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Before the
               Federal Communications Commission
                     Washington, D.C. 20554



In the Matter of

Federal-State Joint Board on 
Universal Service

Changes to the Board of Directors of the National
Exchange Carrier Association

Petition for Waiver of Section 54.717(f) of the
Commission's Rules and Regulations
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CC Docket No.   96-45


CC Docket No.   97-21



                  MEMORANDUM OPINION AND ORDER

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

By the Common Carrier Bureau:

     I.   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.  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.
     II.  BACKGROUND
3.     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.  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.  Because USAC's fiscal year
is the calendar year, the draft audit report is due by March 1.
4.     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.  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. 
III.      DISCUSSION

5.     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.
6.     Generally, the Commission's rules may be waived for good cause shown.  As noted by the
Court of Appeals for the D.C. Circuit, however, agency rules are presumed valid.  The Commission may
exercise its discretion to waive a rule where the particular facts make strict compliance inconsistent with
the public interest.  In addition, the Commission may take into account considerations of hardship,
equity, or more effective implementation of overall policy on an individual basis.  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.
7.     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.  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.
8.     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.
9.     IT IS FURTHER ORDERED that this Order is effective upon release.

                         FEDERAL COMMUNICATIONS COMMISSION
                         
                         
                              Carol E. Mattey
                              Deputy Chief 
                              Common Carrier Bureau