FCC Seeks SCOTUS Review of 5th Circuit USF Ruling

Universal service "has been an essential component" of federal telecom policy since the FCC's creation, the agency argued in a petition for writ of certiorari before the U.S. Supreme Court. Filed Monday (docket 24-354), the FCC's petition said the U.S. 5th Circuit Court of Appeals' ruling in favor of Consumers' Research's challenge of the Universal Service Fund contribution methodology was "incorrect." Moreover, the agency said it "did not delegate governmental power" when it designated the Universal Service Administrative Co. as USF administrator (see 2407240043).

The Communications Act "provides comprehensive guidance to the FCC on how to implement Congress's universal service policy," the agency said. The 5th Circuit's decision "invalidates the system that the commission has used for a quarter century to implement an important act of Congress," it added, warning that the decision "will upend millions of consumers nationwide" if left in place. The commission also noted the 6th and 11th circuit rulings upholding the USF contribution methodology. "The statute at issue here provides far more detailed guidance than others that this Court has upheld."

Section 254 of the Telecom Act "authorizes the FCC to adopt additional universal service principles beyond those listed in the Act," but the commission's "power to adopt such principles is itself constrained by an intelligible standard." The FCC argued that the case "presents no question concerning the scope of that authority" because "the specific FCC order that respondents challenge does not adopt any such additional principles." In addition, the agency asked that SCOTUS consider holding the petition pending resolution of Wisconsin Bell Inc. v. U.S., which is scheduled for oral argument Nov. 4. That case will determine whether a reimbursement request under a universal service program is considered a "claim" under the False Claims Act.

In a response filed Tuesday, Consumers' Research argued the USF contribution mechanism is a taxing system and "unconstitutional under nondelegation principles." Congress "imposed no formula, ceiling, or other meaningful restrictions" on money collected, allowing the FCC to "raise billions of dollars in taxes for a program designed to benefit the country more broadly."

Consumers' Research argued that USAC has "an incentive to push USF charges increasingly higher" each quarter. "There is no evidence the FCC itself ever actually reviews USAC's work or agrees with USAC's discretionary decisions about how much money to raise, which is far from a ministerial undertaking."

The 5th Circuit's decision was "unsurprising," Consumers' Research said. The delegation at issue is "unique because of the unfettered power given to the FCC in defining the scope of universal service," adding time is "of the essence" because USAC continues collecting USF funds. Consumers' Research also asked for a designation as the petitioner in this case "given that they first sought this Court's review on these issues and have been petitioners in all lower-court proceedings."