SCOTUSblog by Amy Howe 3/25/2025
The Supreme Court will hear oral arguments on Wednesday in a major challenge to the federal “E-rate program,” which subsidizes telephone and high-speed internet services in schools, libraries, rural areas, and low-income communities in urban areas. The stakes are high, not only because of the program’s size but also because the theory at the center of the challengers’ case, known as the nondelegation doctrine, is one that conservative lawyers and business groups have been urging the justices in recent years to revive. If the justices accept that invitation, it could be another step in the court’s recent efforts to curtail the power of federal agencies.
The subsidy program is the latest chapter in Congress’s efforts to provide access to the same kinds of telephone (and later internet) services at roughly the same rates to all U.S. residents and businesses. Until the late 20th century, this universal service was funded through implicit subsidies – for example, telephone companies would charge below-cost rates in rural areas, where it was more expensive to provide service, while at the same time charging above-cost rates in urban areas.
When the telephone industry was deregulated, however, Congress created a new system to fund universal service using more explicit subsidies. In the Telecommunications Act of 1996, Congress created the Universal Service Fund to facilitate universal service, which now also included telecommunications and information services like high-speed internet access for schools, libraries, rural health care providers.
In 1997, the FCC established a private nonprofit, known as the Universal Service Administrative Company, to help it administer the fund. Telecommunications carriers make contributions to the fund, which are then used to subsidize universal service. Under FCC regulations, carriers can and do pass the costs of the contributions, which are calculated every quarter, on to their customers.
Consumers’ Research describes itself as the country’s oldest consumer protection agency and has in recent years shifted its focus to fighting “woke” corporations, DEI initiatives, and the consideration of climate change on Wall Street. The group is funded in part by Leonard Leo, the Federalist Society co-chair who has raised hundreds of millions of dollars for conservative legal campaigns and helped pick or confirm each of the court’s six conservative justices.
Last year, the justices took a major step to weaken the power of administrative agencies when they overturned the Chevron doctrine, which significantly curtailed the power of agencies to interpret the laws they implement. The executive director of Consumers’ Research, Will Hild, was a co-founder of the firm that successfully brought one of those two cases.
Consumers’ Research filed challenges to the Universal Service Fund contributions calculated for several different quarters in the U.S. Courts of Appeals for the 5th, 6th, 11th, and District of Columbia Circuits.
Three-judge panels in the 6th and 11th Circuits rejected the group’s challenges in those circuits, and the 6th Circuit denied the group’s petition for rehearing. The D.C. Circuit dismissed the group’s challenge there.
Consumers’ Research was also initially unsuccessful in the conservative 5th Circuit, where a three-judge panel unanimously rejected its challenge. But the full court of appeals agreed to rehear the case and reversed, by a vote of 9-7.
In a decision by Judge Andrew Oldham, who is often mentioned as a potential nominee for the Supreme Court if a vacancy occurs during the Trump administration, the majority deemed the contributions to the fund a “misbegotten tax” that violates the provision of the Constitution giving Congress sole power to legislate.
More:
https://www.scotusblog.com/2025/03/supreme-court-to-hear-nondelegation-challenge-to-telecom-access-program/
