[Federal Register Volume 70, Number 210 (Tuesday, November 1, 2005)]
[Rules and Regulations]
[Pages 65850-65861]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-21728]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket Nos. 96-45; 02-6; WC Docket 02-60; 03-109; FCC 05-178]


Federal-State Joint Board on Universal Service

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission takes immediate steps to 
assist the victims of Hurricane Katrina by making available 
approximately $211 million of targeted support from the Universal 
Service Fund (``USF'') for reconstruction and remediation relating to 
the restoration of telecommunications services. We expect that these 
measures will help the victims of Hurricane Katrina recover from the 
catastrophic damage and help the affected communities rebuild.

[[Page 65851]]


DATES: Effective October 14, 2005.

FOR FURTHER INFORMATION CONTACT: Mika Savir, Attorney, Wireline 
Competition Bureau, Telecommunications Access Policy Division, (202) 
418-7400, TTY (202) 418-0484. For additional information concerning the 
information collection(s) contained in this document, contact Judith-B. 
Herman at (202) 418-0214, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order, 
in CC Docket Nos. 96-45; 02-6; WC Docket 02-60; 03-109; FCC 05-178, 
released October 14, 2005. The full text of this document is available 
for public inspection during regular business hours in the FCC 
Reference Center, Room CY-A257, 445 12th Street, SW., Washington, DC 
20554.

I. Introduction

    1. In this Order, we take immediate steps to assist the victims of 
Hurricane Katrina by making available approximately $211 million of 
targeted support from the Universal Service Fund (``USF'') for 
reconstruction and remediation relating to the restoration of 
telecommunications services. We expect that these measures will help 
the victims of Hurricane Katrina recover from the catastrophic damage 
and help the affected communities rebuild. As explained below, because 
of the exigent circumstances, we find good cause to adopt temporary 
order without notice-and-comment in order to assist the Nation's 
disaster relief effort.

II. Order

A. Waiver Standard

    2. Generally, the Commission's rules may be waived for good cause 
shown. Waiver of the Commission's rules is therefore appropriate only 
if special circumstances warrant a deviation from the general rule, and 
such deviation will serve the public interest. As we discuss in more 
detail below, we find that the catastrophic damage to lives and 
property as a result of Hurricane Katrina in the Gulf Coast states and 
the need for expedited restoration of communications presents special 
circumstances for waiving certain universal service rules and that such 
a waiver is in the public interest.
    3. We find that it is appropriate to implement these rules, 
effective upon release of this Order, on a temporary basis to expand 
funding in the affected areas. We find that the circumstances caused by 
Hurricane Katrina create a special need for the Commission to use its 
discretion to provide universal service support to health care 
providers in the affected areas. This support is necessary to address 
the unique circumstances faced by health care providers, schools, 
libraries, service providers, and low-income consumers in the states of 
Alabama, Louisiana, and Mississippi, and the areas where evacuees have 
relocated. The temporary order represents our recognition of the vital 
role played by telecommunications and by telemedicine in responding to 
the needs in the communities affected by Hurricane Katrina. The 
temporary order also furthers the Commission's core responsibility to 
make available a rapid nationwide network for the purpose of responding 
to national crisis situations. For all of these reasons, we find this 
interim relief to be in the public interest.

B. Lifeline/Link-Up Support

1. Need for and Description of Temporary Order
    4. In this Order, we adopt temporary modifications to the low-
income program rules to improve the effectiveness of the low-income 
support mechanism at meeting the needs of victims of Hurricane Katrina. 
Since its inception, Lifeline/Link-Up has provided support for 
telephone service to millions of low-income consumers. Nationally, the 
telephone penetration rate is 92.4 percent, in large part due to the 
success of the Lifeline/Link-Up program and our other universal service 
programs. In light of the catastrophic damage caused by the worst 
natural disaster this country has faced, thousands of people remain 
without basic telephone service. Unless addressed, this lack of access 
to telecommunications will lengthen the already-long period of time 
anticipated for recovery from the damage caused by Hurricane Katrina.
    5. As discussed in more detail below, in this section, we take two 
steps to address this significant problem affecting thousands of 
people. First, under the Lifeline program, we provide for temporary 
support under the federal Lifeline program for eligible 
telecommunications carriers making available a wireless service 
consumer offering to victims of Hurricane Katrina. Second, we provide 
support under the federal Link-Up program to hurricane victims moving 
to temporary housing arrangements and to those who return to permanent 
residences in the affected areas. To ensure victims of Hurricane 
Katrina in need of help receive this assistance, we base the 
eligibility criteria for these initiatives on those used by FEMA to 
provide individual disaster housing assistance to these people and 
entities.
    6. In crafting the temporary order, we are informed by the 
principles of section 254 and our low-income program rules. Section 
254(b) establishes principles upon which the Commission shall base 
policies for the preservation and advancement of universal service. 
Among other things, these principles state that consumers in all 
regions of the Nation, including low-income consumers, should have 
access to telecommunications and information services that are 
reasonably comparable to those services provided in urban areas and 
that are available at rates that are reasonably comparable to rates 
charged in urban areas. These principles also recognize that ensuring 
rates are affordable is a national priority. In light of these 
principles, we conclude that modifying the low-income program by 
providing for a wireless service federal Lifeline consumer offering and 
providing support under the federal Link-Up program for connection 
charges, on a temporary basis, is necessary to assist the disaster 
recovery efforts related to Hurricane Katrina.
    7. Thousands of people left their homes because of the hurricane. 
Many of these people are in temporary shelters or in the process of 
finding interim housing and may be without a permanent home or 
employment for a period of time. To facilitate the access of evacuees 
and other displaced persons to telecommunications services, any person 
approved for individual FEMA housing assistance or determined by FEMA 
to be eligible for such individual housing assistance relating to the 
hurricane will be eligible for federal Lifeline support for a free 
wireless handset and a package of at least 300 minutes of use, not to 
exceed $130 per household, until March 1, 2006.
    8. We find that $130 per household is a reasonable amount of 
support for the purchase of a handset and at least 300 minutes based on 
the variety of the competitive plans available to consumers throughout 
the United States. We note that at least one wireless provider has 
indicated this amount of support is sufficient to serve low-income 
consumers. Moreover, we find that a minimum of 300 minutes of use per 
household will facilitate evacuees and those remaining in the affected 
areas to reconnect with loved ones, and make living, housing, and work 
arrangements in the wake of the hurricane. In addition, we expect that 
upon expiration, customers will retain the wireless phone and in many 
instances, be able to purchase additional minutes at discounted rates. 
Such

[[Page 65852]]

support will help consumers reconnect to the telecommunications network 
as the disaster-struck areas are rebuilt. For purposes of this Order, 
we define ``household'' as one adult and his/her dependents, living 
together in the same residence. We recognize that many families that 
normally live together as one household have been separated due to the 
hurricane and the evacuation process and may represent more than one 
household for this temporary Lifeline support. Our intent in providing 
this support is to assist hurricane victims, regardless of whether they 
are in an intact household, separated from family temporarily, or 
otherwise. To work within the parameters of the existing program, we 
will order this temporary support available to ETCs providing the 
supported wireless service consumer offering. We note that to receive 
the temporary support, wireless carriers cannot require consumers to 
enter into a long-term contract or require service beyond 300 minutes 
or March 1, 2006, whichever is shorter.
    9. We find that these modifications are economically reasonable and 
consistent with the existing framework of the program rules. Under the 
Lifeline program, low-income consumers could receive up to $10 per 
month or $120 per year. Under the temporary order, qualifying consumers 
would receive a $130 benefit, which would also include a handset. We 
note that this relief, combined with the action we took earlier with 
regard to waiver of the geographic porting requirements, would allow 
evacuees to maintain their home phone numbers, and promote continuity 
with regard to personal contacts, employment, education, and housing. 
Under the unique and devastating circumstances caused by the hurricane 
and its aftermath, we conclude that provision of this support, 
including a free wireless handset, is consistent with the purpose of 
section 254 because it is reasonably necessary to ensure that low 
income consumers have immediate access to telecommunications services. 
We further find that this support fulfills the Commission's broader 
mandate to make wire and radio communication service available to all 
people of the United States, and to promote the safety of life and 
property. We use our ancillary authority under Title I to include a 
free wireless handset.
    10. We also adopt temporary order for the Link-Up program to pay 
for certain costs to connect victims of the hurricane to the network. 
Specifically, we will provide funding under the Link-Up program to 
eligible telecommunications carriers to receive, upon submission of an 
application and any necessary documentation, $30.00 per qualifying 
household for commencing telecommunications service for a single 
telecommunications connection at any temporary housing arrangements. To 
ensure this temporary support is targeted to those victims of Hurricane 
Katrina moving to temporary housing arrangements (e.g., trailer parks 
or other temporary housing facilities), we will make this support 
available from release of this Order through March 1, 2007. In 
addition, we will also permit, under the Link-Up program, eligible 
telecommunications carriers to receive (upon submission of an 
application and any necessary documentation to the Administrator) 
$30.00 per qualifying household returning to a primary residence in the 
Hurricane Katrina disaster area for commencing telecommunications 
service for a single telecommunications connection, including the 
reconnection of service disconnected as a result of Hurricane Katrina. 
Based on the numbers provided by FEMA, we estimate that up to 370,000 
households would be eligible for this temporary Link-Up support at an 
estimated total cost of approximately $12 million.
2. Applicable Time Period
    11. Hurricane victims need access to telephone service, 
particularly in this emergency situation. Carriers operating in the 
disaster areas in Alabama, Louisiana, and Mississippi, as well as in 
any state where people have been temporarily relocated, e.g., Texas, 
should have the opportunity to assist hurricane victims and receive 
appropriate temporary USF support payments. Accordingly, we find that 
due to this emergency situation, good cause exists for adopting these 
temporary Lifeline rules, which will expire on March 1, 2006, 
specifically for free wireless handsets, and at least 300 free minutes 
per household for displaced persons, whether they relocate within the 
three affected states, relocate to another state outside of the area, 
or return home after telephone service has been disconnected. We also 
find that good cause exists to adopt temporary Link-Up rules, as 
discussed above, which will expire on March 1, 2007.
    12. Link-Up support funding is available from the release date of 
this Order until March 1, 2007. Any eligible application for Link-Up 
support postmarked by March 1, 2007 will receive the special Link-Up 
support described above. Wireless Lifeline support is available from 
the release date of this Order until March 1, 2006. Any eligible 
application for support postmarked by March 1, 2006 is eligible for the 
Wireless Lifeline support described above.
3. Eligibility
    13. As discussed above, any person approved for FEMA disaster 
assistance or determined by FEMA to be eligible for individual 
assistance relating to the hurricane will be eligible for temporary 
federal Lifeline and Link-Up support, on a per household basis. Section 
254(e) of the Communications Act of 1934, as amended, provides that 
``only an eligible telecommunications carrier designated under section 
214(e) shall be eligible to receive specific Federal universal service 
support.'' We adopt several conditions to ensure that this Lifeline and 
Link-Up temporary support is used solely to assist victims of Hurricane 
Katrina. First, this Lifeline and Link-Up support is only available to 
consumers approved for FEMA disaster housing assistance or determined 
by FEMA to be eligible for housing assistance relating to the 
hurricane. FEMA's rules target housing assistance to individuals and 
households who are harmed by a disaster and generally have limited 
means. For example, housing assistance is generally not available to 
individuals who have adequate rent-free housing accommodations. To 
ensure this support is targeted to those consumers with the greatest 
need, we are making this temporary support available to those consumers 
determined to be eligible for FEMA disaster housing assistance and who 
do not have any obligation under FEMA rules to repay FEMA for the 
support. Because this is temporary support intended to assist in 
disaster relief and restoration, we limit this Link-Up support to one 
connection for temporary housing and one reconnection (per household) 
for hurricane victims determined to be eligible for individual 
assistance under FEMA rules (and who have no obligation to repay the 
funds to FEMA) returning to permanent residences in the FEMA-designated 
Hurricane Katrina disaster area. We limit the Lifeline support to a 
free wireless handset and at least 300 free minutes. Second, the 
temporary Link-Up support for reconnections is available only for 
circumstances where the consumer was disconnected from service because 
of the hurricane or subsequent flooding. Third, we require consumers 
qualifying for this support to provide documentary evidence to the ETC 
serving them to demonstrate that FEMA determined they were eligible for 
individual disaster housing assistance. Proof of FEMA's determination 
of

[[Page 65853]]

eligibility for individual housing disaster assistance without 
repayment obligations is sufficient. We anticipate that the households 
that will receive support under the temporary order would have received 
support under the existing low-income program rules if they obtained 
telephone service. We note, however, that our Link-Up rules place 
certain restrictions on the number of times at the same residence a 
low-income consumer may qualify for support. We therefore clarify that 
this temporary Link-Up support will be available both for temporary 
housing arrangements and for eligible hurricane victims returning to 
permanent residences in the Hurricane Katrina disaster area.
    14. By adopting these temporary modifications to our Lifeline and 
Link-Up programs, we are working within the existing parameters of the 
low-income program. The Commission has long relied on participation in 
means-tested programs, such as participation in the food stamps 
program, to determine eligibility in our low-income program. In 2004, 
the Commission expanded eligibility for the low-income program when it 
acted upon the Federal-State Joint Board's recommendation to expand the 
federal default eligibility criteria to include an income-based 
criterion and additional means-tested programs. Under the existing 
rules, in cases where a state does not mandate state Lifeline support, 
the Commission's rules rely on other means-tested federal assistance 
programs (e.g., Temporary Assistance to Needy Families, Federal Public 
Housing Assistance, Low Income Home Energy Assistance Program, and the 
National School Lunch Program's free lunch program) to determine 
eligibility criteria for the low-income program. The approach we adopt 
here, i.e., relying on FEMA determinations that a consumer is eligible 
for certain individual disaster assistance program, is consistent with 
our general approach of using federal assistance programs to determine 
consumer eligibility for our low-income program. By relying on FEMA 
determinations of household eligibility for disaster housing 
assistance, we are targeting this support to households struck by 
Hurricane Katrina, and we are using FEMA's determinations as a need-
based program for determining low-income programs eligibility.
    15. There are approximately 65 wireless carriers designated as ETCs 
in the states of Alabama, Louisiana, and Mississippi. We recognize that 
these ETCs, as well as wireless carriers currently designated as ETCs 
in other states, may not be sufficient to implement the temporary order 
in time to help with Hurricane Katrina disaster relief or may not be 
certified in areas where they now need to provide service. In order to 
effectively and efficiently implement the temporary order, we forbear 
for the purposes of this special relief, until March 1, 2006, from 
section 254(e)'s requirement that ``only an eligible telecommunications 
carrier designated under section 214(e) shall be eligible to receive 
specific Federal universal service support.'' We establish the 
following alternative designation process for temporary ETCs to provide 
the specific Lifeline support described in this Order.
    16. Section 10 of the Act requires that the Commission forbear from 
applying any regulation or any provision of the Act to 
telecommunications services or telecommunications carriers if the 
Commission determines that the three conditions set forth in section 
10(a) are satisfied. We find the requirements of section 10(a) are met 
to forbear from the ETC requirement until March 1, 2006, because of the 
limited and temporary nature of the support as well as the narrow 
application of the universal service support to only Lifeline 
customers. Section 10(a)(1) is satisfied because temporary forbearance 
from the ETC requirement will enhance the charges and practices of 
telecommunications carriers as it relates to Lifeline customers because 
it expands the scope of telecommunications services available to these 
consumers. Without such support, many of the affected consumers would 
be left with limited or no access to telecommunications services. In 
addition, because we specifically include a handset and a minimum of 
300 minutes of wireless service and thus tailor the Lifeline support to 
the affected consumers, we do not believe that the additional 
safeguards afforded by the traditional ETC designation requirement are 
necessary for the protection of consumers. Thus, forbearance also 
satisfies section 10(a)(2). Further, under the alternative temporary 
ETC designation process that we establish herein, the Commission will 
review each offering to determine whether it complies with our 
requirements. This review will allow us to ensure that affected 
consumers are provided with affordable access to the telecommunications 
network. Finally, we find our actions here today to be most consistent 
with the public interest and determine that the additional safeguards 
afforded by ETC designation under section 214 work against the public 
interest in this limited circumstance. Under the normal designation 
process, carriers would be required to submit a detailed application 
that addresses not only the Lifeline assistance but also the other 
requirements of serving as an ETC. By streamlining the process, and 
expediting our review, we will enable carriers to provide access to 
telecommunications to affected consumers as quickly as possible. Thus, 
we find that section 10(a)(1) through (3) are satisfied and temporary 
and conditional forbearance is appropriate.
    17. Carriers seeking to be designated a temporary ETC to offer the 
special Lifeline support described in this Order must submit to the 
Commission a detailed description of the plan, including how many and 
type of minutes offered, the brand and model of the handset(s), the 
carrier's licensed service area, and any limitations or conditions 
associated with the plans. In addition, consistent with the 
Commission's ETC precedent, the petition must include (1) a 
certification that the petitioner intends to offer Lifeline services to 
qualifying subscribers consistent with this Order; and (2) a 
description of how the petitioner intends to advertise the availability 
of the Lifeline service. Upon submission, the Commission will conduct 
an expedited review to ensure compliance with our rules. Within ten 
days, the Commission will determine whether the offering complies with 
this Order and whether the carrier will be temporarily designated as an 
ETC for purposes of providing the Lifeline support set out in this 
Order.
    18. We acknowledge that some FEMA-eligible subscribers may already 
possess a handset and not need an additional handset. In those 
instances, and at the subscriber's discretion, the subscriber may opt 
against receiving a new handset and opt instead for a Lifeline-
supported package of greater than 300 minutes and the ETC may still 
receive support not to exceed $130 for its Lifeline package. Further, 
it is acceptable for a carrier to offer a plan that includes a handset 
and a package of some greater amount of minutes (e.g., 500, 750, or 
1000 minutes or more) for the $130 in support. Additionally, a 
subscriber may opt for a plan that exceeds the $130 limit for a minimum 
of 300 minutes of use and a handset, but nevertheless use the $130 
towards the higher minutes of use plus handset plan. This flexibility 
to the plan will allow eligible customers to purchase packages with 
more minutes of use, including packages that require the subscriber to 
pay any additional amount over the $130 threshold. Through this

[[Page 65854]]

temporary change to the federal Lifeline/Link-Up support program, it is 
our intent and purpose through this wireless option to give access to 
affected subscribers with no out-of-pocket costs. The eligible 
customer, however, may choose otherwise by, for example, forgoing the 
handset in exchange for more minutes of use.
    19. We balance the need for quick and decisive action with our 
overarching goals of protecting the program from waste, fraud, and 
abuse. For that reason, we require applicants for the temporary 
Lifeline support pursuant to this Order to certify that they were 
residents of counties that are designated by FEMA as eligible for 
individual assistance, that they are the head of their household, and 
that they are only receiving one Lifeline special support package. 
Applicants seeking Link-Up support must certify that they were 
residents of counties that are designated by FEMA as eligible for 
individual assistance. We require ETCs receiving this temporary support 
to maintain all necessary documentation to verify that the support was 
used for the intended purpose of assisting victims of Hurricane 
Katrina. We also subject all ETCs receiving this temporary support to 
potential audit, and we require all carriers receiving $1 million or 
more of this support to undergo an audit or other investigatory review 
by the Commission's OIG (or the Administrator working under the 
oversight of the OIG) to verify the accuracy of all data submitted and 
that the support was used for intended purposes and to validate that 
the eligible telecommunications carrier has not obtained double-
recovery from a single household.
    20. We find this action necessary to assist in the Hurricane 
Katrina disaster relief effort. Offering temporary support for this 
wireless service consumer offering will not only assist in the recovery 
from the economic damages caused by the hurricane, but it will promote 
public safety by ensuring that disaster victims have ready access to 
E911 capabilities in the event of emergency. We stress that this 
temporary designation to operate as an ETC solely for this temporary 
support mechanism does not grant or otherwise deem the carrier an ETC 
for any other USF support mechanism. Nor does this temporary 
designation prejudge or suggest that any application currently pending 
or to be filed in the future with the state commissions or the 
Commission results in designation as an ETC.

C. Health Care Support

1. Need for and description of Temporary Order
    21. In light of the compelling and unique circumstances caused by 
Hurricane Katrina, we find that it is necessary to adopt temporary 
order, pursuant to section 254(h)(2)(A), to provide public and 
nonprofit health care providers--in both non-rural and rural areas--in 
the affected areas and in areas where evacuees have relocated, as 
detailed below, with a 50 percent discount off the monthly cost of 
advanced telecommunications and information services necessary for the 
provision of health care services to victims of Hurricane Katrina. The 
temporary order discussed below applies to health care providers in the 
federally declared Hurricane Katrina disaster areas in the states of 
Alabama, Louisiana, and Mississippi and in areas where evacuees have 
relocated as detailed below. Specifically, all rural and non-rural 
nonprofit and public health care providers, as defined in Sec.  
54.601(a)(2), located within the states of Alabama, Louisiana, and 
Mississippi are eligible for this additional support. We establish 
different geographic eligibility criteria for the Health Care 
initiative because of the ability to use distance medicine applications 
to treat Hurricane Katrina victims. Furthermore, because the residents 
of the most devastated areas will likely have to relocate for an 
extended period of time, we expand eligibility for the purposes of the 
temporary order to the rural and non-rural nonprofit and public health 
care providers located in areas that are likely to receive most of the 
citizens evacuated from the hardest hit areas. Initial reports show 
these areas to include all counties in Texas and Arkansas that are 
contiguous with Louisiana and Mississippi; the counties of Escambia, 
Santa Rosa, Okaloosa, Walton, and Bay in Florida; the counties of 
Harris, Dallas, Tarrant and Bexar in Texas; the county of Pulaski in 
Arkansas; and the county of Shelby in Tennessee. In addition, we find 
that rural and non-rural health care providers outside of these areas 
may be eligible for support to the extent they serve a substantial 
number of the evacuees when compared to their usual number of patients. 
Health care providers that believe they are eligible under this 
standard should file a request with the Commission. We note that this 
temporary support does not extend to private or for-profit health care 
providers.
    22. American Red Cross and other shelters are providing food, 
water, shelter and physical and mental health services to evacuees. 
Tens of thousands of people displaced from their homes have taken 
refuge in shelters in several states. Accordingly, for the purposes of 
the temporary order, we find it in the public interest that American 
Red Cross or other shelters that also offer medical services are 
eligible for funds as community health centers or community mental 
health centers to the extent they serve a significant number of 
disaster victims using advanced telecommunications and information 
services for telemedicine applications.
    23. We also clarify that temporary or mobile health care providers 
are eligible for support under the 50 percent discount rule we adopt in 
this Order. As we noted in the Rural Health Care Second Report and 
Order, 70 FR 6365, February 7, 2005, mobile health care providers can 
provide essential health care services to underserved populations in 
remote locations. Given the extensive damage to many health care 
facilities due to Hurricane Katrina, we envision that the recovery and 
rebuilding effort will require the use of temporary mobile health 
facilities due to the lack of permanent health care facilities. 
Furthermore, many evacuees may be housed for some time in temporary 
shelters, and health care might be brought to these people via mobile 
health care providers. The receipt of universal service funding will 
better enable mobile health care providers to rapidly diagnose and 
treat patients in the affected areas. We find this rule to be in the 
public interest because it will provide maximum flexibility to mobile 
health care providers to use the most-effective technology to provide 
service to hurricane victims, whether it is satellite, wireline, or 
wireless. In the Rural Health Care Second Report and Order, we 
established a methodology for calculating support that established 
discounts for rural mobile health care providers at the difference 
between the rate for satellite service and the rate for an urban 
wireline service with a similar bandwidth. We find that such a 
calculation is not necessary here because, under the rules we adopt 
today, mobile health care providers will receive 50 percent discount 
off the cost of advanced telecommunications and information services.
    24. In section 254 of the Telecommunications Act of 1996, Congress 
sought to provide rural health care providers ``an affordable rate for 
the services necessary for the purposes of telemedicine and instruction 
relating to such services.'' Specifically, Congress directed 
telecommunications carriers

[[Page 65855]]

``[to] provide telecommunications services which are necessary for the 
provision of health care services in a State, including instruction 
relating to such services, to any public or nonprofit health care 
provider that serves persons who reside in rural areas in that State at 
rates that are reasonably comparable to rates charged for similar 
services in urban areas in that State.'' Congress also provided the 
Commission with authority to enhance access to advanced 
telecommunications and information services for health care providers.
    25. The Commission implemented this statutory directive by adopting 
the rural health care support mechanism in the 1997 Universal Service 
Order, 62 FR 32862, June 7, 1997. In the Rural Health Care Report and 
Order, the Commission provided a 25 percent discount off the cost of 
monthly Internet access for eligible rural health care providers under 
section 254(h)(2)(A). Subsequently, on December 17, 2004, the 
Commission released a Rural Health Care Second Report and Order, 62 FR 
32862, June 7, 1997, that, among other actions, changed the definition 
of ``rural'' for the purposes of the rural health care support 
mechanism. The Commission also expanded funding for mobile rural health 
care providers by subsidizing the difference between the rate for the 
satellite service and the rate for an urban wireline service with a 
similar bandwidth. In addition, on reconsideration, the Commission 
revised its rules to permit rural health care providers in states that 
are ``entirely rural'' to receive a 50 percent discount for advanced 
telecommunications and information services under section 254(h)(2)(A).
    26. As the Commission has recognized in the past, access to 
advanced telecommunications services and information services presents 
the most efficient, cost-effective way to provide many telemedicine 
services. Specifically, telemedicine programs enable patients to 
receive health care services across distances that might otherwise be 
unaffordable, or physically impracticable or impossible to cross. For 
example, health care providers can use advanced telecommunications 
services to transmit x-rays and other medical information in real-time 
to doctors located in other areas for diagnosis and recommendations. 
Thus, patients benefit from access to timely health care services while 
they are spared the expense of lost wages and long-distance travel. In 
this instance, residents of the affected areas might be unable to 
travel for health care services because, for example, vehicles were 
lost in the flooding or gasoline is in short supply. Additionally, 
mobile health care providers can deliver cutting-edge technology and 
specialty care to citizens who are still living in areas that were 
damaged by the hurricane. These mobile clinics literally can mean the 
difference between life and death for many people who are unable to 
travel to see a physician. Furthermore, universal service support for 
advanced telecommunications and information services will enable health 
care providers in the affected areas to utilize their limited resources 
to provide additional care for hurricane victims and other patients.
    27. We find that it is appropriate to adopt these rules on a 
temporary basis to expand funding to health care providers in the 
affected areas under section 254(h)(2)(A). As the Commission has 
determined in the past, we have the authority to provide funding for 
the provision of advanced telecommunications and information services 
under section 254(h)(2)(A). Section 254(h)(2)(A) allows the Commission 
to establish competitively neutral rules to enhance access to advanced 
telecommunications and information services for health care providers. 
Furthermore, section 254(h)(2)(A) gives the Commission broad 
discretionary authority to fulfill this statutory mandate. In prior 
orders, we have established rules under section 254(h)(2)(A) that 
further the Commission's mission of funding telecommunications and 
information services in order to promote telemedicine. By adopting the 
temporary order, therefore, we are working within the existing 
parameters of the rural health care program. We find that the 
circumstances caused by Hurricane Katrina create a special need for the 
Commission to use its discretion to provide universal service support 
to health care providers in the affected areas.
    28. Section 254(h)(2)(A) allows the Commission to establish 
competitively neutral rules to enhance access to advanced 
telecommunications and information services to the extent those rules 
are technically feasible and economically reasonable. We find that 
providing universal service support as discussed herein is both 
technically feasible and economically reasonable. Access to these 
services is technically feasible because eligible health care 
facilities either are already being provided or were being provided 
advanced telecommunications and information services prior to the 
hurricane. In addition, the Commission's actions are economically 
feasible, in light of the circumstances. First, the temporary support 
is for a limited amount of services used for the express purpose of 
treating disaster victims, i.e., advanced telecommunications and 
information services used in telemedicine applications. Second, we 
estimate that we would disburse approximately $28 million in support 
under the temporary order. The Commission has established a cap of $400 
million for the rural health care support mechanism. Given that 
currently the program is disbursing about $30 million a year, we do not 
envision that the additional funding provided for in this Order will 
exceed the Commission's cap. We further note that we are not funding 
all telecommunications services, as provided for under 254(h)(1)(A), 
but only advanced telecommunications and information services that are 
used directly to provide telemedicine services to treat patients. 
Third, based on past experience, we believe a flat 50 percent discount 
is easy to administer and consistent with section 254(h)(5), which 
requires a specific, sufficient and predictable mechanism. Fourth, the 
50 percent discount limits the amount of support per provider, provides 
incentives for health care providers to make prudent economic decisions 
concerning their telemedicine needs and will deter wasteful 
expenditures. Finally, we find that a 50 percent discount is slightly 
less than the average discount rural health care providers current 
receive for telecommunications services under section 254(h)(1)(A).
    29. We find that both rural and non-rural health care providers in 
affected areas should be eligible for this temporary support. Section 
254(h)(1)(A) limits support to health care providers in ``rural'' 
areas. In allowing the Commission discretion to establish competitively 
neutral rules to enhance access to advanced telecommunications and 
information services under section 254(h)(2)(A), however, Congress did 
not specifically limit such access to rural health care providers. 
Thus, we find that providing health care universal service support to 
public or nonprofit health care providers that are not necessarily 
serving ``rural areas,'' as defined in the 2004 Rural Health Care 
Second Report and Order, is consistent with federal court precedent and 
the mechanism's goal to provide health care providers with access to 
modern telecommunications for medical and health maintenance purposes. 
These areas have experienced the destruction of the telecommunications 
network infrastructure and the obliteration of many buildings, 
including homes,

[[Page 65856]]

medical, and other professional facilities, as well as the displacement 
of a significant percentage of the population. Therefore, we find that, 
in light of these extraordinary circumstances, both rural and non-rural 
health care providers are eligible to receive rural health care 
universal service support to serve the medical needs in the affected 
areas. Consistent with the Commission's principles of competitive 
neutrality, we find that eligible health care providers may receive 
discounts for any advanced telecommunications and information service, 
regardless of the platform as long as these services are used to treat 
disaster victims with telemedicine applications.
    30. In administering the universal service fund, we must ensure 
that the goals of section 254 are met while preventing waste, fraud, 
and abuse. For this reason, health care providers seeking support 
pursuant to this Order shall certify that they meet the eligibility 
requirements outlined herein. We also note that our rules require 
applicants to select the most cost-effective, commercially available 
service. We will carefully monitor the use of funds disbursed to 
eligible entities under these new rules to ensure that all support is 
utilized in accordance with Commission rules, and to ensure that 
service providers do not charge unjust or unreasonable rates or seek to 
lock health care providers into long-term contracts beyond Funding Year 
2005. We reserve the right to recover any monies not used for their 
intended purposes or, upon review, we determine were used wastefully.
2. Applicable Time Period
    31. To qualify for this support, a health care provider should 
submit documentation to demonstrate that it used advanced 
telecommunications and information services for telemedicine 
applications and to treat victims of Hurricane Katrina. The health care 
provider should also certify that it used the services for the intended 
purposes. Such health care providers should comply with the program's 
document retention requirements and should maintain sufficient 
documentation to demonstrate the reasonableness of costs in light of 
the exigent circumstances. As noted above, all parties are subject to 
potential audit by the Commission's OIG (or the Administrator working 
under the OIG's oversight), and any party receiving more than $1 
million in support will be automatically audited.
    32. As noted below, the temporary order is effective immediately 
upon release of this Order and continues through the end of Funding 
Year 2005. Temporary health care support funding is available from 
August 29, 2005 until June 30, 2006, which is the end of Funding Year 
2005. Further, all health care providers eligible under these new rules 
are permitted to amend their Funding Year 2005 applications to apply 
for additional support, no later than 60 days after the release of this 
Order. Applicants seeking support to obtain advanced telecommunications 
and information services for telemedicine applications used to treat 
victims of Hurricane Katrina should submit their FCC Form 465 
postmarked no later than 60 days after release of this Order. 
Applicants should comply with all program rules and requirements, 
including the competitive bidding requirements.

D. Schools and Libraries Support

1. Need For and Description of Temporary Order
    33. In this Order, we adopt temporary modifications to the schools 
and libraries universal service support mechanism to meet the needs of 
schools and libraries damaged by Hurricane Katrina. Approximately 600 
schools and libraries in Alabama, Louisiana, and Mississippi may have 
been affected by the hurricane and subsequent flooding. Many schools 
and libraries in other states, although not damaged by the hurricane, 
have an influx of hurricane evacuee students (and library patrons). We 
are, on our own motion, waiving certain rules relating to the schools 
and libraries universal service support mechanism (commonly referred to 
as the E-rate program) on an emergency interim basis, as described 
below. Waiver of these rules will preserve and advance universal 
service by allowing schools and libraries in affected areas to restore 
quickly their ability to provide students and communities with needed 
telecommunications and information services.
    34. Specifically, we (1) re-open the Funding Year 2005 filing 
window for schools and libraries, and consortia of schools and 
libraries, that were directly or indirectly affected by Hurricane 
Katrina; (2) treat all schools and libraries directly affected by 
Hurricane Katrina at the highest level of priority for Priority Two 
services (i.e., 90 percent) for Funding Years 2005 and 2006; (3) allow 
affected parties in eligible counties/parishes in Alabama, Louisiana, 
and Mississippi to ``restart the clock'' for the purposes of 
calculating compliance with the ``two-in-five'' rule; (4) allow program 
participants in affected areas to substitute services or products in 
one broad category for another; and (5) allow schools and libraries 
serving displaced students and citizens to amend their Funding Year 
2005 applications to account for the unexpected increase in population 
by filing a special supplementary FCC Form 471 request for additional 
funding.
    35. In taking these actions, we balance the need for quick and 
decisive action to restore the provision of telecommunications and 
information services to schools and libraries with our overarching need 
to protect the program against waste, fraud, and abuse. We emphasize, 
however, that we will continue to be vigilant to ensure program 
integrity and to detect and deter waste, fraud, and abuse, and pursue 
enforcement action when appropriate. Our intent is not to allow double 
recovery for damages related to telecommunications and information 
services equipment funded under the schools and libraries universal 
service support mechanism. For this reason, schools and libraries 
affected by Hurricane Katrina requesting funding for the restoration of 
their telecommunications and information systems pursuant to the 
direction contained in this Order shall certify that the school or 
library incurred substantial damage as a result of Hurricane Katrina 
and that the services and products sought in their applications will be 
solely used to restore the network to the functional equivalent of the 
pre-Katrina degree of functionality (i.e., prior to August 29, 2005) 
and that other resources (e.g., insurance or public assistance monies 
provided by FEMA) are not available for restoration. In addition, 
schools and libraries affected by Hurricane Katrina shall certify that 
any alternative funding (e.g., insurance payments, FEMA support, 
community resources) in excess of the cost for products or services 
requested on their applications will be returned to the federal 
Universal Service Fund. To the extent that schools and libraries are 
handling increased populations of evacuees, schools and libraries shall 
certify that: (1) There are more than a de minimis number of Hurricane 
Katrina victims; and (2) the entity experienced an associated increase 
in demand for supported services.
    36. At the outset, we note that, in a number of instances, our 
rules explicitly provide participants in the schools and libraries 
program with specific requirements for requesting extensions of 
deadlines or waivers of certain Commission rules due to the occurrence 
of unforeseen events such as Hurricane

[[Page 65857]]

Katrina. Thus, we emphasize that the actions taken here do not 
represent the entirety of the relief that may be available to E-rate 
program participants in affected areas. We are committed to addressing 
all requests for hurricane assistance in an expeditious manner.
    37. Under the Commission's rules, universal service funds are 
available to fund discounts for eligible schools and libraries and 
consortia of such eligible entities on a first-come, first-served 
basis. Each year, the Administrator implements an initial filing period 
that treats all schools and libraries filing within that period as if 
their applications were simultaneously received. The initial filing 
period begins on the date that the Administrator begins to receive 
applications for support, and concludes on a date to be determined by 
the Administrator.
    38. In light of the extensive property damage, including damage to 
the telecommunications and information systems employed by participants 
in the schools and libraries universal service support mechanism, 
caused by Hurricane Katrina in the Gulf Coast states, we waive section 
54.507(c) of our rules and re-open the Funding Year 2005 filing window 
for schools and libraries, and consortia of schools and libraries, that 
were directly or indirectly affected by Hurricane Katrina to the extent 
set forth in this Order. The filing window shall be open for sixty days 
following the date of release of this Order. By waiving Sec.  54.507(c) 
of our rules, and reopening the filing window for Funding year 2005 for 
schools and libraries affected directly by Hurricane Katrina, affected 
program participants in Alabama, Louisiana, and Mississippi can begin 
repairing and restoring needed telecommunications and information 
services quickly and rapidly. Moreover, as described more fully below, 
we recognize that certain schools and libraries may require additional 
funding to support the needs of students and citizens displaced by 
Hurricane Katrina although they have not been directly affected by 
these events. Accordingly, for the reasons stated above, we find that 
due to this natural disaster, good cause exists for waiving Sec.  
54.507(c) for these schools and libraries and that such waiver is in 
the public interest.
    39. Under the Commission's rules, eligible schools and libraries 
may receive discounts ranging from 20 percent to 90 percent of the pre-
discount price of eligible services, based on indicators of need. 
Schools and libraries in areas with higher percentages of students 
eligible for free or reduced-price lunch through the National School 
Lunch Program (or a federally approved alternative mechanism) qualify 
for higher discounts for eligible services than applicants with low 
levels of eligibility for such programs. Schools and libraries located 
in rural areas also generally receive greater discounts. The 
Commission's priority rules provide that requests for 
telecommunications services, voice mail and Internet access for all 
discount categories shall receive first priority for the available 
funding (Priority One services). The remaining funds are allocated to 
requests for support for internal connections (Priority Two services), 
beginning with the most economically disadvantaged schools and 
libraries, as determined by the schools and libraries discount matrix. 
Currently, the most disadvantaged schools and libraries are eligible 
for a 90 percent discount on eligible services, and thus must pay only 
10 percent of the cost of the service. To the extent funds remain after 
discounts are awarded to entities eligible for a 90 percent discount, 
the rules provide that the Administrator shall continue to allocate 
funds for discounts to applicants at each descending single discount 
percentage. The Commission's rules also provide that if sufficient 
funds do not exist to grant all requests within a single discount 
percentage, the Administrator shall allocate the remaining support on a 
pro rata basis over that single discount percentage level.
    40. In light of the extensive property damage, including damage to 
the telecommunications and information systems employed by participants 
in the schools and libraries universal service support mechanism, 
caused by Hurricane Katrina in the Gulf Coast states, we find good 
cause to waive Sec.  54.507 of our rules and treat all schools and 
libraries directly affected by Hurricane Katrina at the highest level 
of priority for Priority Two services (i.e., 90 percent) for Funding 
Years 2005 and 2006. We recognize that program participants in Alabama, 
Louisiana, and Mississippi most affected by Hurricane Katrina may have 
need for an immediate indication of whether they are likely to receive 
funds for Priority Two services. By waiving Sec.  54.507 of our rules, 
and treating all affected schools and libraries at the highest level of 
priority, affected program participants in Alabama, Louisiana, and 
Mississippi can fully anticipate the amount of funding they will 
receive from the universal service fund, and begin the task of 
developing a cogent, feasible, and sustainable plan to resume the 
provision of needed telecommunications and information services. We 
anticipate that treating all affected schools and libraries at the 
highest priority level could result in the disbursement of 
approximately $96 million in E-rate funds for the approximately 600 
schools and libraries in Alabama, Louisiana, and Mississippi affected 
by Hurricane Katrina. We note that these funds have already been 
collected by the Universal Service Fund, and would not have an impact 
on the long-term viability of the universal service program. 
Accordingly, we find that good cause exists for waiving Sec.  54.507 
for affected entities and that such waiver is in the public interest.
    41. We expect that the neediest schools and libraries will receive 
requested funding for Funding Year 2005 for both Priority One and 
Priority Two services. We note that, after applications from the 
disaster-struck schools and libraries are submitted and reviewed, we 
may be able to authorize funding nation-wide requests for any deferred 
requests for Priority Two internal connections service for Funding Year 
2005. The Commission's rules require the Administrator to report the 
amount of unused funds available from prior funding years on a 
quarterly basis. Based on our past experience, significant funds are 
identified as available for use in future funding years. In fact, the 
E-rate Coordinators from Alabama, Louisiana, and Mississippi estimate 
that unused funds from prior funding years will be available to carry 
over for Funding Year 2005 and could be used to fund Hurricane Katrina 
restoration. Because we are re-opening the funding year 2005 filing 
window, such funds previously identified as unused by the Administrator 
may be available to provide support to the disaster-struck schools and 
libraries. We recognize that demand for services from the schools and 
libraries struck by Hurricane Katrina may vary after these entities 
complete their internal reviews and prepare the necessary program 
applications. We will closely monitor this situation and, to the extent 
unused funds from prior funding years are available, we anticipate that 
these funds will be used and that Priority Two funding may be available 
for additional applicants.
    42. Finally, we note that the Commission requires that an entity 
must pay the entire undiscounted portion of the cost of any services it 
receives through the schools and libraries program. Moreover, our rules 
prohibit the provision of free services to an eligible entity by a 
service provider that is also providing discounted services to the 
entity. The Commission has

[[Page 65858]]

previously found that, for the purpose of this program, the provision 
of unrelated free services by a service provider to an eligible entity 
constitutes a rebate of the undiscounted portion of the costs of 
services, in violation of our rules. We clarify that to the extent 
schools and libraries receive FEMA assistance for projects, such 
assistance may be applied to the undiscounted portion of the bill. As 
part of our efforts to respond to the damage caused by Hurricane 
Katrina, we will continue to examine whether waiver of this rule is 
warranted to aid affected schools and libraries to restore the 
provision of service to students and communities.
    43. Under the Commission's rules, eligible entities may receive 
commitments for discounts on Priority Two services (internal 
connections) no more than twice every five funding years (the ``two-in-
five'' rule). For the purpose of determining eligibility, the five-year 
period may begin in any funding year in which the school or library 
receives discounted internal connections services other than basic 
maintenance services.
    44. We find that due to the damage to information and 
telecommunications systems caused by Hurricane Katrina in the Gulf 
Coast states, many participants in the schools and libraries universal 
service support mechanism are likely to need to replace their internal 
connections services, and thus will seek commitments for discounts on 
Priority Two services despite already receiving such commitments in the 
recent past. For these entities, we waive our rule pertaining to the 
frequency of discounts for internal connections services to allow 
affected parties in Alabama, Louisiana, and Mississippi to ``restart 
the clock'' for the purposes of calculating compliance with the ``two-
in-five'' rule. For such participants, Funding Year 2006 will thus 
serve as the first year of the five-year period for determining 
eligibility for funding for these services. We recognize that program 
participants in Alabama, Louisiana, and Mississippi affected by 
Hurricane Katrina may need funding to replace damaged or destroyed 
internal connections services, and should not be denied support 
payments simply due to the timing and frequency of previous requests 
for funding for internal connections. We limit this relief to schools 
and libraries in the Hurricane Katrina disaster area that incurred 
substantial damage as a result of the hurricane. Accordingly, for the 
reasons stated above, we find that due to this natural disaster, good 
cause exists for waiving Sec.  54.506(c) for affected entities and that 
such waiver is in the public interest. To qualify for this waiver, 
parties should submit a request describing the damage incurred to the 
equipment that needs to be replaced.
    45. Section 54.504(f) of the Commission's rules allows the 
Administrator to grant a request by an applicant to substitute a 
service or product for another where the service or product has the 
same functionality; the substitution does not violate any contract 
provisions or state or local procurement laws; the substitution does 
not result in an increase in the percentage of ineligible services or 
functions; and the applicant certifies that the requested change is 
within the scope of the controlling FCC Form 470. On our own motion, we 
waive the requirement that, for purposes of Sec.  54.504(f), the 
substituted service or product must have the same functionality as the 
service it is replacing. Thus, program participants in affected areas 
may substitute services in one broad category (e.g., telecommunications 
service, Internet access, and internal connections) for those in 
another. Along these same lines, we will permit the use of approved 
funds for any facilities or services that need to be replaced due to 
the natural disaster to the extent that they were initially funded 
under the program. We recognize that program participants in Alabama, 
Louisiana, and Mississippi affected by Hurricane Katrina may seek 
needed funding to replace damaged or destroyed services and equipment, 
and that it is in the public interest to allow the replacement of such 
services and equipment with funds previously granted for other services 
and equipment. Accordingly, we find that due to this natural disaster, 
good cause exists for waiving Sec.  54.504(f) for affected entities and 
that such waiver is in the public interest. For any eligible school, 
library or consortium in affected areas, such service substitutions 
will be limited to funds received from applications from Funding Year 
2005.
    46. Certain schools, although not directly affected by Hurricane 
Katrina, may have been indirectly impacted nonetheless due to the 
influx of displaced students into their district. For example, 
additional students may make use of school services and resources in a 
manner originally unanticipated when the schools' technology plans were 
developed and funding requested, thereby taxing information and 
telecommunication services beyond their usual capability. In some 
instances, the addition of students displaced due to Hurricane Katrina 
may cause a school to become eligible for a higher discount level due 
to an increase in the percentage of the student body eligible for the 
National School Lunch Program. To provide an opportunity for schools to 
handle the unforeseen consequences of Hurricane Katrina and the influx 
of new students and patrons, we will allow schools and libraries 
serving displaced students and citizens to amend their Funding Year 
2005 applications to account for the unexpected increase in population 
by filing a special supplementary FCC Form 471 request for additional 
funding. In accordance with our direction here, such schools may amend 
their original funding requests. We instruct the Schools and Libraries 
Division (``SLD'') of the Administrator to accept and immediately 
process requests for additional funding from such schools for sixty 
days following the date of this Order. We recognize that certain 
schools and libraries may need to adjust their requests for USF support 
in light of Hurricane Katrina even though they have not been directly 
damaged by these events. Accordingly, we find that due to this 
catastrophic natural disaster, good cause exists for waiving Sec.  
54.507(c) for these schools and libraries and that such waiver is in 
the public interest. Schools and libraries affected by Hurricane 
Katrina requesting additional funding to support the needs of displaced 
citizens shall submit a certification indicating the approximate number 
of additional students or citizens expected to be served by the 
telecommunications and information services, and that the services and 
products sought in their applications are necessary to serve these 
additional, unanticipated needs. We estimate that this increase in 
funding will be approximately $36 million. We note that these funds 
have already been collected and should not have an impact on the long-
term viability of the universal service program.
    47. Because we want to ensure the schools and libraries harmed by 
Hurricane Katrina receive targeted support, we direct the 
Administrator, in reviewing revised or supplemented requests for E-rate 
support, to determine whether the impact of Hurricane Katrina was de 
minimis (e.g., a small number of students or patrons that necessitates 
no increased demand for supported services). Schools and libraries 
should not submit revised applications if they are getting a de minimis 
increase in students or patrons as a result of Hurricane Katrina. We 
recognize that this determination may depend upon specific facts and 
circumstances. Thus, applicants should submit the number of increased 
students and library patrons

[[Page 65859]]

(both pre-Hurricane Katrina and post-Hurricane Katrina) and certify 
that the number is accurate. We also require schools and libraries to 
maintain documentation in support of these increased numbers. We 
authorize the state E-rate coordinators for Alabama, Louisiana, and 
Mississippi to review e-rate applications to ensure that schools and 
libraries were substantially damaged and that their requests will be 
free of waste, fraud, and abuse. In addition, for those schools and 
libraries handling increased students/patron evacuees, we authorize 
these E-rate coordinators to review whether the schools/libraries are 
handling more than a de minimis number of increased students/patrons. 
We note that the state E-rate coordinators for Alabama, Mississippi, 
and Louisiana will coordinate the application process to limit the 
potential for waste, fraud, and abuse. We authorize this additional 
oversight review activity. We expect such review efforts would include 
verifying that schools and libraries in their states seeking this 
temporary relief meet the de minimis standard. We will carefully 
monitor the use of funds disbursed to ensure that all support is 
utilized in accordance with Commission rules, and to ensure that 
service providers do not charge unjust or unreasonable rates. We 
reserve the right to recover any monies not used for their intended 
purposes or, upon review, we determine were used wastefully.
2. Eligibility
    48. The temporary order adopted and waivers granted herein apply to 
schools, libraries, and consortia of schools and libraries in the 
federally-declared Hurricane Katrina disaster areas in the states of 
Louisiana, Mississippi, and Alabama and in surrounding areas, for the 
counties/parishes designated by FEMA as eligible for individual 
assistance. Furthermore, because the residents of the most devastated 
areas will likely have to relocate for an extended period of time, we 
expand eligibility of funds from the schools and libraries support 
mechanism to schools and libraries (and consortia of eligible schools 
and libraries) located in areas that receive citizens evacuated from 
the hardest hit areas. Initial reports show these areas to include all 
counties in Texas and Arkansas that are contiguous with Louisiana and 
Mississippi; the counties of Escambia, Santa Rosa, Okaloosa, Walton, 
and Bay in Florida; the counties of Harris, Dallas, Tarrant and Bexar 
in Texas; the county of Pulaski in Arkansas; and the county of Shelby 
in Tennessee. Schools and libraries that believe they are eligible 
under this standard should retain documentation of the number of 
additional students and citizens to be supported by telecommunications 
and information services.
    49. The E-rate Funding Year 2005 application window is reopened for 
certain schools, libraries, and consortia directly and indirectly 
affected by the hurricane, as set out above. The window reopens on the 
release date of this Order and closes 60 days after. Any application or 
amended application from an eligible school, library, or consortium, as 
discussed above, that is postmarked by 60 days after the release date 
of this Order will be deemed accepted as timely filed within the 
Funding Year 2005 window. For Funding Years 2005 and 2006, all eligible 
schools, libraries, or consortia, as discussed above, will be treated 
at the highest level of priority, or 90 percent, for Priority Two 
services. For all eligible schools, libraries, or consortia, as 
discussed above, the clock shall be restarted in terms of applying the 
two-in-five rule of receiving Priority Two services. Therefore, 
applicants that qualify for Priority Two services under this Order will 
be deemed to have Funding Year 2006 as their first funding year, for 
purposes of the two-in-five calculation. For any eligible school, 
library or consortium, as discussed above, service substitutions will 
be limited to funds received from applications from Funding Year 2005.

E. High-Cost Support

    50. The high-cost program provides support to carriers (incumbent 
LECs as well as competitive carriers) operating in high-cost and rural 
areas. Under the Commission's rules, rural carriers receive support 
based on their embedded costs and non-rural carriers receive support 
based on forward-looking economic costs, as determined by the 
Commission's cost model. Federal high-cost model support is provided to 
non-rural carriers in states where costs exceed a nationwide cost 
benchmark. After the amount of support available in a state is 
determined, that support is ``targeted'' to high-cost wire centers. 
Section 254(e) of the Act provides that carriers receiving federal 
universal service support ``shall use that support only for the 
provision, maintenance, and upgrading of facilities and services for 
which the support is intended.'' The Commission has previously declined 
to establish ``elaborate rules for compliance with section 254(e)'' 
but, rather, has relied on the states, through the certification 
process, to ensure that carriers are using support for the purposes in 
which it is intended. Indeed, the Commission has stated that as long as 
the uses prescribed by the state are consistent with section 254(e), 
states should have the flexibility to decide how carriers use support 
provided by the federal non-rural high-cost mechanism.
    51. The rules for the high-cost program therefore do not explicitly 
address the use of high-cost funds for disaster relief and restoration 
purposes but, instead, codify section 254(e)'s requirement that 
carriers shall use universal service support only for the provision, 
maintenance, and upgrading of facilities and services for which the 
support is intended. Here we determine such costs to be a purpose for 
which high-cost support is intended. In addition, we find that high-
cost carriers currently operating in the disaster area are coping with 
enormous challenges. More than 200,000 customer lines remain out of 
service. Carriers sustained significant damage to their outside plant 
facilities and switching equipment, in some cases losing entire central 
offices. Because commercial power is not fully available, many carriers 
continue to operate on back-up power. We conclude that these carriers 
are now operating in an area like a high-cost area. We conclude that a 
clarification of the use restrictions in our rules is appropriate given 
the overwhelming public interest in assisting those high-cost areas 
struck by the worst natural disaster in the nation's history. This 
action does not provide additional support to high-cost carriers harmed 
by Hurricane Katrina and thus will not affect the size of the fund. It 
will, however, provide high-cost carriers with the flexibility to use 
some of their support to assist in disaster restoration. We therefore 
clarify that using high-cost support to repair and rebuild facilities 
and services damaged by Hurricane Katrina is consistent with the 
statutory directive contained in section 254(e). Alternatively, we 
waive Commission Rule 54.7 for the limited purposes discussed herein. 
To the extent necessary and for only the relief provided herein, we 
also forbear from section 254(e).
    52. Carriers getting this support should certify that: (1) the 
carrier is serving in the area; and (2) the carrier incurred 
substantial damage as a result of Hurricane Katrina.

F. Other Issues

    53. As we note in the sections above, we are working within the 
existing parameters of the low-income, health care, E-rate, and high-
cost USF programs. Except where noted herein, we expect to apply all 
existing processes and procedures to those applying for

[[Page 65860]]

benefits. For example, schools and libraries would need to prepare 
technology plans, submit applications, and maintain documentation. 
Similarly, carriers seeking support for providing the supported 
wireless service consumer offering will seek reimbursement pursuant to 
the Commission's existing low-income rules. Those programs that have 
caps specified in the Commission's rules--i.e., the $2.25 billion E-
rate program and the $400 million rural health care program--will 
continue to operate under the existing caps and applicable rules. In 
addition, we take no steps to modify or change the Administrator's 
disbursement processes. All carriers and service providers receiving 
USF monies remain subject to audit, and we may recover funds that we 
later determine were used improperly. At this time, we do not 
anticipate a need to adopt any specific forms because of the temporary 
nature of these support initiatives; parties receiving benefits are 
required, however, to maintain all documentation needed to verify the 
accuracy of their applications and the amount of monies received. Nor 
do we anticipate requiring the Administrator to revise its quarterly 
filings, although the Commission may require supplemental or additional 
information on an as-needed basis consistent with our standard 
operating procedures. We also adopt safeguards tailored to these 
temporary support programs, including certification requirements, 
document retention requirements, eligibility criteria relying on FEMA 
determinations, and audits of disbursed funds.
    54. On September 21, 2005, the Administrator filed a letter with 
the Commission, detailing certain implementation concerns regarding 
relief related to Hurricane Katrina. We note that many of the issues 
raised in that letter are addressed in the scope of this Order. Because 
we are applying the USF programs' existing processes and procedures to 
these initiatives, we do not anticipate significant administrative 
issues to implement. We recognize, however, that some implementation 
issues may arise. We therefore require the Administrator to work with 
the Wireline Competition Bureau to resolve any such issues (e.g., the 
content of certifications) expeditiously. We note that the proposal of 
the E-rate coordinators from Alabama, Louisiana and Mississippi does 
not address schools and libraries affected by evacuees. We direct the 
Wireline Competition Bureau to coordinate with the E-rate coordinators 
of the states eligible for relief as a result of a substantial number 
of evacuees to develop review process comparable to that of the E-rate 
coordinators for Alabama, Louisiana and Mississippi.
    55. In this Order, we adopt a number of measures to safeguard the 
USF from misuse of funds. In particular, we rely on the FEMA disaster 
designation and application processes to determine eligibility for the 
temporary support initiatives, and the checks and balances built into 
FEMA's internal controls and procedures to ensure parties that are 
ineligible for support are rejected. Similarly, we target the temporary 
support to the counties, parishes, and individuals that suffered the 
most from the worst natural disaster in the Nation's history. We also 
adopt specific certification and document retention requirements 
pertaining to this temporary support. In addition, all beneficiaries 
and service providers receiving these monies are subject to potential 
audit, and those that receive more than $1 million will automatically 
be audited by the Administrator to ensure the funds are used for their 
intended purposes. All eligible telecommunications carriers, service 
providers, or beneficiaries requesting support under this temporary 
order shall be subject to audit or investigation by the Commission's 
Office of Inspector General (``OIG''), or other authorized federal or 
state governmental agency and, upon request, must make available any 
documentation and records necessary to verify compliance with these 
rules. For the E-rate program, we also rely on the representations of 
the E-rate coordinators for Alabama, Mississippi, and Louisiana that 
they will coordinate the application process to limit the potential for 
waste, fraud, and abuse, and we authorize this additional oversight 
review activity. Finally, this support is temporary and limited for the 
purposes specified in this Order.
    56. We also rely, however, on the existing safeguards and measures 
in the USF programs. Thus, to the extent recovery is sought from USF 
stakeholders, and such stakeholders do not make payments, they will be 
subject to our ``red light'' rule. Parties must still submit 
applications and maintain appropriate documentation, as required by the 
existing program rules. The Administrator will subject all applications 
to the normal review processes so that E-rate applications, for 
example, will go through the Program Integrity Assurance (``PIA'') 
review process and selective review procedures pursuant to the 
Administrator's standard operating procedures. All information 
collection efforts, document retention, and certification requirements 
that normally apply to applications for low-income, rural health care, 
high-cost, or E-rate support will continue to apply for these temporary 
USF support initiatives. We recognize that we have already initiated a 
proceeding to examine these procedures to determine what additional 
measures can be taken to further safeguard the USF from waste, fraud, 
and abuse.
    57. We are committed to ensuring that the funds disbursed as a 
result of these temporary support initiatives are used for their 
intended purposes and that unscrupulous persons do not seek to gain 
from these disaster relief measures. Therefore, to the extent we find 
through audits or other means that funds were not used properly, we 
will require the Administrator to recover such funds through its normal 
processes. For the E-rate program, for example, we will continue to 
apply the recovery standard adopted in the Schools and Libraries Fifth 
Report and Order, 69 FR 55097, September 13, 2004. Thus, amounts 
disbursed ``in violation of the statute or a rule that implements the 
statute or a substantive program goal'' will be recovered in full. We 
emphasize that we retain the discretion to evaluate the uses of USF 
monies and to determine on a case-by-case basis that waste, fraud, or 
abuse of USF monies occurred and that recovery is warranted.

III. Effective Date

    58. The waivers granted herein shall be effective upon the release 
date of this Order. The rule modifications or additions adopted herein 
shall be effective upon the release date of this Order. Pursuant to 
section 553(d)(3) of the Administrative Procedure Act, we find good 
cause to make these rule modifications or additions effective upon 
release of this Order. As explained above, Hurricane Katrina caused 
significant damage in Alabama, Louisiana, and Mississippi including 
flooding in some areas of these states and significant property damage 
and personal injury. The rule changes promulgated in this Order 
represent a critical step in facilitating the Nation's response to the 
disaster wrought by Hurricane Katrina. We note, moreover, that this 
Order does not mandate new burdens or obligations. Accordingly, no 
entity will be adversely affected by making the Order effective at the 
earliest possible date. We delegate authority to the Wireline 
Competition Bureau to work with the Universal Service Administrator to 
make the necessary programmatic changes to implement this Order.

[[Page 65861]]

    59. Given the urgent need, the rules set forth herein shall take 
effect immediately upon release, and without prior public notice and 
comment. Section 553 of the Administrative Procedures Act (APA) permits 
any agency to implement a rule without public notice and opportunity 
for comment ``when the agency for good cause finds * * * that notice 
and public procedure thereon are impracticable, unnecessary, or 
contrary to the public interest.'' Commission rules permit us to render 
an Order effective upon release where good cause warrants. As a general 
matter, we firmly believe that public notice requirements are an 
essential component of our rulemaking process. We find, however, that 
while receipt of public comment clearly is necessary to the formulation 
of final rules, the devastation caused by Hurricane Katrina and the 
need for prompt attention for the victims of Hurricane Katrina present 
good cause to make this Order effective immediately upon release of 
this Order.

IV. Congressional Review Act

    60. The Commission will send a copy of this Order in a report to 
Congress and the Government Accountability Office pursuant to the 
Congressional Review Act, see 5 U.S.C. 801(a)(1)(A). For the reasons 
stated herein, we find good cause for the rule changes made by this 
Order to take effect upon the release of this Order, see 5 U.S.C. 
808(2).

V. Procedural Matters

    61. This Order contains new and modified information collection 
requirements subject to the Paperwork Reduction Act of 1995 (PRA), 
Public Law 104-13. Pursuant to 5 CFR 1320.18(d), the Office of 
Management and Budget (OMB) has granted the Commission a temporary 
waiver of the PRA requirements for this rulemaking. Accordingly, this 
Order will not be submitted to OMB for review.

VI. Ordering Clauses

    62. Pursuant to the authority contained in sections 4(i), 4(j), 10, 
201-205, 214, 254, 303(r), and 403 of the Communications Act of 1934, 
as amended, 47 U.S.C. 151, 154(i), 154(j), 160, 201-205, 214, 254, 
303(r), and 403 this Order is adopted, and the temporary Order shall 
become effective immediately upon release of this Order, pursuant to 5 
U.S.C. 408, 553(d)(3), 47 U.S.C. 408, 553(d)(3).
    63. Pursuant to 4(i) and 251(e) of the Communications Act of 1934, 
as amended, 47 U.S.C. 154(i) and 251(e), and Sec. Sec.  1.1 and 1.3 of 
the Commission's rules, 47 CFR 1.1 and 1.3, that our procedural rules 
relating to the universal service fund are waived to the extent herein 
described.
    64. Pursuant to sections 1, 4(i), 251(b)(2), and 251(e) of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 
251(b)(2) and 251(e), and Sec.  1.3 of the Commission's rules, 47 CFR 
1.3, that Sec.  54.603(b)(3) of the Commission's rules is waived to the 
extent herein described.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 05-21728 Filed 10-31-05; 8:45 am]
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