Confronted with the dilemma of either clarifying its existing rules to capture a broader audience of contributors and face accusations of “regulating the Internet”; or standing idle as the USF contribution base continued to shrink-the FCC responded only by authorizing increases to the USF contribution factor.

In a classic “non-decision,” the FCC found another “solution” to the dilemma. It found a way to avoid protests to expanding the enhanced communication services subject to USF while abating the shrinkage in the USF. It did so essentially by “passing the buck” to USAC.

Without public notice or awareness and without legal authority, the Commission abandoned its congressionally-delegated authority to adopt, interpret, modify and enforce properly adopted rules, and allowed USAC to create and enforce substantive measures resulting in multiple violations of its own statute, as well as the Administrative Procedure Act (“APA”).

Not only did the FCC’s clandestine delegation of substantive rulemaking and decision-making to USAC violate the APA; but so too did USAC’s implementations of that illegitimately delegated authority by its adopting, announcing and enforcing rules and decisions for which it had no legal authority.

This article provides analysis of the Administrative Procedure Act as it relates to FCC rulemaking around the Universal Service Fund.