FCC Issues Applicant-Friendly Decisions
~ Major implications for future application processing ~
Message Posted June 2, 2006
On May 19, the FCC issued an Order (http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-06-54A1.doc) which marks a major turning point in the E-rate program and how it is administered. The Order (commonly referred to as Bishop Perry) granted 196 applicant requests for waivers and appeals that have been pending at the FCC (some for many years) for what the FCC determined were ministerial or clerical denials. The PA applicants included in the 196 favorable appeals/waivers are listed below. Although this landmark FCC ruling is very specific in what should happen to these 196 applications and other similar pending applications and appeals, and how USAC should process future E-rate applications, there are several issues that need further clarification. Below is an outline of what the FCC decision says, what it means for the future of E-rate, and what questions remain to be answered. Please know that there also have been additional applicant-friendly FCC decisions and USAC reversal of decisions made in the last week and I will report on them in a separate message.
1) What ministerial/clerical errors were included in the FCC appeal decisions?
USAC is currently compiling a list of what they believe are ministerial/clerical errors and they intend to post that list to their website. But in the Bishop Perry Order, the FCC grouped their appeal/waiver decisions into three categories:
a) Failure to meet certain Minimum Processing Standards;
b) Filing outside 471 filing window (in cases involving disputes over whether filing was timely, mistakes made or other circumstances beyond control of the applicants’ staff; and
c) Failure to file Form 470 certifications on time.
The FCC wrote that since:
…the violation at issue is procedural, not substantive, we find that the complete rejection of each of these applications is not warranted. Notably, at this time, there is no evidence of waste, fraud or abuse, misuse of funds, or a failure to adhere to core program requirements. Furthermore, we find that denial of funding in these cases would inflict undue hardship on the applicants. In these cases, the applicants have demonstrated that rigid compliance with USAC’s application procedures does not further the purposes of section 254(h) [of the Telecommunications Act of 96] or serve the public interest.
The FCC acknowledged that, in many instances, this decision departs from “prior Commission precedent.” But it also acknowledged the complexity of the program and that E-rate was not the primary job of most of the people filling out these forms.
2) What PA applicants were included in the FCC's decision?
Dunmore School District (FY 2004); Beavertown Community Library (FY 2005); Colonial IU 20 (FY 2005); Ferndale Area School District (FY 2005); McClure Community Library (FY 2005); Middleburg Community Library (FY 2005); Selingsgrove Community Library (FY 2005); Southeast Delco School District (FY 2004); Sarah A. Reed Children's Center (FY 2005); Upper Adams School District (FY 2003).
3) What action must these 10 applicants now take?
The FCC directed USAC to complete its review of these applications within 60 days and USAC has already sent letters to the affected applicants. If you are listed in #2 but did not yet receive the USAC letter, please let me know ASAP (we know contacts at these institutions may have changed since the appeals were originally filed). The affected applicants should expect a very short timeline to submit the requested information to the SLD. Also, although the applications will be reinstated for review, there may be other major problems with the applications, so just because the appeals were granted doesn't automatically mean the applications will be funded. They now will simply be reviewed.
4) If an applicant was previously denied for a ministerial/clerical error, can they now seek relief under this Order?
The FCC Order contained language that said that USAC was required to provide an opportunity for applicants to cure ministerial and clerical errors on their Forms 470 and 471 and an additional opportunity to file the required certifications. What the FCC did not specify is what funding year this directive was related to. Although not explicit, USAC seems to be proceeding on the basis that the FCC Order applies to all denials in Funding Year 2006 (Year 9). Until clarification is provided from the FCC to USAC on this important point, we won’t know whether the new Order will also apply to earlier funding years. I’ll keep you posted when I find out more information.
So… my unofficial advice with the information we have now:
-- If you have a recent denial and are still within your 60-day appeal window, you should appeal to the SLD ASAP.
-- If you were denied and are outside your 60-day appeal window (even from previous years), you can submit an appeal to the SLD, but be aware that the chances it will be granted are small. If the FCC determines that the relief only applies to pending appeals and not those outside the 60-day window, I likely will then advise those applicants to file an appeal deadline waiver request with the FCC.
5) What impact will the FCC's Bishop Perry Order have on the manner in which the SLD reviews applications from now on?
It is important to note that the Bishop Perry Order DOES NOT eliminate filing deadlines and minimum processing standards. The FCC clearly stated that “all existing E-rate program rules and requirements will continue to apply." But we believe the FCC's language is clear that they expect many fewer application denials by the SLD. Specifically, the FCC gave USAC these directives:
* USAC must modify its application review procedures to better inform applicants of approaching filing deadlines and also provide a 15-day opportunity to file the form if the applicant has missed the deadline.
* USAC must provide all E-rate applicants with an opportunity to cure ministerial and clerical errors on their FCC Form 470 or FCC Form 471, and an additional opportunity to file the required certifications (ambiguities with this statement discussed in # 4).
* USAC must inform applicants promptly in writing of any and all ministerial or clerical errors that are detected in their applications, along with a clear and specific explanation of how the applicant can remedy those errors. In addition, USAC must inform applications promptly in writing of any missing or incomplete certifications. Applicants shall have 15 calendar days from the date of receipt of notice in writing by USAC to amend or refile their FCC Form 470, FCC Form 471 or associated certifications.
* USAC must develop a more targeted outreach program and educational efforts to inform and enlighten applicants on the various application requirements, including the application and certification deadlines, in an attempt to reduce these types of errors. This outreach program shall also identify schools and libraries that have timely posted an FCC Form 470 on USAC’s website but have failed to file the associated FCC Form 470 certification.
* USAC must notify applicants that have filed an FCC Form 470, but have failed to file an FCC Form 471 or its certification by the close of the filing window.
6) What financial impact will the Bishop Perry Order have on the Universal Service Fund?
The FCC estimates that appeals granted in the Order involve applications for approx. $68 million in funding for Funding Years 1999-2005, but that their decision will have a minimum effect in the overall Universal Service Fund because the monies for these appeals have already been collected and held in reserve.
In summary….
I believe this decision will result in kindler, gentler E-rate application processing. The program's general rules and deadlines will continue to apply and applicants will still be expected to abide by the rules, but several of the gotcha's that have existed in the program hopefully will be removed. We also understand the FCC will be issuing additional appeal decisions related to other topics and we're hopeful they will continue to be applicant-friendly. The major moral to this story is that you should appeal each and every denial from this point forward, first to the SLD, and if denied, then appeal to the FCC. By filing an appeal, you can preserve your opportunity to benefit from future positive changes to program rules. But hopefully under this new applicant-friendly review system, denials will be few and far between.
As I obtain additional information related to this Order, I'll send it to the listserve.
-- Julie
Julie Tritt Schell
jtschell@comcast.net
www.e-ratepa.org
(717) 730.7133 (voice)
(717) 730.9060 (fax)
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