FCC USF Contributions Mechanism Is 'Textbook' Private Nondelegation Violation, Says CR

Consumers' Research defended its position Tuesday to the U.S. Supreme Court that Congress and the FCC violated the nondelegation doctrine through the Universal Service Fund contributions mechanism (see 2405070042).

The USF's "unique taxing mechanism violates even modern nondelegation precedents," CR's reply brief said (dockets 23-456 and 23-743). It added that the Universal Service Administrative Co. collects "25 times the FCC's annual budget, thanks to quarterly tax rates that climb to new record highs every year."

The group rejected the FCC's claim that the challenge should be dismissed because there has yet to be a circuit split on the issue. "That is no reason to deny certiorari, especially when the FCC agrees there are no vehicle issues complicating this Court’s review of these important issues," CR said.

The absence of a split is a "hardly meaningful" argument, CR said, and "even if a split does not materialize it would only confirm that the modern nondelegation precedent has become a meaningless 'punchline' in need of this Court's review." The group cited a September en banc hearing with the 5th U.S. Circuit Court of Appeals that could be decided "at any time creating a split" (see 2309190072).

CR said in its challenge that "numerous jurists ... have flagged this case as an excellent vehicle for reexamining nondelegation precedent and have argued that the USF regime would fail the original understanding of nondelegation." The reply brief noted that the FCC has also yet to dispute in any of its filings whether the USF contribution factor is a tax. The commission instead "rests on its view that imposed sufficient limitations" on its "legislative taxing power."

"The FCC’s theory seems to be that the only way to violate the nondelegation doctrine is for Congress to give literally limitless power to an agency," the brief said. The USF contributions mechanism demonstrates "the dangers of a lax framework for evaluating nondelegation," the group said. It noted the FCC's taxing power is limited only by the commission's "voluntary self-denial."

The FCC also violated the private nondelegation doctrine by directing the USAC to calculate quarterly USF contributions. The group disagreed with the commission's argument that USAC functions solely in an administrative capacity, saying it's "most critical role is in determining the budget for the USF each quarter."

Allowing USAC's calculations to "automatically become binding" is "a textbook private nondelegation violation," the reply brief said. The "mere hypothetical oversight" of USAC "making significant policy and executive determinations is insufficient to satisfy nondelegation principles." The FCC "never substantially reviews those numbers on the back end" and "does not even engage in the pretense of review," the group said.

"Congress passed the buck to the FCC, which then passed it to the private USAC," the group said: "The buck should stop here."