U.S. Court of Appeals Fifth Circuit Stays its Order Pending Supreme Court Review

U.S. Court of Appeals Fifth Circuit Court Stays its Order Pending Supreme Court Review

Federal Universal Service Contributions Will Continue as Normal During this Period

On August 23, 2024, the U.S. Court of Appeals, Fifth Circuit granted the Federal Communications Commission (FCC’s) motion to stay its order addressing the constitutionality of the FCC’s contribution methodology. The current methodology directs the Universal Service Administrative Company (USAC) to project the total contribution base using carrier reports and submit quarterly projected contributions to the FCC’s Office of Managing Director (OMD) who then receives these data, reviews the data, and calculates the contribution factor for FCC publication. Recall that in July the court determined that USAC’s function was more than a ministerial function guided by the FCC’s policies and direction and remanded the matter back to the FCC for further action.

This stay keeps in place for now the FCC’s contribution method used to assess carriers for being interconnected with the national telecommunications network and benefiting from this valuable network. The court viewed this contribution as a tax and held that the FCC’s delegation to USAC of its Congressionally delegated taxing authority violated the U.S. Constitution. The stay is applied until October 1, 2024, or if the FCC files an appeal with the U.S. Supreme Court, the stay will remain effective until the Court’s final disposition. JSI expects the FCC to appeal the decision in part because there are conflicting court opinions in both the Sixth and Eleventh Circuit Courts—those courts affirmed the FCC’s contribution methodology and actions.

As federal universal service support is vital to rural carrier operations, JSI is available to discuss how these actions may impact your operations and future plans.

Please contact Steve Meltzer, John Kuykendall, Douglas Meredith, or local JSI contact for further information.