASF on and after January 1, 2011, $10,000,000 is to be deposited into the Rural and Urban Regional Broadband Consortia Grant Account and used for specified purposes, and $15,000,000 is to be deposited into the Broadband Infrastructure Revolving Loan Account and used for specified purposes.

This bill would require that of the moneys collected for CASF on and after January 1, 2011, $15,000,000 is to be deposited into the Rural and Urban Regional Broadband Consortia Grant Account and used for specified purposes, and $10,000,000 is to be deposited into the Broadband Infrastructure Revolving Loan Account and used for specified purposes.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: 23. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 281 of the Public Utilities Code is
2amended to read:

3

281.  

(a) The commission shall develop, implement, and
4administer the California Advanced Services Fund program to
5encourage deployment of high-quality advanced communications
6services to all Californians that will promote economic growth,
P3    1job creation, and the substantial social benefits of advanced
2information and communications technologies, consistent with
3this section.

4(b) (1) The goal of the program is, no later than December 31,
52015, to approve funding for infrastructure projects that will
6provide broadband access to no less than 98 percent of California
7households.

8(2) In approving infrastructure projects, the commission shall
9give priority to projects that provide last-mile broadband access
10to households that are unserved by an existing facilities-based
11broadband provider. The commission shall provide each applicant,
12and any party challenging an application, the opportunity to
13demonstrate actual levels of broadband service in the project area,
14which the commission shall consider in reviewing the application.

15(c) The commission shall establish the following accounts within
16the fund:

17(1) The Broadband Infrastructure Grant Account.

18(2) The Rural and Urban Regional Broadband Consortia Grant
19Account.

20(3) The Broadband Infrastructure Revolving Loan Account.

21(4) The Broadband Public Housing Account.

22(d) (1) All moneys collected by the surcharge authorized by
23the commission pursuant to Decision 07-12-054 shall be
24transmitted to the commission pursuant to a schedule established
25by the commission. The commission shall transfer the moneys
26received to the Controller for deposit in the California Advanced
27Services Fund. Moneys collected on and after January 1, 2011,
28shall be deposited in the following amounts in the following
29accounts:

30(A) One hundred ninety million dollars ($190,000,000) into the
31Broadband Infrastructure Grant Account.

32(B) begin deleteTen million dollars ($10,000,000) end deletebegin insertFifteen million dollars
33($15,000,000) end insert
into the Rural and Urban Regional Broadband
34 Consortia Grant Account.

35(C) begin deleteFifteen million dollars ($15,000,000) end deletebegin insertTen million dollars
36($10,000,000) end insert
into the Broadband Infrastructure Revolving Loan
37Account.

38(2) All interest earned on moneys in the fund shall be deposited
39in the fund.

P4    1(3) The commission shall not collect moneys, by imposing the
2surcharge described in paragraph (1) for deposit in the fund, in an
3amount that exceeds one hundred million dollars ($100,000,000)
4before January 1, 2011. On and after January 1, 2011, the
5commission may collect an additional sum not to exceed two
6hundred fifteen million dollars ($215,000,000), for a sum total of
7moneys collected by imposing the surcharge described in paragraph
8(1) not to exceed three hundred fifteen million dollars
9($315,000,000). The commission may collect the additional sum
10beginning with the calendar year starting on January 1, 2011, and
11continuing through the 2020 calendar year, in an amount not to
12exceed twenty-five million dollars ($25,000,000) per year, unless
13the commission determines that collecting a higher amount in any
14year will not result in an increase in the total amount of all
15surcharges collected from telephone customers that year.

16(e) (1) All moneys in the California Advanced Services Fund
17shall be available, upon appropriation by the Legislature, to the
18commission for the program administered by the commission
19pursuant to this section, including the costs incurred by the
20commission in developing, implementing, and administering the
21program and the fund.

22(2) Notwithstanding any other law and for the sole purpose of
23providing matching funds pursuant to the federal American
24Recovery and Reinvestment Act of 2009 (Public Law 111-5), any
25entity eligible for funding pursuant to that act shall be eligible to
26apply to participate in the program administered by the commission
27pursuant to this section, if that entity otherwise satisfies the
28eligibility requirements under that program. Nothing in this section
29shall impede the ability of an incumbent local exchange carrier,
30as defined by subsection (h) of Section 251 of Title 47 of the
31United States Code, that is regulated under a rate of return
32regulatory structure, to recover, in rate base, California
33infrastructure investment not provided through federal or state
34grant funds for facilities that provide broadband service and
35California intrastate voice service.

36(3) Notwithstanding subdivision (b) of Section 270, an entity
37that is not a telephone corporation shall be eligible to apply to
38participate in the program administered by the commission pursuant
39to this section to provide access to broadband to an unserved or
40underserved household, as defined in commission Decision
P5    112-02-015, if the entity otherwise meets the eligibility requirements
2and complies with program requirements established by the
3commission. These requirements shall include all of the following:

4(A) That projects under this paragraph provide last-mile
5broadband access to households that are unserved by an existing
6facilities-based broadband provider and only receive funding to
7provide broadband access to households that are unserved or
8underserved, as defined in commission Decision 12-02-015.

9(B) That funding for a project providing broadband access to
10an underserved household shall not be approved until after any
11existing facilities-based provider has an opportunity to demonstrate
12to the commission that it will, within a reasonable timeframe,
13upgrade existing service. An existing facilities-based provider
14may, but is not required to, apply for funding under this section to
15make that upgrade.

16(C) That the commission shall provide each applicant, and any
17party challenging an application, the opportunity to demonstrate
18actual levels of broadband service in the project area, which the
19commission shall consider in reviewing the application.

20(D) That a local governmental agency may be eligible for an
21infrastructure grant only if the infrastructure project is for an
22unserved household or business, the commission has conducted
23an open application process, and no other eligible entity applied.

24(E) That the commission shall establish a service list of
25 interested parties to be notified of California Advanced Services
26Fund applications.

27(f) Moneys in the Rural and Urban Regional Broadband
28Consortia Grant Account shall be available for grants to eligible
29consortia to fund the cost of broadband deployment activities other
30than the capital cost of facilities, as specified by the commission.
31An eligible consortium may include, as specified by the
32commission, representatives of organizations, including, but not
33limited to, local and regional government, public safety, elementary
34and secondary education, health care, libraries, postsecondary
35education, community-based organizations, tourism, parks and
36recreation, agricultural, and business, and is not required to have
37as its lead fiscal agent an entity with a certificate of public
38convenience and necessity.

39(g) Moneys in the Broadband Infrastructure Revolving Loan
40Account shall be available to finance capital costs of broadband
P6    1facilities not funded by a grant from the Broadband Infrastructure
2Grant Account. The commission shall periodically set interest rates
3on the loans based on surveys of existing financial markets.

4(h) (1) For purposes of this subdivision, the following terms
5have the following meanings:

6(A) “Publicly subsidized” means either that the housing
7development receives financial assistance from the United States
8Department of Housing and Urban Development pursuant to an
9annual contribution contract or is financed with low-income
10housing tax credits, tax-exempt mortgage revenue bonds, general
11obligation bonds, or local, state, or federal loans or grants and the
12rents of the occupants, who are lower income households, do not
13exceed those prescribed by deed restrictions or regulatory
14agreements pursuant to the terms of the financing or financial
15assistance.

16(B) “Publicly supported community” means a publicly
17subsidized multifamily housing development that is wholly owned
18by either of the following:

19(i) A public housing agency that has been chartered by the state,
20or by any city or county in the state, and has been determined to
21be an eligible public housing agency by the United States
22Department of Housing and Urban Development.

23(ii) An incorporated nonprofit organization as described in
24Section 501(c)(3) of the Internal Revenue Code (26 U.S.C. Sec.
25501(c)(3)) that is exempt from taxation under Section 501(a) of
26that code (16 U.S.C. Sec. 501(a)), and that has received public
27funding to subsidize the construction or maintenance of housing
28occupied by residents whose annual income qualifies as “low” or
29“very low” income according to federal poverty guidelines.

30(2) Notwithstanding subdivision (b) of Section 270, moneys in
31the Broadband Public Housing Account shall be available for the
32commission to award grants and loans pursuant to this subdivision
33to an eligible publicly supported community if that entity otherwise
34meets eligibility requirements and complies with program
35requirements established by the commission.

36(3) Not more than twenty million dollars ($20,000,000) shall
37be available for grants and loans to a publicly supported community
38to finance a project to connect a broadband network to that publicly
39supported community. A publicly supported community may be
40an eligible applicant only if the publicly supported community can
P7    1verify to the commission that the publicly supported community
2has not denied a right of access to any broadband provider that is
3willing to connect a broadband network to the facility for which
4the grant or loan is sought.

5(4) (A) Not more than five million dollars ($5,000,000) shall
6be available for grants and loans to a publicly supported community
7to support programs designed to increase adoption rates for
8broadband services for residents of that publicly supported
9community. A publicly supported community may be eligible for
10funding for a broadband adoption program only if the residential
11units in the facility to be served have access to broadband services
12or will have access to broadband services at the time the funding
13for adoption is implemented.

14(B) A publicly supported community may contract with other
15nonprofit or public agencies to assist in implementation of a
16broadband adoption program.

17(5) To the extent feasible, the commission shall approve projects
18 for funding from the Broadband Public Housing Account in a
19manner that reflects the statewide distribution of publicly supported
20communities.

21(6) In reviewing a project application under this subdivision,
22the commission shall consider the availability of other funding
23sources for that project, any financial contribution from the
24broadband service provider to the project, the availability of any
25other public or private broadband adoption or deployment program,
26including tax credits and other incentives, and whether the applicant
27has sought funding from, or participated in, any reasonably
28available program. The commission may require an applicant to
29 provide match funding, and shall not deny funding for a project
30solely because the applicant is receiving funding from another
31source.

32(7) (A) To provide funding for the purposes of this subdivision,
33the commission shall transfer to the Broadband Public Housing
34Account twenty million dollars ($20,000,000) from the Broadband
35Infrastructure Grant Account and five million dollars ($5,000,000)
36from the Broadband Revolving Loan Account. Any moneys in the
37Broadband Public Housing Account that have not been awarded
38pursuant to this subdivision by December 31, 2016, shall be
39transferred back to the Broadband Infrastructure Grant Account
P8    1and Broadband Infrastructure Revolving Loan Account in
2proportion to the amount transferred from the respective accounts.

3(B) The commission shall transfer funds pursuant to
4subparagraph (A) only if the commission is otherwise authorized
5to collect funds for purposes of this section in excess of the total
6amount authorized pursuant to paragraph (3) of subdivision (d).

7(i) (1) The commission shall conduct two interim financial
8audits and a final financial audit and two interim performance
9audits and a final performance audit of the implementation and
10effectiveness of the California Advanced Services Fund to ensure
11that funds have been expended in accordance with the approved
12terms of the grant awards and loan agreements and this section.
13The commission shall report its interim findings to the Legislature
14by April 1, 2011, and April 1, 2017. The commission shall report
15its final findings to the Legislature by April 1, 2021. The reports
16shall also include an update to the maps in the final report of the
17California Broadband Task Force and data on the types and
18numbers of jobs created as a result of the program administered
19by the commission pursuant to this section.

20(2) (A) The requirement for submitting a report imposed under
21paragraph (1) is inoperative on January 1, 2022, pursuant to Section
2210231.5 of the Government Code.

23(B) A report to be submitted pursuant to paragraph (1) shall be
24submitted in compliance with Section 9795 of the Government
25Code.

26(j) (1) Beginning on January 1, 2012, and annually thereafter,
27the commission shall provide a report to the Legislature that
28includes all of the following information:

29(A) The amount of funds expended from the California
30Advanced Services Fund in the prior year.

31(B) The recipients of funds expended from the California
32Advanced Services Fund in the prior year.

33(C) The geographic regions of the state affected by funds
34expended from the California Advanced Services Fund in the prior
35year.

36(D) The expected benefits to be derived from the funds expended
37from the California Advanced Services Fund in the prior year.

38(E) Actual broadband adoption levels from the funds expended
39from the California Advanced Services Fund in the prior year.

P9    1(F) The amount of funds expended from the California
2Advanced Services Fund used to match federal funds.

3(G) An update on the expenditures from California Advanced
4Services Fund and broadband adoption levels, and an accounting
5of remaining unserved and underserved households and areas of
6the state.

7(H) The status of the California Advanced Services Fund balance
8and the projected amount to be collected in each year through 2020
9to fund approved projects.

10(2) (A) The requirement for submitting a report imposed under
11paragraph (1) is inoperative on January 1, 2021, pursuant to Section
1210231.5 of the Government Code.

13(B) A report to be submitted pursuant to paragraph (1) shall be
14submitted in compliance with Section 9795 of the Government
15Code.

16

SEC. 2.  

This act is an urgency statute necessary for the
17immediate preservation of the public peace, health, or safety within
18the meaning of Article IV of the Constitution and shall go into
19immediate effect. The facts constituting the necessity are:

20The immediate continuation of assistance with broadband
21deployment is a primary purpose of the Rural and Urban Regional
22Broadband Consortia Grant Account. In order to ensure funding
23for regular broadband consortia activities, adequate funding must
24be made available. The Rural and Urban Regional Broadband
25Consortia Grant Account has been exhausted and unless moneys
26are made available immediately, deployment activities could cease.



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