SCOTUS upholds FCC ‘universal service’ funding scheme

The Federal Communication Commission’s system of requiring certain payments from telecommunications companies in order to subsidize basic communications services for consumers in underserved rural and low-income communities does not violate the Constitution’s nondelegation doctrine, the U.S. Supreme Court ruled 6-3 in reversing a judgment from the 5th Circuit.

The so-called “Universal Service Fund” into which contributions are paid is administered by a not-for-profit corporation, Universal Service Administrative Company. Under FCC regulations, a carrier must pay into the so-called “Universal Service Fund” an amount equal to its own projected revenue multiplied by a “contribution factor” periodically determined by USAC and approved by the FCC.

The case involves a challenge brought by the conservative nonprofit Consumer’s Research to the FCC setting a 25.2 percent contribution factor for the first quarter of 2022. The en banc 5th Circuit ruled that FCC’s universal-service contribution scheme violates the nondelegation doctrine.

Click here to read the full text of the June 27 decision in Federal Communication Commission v. Consumer’s Research.

• “The question in this case is whether the universal-service scheme — more particularly, its contribution mechanism — violates the Constitution’s nondelegation doctrine, either because Congress has given away its power to the FCC or because the FCC has given away its power to a private company. We hold that no impermissible transfer of authority has occurred. Under our nondelegation precedents, Congress sufficiently guided and constrained the discretion that it lodged with the FCC to implement the universal-service contribution scheme. And the FCC, in its turn, has retained all decision-making authority within that sphere, relying on the Administrative Company only for non-binding advice. Nothing in those arrangements, either separately or together, violates the Constitution.”
  — Justice Elena Kagan, opinion of the court

• “As the Court explains, Congress has delegated authority to the FCC with respect to the Universal Service Fund in accordance with the longstanding intelligible principle test. If the FCC were an independent agency, however, the question would be more difficult. Because that issue is not presented in this case, I join the Court’s opinion in full.”
  — Justice Brett M. Kavanaugh, concurring

• “I write separately to express my skepticism that the private nondelegation doctrine —which purports to bar the Government from delegating authority to private actors — is a viable and independent doctrine in the first place. Nothing in the text of the Constitution appears to support a per se rule barring private delegations. And recent scholarship highlights a similar lack of support for the doctrine in our history and precedents.”
  — Justice Ketanji Brown Jackson, concurring

• “Within the federal government, Congress ‘alone has access to the pockets of the people.’ The Constitution affords only our elected representatives the power to decide which taxes the government can collect and at what rates. Throughout the Nation’s history, Congress has almost invariably respected this assignment. As this Court observed some decades ago, it would represent ‘a sharp break with our traditions’ for Congress to abdicate its responsibilities and ‘besto[w] on a federal agency the taxing power.’
  “Today, the Court departs from these time-honored rules. When it comes to ‘universal service’ taxes, the Court concludes, an executive agency may decide for itself what rates to apply and how much to collect. In upholding that arrangement, the Court defies the Constitution’s command that Congress ‘may not transfer to another branch “powers which are strictly and exclusively legislative.”’”
  — Justice Neil M. Gorsuch, joined by Justices Clarence Thomas and Samuel A. Alito Jr., dissenting