Federal Register / Vol. 75, No. 232 / Friday, December 3, 2010 / Rules and Regulations 75393 

the tolerances and specify how 

compliance with the tolerances is to be 

measured. The revised tolerance 

expression makes clear that the 

tolerances cover residues of the 

fungicide metrafenone, including its 

metabolites and degradates, but that 

compliance with the specified tolerance 

levels is to be determined by measuring 

only metrafenone (3-bromo-6-methoxy2-methylphenyl)(2,3,4-trimethoxy-6- 

methylphenyl)methanone in or on the 

commodities. 

V. Conclusion 

Therefore, tolerances are established 

for residues of metrafenone, (3-bromo-6- 

methoxy-2-methylphenyl)(2,3,4- 

trimethoxy-6-methylphenyl)methanone, 

in or on grape at 4.5 ppm and grape, 

raisin at 17 ppm. 

VI. Statutory and Executive Order 

Reviews 

This final rule establishes tolerances 

under section 408(d) of FFDCA in 

response to a petition submitted to the 

Agency. The Office of Management and 

Budget (OMB) has exempted these types 

of actions from review under Executive 

Order 12866, entitled Regulatory 

Planning and Review (58 FR 51735, 

October 4, 1993). Because this final rule 

has been exempted from review under 

Executive Order 12866, this final rule is 

not subject to Executive Order 13211, 

entitled Actions Concerning Regulations 

That Significantly Affect Energy Supply, 

Distribution, or Use (66 FR 28355, May 

22, 2001) or Executive Order 13045, 

entitled Protection of Children from 

Environmental Health Risks and Safety 

Risks (62 FR 19885, April 23, 1997). 

This final rule does not contain any 

information collections subject to OMB 

approval under the Paperwork 

Reduction Act (PRA), 44 U.S.C. 3501 

et seq., nor does it require any special 

considerations under Executive Order 

12898, entitled Federal Actions to 

Address Environmental Justice in 

Minority Populations and Low-Income 

Populations (59 FR 7629, February 16, 

1994). 

Since tolerances and exemptions that 

are established on the basis of a petition 

under section 408(d) of FFDCA, such as 

the tolerance in this final rule, do not 

require the issuance of a proposed rule, 

the requirements of the Regulatory 

Flexibility Act (RFA) (5 U.S.C. 601 

et seq.) do not apply. 

This final rule directly regulates 

growers, food processors, food handlers, 

and food retailers, not States or tribes, 

nor does this action alter the 

relationships or distribution of power 

and responsibilities established by 

Congress in the preemption provisions 

of section 408(n)(4) of FFDCA. As such, 

the Agency has determined that this 

action will not have a substantial direct 

effect on States or tribal governments, 

on the relationship between the national 

government and the States or tribal 

governments, or on the distribution of 

power and responsibilities among the 

various levels of government or between 

the Federal Government and Indian 

tribes. Thus, the Agency has determined 

that Executive Order 13132, entitled 

Federalism (64 FR 43255, August 10, 

1999) and Executive Order 13175, 

entitled Consultation and Coordination 

with Indian Tribal Governments (65 FR 

67249, November 9, 2000) do not apply 

to this final rule. In addition, this final 

rule does not impose any enforceable 

duty or contain any unfunded mandate 

as described under Title II of the 

Unfunded Mandates Reform Act of 1995 

(UMRA) (Pub. L. 104–4). 

This action does not involve any 

technical standards that would require 

Agency consideration of voluntary 

consensus standards pursuant to section 

12(d) of the National Technology 

Transfer and Advancement Act of 1995 

(NTTAA), Public Law 104–113, section 

12(d) (15 U.S.C. 272 note). 

VII. Congressional Review Act 

The Congressional Review Act, 

5 U.S.C. 801 et seq., generally provides 

that before a rule may take effect, the 

agency promulgating the rule must 

submit a rule report to each House of 

the Congress and to the Comptroller 

General of the United States. EPA will 

submit a report containing this rule and 

other required information to the U.S. 

Senate, the U.S. House of 

Representatives, and the Comptroller 

General of the United States prior to 

publication of this final rule in the 

Federal Register. This final rule is not 

a ‘‘major rule’’ as defined by 5 U.S.C. 

804(2). 

List of Subjects in 40 CFR Part 180 

Environmental protection, 

Administrative practice and procedure, 

Agricultural commodities, Pesticides 

and pests, Reporting and recordkeeping 

requirements. 

Dated: November 24, 2010. 

Steven Bradbury, 

Director, Office of Pesticide Programs. 

■ Therefore, 40 CFR chapter I is 

amended as follows: 

PART 180—[AMENDED] 

■ 1. The authority citation for part 180 

continues to read as follows: 

Authority: 21 U.S.C. 321(q), 346a and 371. 

■ 2. Section 180.624 paragraph (a) is 

revised to read as follows: 

§ 180.624 Metrafenone; tolerances for 

residues. 

(a) General. Tolerances are 

established for residues of the fungicide 

metrafenone, including its metabolites 

and degradates, in or on the 

commodities in the table below. 

Compliance with the tolerance levels 

specified in the following table is to be 

determined by measuring only 

metrafenone (3-bromo-6-methoxy-2- 

methylphenyl)(2,3,4-trimethoxy-6- 

methylphenyl)methanone in or on the 

following commodities: 

Commodity Parts per million 

Grape .............................. 4 .5 

Grape, raisin ................... 17 

* * * * * 

[FR Doc. 2010–30363 Filed 12–2–10; 8:45 am] 

BILLING CODE 6560–50–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 54 

[CC Docket No. 02–6, GN Docket No. 09– 

51; FCC 10–175] 

Schools and Libraries Universal 

Service Support Mechanism and A 

National Broadband Plan for Our 

Future 

AGENCY: Federal Communications 

Commission. 

ACTION: Final rule. 

SUMMARY: In this document, the Federal 

Communications Commission 

(Commission) takes another step toward 

realizing the National Broadband Plan’s 

vision of improving connectivity to 

schools and libraries by upgrading and 

modernizing the successful E-rate 

program. In particular, the Commission 

takes action on upgrades that can be 

implemented in funding year 2011 (July 

1, 2011–June 30, 2012); enables schools 

and libraries to better serve students, 

teachers, librarians, and their 

communities by providing more 

flexibility to select and make available 

the most cost-effective broadband and 

other communications services; 

simplifies and streamlines the program; 

and improves safeguards against waste, 

fraud and abuse. In addition, the 

Commission adopts the eligible services 

list for funding year 2011. 

DATES: Effective January 3, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Regina Brown, Wireline Competition 


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Bureau, Telecommunications Access 

Policy Division, (202) 418–0792 or TTY: 

(202) 418–0484. 

SUPPLEMENTARY INFORMATION: This is a 

synopsis of the Commission’s Sixth 

Report and Order in CC Docket No. 

02–6, GN Docket No. 09–51, FCC 10– 

175, adopted September 23, 2010, and 

released September 28, 2010. The 

complete text of this document is 

available for inspection and copying 

during normal business hours in the 

FCC Reference Information Center, 

Portals II, 445 12th Street, SW., Room 

CY–A257, Washington, DC 20554. The 

document may also be purchased from 

the Commission’s duplicating 

contractor, Best Copy and Printing, Inc., 

445 12th Street, SW., Room CY–B402, 

Washington, DC 20554, telephone (800) 

378–3160 or (202) 863–2893, facsimile 

(202) 863–2898, or via the Internet at 

http://www.bcpiweb.com. It is also 

available on the Commission’s Web site 

at http://www.fcc.gov. People with 

Disabilities: To request materials in 

accessible formats for people with 

disabilities (braille, large print, 

electronic files, audio format), send an 

e-mail to fcc504@fcc.gov or call the 

Consumer & Governmental Affairs 

Bureau at 202–418–0530 (voice), 202– 

418–0432 (tty). 

I. Introduction 

1. In this order, we take another step 

toward realizing the National 

Broadband Plan’s (NBP) vision of 

improving connectivity to schools and 

libraries by upgrading and modernizing 

the successful E-rate program (more 

formally known as the schools and 

libraries universal service support 

mechanism). Schools and libraries can 

serve as anchor institutions for their 

communities, and certain areas may 

depend on these anchor institutions to 

achieve the NBP’s goal of affordable 

access to broadband of at least 1 gigabit 

per second in every community in the 

country. Broadband is an essential tool 

to help educators, parents, and students 

meet challenges in education and lifelong learning. Through broadband, 

librarians can assist library patrons to 

improve skills for jobs, apply for 

employment, or access government 

resources. Access to broadband—at 

home or at anchor institutions—is a 

critical component of enabling everyone 

in America to develop the digital skills 

they need to prosper in the 21st century. 

2. The NBP, delivered to Congress on 

March 16, 2010, recommended that the 

Commission take a fresh look at the Erate program and identify potential 

improvements to reflect changes in 

technology and evolving teaching 

methods used by schools. In May 2010, 

the Commission issued a Notice of 

Proposed Rulemaking (NPRM) seeking 

public comment on proposals to ensure 

that the E-rate program continues to 

help our children and communities 

prepare for the high-skilled jobs of the 

future and reap the full benefits of the 

Internet. The Commission received 

extensive comments in response to the 

E-rate Broadband NPRM, 75 FR 32699, 

June 9, 2010, which inform the policy 

choices made in this order. 

3. We adopt a number of the 

proposals put forward in the E-rate 

Broadband NPRM. The revisions we 

adopt today fall into three conceptual 

categories: (1) Enabling schools and 

libraries to better serve students, 

teachers, librarians, and their 

communities by providing more 

flexibility to select and make available 

the most cost-effective broadband and 

other communications services; (2) 

simplifying and streamlining the E-rate 

application process; and (3) improving 

safeguards against waste, fraud, and 

abuse. As a result of these changes, 

schools and libraries throughout the 

country can make their limited dollars 

go further. The changes we adopt will 

increase the ability of students and the 

public to utilize broadband services for 

educational needs. In addition, the 

changes to simplify the E-rate program 

will help reduce the cost of 

participating in the program, thereby 

making the program more accessible, 

particularly to smaller school districts 

and libraries that are often located in 

more rural areas and may not have staff 

dedicated to managing E-rate 

applications and related activities. 

4. In particular, in this report and 

order, we: 

Æ Enable schools and libraries to 

better serve students, teachers, 

librarians, and their communities by 

providing more flexibility to select and 

make available the most cost-effective 

broadband and other communications 

services by 

• Allowing applicants to lease dark 

or lit fiber from the most cost-effective 

provider, including non-profit and forprofit entities, so that applicants can 

choose the services that best meet their 

needs from a broad set of competitive 

options and in the most cost-effective 

manner available in the marketplace; 

• Changing our rules to permit 

schools to allow community use of Erate funded services outside of school 

hours; 

• Supporting eligible services to the 

residential portion of schools that serve 

students with special circumstances; 

• Indexing E-rate’s funding cap to 

inflation to preserve the purchasing 

power of a successful program; 

› Seeking proposals for a limited 

pilot program to establish best practices 

to support off-campus wireless 

connectivity for portable learning 

devices outside of regular school or 

library operating hours; 

Æ Simplify and streamline the 

program by 

› Streamlining the application 

process to reduce the administrative 

burden on applicants; 

› Removing the technology plan 

requirement for priority one 

(telecommunications services and 

Internet access) services; 

› Facilitating the disposal and 

recycling of obsolete equipment that 

received E-rate support by authorizing 

schools and libraries to receive 

consideration for such equipment; and 

Æ Improve safeguards against waste, 

fraud and abuse by 

› Codifying the requirement that 

competitive bidding processes be fair 

and open. In addition, the report and 

order adopts the eligible services list 

(ESL) for funding year 2011. 

II. Upgrading E-Rate for the 21st 

Century 

A. Improving Broadband Access for 

Students, Teachers, Librarians, and the 

Communities They Serve 

1. Expanded Access to Low-Cost Fiber 

5. Pursuant to sections 254(c)(3), 

(h)(1)(B), and (h)(2) of the Act, we 

include dark fiber on the ESL and allow 

eligible schools and libraries to receive 

support for the lease of fiber, whether lit 

or dark, as a priority one service, from 

any entity, including but not limited to 

telecommunications carriers and nontelecommunications carriers, such as 

research and education networks; 

regional, state, and local government 

entities or networks; non-profits and forprofit providers; and utility companies. 

Accordingly, we amend § 54.502 of our 

rules to allow any entity to provide 

supported telecommunications in whole 

or in part via fiber. Specifically, we 

require applicants that choose to lease 

dark (i.e., unlit) fiber to light it 

immediately and to use the lit fiber to 

meet their broadband needs in order to 

receive E-rate support. Our decision 

today will not allow applicants to use 

E-rate discounts to acquire unneeded 

capacity or warehouse dark fiber for 

future use. Because dark fiber has not 

been classified as either a 

telecommunications service or Internet 

access, we hereby include it in the 

telecommunications section of the ESL. 

For purposes of funding year 2011, we 


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direct applicants to select either the 

telecommunications service or Internet 

access box on the FCC Form 471 for 

type of service requested when applying 

for funding for leased dark or lit fiber, 

based on the type of provider they select 

to provide the leased dark fiber service. 

We emphasize that selecting a 

telecommunications carrier as a service 

provider does not absolve schools and 

libraries of their obligation to adhere to 

the Children’s Internet Protection Act 

(CIPA) requirements when they use that 

service to obtain Internet service or 

access to the Internet. Furthermore, we 

amend § 54.518 of our rules to clarify 

that states acting as service providers 

are treated the same as 

telecommunications carriers or other 

non-telecommunications providers 

when applicants are leasing a wide area 

network (WAN). 

6. Section 254 of the Act gives the 

Commission authority to designate 

‘‘telecommunications services’’ and 

additional services as eligible for 

support under the E-rate program. In the 

Universal Service First Report and 

Order, 62 FR 32862, June 17, 1997, the 

Commission designated all 

commercially available 

telecommunications services as services 

eligible for support (or discounts) under 

the E-rate program. At the same time, 

the Commission determined that it 

could provide E-rate support for 

additional, non-telecommunications 

services, particularly Internet access, 

email, and internal connections, 

provided by both telecommunications 

carriers and non-telecommunications 

carriers pursuant to sections 4(i) and 

254(c)(1), (c)(3), (h)(1)(B), and (h)(2). 

The Commission reasoned that such 

services enhance access to advanced 

telecommunications and information 

services for public and non-profit 

elementary and secondary school 

classrooms and libraries. Thus, pursuant 

to this authority, we now include on the 

ESL leased dark and lit fiber provided 

by both telecommunications carriers 

and non-telecommunications carrier 

providers, as described below. 

7. Although lit fiber is already eligible 

for funding as either a 

telecommunications service or an 

Internet access service (depending upon 

how it is used by an eligible school or 

library and who is providing the 

service), under current implementation 

of section 254, an applicant cannot lease 

the lit fiber for voice 

telecommunications from a nontelecommunications carrier. State 

networks and other providers, however, 

may be able to provide the voice 

telecommunications, even if they are 

not ‘‘offering it to the public for a fee,’’ 

as is required of a telecommunications 

carrier. Section 254(h)(1)(B) requires 

telecommunications carriers to provide 

universal service to schools and 

libraries; it does not, however, stand as 

a bar to our authority to allow nontelecommunications providers to 

provide such services and participate in 

the E-rate program. As explained below, 

drawing a distinction between 

telecommunications carriers and 

entities other than telecommunications 

carriers in this specific context would 

unduly limit the flexibility of schools 

and libraries to select the most costeffective broadband solutions to meet 

their needs, which would be 

inconsistent with our schools and 

libraries policies. We find that 

broadening the scope of potential 

suppliers of broadband increases 

competitive options, which in turn 

enhances choice and reduces cost. Thus, 

pursuant to section 254(c)(3) and (h)(2) 

and section 4(i), we now include lit 

fiber provided by nontelecommunications providers on the 

ESL. We conclude that eligible schools 

and libraries should be free to meet their 

communications needs by leasing fiber 

from entities other than 

telecommunications carriers that are 

able to provide schools and libraries the 

same services that a traditional 

telecommunications carrier can provide 

a school or library over a fiber network. 

8. The Commission precedent refutes 

any contention that leasing dark fiber is 

not a ‘‘service.’’ Because dark fiber is a 

service, we do not have to decide 

whether we could otherwise fund it 

under section 254(h). Moreover, like 

internal connections, which the 

Commission has found to be services for 

purposes of the E-rate program, dark 

fiber is part of the transmission path 

that enables the requisite functionality 

(delivery of voice, video and/or data) to 

be delivered to the classroom. Further, 

contrary to opponents’ arguments, we 

find that dark fiber does enhance access 

to advanced telecommunications and 

information services consistent with 

section 254(h)(2)(A). As discussed 

below, allowing schools and libraries to 

lease fiber from any provider will give 

the institutions more flexibility to select 

the most cost-effective broadband 

solutions. It should also increase 

competition among providers of fiber 

and ensures that schools and libraries 

can pay less for the same or greater 

bandwidth, which should increase 

access to advanced telecommunications 

and information services, including 

Internet access. Additionally, if schools 

and libraries are able to receive 

additional capacity for less money, this 

should free up E-rate funding to help 

other schools and libraries meet their 

connectivity goals. 

9. As instructional technology 

requires greater bandwidth, applicants 

will benefit from having the freedom to 

select from more options for broadband 

access. If more providers bid to provide 

services to schools and libraries, the 

resulting competition should better 

ensure that applicants—and the E-rate 

program—receive the best price for the 

most bandwidth. If schools and libraries 

are able to receive the same—or better— 

capacity for less money, the program 

should save money that can be spent on 

other services to help schools and 

libraries meet their connectivity goals. 

We thus find that allowing schools and 

libraries to lease fiber from any provider 

will best serve the purposes of the E-rate 

program. 

10. The designation of dark and lit 

fiber provided by telecommunications 

carriers and non-telecommunications 

carrier providers as services eligible for 

E-rate support should help schools and 

libraries save money or receive 

additional capacity for the same or 

fewer dollars. Commenters provided 

many examples of schools and libraries 

that are using fiber today because it is 

the most cost-effective solution for 

them, even without E-rate support. For 

example, the Tri-County Educational 

Service Center in Wooster, Ohio, which 

serves more than 30,000 students in 19 

school districts across three Central 

Ohio counties, has been able to save 50 

percent over traditional carrier services 

through the use of dark fiber, along with 

a 750 percent increase in network 

performance. Such cost savings will 

help E-rate funds go further. 

11. Furthermore, the increased 

capacity available through fiber will 

enable schools and libraries to develop 

and deliver a wide variety of 

educational programs and services to 

students and library patrons. For 

example, the bandwidth used by San 

Francisco’s public libraries has 

increased over the past five years, from 

1.44 megabits per second (Mbps) to 50 

Mbps, but even 50 Mbps is currently 

insufficient for San Francisco to deliver 

the bandwidth-intensive content 

available on the Internet through its 

libraries’ online resources and 

databases. San Francisco’s public library 

branches serve as community anchors, 

both as centers for digital literacy and as 

hubs for access to public computers. 

While their bandwidth needs are 

increasing, their local government and 

school district budgets are shrinking. 

Currently, San Francisco’s public 

libraries must rely on commercial 

telecommunications services in order to 


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take advantage of E-rate discounts. As 

bandwidth needs continue to increase, 

the ability to receive E-rate discounts on 

leased fiber will provide another option 

for schools and libraries, such as those 

in San Francisco, to access the 

bandwidth they need to deliver the most 

cost-effective services to their students 

and patrons, thus enhancing access to 

advanced telecommunications and 

information services. Our action today 

encourages collaboration with local, 

state, and federal agencies to more 

effectively utilize existing facilities and 

resources to meet the broadband needs 

of schools and libraries across the 

nation. 

12. We are not persuaded by 

commercial service providers’ 

arguments that entities other than 

commercial service providers cannot be 

trusted to serve applicants adequately, 

or that schools and libraries are 

unequipped to lease dark fiber. There 

are a variety of entities—from 

telecommunications carriers to nontraditional providers, including research 

and education networks; regional, state, 

and local government entities and 

networks; other non-profit and for-profit 

providers; and utility companies—that 

are successfully provisioning fiber 

solutions. For example, the City of San 

Francisco has provisioned dark fiber to 

10 campus sites of City College of San 

Francisco, one of the largest college 

systems in the country. The City College 

network has enabled the 

implementation of new classes, allowed 

expansion of computer labs, and 

facilitated deployment of new 

educational applications that would not 

have been possible with City College’s 

previous networking environment. 

Additionally, in the last 13 years, nonprofit national and state research and 

education networks have deployed 

almost 25,000 miles of a national fiber 

infrastructure to more than 66,000 

community anchor institutions. 

13. Some commercial service 

providers argue that school and library 

information technology (IT) 

professionals are unlikely to understand 

how to use leased dark fiber. We find no 

evidence in the record supporting that 

assertion, and note that many schools 

and libraries have expert, professional 

IT staff. We believe applicants are 

generally in the best position to know 

their needs, resources, and capabilities, 

and to procure from the full range of 

competitive options in the marketplace 

the most cost-effective broadband 

solutions for those needs. Nor are we 

persuaded by suggestions that we 

should not provide flexibility to allow 

schools to lease dark fiber or other spare 

capacity from a municipal network 

because the schools would be 

unprotected if the municipality cannot 

continue to operate. It is unclear why a 

municipality would be more likely to 

discontinue service than a private 

company, and, in any event, our rules 

permit schools and libraries to change 

service providers under certain 

circumstances when the service 

provider ceases operations or is unable 

to perform. Further, we are not 

convinced that schools and libraries 

purchasing services from other 

governmental or non-profit entities will 

raise conflict of interest issues or 

financial conflicts related to their 

employees. We believe our competitive 

bidding rules protect against any such 

waste, fraud, and abuse of the E-rate 

program. To the extent the Commission 

finds violations of its rules, such as 

sharing of inside information during the 

competitive bidding process, the 

Commission will require USAC to 

adjust its funding commitment or 

recover any disbursed E-rate funds 

through its normal processes. 

14. Commenters that opposed 

including leased dark fiber on the ESL 

also argue that schools and libraries will 

be unaware of or unable to bear the 

additional cost of installation. They also 

argue that leased fiber may include 

more capacity than needed by a school 

or library system for educational 

purposes. We are not persuaded by such 

arguments. The Commission’s 

competitive bidding rules serve as a 

central tenet of the E-rate program. They 

ensure more efficient pricing for 

telecommunications and information 

services purchased by schools and 

libraries and help deter waste, fraud and 

abuse. Thus, while not all schools and 

libraries may choose to use leased fiber 

to meet their broadband needs, our rules 

require all applicants to select the 

service or equipment offering that will 

be the most cost-effective means of 

meeting their educational needs and 

technology goals. Our rules also require 

schools and libraries to have the 

necessary resources to support any nondiscounted portion of the eligible 

services, in order to make the most 

effective use of E-rate funding. We 

believe these two rules will ensure that 

all applicants that choose to use a leased 

fiber solution are considering the full 

range of costs associated with 

implementing leased fiber and are not 

requesting funding for more capacity 

than necessary for their educational 

needs. We also emphasize, in this 

context, the importance of applicants 

making ‘‘apples-to-apples comparisons 

when evaluating competing bids to meet 

their needs. Providing services using 

dark fiber may involve a number of 

additional costs beyond lease payments 

for fiber connectivity, and those costs 

should be factored in to a total-cost 

comparison across bids. 

15. In order for schools and libraries 

to utilize and make the most efficient 

use of dark fiber, we include as eligible 

certain costs associated with leased dark 

fiber. Specifically, we include as eligible 

maintenance costs and installation 

charges. Providing support for 

maintenance costs and installation 

charges will enhance access to advanced 

telecommunications and information 

services by helping schools and libraries 

make use of an existing or new local 

fiber network. At this time, however, we 

decline to extend support to cover 

special construction charges that may be 

incurred to build out connections from 

applicants’ facilities to an off-premises 

fiber network, preferring to seek further 

comment in a subsequent proceeding on 

the potential effect of such changes on 

the fund. We also do not include as 

eligible the cost of modulating 

electronics needed to light dark fiber. 

The applicant is therefore responsible 

for covering these costs in order to 

receive E-rate funding for the lease of 

dark fiber. While we conclude that 

including leased dark fiber on the ESL 

should provide greater flexibility to Erate participants to meet their 

bandwidth needs and reduce their 

overall cost of broadband, we 

nevertheless limit funding in this 

manner pending further inquiry into the 

potential impact on the E-rate fund of 

allowing related costs. 

2. Community Use of Schools’ E-Rate 

Funded Facilities and Services 

16. We conclude that we should 

revise our rules to permanently allow 

schools to open their facilities, when 

classes are not in session, to the general 

public to utilize services and facilities 

supported by E-rate. Specifically, we 

revise §§ 54.503 and 54.504 of our rules 

to require applicants to certify that 

‘‘[t]he services the applicant purchases 

at discounts will be used primarily for 

educational purposes.’’ This is 

consistent with the standard we adopted 

in the Community Use Order, 75 FR 

10199, March 24, 2010. Thus, schools 

must primarily use services funded 

under the E-rate program, in the first 

instance, for educational purposes. To 

primarily use services supported by Erate, E-rate recipients must ensure that 

students always get first priority in use 

of the schools’ resources. 

17. Our experience convinces us that 

our decision will expand the benefits of 

using E-rate funds. For example, after 

we waived the rule in February 2010, 


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the State of West Virginia allowed 

community use of school Internet access 

and networks by offering evening 

community technology training lab 

classes and school technology nights. 

Most notably, during the April 2010 

Upper Big Branch coal mining disaster, 

a school in West Virginia whose 

students were on spring break provided 

community access to its facilities to be 

used as a government and media 

command center during the rescue and 

eventual search and recovery efforts. We 

thus find that permitting community 

use of E-rate services and equipment 

during times when classes are not in 

session (non-operating hours) will 

promote broadband access. Moreover, 

this decision is consistent with 

Congress’s directive to consider how 

anchor institutions, such as schools, can 

ensure access to broadband service. We 

remain focused on Congress’s primary 

purpose in establishing the schools 

component of the E-rate program: to 

ensure that educators, students, and 

school personnel have access to 

advanced telecommunications and 

information services for educational 

purposes. At the same time, there are 

many times when schools are out of 

session—evenings, weekends, school 

holidays, and summer breaks, for 

example—and we conclude that it is in 

the public interest to allow greater use 

of government-supported services and 

facilities during those times, 

particularly because that enhanced 

access comes at no additional cost to the 

E-rate program. Moreover, we find that 

the revised rules are consistent with the 

overarching goals of universal service to 

promote access to telecommunications 

and information services, and that no 

provision of the Communications Act 

prohibits this use of E-rate supported 

services. 

18. To reduce the likelihood of waste, 

fraud, and abuse, and to guard against 

expanding the cost of the E-rate 

program, we set forth certain conditions 

for schools that choose to allow the 

community to use their E-rate funded 

services. First, schools participating in 

the E-rate program may not request 

funding for more services than are 

necessary for educational purposes to 

serve their current student population. 

This condition is necessary to ensure 

that E-rate funds that schools receive 

remain targeted to the educational needs 

of the institution and its students. This 

is essential to preserve limited funds 

and to carry out Congress’s intent in 

establishing the E-rate program. To the 

extent that a school desires to augment 

services beyond that which is necessary 

for educational purposes, it must use 

other, non-E-rate funded resources. Any 

community use of the services 

purchased under the E-rate program 

must be incidental and not increase 

overall costs to the E-rate program. 

19. Second, any community use of Erate funded services at a school facility 

shall be limited to non-operating hours 

of the school and to community 

members who access the Internet while 

on a school’s campus. Thus, the public 

can utilize a school’s facilities and 

services during times when the school 

is not in session, such as after school 

hours, weekends, school holidays, and 

summer breaks. Services supported by 

E-rate funds must, in the first instance, 

be used for educational purposes, and 

students, educators, and other school 

personnel shall always get priority in 

the use of these resources. Further, the 

decision about whether to allow 

community access rests with the school, 

and we thus leave it to schools to 

establish their own policies regarding 

specific use of their services and 

facilities, including, for example, the 

hours of use. We decline at this time to 

provide guidance on after-hours 

community use policies. We find that 

schools are in the best position to 

establish their own individualized 

policies, including ways in which to 

inform the public of the hours of 

operation to the general public. While 

we are sensitive to placing additional 

administrative burdens on applicants, 

we plan to include a box on the FCC 

Form 471 when we next revise this form 

for applicants to check if they are taking 

advantage of this rule change. We 

believe checking a box indicating 

community use, without requiring 

additional, specific information, will 

enable the Commission to develop a 

better understanding of where such 

community use is occurring while at the 

same time minimizing applicants’ 

reporting burden. In addition, we urge 

schools to make their community use 

policies and hours publicly available on 

their Web sites. Additionally, schools 

can submit their success stories directly 

to the Commission regarding the 

community’s use of their E-rate funded 

facilities and services at the 

Commission’s Web site, http:// 

www.fcc.gov/wcb/tapd/ 

universal_service/schoolsandlibs.html, 

in the section titled ‘‘E-rate Community 

Use Success Stories.’’ 

20. Third, as set forth in the Act and 

our rules, schools’ discounted service or 

network capacity may not be ‘‘sold, 

resold, or transferred by such user in 

consideration for money or any other 

thing of value.’’ Specifically, schools 

may not charge for the use of services 

and facilities purchased using E-rate 

funds. The Commission concluded, 

however, in the Universal Service First 

Report and Order, that section 254(h)(3) 

of the Act does not prohibit an eligible 

entity from charging fees for any 

services that schools or libraries 

purchase that are not subject to a 

universal service discount. Thus, the 

Commission found that an eligible 

school or library may assess computer 

fees to help defray the cost of computers 

or training fees to help cover the cost of 

training because these purchases are not 

subsidized by the universal service 

support mechanisms. Similarly, we 

agree with the Massachusetts 

Department of Telecommunications and 

Cable (MDTC) and Sprint that schools 

should not be prohibited from 

recovering costs reasonably associated 

with permitting community access, such 

as additional electricity, security, and 

heating costs used to facilitate 

community access. 

21. We emphasize that the revision of 

our rules creates an opportunity for 

schools, but not an obligation. Schools 

may have any number of reasons to 

decide not to open their facilities to the 

general public to utilize services and 

facilities supported by E-rate during 

non-operating hours. For example, some 

schools may find that school activities 

utilize all or almost all of the E-rate 

supported services, or that there is not 

a public need for use during nonoperating hours in a particular school. 

We therefore stress the optional nature 

of these rule revisions, leaving this 

decision up to individual recipients of 

E-rate funding. 

3. Expanding Access for Residential 

Schools That Serve Unique Populations 

22. We adopt our proposal to allow 

residential schools that serve unique 

populations—schools on Tribal lands; 

schools designed to serve students with 

medical needs; schools designed to 

serve students with physical, cognitive 

or behavioral disabilities; schools where 

35 percent or more of their students are 

eligible for the national school lunch 

program; or juvenile justice facilities— 

to receive E-rate funding for all 

supported services provided in the 

residential areas of those schools. We 

find that, because these schools also 

serve as residences to the students, the 

supported E-rate services will be used 

primarily, if not exclusively, for 

educational purposes, and thus support 

is consistent with our rules and with the 

purposes of section 254. As the 

Commission stated in the Schools and 

Libraries Second Report and Order, 68 

FR 36931, June 20, 2003, the technology 

needs of participants in the E-rate 

program are often complex and unique 


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to each participant. Based on the record 

before us, we find that these schools 

serve students whose educational needs 

may not be otherwise met without 

attending such a residential school. We 

therefore find it to be reasonable and 

consistent with the public interest to 

provide support for E-rate services 

provided to the residential areas of 

those schools, including Internet access, 

telecommunications, 

telecommunications services, and 

internal connections. Additionally, 

E-rate support will facilitate ongoing 

access to educational and learning 

materials beyond the normal school day 

and increase the ability of those 

students to complete homework 

assignments, such as those that require 

broadband access for research projects, 

after school hours. Accordingly, we find 

that such use meets the definition of 

educational purposes. Additionally, we 

amend § 54.502 to permit discounts for 

internal connections in noninstructional buildings of a school or 

school district where the Commission 

has found that the use of those services 

meets the definition of educational 

purpose. 

23. We decline, at this time, to adopt 

SECA’s suggestion to expand this 

proposal to any school that has a 

dormitory or residential facility on its 

grounds. While we recognize that there 

are other residential schools that do not 

fall within the categories outlined 

above, we want to proceed in a 

conservative fashion to focus on schools 

serving students with the most unique 

needs as provided above, rather than 

providing funding more broadly to all 

residential schools. Thus, we believe it 

is preferable to limit the potential 

impact of this revision on the E-rate 

program as we consider additional 

upgrades to the program. We agree with 

SECA, however, that we should not 

limit support to residential campuses 

that are state- or federal-sponsored 

institutions. For instance, there may be 

private schools that serve students with 

physical, cognitive, or behavioral 

disabilities, and their students face the 

same need to have ongoing access to 

technology-based learning outside of the 

classroom. Therefore, we decline to 

limit support for services to residential 

areas only to schools partly or fully 

sponsored by state or federal funds. 

24. West Virginia Request for Waiver 

and Clarification. The West Virginia 

Department of Education (WVDE) filed 

a request for waiver and clarification of 

the Commission’s rules to allow the 

West Virginia Schools for the Deaf and 

the Blind to receive funding for services 

for their students who reside on the 

school campus. Because we address the 

issues raised by WVDE in this order, we 

dismiss WVDE’s request as moot. 

4. Indexing the Annual Funding Cap to 

Inflation 

25. Many commenters encouraged the 

Commission to increase the E-rate 

program funding cap significantly from 

its current $2.25 billion level before 

indexing the cap to inflation on a goingforward basis. Commenters contend that 

the Commission should increase the cap 

to reflect all inflationary adjustments 

since the program was initiated in 1997, 

which would immediately add about 

$650 million to the E-rate program. 

Others said that indexing the E-rate cap 

to inflation on a going-forward basis 

would not be sufficient to meaningfully 

fund the program. We note that when 

the E-rate program began in 1997, basic 

Internet connectivity required a phone 

line and dial-up Internet service, which 

might have cost a total of less than $50 

per month. Today, for basic Internet 

connectivity capable of supporting 

common applications and learning tools 

such as educational video content, a 

school or library needs broadband at 

speeds of at least several megabits per 

second, which might cost upwards of 

$500 per month (e.g., for a T–1 line), 

plus the costs of necessary internal 

connections. 

26. We find that indexing the current 

$2.25 billion E-rate cap to inflation is a 

sensible approach to gradually aligning 

the support provided by E-rate with the 

needs of schools and libraries, which 

the E-rate program is designed to serve. 

Using the analysis described below, the 

cap for funding year 2010 will be 

increased to $2,270,250,000. The 

Commission must balance its desire to 

ensure that schools and libraries have 

access to valuable communications 

opportunities with the need to ensure 

that consumer rates for communications 

services remain affordable. End users 

ultimately bear the cost of supporting 

universal service, through carrier 

charges. Thus, we amend § 54.507 of our 

rules to index the E-rate program 

funding cap to the rate of inflation on 

a going-forward basis, beginning in the 

current funding year. Indexing the cap 

to inflation will ensure that the program 

maintains its current purchasing power 

in today’s dollars without significantly 

increasing the fund and raising the 

contribution factor. 

27. It could be argued that the 

existence of substantial rollover funds 

demonstrates that an increase in the cap 

is unwarranted. The rollover funding is 

not surplus funding left over after 

demand has been met, however. To the 

contrary, even with an additional $600 

million in rollover funding for funding 

year 2008, added to the $2.25 billion 

cap, the program still did not come 

close to meeting demand for priority 

two services and was forced to deny 

millions of dollars in applications 

because existing funding had been 

exhausted. The Commission uses the 

full extent of funds available, including 

rollover funds, to meet demand each 

year. Nevertheless, demand still exceeds 

available funding. 

28. We also note that additional 

universal service funds required to 

index the E-rate cap to inflation will be 

offset by the Commission’s recent 

decision to use reclaimed funds 

surrendered from competitive eligible 

telecommunications carriers as a 

‘‘fiscally responsible down payment on 

proposed broadband universal service 

reforms,’’ including indexing the E-rate 

funding cap to inflation. Thus, 

reclaimed universal service funds will 

be used to cover any increase that 

results from increases to the fund from 

inflation adjustments. Finally, no party 

objected to an increase in the cap and 

many supported the proposal. They 

noted that this step will ensure that the 

program continues to serve a key role in 

bringing essential communications and 

information services to thousands of 

schools and libraries. One commenter 

noted that an increase in the E-rate 

funding cap should occur only after the 

completion of comprehensive reform of 

the contribution methodology. We find, 

however, that the adoption of a fiscally 

responsible increase in the funding cap 

will not interfere with our broader 

efforts to reform the contribution 

methodology and acts only to give some 

relief to a capped support mechanism 

that is consistently oversubscribed. 

29. As proposed, the Commission will 

use the gross domestic product chaintype price index (GDP–CPI) to inflationadjust the amount of funds available 

annually to E-rate program participants. 

This is the same index the Commission 

uses to inflation-adjust revenue 

thresholds used for classifying carrier 

categories for various accounting and 

reporting purposes and to calculate 

adjustments to the annual funding cap 

for the high-cost loop support 

mechanism. There is no index that 

specifically examines the cost of the 

services funded under the E-rate 

program, and no record support for a 

more targeted measure of inflation than 

the GDP–CPI. Moreover, the 

Commission has used the GDP–CPI 

index in other contexts to estimate 

inflation of carrier costs, and we find it 

reasonable to use the GDP–CPI to 

approximate the impact of inflation on 

E-rate supported services. During 

periods of deflation, we will maintain 


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the prior-year cap to maintain 

predictability. When the calculation of 

the yearly average GDP–CPI is 

determined, the Wireline Competition 

Bureau Commission will publish a 

Public Notice in the Federal Register 

within 60 days announcing any increase 

of the annual funding cap based on the 

rate of inflation. 

30. Specifically, to compute the 

annual increase, the percentage increase 

in the GDP–CPI from the previous year 

will be used. The increase shall be 

rounded to the nearest 0.1 percent. The 

increase in the inflation index will then 

be used to calculate the amount of 

funding for the next E-rate funding year 

(which runs from July 1 to June 30). 

Using this computation, we find that the 

GDP–CPI from 2008 to 2009 increased .9 

percent. Using the analysis described 

below, the cap for funding year 2010 

will be increased to $2,270,250,000. 

5. Limited Trial To Investigate Offsite 

Access 

31. Currently, our rules presume that 

services used on school or library 

premises are serving an educational 

purpose, and the E-rate program 

supports wireless Internet access on 

school and library grounds. If a device 

that provides wireless Internet access 

service, such as a laptop or other mobile 

computing device, is taken off school or 

library premises, however, applicants 

are required to cost-allocate the dollar 

amount of support for wireless Internet 

access use for the time that the device 

is not at the school or library and 

remove that portion from its E-rate 

funding request. If that same device, 

however, is left on school or library 

grounds all of the time, the E-rate 

program would pay 100 percent of the 

applicant’s non-discount share for 

wireless Internet access use. As such, 

our current rules may prevent full 

utilization of the learning opportunities 

that portable wireless devices, such as 

digital textbooks, can provide off 

campus and outside of regular school 

hours. 

32. Advances in technology have 

enabled students to continue to learn 

well after the school bell rings, 

including from their homes or other 

locations, for example, youth centers. 

As noted in the NBP, ‘‘[o]nline 

educational systems are rapidly taking 

learning outside the classroom, creating 

a potential situation where students 

with access to broadband at home will 

have an even greater advantage over 

those students who can only access 

these resources at their public schools 

and libraries.’’ In the E-rate Broadband 

NPRM, we sought comment on the NBP 

recommendation to provide full E-rate 

support for wireless Internet access 

service for portable learning devices that 

are used beyond school or library 

premises. In response, commenters 

generally agreed that students need to 

learn ‘‘anytime/anywhere,’’ which 

would require Internet access outside 

schools and libraries. Some schools 

identified that they are already 

implementing innovative programs 

utilizing portable devices that can use 

data applications wirelessly, such as 

e-readers, tablet PCs, smartphones, and 

netbooks. Some of these programs 

enable students to download all of their 

textbooks onto one portable device and 

access them both during school and at 

home. Others use software applications 

to help students write essays or create 

presentations for their classmates. Initial 

studies indicate that—with the correct 

support and training for teachers, 

students, and parents—targeted 

programs like these can demonstrably 

improve student achievement. 

Commenters noted that, in addition to 

the educational benefits, improvements 

and cost reductions in portable learning 

devices like e-readers, smartphones, and 

tablet computers make funding offpremises wireless connectivity for these 

devices a cost-efficient supported 

service. 

33. We recognize the benefits of 

enabling innovation in learning outside 

the boundaries of the school building 

and the traditional school day, as well 

as of enabling libraries to innovate with 

new models of delivering service to 

library patrons. We note the potential 

for meaningful gains in student 

achievement that new devices and 

applications may deliver. We also see 

significant utility in devices that allow 

remote access to the Internet for library 

patrons. At the same time, however, we 

acknowledge the concerns of 

commenters who urged us to proceed 

cautiously in this area and emphasized 

the challenges that may accompany 

support for connectivity for portable 

learning devices used outside the 

physical grounds of schools and 

libraries. For example, some 

commenters identified possible 

challenges in administration and 

oversight, and in ensuring compliance 

with existing program rules, including 

requirements under CIPA and the 

program’s definition of educational 

purposes. Others raised concerns about 

the potential for waste, fraud, and 

abuse, as well as increased costs to the 

E-rate fund, noting that if support is 

expanded for wireless Internet access 

outside of school or library grounds, the 

availability of funding for other equally 

or more important services may be 

reduced. Some commenters also were 

concerned about schools or students 

who may not be able to afford the 

equipment or devices necessary to 

connect to E-rate funded wireless 

Internet services. Finally, some 

commenters argued that E-rate funding 

for wireless access off premises is not 

technology-neutral and improperly 

favors wireless services over wired 

services. We believe these concerns 

warrant further inquiry and 

consideration before such services 

should be eligible for support on a 

program-wide basis. 

34. The E-rate Deployed Ubiquitously 

(EDU) 2011 Pilot Program. To assist us 

in our inquiry and program 

development, we establish a trial 

program to investigate the merits and 

challenges of wireless off-premises 

connectivity services, and to help us 

determine whether they should 

ultimately be eligible for E-rate support. 

We plan to use this trial program to 

gather more information about the 

implementation challenges described 

above and to identify and disseminate 

best practices in existing projects. We 

ask schools and libraries that already are 

implementing or experimenting with 

wireless off-campus learning to provide 

us with information about their projects, 

as described below. 

35. A number of commenters have 

indicated that they have already found 

solutions to the challenges to 

successfully implementing off-premises 

wireless Internet connectivity, including 

ensuring CIPA compliance and other 

protections against waste, fraud and 

abuse. Additionally, some commenters 

suggested that corporate partnerships 

may help with equipment and 

application costs. Through the EDU2011 

Program, we expect to obtain more 

information about how wireless learning 

programs are operating today. For 

example, we hope to gain a better 

understanding of operational and 

administrative issues associated with 

off-premises use and connectivity, as 

well as the financial impact on the 

E-rate program overall. We also hope to 

learn what conditions, if any, should 

accompany off-premises access to 

prevent waste, fraud, and abuse; to 

ensure compliance with the statute and 

Commission rules, such as CIPA; and to 

enable such programs to maximize 

student achievement and utilization of 

library services. Additionally, we 

recognize that schools and libraries face 

different issues when considering offpremises use, and we would like to gain 

a greater understanding about how 

libraries are using remote access to serve 

their communities. Finally, we hope to 

gain insight on evolving uses of mobile 


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wireless devices that will assist us in 

crafting effective permanent rules in this 

area should we decide to support offsite 

wireless access. 

36. As part of this first phase, we may 

decide to fund off-campus wireless 

telecommunications and Internet access 

for some small number of select 

programs for funding year 2011, if we 

find proposals that we believe 

adequately meet the factors we discuss 

below. We expect that most of these 

proposals will not provide broad access 

to the Internet, but instead will provide 

connectivity for limited purposes, for 

example downloading digital textbooks. 

We authorize up to $10 million for 

funding year 2011 to support innovative 

and interactive off-premise wireless 

device connectivity for schools and 

libraries. Given the Commission’s 

planning and competitive bidding 

requirements, we recognize there is 

limited time for applicants to develop a 

proposal from scratch for this round of 

funding. Therefore, considering those 

practical barriers, we anticipate that any 

first phase EDU2011 Program funding 

will primarily, if not exclusively, be 

provided to already-existing portable 

wireless device programs. 

37. How To Apply. We delegate 

implementation of this pilot program to 

the Wireline Competition Bureau 

(Bureau). To be considered for first 

phase EDU2011 Program funding, 

applicants must complete a two-step 

application process. After publication of 

this Order in the Federal Register, the 

Bureau will release a public notice with 

the due date for applications. First, 

applicants must submit the information 

detailed in the following paragraph to 

the Bureau. Second, applicants must 

apply for E-rate funding by following 

the regular E-rate program rules. 

Because potential applicants will most 

likely already be using portable wireless 

devices in their school or library, we 

understand that the applicants may 

have an established relationship with a 

service provider. Therefore, to the 

extent necessary, we waive the 

applicable sections of our E-rate 

competitive bidding rules for those first 

phase EDU2011 Program applicants that 

have already entered into legally 

binding agreements with a service 

provider for portable wireless device 

connectivity off-premises. We also 

delegate to the Bureau the authority to 

waive any other E-rate rules, to the 

extent necessary, to effectuate this 

program. Applicants for first phase 

EDU2011 Program funding must submit 

FCC Form 471 to USAC during the 

regular application window. We 

encourage applicants to submit FCC 

Form 471 specifically for the wireless 

Internet access services to be used off 

premises, and file a separate FCC Form 

471 for any services to be used on 

premises. We note that support under 

this program will not be provided for 

the portable devices or equipment, but 

for the connectivity services. 

38. To be considered for first phase 

EDU2011 Program funding, E-rate 

eligible applicants must have 

implemented or already be in the 

process of implementing a program to 

provide off-premise connectivity to 

students or library patrons through the 

use of portable wireless devices. The 

application must contain the following 

information: 

(1) A description of the current or 

planned program, how long it has been 

in operation, and a description of any 

improvements or other changes that 

would be made if E-rate funding were 

received for funding year 2011; 

(2) Identification of the costs 

associated with implementing the 

program including, for example, costs 

for equipment such as e-readers or 

laptops, access and connection charges, 

teacher training, librarian training, or 

student/parent training; 

(3) Relevant technology plans; 

(4) A description of how the program 

complies with CIPA and adequately 

protects against waste, fraud, and abuse; 

(5) A copy of internal policies and 

enforcement procedures governing 

acceptable use of the wireless device off 

the school’s or library’s premises; 

(6) For schools, a description of the 

program’s curriculum objectives, the 

grade levels included, and the number 

of students and teachers involved in the 

program; and 

(7) For schools, any data collected on 

program outcomes. 

39. Selection. After applications are 

received, for schools, the Bureau should 

consider the extent to which applicants 

are providing innovative and interactive 

learning programs using portable 

wireless devices for students. For 

libraries, the Bureau should consider 

how the library’s portable wireless 

device program facilitates access in the 

community to needed services, such as 

job applications, governmental services, 

job training, and online learning 

opportunities. Factors the Bureau 

should consider in selecting programs 

that may be eligible for additional 

funding include: The magnitude of the 

impact E-rate support for off-premise 

connectivity is likely to have; the 

number of students or library patrons 

served; the cost of the program; the 

poverty level and current discount rate 

of the school or library; the financial 

need of the school or library; the 

location and topography of the school or 

library, so that we can analyze the 

availability of wireless access; the 

committed school or library resources 

available to implement the entire 

proposal, including funding for 

necessary equipment, as well as teacher, 

librarian, and student training and data 

collection; and the extent of CIPA 

protections and other protections to 

guard against waste, fraud, and abuse. 

40. The Bureau will notify USAC of 

selected applicants. We expect that, if 

the Bureau decides to award funding for 

these programs, there will be only a 

handful of selected applicants. Selected 

applicants will receive the identified 

connectivity support and will not be 

required to cost-allocate the dollar 

amount of support for the time that 

portable devices are not at the school or 

library. Applicants will receive funds 

sufficient to cover the connectivity 

amount eligible for E-rate funding based 

on their discount; they will still be 

required to pay their non-discount 

share. After the trial period, applicants 

will be required to submit a report to the 

Bureau detailing any data collected as a 

result of the program and a narrative 

describing lessons learned from the 

program that would assist other schools 

and libraries desiring to adopt similar 

programs in the future. 

B. Streamlining and Simplifying 

Administrative Requirements 

41. We next adopt proposals to 

streamline and simplify the E-rate 

programs. First, we amend § 54.508 of 

our rules to eliminate the E-rate 

technology plan requirements for all 

priority one applications. We retain the 

technology plan requirements for 

applicants requesting priority two 

funding. Second, we find that 

applicants are not required to have a 

technology plan in place before a thirdparty master contract’s FCC Form 470 is 

posted. Third, we also amend § 54.508 

to eliminate the requirement that 

applicants demonstrate they have a 

budget sufficient to acquire and support 

the non-discounted elements of the 

plan. Fourth, we permit the disposal of 

E-rate equipment for payment or other 

consideration, but no sooner than five 

years after the equipment is installed. 

1. Technology Plans 

42. We amend §§ 54.504 and 54.508 of 

our rules to eliminate the E-rate 

technology plan requirements for all 

priority one applications. We retain, 

however, the technology plan 

requirements for applicants requesting 

priority two funding. 

43. To avoid duplication of 

technology plan requirements and to 

simplify the application process in 


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general, we proposed in the NPRM to 

eliminate E-rate technology plan 

requirements for applicants seeking 

priority one services that are otherwise 

subject to state and local technology 

planning requirements. Commenters 

indicated, however, that determining 

which applicants seeking priority one 

services are subject to technology plan 

requirements outside of the E-rate 

program could be difficult, might lead to 

unnecessary violations of program rules, 

and could be administratively difficult 

to administer. Because the record 

demonstrates that applicants are 

required to or will likely perform 

technology planning even without the 

E-rate program requirements, we find 

that eliminating the technology 

planning requirement entirely for 

priority one funding will better serve 

the intent of the NPRM proposal to 

simplify the application process, while 

still adequately addressing concerns 

regarding waste, fraud, and abuse. 

44. Priority One. The Commission 

must strive to balance the need to 

ensure that E-rate funds are being used 

for their intended purposes with 

avoiding the imposition of 

unnecessarily burdensome requirements 

on applicants. Moreover, the 

Commission must routinely reevaluate 

its program rules to ensure that it has 

struck the proper balance. After careful 

consideration of our experience and 

comments in the record, we conclude 

that the proper balance warrants 

eliminating the Commission’s 

technology plan requirements for 

applicants requesting priority one 

services. 

45. We find that it is reasonable to 

eliminate the technology plan 

requirement for all priority one service 

requests, even when the applicant is not 

subject to a state or local technology 

planning requirement, and regardless of 

the amount of the request. Even without 

a Commission requirement, most 

entities will continue to evaluate their 

needs by conducting technology 

planning. Applicants applying for 

Enhancing Education Through 

Technology (EETT) funding from the 

Department of Education must comply 

with a technology plan requirement 

nearly identical to the Commission’s. 

The Elementary and Secondary 

Education Act, reauthorized in 2002 as 

the No Child Left Behind Act, also has 

requirements that overlap with E-Rate’s 

technology planning rules. In addition, 

technology planning is often 

incorporated into the budget and 

procurement processes of schools and 

libraries. Thus, we find that applicants 

generally will continue to perform 

technology analyses notwithstanding 

elimination of the technology plan 

requirement for E-rate. 

46. Furthermore, we find that this 

change will simplify the current 

application process and will reduce the 

costs for applicants of complying with 

and administering the E-rate program. 

Reducing the burden on applicants will 

result in greater E-rate participation, 

particularly for the schools with the 

fewest resources and greatest need to 

participate in the program. Eliminating 

the technology plan requirement for 

priority one applications also will 

reduce costs associated with 

administering the E-rate program. 

47. Moreover, the Commission has 

other safeguards to ensure that priority 

one funding requests are based ‘‘on the 

reasonable needs and resources of the 

applicant and are consistent with the 

goals of the program.’’ For instance, to 

ensure that applicants are able to use 

the discounted services effectively, and 

thereby minimize waste, our rules 

require applicants to certify that they 

have ‘‘secured access to all of the 

resources, including computers, 

training, software, maintenance, internal 

connections, and electrical connections, 

necessary to make effective use of the 

services.’’ The Commission has 

additional protections in place to guard 

against waste, fraud, and abuse in the 

E-rate program. Although we find that 

we no longer need the technology play 

requirement for priority one services in 

light of the other protections in place, 

we will remain vigilant to ensure that 

eliminating this requirement does not 

increase opportunities for waste, fraud, 

and abuse. 

48. Priority Two. We conclude that we 

should retain the requirement to have a 

technology plan for priority two 

services. We find that maintaining a 

specific technology plan requirement for 

E-rate applicants for priority two 

services—internal connections and 

basic maintenance of internal 

connections—continues to serve a 

valuable purpose and therefore 

outweighs any potential administrative 

burden. Many commenters support this 

conclusion. First, our experience 

reflects that waste, fraud, and abuse 

tends to be concentrated in use of 

priority two services. Past experience 

convinces us that we should not at this 

time eliminate the technology plan 

requirement for priority two services. 

Second, installing internal connections 

in schools and libraries is a complex 

and expensive process, with installation 

techniques that vary depending on the 

nature of the project. Unlike priority one 

services, which are generally recurring 

services, internal connections are onetime upgrades that are designed to 

produce long-term benefits to schools 

and libraries. Maintaining the 

requirement for priority two services 

will require applicants to plan and 

justify these requests and strategically 

define their vision for use of these 

technologies. 

49. For the reasons stated above, we 

decline to adopt proposals suggested by 

commenters either (1) to completely 

eliminate the technology plan 

requirement for priority two applicants; 

or (2) to establish a bifurcated approach 

in which only priority two applicants 

not subject to other state or local 

requirements are required to develop 

technology plans. It would be 

administratively burdensome for USAC 

to determine which schools and 

libraries are subject to official state and 

local technology plan requirements and 

which are not. 

50. While we decline to eliminate the 

technology plan for priority two 

applicants, we adopt measures to 

simplify the technology planning 

process. First, we amend § 54.504 of our 

rules to eliminate the requirement that 

technology plans covering the entire, 

upcoming funding year be in place 

when the FCC Form 470 is submitted. 

Under the current rule, an applicant 

may not rely on an approved, existing 

technology plan if it expires prior to the 

last date of service of the upcoming 

funding year. We believe that the threeyear technology plan cycle that has 

evolved for the E-rate program does not 

accurately reflect how schools and 

libraries plan for their technology needs. 

For example, if a school has developed 

and is implementing a three-year 

technology plan, it does not make sense 

to require the school to develop a new 

plan in October (before filing its Form 

470) just because the existing plan 

expires before the upcoming funding 

year ends. The school should be able to 

obtain services under that existing 

technology plan if it covers part of the 

upcoming funding year and then revise 

the plan over the next several months 

before it expires. Forcing the applicant 

to prepare another three-year plan so far 

in advance of the end of the current one 

is administratively burdensome. 

Technology plans are evolving 

documents, and we want to encourage 

applicants to have technology plans that 

reflect their current needs. We thus find 

that applicants with approved 

technology plans that cover at least part 

of the upcoming funding year in effect 

as of the date of their FCC Form 470 

filings will be deemed to be in 

compliance with our rules. 

51. We also find that applicants are 

not required to have a technology plan 

in place before a third-party master 


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contract’s FCC Form 470 is posted. FCC 

Forms 470 for master contracts typically 

are filed far in advance of the filing 

window because of the more detailed 

solicitation process they require. 

Schools and libraries typically have no 

control or advance knowledge of the 

solicitation of bids for third-party 

master contracts, and, as such, would 

have no way of knowing when their 

technology plans would need to be 

completed. Therefore, we find that, if an 

applicant has filed its own FCC Form 

470, but later chooses to purchase a 

service from a state master contract, the 

applicant only needs to have a 

technology plan in existence prior to 

filing its own FCC Form 470. To do 

otherwise could unintentionally 

discourage applicants from taking 

service from a master contract. 

52. We also amend § 54.508 of our 

rules to eliminate the requirement that 

applicants demonstrate they have a 

budget sufficient to acquire and support 

the non-discounted elements of the 

plan. The E-rate program already has 

rules in place to ensure that applicants 

have sufficient resources, and thus this 

requirement is redundant. 

53. E-Rate Central Petition. E-rate 

Central filed a petition seeking 

clarification of the language defining 

‘‘basic telephone services’’ for priority 

one services in the funding year 2008 

ESL. The actions in this order address 

E-Rate Central’s concerns. Therefore, we 

find that no further Commission action 

on E-Rate Central’s petition is necessary. 

2. Competitive Bidding Process 

54. FCC Form 470. We retain the 

competitive bidding and waiting period 

obligations for all service requests, even 

where applicants are subject to state or 

local procurement obligations, rather 

than subjecting priority one and priority 

two applications to different standards, 

as proposed in the NPRM. We find, 

however, that we should simplify the 

FCC Form 470 process for all program 

participants. Many applicants requested 

that we simplify the FCC Form 470 if we 

do not eliminate it. After consideration 

of the record and our programmatic 

experience, we conclude that the 

competitive bidding and waiting period 

requirements have provided consistency 

and transparency for program 

participants in their search for the most 

cost-effective provider of E-rate eligible 

services. In seeking to achieve the 

proper balance between ensuring 

program integrity and eliminating 

excessive administrative burdens, we 

conclude that the preferable course is to 

simplify and redesign the FCC Form 

470. We find that the changes we adopt 

will decrease the number of denials that 

stem purely from technical deficiencies 

rather than the applicant’s failure to 

conduct a fair and open competitive 

bidding process. Streamlining the form 

to include only the information 

necessary to the competitive bidding 

process will also reduce appeals and 

increase program participation. 

Accordingly, we amend § 54.504(b) of 

the Commission’s rules to reflect 

accurately the specific information 

being requested on the FCC Form 470 in 

order to facilitate a fair and open 

competitive bidding process. 

55. We find that requiring the FCC 

Form 470 produces a better competitive 

bidding process. Currently, schools and 

libraries are required to post an FCC 

Form 470 to USAC’s website so that 

service providers easily can view the 

services that are requested in one 

centralized location. While many 

schools and libraries must also follow 

their own state or local procurement 

processes, those bid requests are often 

limited to publication, for example, in 

local newspapers. The nationwide 

posting on USAC’s website ensures that 

more service providers can obtain notice 

about the requests for bids. If more 

service providers are viewing and 

responding to proposals, the resulting 

additional competition should help 

keep prices lower for applicants and, in 

turn, require fewer dollars from the 

universal service fund. Many service 

providers noted that they annually 

review the posted FCC Forms 470 and 

submit bids to provide the requested 

services. 

56. We anticipate that the new, 

simplified FCC Form 470 will take effect 

prior to the opening of the filing 

window for funding year 2011. 

However, if an applicant has already 

submitted an FCC Form 470 (in the 

current format) for funding year 2011, 

the applicant will not be required to 

submit a new form. Once the revised 

form has received Office of Management 

and Budget (OMB) approval, all 

applicants will be required to prepare 

and submit the newly revised form 

going forward. The Wireline 

Competition Bureau will announce the 

effective date of the new FCC Form 470 

once approval has been received from 

OMB. If an applicant has not submitted 

an FCC Form 470 by the effective date, 

the applicant will need to submit the 

new FCC Form 470. 

3. Clarifying Process for Disposal of 

Obsolete Equipment 

57. E-rate Program Rules and 

Requirements. Section 254(h)(3) of the 

Act prohibits an eligible school or 

library that has purchased 

telecommunications services and 

network capacity at a discount under 

the E-rate program from reselling or 

otherwise transferring those services, or 

any equipment components of such 

service, in consideration for money or 

any other thing of value. In the Schools 

and Libraries Third Report and Order, 

69 FR 6181, February 10, 2004, the 

Commission also prohibited schools and 

libraries from transferring the 

equipment components of eligible 

services to other schools within three 

years of their purchase, even without 

receiving money or other consideration, 

unless the donating school or library 

permanently or temporarily closes. The 

Commission also stated that 

‘‘[r]ecipients of support are expected to 

use all equipment purchased with 

universal service discounts at the 

particular location, for the specified 

purpose for a reasonable amount of 

time.’’ The Act and the Commission’s 

rules, however, do not currently specify 

what schools and libraries are permitted 

do with equipment components of 

eligible services acquired with E-rate 

support once the equipment is obsolete. 

58. Process for Disposal of Obsolete 

Equipment. We amend § 54.513(a) of 

our rules to permit the disposal of 

equipment components of E-rate 

services (E-rate equipment) for payment 

or other consideration, but no sooner 

than five years after the equipment is 

installed. We decline to adopt the 

reporting and recordkeeping 

requirements proposed in the E-rate 

Broadband NPRM. 

59. First, we revise our rules to permit 

the disposal of E-rate equipment for 

payment or other consideration, but no 

sooner than five years after the 

equipment is installed. We find that 

section 254(h)(3) of the Act was 

intended to address the concern that 

schools and libraries might resell 

current telecommunications services 

and network capacity, and does not 

address obsolete equipment. As it is in 

the public interest and consistent with 

the Commission’s environmental 

initiatives and the goal of making 

technology affordable for all, we 

encourage schools and libraries to 

donate and recycle their obsolete 

equipment whenever possible. To 

further assist this goal, we direct USAC 

to make available on its website and 

update on an ongoing basis a list of 

donation and recycling locations for 

communications equipment. 

60. We adopt the five-year threshold 

for a number of reasons. We conclude 

that five years from the date of 

installation is a reasonable period of 

time based on the rate of change in 

communications technology and 

equipment, industry standards for the 


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useful life of E-rate eligible equipment, 

and the need for schools and libraries to 

maintain viable networks that reflect 

those changes. Moreover, we find that 

adopting a straightforward and easy-tounderstand rule will help reduce the 

confusion that has led to applicants 

either throwing away equipment or to 

storing the equipment indefinitely 

because applicants are unsure if 

disposing of it will violate E-rate rules. 

61. We conclude that adopting five 

years as a minimum threshold standard 

is superior to attempting to discern a 

specific useful life for each piece of 

equipment under E-rate. As the E-rate 

program supports thousands of different 

pieces of eligible equipment, and as that 

equipment and the eligible services list 

is constantly evolving, the burden of 

verifying the useful life for each piece 

of equipment would be unduly onerous. 

In the Schools and Libraries Third 

Report and Order, we discussed the 

adoption of useful life criteria in the 

context of transferring services and 

equipment. In that context, we decided 

not to adopt useful life criteria, finding 

that ‘‘developing and enforcing useful 

life criteria would add a significant 

degree of complexity to the program, 

which would result in increased 

administrative costs and burden for both 

recipients and USAC.’’ We agree that 

detailing a specific period of useful life 

for each of the thousands of types of 

equipment supported under E-rate 

would be unduly costly and 

burdensome. 

62. We emphasize that this rule does 

not require schools and libraries to 

continue using equipment for five years, 

nor does it require disposal five years 

after installation, but it does prohibit 

resale or disposal before five years has 

passed. We strongly encourage schools 

and libraries to be the best stewards of 

E-rate funding possible and to continue 

to fully use equipment purchased with 

universal service funds for as long as the 

equipment remains viable as an 

effective and efficient technology 

solution. Additionally, the New York 

State Education Department inquired 

whether the disposal of obsolete 

equipment by a service provider, free of 

charge, violates § 54.523 of our rules. 

We conclude that this service does not 

provide the incentive or inducement for 

selection that § 54.523 is designed to 

prevent, and therefore we find that free 

of charge disposal of obsolete 

equipment by a service provider does 

not violate § 54.523 of our rules. 

63. We decline to adopt a time period 

of three years, as suggested by some 

commenters. Some schools and libraries 

transfer equipment from the location 

that originally sought funding for the 

equipment to other locations after three 

years, as permitted by our rules. Those 

transfers suggest that that equipment 

may not typically exhaust its useful life 

within three years. Additionally, 

although in some instances we allow 

applicants to receive funding twice 

every five years to help, in part, allow 

for updated internal connections, that 

rule is primarily intended to allow 

funding to be distributed more 

equitably. It is not a benchmark for 

measuring equipment obsolescence. 

64. Second, we decline to adopt the 

proposal that would require applicants 

to formally declare that equipment is 

obsolete. Schools and libraries should 

make this determination in the normal 

course as they create technology plans 

and determine what equipment is 

required to keep the network running 

efficiently. Each school and library 

board has its own established 

procedures for making this 

determination. We find that a formal 

declaration would serve little if any 

value, and would create an unnecessary 

administrative burden. Therefore, we 

decline to adopt this proposed 

condition. 

65. Third, we decline to adopt a rule 

that schools and libraries must notify 

USAC of the resale or disposal of 

equipment funded by the E-rate program 

within 90 days of its disposal, or that 

applicants be required to keep a record 

of the disposal for a period of five years 

following the disposal. We also decline 

to require schools and libraries to track 

disposal of obsolete equipment on their 

asset and inventory lists beyond what 

the current rules already require. As we 

decline to adopt the reporting 

requirement, we see little utility in 

revising the FCC Form 500 as proposed, 

and we decline to do so. Because we are 

convinced that the remaining value of 

equipment purchased using E-rate funds 

is generally de minimis after five years, 

we find that such reporting 

requirements do not justify the 

substantial administrative burden they 

would impose on both applicants and 

USAC. Nevertheless, the purpose of 

permitting applicants to dispose of 

equipment for money or other 

consideration is to encourage recycling 

and optimization of resources. It is not 

intended to create a profit-making 

opportunity for E-rate participants or to 

create incentives to request services that 

exceed the applicant’s immediate needs. 

Thus, if we have reason to believe that 

this revised rule results in waste or 

abuse, we may impose reporting 

obligations, recover funding, or take 

other steps to eliminate opportunities 

for abuse. 

66. Fourth, we decline to adopt, as a 

condition of compliance with our E-rate 

rules, a specific rule that the disposal 

process must comply with state and 

local laws. While we expect any schools 

and libraries disposing of obsolete 

equipment will comply with applicable 

federal, state, and local laws, we find 

that making such compliance a 

condition of our E-rate program 

requirements would impose significant 

administrative burdens on USAC to 

track such compliance, and that such 

burden outweighs any potential benefit 

of imposing such a requirement. 

67. Finally, we decline to require 

schools and libraries to return to USAC 

any funds received in exchange for the 

sale or disposal of obsolete E-rate 

equipment. We sought comment on Erate Central’s proposal that would 

require the return to USAC of any funds 

greater than $1,000 related to the resale 

or disposal of E-rate equipment. Because 

our intent is to permit disposal only of 

obsolete equipment, we expect that any 

consideration that schools or libraries 

receive should be nominal. Thus we 

find that the potential recovery does not 

warrant the administrative burdens that 

USAC and applicants would face as a 

result of requiring remission of such 

amounts. 

68. E-Rate Central Petition for 

Clarification or Waiver. As discussed in 

the E-rate Broadband NPRM, E-Rate 

Central filed a petition for clarification 

or waiver of the Commission’s rules 

concerning the disposal of equipment 

purchased under the E-rate program. 

The rules adopted in this order address 

E-Rate Central’s Petition for 

Clarification or Waiver. Therefore, we 

dismiss E-Rate Central’s petition as 

moot. 

C. Improving Safeguards Against Waste, 

Fraud and Abuse 

69. Fair and Open Competitive 

Bidding Rule. We amend § 54.503 of the 

Commission’s rules to codify the 

existing requirement that the E-rate 

competitive bidding process be fair and 

open. The Commission has observed 

that competitive bidding is vital to 

ensuring that schools and libraries—and 

the E-rate program—receive the best 

value for their limited funds, and to 

clarify the prohibition against E-rate 

applicants receiving gifts. Although 

numerous Commission orders already 

make clear that, to comply with the 

Commission’s competitive bidding 

process requirements, applicants and 

service providers must conduct and 

participate in a fair and open 

competitive bidding process, we find 

that codification of this requirement is 

warranted. We remind parties that all 


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applicants and service providers have 

had, and will continue to have, an 

obligation to comply with any 

applicable state or local procurement 

laws, in addition to the Commission’s 

requirements. 

70. As proposed in the E-rate 

Broadband NPRM, we find that the 

following types of conduct are necessary 

to satisfy a fair and open competitive 

bidding requirement. As a general 

matter, all potential bidders and service 

providers must have access to the same 

information and must be treated in the 

same manner throughout the 

procurement process. Any additions or 

modifications to the FCC Form 470, 

RFP, or other requirements or 

specifications must be available to all 

potential providers at the same time and 

in a uniform manner. Moreover, 

consistent with precedent, it is a 

violation of the Commission’s 

competitive bidding rules if: (1) The 

applicant has a relationship with a 

service provider that would unfairly 

influence the outcome of a competition 

or would furnish the service provider 

with ‘‘inside’’ information; (2) someone 

other than the applicant or an 

authorized representative of the 

applicant prepares, signs, and submits 

the FCC Form 470 and certification; (3) 

a service provider representative is 

listed as the FCC Form 470 contact 

person and that service provider is 

allowed to participate in the 

competitive bidding process; or (4) a 

service provider prepares the 

applicant’s FCC Form 470 or 

participates in the bid evaluation or 

vendor selection process in any way. In 

the Mastermind Order, the Commission 

found that an applicant violates the 

Commission’s competitive bidding rules 

if the applicant turns over to a service 

provider the responsibility for ensuring 

a fair and open competitive bidding 

process. The Commission concluded in 

the SEND Order that a competitive 

bidding process is undermined when an 

applicant employee with a role in the 

service provider selection process also 

has an ownership interest in the vendor 

that is seeking to provide the products 

or services. In the Ysleta Order, the 

Commission found that an applicant 

violates the Commission’s competitive 

bidding rules if its FCC Form 470 does 

not describe the desired products and 

services with sufficient specificity to 

enable interested parties to submit 

responsive bids. We emphasize that this 

is not an exhaustive summary of the 

types of conduct that we have found, 

and will continue to find, to violate the 

competitive bidding process. Because 

we cannot anticipate and address every 

possible action that parties may take in 

the E-rate application process, we 

expect that we will continue to use the 

appeal process as necessary to decide 

alleged competitive bidding violations. 

71. In addition to this precedent, we 

address the receipt of gifts by applicants 

from service providers and potential 

service providers under the E-rate 

program. As noted above, the 

Commission’s rules and precedent 

require that applicants conduct a fair 

and open competitive bidding process. 

In addition, applicants are required to 

certify on the FCC Form 471 that they 

have not received anything of value or 

a promise of anything of value other 

than the services and equipment 

requested on the form. In the E-rate 

Broadband NPRM, we listed gift-giving 

as one example of prohibited conduct 

under a fair and open competitive 

bidding process. 

72. We find that the best approach is 

to make gift rules under the E-rate 

program consistent with the gift rules 

applicable to federal agencies, which 

permit only certain de minimis gifts. 

Generally, the federal rules prohibit a 

federal employee from directly or 

indirectly soliciting or accepting a gift 

(i.e., anything of value) from someone 

who does business with his or her 

agency or accepting a gift given as a 

result of the employee’s official 

position. The federal rules do, however, 

permit two categories of circumscribed 

de minimis gifts: (1) Modest 

refreshments that are not offered as part 

of a meal (e.g., coffee and donuts 

provided at a meeting) and items with 

little intrinsic value intended solely for 

presentation (e.g., certificates and 

plaques); and (2) items that are worth 

$20 or less (e.g., pencils, pens, hats, tshirts, and other items worth less than 

$20, including meals), as long as those 

items do not exceed $50 per employee 

from any one source per calendar year. 

Similarly, the rule we adopt today also 

allows such de minimis gifts. In 

determining the amount of gifts from 

any one source, we will consider the 

aggregate value of all gifts from any 

employees, officers, representatives, 

agents, independent contractors, or 

directors of the service providers in a 

given funding year. We note that the 

restriction on gifts is always applicable, 

and is not in effect or triggered only 

during the time period when the 

competitive bidding process is taking 

place. Based on our experience, gift 

activities that undermine the 

competitive bidding process may occur 

outside the bidding period. 

Accordingly, we amend § 54.503 of our 

rules to prohibit E-rate applicants from 

soliciting or accepting any gift or other 

thing of value from a service provider 

participating in or seeking to participate 

in the E-rate program. We further amend 

that rule to make it a violation for any 

service provider to offer or provide any 

gift or other thing of value to those 

personnel of eligible entities involved 

with the E-rate program. Like the federal 

rules, we include an exception for gifts 

to family and personal friends when 

those gifts are made using personal 

funds of the donor (without 

reimbursement from an employer) and 

are not related to a business transaction 

or business relationship. 

73. We find that the federal rules offer 

a fair balance between prohibiting gifts 

that might have undue or improper 

influence on a procurement decision 

and acknowledging the realities of 

professional interactions, which might 

occasionally involve giving people 

coffee or other modest refreshments or 

a token gift. Moreover, the federal rules 

are well-established and have been 

interpreted frequently, and parties can 

look to these decisions if there are 

questions about the propriety of a 

particular offering. In addition, we find 

that this rule is appropriate for ease of 

administration and also to provide 

clarity for service providers and 

applicants. Finally, we emphasize again 

that schools, libraries, and service 

providers remain subject to applicable 

state and local restrictions regarding 

gifts. Thus, to the extent a state or local 

provision is more stringent than the 

federal requirements, violation of the 

state or local provision constitutes a 

violation of the Commission rule we 

adopt herein. 

74. AT&T was concerned that a 

prohibition against gifts might prevent 

companies from making charitable 

contributions to schools, or would deter 

other philanthropic activities, such as 

employee donations through United 

Way. The rule we articulate today does 

not discourage companies from making 

charitable donations to E-rate eligible 

entities in the support of schools— 

including, for example, literacy 

programs, scholarships, and capital 

improvements—as long as such 

contributions are not directly or 

indirectly related to E-rate procurement 

activities or decisions. If contributions 

have no relationship to the procurement 

of E-rate eligible services and are not 

given by service providers to 

circumvent our rules, including rules 

that require schools and libraries to pay 

their own non-discount share for the 

services they are purchasing, such 

contributions will not violate the 

prohibition against gift-giving. If 

applicants or service providers are 

unclear about a particular anticipated 


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gift, they should seek guidance from 

USAC or the FCC. 

75. We also offer greater clarity with 

regard to permissible service provider 

identification number (SPIN) changes 

following a competitive bidding 

process. In the E-rate Broadband NPRM, 

we proposed to prohibit a service 

provider from circumventing a 

competitive bidding process by offering 

a new, lower price for products and 

services that have already been 

competitively bid and are part of an 

existing contract. The Commission 

currently permits applicants to change 

service providers for specified reasons 

(e.g., the service provider went out of 

business or is unable to perform) after 

a funding commitment has been issued 

through the operational SPIN change 

process. Applicants must wait until 

after the funding commitment has been 

issued to enable USAC to review and 

identify any issues related to the 

competitive bidding process of the 

original service provider. There may be 

some instances, however, where the 

reason for the SPIN change is not 

consistent with program purposes. For 

example, the applicant might identify a 

service provider as the winning bidder 

but intend to change providers through 

the SPIN change process as soon as 

USAC issues a funding commitment. 

We believe that this type of conduct is 

inappropriate and is not conducive to a 

fair and open competitive bidding 

process. Therefore, to alleviate 

uncertainty regarding the types of SPIN 

changes that are permissible following a 

competitive bidding process, we clarify 

that once a contract for products or 

services is signed by the applicant and 

service provider, the applicant may not 

change to a different service provider 

unless (1) there is a legitimate reason to 

change providers (e.g., breach of 

contract or the service provider is 

unable to perform); and (2) the newly 

selected service provider received the 

next highest point value in the original 

bid evaluation, assuming there was 

more than one bidder. 

76. Some commenters challenged the 

statement in the E-rate Broadband 

NPRM that ‘‘[a] service provider may 

provide information to an applicant 

about products or services—including 

demonstrations—before the applicant 

posts the FCC Form 470, but not during 

the bid selection process.’’ They argue 

that applicants need vendor information 

during the bid selection process in order 

to make the best decision about the 

services they are requesting. We agree 

with these commenters and note that, 

currently, service providers are 

permitted to supply information about 

their products and services during the 

28-day waiting period. Our concern 

regarding vendor communication during 

the 28-day waiting period was not about 

the specific products or services being 

requested, but rather about ensuring that 

potential bidders are not influencing the 

bidding process by providing 

inappropriate assistance as explained 

above. Thus, we clarify that we do not 

prohibit communications during the 28- 

day waiting period as long as all parties 

are privy to the same information from 

the applicant during that period and the 

communications are consistent with any 

applicable state or local competitive 

bidding requirements. 

III. Eligible Services List 

77. In this order, we release the ESL 

for funding year 2011 and adopt most of 

the proposals made in the 2009 ESL 

Further NPRM, 75 FR 32692, June 9, 

2010, and the 2010 ESL Public Notice. 

We add dark fiber to the ESL as an 

eligible service. We also retain web 

hosting as an eligible priority one 

service. Finally, we decline to add the 

following services to the ESL: (1) 

Software applications that are used in 

connection with wireless devices; (2) 

enhanced firewalls and intrusion 

detection/intrusion prevention devices; 

(3) anti-virus and anti-spam software; 

(4) online backup solutions; and (5) 

unbundled warranties. 

78. We also make slight modifications 

to the rules pertaining to ESL 

administration. First, as explained 

below, we find that individual eligible 

and ineligible services should be listed 

in the ESL only rather than in our rules. 

Second, we require USAC to submit any 

proposed changes to the ESL to the 

Commission by March 30 of each year. 

Third, the rules will now provide the 

Commission with flexibility to release 

the ESL by public notice or order. 

Finally, because we are releasing the 

final ESL for funding year 2011 by this 

report and order, pursuant to our rules, 

we also authorize USAC to open the 

annual application filing window no 

earlier than November 29, 2010. 

79. The Commission uses several 

criteria to determine whether to include 

a service in the ESL. First, under the 

statute, a service must serve an 

educational purpose. Second, the 

service should be primarily or 

significantly used to facilitate 

connectivity. The E-rate program does 

not provide support for content or enduser devices such as computers or 

telephones. Third, due to the financial 

constraints on the fund, we must 

balance the benefits of particular 

services with the costs of adding to our 

list of supported services—i.e., if more 

services are eligible for E-rate funding, 

some schools may receive more funding, 

but some schools may not receive any 

funding for priority two services. We 

recognize that E-rate may not be able to 

fund every service that potentially 

serves an educational purpose, and for 

that reason we need to evaluate 

potential impact of adding additional 

services to the eligible services list. 

Finally, the Commission must exercise 

discretion in order to balance the goals 

of the E-rate program with the 

overarching (and potentially competing) 

goals of universal service, such as 

ensuring affordable rates to all 

Americans across the country. In 

deciding whether to extend E-rate 

support to a particular service, the 

Commission must keep in mind that the 

support ultimately is paid for by 

consumers. This balancing bears on 

each decision about whether to 

designate a service as eligible or 

ineligible for E-rate support. 

1. Eligible Services 

80. Web Hosting. Based on the record 

before us, we find that web hosting 

should continue to receive priority one 

funding. Comments provided 

compelling examples of how web 

hosting is essential for facilitating 

teaching and learning as well as 

communication among the entire school 

community. For example, teachers use 

individual web pages to post homework 

assignments, collect completed 

homework from students, post messages 

to students and parents, and respond to 

student or parent questions. Web pages 

also can increase learning time outside 

of school by providing students and 

parents with 24/7 access to classroom 

information and supplemental 

educational resources. Moreover, 

parental and family engagement in a 

child’s school has been linked to 

improved educational outcomes for 

students. Web hosting, as the 

commenters have shown, is an example 

of a service that can provide a 

substantial educational impact for a 

relatively small cost. 

81. We are also persuaded that 

features that facilitate the ability to 

communicate, such as blogging, emailing over a school or library’s hosted 

website, discussion boards, and services 

that may facilitate real-time interactive 

communication such as instant 

messaging or chat, should be eligible for 

E-rate funds as part of a web hosting 

package. Therefore, we revise the ESL to 

include those features of web hosting. 

This decision alters prior decisions 

limiting web hosting support to hosting 

a school or library’s static website and 

excluded the ability to engage in 

interactive activity such as blogging. We 


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recognize that the transfer of messages 

across a school’s hosted website is 

functionally equivalent to other services 

that facilitate the ability to communicate 

such as e-mail, text messaging, voice 

mail, and paging. We remind applicants, 

however, that content—including 

content created by third-party vendors, 

and any features involving data input or 

retrieval—including searching of 

databases for grades, student attendance 

files, or other reports—remains 

ineligible. In addition, support for web 

hosting will not include support for the 

applications necessary to run online 

classes or collaborative meetings. 

2. Ineligible Services 

82. Wireless Internet Access 

Applications. We conclude that wireless 

Internet access applications should 

remain ineligible for E-rate support. The 

E-rate program generally does not 

provide support for software or 

applications. Our decision does not 

contradict the Schools and Libraries 

Second Report and Order determination 

that wireless telecommunications 

services on a school bus or a library’s 

mobile unit are eligible for E-rate 

funding, because in that order the 

Commission decided to fund the 

telecommunications service used on 

school buses but not any overlying 

functionalities or applications. 

Although some commenters argue that 

wireless Internet applications should be 

funded if they are used for an 

‘‘educational purpose,’’ we find that 

even if certain of these applications do 

serve educational purposes, they should 

not be funded given the overall 

constraints on the universal service 

fund, and our desire to maintain the 

focus of E-rate on its core purpose of 

ensuring communications connectivity. 

Thus, we are not persuaded that 

expanding eligibility to fund wireless 

Internet access applications at this time 

is a prudent course of action. 

83. We disagree with commenters that 

applications for wireless devices should 

be eligible if they are bundled with 

eligible voice and data services. Such an 

approach would allow providers in 

effect to expand the ESL by bundling 

ineligible wireless applications with 

eligible services. Although we do not 

prohibit providers from choosing how to 

offer their services, individual ineligible 

services within the bundle will still 

need to be cost allocated. To the extent 

that carriers bundle eligible and 

ineligible services and do not present a 

reasonable cost allocation between the 

services, we direct USAC to continue to 

provide outreach to applicants during 

the program integrity assurance review 

process and make determinations based 

on any additional information provided 

in the discussions and informationsharing with applicants. 

84. Funds for Learning asserts that the 

language in the draft 2011 ESL appears 

to say that applicants may not receive 

discounts on any data charges used for 

accessing wireless applications. This 

language was intended to indicate that 

wireless Internet access service and data 

charges for a service that is solely 

dedicated to accessing an ineligible 

functionality is ineligible for E-rate 

funding. For example, wireless Internet 

access service that enables students to 

access the Internet on a laptop computer 

will still be eligible for E-rate funding 

even if that service happens to allow a 

student to access applications that 

would not be eligible for E-rate funds. 

If a wireless Internet access service is 

dedicated to a service or group of 

services that are ineligible, however, the 

entire service request will be deemed 

ineligible. For example, a wireless 

service solely dedicated to applications 

that track the location of a school’s bus 

drivers or student attendance would be 

fully ineligible. 

85. Enhanced Firewalls, Intrusion 

Detection/Intrusion Prevention Devices, 

Anti-Virus and Anti-Spam Software. 

Firewall services are intended to 

prevent unauthorized access to a school 

or library’s network. Anti-virus and 

anti-spam software and intrusion 

protection and intrusion prevention 

devices monitor, detect, and deter 

threats to a network from external and 

internal attacks. We decline to extend Erate support to anti-virus and anti-spam 

software and intrusion protection and 

intrusion prevention devices. We will 

continue to fund basic firewall 

protection, but we will not at this time 

extend E-rate support beyond basic 

firewall protection that is included as 

part of an Internet access service. While 

some commenters support greater 

support for firewall services, contending 

that such services are necessary 

protection for Internet services and 

equipment, we must balance the 

benefits of such protections with the 

costs of augmenting our list of 

supported services. We are concerned 

about the financial impact on the fund— 

i.e., if more services are eligible for Erate funding, fewer schools will get 

funding for priority two services. 

Although we agree that protection from 

unauthorized access is a legitimate 

concern, the funds available to support 

the E-rate program are constrained. 

Therefore, we find that, on balance, the 

limited E-rate funds should not be used 

to support these services. 

86. Unbundled Warranties. We add 

unbundled warranties to our list of 

ineligible basic maintenance of internal 

connections (BMIC). This conforms to 

the decision we made last year that 

unbundled warranties are ineligible. 

The Commission has found that basic 

maintenance services are eligible for 

universal service support as priority two 

internal connections service if, but for 

the maintenance at issue, the internal 

connection would not function and 

serve its intended purpose with the 

degree of reliability ordinarily provided 

in the marketplace to entities receiving 

such services. USAC has treated as an 

unbundled warranty a separately priced 

warranty allowing for broken equipment 

to be fixed or, in the event that the 

problem is beyond repair, replaced. We 

find that an unbundled warranty is an 

ineligible BMIC service because it is 

purchased as a type of retainer and not 

as an actual maintenance service. That 

is, BMIC contracts that require an 

upfront payment and that payment is 

required regardless of whether any 

service is actually performed are not 

eligible. In light of the limited funds 

available for the program, we decline to 

include support for service that may not 

need to be performed. To avoid the 

potential waste of E-rate resources, 

therefore, we will continue to disallow 

E-rate discounts for unbundled 

warranties. 

87. Requests for basic maintenance 

will continue to be funded as internal 

connections if, but for the maintenance 

at issue, the service would not function 

and serve its intended purpose with the 

degree of reliability ordinarily provided 

in the marketplace to entities receiving 

such services. Thus, requests for routine 

maintenance will continue to be funded. 

In addition, if applicants are able to 

estimate a certain number of hours per 

year for maintenance, based on the 

current life of their equipment and a 

history of needed repairs and upkeep, 

they may seek E-rate funds for upfront 

costs on service contracts designed to 

cover this estimate of repairs and 

upkeep. Reimbursements will be paid 

on the actual work performed and hours 

used only. For example, if a school 

determines it will need 30 service hours 

in a given year to maintain its internal 

connections but uses only 20 hours, the 

school will be reimbursed only for 20 

hours even if they were approved for Erate funds on 30 hours. We find that this 

procedure will ensure that E-rate funds 

will be used only for actual 

maintenance performed. 

88. We understand from the 

comments that there may be confusion 

about the eligibility of manufacturer’s 

warranties. The language in the ESL 

under the entry for ‘‘Miscellaneous Fees 

and Charges,’’ states that, ‘‘a 


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manufacturer’s multi-year warranty 

provided as an integral part of an 

eligible component without separately 

identifiable cost can be included in the 

cost of the component.’’ We agree with 

commenters that a manufacturer’s 

warranty of no more than three years 

that is included in the price of eligible 

equipment should continue to be 

eligible as priority two internal 

connections equipment, and add the 

clarification of the three year period to 

the ESL. In the same entry for 

‘‘Miscellaneous Fees and Charges,’’ 

however, it states that ‘‘[e]xtended 

warranties and service contracts are 

eligible only for that portion associated 

with the relevant funding year.’’ We will 

remove this language from the ESL for 

funding year 2011 to eliminate any 

implication in the ESL that an 

unbundled warranty may be eligible for 

E-rate funding. 

89. Other Ineligible Services. We also 

decline to designate scheduling services 

and online backup solutions as eligible 

for E-rate funding. Given the overall 

constraints on the universal service 

fund, and our desire to maintain the 

focus of E-rate on its core purpose of 

ensuring communications connectivity, 

we are not persuaded that expanding 

eligibility to fund these services at this 

time is a prudent course of action. 

3. Administrative Changes Pertaining to 

the ESL 

90. We adopt the proposal in the 2009 

ESL Further NPRM to restructure our 

rules such that the services eligible for 

support will be listed in the ESL and 

will not specified in the Commission’s 

rules. Any reference to specific services 

or products in the rules will be removed 

and the revised rule regarding the ESL 

will state that all products and services 

eligible for E-rate support will be listed 

in the ESL. This change will help the 

Commission ensure that the ESL is 

updated in a timely manner. We find 

that listing general categories of eligible 

services in the rules and specific types 

of eligible services that fall within those 

categories of eligible services in the ESL 

is confusing. Moreover, it does not serve 

the public interest to change both the 

Commission’s rules and the ESL each 

time a new service or product is 

designated eligible (or ineligible) for Erate support. Therefore, to alleviate this 

confusion, we will list the services and 

products eligible for E-rate support only 

in the ESL. This change will enable the 

Commission to modify the ESL only as 

necessary to keep up with rapidly 

changing technology. We note that the 

Commission will continue to seek 

comment on each funding year’s 

proposed ESL, pursuant to our rules. 

Additionally, we will modify our rules 

pertaining to the ESL when necessary to 

designate new categories of services as 

eligible for E-rate support. 

91. We also adopt the proposal that 

USAC should be required to submit any 

proposed changes to the ESL to the 

Commission by March 30 of each year, 

instead of June 30. Accordingly, we 

amend § 54.522 of our rules. We agree 

with commenters that requiring USAC 

to submit the proposed ESL earlier will 

allow additional time for the 

Commission to review the proposal and 

to review and analyze public comment 

on the proposed ESL. Some commenters 

also propose that we release the ESL 

earlier than the existing deadline. 

Although we agree that applicants 

should have ample time to review the 

final ESL while they prepare their 

funding applications, the existing rule 

requires the final ESL to be released at 

least 60 days prior to the opening of the 

funding window. We find that this 60 

day period, in addition to the period of 

time applicants had to review the 

proposed changes released in the draft 

ESL, should afford applicants a 

reasonable amount of time to 

understand any changes to the ESL and 

prepare their applications. 

92. Finally, we adopt our proposal 

that the final ESL should no longer be 

required to be released by public notice. 

We find that it is important that the 

Commission have the flexibility to 

release the ESL through a public notice 

or an order to account for the situations 

where the Commission will need to 

provide more detailed explanations as 

to why a service is deemed eligible or 

ineligible for E-rate funding. We wish to 

dispel any concerns that this change 

would eliminate the opportunity for 

public comment on any modifications to 

the ESL. Indeed, the proposed rule 

attached to the 2009 ESL Further NPRM 

states that ‘‘[t]he Wireline Competition 

Bureau will issue a Public Notice 

seeking comment on the Administrator’s 

proposed eligible services list,’’ and we 

adopt that proposed rule herein. 

IV. Procedural Matters 

A. Final Regulatory Flexibility Analysis 

93. As required by the Regulatory 

Flexibility Act of 1980, as amended 

(RFA), the Federal Communications 

Commission (Commission) included an 

Initial Regulatory Flexibility Analysis 

(IRFA) of the possible significant 

economic impact on a substantial 

number of small entities of the policies 

and rules considered in the E-rate 

Broadband NPRM in CC Docket No. 02– 

6 and GN Docket No. 09–51. The 

Commission sought written public 

comment on the proposals in the E-rate 

Broadband NPRM, including comment 

on the IRFA. This Final Regulatory 

Flexibility Analysis (FRFA) conforms to 

the RFA. 

B. Need for, and Objectives of, the 

Report and Order 

94. The Commission is required by 

section 254 of the Communications Act 

of 1934, as amended, to promulgate 

rules to implement the universal service 

provisions of section 254. On May 8, 

1997, the Commission adopted rules to 

reform its system of universal service 

support mechanisms so that universal 

service is preserved and advanced as 

markets move toward competition. 

Specifically, under the schools and 

libraries universal service support 

mechanism, also known as the E-rate 

program, eligible schools, libraries, and 

consortia that include eligible schools 

and libraries may receive discounts for 

eligible telecommunications services, 

Internet access, and internal 

connections. 

95. The National Broadband Plan 

(NBP), issued on March 16, 2010, 

recommended that the Commission take 

a fresh look at the E-rate program and 

identify potential improvements to 

reflect changes in technology and 

evolving teaching methods used by 

schools. In May 2010, the Commission 

issued a Notice of Proposed Rulemaking 

seeking public comment on proposals to 

ensure that the E-rate program continues 

to help our children and communities 

prepare for the high-skilled jobs of the 

future and reap the full benefits of the 

Internet. In this Report and Order, the 

Commission adopts a number of the 

proposals put forward in the E-rate 

Broadband NPRM. 

96. The revisions adopted by the 

Commission in the Report and Order 

fall into three conceptual categories. 

First, the Commission enables schools 

and libraries to better serve students, 

teachers, librarians, and their 

communities by providing more 

flexibility to select and make available 

the most cost-effective broadband and 

other communications services. 

Specifically, the Commission allows 

applicants to lease fiber from the most 

cost-effective provider, including notfor-profit entities, so that applicants can 

choose the services that best meet their 

needs from a broad set of competitive 

options and in the most cost-effective 

manner available in the marketplace. It 

also changes the rules to permit schools 

to allow community use of E-rate 

funded services outside of school hours 

and supports broadband connections to 

the residential portion of schools that 

serve students with special 


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circumstances. The Commission further 

indexes E-rate’s funding cap to inflation 

to preserve the purchasing power of a 

successful program. Additionally, the 

Commission seeks proposals for a 

limited pilot program to establish best 

practices to support off-campus wireless 

connectivity for portable learning 

devices outside of regular school or 

library operating hours. Second, the 

Commission simplifies and streamlines 

the E-rate application process by 

removing the technology plan 

requirement for priority one 

telecommunications and Internet access 

services, and facilitating the disposal 

and recycling of obsolete equipment 

supported by E-rate by authorizing 

schools and libraries to receive 

consideration for such equipment. 

Third, the Commission improves 

safeguards against waste, fraud, and 

abuse by codifying the requirement that 

competitive bidding processes be fair 

and open. In addition, the Commission 

adopts the eligible services list for 

funding year 2011. 

97. As a result of these changes, 

schools and libraries throughout the 

country can make their limited dollars 

go further. The changes adopted in this 

Report and Order will increase the 

ability of students and the public to 

utilize broadband services for 

educational needs. In addition, the 

changes to simplify the E-rate program 

will help reduce the cost of 

participating in the program, thereby 

making the program more accessible, 

particularly to smaller school districts 

and libraries that are often located in 

more rural areas and may not have staff 

dedicated to managing E-rate 

applications and related activities. 

C. Summary of Significant Issues Raised 

by Public Comments in Response to the 

IRFA 

98. No comments specifically 

addressed the IRFA. 

D. Description and Estimate of the 

Number of Small Entities to Which 

Rules Will Apply 

99. The RFA directs agencies to 

provide a description of and, where 

feasible, an estimate of the number of 

small entities that may be affected by 

the proposed rules, if adopted. The RFA 

generally defines the term ‘‘small entity’’ 

as having the same meaning as the terms 

‘‘small business,’’ ‘‘small organization,’’ 

and ‘‘small governmental jurisdiction.’’ 

In addition, the term ‘‘small business’’ 

has the same meaning as the term ‘‘small 

business concern’’ under the Small 

Business Act. A small business concern 

is one that: (1) Is independently owned 

and operated; (2) is not dominant in its 

field of operation; and (3) satisfies any 

additional criteria established by the 

Small Business Administration (SBA). 

Nationwide, there are a total of 

approximately 29.6 million small 

businesses, according to the SBA. A 

‘‘small organization’’ is generally ‘‘any 

not-for-profit enterprise which is 

independently owned and operated and 

is not dominant in its field.’’ 

Nationwide, as of 2002, there were 

approximately 1.6 million small 

organizations. The term ‘‘small 

governmental jurisdiction’’ is defined 

generally as ‘‘governments of cities, 

towns, townships, villages, school 

districts, or special districts, with a 

population of less than fifty thousand.’’ 

Census Bureau data for 2002 indicate 

that there were 87,525 local 

governmental jurisdictions in the 

United States. We estimate that, of this 

total, 84,377 entities were ‘‘small 

governmental jurisdictions.’’ Thus, we 

estimate that most governmental 

jurisdictions are small. 

100. Small entities potentially 

affected by the proposals herein include 

eligible schools and libraries and the 

eligible service providers offering them 

discounted services, including 

telecommunications service providers, 

Internet Service Providers (ISPs), and 

vendors of the services and equipment 

used for internal connections. 

a. Schools 

101. As noted, ‘‘small entity’’ includes 

non-profit and small governmental 

entities. Under the schools and libraries 

universal service support mechanism, 

which provides support for elementary 

and secondary schools, an elementary 

school is generally ‘‘a non-profit 

institutional day or residential school 

that provides elementary education, as 

determined under state law.’’ A 

secondary school is generally defined as 

‘‘a non-profit institutional day or 

residential school that provides 

secondary education, as determined 

under state law,’’ and not offering 

education beyond grade 12. For-profit 

schools, and schools and libraries with 

endowments in excess of $50,000,000, 

are not eligible to receive discounts 

under the program. Certain other 

restrictive definitions apply as well. The 

SBA has also defined for-profit, 

elementary and secondary schools 

having $7 million or less in annual 

receipts as small entities. In funding 

year 2007, approximately 105,500 

schools received funding under the 

schools and libraries universal service 

mechanism. Although we are unable to 

estimate with precision the number of 

these additional entities that would 

qualify as small entities under SBA’s 

size standard, we estimate that fewer 

than 105,500 such schools might be 

affected annually by our action, under 

current operation of the program. 

b. Telecommunications Service 

Providers 

102. Incumbent Local Exchange 

Carriers (LECs). Neither the Commission 

nor the SBA has developed a size 

standard for small incumbent local 

exchange services. The closest size 

standard under SBA rules is for Wired 

Telecommunications Carriers. Under 

that size standard, such a business is 

small if it has 1,500 or fewer employees. 

According to Commission data, 1,311 

incumbent carriers reported that they 

were engaged in the provision of local 

exchange services. Of these 1,311 

carriers, an estimated 1,024 have 1,500 

or fewer employees and 287 have more 

than 1,500 employees. Thus, under this 

category and associated small business 

size standard, we estimate that the 

majority of entities are small. 

103. We have included small 

incumbent local exchange carriers in 

this RFA analysis. A ‘‘small business’’ 

under the RFA is one that, inter alia, 

meets the pertinent small business size 

standard (e.g., a telephone 

communications business having 1,500 

or fewer employees), and ‘‘is not 

dominant in its field of operation.’’ The 

SBA’s Office of Advocacy contends that, 

for RFA purposes, small incumbent 

local exchange carriers are not dominant 

in their field of operation because any 

such dominance is not ‘‘national’’ in 

scope. We have therefore included small 

incumbent carriers in this RFA analysis, 

although we emphasize that this RFA 

action has no effect on the 

Commission’s analyses and 

determinations in other, non-RFA 

contexts. 

104. Interexchange Carriers. Neither 

the Commission nor the SBA has 

developed a definition of small entities 

specifically applicable to providers of 

interexchange services (IXCs). The 

closest applicable definition under the 

SBA rules is for wired 

telecommunications carriers. This 

provides that a wired 

telecommunications carrier is a small 

entity if it employs no more than 1,500 

employees. According to the 

Commission’s 2008 Trends Report, 300 

companies reported that they were 

engaged in the provision of 

interexchange services. Of these 300 

IXCs, an estimated 268 have 1,500 or 

fewer employees and 32 have more than 

1,500 employees. Consequently, the 

Commission estimates that most 

providers of interexchange services are 

small businesses. 


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105. Competitive Access Providers. 

Neither the Commission nor the SBA 

has developed a definition of small 

entities specifically applicable to 

competitive access services providers 

(CAPs). The closest applicable 

definition under the SBA rules is for 

wired telecommunications carriers. This 

provides that a wired 

telecommunications carrier is a small 

entity if it employs no more than 1,500 

employees. According to the 2008 

Trends Report, 1,005 CAPs and 

competitive local exchange carriers 

(competitive LECs) reported that they 

were engaged in the provision of 

competitive local exchange services. Of 

these 1,005 CAPs and competitive LECs, 

an estimated 918 have 1,500 or fewer 

employees and 87 have more than 1,500 

employees. Consequently, the 

Commission estimates that most 

providers of competitive exchange 

services are small businesses. 

106. Wireless Telecommunications 

Carriers (except Satellite). Since 2007, 

the Census Bureau has placed wireless 

firms within this new, broad, economic 

census category. Prior to that time, such 

firms were within the now-superseded 

categories of ‘‘Paging’’ and ‘‘Cellular and 

Other Wireless Telecommunications.’’ 

Under the present and prior categories, 

the SBA has deemed a wireless business 

to be small if it has 1,500 or fewer 

employees. Because Census Bureau data 

are not yet available for the new 

category, we will estimate small 

business prevalence using the prior 

categories and associated data. For the 

category of Paging, data for 2002 show 

that there were 807 firms that operated 

for the entire year. Of this total, 804 

firms had employment of 999 or fewer 

employees, and three firms had 

employment of 1,000 employees or 

more. For the category of Cellular and 

Other Wireless Telecommunications, 

data for 2002 show that there were 1,397 

firms that operated for the entire year. 

Of this total, 1,378 firms had 

employment of 999 or fewer employees, 

and 19 firms had employment of 1,000 

employees or more. Thus, we estimate 

that the majority of wireless firms are 

small. 

107. Wireless Telephony. Wireless 

telephony includes cellular, personal 

communications services, and 

specialized mobile radio telephony 

carriers. As noted, the SBA has 

developed a small business size 

standard for Wireless 

Telecommunications Carriers (except 

Satellite). Under the SBA small business 

size standard, a business is small if it 

has 1,500 or fewer employees. 

According to the 2008 Trends Report, 

434 carriers reported that they were 

engaged in wireless telephony. Of these, 

an estimated 222 have 1,500 or fewer 

employees and 212 have more than 

1,500 employees. We have estimated 

that 222 of these are small under the 

SBA small business size standard. 

108. Common Carrier Paging. As 

noted, since 2007 the Census Bureau 

has placed paging providers within the 

broad economic census category of 

Wireless Telecommunications Carriers 

(except Satellite). Prior to that time, 

such firms were within the nowsuperseded category of ‘‘Paging.’’ Under 

the present and prior categories, the 

SBA has deemed a wireless business to 

be small if it has 1,500 or fewer 

employees. Because Census Bureau data 

are not yet available for the new 

category, we will estimate small 

business prevalence using the prior 

category and associated data. The data 

for 2002 show that there were 807 firms 

that operated for the entire year. Of this 

total, 804 firms had employment of 999 

or fewer employees, and three firms had 

employment of 1,000 employees or 

more. Thus, we estimate that the 

majority of paging firms are small. 

109. In addition, in the Paging Second 

Report and Order, the Commission 

adopted a size standard for ‘‘small 

businesses’’ for purposes of determining 

their eligibility for special provisions 

such as bidding credits and installment 

payments. A small business is an entity 

that, together with its affiliates and 

controlling principals, has average gross 

revenues not exceeding $15 million for 

the preceding three years. The SBA has 

approved this definition. An initial 

auction of Metropolitan Economic Area 

(‘‘MEA’’) licenses was conducted in the 

year 2000. Of the 2,499 licenses 

auctioned, 985 were sold. Fifty-seven 

companies claiming small business 

status won 440 licenses. A subsequent 

auction of MEA and Economic Area 

(‘‘EA’’) licenses was held in the year 

2001. Of the 15,514 licenses auctioned, 

5,323 were sold. One hundred thirtytwo companies claiming small business 

status purchased 3,724 licenses. A third 

auction, consisting of 8,874 licenses in 

each of 175 EAs and 1,328 licenses in 

all but three of the 51 MEAs, was held 

in 2003. Seventy-seven bidders claiming 

small or very small business status won 

2,093 licenses. 

110. Currently, there are 

approximately 74,000 Common Carrier 

Paging licenses. According to the most 

recent Trends in Telephone Service, 281 

carriers reported that they were engaged 

in the provision of ‘‘paging and 

messaging’’ services. Of these, an 

estimated 279 have 1,500 or fewer 

employees and two have more than 

1,500 employees. We estimate that the 

majority of common carrier paging 

providers would qualify as small 

entities under the SBA definition. 

c. Internet Service Providers 

111. The 2007 Economic Census 

places these firms, whose services might 

include voice over Internet protocol 

(VoIP), in either of two categories, 

depending on whether the service is 

provided over the provider’s own 

telecommunications facilities (e.g., cable 

and DSL ISPs), or over client-supplied 

telecommunications connections (e.g., 

dial-up ISPs). The former are within the 

category of Wired Telecommunications 

Carriers, which has an SBA small 

business size standard of 1,500 or fewer 

employees. The latter are within the 

category of All Other 

Telecommunications, which has a size 

standard of annual receipts of $25 

million or less. The most current Census 

Bureau data for all such firms, however, 

are the 2002 data for the previous 

census category called Internet Service 

Providers. That category had a small 

business size standard of $21 million or 

less in annual receipts, which was 

revised in late 2005 to $23 million. The 

2002 data show that there were 2,529 

such firms that operated for the entire 

year. Of those, 2,437 firms had annual 

receipts of under $10 million, and an 

additional 47 firms had receipts of 

between $10 million and $24, 999,999. 

Consequently, we estimate that the 

majority of ISP firms are small entities. 

d. Vendors of Internal Connections 

112. Telephone Apparatus 

Manufacturing. The Census Bureau 

defines this category as follows: ‘‘This 

industry comprises establishments 

primarily engaged in manufacturing 

wire telephone and data 

communications equipment. These 

products may be standalone or boardlevel components of a larger system. 

Examples of products made by these 

establishments are central office 

switching equipment, cordless 

telephones (except cellular), PBX 

equipment, telephones, telephone 

answering machines, LAN modems, 

multi-user modems, and other data 

communications equipment, such as 

bridges, routers, and gateways.’’ The 

SBA has developed a small business 

size standard for Telephone Apparatus 

Manufacturing, which is: All such firms 

having 1,000 or fewer employees. 

According to Census Bureau data for 

2002, there were a total of 518 

establishments in this category that 

operated for the entire year. Of this 

total, 511 had employment of under 

1,000, and an additional seven had 

employment of 1,000 to 2,499. Thus, 


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under this size standard, the majority of 

firms can be considered small. 

113. Radio and Television 

Broadcasting and Wireless 

Communications Equipment 

Manufacturing. The Census Bureau 

defines this category as follows: ‘‘This 

industry comprises establishments 

primarily engaged in manufacturing 

radio and television broadcast and 

wireless communications equipment. 

Examples of products made by these 

establishments are: Transmitting and 

receiving antennas, cable television 

equipment, GPS equipment, pagers, 

cellular phones, mobile 

communications equipment, and radio 

and television studio and broadcasting 

equipment.’’ The SBA has developed a 

small business size standard for firms in 

this category, which is: All such firms 

having 750 or fewer employees. 

According to Census Bureau data for 

2002, there were a total of 1,041 

establishments in this category that 

operated for the entire year. Of this 

total, 1,010 had employment of under 

500, and an additional 13 had 

employment of 500 to 999. Thus, under 

this size standard, the majority of firms 

can be considered small. 

114. Other Communications 

Equipment Manufacturing. The Census 

Bureau defines this category as follows: 

‘‘This industry comprises establishments 

primarily engaged in manufacturing 

communications equipment (except 

telephone apparatus, and radio and 

television broadcast, and wireless 

communications equipment).’’ The SBA 

has developed a small business size 

standard for Other Communications 

Equipment Manufacturing, which is: All 

such firms having 750 or fewer 

employees. According to Census Bureau 

data for 2002, there were a total of 503 

establishments in this category that 

operated for the entire year. Of this 

total, 493 had employment of under 

500, and an additional 7 had 

employment of 500 to 999. Thus, under 

this size standard, the majority of firms 

can be considered small. 

E. Description of Projected Reporting, 

Recordkeeping, and Other Compliance 

Requirements 

115. In the Report and Order, the 

Commission establishes a trial 

program—E-rate Deployed Ubiquitously 

(EDU) 2011 Pilot Program—to 

investigate the merits and challenges of 

wireless off-premises connectivity 

services, and to help the Commission 

determine whether they should 

ultimately be eligible for E-rate support. 

To be considered for first phase 

EDU2011 Program funding, E-rate 

eligible applicants must have 

implemented or already be in the 

process of implementing a program to 

provide off-premise connectivity to 

students or library patrons through the 

use of portable wireless devices. 

Applicants also must submit certain 

information to the Wireline Competition 

Bureau for review and consideration as 

part of the application process as part of 

this trial program. Specifically, the 

application must contain the following 

information: 

(1) A description of the current or 

planned program, how long it has been 

in operation, and a description of any 

improvements or other changes that 

would be made if E-rate funding were 

received for funding year 2011 (July 1, 

2011–June 30, 2012); 

(2) Identification of the costs 

associated with implementing the 

program including, for example, costs 

for equipment such as e-readers or 

laptops, access and connection charges, 

teacher training, librarian training, or 

student/parent training; 

(3) Relevant technology plans; 

(4) A description of how the program 

complies with the Children’s Internet 

Protection Act (CIPA) and adequately 

protects against waste, fraud, and abuse; 

(5) A copy of internal policies and 

enforcement procedures governing 

acceptable use of the wireless device off 

the school’s or library’s premises; 

(6) For schools, a description of the 

program’s curriculum objectives, the 

grade levels included, and the number 

of students and teachers involved in the 

program; and 

(7) For schools, any data collected on 

program outcomes. 

As indicated above, we have assessed 

the effects of this trial program and find 

that any information submitted by the 

applicants to the Commission as part of 

this program will not significantly 

impact the burden on small businesses. 

The trial program is limited to schools 

and libraries that are already 

implementing or experimenting with 

wireless off-campus learning; therefore, 

any information collected from 

participants in this program is limited to 

information about their current projects. 

F. Steps Taken To Minimize Significant 

Economic Impact on Small Entities, and 

Significant Alternatives Considered 

116. The RFA requires an agency to 

describe any significant alternatives that 

it has considered in reaching its 

proposed approach, which may include 

the following four alternatives (among 

others): (1) The establishment of 

differing compliance and reporting 

requirements or timetables that take into 

account the resources available to small 

entities; (2) the clarification, 

consolidation, or simplification of 

compliance or reporting requirements 

under the rule for small entities; (3) the 

use of performance, rather than design, 

standards; and (4) an exemption from 

coverage of the rule, or part thereof, for 

small entities. 

117. In this Report and Order, as 

detailed above, the Commission adopts 

a number of the proposals put forward 

in the E-rate Broadband NPRM to help 

realize the NBP’s vision of improving 

connectivity to schools and libraries by 

upgrading and modernizing the 

successful E-rate program. We believe 

the reforms adopted in this Report and 

Order will not have a significant 

economic impact on small entities 

under the E-rate program. Rather, the 

reforms will benefit small entities by 

simplifying the application process, 

providing more flexibility to select and 

make available the most cost-effective 

broadband and other communications 

services, and improving safeguards 

against waste, fraud, and abuse, while 

ensuring that the amount of funding 

available keeps pace with the rate of 

inflation. Because this Report and Order 

does not adopt additional regulation for 

service providers and equipment 

vendors, these small entities will 

experience no significant additional 

burden. 

G. Report to Congress 

118. The Commission will send a 

copy of the Second Report and Order, 

including this FRFA, in a report to be 

sent to Congress and the Government 

Accountability Office pursuant to the 

Congressional Review Act. In addition, 

the Commission will send a copy of the 

Second Report and Order, including this 

FRFA, to the Chief Counsel for 

Advocacy of the SBA. A copy of the 

Second Report and Order and FRFA (or 

summaries thereof) will also be 

published in the Federal Register. 

H. Paperwork Reduction Act Analysis 

119. This document contains new 

information collection requirements 

subject to the Paperwork Reduction Act 

of 1995 (PRA), Public Law 104–13. It 

will be submitted to the Office of 

Management and Budget (OMB) for 

review under section 3507(d) of the 

PRA. OMB, the general public, and 

other Federal agencies are invited to 

comment on the new information 

collection requirements contained in 

this proceeding. In addition, we note 

that pursuant to the Small Business 

Paperwork Relief Act of 2002, Public 

Law 107–198, see 44 U.S.C. 3506(c)(4), 

we previously sought specific comment 

on how the Commission might further 

reduce the information collection 


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burden for small business concerns with 

fewer than 25 employees. 

120. In this present document, we 

establish a trial program to investigate 

the merits and challenges of wireless 

off-premises connectivity services, and 

to help us determine whether and how 

they should ultimately be eligible for 

E-rate support. We have assessed the 

effects of this trial program and find that 

any information submitted by the 

applicants to the Commission as part of 

this program will not significantly 

impact the burden on small businesses. 

The trial program is limited to schools 

and libraries that are already 

implementing or planning to implement 

wireless off-campus learning; therefore, 

any information collected from 

participants in this program is limited to 

information about their current projects. 

I. Congressional Review Act 

121. The Commission will include a 

copy of this Report and Order in a 

report to be sent to Congress and the 

Government Accountability Office 

pursuant to the Congressional Review 

Act, see 5 U.S.C. 801(a)(1)(A). 

List of Subjects in 47 CFR Part 54 

Communications Common Carriers, 

Health Facilities, Infants and Children, 

Libraries, Reporting and Recordkeeping 

requirements, Schools, 

Telecommunications, Telephone. 

Federal Communications Commission. 

Marlene H. Dortch, 

Secretary. 

Final Rules 

■ For the reasons discussed in the 

preamble, the Federal Communications 

Commission amends 47 CFR part 54 as 

follows: 

PART 54—UNIVERSAL SERVICE 

■ 1. The authority citation continues to 

read as follows: 

Authority: 47 U.S.C. 151, 154(i), 201, 205, 

214, and 254 unless otherwise noted. 

■ 2. Amend § 54.501 by revising the 

section heading, removing paragraph 

(a), redesignating paragraphs (b), (c), 

and (d) as paragraphs (a), (b), and (c), 

and revising newly redesignated 

paragraphs (a)(1), (b)(1), and (c)(1) to 

read as follows: 

§ 54.501 Eligible recipients. 

(a) Schools. (1) Only schools meeting 

the statutory definitions of ‘‘elementary 

school,’’ as defined in 20 U.S.C. 

7801(18), or ‘‘secondary school,’’ as 

defined in 20 U.S.C. 7801(38), and not 

excluded under paragraphs (a)(2) or (3) 

of this section shall be eligible for 

discounts on telecommunications and 

other supported services under this 

subpart. 

* * * * * 

(b) Libraries. (1) Only libraries eligible 

for assistance from a State library 

administrative agency under the Library 

Services and Technology Act (Pub. L. 

104–208) and not excluded under 

paragraphs (b)(2) or (3) of this section 

shall be eligible for discounts under this 

subpart. 

* * * * * 

(c) Consortia. (1) For purposes of 

seeking competitive bids for supported 

services, schools and libraries eligible 

for support under this subpart may form 

consortia with other eligible schools and 

libraries, with health care providers 

eligible under subpart G, and with 

public sector (governmental) entities, 

including, but not limited to, state 

colleges and state universities, state 

educational broadcasters, counties, and 

municipalities, when ordering 

telecommunications and other 

supported services under this subpart. 

With one exception, eligible schools and 

libraries participating in consortia with 

ineligible private sector members shall 

not be eligible for discounts for 

interstate services under this subpart. A 

consortium may include ineligible 

private sector entities if the pre-discount 

prices of any services that such 

consortium receives are generally 

tariffed rates. 

* * * * * 

■ 3. Revise § 54.502 to read as follows: 

§ 54.502 Eligible services. 

(a) Supported services. Supported 

services are listed in the Eligible 

Services List as updated annually in 

accordance with paragraph (b) of this 

section. The services in this subpart will 

be supported in addition to all 

reasonable charges that are incurred by 

taking such services, such as state and 

federal taxes. Charges for termination 

liability, penalty surcharges, and other 

charges not included in the cost of 

taking such service shall not be covered 

by the universal service support 

mechanisms. These supported services 

fall within the following general 

categories: 

(1) Telecommunications services. For 

purposes of this subpart, supported 

telecommunications services provided 

by telecommunications carriers include 

all commercially available 

telecommunications services. 

(2) Telecommunications. For 

purposes of this subpart, supported 

telecommunications can be provided in 

whole or in part via fiber by any entity. 

(3) Internet access. For purposes of 

this subpart, Internet access is as 

defined in § 54.5. 

(4) Internal connections and basic 

maintenance. (i) For purposes of this 

subpart, a service is eligible for support 

as a component of an institution’s 

internal connections if such service is 

necessary to transport information 

within one or more instructional 

buildings of a single school campus or 

within one or more non-administrative 

buildings that comprise a single library 

branch. Discounts are not available for 

internal connections in noninstructional buildings of a school or 

school district, or in administrative 

buildings of a library, to the extent that 

a library system has separate 

administrative buildings, unless those 

internal connections are essential for the 

effective transport of information to an 

instructional building of a school or to 

a non-administrative building of a 

library or the Commission has found 

that the use of those services meets the 

definition of educational purpose. 

Internal connections do not include 

connections that extend beyond a single 

school campus or single library branch. 

There is a rebuttable presumption that 

a connection does not constitute an 

internal connection if it crosses a public 

right-of-way. 

(ii) For purposes of this subpart, basic 

maintenance services shall be eligible as 

an internal connections service if, but 

for the maintenance at issue, the 

internal connection would not function 

and serve its intended purpose with the 

degree of reliability ordinarily provided 

in the marketplace to entities receiving 

such services. Basic maintenance 

services do not include services that 

maintain equipment that is not 

supported or that enhance the utility of 

equipment beyond the transport of 

information, or diagnostic services in 

excess of those necessary to maintain 

the equipment’s ability to transport 

information. 

(iii) Each eligible school or library 

shall be eligible for support for internal 

connections services, except basic 

maintenance services, no more than 

twice every five funding years. For the 

purpose of determining eligibility, the 

five-year period begins in any funding 

year in which the school or library 

receives discounted internal 

connections services other than basic 

maintenance services. If a school or 

library receives internal connections 

services other than basic maintenance 

services that are shared with other 

schools or libraries (for example, as part 

of a consortium), the shared services 

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in determining whether it is eligible for 

support. 

(b) Eligible Services List. (1) The 

Administrator shall submit by March 30 

of each year a draft list of services 

eligible for support, based on the 

Commission’s rules for the following 

funding year. The Wireline Competition 

Bureau will issue a Public Notice 

seeking comment on the Administrator’s 

proposed eligible services list. At least 

60 days prior to the opening of the 

window for the following funding year, 

the final list of services eligible for 

support will be released. 

(2) All supported services are listed in 

the Eligible Services List as updated 

annually in accordance with paragraph 

(b)(1) of this section. 

■ 4. Revise § 54.503 to read as follows: 

§ 54.503 Competitive bidding 

requirements. 

(a) All entities participating in the 

schools and libraries universal service 

support program must conduct a fair 

and open competitive bidding process, 

consistent with all requirements set 

forth in this subpart. Note to paragraph 

(a): The following is an illustrative list 

of activities or behaviors that would not 

result in a fair and open competitive 

bidding process: the applicant for 

supported services has a relationship 

with a service provider that would 

unfairly influence the outcome of a 

competition or would furnish the 

service provider with inside 

information; someone other than the 

applicant or an authorized 

representative of the applicant prepares, 

signs, and submits the FCC Form 470 

and certification; a service provider 

representative is listed as the FCC Form 

470 contact person and allows that 

service provider to participate in the 

competitive bidding process; the service 

provider prepares the applicant’s FCC 

Form 470 or participates in the bid 

evaluation or vendor selection process 

in any way; the applicant turns over to 

a service provider the responsibility for 

ensuring a fair and open competitive 

bidding process; an applicant employee 

with a role in the service provider 

selection process also has an ownership 

interest in the service provider seeking 

to participate in the competitive bidding 

process; and the applicant’s FCC Form 

470 does not describe the supported 

services with sufficient specificity to 

enable interested service providers to 

submit responsive bids. 

(b) Competitive Bid Requirements. 

Except as provided in § 54.511(c), an 

eligible school, library, or consortium 

that includes an eligible school or 

library shall seek competitive bids, 

pursuant to the requirements 

established in this subpart, for all 

services eligible for support under 

§ 54.502. These competitive bid 

requirements apply in addition to state 

and local competitive bid requirements 

and are not intended to preempt such 

state or local requirements. 

(c) Posting of FCC Form 470. (1) An 

eligible school, library, or consortium 

that includes an eligible school or 

library seeking to receive discounts for 

eligible services under this subpart, 

shall submit a completed FCC Form 470 

to the Administrator to initiate the 

competitive bidding process. The FCC 

Form 470 and any request for proposal 

cited in the FCC Form 470 shall include, 

at a minimum, the following 

information, to the extent applicable 

with respect to the services requested: 

(i) A list of specified services for 

which the school, library, or consortia 

including such entities, anticipates they 

are likely to seek discounts; and 

(ii) Sufficient information to enable 

bidders to reasonably determine the 

needs of the applicant. 

(2) The FCC Form 470 shall be signed 

by the person authorized to order 

eligible services for the eligible school, 

library, or consortium including such 

entities and shall include that person’s 

certification under oath that: 

(i) The schools meet the statutory 

definition of elementary and secondary 

schools found under section 254(h) of 

the Act, as amended in the No Child 

Left Behind Act of 2001, 20 U.S.C. 

7801(18) and (38), do not operate as forprofit businesses, and do not have 

endowments exceeding $50 million; 

(ii) The libraries or library consortia 

eligible for assistance from a State 

library administrative agency under the 

Library Services and Technology Act of 

1996 do not operate as for-profit 

businesses and whose budgets are 

completely separate from any school 

(including, but not limited to, 

elementary and secondary schools, 

colleges, and universities). 

(iii) All of the individual schools, 

libraries, and library consortia receiving 

services are or will be covered by: 

(A) Technology plans for using the 

services requested in the application; or 

(B) No technology plan is required by 

Commission rules. 

(iv) To the extent a technology plan is 

required by § 54.508, the technology 

plan(s) has/have been/will be approved 

consistent with § 54.508. 

(v) The services the school, library, or 

consortium purchases at discounts will 

be used primarily for educational 

purposes and will not be sold, resold, or 

transferred in consideration for money 

or any other thing of value, except as 

allowed by § 54.513. 

(vi) Support under this support 

mechanism is conditional upon the 

school(s) and library(ies) securing 

access to all of the resources, including 

computers, training, software, 

maintenance, internal connections, and 

electrical connections necessary to use 

the services purchased effectively. 

(vii) All bids submitted for eligible 

products and services will be carefully 

considered, with price being the 

primary factor, and the bid selected will 

be for the most cost-effective service 

offering consistent with § 54.511. 

(3) The Administrator shall post each 

FCC Form 470 that it receives from an 

eligible school, library, or consortium 

that includes an eligible school or 

library on its website designated for this 

purpose. 

(4) After posting on the 

Administrator’s website an eligible 

school’s, library’s, or consortium’s FCC 

Form 470, the Administrator shall send 

confirmation of the posting to the entity 

requesting service. That entity shall 

then wait at least four weeks from the 

date on which its description of services 

is posted on the Administrator’s website 

before making commitments with the 

selected providers of services. The 

confirmation from the Administrator 

shall include the date after which the 

requestor may sign a contract with its 

chosen provider(s). 

(d) Gift Restrictions. (1) Subject to 

paragraphs (d)(3) and (4) of this section, 

an eligible school, library, or consortium 

that includes an eligible school or 

library may not directly or indirectly 

solicit or accept any gift, gratuity, favor, 

entertainment, loan, or any other thing 

of value from a service provider 

participating in or seeking to participate 

in the schools and libraries universal 

service program. No such service 

provider shall offer or provide any such 

gift, gratuity, favor, entertainment, loan, 

or other thing of value except as 

otherwise provided herein. Modest 

refreshments not offered as part of a 

meal, items with little intrinsic value 

intended solely for presentation, and 

items worth $20 or less, including 

meals, may be offered or provided, and 

accepted by any individuals or entities 

subject to this rule, if the value of these 

items received by any individual does 

not exceed $50 from any one service 

provider per funding year. The $50 

amount for any service provider shall be 

calculated as the aggregate value of all 

gifts provided during a funding year by 

the individuals specified in paragraph 

(d)(2)(ii) of this section. 

(2) For purposes of this paragraph: 

(i) The terms ‘‘school, library, or 

consortium’’ include all individuals who 

are on the governing boards of such 


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entities (such as members of a school 

committee), and all employees, officers, 

representatives, agents, consultants or 

independent contractors of such entities 

involved on behalf of such school, 

library, or consortium with the Schools 

and Libraries Program of the Universal 

Service Fund (E-rate Program), 

including individuals who prepare, 

approve, sign or submit E-rate 

applications, technology plans, or other 

forms related to the E-rate Program, or 

who prepare bids, communicate or work 

with E-rate service providers, E-rate 

consultants, or with USAC, as well as 

any staff of such entities responsible for 

monitoring compliance with the E-rate 

Program; and 

(ii) The term ‘‘service provider’’ 

includes all individuals who are on the 

governing boards of such an entity (such 

as members of the board of directors), 

and all employees, officers, 

representatives, agents, or independent 

contractors of such entities. 

(3) The restrictions set forth in this 

paragraph shall not be applicable to the 

provision of any gift, gratuity, favor, 

entertainment, loan, or any other thing 

of value, to the extent given to a family 

member or a friend working for an 

eligible school, library, or consortium 

that includes an eligible school or 

library, provided that such transactions: 

(i) Are motivated solely by a personal 

relationship, 

(ii) Are not rooted in any service 

provider business activities or any other 

business relationship with any such 

eligible school, library, or consortium, 

and 

(iii) Are provided using only the 

donor’s personal funds that will not be 

reimbursed through any employment or 

business relationship. 

(4) Any service provider may make 

charitable donations to an eligible 

school, library, or consortium that 

includes an eligible school or library in 

the support of its programs as long as 

such contributions are not directly or 

indirectly related to E-rate procurement 

activities or decisions and are not given 

by service providers to circumvent 

competitive bidding and other E-rate 

program rules, including those in 

paragraph (c)(2)(vi) of this section, 

requiring schools and libraries to pay 

their own non-discount share for the 

services they are purchasing. 

■ 5. Revise § 54.504 to read as follows: 

§ 54.504 Requests for services. 

(a) Filing of the FCC Form 471. An 

eligible school, library, or consortium 

that includes an eligible school or 

library seeking to receive discounts for 

eligible services under this subpart, 

shall, upon signing a contract for 

eligible services, submit a completed 

FCC Form 471 to the Administrator. A 

commitment of support is contingent 

upon the filing of an FCC Form 471. 

(1) The FCC Form 471 shall be signed 

by the person authorized to order 

eligible services for the eligible school, 

library, or consortium and shall include 

that person’s certification under oath 

that: 

(i) The schools meet the statutory 

definition of elementary and secondary 

schools found under section 254(h) of 

the Act, as amended in the No Child 

Left Behind Act of 2001, 20 U.S.C. 

7801(18) and (38), do not operate as forprofit businesses, and do not have 

endowments exceeding $50 million. 

(ii) The libraries or library consortia 

eligible for assistance from a State 

library administrative agency under the 

Library Services and Technology Act of 

1996 do not operate as for-profit 

businesses and whose budgets are 

completely separate from any school 

(including, but not limited to, 

elementary and secondary schools, 

colleges, and universities). 

(iii) The entities listed on the FCC 

Form 471 application have secured 

access to all of the resources, including 

computers, training, software, 

maintenance, internal connections, and 

electrical connections, necessary to 

make effective use of the services 

purchased, as well as to pay the 

discounted charges for eligible services 

from funds to which access has been 

secured in the current funding year. The 

billed entity will pay the non-discount 

portion of the cost of the goods and 

services to the service provider(s). 

(iv) All of the schools and libraries 

listed on the FCC Form 471 application 

are or will be covered by: 

(A) Technology plan(s) for using the 

services requested in the application; or 

(B) No technology plan is required by 

Commission rules. 

(v) To the extent a technology plan is 

required by § 54.508, status of 

technology plan(s) has/have been 

approved or will be approved by a state 

or other authorized body. 

(vi) The entities listed on the FCC 

Form 471 application have complied 

with all applicable state and local laws 

regarding procurement of services for 

which support is being sought. 

(vii) The services the school, library, 

or consortium purchases at discounts 

will be used primarily for educational 

purposes and will not be sold, resold, or 

transferred in consideration for money 

or any other thing of value, except as 

allowed by § 54.513. 

(viii) The entities listed in the 

application have complied with all 

program rules and acknowledge that 

failure to do so may result in denial of 

discount funding and/or recovery of 

funding. 

(ix) The applicant understands that 

the discount level used for shared 

services is conditional, for future years, 

upon ensuring that the most 

disadvantaged schools and libraries that 

are treated as sharing in the service, 

receive an appropriate share of benefits 

from those services. 

(x) The applicant recognizes that it 

may be audited pursuant to its 

application, that it will retain for five 

years any and all worksheets and other 

records relied upon to fill out its 

application, and that, if audited, it will 

make such records available to the 

Administrator. 

(xi) All bids submitted to a school, 

library, or consortium seeking eligible 

services were carefully considered and 

the most cost-effective bid was selected 

in accordance with § 54.503 of this 

subpart, with price being the primary 

factor considered, and is the most costeffective means of meeting educational 

needs and technology plan goals. 

(2) [Reserved] 

(b) Mixed eligibility requests. If 30 

percent or more of a request for 

discounts made in an FCC Form 471 is 

for ineligible services, the request shall 

be denied in its entirety. 

(c) Rate disputes. Schools, libraries, 

and consortia including those entities, 

and service providers may have 

recourse to the Commission, regarding 

interstate rates, and to state 

commissions, regarding intrastate rates, 

if they reasonably believe that the 

lowest corresponding price is unfairly 

high or low. 

(1) Schools, libraries, and consortia 

including those entities may request 

lower rates if the rate offered by the 

carrier does not represent the lowest 

corresponding price. 

(2) Service providers may request 

higher rates if they can show that the 

lowest corresponding price is not 

compensatory, because the relevant 

school, library, or consortium including 

those entities is not similarly situated to 

and subscribing to a similar set of 

services to the customer paying the 

lowest corresponding price. 

(d) Service substitution. (1) The 

Administrator shall grant a request by 

an applicant to substitute a service or 

product for one identified on its FCC 

Form 471 where: 

(i) The service or product has the 

same functionality; 

(ii) The substitution does not violate 

any contract provisions or state or local 

procurement laws; 


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(iii) The substitution does not result 

in an increase in the percentage of 

ineligible services or functions; and 

(iv) The applicant certifies that the 

requested change is within the scope of 

the controlling FCC Form 470, including 

any associated Requests for Proposal, for 

the original services. 

(2) In the event that a service 

substitution results in a change in the 

pre-discount price for the supported 

service, support shall be based on the 

lower of either the pre-discount price of 

the service for which support was 

originally requested or the pre-discount 

price of the new, substituted service. 

(3) For purposes of this rule, the broad 

categories of eligible services 

(telecommunications service, Internet 

access, and internal connections) are not 

deemed to have the same functionality 

with one another. 

(e) Mixed eligibility services. A 

request for discounts for a product or 

service that includes both eligible and 

ineligible components must allocate the 

cost of the contract to eligible and 

ineligible components. 

(1) Ineligible components. If a product 

or service contains ineligible 

components, costs must be allocated to 

the extent that a clear delineation can be 

made between the eligible and ineligible 

components. The delineation must have 

a tangible basis, and the price for the 

eligible portion must be the most costeffective means of receiving the eligible 

service. 

(2) Ancillary ineligible components. If 

a product or service contains ineligible 

components that are ancillary to the 

eligible components, and the product or 

service is the most cost-effective means 

of receiving the eligible component 

functionality, without regard to the 

value of the ineligible component, costs 

need not be allocated between the 

eligible and ineligible components. 

Discounts shall be provided on the full 

cost of the product or service. An 

ineligible component is ‘‘ancillary’’ if a 

price for the ineligible component 

cannot be determined separately and 

independently from the price of the 

eligible components, and the specific 

package remains the most cost-effective 

means of receiving the eligible services, 

without regard to the value of the 

ineligible functionality. 

(3) The Administrator shall utilize the 

cost allocation requirements of this 

subparagraph in evaluating mixed 

eligibility requests under paragraph 

(e)(1) of this section. 

(f) Filing of FCC Form 473. All service 

providers eligible to provide 

telecommunications and other 

supported services under this subpart 

shall submit annually a completed FCC 

Form 473 to the Administrator. The FCC 

Form 473 shall be signed by an 

authorized person and shall include that 

person’s certification under oath that: 

(1) The prices in any offer that this 

service provider makes pursuant to the 

schools and libraries universal service 

support program have been arrived at 

independently, without, for the purpose 

of restricting competition, any 

consultation, communication, or 

agreement with any other offeror or 

competitor relating to those prices, the 

intention to submit an offer, or the 

methods or factors used to calculate the 

prices offered; 

(2) The prices in any offer that this 

service provider makes pursuant to the 

schools and libraries universal service 

support program will not be knowingly 

disclosed by this service provider, 

directly or indirectly, to any other 

offeror or competitor before bid opening 

(in the case of a sealed bid solicitation) 

or contract award (in the case of a 

negotiated solicitation) unless otherwise 

required by law; and 

(3) No attempt will be made by this 

service provider to induce any other 

concern to submit or not to submit an 

offer for the purpose of restricting 

competition. 

■ 6. Amend § 54.505 by revising 

paragraph (b)(4) to read as follows: 

§ 54.505 Discounts. 

* * * * * 

(b) * * * 

(4) School districts, library systems, or 

other billed entities shall calculate 

discounts on supported services 

described in § 54.502(b) that are shared 

by two or more of their schools, 

libraries, or consortia members by 

calculating an average based on the 

applicable discounts of all member 

schools and libraries. School districts, 

library systems, or other billed entities 

shall ensure that, for each year in which 

an eligible school or library is included 

for purposes of calculating the aggregate 

discount rate, that eligible school or 

library shall receive a proportionate 

share of the shared services for which 

support is sought. For schools, the 

average discount shall be a weighted 

average of the applicable discount of all 

schools sharing a portion of the shared 

services, with the weighting based on 

the number of students in each school. 

For libraries, the average discount shall 

be a simple average of the applicable 

discounts to which the libraries sharing 

a portion of the shared services are 

entitled. 

* * * * * 

§ 54.506 [Removed and Reserved] 

■ 7. Remove and reserve § 54.506. 

■ 8. Amend § 54.507 by revising 

paragraphs (a), (g) introductory text, and 

(g)(1)(i), to read as follows: 

§ 54.507 Cap. 

(a) Amount of the annual cap. In 

funding year 2010 and subsequent 

funding years, the $2.25 billion funding 

cap on federal universal service support 

for schools and libraries shall be 

automatically increased annually to take 

into account increases in the rate of 

inflation as calculated in paragraph 

(a)(1) of this section. 

(1) Increase Calculation. To measure 

increases in the rate of inflation for the 

purposes of this paragraph (a), the 

Commission shall use the Gross 

Domestic Product Chain-type Price 

Index (GDP–CPI). To compute the 

annual increase as required by this 

paragraph (a), the percentage increase in 

the GDP–CPI from the previous year 

will be used. For instance, the annual 

increase in the GDP–CPI from 2008 to 

2009 would be used for the 2010 

funding year. The increase shall be 

rounded to the nearest 0.1 percent by 

rounding 0.05 percent and above to the 

next higher 0.1 percent and otherwise 

rounding to the next lower 0.1 percent. 

This percentage increase shall be added 

to the amount of the annual funding cap 

from the previous funding year. If the 

yearly average GDP–CPI decreases or 

stays the same, the annual funding cap 

shall remain the same as the previous 

year. 

(2) Public notice. When the 

calculation of the yearly average GDP– 

CPI is determined, the Wireline 

Competition Bureau shall publish a 

public notice in the Federal Register 

within 60 days announcing any increase 

of the annual funding cap based on the 

rate of inflation. 

(3) Amount of unused funds. All 

funds collected that are unused shall be 

carried forward into subsequent funding 

years for use in the schools and libraries 

support mechanism in accordance with 

the public interest and notwithstanding 

the annual cap. 

(i) The Administrator shall report to 

the Commission, on a quarterly basis, 

funding that is unused from prior years 

of the schools and libraries support 

mechanism. 

(ii) Application of unused funds. On 

an annual basis, in the second quarter 

of each calendar year, all funds that are 

collected and that are unused from prior 

years shall be available for use in the 

next full funding year of the schools and 

libraries mechanism in accordance with 

the public interest and notwithstanding 


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Federal Register / Vol. 75, No. 232 / Friday, December 3, 2010 / Rules and Regulations 75415 

the annual cap as described in this 

paragraph (a). 

* * * * * 

(g) Rules of priority. The 

Administrator shall act in accordance 

with paragraph (g)(1) of this section 

with respect to applicants that file an 

FCC Form 471, as described in 

§ 54.504(a), when a filing period 

described in paragraph (c) of this 

section is in effect. The Administrator 

shall act in accordance with paragraph 

(g)(2) of this section with respect to 

applicants that file an FCC Form 471, as 

described in § 54.504(a), at all times 

other than within a filing period 

described in paragraph (c) of this 

section. 

(1) * * * 

(i) Schools and Libraries Corporation 

shall first calculate the demand for 

telecommunications, 

telecommunications services, voicemail, and Internet access for all discount 

categories as determined by the schools 

and libraries discount matrix in 

§ 54.505(c). These services shall receive 

first priority for the available funding. 

* * * * * 

■ 9. Revise § 54.508 to read as follows: 

§ 54.508 Technology plans. 

(a) Applicants must develop a 

technology plan when requesting 

discounts for internal connections and 

basic maintenance for internal 

connections. Applicants must document 

the date on which the technology plan 

was created. The technology plan must 

include the following elements: 

(1) A clear statement of goals and a 

realistic strategy for using 

telecommunications and information 

technology to improve education or 

library services; 

(2) A professional development 

strategy to ensure that the staff 

understands how to use these new 

technologies to improve education or 

library services; 

(3) An assessment of the 

telecommunication services, hardware, 

software, and other services that will be 

needed to improve education or library 

services; and 

(4) An evaluation process that enables 

the school or library to monitor progress 

toward the specified goals and make 

mid-course corrections in response to 

new developments and opportunities as 

they arise. 

(b) Relevance of approval under 

Enhancing Education through 

Technology. Technology plans that meet 

the standards of the U.S. Department of 

Education’s Enhancing Education 

Through Technology (EETT), 20 U.S.C. 

6764, are sufficient for satisfying 

paragraphs (a)(1) through (4) of this 

section. Furthermore, to the extent that 

the U.S. Department of Education 

adopts future technology plan 

requirements that require one or more of 

the four elements described in 

paragraph (a) of this section, such plans 

will be acceptable for satisfying those 

elements of paragraph (a) of this section. 

Applicants with such plans will only 

need to supplement such plans with the 

analysis needed to satisfy those 

elements of paragraph (a) of this section 

not covered by the future Department of 

Education technology plan 

requirements. 

(c) Timing of certification. As required 

under §§ 54.503(c)(2)(iii) and 

54.504(a)(1)(iv), applicants must certify 

that they have prepared any required 

technology plans. They must also 

confirm, in FCC Form 486, that their 

plan was approved before they began 

receiving services pursuant to it. 

(d) Parties qualified to approve 

technology plans required in this 

subpart. Applicants required to prepare 

and obtain approval of technology plans 

under this subpart must obtain such 

approval from either their state, the 

Administrator, or an independent entity 

approved by the Commission or 

certified by the Administrator as 

qualified to provide such approval. All 

parties who will provide such approval 

must apply the standards set forth in 

paragraphs (a) and (b) of this section. 

■ 10. Amend § 54.511 by revising 

paragraphs (a), (c)(1) introductory text, 

(c)(1)(ii), and (d)(1), and removing 

paragraph (c)(3). 

The revisions read as follows: 

§ 54.511 Ordering services. 

(a) Selecting a provider of eligible 

services. In selecting a provider of 

eligible services, schools, libraries, 

library consortia, and consortia 

including any of those entities shall 

carefully consider all bids submitted 

and must select the most cost-effective 

service offering. In determining which 

service offering is the most costeffective, entities may consider relevant 

factors other than the pre-discount 

prices submitted by providers, but price 

should be the primary factor considered. 

* * * * * 

(c) Existing contracts. (1) A signed 

contract for services eligible for 

discounts pursuant to this subpart 

between an eligible school or library as 

defined under § 54.501 or consortium 

that includes an eligible school or 

library and a service provider shall be 

exempt from the requirements set forth 

in § 54.503 as follows: 

* * * * * 

(ii) A contract signed after July 10, 

1997, but before the date on which the 

universal service competitive bid 

system described in § 54.503 is 

operational, is exempt from the 

competitive bid requirements only with 

respect to services that are provided 

under such contract between January 1, 

1998 and December 31, 1998. 

* * * * * 

(d)(1) The exemption from the 

competitive bid requirements set forth 

in paragraph (c) of this section shall not 

apply to voluntary extensions or 

renewals of existing contracts. 

* * * * * 

■ 11. Amend § 54.513 by revising 

paragraph (a) and redesignating 

paragraphs (b) and (c) as paragraphs (c) 

and (d) and adding new paragraph (b) to 

read as follows: 

§ 54.513 Resale and transfer of services. 

(a) Prohibition on resale. Eligible 

supported services provided at a 

discount under this subpart shall not be 

sold, resold, or transferred in 

consideration of money or any other 

thing of value, except as provided in 

paragraph (b) of this section. 

(b) Disposal of obsolete equipment 

components of eligible services. Eligible 

equipment components of eligible 

services purchased at a discount under 

this subpart shall be considered obsolete 

if the equipment components have has 

been installed for at least five years. 

Obsolete equipment components of 

eligible services may be resold or 

transferred in consideration of money or 

any other thing of value, disposed of, 

donated, or traded. 

* * * * * 

§ 54.517 [Removed and Reserved] 

■ 12. Remove and Reserve § 54.517. 

■ 13. Revise § 54.518 to read as follows: 

§ 54.518 Support for wide area networks. 

To the extent that schools, libraries or 

consortia that include an eligible school 

or library build or purchase a wide area 

network to provide telecommunications 

services, the cost of such wide area 

networks shall not be eligible for 

universal service discounts provided 

under this subpart. 

■ 14. Revise § 54.519 by revising 

paragraphs (a) introductory text, (a)(6), 

and (b) to read as follows: 

§ 54.519 State telecommunications 

networks. 

(a) Telecommunications services. 

State telecommunications networks may 

secure discounts under the universal 

service support mechanisms on 

supported telecommunications services 


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75416 Federal Register / Vol. 75, No. 232 / Friday, December 3, 2010 / Rules and Regulations 

(as described in § 54.502(a)) on behalf of 

eligible schools and libraries (as 

described in § 54.501) or consortia that 

include an eligible school or library. 

Such state telecommunications 

networks shall pass on such discounts 

to eligible schools and libraries and 

shall: 

* * * * * 

(6) Comply with the competitive bid 

requirements set forth in § 54.503. 

(b) Internet access and installation 

and maintenance of internal 

connections. State telecommunications 

networks either may secure discounts 

on Internet access and installation and 

maintenance of internal connections in 

the manner described in paragraph (a) of 

this section with regard to 

telecommunications, or shall be eligible, 

consistent with § 54.502(a), to receive 

universal service support for providing 

such services to eligible schools, 

libraries, and consortia including those 

entities. 

§ 54.522 [Removed and Reserved] 

■ 15. Remove and reserve § 54.522. 

[FR Doc. 2010–29386 Filed 12–2–10; 8:45 am] 

BILLING CODE 6712–01–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Part 635 

[Docket No. 0906221072–91425–02] 

RIN 0648–XA052 

Atlantic Highly Migratory Species; 

Inseason Action To Close the 

Commercial Non-Sandbar Large 

Coastal Shark Fishery in the Atlantic 

Region 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Fishery closures. 

SUMMARY: NMFS is closing the 

commercial fishery for non-sandbar 

large coastal sharks (LCS) in the Atlantic 

region. This action is necessary because 

landings in this fishery have exceeded 

80 percent of the available quota. 

DATES: The commercial non-sandbar 

LCS fishery in the Atlantic region is 

closed effective 11:30 p.m. local time, 

December 5, 2010, until the effective 

date of the final 2011 shark season 

specifications, which NMFS will 

publish as a separate document in the 

Federal Register. 

FOR FURTHER INFORMATION CONTACT: 

Karyl Brewster-Geisz or Guy DuBeck, 

301–713–2347; (fax) 301–713–1917. 

SUPPLEMENTARY INFORMATION: The 

Atlantic shark fisheries are managed 

under the 2006 Consolidated Atlantic 

Highly Migratory Species (HMS) Fishery 

Management Plan (FMP), its 

amendments, and its implementing 

regulations found at 50 CFR part 635 

issued under authority of the 

Magnuson-Stevens Fishery 

Conservation and Management Act (16 

U.S.C. 1801 et seq.). 

Under § 635.5(b)(1), shark dealers are 

required to report to NMFS all sharks 

landed every two weeks. Dealer reports 

for fish received between the 1st and 

15th of any month must be received by 

NMFS by the 25th of that month. Dealer 

reports for fish received between the 

16th and the end of any month must be 

received by NMFS by the 10th of the 

following month. Under § 635.28(b)(2), 

when NMFS projects that fishing season 

landings for a species group have 

reached or are about to reach 80 percent 

of the available quota, NMFS will file 

for publication with the Office of the 

Federal Register a notice of closure for 

that shark species group that will be 

effective no fewer than 5 days from the 

date of filing. From the effective date 

and time of the closure until NMFS 

announces, via a notice in the Federal 

Register, that additional quota is 

available and the season is reopened, 

the fishery for that species group is 

closed, even across fishing years. 

On January 5, 2010 (75 FR 250), 

NMFS announced that the non-sandbar 

LCS fishery quota in the Atlantic region 

for the 2010 fishing year would be 169.7 

metric tons (mt) dressed weight (dw) 

(374,121 lb dw). Dealer reports through 

October 31, 2010, indicate that 142 mt 

dw or 83.6 percent of the available 

quota for non-sandbar LCS Atlantic 

fishery has been landed. The fishery has 

to date reached 83.6 percent of the 

quota, which exceeds the 80 percent 

limit specified in the regulations. Dealer 

reports received to date indicate that 

13.1 percent of the quota was landed 

from the opening of the fishery on July 

15, 2010, through July 31, 2010; 31.9 

percent of the quota was landed in 

August; 22.9 percent of the quota was 

landed in September; and 15.7 percent 

of the quota was landed in October. 

Accordingly, NMFS is closing the 

commercial non-sandbar LCS fishery in 

the Atlantic region as of 11:30 p.m. local 

time, December 5, 2010. This closure 

does not affect any other shark fishery. 

As such, as of 11:30 p.m. local time, 

December 5, 2010, all commercial nonsandbar LCS fisheries in all regions and 

fisheries will be closed. All of the 

pelagic shark fisheries will remain open. 

During this closure, a fishing vessel, 

issued an Atlantic Shark LAP, pursuant 

to § 635.4, may not possess or sell a nonsandbar LCS. A shark dealer, issued a 

permit pursuant to § 635.4, may not 

purchase or receive non-sandbar LCS 

from a vessel issued an Atlantic Shark 

LAP, except that a permitted shark 

dealer or processor may possess sharks 

that were harvested, off-loaded, and 

sold, traded, or bartered, prior to the 

effective date of the closure and were 

held in storage. Additionally, a shark 

dealer issued a Federal permit, pursuant 

to § 635.4, may in accordance with state 

regulations, purchase or receive a nonsandbar LCS if the shark was harvested, 

off-loaded, and sold, traded, or bartered 

from a vessel that fishes only in state 

waters and had not been issued an 

Atlantic Shark LAP, HMS Angling 

permit, or HMS Charter/Headboat 

permit pursuant to § 635.4. 

Classification 

Pursuant to 5 U.S.C. 553(b)(B), the 

Assistant Administrator for Fisheries, 

NOAA (AA), finds that providing for 

prior notice and public comment for 

this action is impracticable and contrary 

to the public interest because the 

fisheries are currently under way, and 

any delay in this action would cause 

overharvest of the quotas and be 

inconsistent with management 

requirements and objectives. Similarly, 

affording prior notice and opportunity 

for public comment on this action is 

contrary to the public interest because if 

the quotas are exceeded, the affected 

public is likely to experience reductions 

in the available quotas and a lack of 

fishing opportunities in future seasons. 

Thus, for these reasons, the AA also 

finds good cause to waive the 30-day 

delay in effective date pursuant to 5 

U.S.C. 553(d)(3). This action is required 

under 50 CFR 635.28(b)(2) and is 

exempt from review under Executive 

Order 12866. 

Authority: 16 U.S.C. 1801 et seq. 

Dated: November 30, 2010. 

Emily H. Menashes, 

Acting Director, Office of Sustainable 

Fisheries, National Marine Fisheries Service. 

[FR Doc. 2010–30389 Filed 11–30–10; 4:15 pm] 

BILLING CODE 3510–22–P 


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