D.C. Memo: Fifth Circuit Strikes Down USF As Unconstitutional
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USF: The FCC’s Universal Service Fund is unconstitutional, the U.S. Court of Appeals for the Fifth Circuit in New Orleans ruled yesterday, likely setting up a decision by the Supreme Court. “In the Telecommunications Act of 1996, Congress delegated its taxing power to the FCC. FCC then subdelegated the taxing power to a private corporation. That private corporation, in turn, relied on for-profit telecommunications companies to determine how much American citizens would be forced to pay for the ‘universal service’ tax that appears on cell phone bills across the Nation. We hold this misbegotten tax violates Article I, § 1 of the Constitution. That constitutional article vested taxing power in Congress. "Our court today holds that the delegation of Congress’s taxing power, first to a federal agency, and then to a private entity, violates the Vesting Clause of Article I of the Constitution. I agree and accordingly concur," said Circuit Judge James C. Ho in his concurrence. The Fifth Circuit’s 9-7 vote, reversed the panel below. Two other appellate courts have upheld the lawfulness of the USF in a challenge brought by Consumers’ Research, a non-profit conservative organization. In June, the Supreme Court refused to hear Consumers’ Research’s appeal. “This decision is misguided and wrong. The opinion reflects a lack of understanding of the statutory scheme that helped create the world’s best and most far-reaching communications network. We will pursue all available avenues for review,” said FCC Chairwoman Jessica Rosenworcel. Gigi Sohn, spokesperson for the Affordable Broadband Campaign, called the decision "outrageous" and driven by "activist judges" based on “dubious legal grounds." NTCA–The Rural Broadband Association, the Competitive Carriers Association, and USTelecom–The Broadband Association issued a joint release saying the decision "could put at risk the availability and affordability of essential communications services for millions of rural Americans, low-income consumers, and community anchor institutions."
