FCC Limits E-rate Appeal Options
In its first order of 2017, the FCC denied an application for review filed by Net56, after both USAC and the Wireline Competition Bureau found that Net56’s appeal had been untimely filed because it was received more than 60 days after receipt of commitment adjustment decision letters (COMADs) from USAC.
Net56 argued that its appeal was timely filed because the 60-day appeal clock should have started with the receipt of a demand payment letter, rather than with the COMADs. The Commission disagreed, concluding that a demand letter is not the “decision being appealed” for purposes of establishing the appeal filing deadline. The Commission also declined to waive the deadline, stating that Net56 had failed to identify any special circumstances that would warrant a waiver of the Commission’s rules.
There are two key things to note about the Commission’s order:First, the Commission announced that the receipt of a demand payment letter from USAC is not itself an appealable event, and thus does not establish a new 60-day deadline for filing an appeal. An appeal that is filed more than 60 days after receipt of a commitment adjustment decision (COMAD) is therefore late, even if the appeal is filed within 60 days of a subsequent demand payment letter.
Notably, the Commission did not acknowledge that it was reversing its longstanding position that a demand letter may indeed be appealed. In 2004, the Commission stated, in paragraph 40 of its E Rate Fifth Report and Order, that parties may “challenge any action of USAC – including the issuance of a demand for recovery of funds – by filing a request for review with this Commission.” Nevertheless, in last week’s order the Commission rejected Net56’s argument that receipt of a demand letter from USAC starts a new 60-day window for filing an appeal. The Commission stated that the COMAD starts the 60 day appeal window, not the subsequent demand letter: “A Demand Payment Letter is not the decision being appealed [for purposes of starting the 60-day filing window, pursuant to the Commission’s rules]; it is issued for the purpose of recovering funds that USAC or the Commission have previously determined were erroneously disbursed.” It is not clear why the Commission changed its position on the appealability of demand letters, or why it did not acknowledge that it was doing so.
The second noteworthy thing is that last week’s order discusses the Commission’s policy directive that USAC complete investigations and seek recovery within five years of the final delivery of service for a specific funding year. In fact, the order contains the most detailed discussion of the five-year limitation on recovering E-rate funds since the Commission first outlined the policy in the E Rate Fifth Report and Order.
Net56 argued that USAC’s recovery of funds was time-barred by the five-year limitation. The Commission disagreed, finding that USAC had in fact completed its inquiries within the five-year period. The Commission then clarified that even if USAC’s recovery action had fallen outside the five-year period, the recovery of funds would not necessarily be time barred because the five-year limitation is “merely a policy preference . . . and not an absolute bar to recovery.” (The Wireline Competition Bureau had previously interpreted the E-Rate Fifth Report and Order as establishing a policy directive rather than a hard deadline, in its 2014 Premio decision. The Commission’s Net56 order effectively affirmed the Bureau’s interpretation.) The Commission emphasized that its preference for recovering E-rate funds expeditiously must not be read as imposing a debt collection deadline that would conflict with the Debt Collection Improvement Act.
The Commission’s Net56 order can be found at: http://transition.fcc.gov/Daily_Releases/Daily_Business/2017/db0117/FCC-17-1A1.pdf
The Commission’s E Rate Fifth Report and Order can be found at: https://apps.fcc.gov/edocs_public/attachmatch/FCC-04-190A1.pdf
The Wireline Competition Bureau’s Premio order can be found at: https://apps.fcc.gov/edocs_public/attachmatch/DA-14-967A1.pdf
Net56 argued that its appeal was timely filed because the 60-day appeal clock should have started with the receipt of a demand payment letter, rather than with the COMADs. The Commission disagreed, concluding that a demand letter is not the “decision being appealed” for purposes of establishing the appeal filing deadline. The Commission also declined to waive the deadline, stating that Net56 had failed to identify any special circumstances that would warrant a waiver of the Commission’s rules.
There are two key things to note about the Commission’s order:First, the Commission announced that the receipt of a demand payment letter from USAC is not itself an appealable event, and thus does not establish a new 60-day deadline for filing an appeal. An appeal that is filed more than 60 days after receipt of a commitment adjustment decision (COMAD) is therefore late, even if the appeal is filed within 60 days of a subsequent demand payment letter.
Notably, the Commission did not acknowledge that it was reversing its longstanding position that a demand letter may indeed be appealed. In 2004, the Commission stated, in paragraph 40 of its E Rate Fifth Report and Order, that parties may “challenge any action of USAC – including the issuance of a demand for recovery of funds – by filing a request for review with this Commission.” Nevertheless, in last week’s order the Commission rejected Net56’s argument that receipt of a demand letter from USAC starts a new 60-day window for filing an appeal. The Commission stated that the COMAD starts the 60 day appeal window, not the subsequent demand letter: “A Demand Payment Letter is not the decision being appealed [for purposes of starting the 60-day filing window, pursuant to the Commission’s rules]; it is issued for the purpose of recovering funds that USAC or the Commission have previously determined were erroneously disbursed.” It is not clear why the Commission changed its position on the appealability of demand letters, or why it did not acknowledge that it was doing so.
The second noteworthy thing is that last week’s order discusses the Commission’s policy directive that USAC complete investigations and seek recovery within five years of the final delivery of service for a specific funding year. In fact, the order contains the most detailed discussion of the five-year limitation on recovering E-rate funds since the Commission first outlined the policy in the E Rate Fifth Report and Order.
Net56 argued that USAC’s recovery of funds was time-barred by the five-year limitation. The Commission disagreed, finding that USAC had in fact completed its inquiries within the five-year period. The Commission then clarified that even if USAC’s recovery action had fallen outside the five-year period, the recovery of funds would not necessarily be time barred because the five-year limitation is “merely a policy preference . . . and not an absolute bar to recovery.” (The Wireline Competition Bureau had previously interpreted the E-Rate Fifth Report and Order as establishing a policy directive rather than a hard deadline, in its 2014 Premio decision. The Commission’s Net56 order effectively affirmed the Bureau’s interpretation.) The Commission emphasized that its preference for recovering E-rate funds expeditiously must not be read as imposing a debt collection deadline that would conflict with the Debt Collection Improvement Act.
The Commission’s Net56 order can be found at: http://transition.fcc.gov/Daily_Releases/Daily_Business/2017/db0117/FCC-17-1A1.pdf
The Commission’s E Rate Fifth Report and Order can be found at: https://apps.fcc.gov/edocs_public/attachmatch/FCC-04-190A1.pdf
The Wireline Competition Bureau’s Premio order can be found at: https://apps.fcc.gov/edocs_public/attachmatch/DA-14-967A1.pdf
