The FCC, USF, and USAC: An Alphabet Soup of Due Process Violations

Abstract

The Federal Communications Commission (FCC) ostensibly “runs” the Universal Service Fund (USF) program under Section 254 of the Communications Act. But the vagueness in the statutory language, and the way in which the FCC has chosen to delegate tremendous power to a private entity (the Universal Service Administrative Company – USAC), including allowing USAC to set “tax” rates (the Contribution Factor) that Americans pay on their telephone bills free of any transparency or Freedom of Information Act (FOIA) restraints, pose numerous due process problems. This study will focus on one particular aspect of the private non-delegation problem: USAC believes that no statute of limitations applies to its ability to “claw back” benefits received from the USF. The FCC began condoning this view (in 2017), and to date, at least one court has upheld it, when, in 2021, USAC used an “offset” mechanism to reduce the future benefits to a telephone company based on an amount USAC determined had been overpaid over a decade before. This problem is compounded by the fact that USAC’s budget is taken off the top of the monies it collects from consumers. It has, at least in years past, also had the authority to give bonuses to staff based on the amount of funds recouped through its audit programs. This paper examines appeals made by beneficiaries of the Schools and Library (E-rate) program between 2016 and the present to determine whether USAC has used the absence of a cognizable statute of limitations to reach further back in its efforts to recoup monies for the program—and its own personnel budget.