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*****************************************************                            Before the
               Federal Communications Commission
                     Washington, D.C. 20554


In the Matter of                   )
                              )
Federal-State Joint Board on       )         CC Docket No. 96-45
Universal Service                  )


                             ORDER


Adopted:  August 26, 1998                              Released:  August 27, 1998
                         
By the Chief, Common Carrier Bureau:

     1.   On November 12, 1997, the Minnesota Public Utility Commission (Minnesota
Commission) filed a request for a temporary waiver until August 1, 1998 of  the Commission's
rule requiring that states that provide Lifeline support must establish consumer qualification
criteria that is based solely on income or on factors directly related to income.  On December
30, 1997, the Common Carrier Bureau (Bureau) granted the Minnesota Commission's request for
a temporary waiver so that current Lifeline consumers in Minnesota would receive uninterrupted
federal support pending legislative changes necessary to conform Minnesota's eligibility criteria
to our rules.  In this Order, we address the status of Minnesota's Lifeline consumer qualification
criteria and conclude that consumers in Minnesota who satisfy the federal default consumer
qualification established in section 54.409(b) of the Commission's rules are eligible to receive
the baseline amount of federal Lifeline support.

     2.   On May 8, 1997, the Commission issued a Report and Order that revised our
rules governing consumer qualification for federal Lifeline support and the federal Lifeline
support amount.  In revising these rules, the Commission sought generally to make Lifeline and
Link Up available to low-income consumers in every state and territory in the nation.  The
revised rules specify that states that provide Lifeline support shall establish consumer
qualification criteria that is based solely on income or on factors directly related to income.  To
qualify to receive federal Lifeline support in states that do not provide state Lifeline support, a
consumer must certify that he or she satisfies the federal default criteria, i.e.,  participates in one
of the following programs:  Medicaid; food stamps; Supplemental Security Income; federal
public housing assistance; or Low-Income Home Energy Assistance Program.  The revised
rules also provide for three forms of federal Lifeline support:  (1) $3.50 per qualifying low-
income consumer; (2) an additional $1.75 if the state commission approves a reduction of $1.75
in the intrastate rate paid by Lifeline consumers; and (3) additional support, subject to a $7.00
ceiling on the total amount of federal Lifeline support, if the state provides intrastate Lifeline
support to customers based solely on income or factors directly related to income.

     3.   In its waiver request, the Minnesota Commission explained that Minnesota state
law required that the consumer qualification criteria for its state Lifeline program, called the
Telephone Assistance Program (TAP), must be based on both income and age or disability and
thus did not qualify as a Lifeline program under federal rules.  The Minnesota Commission
stated that the Minnesota legislature would begin its 1998 legislative session in February, and
any changes in legislation that bring TAP's consumer qualification criteria into compliance with
Commission rules likely would not become effective until August 1, 1998.  In our Lifeline
Waiver Order, we found that good cause existed to waive our rule until August 1, 1998 so that
consumers in Minnesota who were eligible for low-income assistance at that time continued to
benefit from federal Lifeline support and did not experience temporary disruption in their local
rates between January and August.

     4.   The Minnesota Commission has informed the Commission that the consumer
qualification criteria for TAP has not been brought into compliance with section 54.409(a). 
The Minnesota Commission also reports in its July 17 letter, however, that, pursuant to authority
granted to it by state law, it has adopted the federal default consumer qualification criteria. 
The Minnesota Commission maintains, therefore, that consumers in Minnesota who meet the
federal default criteria should be eligible to receive the baseline level of federal Lifeline support,
i.e., $5.25.  The Minnesota Commission asserts that consumers who satisfy both the federal
default criteria and TAP's limited eligibility criteria should be eligible to receive $5.25 in federal
support, but that consumers participating in TAP will no longer receive the additional $1.75 in
federal support that is available when a state provides funds to customers based solely on income
or factors directly related to income.
     
     5.   We concur with the Minnesota Commission's assertion.  We find that, in adopting
the federal default consumer qualification criteria, the Minnesota Commission has complied with
our rules in section 54.409(a).  We also find that it would be unfair to consumers in Minnesota
who meet the federal default criteria to deny the $5.25 in federal baseline support that is
available to similarly-situated consumers in states that do not provide any Lifeline support. 
Thus, we conclude that consumers in Minnesota who satisfy the federal default consumer
qualification criteria will be eligible to receive $5.25 in federal Lifeline support per qualifying
low-income consumer.  Minnesota remains free, of course, to continue to provide state support
to the more limited class of consumers eligible for TAP (i.e., low-income consumers who also
meet age or disability criteria).  Because TAP does not comply with section 54.409(a) of our
rules, however, participants in that program will not be eligible to receive the additional $1.75 in
federal support that is available to states that comply with section 54.403(a) of the Commission's
rules.  We further conclude that, because the waiver expired August 1, 1998, only the federal
Lifeline support amount of $5.25 per eligible consumer per month should be provided as of
August 1, 1998.
     6.   It is THEREFORE ORDERED, pursuant to sections 4(i), 214, and 254 of the
Communications Act of 1934, as amended, 47 U.S.C.  154(i), 214, and 254 and sections 0.91,
0.291, 1.3, and 54.409 of the Commission's rules, 47 C.F.R.  0.91, 0.291, 1.3, and 54.409 that
consumers in Minnesota who satisfy the federal default Lifeline consumer qualification criteria
may receive the baseline level of federal Lifeline support (i.e., $5.25 per month).


                         FEDERAL COMMUNICATIONS COMMISSION

                    
                         Kathryn C. Brown
                         Chief, Common Carrier Bureau