Sec. 36.631  Expense adjustment.

    (a) Until December 31, 1987, for study areas reporting 50,000 or 
fewer working loops pursuant to Sec. 36.611(a)(8), the expense 
adjustment (additional interstate expense allocation) is equal to the 
sum of the following:
    (1) Fifty percent of the study area average unseparated loop cost 
per working loop as calculated pursuant to Sec. 36.622(b) in excess of 
115 percent of the national average for this cost but not greater than 
150 percent of the national average for this cost as calculated pursuant 
to Sec. 36.622(a) multiplied by the number of working loops reported in 
Sec. 36.611(a)(8) for the study area.
    (2) Seventy-five percent of the study area unseparated loop cost per 
working loop as calculated pursuant to Sec. 36.622(b) in excess of 150 
percent of the national average for this cost as calculated pursuant to 
Sec. 36.622(a) multiplied by the number of working loops reported in 
Sec. 36.611(a)(8) for the study area.
    (b) Until December 31, 1987, for study areas reporting more than 
50,000 working loops pursuant to Sec. 36.611(a)(8), the expense 
adjustment (additional interstate expense allocation) is equal to the 
sum of the following:
    (1) Twenty-five percent of the study area average unseparated loop 
cost per working loop as calculated pursuant to Sec. 36.622(b) in excess 
of 115 percent of the national average for this cost but not greater 
than 150 percent of the national average for this cost as calculated 
pursuant to Sec. 36.622(a) multiplied by the number of working loops 
reported in Sec. 36.611(a)(8) for the study area.
    (2) The amount calculated pursuant to Sec. 36.631(a)(2).
    (c) Beginning January 1, 1988, for study areas reporting 200,000 or 
fewer working loops pursuant to Sec. 36.611(a)(8), the expense 
adjustment (additional interstate expense allocation) is equal to the 
sum of the following:
    (1) Sixty-five percent of the study area average unseparated loop 
cost per working loop as calculated pursuant to Sec. 36.622(b) in excess 
of 115 percent of the national average for this cost but not greater 
than 150 percent of the national average for this cost as calculated 
pursuant to Sec. 36.622(a) multiplied by the number of working loops 
reported in Sec. 36.611(a)(8) for the study area.
    (2) Seventy-five percent of the study area average unseparated loop 
cost per working loop as calculated pursuant to Sec. 36.622(b) in excess 
of 150 percent of the national average for this cost as calculated 
pursuant to Sec. 36.622(a) multiplied by the number of working loops 
reported in Sec. 36.611(a)(8) for the study area.
    (d) Beginning January 1, 1988, for study areas reporting more than 
200,000 working loops pursuant to Sec. 36.611(a)(8), the expense 
adjustment (additional interstate expense allocation) is equal to the 
sum of the following:
    (1) Ten percent of the study area average unseparated loop cost per 
working loop as calculated pursuant to Sec. 36.622(b) in excess of 115 
percent of the national average for this cost but not greater than 160 
percent of the national average for this cost as calculated pursuant to 
Sec. 36.622(a) multiplied by the number of working loops reported in 
Sec. 36.611(a)(8) for the study area.
    (2) Thirty percent of the study area average unseparated loop cost 
per working loop as calculated pursuant to Sec. 36.622(b) in excess of 
160 percent of the national average for this cost but not greater than 
200 percent of the national average for this cost as calculated pursuant 
to Sec. 36.622(a) multiplied by the number of working loops reported in 
Sec. 36.611(a)(8) for the study area.
    (3) Sixty percent of the study area average unseparated loop cost 
per working loop as calculated pursuant to Sec. 36.622(b) in excess of 
200 percent of the national average for this cost but not greater than 
250 percent of the national average for this cost as calculated pursuant 
to Sec. 36.622(a) multiplied by the number of working loops reported in 
Sec. 36.611(a)(8) for the study area.

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    (4) Seventy-five percent of the study area average unseparated loop 
cost per working loop as calculated pursuant to Sec. 36.622(b) in excess 
of 250 percent of the national average for this cost as calculated 
pursuant to Sec. 36.622(a) multiplied by the number of working loops 
reported in Sec. 36.611(a)(8) for the study area.
    (e) Beginning April 1, 1989, the expense adjustment calculated 
pursuant to Sec. 36.631 (c) and (d) shall be adjusted each year to 
reflect changes in the size of the Universal Service Fund resulting from 
adjustments calculated pursuant to Sec. 36.612(a) made during the 
previous year. If the resulting amount exceeds the previous year's fund 
size, the difference will be added to the amount calculated pursuant to 
Sec. 36.631 (c) and (d) for the following year. If the adjustments made 
during the previous year result in a decrease in the size of the funding 
requirement, the difference will be subtracted from the amount 
calculated pursuant to Sec. 36.631 (c) and (d) for the following year.
[ 52 FR 17229 , May 6, 1987, as amended at  53 FR 33011  and 33012, Aug. 29, 
1988]

                     Transitional Expense Adjustment