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OFFICE OF
THE CHAIRMAN
The Honorable David Vitter
United States Senate
516 Hart Senate Office Building
Washington, D.C. 20510
Dear Senator Vitter:
WASH !NGTON
December 29, 2014
Thank you for your letter regarding our efforts to curb waste, fraud, and abuse in the
Lifeline program, and particularly the Commission's Office of Inspector General's (OIG)
request for Section 1811 criminal investigators. Please be assured that curbing waste, fraud,
and abuse in all the Universal Service Fund (USF) programs is a top priority at the
Commission, and we are actively coordinating with the OIG within the four corners of the
Universal Service Administrative Company (USAC) Memorandum of Understanding to
ensure that all USF programs undergo robust and sustained monitoring and enforcement.
The OIG is able to, and has, hired trained investigators to fulfill its mission. The
Commission does not maintain any control over the OIG's funding and passes through its
budget request to the Office of Management and Budget (0MB) and Congress, including
Salaries and Expenses (S&E) accounts. Through this process, the OJG exercises independent
discretion in determining the size and composition of its staff in accordance with Section 8G of
the Inspector General Act and subject to standard federal hiring and employment regulations and
statutes.
The OIG's request for Section 1811 criminal investigators, however, requires
additional scrutiny and consideration because these employees can be authorized to carry
weapons. Also, the Communications Act of 1934 does not provide specific authority for hiring
Section 1811 Criminal Investigators or equivalents, so the FCC's Chairman is legally responsible
for ensuring that a decision to bring these employees to the FCC would comply with all
applicable laws and federal workplace rules. I take this responsibility very seriously and I am
currently reviewing the OIG' s request with these issues in mind.
I would also note that during Fiscal Years 2014 and 2015 the OIG received nearly
all funds requested from the FCC's appropriation. And in previous years, the OIG has
received permission from Congress to use USF funds for related program investigations.
Unfortunately, the Commission's Fiscal Year 2015 appropriation does not provide
additional requested funds to fully deploy our USF strike force. General FCC funding
has been flat-lined for several years, with an additional loss of almost $17 million in 2013
due to sequestration.
FEDERAL COMMUNICATIONS COMMISSION
Page 2-The Honorable David Vitter
Despite this funding situation, the FCC has achieved considerable success in
reforming all the USF programs, including Lifeline. For example, the Commission
established a National Lifeline Accountability Database (NLAD) as part of our Lifeline
Reform Order, and its use has decreased program fraud significantly. Thus far, the NLAD
has eliminated approximately 1.28 million duplicates, which will save the fund
approximately $161 million on an annualized basis.
These data paint a different picture from that in the Washington Examiner report cited in
your letter because that report relies upon stale, inaccurate data. The quoted study was based on
data through the third quarter of 2012, just as we began to implement the majority of the reforms
in the 2012 Lifeline Reform Order. The study itself notes that the number of Lifeline subscribers
in Maryland began to decline shortly after the release of the Lifeline Reform Order. More recent
USAC data indicates that Maryland is a success story, with less than half the number of Lifeline
subscribers that it had in 2012. These subscribers represent well under half of the Lifeline
eligible households in Maryland based on census estimates.
We also have significantly increased our efforts to tackle waste, fraud and abuse in
the Lifeline program, including coordination with OIG and the Department of Justice on
various joint investigations. The FCC's Enforcement Bureau (EB) issued an Enforcement
Advisory noting that Lifeline providers are liable if their agents or representatives violate
Lifeline program rules. In addition, EB issued over 300 citations to individuals in 10 states
notifying them that they had violated the Lifeline program rules by receiving Lifeline-supported
service on multiple customer accounts and advising them of the potential assessment of fines of
up to $16,000, the maximum amount the Commission may fine a consumer for this type of
violation.
Our Lifeline enforcement actions during the last two years include twelve Notices of
Apparent Liability proposing over $90 million in fines against companies for violating rules
limiting Lifeline subscriptions to one subscriber per household. These proposed penalties are in
addition to full recovery of the USF funds paid to the carriers for duplicative Lifeline service.
EB also entered into consent decrees with two companies providing Lifeline service in
Oklahoma, which involved duplicative support claims and collectively resulted in $600,000 in
payments to the U.S. Treasury and over $400,000 in repayments to the USF.
In addition to its aggressive enforcement efforts aimed at Lifeline program
noncompliance, during 2013 and 2014 the Commission carried out eight enforcement actions
involving violations of its USF contribution rules, resulting in payments to the U.S. Treasury
totaling approximately $3.3 million. The Enforcement Bureau continues to investigate alleged
rule violations in all of the universal service programs, and the USF Strike Force has a number of
active investigations aimed at rooting out waste, fraud, and abuse.
Page 3-The Honorable David Vitter
The Lifeline program provides critical communications services to those who are least
likely to be able to secure these services, affording the less fortunate an ability to contact family,
employers, prospective employers and emergency services by the same rapid and reliable means
that are routinely available to other consumers. Protecting this vital program from fraud, waste
and abuse is a central component of our efforts to ensure the program's continued viability.
I appreciate your interest in these matters. Please let me know if I can be of any further
assistance.
Sincerely,
Tom Wheeler