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USAC Seeks Millions in Old, Disputed Funds

Recently, there has been a troublesome uptick in USAC’s efforts to collect funds from very old disputes. USAC has issued commitment adjustments (“COMADs”) and intends to seek millions of dollars in repayment from applicants and service providers for issues that extend back many years (in some cases more than 15.) Although USAC may have spent the better part of a decade looking at these cases, recipients of these COMADs will have only a few weeks to gather their information and appeal the decisions. Those who do not will either be paying funds back, or will risk a “red light” that dismisses all current applications and appeals. Only in cases involving criminal activity should USAC be allowed to extend their collections activities into the distant past. It is time for the FCC to put a cutoff date on commitment adjustments and the repayment of funds.
On January 17, 2017, the FCC issued an Order with significant implications for many E-rate stakeholders. In the Net56 Order, the Commission denied an application for review filed by Net56 and affirmed USAC’s decision to recover disbursed funds dating back to 2006. Net56 argued that USAC’s recovery action for funding year 2006 had been time-barred, pointing to the Fifth Report and Order, in which the FCC directed USAC to finish its investigations and to seek recovery within five years. The Commission, however, found the five-year limit to be merely a “policy preference” and not an absolute bar to recovery.
Since the release of the Order, USAC has issued hundreds of Commitment Adjustment Decision Notifications to program applicants, some for obligations outstanding for more than 15 years. Though many of the reviews were conducted long ago, applicants were neither notified by USAC that the review had been completed nor informed that any funding would be rescinded.
Collecting on old disputes may be good for the USAC bank account or a line item in some obscure federal report, but it does not help applicants or the E-rate program in general. There is a “guilty unless proven innocent” feel to all of this. In many situations, the document retention requirements have long since expired and all the relevant staff have moved on. Applicants are left to appeal a long-disputed case that was, by its very definition, difficult to resolve. Repayment would have been sought long ago if it was not a scenario that required some clarification or policy guidance. USAC and/or the FCC have spent years pondering these thorny, questionable, grey-area sorts of disputed findings only to drop them, out of the blue, into the hands of unexpecting applicants and service providers.
Ironically, in addressing an ancillary argument regarding the appeal deadline, the FCC explains in the Net56 Order that “clear filing deadlines for appeals are needed to provide finality in the decision making process.” Though the Commission emphasizes the importance of finality, it appears the concept does not extend to USAC’s investigation and review process.
To address this situation, Funds For Learning proposes the following three steps be taken:
  • The FCC require that commitment adjustment or repayment requests be issued within one year of a non-criminal finding.
  • A Good Faith Funding Commitment policy, first proposed by Funds For Learning in 2005, be enacted immediately.
  • The FCC issue a blanket waiver for all COMADs released this year for disputes that are more than two years old.
It is time to put an end to surprise commitment adjustments and decades-old repayment requests. Without these types of safeguards and deadlines in place, the FCC is creating what is tantamount to a multibillion dollar liability for America’s schools and libraries… but that is a topic for another commentary.
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