Major broadband subsidy survives Supreme Court challenge
Bloomberg Creative Photos via Getty Images
By
Chris Teale
By a 6-3 majority, Justices upheld the Universal Service Fund, which subsidizes low-income and rural Americans’ phone and internet bills.
The Supreme Court on Friday upheld the Universal Service Fund, a federal subsidy that helps rural and low-income Americans pay for phone and internet service.
A 6-3 majority found that the Federal Communications Commission, which operates the fund, does not violate the “non-delegation doctrine” in the way it raises money for the USF. Legal conservatives had argued that the funding mechanism was unconstitutional as it gave the FCC too much leeway on how to set rates.
The FCC designated the independent nonprofit Universal Service Administrative Company to determine how much funding is required for USF, then assess a contribution from each telecom service provider. Those assessments are then passed onto consumers via their monthly bills. The USF was established in 1996 under the Telecommunications Act.
Writing for the majority, Justice Elena Kagan said the FCC’s delegation of that power to the USAC does not represent an “impermissible transfer of authority” that violated Congress’ intent. Kagan said lawmakers gave the FCC sufficient flexibility to implement USF and raise the money it feels it needs through USAC, and the FCC has retained its decision-making authority by only taking nonbinding advice from the nonprofit.
The FCC also needs to retain flexibility in determining what constitutes universal service; Kagan noted that the definition must be allowed to evolve with technology, and the law as written allows that.
“The Act’s embrace of evolution — the permission it gives the FCC to subsidize different services now than 30 years ago — ensures that the universal-service program will be of enduring utility,” Kagan wrote. “But that conferral of discretion does not strip the statute of standards and constraints. The Commission still may fund only essential, widely used, and affordable services, for the benefit of only designated recipients.”
Kagan was joined in the majority by Chief Justice John Roberts, as well as Justices Amy Coney Barrett, Ketanji Brown Jackson, Brett Kavanaugh and Sonia Sotomayor. Justices Samuel Alito, Neil Gorsuch and Clarence Thomas dissented.
The USF funds various programs to help boost broadband access, including the Lifeline and High Cost subsidy programs, as well as the Rural Health Care Program and E-Rate, which subsidizes telecommunication and other services for public schools and libraries. But Consumers’ Research, a conservative nonprofit, argued in a lawsuit that funding for those programs via USF was unconstitutional, prompting other groups and Justices themselves to ponder what the future of broadband access could look like, especially for rural and low-income Americans.
The U.S. Court of Appeals for the Fifth Circuit previously ruled that method gave the FCC too much discretion in how it sets USF contribution rates and so is making major policy and revenue decisions without congressional oversight. Kagan said the FCC has offered “clear guidance on how to promote universal service using carrier contributions,” within the general parameters laid out by Congress.
“For nearly three decades, the work of Congress and the Commission in establishing universal service programs has led to a more fully connected country,” Kagan wrote. “And it has done so while leaving fully intact the separation of powers integral to our Constitution.”
The USF has received bipartisan support, and after the Supreme Court’s decision, it received further praise and promises for reform. FCC Chairman Brendan Carr said in a statement that the agency’s universal service programs have “played a key role in expanding connectivity and Internet service to Americans in communities across the country,” and the decision is “an opportunity to turn the FCC’s focus towards the types of reforms necessary to ensure that all Americans have a fair shot at next-generation connectivity.” Congressional Republicans agreed.
Others had been concerned about the future for programs funded by USF, including E-Rate.
U.S. Sen. Ed Markey, a Massachusetts Democrat who was behind the program, said in a statement the decision means E-Rate will “continue serving as a great technological equalizer for millions of students.”
“Without it, too many classrooms would fall into digital darkness and too many students would be left offline and unable to compete,” he added. Those who rely on the program for funding their efforts on the ground mirrored those sentiments.
“Since the program was established in 1996, E-Rate has transformed and revolutionized access to information,” Cindy Hohl, president of the American Library Association, said in a statement. “Virtually all libraries in the country now have high-speed broadband, which powers modern library services that range from online tutoring and employment assistance to telehealth appointments.”