Free State Foundation Files Brief Supporting Constitutional Challenges to USF Regime

On April 18, the Free State Foundation and FSF President Randolph May filed an amicus curiae brief in the Fifth Circuit Court of Appeals in a case challenging the constitutionality of the FCC's universal service regime. The amicus brief, which is led by the Competitive Enterprise Institute and includes other telecommunications and administrative law experts, argues that the imposition of the USF contribution fee by the FCC and the Universal Service Administrative Company violates the nondelegation doctrine and the major questions doctrine, both of which are central to maintaining the separation of powers required by the Constitution. The case is Consumers' Research v. FCC.  

Here are two key paragraphs from the amicus brief's introduction:

Only Congress has the power to lay and to collect taxes for the general welfare of all Americans. Regardless of the public policy that it seeks to advance, Congress cannot delegate this power to the FCC or any other executive branch agency. Yet that is exactly what Congress did when it enacted the Telecommunications Act of 1996 to create a universal service program for the Commission to raise revenue however it sees fit "for the protection of the public interest" in seeking to provide greater access to telecommunications services. 47 U.S.C. § 254(b)(7). 

 

The Constitution does not permit Congress to circumvent the legislative process by allowing an independent agency (guided by a private company owned by an industry trade group) to raise and to spend however much money it wants every quarter for "universal service" at the expense of every American who pays a monthly phone bill. Elected representatives of the people, not the Federal Communications Commission, must be responsible for making the difficult decisions to raise the revenue that funds this program. 

The amicus brief argues that the "contribution" mandated by Section 254 of the Communications Act is functionally a tax and that Congress's delegation of broad regulatory power to the Universal Service Administrative Company (USAC) – a private corporation – raises serious structural separation-of-power issues. As the brief states: 

The Company now rakes in nearly $10 billion each year in 'contributions' (ultimately borne by consumers), which it then disburses to libraries, schools, rural areas, and carriers providing services in high-cost areas... Yet Congress provided no direction as to how either the FCC or the Universal Service Administrative Company should calculate rates for service providers or how much money should be collected and distributed each year. 

As mentioned above, the amicus brief also argues that "[t]he major questions doctrine forecloses any interpretation of Section 254 that would allow the FCC to collect and to spend billions of dollars every year as it sees fit."

 

The amicus brief in Consumers' Research v. FCC is available for reading here. And thank you to the Competitive Enterprise Institute and their legal counsel. 

 

For more on the constitutional problems with the universal service regime, see FSF President Randy May's November 2021 Perspectives from FSF Scholars, "A Nondelegation Doctrine Challenge to the FCC's Universal Service Regime," as well as our April 2021 Perspectives, "Congress Should Put Universal Service on a Firmer Constitutional Foundation." Additionally, the Free State Foundation filed comments in February 2022 and reply comments in March of this year in the FCC's proceeding for its upcoming Report on the Future of the Universal Service Fund.