Schools and Libraries Universal Service Support Mechanism, 55767-55771 [2017-25406]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 82, Number 225 (Friday, November 24, 2017)]
[Rules and Regulations]
[Pages 55767-55771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-25406]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket No. 02-6; FCC 17-139]


Schools and Libraries Universal Service Support Mechanism

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission 
adopts, on an emergency basis, temporary rules to provide immediate 
relief to schools and libraries contending with the devastation caused 
by Hurricanes Harvey, Irma, and Maria, which struck the United States 
and its territories in August and September 2017. These temporary rules 
make available targeted support to schools and libraries that are 
forced to rebuild facilities and replace equipment damaged by the 
Hurricanes, and provide increased flexibility for eligible services to 
be restored through service substitutions. The rules also provide 
support for schools that have

[[Page 55768]]

increased their total student enrollments by 5 percent or more by 
taking in students displaced by the Hurricanes

DATES: 
    Effective date: The rules are effective on November 24, 2017.
    Applicability date: These rules were applicable on October 30, 
2017.

FOR FURTHER INFORMATION CONTACT: Aaron Garza, Wireline Competition 
Bureau, (202) 418-1175 or TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
in CC Docket No. 02-6; FCC 17-139, adopted on October 26, 2017 and 
released on October 30, 2017. 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, or at the following Internet address: https://transition.fcc.gov/Daily_Releases/Daily_Business/2017/db1030/FCC-17-139A1.pdf.

I. Introduction

    1. In this Order, the Federal Communications Commission 
(Commission) adopts, on an emergency basis, temporary rules to provide 
immediate relief to schools and libraries contending with the 
devastation caused by Hurricanes Harvey, Irma, and Maria (Hurricanes), 
which struck the United States and its territories in August and 
September 2017. These temporary rules make available targeted support 
to schools and libraries that are forced to rebuild facilities and 
replace equipment damaged by the Hurricanes, and provide increased 
flexibility for eligible services to be restored through service 
substitutions. We also make additional E-rate support available for 
schools that are incurring additional costs for eligible services, 
e.g., for increased bandwidth demand, because they are serving students 
that have been displaced by the storms, even though they may not be 
contending with substantial physical damage caused by the Hurricanes. 
As explained herein, we find that the exigent circumstances faced by 
the schools and libraries contending with the consequences of these 
natural disasters constitute good cause to adopt these temporary rules 
without notice and comment.

II. Discussion

    2. The temporary rules adopted in this Order provide relief to two 
categories of applicants: (a) Schools and libraries located in counties 
designated by FEMA as eligible for individual disaster assistance 
(Directly Impacted Areas); and (b) schools that are incurring 
additional costs because their student counts have increased by 5 
percent or more because they are serving displaced students.
    3. For schools and libraries that are located in the Directly 
Impacted Areas, and that comply with the certification requirements 
described below, we make additional E-rate discounts available for the 
purchase of services and equipment that were disrupted, damaged, or 
destroyed by the Hurricanes by: (a) Opening a second Funding Year (FY) 
2017 Application Window; and (b) resetting per-school, per-library 
five-year budgets for Category Two services. We also provide additional 
flexibility for these applicants to request service substitutions for a 
service or product that has been disrupted, destroyed or rendered 
unusable by the Hurricanes.
    4. For schools that are incurring additional costs to provide 
services for students displaced by the Hurricanes, and that comply with 
the certification requirements described below, we make additional 
funding available to defray some of those increased costs by permitting 
the schools to file a supplemental FCC Form 471 to request additional 
E-rate discounts.
    5. All relief granted by this Order is subject to the parameters 
and limitations stated herein, and conditioned on compliance with all 
E-rate program rules that are not specifically modified herein. To that 
end, we adopt additional measures to protect the Universal Service Fund 
from waste, fraud, and abuse. We also remind applicants that they 
remain subject to audits and investigations by the Universal Service 
Administrative Company (USAC) and the Commission, and will be held 
responsible for retaining all records related to any relief provided 
under this Order.
    6. The Commission adopts temporary rules to assist schools and 
libraries that need to rebuild facilities and replace equipment 
destroyed by the Hurricanes, and take other steps necessary to 
reinstate E-rate eligible services for the students they serve. To 
ensure that the adopted measures reach those contending with the most 
severe damage caused by the Hurricanes, we limit the relief provided by 
these measures to schools and libraries located in the Directly 
Impacted Areas that certify that: (a) They are located in counties 
designated by FEMA as eligible for individual disaster assistance; (b) 
the schools or libraries incurred substantial damage to E-rate eligible 
services as a result of one or more of the Hurricanes; (c) any 
additional E-rate funding received pursuant to this Order will be used 
solely to restore E-rate eligible services to the level of 
functionality that immediately preceded the Hurricanes; (d) other 
resources (e.g., insurance, public assistance monies from FEMA, support 
from community organizations or donations) are not available to restore 
the E-rate eligible services to their prior functionality; and (e) 
additional E-rate funding requested pursuant to this Order will be 
returned to the Universal Service Fund if funding from other sources 
causes any E-rate funding disbursed to exceed the charges paid for 
restoring the E-rate eligible services. Schools and libraries that are 
located in the Directly Impacted Areas and submit the required 
certification are referred to herein as Directly Impacted Applicants.
    7. Section 54.504(d) of the Commission's rules allows USAC to grant 
a request by an applicant to substitute a service or product for 
another where: (a) The service or product has the same functionality; 
(b) the substitution does not violate any contract provision or state 
or local procurement laws; (c) the substitution does not result in an 
increase in the percentage of ineligible services or functions; and (d) 
the applicant certifies that the requested change is within the scope 
of the controlling FCC Form 470. For Directly Impacted Applicants that 
need to replace a service or product that has been disrupted, 
destroyed, or rendered unusable by the Hurricanes, we modify this rule 
to exclude the requirement that the substituted service or product must 
have the same functionality as the service or product that it is 
replacing. This modification will allow Directly Impacted Applicants 
the maximum flexibility to substitute services based on their local 
needs without being constrained by categories of service or service 
types (e.g., applicants may substitute Internet access service with 
internal connections and vice versa), so that they may use already 
approved E-rate funding to replace damaged or destroyed equipment and 
restore services, subject to the limitations stated herein. We believe 
this additional flexibility will allow schools and libraries, given 
their specific understanding of their circumstances, to use funding in 
ways that best meet their needs. The flexibility conferred by this 
measure effectively waives Sec.  54.504(d)(1)(i) of the Commission's 
rules for Directly Impacted Applicants while keeping the remaining 
aspects of our service substitution rule intact. Directly Impacted 
Applicants must continue to ensure that a service substitution: (a) 
Does not violate any contract

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provisions; (b) does not violate state or local procurement laws; (c) 
does not result in an increase in the percentage of ineligible services 
or functions; and (d) is within the scope of an FCC Form 470. Directly 
Impacted Applicants must also request approval of service substitutions 
by submitting a service substitution request to USAC.
    8. The Hurricanes have caused widespread disruptions in service for 
schools and libraries in the Directly Impacted Areas, and some Directly 
Impacted Applicants may need to rebuild facilities and replace 
equipment to restore E-rate eligible services to their pre-Hurricane 
levels of functionality. Consistent with the E-rate program's mission 
to ensure that schools and libraries have access to high-speed 
broadband sufficient to support digital learning, we direct USAC to 
open a second FY 2017 application window to allow Directly Impacted 
Applicants to request additional E-rate discounts for the purchase of 
replacement products and services (Second FY 2017 Application Window), 
subject to the parameters and limitations in this Order.
    9. Second FY 2017 Application Window Dates. Given the urgent need 
that many Directly Impacted Applicants have for funding to rebuild and 
restore eligible services, the Second FY 2017 Application Window shall 
open 14 days after the release of this Order and will remain open for 
30 days. We find that this 30-day window, opening 14 days after the 
release date of this Order, will provide enough time for Directly 
Impacted Applicants participating in the Second FY 2017 Application 
Window to complete any necessary competitive bidding, per the 
requirements below, and apply for FY 2017 funding needed to restore 
essential E-rate eligible services.
    10. We recognize that some Directly Impacted Applicants, 
particularly applicants in Puerto Rico and the USVI, may not be able to 
participate in the Second FY 2017 Application Window because they will 
still lack access to the electricity and communications networks 
required to do so. Directly Impacted Applicants contending with 
widespread destruction to property and surrounding facilities may also 
require additional time to assess the full extent of the damage they 
have incurred, and determine the resources they will need replace and 
restore E-rate eligible services. We recognize that the relief provided 
in this Order may not address the needs of all Directly Impacted 
Applicants, and assure them that the Second FY 2017 Application Window 
does not mark the end of our efforts. We direct the Wireline 
Competition Bureau (Bureau) to work with USAC in the coming months to 
formulate a plan for providing additional relief to Directly Impacted 
Applicants who are unable to participate in the Second FY 2017 
Application Window, and may not be able to replace and restore E-rate 
eligible services through the additional measures adopted in this Order 
and the ordinary application process for FY 2018. When considering the 
form and timing of these additional measures, we direct the Bureau to 
take into consideration factors such as when the Directly Impacted 
Applicants regained access to electricity and other resources necessary 
to make effective use of E-rate eligible services, and how the 
additional measures will function within the overall administration of 
the program.
    11. Competitive Bidding. Competitive bidding is a cornerstone of 
the E-rate program. Our competitive bidding rules ensure that 
applicants are informed of all the options available to them whenever 
they seek a new service contract, ensure that service providers have 
sufficient information to submit a responsive proposal, generate the 
most efficient pricing for eligible services, and guard against waste, 
fraud, and abuse. To ensure the most efficient use of the additional 
funds made available for the Second FY 2017 Application Window, and as 
a safeguard against waste, fraud, and abuse, we retain our competitive 
bidding rules for the Second FY 2017 Application Window with two 
limited modifications.
    12. First, a Directly Impacted Applicant may submit an FCC Form 471 
during the Second FY 2017 Application Window requesting E-rate 
discounts without initiating a new competitive bidding process for the 
requested services or equipment if the Directly Impacted Applicant: (a) 
Has already sought bids for the services or equipment by posting an FCC 
Form 470; (b) received a Funding Commitment Decision Letter (FCDL) from 
USAC approving an FY 2017 funding request that relied on that FCC Form 
470, or has such an FY 2017 funding request pending; and (c) requests 
additional E-rate discounts during the Second FY 2017 Application 
Window to purchase the same services or equipment on substantially 
similar terms and conditions as the contract originated by the existing 
FCC Form 470. This modification is intended to expedite the restoration 
of services or the replacement of equipment that were already purchased 
by, and delivered to, Directly Impacted Applicants for FY 2017, but 
destroyed or otherwise affected by the Hurricanes. Directly Impacted 
Applicants that wish to avail themselves of this option must submit the 
following information in the Narrative Section of the relevant FCC Form 
471 funding request: (a) The identification numbers for the FY 2017 FCC 
Form 471 and funding request that previously relied on the FCC Form 
470; (b) a statement confirming that the services or equipment for 
which the applicant previously requested E-rate discounts in FY 2017 
were delivered prior to the Hurricanes, and subsequently disrupted, 
destroyed, or damaged by the Hurricanes; and (c) a statement confirming 
that the requested additional E-rate discounts are to replace those 
services or equipment by the pertinent service implementation deadline.
    13. Second, for all other funding requests submitted during the 
Second FY 2017 Application Window, we modify the requirement that 
applicants wait to enter a contract with a service provider until 28 
days have passed after posting an FCC Form 470. Specifically, we will 
require Directly Impacted Applicants that wish to seek additional E-
rate discounts during the Second FY 2017 Application Window to wait 
only 14 days prior to selecting a service provider and filing an FCC 
Form 471 requesting E-rate support. We find that reducing the mandatory 
waiting period balances the need for quick and decisive action to 
restore E-rate eligible services to schools and libraries with our 
obligations to ensure the most efficient use of universal service funds 
and protect the program against waste, fraud, and abuse.
    14. Discount Rate. 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 Category One (C1) 
services and between 20 percent and 85 percent of the pre-discount 
price of eligible Category Two (C2) services, based on indicators of 
poverty, as well as rural or urban status. For the Second FY 2017 
Application Window only, we increase the discount rate for all Directly 
Impacted Applicants to the maximum discount rate for both C1 and C2 
services, excluding voice services. All Directly Impacted Applicants 
will, therefore, receive a 90 percent discount for C1 services, other 
than voices services, and an 85 percent discount for C2 services for 
these requests. We conclude that increasing the discount rate for 
Directly Impacted Applicants will provide needed funding to immediately 
assist such applicants with restoring E-rate eligible services.
    15. E-rate applicants may request support for C2 services pursuant 
to our

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rules that establish a pre-discount budget of $150 per student over 
five years for schools, and a pre-discount budget of $2.30 or $5.00 per 
square foot for libraries depending on their location. It is up to each 
school and library to determine how to allocate funds from their C2 
budgets over a five-year period. Five-year C2 budgets were first 
instituted in FY 2015. It is therefore possible that some schools and 
libraries had already expended all or most of their C2 budgets by the 
time the Hurricanes hit in August and September 2017. Accordingly, some 
Directly Impacted Applicants may have little to no funds remaining in 
their school and library budgets to replace internal connections 
destroyed by the Hurricanes.
    16. The Commission has recognized the importance of ensuring that 
sufficient funding is available for school and library internal 
connections, such as wireless access points, to ensure that high-speed 
broadband connectivity is effectively distributed to classrooms. 
Accordingly, we reset the five-year C2 budgets for all Directly 
Impacted Applicants. For those Directly Impacted Applicants that 
request additional E-rate discounts for C2 services during the Second 
FY 2017 Application Window, those requests will start the five-year 
clock on their budgets. For all other Directly Impacted Applicants, the 
five-year clock will begin in the first year that they request E-rate 
discounts for C2 services after the effective date of this Order.
    17. Some schools that are located in Directly Impacted Areas but 
did not incur substantial damage, or that are located outside of the 
Directly Impacted Areas, may be incurring additional costs due to an 
influx of displaced students (Indirectly Impacted Schools). The influx 
of additional students may increase the resource needs of the school, 
may increase a school's National School Lunch Program (NSLP) rate, or 
may affect a school's C2 budget. To assist these Indirectly Impacted 
Schools, and support the educational needs of students displaced by the 
Hurricanes, we will allow schools that certify that their student count 
has increased by 5 percent or more due to an influx of displaced 
students to submit a supplementary FCC Form 471 during the Second FY 
2017 Application Window to request additional funding. Indirectly 
Impacted Schools requesting this additional funding must certify: (a) 
That their student count for FY 2017 has increased by 5 percent or more 
because of students displaced by the Hurricanes; (b) the number of 
students they served during the original FY 2017 Application Window, 
the number of additional students they are serving as-of the Second FY 
2017 Application Window, and their total student population as-of the 
Second FY 2017 Application Window; (c) that they experienced an 
associated increase in demand for services for which they have 
submitted an FY 2017 funding request; (d) that the additional funding 
requested is necessary to serve these additional, unanticipated needs; 
and (e) that funding is not available from another source (e.g., 
insurance, public assistance monies from FEMA, support from community 
organizations or donations) to cover the increased costs. We also 
require schools to maintain documentation in support of this increased 
number in accordance with our recordkeeping requirements.
    18. Indirectly Impacted Schools requesting additional funds 
pursuant to this Order may avail themselves of the competitive bidding 
modifications established for the Second FY 2017 Application Window. 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 that are not used for their 
intended purposes or, upon review, that we determine were used 
wastefully.
    19. We are committed to guarding against waste, fraud, and abuse. 
Although we establish the limited, temporary rules described herein, we 
adopt steps to ensure program integrity, including enhanced audit 
procedures. Except where noted herein, we apply all existing processes 
and procedures for applying for and receiving E-rate discounts. We will 
require USAC to recover funds that we discover were not used properly 
through its normal processes. We also direct USAC to incorporate into 
its processes appropriate safeguards and audit measures to prevent and 
detect waste, fraud, and abuse related to the particular provisions we 
adopt here. We emphasize that we retain the discretion to evaluate the 
use 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.
    20. Sunset of Temporary Rules. We will reevaluate the temporary 
rule changes adopted herein before the opening of the FY 2018 filing 
window. Absent further action by the Commission, the temporary rule 
changes adopted herein will not apply to future funding years, 
including FY 2018, except insofar as this order resets five-year C2 
budgets for Directly Impacted Applicants. We believe that reevaluating 
the sufficiency and efficacy of these temporary rules is a necessary 
safeguard against waste, fraud, and abuse going forward.
    21. Record Retention. We require any school, library, or consortium 
using the temporary rules adopted herein to maintain documentation in 
support of its filing in accordance with our recordkeeping 
requirements. Applicants and service providers relying on these 
temporary rules are responsible for maintaining records that 
demonstrate their need and eligibility to rely on the temporary rules, 
including records supporting their certification that they received 
substantial damage as a result of the Hurricanes.
    22. Audits. All beneficiaries and service providers receiving E-
rate money are subject to potential audit, and those that receive more 
than $500,000 will automatically be audited by USAC to ensure the funds 
are used for their intended purposes. All eligible telecommunications 
carriers, service providers, or beneficiaries requesting support under 
these temporary rules shall be subject to audit or investigation by the 
Commission's Office of Inspector General 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.
    23. Necessary Resources. We retain the requirement that applicants 
certify that they have secured access to all of the resources necessary 
to make effective use of the services purchased. Applicants eligible to 
request relief pursuant to this Order are cautioned that they may not 
request E-rate support for eligible services that they cannot actually 
use by the pertinent service implementation deadline because they do 
not have the required facilities, power, or other resources necessary 
to make effective use of the services.
    24. Prohibition on Free Services. We retain the requirement that 
all applicants pay their entire non-discounted portion of the cost of 
any services or products received through E-rate. 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. 
Moreover, our rules state that the provision of free services or 
products

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unrelated to the supported service or product constitutes a rebate of 
the non-discount portion of the supported services.
    25. Section 553 of the Administrative Procedures Act permits an 
agency to implement rules 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.'' The Commission's rules additionally permit us to 
render an order effective upon release where good cause warrants. The 
Hurricanes have caused extensive damage in areas of Texas, Florida, and 
Georgia, and throughout Puerto Rico and the USVI, creating an urgent 
and immediate need for the relief provided by this Order. While we 
believe that public notice requirements are an essential part of our 
rulemaking process, the need for prompt attention to the victims and 
quick restoration of services presents good cause to forgo notice and 
comment on these limited, temporary rules and to make this Order 
effective immediately upon release. The temporary rules that we adopt 
herein constitute an important step in the Nation's response to these 
natural disasters, as well as the ability of the E-rate program to 
fulfill its purpose of ensuring that schools and libraries have 
affordable access to the high-speed broadband necessary for students to 
succeed in their educational pursuits and beyond. Further, this Order 
does not mandate new burdens or obligations. Accordingly, no entity 
will be adversely affected by making the Order effective upon its 
release. We find, therefore, that good cause exists to forgo notice and 
comment on these rules and make the temporary rules adopted by this 
Order effective immediately upon the release date of this Order. We 
delegate authority to the Bureau to work with USAC to make the 
necessary programmatic changes to implement this Order.
    26. This document does not contain new or modified information 
collection requirements subject to the Paperwork Reduction Act of 1995 
(PRA), Public Law 104-13. In addition, therefore, it does not contain 
any new or modified information collection burden for small business 
concerns with fewer than 25 employees, pursuant to the Small Business 
Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 
3506(c)(4).
    27. 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).

III. Ordering Clauses

    28. Accordingly, it is ordered that, 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 rules shall become effective immediately 
upon release of this Order, pursuant to 5 U.S.C. 408, 553(d)(3); 47 CFR 
1.103(a), 1.427(b).

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2017-25406 Filed 11-22-17; 8:45 am]
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