Fact Check: 5th Circuit Court ruled 9-7 that phone fee funding method is unconstitutional
What We Know
On July 24, 2024, the 5th U.S. Circuit Court of Appeals issued a ruling stating that the method used by the Federal Communications Commission (FCC) to fund the Universal Service Fund (USF) is unconstitutional. This decision was made by a narrow margin of 9-7 and described the funding mechanism as a “misbegotten tax” that improperly delegates congressional taxing authority to the FCC and a private entity, the Universal Service Administrative Company (USAC) (AP News). The ruling reverses an earlier decision by a three-judge panel of the same court and sends the matter back to the FCC for further consideration (Akin Gump).
The USF is designed to support telephone service for low-income users and broadband services for schools and libraries. The court's majority opinion, authored by Judge Andrew Oldham, emphasized that the FCC's broad discretion under the Communications Act allows it to operate outside of congressional control, which constitutes a constitutional violation (Perkins Coie). The dissenting judges argued that this ruling conflicts with decisions from three other circuit courts that upheld the constitutionality of the USF funding system (AP News).
Analysis
The ruling by the 5th Circuit has significant implications for the future of the USF and its funding mechanisms. The majority opinion asserts that the FCC has been given excessive discretion under the Communications Act, leading to unconstitutional delegations of authority. Judge Oldham's argument hinges on the interpretation of Section 254 of the Act, which the court found lacks clear limitations on the FCC's ability to set contribution rates for the USF (Akin Gump).
Critics of the ruling, including dissenting judges, contend that the majority's interpretation blurs the line between taxes and fees and undermines established precedents. They argue that the FCC's actions are subject to congressional oversight and that the USAC operates under the FCC's authority, thus not constituting an unconstitutional delegation (Perkins Coie). The dissenting opinions highlight that other circuit courts, such as the 6th and 11th, have upheld the constitutionality of the USF funding system, suggesting that the 5th Circuit's ruling may not reflect a consensus among federal courts (Akin Gump).
The potential for a Supreme Court appeal looms large, as advocates for media access and telecommunications policy are likely to challenge this ruling, especially given the dissenting opinions from a bipartisan group of judges (AP News).
Conclusion
The claim that the 5th Circuit Court ruled 9-7 that the phone fee funding method is unconstitutional is True. The court's decision reflects a significant shift in the legal landscape regarding telecommunications funding, raising questions about the balance of power between Congress and federal agencies. The ruling's implications are profound, potentially affecting billions in funding for essential services aimed at supporting low-income and rural populations.
