USF SCOTUS Case Could Overturn Decades of Precedent

A bad SCOTUS decision on the merits “could be disastrous for schools and libraries, rural healthcare providers, but also for the country,” said John Windhausen, executive director of the Schools, Health & Libraries Broadband Coalition. More than 100,000 schools and 54 million students benefit from the E-rate program, he said. Some 16,000 rural healthcare providers depend on USF subsidies. “I’m very nervous about what the Supreme Court might do.”

Wilkinson Barker’s Jennifer Tatel, representing USTelecom, the Competitive Carriers Association and NCTA in the case, noted a ruling could get caught up in broader questions about the nondelegation doctrine (see 2411270020).

The nondelegation doctrine is based on the foundational principle of separation of powers, to keep Congress from ceding authority to “the other entities” without legislative power, said Tatel, a former FCC acting general counsel. “It is not an absolute ban, that is, it doesn’t require the complete separation of the other branches of government from the legislative process,” she said.

SCOTUS has long held that Congress can delegate discretion “if it lays out a legal framework that sufficiently guides its delegee,” said Tatel. That test has been around since the 1920s and SCOTUS has employed it “to uphold a variety of relatively broad delegations."

SCOTUS has long recognized that “in our increasingly complex society, replete with ever-changing and more technical problems, Congress simply cannot do its job absent an ability to delegate power under broad general directives,” Tatel said. There have been only two cases where SCOTUS has struck down statutes on nondelegation grounds, both involving New Deal legislation and the Great Depression, she said.

But there appears to be “growing skepticism” on the court about the long-standing “intelligible principle concept,” Tatel said. That could be seen in a 2019 case, Gundy v. U.S., a criminal prosecution involving a sex offender registry. “The court upheld the delegation [, which] it described as distinctively small bore compared to the other delegations that the court had upheld.”

In a dissent, written by Justice Neal Gorsuch, joined by Chief Justice John Roberts and Clarence Thomas, Gorsuch argued that the law gave the attorney general “unfettered authority” to make decisions about the registry and was a violation of the nondelegation doctrine, Tatel said. The dissent said the court's long-used test “has really no basis in the original meaning of the Constitution or in historical practice” and called on the court to rethink the doctrine.

Dismissal of the case isn’t a good outcome for anyone and Consumers' Research could file a future lawsuit, probably again in the 5th Circuit, said Wilkinson Barker’s Adam Copeland. That “preserves the status quo for a year or two,” but “we’ll just be back in the same spot we are now eventually,” he said. “It’s probably in everyone’s interest for the Supreme Court to make a decision either way."

Said Windhausen, “I would hate for the Supreme Court to abandon” the intelligible principle test “and overturn its past precedent in a way that would throw everything into chaos.”

Windhausen believes there are ways the FCC could address the 5th Circuit's concerns. One problem the court found was the Universal Service Administrative Co.'s role as USF administrator, he said. The FCC could strengthen the USAC board and put more FCC employees on it “as a way to show that it actually is subordinate” to the agency. Congress could also specify that Section 254 of the Communications Act applies to broadband, he said.

The case has far-reaching implications, said Carol Mattey, a former top FCC official. A working group on Capitol Hill is looking at USF issues more broadly, she said. “Even the fact that the case occurred” will factor to some extent into the ongoing debate, she said. If the case is dismissed as moot, it provides an opportunity for the FCC to “take some administrative steps” to improve the performance of the USF.

Mattey also noted the 5th Circuit’s concerns with USAC. “Almost every government agency uses government contractors to perform ministerial functions … and nobody questions that,” she said. Congress could recognize the existence of USAC and if the FCC modifies its relationship with the company, “that, to me, could completely undercut the premise of the [5th Circuit’s] decision, which I personally do not agree with.”

Davis Wright’s Thaila Sundaresan, who filed an amicus on behalf of bipartisan members of Congress, said their message was clear. “USF is very important. It’s indispensable for millions of consumers nationwide.” Contrary to Consumers' Research claims, Congress has consistently approved legislation addressing USF, held oversight hearings and is deeply engaged in it, she said. “The USF system is rooted in direction from Congress.”

SHLB has filed briefs in all the USF cases in the different circuits explaining “the incredible impact that USF has in states and communities across the country,” said HWG’s Jason Neal, who is representing the group. The organization is emphasizing “how big of a deal it is if the courts were to say all of this had to be undone, or changed in some significant way.”

SCOTUS recently laid out a briefing schedule in the case (docket 24-354). Petitioner briefs are due Jan. 6, respondent briefs Feb. 5 and reply briefs March 7.