Amicus Curiae Brief — Federal Communications Commission, et al., Petitioners v. Consumers' Research, et al.

Nos. 24-354 & 24-422

IN THE

Supreme Court of the United States

FEDERAL COMMUNICATIONS COMMISSION, et al.,

v.

Petitioners,

CONSUMERS’ RESEARCH, et al.,

Respondents.

SCHOOLS, HEALTH & LIBRARIES

BROADBAND COALITION, et al.,

Petitioners,

v.

CONSUMERS’ RESEARCH, et al.,

Respondents.

ON WRITS OF CERTIORARI TO THE UNITED STATES

COURT OF A PPEALS FOR THE FIFTH CIRCUIT

BRIEF OF BIPARTISAN FORMER

COMMISSIONERS OF THE FEDERAL

COMMUNICATIONS COMMISSION AS AMICI

CURIAE IN SUPPORT OF PETITIONERS

BEN C. FABENS-LASSEN

DLA PIPER LLP (US)

2000 Avenue of the Stars,

Suite 400

Los Angeles, CA 90067

PETER K ARANJIA

Counsel of Record

IAN FORBES

SERGIO FILIPE ZANUTTA VALENTE

DLA PIPER LLP (US)

500 Eighth Street, NW

Washington, DC 20004

(202) 799-4000

peter.karanjia@us.dlapiper.com

January 16, 2025

Counsel for Amici Curiae

335808

A

(800) 274-3321 • (800) 359-6859

i

TABLE OF CONTENTS

TABLE OF CONTENTS ............................................. i

TABLE OF AUTHORITIES ..................................... iii

INTEREST OF AMICI CURIAE ................................1

SUMMARY OF ARGUMENT.....................................2

ARGUMENT ...............................................................6

I.

The FCC Is the Ultimate Decisionmaker When

Implementing Universal-Service Programs, and

It Controls the Administrator Through Three

Distinct Levers .....................................................6

Step 1: The FCC Determines the Data to Collect

and Controls the Contribution-Factor Process ....7

Step 2: The Administrator Collects and Compiles

the Data, Which the FCC Reviews, Revises as

Necessary, and Uses to Determine the

Contribution Factor ............................................10

Step 3: The FCC Conducts De Novo Appellate

Review of the Administrator’s Decisions ...........15

II. The FCC Is Well Aware of Statutory Limitations

on Its Authority and Case Law that Applies and

Defines Those Limitations .................................17

A. Section 254 Provides Intelligible Principles

to Guide the USF’s Contribution Factor .....17

B. In Amici’s Experience, the Commission Has

Declined to Adopt Proposals Beyond Its

Statutorily Delegated Authority .................21

ii

III. The Fifth Circuit’s Decision Hinders

Regulatory Flexibility and Jeopardizes

Important Federal Programs .............................24

CONCLUSION ..........................................................27

iii

TABLE OF AUTHORITIES

Page(s)

Cases

AT&T, Inc. v. FCC,

886 F.3d 1236 (D.C. Cir. 2018) .............................18

Alenco Comm’cns, Inc. v. FCC,

201 F.3d 608 (5th Cir. 2000) ...........................20, 24

Consumers’ Rsch. v. FCC,

109 F.4th 743

(5th Cir. 2024) ................... 2, 4, 6, 10, 12, 14, 17, 25

Direct Comm’cns Cedar Valley, LLC v. FCC,

753 F.3d 1015 (10th Cir. 2014) .......................19, 22

Gen. Tel. Co. of the Sw. v. United States,

449 F.2d 846 (5th Cir. 1971) .................................24

Loper Bright Enters. v. Raimondo,

603 U.S. 369 (2024) ...............................................24

Panama Refin. Co. v. Ryan,

293 U.S. 388 (1935) ...............................................26

Philip Morris USA, Inc. v. Vilsack,

736 F.3d 284 (4th Cir. 2013) .................................26

Quest Comm’cns Int’l, Inc. v. FCC,

398 F.3d 1222 (10th Cir. 2005) .............................18

Qwest Corp. v. FCC,

258 F.3d 1191 (10th Cir. 2001) .......................18, 22

Rural Cellular Ass’n & Universal Serv. v. FCC,

685 F.3d 1083 (D.C. Cir. 2012) .............................19

Tex. Off. of Pub. Util. Couns. v. FCC,

183 F.3d 393 (5th Cir. 1999) ............... 18, 20, 21, 23

iv

Tri-Cnty. Tel. Ass’n v. FCC,

999 F.3d 714 (D.C. Cir. 2021) ...............................18

Vonage Holdings Corp. v. FCC,

489 F.3d 1232 (D.C. Cir. 2007) .............................20

Administrative Decisions

Connect Am. Fund,

26 FCC Rcd. 17663 (2011). ...................................22

Contributions to the Telecommunications

Relay Services Fund,

26 FCC Rcd. 14532 (2011) ......................................9

Federal-State Joint Board on Universal Service,

12 FCC Rcd. 8776 (1997) ......................................21

High-Cost Universal Service Support,

24 FCC Rcd. 6475 (2008) ................................22, 23

Petitions for Declaratory Ruling on Regulatory

Status of Wireless Messaging Service,

33 FCC Rcd. 12075 (2018) ......................................8

Proposed Change to FCC Form 499-A, FCC Form

499-Q, and Accompanying Instructions,

77 Fed. Reg. 74010 (Dec. 12, 2012) ........................9

Proposed First Quarter 2025 Universal Service

Contribution Factor, DA 24-1245,

2024 WL 5105635 (FCC OMD Dec. 12, 2024)......13

Proposed Fourth Quarter 2023 Universal Service

Contribution Factor,

38 FCC Rcd. 8362 (FCC OMD 2023) ....................13

Proposed Fourth Quarter 2024 Universal Service

Contribution Factor, DA 24-924,

2024 WL 4185702 (FCC Sept. 11, 2024) .. 11, 12, 13

v

Proposed Third Quarter 2023 Universal Serv.

Contribution Factor, 38 FCC Rcd. 5670

(FCC OMD 2023) ..................................................13

Proposed Third Quarter 2024 Universal Service

Contribution Factor, DA 24-557,

2024 WL 3010573 (FCC OMD June 12, 2024).....13

Revised Second Quarter 2003 Universal Service

Contribution Factor,

18 FCC Rcd. 5097 (2003) .......................................14

Universal Serv. Contribution Methodology

A Nat’l Broadband Plan for Our Future,

27 FCC Rcd. 5357 (2012) ......................................23

Universal Service Contribution Methodology,

Request for Review of Decision of the Universal

Service Administrator by BT Americas Inc.,

37 FCC Rcd. 9216 (2022) ......................................15

Universal Service Contribution Methodology,

Requests for Review of Decisions of Universal

Service Administrator by Curry IP Solutions,

23 FCC Rcd. 14661 (2008) ....................................15

Universal Service Contribution Methodology,

Application for Review of Decision of the

Wireline Competition Bureau filed by Global

Crossing Bandwidth, Inc.,

27 FCC Rcd. 13780 (2012) ....................................16

Universal Service Fund Contribution Methodology,

Request for Review of Decision of the Universal

Service Administrator by Network Enhanced

Telecom, LLP,

25 FCC Rcd. 14533 (2010) ....................................15

vi

Wireline Competition Bureau Announces Release

of the Revised 2010 FCC Forms 499-A and

499-Q and Accompanying Instructions,

25 FCC Rcd. 1778 (2010) ........................................9

Wireline Competition Bureau Releases 2014

Telecommunications Reporting Worksheet and

Accompanying Instructions,

29 FCC Rcd. 939 (2014) ........................................16

Wireline Competition Bureau Releases the 2021

Telecommunications Reporting Worksheets

and Accompanying Instructions,

35 FCC Rcd. 13671 (2020) ......................................8

Wireline Competition Bureau Seeks Comment on

Proposed Changes to the 2016 FCC Form 499A, FCC Form 499-Q, and Accompanying

Instructions,

30 FCC Rcd. 13510 (2015) ..................................8, 9

Wireline Competition Bureau Seeks Comment on

Proposed Changes to the 2025 FCC Form 499-A,

FCC Form 499-Q, and Accompanying

Instructions, DA 24-622,

2024 WL 3249293 (June 28, 2024) .........................8

Statutes, Rules, and Other Authorities

47 U.S.C. § 151 ..........................................................24

47 U.S.C. § 254(b).......................... 4, 17, 18, 20, 22, 23

47 U.S.C. § 254(b)(1) .................................................18

47 U.S.C. § 254(b)(2) .................................................24

47 U.S.C. § 254(b)(3) .................................................18

47 U.S.C. § 254(b)(4) .................................................18

vii

47 U.S.C. § 254(c) .......................................... 17, 19, 20

47 U.S.C. § 254(c)(1)............................................19, 25

47 U.S.C. § 254(d)...................... 2, 4, 17, 19, 20, 23, 24

47 U.S.C. § 254(e) ...................................... 4, 17, 20, 21

47 C.F.R. § 54.423 .....................................................16

47 C.F.R. § 54.507 .....................................................17

47 C.F.R. § 54.619 .....................................................17

47 C.F.R. § 54.702(c) ...................................................7

47 C.F.R. § 54.708 .......................................................9

47 C.F.R. § 54.709(a)(3) ...................... 3, 10, 11, 12, 14

47 C.F.R. § 54.719(b) .................................................15

Sup. Ct. R. 37.6 ...........................................................1

Federal Universal Service Support Mechanisms

Quarterly Contribution Base for the First

Quarter 2025, Universal Serv. Admin. Co.,

(Dec. 2, 2024) .................................................7, 8, 10

Memorandum of Understanding Between the

Federal Communications Commission and

the Universal Service Administrative Company,

(Oct. 17, 2024) .................................................11, 14

SENATE REP. NO. 104-23............................................25

1

INTEREST OF AMICI CURIAE1

Amici are the following bipartisan group of former

chairs and commissioners of the Federal

Communications Commission (FCC or Commission):

▪

Kathleen Q. Abernathy (Commissioner, 2001–

2005)

▪

Jonathan S. Adelstein (Commissioner, 2002–

2009)

▪

Rachelle B. Chong (Commissioner, 1994–

1997)

▪

Mignon L. Clyburn (Acting Chairwoman,

2013; Commissioner, 2009–2018)

▪

Julius Genachowski (Chairman, 2009–2013)

▪

Reed E. Hundt (Chairman, 1993–1997)

▪

Tom Wheeler (Chairman, 2013–2017)

▪

Richard E. Wiley (Chairman, 1974–1977;

Commissioner, 1972–1974)

While Amici have differing views on many

regulatory issues, they share the view that the

decision below misunderstands the FCC’s role in

discharging its statutory responsibilities to advance

universal service. Amici also share the view that

allowing the decision below to stand would undermine

1 Pursuant to Supreme Court Rule 37.6, Amici state that no

counsel for a party authored this brief in whole or in part, and

no counsel or party made a monetary contribution intended to

fund the preparation or submission of this brief. No person other

than Amici or their counsel made a monetary contribution to its

preparation or submission.

2

important universal-service programs that help rural

and other under-served communities enjoy the

benefits of ubiquitous advanced communications

services.

During their combined tenures serving in the

FCC’s leadership, which span seven administrations,

Amici have become intimately familiar with the

workings of the Communications Act, the FCC’s

statutorily prescribed responsibility to advance

universal service, and the agency’s relationship with

the Universal Service Administrative Company

(Administrator or USAC). Amici are thus well-suited

to provide the Court with insights and context

concerning these issues, including highlighting the

Fifth Circuit’s misunderstandings of how the FCC

exerts close supervision and control over the

Administrator. Amici also have a strong interest in

ensuring that the FCC’s universal-service programs

continue to serve Congress’s objectives and that the

Commission can continue to “preserve and advance

universal service,” as Congress has specifically

directed it to do. 47 U.S.C. § 254(d).

SUMMARY OF ARGUMENT

The Fifth Circuit held that the mechanism that

determines contributions to the federal Universal

Service Fund (USF or Fund) is unconstitutional

because “the combination of Congress’s broad

delegation” to the FCC and the FCC’s “subdelegation”

to the Administrator “amounts to a constitutional

violation.” Consumers’ Rsch. v. FCC, 109 F.4th 743,

756 (5th Cir. 2024) (en banc). The Fifth Circuit’s

3

analysis, however, (1) misconstrues the FCC’s relationship with, and control of, the Administrator,

(2) glosses over the existing statutory limitations on

the FCC’s authority to assess contributions and

otherwise advance universal service, and (3) would

deprive the federal government of the flexibility

necessary to keep up with developments in the

dynamic area of advanced communications technology.

I. Contrary to the Fifth Circuit’s characterization,

the FCC does not merely “rubber stamp” the

Administrator’s work. The FCC—not the Administrator—sets the “contribution factor” (i.e., the percentage

of revenues subject to USF contributions that

communications service providers must remit to the

Fund). 47 C.F.R. § 54.709(a)(3). In determining the

proper contribution factor, the Commission considers

data (including projections of demand for USF

funding, revenues subject to contributions, and

administrative expenses) collected by the Administrator based on filings by service providers. And the

Commission carefully controls the Administrator’s

activity in three significant ways. First, the Commission creates the forms that the Administrator uses to

collect its data. The Commission thereby sets the

stage for the types of data the Administrator will

receive and defines which categories of service

provider must contribute to the Fund. Second, the

Commission independently establishes the contribution factor after reviewing the Administrator’s

demand and expense projections, as well as its

4

calculations of total assessable revenues. At this

stage, the Commission can, and sometimes does,

adjust the numbers provided by the Administrator;

but in either case, the Commission (not the

Administrator) takes the affirmative step of determining and announcing the tentative contribution

factor. The Commission also retains the authority to

revise the contribution factor (sometimes in response

to comments from interested parties) within fourteen

days of its public notice. Third, the Commission acts

as an appellate administrative tribunal that reviews

de novo—and, in appropriate instances, reverses—

decisions by the Administrator relating to the contribution factor or other issues.

The Fifth Circuit ignored the first and third levers

of control, while misapprehending how the second one

works. See Consumers’ Rsch., 109 F.4th at 771. In

particular, the court conflated the public-notice

period, during which the Commission solicits public

comments on the contribution factor that it proposes,

with the process by which the Commission determines the contribution factor. Id. at 750. In sum, the

court’s conclusions were based upon a misunderstanding of the regulatory framework.

II. The statutory scheme provides meaningful

limitations on the Commission’s actions to preserve

and advance universal service, including its management of the Fund. Sections 254(b)–(e) of the

Communications Act provide concrete limitations

that courts have used to review the Commission’s

universal-service decisions. The Commission addresses the statutory bounds of its authority in its

5

decisions, and, on the rare occasions when it has

exceeded those limitations, it has been reversed on

judicial review.

Moreover, as Amici are well aware, the Commission has declined to pursue various proposed reforms

to its USF programs and rules when it has concluded

that those reforms would conflict with the universalservice principles enumerated in Section 254 of the

Communications Act or otherwise exceed the FCC’s

statutory authority. This restraint, as well as the

substantial body of federal case law elaborating on

the statutory limits of the FCC’s authority, demonstrate at a minimum an intelligible principle guiding

the Commission’s conduct. The Fifth Circuit’s contrary conclusion was mistaken.

III. Finally, the Fifth Circuit’s decision endangers

the federal government’s ability to support expanded

access to communications services—an important and

longstanding federal policy. Rather than rely on ad

hoc and piecemeal appropriations to expand the

availability of communications services, Congress

deliberately chose to vest the Commission with

authority to respond nimbly to new developments in

technology—as exemplified by the growth of the

internet and high-speed broadband services. The

Fifth Circuit’s decision would eliminate that flexibility and throw federal efforts to support access to

vital communications services into disarray.

6

ARGUMENT

I. The FCC Is the Ultimate Decisionmaker

When Implementing Universal-Service Programs, and It Controls the Administrator

Through Three Distinct Levers.

In Amici’s experience, the Commission does not

simply “rubber stamp” the Administrator’s work. The

Fifth Circuit’s contrary characterization rested on a

misunderstanding of the regulatory framework. First,

the court overlooked multiple layers of the Commission’s control over the contribution factor—instead

focusing exclusively on the Commission’s review of

the Administrator’s demand and expense projections.

See Consumers’ Rsch., 109 F.4th at 771. (“That [the]

FCC retains discretion to revise the proposed

contribution amount is insufficient.” (citation omitted)). Second, the court overlooked that the FCC

always affirmatively approves or rejects (rather than

passively acquiescing to) the Administrator’s demand

and expense projections. Id. (“The first problem is

that FCC regulations provide that [the Administrator’s] projections take legal effect without formal FCC

approval.”).

The Commission’s control over the contributionfactor determination begins long before the Administrator presents its projections, and it continues even

after the Commission approves those numbers (if it

approves them at all). The Commission’s levers of

control include (1) establishing the inputs for calculating the contribution factor; (2) reviewing the data

that the Administrator collects, revising the data as

needed, and then independently establishing the

7

contribution factor; and (3) handling administrative

appeals of the Administrator’s actions (including its

actions concerning the contribution factor). Individually and collectively, these measures ensure that the

FCC retains close supervision and control over the

Administrator. This regime is a far cry from a mere

rubber stamp—much less an unconstitutional subdelegation of regulatory authority.

The Commission’s comprehensive control is not

only apparent from the Commission’s rules, which

specify that the Administrator “may not make policy,

interpret unclear provisions of the statute or rules, or

interpret the intent of Congress,” and instead must

“seek guidance from the Commission” if the statute or

rules “are unclear” or “do not address a particular

situation.” 47 C.F.R. § 54.702(c). It is also apparent

from how the Commission and the Administrator

actually operate in practice when the FCC establishes

the quarterly contribution factor—a subject on which

Amici have substantial experience.

Step 1: The FCC Determines the Data to

Collect and Controls the Contribution-Factor

Process.

First, the FCC closely regulates what data, or

inputs, the Administrator collects. The Administrator

receives data from communications providers through

two forms: the 499-A and the 499-Q. See Federal

Universal Service Support Mechanisms Quarterly

Contribution Base for the First Quarter 2025,

Universal Serv. Admin. Co., 3 (Dec. 2, 2024),

https://www.usac.org/fcc-filings/2025/firstquarter/financials/USAC%201Q2025%20Universal%

8

20Service%20Contribution%20Base%20Filing.pdf.

The Form 499-A is used to report a service provider’s

actual revenues billed during the prior calendar year,

while the Form 499-Q forecasts the provider’s

revenues for the next calendar quarter. By

determining which providers must fill out these forms

and what the forms require, the FCC exercises control

from the outset of the process.

Each year, the FCC releases a public notice

announcing any intended alterations to its Forms

499-A and 499-Q and invites interested stakeholders

to comment on the changes. See, e.g., Wireline

Competition Bureau Seeks Comment on Proposed

Changes to the 2025 FCC Form 499-A, FCC Form 499Q, and Accompanying Instructions, DA 24-622, 2024

WL 3249293, at *1 (June 28, 2024). Sometimes these

proposed changes are minor. But other times they

reflect policy decisions made by the Commission

during the previous year and significantly alter both

the data that the Administrator receives and the

categories of communications providers that are

required to contribute to the Fund.

For example, the FCC frequently adjusts the

forms to reflect its interpretations of the Communications Act. See, e.g., Wireline Competition Bureau

Releases the 2021 Telecommunications Reporting

Worksheets and Accompanying Instructions, 35 FCC

Rcd. 13671, 13672 & n.7 (2020) (updating Form 499A to categorize SMS and MMS messaging services as

“information services” in line with its decision in

Petitions for Declaratory Ruling on Regulatory Status

of Wireless Messaging Service, 33 FCC Rcd. 12075

(2018)); Wireline Competition Bureau Seeks Comment

9

on Proposed Changes to the 2016 FCC Form 499-A,

FCC Form 499-Q, and Accompanying Instructions, 30

FCC Rcd. 13510, 13511 & n.4 (2015) (adjusting Form

499-A to require non-interconnected voice over

internet protocol services to register per Contributions to the Telecommunications Relay Services Fund,

26 FCC Rcd. 14532, 14542 (2011)). In this way, the

Commission exerts comprehensive control over the

contribution-factor process not only through its

actions directed primarily at the Administrator, but

also through its other decisions directly affecting the

service providers that must contribute to the Fund.

The FCC also engages in policymaking with realworld effects when it determines which providers are

exempt from contributing to the Fund because their

revenues are “de minimis.” See 47 C.F.R. § 54.708

(defining de minimis contributors as those whose

total contribution would be less than $10,000). The

Commission adjusts this de minimis threshold

periodically and incorporates those changes into its

forms. See, e.g., Wireline Competition Bureau Announces Release of the Revised 2010 FCC Forms 499A and 499-Q and Accompanying Instructions, 25 FCC

Rcd. 1778, 1778 (2010) (adjusting the de minimis

“estimation factor”); Proposed Change to FCC Form

499-A, FCC Form 499-Q, and Accompanying

Instructions, 77 Fed. Reg. 74010, 74011 (Dec. 12,

2012) (similar).

10

Step 2: The Administrator Collects and

Compiles the Data, Which the FCC Reviews,

Revises as Necessary, and Uses to Determine

the Contribution Factor.

After the Commission decides what data to collect,

the Administrator performs the purely ministerial

task of collecting that data and performing

mechanical calculations using the data. See, e.g.,

Federal Universal Service Support Mechanisms

Quarterly Contribution Base for the First Quarter

2025, Universal Serv. Admin. Co., 4-5 (Dec. 2, 2024),

https://www.usac.org/fcc-filings/2025/firstquarter/financials/USAC%201Q2025%20Universal%

20Service%20Contribution%20Base%20Filing.pdf

(providing, “[f]or the FCC’s review,” the total

projected revenue base for the first quarter of 2025).

The Administrator calculates and reports to the FCC

projected demand and expenses incurred in administering the various universal-service programs, as

well as the “total contribution base” (i.e., the revenues

assessable for contributions purposes, based on the

information that service providers report to the

Administrator on their Form 499 filings). See 47

C.F.R.

§ 54.709(a)(3).2

As

described

in

a

2 The Fifth Circuit expressed concern that the Commission

lacks adequate time to review the Administrator’s numbers

because the proposals “play[ ] out just days before the new

quarter begins.” Consumers’ Rsch., 109 F.4th at 771 n.17. The

regulations, however, require the Administrator to give the

Commission its projection for the total contribution base about a

month before the quarter ends. 47 C.F.R. § 54.709(a)(3). In

Amici’s experience, this allows plenty of time to review the

Administrator’s proposal.

11

Memorandum of Understanding between the FCC

and the Administrator (and reflecting longstanding

practice), the Commission’s Office of the Managing

Director (OMD) then reviews the Administrator’s

projections on two separate occasions. First, the

Administrator informally shares its projections with

OMD, before it formally submits the projections to the

Commission. Memorandum of Understanding

Between the Federal Communications Commission

and the Universal Service Administrative Company, 7

(Oct. 17, 2024), www.fcc.gov/sites/default/files/usacmou.pdf. OMD then provides “any necessary

feedback” to the Administrator on its projections. Id.

After this informal process, the Administrator

publicly submits its numbers to the Commission. See

47 C.F.R. § 54.709(a)(3).

Upon receiving the Administrator’s formal

submission, OMD reviews these projections for a

second time and, if it agrees, the Commission uses

them to calculate a tentative contribution factor,

which it announces in a public notice. Id.; see, e.g.,

Proposed Fourth Quarter 2024 Universal Service

Contribution Factor, DA 24-924, 2024 WL 4185702, at

*1 (FCC Sept. 11, 2024). The release of the public

notice announcing a tentative contribution factor

triggers a fourteen-day period within which the

Commission may adjust its contribution-factor

calculation to reflect any changes to the projections of

demand and/or administrative expenses it determines

“will serve the public interest.” 47 C.F.R.

§ 54.709(a)(3). If—after receiving any comments from

interested parties—the Commission remains satisfied with the contribution factor it calculated and

12

proposed, the contribution factor and underlying

projections are “deemed approved.” Id.

It is therefore not true, as the Fifth Circuit

believed, that the Administrator proposes a contribution factor that “take[s] legal effect without formal

[Commission] approval.” Consumers’ Rsch., 109 F.4th

at 771; see also id. (suggesting that the Commission

does not “affirmatively act to give legal effect” to the

contribution factor). The Fifth Circuit got it wrong

because it conflated the process by which the FCC

establishes the contribution factor with the subsequent fourteen-day public-notice period. See Consumers’ Rsch., 109 F.4th at 750 (suggesting, incorrectly,

that because the FCC’s public notice is deemed

approved within fourteen days if no action is taken,

the FCC does not substantively review the

Administrator’s projections).

The FCC—not the Administrator—establishes the

tentative contribution factor in the initial public

notice, as explained above. 47 C.F.R. § 54.709(a)(3)

(“Total projected expenses for the federal universal

service support mechanisms for each quarter must be

approved by the Commission before they are used to

calculate the quarterly contribution factor and

individual contributions . . . . [T]he . . . contribution

factor shall be announced by the Commission in a

public notice and shall be made available on the

Commission’s website.” (emphasis added)). The

Administrator does not propose a contribution factor.

Id. It provides projections, which the Commission

reviews and then the Commission publishes the

13

public notice, which includes the contribution factor

that the Commission deems appropriate. The Commission retains plenary control over this process and

can, and does, adjust the Administrator’s projections

as needed in the initial public notice. See, e.g.,

Proposed First Quarter 2025 Universal Service

Contribution Factor, DA 24-1245, 2024 WL 5105635,

at *2 (FCC OMD Dec. 12, 2024) (explaining that FCC

bureaus had “instructed [the Administrator] . . . to

apply $48 million in unused funds to offset the

$168.83 million projected Rural Health Care program

demand” and that “[t]his offset reduces the first

quarter 2025 contribution factor to a level below what

the contribution factor would be based on USAC’s

filings.”); Proposed Fourth Quarter 2024 Universal

Service Contribution Factor, DA 24-924, 2024 WL

4185702, at *2 (FCC OMD Sept. 11, 2024) (similar);

Proposed Third Quarter 2024 Universal Service

Contribution Factor, DA 24-557, 2024 WL 3010573, at

*1 (FCC OMD June 12, 2024) (similar); Proposed

Fourth Quarter 2023 Universal Service Contribution

Factor, 38 FCC Rcd. 8362, 8364 (FCC OMD 2023)

(similar); Proposed Third Quarter 2023 Universal

Serv. Contribution Factor, 38 FCC Rcd. 5670, 5672

(FCC OMD 2023) (similar).3

3 It should come as no surprise that the Commission often

agrees with the Administrator’s projections at this stage. After

all, this is the second round of review. By the time the

Administrator formally submits its projections to the

Commission, OMD has already informally reviewed and

14

The Fifth Circuit overlooked this review process

and instead focused on the following fourteen-day

public-notice period, Consumers’ Rsch., 109 F.4th at

750, which affords the Commission a further

opportunity to determine the final contribution factor.

After the Commission has reviewed the Administrator’s projections and after the Commission has

already determined a contribution factor, the

Commission can, and at times does, revise the

contribution factor, sometimes in response to

comments from interested stakeholders. See, e.g.,

Revised Second Quarter 2003 Universal Service

Contribution Factor, 18 FCC Rcd. 5097, 5097 & n.2

(2003) (reconsidering the contribution factor proposed

in a previous public notice). In this context, it makes

sense that the contribution factor—developed by the

Commission itself based on data from the

Administrator that the Commission has reviewed and

sometimes adjusted—is “deemed approved” unless

the Commission takes an affirmative step to revise it.

47 C.F.R. § 54.709(a)(3). But that does not mean that

the contribution factor “take[s] legal effect without

formal [Commission] approval,” as the Fifth Circuit

contended. Consumers’ Rsch., 109 F.4th at 771.

provided “any necessary feedback” on the Administrator’s

projections. Memorandum of Understanding Between the

Federal Communications Commission and the Universal Service

Administrative

Company,

7

(Oct.

17,

2024),

www.fcc.gov/sites/default/files/usac-mou.pdf.

15

Step 3: The FCC Conducts De Novo Appellate

Review of the Administrator’s Decisions.

The FCC’s comprehensive control over the

Administrator is also clear from its role in reviewing,

de novo, the Administrator’s actions (including those

concerning the contribution factor) as an appellate

administrative tribunal. Under the FCC’s rules,

“[a]ny party aggrieved by an action taken by the

Administrator, after seeking review from the

Administrator, may then seek review from the

Federal Communications Commission.” 47 C.F.R.

§ 54.719(b); see also id. § 54.723 (specifying “de novo”

review of Administrator’s decisions). In this context,

too, the Commission not only supervises the

Administrator’s work, but also it can—and often

does—reverse the Administrator’s decisions. See, e.g.,

Universal Service Contribution Methodology, Request

for Review of Decision of the Universal Service

Administrator by BT Americas Inc., 37 FCC Rcd.

9216, 9216 (2022) (reversing the Administrator’s

decision requiring a company to report overcharges on

Form 499-A); Universal Service Fund Contribution

Methodology, Request for Review of Decision of the

Universal Service Administrator by Network

Enhanced Telecom, LLP, 25 FCC Rcd. 14533 (2010)

(reversing the Administrator’s decision classifying

petitioner’s services and remanding for further

proceedings); Universal Service Contribution Methodology, Requests for Review of Decisions of Universal

Service Administrator by Curry IP Solutions, 23 FCC

Rcd. 14661, 14661 (2008) (granting all six requests

seeking reversal of the Administrator’s assessment of

late fees).

16

The FCC also provides guidance that the

Administrator must implement. In 2012, for example,

the FCC confronted the question of when a wholesaler

must pay contributions. Universal Service Contribution Methodology, Application for Review of Decision

of the Wireline Competition Bureau filed by Global

Crossing Bandwidth, Inc., 27 FCC Rcd. 13780, 13781

(2012). Under FCC rules, wholesalers are exempt

from paying contributions so long as resellers—the

entities that buy from the wholesalers—are

contributing to the Fund. Id. But a wholesaler may

not always know if its reseller is paying contributions,

so the FCC exempts the wholesaler if it has a

“reasonable expectation” that its customer would

contribute. Id. at 13782. The exemption standard had

created significant confusion, so the FCC “provide[d]

guidance” to the Administrator on how to assess that

standard. Id. After issuing this decision, the FCC

updated Form 499-A to reflect its decision. Wireline

Competition Bureau Releases 2014 Telecommunications Reporting Worksheet and Accompanying

Instructions, 29 FCC Rcd. 939, 940 (2014).

*

*

*

Through the three levers discussed above, the FCC

maintains pervasive control over the Administrator

and the data it collects. And these direct controls over

the Administrator’s functions are not the only way

that the Commission exercises its control over the

contribution factor. The Commission’s regulations

also provide significant parameters for the ultimate

contribution factor, such as setting forth caps for the

total funds attributable to specific universal-service

programs. See, e.g., 47 C.F.R. § 54.423 (Lifeline

17

Program); id. § 54.507 (School and Libraries

Program); id. § 54.619 (Rural Health Care Program).

These budget-capping regulations constitute direct

Commission action that shapes the ultimate contribution factor even before the Administrator sends its

projections. For all these reasons, the Fifth Circuit

erred in concluding that the FCC’s “subdelegation” to

the Administrator raises constitutional concerns.

II. The FCC Is Well Aware of Statutory

Limitations on Its Authority and Case Law

that Applies and Defines Those Limitations.

While the Commission exercises control over the

Administrator, Congress controls the Commission

through the statutory framework it enacted. The

statute, and the body of case law interpreting it, limit

the Commission’s discretion and provide an

intelligible principle to guide that discretion.

A. Section 254 Provides Intelligible Principles to Guide the USF’s Contribution

Factor.

Section 254 provides four limiting principles

regarding the USF—located in Subsections (b), (c),

(d), and (e)—and Article III courts rely on those

principles when reviewing the Commission’s

decisions.4

First, Section 254(b) sets forth a list of guiding

principles, which the Commission must use for its

4 The Fifth Circuit’s en banc decision addressed only three of

these statutory provisions: Section 254(b)–(d). Consumers’ Rsch,

109 F.4th at 760.

18

universal-service policies. 47 U.S.C. § 254(b) (“[T]he

Commission shall base policies for the preservation

and advancement of universal service on the following

principles . . . .” (emphasis added)). These principles

include ensuring “[q]uality services . . . at just,

reasonable, and affordable rates,” id. § 254(b)(1), and

providing “low-income consumers and those in rural,

insular, and high cost areas” with services “that are

reasonably comparable to those services provided in

urban areas . . . .” Id. § 254(b)(3). Reviewing courts

have evaluated the Commission’s decisions against

these principles. See Tri-Cnty. Tel. Ass’n v. FCC, 999

F.3d 714, 722 (D.C. Cir. 2021) (per curiam)

(construing Sections 254(b)(3) and 254(b)(4) and

holding that the Commission’s orders complied with

them); AT&T, Inc. v. FCC, 886 F.3d 1236, 1249–1253

(D.C. Cir. 2018) (considering challenges that the

Commission failed to adhere to two of Section 254(b)’s

principles); Qwest Corp. v. FCC, 258 F.3d 1191, 1200

(10th Cir. 2001) (describing the Commission’s duty to

consider the principles enumerated in Section 254(b)

as “mandatory”). On the rare occasions when the

Commission’s orders failed to adhere to these

mandatory principles, Article III courts have stepped

in. See Quest Comm’cns Int’l, Inc. v. FCC, 398 F.3d

1222, 1234 (10th Cir. 2005) (concluding that the

Commission incorrectly applied the principles in

Section 254(b) because it could not “ignore[ ] all but

one principle enumerated in [the statute]”); see also

Tex. Off. of Pub. Util. Couns. v. FCC, 183 F.3d 393,

434 (5th Cir. 1999) (“TOPUC”) (observing that the

FCC’s discretion under Section 254 “is not absolute”).

19

Second, Section 254(c) confines the types of

communication services that universal-service funds

may support to “telecommunication services.” 47

U.S.C. § 254(c)(1). In deciding which telecommunication services to support, the Commission

“shall consider the extent to which” they “are

essential to education, public health, or public safety”;

have “been subscribed to by a substantial majority of

residential customers”; “are being deployed in public

telecommunications networks by telecommunications

carriers”; and “are consistent with the public interest,

convenience, and necessity.” Id. The statute therefore

limits the types of services the Fund may cover.

Reviewing courts may consider, and indeed have

considered, these statutory limitations when assessing whether a decision by the Commission to fund

certain services has contravened the statute’s

requirements. See, e.g., Direct Comm’cns Cedar

Valley, LLC v. FCC, 753 F.3d 1015, 1044–1045 (10th

Cir. 2014) (considering whether the Commission’s

decision to cover voice-over-internet-protocol services

exceeded its statutory authority).

Third, Section 254(d) requires, among other

things, that the Commission use “specific, predictable, and sufficient mechanisms” to determine contributions from service providers. 47 U.S.C. § 254(d).

This provides, at the very least, an “intelligible

principle” with which to evaluate expansions of the

contributor base. See Rural Cellular Ass’n &

Universal Serv. v. FCC, 685 F.3d 1083, 1091–1092

(D.C. Cir. 2012) (holding that the Commission’s order

assessing contributions for the Fund satisfied Section

254(d) and that the statute does not “grant to the

20

agency a carte blanche”); Vonage Holdings Corp. v.

FCC, 489 F.3d 1232, 1240–1241 (D.C. Cir. 2007)

(analyzing the language of Section 254(d) and, based

on that analysis, approving the Commission’s

decision to include voice-over-internet-protocol

providers within the USF contribution base).

Finally, Section 254(e) requires that federal

support provided by the Fund “be explicit and

sufficient to achieve the purposes of this section.” 47

U.S.C. § 254(e). The requirements of “explicit” and

“sufficient” support provide an additional lens

through which courts evaluate whether the Commission’s decisions follow Congress’s command, in particular with respect to the size of the Fund. See Alenco

Comm’cns, Inc. v. FCC, 201 F.3d 608, 620 (5th Cir.

2000) (observing that “excessive funding may itself

violate the sufficiency requirements of” Section

254(e)); TOPUC, 183 F.3d at 425 (“Because the

agency continues to require implicit subsidies . . . in

violation of a plain, direct statutory command, we

reverse its decision . . . .”).

Taken together, these provisions guide (1) the

overall policy of the Fund, 47 U.S.C. § 254(b);

(2) which communication services that Fund may

subsidize, id. § 254(c); (3) the mechanism through

which telecommunications carriers must contribute

to the Fund, id. § 254(d); and (4) even the size and

budget of the Fund, id. § 254(e) (requiring that all

support must be “sufficient”).

21

B. In Amici’s Experience, the Commission

Has Declined to Adopt Proposals Beyond

Its Statutorily Delegated Authority.

Since the creation of the Fund in 1997, the

Commission has expressly considered and rejected

regulatory proposals that would exceed the statutory

authority Congress granted it under the Communications Act. Indeed, in the very first order

establishing rules for the various USF programs, the

Commission declined to adopt additional universalservice principles, explaining that it would “address

the issue of access to affordable telecommunications

services by only the particular groups identified by

Congress in section 254.” Federal-State Joint Board

on Universal Service, 12 FCC Rcd. 8776, 8804, ¶ 54

(1997) (“1997 USF Order”) (emphasis added), aff’d in

part, rev’d in part, and remanded in part on other

grounds, TOPUC, 183 F.3d 393. The Commission also

rejected proposals to provide subsidies under the

Lifeline Program to communications providers that

were not designated as “eligible telecommunications

carriers,” explaining that doing so would be

inconsistent with Section 254(e) of the Act. 1997 USF

Order, at 8971–8972, ¶¶ 369–370. The Commission

even limited the use of universal-service support to a

single connection for primary residences and

businesses, reasoning that providing support to

“second residential connections, second residences,

and businesses with multiple connections may be

inconsistent with the goals of universal service.” Id.

at 8829, ¶ 95.

More recently, the Commission has been mindful

of the limits of its authority in considering proposals

22

to reform certain USF programs. In its 2011 Connect

America Fund order, the Commission reformed the

High Cost Program to “promot[e] ubiquitous deployment of, and consumer access to, both traditional

voice calling capabilities and modern broadband

services over fixed and mobile networks.” See Connect

Am. Fund, 26 FCC Rcd. 17663, 17683, ¶ 60 (2011). In

doing so, the Commission recognized that it had “a

‘mandatory duty’ to adopt universal service policies

that advance the principles outlined in section 254(b),

and [it has] the authority to ‘create some inducement’

to ensure that those principles are achieved.” Id. at

17686, ¶ 65 (quoting Qwest Corp., 258 F.3d at 1200,

1204). To that end, the Commission required service

providers to offer broadband service as a condition of

receiving federal universal-service support (while

declining to add broadband to the list of services

expressly supported by universal-service funding). Id.

at 17686–17687, ¶ 65. The Tenth Circuit later denied

petitions for review challenging the Commission’s

decision. See Direct Comm’cns Cedar Valley, 753 F.3d

at 1033.

As for the current USF contribution system, on

multiple occasions, the Commission has considered

potential changes to the established assessment

methodology. In 2008, for example, the then-FCC

Chair proposed “a telephone numbers-based methodology under which contributors [would] pay a

constant, flat-rate assessment” of $1.00 per residential number per month “based on the number of

telephone numbers they [had] assigned to residential

end users.” High-Cost Universal Service Support, 24

FCC Rcd. 6475, 6536, ¶ 92 (Appx. A: Chairman’s

23

Draft Proposal) (2008). Though the proposal to move

from a revenues-based contribution mechanism to a

connections-based contribution mechanism was circulated to the Commissioners and placed on the

Commission’s monthly meeting agenda for a vote, it

was ultimately scrapped. See id. at 6493, ¶ 40. And

when the FCC revisited the issue four years later, it

demonstrated its acute awareness of the bounds of its

authority under the Communications Act by asking

interested parties to comment on “whether a

connections-based methodology is consistent with the

Fifth Circuit’s TOPUC decision,” which interpreted

Sections 2(b), 254(b), and 254(d) of the Communications Act to bar the Commission from assessing USF

contributions on intrastate (as opposed to interstate)

service revenues. Universal Serv. Contribution

Methodology A Nat’l Broadband Plan for Our Future,

27 FCC Rcd. 5357, 5439, ¶ 225 (2012) (citing TOPUC,

183 F.3d at 446–448); cf. 47 U.S.C. § 254(d) (“Every

telecommunications carrier that provides interstate

telecommunications services shall contribute[.]”

(emphasis added)). To date, the Commission has

declined to change the contribution methodology

established more than twenty-five years ago, in part

because of concerns over the bounds of its statutory

authority.

These examples demonstrate the Commission’s

commitment to ensuring that its actions in overseeing

the Fund and the associated contributions system

comport with Congress’s commands.

24

III. The Fifth Circuit’s Decision Hinders

Regulatory Flexibility and Jeopardizes

Important Federal Programs.

“Universal service has been a fundamental goal of

federal telecommunications regulation since the

passage of the Communications Act of 1934.” Alenco

Comm’cns, 201 F.3d at 614 (citing 47 U.S.C. § 151).

Consistent with that goal, Congress determined that

“[a]ccess to advanced telecommunications and information services should be provided in all regions of

the Nation.” 47 U.S.C. § 254(b)(2). In tasking the

Commission with “preserv[ing] and advanc[ing]

universal service,” id. § 254(d), Congress vested the

agency with some flexibility to adopt universalservice rules and policies that keep pace with

developments in this ever-changing industry. If

allowed to stand, however, the Fifth Circuit’s decision

would both undermine that flexibility and jeopardize

important universal-service programs on which tens

of millions of individuals rely.

As the Fifth Circuit recognized more than fifty

years ago, “[t]he Communications Act was designed to

endow the Commission with sufficiently elastic

powers such that it could readily accommodate

dynamic new developments in the field of

communications.” Gen. Tel. Co. of the Sw. v. United

States, 449 F.2d 846, 853 (5th Cir. 1971); see also

Loper Bright Enters. v. Raimondo, 603 U.S. 369, 394

(2024) (“In a case involving an agency, of course, the

statute’s meaning may well be that the agency is

authorized to exercise a degree of discretion. Congress

has often enacted such statutes.”). That is

particularly true for universal service. When enacting

25

Section 254 of the Communications Act, Congress

expressly delegated to the Commission authority over

universal service because of the inherently fastchanging nature of communications services and

related technologies. This is clear from the plain text

of the statute, which defines universal service as “an

evolving level of telecommunications services that the

Commission shall establish periodically under this

section, taking into account advances in telecommunications and information technologies and

services.” 47 U.S.C. § 254(c)(1) (emphasis added).

Congress thus recognized that services and

technologies that advance universal service

“evolv[e],” that their definition must be updated

“periodically,” and that such updates must account for

rapid change and advancement. Id. The need for

flexibility is clear from the legislative history of that

definition as well: Congress authorized the Commission to define universal service based on the realities

of “modern life” and market conditions, so that the

definition “include[s], at a minimum, any telecommunications service that is subscribed to by a

substantial majority of residential customers.”

SENATE REP. NO. 104-23, at 27.

By delegating this authority to the Commission,

rather than simply undertaking ad hoc and piecemeal

appropriations to advance universal service, cf.

Consumers’ Rsch. 109 F.4th at 762–763 (expressing

concern that Section 254 differs from the ordinary

congressional appropriations process), Congress

recognized that the FCC should have an appropriate

degree of flexibility to respond to new developments

in technology—as exemplified by the growth of the

26

internet and broadband services. A contrary approach

that deprived the FCC of this flexibility would result

in “extensive ossification of our regulatory system—

the signal virtue of which is its flexibility.” Philip

Morris USA, Inc. v. Vilsack, 736 F.3d 284, 294 (4th

Cir. 2013). “The Constitution has never been regarded

as denying to the Congress the necessary resources of

flexibility and practicality, which will enable it to

perform its function.” Panama Refin. Co. v. Ryan, 293

U.S. 388, 421 (1935).

The statutory provisions establishing the Fund—

and the funding mechanisms underlying it—reflect

these practical considerations. And the discretion

that Congress expressly delegated to the Commission—subject always to the statutory guardrails

specified in Section 254—would be eviscerated if this

Court endorsed the Fifth Circuit’s view that the FCC’s

existing mechanisms for funding universal service are

unconstitutional.

The existing USF programs—including the High

Cost Program, the E-Rate Program, the Rural

Healthcare Program, and the Lifeline Program—are

consistent with the Commission’s statutory mandate

to advance universal service by (i) facilitating the

deployment of communications infrastructure in

rural areas, (ii) ensuring that schools, libraries, and

rural healthcare providers have access to affordable

internet and telecommunications services, and

(iii) enabling low-income households to afford

telecommunications services. Amici have seen the

substantial benefits that USF programs have

provided to rural areas, low-income households, and

27

schools and libraries. Indeed, the Fund has expanded

access to services for tens of millions of people,

providing a crucial lifeline that enables them to

connect to the internet and maintain affordable

telephone services. The continued viability of these

programs—and the ability of program participants to

continue receiving these benefits—are the real-world

implications of this case.

And that is not all. The decision below undermines

long-term planning decisions by service providers

that have relied on the continuing availability of

universal-service support to invest billions of dollars

to expand their communications networks to reach

under-served communities (often in hard-to-reach

and high-cost areas). The resulting financial losses

experienced by these service providers would impede

their ability to serve both individuals who directly

benefit from the Fund and other customers as well.

Amici respectfully urge the Court to preserve these

vital universal-service programs, and both the

consumer benefits and economic growth that they

sustain, by reversing the Fifth Circuit’s decision here.

CONCLUSION

For the foregoing reasons, this Court should

reverse the judgment of the United States Court of

Appeals for the Fifth Circuit.

28

Respectfully submitted,

PETER KARANJIA

Counsel of Record

IAN FORBES

SERGIO FILIPE ZANUTTA VALENTE

DLA PIPER LLP (US)

500 Eighth Street, NW

Washington, D.C. 20004

Tel. (202) 799-4000

peter.karanjia@us.dlapiper.com

BEN C. FABENS-LASSEN

DLA PIPER LLP (US)

2000 Avenue of the Stars

Suite 400

Los Angeles, CA 90067

Counsel for Amici Curiae

January 16, 2025