The U.S. Supreme Court has officially announced that it will review the constitutionality of a crucial federal program aimed at enhancing telecommunications services across schools, libraries, and underserved areas, particularly for low-income households and rural regions.
In a significant move, the justices will examine appeals submitted by the Federal Communications Commission (FCC) alongside prominent telecom companies, all seeking to overturn a pivotal ruling by the U.S. Court of Appeals for the Fifth Circuit. This decision, the FCC and private sector stakeholders warn, poses a substantial risk to the internet and phone services that millions of Americans depend on, services that are heavily subsidized through the Universal Service Fund.
The Supreme Court is anticipated to hear arguments regarding the legitimacy of this program either in March or April. A definitive ruling is expected to follow by July. The court also instructed the involved parties to prepare briefs addressing whether these consolidated cases remain relevant given the challengers’ litigation strategies taken in the Fifth Circuit.
The current cases represent one of two pending appeals before the Supreme Court centered on the Universal Service Fund. The second appeal examines whether certain reimbursement payments claimed under this initiative fall under the purview of the False Claims Act.
The arguments accepted by the Court are steeped in a rarely invoked doctrine of constitutional law termed “nondelegation,” which argues that Congress cannot transfer its legislative authority to external agencies. This particular constitutional principle has not been used by the Supreme Court to dismantle federal legislation since the 1930s, leading legal scholars to refer to it as a “shotgun behind the door.”
Previously in March, the conservative Fifth Circuit concluded that the FCC’s Universal Service Program violates this constitutional tenet by shifting Congressional powers to the FCC, which subsequently further delegates rate-setting responsibilities to the industry-operated Universal Service Administrative Co.
The Fifth Circuit characterized the situation as follows: “American telecommunications consumers are subject to a multibillion-dollar tax nobody voted for.” They argued that the determination of this tax amount is effectively manipulated by a trade association composed of industry insiders, with no accountability mechanisms in place for public oversight.
The Universal Service Fund, established under the 1996 Telecommunications Act, encompasses various programs tailored to expand telecommunications access in rural, low-income regions, as well as within schools and libraries. Uniquely, the program is financed by contributions from telecommunications carriers at rates established by a private administrator.
The federal government advocates that the Universal Service Fund plays a vital role in enhancing internet accessibility for millions across the nation. However, the Fifth Circuit suggested that it bestows the FCC with excessive authority to establish its universal service goals and improperly delegates the formulation of its industry contribution requirements to an external entity.
Specifically, the Universal Service Administrative Co. generates financial projections that guide the FCC in determining how much telecom carriers should contribute to the program. These incurred costs ultimately filter down to consumers, reflected in their monthly phone and internet bills.
In a proactive legal move, a coalition of plaintiffs spearheaded by the anti-regulatory organization Consumers’ Research has initiated a challenge against the program’s constitutionality. This group is represented by attorney R. Trent McCotter from Boyden Gray PLLC.
The federal government has strongly encouraged the justices to reassess the Fifth Circuit’s ruling. U.S. Solicitor General Elizabeth Prelogar articulated that “If left in place, the [Fifth Circuit’s] decision will upend the universal service programs, to the detriment of millions of consumers nationwide,” urging the court to grant a writ of certiorari and reverse the prior decision.
A distinct appeal from the telecommunications sector contends similar implications stemming from the Fifth Circuit’s ruling. The telecom industry emphasized, “The Fund has supported subsidies on which millions of Americans and thousands of service providers rely. Absent this Court’s review, the Fifth Circuit’s decision would call into question the FCC’s ability to continue to operate all of those programs.”
The Supreme Court’s decision to accept the case was anticipated, especially since the Sixth and Eleventh circuits have rejected nondelegation challenges to the Universal Service Fund, resulting in a “circuit split” that typically heightens the likelihood of Supreme Court intervention.
The challengers had actively urged the Court to consider the issue expeditiously, underlining its importance in the current legal landscape.
The fact that the Supreme Court has agreed to hear appeals from both the FCC and the telecom sector reduces the likelihood that this legal dispute would lose relevance if a new administration were to withdraw support for the Biden Department of Justice’s defense of the Universal Service Fund program.
In addition to scrutinizing the funding structure of the Universal Service Fund, the Supreme Court directed the involved parties to provide arguments addressing the question: “Whether this case is moot in light of the challengers’ failure to seek preliminary relief before the Fifth Circuit.”
The cases being reviewed are FCC v. Consumers’ Research, No. 24-354, and SHLB Coalition v. Consumers’ Research, No. 24-354.
**Interview with Legal Expert on Supreme Court Review of the Universal Service Fund**
**Editor:** Welcome, Dr. Simmons, a constitutional law expert and professor at State University. Thank you for joining us to discuss the Supreme Court’s upcoming review of the Universal Service Fund.
**Dr. Simmons:** Thank you for having me. It’s a pleasure to be here.
**Editor:** To start, can you explain what the Universal Service Fund is and why it’s under scrutiny by the Supreme Court?
**Dr. Simmons:** The Universal Service Fund (USF) was created under the 1996 Telecommunications Act to ensure that all Americans, particularly those in low-income households and rural areas, have access to essential telecommunications services like internet and phone. It is financed by contributions from telecommunications carriers. The Supreme Court is reviewing challenges to this program based on a Fifth Circuit ruling that argues the way the FCC administers it may violate the constitutional principle of nondelegation—meaning Congress shouldn’t transfer its legislative powers to external agencies.
**Editor:** That’s an important distinction. What was the specific ruling from the Fifth Circuit that prompted this Supreme Court review?
**Dr. Simmons:** The Fifth Circuit ruled that the FCC’s USF program delegates excessive authority to the Universal Service Administrative Company, a private entity. They characterized the funding mechanism as a “multibillion-dollar tax nobody voted for,” suggesting that there’s a lack of accountability since industry insiders essentially control how much telecom carriers must contribute to the fund [[1](https://www.theverge.com/2024/11/22/24303585/supreme-court-fcc-v-consumers-research-universal-service-fund-broadband)].
**Editor:** How significant is it that the Supreme Court is considering this principle of nondelegation, particularly since it hasn’t been invoked in such cases since the 1930s?
**Dr. Simmons:** It’s quite significant. The nondelegation doctrine has historically been a powerful tool for limiting federal authority, but its use has dwindled over the decades. If the Supreme Court agrees with the Fifth Circuit on this nondelegation claim, it could set a strong precedent that limits how much legislative power Congress can delegate to federal agencies. It reopens a conversation about the balance of power in federal governance, particularly in areas like telecommunications that deeply affect everyday life [[1](https://www.theverge.com/2024/11/22/24303585/supreme-court-fcc-v-consumers-research-universal-service-fund-broadband)].
**Editor:** What are the potential consequences if the Supreme Court upholds the Fifth Circuit’s decision?
**Dr. Simmons:** If the Supreme Court decides to uphold the Fifth Circuit ruling, it could severely disrupt the Universal Service Fund and potentially other federal programs that operate similarly. This could lead to reduced access to essential services for low-income and rural populations, as these programs are vital for promoting broadband and phone service equality across the country [[1](https://www.theverge.com/2024/11/22/24303585/supreme-court-fcc-v-consumers-research-universal-service-fund-broadband)].
**Editor:** With arguments set to be heard in the coming months, what should we look out for in the hearings?
**Dr. Simmons:** Pay close attention to the justices’ questions during the oral arguments. They can often indicate how they are thinking about the issues at stake. Additionally, it will be crucial to see how the government articulates the importance of the USF and what kind of precedence they emphasize in their arguments against the Fifth Circuit’s ruling.
**Editor:** Thank you, Dr. Simmons, for shedding light on this important issue. We’ll keep an eye on the developments as we get closer to the hearings.
**Dr. Simmons:** Thank you for having me. I look forward to discussing this further as the case unfolds.
