Federal Communications Commission FCC 07-36 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of Requests for Review of the Decision of the Universal Service Administrator by Alpaugh Unified School District, Alpaugh, CA, et al. Schools and Libraries Universal Service Support Mechanism ) ) ) ) ) ) ) ) ) ) ) File Nos. SLD-523576, et al. CC Docket No. 02-6 ORDER Adopted: March 22, 2007 Released: March 28, 2007 By the Commission: Commissioner McDowell issuing a statement. 1. In this Order, we grant 78 appeals of decisions by the Universal Service Administrative Company (USAC) reducing or denying funding from the schools and libraries universal service support mechanism (also known as the E-rate program) on the grounds that applicants failed to respond to USAC’s requests for information within the USAC-specified time frame.1 As explained below, in each case we find good cause to grant the appeals and remand the underlying applications associated with these appeals to USAC for further action consistent with this Order. To ensure that the underlying applications are resolved expeditiously, we direct USAC to complete its review of each application listed in the Appendix and issue an award or denial based upon a complete review and analysis no later than 120 days from the release of this Order. In addition, we direct USAC to develop outreach procedures designed to better inform applicants of the additional information that may be needed and to provide applicants with a 15-day opportunity to respond to such request. 2. Background. 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 USAC examines applications for discounted services to ensure that only eligible services are funded, and such scrutiny may result in requests by USAC for additional information from applicants. Absent the applicant providing such additional information, USAC may deny the application for failure to demonstrate that the services in question are eligible for support. 3. Given the volume of applications and other submissions that USAC processes and reviews each year, it is necessary for USAC to establish measures to ensure prompt resolution of applications. One such measure in place is an administrative procedure permitting USAC to request additional 1 The list of Petitioners is attached in the Appendix. Section 54.719(c) of the Commission’s rules provides that any person aggrieved by an action taken by a division of the Administrator may seek review from the Commission. 47 C.F.R. § 54.719(c). 2 47 C.F.R. §§ 54.501-54.503. Federal Communications Commission FCC 07-36 2 information from applicants.3 USAC requires that a response to all of its requests for additional or clarifying information or documentation be made within seven days of the applicant being contacted, unless the deadline is explicitly extended by USAC.4 If this deadline is not met, or the response provided is incomplete, USAC makes a funding determination based on the information it has in its possession. 4. Discussion. In this Order, we grant 78 appeals of decisions reducing or denying requests for funding from the E-rate program and remand the underlying applications associated with these appeals to USAC for further action consistent with this Order.5 Petitioners’ requests for funding were denied or reduced because applicants failed to respond to USAC’s requests for information within the specified time frame. Petitioners generally argue that they did not actually receive the requests from USAC for additional information,6 that they submitted the requested information to USAC, 7 that they requested a 3 See Request for Review by Boone County School District, Federal-State Joint Board on Universal Service, Changes to the Board of Directors of the National Exchange Carrier Association, Inc., File No. USAC-220067, CC Docket Nos. 96-45 and 97-21, Order, 17 FCC Rcd 22467, 22469, para. 5 (Wireline Comp. Bur. 2002) (Boone County Order); Request for Review by Henryetta Public Schools, Federal-State Joint Board on Universal Service, Changes to the Board of Directors of the National Exchange Carrier Association, Inc., File No. USAC-268075, CC Docket Nos. 96-45 and 97-21, Order, 17 FCC Rcd 17423, 17424, para. 3 (Wireline Comp. Bur. 2002). 4 See SLD website, www.sl.universalservice.org/reference/deadline.asp>, (visited December 11, 2006), see also Request for Review by Marshall County School District, Federal-State Joint Board on Universal Service, Changes to the Board of Directors of the National Exchange Carrier Association, Inc., File No. USAC-220105, CC Docket Nos. 96-45 and 97-21, Order, 18 FCC Rcd 4520, 4522, para. 6 (Wireline Comp. Bur. 2003). 5 See Appendix. 6 See Request for Review by Alice Ward Memorial Library; Request for Review by Bais Yaakov High School of Chicago; Request for Review by Canon City Schools; Request for Review by Cleora Public School; Request for Review by Cotulla Independent School District; Request for Review by Diboll Independent School District; Request for Review by Evangelical Children’s Home; Request for Review by Fairfax School District; Request for Review by Fairland Public Schools; Request for Review by Glassboro Public School District; Request for Review by Grass Lake Community School District; Request for Review by Lubavitch Yeshiva of Minnesota-Wexler Learning Institute; Request for Review by Marvin L. Winans Academy of Performing Arts; Request for Review by Pleasantville School District; Request for Review by Toras Imecha; Request for Review by Vicksburg Warren School District; and Request for Review by Yeshiva Beth Yitzchok D’Spinka. 7 See Request for Review by Beaver Area School District; Request for Review by Berrien County Schools; Request for Review by Boone County School District; Request for Review by Brewster Central School District; Request for Review by Charleston County School District; Request for Review by Cherry Creek Schools; Request for Review by Colegio Dr. Roque Diaz; Request for Review by Delta-Schoolcraft Intermediate School District; Request for Review by Devereux Foundation; Request for Review by DINE Southwest High School; Request for Review by District of Columbia Public Schools; Request for Review by East Cleveland School District; Request for Review by Eastern Upper Peninsula Independent School District; Request for Review by East Orange Community Charter School; Request for Review by Educational Institute Oholei Torah; Request for Review by Florence City School District; Request for Review by Franklin Township School District; Request for Review by Greater Johnstown AVTS; Request for Review by Jennings County Schools; Request for Review by Lake Erie Educational Computer Association; Request for Review by Leominster Public Schools; Request for Review by Long Valley Charter School; Request for Review by Lynd Public School; Request for Review by Madison-Oneida Board of Cooperative Educational Services; Request for Review by Madison-Plains Local School District; Request for Review by The Mesorah School; Request for Review by The Mill School; Request for Review by Milltown School District; Request for Review by Montezuma-Cortez School District RE-1; Request for Review by Oak Hills Local School District; Request for Review by Oakland Unified School District; Request for Review by Petersburg Independent School District; Request for Review by Point Pleasant Schools; Request for Review by Rylie Family Faith Academy Consortium; Request for Review by Silo Public Schools; Request for Review by St. John’s County School District; Request for Review by Saint Martin de Porres Church; Request for Review by Taft School District; Request for Review by Wellsville Local School District; Request for Review by Winn Parish School District; and Request for Review by Youthbuild Albuquerque. Federal Communications Commission FCC 07-36 3 deferral over the summer, 8 or that a staffing problem prevented them from submitting the requested information.9 5. Balancing the facts and the circumstances of these specific cases as described below, we find that good cause exists to grant these appeals and remand them back to USAC for further processing. Importantly, these appeals involved a procedural error on the part of the Petitioners, not a failure to adhere to a core program requirement or a misuse of funds. As the Commission has noted previously, given that any violations that occurred were procedural, not substantive, we find that the complete rejection of these applications is not warranted.10 Furthermore, these appeals involved a processing deadline, not a program rule. Although deadlines are necessary for the efficient administration of the program, in these cases, the applicants have demonstrated that rigid adherence to such procedures does not further the purposes of section 254(h) of the Telecommunications Act of 1996 or serve the public interest.11 We also note that grant of these appeals should have a minimal impact on the Universal Service Fund because the monies needed to fund the underlying applications, should they all be fully funded, have already been collected and held in reserve.12 We therefore find that good cause exists to grant and remand these appeals. In remanding these applications to USAC, we make no finding as to the ultimate eligibility of the services. To ensure these issues are resolved expeditiously, we direct USAC to complete its review of the applications listed in the Appendix and issue an award or a denial based on a complete review and analysis no later than 120 calendar days from release of this Order. 6. 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. Although we grant the subject appeals before us, our action here does not eliminate USAC’s deadlines for processing applications.13 In addition, this decision is not intended to reduce or eliminate any application review procedures or lessen the program requirements that applicants must comply with to receive funding. We continue to require E-rate applicants to submit, complete and accurate information to USAC 8 See Request for Review by Bethlehem Area School District; Request for Review by De Soto Unified School District 232; and Request for Review by University Academy. 9 See Request for Review by Alpaugh Unified School District; Request for Review by Crockett Independent School District; Request for Review by Cypress Heights Academy; Request for Review by Griffin Foundation Inc.; Request for Review by Jessamine County Schools; Request for Review by Oberlin Unified School District No. 294; Request for Review by Pelham City Public Schools; Request for Review by Perry Unified School District 343; and Request for Review by Scranton School District. 10 Request for Review of the Decision of the Universal Service Administrator by Bishop Perry Middle School, Schools and Libraries Universal Service Support Mechanism, File Nos. SLD-487170, et al., CC Docket No. 02-6, Order, 21 FCC Rcd 5316, 5319, para. 9 (rel. May 19, 2006) (Bishop Perry Middle School). 11 47 U.S.C. § 254(h). The Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56, amended the Communications Act of 1934. 12 We estimate that the appeals granted in this Order involve applications for approximately $45 million in funding for Funding Years 2000-2006. We note that USAC has already reserved sufficient funds to address outstanding appeals. See, e.g., Universal Service Administrative Company, Federal Universal Service Support Mechanisms Fund Size Projections for the Second Quarter 2007 (dated Jan. 31, 2007). 13 We note that the Commission has initiated a proceeding to address whether particular deadlines should be modified. Comprehensive Review of Universal Service Fund Management, Administration, and Oversight, Federal- State Joint Board on Universal Service, Schools and Libraries Universal Service Support Mechanism, Rural Health Care Support Mechanism, Lifeline and Linkup, Changes to the Board of Directors of the National Exchange Carrier Association, Inc., WC Docket Nos. 05-195, 02-60, 03-109, CC Docket Nos. 96-45, 02-6, 97-21, Notice of Proposed Rulemaking and Further Notice of Proposed Rulemaking, FCC 05-124, para. 29 (2005) (Comprehensive Review NPRM). Federal Communications Commission FCC 07-36 4 in a timely fashion as part of the application review process. However, beginning with applications for funding year 2007, we require USAC in each instance to detail in writing and with specificity to the applicant any information or documentation USAC is seeking. In addition, USAC shall permit applicants to provide the information to USAC within 15 calendar days from the date of receipt of the written notice from USAC that additional information is required.14 7. 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 appeals 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 the Commission’s procedures and in cooperation with law enforcement agencies. 8. 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, the Requests for Review as listed the Appendix ARE GRANTED and REMANDED to USAC for further consideration in accordance with the terms of this Order. 9. 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, USAC SHALL COMPLETE its review of each remanded application listed in the Appendix and SHALL ISSUE an award or a denial of each application based on a complete review and analysis no later than 120 calendar days from release of this Order. 10. IT IS FURTHER ORDERED that this Order SHALL BE EFFECTIVE upon release, in accordance with section 1.103 of the Commission’s rules, 47 C.F.R. § 1.103. FEDERAL COMMUNICATIONS COMMISSION Marlene H. Dortch Secretary 14 Applicants will be presumed to have received notice five days after such notice is postmarked by USAC. USAC shall continue, however, to work beyond the 15 days with applicants attempting in good faith to submit the necessary documentation. Federal Communications Commission FCC 07-36 5 APPENDIX Applicant Application Number Funding Year Alpaugh Unified School District Alpaugh, CA 523576 2006 Alice Ward Memorial Library Canaan, VT 487811 2005 Bais Yaakov High School of Chicago Chicago, IL 234381 2001 Beaver Area School District Beaver, PA 526862 2006 Berrien County School District Nashville, GA 426240 2004 Bethlehem Area School District Bethlehem, PA 532028, 532117, 534228, 534843, 534980, 535090 2006 Bethlehem Area School District Bethlehem, PA 533726, 533860, 533981, 534601, 534316 2006 Bethlehem Area School District Bethlehem PA 534078 2006 Boone County School District Madison, WV 338632 2003 Brewster Central School District Brewster, NY 398144 2004 Canon City School District RE-1 Canon City, CO 422001 2004 Charleston County School District Charleston, SC 399988, 400066, 400095, 400135, 400148, 400166, 400185, 400199, 420054, 420158, 420266, 421719, 421919, 423536, 424838, 429071 2004 Cherry Creek School District 5 Englewood, CO 226427 2001 Cleora Public School Afton, OK 466824 2005 Colegio Dr. Roque Diaz Yabucoa, PR 414245 2004 Cotulla Independent School District Cotulla, TX 320087 2002 Federal Communications Commission FCC 07-36 6 Crockett Independent School District Crockett, TX 504311, 506302, 524164, 524195, 527805, 527831, 527849, 527885, 527903, 530689, 532849 2006 Cypress Heights Academy Baton Rouge, LA 533588, 537630, 537700 2006 Delta-Schoolcraft Intermediate School District 538357 2006 De Soto Unified School District 232 De Soto, KS 476682 2005 Devereux Foundation King of Prussia, PA 538789 2006 Diboll Independent School District Diboll, TX 430473 2004 DINE Southwest High School Winslow, AZ 398842 2004 District of Columbia Public Schools Washington, DC 393708 2004 East Cleveland School District, East Cleveland, OH 4233380, 423397 2004 Eastern Upper Peninsula Independent School District Sault St. Marie, MI 471037, 469866 2005 East Orange Community Charter School East Orange, NJ 415781 2004 Educational Institute Oholei Torah Brooklyn, NY 382666 2003 Evangelical Children’s Home St. Louis, MO 392392 2004 Fairfax School District Bakersfield, CA 477012 2005 Fairfax School District Bakersfield, CA 478082 2005 Fairfax School District Bakersfield, CA 478152 2005 Fairland Public Schools Fairland, OK 463624 2005 Fairland Public Schools Fairland, OK 466913 2005 Florence City School District Florence, AL 464775 2005 Franklin Township School District Somerset, NJ 474034 2005 Federal Communications Commission FCC 07-36 7 Glassboro Public School District Glassboro, NJ 487609 2005 Grass Lake Community School District Tecumseh, MI 514283 2006 Greater Johnstown AVTS Johnstown, PA 533504 2006 Griffin Foundation Inc. Tucson, AZ 486140 2005 Jennings County Schools North Vernon, IN 522029 2005 Jessamine County Schools Nicholasville, KY 498994 2005 Lake Erie Educational Computer Association Elyria, OH 387075 2004 Leominster Public Schools Leominster, MA 372922 2003 Long Valley Charter School Doyle, CA 410086 2004 Lubavitch Yeshiva of Minnesota-Wexler Learning Institute St. Paul, MN 266085 2001 Lynd Public School Lynd, MN 393043 2004 Madison-Oneida Board of Cooperative Educational Services Verona, NY 312009 2002 Madison-Plains Local School District London, OH 524383 2005 Marvin L. Winans Academy of Performing Arts Detroit, MI 500983 2006 Milltown School District Monsey, NY 470851 2005 Montezuma-Cortez School District RE-1 Cortez, CO 414192 2004 Oak Hills Local School District Cincinnati, OH 463594 2005 Oakland Unified School District Novato, CA 263553 2001 Oakland Unified School District 327574, 327579, 327586 2002 Federal Communications Commission FCC 07-36 8 Oakland, CA Oberlin Unified School District No. 294 Oberlin, KS 460015 2005 Pelham City Public Schools Pelham, GA 362302 2003 Perry Unified School District 343 Perry, KS 532787 2006 Petersburg Independent School District Petersburg, TX 446593 2005 Pleasantville School District Broomall, PA 484579, 485093, 485464 2005 Point Pleasant Schools Point Pleasant, NJ 457647 2005 Rylie Family Faith Academy Consortium Dallas, TX 425796 2004 Saint Martin de Porres Church Philadelphia, PA 359750 2003 Scranton School District Scranton, PA 530269 2006 Silo Public Schools Allen, OK 443976 2005 St. Johns County District St. Augustine, FL 409719, 411916 2004 St. Johns County School District St. Augustine, FL 409805 2004 Taft School District Lockport, IL 501995 2006 The Mesorah School Brooklyn, NY 382513 2003 The Mill School Baltimore, MD 354229 2003 Toras Imecha Lakewood, NJ 404918, 421609 2004 University Academy Lawrence, KS 486799, 486829 2005 Vicksburg Warren School District Vicksburg, MS 265505 2001 Wellsville Local School District Wellsville, OH 512851 2006 Winn Parish School District Winnfield, LA 427753 2004 Yeshiva Beth Yitzchok D’Spinka 262909 2001 Federal Communications Commission FCC 07-36 9 Brooklyn, NY Youthbuild Albuquerque Philadelphia, PA 524250 2006 Youthbuild Albuquerque Philadelphia, PA 524253 2006 Federal Communications Commission FCC 07-36 10 STATEMENT COMMISSIONER ROBERT M. McDOWELL Re: Requests for Waiver of the Decision of the Universal Service Administrator by Adams County School District 14, Commerce City, CO, et al., and Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6 Re: Requests for Review of the Decision of the Universal Service Administrator by Alpaugh Unified School District, Alpaugh, CA, et al., and Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6 Re: Requests for Review or Waiver of the Decision of the Universal Service Administrator by Brownsville Independent School District, Brownsville, TX, et al., and Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6 By adopting these three orders, we are granting 182 appeals of decisions taken by the Universal Service Administrative Company (USAC) that reduced or denied funding by applicants of the schools and libraries universal service mechanism. This program promotes the noble goal of assisting schools and libraries in the United States to obtain affordable telecommunications and Internet access. I support these decisions for several reasons. First, each of these appeals involves technicalities in the USAC procedures. Our actions here do not substantively alter the eligibility of the Schools and Libraries program. Furthermore, we find no indication of any intention to defraud the system on the part of any of these applicants. Also, our decisions and USAC’s actions on appeal should have minimal effect on the level of the Universal Service Fund, because USAC has already reserved sufficient funds to take into account pending appeals. Finally, I am pleased that we impose reasonable time limits on USAC to address these cases on appeal so they can be resolved expeditiously.