Supreme Court to review 5th Circuit ruling that upends Universal Service Fund

The US Supreme Court will hear appeals of a 5th Circuit ruling that called Universal Service fees on phone bills an illegal tax.

The US Court of Appeals for the 5th Circuit ruled in July that the Federal Communications Commission's Universal Service Fund is unconstitutional and that the fees on phone bills are a "misbegotten tax." The FCC and several non-government groups challenged the ruling, and the Supreme Court agreed to take up the case on Friday.

The Universal Service Fund is an $8 billion-a-year system that subsidizes the expansion of telecom networks with grants to Internet service providers and makes access more affordable through programs such as Lifeline discounts. The FCC program has faced several court challenges filed by Consumers' Research, a nonprofit that fights "woke corporations," and a mobile virtual network operator called Cause Based Commerce.

The conservative 5th Circuit's ruling conflicted with decisions by the 6th and 11th circuit appeals courts, which both rejected claims that the Universal Service Fund is unconstitutional. In a 9–7 ruling, the 5th Circuit objected to the FCC's decision to let the Universal Service Fund be administered by a private organization called the Universal Service Administrative Company (USAC). The 5th Circuit said the FCC "subdelegated the taxing power to a private corporation," and that "the combination of Congress's sweeping delegation to FCC and FCC's unauthorized subdelegation to USAC violates the Legislative Vesting Clause in Article I, § 1."

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