Supreme Court Endorses FCC Funding Mechanism

By John Kruzel

WASHINGTON (Reuters) – The U.S. Supreme Court on Friday endorsed the Federal Communications Commission’s (FCC) funding approach for expanding phone and broadband internet access to low-income and rural Americans.

The 6-3 ruling overturned a lower court’s determination that the FCC’s funding mechanism, which includes mandatory contributions from telecommunications companies, constituted a “misbegotten tax” violating the U.S. Constitution’s legislative authority provisions.

This fund helps low-income Americans, rural residents, Native American tribes, schools, and libraries gain access to vital telecommunications services. The Telecommunications Act of 1996 authorized the FCC to administer the Universal Service Fund, drawing approximately $9 billion annually from contributions by telecommunications companies, most of which are passed on to consumers.

The case raised legal questions regarding the non-delegation doctrine, which limits Congress’s power to delegate constitutional authority to government agencies such as the FCC. Justice Elena Kagan, who authored the ruling, stated that Congress provided adequate guidance on operating the fund.

“We hold that no impermissible transfer of authority has occurred,” Kagan stated, with support from her liberal colleagues and conservative justices John Roberts, Brett Kavanaugh, and Amy Coney Barrett.

In dissent were three conservative justices: Neil Gorsuch, Clarence Thomas, and Samuel Alito.

The law outlines six principles guiding the fund’s operation, ensuring affordable service, universal access, and advanced telecommunications nationwide. Democratic FCC Commissioner Anna Gomez praised the ruling, highlighting the need for reforms to avoid cutting off millions from essential services.

Another aspect of the case involved the FCC’s delegation of authority to the Universal Service Administrative Company, tasked with administrating the fund. The court dismissed arguments that this delegation violated constitutional principles.

U.S. telecom providers benefit from the fund, which has helped 7.5 million low-income households and provided significant financial support for internet in rural areas. The US Telecom Association hailed the ruling as a victory for millions relying on affordable broadband.

In 2022, a group of challengers led by Consumers’ Research claimed the funding mechanism was unconstitutional. However, the 5th U.S. Circuit Court of Appeals ruled in 2024 that the FCC’s actions were legitimate and constitutional.

The Supreme Court heard the case on March 26, reflecting the growing scrutiny of federal regulatory agencies in recent rulings, though this case did not directly address the non-delegation doctrine.