On June 21, 2011, the Federal Communications Commission (“FCC” or “Commission”) released a Report and Order designed to prevent duplicative program payments to a single individual through the Lifeline and Link-Up programs funded by the Universal Service Fund (“USF”). The Order follows a series of Commission audits into Lifeline benefits which revealed that many recipients had received multiple benefits in contravention of the program rules. In the Order, the FCC clarified that qualifying low-income consumers may receive no more than a single Lifeline benefit, and amended its rules to codify this restriction.
In addition, the Commission required any Eligible Telecommunications Carrier (“ETC”) providing Lifeline services to de-enroll any subscriber if it discovers that the subscriber has received duplicative benefits in violation of the rule. The Commission also delegated authority to the Wireline Competition Bureau (“WCB”) to implement the Order by sending a letter to the USF administrator, the Universal Service Administrative Company (“USAC”), to develop and implement an administrative process to detect and resolve duplicative claims. The FCC directed USAC to implement a process consistent with the interim industry duplicate resolution process proposed by the United States Telecom Association, CTIA –The Wireless Association and several of the largest ETCs. USAC must continue to perform data validations to expose duplicative claims for Lifeline support
The Commission’s delegation of authority to the WCB to develop guidelines for identifying and resolving duplicative Lifeline claims in conjunction with USAC raises significant questions relating to the FCC’s ability to delegate rulemaking authority. It appears that by this Order the Commission has arguably delegated “rulemaking” authority to the WCB, by empowering it to create substantive requirements for compliance with the Commission’s directives. Furthermore, the WCB has been instructed to work with USAC on enforcement. This arguably ultra vires delegation of rulemaking authority creates the same potential for misadministration of the subsidy side of the USF that currently plagues the contribution side. Specifically, because the FCC has abdicated its authority to enforce USF requirements to USAC, USAC has taken on substantive rulemaking responsibilities in violation of its administrative charter.
For these reasons, clients should consider petitioning the Commission for reconsideration, specifically requesting that the FCC establish rules for implementing its directives in the Order, even if USAC must enforce the rules. Clients with questions regarding this Advisory should contact the attorney assigned to their accounts.
To review the FCC’s Report and Order, see here: Report and Order
To learn more about the broken Universal Service system, we invite you to read the recently published law review article which details a variety of alleged abuses of authority by USAC over the past decade:
THE MIS-ADMINISTRATION AND MISADVENTURES OF THE UNIVERSAL SERVICE FUND: A STUDY IN THE IMPORTANCE OF THE ADMINISTRATIVE PROCEDURE ACT TO GOVERNMENT AGENCY RULEMAKING – CommLaw Conspectus, Vol. 19 (2011)