Fifth Circuit Invalidates FCC's $9 Billion Telecom Subsidy Fund
The U.S. Court of Appeals for the Fifth Circuit ruled the FCC lacked legal authority to establish the Universal Service Administrative Co to manage telecom subsidies.
The United States Court of Appeals for the Fifth Circuit invalidated the Federal Communications Commission's $9 billion Universal Service Fund, ruling that the agency lacked the legal authority to establish the Universal Service Administrative Co (USAC) to collect funds and set contribution rates.
Judge Edith Brown Clement authored the decision, stating the FCC violated the Government Corporation Control Act because Congress never specifically authorized the creation of USAC. The fund provides essential communications services to schools, libraries, rural health care facilities, Native American tribal lands, and low-income areas. In 2024, the program benefited 7.5 million low-income households and distributed $4.2 billion to telecom companies for rural high-speed internet.
The FCC stated it is considering all available options in response to the ruling. The agency noted that the court's order will not take effect for at least two months.
