Supreme Court leans toward upholding federal internet subsidy program

Yahoo

26-03-2025

The Supreme Court leaned toward upholding a $9 billion subsidy program that funds phone and internet services in rural areas and schools during oral arguments Wednesday.
The dispute gives the justices an opportunity to examine the so-called nondelegation doctrine, which prevents Congress from delegating its legislative authority to the executive branch.
The Supreme Court has not struck down a statute under the doctrine in 90 years, but anti-regulatory groups have hoped the court's conservative supermajority will revitalize it by agreeing that Congress handed the Federal Communications Commission (FCC) too much power in administering the subsidy program, called the Universal Service Fund (USF).
At Wednesday's arguments, however, a majority of the nine justices appeared sympathetic toward the government's defense of the setup, including members of both the court's liberal and conservative wings.
'What you're saying is that we should read this statute as expansively as possible to give the agency as much power as it could possibly be viewed as giving, and all in order to, in the end, blow the statute up. And I think that that's just not the right way to think about the interpretation of regulatory statutes,' Justice Elena Kagan pressed the challengers' attorney.
Established in 1996, the USF provides billions in annual subsidies to rural and low-income consumers as well as schools, libraries and health care facilities. It is funded by telecommunication companies and is intended to help the FCC accomplish its decades-long aim of providing affordable 'universal service' nationwide.
Consumers' Research, a conservative nonprofit, has filed a series of challenges to how Congress allows the FCC to determine how much the companies must contribute to the fund. The commission, in turn, sets the rates based on financial projections from a private company.
The 5th U.S. Circuit Court of Appeals ruled that those two factors, together, amounted to an unconstitutional delegation of Congress's lawmaking authority.
'At its heart, this case is about taxation without representation,' Trent McCotter, a partner at Boyden Gray who represented the challengers, told the court.
'Every year, Americans pay billions for the Universal Service Fund,' he continued. The rate has increased ten-fold. The amount collected is now 20 times the size of the FCC's entire annual budget.'
Under the nondelegation doctrine, the court has long permitted agencies to exercise significant authority if Congress gave it an 'intelligible principle' to guide its work. The government insists the fund easily meets that standard since Congress included a series of statutory 'principles' the FCC must follow.
'This statute has plenty in it that imposes limits on what the FCC is doing,' Kagan told McCotter.
Several of the court's conservatives expressed skepticism at a need to replace the existing standard with a hard numerical cap on the fund contributions.
'It could be very high, and then the question is what exactly are we accomplishing?' said Justice Brett Kavanaugh.
Picking up on Kavanaugh's questioning moments later, Justice Amy Coney Barrett later pressed, '$3 trillion or $5 trillion, that's just kind of throwing a number out there for the sake of throwing a number Why have they really set the policy in a way that's meaningfully different than they did in this statute?'
Justice Neil Gorsuch, meanwhile, probed the government about the bounds of the FCC's authority by posing a hypothetical of the commission ordering every American be provided access to billionaire Elon Musk's Starlink. Gorsuch suggested taking the government's position meant it would be permitted.
'It sounds like it. It's a pretty good deal. I'd like one,' Gorsuch joked.
Acting Solicitor General Sarah Harris repeatedly insisted that Congress imposed sufficient limits on the agency.
'Section 254 is no delegation running riot,' she said.
The case is the latest at the Supreme Court to take aim at federal agency power. It comes amid the court's broader assault on the so-called 'administrative state,' including major decisions that eliminated broad deference to agencies and ruled that agencies must have clear authorization when taking actions of great political and economic significance.
A decision in the cases, FCC v. Consumers' Research and Schools, Health & Libraries Broadband Coalition v. Consumers' Research, is expected by early summer.
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