WASHINGTON — On Wednesday, the Supreme Court appeared inclined to maintain the $8 billion annual budget the federal government allocates to subsidize telecommunications services in schools, libraries, and rural communities. The justices engaged in nearly three hours of deliberations over a federal regulatory power case, assessing an appellate judgment that annulled the Universal Service Fund and deemed it unconstitutional. This tax has been a component of phone bills for almost three decades.
Both liberal and conservative members of the Court expressed concerns regarding the potentially detrimental effects of dismantling a fund that benefits millions of Americans. This fund is gathered by the Federal Communications Commission from telecommunications companies, which then transfer the costs to their clientele.
A conservative advocacy group named Consumer Research has contested this arrangement. In the past, the Supreme Court declined two appeals from Consumer Research after other federal courts supported the program. However, the 5th U.S. Circuit Court of Appeals—one of the more conservative courts—ruled in a 9-7 decision that the funding method breaches constitutional standards.
The basis of the 5th Circuit’s ruling was that Congress granted excessive power to the FCC, which in turn delegated too much control to a private entity or administrator.
Justice Sonia Sotomayor noted that FCC subsidies exclusively pertain to telephone and internet services, advocating for their necessity by stating, “It is a very real constraint. They are the only two services that have been identified.”
Justice Neil Gorsuch displayed support for the opposition, criticizing the fund as “a tax that’s unlike any other tax this court has ever approved.” Historically, the Supreme Court last cited the nondelegation doctrine to nullify a federal statute in 1935, but certain conservative justices have posited a willingness to breathe new life into this legal concept.
In recent years, the conservative-leaning court has restricted federal agencies in notable judgements. Last year, it overturned a 40-year-old precedent frequently used to endorse federal regulations. The court further decreed that Congress must have explicit intent before agencies can tackle “major questions,” a ruling that restricted the Environmental Protection Agency’s capacity to combat climate change.
“This is simply not the right case for the court to revamp the nondelegation doctrine,” lawyer Paul Clement appealed to the Court on behalf of telecommunications firms.
The Trump administration had been proactive in limiting administrative bodies in various sectors but stands in defense of the FCC initiative, an appeal initially instituted by the Biden administration.
“Neither Congress’s conferral of authority on the FCC, the FCC’s reliance on advice from the administrator, nor the combination of the two violates the Constitution,” acting Solicitor General Sarah Harris articulated in a Supreme Court brief.
Consumer Research argues that this situation represents a “nightmare scenario” in which Congress set no parameters on the amount the FCC can generate to finance the program, resulting in the Universal Service Fund tax rate rising from under 4% in 1998 to nearly 37% today.
The group’s legal representation suggests a simple resolution: Congress could assign funds directly for the program or establish a cap on expenditures, even one in the trillions.
Nevertheless, various justices mentioned that Congress could potentially set an excessively high cap that does nothing to appropriately regulate the spending. “That sounds like a meaningless exercise,” noted Justice Amy Coney Barrett.
In the previous year, Congress allowed the funding for an internet subsidy program, the Affordable Connectivity Program, to lapse. In response, the FCC employed funds from the E-rate program, which receives support from the Universal Service Fund, to bridge the gap.
The Universal Service Fund was instituted by Congress as part of a 1996 overhaul of the telecommunications industry, with the goals of fostering competition and dismantling monopolies. The subsidies targeted at rural and low-income regions were designed to keep telecommunications services accessible.
A decision by the Supreme Court on this matter is anticipated by late June.