Before the

Federal Communications Commission

**Washington, D.C. 20554**

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| In the Matter of                 | * | CC Docket No. 96-45          |
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| Federal-State Joint Board on     | ) | CC Docket No. 97-21          |
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| Universal Service                | * |                              |
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| Exchange Carrier Association     | ) |                              |
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| Petition for Waiver of Section   | * |                              |
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**MEMORANDUM OPINION AND ORDER**

**Adopted: February 26, 2001 Released: February 27, 2001**

By the Common Carrier Bureau:

# INTRODUCTION

1.  In this Order, we grant the Universal Service Administrative Company
    (USAC) a limited waiver of section §54.717(f) of the Commission's
    rules to extend the filing deadline by which USAC's independent
    auditor must submit its draft audit report for the year 2000.[^1] We
    find that good cause exists to extend the deadline by 45 days to
    permit USAC's independent auditor to file the draft audit report on
    or before April 15, 2001.

# BACKGROUND

2.  Under section 54.717 of the Commission's rules, USAC is required to
    designate an independent auditor to examine its operations and books
    of account to determine, among other things, whether USAC is
    properly administering the universal service support mechanisms to
    prevent fraud, waste, and abuse.[^2] The independent auditor is
    required to submit a draft audit report to the Common Carrier Bureau
    audit staff within 60 days after the end of the audit period.[^3]
    Because USAC's fiscal year is the calendar year, the draft audit
    report is due by March 1.

3.  USAC seeks a permanent waiver of this requirement or, in the
    alternative, a rule change that would allow the independent auditor
    to file the draft audit report on or before April 15 instead of
    March 1. USAC explains that because it closes its books in early
    February and its parent, the National Exchange Carrier Association
    (NECA), does not close its books until mid-February, the 60-day
    deadline leaves the independent auditor only two weeks to complete
    its draft audit report. USAC explains that meeting the March 1
    deadline is extremely difficult because it provides the independent
    auditor with just two weeks to complete six financial audits and
    five program reviews.[^4] This short timeframe to complete the draft
    audit report has, in the past, resulted in the independent auditor
    submitting a timely but incomplete draft report.[^5]

**III. DISCUSSION**

4.  We grant USAC a limited waiver and extend the filing deadline for
    this year by 45 days to April 15, 2001. The Commission will consider
    in a future order USAC's request for a permanent change to rule
    section 54.717(f) to extend the audit deadline.

5.  Generally, the Commission's rules may be waived for good cause
    shown.[^6] As noted by the Court of Appeals for the D.C. Circuit,
    however, agency rules are presumed valid.[^7] The Commission may
    exercise its discretion to waive a rule where the particular facts
    make strict compliance inconsistent with the public interest.[^8] In
    addition, the Commission may take into account considerations of
    hardship, equity, or more effective implementation of overall policy
    on an individual basis.[^9] Waiver of the Commission's rules is
    therefore appropriate only if special circumstances warrant a
    deviation from the general rule, and such a deviation will serve the
    public interest.[^10]

6.  We find that USAC has shown good cause to grant an extension of the
    deadline imposed by section 54.717(f) of the Commission's rules
    because such deadline does not afford the independent auditor
    sufficient time to complete its draft audit report. By allowing the
    independent auditor to submit the report on or before April 15,
    2001, we ensure that the draft audit report is accurate and complete
    when submitted. We also find that no harm will result from
    permitting the independent auditor to submit the draft audit report
    on or before April 15, 2001. The Common Carrier Bureau's audit
    staff, USAC, and the independent auditor will then review the draft
    audit report and comply with the other provisions of section 54.717.
    Finally, we conclude that it is in the public interest to grant
    USAC's waiver because this report is intended to assist the
    Commission in determining, among other things, whether the
    Administrator is properly administering the universal service
    support mechanism to prevent fraud, waste, and abuse.[^11] By
    extending this deadline, we provide the independent auditor with
    more time to complete its work, thereby ensuring a complete and
    accurate draft audit report.

7.  Accordingly, IT IS ORDERED that, pursuant to sections 1, 4, and 254
    of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151,
    154, 254 and the authority delegated under sections 0.91, 0.291, and
    1.3 of the Commission's rules, 47 C.F.R. §§ 0.91, 0.291, and 1.3,
    the waiver request filed by the Universal Service Administrative
    Company on July 26, 2000 is GRANTED to the extent indicated herein
    to allow submission of the draft audit report for the year 2000 on
    or before April 15, 2001.

8.  IT IS FURTHER ORDERED that this Order is effective upon release.

    FEDERAL COMMUNICATIONS COMMISSION

> Carol E. Mattey
>
> Deputy Chief
>
> Common Carrier Bureau

[^1]: *Universal Service Fund Administrator's Petition for Permanent
    Waiver of 47 CFR §54.717(f) Regarding Audit Report Deadline or, in
    the Alternative, for a Rule Change*, filed July 26, 2000 (USAC
    Petition). *See* 47 C.F.R. § 54.717(f).

[^2]: 47 C.F.R. § 54.717.

[^3]: 47 C.F.R. § 54.717(f).

[^4]: USAC Petition at 3.

[^5]: USAC Petition at 3.

[^6]: 47 C.F.R. § 1.3

[^7]: *WAIT Radio v. FCC*, 418 F.2d 1153, 1159 (D.C. Cir. 1969), *cert.
    denied,* 409 U.S. 1027 (1972).

[^8]: *Northeast Cellular Telephone Co. v. FCC*, 897 F.2d 1164, 1166
    (D.C. Cir. 1990).

[^9]: *WAIT Radio*, 418 F.2d at 1159; *Northeast Cellular*, 897 F.2d at
    1166.

[^10]: *WAIT Radio*, 418 F.2d at 1159.

[^11]: 47 C.F.R. § 54.717.