In a recent petition for review at the Sixth Circuit Court of Appeals, Consumers’ Research and other groups challenge the administration of the Universal Service Fund (USF) by the private Universal Service Administrative Co. (USAC), in conjunction with the FCC's supervision, as an unconstitutional delegation of congressional power. In other words, these petitioners argue the USF violates the nondelegation doctrine.
This challenge follows comments from the same petitioners making the same arguments submitted to the FCC’s Proposed Fourth Quarter 2021 Universal Service Contribution Factor proceeding. Petitioners’ main argument is that Congress’s delegation of legislative and taxation powers to the FCC, which the FCC then delegates to USAC, a private corporation, is unconstitutional. Additionally, petitioners also argue that Congress’s delegation of appointment power over the USAC Board of Directors to the FCC Chairman is unconstitutional. In the alternative, petitioners argue that the FCC exceeds its statutory authority and violates the APA in its administration of the USF.
Free State Foundation President Randolph May and Senior Fellow Seth Cooper previously raised similar nondelegation concerns regarding the USF, urging Congress to appropriate USF funding instead of delegating taxing powers to the FCC. May, an administrative law scholar, has long called for an interpretation of the nondelegation doctrine with more vitality. In a 2001 article for the Federal Communications Law Journal, May argued that the Communications Act’s "public interest" standard is far too vague to be a lawful delegation of power. More recently, May commented on the last nondelegation case at the Supreme Court, Gundy v. United States, hoping Gundy signaled a move "some steps closer to the Framers' original constitutional understanding" of separation of powers.
As the chart above shows, consumers are now subject to nearly a 30% surcharge tacked on to all their traditional telephone calls. Free State Foundation scholars have long supported reform of the Universal Service subsidy regime. For example, Free State Foundation Academic Advisor Justin (Gus) Hurwitz recently discussed USF reform, calling for "a rethinking and substantial reworking of our approach to our Universal Service commitment in telecommunications." And Senior Fellow Andrew Long highlighted FCC Commissioner Brendan Carr’s innovative plan to fund universal service through Big Tech platform ad revenues. President Randolph May, writing in the Yale Journal on Regulation just this week, says Commissioner Carr's proposal is worthy of serious consideration and would be a good candidate for an FCC Notice of Inquiry.
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