USF Opponents Attacking ‘a Strawman’: Trump Administration

WASHINGTON, March 18, 2025 – In a reply brief, the Trump administration defended the Universal Service Fund to the Supreme Court Thursday, arguing the challenge to its constitutionality attacked “a strawman.” Oral arguments are scheduled for March 26.

Managed by the Federal Communications Commission, USF spends about $8 billion per year supporting construction and maintenance of rural networks, plus internet discounts for low-income households, schools and libraries, and healthcare centers.

It’s funded by fees on interstate voice revenue, with the accounting work handled by the Universal Service Administrative Company, a nonprofit set up for the purpose.

After multiple unsuccessful legal challenges from conservative nonprofit Consumers’ Research, the Fifth Circuit reheard the case and ruled in July 2024 that the arrangement was unconstitutional, writing that it amounted to taking unfettered taxing authority from the legislature.

“If the Universal Service Fund really worked that way, the government would not defend its constitutionality,” Acting Solicitor General Sarah Harris wrote, adding that the administration agreed Congress could not delegate broad taxing power to agencies or private entities. “Neither Congress nor the FCC, however, has done anything of the sort.”

The government said the 1996 Telecom Act put sufficient guardrails on the FCC’s administration of the fund, arguing its list of principles and policy goals – like universal telecom and information services at reasonable rates – were binding rather than aspirational.

Partly at issue is whether the law violates the nondelegation doctrine, the idea that Congress can’t hand its legislative powers to other entities. Several conservative legal groups have urged justices to take the case as an opportunity to institute a new nondelegation test that would make it harder for statutes to pass legal muster, effectively curtailing Congress’s ability to delegate broad authority to agencies.

Consumers’ Research had argued that the Telecom Act deserved extra scrutiny for empowering the FCC to raise revenue, and that Congress should have to set a cap on the money raised or the contribution rate.

“Particularly salient here, this Court has rejected special nondelegation tests for taxation,” the government wrote, later adding that “revenue-raising statutes without precise numerical limits remain common today.”

Broadband industry associations and a group of consumer advocates led by the Schools, Health, and Libraries Broadband Coalition also submitted briefs defending the fund.

SHLB noted the contribution factor, the percent of each provider's assessable revenue paid into the fund each quarter, has ballooned while the size of the fund has “remained relatively flat” because the law prohibits tapping additional sources of revenue.  

“Policymakers may debate whether and how to expand the contribution base, but the limitations at issue derive from statutory text, which is pretty much the opposite of a nondelegation problem,” the group wrote.

The problem of modernizing the fund in the face of dwindling voice revenue has proved a difficult one for lawmakers, and it’s widely agreed it will need to be resolved even if USF emerges from the current legal challenge unscathed. ISPs have pushed for big tech companies to pay in, something FCC Chairman Brendan Carr supports, with the software giants predictably countering it should solely be broadband providers.

Previous FCC Chairwoman Jessica Rosenworcel had declined to levy fees on ISPs when the agency moved to classify them as more tightly regulated telecom providers – a move that has since been reversed by the courts – arguing that providers passing the cost onto consumers could ultimately raise prices across the board.