Two law professors told the U.S. Supreme Court on Friday it should reverse the 5th U.S. Circuit Court of Appeals' 9-7 en banc decision, which found the USF contribution factor is a "misbegotten tax.” SCOTUS has agreed to hear the case, FCC v. Consumers’ Research, which potentially has broad implications, experts say (see 2412100060). Look no further than a 1938 brief by then-Solicitor General Robert Jackson, urged Gerard Magliocca, professor at the Indiana University Law School, and John Barrett, professor of law at St. John’s University, in an amicus brief Friday. They wrote that Jackson, later appointed to SCOTUS, “proposed an elegant solution to the issue now before the Court" when he argued in Currin v. Wallace that "the non-delegation doctrine applies only when Congress delegates power to the President" and "that congressional delegations to federal agencies, independent boards, and private actors are not subject to" the doctrine. Acknowledging that SCOTUS decided Currin without addressing Jackson's theory, they said the court should read his "thoughtful brief" and reverse the 5th Circuit.

Consumers’ Research asked the 5th U.S. Circuit Court of Appeals to vacate the FCC’s USF contribution factor for Q1 of this year, set by the agency last month. The group, and its allies, had already asked the FCC to zero out the contribution factor (see 2412130016), calling it “an unconstitutional tax raised and spent by an unaccountable federal agency.” The 5th Circuit earlier found in a 9-7 en banc decision that the contribution factor is a "misbegotten tax.” That decision is before the U.S. Supreme Court (see 2412100060). “Congress’s standardless delegation to the FCC of legislative authority to raise and spend nearly unlimited money via the Universal Service Fund violates Article I, section 1 of the U.S. Constitution,” said the filing with the court: USF charges “are taxes and therefore Congress’s standardless delegation to the FCC of authority to raise and spend nearly unlimited taxes violates Article I, section 8” of the Constitution.

Consumers’ Research and other conservative interests last week urged the FCC to zero out the USF contribution factor. Next year, the U.S. Supreme Court is slated to hear a case that Consumers’ Research brought in the 5th U.S. Circuit Court of Appeals (see 2412100060), which found in a 9-7 en banc decision that the contribution factor is a "misbegotten tax.” Posted Friday in docket 96-45, the filing arrived the day after the FCC Office of Managing Director proposed a contribution factor of 36.3% for Q1 2025 (see 2412120061). The contribution factor “is an unconstitutional tax raised and spent by an unaccountable federal agency -- which in turn has delegated almost all authority over this revenue-raising scheme to a private company registered in Delaware,” the Universal Service Administrative Co. The cost “is ultimately borne by consumers via a separate line item on nearly every phone bill in the country,” the filing said. In its decision, the 5th Circuit found the USAC “sets the USF Tax -- subject only to FCC’s rubber stamp” and the agency lacks "a documented process for checking USAC’s work,” the filing said. Among those endorsing the pleading was Edward Blum, president of Students for Fair Admissions, which last year won a SCOTUS case that effectively ended race-based affirmative action policies in American college admissions, and other respondents listed on Consumers’ Research’s initial SCOTUS brief.

Many questions remain about how the U.S. Supreme Court will decide FCC v. Consumers’ Research, lawyers involved in the case said Tuesday during an FCBA webinar. The USF case is expected to be heard in the spring. SCOTUS decided last month to hear a challenge to the 5th U.S. Circuit Court of Appeals' 9-7 en banc decision, which found the USF contribution factor is a "misbegotten tax.” Consumers' Research challenged the contribution factor in the 5th Circuit and other courts.

Communications industry executives and former federal officials said during a Practising Law Institute event Tuesday they see a likely GOP-led budget reconciliation package next year as a potential vehicle for legislation that would reinstate the FCC’s lapsed spectrum auction authority. House Commerce Committee leaders and Senate Commerce Committee Chair Maria Cantwell, D-Wash., have repeatedly attempted to reinstate the authority during this Congress only to have their efforts stall (see 2409170066).

Senate Commerce Committee ranking member Ted Cruz, R-Texas, could shift the direction Congress’ USF revamp takes when he becomes the panel’s chairman in January, lawmakers and lobbyists told us. Observers believe his impact on what Congress decides will partially depend on how the U.S. Supreme Court rules when it reviews the FCC appeal of the 5th U.S. Circuit Court of Appeals' ruling in favor of Consumers' Research's challenge of the USF contribution methodology (see 2411220050). A high court ruling upholding the 5th Circuit could shift momentum in favor of Cruz’s proposal that Congress make USF funding part of the appropriations process, officials said.

A possible shakeup of the federal Universal Service Fund (USF) will be top of mind for state telecom regulators in the year ahead, NARUC Telecom Committee Chair Tim Schram said in an interview earlier this month at the association’s Anaheim meeting. USF is one of several areas of uncertainty in 2025, said three state consumer advocates in a separate interview at the collocated National Association of State Utility Consumer Advocates (NASUCA) conference.

The extent to which the U.S. Supreme Court decides the USF challenge on theoretical rather than practical grounds could have major implications for whether the court issues a decision that overturns the program's funding mechanism. The court said last week it will hear a challenge to the 5th U.S. Circuit Court of Appeals' 9-7 en banc decision, which found the USF contribution factor is a "misbegotten tax.” Consumers' Research challenged the contribution factor in the 5th Circuit and other courts.

In an investors' note Monday, New Street’s Blair Levin discussed reasons why the U.S. Supreme Court may overturn the 5th U.S. Circuit Court of Appeals' 9-7 en banc decision, which found the USF contribution factor is a "misbegotten tax.” Consumers' Research, a conservative group, challenged the contribution factor in the 5th Circuit and other courts.

The U.S. Supreme Court granted the FCC's cert petition challenging the 5th U.S. Circuit Court of Appeals' ruling in favor of Consumers' Research's challenge of the USF contribution methodology (see 2410010024). In a docket 24-254 notation Friday, SCOTUS said that along with the questions raised in the petitions, it wanted the parties to brief and argue about whether the case is moot given the challengers' not seeking preliminary relief before the 5th Circuit. NTCA, Competitive Carriers Association and USTelecom in a statement said they were "grateful" SCOTUS was taking up the petition. "The Fifth Circuit’s decision is contrary to Supreme Court precedent and the decision of several other circuit courts of appeals, and it 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," they said. "We look forward to presenting arguments in defense of the USF contribution mechanism as the case moves forward, and ultimately to dispelling the uncertainty that these challenges have created in furthering our nation’s mission of universal service.” Also applauding the high court's move, the Schools, Health and Libraries Broadband Coalition said the 5th Circuit decision "has no precedent in prior Supreme Court jurisprudence." It said it's "further encouraged by the Supreme Court's request that parties brief the question whether the Consumers' Research challenge is moot."