[Federal Register Volume 63, Number 141 (Thursday, July 23, 1998)]
[Proposed Rules]
[Pages 39549-39552]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19707]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 54 and 69
[CC Docket Nos. 97-21 and 96-45; DA 98-1336]
Federal Universal Service Support Mechanisms
AGENCY: Federal Communications Commission.
ACTION: Proposed rule; request for comments.
-----------------------------------------------------------------------
SUMMARY: In this document, the Commission seeks comment on the Report
and Proposed Plan of Reorganization (Plan) filed on July 1, 1998 by the
Universal Service Administrative Company (USAC), the Schools and
Libraries Corporation (SLC), and the Rural Health Care Corporation
(RHCC). The Plan proposes a revised administrative structure of the
federal universal service support mechanisms. RHCC filed a Separate
Statement of the Rural Health Care Corporation and Request for Three
Changes in the Plan, dissenting from certain provisions of the proposed
Plan. In this document, the Commission also seeks comment on other
issues regarding the administration of the federal universal service
support mechanisms, including processes for Commission review of
actions by USAC, SLC, and RHCC.
DATES: Comments are due on or before August 5, 1998 and Reply Comments
are due on or before August 12, 1998.
ADDRESSES: One original and six copies of all comments and reply
comments should be sent to the Commission's Secretary, Magalie Roman
Salas, Office of the Secretary, Federal Communications Commission, 1919
M Street, N.W., Room 222, Washington, D.C. 20554. All filings should
refer to USAC Plan of Reorganization, CC Docket Nos. 97-21 and 96-45,
and DA 98-1336. Parties also may file comments electronically via the
Internet at: http://www.fcc.gov/e-file/ecfs.html>. Only one copy of an
electronic submission must be submitted. In completing the transmittal
screen, commenters should include their full name, Postal Service
mailing address, and the lead docket number for this proceeding, which
is Docket No. 97-21. Parties not submitting their comments via the
Internet are also asked to submit their comments on diskette. Parties
submitting diskettes should submit them to Sheryl Todd, Accounting
Policy Division, 2100 M Street, N.W., Room 8606, Washington, D.C.
20554. Such a submission should be on a 3.5 inch diskette formatted in
an IBM compatible format using WordPerfect 5.1 for Windows or
compatible software. The diskette should be accompanied by a cover
letter and should be submitted in ``read only'' mode. The diskette
should be clearly labelled with the party's name, proceeding (including
the lead docket number in this case, Docket No. 97-21), type of
pleading (comment or reply comment), date of submission, and the name
of the electronic file on the diskette. Each diskette should contain
only one party's pleadings, preferably in a single electronic file. In
addition, parties must send copies to the Commission's copy contractor,
International Transcription Service, Inc., 1231 20th Street, N.W.,
Washington, D.C. 20037.
FOR FURTHER INFORMATION CONTACT: Sharon Webber, Attorney, Common
Carrier Bureau, Accounting Policy Division, (202) 418-7400 or Adrian
Wright, Common Carrier Bureau, Accounting Policy Division, (202) 418-
7400.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's
document released on July 15, 1998. The full text of this document and
the Plan are available for public inspection during regular business
hours in the FCC Reference Center, Room 239, 1919 M Street, N.W.,
Washington, D.C., 20554. An electronic copy of the complete plan of
reorganization also may be found on the Commission's Universal Service
Web Page at www.fcc.gov/ccb/universal__service/usacjuly.pdf>.
Background
1. In connection with supplemental appropriations legislation
enacted on May 1, 1998, Congress requested that the Commission propose
a single entity to administer the support mechanisms for schools and
libraries and rural health care providers. In its Report to Congress,
the Commission proposed to merge the Schools and Libraries Corporation
(SLC) and the Rural Health Care Corporation (RHCC) into the Universal
Service Administrative Company (USAC) as the single entity responsible
for administering the universal service support mechanisms for schools,
libraries and rural health care providers by January 1, 1999. The
Commission indicated that USAC, SLC and RHCC would be required jointly
to prepare and submit a plan of reorganization, for approval by the
Commission.
2. On July 1, 1998, SLC, RHCC and USAC filed a Report and Proposed
Plan of Reorganization (Plan) for revising the administrative structure
of the federal universal service support mechanisms. RHCC filed a
Separate Statement of the Rural Health Care Corporation and Request for
Three Changes in the Plan (RHCC Statement), proposing certain
modifications to the Plan. In this document, we seek comment from
interested parties on issues raised by the Plan and the RHCC Statement.
We also seek comment on other issues regarding the administration of
the federal universal service support mechanisms, including processes
for Commission review of actions by USAC, RHCC and SLC, divestiture of
USAC from the National Exchange Carrier Association (NECA), and
compensation limitations.
Issues for Comment
Revised Administrative Structure
3. USAC, SLC, and RHCC have proposed a plan to merge SLC and RHCC
into USAC as the single entity responsible for administering the
universal service support mechanisms for schools, libraries and rural
health care providers by January 1, 1999. As described more fully in
the Plan, USAC would consist of three divisions--the High Cost & Low
Income Division, the Schools and Libraries Division, and the Rural
Health Care Division. The current USAC Board consists of seventeen
members representing a cross-section of industry and beneficiary
interests. Under the revised administrative structure, the USAC Board
of Directors (the Board) would consist of seventeen
[[Page 39550]]
members plus the USAC Chief Executive Officer (CEO). In addition, the
Plan proposes that two new committees of the USAC Board would be
established to oversee the schools and libraries and rural health care
support mechanisms. Any action taken by the Rural Health Care, Schools
and Libraries, and High Cost and Low Income committees with regard to
their respective support mechanisms would be binding on the Board,
unless such action is presented for review to the full Board by the
USAC CEO and the Board disapproves of such action by a two-thirds vote
of a quorum of directors. However, all committee budgetary matters
would be presented to the full USAC Board and could be disapproved by a
two-thirds vote of a quorum of directors. Under the Plan, the USAC CEO
would manage all three universal service support mechanisms.
4. We seek comment on whether vesting the consolidated USAC with
the administrative responsibilities for all of the universal service
support mechanisms would best further the goals of efficient
administration and accountability. We also seek comment on whether the
Plan fulfills the goal of administrative efficiency while preserving
the distinct missions of the three universal service support
mechanisms. We seek comment on any other administrative structures the
Commission could adopt. To the extent that parties suggest alternative
structures, we urge them to provide as much detail as possible, and to
evaluate fully the benefits and disadvantages of such structure in
comparison to USAC's Plan. We also seek comment on the proposed
functions and composition of the three committees of the Board, as
described in the Plan.
5. Although the Plan is silent on the selection process for the
USAC CEO, we seek comment on whether the Commission should adopt the
procedure that currently applies to the selection of a CEO for SLC and
RHCC. Under that procedure, the consolidated USAC Board would submit to
the Chairman of the Commission a candidate to serve as the USAC CEO.
Final selection of that individual would be subject to the approval of
the Chairman of the Commission.
6. In the RHCC Statement, RHCC proposes three modifications to the
proposed Plan. First, RHCC proposes that two additional rural health
care representatives serve on the USAC Board and that the Plan identify
the individuals who initially would serve on the combined Board and the
individuals who would serve on the initial Rural Health Care Committee.
Second, RHCC proposes that the RHCC Committee have the authority to
bind the full USAC Board with regard to all of the Committee's
programmatic functions and that Committee decisions not be subject to
disapproval by a two-thirds vote of a quorum of the Board. Third, while
RHCC agrees that the CEO should have the authority to hire and fire the
division heads, RHCC proposes that the RHCC division head be granted
the authority to hire and fire division staff. We seek comment on
RHCC's proposals.
Compensation Limitations
7. In the Commission's recent order regarding funding for the
schools and libraries universal service support mechanism, the
Commission concluded that the Administrator must, as a condition of its
continued service, compensate all officers and employees of SLC and
RHCC at an annual rate of pay, including any non-regular payments,
bonuses, or other compensation, that does not exceed the rate of basic
pay in effect for Level I of the Executive Schedule under section 5312
of Title 5 of the United States Code. The Commission further stated
that such level of compensation would apply, effective July 1, 1998, to
all officers and employees of SLC and RHCC, as currently organized, as
well as to all such officers and employees in the consolidated
administrative corporation following reorganization on January 1, 1999.
We seek comment on whether compensation limitations also should apply
to all USAC officers and employees, including, for example, those
responsible for administering the support mechanisms for high cost
areas and low income consumers as well as those responsible for
performing the billing and collection functions for all of the support
mechanisms. We also seek comment on whether such compensation
limitations should apply to officers and employees of NECA.
USAC's Permanence and Divestiture From NECA
8. In the Report to Congress, the Commission proposed that the
revised administrative structure be made permanent, subject to the
Commission's review and determination after one year that the new
structure is administering the distribution of universal service
support and benefits to eligible entities in an efficient, effective
and competitively neutral manner. We seek comment on the Commission's
proposal to designate USAC as the permanent Administrator. In the
Report to Congress, the Commission further proposed that, pending
Commission review of USAC's performance after one year, USAC should be
divested from NECA. The Plan proposes to divest USAC from NECA as soon
as possible. We seek comment on the proposed divestiture of USAC from
NECA and the timing of such divestiture.
FCC Oversight
9. The Commission has always retained ultimate control over the
operation of the federal universal service support mechanisms through
its authority to establish the rules governing the support mechanisms
and to review all decisions concerning administration of the support
mechanisms. The consolidated USAC would continue to be accountable to
the Commission pursuant to the procedures that currently apply to USAC,
SLC, and RHCC. SLC and RHCC have the authority to direct the
performance of audits of schools and libraries and rural health care
provider beneficiaries of universal service support. The Commission
also oversees the structure and content of the annual independent audit
that USAC, SLC, and RHCC are required to undertake.
10. The Commission will levy a forfeiture for a violation of the
Act under section 503(b)(1)(B) and (2)(C) of the Act. Furthermore,
persons found willfully to have made false statements to the Commission
may be subject to criminal penalties under Title 18 of the United
States Code.
11. We note that parties already have asked the Commission what
procedures will be used to review decisions by SLC, RHCC, and USAC. Any
affected party may seek review from the Commission using existing
Commission procedures. However, until a revised administrative
structure is adopted, we strongly encourage parties seeking relief from
a decision of USAC, SLC, or RHCC to seek initial reconsideration from
SLC, RHCC or the High Cost and Low Income Committee, as appropriate.
12. In the Report to Congress, the Commission proposed to establish
specific appeal procedures under which administrative decisions made by
USAC would be reviewable by the Commission. We seek comment on the
following proposal: An affected party would be permitted to file with
the Common Carrier Bureau (the Bureau), within sixty days of an action
taken by USAC, a petition for Commission review. The Bureau would have
delegated authority to rule on such petition and if the Bureau took no
action within sixty days, USAC's decision would be deemed approved by
the Bureau. As with other decisions made by the Bureau acting pursuant
to its
[[Page 39551]]
delegated authority, parties could seek Commission review of the
Bureau's decision. The Bureau also would have the authority to review
the decisions of USAC at any time on the Bureau's own motion. The
Bureau would conduct de novo review of appeals from USAC decisions. If
an application for discounted services or support is approved, and that
approval is appealed to the Commission, the pendency of that appeal
would not affect the eligibility of the applicant to receive discounted
services, nor would it prevent reimbursement of carriers for discounted
services provided to such applicants. We seek comment on all aspects of
this proposal. At the same time, we propose to limit the Bureau's
authority to issues that are not novel questions of fact, law or
policy. We seek comment on this proposal. We also seek comment on
whether state procurement rules or other state experiences may serve as
useful models in addressing appeals of USAC's decisions.
13. In addition, we seek comment on whether a party affected by a
decision made by the division staff should be required to seek relief
from the appropriate committee of the Board before filing an appeal
with the Commission. Similarly, if the relief sought pertains to a
matter that is solely within the jurisdiction of the full USAC Board,
we seek comment on whether the affected party should be required to
seek relief from the full USAC Board before filing an appeal with the
Commission. We also seek comment on the timing issues that would be
raised if the USAC CEO chose to bring the matter before the full USAC
Board under the supermajority procedure. In addition, we seek comment
on other ways in which the appeals process may be made as fair and
efficient as possible.
14. To foster greater accountability of the consolidated USAC
entity, the Commission proposed in the Report to Congress that, in
connection with its annual audit, USAC prepare and file with Congress
and the Commission an annual report describing all significant aspects
of its structure and operations for the preceding year. We seek comment
on this proposal and on ways to structure such a report to enhance the
Commission's oversight of USAC's administration and operations.
15. We seek comment on whether there are any additional enforcement
mechanisms that the Commission should invoke. Furthermore, we seek
comment on what action the Commission should take if it is determined
that an application was approved and funds subsequently disbursed
erroneously.
Regulatory Flexibility Analysis
16. The Regulatory Flexibility Act (RFA) requires that a regulatory
flexibility analysis be prepared for notice and comment rulemaking
proceedings, unless the agency certifies that ``the rule will not, if
promulgated, have a significant economic impact on a substantial number
of small entities.'' The RFA generally defines ``small entity'' as
having the same meaning as the terms ``small business,'' ``small
organization,'' and ``small governmental jurisdiction.'' A small
organization is generally ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
This regulatory flexibility analysis supplements our prior
certification and analyses.
17. Supplemental Regulatory Flexibility Certification. In the NECA
Governance Order, the Commission directed NECA, as a condition of its
service as temporary Administrator of the universal service support
mechanisms, to create an independent subsidiary, USAC, to administer
temporarily certain aspects of the universal service support mechanisms
and to establish SLC and RHCC to administer specific aspects of the
universal service mechanisms for schools and libraries and rural health
care providers. In that Order, the Commission concluded that NECA is
not a small organization within the meaning of the RFA, finding that
NECA is a non-profit association that was created to administer the
Commission's interstate access tariff and revenue distribution
processes. On this basis, the Commission certified pursuant to the RFA
that the rules adopted in the NECA Governance Order would not have a
significant economic impact on a substantial number of small entities.
18. This document seeks comment on the proposed plan to merge SLC
and RHCC into USAC as the single entity responsible for the
administration of the universal service support mechanisms for schools,
libraries and rural health care providers. We also seek comment on a
proposal to require USAC to prepare and file with Congress and the
Commission an annual report describing all significant aspects of its
structure and operations for the preceding year. For the same reasons
stated in the NECA Governance Order, we find that NECA is not a small
organization within the meaning of the RFA. Similarly, USAC, as a
wholly-owned, non-profit subsidiary of NECA, is not a small
organization. SLC and RHCC are non-profit corporations created by NECA
as a condition of its service as temporary Administrator. Even if NECA,
USAC, SLC and RHCC are small entities, we certify that the
reorganization of SLC, RHCC, and USAC proposed here will affect
directly only those four entities and thus will not have a direct,
significant impact on a substantial number of small entities. We
therefore certify, pursuant to RFA, 5 USC 605(b), that this action will
not have a significant economic impact on a substantial number of small
entities.
19. Supplemental Regulatory Flexibility Analysis. This document
seeks comment on the proposed procedures under which administrative
decisions made by USAC would be reviewable by the Commission. This
document also seeks comment on the enforcement mechanisms the
Commission should invoke in connection with the universal service
support mechanisms. We previously performed a regulatory flexibility
analysis regarding the implementation of the universal service support
mechanisms. This supplemental regulatory flexibility analysis addresses
possible changes to our previous analyses that might result from our
proposal here.
20. The Commission is required by sections 254(a)(2) and 410(c) of
the Act to propose rules to implement properly the universal service
support mechanisms. In this document, the Commission proposes
procedures under which administrative decisions made by USAC would be
reviewable by the Commission. This document also seeks comment on
whether a party affected by a decision made by the division staff of
USAC should be required to seek relief from the appropriate committee
of the USAC Board before filing an appeal with the Commission. Specific
appeal procedures are necessary to ensure that the Commission retains
ultimate authority over the implementation of universal service support
mechanisms. The description of the small entities to which the proposed
rules would apply is set forth in the Universal Service Order and
continues to apply to our analysis. The Commission proposes a two-level
appeal process. We do not believe that such a requirement will have a
significant economic impact on the small entities affected by the
process. Affected parties will benefit from review by the appropriate
committee of the full USAC Board instead of having to resort to full
Commission review in the first instance. We seek comment on these
tentative conclusions.
21. The Commission's Office of Public Affairs Reference Operations
Division, will send a copy of this document,
[[Page 39552]]
including this certification, to the Chief Counsel for Advocacy of the
Small Business Administration.
Ex Parte
22. Pursuant to 47 CFR 1.1206, this proceeding will be conducted as
a permit-but-disclose proceeding in which ex parte communications are
permitted subject to disclosure.
List of Subjects
47 CFR Part 54
Healthcare providers, Libraries, Schools, Telephone.
47 CFR Part 69
Communications common carriers.
Federal Communications Commission.
Kathryn C. Brown,
Chief Common Carrier Bureau.
Statement of Commissioner Harold Furchtgott-Roth
Re: Proposal to Revise Administrative Structure for Federal Universal
Service Support Mechanisms; (CC Docket No 96-45)
July 15, 1998.
Today the Common Carrier Bureau releases a Public Notice seeking
comment on the Universal Service Administrative Company's (USAC)
proposed plan for reorganization of the universal service
administrative structures. The proposal for consolidating the three
corporations is a good first step in reaching a more rational and
efficient structure to administer universal service. I also appreciate
that the Bureau is following up on the Commission's commitment in its
May 8, 1998 report to Congress to ``establish a procedure under which
administrative decisions made by USAC would be reviewable by the
Commission.'' I have reservations, however, about the details of these
proposals, including the specific functions of the consolidated entity
and the Bureau's proposed procedures for Commission oversight.
Section 2005(b)(2)(A) of Senate Bill 1768, which prompted these
revisions, provides for an extremely limited administrative entity:
[T]he entity proposed by the Commission to administer the program--
(i) is limited to implementation of the FCC rules for applications for
discounts and processing the application necessary to determine
eligibility for discounts under section 254(h) of the Communications
Act of 1934 (47 U.S.C. 254(h)) as determined by the Commission: (ii)
may not administer the program in any manner that requires that entity
to interpret the intent of Congress in establishing the programs or
interpret any rule promulgated by the Commission in carrying out the
programs, without appropriate consultation and guidance from the
Commission.
In light of such limited administrative functions, I fail to see
the need for such bureaucratic corporations with formal multiple
committees. If the overall entity is prohibited from setting policy and
limited to the function of processing applications, then any
subcommittee must be similarly constrained. But what kinds of decisions
will any subcommittee be making that would be of such paramount
interest to the program that it would be necessary to bind the full
USAC board absent a supermajority? In establishing an entity to review
and process the applications, the Commission is merely contracting out
administrative functions. All decisions regarding where the money
should be going and how it should be distributed should--indeed must--
be made by the Commission.
I am also concerned that the Commission itself is insufficiently
involved in the decision-making process under the Bureau's proposal.
For example, an affected party would file a petition for review first
with the Common Carrier Bureau, who would have specific delegated
authority to rule on the petitions with possible appeal to the full
Commission. I would prefer that the full Commission be more actively
involved in overseeing the administration of these new programs. For
example. unless amended, this process would allow for Bureau approval
of USAC decisions without an order explaining their reasoning. My
concerns regarding sufficient Commission involvement earlier in the
process are only exacerbated by the Bureau's proposal to allow
applicants to receive discounted services and carriers to be reimbursed
during the pendency of such an appeal. Thus, If the Bureau failed to
act for any number of reasons, public funds would still be disbursed
while a potentially valid challenge remained. What assurances are there
for taxpayers that erroneous payments will be returned?
I also fail to see the need for any party to be required to appeal
a USAC staff decision first to the USAC Board, and possibly even to the
relevant committee of the Board, as proposed. USAC has no policy-making
or adjudicative authority. As such, an affected party should be able to
seek relief directly from the full Commission, or the Bureau if
appropriate under delegated authority.
Moreover, my concerns regarding appropriate Commission oversight
are heightened by the fact that the proposed committees of USAC would
have the power to bind the USAC Board regarding matters within their
expertise, absent a supermajority of the full USAC Board voting to
override the committee's actions. Matters within the Schools and
Libraries Committee's expertise. For example, include ``developing and
implementing other distinctive program functions.'' I am concerned with
such open-ended authority, especially in light of the protracted
procedure for Commission review. I encourage parties to take these
issues into account when commenting on the proposed structure.
I believe that the full Commission must take a more active role in
the direct oversight of these quasi-public companies. Congress clearly
favors a more efficient organization of only limited administrative
functions, without the ability to ``interpret the intent of Congress''
or ``any rule promulgated by the Commission.\1\ While a good start,
this public notice fails to ensure meaningful and early Commission
involvement in budgetary decisions and the policy-making process.\2\
---------------------------------------------------------------------------
\1\ Section 2005(b) of Senate Bill 1768.
\2\ For example, I am concerned about the degree of oversight
that is being exercised regarding administrative and start-up costs.
In their latest filing, the Schools and Libraries Corporation
indicates that it paid NECA $1.86 million in start-up costs, more
than three time the original estimate, and it is still not able to
provide an accurate estimate of all its administrative costs for the
first quarter. Third Quarter 1998 Fund Size Requirements for the
Schools and Libraries Universal Service Program, dated May 1, 1998.
---------------------------------------------------------------------------
Finally, I remain concerned that the report fails to address fully
the issues raised by the GAO report regarding the legality of the
Commission creating any new corporations without specific statutory
authority. I fail to see how the Commission can direct that these
corporations continue to act without first receiving the requisite
authorization from Congress, and urge others to comment on this aspect
of the revised organization.
[FR Doc. 98-19707 Filed 7-22-98; 8:45 am]
BILLING CODE 6712-01-M
