Court ruling reverses an earlier panel decision on USF constitutionality
The U.S. Court of Appeals for the Fifth Circuit has ruled that the mechanism by which the Universal Service Fund is funded and administered is unconstitutional, which imperils the existence of the program that supports telecom services for rural and low-income Americans.
The ruling, issued yesterday, reverses an earlier decision by a panel of Circuit Court judges. In a ruling in March 2023, that panel ruled that the Federal Communications Commission has the authority to operate the USF and that its current framework for management of the USF was within the bounds of the Constitution.
The nearly 30-year-old USF, administered by the private Universal Service Administrative Company, supports telecom services through four programs: the High-Cost Program, which subsidizes the provision of voice and internet services in unserved and underserved rural communities; the Lifeline program to subsidize voice service for low-income consumers; the E-Rate program that subsidizes broadband and Wi-Fi for schools and libraries; and the Rural Health Care Program, which financially supports telecommunications services to connect rural healthcare providers.
Essentially, the Circuit Court ruled that Congress improperly delegated power to “tax” to the Federal Communications Commission, which then allowed the USAC to set USF rates which telecom carriers must contribute and which are passed on to the consumer on their monthly telecom bills.
“This decision is misguided and wrong. It upends decades of bipartisan support for FCC programs that help communications reach the most rural and least-connected households in our country, as well as hospitals, schools, and libraries nationwide,” said FCC Chairwoman Jessica Rosenworcel. “The opinion reflects a lack of understanding of the statutory scheme that helped create the world’s best and most far-reaching communications network. We will pursue all available avenues for review.”
FCC Commissioner Geoffrey Starks said that he was “gravely disappointed” by the decision and added: “The en banc decision overturns the original panel’s well-reasoned decision, and runs contrary to two Circuit courts—the 6th and 11th—that recently found the Universal Service Fund (USF) to be constitutional. This decision is a monumental blow in our long-running effort to close the digital divide, and will particularly harm Americans that rely on USF for connectivity including vulnerable households, those that live in rural areas, and our youngest learners. I am reviewing the decision and how the Agency can continue to fulfill one of the core mandates of the Communications Act: universal service.”
John Bergmayer, legal director at Public Knowledge (which filed an amicus brief in the case), said in a blog post: “Following the end of the Affordable Connectivity Program, today’s Fifth Circuit ruling that the FCC’s long-standing mechanism for funding the Universal Service Program is unconstitutional eliminates the last remaining federal mechanism to make broadband affordable for all Americans. Happily, this decision will likely be reversed. Riddled with errors from its very first paragraph, the opinion contradicts Supreme Court precedent, and breaks with rulings from the D.C., Sixth, and Eleventh Circuits. This is in keeping with many recent Fifth Circuit rulings that disregard settled law and, where necessary, the facts, to achieve results desired by fringe, anti-government groups who want to use the courts to impose their unpopular agenda on the American people.”
