On July 24, 2024, the Fifth U.S. Circuit Court of Appeals issued an en banc decision declaring that the funding scheme used by the FCC for the Universal Service Fund (“USF”) is unconstitutional.
The suit is one of eight filed by Consumers’ Research over the past four years. Consumers’ Research alleged that the FCC’s USF funding mechanism, which requires a contribution from each provider, unconstitutionally delegates Congressional taxing authority. The Fifth Circuit en banc decision agreed, stating that the program was too large and the funding mechanism constituted a tax, which the FCC does not have proper authority to impose. The USF program funds E-Rate, Lifeline, and other programs aimed at rural and low-income individuals, which may now see changes in the coming months.
The issue will be remanded back to the FCC for further proceedings. After the decision, Chairwoman Jessica Rosenworcel issued a statement, calling the decision “misguided and wrong” and stating that the FCC will seek all available avenues for review. Commissioner Starks also issued a statement, saying that the opinion is a “monumental blow” in the FCC’s “long-running effort to close the digital divide,” especially for rural Americans and young learners.
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