Recent 11th U.S. Circuit Court Decision on FCC’s Authority and Delegation of Universal Service Fund Oversight
We would like to bring to your attention a recent development in the legal landscape concerning the Federal Communications Commission’s (FCC) authority in overseeing the distribution of government advanced telecommunications subsidy funds.
On December 14, the 11th U.S. Circuit Court of Appeals issued a ruling affirming the FCC’s constitutional authority to delegate the administration of these funds to the Universal Service Administrative Co. (USAC), a private company. The court’s decision aligns with previous rulings by the 5th and 6th circuits, asserting that the FCC’s delegation of oversight to USAC is permissible because the government regulator retains control and supervision.
The legal challenges were centered on the nondelegation doctrine, arguing that Congress, and consequently the FCC, lacked the authority to delegate legislative powers related to the Universal Service Fund (USF) to a private entity. Notably, Congress mandated the FCC to establish the USF to address connectivity gaps and narrow the digital divide.
Organizations challenging the FCC’s actions contended that the delegation of USF oversight to USAC violated the nondelegation doctrine. However, the recent 11th Circuit decision dismissed these concerns, emphasizing the FCC’s constitutional footing in carrying out its directive from Congress over 25 years ago.
In response to the ruling, industry associations such as USTelecom, the Competitive Carriers Association, and NTCA–The Rural Broadband Association expressed satisfaction, stating that the decision is a victory for both rural and urban consumers who benefit from the services supported by the federal USF. They highlight the USF’s crucial role in addressing connectivity gaps and its constitutionality in alignment with Congress’s directive.
In spite of the recent ruling, as our firm has previously advised, the fate of both USAC and the USF program (as presently constituted and funded) remains uncertain. For although there has been consistency across multiple circuit courts, all supporting the stability of the FCC’s approach in delegating USF oversight to USAC, there remain significant obstacles in the road ahead. Notably, on the judicial front, there remains a pending full circuit challenge before the 5th Circuit and writ of certiorari at the U.S. Supreme Court. And on the legislative front, the Congressional USF Working Group continues to evaluate ways to perpetuate, improve and expand the fund and the funding base of revenue. In sum, there is much work yet to be done!! Especially when the USF contribution factor continues to escalate, most recently hitting yet another high water mark at 34.6% for the 1st Quarter of 2024.
Should you have any questions or require further clarification on how this decision may impact your specific circumstances, please do not hesitate to contact us.