[Federal Register Volume 66, Number 142 (Tuesday, July 24, 2001)]
[Rules and Regulations]
[Pages 38375-38379]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-18385]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[CC Docket No. 96-45; FCC 01-195]
Federal-State Joint Board on Universal Service
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Commission adopts rules that will extend
the deadline for receipt of non-recurring services. The Commission also
adopts a rule that will establish a deadline for the implementation of
non-recurring services for certain qualified applicants who are unable
to complete implementation by the September 30 deadline.
DATES: This document contains information collection requirements that
have not been approved by the Office of Management and Budget (OMB).
The Commission will publish a document in the Federal Register
announcing the effective date of this document.
FOR FURTHER INFORMATION CONTACT: Katherine Tofigh, Attorney, Common
Carrier Bureau, Accounting Policy Division, (202) 418-7400, TTY: (202)
418-0484.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order in CC Docket No. 96-45 released on June 29, 2001. The full
text of this document is available for public inspection during regular
business hours in the FCC Reference Center, Room CY-A257, 445 Twelfth
Street, SW., Washington, DC 20554.
I. Introduction
1. In this Report and Order, we adopt a rule proposed in the
Further Notice of Proposed Rulemaking (NPRM), 66 FR 23204, May 8, 2001,
to provide additional time for recipients under the schools and
libraries universal service support mechanism to implement contracts or
agreements with service providers for non-recurring services. We adopt
a rule that will extend the deadline for receipt of non-recurring
services from June 30, to September 30 following the close of the
funding year. Further, we adopt a rule that will establish a deadline
for the implementation of non-recurring services for certain qualified
applicants who are unable to complete implementation by the September
30 deadline. We find that the amended rules will provide schools and
libraries with more time to install non-recurring services, and thereby
make greater use of their universal service discounts.
2. In the NPRM, the Commission also sought comment on its rule
addressing the allocation of discounts for schools and libraries under
the federal universal service mechanism when there is insufficient
funding to support all requests for internal connections. Specifically,
the Commission sought comment on whether to modify the rule to give
funding priority to requests for internal connections made by
individual schools and libraries that did not receive funding
commitments for internal connections during the previous funding year.
After consideration of the proposals, we conclude that we will not
revise the Commission's rules of priority for Funding Year 4 of the
schools and libraries universal service mechanism.
II. Discussion
A. Modification of Implementation Schedule for Non-Recurring Services
1. Extension of Installation Deadline for Non-Recurring Services
The Commission sought comment in the NPRM regarding a modification
to our rules relating to the deadline for implementation of non-
recurring services. Non-recurring services are funding requests with a
one-time cost listed on Block 5 of an applicant's FCC Form 471. We
conclude that it is reasonable for schools and libraries to have
additional time to implement non-recurring services, given the fact
that many of these services must be installed during the summer months
when classes are not in session. Therefore, we adopt a rule change that
would allow schools and libraries to implement non-recurring services
by September 30, following the close of the funding year.
As noted in each year of the schools and libraries program, the
Commission has extended the deadline for receipt of non-recurring
services. Non-recurring services often involve the installation of
equipment or wiring, for which schools and libraries incur a one-time
cost. As a result, many non-recurring services need to be performed
while students are not in school or during a time period that will
modify our rule to permanently minimize disruptions for classrooms and
students. We now find that it is appropriate to extend the deadline
from June 30 to September 30. The extended
[[Page 38376]]
deadline is more realistic, and appropriately takes into consideration
the needs of program participants.
We note that this rule change does not affect the twelve-month
funding year for non-recurring and recurring services. Rather, this
rule change only affects the deadline for receiving non-recurring
services. In addition, we do not increase the amount that schools and
libraries may receive for non-recurring services for each program year.
Instead, we are merely providing schools and libraries with additional
time in which to complete their receipt of these discounted non-
recurring services.
2. Limited Extension for Qualified Applicants
In the NPRM, the Commission also sought comment regarding a rule
that would further extend the deadline for implementation of non-
recurring services for schools and libraries that are unable to meet
the original deadline due to circumstances beyond their control. We
adopt the proposed rule, thereby extending the deadline for
implementation of non-recurring services for certain qualified
applicants who are unable to meet the September 30 deadline. Applicants
may qualify for the extension, based on satisfaction of one of four
criteria. Subsequently, the Administrator will calculate a revised
implementation deadline, based on the date that the applicant satisfies
one of the criteria.
We believe the revised rule will ensure that schools and libraries
have a reasonable and predictable deadline for implementation of non-
recurring services. External circumstances, like delayed funding
decisions or manufacturing problems, can create situations where
deadlines are both impractical and unreasonable. Adoption of the
proposed rule will set in place a predictable mechanism to recalculate
the implementation deadline in certain limited circumstances.
Furthermore, consistent with the Commission's commitment to providing
support for schools and libraries, we believe that this action will
increase the likelihood that schools and libraries may successfully
utilize discounts available from the schools and libraries universal
service mechanism.
Specifically, under the revised rule, applicants will qualify for
an extension of the implementation deadline for non-recurring services
if they satisfy one of the following criteria: (1) Applicants whose
funding commitment decision letters are issued by the Administrator on
or after March 1 of the funding year for which discounts are
authorized; (2) applicants who receive service provider change
authorizations or service substitution authorizations from the
Administrator on or after March 1 of the funding year for which
discounts are authorized; (3) applicants whose service providers are
unable to complete implementation for reasons beyond the service
provider's control; or (4) applicants whose service providers are
unwilling to complete installation because funding disbursements are
delayed while the Administrator investigates their application for
program compliance.
Should an applicant satisfy one of the four criteria, March 1 is
the key date for calculating the extended deadline. If one of the
conditions is satisfied before March 1 (of any year), the applicant
will have until the subsequent September 30 to complete implementation.
If one of the conditions is satisfied after March 1, the applicant will
have until September 30 of the following year to complete
implementation. Therefore, if an applicant receives authorization for a
service provider change on February 27, 2002 (before March 1), the
deadline for receipt of non-recurring services will be September 30,
2002. By contrast, for funding commitments made in April 2002 for
Funding Year 4 applications (after March 1), the deadline for receipt
of non-recurring service will be September 30, 2003.
The Administrator will consider whether criteria (1) and (2) have
been satisfied, respectively, based on the date that the funding
commitment decisions are issued, or service provider changes or service
substitutions are authorized. The revised deadline for implementation
of non-recurring services will then be determined, based on the date
that one of these events occurs.
Similar to the requirements outlined in the November 2000 Extension
Order, applicants who wish to satisfy criteria (3) should submit
documentation to the Administrator requesting relief on these grounds
on or before the original non-recurring services deadline. The revised
deadline will be calculated based on the date of the Administrator's
decision relating to the explanation. For example, if an entity is
awarded discounts for internal connections in Funding Year 4, and
installation is delayed due to circumstances beyond its control, it
will need to file with the Administrator an explanation and evidence of
the delay on or before September 30, 2002. If the Administrator grants
an extension before March 1, 2003, they will have until September 30,
2003 to complete installation.
Furthermore, we recognize that there may be a wide range of
situations under criteria (3) in which an applicant through no fault of
its own is unable to complete installation by the applicant's original
September 30 implementation deadline. Circumstances beyond the service
provider's control may include manufacturing delays and natural
disasters. Commenters suggested that the Commission further clarify the
type of events that may satisfy criteria (3). Because we are unable to
anticipate every type of circumstance that may arise under criteria
(3), we instead direct the Administrator to address such situations on
a case by case basis, consistent with the reasoning set forth in this
Report and Order.
With regard to criteria (4), applicants must certify to the
Administrator that its service provider was unwilling to deliver or
install non-recurring services before the expiration of the original
non-recurring services installation deadline, because the Administrator
had withheld payment for those services on a properly-submitted invoice
for more than 60 days after the submission of the invoice. Applicants
must make this certification on or before the original non-recurring
services installation deadline. The revised implementation date will be
calculated based on the date that the funds are released by the
Administrator.
We conclude that a rule change will ensure schools and libraries
are not penalized when they are not responsible for missing the
installation deadline. Additionally, implementation of this policy will
provide clarity to the Administrator and applicants by establishing a
certain deadline for installation. Ultimately, this rule gives all
schools and libraries the opportunity to schedule implementation of
non-recurring services over the summer months.
3. Extension of Competitive Bidding Rules
In addition, we adopt a rule granting a limited extension of the
Commission's competitive bidding rules for contracts for non-recurring
services. Under this rule, contracts for non-recurring services may be
voluntarily extended to coincide with the appropriate deadline for
implementation. Parties may not, however, extend other contractual
provisions beyond the dates established by the Commission's rules
without complying with the competitive bidding process. This action
will ensure equitable treatment for recipients of discounts for non-
recurring services.
[[Page 38377]]
B. Funding Priority for Internal Connections
In the NPRM, the Commission also sought comment on two options
relating to the Commission's rules of priority and the distribution of
support for internal connections. The Commission determined it was
appropriate to consider revising the rules of priority because of heavy
demand in Funding Year 4 of the schools and libraries universal service
mechanism. In April, the Administrator estimated that after funding
priority one services (telecommunications services and Internet access)
in Funding Year 4, there would not be enough funds available to fund
priority two requests (internal connections) from the poorest schools
and libraries, who qualify for a 90% discount under the schools and
libraries discount matrix.
The first proposal in the NPRM was to maintain the Commission's
rules as currently written, which direct that the remaining funds be
prorated by discount band. The second proposal was to give funding
priority to requests for internal connections made by individual
schools and libraries that did not receive funding commitments for
internal connections during the previous funding year. After
consideration of two proposals regarding the distribution of support
for internal connections, we now conclude that we will not revise the
rules of priority relating to the funding of internal connections for
Funding Year 4 of the schools and libraries program. Therefore, under
the current rules, the Administrator will allocate the available funds
among applicants in the 90 percent discount level on a pro rata basis,
so that each such applicant in Funding Year 4 receives a portion of the
amount requested.
The overwhelming majority of commenters expressed concern about
revising the rules of priority during Funding Year 4, after the
application process had closed. In fact, commenters suggested that they
would have structured their technology plans differently had they been
aware of the proposed rules of priority. Furthermore, commenters
emphasized the need for predictability and raised operational questions
regarding implementation of the rule in the current funding year. Given
the strong concerns voiced by the schools and libraries community, we
agree that the Commission should not revise its rules of priority for
Funding Year 4 of the schools and libraries universal service
mechanism.
Several commenters supported giving funding priority to requests
for internal connections made by individual schools and libraries that
did not receive funding commitments for internal connections during the
previous funding year. Those commenters believed that the proposed
rules would enable many needy schools and libraries, who have not
previously been awarded discounts, the opportunity to receive funding
for internal connections. The Commission is strongly committed to
ensuring that discounts continue to go to schools and libraries that
are economically disadvantaged. Based on the current record, we
conclude it is not reasonable to revise the rule for Funding Year 4
applications. We will continue to consider the operational and other
implementation issues raised by commenters for future funding years.
II. Procedural Matters
A. Paperwork Reduction Act
4. The action contained herein has been analyzed with respect to
the Paperwork Reduction Act of 1995 (PRA) and found to impose new or
modified reporting and/or recordkeeping requirements or burdens on the
public. Implementation of these new or modified reporting and/or
recordkeeping requirements will be subject to approval by the Office of
Management and Budget (OMB). The Commission will publish a document in
the Federal Register announcing the effective date.
B. Final Regulatory Flexibility Analysis
5. As required by the Regulatory Flexibility Act (RFA), an Initial
Regulatory Flexibility Analysis (IRFA) was incorporated in the NPRM.
The Commission sought written public comments on the proposals in the
NPRM, including comment on the IRFA. This present Final Regulatory
Flexibility Analysis (FRFA) conforms to the RFA, as amended.
1. Need for, and Objectives of, the Rules
6. We modify our rules to provide additional time for recipients
under the schools and libraries universal service support mechanism to
implement contracts or agreements with service providers for non-
recurring services. First, we extend the deadline for receipt of non-
recurring services from June 30, to September 30 following the close of
the funding year. Second, we establish a deadline for the
implementation of non-recurring services for certain qualified
applicants who are unable to complete implementation by the September
30 deadline.
7. The Commission also sought comment on its rule addressing the
allocation of discounts for schools and libraries under the federal
universal service mechanism when there is insufficient funding to
support all requests for internal connections. After consideration, the
Commission will not revise the Commission's rules of priority for
Funding Year 4 of the schools and libraries universal service
mechanism.
2. Summary of Significant Issues Raised by the Public Comments in
Response to the IRFA
8. The Commission received no comments directly addressing the
IRFA.
3. Description and Estimate of the Number of Small Entities to Which
Rules Will Apply
9. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted. The RFA generally defines
the term ``small entity'' as having the same meaning as the terms
``small business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act. A small business concern is one that: (1) Is independently owned
and operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the Small Business
Administration (SBA). A small organization is generally ``any not-for-
profit enterprise which is independently owned and operated and is not
dominant in its field.'' Nationwide, as of 1992, there were
approximately 275,801 small organizations. ``Small governmental
jurisdiction'' generally means ``governments of cities, counties,
towns, townships, villages, school districts, or special districts,
with a population of less than 50,000.'' As of 1992, there were
approximately 85,006 governmental entities in the United States. This
number includes 38,978 counties, cities, and towns; of these, 37,566,
or 96 percent, have populations of fewer than 50,000. The Census Bureau
estimates that this ratio is approximately accurate for all
governmental entities. Thus, of the 85,006 governmental entities, we
estimate that 81,600 (96 percent) are small entities.
10. Under the schools and libraries universal service support
mechanism, which provides support for elementary and secondary schools
and libraries, an elementary school is generally ``a non-profit
institutional day or residential
[[Page 38378]]
school that provides elementary education, as determined under state
law.'' A secondary school is generally as ``a non-profit institutional
day or residential school that provides secondary education, as
determined under state law,'' and not offering education beyond grade
12. For-profit schools and libraries, and schools and libraries with
endowments in excess of $50,000,000, are not eligible to receive
discounts under the program, nor are libraries whose budgets are not
completely separate from any schools. Certain other statutory
definitions apply as well. The SBA has defined as small entities
elementary and secondary schools and libraries having $5 million or
less in annual receipts. In funding year 2 (July 1, 1999 to June 20,
2000) approximately 83,700 schools and 9,000 libraries received
discounts under the schools and libraries universal service mechanism.
Although we are unable to estimate with precision the number of these
entities that would qualify as small entities under SBA's definition,
we estimate that fewer than 83,700 schools and 9,000 libraries would be
affected annually by the rules promulgated in this Order, under current
operation of the program.
4. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
11. We adopt a rule that will require certain applicants, outlined
in criteria (3) and (4) to submit information to the Administrator in
order to qualify for an extension of the deadline for installation of
non-recurring services. Under criteria (3), applicants whose service
providers are unable to complete implementation for reasons beyond the
service provider's control must submit documentation to the
Administrator requesting relief on these grounds. In order to comply
with the requirements for criteria (4), applicants must certify to the
Administrator that its service provider was unwilling to deliver or
install non-recurring services before the expiration of the original
non-recurring services installation deadline, because the Administrator
had withheld payment for those services on a properly-submitted invoice
for more than 60 days after the submission of the invoice.
5. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
12. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed approach,
which may include the following four alternatives (among others): (1)
The establishment of differing compliance and reporting requirements or
timetables that take into account the resources available to small
entities; (2) the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for small entities;
(3) the use of performance, rather than design, standards; and (4) an
exemption from coverage of the rule, or part thereof, for small
entities.
13. The Commission adopts two administrative modifications relating
to the deadline for implementation of non-recurring services. First,
the Commission extends the deadline for implementation of non-recurring
services from June 30 of each funding year to September 30. Second, the
Commission establishes an extended deadline for certain qualified
applicants who are unable to meet the September 30 deadline. We believe
that the extension of the deadline for the installation of non-
recurring services has the same impact on small and large entities.
Further, we believe that the extension of the deadline has no adverse
or disparate effect on small or large entities. We previously
determined that this was a situation that we needed to evaluate
alternatives, had there been any concern expressed about the impact on
small entities. After consideration, we conclude that all impact is
beneficial and all impact is the same for small and large entities.
14. In the NPRM, the Commission also sought comment relating to the
allocation of discounts for schools and libraries when there is
insufficient funding to support all requests for internal connections.
We conclude in this Report and Order that we will not revise the
Commission's rules of priority for Funding Year 4 of the schools and
libraries universal service mechanism. Because the Commission
promulgates no additional final rules with respect to the rules of
priority, there is no impact on small businesses to consider.
15. Report to Congress: The Commission will send a copy of this
Report and Order, including this FRFA, in a report to be sent to
Congress pursuant to the Small Business Regulatory Enforcement Fairness
Act of 1996. In addition, the Commission will send a copy of the Report
and Order, including this FRFA, to the Chief Counsel for Advocacy of
the Small Business Administration. A copy of the Report and Order and
FRFA (or summaries thereof) will also be published in the Federal
Register.
D. Ordering Clauses
16. Pursuant to sections 1-4, 201-205, 218-220, 254, 303(r), and
403 of the Communications Act of 1934, as amended, that the amendments
to part 54 of the Commission's rules, as described in this Report and
Order are adopted, and section 553 of the Administrative Procedure Act,
5 U.S.C. 553.
17. This document which contains information collection
requirements that have not been approved by the Office of the
Management Budget (OMB). The Commission will publish a document in the
Federal Register announcing the effective date of this section.
18. It is further ordered that the Commission's Consumer
Information Bureau, Reference Information Center, SHALL SEND a copy of
this Report and Order, including the Final Regulatory Flexibility
Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration.
List of Subjects in 47 CFR Part 54
Communications common carriers, Libraries, Reporting and
recordkeeping requirements, Schools, Telecommunications, Telephone.
Federal Communications Commission.
William F. Caton,
Deputy Secretary.
Final Rules
For the reason discussed in the preamble, the Federal
Communications Commission amends 47 CFR part 54 as follows:
PART 54--UNIVERSAL SERVICE
1. The authority citation for part 54 continues to read as follows:
Authority: 47 U.S.C. 1, 4(I), 201, 205, 214, and 254 unless
otherwise noted.
Subpart F--Universal Service Support for Schools and Libraries
2. Amend Sec. 54.507 by revising paragraph (d) to read as follows:
Sec. 54.507 Cap.
* * * * *
(d) Annual filing requirement. Schools and libraries, and consortia
of such eligible entities shall file new funding requests for each
funding year no sooner than the July 1 prior to the start of that
funding year. Schools, libraries, and eligible consortia must use
recurring services for which discounts have been committed by the
Administrator within the funding year for which the discounts were
sought. The deadline for implementation of non-recurring services will
be
[[Page 38379]]
September 30 following the close of the funding year. An applicant may
request and receive from the Administrator an extension of the
implementation deadline for non-recurring services if it satisfies one
of the following criteria:
(1) The applicant's funding commitment decision letter is issued by
the Administrator on or after March 1 of the funding year for which
discounts are authorized;
(2) The applicant receives a service provider change authorization
or service substitution authorization from the Administrator on or
after March 1 of the funding year for which discounts are authorized;
(3) The applicant's service provider is unable to complete
implementation for reasons beyond the service provider's control; or
(4) The applicant's service provider is unwilling to complete
installation because funding disbursements are delayed while the
Administrator investigates their application for program compliance.
* * * * *
[FR Doc. 01-18385 Filed 7-23-01; 8:45 am]
BILLING CODE 6712-01-P