Trump Administration Defends USF Contribution Factor at SCOTUS
The government defended the FCC in a reply brief in FCC v. Consumers’ Research, the USF case before the U.S. Supreme Court, arguing that Consumers' Research (CR) creates a “straw man” to attack. Public interest groups, led by the Schools, Health & Libraries Broadband Coalition, also defended the legality of how the USF contribution factor is calculated. SCOTUS is set to hear oral argument March 26.
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The court decided in November to hear a challenge to the 5th U.S. Circuit Court of Appeals' 9-7 en banc decision, which found that the USF contribution factor is a "misbegotten tax,” which many observers say could overturn a program critical to consumers and widen the digital divide (see 2412100060).
The government said in its reply brief filed Thursday that the USF “really worked [the] way" CR and others claim, "it wouldn't defend its constitutionality." “Respondents go too far in arguing that ‘the level of statutory specificity required by the nondelegation doctrine varies’ from power to power, so that courts must apply a ‘more restrictive’ test to the taxing power, a ‘less restrictive’ test to the spending power, and (presumably) still other tests to other enumerated domestic-affairs powers,” the government said. That “Goldilocks” approach “contravenes the century-old general nondelegation framework that this Court has applied across Article I powers, including the taxing power.”
The government also said that respondents' assertion that the USF is “unique” in the nation’s history "overlooks the pre-1996 statutory regime for universal service, which respondents have never challenged as unconstitutional,” the government said: “That regime supplied significantly less guidance than Section 254 [of the Communications Act]. For decades until 1996, the FCC promoted universal service primarily through its power to set ‘just and reasonable’ rates.” It would be “perverse to conclude that Congress crossed the constitutional line by tightening the limits on the FCC in Section 254.”
The government also defended the role played by the Universal Service Administrative Co. in making the calculations on which the contribution factor is set. “The FCC, not the Administrator, sets the quarterly contribution factor within the limits Congress prescribed; the Administrator just recommends how to exercise that authority,” the brief said. It called constitutional objections to the administrator’s advisory role “unsound.”
SHLB, the Benton Institute for Broadband & Society, the National Digital Inclusion Alliance and the Center for Media Justice also defended the FCC in a second reply brief.
CR’s arguments "reflect a misapprehension of the long history of the FCC’s congressionally mandated preservation and advancement of universal service, this Court’s approval of agency discretion to regulate utilities, and the actual text and operation of both Section 254 and the FCC’s rules governing the Fund,” the groups said. Respondents blame growth in the contribution factor on an “out-of-control bureaucracy,” the brief said.
The real reason that the contribution base is shrinking that "the communications industry has increasingly shifted away from the telecommunications services Congress made subject to the contribution requirement in 1996,” the groups said: “Policymakers may debate whether and how to expand the contribution base, but the limitations at issue derive from statutory text, which is pretty much the opposite of a nondelegation problem.”
CR and other conservative interests, meanwhile, called on the FCC to zero out the USF contribution factor, the day after the FCC Office of Managing Director announced a proposed Q2 USF contribution factor of 36.6%, as calculated by USAC. The group did the same thing in December, the day after the last contribution factor was proposed (see 2412130016).
The factor is “an unconstitutional tax raised and spent by an unaccountable federal agency -- which in turn has delegated almost all authority over this revenue-raising scheme to a private company,” said a filing posted Friday in docket 96-45: “The cost of this tax is ultimately borne by consumers via a separate line item on nearly every phone bill in the country.”