*Pages 1--5 from Microsoft Word - 59552.doc* Federal Communications Commission DA 06- 1806 Before the Federal Communications Commission Washington, DC 20554 In the Matter of ) ) Request for Review of the Decision ) of the Universal Service Administrator by ) ) Scott County School System ) File No. SLD- 399037 Huntsville, Tennessee ) ) Schools and Libraries Universal Service ) CC Docket No. 02- 6 Support Mechanism ) ORDER Adopted: September 11, 2006 Released: September 11, 2006 By the Chief, Wireline Competition Bureau: I. INTRODUCTION 1. In this Order, we grant the Request for Review filed by the Scott County School System (Scott County) of a decision by the Universal Service Administrative Company (USAC) denying Scott County discounted services for Funding Year 2004 under the schools and libraries universal service support mechanism (E- rate program). 1 For the reasons set forth below, we waive the FCC Form 486 filing deadline for Scott County and remand its application to USAC for action consistent with this Order. We also direct USAC to complete its review of this application and issue an award or denial based on a complete review and analysis no later than 30 days from release of this Order. II. BACKGROUND 2. Under the E- rate program, eligible schools, libraries, and consortia that include eligible schools and libraries may apply for discounts for eligible telecommunications services, Internet access, and internal connections. 2 After an applicant for discounted services under the E- rate program has entered into agreements for eligible services with one or more service providers, it must file an FCC Form 471 with USAC. 3 The FCC Form 471 notifies USAC of the services that have been ordered and supplies an estimate of funds requested for eligible services. 4 USAC then issues a funding commitment decision letter indicating the funding, if any, for which the applicant is approved to receive. After the funding year begins and the applicant begins receiving services at the discounted rate, the applicant submits an FCC Form 486 to USAC. The FCC Form 486 indicates that the service has begun, specifies the service start date and demonstrates that 1 Letter from C. Michael Lay, Scott County School System, to the Federal Communications Commission, filed April 12, 2006 (Request for Review). Section 54. 719( c) of the Commission’s rules provides that any person aggrieved by an action taken by a division of the Universal Service Administrative Company may seek review from the Commission. 47 C. F. R. § 54. 719( c). Funding Year 2004 started on July 1, 2004 and ended on June 30, 2005. 2 See 47 C. F. R. §§ 54. 501- 54.503. 3 See Schools and Libraries Universal Service, Services Ordered and Certification Form, OMB 3060- 0806 (October 2003) (FCC Form 471). 4 47 C. F. R. § 54.504( c). 1 Federal Communications Commission DA 06- 1806 2 the applicant has received approval of its technology plan. 5 The timely submission of an FCC Form 486 ensures that disbursements for discounts on eligible services are done in a prompt and efficient manner. Because the FCC Form 486 indicates the actual service start date, USAC will only issue disbursements to the service provider for discounts on eligible services after receipt of the form. 6 3. The deadline for receipt of the FCC Form 486 is a procedural deadline created by USAC. In Funding Year 2004, the FCC Form 486 had to be postmarked no later than 120 days after the date service began or no later than 120 days after the date of the funding commitment decision letter, whichever was later, to receive discounts retroactively to the service start date. 7 For a late- filed FCC Form 486, the start date for discounted services is reset to 120 days before the postmark date. 8 No funding is provided for services rendered prior to the new start date and funding commitments are reduced for the relevant funding request. 9 4. In Funding Year 2004, Scott County sought E- rate program funding for internal connections. 10 On January 24, 2005, USAC issued a funding commitment decision letter to Scott County for the requested services. 11 On March 27, 2006, Scott County filed its FCC Form 486, approximately 10 months after the filing deadline. 12 On April 11, 2006, USAC notified Scott County that its service start date was changed from July 1, 2004 to November 22, 2005. 13 On April 12, 2006, Scott County filed a Request for Review with the Commission. 14 In its Request for Review, Scott County contends that USAC gave indications that its FCC Form 486 was timely filed. 15 Scott County also notes that had the school system been timely informed of its filing oversight, it could have remedied the problem. 16 5 Instructions for Completing the Schools and Libraries Universal Service, Receipt of Service Confirmation Form (FCC Form 486), OMB 3060- 0853 (August 2003) at 2 (FCC Form 486 Instructions). 6 See, e. g., FCC Form 486 Instructions at 2. See also Federal- State Joint Board on Universal Service, Children’s Internet Protection Act, CC Docket No. 96- 45, Order, 17 FCC Rcd 12443, 12444, para. 4 (2002) (CIPA II Order). 7 CIPA II Order, 17 FCC Rcd at 12445, para. 5; FCC Form 486 Instructions at 6. 8 FCC Form 486 Instructions at 6. 9 Id. 10 Letter from Schools and Libraries Division, Universal Service Administrative Company, to Archer Coppedge, Scott County School System, dated Jan. 24, 2005 (Funding Commitment Decision Letter). 11 Id. 12 FCC Form 486, Scott County School System, filed March 27, 2006 (Scott County FCC Form 486). Scott County also states that it filed its FCC Form 486 in March 2006 upon learning from a USAC representative that its FCC Form 486 was not on file. Request for Review at 1. 13 Letter from Schools and Libraries Division, Universal Service Administrative Company, to Steve Tenzer, Scott County School System, dated April 12, 2006 (FCC Form 486 Notification Letter). 14 Request for Review. 15 Specifically, Scott County references an FCC Form 472 (BEAR Form) Notification Letter that its service provider received on January 24, 2006 indicating that the applicant filed an FCC Form 486. Request for Review at 1- 2; Letter from Schools and Libraries Division, Universal Service Administrative Company, to Greg Lockhart, Universal Systems, dated Jan. 24, 2006 (Form 472 (BEAR Form) Notification Letter). Scott County also contends that its school officials had several communications with USAC representatives before the FCC Form 486 filing deadline, but was never informed by USAC that its form was not filed. Request for Review at 1- 2. 16 Id. at 2- 3. 2 Federal Communications Commission DA 06- 1806 3 5. The Commission may waive any provision of its rules on its own motion and for good cause shown. 17 A rule may be waived where the particular facts make strict compliance inconsistent with the public interest. 18 In addition, the Commission may take into account considerations of hardship, equity, or more effective implementation of overall policy on an individual basis. 19 In sum, waiver is appropriate if special circumstances warrant a deviation from the general rule, and such deviation would better serve the public interest than strict adherence to the general rule. 20 III. DISCUSSION 6. Based on the facts and the circumstances of this specific case, we grant Scott County’s Request for Review. We find that good cause exists to waive the FCC Form 486 filing deadline for Scott County and remand the underlying application associated with its appeal to USAC for further action consistent with this Order. 7. Under Bureau precedent, deadlines have been strictly enforced for the E- rate program, including those pertaining to the FCC Form 486. 21 As the Commission recently noted in Bishop Perry Middle School, however, a departure from required filing deadlines may be warranted upon careful review of the Petitioner’s case and when doing so will serve the public interest. 22 Scott County claims that it was unaware that USAC had not received its FCC Form 486 and believed that it had submitted its form through communications with USAC representatives. 23 Upon learning that USAC did not have the form, Scott County promptly submitted the FCC Form 486 to USAC. 24 Given that the violation at issue is a USAC deadline, not a substantive Commission rule, we find that the complete rejection of this application is not warranted. Notably, there is no evidence of waste, fraud or abuse, misuse of funds, or a failure to adhere to core program requirements. Furthermore, we find that denial of funding in this case would inflict undue hardship on Scott County. In this case, the applicant has demonstrated that rigid compliance with USAC’s application procedures does not further the purposes of section 254( h) or serve the public interest. 25 We 17 47 C. F. R. §1. 3. 18 Northeast Cellular Telephone Co. v. FCC, 897 F. 2d 1164, 1166 (D. C. Cir. 1990) (Northeast Cellular). 19 WAIT Radio v. FCC, 418 F. 2d 1153, 1157, (D. C. Cir. 1969), affirmed by WAIT Radio v. FCC, 459 F. 2d 1203 (D. C. Cir. 1972). 20 Northeast Cellular, 897 F. 2d at 1166. 21 See Requests for Waiver by Lucia Mar, et al., File Nos. 249712, et al., Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02- 6, Order, 19 FCC Rcd 20364, 20365, para. 3 (Wireline Comp. Bur. 2004); Request for Review by East Carroll Parish School Board, Federal- State Joint Board on Universal Service, Changes to the Board of Directors of the National Exchange Carrier Association, Inc., File No. SLD- 232946, CC Docket Nos. 96-45 and 97- 21, Order, 17 FCC Rcd 24591, 24594, para. 7 (Wireline Comp. Bur. 2002). 22 See Request for Review of the Decision of the Universal Service Administrator by Bishop Perry Middle School, et al., Schools and Libraries Universal Service Support Mechanism, File Nos. SLD- 487170, et al., CC Docket No. 02- 6, Order, 21 FCC Rcd 5316, 5316- 17, 5319- 20, paras. 2, 9 (2006) (Bishop Perry Middle School); see also Request for Waiver of the Decision of the Universal Service Administrator by Douglas- Omaha Technology Commission, Schools and Libraries Universal Service Support Mechanism, File Nos. SLD- 427054, CC Docket No. 02- 6, Order, DA 06- 1656, para. 6 (rel. Aug. 18, 2006) (finding that good cause exists to waive the FCC Form 486 deadline when applicant had personnel issues that prevented the timely filing). 23 Request for Review at 1- 2. 24 Id. at 1. 25 See 47 U. S. C. § 254( h). 3 Federal Communications Commission DA 06- 1806 4 therefore grant Scott County’s Request for Review and remand the application to USAC for further processing consistent with this Order. 26 8. To ensure these issues are resolved expeditiously, we direct USAC to complete its review of Scott County’s application and process the application in accordance with this Order no later than 30 calendar days from release of this Order. We emphasize the limited nature of this decision. As stated above, we recognize that filing deadlines are necessary for the efficient administration of the schools and libraries E-rate program. 27 Although we grant the Request for Review before us, our action here does not eliminate USAC’s deadline for filing the FCC Form 486. We continue to require E- rate applicants to submit complete and accurate information to USAC as part of the application review process. 28 9. Finally, we are committed to guarding against waste, fraud, and abuse, and to ensuring that funds disbursed through the E- rate program are used for appropriate purposes. Although we grant the Request for Review addressed here, this action in no way affects the authority of the Commission or USAC to conduct audits or investigations to determine compliance with the E- rate program rules or requirements. Because audits and investigations may provide information showing that a beneficiary or service provider failed to comply with the statute or Commission rules, such proceedings can reveal instances in which universal service funds were improperly disbursed or in a manner inconsistent with the statute or the Commission’s rules. To the extent we find that funds were not used properly, we will require USAC to recover such funds through its normal process. We emphasize that we retain the discretion to evaluate the uses of monies disbursed through the E- rate program and to determine on a case- by- case basis that waste, fraud, or abuse of program funds occurred and that recovery is warranted. We remain committed to ensuring the integrity of the program and will continue to aggressively pursue instances of waste, fraud, or abuse under our own procedures and in cooperation with law enforcement agencies. 26 Because we hereby waive USAC’s FCC Form 486 deadline, we also waive any subsequent deadlines, such as the FCC Form 472 deadline, related to the processing of Scott County’s application. 27 Supra para. 7. 28 Our action here in no way eliminates the obligation for Scotty County to file its FCC Form 486. 4 Federal Communications Commission DA 06- 1806 5 IV. ORDERING CLAUSES 10. ACCORDINGLY, IT IS ORDERED that, pursuant to the authority contained in sections 1- 4 and 254 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151- 154 and 254, and pursuant to authority delegated in sections 0.91, 0. 291, and 54.722( a) of the Commission’s rules, 47 C. F. R. §§ 0.91, 0.291, and 54. 722( a), that the Request for Review filed by Scott County School System, Huntsville, Tennessee, IS GRANTED. 11. IT IS FURTHER ORDERED that, pursuant to the authority contained in sections 1- 4 and 254 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151- 154 and 254, and pursuant to authority delegated in sections 0.91, 0. 291, 1. 3, and 54. 722( a) of the Commission’s rules, 47 C. F. R. §§ 0. 91, 0.291, 1.3 and 54.722( a), that the deadline for filing the FCC Form 486 for Scott County School System, Huntsville, Tennessee, IS WAIVED and the application IS REMANDED to USAC for further consideration in accordance with the terms of this Order. 12. IT IS FURTHER ORDERED that, pursuant to the authority contained in sections 1- 4 and 254 of the Communications Act of 1934, as amended, 47 U. S. C. §§ 151- 154 and 254, and pursuant to authority delegated in sections 0.91 and 0.291 of the Commission’s rules, 47 C. F. R. §§ 0. 91 and 0.291, that USAC SHALL COMPLETE its review of the application and ISSUE an award or a denial based on a complete review and analysis no later than 30 calendar days from release of this Order. 13. IT IS FURTHER ORDERED that this Order SHALL BE EFFECTIVE upon release. FEDERAL COMMUNICATIONS COMMISSION Thomas J. Navin Chief Wireline Competition Bureau 5