Washington, D.C. – On Wednesday, July 24th, the United States Court of Appeals for the Fifth Circuit ruled that the Federal Communications Commission’s (FCC) “Universal Service Fund” (USF) is unconstitutional under the nondelegation doctrine.
Boyden Gray PLLC and Texas Public Policy Foundation are proud to represent the challengers, with Boyden Gray Partner Trent McCotter arguing the case before the en banc Fifth Circuit in the fall and Boyden Gray Counsel Jared Kelson leading the briefing effort.
Congress authorized the FCC to raise money for the USF, supposedly to expand telephone service. But Congress never set any limits on how much the FCC can collect, handing a blank check to an agency full of bureaucrats. And then the FCC redelegated this taxing power to a private entity full of self-interested telecom insiders, in effect allowing an unelected corporation to set the tax rates paid by millions of Americans.
The Fifth Circuit held that this unprecedented “combination of delegations, subdelegations, and obfuscations of the USF Tax mechanism offends Article I, § 1 of the Constitution.”
Given the lack of political oversight and responsibility, it is unsurprising the USF tax rate climbs higher every year, with significant amounts wasted and siphoned off, and that no one ensures the money is being spent wisely.
As the majority opinion concludes: “American telecommunications consumers are subject to a multibillion-dollar tax nobody voted for. The size of that tax is de facto determined by a trade group staffed by industry insiders with no semblance of accountability to the public.”
“This ruling is a victory for American consumers and the rule of law,” says Chance Weldon, Director of Litigation at TPPF. “The FCC’s practice of allowing a private entity to tax citizens was an egregious overreach of governmental authority. Today’s decision reaffirms the fundamental principle that only Congress has the power to tax and that this power cannot be delegated away lightly.”
The Fifth Circuit’s opinion can be read here.