USF at the Supreme Court

The U.S. Supreme Court (SCOTUS) will hear oral arguments on March 26 in the case of FCC v. Consumers’ Research regarding the constitutionality of the Universal Service Fund (USF). The Court will be reviewing a ruling by the U.S. Court of Appeals for the Fifth Circuit that said that the USF is unconstitutional. That ruling conflicted with rulings from two other appeal courts that largely blessed the Federal Communications Commission and USF. The case that drove this to the Supreme Court was filed by Consumers’ Research, a nonprofit activist group. The 11^th Circuit ruled that the method used to fund the USF is an illegal tax that didn’t have any specific direction or approval from Congress. If SCOTUS scuttles the current USF, it will be up to Congress to decide if it values the functions being done by the fund. Congress could probably authorize the current USF and the FCC’s role in a law with only a few paragraphs of language. Congress could also preempt this challenge at any time before the ruling. The whole industry recognizes that the USF needs reform, particularly in the way it is funded. That’s likely to be the sticky point for finding a Congressional solution because the funding question pits a lot of powerful lobbies against each other.