[Federal Register Volume 68, Number 141 (Wednesday, July 23, 2003)]
[Rules and Regulations]
[Pages 43472-43473]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-18640]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket Nos. 96-45 and 97-21; FCC 03-161]


Request for Immediate Relief Filed by the State of Tennessee; 
Federal-State Joint Board in Universal Service; Changes to the Board of 
Directors of the National Exchange Carrier Association, Inc.

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission has 
under consideration a Request for Immediate Relief filed by the State 
of Tennessee (Tennessee). Tennessee seeks approval to change its 
service provider for Funding Year 2002 of the schools and libraries 
universal service support mechanism, before the Schools and Libraries 
Division (SLD) of the Universal Service Administrative Company (USAC) 
has issued a Funding Commitment Decision Letter (FCDL) to Tennessee for 
Funding Year 2002. For the reasons set forth below, we grant 
Tennessee's Petition in part, and instruct USAC to process Tennessee's 
request.

FOR FURTHER INFORMATION CONTACT: Romanda Williams, Attorney, 
Telecommunications Access Policy Division, Wireline Competition Bureau, 
(202) 418-7400, TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
in CC Docket Nos. 96-45 and 97-21; FCC 03-161 released on July 2, 2003. 
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. The Federal Communications Commission has under consideration a 
Request for Immediate Relief filed by the State of Tennessee 
(Tennessee). Tennessee seeks approval to change its service provider 
for Funding Year 2002 of the schools and libraries universal service 
support mechanism, before the Schools and Libraries Division (SLD) of 
the Universal Service Administrative Company (USAC) has issued a 
Funding Commitment Decision Letter (FCDL) to Tennessee for Funding Year 
2002. For the reasons set forth below, we grant Tennessee's Petition in 
part, and instruct USAC to process Tennessee's request in accordance 
with this Order.

II. Discussion

    2. We conclude that it is appropriate to grant, in part, 
Tennessee's request by modifying the Good Samaritan policy in this 
limited instance. We direct USAC to process Tennessee's application and 
Good Samaritan election in accordance with the conditions set forth in 
this Order.
    3. The Commission takes seriously all allegations of waste, fraud, 
and abuse. We are fully committed to maintaining the integrity of the 
schools and libraries support mechanism so that we adequately discharge 
our statutory obligation to preserve and advance universal service. At 
the same time, we recognize that inaction on a funding request during 
the pendency of a criminal investigation may have the effect of 
penalizing parties that are in no way implicated in potential 
wrongdoing. Based on the circumstances presented, we conclude that it 
is justified in this instance to allow Tennessee to substitute service 
providers for purposes of passing through payments to subcontractors.
    4. In reaching this decision, we find several factors persuasive. 
First, we are not aware of any allegations of waste, fraud, abuse, or 
other wrongdoing relating to any of the subcontractors that have 
provided service under the Education Networks of America, Inc. (ENA) 
contract, or, for that matter, the award of the specific ENA contract 
itself. The relevant subcontractors have provided service in good faith 
to the schools of Tennessee, in reliance on the contractual agreement 
between ENA and Tennessee. Second, in granting the requested relief to 
Tennessee, the risk of improperly paying a potential wrongdoer is 
diminished because, as discussed more fully below, no funds will be 
paid to ENA pending further developments in the ongoing investigation. 
Third, we find it significant that Tennessee was not in a position to 
take any action to protect its ability to receive universal service 
discounts in Funding Year 2002. The investigation involving ENA was 
made public five months after the commencement of the funding year, 
long after the filing window for Funding Year 2002 has closed, and long 
after

[[Page 43473]]

Tennessee had entered into a contract with ENA for that funding year.
    5. We conclude that, in light of the specific circumstances and the 
enumerated safeguards, it is appropriate to apply a modification of the 
Good Samaritan policy in this instance. We instruct USAC to grant 
Tennessee's request to substitute a common carrier as its Good 
Samaritan service provider for Funding Year 2002, consistent with its 
existing procedures for Good Samaritan providers and to process 
Tennessee's funding request. USAC shall determine whether the selected 
common carrier meets its existing criteria for identifying a substitute 
service provider. If USAC determines that Tennessee's application for 
Funding Year 2002 otherwise complies with the rules of the schools and 
libraries program, USAC shall issue a funding commitment to Tennessee. 
Upon determining that all of the invoices submitted by ENA's 
subcontractors comply with program rules and procedures, USAC then may 
disburse funds to the designated common carrier for payment to ENA's 
subcontractors. USAC should determine the identities of the 
subcontractors, their portion of the contract, and the portion 
associated with services provided by ENA. USAC should ascertain what 
services have been rendered, the total cost of those services, and the 
amount that Tennessee has actually paid for the services rendered. USAC 
may disburse funds for services delivered until the end of Funding Year 
2002.
    6. We also instruct USAC to set aside on ENA's account any funds 
that would have been paid to ENA to compensate it directly for its 
services under the Tennessee contract, but we do not authorize any 
payment to ENA at this time. We do not know how long the pending 
investigation may continue, and cannot predict its ultimate resolution. 
Absent an indictment or other public action, it may be difficult to 
determine whether the relevant authorities have concluded their 
investigation. We therefore cannot specify at this time the 
circumstances under which it would be appropriate for Tennessee or ENA 
to petition for reimbursement of funds owed to ENA for services 
rendered pursuant to ENA's Funding Year 2002 contract with Tennessee. 
At the same time, we expressly contemplate that ENA should have the 
opportunity to make its case at some future date that the remaining 
funds should be released to it for services rendered. If, however, ENA 
ultimately is found either civilly or criminally liable for any actions 
arising out of its participation in the schools and libraries program, 
the Commission shall initiate debarment proceedings pursuant to the 
rules adopted in the Commission's most recent order relating to the 
schools and libraries universal service mechanism.
    7. We deny Tennessee's request that payments be made to its 
selected Good Samaritan provider to cover the salaries of certain key 
ENA employees who are necessary to keep the network operational for the 
remainder of the school year. We remain concerned about any funds going 
to persons currently employed by ENA at this point, especially given 
the percentage of funding that Tennessee asserts is required to pay 
these individuals. We encourage Tennessee to explore alternative 
arrangements to ensure that its network continues to support the 
educational mission of the state.
    8. In reaching this decision, we seek to balance USAC's proper 
caution in acting on a funding request that may be associated with a 
law enforcement investigation with the equally important objective of 
avoiding potentially harmful effects on third parties. We recognize 
that the circumstances surrounding other investigations may vary 
significantly. In granting this petition, we emphasize the narrowness 
of this fact-specific determination. We do not intend our action today 
to affect the efficient administration of this universal service 
support mechanism.
    9. In conclusion, we emphasize that we seek to guard against waste, 
fraud and abuse, while ensuring that universal service is preserved and 
advanced. We recognize that the ongoing investigation may call into 
question compliance with Commission rules and requirements. If it is 
ultimately determined that Tennessee, ENA, or other party has violated 
any program requirements, the Commission shall take all appropriate 
actions to address that wrongdoing, including, if merited, seeking 
reimbursement of disbursed funds. It remains incumbent upon the 
applicant to ensure its compliance with all program rules. But we 
decline to relegate the Tennessee Funding Year 2002 application to 
limbo indefinitely, during the pendency of this ongoing investigation.

III. Ordering Clause

    10. Pursuant to sections 1-4, and 254 of the Communications Act of 
1934, 47 U.S.C. 151-154 and 254, and Sec.  54.503 of the Commission's 
rules, that the Petition for Immediate Relief filed by the State of 
Tennessee on April 17, 2003, is granted to the extent provided herein. 
We instruct SLD to process Tennessee's Funding Year 2002 application 
and, if appropriate, disburse funds to the designated Good Samaritan 
provider, as provided herein.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.
[FR Doc. 03-18640 Filed 7-22-03; 8:45 am]
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