WASHINGTON, D.C.—The U.S. Supreme Court has agreed to hear an appeal in a case that alleges the FCC does not have the authority to decide how funds from the Universal Service Fund are used.
The 5th U.S. Circuit Court of Appeals had ruled that the funding arrangement used by the FCC to subsidize and promote access to phone and broadband services for libraries, rural areas, tribal areas, lower-income Americans and other constituencies was unconstitutional.
If upheld he ruling would upset longstanding funding procedures that have been used to make telecommunications services available in less affluent rural areas.
Congress gave the FCC the authority to set up the Universal Service Fund in the Telecommunications Act of 1996. Consumers pay about $8 billion a year to fund the USF.
The lawsuit filed by the conservative group Consumer Resarch argued that Congress did not have the authority to delegate how the funds are spent to a government agency like the FCC, citing a nondelegation doctrine that was used by the Supreme Court to overturn New Deal legislation in 1935.
The 5th Circuit in New Orleans agreed. "American telecommunications consumers are subject to a multibillion-dollar tax nobody voted for," the 5th Circuit ruled according to Law.com. "The size of that tax is de facto determined by a trade group staffed by industry insiders with no semblance of accountability to the public."
However, other circuits have rejected the line of reasoning. “The Sixth and Eleventh circuits have rejected nondelegation challenges to the USF,” Law.com has reported.
The FCC and others appealed the decision to the Supreme Court. Arguments in the case are not likely to be heard until 2025.
