[Federal Register Volume 66, Number 89 (Tuesday, May 8, 2001)]
[Proposed Rules]
[Pages 23204-23208]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-11514]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[CC Docket No. 96-45, FCC 01-143]
Federal-State Joint Board on Universal Service
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rule.
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SUMMARY: In this document, the Commission proposes a revised method for
allocating discounts to schools and libraries under the federal
universal service mechanism when there is insufficient funding to
support all requests for internal connections. The Commission also
seeks comment on proposed administrative modifications to 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.
DATES: Comments are due on or before May 23, 2001. Reply comments are
due on or before May 30, 2001.
ADDRESSES: All filings must be sent to the Commission's Secretary,
Magalie Roman Salas, Office of the Secretary, Federal Communications
Commission, 445 12th Street, S.W., Washington, D.C. 20554. Parties
should also send three paper copies of their filings to Sheryl Todd,
Accounting Policy Division, Common Carrier Bureau, Federal
Communications Commission, 445 Twelfth Street, S.W., Room 5-B540,
Washington, D.C. 20554. Parties who choose to file by paper should also
submit their comments on diskette. These diskettes should be submitted
to Sheryl Todd, Accounting Policy Division, Common Carrier Bureau,
Federal Communications Commission, 445 Twelfth Street, S.W., Room 5-
B540, Washington, D.C. 20554. The diskette should be clearly labeled
with the commenter's name, proceeding, including the lead docket number
in the proceeding (CC Docket No. 96-45), type
[[Page 23205]]
of pleading (comment or reply comment), date of submission, and the
name of the electronic file on diskette. In addition, commenters must
send diskette copies to the Commission's copy contractor, International
Transcription Services, Inc., 1231 20th Street, N.W., Washington, D.C.
20037.
FOR FURTHER INFORMATION CONTACT: Katherine Tofigh, Attorney, Common
Carrier Bureau, Accounting Policy Division, (202) 418-7400.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's
Further Notice of Proposed Rulemaking (FNPRM) in CC Docket No. 96-45
released on April 30, 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, S.W., Washington,
D.C., 20554.
I. Introduction
1. The Commission's rules require schools and libraries to
implement services for which discounts have been committed by the
Administrator within the funding year for which the discounts were
sought. The Commission's May 8, 1997, Universal Service Order, 62 FR
32862 (June 17, 1997), established a calendar funding year (January 1--
December 31) for schools and libraries receiving universal service
support. On September 10, 1997, the Common Carrier Bureau released a
Public Notice, 62 FR 48280, September 15, 1997, seeking comment on
Universal Service Support Distribution Options for School, Libraries,
and Rural Health Care Providers. The Commission subsequently issued its
Fifth Reconsideration Order, 63 FR 38089, July 15, 1998, which changed
the funding year for schools and libraries support to a fiscal year
(July 1-June 30).
2. In the Tenth Reconsideration Order, 64 FR 22806, April 28, 1999,
the Commission extended the deadline for schools and libraries to use
their discounts on non-recurring services from June 30, 1999 to
September 30, 1999, which allowed schools and libraries to implement
non-recurring services in the summer months, when schools were in
recess. On May 4, 2000, the Common Carrier Bureau (Bureau) extended the
Year 2 deadline for schools and libraries to use their discounts on
non-recurring services from June 30, 2000 (the end of the funding
period) to September 30, 2000.
3. In this Further Notice of Proposed Rulemaking (FNPRM), we
propose a revised method for allocating discounts to schools and
libraries under the federal universal service mechanism when there is
insufficient funding to support all requests for internal connections.
Specifically, we seek comment on a proposed rule change 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. With many
schools and libraries having already benefited from several years of
discounts for internal connections under the existing mechanism, we
conclude that it is appropriate to reconsider the rules of priority to
ensure that discounts continue to go to those most in need.
4. We also seek comment on proposed administrative modifications to
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 propose to extend the deadline for receipt of non-
recurring services from June 30, to September 30 following the close of
the funding year. Second, we propose to 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. These minor administrative modifications should provide
applicants with greater flexibility without compromising program
integrity. Finally, on our own motion, we waive the June 30, 2001
deadline for implementation of non-recurring services for all Funding
Year 3 applicants and extend the deadline to September 30, 2001.
II. Discussion
A. Funding Priority for Internal Connections
5. The Commission did not envision demand for the schools and
libraries universal service support mechanism at the level we are
currently experiencing. In the Fifth Order on Reconsideration, and the
Eleventh Order on Reconsideration, 64 FR 33785, June 24, 1999, the
Commission anticipated that the fund would provide full support for
telecommunications services and Internet access, and would provide
support for internal connections for the neediest applicants. In
Funding Year 4, however, the Administrator estimates that there will
not be enough funding for the neediest applicants, who are eligible for
a 90 percent discount. The Commission is committed to ensuring that
discounts under this support mechanism are targeted to the schools and
libraries with the greatest need. Therefore, we believe it is
appropriate to reconsider the Commission's rules of priority to ensure
that support goes to the neediest applicants. The Commission seeks
comments on two options, relating to the distribution of support for
internal connections. The first option would be to maintain the
Commission's rules as currently written, which direct that the
remaining funds be prorated by discount band. The second option would
be 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.
6. Our current rules require that the Administrator allocate the
available funds among applicants in the 90 percent discount level on a
pro rata basis, so that each applicant would receive only a portion of
the amount requested. The Commission has several concerns about the
application of the current rules of priority. If applicants were to
receive only a pro rata portion of the support they requested, schools
and libraries might not receive sufficient funding to permit completion
of a useful system of internal connections. As a result, schools and
libraries would be in a position of hiring contractors to perform only
a portion of an internal connection project. It is possible that some
schools may be unable to complete even part of their internal
connection project, because they are unable to finance the additional
funding burden. The Commission is also concerned that applicants
eligible for 90 percent discounts could receive funding commitments on
internal connections for two years in a row, while other schools that
are also economically disadvantaged, albeit not to the same degree,
could receive no discounts at all. Therefore, some needy schools will
get no support, while others receive support for several consecutive
years. In light of these concerns, we seek comment on whether we should
keep the funding priority rules without modification.
7. The Commission proposes and seeks comment on a second option.
For each funding year, starting with Funding Year 4, funding priority
would be given 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 in order of
discount level. Specifically, for both shared services and site-
specific services, the
[[Page 23206]]
Administrator would examine each application to determine which
individual sites within that application had not received funding for
internal connections in the prior funding year. These individual sites
would be funded in order of discount level. We seek comment on this
proposal.
8. By adopting the proposed rule change, we would be able to fund
requests for internal connections from many needy schools and libraries
that did not receive funding in the previous funding year. As a result,
we would be able to better target discounts to schools and libraries
that are more in need of discounts. We tentatively conclude that this
approach would be more consistent with the Commission's commitment to
ensuring that discounts under this support mechanism are targeted to
the schools and libraries with the greatest need. While we recognize
that some applicants' requests would not be funded during the current
funding year, those applicants could apply for discounts for internal
connections during the following funding year. We also note that the
rule change could be implemented with relative ease, because little or
no additional information would be necessary from the applicants.
Currently, the necessary information relating to individual schools and
libraries is collected as part of Item 22 of the applicant's FCC Form
471.
B. Modification of Implementation Schedule for Non-Recurring Services
9. We also propose to revise the Commission's rules relating to the
implementation of non-recurring services. In doing so, we note that we
have found it necessary to waive the implementation deadline for
nonrecurring services for Funding Years 1 and 2. We again find it
necessary to waive that rule for Funding Year 3. As noted by the Court
of Appeals for the D.C. Circuit, agency rules are presumed valid. The
Commission's rules, however, may be waived for good cause shown, where
the particular facts make strict compliance inconsistent with the
public interest. Waiver of the deadline for implementation of non-
recurring services is therefore appropriate only if special
circumstances warrant a deviation from the general rule, and such a
deviation would serve the public interest.
10. Currently, the Commission's rules require schools and libraries
to implement services for which discounts have been committed by the
Administrator within the funding year the discounts were granted. In
Funding Years 1 and 2, we found it necessary to extend this service
implementation deadline from June 30 to September 30, thereby allowing
schools and libraries to implement non-recurring services in the summer
months, when schools were in recess. We find that many schools and
libraries have been unable to meet the June 30 implementation deadline
in previous years due to a variety of reasons, including delays in
funding commitments and events beyond the service provider's control,
such as manufacturing delays and natural disasters. For these reasons,
we find good cause to waive, on our own motion, the June 30, 2001
deadline for implementation of non-recurring services for all Funding
Year 3 applicants and extend the deadline to September 30, 2001.
11. We conclude that the public interest is best served if all
schools and libraries receiving Funding Year 3 discounts on non-
recurring services have the benefit of an extension of the deadline.
Similar to the Commission's actions in Funding Year 1 and Funding Year
2, we also grant Funding Year 3 applicants a limited exemption from the
Commission's competitive bidding requirements. Contracts for non-
recurring services approved for Funding Year 3 discounts may be
voluntarily extended until September 30, 2001.
12. Based on this record that has necessitated extensions during
the last three funding years, we propose to modify our rules relating
to the use of funds for non-recurring services. We tentatively conclude
that it is appropriate for schools and libraries to have the
flexibility of additional time to implement non-recurring services. We
propose a rule change that would allow schools and libraries to
implement non-recurring services by September 30, following the close
of the funding year. We seek comment on this proposal.
13. For certain qualified applicants who are unable to meet the
September 30 deadline, we propose to extend the deadline for
implementation of non-recurring services. Specifically, we propose to
implement a rule to permit qualified applicants to extend the deadline
for implementation of non-recurring services if they satisfy one of the
following proposed criteria: applicants whose funding commitment
decision letters were issued by the Administrator on or after March 1
of the funding year; applicants who received service provider change
authorizations or service substitution authorizations from the
Administrator on or after March 1 of the funding year; applicants whose
service providers were unable to complete implementation for reasons
beyond the service provider's control; or applicants who have their
funding disbursements delayed while the Administrator investigates
their application for program compliance. Under the proposed rule, if
one of the conditions was satisfied before March 1, they would have
until the subsequent September 30 to complete implementation. If one of
the conditions was satisfied after March 1, applicants would have until
September 30 of the following year to complete implementation. We seek
comment on this proposal.
14. As noted, in each year of the program, the Commission has
ordered a waiver of its rules and extended the deadline for receipt of
non-recurring services. Changing the deadline would provide schools and
libraries, as well as the Administrator, with the certainty of a
deadline that experience has shown is more realistic, based on the
needs of the various program participants. We tentatively conclude that
the proposed rule change provides clarity to the Administrator and
applicants by establishing a 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.
Implementation of this policy should ensure schools and libraries are
not penalized when they are not responsible for missing the
installation deadline. Ultimately, these administrative modifications
to the rules should allow all schools and libraries to schedule
implementation of non-recurring services over the summer months.
15. In addition, we also propose to grant a limited extension of
the Commission's competitive bidding rules for contracts for non-
recurring services. Under this proposal, contracts for non-recurring
services could be voluntarily extended to coincide with the appropriate
deadline for implementation. Parties would not, however, be able to
extend other contractual provisions beyond the dates established by the
Commission's rules without complying with the competitive bidding
process. We seek comment on this proposal.
III. Procedural Matters
A. Initial Regulatory Flexibility Analysis
16. As required by the Regulatory Flexibility Act (RFA), the
Commission has prepared this Initial Regulatory Flexibility Analysis
(IRFA) of the possible significant economic impact on small entities by
the policies and rules proposed in this FNPRM. Written public comments
are requested on this IRFA. Comments must be identified as
[[Page 23207]]
responses to the IRFA and must be filed by the deadlines for comments
on the FNPRM provided. The Commission will send a copy of the FNPRM,
including this IRFA, to the Chief Counsel for Advocacy of the Small
Business Administration (SBA). In addition, the FNPRM and IRFA (or
summaries thereof) will be published in the Federal Register.
1. Need for, and Objectives of, the Proposed Rules
17. In this FNPRM, we propose a revised method for allocating
discounts to schools and libraries under the federal universal service
mechanism when there is insufficient funding to support all requests
for internal connections. Specifically, we seek comment on a proposed
rule change 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.
18. We also seek comment on proposed administrative modifications
to 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 propose to extend the deadline for receipt of non-
recurring services from June 30, to September 30 following the close of
the funding year. Second, we propose to 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.
2. Legal Basis
19. The legal basis for this FNPRM is contained in sections 1
through 4, 201 through 205, 254, 303(r), and 403 of the Communications
Act of 1934, as amended by the Telecommunications Act of 1996, and
Sec. 1.411 of the Commission's rules.
3. Description and Estimate of the Number of Small Entities To Which
Rules Will Apply
20. 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: Is independently owned and
operated; is not dominant in its field of operation; and 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 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 (96 percent) are small entities.
21. 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 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 funding 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
proposed in this FNPRM, under current operation of the program.
4. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
22. The measures under consideration in this FNPRM would, if
adopted, result in no additional reporting.
5. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
23. 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): The
establishment of differing compliance and reporting requirements or
timetables that take into account the resources available to small
entities; the clarification, consolidation, or simplification of
compliance or reporting requirements under the rule for small entities;
the use of performance, rather than design, standards; and an exemption
from coverage of the rule, or part thereof, for small entities.
24. The Commission seeks comment on two alternatives relating to
the allocation of discounts to schools and libraries under the federal
universal service mechanism when there is insufficient funding to
support all requests for internal connections. Under the Commission's
current rules, the Administrator would allocate the available funds
among applicants in the 90 percent discount level on a pro rata basis,
so that each applicant would receive only a portion of the amount
requested. If applicants were to receive only a pro rata portion of the
support they requested, we are concerned that less affluent schools and
libraries would be unable to finance the additional funding burden. We
seek to minimize the impact on schools and libraries with less
resources and propose 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.
25. In addition, the Commission seeks comments on two proposals
relating to the deadline for implementation of non-recurring services.
First, the Commission proposes to extend the deadline for
implementation of non-recurring services from June 30 of each funding
year to September 30. Second, the Commission proposes to establish an
extended deadline for certain qualified applicants who are unable to
meet the September 30 deadline. Under these proposals, we aim to
provide schools and libraries with additional
[[Page 23208]]
time to complete installation and minimize the harm that may affect
small entities due to the shorter deadline.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
26. None.
B. Comment Due Dates and Filing Procedures
27. We invite comment on the issues and questions set forth in the
FNPRM of Proposed Rulemaking and Initial Regulatory Flexibility
Analysis contained herein. Pursuant to applicable procedures set forth
in Secs. 1.415 and 1.419 of the Commission's rules, interested parties
may comment on or before May 23, 2001, and reply comment on or before
May 30, 2001. Comments may be filed using the Commission's Electronic
Comment Filing System (ECFS) or by filing paper copies. See Electronic
Filing of Documents in Rulemaking Proceedings, 63 FR 24,121, May 1,
1998.
V. Ordering Clauses
28. Pursuant to the authority contained in sections 1-4, 201-205,
254, 303(r), and 403 of the Communications Act of 1934, as amended, and
Secs. 0.91, 0.291, 1.3, and 1.411 of the Commission's rules, this
Further Notice of Proposed Rulemaking and Order is adopted.
29. The deadline for the implementation of non-recurring services
in Funding Year 3 of the schools and libraries universal support
mechanism for all applicants is extended from June 30, 2001 to
September 30, 2001.
30. Applicants in Funding Year 3 may extend existing contracts for
non-recurring services until September 30, 2001, without having to
comply with the Commission's competitive bidding requirements.
31. The Commission's Consumer Information Bureau, Reference
Information Center, shall send a copy of this Further Notice of
Proposed Rulemaking and Order, including the Initial Regulatory
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration.
Federal Communications Commission
Magalie Roman Salas,
Secretary.
[FR Doc. 01-11514 Filed 5-7-01; 8:45 am]
BILLING CODE 6712-01-P