Hill USF Working Group Eyes Potential Revamp Impact of 5th Circuit Ruling

Members of the congressional Universal Service Fund revamp working group are considering whether, and how much, the 5th U.S. Circuit Court of Appeals' ruling will affect their rollout of a framework for overhauling the program. The court ruled last week that the FCC's USF contribution factor is unconstitutional (see 2407240043). Experts believe lawmakers will likely factor the ruling into the framework, but it could be moot should the U.S. Supreme Court reverse the decision on appeal (see 2407260044). Uncertainty about USF’s future will likely extend the working group’s already lengthy process, lobbyists told us.

The 5th Circuit’s ruling “is a travesty,” but it also “highlights the importance of coming together to modernize [USF] … to ensure that these programs remain in place,” said Senate Communications Subcommittee Chairman Ben Ray Lujan, D-N.M. Lujan and ranking member John Thune, R-S.D., set up the working group in May 2023 (see 2305110066). Lujan expects the working group will continue deliberating on a framework, which Congress could advance in conjunction with funding the affordable connectivity program and other telecom priorities.

Thune and some other working group members expect the Supreme Court to review the 5th Circuit’s ruling, which conflicts with decisions in the 6th and 11th circuits that upheld USF’s constitutionality (see 2312140058). “It’s all going to get appealed” given the circuits’ split, so “there’s still some legal process” left to play out while the working group deliberates, Thune told us. The high court in June denied a cert petition from Consumers’ Research that sought a review of the 11th Circuit’s decision (see 2406110008).

“I don’t agree with the 5th Circuit a lot, so I’m not surprised” it ruled against USF, said working group member Sen. Amy Klobuchar, D-Minn. The group should “keep moving ahead” because “we need to keep [USF] successful, and we’d like to see some reforms” to keep it sustainable. A final SCOTUS decision could affect whether the working group “will have to shift” its approach, but “we’ll have to look at” the justices’ legal reasoning to make that decision, Klobuchar told us.

House Communications Subcommittee Chairman Bob Latta, R-Ohio, and ranking member Doris Matsui, D-Calif., separately said they needed to analyze the 5th Circuit’s ruling to understand its impact on the working group’s framework. “I want to read exactly what [the circuit court] said” and have legal aides parse it, Latta said. Working group member Sen. Shelley Moore Capito, R-W.Va., also wanted to reread the 5th Circuit’s ruling before commenting.

More Delays?

Matsui suggested the 5th Circuit’s ruling could hinder the working group’s ability to release a USF framework before the end of this Congress. “There’s not much time” given both chambers will be out for the August recess by the end of this week and won't be in town during October, she said. Communications sector lobbyists pointed to ACP supporters’ push for stopgap funding ahead of the program’s late May lapse as one reason work on the framework has pushed past some group members’ goal of releasing recommendations back in the spring.

The USF group’s talks have been “a little bit difficult” and reflect problems reaching a consensus on ACP and other matters, Matsui told us. Communications sector lobbyists noted working group members are increasingly disagreeing about how to proceed after industry stakeholders raised concerns that draft recommendations didn’t provide enough direction to the FCC on what a revamp should include. Republicans want to prevent a USF revamp from giving the FCC the same degree of statutory latitude that the Infrastructure Investment and Jobs Act gave NTIA to implement the $42.5 billion broadband equity, access and deployment program (see 2312180063), lobbyists said.

Latta cautioned against trying to “rush" the framework "at the very end” of this year. He noted some senators in the working group would prefer to “wait to see how things play out.” Communications sector officials expect the working group will have to further delay release of the framework because of the 5th Circuit’s ruling. Lawmakers conversely still strongly want to release at least some USF language this year and discuss remaining specifics during the next Congress, lobbyists said.

Lujan believes the working group is “in a strong position with what’s already been developed.” Some preliminary ideas made it into the Lujan-led Secure and Affordable Broadband Extension Act (S-4317), which would pair $6 billion in stopgap ACP funding with changes to the program’s scope and eligibility rules (see 2405090068). Working group members have considered melding ACP with USF’s Lifeline program and keeping the latter’s narrower eligibility rules (see 2404170066).

New Street’s Blair Levin said the USF working group can “move ahead” while awaiting a Supreme Court ruling. Levin, who’s also a Brookings Institution senior fellow, cautioned that “the framework [the working group has] been talking about gets blown up” if the 5th Circuit decision stands. It would be “really hard” to get a framework that survives not only that ruling but also the Supreme Court’s Loper Bright Enterprises v. Raimondo and major questions doctrine tests, he told us.