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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, D.C. 20554 In the Matter of Federal-State Joint Board on Universal Service ) ) ) ) CC Docket No. 96-45 ORDER Adopted: May 4, 2000 Released: May 5, 2000 Before the Common Carrier Bureau: I. INTRODUCTION 1. The Bureau has under review a request by the Illinois State Department of Education (ISDE) to waive the June 30, 2000 deadline for the use of nonrecurring services by Illinois schools receiving services under the schools and libraries universal service support mechanism. Pursuant to section 1.3 of the Commission's rules, and for the reasons outlined below, we find good cause to waive Commission rules pertaining to the deadline for the implementation of nonrecurring services in Year Two of the schools and libraries universal service support mechanism for the Illinois petitioners as well as for all schools and libraries receiving support in Year Two of this program. II. BACKGROUND 2. The Commission's rules require schools and libraries to implement services for which discounts have been committed by the Administrator, the Universal Service Administrative Company (USAC), within the funding year for which 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 in the schools and libraries support mechanism in the first year of the program, the Commission subsequently amended its rules to extend the deadline for schools and libraries to use their discounts on Year One nonrecurring services from June 30, 1999 (the end of the funding period) to September 30, 1999. The Commission permitted this last extension because a number of schools and libraries received late notice of funding commitment decisions from USAC, making it difficult for them "to initiate the installation of internal connections." Moreover, the Commission noted that extending the deadline until September 30 would allow schools to implement nonrecurring services over the summer months when schools were in recess. 3. The Commission has received a request from ISDE to waive the June 30, 2000 deadline for the implementation of Year Two nonrecurring services by Illinois schools, and to allow those schools to use their universal service discounts for nonrecurring services until September 30, 2000. In its letter, ISDE explains that it seeks this extension because many Illinois schools received funding commitment letters from USAC late in the Year Two funding year (as late as December 1999), making it difficult for them to complete implementation of nonrecurring services before the June 30, 2000 deadline. ISDE indicates further that many Illinois schools have been attempting to complete installation of internal connections before the current deadline by engaging contractors to work after school hours and on weekends, but that this situation is causing schools to incur additional costs. An extension of the deadline, according to ISDE, would allow schools to complete installation of internal connections during the summer months when classes are not in session, thereby minimizing increased costs and classroom disruption. ISDE also notes that many Illinois schools estimate that they will be unable to complete installation prior to the June 30, 2000 deadline, and fear losing a substantial portion of their nonrecurring costs discounts. A separate filing on this matter, made by the Council of Chief State School Officers (CCSSO), states that a consensus of 22 state technology coordinators agreed that the extension sought by ISDE would be "enormously helpful to their schools." CCSSO states further that rural schools are particularly burdened by the deadline for use of nonrecurring services because they employ small contractors who "do not have sufficient manpower to meet the pressing schedules of multiple customers at peak work times." III. DISCUSSION 4. The Commission may waive any provision of its rules on its own motion and 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." A rule may be waived where the particular facts make strict compliance inconsistent with the public interest. In addition, we 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. For the reasons set forth below, we find that it is in the public interest and that special circumstances exist to merit granting a waiver to Illinois schools of the June 30, 2000 deadline for the use of Year Two nonrecurring services. Moreover, because we conclude that it would be in the public interest to grant this relief to all Year Two applicants, we waive, on our own motion, the June 30, 2000 deadline for use of Year Two nonrecurring services by all applicants receiving support under the schools and libraries program. 5. As an initial matter, we conclude that it is in the public interest to grant a waiver of the June 30, 2000 deadline for use of Year Two nonrecurring services to all Illinois school applicants. We find that a number of Illinois school applicants, through no fault of their own, did not receive from USAC notice of Year Two funding commitments until as late as December 1999. We also find that this delay caused many Illinois applicants to wait until they received their funding commitments to schedule vendor work to implement nonrecurring services during the school year. As a result, many Illinois applicants were forced to engage vendors for nonrecurring services implementation after school hours and on weekends to prevent classroom disruption. According to ISDE, "this schedule has placed a logistical and financial burden on both the schools and the vendors to complete the assigned work on time and within the proposed budget." We agree with ISDE and CCSSO that extending the deadline for implementation of nonrecurring services would allow applicants to schedule vendor work during regular business hours over the summer, reducing costs and classroom disruption. We take notice of the fact that many Illinois schools indicate that they will lose large portions of their discounted funds because they expect to be unable to implement nonrecurring services by the June 30, 2000 deadline. We find that special circumstances exist here, where the applicants have been prevented through no fault of their own from scheduling work earlier in the funding year and where the unique requirements of scheduling work so as to not disrupt classrooms is critical. For these reasons, we conclude that the public interest is best served by granting a waiver of the Year Two deadline for implementation of nonrecurring services by Illinois schools, and by extending the deadline for use of nonrecurring services from June 30, 2000 to September 30, 2000. 6. Moreover, the Commission is empowered to waive on its own motion any of its rules for good cause shown. For the reasons outlined below, we grant a waiver of the June 30, 2000 deadline for the use of Year Two nonrecurring services to all schools and libraries. We find that, like the Illinois schools, many schools and libraries across the country have encountered similar problems arising out of late receipt of funding commitments from USAC for Year Two. We conclude, therefore, that all schools and libraries in this country, who have received nonrecurring services' discounts, would benefit from a waiver of this deadline for Year Two. We conclude further that the public interest is best served if all schools and libraries receiving Year Two discounts on nonrecurring services have the benefit of an extension of the deadline for nonrecurring services. We, therefore, grant a waiver, on our own motion, of the deadline for use of nonrecurring services to all schools and libraries receiving support, and extend the deadline for their use of nonrecurring services from June 30, 2000 to September 30, 2000. This action effectively grants the same relief that the Commission granted to all Year One applicants in the Tenth Reconsideration Order. 7. We note that, by granting this waiver, we are not increasing the amount that schools and libraries may receive for nonrecurring services for Year Two of the program beyond that already committed by USAC. Instead, we are merely providing schools and libraries with additional time in which to complete their receipt of these discounted nonrecurring services, just as the Commission did in the Tenth Reconsideration Order. Such nonrecurring services must have been requested within the initial filing window and approved by USAC for Year Two of the schools and libraries program. 8. Similar to the Commission's action in the Tenth Reconsideration Order, we also grant a limited waiver of the Commission's competitive bidding rules for existing contracts with respect to these nonrecurring services. We conclude that this action will ensure equitable treatment for recipients of discounts for nonrecurring services. Contracts exempt from competitive bidding that will expire June 30, 2000, may be voluntarily extended until September 30, 2000 with respect to nonrecurring services for which discounts have been approved by USAC for Year Two. Thus, parties to such contracts may extend to September 30, 2000 the date by which nonrecurring services approved for Year Two discounts may be received without complying with the Commission's competitive bidding process. Parties may not, however, extend other contractual provisions beyond the dates established by the Commission's rules without complying with the competitive bidding process. IV. ORDERING CLAUSES 9. 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 Waiver is GRANTED. 10. IT IS FURTHER ORDERED that the deadline for the use of nonrecurring services in the second funding year of the schools and libraries universal service support mechanism for all applicants is extended from June 30, 2000 to September 30, 2000. FEDERAL COMMUNICATIONS COMMISSION Carol E. Mattey Deputy Chief Common Carrier Bureau