[Federal Register Volume 64, Number 81 (Wednesday, April 28, 1999)]
[Rules and Regulations]
[Pages 22806-22810]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10702]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket No. 96-45; FCC 99-46]


Federal-State Joint Board on Universal Service

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, we take steps designed to ensure that 
eligible schools, libraries, and rural health care providers gain 
access to, and receive, discounted services throughout the first 
funding cycle. Specifically, we amend our rules to allow schools, 
libraries, and rural health care providers with existing contracts that 
expired prior to December 31, 1998 to extend or renew voluntarily these 
existing contracts without engaging in competitive bidding through June 
30, 1999. As a result, we will permit schools and libraries to be 
eligible for additional discounts on recurring services covered by such 
contracts for the period from January 1, 1999 through June 30, 1999. We 
also amend our rules to allow schools and libraries to use nonrecurring 
services for which the Administrator has approved a request for a 
discount for this funding year, 1998-1999, through September 30, 1999. 
This specific action will not result in increased funding amounts from 
the schools and libraries universal service support mechanism because 
this change in our rules will merely allow schools and libraries a 
longer period of time in which to complete receipt of non-recurring 
services.

DATES: Effective April 28, 1999.

FOR FURTHER INFORMATION CONTACT: Sharon Webber, Attorney, Common 
Carrier Bureau, Accounting Policy Division, (202) 418-7400.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
document released on April 2, 1999. The full text of this document is 
available for public inspection during regular business hour in the FCC 
Reference Center, 445 12th Street, S.W., Washington, D.C. 20554.

Summary of Tenth Order on Reconsideration in CC Docket No. 96-45.

    1. By this Order, we take steps designed to ensure that eligible 
schools, libraries, and rural health care providers gain access to, and 
receive, discounted services throughout the first funding cycle. We 
note that our actions address concerns raised by various schools and 
libraries in light of the Commission's extension of the 1998-99 funding 
year.

I. Limited Exemption From Competitive Bidding

    2. On our own motion, we find that it is in the public interest to 
reconsider the portion of the Fifth Reconsideration Order and the Ninth 
Reconsideration Order, 63 FR 43088 (August 12, 1998), 64 FR 0259 
(January 15, 1999), relating to the limited exemption from competitive 
bidding. After further reflection, informed by the Council of Chief 
State School Officers (CCSSO's) letter, we conclude that it is 
necessary to modify sections 54.511 and 54.604 of our rules, so that 
eligible applicants that filed during the initial filing window and 
were approved for discounts, are exempt from our competitive bidding 
rules for voluntary extensions or renewals of existing contracts to a 
date no later than June 30, 1999. This modification is necessary in 
light of the Commission's decision in the Fifth Reconsideration Order 
to change the funding year from a calendar year to a fiscal year that 
begins July 1st and ends June 30th of each year. The modification 
applies only to the 1998 funding year.
    3. When the Commission changed the funding cycle for schools and 
libraries on June 22, 1998, and for rural health care providers on 
December 31, 1998, the initial filing windows had already closed, and 
some schools, libraries, and rural health care providers had existing 
contracts that were set to end before December 31, 1998. We decided in 
the Fifth Reconsideration Order and the Ninth Reconsideration Order to 
allow exemption from our competitive bidding requirements for voluntary 
extensions of existing contracts expiring between December 31, 1998 and 
June 30, 1999, because it would be ``administratively and financially 
unworkable'' for them to participate in competitive bidding for only a 
six month service period. The Commission did not foresee, however, that 
some applicants that were approved to receive universal service 
discounts had existing contracts that would expire before December 31, 
1998, and would consequently be unable, without engaging in competitive 
bidding for only a six month period, to receive discounts for the 
following six months from January 1, 1999 through June 30, 1999. For 
example, applicants that filed during the filing window and had 
existing contracts expiring between the 1998 filing window closing date 
and December 31, 1998 may have been willing, under the old calendar 
year funding cycle, to forego a month or two of discounts in 
anticipation of discounts for the following year (starting in January). 
Under the new fiscal year funding cycle (starting in July) implemented 
in our orders, however, these applicants would be required to engage in 
competitive bidding for only a six-month period or be left without 
discounts for a period of greater than six months. An unintended 
consequence of the two orders, therefore, was that applicants with 
contracts expiring before December 31, 1998 were treated less favorably 
than applicants with contracts expiring between December 31, 1998 and 
June 30, 1999.
    4. We further note that the policy interest we articulated in the 
Fifth Reconsideration Order and the Ninth Reconsideration Order (i.e., 
eliminating the administrative burden of bidding for only a six-month 
period) exists equally for applicants with existing contracts expiring 
between the closing dates of their filing windows and December 31, 
1998, and those with existing contracts expiring between December 31, 
1998 and June 30, 1999. In light of these considerations, and those 
raised by the CCSSO and various schools, we reconsider our holding in 
the Fifth Reconsideration Order and the Ninth Reconsideration Order and 
find herein that all schools, libraries, and rural health care 
providers that have applied and been approved for discounts for 
eligible services subject to existing contracts that expire between the 
respective closing dates of their 1998 filing window and June 30, 1999, 
are exempt from our competitive bidding requirements for voluntary 
extensions or renewals of these contracts to a date no later than June 
30, 1999. As we noted previously in the Fifth Reconsideration Order it 
would be administratively and financially unworkable for schools, 
libraries, and rural health care providers to participate in 
competitive bidding for only a six-month service period.
    5. In extending this exemption from our competitive bidding 
requirements, we make clear that additional discounts for these 
contracts will only be available for recurring services for the period 
January 1, 1999 through June 30, 1999. With respect to the limited time 
period, we recognize that parties to these contracts were 
unintentionally treated

[[Page 22807]]

differently from those applicants with existing contracts expiring 
after December 31, 1998, but we do not intend to place them in a better 
position than they would have been had we not changed the funding year. 
That is, if applicants were willing to forego a month or two of 
discounted services, in anticipation of a funding year beginning on 
January 1, 1998, we will not now provide discounts for that period in 
which the applicant made such a conscious decision. Therefore, 
recurring services in these approved existing contracts expiring 
between the closing dates of the 1998 filing window and June 30, 1999, 
will be eligible for universal service discounts only for the period 
from January 1, 1999 through June 30, 1999, pursuant to sections 
54.501, 54.511(c) and (d), 54.601, and 54.611 of our rules. Consistent 
with our decision in the Fifth Reconsideration Order and the Ninth 
Reconsideration Order additional discounts will be funded at the 
monthly level approved by the Administrator, as established by letters 
sent to eligible schools and libraries, and rural health care 
providers, through June 30, 1999. We conclude that this approach is 
reasonable because telecommunications services and Internet access are 
generally provided at regular, monthly intervals and are billed on a 
monthly, recurring basis.

II. Nonrecurring Services

    6. We also reconsider on our own motion, for the 1998-1999 funding 
year, the requirement that schools and libraries use nonrecurring, 
discounted services within the funding year for which the discounts 
were received. Specifically, we amend our rules to allow schools and 
libraries to use nonrecurring services for which discounts have been 
committed by the Administrator until September 30, 1999, three months 
beyond the end of this first funding year.
    7. As previously explained, in June 1998, we changed the funding 
year for the schools and libraries universal services support mechanism 
to begin July 1 of a given year and to end June 30 of the following 
year. In addition, we extended our first funding year to coincide with 
this new funding year rule, resulting in an eighteen-month 
implementation funding year (January 1, 1998-June 30, 1999). When we 
changed this first funding year, we explicitly noted that this change 
would ameliorate concerns by applicants that they would be unable to 
receive services of a nonrecurring nature, such as internal 
connections, prior to the close of the funding year. Indeed, we 
recognized that the delay in providing schools and libraries with 
information on the discounts that they were approved to receive from 
service providers pursuant to their requests under section 254 could 
contribute to applicants' inability to receive discounted services 
within the original funding year deadline. We note that this rule 
change applies only to the 1998-99 funding year, and is not applicable 
to subsequent funding cycles.
    8. Since that time, the Administrator has begun to inform schools 
and libraries about their eligibility to receive discounted services 
and the availability of funds to cover such discounted services. 
Although the Administrator proceeded at a reasonable pace, we are 
concerned that some schools and libraries that will be approved to 
receive discounted services may have been informed by the Administrator 
rather late in the funding year. Because the schools and libraries 
support mechanism was first implemented in this 1998-99 funding year, 
we did not anticipate these initial delays. Indeed, the Administrator 
continued to notify schools of their eligibility to receive discounted 
services and the availability of funds to cover the provision of such 
services through February of this year.
    9. As recently highlighted by the CCSSO, such schools and libraries 
quite reasonably may not be able to complete the prerequisites 
necessary to receive nonrecurring discounted services by June 30, 1999, 
the end of this funding year. For example, some schools and libraries 
may have been reluctant to initiate the installation of internal 
connections without first being notified by the Universal Service 
Administrator of approval of their requested discounts for these 
nonrecurring services. We believe it would be unduly harsh to insist 
that those schools and libraries forgo these nonrecurring discounted 
services, solely because they were not notified of their eligibility 
for such discounted services, within a time frame that would allow them 
to take advantage of such services. Such schools and libraries should 
not be penalized for merely being cautious about taking such services 
without full information as to how they would pay for the services.
    10. In addition, as we noted in the Fifth Reconsideration Order 
many nonrecurring services may need to be performed while children are 
not in school. Thus, schools notified in February of their 
qualification for these discounted services have little opportunity to 
receive such services between now and the end of this funding year. 
Indeed, for many schools, the only time available to receive 
nonrecurring services may be at the close of school, which may run 
close to the end of the funding year. Moreover, although schools and 
libraries should have contracts in place to begin the work necessary to 
ensure service can be taken, actually having the necessary personnel on 
site to complete the contract by June 30, 1999, could prove difficult, 
if not impossible. Giving schools and libraries additional time in 
which to complete delivery of nonrecurring services will address these 
concerns. We note that, with respect to this change, we are not 
increasing the amount of discounts that schools and libraries may 
receive for nonrecurring services in 1998-99 beyond those already 
anticipated by the Administrator; we are merely providing schools and 
libraries with additional time in which to complete their receipt of 
these discounted nonrecurring services. Such nonrecurring services must 
have been requested within the initial filing window and approved by 
the Administrator for this funding year, 1998-1999.
    11. In order to ensure equitable treatment for recipients of 
discounts for nonrecurring services, we also adopt a limited extension 
of our exemption from competitive bidding for existing contracts with 
respect to these nonrecurring services. Contracts exempt from 
competitive bidding that will expire by June 30, 1999, may be 
voluntarily extended with respect to nonrecurring services for which 
discounts have been approved by the Administrator for the funding year 
1998-1999, until September 30, 1999. This extension applies only to the 
period during which schools and libraries may receive nonrecurring 
services for which discounts have been approved by the Administrator 
for the first funding year; it does not provide additional discount 
funds. Thus, parties to such contracts may extend to September 30, 1999 
the date by which nonrecurring services approved for discounts may be 
received without complying with the competitive bidding process. 
Parties may not, however, extend other provisions beyond the dates 
established by our rules without complying with the competitive bidding 
process.
    12. We believe these actions will ensure that schools and libraries 
are provided the ability to access ``advanced telecommunications and 
information services.'' At the same time, these changes will not 
undermine the efficacy of the schools and libraries universal service 
support mechanism, because they will not adversely affect the 
administration of that mechanism. Nor

[[Page 22808]]

will these actions financially overburden the schools and libraries 
universal support mechanism because they require no additional funding; 
rather, they merely allow collected funds to be used within a 
reasonable time period.

III. Effective Date of Rules

    13. In this Order, as noted, we adopt amendments to our exemption 
from competitive bidding requirements (sections 54.511 and 54.604 of 
our rules) so that schools, libraries, and rural health care providers 
that filed applications within the 75-day initial filing window may be 
exempt from competitive bidding requirements for voluntary extensions 
or renewals of existing contracts to a date no later than June 30, 
1999. The limited exemption from competitive bidding for voluntary 
extensions or renewals of existing contracts that would otherwise 
expire between the closing dates of the 1998 filing window and June 30, 
1999, will be available only through June 30, 1999. Further, we adopt 
amendments to sections 54.507(b) and 54.511(d), with respect to 
nonrecurring services. These rule changes will make it less difficult 
for schools and libraries to receive eligible, discounted services 
pursuant to section 254 of the Communications Act of 1934, as amended. 
Pursuant to the Administrative Procedure Act, we find that we should 
depart from the general requirement that final rules take effect not 
less than thirty days after their publication in the Federal Register, 
because these substantive rule changes grant an exemption and 
``relieve[. . .] a restriction.'' We conclude that these new rules will 
take effect upon the date of their publication in the Federal Register.

IV. Supplemental Final Regulatory Flexibility Analysis

    14. In compliance with the Regulatory Flexibility Act (RFA), and 
the Initial Regulatory Flexibility Analysis (IRFA) that accompanied the 
Collection Public Notice, 63 FR 27542 (May 19, 1998), in the Federal 
Register, this Supplemental Final Regulatory Flexibility Analysis 
(SFRFA) supplements the Final Regulatory Flexibility Analysis (FRFA) 
included in the Universal Service Order, 62 FR 32862 (June 17, 1997), 
and the Supplemental Final Regulatory Flexibility Analyses in the Fifth 
Reconsideration Order and the Ninth Reconsideration Order only to the 
extent that changes to the Order adopted here on reconsideration 
require changes in the conclusions reached in the FRFA in the Universal 
Service Order and the Supplemental Final Regulatory Flexibility 
Analyses in the Fifth Reconsideration Order and Ninth Reconsideration 
Order. This FRFA was preceded by an Initial Regulatory Flexibility 
Analysis (IRFA) incorporated in the Notice of Proposed Rulemaking and 
Order Establishing the Joint Board (NPRM), prepared in connection with 
the Recommended Decision, which sought written public comment on the 
proposals in the NPRM and the Recommended Decision.
    15. To the extent that any statement contained in this Supplemental 
Final Regulatory Flexibility Analysis is perceived as creating 
ambiguity with respect to our rules or statements made in preceding 
sections of this Order, the rules and statements set forth in those 
preceding sections shall be controlling.
A. Need for and Objectives of this Report and Order
    16. The Commission is required by section 254 of the Act to 
promulgate rules to implement promptly the universal service provisions 
of section 254. On May 8, 1997, the Commission adopted rules intended, 
inter alia, to reform our system of universal service support 
mechanisms so that universal service is preserved and advanced as 
markets move toward competition. In this Order, we reconsider one 
aspect of those rules. Specifically, in order to give consistent 
treatment to all schools, libraries, and rural health care providers 
that applied for discounts during the 75-day initial filing window, we 
amend sections 54.511(d) and 54.604 of our rules, so that all 
applicants that filed for support during the initial filing window may 
be exempt from our competitive bidding rules for voluntary extensions 
or renewals of existing contracts to a date no later than June 30, 
1999. This, we find, is in the public interest.
    17. In addition, in order to avoid penalizing schools and libraries 
for any caution they exhibited in using nonrecurring services without 
full information as to how they would pay for them, we amend section 
54.507 of our rules to allow schools and libraries for which the 
Administrator approved discounts on eligible nonrecurring services to 
receive such services through September 30, 1999. To provide equitable 
treatment, we amend section 54.511(d) of our rules to allow a limited 
extension of our exemption from the competitive bidding rules for 
voluntary extensions on existing contracts with respect to nonrecurring 
services. Contracts exempt from competitive bidding that will expire by 
June 30, 1999 may be voluntarily extended with respect to nonrecurring 
services for which discounts have been approved by the Administrator 
for the funding year 1998-1999 until September 30, 1999. As explained 
above, we find these actions will ensure that schools and libraries are 
provided the ability to access ``advanced telecommunications and 
information services,'' consistent with section 254.
B. Summary and Analysis of the Significant Issues Raised by Public 
Comments in Response to the IRFA
    18. The Commission received several letters from various small 
governmental entities encouraging us to reconsider our rules regarding 
the exemption of contracts from competitive bidding, and the 
application of discounts to nonrecurring services beyond the first 
funding period. As a result, in this Order, we have reconsidered our 
limited exemption from competitive bidding and have determined that all 
schools, libraries, and rural health care providers that have applied 
and been approved for discounts in this initial funding cycle, may be 
exempt from competitive bidding for voluntary extensions or renewals of 
existing contracts to a date no later than June 30, 1999, where such 
contracts otherwise would expire between the closing date of their 1998 
filing windows and June 30, 1999. We further amend our rules to allow 
schools and libraries to receive nonrecurring services for which they 
applied and have received approval for discounts from the Administrator 
for the funding year 1998-1999, through September 30, 1999.
C. Description and Estimates of the Number of Small Entities to Which 
the Rules Adopted in This Order Will Apply
    19. 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 which: (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

[[Page 22809]]

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 such jurisdictions 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 (91 percent) are small entities.
    20. As noted in the FRFA at paragraphs 890-925 of the Universal 
Service Order, there are a number of small entities that would be 
affected by the new universal service rules. The rules adopted in this 
Order, however, would affect primarily only schools, libraries, and 
rural health care providers. Moreover, because the rules would relieve 
restrictions on these entities, we believe these rules would not have a 
significant impact on these small entities. We further describe and 
estimate, however, the number of small governmental jurisdictions, 
small businesses, and small organizations that may potentially be 
affected by the rules adopted in this Order.
    21. The Commission specifically noted in the Universal Service 
Order that the SBA defined small elementary and secondary schools and 
small libraries as those with under $5 million in annual revenues. The 
Commission further estimated 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 the Universal Service 
Order. We believe that these same small entities may be affected 
potentially by the rules adopted in this Order.
    22. In addition, the Commission noted in the Universal Service 
Order that 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 estimated that there are fewer than 12,296 health 
care providers potentially affected by the rules in the Universal 
Service Order. We note that these small entities may potentially be 
affected by the rules adopted in this Order.
D. Summary Analysis of the Projected Reporting, Recordkeeping, and 
Other Compliance Requirements
    23. In the FRFA to the Universal Service Order, we described the 
projected reporting, recordkeeping, and other compliance requirements 
associated with the Schools and Libraries section, the Rural Health 
Care Provider section, and the Administration section of the Universal 
Service Order. We provide the following analysis of the new 
requirements adopted in this present Order.
    24. Under the rule changes adopted herein, those schools, 
libraries, and rural health care providers that filed applications 
within the 75-day initial filing window, are exempt through June 30, 
1999 from our competitive bidding rules for voluntary extensions or 
renewals of their existing contracts for telecommunications and 
Internet access services. This revised rule is in the public interest 
because it provides consistent treatment to all applicants that filed 
during the 75-day initial filing window, regardless of when their 
existing contracts were set to expire. Further, as noted, this revised 
rule also eliminates the administrative burden for schools, libraries, 
and rural health care providers, of bidding for only a six month 
period. This change will not have a significant impact on the 
reporting, recordkeeping, and other compliance requirements for the 
schools, libraries, and rural health care support mechanisms, and may 
reduce paperwork for some schools, libraries, rural health care 
providers, and other entities.
    25. In addition, we adopt rule changes to allow schools and 
libraries for which the Administrator approved discounts on eligible 
nonrecurring services to receive such services through September 30, 
1999. We also allow a limited extension of our exemption from the 
competitive bidding rules for voluntary extensions on existing 
contracts with respect to nonrecurring services. Contracts exempt from 
competitive bidding that will expire by June 30, 1999 may be 
voluntarily extended with respect to nonrecurring services for which 
discounts have been approved by the Administrator for the funding year 
1998-1999 until September 30, 1999. These rule changes will allow 
schools and libraries additional time in which to receive discounted, 
nonrecurring services. These changes also will not have a significant 
impact on the reporting, recordkeeping, and other compliance 
requirements for the schools and libraries, and may reduce paperwork 
for some schools and libraries, and other entities.
E. Steps Taken to Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    26. In the FRFA to the Universal Service Order, the Commission 
described the steps taken to minimize the significant economic impact 
on a substantial number of small entities consistent with stated 
objectives associated with the Schools and Libraries section, the Rural 
Health Care Provider section, and the Administration section of the 
Universal Service Order. As described above, our current action to 
amend our rules regarding exemptions from competitive bidding will 
benefit schools, libraries, and rural health care providers, by 
eliminating the administrative burden of bidding for services for only 
a six-month period through June 30, 1999. In addition, our decision to 
amend our rules to allow schools and libraries for which the 
Administrator approved discounts on eligible nonrecurring services to 
receive such services through September 30, 1999 will benefit schools 
and libraries because it will provide them additional time in which to 
receive such services. Moreover, our decision to allow a limited 
extension of our exemption from the competitive bidding rules for 
voluntary extensions on existing contracts with respect to nonrecurring 
services will also provide additional time in which to receive such 
services without the potential administrative burden of bidding for 
such services. We believe that these amended rules fulfill the 
statutory mandate to enhance access to telecommunications services for 
schools, libraries, and rural health care providers, and fulfill the 
statutory principle of providing quality services at ``just, 
reasonable, and affordable rates,'' without imposing unnecessary 
burdens on schools, libraries, rural health care providers, or service 
providers, including small entities.

V. Ordering Clauses

    27. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 1-4, 201-205, 254, 303(r), 403, and 405 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201-205, 
254, 303(r), 403, and 405, and 47 CFR 1.108 of the Commission's rules, 
the Tenth Order on Reconsideration in CC Docket No. 96-45 is adopted.
    28. It is further ordered that, pursuant to the authority contained 
in sections 1-4, 201-205, 254, 303(r), 403, and 405 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201-205,

[[Page 22810]]

254, 303(r), 403, and 405, and 47 CFR 1.108 of the Commission's rules, 
part 54 of the Commission's rules, 47 CFR part 54, are amended, as set 
forth.
    29. It is further ordered that, because the rule changes set forth 
below grant an exemption and relieve a restriction, the rule changes 
are effective immediately upon publication in the Federal Register.
    30. It is further ordered that the Commission's Office of Public 
Affairs, Reference Operations Division, shall send a copy of this Tenth 
Order on Reconsideration, including the Supplemental Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects in 47 CFR Part 54

    Healthcare providers, Libraries, Reporting and recordkeeping 
requirements, Schools, Telecommunications, Telephone.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Rule Changes

    Part 54 of Title 47 of the Code of Federal Regulations is amended 
to read 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.

    2. Revise Sec. 54.507(b) to read as follows


Sec. 54.507  Cap.

* * * * * *
    (b) A funding year for purposes of the schools and libraries cap 
shall be the period July 1 through June 30. For the initiation of the 
mechanism only, the eighteen month period from January 1, 1998 to June 
30, 1999 shall be considered a funding year. For the 1998-99 funding 
year:
    (1) Schools and libraries filing applications within the initial 
75-day filing window, and receiving approval for discounts on recurring 
services, shall receive funding for requested recurring services 
through June 30, 1999; and
    (2) Schools and libraries filing applications within the initial 
75-day filing window, and receiving approval for discounts on eligible 
nonrecurring services, may receive those nonrecurring services subject 
to the approved discount amounts through September 30, 1999.
* * * * * *
    3. Revise Sec. 54.511(d) to read as follows


Sec. 54.511  Ordering services.

* * * * * *
    (d)(1) The exemption from the competitive bid requirements set 
forth in paragraph (c) of this section shall not apply to voluntary 
extensions or renewals of existing contracts, with the exception that 
an eligible school or library as defined under Sec. 54.501 or 
consortium that includes an eligible school or library, that filed an 
application within the 75-day initial filing window for 1998 (January 
30, 1998-April 15, 1998), may voluntarily extend or renew, to a date no 
later than June 30, 1999, an existing contract that otherwise would 
terminate between April 15, 1998 and June 30, 1999.
    (2) For the 1998-1999 funding year, a contract exempt from the 
competitive bid requirement, as described in paragraph (c) of this 
section, may be voluntarily extended to September 30, 1999 only to the 
extent necessary to permit delivery of the nonrecurring services 
subject to that contract and for which discounts have been approved.
    4. Revise Sec. 54.604(d) to read as follows


Sec. 54.604  Existing contracts.

* * * * * *
    (d) The exemption from competitive bid requirements set forth in 
paragraph (a) of this section shall not apply to voluntary extensions 
or renewals of existing contracts, except to the extent that an 
eligible rural health care provider as defined in Sec. 54.601 or 
consortium that includes an eligible health care provider, and that 
filed an application within the 75-day initial filing window for 1998 
(May 1, 1998--July 14, 1998), may voluntarily extend or renew, to a 
date no later than June 30, 1999, an existing contract that otherwise 
would terminate between July 14, 1998 and June 30, 1999.

[FR Doc. 99-10702 Filed 4-27-99; 8:45 am]
BILLING CODE 6712-01-P