Third Court Upholds Legality of Universal Service Fund

A third US Appeals Court has concluded that the Federal Communications Commission is on sound constitutional footing when it comes to delegating oversight of the billions of dollars in government advanced telecommunications subsidy money it hands out annually with a big assist from the Universal Service Administrative Company (USAC). The 11th US Circuit Court of Appeals ruled that the FCC is within its authority to delegate administration of those funds through a private company—USAC—because the government regulator maintains control and oversight. That follows similar findings by the appeals courts in the 5th and 6th circuits. Some groups had challenged the constitutionality of the USAC under the nondelegation doctrine, the legal principle that holds that Congress cannot delegate legislative powers to other entities. The ruling found that a government agency may delegate authority to private entities without violating the private non-delegation doctrine, so long as the entity “function[s] subordinately” to the agency and the agency retains “authority and surveillance over the activities” of the private entity. And the court found that USAC is “subordinate to the FCC and performs ministerial and fact-gathering functions.” The Eleventh Circuit maintained that the USAC cannot make policy or interpret unclear provisions or rules, because where there is confusion about how USAC should act, it must seek direction from the FCC.