Before the Federal Communications Commission Washington, DC 20554 In the Matter of ) ) CC Docket No. 96-45 Federal-State Joint Board on ) Universal Service ) MEMORANDUM OPINION AND ORDER Adopted: September 30, 1999 Released: September 30, 1999 By the Deputy Chief, Common Carrier Bureau: I. INTRODUCTION 1. The Santa Maria-Bonita School District (SMBSD) of Santa Maria, California, has submitted a petition for waiver of the September 30, 1999, deadline for utilizing universal service discounts for non-recurring services distributed in the first year of the schools and libraries program. The September 30, 1999, deadline was established by the Commission's Tenth Reconsideration Order in this docket, extending the previous deadline of June 30, 1999. In this Order, we conclude that SMBSD has failed to demonstrate particular facts or special circumstances warranting a deviation from the general rule established in the Tenth Reconsideration Order. Accordingly, we deny SMBSD's petition for a waiver of the September 30, 1999, deadline. II. BACKGROUND 1. Section 54.507(d) of the Commission's rules requires schools and libraries "to file new funding requests for each funding year." Section 54.507(e) limits the availability of discounts for a long-term contract covering eligible services to the funding year for which discounts are sought. Moreover, section 54.507(b) states that, for the 1998-1999 funding year, "[s]chools and libraries filing applications within the initial 75-day filing window shall receive funding for requested services through June 30, 1999." These provisions, along with the Commission's orders, require schools and libraries to use services for which discounts have been committed by the Administrator within the funding year for which the discounts were sought. 2. 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 method (July 1 of a given year June 30 of the following year). In order to ease the transition to the new fiscal year method, the Commission extended the first year funding period by six months to the new fiscal year end. As a result, the first year funding period for schools and libraries support ran from January 1, 1998 through June 30, 1999, a total funding period of 18 months. This extension applied only to the 1998-99 funding year. 3. Beginning November 23, 1998, the Universal Service Administrative Company (USAC or Administrator) informed schools and libraries about their eligibility to receive discounted services and the availability of funds to cover such discounted services for the first year funding period. In order to get funding commitments to eligible schools and libraries as soon as possible, USAC issued funding commitments for Year 1 of the schools and libraries program in waves. The last of these 10 waves of funding notifications was issued on February 27, 1999. 4. Although USAC proceeded at a reasonable pace, the Commission became concerned that some schools and libraries that would be approved to receive discounted services might be informed by the Administrator rather late in the funding year. Under the provisions of Rule 54.507, the later a school or library received its funding commitments from USAC, the less time it had to implement its discounted projects and thereby to take full advantage of its discounts. Thus, schools and libraries informed of their discounts late in the funding period might be unfairly penalized for delays in the administration of the schools and libraries program. In order to remedy this situation, the Commission's Tenth Reconsideration Order extended the implementation period 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, an extension of 92 days. 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. III. santa maria-bonita school district's petition 1. The Santa Maria-Bonita School District (SMBSD) is located in Santa Maria, California. According to SMBSD's petition, eleven of the fourteen schools in the district are in the highest funding priority for the schools and library program, qualifying for 90% discounts. Two other schools qualify at the 80% discount level, with the district average being 86%. 2. SMBSD argues that the September 30, 1999 deadline for implementation of non- recurring services is an insufficient deadline for several reasons. SMBSD explains that, due to delays in the design of application forms and in the implementation of USAC's mechanism for processing applications, schools and libraries were not able to submit applications for the funding period beginning January 1, 1998, until the end of January 1998. SMBSD also contends that the funding process was further delayed as a consequence of the Schools and Libraries Corporation's decision to create a 75-day application window in which all applications would be treated as being first in line, causing USAC to be flooded with over 30,000 applications. As a consequence of additional delays over the course of USAC's review of the funding requests, SMBSD asserts that USAC repeatedly shifted dates for funding notification forward into the future. 3. SMBSD also notes that, while the Fifth Reconsideration Order extended the end of the first year funding period to June 30, 1999, it also established new funding priorities for schools and libraries support. Under these new priorities, all requests for eligible telecommunications services and Internet access were provided funding, regardless of the discount percentage, with internal connections given secondary priority. Because of SLD's decision to provide only one funding letter per application, the effect of these funding priorities was to delay funding notifications to schools and libraries requesting support for internal connections until it could be determined whether there were funds left over after allocations to eligible telecommunications services and Internet access. Furthermore, under SLD's notification policy, schools and libraries filing requests with multiple discount percentages could not be given funding notification until it was determined whether their requests in the lowest discount percentages could be funded. 4. According to SMBSD, the net effect of the delays and policy changes in administration of the schools and libraries program was a significant reduction in the time applicants notified in later waves had to complete their projects. Applicants notified in wave 10 had 96 fewer days to use their discounts than applicants notified of funding commitments in wave 1. For the first year funding period, SMBSD both filed requests in multiple discount percentages and requested support for internal connections. As a consequence, SMBSD was notified in wave 8 and had 78 fewer days to complete its project than applicants notified in wave 1. In its petition, SMBSD seeks a waiver of the Commission's September 30, 1999, deadline for implementation of non-recurring services and an extension of that deadline to December 17, 1999, in order to give SMBSD as many days to complete its project as enjoyed by applicants notified in wave 1. IV. 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, and "an applicant for waiver faces a high hurdle even at the starting gate." 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 is, therefore, 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. The test for whether SMBSD may be granted a waiver, therefore, is whether it has shown such special circumstances that warrant deviation from the rules established in the Fifth Reconsideration Order and the Tenth Reconsideration Order. We conclude that SMBSD has failed to make that showing. 2. As an initial matter, SMBSD requests certain relief which would be inappropriate to grant in response to SMBSD's petition for waiver. SMBSD requests not only that the September 30, 1999, deadline be waived for itself, but also that the deadline be waived and extended for all applicants given funding notifications after wave 1, such that all applicants given notification would have the same number of days to complete their projects as applicants notified in wave 1. This requested relief for all applicants given notification after wave 1 is not a request for individualized relief premised on their particular facts or special circumstances. In fact, SMBSD fails to raise even any mention of the particular facts or special circumstances faced by these potential recipients of its requested relief. Thus, SMBSD's request that the Commission "equalize" the time periods to implement non-recurring services for all recipients of Year 1 schools and libraries funding is denied. 3. Furthermore, for similar reasons, SMBSD's request for an extension of its own deadline to December 17, 1999, is denied. SMBSD fails to raise any relevant particular facts or special circumstances it faces which render its situation different in any significant respect from the situation of any other applicant given notification in wave 8. The delays and policy changes SMBSD describes in the administration of the schools and libraries program were faced by all applicants given funding commitments by USAC. The other justification for waiver offered by SMBSD, achieving parity between applicants given notification in different waves, similarly applies to all applicants given funding as opposed to presenting any particular or special hardship for SMBSD alone. In fact, the rationale behind the Commission's extension of the deadline for implementation of non-recurring services to September 30, 1999, in the Tenth Reconsideration Order was to alleviate the hardship faced by applicants specifically in later waves; in other words, the purpose behind that extension was to achieve the very parity SMBSD seeks. To the extent SMBSD's petition contends that this extension is insufficient, it presents no particular facts about or special circumstances regarding SMBSD's situation indicating why this extended deadline is insufficient. 4. We also note that the waiver standard is a difficult one to meet and, in situations such as those presented by SMBSD's petition, where we must maintain universal service support mechanisms that are "specific, predictable, and sufficient," we must consider carefully the consequences of making exceptions to rules designed to provide predictability. In section 54.507 of its rules, the Commission set forth clear guidelines for the time frame within which schools and libraries must use their discounts. In considering SMBSD's petition for waiver, therefore, we must take into account the impact on universal service if other school districts in the United States requested similar extensions of the deadline for implementation of non-recurring services. We conclude that, on the facts presented, granting SMBSD's petition for waiver would undermine the Commission's method for ensuring that universal service support mechanisms are "specific, predictable and sufficient" and, therefore, SMBSD's petition is denied. V. conclusion 1. It is THEREFORE ORDERED, 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, that the Santa Maria-Bonita School District's petition for waiver IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Lisa M. Zaina Deputy Chief, Common Carrier Bureau