Federal agency authority back in SCOTUS crosshairs in flap over telecom subsidy

WASHINGTON (CN) — Setting up a separation-of-powers showdown, the Supreme Court on Friday agreed to decide whether Congress and the Federal Communications Commission violated the Constitution through a subsidies program providing telecommunications services to underserved communities.

For decades, Interstate telecommunications companies have contributed subsidies to the Universal Service Fund for vital utilities at schools, libraries, rural health care providers and rural and low-income customers. But, in July, an appeals court declared the program’s funding mechanism unconstitutional.

The Biden administration urged the justices to review the ruling, warning that it could nullify the universal service programs and harm the millions of Americans who rely on its assistance.

“If the Fifth Circuit’s decision is allowed to take effect, carriers in that circuit (and perhaps elsewhere) are likely to argue that they no longer have a legal obligation to make universal service contributions because the FCC and the administrator lack the power to collect such payments,” U.S. Solicitor General Elizabeth Prelogar wrote. “Such a development would devastate the FCC’s ability to ensure sufficient funding for universal service subsidies going forward.”

Coming only months after curbing federal rulemaking authority, the case will also allow the court to rule on the nondelegation doctrine — a theory limiting how the government delegates its constitutional authority.

The conservative-leaning organization Consumers’ Research says the program’s funding mechanism violates Article I of the Constitution by skirting appropriations fights.

“Rather than pay for a multibillion-dollar social welfare program with an appropriation from federal revenues, Congress requires telecommunications carriers to contribute to the USF, with carriers passing along a portion of that cost to consumers via line-item charges in their monthly phone bills,” Consumers’ Research wrote.

In 2021, Consumers’ Research, a carrier and a group of customers requested that their contribution factor be set at 0% instead of 25.2% After the commission refused to act on their comments, the groups asked a Fifth Circuit panel to review but came up short. However, an en banc Fifth Circuit sided with Consumers’ Research.

The Biden administration said the high court has routinely upheld very broad delegations of authority but that neither Congress nor the commission delegated their respective authority to another.

The Communications Act, the government argued, provided comprehensive guidance to the FCC on how to implement Congress’ universal service policy. This included who would pay the funds, who would receive the benefits and the minimum standards of the service.

“The act therefore effects a permissible grant of discretionary authority, not an impermissible delegation of legislative power,” Prelogar wrote.

Consumers’ Research contests that lawmakers gave the agency unfettered power, allowing the FCC to levy a tax to pay for a service with no limits and without knowing the end user.

“In essence, a private company is taxing Americans in amounts that total billions of dollars every year, under penalty of law, without true governmental accountability,” Consumers’ Research wrote.

While the justices did not explain their decision to hear the case, they did order briefing on whether the case is moot because the challengers did not ask for preliminary relief before the Fifth Circuit.

The Supreme Court will hear the case next year.

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