[Federal Register Volume 64, Number 109 (Tuesday, June 8, 1999)]
[Rules and Regulations]
[Pages 30440-30442]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-14488]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket No. 96-45; FCC 99-121]


Federal-State Joint Board on Universal Service

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, we reconsider, on our own motion, the 
Commission's decision governing the amount of money that may be 
collected during the second six months of 1999 and the first six months 
of 2000 to fund the second year of the federal universal service 
support mechanisms for schools, libraries, and rural health care 
providers. In this Order, we direct the Universal Service 
Administrative Company (USAC or the Administrator) to collect no more 
than $562.5 million per quarter for the third and fourth quarters of 
1999 and the first and second quarters of 2000 to support the schools 
and libraries universal service support mechanism, and to limit 
collections to no more than $3 million per quarter for the third and 
fourth quarters of 1999 and the first and second quarters of 2000 to 
support the rural health care universal service support mechanism.

DATES: Effective June 8, 1999.

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

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
document released on May 28, 1999. 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 Order, we reconsider, on our own motion, the 
Commission's decision governing the amount of money that may be 
collected during the second six months of 1999 and the first six months 
of 2000 to fund the second year of the federal universal service 
support mechanisms for schools, libraries, and rural health care 
providers. We find that we should set the collection rate for the 
schools and libraries support mechanism at the $2.25 billion cap 
adopted in the Universal Service Order, 62 FR 32862 (June 17, 1997), 
and that we should modify the collection rate for the rural health care 
support mechanism by setting a collection level of $12 million. 
Although we modify the collection rate for the rural health care 
support mechanism, we do not revise the annual $400 million cap for the 
rural health care support mechanism adopted in the Universal Service 
Order. In addition, we do not revise the rules of priority adopted in 
the Fifth Order on Reconsideration, 63 FR 43088 (August 12, 1998), and 
the Eleventh Order on Reconsideration to govern the schools and 
libraries support mechanism.
    2. In this Order, we direct the Universal Service Administrative 
Company (USAC or the Administrator) to collect no more than $562.5 
million per quarter for the third and fourth quarters of 1999 and the 
first and second quarters of 2000 to support the schools and libraries 
universal service support mechanism, and to limit collections to no 
more than $3 million per quarter for the third and fourth quarters of 
1999 and the first and second quarters of 2000 to support the rural 
health care universal service support mechanism. Furthermore, we direct 
USAC neither to commit nor disburse more than $2.25 billion for the 
schools and libraries support mechanism during the third and fourth 
quarters of 1999 and the first two quarters of 2000 or more than $12 
million for the third and fourth quarters of 1999 and the first and 
second quarters of 2000 for the rural health care support mechanism.

II. Collections During the Second Funding Year

    9. The Commission is committed to setting collection levels for the 
second funding year at an amount that will ensure that the 
Administrator is able to allocate support to schools and libraries at a 
level that is equal to or greater than the level of support that was 
allocated in the first funding year. Accordingly, given this commitment 
and estimated demand at $2.435 billion, we believe that the collection 
level should be set at the $2.25 billion cap recommended by the Joint 
Board on Universal Service in the First Recommended Decision, 61 FR 
63778 (December 2, 1996), and adopted by the Commission in the 
Universal Service Order. Consistent with the Commission's conclusion in 
the Universal Service Order, we believe that setting the collection 
level at $2.25 billion reasonably balances the desire to provide 
support to eligible schools and libraries against the costs associated 
with establishing larger support mechanisms. While we recognize that 
some applicants' needs will not be met in full (i.e., for funding of 
all internal connection requests), a collection rate of $2.25 billion 
will be sufficient to fund fully all requests for priority one services 
(telecommunications services and Internet access) and to fund fully 
requests by the neediest schools and libraries for internal connections 
to the same level of discount as was funded in the first program year. 
This approach is consistent with the Commission's commitment to 
ensuring that support will be directed toward the most economically 
disadvantaged schools and libraries, as well as those located in rural 
areas. Accordingly, we direct USAC to collect only as much as required 
by demand, but in no event more than $562.5 million per quarter for the 
third and fourth quarters of 1999 and the first and second quarters of 
2000 to support the schools and libraries universal service support 
mechanism. We also direct the Administrator to commit to applicants no 
more than $2.25 billion for disbursement during the second half of 1999 
and the first half of 2000 to support the schools and libraries support 
mechanism.
    10. We have determined that demand for funding will not increase 
significantly during the second funding year of the rural health care 
support mechanism. As projected by USAC, we anticipate that demand is 
not likely to exceed $12 million total annual support for the second 
funding year. We conclude therefore that we should establish a maximum 
collection level at $12 million for the third and fourth quarters of 
1999 and the first and second quarters of 2000. This collection level 
is consistent with projected demand, and there is no evidence that 
eligible health care providers will require funding beyond this level 
for the second funding year. Accordingly, we direct USAC to limit 
collections to no more than $3 million per quarter for the third and 
fourth quarters of 1999 and the first and second quarters of 2000 for 
the rural health care universal service support mechanism. We also 
direct USAC to commit to applicants no more than $12 million for 
disbursement during the second half of 1999 and the

[[Page 30441]]

first half of 2000 to support the rural health care support mechanism.

III. Regulatory Flexibility Analysis

A. Final Regulatory Analysis

    13. In compliance with the Regulatory Flexibility Act (RFA), this 
Supplemental Final Regulatory Flexibility Analysis (Supplemental FRFA) 
supplements the Final Regulatory Flexibility Analysis (FRFA) included 
in the Universal Service Order, and the Supplemental Final Regulatory 
Flexibility Analyses in the Fifth Reconsideration Order and the Eighth 
Order on Reconsideration, 63 FR 70564 (December 21, 1998), only to the 
extent that changes to the Order adopted here on reconsideration 
require changes in the conclusions reached in the FRFA and the two 
previous Supplemental FRFAs. In the previous analyses, we sought 
written public comment on the potential economic impact on small 
entities.
1. Need for and Objectives of This Order
    14. 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 whose 
principal goal is 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. We reconsider, on our own motion, the amounts 
that will be collected during the second six months of 1999 and the 
first six months of 2000 for the schools and libraries and rural health 
care support mechanisms.
2. Description and Estimates of the Number of Small Entities to Which 
the Rules Adopted in This Order Will Apply
    15. 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.''
    16. In the FRFA of the Universal Service Order, we estimated and 
described in detail the number of small entities that might be affected 
by the new universal service rules. The rules adopted in this Order, 
however, would affect primarily schools, libraries, and rural health 
care providers. Moreover, the adopted rules will allow schools, 
libraries, and rural health care providers to benefit more fully from 
the schools and libraries and rural health care universal service 
support mechanisms, constituting a positive economic impact on these 
small entities.
    17. As noted, small entities includes ``small businesses,'' ``small 
organizations,'' and ``small governmental jurisdictions.'' All three 
types of small entities may also constitute schools, libraries, or 
rural health care providers for the purpose of this analysis. ``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 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. As for ``small 
organizations,'' as of 1992, there were approximately 275,801.
    18. Also, as the Commission specifically noted in the Universal 
Service Order, the SBA defined small elementary and secondary schools 
and small libraries as those with under $5 million in annual revenues. 
The Commission has 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.
    19. 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.
3. Description of the Projected Reporting, Recordkeeping, and Other 
Compliance Requirements
    20. The modifications to the Commission's rules that are set forth 
in this Order relate only to actions that need to be taken by the 
Administrator of the universal service support mechanisms. As a result, 
we do not anticipate any additional burdens or costs associated with 
these proposed rules on any entities, including on small entities.
4. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    21. 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, our current action to amend our 
rules will benefit schools, libraries, and rural health care providers, 
by ensuring that funds are allocated first to the neediest schools and 
libraries and that schools, libraries, and rural health care providers 
will be able to receive any support approved by the Administrator that 
is not the subject of an appeal. 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.
    22. Report to Congress. The Commission will send a copy of the 
Twelfth Order on Reconsideration in CC Docket No. 96-45, including this 
FRFA, in a report to be sent to Congress pursuant to the Small Business 
Regulatory Enforcement Fairness Act of 1996, see 5 U.S.C. 801(a)(1)(A). 
In addition, the Commission will send a copy of the Twelfth Order on 
Reconsideration in CC Docket No. 96-45, to the Chief Counsel for 
Advocacy of the Small Business Administration. A copy of the Twelfth 
Order on

[[Page 30442]]

Reconsideration in CC Docket No. 96-45, and FRFA (or summaries thereof) 
will also be published in the Federal Register. See 5 U.S.C. 604(b).

IV. Ordering Clauses

    23. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 1-4, 201-205, 218-220, 254, 303(r), 403, and 405 
of the Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201-
205, 218-220, 254, 303(r), 403, and 405, 47 CFR 1.108, and section 553 
of the Administrative Procedure Act, 5 U.S.C. 553, and 47 CFR Part 54, 
are revised as set forth, effective upon publication in the Federal 
Register.
    24. It is furthered ordered that the Commission's Office of Public 
Affairs, Reference Operations Division, shall send a copy of this 
Twelfth 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

    For the reasons 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.

    2. Revise Sec. 54.507(a)(1) to read as follows:


Sec. 54.507  Cap.

    (a) * * *
    (1) No more than $562.5 million shall be collected or spent per 
quarter for the third and fourth quarters of 1999 and the first and 
second quarters of 2000 to support the schools and libraries universal 
service support mechanism. No more than $2.25 billion shall be 
collected or disbursed during the twelve month period from July 1, 1999 
through June 30, 2000.
* * * * *
    3. Revise Sec. 54.623(a) to read as follows:


Sec. 54.623  Cap.

    (a) Amount of the annual cap. The annual cap on federal universal 
service support for health care providers shall be $400 million per 
funding year, with the following exceptions. No more than $3 million 
shall be collected or spent per quarter for the third and fourth 
quarters of 1999 and the first and second quarters of 2000 for the 
rural health care universal service support mechanism. No more than $12 
million shall be committed or disbursed during the twelve month period 
from July 1, 1999 through June 30, 2000.
* * * * *
[FR Doc. 99-14488 Filed 6-7-99; 8:45 am]
BILLING CODE 6712-01-P