The FCC and USF

The Federal Communications Commission quietly won two court cases over the last month that most folks have not heard about. A group of complainants brought a suit against the FCC, saying that the agency didn’t have explicit direction from Congress for the creation of the Universal Service Fund (USF) or the authority to delegate the operation of the USF to a third party. Years ago, the FCC prompted the creation of the non-profit firm Universal Service Administrative Company (USAC) to administer the day-to-day operations of the $10 billion fund. The plaintiffs pleaded that the FCC didn’t have the constitutional authority to create the Universal Service Fund since that was not specifically spelled out by Congress; specifically arguing that the FCC was violating the nondelegation doctrine, a legal principle that says that Congress cannot delegate its legislative powers to other entities. The Universal Service Fund has always been controversial, and this is not the first challenge to its authority. There are a lot of people who don’t think the FCC should effectively have the power to levy a tax on telecommunications services, the primary tool for funding the USF. The FCC is careful to call this a fee, but to folks who pay it, the distinction between a fee and a tax is hard to see. The FCC is not entirely out of the woods, and there is one more similar challenge to its authority pending in the 11^th Circuit Court.