Federal Appeals Court Rules the FCC’s Universal Service Fund Is an Illegal Tax

A federal appeals court has ruled in favor of a conservative nonprofit in a case that challenged the legitimacy of the way the Federal Communications Commission (FCC) administers the Universal Service Fund (USF). The court held that because the FCC relied on for-profit telecommunications companies to determine the USF surcharge, it functions as a tax that voters did not approve and so is unconstitutional. In a 9–7 split decision issued by the full 5th Circuit Court of Appeals on July 24, the court sided with Washington-based nonprofit Consumers’ Research, finding that the USF surcharge is an illegal tax because, even though Congress delegated taxing power to the FCC, the agency relied on private companies to set the surcharge, in violation of Article I, Section I of the U.S. Constitution....