USF Challenge Being Made in Wrong Place, at Wrong Time, FCC Argues
The FCC's Q4 2022 universal service contribution factor proceeding isn't the right venue for challenging the constitutionality of the entire universal service fund regime, and Section 254 of the Communications Act "easily" answers questions about whether Congress wrongly delegated its lawmaking power by limiting and guiding the FCC's universal service implementation, the agency told the 11th U.S. Circuit Court of Appeals Dec. 22. In a docket 22-13315 reply to a challenge to the USF (see 2211220075), the FCC said the 11th Circuit also lacks jurisdiction because the suit is attempting "an end-run" around time limits for challenging an agency rule. Counsel for the petitioners didn't comment Friday.
The case is just one front in the petitioners' ongoing effort to get a ruling that Section 254 -- governing the FCC's universal service responsibilities and mechanisms -- and the regulations implementing it violate the nondelegation doctrine, the commission said. The nondelegation doctrine is an administrative law principle that Congress can't delegate its legislative powers. The petitioners more than once have asked the FCC to abandon the regime of collecting universal service contributions, arguing Section 254 unconstitutionally delegates Congress’ legislative and taxing power to the FCC, which in turn improperly re-delegated this power to USAC, the agency said.
Section 254 provisions such as the requirement that contributions be made on an equitable and nondiscriminatory basis and the guidelines on what services are considered eligible for universal service support collectively "confine the FCC’s discretion to increase the size and scope of its universal service program and the amount of fees it collects to finance the program," the commission said. It waved off arguments that universal service contributions are taxes, saying they are fees because they benefit the carriers paying them, with the money supporting an expanded network.
The FCC also pushed back on arguments it's violating limits on delegation of congressional authority to nongovernmental actors. The agency said it relies on the Universal Service Administrative Co. for help in administering the universal service program. USAC is subordinate to the agency and only does accounting, billing and distribution tasks while the agency makes the universal service policy decisions, the commission said.
The USF legal challenge was brought under the Hobbs Act, which generally allows pre-enforcement judicial review of an agency rule if a petition is filed within 60 days of the rule’s publication, but the petitioners are challenging Section 254's implementation, not a single quarterly contribution factor’s application, the FCC said. The petitioners had other options for challenging the USF regime, such as petitioning the FCC, or petitioner telco Cause Based Commerce could have objected to its USAC invoice and sought FCC relief, the commission said.
The FCC said Supreme Court precedent falls on the side of supporting the universal service regime, with the court having long supported Congress being able to delegate implementation details of a legislative program. The agency said revenue-raising status falls squarely within that.