[Federal Register Volume 62, Number 209 (Wednesday, October 29, 1997)]
[Rules and Regulations]
[Pages 56118-56120]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-28612]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket No. 96-45; FCC 97-380]


Universal Service

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this Order, we adopt a filing window period that begins on 
the date that the Schools and Libraries Corporation and the Health Care 
Corporation begin to receive applications for support. We also conclude 
that the administrative corporations will determine the length of the 
window and resolve other administrative issues necessary to implement 
our decision to adopt a window filing period consistent with our 
guidance set forth below. Therefore, we amend our rules to implement 
this change. In addition, we delegate authority to the Chief, Common 
Carrier Bureau to resolve unanticipated technical and operational 
issues relating to the new universal service mechanisms that may arise 
in the future.

EFFECTIVE DATE: All policies and rules adopted herein shall be 
effective November 28, 1997.

FOR FURTHER INFORMATION CONTACT: Valerie Yates, Legal Counsel, Common 
Carrier Bureau, (202) 418-1500, or Sheryl Todd, Common Carrier Bureau, 
(202) 418-7400.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Third 
Report and Order adopted on October 10, 1997 and released on October 
14, 1997, including changes made in an erratum released October 15, 
1997. The full text of the Third Report and Order is available for 
inspection and copying during normal business hours in the FCC 
Reference Center (Room 239), 1919 M St., NW., Washington, DC. Pursuant 
to the Telecommunications Act of 1996, the Commission released a Notice 
of Proposed Rulemaking and Order Establishing Joint Board, Federal-
State Joint Board on Universal Service, CC Docket No. 96-45 on March 8, 
1996 (61 FR 10499 (March 14, 1996)), a Recommended Decision on November 
8, 1996 (61 FR 63778 (December 2, 1996)), a Public Notice on November 
18, 1996 (61 FR 63778 (December 2, 1996)), and a Report and Order that 
was adopted on May 7, 1997 and released on May 8, 1997 (62 FR 32862 
(June 17, 1997)) implementing rules for Secs. 254 and 214(e) of the Act 
relating to universal service. Also pursuant to the Telecommunications 
Act of 1996, the Commission released a Report and Order in CC Docket 
97-21 on July 18, 1997 (62 FR 41294 (August 1, 1997)). The Common 
Carrier Bureau released a Public Notice seeking comment on additional 
issues addressed in the Third Report and Order on September 10, 1997 
(62 FR 48280 (September 15, 1997)).

Summary of the Third Report and Order

    1. On March 8, 1996, as required by the Telecommunications Act of 
1996 (1996 Act), the Commission released a Notice of Proposed 
Rulemaking and Order Establishing a Joint Board on Universal Service. 
As required by the RFA, the NPRM included an Initial Regulatory 
Flexibility Analysis (IRFA). At that time, the Commission sought 
written public comment on the proposals in the NPRM, including comment 
on the IRFA. On May 8, 1997 the Commission released a Report and Order 
that included a Final Regulatory Flexibility Analysis (FRFA). On 
September 10, 1997, the Common Carrier Bureau issued a Public Notice 
seeking comment on several issues with respect to the application 
process and the distribution of federal universal service support funds 
for schools, libraries, and rural health care providers. This FRFA 
supplements the FRFA that was included in the First Report and Order 
and incorporates the comments with respect to the proposal to adopt a 
filing window that were received in response to the Bureau's September 
10 Public Notice. This present FRFA conforms to the RFA.
    2. In the Universal Service Order, we concluded that the 
Administrator would commit funds to applicants on a first-come first-
served basis. We now conclude, based on the nearly unanimous comments 
received in response to the September 10 Public Notice, that all 
applications filed during the window will be treated as if 
simultaneously received. For the reasons discussed below, we find that 
adopting such a window period will best serve the needs of applicants 
for universal service discounts, and will assist the administrative 
corporations in processing these requests in a timely manner.
    3. In response to commenters' requests, we clarify that an 
applicant's ``place in line,'' or seniority, with respect to funds will 
be determined by the date on which an applicant submits a contract to 
the applicable administrative corporation. An applicant's submission of 
its initial request for services, which one of the administrative 
corporations will post on its website, does not determine the 
applicant's seniority for the purposes of allocating funding. We 
clarify that the Schools and Libraries Corporation, as administrator, 
will allocate funds reasonably and in accordance with the rules of 
priority set forth in Sec. 54.507(g) of our rules.
    4. In light of our decision to adopt a window filing period, we 
also conclude that the administrative corporations should determine the 
length of the window and resolve other administrative matters necessary 
to implement a window filing period. We conclude that this 
responsibility entails ``administering the support mechanisms for 
eligible schools and libraries and rural health care providers,'' a 
function already within the scope of the corporations' general duties. 
We find that the goals of the universal service mechanisms will best be 
served if the administrative corporations are responsible for 
implementing the window filing periods because they will be performing 
the day-to-day functions of the schools, libraries, and rural health 
care universal service mechanisms and thus are better able to determine 
an appropriate window periods in light of their needs and resources. We 
remain committed to the general principle that funds will be allocated 
to applicants on a first-come first-served basis. Consistent with this 
principle, we direct the corporations to adopt a reasonable window 
period that is of sufficient duration to effectuate the administrative 
purposes of the window, as set forth

[[Page 56119]]

above, but is short enough to ensure that funds are allocated without 
unnecessary delay and to encourage applicants to file requests for 
support without undue delay. In addition, to ensure that all applicants 
will be informed of the window periods with sufficient time to adjust 
their plans accordingly, we direct the administrative corporations to 
make a determination with respect to the initial window filing periods 
by October 31, 1997 and to publicize that decision promptly using 
appropriate media and other avenues that will notify the educational, 
library, and rural health care communities. In order to facilitate 
notification to the public, we direct the Bureau to issue a public 
notice announcing the administrative corporations' decisions.
    5. We further find that unanticipated technical and operational 
issues may arise that will require prompt attention, but will not 
warrant Commission review. To the extent clarification of our rules are 
necessary, however, we delegate to the Chief, Common Carrier Bureau the 
authority to issue orders interpreting our rules as necessary to ensure 
that support for services provided to schools and libraries and rural 
health care providers operate to further our universal service goals. 
We find that this action is ``necessary to the proper functioning of 
the Commission and the prompt and orderly conduct of its business.'' 47 
U.S.C. 155(c)(1). Any action taken pursuant to this delegation of 
authority ``shall have the same force and effect and shall be made, 
evidenced, and enforced in the same manner as actions of the 
Commission.'' 47 CFR 0.203; see also 47 U.S.C. 155(c)(3).

Final Federal Regulatory Flexibility Analysis

    6. On March 8, 1996, as required by the Telecommunications Act of 
1996 (1996 Act), the Commission released a Notice of Proposed 
Rulemaking and Order Establishing a Joint Board on Universal Service. 
As required by the RFA, the NPRM included an Initial Regulatory 
Flexibility Analysis (IRFA). At that time, the Commission sought 
written public comment on the proposals in the NPRM, including comment 
on the IRFA. On May 8, 1997 the Commission released a Report and Order 
that included a Final Regulatory Flexibility Analysis (FRFA). On 
September 10, 1997, the Common Carrier Bureau issued a Public Notice 
seeking comment on several issues with respect to the application 
process and the distribution of federal universal service support funds 
for schools, libraries, and rural health care providers. This FRFA 
supplements the FRFA that was included in the First Report and Order 
and incorporates the comments with respect to the proposal to adopt a 
filing window that were received in response to the Bureau's September 
10 Public Notice. This present FRFA conforms to the RFA.
    7. Need for, and Objectives of, this Third Report and Order. The 
Commission is required by sections 254(a)(2) and 410(c) of the Act, as 
amended by the 1996 Act, to promulgate these rules to implement 
promptly the universal service provisions of section 254. The goal of 
this Third Report and Order (Order) is to ease the burden on schools, 
libraries, and rural health care providers that will submit requests 
for funding to the universal service administrator by adopting a filing 
window. All applications filed during the window will be treated as if 
simultaneously received.
    8. Summary of Significant Issues Raised by Public Comments. 
Commenters overwhelmingly recommended adoption of a filing window in 
order to ease the administrative burdens on schools, libraries, and 
rural health care providers, particularly smaller entities with fewer 
administrative resources. Some commenters urged the Commission to 
ensure that applicants in all states would receive some opportunity to 
receive funding.
    9. Description and Estimates of the Number of Small Entities to 
Which the Rules Adopted in This Report and Order will Apply. The RFA 
generally defines ``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, 15 U.S.C. 632, unless the Commission has developed 
one or more definitions that are appropriate to its activities. 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) meets any additional criteria established by the 
Small Business Administration (SBA). As noted, the RFA also applies to 
nonprofit organizations and to governmental organizations such as 
governments of cities, counties, towns, townships, villages, school 
districts, or special districts with populations of less than 50,000. 
As of 1992, the most recent figures available, there were 85,006 
governmental entities in the United States.
    10. For ``small business'' determinations in this context, the SBA 
has established a definition of small elementary and secondary schools 
and small libraries as those with under $5 million in annual revenues. 
Other entities of this sort may be considered small under the other two 
prongs of the RFA. The most reliable source of information regarding 
the total number of kindergarten through 12th grade (K-12) schools and 
libraries nationwide of which we are aware appears to be data collected 
by the United States Department of Education and the National Center 
for Educational Statistics. Based on that information, it appears that 
there are approximately 86,221 public and 26,093 private K-12 schools 
in the United States (SIC 8211). It further appears that there are 
approximately 15,904 libraries, including branches, in the United 
States (SIC 8231). Although it seems certain that not all of these 
schools and libraries would qualify as small entities under the SBA's 
determination, we are unable at this time to estimate with greater 
precision the number of small schools and libraries that would qualify 
as small entities under the definition. Consequently, we estimate that 
there are fewer than 86,221 public and 26,093 private schools and fewer 
than 15,904 libraries that may be affected by the decisions and rules 
adopted in this Order.
    11. Neither the Commission nor the SBA has developed a definition 
of small, rural health care providers. Section 254(h)(5)(B) defines the 
term ``health care provider'' and sets forth the seven categories of 
health care providers eligible to receive universal service support. We 
estimate that there are: (1) 625 ``post-secondary educational 
institutions offering health care instruction, teaching hospitals, and 
medical schools,'' including 403 rural community colleges, 124 medical 
schools with rural programs, and 98 rural teaching hospitals; (2) 1,200 
``community health centers or health centers providing health care to 
migrants;'' (3) 3,093 ``local health departments or agencies'' 
including 1,271 local health departments and 1,822 local boards of 
health; (4) 2,000 ``community mental health centers;'' (5) 2,049 ``not-
for-profit hospitals;'' and (6) 3,329 ``rural health clinics.'' We do 
not have sufficient information to make an estimate of the number of 
consortia of health care providers at this time. The total of these 
categorical numbers is 12,296. Consequently, we estimate that there are 
fewer than 12,296 health care providers potentially affected by the 
rules in this Order. For the purposes of ``small business'' analysis, 
we note that

[[Page 56120]]

according to the SBA definition, hospitals must have annual gross 
receipts of $5 million or less to qualify as a small business concern. 
There are approximately 3,856 hospital firms, of which 294 have gross 
annual receipts of $5 million or less. Although some of these small 
hospital firms may not qualify as rural health care providers, we are 
unable at this time to estimate with greater precision the number of 
small hospital firms which may be affected by this Order. Consequently, 
we estimate that there are fewer than 294 hospital firms affected by 
this Order.
    12. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements. This order will impose no additional 
reporting, recordkeeping or other compliance requirements on small 
entities.
    13. Steps Taken to Minimize the Significant Economic Impact on 
Small Entities and Significant Alternatives Considered. As explained in 
the Order, based on the nearly unanimous comments received in response 
to the September 10 Public Notice, the Commission concludes that all 
applications filed during the window will be treated as if 
simultaneously received. We find that adopting such a window period 
will best serve the needs of applicants for universal service 
discounts, and will assist the administrative corporations in 
processing these requests in a timely manner. The Commission finds that 
the window will reduce pressure on applicants to submit their contracts 
at the earliest possible moment and, thus, will improve the accuracy 
and care with which these contracts are negotiated and the accompanying 
forms are completed. By providing additional time to complete contract 
negotiations after the four-week competitive bid waiting period, a 
window will allow schools to negotiate their contracts with greater 
care. Further, this window will reduce disparities between applicants 
with substantial administrative resources and applicants with fewer 
resources, such as small schools, libraries, and health care providers. 
We recognize, as noted by the commenters, that this window will not 
eliminate all disparities among applicants. The Commission adopted 
annual funding caps, $2.25 billion for schools and libraries and $400 
million for health care providers, because it estimated that these 
monies would be sufficient for all applicants during the funding year. 
We emphasize that we have no reason to revise these estimates and have 
no reason to believe that either of the caps will be reached during the 
initial filing period, nor at any other point during the funding 
period. We are adopting a window primarily to allow applicants 
sufficient time to negotiate contracts properly and submit complete 
filings.
    14. The Commission will send a copy of the Order, including this 
FRFA, in a report to be sent to Congress pursuant to the Small Business 
Regulatory Enforcement Fairness Act of 1996. A copy of the Order and 
this FRFA will also be published in the Federal Register and will be 
sent to the Chief Counsel for Advocacy of the Small Business 
Administration.

List of Subjects in 47 CFR Part 54

    Libraries, Schools, Healthcare providers, Telecommunications, 
Telephone.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Rule Changes

    1. Part 54 of Title 47 of the Code of Federal Regulations (CFR) is 
amended as follows:

PART 54--UNIVERSAL SERVICE

    2. Section 54.507 is amended by adding the last three sentences to 
paragraph (c) to read as follows:


Sec. 54.507  Cap.

* * * * *
    (c) Requests. * * * The Schools and Libraries Corporation shall 
implement an initial filing period that treats all schools and 
libraries filing within that period as if they were simultaneously 
received. The initial filing period shall begin on the date that the 
Schools and Libraries Corporation begins to receive applications for 
support, and shall conclude on a date to be determined by the Schools 
and Libraries Corporation. The Schools and Libraries Corporation may 
implement such additional filing periods as it deems necessary.
* * * * *
    3. Section 54.623 is amended by adding the last three sentences to 
paragraph (c) to read as follows:


Sec. 54.623  Cap.

* * * * *
    (c) Requests. * * * The Rural Health Care Corporation shall 
implement an initial filing period that treats all health care 
providers filing within that period as if they were simultaneously 
received. The initial filing period shall begin on the date that the 
Rural Health Care Corporation begins to receive applications for 
support, and shall conclude on a date to be determined by the Rural 
Health Care Corporation. The Rural Health Care Corporation may 
implement such additional filing periods as it deems necessary.
* * * * *
[FR Doc. 97-28612 Filed 10-28-97; 8:45 am]
BILLING CODE 6712-01-P