[Federal Register Volume 63, Number 244 (Monday, December 21, 1998)]
[Rules and Regulations]
[Pages 70564-70578]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33549]
[[Page 70563]]
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Part IV
Federal Communications Commission
_______________________________________________________________________
47 CFR Parts 54 and 69
Changes to the Board of Directors of the National Exchange Carrier
Association, Inc., Federal-State Joint Board on Universal Service;
Final Rule
Federal Register / Vol. 63, No. 244 / Monday, December 21, 1998 /
Rules and Regulations
[[Page 70564]]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 54 and 69
[CC Docket Nos. 97-21 and 96-45; FCC 98-306]
Changes to the Board of Directors of the National Exchange
Carrier Association, Inc., Federal-State Joint Board on Universal
Service
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, we reconsider the current organizational
structure for administering the universal service support mechanisms
and adopt a plan for merging the Schools and Libraries Corporation
(SLC) and the Rural Health Care Corporation (RHCC) into the Universal
Service Administrative Company (USAC) by January 1, 1999. We
substantially adopt the Report and Proposed Plan of Reorganization (the
Plan) filed with the Commission by USAC, SLC, and RHCC on July 1, 1998,
with certain modifications. We also adopt specific procedures under
which administrative decisions made by USAC will be reviewable by the
Commission.
DATES: These rules are effective January 1, 1999, except for
Sec. 54.701, which is effective December 1, 1998; and Secs. 54.703(c)
and 54.721, which contain modified information collection requirements
and will not become effective until approved by the Office of
Management and Budget. The FCC will publish a document in the Federal
Register announcing the effective date for Secs. 54.703(c) and 54.721.
FOR FURTHER INFORMATION CONTACT: Sharon Webber, Attorney, Common
Carrier Bureau, Accounting Policy Division, (202) 418-7400.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's
document released on November 20, 1998. The full text of this document
is available for public inspection during regular business hours in the
FCC Reference Center, Room 239, 1919 M Street, N.W., Washington, D.C.,
20554.
Summary of Third Report and Order in CC Docket No. 97-21, Fourth
Order on Reconsideration in CC Docket No. 97-21 and Eighth Order on
Reconsideration in CC Docket No. 96-45
I. Introduction
1. In this Order, we reconsider the current organizational
structure for administering the universal service support mechanisms
and adopt a plan for merging the Schools and Libraries Corporation
(SLC) and the Rural Health Care Corporation (RHCC) into the Universal
Service Administrative Company (USAC) by January 1, 1999. We
substantially adopt the Report and Proposed Plan of Reorganization (the
Plan ) filed with the Commission by USAC, SLC, and RHCC on July 1,
1998, with certain modifications. We also adopt specific procedures
under which administrative decisions made by USAC will be reviewable by
the Commission.
II. Revised Corporate Structure
A. Consolidation of Administrative Responsibilities
2. Commenters generally support vesting in USAC the responsibility
for administering all of the universal service support mechanisms,
including the creation of three divisions--the Schools and Libraries
Division, the Rural Health Care Division and the High Cost and Low
Income Division--to oversee each of the support mechanisms.
3. We find that consolidating all of the administrative
responsibilities into USAC is consistent with Congress's directive to
establish a single entity to administer the universal service support
mechanisms for schools, libraries, and rural health care providers, and
will minimize disruption and take advantage of USAC's experience in
administering the universal service support mechanisms. We conclude
that USAC is uniquely qualified to assume responsibility for the
administration of all of the support mechanisms in light of its current
responsibility for administering the high cost and low income
mechanisms and for collecting and disbursing funds for the schools and
libraries and rural health care support mechanisms. We find that the
appointment of USAC minimizes the potential disruption of the ongoing
administration of the universal service support mechanisms that could
occur were we to appoint an entity that has not previously been
involved in the administration of universal service. In addition,
establishing USAC as the single administrator establishes clear lines
of accountability. We further believe, that the consolidation will
result in administrative efficiencies. The distinct mission of each
support mechanism will be preserved by establishing divisions within
USAC. The divisions will perform the duties and functions currently
performed by SLC, RHCC and the High Cost and Low Income Committee, as
directed by the committees of the USAC Board.
4. We disagree with SBC's assertions that the revised
administrative structure is flawed in light of its ``erroneous''
reliance on the lawfulness of USAC. SBC contends that the GAO's finding
that the Commission's creation of SLC and RHCC violated the Government
Corporation Control Act (GCCA) similarly applies to the Commission's
creation of USAC.
5. The Commission has stated that it reasonably relied upon the
authority of sections 254 and 4(i) of the Communications Act (Act) when
it conditioned the approval of NECA as the temporary Administrator of
the support mechanisms on NECA's formation of SLC, RHCC, and USAC.
Indeed, in enacting section 254, Congress specifically contemplated
that the Commission would create federal universal service support
mechanisms. NECA, an independent, non-profit organization, had been
administering the high cost support mechanism for more than a decade
when Congress passed the Telecommunications Act of 1996. Thus, Congress
was aware of NECA's role when it adopted section 254, which affirmed
and expanded the Commission's authority to direct the administration of
universal service and therefore, implicitly affirmed the Commission's
authority to employ an independent entity to administer universal
service. We find no indication that Congress sought to dismantle the
existing administrative system, or to prohibit the Commission from
using NECA, or another independent entity to administer universal
service. USAC was created as a subsidiary of NECA. Inasmuch as USAC is
a subsidiary of NECA, which was lawfully created and has the authority
to administer the universal service support mechanisms, we see no
statutory impediment to USAC. Moreover, we find it significant that the
GAO made findings only with respect to the creation of SLC and RHCC;
GAO did not make any findings concerning the establishment of USAC. We
thus find that consolidating the administration of universal service
into USAC is ``pursuant to the findings of the General Accounting
Office.''
B. Limitations on USAC's Authority
6. Several commenters recommend that USAC's functions be confined
strictly to applying the Commission's rules and that it be prohibited
from engaging in policy making. Consistent with Congress's directive
that the combined entity shall not interpret rules or statute, we
emphasize that USAC's function under the revised structure will be
exclusively administrative. USAC may not make policy, interpret
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unclear provisions of the statute or rules, or interpret the intent of
Congress. Where the Act or the Commission's rules are unclear, or do
not address a particular situation, USAC must seek guidance from the
Commission on how to proceed. Furthermore, USAC may advocate positions
before the Commission and Commission staff only on administrative
matters relating to the universal service support mechanisms.
7. Commenters also urge the Commission to ensure USAC's
accountability to the Commission. The Commission retains ultimate
control over the operation of the federal universal service support
mechanisms through its authority to establish the rules governing the
support mechanisms and through its review of administrative decisions
that are appealed to the Commission. The consolidated USAC will
continue to be accountable to the Commission through the procedures
that currently apply to USAC, SLC, and RHCC. In fact, USAC's
appointment as permanent Administrator and the expansion of its
responsibilities are conditioned on its compliance with Commission
rules and orders. Existing procedures to ensure accountability include
the Commission's universal service rules, which provide detailed
guidance on administration of the universal service support mechanisms,
annual audit requirements, regular coordination with Commission staff,
and quarterly filing of projected administrative expenses and estimates
of support mechanism demand. In addition, the Commission will continue
to oversee the structure and content of the annual independent audit
that USAC is required to undertake.
8. To foster greater accountability, we direct USAC to prepare and
submit to the Commission and Congress an annual report by March 31 of
each year. The Commission proposed such a report in the Report to
Congress and several commenters supported this proposal. The annual
report should detail USAC's operations, activities, and accomplishments
for the prior calendar year. In addition, the annual report should
provide an assessment of contractor performance. Consistent with the
comments of the American Library Association (ALA) and Intermedia, we
direct USAC to include in its annual report information about
beneficiary and Service Provider participation in each of the universal
service support mechanisms and administrative actions intended to
prevent waste, fraud, and abuse by beneficiaries and service providers.
USAC shall consult with Commission staff to define the scope and
content of the annual report. This report will serve as the basis for
an annual review by the Commission of the universal service support
mechanisms. Because the annual report will detail contractor
operations, it also will enhance the Commission's oversight of
contractor performance.
C. USAC Permanence and Divestiture
9. We conclude that USAC should be made the permanent Administrator
and hereby dispense with the requirement that the permanent
Administrator be chosen by a federal advisory committee. Many
commenters support the Plan's recommendation that the Commission
designate USAC as the permanent Administrator. The primary reason that
USAC initially was designated as temporary rather than permanent
Administrator was because the Joint Board had concerns that NECA and
USAC, as a subsidiary of NECA, might be biased in favor of local
exchange carriers and might not fully represent all interested parties.
We conclude that, subject to the modifications set forth in this Order,
USAC fairly represents all interested parties, including a broad range
of industry, consumer, and beneficiary groups. Therefore, we conclude
that USAC should be the permanent Administrator. We also adopt the
proposal set forth in the Commission's Report to Congress to review
USAC's performance after one year to ensure that it is administering
universal service in an efficient, effective, and competitively neutral
manner. Providing permanence to the revised structure will ensure
USAC's ability to continue to attract and maintain qualified personnel
and to prevent unnecessary disruption to contributors and
beneficiaries.
10. We decline to adopt the Plan's proposal to divest USAC from
NECA at this time. Rather, consistent with the Commission's proposal in
the Report to Congress to divest USAC from NECA pending Commission
review of USAC's performance after one year, we will review in one year
whether USAC should remain affiliated with NECA. Retaining USAC as a
subsidiary of NECA is most responsive to Congress's directive that the
revised administrative structure be consistent with the GAO letter.
Since NECA was established in 1983, neither GAO nor any other party has
alleged that the creation of NECA was unlawful or that it violated the
GCCA. Therefore, we find that retaining USAC's affiliation with NECA is
responsive to concerns raised by the GAO. Moreover, maintaining USAC as
a subsidiary of NECA should minimize disruption to the support
mechanisms due to legal challenges. Finally, to eliminate any further
question concerning the Commission's authority to appoint USAC as the
permanent Administrator, we renew our request for specific statutory
authorization.
D. Changes to the USAC Board
11. We adopt the Plan's proposals to retain the current seventeen
Board member positions, based on our belief that the current Board has
achieved an appropriate balance of broad industry, beneficiary, and
consumer representation. In addition, we are persuaded that we should
add one additional rural health care provider to the Board. We also
adopt the Plan's proposal to create a permanent position on the USAC
Board for the USAC CEO, for a total of 19 members. Because the USAC CEO
will have overall management responsibility for all of the support
mechanisms, we conclude that the creation of a voting position on the
Board for the USAC CEO will offer continuity and consistency to USAC's
administration, and will create clear lines of accountability. We
direct that USAC's by-laws be amended to reflect the addition of the
USAC CEO, as well as an additional rural health care position.
12. We modify the Plan to add a second rural health care
representative to the USAC Board. We agree with RHCC and numerous
commenters that additional rural health care representation will assist
the Board's ability to address technical issues that are unique to the
rural health care community and that may fall outside of the general
competence and expertise of the USAC Board as a whole. We believe that
adding a second rural health care representative will help ensure that
the administrative structure ``take[s] into account the distinct
mission of providing universal service to rural health care
providers,'' in accordance with Congress's direction. Rather than
changing the Board's composition by replacing schools and libraries
representatives with rural health care provider representatives, as GTE
suggests, we have determined to add a second rural health care provider
representative to the Board. We find that this best ensures adequate
representation of all interested groups, without disrupting the
existing representation of schools and libraries, which was decided
based on input from all interested parties. Accordingly, the additional
rural health care representative on the Rural Health Care Board shall
serve on the USAC Board.
13. We are not convinced by Intermedia's suggestion that subject
matter expertise is necessary only at the
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division level, and would not be helpful on the Board as well. We also
decline to allocate a total of three positions on the USAC Board for
rural health care interests, as requested by RHCC. Given the relatively
smaller size of the rural health care mechanism compared to the schools
and libraries support mechanism, we find that including two rural
health care representatives ensures adequate and proportionate
representation of health care interests.
14. The American Psychological Association recommends that we
allocate one rural heath care position specifically to a representative
of rural behavioral health care providers. The Secretary of Health and
Human Services recommends that we add a representative with experience
in the use of telemedicine in the delivery of rural health care and
another one with experience in rural public health. We are reluctant to
substitute our judgment for that of the rural health care community
concerning the particular categories of rural health care providers
that should serve on the USAC Board. Accordingly, we will permit the
rural health care community to nominate, through the consensus
nomination process, the particular rural health care provider
representatives who should serve on the USAC Board. This approach is
consistent with the Commission's decision not to specify the particular
categories of educational institutions (e.g., public versus private
institutions) that are represented on the USAC Board. Rather, the
Commission has permitted the education community to select, through the
nomination process, the particular schools representatives who serve on
the USAC Board.
15. We decline to adopt the American Library Association's
recommendation that we increase library representation on the Board
commensurate with any increase in rural health care representation on
the Board. Although the American Library Association identifies certain
universal service implementation issues that are unique to libraries,
we find that, for the most part, schools and libraries face similar
issues as beneficiaries of the same universal service support
mechanism. As a result, in determining whether libraries are adequately
represented, we find that it is appropriate to consider whether schools
and libraries, as a whole, have adequate representation on the Board.
We believe this is consistent with Congress's establishment of a single
support mechanism for schools and libraries. Accordingly, we conclude
that a total of four positions on the USAC Board adequately represents
these beneficiary interests. Furthermore, in light of the relative
number of potential school and library participants, we find that it is
appropriate to allocate three representatives to schools and one
representative to libraries.
16. We decline to adopt one commenter's suggestion that we
fundamentally alter the composition of the Board by adding a variety of
industry representatives. We find that the USAC Board, as currently
configured, generally has afforded fair representation of the diverse
participants in, and competitively neutral administration of, the
universal service support mechanisms. We are reluctant to increase
further the size of the Board, absent a demonstrated need, because we
are concerned that to do so might make the decision-making process more
difficult.
E. USAC Committees
17. We generally find that the composition of the Committees of the
Board proposed by the Plan adequately represents the variety of
beneficiaries' interests and therefore we adopt, subject to the
modifications, the Plan's recommendation to retain the existing High
Cost and Low Income Committee and to establish two new committees of
the Board: the Schools and Libraries Committee and the Rural Health
Care Committee. Specifically, we adopt the Plan's proposal with respect
to the make-up of the Schools and Libraries Committee. We also adopt
the Plan's proposal regarding the Rural Health Care Committee, except
that we add one rural health care provider to the Committee. We adopt
the Plan's proposal with respect to the High Cost and Low Income
Committee, except that we add one incumbent LEC to that Committee.
Finally, to enhance Commission oversight of the revised administrative
structure, we adopt the Plan's proposal that the USAC Board may not
modify substantially the power or authority of the Committees of the
Board without Commission approval.
18. We disagree with Intermedia's claims that committees are
unnecessary in light of the statutory provision that limits USAC to the
performance of purely administrative functions. According to
Intermedia, staff in each of the divisions could provide the necessary
expertise and interface with particular communities as needed. We are
persuaded by the Plan, however, that the proposed committees are
uniquely able to provide expertise necessary to administer the support
mechanisms most effectively. For example, the Plan notes that the
committee structure will enable USAC to target communications to the
particular beneficiary or service provider group impacted by a support
mechanism. We conclude that the creation of specialized committees will
help preserve the distinct mission of each of the support mechanisms
and, in particular, is consistent with Congress's directive to ``take
into account the distinct mission of providing universal service to
rural health care providers.''
19. Numerous commenters from the rural health care community oppose
the Plan's proposed composition of the Rural Health Care Committee,
which consists of one rural health care representative on a seven-
member committee. The majority of these commenters recommends that
most, if not all, of the members of the Rural Health Care Committee
should represent rural health care interests. Some commenters request
that USAC establish an advisory committee that would provide guidance
to USAC on rural health care issues. We share commenters' concerns with
respect to rural health care representation on the Rural Health Care
Committee as proposed by the Plan. Accordingly, we conclude that the
Committee should include the additional rural health care
representative that we allocate to the USAC Board in this Order. We
find that adding a second rural health care provider will enable the
committee to represent more fully the variety of beneficiaries'
interests. We also find that adding an additional representative to the
committee will not disturb the balance created by the Plan, which
recommended three committees of approximately the same size.
20. We are not persuaded, however, that rural health care providers
should comprise most or all of the committee positions, and in fact,
RHCC's Separate Statement would not have resulted in a majority of
rural health care providers serving on the Rural Health Care Committee.
There are many different groups affected by the rural health care
support mechanism, including service providers and ratepayers. We find
that each interest group should have some representation on the
committee. We note that the other two committees will have a broad
range of interests represented, and will not be comprised solely of
beneficiaries. We also reject suggestions that the Commission establish
a separate advisory committee on rural health care matters. To the
extent that subject matter expertise is needed, however, USAC is free
to seek input from various industry and non-industry groups on
particular rural health care matters.
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21. The National Telephone Cooperative Association (NTCA) contends
that the Plan's proposal for restructuring the High Cost and Low Income
Committee would result in a committee that is not sufficiently
representative of the beneficiaries of the high cost and low income
mechanisms. We agree with NTCA that the ``interests and perspectives of
a rural carrier will vary significantly from those of a urban
carrier.'' The Plan proposes only one incumbent LEC member of the High
Cost and Low Income Committee. We find that one incumbent LEC
representative may find it difficult to represent fairly the interests
of both small and large carriers. To ensure that both rural and non-
rural telephone companies receive adequate representation, we add one
more incumbent LEC to the High Cost and Low Income Committee than
proposed by the Plan. One incumbent LEC on the Board shall represent
rural telephone companies, as that term is defined in section 3(37) of
the Act, and one incumbent LEC shall represent non-rural telephone
companies. We do not adopt NTCA's suggestion that we retain all the
members of the current High Cost and Low Income Committee. We find that
retaining the existing ten (10) committee members is unnecessary to
represent contributors and beneficiaries of the high cost and low
income support mechanisms. We also are concerned that an 11 member
committee, comprised of the existing ten (10) members plus the USAC
CEO, would disturb the balance achieved by the Plan in proposing three
committees of approximately the same size.
F. Binding Authority of the Committees
22. We find that, by vesting in the committees the power and
authority to bind the USAC Board on matters relating to the daily
administration of the support mechanisms, the Plan gives the committees
the autonomy and flexibility needed to administer efficiently and
effectively each of the support mechanisms. We also conclude that the
power vested in the USAC Board to disapprove the decision of a
committee under the Board Disapproval procedure ensures that USAC is
accountable for all administrative decisions. Thus, we do not believe,
as some commenters suggest, that the committees' ability to bind the
Board would somehow diminish the Commission's ultimate responsibility
for administration of the universal service support mechanisms.
Similarly, because the Board and its committees are subject to
Commission rules and oversight, we do not believe, as Intermedia
suggests, that the Board Disapproval process permits the Board, through
its committees, to make decisions outside the scope of its authority.
We also find that subjecting committee budgets to the Board Disapproval
procedure facilitates oversight of committee administrative costs. RHCC
requests that the Commission grant the Rural Health Care Committee the
authority to bind the full USAC Board on all ``programmatic aspects.''
We find that such an approach would be at odds with Congress's
directive to establish a single Administrator that is accountable for
all decisions regarding the schools and libraries and rural health care
support mechanisms.
G. The USAC CEO
23. We adopt the Plan's proposal that the USAC CEO will have
ultimate authority over all personnel matters, but may delegate to
division heads the authority to hire and fire division staff. We find
that vesting the hiring and firing authority with the USAC CEO is
necessary to ensure accountability and effective administration of
USAC. Although we disagree with RHCC, GTE, and US WEST that the
division heads rather than the USAC CEO should have authority to hire
and fire division staff, we find that permitting the USAC CEO to
delegate some hiring and firing decisions to division chiefs provides
reasonable flexibility and may be the most efficient course of action
in some instances.
H. Selection Process for USAC Board and Chief Executive Officer
24. We adopt the Plan's recommendation that the consolidated USAC
Board be selected under the procedures set forth in 47 CFR 69.614 of
the Commission's rules. We do not agree with the view expressed by GTE
that procedures set forth in 47 CFR 69.614 allow Board appointments to
be ``influenced by the Commission's individual preferences.''
Candidates are nominated through a consensus process of particular
interest groups and therefore, it is the preference of a particular
industry or non-industry group represented on the Board that is
reflected through this process, not the Commission's individual
preferences. Moreover, our rules provide that Board members will be
nominated by the Commission Chairman only if an industry or non-
industry group is unable to reach a consensus or fails to submit a
nomination. The process we adopt will encourage groups to nominate the
most experienced and knowledgeable individuals who can most effectively
represent the interests of that constituency, while also ensuring that
the Commission retains a mechanism for appointing Board members when
industry or non-industry groups fail to achieve consensus.
25. With regard to Board member terms, section 69.614(e) of the
Commission's rules provides that USAC Board members shall serve two-
year terms and may be reappointed for subsequent terms pursuant to the
nomination and selection process. The Plan, however, proposes that
Board members serve staggered three-year terms. We adopt the Plan's
proposal and amend our rules accordingly. These measures help ensure
continuity on the Board and continuity in the administration of the
support mechanisms. Because the merger is scheduled to take place by
January 1, 1999, we conclude that Board member terms should commence on
January 1 and conclude on December 31, three years after appointment.
Consistent with the January 1, 1999 merger date, and to ensure
continuity during the initial implementation of the revised
administrative structure, we conclude that the terms of six Board
members should expire on December 31, 2000, another six on December 31,
2001, and the remaining six on December 31, 2002. Insofar as Board
member terms will not begin to expire until December 31, 2000, we
believe this responds to the American Library Association's request
that we retain the current library representative during the initial
phases of reorganization. USAC shall determine when particular Board
member terms shall expire. In making this determination, USAC should
attempt to maintain continuity on the Board by providing that the first
set of Board members whose terms will expire will be representatives of
industry and non-industry groups with multiple representatives on the
Board.
26. The Plan is silent with regard to the selection process for the
USAC CEO. The July 15 Public Notice, 63 FR 39549 (July 23, 1998),
proposed adopting the procedure that currently applies to the selection
of a CEO for SLC and RHCC. Under that procedure, the consolidated USAC
Board would submit to the Chairman of the Commission a candidate to
serve as the USAC CEO. Bell Atlantic supports this proposal. The
Pennsylvania Public Utility Commission supports approval of the USAC
CEO by the Chairman of the Commission, but recommends referral to the
other commissioners ``to ensure greater visibility and
accountability.'' By contrast, BellSouth recommends selection by the
USAC Board, subject to
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removal for good cause by the Chairman of the Commission. We conclude
that the USAC Board should have the primary responsibility for
selection of a CEO, and that approval by the Chairman of the Commission
ensures appropriate oversight.
I. Compensation Limitations
27. In a recent order regarding funding levels under the schools
and libraries mechanism, the Commission concluded that, effective July
1, 1998, the Administrator must, as a condition of its continued
service, compensate all officers and employees of SLC and RHCC at an
annual rate of pay, including any non-regular payments, bonuses, or
other compensation, that does not exceed the rate of basic pay in
effect for Level I of the Executive Schedule under 47 U.S.C. 5312.
Congress's intent regarding the level of compensation for officers and
employees of the revised administrative structure was stated clearly in
both section 2005(c) of the Senate bill and the Conference Report.
Although few parties commented on the issue of salary limitations,
those who addressed the issue support the imposition of such
limitations on all officers and employees of the consolidated USAC. The
Senate and the House-Senate conferees stated that compensation
limitations should be imposed on the officers and employees of the
entity to be proposed under section 2005(b)(2) of the Senate bill.
Thus, consistent with the will of Congress, we direct the consolidated
USAC to compensate all officers and employees under the consolidated
USAC at an annual rate of pay, including any non-regular payments,
bonuses, or other compensation, that does not exceed the rate of basic
pay in effect for Level I of the Executive Schedule under 47 U.S.C.
5312. These compensation limitations shall apply to officers and
employees who will administer the schools, libraries, rural health
care, high cost, and low income support mechanisms, as well as those
responsible for USAC's billing, collection and disbursement functions.
28. We decline at this time to extend the salary limitations to
NECA inasmuch as Congress did not direct the imposition of salary
limitations on NECA. The commenters that address the issue maintain
that it would be inappropriate to apply such limitations. We agree with
commenters and do not extend salary limitations to NECA.
III. Administrative Efficiencies Under the Unified Structure
29. Congress has directed the Commission to have a single entity
administer the schools and libraries and rural health care support
mechanisms. We have reviewed the proposals set forth in the Plan to
assess whether, where possible, corporate operations will be
consolidated to eliminate duplicative functions. In those instances
where the Plan proposes to maintain separate operations, we have
evaluated whether such separate operations will further the goal of
preserving the distinct missions of the four support mechanisms. We
find that the functions that the Plan proposes to consolidate will
improve the efficiency and effectiveness with which the universal
service support mechanisms are administered. We likewise conclude that
the retention of separate operations for certain functions that are
unique to a particular support mechanism ensures that the
administrative systems and expertise that SLC and RHCC have developed
will be preserved in the revised administrative structure. Moreover,
because the Plan proposes to consolidate most functions, we believe
that this streamlined administrative structure will facilitate the
Commission's oversight of universal service administration. Subject to
the modifications and clarifications set forth, we adopt the Plan's
proposals for consolidating operations. Accordingly, we direct USAC,
SLC, and RHCC to enter into a merger agreement that reflects the
proposal set forth in the Plan, as modified and clarified herein.
30. The Plan suggests that it may be more efficient to have a
consolidated USAC website, but initially proposes to retain the SLC and
RHCC websites. The American Library Association questions the prudence
of merging the websites at all, in light of SLC's and RHCC's different
organizational approaches. We find that the websites should be
reorganized and consolidated. Blooston, Mordkofsky, Jackson & Dickens
(Blooston) notes that currently there is no consistency as to where
information regarding the universal service support mechanisms now may
be found. We conclude that a separate USAC website should be created
and that the information now found on the SLC and RHCC websites should
be merged into the USAC website. We find that a single consolidated
USAC website is consistent with our goal of eliminating duplicative
functions, and that a consolidated website for all four universal
service support mechanisms will be easier to utilize. Accordingly, we
direct USAC to report to the Commission by December 31, 1998 the date
by which it could consolidate the website. In the interim, as proposed
in the Plan, we direct USAC to provide links among all the relevant
websites.
31. We also direct USAC to submit to the Commission for approval,
as suggested in the Plan and consistent with the Commission's rules, a
proposed method for allocating costs among the four support mechanisms
by December 31, 1998. We approve of the Plan's proposal to retain
common outside counsel for use by all divisions and committees. Outside
counsel shall perform work only as directed by the USAC CEO. USAC may
hire additional in-house counsel to perform work on its behalf if USAC
determines that doing so would be more cost effective than retaining
outside counsel to perform such work.
32. We adopt the Plan's proposal regarding merging the
corporations. In implementing the merger, USAC may assume, where
appropriate, SLC's and RHCC's contracts with employees and
subcontractors. To the extent USAC determines that the recision or
modification of certain contracts will result in efficiencies or other
benefits, USAC may rescind or modify such contracts, in accordance with
applicable law.
33. The American Library Association contends that it is unclear
whether the Plan will improve efficiency or effectiveness. We will
review USAC's performance after one year from the merger to assess
whether USAC has succeeded in eliminating duplicative functions and
whether it has succeeded in preserving the distinct missions of the
schools and libraries and rural health care support mechanisms. We also
require USAC to submit an annual report by March 31 of each year
detailing its activities and accomplishments for the prior year. We
will continue to evaluate ways of achieving greater efficiency,
effectiveness, and accountability in the administration of universal
service.
IV. Procedures for Review of USAC Decisions
34. We agree with commenters that affected parties should have the
right to appeal USAC division, committee, and Board decisions directly
to the Commission. The majority of commenters opposes requiring
affected parties to seek review of USAC division decisions from the
appropriate USAC Committee of the Board or the full USAC Board before
filing an appeal with the Commission. Commenters generally maintain
that direct appeal to
[[Page 70569]]
the Commission is necessary to ensure adequate oversight of USAC's
operations. Commenters further argue that review by USAC in the first
instance would be burdensome and would cause unnecessary delays in
obtaining a final decision. We find that Commission oversight will be
strengthened by an appeals process that ensures that matters are
brought promptly to the Commission. Requiring affected parties to seek
review from a Committee of the Board or the full USAC Board in the
first instance might cause unnecessary delay in the appeals process
without, as MCI notes, any identifiable benefit.
35. We also agree with USAC and SLC that affected parties should be
encouraged to bring issues to the attention of the division head or the
USAC CEO to determine whether the matter can be handled without a
formal appeal to the Commission. We anticipate that, under certain
circumstances, a party may prefer to seek redress initially from the
appropriate Committee of the Board or the full USAC Board. Accordingly,
we conclude that affected parties should have the option of seeking
redress from a Committee of the Board or, if the matter concerns a
billing, collection, or disbursement matter that falls outside of the
jurisdiction of a particular committee, from the full USAC Board. We
encourage parties to seek redress in the first instance from Committees
of the Board for matters that involve straightforward application of
the Commission's rules. To the extent that affected parties can obtain
prompt resolution of such disputes, support mechanism participants will
be better served and limited Commission resources will be conserved.
Although Intermedia recommends excluding USAC internal administrative
decisions from the appeal process, we do not believe that any benefits
would be realized from limiting the types of decisions that may be
appealed to the Commission. We believe that the option of seeking
redress from USAC or the Commission addresses BellSouth's concerns
regarding the due process guarantees of the APA.
36. As proposed in the July 15 Public Notice, we delegate to the
Bureau the authority to rule on petitions for review of USAC division,
committee, or Board decisions that do not raise novel questions of
fact, law, or policy. This delegation to the Bureau is consistent with
the Commission's authority under section 5(c) of the Act to delegate
particular functions to staff in the first instance, subject to the
filing of applications for review with the Commission. Petitions that
raise novel questions of fact, law, or policy shall be brought before
the full Commission. As with other decisions made by the Bureau acting
pursuant to its delegated authority, parties may seek Commission review
of any Bureau decision. The Bureau also would have the authority to
review the decisions of USAC at any time on its own motion. Contrary to
GTE's claims that Bureau involvement is unnecessary and will result in
delay, we believe that granting the Bureau delegated authority to
review petitions that do not raise novel questions of fact, law, or
policy will facilitate prompt resolution of routine or settled matters.
37. Furthermore, consistent with the Commission's ultimate
responsibility over the universal service support mechanisms, we
conclude that USAC decisions, whether considered by the Bureau or the
Commission, should be subject to de novo review. Accordingly, we
decline to adopt USAC's and SLC's recommendation that the Commission
uphold USAC decisions without considering the merits of the appeal if
the Commission finds that USAC has not exceeded its authority and has
acted consistently with the Commission's rules.
38. In response to commenters' requests for a streamlined appeals
process, we conclude that an affected party will have thirty (30) days
to file an appeal of a USAC decision. This thirty (30) day period will
begin to run from the date of issuance of a USAC decision. The filing
of an appeal to a Committee of the Board or the full Board will toll
the time period for filing an appeal with the Commission. For matters
that are not new or novel, and may be decided by the Bureau, we further
find that we should establish a streamlined process for review. If the
Bureau takes no action within ninety (90) days upon an appeal properly
before it, USAC's decision will be deemed approved. We are confident
that a 90-day period will provide an adequate opportunity for review,
in most cases, and the Bureau, within that 90-day period, may take
action to extend the period of review. For appeals that are properly
before the Commission, a written decision will be issued within 90 days
unless the Commission takes action to extend the period for review;
under no circumstances will an appeal before the full Commission be
deemed approved as a result of inaction on the part of the Commission.
We expect that the Bureau and the Commission will act promptly to
resolve appeals of USAC decisions. Based on this expectation, we do not
adopt BellSouth's suggestion that the Commission adopt a mechanism
similar to the accelerated review process adopted for complaints filed
under section 208 of the Act.
39. To facilitate prompt resolution by the Commission of appeals of
USAC decisions, we also adopt specific filing requirements for such
petitions. The appellant must state specifically its interest in the
matter presented for review. The appellant also must provide the
Commission with a full statement of relevant, material facts with
supporting affidavits and documentation. In addition, the appellant
must state concisely the question presented for review, with reference,
where appropriate, to the relevant Commission rule, Commission order,
or statutory provision. The appellant also must state the relief sought
and the relevant statutory or regulatory provision pursuant to which
such relief is sought. If an appellant alleges prohibited conduct by a
third party, the appellant shall serve a copy of the appeal on such
third party, who shall have an opportunity to file an opposition.
Similarly, appellants shall serve on USAC a copy of the appeal of a
USAC decision filed with the Commission. We encourage USAC to file
comments setting forth USAC's position on the issues raised in the
appeal. We believe that USAC's comments may aid the Commission in
understanding the nature of the disputed issues and facilitate a timely
resolution of the matter. We decline to adopt Weisiger's recommendation
that the applications for discounted services provide information
regarding beneficiaries' right to seek review of USAC decisions.
40. We note that BellSouth questions whether the Commission has
jurisdiction to adjudicate a dispute involving a non-telecommunications
carrier. We find that the Commission has the authority to review USAC
decisions, regardless of the identity of the parties, because USAC is
administering the universal service support mechanisms for the
Commission, subject to Commission rules and oversight.
41. We decline to adopt SBC's proposal, supported by GTE, NTCA, and
Ameritech, that the appeal procedures should apply to decisions
previously rendered by USAC, SLC, and RHCC. Specifically, SBC proposes
that affected parties be granted sixty (60) days from the effective
date of our rules to appeal prior USAC, SLC, or RHCC decisions. Parties
seeking redress from previously issued decisions of USAC, SLC, and RHCC
have not been prevented from appealing those decisions to the
Commission under existing Commission
[[Page 70570]]
procedures. Indeed, several parties have filed appeals with the
Commission. Thus, we conclude that retroactive application of these
appeal procedures is not warranted.
42. The July 15 Public Notice also proposed that, if an application
for discounted services or support is approved, and that approval is
appealed to the Commission, the pendency of that appeal would not
affect the eligibility of the applicant to receive discounted services,
nor would it prevent reimbursement of service providers for discounted
services provided to such applicants. We conclude that, until the
Bureau or the full Commission has resolved an appeal of a USAC
decision, an applicant will not be permitted to receive discounted
services and service providers will not be permitted to receive
reimbursement for discounted services provided to such applicants. We
believe that withholding support during the pendency of an appeal will
reduce the likelihood that support is disbursed in error. We further
find that, because requests for review of USAC decisions that are
properly before the Bureau will be deemed approved if the Bureau takes
no action within 90 days, and because the full Commission is committed
to issuing decisions within 90 days, parties will have limited ability
to delay support and discounts for a substantial period of time merely
by filing an appeal.
V. Implementation Issues
A. Submission and Approval of Merger Documents
43. Consistent with our adoption of the Plan as modified herein, we
direct USAC, SLC, and RHCC to submit draft merger documents to the
Commission by December 1, 1998. We also direct USAC to submit to the
Commission by December 1, 1998, draft revised by-laws and articles of
incorporation. The Commission delegates to the Bureau the authority to
review and approve the merger documents, revised by-laws and revised
articles of incorporation. Such documents should be consistent with the
requirements of this Order and consistent with principles and
requirements of Delaware state law. The Bureau will indicate its
approval of the documents in a public notice. Upon consummation of the
merger and the filing of the revised by-laws, SLC and RHCC shall take
all steps necessary to dissolve SLC and RHCC in accordance with
Delaware state law.
B. Effective Date of Rules
44. In this Order, the Commission directs that SLC and RHCC merge
into USAC as the single entity responsible for administering the
universal service mechanisms by January 1, 1999. To ensure that USAC is
able to meet the January 1, 1999 deadline, the Commission directs USAC
to submit to the Commission by December 1, 1998 USAC's draft merger
documents and draft revised by-laws. Thus, we make this requirement
effective December 1, 1998, which may occur within fewer than thirty
(30) days after publication in the Federal Register of the rules
adopted in this Order. In this Order, we also adopt rules that will
govern USAC following the required merger. Accordingly, these rules
must take effect upon the required consummation of the merger on
January 1, 1999, which may occur fewer than thirty (30) days after
publication in the Federal Register of the rules adopted in this Order.
These actions are necessary to ensure completion of the merger by the
January 1, 1999 deadline that the Commission proposed in the Report to
Congress in an effort to respond promptly to Congress's directive that
the Commission establish a single entity to administer universal
service. In addition, the parties required to take these actions--SLC,
RHCC, and USAC--will have actual notice of their obligations when the
Commission adopts this Order. Accordingly, we find good cause to depart
in the manner described from the general requirement of 5 U.S.C. 553(d)
that final rules take effect not less than thirty (30) days after their
publication in the Federal Register.
VI. Final Regulatory Flexibility Analysis
45. The Regulatory Flexibility Act (RFA) requires that a regulatory
flexibility analysis be prepared for notice-and-comment rulemaking
proceedings, unless the agency certifies that ``the rule will not, if
promulgated, have a significant economic impact on a substantial number
of small entities.'' The RFA generally defines ``small entity'' as
having the same meaning as the terms ``small business,'' ``small
organization,'' and ``small governmental jurisdiction.'' A small
organization is generally ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
This regulatory flexibility certification supplements our prior
certifications and analyses in this proceeding. The Commission will
send a copy of this Order, including a copy of this final
certification, in a report to Congress pursuant to the Small Business
Regulatory Enforcement Fairness Act of 1996. In addition, this Order
and certification will be sent to the Chief Counsel for Advocacy of the
Small Business Administration, and will be published in the Federal
Register.
46. This Order directs the merger of SLC and RHCC into USAC as the
single entity responsible for administering the universal service
support mechanisms. In addition, we adopt specific procedures under
which administrative decisions made by USAC will be reviewable by the
Commission, including the requirements for filing review petitions with
the Commission. Pursuant to the RFA, and as described, we certify that
these actions will not have a significant economic impact on a
substantial number of small entities.
47. Regarding the subject merger, in the NECA Order, 62 FR 41294
(August 1, 1997), the Commission directed NECA, as a condition of its
service as temporary Administrator of the universal service support
mechanisms, to create an independent subsidiary, USAC, to administer
temporarily certain aspects of the universal service support mechanisms
and to establish SLC and RHCC to administer specific aspects of the
universal service mechanisms for schools and libraries and rural health
care providers. In that order, the Commission also concluded that NECA
is not a small organization within the meaning of the RFA, finding that
NECA is a non-profit association that was created to administer the
Commission's interstate access tariff and revenue distribution
processes. On this basis, the Commission certified pursuant to the RFA
that the rules adopted in the NECA Order would not have a significant
economic impact on a substantial number of small entities.
48. In the July 15 Public Notice, the Bureau sought comment on the
proposed plan to merge SLC and RHCC into USAC as the single entity
responsible for the administration of the universal service support
mechanisms for schools and libraries and rural health care providers.
For the reasons stated in the NECA Order, the Bureau found that NECA is
not a small organization within the meaning of the RFA. Similarly,
USAC, as a wholly-owned, non-profit subsidiary of NECA, is not a small
organization. SLC and RHCC are non-profit corporations created by NECA
as a condition of its service as temporary Administrator. The Bureau
tentatively certified that, even if NECA, USAC, SLC, and RHCC are small
entities, the reorganization of SLC, RHCC, and USAC would affect
directly only those four entities and thus would not have a direct,
significant economic impact on a substantial number of small
[[Page 70571]]
entities. The Bureau requested comment on this matter.
49. Under the rules adopted in this Order, USAC will serve as the
single entity responsible for administering all of the universal
service support mechanisms as of January 1, 1999. The Commission
received no comments requesting that we modify our previous
certification that the reorganization of SLC, RHCC, and USAC will not
have a significant economic impact on a substantial number of small
entities. We hereby certify pursuant to the RFA, 5 U.S.C. 605(b), that
the rules adopted in this Order directing the merger of SLC and RHCC
into USAC as the permanent Administrator of the universal service
support mechanisms will not have a significant economic impact on a
substantial number of small entities.
50. Regarding the adoption of specific procedures under which
administrative decisions made by USAC will be reviewable by the
Commission, we note that, in the Final Regulatory Flexibility Analysis
to the Universal Service Order, 62 FR 32862 (June 17, 1997), we
described and estimated the number of small entities that might be
affected significantly by the new universal service rules, including
the rule requiring telecommunications carriers and other entities to
contribute to the universal service support mechanisms. These entities
included telephone companies and similar entities, including wireless
entities; cable system operators and similar entities, including DBS
and international entities; municipalities; rural health care
providers; schools; and libraries. The rules adopted here, which set
forth the procedures by which affected parties may seek Commission
review of administrative decisions made by USAC, will apply to those
same telecommunications carriers and entities. In the July 15 Public
Notice, the Bureau tentatively certified that the rule amendments under
consideration would not have a significant economic impact on a
substantial number of small entities, noting that the rules, which
would afford entities multiple options in seeking review, would likely
have a beneficial impact on such entities. The Bureau requested comment
specifically on this tentative conclusion. No such comments were filed.
51. In this Order, the Commission adopts, inter alia, procedures
under which affected parties may appeal USAC division, committee, and
Board decisions directly to the Commission. This decision affords
parties options for seeking review of USAC decisions and as a result,
the economic effect of such change should, if anything, be beneficial.
In addition, we adopt specific requirements for filing review petitions
with the Commission under these rules. We find that the filing
requirements we adopt are merely procedural in nature and are no more
onerous than other, similar filing requirements in the Commission's
rules; as such they will not result in a significant economic impact on
entities that choose to file under the rules. We therefore certify that
the rules we adopt to afford direct review of USAC decisions by the
Commission, including the requirements for filing review petitions with
the Commission, will not have a significant economic impact on a
substantial number of small entities.
VII. Ordering Clauses
52. Accordingly, it is ordered that, pursuant to the authority
contained in sections 1-4, 201-205, 218-220, 254, 303(r), 403 and 405
of the Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201-
205, 218-220, 254, 303(r), 403 and 405, section 553 of the
Administrative Procedure Act, 5 U.S.C. 553, and 47 CFR 1.108, the Third
Report and Order in CC Docket No. 97-21, Fourth Order on
Reconsideration in CC Docket No. 97-21 and Eighth Order on
Reconsideration in CC Docket No. 96-45 is adopted.
53. It is further ordered that, pursuant to the authority contained
in sections 1-4, 201-205, 218-220, 254, 303(r), 403 and 405 of the
Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201-205,
218-220, 254, 303(r), 403 and 405, section 553 of the Administrative
Procedure Act, 5 U.S.C. 553, and 47 CFR 1.108, Part 54 of the
Commission's rules, 47 CFR Parts 54 and 69, are amended.
54. It is further ordered that, because the Commission has found
good cause, this Order and 47 CFR 54.701, as amended, are effective on
December 1, 1998, which may be less than thirty (30) days after
publication in the Federal Register.
55. It is further ordered that the merger of SLC and RHCC into USAC
shall be consummated by January 1, 1999.
56. It is further ordered that, because the Commission has found
good cause, except as otherwise provided herein, the rule changes set
forth are effective on January 1, 1999, which may be less than thirty
(30) days after publication in the Federal Register.
57. It is further ordered that, upon consummation of the merger of
SLC and RHCC into USAC, SLC and RHCC shall be dissolved, in accordance
with applicable state law.
58. It is further ordered that the Commission's Office of Public
Affairs, Reference Operations Division, shall send a copy of this
Order, including the Final Regulatory Flexibility Certification, to the
Chief Counsel for Advocacy of the Small Business Administration.
59. It is further ordered that the information collections
contained in 47 CFR 54.703(c) and 54.721 of the Commission's rules,
will become effective following approval from the Office of Management
and Budget.
List of Subjects
47 CFR Part 54
Healthcare providers, Libraries, Reporting and recordkeeping
requirements, Schools, Telecommunications, Telephone.
47 CFR Part 69
Communications common carriers, Reporting and recordkeeping
requirements, Telephone.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
Rule Changes
Parts 54 and 69 of Title 47 of the Code of Federal Regulations are
amended to read as follows:
PART 54--UNIVERSAL SERVICE
1. The authority citation for part 54 continues to read as follows:
Authority: 47 U.S.C. 1, 4(i), 201, 205, 214, and 254 unless
otherwise noted.
2. In Sec. 54.5 remove the terms High Cost and Low Income
Committee, Rural Health Care Corporation, and Schools and Libraries
Corporation and the definitions of those terms; revise the definition
of the term Administrator; add the definition of the term website in
alphabetical order as follows:
Sec. 54.5 Terms and definitions.
* * * * *
Administrator. The term ``Administrator'' shall refer to the
Universal Service Administrative Company that is an independent
subsidiary of the National Exchange Carrier Association, Inc., and that
has been appointed the permanent Administrator of the federal universal
service support mechanisms.
* * * * *
Website. The term ``website'' shall refer to any websites operated
by the Administrator in connection with the schools and libraries
support mechanism, the rural health care support mechanism, the high
cost
[[Page 70572]]
mechanism, and the low income mechanism.
3. In Sec. 54.504 remove the words ``Schools and Libraries
Corporation'' in paragraphs (b)(1), (b)(2)(vii), (b)(3), and (c) and
add, in its place, the word ``Administrator'', and revise paragraph
(b)(4) to read as follows:
Sec. 54.504 Requests for services.
* * * * *
(b) * * *
(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).
* * * * *
Sec. 54.505 [Amended]
4. In Sec. 54.505 remove the words ``Schools and Libraries
Corporation'' in paragraphs (b)(3) and (c) and add, in its place, the
word ``Administrator.''
5. In Sec. 54.507 remove the words ``Schools and Libraries
Corporation'' in paragraphs (e) through (f), the introductory text to
(g), (g)(1) and add, in its place, the word ``Administrator'', and
revise paragraphs (c), (g)(2)(i) and (g)(2)(iv) to read as follows:
Sec. 54.507 Cap.
* * * * *
(c) Requests. Funds shall be available to fund discounts for
eligible schools and libraries and consortia of such eligible entities
on a first-come-first-served basis, with requests accepted beginning on
the first of July prior to each funding year. The Administrator shall
maintain on the Administrator's website a running tally of the funds
already committed for the existing funding year. The Administrator
shall implement an initial filing period that treats all schools and
libraries filing within that period as if their applications were
simultaneously received. The initial filing period shall begin on the
date that the Administrator begins to receive applications for support,
and shall conclude on a date to be determined by the Administrator. The
Administrator may implement such additional filing periods as it deems
necessary.
* * * * *
(g) * * *
(2) * * *
(i) The Administrator or the Administrator's subcontractor shall
post a message on the Administrator's website, notify the Commission,
and take reasonable steps to notify the educational and library
communities that commitments for the remaining $250 million of support
will only be made to the most economically disadvantaged schools and
libraries (those in the two most disadvantaged categories) for the next
30 days or the remainder of the funding year, whichever is shorter.
* * * * *
(iv) After all requests submitted by schools and libraries
described in paragraphs (g)(2) and (g)(3) of this section during the
30-day period have been met, the Administrator shall allocate the
remaining available funds to all other eligible schools and libraries
in the order in which their requests have been received by the
Administrator, until the $250 million is exhausted or the funding year
ends.
* * * * *
6. In Sec. 54.509 remove the words ``Schools and Libraries
Corporation'' in paragraph (b) and add, in its place, the word
``Administrator'' and revise paragraph (c) to read as follows:
Sec. 54.509 Adjustments to the discount matrix.
* * * * *
(c) Remaining funds. If funds remain under the cap at the end of
the funding year in which discounts have been reduced below those set
in the matrices, the Administrator shall consult with the Commission to
establish the best way to distribute those funds.
Sec. 54.511 [Amended]
7. In Sec. 54.511 remove the words ``Schools and Libraries
Corporation'' in paragraph (c)(3) and add, in its place, the word
``Administrator.''
Sec. 54.516 [Amended]
8. In Sec. 54.516 remove the words ``Schools and Libraries
Corporation'' in paragraph (b) and add, in its place, the word
``Administrator.''
Sec. 54.603 [Amended]
9. In Sec. 54.603 remove the words ``Rural Health Care
Corporation'' in paragraphs (a)(1) through (5) and add, in its place,
the word ``Administrator.''
Sec. 54.604 [Amended]
10. In Sec. 54.604 remove the words ``Rural Health Care
Corporation'' in paragraph (c) and add, in its place, the word
``Administrator.''
Sec. 54.605 [Amended]
11. In Sec. 54.605 remove the words ``Rural Health Care
Corporation'' in paragraph (e) and add, in its place, the word
``Administrator.''
Sec. 54.609 [Amended]
12. In Sec. 54.609 remove the words ``Rural Health Care
Corporation'' in paragraph (b) and add, in its place, the word
``Administrator.''
Sec. 54.619 [Amended]
13. In Sec. 54.619 remove the words ``Rural Health Care
Corporation'' in paragraphs (b) and (d) and add, in its place, the word
``Administrator.''
Sec. 54.623 [Amended]
14. In Sec. 54.623 remove the words ``Rural Health Care
Corporation'' in paragraphs (c), (e) through (f) and add, in its place,
the word ``Administrator.''
Sec. 54.625 [Amended]
15. In Sec. 54.625 remove the words ``Rural Health Care
Corporation'' in paragraph (a) and add, in its place, the word
``Administrator.''
16. Revise Sec. 54.701 to read as follows:
Sec. 54.701 Administrator of universal service support mechanisms.
(a) The Universal Service Administrative Company is appointed the
permanent Administrator of the federal universal service support
mechanisms, subject to a review after one year by the Federal
Communications Commission to determine that the Administrator is
administering the universal service support mechanisms in an efficient,
effective, and competitively neutral manner.
(b) The Schools and Libraries Corporation and the Rural Health Care
Corporation shall merge into the Universal Service Administrative
Company by January 1, 1999; provided, however, that the merger shall
not take place until the Common Carrier Bureau, acting pursuant to
delegated authority, has approved the merger documents, the amended by-
laws, and the amended articles of incorporation, as set forth in
paragraphs (c) and (d) of this section.
(c) By December 1, 1998, the Schools and Libraries Corporation, the
Rural Health Care Corporation and the Universal Service Administrative
Company shall file with the Federal Communications Commission draft
copies of all documents necessary to effectuate the merger.
(d) By December 1, 1998, the Universal Service Administrative
Company shall file with the Federal Communications Commission draft
[[Page 70573]]
copies of amended by-laws and amended articles of incorporation.
(e) Upon consummation of the merger of the Schools and Libraries
Corporation and the Rural Health Care Corporation into the Universal
Service Administrative Company, the Schools and Libraries Corporation
and the Rural Health Care Corporation shall take all steps necessary to
dissolve such corporations.
(f) The Administrator shall establish a nineteen (19) member Board
of Directors, as set forth in Sec. 54.703. The Administrator's Board of
Directors shall establish three Committees of the Board of Directors,
as set forth in Sec. 54.705: (1) the Schools and Libraries Committee,
which shall oversee the schools and libraries support mechanism; (2)
the Rural Health Care Committee, which shall oversee the rural health
care support mechanism; and (3) the High Cost and Low Income Committee,
which shall oversee the high cost and low income support mechanism. The
Board of Directors shall not modify substantially the power or
authority of the Committees of the Board without prior approval from
the Federal Communications Commission.
(g) The Administrator shall establish three divisions: (1) the
Schools and Libraries Division, which shall perform duties and
functions in connection with the schools and libraries support
mechanism under the direction of the Schools and Libraries Committee of
the Board, as set forth in Sec. 54.705(a); (2) the Rural Health Care
Division, which shall perform duties and functions in connection with
the rural health care support mechanism under the direction of the
Rural Health Care Committee of the Board, as set forth in
Sec. 54.705(b); and (3) the High Cost and Low Income Division, which
shall perform duties and functions in connection with the high cost and
low income support mechanism under the direction of the High Cost and
Low Income Committee of the Board, as set forth in Sec. 54.705(c). As
directed by the Committees of the Board set forth in Sec. 54.705, these
divisions shall perform the duties and functions unique to their
respective support mechanisms.
(h) The Administrator shall be managed by a Chief Executive
Officer, as set forth in Sec. 54.704. The Chief Executive Officer shall
serve on the Committees of the Board established in Sec. 54.705.
17. Add a new Sec. 54.702 to read as follows:
Sec. 54.702 Administrator's functions and responsibilities.
(a) The Administrator, and the divisions therein, shall be
responsible for administering the schools and libraries support
mechanism, the rural health care support mechanism, the high cost
support mechanism and the low income support mechanism.
(b ) The Administrator shall be responsible for billing
contributors, collecting contributions to the universal service support
mechanisms, and disbursing universal service support funds.
(c) The Administrator may not make policy, interpret unclear
provisions of the statute or rules, or interpret the intent of
Congress. Where the Act or the Commission's rules are unclear, or do
not address a particular situation, the Administrator shall seek
guidance from the Commission.
(d) The Administrator may advocate positions before the Commission
and its staff only on administrative matters relating to the universal
service support mechanisms.
(e) The Administrator shall maintain books of account separate from
those of the National Exchange Carrier Association, of which the
Administrator is an independent subsidiary. The Administrator's books
of account shall be maintained in accordance with generally accepted
accounting principles. The Administrator may borrow start up funds from
the National Exchange Carrier Association. Such funds may not be drawn
from the Telecommunications Relay Services (TRS) fund or TRS
administrative expense accounts.
(f) Pursuant to its responsibility for billing and collecting
contributions, the Administrator shall compare periodically information
collected by the administrator of the TRS Fund from TRS Fund Worksheets
with information submitted by contributors on Universal Service
Worksheets to verify the accuracy of information submitted on Universal
Service Worksheets. When performing a comparison of contributor
information as provided by this paragraph, the Administrator must
undertake company-by-company comparisons for all entities filing
Universal Service and TRS Fund Worksheets.
(g) The Administrator shall create and maintain a website, as
defined in Sec. 54.5, on which applications for services will be posted
on behalf of schools, libraries and rural health care providers.
(h) The Administrator shall file with the Commission and Congress
an annual report by March 31 of each year. The report shall detail the
Administrator's operations, activities, and accomplishments for the
prior year, including information about participation in each of the
universal service support mechanisms and administrative action intended
to prevent waste, fraud, and abuse. The report also shall include an
assessment of subcontractors' performance, and an itemization of
monthly administrative costs that shall include all expenses, receipts,
and payments associated with the administration of the universal
service support programs. The Administrator shall consult each year
with Commission staff to determine the scope and content of the annual
report.
(i) The Administrator shall report quarterly to the Commission on
the disbursement of universal service support program funds. The
Administrator shall keep separate accounts for the amounts of money
collected and disbursed for eligible schools and libraries, rural
health care providers, low-income consumers, and high cost and insular
areas.
(j) Information based on the Administrator's reports will be made
public by the Commission at least once a year as part of a Monitoring
Report.
(k) The Administrator shall provide the Commission full access to
the data collected pursuant to the administration of the universal
service support programs.
(l) Pursuant to Sec. 64.903 of this chapter, the Administrator
shall file with the Commission a cost allocation manual (CAM) that
describes the accounts and procedures the Administrator will use to
allocate the shared costs of administering the universal service
support mechanisms and its other operations.
(m) The Administrator shall make available to whomever the
Commission directs, free of charge, any and all intellectual property,
including, but not limited to, all records and information generated by
or resulting from its role in administering the support mechanisms, if
its participation in administering the universal service support
mechanisms ends.
(n) If its participation in administering the universal service
support mechanisms ends, the Administrator shall be subject to close-
out audits at the end of its term.
18. Revise Sec. 54.703 to read as follows:
Sec. 54.703 The Administrator's Board of Directors.
(a) The Administrator shall have a Board of Directors separate from
the Board of Directors of the National Exchange Carrier Association.
The National Exchange Carrier Association's
[[Page 70574]]
Board of Directors shall be prohibited from participating in the
functions of the Administrator.
(b) Board composition. The independent subsidiary's Board of
Directors shall consist of nineteen (19) directors:
(1) Three directors shall represent incumbent local exchange
carriers, with one director representing the Bell Operating Companies
and GTE, one director representing ILECs (other than the Bell Operating
Companies) with annual operating revenues in excess of $40 million, and
one director representing ILECs (other than the Bell Operating
Companies) with annual operating revenues of $40 million or less;
(2) Two directors shall represent interexchange carriers, with one
director representing interexchange carriers with more than $3 billion
in annual operating revenues and one director representing
interexchange carriers with annual operating revenues of $3 billion or
less;
(3) One director shall represent commercial mobile radio service
(CMRS) providers;
(4) One director shall represent competitive local exchange
carriers;
(5) One director shall represent cable operators;
(6) One director shall represent information service providers;
(7) Three directors shall represent schools that are eligible to
receive discounts pursuant to Sec. 54.501;
(8) One director shall represent libraries that are eligible to
receive discounts pursuant to Sec. 54.501;
(9) Two directors shall represent rural health care providers that
are eligible to receive supported services pursuant to Sec. 54.601;
(10) One director shall represent low-income consumers;
(11) One director shall represent state telecommunications
regulators;
(12) One director shall represent state consumer advocates; and
(13) The Chief Executive Officer of the Administrator.
(c) Selection process for board of directors. (1) Sixty (60) days
prior to the expiration of a director's term, the industry or non-
industry group that is represented by such director on the
Administrator's Board of Directors, as specified in paragraph (b) of
this section, shall nominate by consensus a new director. The industry
or non-industry group shall submit the name of its nominee for a seat
on the Administrator's Board of Directors, along with relevant
professional and biographical information about the nominee, to the
Chairman of the Federal Communications Commission. Only members of the
industry or non-industry group that a Board member will represent may
submit a nomination for that position.
(2) The name of an industry or non-industry group's nominee shall
be filed with the Office of the Secretary of the Federal Communications
Commission in accordance with part 1 of this chapter. The document
nominating a candidate shall be captioned ``In the matter of:
Nomination for Universal Service Administrator's Board of Directors''
and shall reference FCC Docket Nos. 97-21 and 96-45. Each nomination
shall specify the position on the Board of Directors for which such
nomination is submitted. Two copies of the document nominating a
candidate shall be submitted to the Common Carrier Bureau's Accounting
Policy Division.
(3) The Chairman of the Federal Communications Commission shall
review the nominations submitted by industry and non-industry groups
and select each director of the Administrator's Board of Directors, as
each director's term expires pursuant to paragraph (d) of this section.
If an industry or non-industry group does not reach consensus on a
nominee or fails to submit a nomination for a position on the
Administrator's Board of Directors, the Chairman of the Federal
Communications Commission shall select an individual to represent such
group on the Administrator's Board of Directors.
(d) Board member terms. The directors on the Administrator's Board
shall be appointed for three-year terms, except that the Chief
Executive Officer shall be a permanent member of the Board. Board
member terms shall run from January 1 of the first year of the term to
December 31 of the third year of the term, except that, for purposes of
the term beginning on January 1, 1999, the terms of six directors shall
expire on December 31, 2000, the terms of another six directors on
December 31, 2001, and the terms of the remaining six directors on
December 31, 2002. Directors may be reappointed for subsequent terms
pursuant to the initial nomination and appointment process described in
paragraph (c) of this section. If a Board member vacates his or her
seat prior to the completion of his or her term, the Administrator will
notify the Common Carrier Bureau of such vacancy, and a successor will
be chosen pursuant to the nomination and appointment process described
in paragraph (c) of this section.
(e) All meetings of the Administrator's Board of Directors shall be
open to the public and held in Washington, D.C.
(f) Each member of the Administrator's Board of Directors shall be
entitled to receive reimbursement for expenses directly incurred as a
result of his or her participation on the Administrator's Board of
Directors.
19. Add a new Sec. 54.704 to read as follows:
Sec. 54.704 The Administrator's Chief Executive Officer.
(a) Chief Executive Officer's functions. (1) The Chief Executive
Officer shall have management responsibility for the administration of
the federal universal service support mechanisms.
(2) The Chief Executive Officer shall have management
responsibility for all employees of the Universal Service
Administrative Company. The Chief Executive Officer may delegate such
responsibility to heads of the divisions established in Sec. 54.701(g).
(3) The Chief Executive Officer shall serve on the Administrator's
Board of Directors as set forth in Sec. 54.703(b) and on the Committees
of the Board established under Sec. 54.705.
(b) Selection process for the Chief Executive Officer. (1) The
members of the Board of Directors of the Administrator shall nominate
by consensus a Chief Executive Officer. The Board of Directors shall
submit the name of its nominee for Chief Executive Officer, along with
relevant professional and biographical information about the nominee,
to the Chairman of the Federal Communications Commission.
(2) The Chairman of the Federal Communications Commission shall
review the nomination submitted by the Administrator's Board of
Directors. Subject to the Chairman's approval, the nominee shall be
appointed as the Administrator's Chief Executive Officer.
(3) If the Board of Directors does not reach consensus on a nominee
or fails to submit a nomination for the Chief Executive Officer, the
Chairman of the Federal Communications Commission shall select a Chief
Executive Officer.
20. Revise Sec. 54.705 to read as follows:
Sec. 54.705 Committees of the Administrator's Board of Directors.
(a) Schools and Libraries Committee.--(1) Committee functions. The
Schools and Libraries Committee shall oversee the administration of the
schools and libraries support mechanism by the Schools and Libraries
Division. The Schools and Libraries Committee shall have the authority
to make decisions concerning:
(i) How the Administrator projects demand for the schools and
libraries support mechanism;
(ii) Development of applications and associated instructions as
needed for the
[[Page 70575]]
schools and libraries support mechanism;
(iii) Administration of the application process, including
activities to ensure compliance with Federal Communications Commission
rules and regulations;
(iv) Performance of outreach and education functions;
(v) Review of bills for services that are submitted by schools and
libraries;
(vi) Monitoring demand for the purpose of determining when the $2
billion trigger has been reached;
(vii) Implementation of the rules of priority in accordance with
Sec. 54.507(g) of this chapter;
(viii) Review and certification of technology plans when a state
agency has indicated that it will not be able to review such plans
within a reasonable time;
(ix) The classification of schools and libraries as urban or rural
and the use of the discount matrix established in Sec. 54.505(c) of
this chapter to set the discount rate to be applied to services
purchased by eligible schools and libraries;
(x) Performance of audits of beneficiaries under the schools and
libraries support mechanism; and
(xi) Development and implementation of other functions unique to
the schools and libraries support mechanism.
(2) Committee composition. The Schools and Libraries Committee
shall consist of the following members of the Administrator's Board of
Directors:
(i) Three school representatives;
(ii) One library representative;
(iii) One service provider representative;
(iv) One at-large representative elected by the Administrator's
Board of Directors; and
(v) The Administrator's Chief Executive Officer.
(b) Rural Health Care Committee.--(1) Committee functions. The
Rural Health Care Committee shall oversee the administration of the
rural health care support mechanism by the Rural Health Care Division.
The Rural Health Care Committee shall have authority to make decisions
concerning:
(i) How the Administrator projects demand for the rural health care
support mechanism;
(ii) Development of applications and associated instructions as
needed for the rural health care support mechanism;
(iii) Administration of the application process, including
activities to ensure compliance with Federal Communications Commission
rules and regulations;
(iv) Calculation of support levels under Sec. 54.609;
(v) Performance of outreach and education functions;
(vi) Review of bills for services that are submitted by rural
health care providers;
(vii) Monitoring demand for the purpose of determining when the
$400 million cap has been reached;
(viii) Performance of audits of beneficiaries under the rural
health care support mechanism; and
(ix) Development and implementation of other functions unique to
the rural health care support mechanism.
(2) Committee composition. The Rural Health Care Committee shall
consist of the following members of the Administrator's Board of
Directors:
(i) Two rural health care representatives;
(ii) One service provider representative;
(iii) Two at-large representatives elected by the Administrator's
Board of Directors;
(iv) One State telecommunications regulator, one state consumer
advocate; and
(v) The Administrator's Chief Executive Officer.
(c) High Cost and Low Income Committee.--(1) Committee functions.
The High Cost and Low Income Committee shall oversee the administration
of the high cost and low income support mechanisms by the High Cost and
Low Income Division. The High Cost and Low Income Committee shall have
the authority to make decisions concerning:
(i) How the Administrator projects demand for the high cost and low
income support mechanisms;
(ii) Development of applications and associated instructions as
needed for the high cost and low income support mechanisms;
(iii) Administration of the application process, including
activities to ensure compliance with Federal Communications Commission
rules and regulations;
(iv) Performance of audits of beneficiaries under the high cost and
low income support mechanisms; and
(v) Development and implementation of other functions unique to the
high cost and low income support mechanisms.
(2) Committee composition. The High Cost and Low Income Committee
shall consist of the following members of the Administrator's Board of
Directors:
(i) One low income representative;
(ii) One state telecommunications regulator;
(iii) One state consumer advocate;
(iv) Two incumbent local exchange carrier representatives (one
shall represent rural telephone companies, as that term is defined in
47 U.S.C. 153(37) and one shall represent non-rural telephone
companies);
(v) One interexchange carrier representative;
(vi) One competing local exchange carrier representative;
(vii) One commercial mobile radio service representative; and
(viii) The Administrator's Chief Executive Officer.
(d) Binding Authority of Committees of the Board.
(1) Any action taken by the Committees of the Board established in
paragraphs (a) through (c) of this section shall be binding on the
Board of Directors of the Administrator, unless such action is
presented for review to the Board by the Administrator's Chief
Executive Officer and the Board disapproves of such action by a two-
thirds vote of a quorum of directors, as defined in the Administrator's
by-laws.
(2) The budgets prepared by each Committee shall be subject to
Board review as part of the Administrator's combined budget. The Board
shall not modify the budgets prepared by the Committees of the Board
unless such modification is approved by a two-thirds vote of a quorum
of the Board, as defined in the Administrator's by-laws.
21. Add a new Sec. 54.706 to read as follows:
Sec. 54.706 Contributions.
(a) Entities that provide interstate telecommunications to the
public, or to such classes of users as to be effectively available to
the public, for a fee will be considered telecommunications carriers
providing interstate telecommunications services and must contribute to
the universal service support programs. Interstate telecommunications
include, but are not limited to:
(1) Cellular telephone and paging services;
(2) Mobile radio services;
(3) Operator services;
(4) Personal communications services (PCS);
(5) Access to interexchange service;
(6) Special access service;
(7) WATS;
(8) Toll-free service;
(9) 900 service;
(10) Message telephone service (MTS);
(11) Private line service;
(12) Telex;
(13) Telegraph;
(14) Video services;
(15) Satellite service;
(16) Resale of interstate services; and
(17) Payphone services.
(b) Every telecommunications carrier that provides interstate
[[Page 70576]]
telecommunications services, every provider of interstate
telecommunications that offers telecommunications for a fee on a non-
common carrier basis, and payphone providers that are aggregators shall
contribute to the programs for eligible schools, libraries, and health
care providers on the basis of its interstate, intrastate, and
international end-user telecommunications revenues. Entities providing
open video systems (OVS), cable leased access, or direct broadcast
satellite (DBS) services are not required to contribute on the basis of
revenues derived from those services. The following entities will not
be required to contribute to universal service: non-profit schools,
non-profit colleges, non-profit universities, non-profit libraries, and
non-profit health care providers; broadcasters; systems integrators
that derive less than five percent of their systems integration
revenues from the resale of telecommunications.
(c) Every telecommunications carrier that provides interstate
telecommunications services, every provider of interstate
telecommunications that offers telecommunications for a fee on a non-
common carrier basis, and payphone providers that are aggregators shall
contribute to the programs for high cost, rural and insular areas, and
low-income consumers on the basis of its interstate and international
end-user telecommunications revenues. Entities providing OVS, cable
leased access, or DBS services are not required to contribute on the
basis of revenues derived from those services. The following entities
will not be required to contribute to universal service: non-profit
schools, non-profit colleges, non-profit universities, non-profit
libraries, and non-profit health care providers; broadcasters; systems
integrators that derive less than five percent of their systems
integration revenues from the resale of telecommunications.
22. Add a new Sec. 54.708 to read as follows:
Sec. 54.708 De minimis exemption.
If a contributor's contribution to universal service in any given
year is less than $10,000, that contributor will not be required to
submit a contribution or Universal Service Worksheet for that year. If
a contributor improperly claims exemption from the contribution
requirement, it will be subject to the criminal provisions of sections
220(d) and (e) of the Act regarding willful false submissions and will
be required to pay the amounts withheld plus interest.
23. In Sec. 54.709 remove the words ``Administrator's, the Schools
and Libraries Corporation's, and the Rural Health Care Corporation's''
from paragraph (a)(2) and add, in its place, the word
``Administrator's''; revise paragraph (a)(3) to read as follows:
Sec. 54.709 Computations of required contributions to universal
service support mechanisms.
* * * * *
(3) Total projected expenses for universal service support programs
for each quarter must be approved by the Commission before they are
used to calculate the quarterly contribution factors and individual
contributions. For each quarter, the Administrator must submit its
projections of demand for the high cost and low-income support
mechanisms, the schools and libraries support mechanism, and the rural
health care support mechanism, respectively, and the basis for those
projections, to the Commission and the Common Carrier Bureau at least
sixty (60) calendar days prior to the start of that quarter. For each
quarter, the Administrator must submit its projections of
administrative expenses for the high cost and low-income programs, the
schools and libraries program and the rural health care program and the
basis for those projections to the Commission and the Common Carrier
Bureau at least sixty (60) calendar days prior to the start of that
quarter. Based on data submitted to the Administrator on the Universal
Service Worksheets, the Administrator must submit the total
contribution bases to the Common Carrier Bureau at least sixty (60)
days before the start of each quarter. The projections of demand and
administrative expenses and the contribution factors shall be announced
by the Commission in a public notice and shall be made available on the
Commission's website. The Commission reserves the right to set
projections of demand and administrative expenses at amounts that the
Commission determines will serve the public interest at any time within
the fourteen-day period following release of the Commission's public
notice. If the Commission takes no action within fourteen (14) days of
the date of release of the public notice announcing the projections of
demand and administrative expenses, the projections of demand and
administrative expenses, and contribution factors shall be deemed
approved by the Commission. Once the projections and contribution
factors are approved, the Administrator shall apply the quarterly
contribution factors to determine individual contributions.
* * * * *
Sec. 54.711 [Amended]
24. In Sec. 54.711 remove the words ``Administrator, Rural Health
Care Corporation and Schools and Libraries Corporation'' from paragraph
(b) and add, in its place, the word ``Administrator.''
25. Revise Sec. 54.715 to read as follows:
Sec. 54.715 Administrative expenses of the Administrator.
(a) The annual administrative expenses of the Administrator should
be commensurate with the administrative expenses of programs of similar
size, with the exception of the salary levels for officers and
employees of the Administrator described in paragraph (b) of this
section. The annual administrative expenses may include, but are not
limited to, salaries of officers and operations personnel, the costs of
borrowing funds, equipment costs, operating expenses, directors'
expenses, and costs associated with auditing contributors of support
recipients.
(b) All officers and employees of the Administrator may be
compensated at an annual rate of pay, including any non-regular
payments, bonuses, or other compensation, in an amount not to exceed
the rate of basic pay in effect for Level I of the Executive Schedule
under 5 U.S.C. 5312.
(c) The Administrator shall submit to the Commission projected
quarterly budgets at least sixty (60) days prior to the start of every
quarter. The Commission must approve the projected quarterly budgets
before the Administrator disburses funds under the federal universal
service support mechanisms. The administrative expenses incurred by the
Administrator in connection with the schools and libraries support
mechanism, the rural health care support mechanism, the high cost
support mechanism and the low income support mechanism shall be
deducted from the annual funding of each respective support mechanism.
The expenses deducted from the annual funding for each support
mechanism also shall include the Administrator's joint and common costs
allocated to each support mechanism pursuant to the cost allocation
manual filed by the Administrator under Sec. 64.903 of this chapter.
26. Add a new Sec. 54.717 to read as follows:
Sec. 54.717 Audits of the Administrator.
The Administrator shall obtain and pay for an annual audit
conducted by an independent auditor to examine its operations and books
of account to determine, among other things, whether the Administrator
is properly
[[Page 70577]]
administering the universal service support mechanisms to prevent
fraud, waste, and abuse:
(a) Before selecting an independent auditor, the Administrator
shall submit preliminary audit requirements, including the proposed
scope of the audit and the extent of compliance and substantive
testing, to the Common Carrier Bureau Audit Staff.
(b) The Common Carrier Bureau Audit Staff shall review the
preliminary audit requirements to determine whether they are adequate
to meet the audit objectives. The Common Carrier Bureau Audit Staff
shall prescribe modifications that shall be incorporated into the final
audit requirements.
(c) After the audit requirements have been approved by the Common
Carrier Bureau Audit Staff, the Administrator shall engage within
thirty (30) calendar days an independent auditor to conduct the annual
audit required by this paragraph. In making its selection, the
Administrator shall not engage any independent auditor who has been
involved in designing any of the accounting or reporting systems under
review in the audit.
(d) The independent auditor selected by the Administrator to
conduct the annual audit shall be instructed by the Administrator to
develop a detailed audit program based on the final audit requirements
and shall be instructed by the Administrator to submit the audit
program to the Common Carrier Bureau Audit Staff. The Common Carrier
Bureau Audit Staff shall review the audit program and make
modifications, as needed, that shall be incorporated into the final
audit program. During the course of the audit, the Common Carrier
Bureau Audit Staff may direct the Administrator to direct the
independent auditor to take any actions necessary to ensure compliance
with the audit requirements.
(e) During the course of the audit, the Administrator shall
instruct the independent auditor to:
(1) Inform the Common Carrier Bureau Audit Staff of any revisions
to the final audit program or to the scope of the audit;
(2) Notify the Common Carrier Bureau Audit Staff of any meetings
with the Administrator in which audit findings are discussed; and
(3) Submit to the Chief of the Common Carrier Bureau any accounting
or rule interpretations necessary to complete the audit.
(f) Within sixty (60) calendar days after the end of the audit
period, but prior to discussing the audit findings with the
Administrator, the independent auditor shall be instructed by the
Administrator to submit a draft of the audit report to the Common
Carrier Bureau Audit Staff.
(g) The Common Carrier Bureau Audit Staff shall review the audit
findings and audit workpapers and offer its recommendations concerning
the conduct of the audit or the audit findings to the independent
auditor. Exceptions of the Common Carrier Bureau Audit Staff to the
findings and conclusions of the independent auditor that remain
unresolved shall be included in the final audit report.
(h) Within fifteen (15) calendar days after receiving the Common
Carrier Bureau Audit Staff's recommendations and making any revisions
to the audit report, the Administrator shall instruct the independent
auditor to submit the audit report to the Administrator for its
response to the audit findings. At this time the auditor also must send
copies of its audit findings to the Common Carrier Bureau Audit Staff.
The Administrator shall provide the independent auditor time to perform
additional audit work recommended by the Common Carrier Bureau Audit
Staff.
(i) Within thirty (30) calendar days after receiving the audit
report, the Administrator shall respond to the audit findings and send
copies of its response to the Common Carrier Bureau Audit Staff. The
Administrator shall instruct the independent auditor that any reply
that the independent auditor wishes to make to the Administrator's
responses shall be sent to the Common Carrier Bureau Audit Staff as
well as the Administrator. The Administrator's response and the
independent auditor's replies shall be included in the final audit
report;
(j) Within ten (10) calendar days after receiving the response of
the Administrator, the independent auditor shall file with the
Commission the final audit report.
(k) Based on the final audit report, the Chief of the Common
Carrier Bureau may take any action necessary to ensure that the
universal service support mechanisms operate in a manner consistent
with the requirements of this Part, as well as such other action as is
deemed necessary and in the public interest.
27. Add a subpart I to part 54 of title 47 of the Code of Federal
Regulations as follows:
Subpart I--Review of Decisions Issued by the Administrator
54.719 Parties permitted to seek review of Administrator decisions.
54.720 Filing deadlines.
54.721 General filing requirements.
54.722 Review by the Common Carrier Bureau or the Commission.
54.723 Standard of review.
54.724 Time periods for Commission approval of Administrator
decisions.
54.725 Universal service disbursement during pendency of a request
for review of an Administrator decision.
28. Add a new Sec. 54.719 to read as follows:
Sec. 54.719 Parties permitted to seek review of Administrator
decisions.
(a) Any person aggrieved by an action taken by a division of the
Administrator, as defined in Sec. 54.701(g), may seek review from the
appropriate Committee of the Board, as defined in Sec. 54.705.
(b) Any person aggrieved by an action taken by the Administrator
pertaining to a billing, collection or disbursement matter that falls
outside the jurisdiction of the Committees of the Board may seek review
from the Board of Directors of the Administrator, as defined in
Sec. 54.703.
(c) Any person aggrieved by an action taken by a division of the
Administrator, as defined in Sec. 54.701(g), a Committee of the Board
of the Administrator, as defined in Sec. 54.705, or the Board of
Directors of the Administrator, as defined in Sec. 54.703, may seek
review from the Federal Communications Commission, as set forth in
Sec. 54.722.
29. Add a new Sec. 54.720 to read as follows:
Sec. 54.720 Filing deadlines.
(a) An affected party requesting review of an Administrator
decision by the Commission pursuant to Sec. 54.719(c), shall file such
request within thirty (30) days of the issuance of the decision by a
division or Committee of the Board of the Administrator.
(b) An affected party requesting review of a division decision by a
Committee of the Board pursuant to Sec. 54.719(a), shall file such
request within thirty (30) days of issuance of the decision by the
division.
(c) An affected party requesting review by the Board of Directors
pursuant to Sec. 54.719(b) regarding a billing, collection, or
disbursement matter that falls outside the jurisdiction of the
Committees of the Board shall file such request within thirty (30) days
of issuance of the Administrator's decision.
(d) The filing of a request for review with a Committee of the
Board under Sec. 54.719(a) or with the full Board under Sec. 54.703,
shall toll the time period for seeking review from the Federal
Communications Commission. Where the time for filing an appeal has been
tolled, the party that filed the request for review from a Committee of
the Board
[[Page 70578]]
or the full Board shall have thirty (30) days from the date the
Committee or the Board issues a decision to file an appeal with the
Commission.
(e) Parties shall adhere to the time periods for filing oppositions
and replies set forth in 47 CFR 1.45.
30. Add a new Sec. 54.721 to read as follows:
Sec. 54.721 General filing requirements.
(a) Except as otherwise provided herein, a request for review of an
Administrator decision by the Federal Communications Commission shall
be filed with the Federal Communications Commission's Office of the
Secretary in accordance with the general requirements set forth in part
1 of this chapter. The request for review shall be captioned ``In the
matter of: Request for Review by (name of party seeking review) of
Decision of Universal Service Administrator'' and shall reference FCC
Docket Nos. 97-21 and 96-45.
(b) A request for review pursuant to Sec. 54.719(a) through (c)
shall contain: (1) a statement setting forth the party's interest in
the matter presented for review; (2) a full statement of relevant,
material facts with supporting affidavits and documentation; (3) the
question presented for review, with reference, where appropriate, to
the relevant Federal Communications Commission rule, Commission order,
or statutory provision; (4) a statement of the relief sought and the
relevant statutory or regulatory provision pursuant to which such
relief is sought.
(c) A copy of a request for review that is submitted to the Federal
Communications Commission shall be served on the Administrator
consistent with the requirement for service of documents set forth in
Sec. 1.47 of this chapter.
(d) If a request for review filed pursuant to Sec. 54.720(a)
through (c) alleges prohibitive conduct on the part of a third party,
such request for review shall be served on the third party consistent
with the requirement for service of documents set forth in Sec. 1.47 of
this chapter. The third party may file a response to the request for
review. Any response filed by the third party shall adhere to the time
period for filing replies set forth in Sec. 1.45 of this chapter and
the requirement for service of documents set forth in Sec. 1.47 of this
chapter.
31. Add a new Sec. 54.722 to read as follows:
Sec. 54.722 Review by the Common Carrier Bureau or the Commission.
(a) Requests for review of Administrator decisions that are
submitted to the Federal Communications Commission shall be considered
and acted upon by the Common Carrier; provided, however, that requests
for review that raise novel questions of fact, law or policy shall be
considered by the full Commission.
(b) An affected party may seek review of a decision issued under
delegated authority by the Common Carrier Bureau pursuant to the rules
set forth in part 1 of this chapter.
32. Add a new Sec. 54.723 to read as follows:
Sec. 54.723 Standard of review.
(a) The Common Carrier Bureau shall conduct de novo review of
requests for review of decisions issued by the Administrator.
(b) The Federal Communications Commission shall conduct de novo
review of requests for review of decisions by the Administrator that
involve novel questions of fact, law, or policy; provided, however,
that the Commission shall not conduct de novo review of decisions
issued by the Common Carrier Bureau under delegated authority.
33. Add a new Sec. 54.724 to read as follows:
Sec. 54.724 Time periods for Commission approval of Administrator
decisions.
(a) If the Common Carrier Bureau does not take action within ninety
(90) days upon appeals that are properly before it, a decision issued
by the Administrator shall be deemed approved; provided, however, that
within the 90-day period, the Common Carrier Bureau may extend the time
period for taking action on a request for review of an Administrator
decision.
(b) The Commission shall issue a written decision in response to a
request for review of an Administrator decision that involves novel
questions of fact, law or policy within ninety (90) days; provided,
however, that the Commission may extend the time period for taking
action on the request for review.
34. Add a new Sec. 74.725 to read as follows.
Sec. 54.725 Universal service disbursements during pendency of a
request for review of an Administrator decision.
(a) When a party has sought review of an Administrator decision
under Sec. 54.719(a) through (c) in connection with the schools and
libraries support mechanism or the rural health care support mechanism,
the Administrator shall not reimburse a service provider for the
provision of discounted services until a final decision has been issued
either by the Administrator or by the Federal Communications
Commission.
(b) When a party has sought review of an Administrator decision
under Sec. 54.719(a) through (c) in connection with the high cost and
low income support mechanisms, the Administrator shall not disburse
support to a service provider until a final decision has been issued
either by the Administrator or by the Federal Communications
Commission.
PART 69--ACCESS CHARGES
35. The authority citation for part 69 continues to read as
follows:
Authority: 47 U.S.C. 154, 201, 202, 203, 205, 218, 220, 254,
403.
Sec. 69.600 [Removed]
36. Remove Sec. 69.600.
Sec. 69.603 [Amended]
37. In Sec. 69.603 remove paragraphs (c), (d), and (e).
Sec. Sec. 69.613 through 69.622 [Removed]
38. Remove Secs. 69.613 through 69.622.
[FR Doc. 98-33549 Filed 12-18-98; 8:45 am]
BILLING CODE 6712-01-P