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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, DC 20554 In the Matter of ) ) Federal-State Joint Board on ) CC Docket No. 96-45 Universal Service ) order Adopted: December 28, 1999 Released: December 28, 1999 By the Common Carrier Bureau: I. INTRODUCTION 1. Pursuant to section 1.3 of the Commission's rules, we find good cause to waive, on our own motion, Commission rules pertaining to the deadline for the implementation of non- recurring services during Year One of the schools and libraries universal service support mechanism. As described in more detail below, we waive the September 30, 1999, deadline for implementation of non-recurring services during Year One for certain applicants in the following three categories: (1) applicants whose Year One funding requests were granted late in the funding year, or after the funding year had ended, pursuant to a favorable decision on a request for review; (2) applicants for whom valid Year One service provider changes were approved by the Universal Service Administrative Company (USAC or the Administrator) late in the funding year, or after the funding year had ended; and (3) applicants for whom disbursements of Year One discounts were temporarily delayed. II. background 1. The Commission's rules require schools and libraries to implement services for which discounts have been committed by the Administrator within the funding year for which the discounts were sought. The Commission's May 8, 1997, Universal Service Order established a calendar funding year (January 1 December 31) for schools and libraries receiving universal service support. On June 22, 1998, however, the Commission issued its Fifth Reconsideration Order, which changed the funding year for schools and libraries support to a fiscal year (July 1 June 30). To ease the transition to the new fiscal year method, the Commission extended the first year funding period by six months so that the Year One funding period for schools and libraries support ran from January 1, 1998 through June 30, 1999. To account for delays in the implementation of the schools and libraries support mechanism, the Commission subsequently amended its rules to extend the deadline for schools and libraries to use their discounts on non- recurring services from June 30, 1999 (the end of the funding period) to September 30, 1999. The extended deadline gave schools and libraries with funding commitments more time in which to implement any discounted non-recurring services, such as the installation of internal connections, and thereby make greater use of their universal service discounts. 2. There are three categories of applicants that have not been able to meet the September 30, 1999, deadline established in the Tenth Reconsideration Order. In the first category are those applicants whose funding requests have been granted as a result of a request for review filed with the Administrator or the Commission. Under the Commission's rules, any party affected by a decision of the Administrator may seek review of that decision from the Administrator or the Commission. Many Year One applicants that were denied funding sought review from the Administrator or the Commission. Because of the time required to give these requests for review due consideration, USAC released many of its decisions on requests for review either near, or after, the September 30, 1999, deadline. Moreover, USAC continues to issue decisions on requests for review of Year One funding commitments. Similarly, the Commission issued decisions on requests for review near, or after the September 30, 1999, deadline and continues to issue decisions on Year One requests for review of decisions issued by USAC. Because many of the services that received approval were complex, internal connections installations, requiring equipment and/or wiring to be received and installed, it is impossible for applicants whose requests for review were granted near, or after, the September 30, 1999, deadline to meet that deadline. 3. In the second category are those applicants that, as a result of extenuating circumstances, received approval from USAC to change service providers during the Year One funding period. Several of these applicants submitted service provider change requests that were approved by the Administrator late in Year One or after the funding year ended. As a result, these applicants did not have sufficient time to complete installation of their non-recurring services before the September 30, 1999, deadline. 4. In the third category are applicants that were issued funding commitments by the Administrator, but for whom the disbursement of discounts to the applicants' service providers pursuant to those funding commitments had to be delayed. During that time, some of the affected applicants suspended their purchase of eligible services until disbursement of the discounts resumed. Because in some cases disbursement of the discounts resumed late in the funding year, or after the funding year ended, some applicants did not have sufficient time in which to apply their discounts towards non-recurring services before the September 30, 1999, deadline. III. discussion 1. Generally, the Commission's rules may be waived for good cause shown. As noted by the Court of Appeals for the D.C. Circuit, however, agency rules are presumed valid. The Commission may exercise its discretion to waive a rule where the particular facts make strict compliance inconsistent with the public interest. In addition, the Commission may take into account considerations of hardship, equity, or more effective implementation of overall policy on an individual basis. Waiver of the deadline for implementation of non-recurring services as established in the Tenth Reconsideration Order, therefore, is appropriate if special circumstances warrant a deviation from the general rule established in that order, and such deviation would better serve the public interest than strict adherence to the general rule. We conclude that such special circumstances exist with respect to the three categories of Year One applicants described above, thus warranting a waiver of the September 30, 1999, deadline. 2. Unlike most eligible schools and libraries receiving discounts, these applicants face the situation of having waited well into the Year One funding period for decisions regarding their requests for review, their requests for service provider changes, or the disbursement of their discounts. As a result of these delays, and due to no fault of the applicants, there was insufficient time before the September 30, 1999, deadline for the applicants to complete implementation of non-recurring services. Many of these applicants simply were unable to receive completed services in that time. Thus, enforcing the September 30, 1999, deadline would deprive the students and patrons of these applicants of the benefits of the communications technologies their funding commitments would otherwise make possible. For the applicants described above, we find that enforcement of the Commission's September 30, 1999, implementation deadline for the receipt of non-recurring services would be inconsistent with the public interest. Accordingly, all such applicants will receive an additional 180 days, as defined below, to complete installation of their non-recurring services. 3. With respect to Year One schools and libraries funding commitments issued pursuant to requests for review granted by USAC or the Commission and issued on or after the 180th day before October 1, 1999 (i.e., on or after April 4, 1999), the September 30, 1999, deadline for implementation of non-recurring services in Year One of the schools and libraries support mechanism is waived, and the deadline for implementation of non-recurring services under each such funding commitment is extended to 180 days after the date on which a funding commitment letter is issued by USAC to the applicant pursuant to its successful request for review. 4. With respect to each Year One applicant for whom USAC issued, on or after the 180th day before October 1, 1999 (i.e., on or after April 4, 1999), a notification to a new service provider of USAC's approval of the applicant's request to change service providers, the September 30, 1999, deadline for implementation of Year One non-recurring services is waived. The deadline for implementation of Year One discounted non-recurring services by each such new service provider is extended to 180 days after the date on which USAC issued its notification to the new service provider of its approval of the applicant's request. 5. With respect to Year One funding commitments for non-recurring services for which discounts were not disbursed, whether in whole or in part, to approved service providers until, or until after, the 180th day before October 1, 1999 (i.e., until, or until after, April 4, 1999), for which USAC has not disbursed all discounts as of the date of this Order, and for which the applicant properly submitted to SLD an FCC Form 486 ("Receipt of Service Confirmation Form") and corresponding invoices prior to the date of this Order, the September 30, 1999, deadline for implementation of non-recurring services in Year One of the schools and libraries support mechanism is waived. The deadline for implementation of non-recurring services under such funding commitments that have not already been implemented is extended by 180 days from the date USAC issues a notification to the applicant of its eligibility for a waiver and extension of the deadline. To effectuate this extension, the Bureau directs USAC to examine its records of discount disbursements and identify the Year One funding commitments for non-recurring services for which discounts were not disbursed, whether in whole or in part, to approved service providers until, or until after, the 180th day before October 1, 1999 (i.e., until, or until after, April 4, 1999), for which USAC has not disbursed all discounts as of the date of this Order, and for which the applicant properly submitted to SLD an FCC Form 486 ("Receipt of Service Confirmation Form") and corresponding invoices prior to the date of this Order. The Bureau further directs USAC to notify, within 30 days of the release of this order, each such applicant that its deadline for implementation of any Year One non-recurring services discounted under such funding commitments that have not already been implemented is extended by 180 days from the date of issuance of USAC's notification. 6. Finally, to effectuate the waivers and extensions granted in this Order of the September 30, 1999, implementation deadline, we waive Section 54.515(b) of the Commission's rules with respect to any funding commitments by the Administrator for which the September 30, 1999, implementation deadline has been extended by this Order. This waiver will allow Year One discounts to continue to flow to service providers as services are implemented under the extended deadlines created in this Order. IV. ordering clauses 1. ACCORDINGLY, IT IS ORDERED that, pursuant to section 4(i) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i) and sections 0.91, 0.291, and 1.3 of the Commission's rules, 47 C.F.R.  0.91, 0.291, and 1.3, the Order is ADOPTED. 2. IT IS FURTHER ORDERED that the deadline for implementation of non-recurring services under each funding commitment letter issued pursuant to a successful request for review by the Administrator on or after April 4, 1999, is extended to 180 days after the date on which such funding commitment letter was issued. 3. IT IS FURTHER ORDERED that the deadline for implementation of non-recurring services under each funding commitment for which the Administrator issued on or after April 4, 1999, a notice of its approval of a request to change service providers, is extended to 180 days after the date on which the Administrator's notice of approval to the new service provider was issued. 4. IT IS FURTHER ORDERED that, with respect to funding commitments for which discounts were not disbursed for non-recurring services until, or until after, April 4, 1999, and for which USAC has not disbursed all discounts for non-recurring services as of the date of this Order, the September 30, 1999, the deadline for implementation of non-recurring services under such funding commitments is extended to 180 days after the date on which the Administrator notifies each such applicant that its discounts were delayed in the manner described. 5. Finally, IT IS FURTHER ORDERED that Section 54.515(b) of the Commission's rules, 47 C.F.R.  54.515(b), is waived with respect to any funding commitments by the Administrator for which the September 30, 1999, deadline for implementing non-recurring services has been extended by this Order. FEDERAL COMMUNICATIONS COMMISSION Yog R. Varma Deputy Chief, Common Carrier Bureau