The Supreme Court has upheld the constitutionality of the Universal Service Fund, which provides about $8 billion annually to defray the cost of broadband service for a wide range of entities, including rural hospitals.
The court ruled 6-3 that the way the fund operates does not violate the "nondelegation doctrine." Justice Elena Kagan wrote the opinion for the majority, in which she was joined by Chief Justice John Roberts and Justices Brett Kavanaugh, Sonia Sotomayor, Amy Coney Barrett and Ketanji Brown Jackson. Justice Neil Gorsuch dissented and was joined by Justices Samuel Alito and Clarence Thomas.
The question in the case, Kagan said, was whether the "universal-service scheme — more particularly, its contribution mechanism — violates the Constitution’s nondelegation doctrine, either because Congress has given away its power to the [Federal Communications Commission] or because the FCC has given away its power to a private company.
"We hold that no impermissible transfer of authority has occurred," she wrote. "Under our nondelegation precedents, Congress sufficiently guided and constrained the discretion that it lodged with the FCC to implement the universal-service contribution scheme. And the FCC, in its turn, has retained all decision-making authority within that sphere, relying on the [Universal Service] Administrative Company only for non-binding advice. Nothing in those arrangements, either separately or together, violates the Constitution."
The court rejected the basis of the 5th Circuit Court of Appeals' decision last July: "that the 'combination' of Congress’s grant of authority to the FCC and the FCC’s reliance on the [USAC] Administrator violates the Constitution, even if neither one does so alone."
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In the dissent, Gorsuch said, "When Congress has willingly surrendered its power to the Executive Branch, this Court’s responses can only be described as feeble."
"By employing the modern, enfeebled form of the intelligible principle test, we do the Constitution no favors," he wrote. "And by approving a delegation of Congress’s taxing power unprecedented in this court’s history, we risk making matters worse yet."
In July 2024, the 5th Circuit Court of Appeals in New Orleans ruled 9-7 that in choosing which fees to collect from telecommunications carriers for the $8 billion fund, the FCC and USAC, an independent corporation, violated the Constitution by harnessing the “quintessentially legislative” power to tax.
The FCC cited conflicting decisions from the 6th and 11th Circuit Curt of Appeals in petitioning the Supreme Court for review. "If left in place, the decision will upend the universal service programs, to the detriment of millions of consumers nationwide,” the government’s petition said.
Fifteen Republican state attorneys general filed a brief opposing the petition. They argued that Universal Service Fund assessments violate the nondelegation doctrine by placing Congress’s authority to tax in the hands of USAC. “Congress needs to be the one to act here, not a private band of unaccountable industry participants,” they said.
Among the groups arguing to uphold the contribution scheme was NTCA-The Rural Broadband Coalition, which said the 5th Circuit decision "threatens to undermine universal service programs that, for many decades, have served to promote the availability and affordability of critical communications services for millions of rural and low-income consumers, rural health care facilities, and schools and libraries across the nation."
The National Rural Electric Cooperative Association applauded the decision.
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