The Federal Communications Commission (FCC) asked the U.S. Supreme Court on Sept. 30 to review a lower court ruling that struck down an $8-billion-a-year broadband subsidy.
On July 24, the U.S. Court of Appeals for the Fifth Circuit found the Universal Service Fund was unconstitutional because it took taxing power away from Congress.
The program is funded by a tax on telephone service and is administered by the Universal Service Administrative Company (USAC), a private company created by the FCC. The tax is collected through line-item charges that appear on monthly telephone bills.
The Fifth Circuit found that the system used to support the fund violated the nondelegation doctrine, which holds that Congress may not delegate its legislative powers to other entities, including private organizations and administrative agencies.
The decision “invalidates the system that the Commission has used for a quarter century to implement an important Act of Congress,” she wrote.
“If left in place, the decision will upend the universal service programs, to the detriment of millions of consumers nationwide.”
The Fifth Circuit said in its ruling that Congress delegated its taxing power to the FCC when it passed the Telecommunications Act. The commission then sub-delegated that power to USAC, which “relied on for-profit telecommunications companies to determine how much American citizens would be forced to pay for the ‘universal service’ tax that appears on cell phone bills across the Nation.”
The court found that the “misbegotten tax violates Article I, [Section] 1 of the Constitution.” That part of the Constitution provides that “All legislative Powers … shall be vested in … Congress.”
Congress failed to define “universal service” and instead gave the FCC the authority to do so, according to the court. The legislative body gave the communications agency the power to “‘periodically ‘establish’ the concept of ‘universal service’ by ‘taking into account advances in telecommunications and information technologies and services.’”
This means the FCC has given USAC authority “for imposing the [Universal Service Fund] Tax.”
“Congress, not agencies, must make legislative decisions,” the circuit court said.
Prelogar, the solicitor general, disagreed with the court’s finding.
“Congress did not delegate legislative power to the Commission. The Commission did not delegate governmental power to the [FCC] Administrator. Nor did the combination of those two conferrals of responsibility create a constitutional violation.”
The Fifth Circuit erred, she wrote, and its decision “conflicts with decisions of the Sixth and Eleventh Circuits, which have rejected similar nondelegation challenges.”
The group described the Universal Service Fund as “a multibillion-dollar social welfare program with an appropriation from federal revenues.”
It is a problem, the group said, that “Congress imposed no formula, ceiling, or other meaningful restrictions on how much money can be raised for the [fund].”
Although Congress created a body of universal service “principles … they are so amorphous and non-binding that courts—adopting the FCC’s own language—have long labeled them ‘aspirational only,’” the group said.
The group added that Congress gave the FCC power “to redefine ‘universal service’ and ‘universal service principles’ as often as it wishes, giving the agency even broader authority to raise billions of dollars in taxes for a program designed to benefit the country more broadly.”
It is unclear when the Supreme Court will consider the petition.
