Fifth Circuit to Hear Arguments on FCC’s Revenue-Raising Authority

The Fifth Circuit will hear arguments about whether Congress properly delegated its revenue-raising authority to the Federal Communications Commission (FCC) to charge telecommunications companies for a broadband access subsidy. This case comes after the court’s history of placing strict requirements on agency power.

The Universal Service Fund, which has been in existence for decades, supports telephone and internet access for low-income families, rural hospitals, and schools. Companies pass along the cost of the program to consumers through a monthly charge on their telephone bill. If the court agrees with Consumers’ Research, an advocacy group, that the Telecommunications Act of 1996 does not provide necessary limits on the FCC’s revenue-raising authority, it could have disruptive effects.

The court is also considering whether the Universal Service Administrative Company, a non-profit organization that manages the fund, has been given excessive power in violation of the non-delegation doctrine. Consumers’ Research argues that the Telecommunications Act leaves the FCC with vague aspirations which do not meaningfully limit the agency.

The FCC maintains that Congress has historically allowed administrative agencies to fill in the details of legislated programs. The agency also argues that the Supreme Court does not require specific criteria for determining how much revenue an agency can raise.

The Sixth Circuit has already ruled in favor of the FCC in a similar case, stating that the Telecommunications Act offers guidance while limiting the discretion of the FCC. The Eleventh Circuit is also considering related arguments.

Consumers’ Research suggests that the Fifth Circuit could limit relief to the named petitioners, but others argue that the court could enjoin the FCC from collecting funds, which could affect schools, libraries, and low-income households. The outcome of this case could also impact businesses that have invested in network infrastructure and service plans based on future universal service payments.

It is uncertain how Congress would respond if the fund’s revenue scheme is ruled an impermissible delegation. Some believe that Congress may not act quickly to address the issue.