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Petition challenges constitutionality of roles played by FCC and USAC in Universal Service Fund: Broadband Breakfast

By on April 21, 2022 0

WASHINGTON, April 19, 2022 — A petition filed last week asks a U.S. appellate court to declare unconstitutional the process for funding the Universal Service Fund and the manner in which its administration was delegated.

The plaintiffs, including nonprofit research firm Consumers’ Research and communications service provider Cause Based Commerce Inc., are suing the United States Court of Appeals for the Fifth Circuit that Congress has awarded to the Federal Communications Commission, under the Telecommunications Act of 1996, the power to delegate unfettered to raise revenue for the approximately $8 billion annual program that aims to expand basic telecommunications services across the country – including low-income Americans, schools and libraries, and rural health care.

This unloading of duties without “formula, cap, or other meaningful or objective restrictions” is contrary to the doctrine of nondelegation, the petitioners argue, which is a constitutional limit that does not allow Congress to delegate to other branches its own legislative authority.

“The Framers [of the Constitution] understood “that it would frustrate” the constitutionally ordained system of government “if Congress could simply announce vague aspirations and then entrust others with the responsibility of passing legislation to achieve its goals,” the petition reads. .

Congress improperly granted taxing powers and improperly delegated powers to a private entity, petitioners claim

The petitioners, who name the FCC as a defendant, argue that because the money collected for the fund comes from telecommunications companies, which often pass these costs on to customers’ voice service bills, Congress effectively gave the FCC taxing powers – a single legislative authority.

Additionally, they argue that the FCC itself violates the non-delegation doctrine by outsourcing USF administration to a private entity called the Universal Service Administrative Company, which announces the amount needed to be obtained each quarter to meet the goals. of the fund. They argue that because the process of determining the amount and having it approved by the FCC occurs “only days before the start of the new quarter”, the FCC has “no choice” but to agree with everything USAC says.

“This inexplicable situation has unsurprisingly led to skyrocketing costs, with the premium rate quintupling since 2002, and rampant waste, fraud and abuse,” the petition reads, referring to the percentage of service revenue. vocals that need to be collected to support the program.

In a quarter last year, the contribution percentage hit a record high of 33.4% with voice revenue down. USF supporters have called for a more sustainable model for the fund, including expanding the contribution base to include broadband revenue and big tech platforms, with others calling for removing all of that and adding simply the amount required from a Congressional line item.

As such, the petitioners say USF should be funded by federal revenue money.

“If Congress deems these programs worthy of funding, it should undergo public scrutiny and beneficial debate about raising funds and offering an appropriation for them,” the petition states. “But “[b]By transferring responsibility to a less responsible branch, Congress protects itself from political censorship and deprives the people of the voice the editors wanted them to have.

Some argue that general tax revenue should fund the Universal Service Fund

General tax supporters for the fund, including AT&T and the former FCC chairman Ajit Paihave often pointed to the added benefit of having congressional oversight to minimize fraud and abuse.

The petitioners have the support of the nonprofit tech think tank TechFreedom, which filed a brief with the court to bolster the position. TechFreedom then already submitted comments to the FCC on its study of USF’s future, arguing that the money should come from general taxation and that the FCC “cannot unilaterally” expand the fund to include contributions. major technology platforms. The FCC consultation included a question about this jurisdictional issue, with parties including Affordable Communications Advocate, Public Knowledge and Carole Matteywho called for the fund to be expanded to include broadband revenue, arguing that the FCC has jurisdiction to expand the base because it is in the public interest.

“This double delegation — and, worse, private delegation — has led to lax oversight, runaway budgets, wasteful spending, and outright fraud,” TechFreedom alleged in its brief.

“It was bad enough that Congress handed such broad and ill-defined regulatory power to an independent agency — a government entity not subject to the direct control of democratically elected leaders,” TechFreedom said, adding that the FCC would pass this on. power to USAC without Congressional authorization “means that USF is not subject to any procedural safeguards established by Congress”.

TechFreedom continues its complaint, arguing that the USAC directors “are not properly appointed” and that “the FCC’s approval of the USAC proposals violates the Administrative Procedure Act.”

The nonprofit organization Competitive Enterprise Institute and the think tank Free State Foundation also filed a joint brief with other professors and institutes arguing that the USF administration effectively usurped the power of Congress to levy taxes. taxes via the ability of service providers to pass on the cost of funds to consumers.

“The Constitution does not allow Congress to circumvent the legislative process by permitting an independent agency (guided by a private corporation owned by an industrial business group) to raise and spend as much money as it wishes each quarter for the ‘universal service’ at the expense of every American who pays a monthly phone bill,” the joint submission said.

Named interveners in the case — who are not parties to it but may submit comments to assist the court — include the Benton Institute, the National Digital Inclusion Alliance, the Center for Media Justice, the Schools, Health and Libraries Broadband Coalition , the National Telecommunications Cooperative Association and the Competitive Carriers Association.