A federal appeals court has upheld the constitutionality of the way the Federal Communications Commission hands out billions of dollars in subsidies for broadband and other advanced communications services.
At issue were the Universal Service Fund (USF) and the FCC’s use of a private company, the Universal Service Administrative Co. (USAC), to administer the distribution of those funds to subsidize broadband and phone service to high-cost areas and low-income households nationwide.
Suing the FCC were phone provider Consumers’ Research and a group of its subscribers.
In an opinion released Friday (March 24) rejecting a challenge to that authority, the 5th U.S. Circuit Court of Appeals concluded that the FCC did sufficient due diligence on USAC proposals, which the agency independently considers based on data it collects and other relevant information, and that the regulator was sufficiently in charge not to run afoul of the law.
The challenge was principally based on the assertion that USAC was not “sufficiently subordinate” to the FCC to pass constitutional muster.
The 5th Circuit pointed out that federal agencies are allowed to “reasonably condition” their actions on “determinations by outside parties.” In the case of the USF and USAC, the conditions were reasonable and thus USAC was properly subordinate to the FCC.
“To be clear,” the court said, “agencies may delegate to private entities so long as the entities function subordinately to the federal agency and the agency has authority and surveillance” over its activities.
The USAC makes recommendations to the FCC, which are not binding until the commission signs off on them, the court pointed out. The FCC also allows telecoms to challenge USAC proposals directly to the regulator and “often” grants relief, the court said. The FCC also dictates the amount of the contribution telecoms have to make to the fund.
All of that shows the FCC has sufficient control of the process for the delegation not to run afoul of the private nondelegation doctrine (under Article I of the Constiution) that prevents the delegation of or regulatory oversight to private entities, the court said.
Andrew Schwartzman represented the Benton Institute for Broadband & Society, which filed a brief in the case in support of the FCC.
“Coming from one of the more conservative courts in the country, this decision is a ringing ratification of the system Congress established to ensure that all Americans have affordable access to telecommunications service and advanced services like broadband,” he said after the decision was issued. “This should not come as a surprise but once the USF was subjected to a legal challenge, the Benton Institute for Broadband & Society joined with its allies to defend this critical mechanism for ensuring universal broadband service.”
"NaLA is pleased with this decision [because] the USF and Lifeline in particular provides targeted support to low-income Americans who struggle to afford essential communications services necessary to participate in our digital society," said David Dorwart, chairman of the National Lifeline Association. "NaLA is proud to serve these consumers and ensure they can connect to family, community, jobs, education, telehealth and other service using our members’ mobile voice and broadband solutions."
"We are pleased to see the Fifth Circuit uphold the FCC's authority to administer the Universal Service Fund," said Angie Kronenberg, presdient of INCOMPAS, whose members include edge providers rooting for as universal service as possible. "This is a big win for the FCC and a big win for the millions of Americans who rely on this program. While we are delighted at today's result, we believe reforms to the USF are necessary to ensure this critical service can continue to exist."■
