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

Nos. 24-354 and 24-422

In the

Supreme Court of the United States

FEDERAL COMMUNICATIONS COMMISSION, et al.,

Petitioners,

v.

CONSUMERS’ RESEARCH, et al.,

Respondents.

SCHOOLS, HEALTH & LIBRARIES

BROADBAND COALITION, et al.,

Petitioners,

v.

CONSUMERS’ RESEARCH, et al.,

Respondents.

On Writ of Certiorari to the United States

Court of A ppeals for the Fifth Circuit

AMICUS CURIAE BRIEF OF FORMER

LEADERSHIP OF THE UNIVERSAL

SERVICE ADMINISTRATIVE COMPANY

IN SUPPORT OF PETITIONERS

Gina Spade

Counsel of Record

Carol Simpson

Jennifer McKee

Broadband Legal

Strategies, LLC

1118 Rankin Drive

Lawrence, KS 66049

(202) 789-3530

gina@broadbandlegal.com

Counsel for Former Leadership

of the Universal Service

Administrative Company

i

TABLE OF CONTENTS

Page

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

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . . ii

INTERESTS OF AMICUS CURIAE . . . . . . . . . . . . . . 1

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

A RGU M EN T: T H E DELEGAT ION OF

MINISTERIAL DUTIES TO USAC BY

THE FCC IS LAWFUL UNDER THIS

COURT’S PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 4

I.

USAC Is Subordinate to the FCC . . . . . . . . . . . . 4

A. USAC’s Limited Role and Organizational Structure Demonstrate It Is

Subordinate to the FCC . . . . . . . . . . . . . . . . 6

B. USAC Has a Subordinate Role in the

Calculation of the Quarterly Universal

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

II. USAC Is Subject to the FCC’s Authority

and Surveillance . . . . . . . . . . . . . . . . . . . . . . . . . 17

III. USAC’s Role Satisf ies This Cour t’s

Standard for Lawful Agency Delegation

to a Private Entity . . . . . . . . . . . . . . . . . . . . . . . . 24

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

ii

TABLE OF CITED AUTHORITIES

Page

CASES

Carter v. Carter Coal,

298 U.S. 238 (1936) . . . . . . . . . . . . . . . . . . . . . . . . 24, 25

Consumers’ Rsch. v. FCC,

109 F.4th 743 (5th Cir. 2024), cert. granted,

2024 WL 4864036 (U.S. Nov. 22, 2024)

(No. 24-354) . . . . . . . . . . . . . . . . . . . . 2, 8, 11, 13, 15, 16

Consumers’ Rsch. v. FCC,

67 F.4th 773 (6th Cir. 2023), cert. denied,

144 S. Ct. 2628 (2024) . . . . . . . . . . . . . . . . . . . . . . 10, 16

Oklahoma v. United States,

62 F.4th 221 (6th Cir. 2023) . . . . . . . . . . . . . . . . . . . . 16

Sunshine Anthracite Coal Co. v. Adkins,

310 U.S. 381 (1940) . . . . . . . . . . . . . . . . . . . . 2, 4, 17, 25

STATUTES

Communications Act of 1934, ch. 652, 48 Stat. 1064

(47 U.S.C. 151 et seq.) . . . . . . . . . . . . . . . . . . . . . . . . . . 5

47 U.S.C. § 151 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

47 U.S.C. § 254 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

47 U.S.C. § 254(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

iii

Cited Authorities

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47 U.S.C. § 254(h)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . 13

47 U.S.C. § 254(h)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . 13

47 U.S.C. § 254(h)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

REGULATIONS

47 C.F.R. § 54.420(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

47 C.F.R. § 54.502 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

47 C.F.R. § 54.505(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

47 C.F.R. § 54.516 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

47 C.F.R. § 54.631 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

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

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

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

47 C.F.R. § 54.702(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

47 C.F.R. § 54.702(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

47 C.F.R. § 54.702(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

iv

Cited Authorities

Page

47 C.F.R. § 54.702(j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

47 C.F.R. § 54.703(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

47 C.F.R. § 54.704(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

47 C.F.R. § 54.704(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

47 C.F.R. § 54.706 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

47 C.F.R. § 54.706(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

47 C.F.R. § 54.709(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

47 C.F.R. § 54.709(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

47 C.F.R. § 54.711(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

47 C.F.R. § 54.711(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

47 C.F.R. § 54.715(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

47 C.F.R. § 54.715(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

47 C.F.R. § 54.715(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

47 C.F.R. § 54.717 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

47 C.F.R. § 54.719 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

v

Cited Authorities

Page

47 C.F.R. § 54.719(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

47 C.F.R. § 54.723(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

OTHER AUTHORITIES

FED. COMMC’NS COMM’N:

Connect America Fund, Report and Order and

Further Notice of Proposed Rulemaking, 26

FCC Rcd. 17663 (2011), pets. for review denied, In

Re FCC 11-161, 753 F.3d 1015 (10th Cir. 2014) . . . . . 12

E-Rate FY 2024 Program Integrity Assurance

FCC Form 471 Review Procedures, Letter,

39 FCC Rcd. 2922 (2024) . . . . . . . . . . . . . . . . . . . . . . . 9

FCC Agency Financial Repor t for Fiscal

Year 2 024 , Repor t , DA-2 4 -114 2 (OM D

rel. Nov. 15, 2024), https://docs.fcc.gov/

public/attachments/DA-24-1142A1.pdf . . . . . . . . 20, 21

FCC Guidance to USAC on E-rate Competitive

Bidding Rules, Letter, DA 24-1287 (WCB

rel. Dec. 20, 2024), https://docs.fcc.gov/

public/attachments/DA-24-1287A1.pdf . . . . . . . . . . . 23

FCC Off. Inspector Gen., FCC’s Top Performance

and Management Challenges for FY 2025

(2014), https://w w w.fcc.gov/sites/default/

files/fy25_fcc_tmpc_10012024.pdf . . . . . . . . . . . . . . 24

vi

Cited Authorities

Page

Letter from Jessica Rosenworcel, Chairwoman,

Fed. Commc’ns Comm’n, to Sen. Ben Ray

Luján (Jan. 12, 2024), https://docs.fcc.gov/

public/attachments/DOC-400113A1.pdf . . . . . . . . . . . 8

Letter from Mark Stephens, Managing Director,

Fed. Commc’ns Comm’n, to Radha Sekar, Chief

Exec. Officer, Universal Serv. Admin. Co. (Dec.

19, 2018), https://www.fcc.gov/sites/default/

files/2018-procurement-review-ltr121918.pdf . . . . . . 9

Letter from Mark Stephens, Managing Dir., Fed.

Commc’ns Comm’n, to Radha Sekar, Chief

Exec. Officer, Universal Serv. Admin. Co. (Jan.

14, 2020), https://www.fcc.gov/sites/default/files/

fcc-afr-findings-ltr-to-usac-01142020.pdf . . . . . . . . 21

L ife li n e a n d L i n k Up R e f o r m a n d

Modernization, Third Report and Order,

Further Report and Order, and Order on

Reconsideration, 31 FCC Rcd. 3962 (2016) . . . . . . . 12

Lifeline Program for Low-Income Consumers,

F C C , h t t p s : / / w w w. f c c . g o v / g e n e r a l /

li feline -prog ram-low-income - consumers

(last visited Jan. 6, 2025) . . . . . . . . . . . . . . . . . . . . . . 12

Lifeline Support for Affordable Communications,

FCC, https://www.fcc.gov/lifeline-consumers

(last visited Jan. 6, 2025) . . . . . . . . . . . . . . . . . . . . . . 12

vii

Cited Authorities

Page

Memora ndum of Underst a nd i ng Bet ween

the Federal Communications Commission

and the Universal Service Administrative

Company (Oct. 17, 2024), https://www.fcc.

gov/sites/default/files/usac-mou.pdf . . . . . . . . . . . . . . 6

Mo d e r n i z i n g t h e E - r a t e P r o g r a m f o r

Schools and Libraries, Report and Order,

29 FCC Rcd. 8870 (2014) . . . . . . . . . . . . . . . . . . . . . . 21

Proposed Four th Quar ter 2024 Universal

Service Contribution Factor, Public Notice,

DA 24-494 (rel. Sept. 11, 2024) . . . . . . . . . . . . . . . . . 15

Requests for Review and/or Waiver of Decisions

of the Universal Service Administrator by

Accomack County Public School, Order,

38 FCC Rcd. 330 (WCB 2023) . . . . . . . . . . . . . . . . . . 22

Rural Digital Opportunity Fund; Connect America

Fund, WC Docket Nos. 19-126 and 10-90,

Report and Order, 35 FCC Rcd. 686 (2020) . . . . . . 12

Rural Health Care Program Funding Year

2024 Funding Request Review Procedures,

Letter, 39 FCC Rcd. 4125 (2024) . . . . . . . . . . . . . . . .10

Streamlined Resolution of Requests Related

t o Ac ti o n s b y t h e Univ e r s a l Se r v i c e

Administrative Company, Public Notice, DA

24-482 (rel. June 3, 2024), https://docs.fcc.

gov/public/attachments/DA-24-482A1.pdf . . . . . . . . 18

viii

Cited Authorities

Page

Streamlined Resolution of Requests Related

t o Ac ti o n s b y t h e Univ e r s a l Se r v i c e

Administrative Company, Public Notice, DA

24-862 (rel. Sept. 3, 2024), https://docs.fcc.

gov/public/attachments/DA-24-862A1.pdf . . . . . . . . 18

Streamlined Resolution of Requests Related

t o Ac ti o n s b y t h e Univ e r s a l Se r v i c e

Administrative, P ublic Notice, DA 2 4 973 (rel. Oct. 1, 2024), https://docs.fcc.gov/

public/attachments/DA-24-973A1.pdf . . . . . . . . . . . 18

Streamlined Resolution of Requests Related

t o Ac ti o n s b y t h e Univ e r s a l Se r v i c e

Administrative, P ublic Notice, DA 2 4 1169 (rel. Dec. 2, 2024), https://docs.fcc.

gov/public/attachments/DA-24-1169A1.pdf . . . . . . . 18

Testimony of Jessica Rosenworcel, Chairwoman,

Fed. Commc’ns Comm’n, Before the Subcomm. on

Commc’ns & Tech. of the H. Comm. on Energy &

Com., 118th Cong. (Nov. 30, 2023), https://docs.fcc.

gov/public/attachments/DOC-398881A1.pdf . . . . . . 18

Universal Service Fund General Management

& Oversight, FCC, https://w w w.fcc.gov/

universal-service-fund-general-managementand-oversight (last visited Jan 9, 2025) . . . . . . . . . . 23

ix

Cited Authorities

Page

Wireline Competition Bureau Announces

E-Rate and RHC Programs’ Inflation-Based

Caps for Funding Year 2024, Pub. Notice,

39 FCC Rcd. 2206 (Mar. 8, 2024) . . . . . . . . . . . . . . . 13

MISCELLANEOUS:

2023 Annual Report, Universal Serv. Admin.

Co., https://www.usac.org/wp-content/uploads/

about/documents/annual-reports/2023/2023_

USAC_Annual_Report.pdf . . . . . . . . . . . . . . . . . . . . . 5

Audit Committee Briefing Book, Universal Serv.

Admin. Co. (Oct. 28, 2024) (USAC Audit

Comm. Briefing Book), https://w w w.usac.

org/wp-content/uploads/about/documents/

leadership/materials/audit/2024/2024-10 28-AC-Briefing-Book-Public.pdf . . . . . . . . . . . . . . . . 10

Beneficiary & Contributor Audit Program

(BCA P), Un iver sa l S er v. A d m i n. Co.,

h t t p s : // w w w. u s a c . o r g /a b o u t /a p p e a l s audits/ beneficiary-and-contributor-auditprogram-bcap/ (last visited Jan. 8, 2025) . . . . . . . . . 19

PQA Program, Universal Serv. Admin. Co.,

https://www.usac.org/about/appeals-audits/

pqa-program/ (last visited Jan. 8, 2025) . . . . . . . . . 20

x

Cited Authorities

Page

Rural Health Care Committee Briefing Book,

Universal Serv. Admin. Co. (Oct. 28, 2024),

https://w w w.usac.org/wp-content/uploads/

about /docu ment s / leadersh ip/mat er ia ls /

rhc/2024/2024-10-28-RHC-Briefing-BookPublic.pdf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

U.S. Gov’t Accountability Off., GAO-24-106967,

Telecommunications: Administration of

Universal Service Program Is Consistent with

Selected FCC Requirements (2024) . . . . . . . . . . . . . 24

1

INTERESTS OF AMICUS CURIAE1

We are former board members and former employees

of the Universal Service Administrative Company

(USAC), the not-for-profit company that administers the

federal universal service program. We provide this amicus

brief in support of the Petitioners. Our interest is to

provide a description, based on our collective experience,

of how USAC is subordinate to and operates under the

authority and surveillance of the Federal Communications

Commission (FCC). The Fifth Circuit Court of Appeals,

to reach its decision, relied on factual inaccuracies about

the relationship between USAC and the FCC that we wish

to correct and clarify for the record.

D. Scott Barash

CEO of USAC (Acting): 2006-2014

Vice President & General Counsel: 1999-2005

Mel Blackwell

Vice President, Schools & Libraries Division: 2006-2016

Bob Bocher

Board member: 2016-2019

Anne L. Bryant

Board member: 1997-2012

1. As required by Rule 37.6, we note that this amicus brief

was not authored, either in whole or in part, by counsel to any

party in this case. In addition, no monetary contribution to this

amicus brief was made by either party to this case, by counsel to

either party, or by any person other than the signatories to this

brief and their counsel.

2

Irene M. Flannery

Senior Vice President, External Relations: 2006-2007

Senior Vice President, Programs: 2005-2006

Vice President, High Cost & Low Income Division:

2000-2005

Joseph Gillan

Board member: 2008-2023

Joel Lubin

Board member: 2001-2019

Brian Talbott

Board member: 1997-2018

SUMMARY OF ARGUMENT

This brief demonstrates that USAC is not the

uncontrolled free agent depicted by the Fifth Circuit,

Consumers’ Rsch. v. FCC, 109 F.4th 743, 783 (5th Cir.

2024), cert. granted, 2024 WL 4864036 (U.S. Nov. 22,

2024) (No. 24-354). In reality, the numerous limitations

set forth by Congress and the FCC are a model of how

a federal agency can employ the benefits of outsourcing

certain ministerial functions in compliance with the legal

standard articulated by this Court. Such outsourcing

allows the FCC to implement its policymaking while

maintaining full control and authority over the universal

service program that Congress established.

This Court has held that a private entity may carry

out the ministerial tasks associated with a federal agency’s

functions as long as (1) the private entity “function[s]

subordinately to” the federal agency, and (2) the federal

agency “has authority and surveillance over the activities”

3

of the private entity. Sunshine Anthracite Coal Co. v.

Adkins, 310 U.S. 381, 399 (1940). Based on our collective

firsthand knowledge of USAC’s operations, we can attest

that the relationship between the FCC and USAC complies

with that standard. The USAC depicted by the Fifth

Circuit does not match our own experience of how USAC

operates.

As part of the initial onboarding of new board

members and new employees, it is explained that USAC

functions subordinately to the FCC. We understood that

USAC served a purely administrative function and that its

role was defined and limited by the FCC’s rules, orders,

and directives. The FCC’s rules make clear that USAC is

prohibited from creating or even interpreting rules. The

FCC retains and exercises final decision-making authority

over every aspect of the federal universal service program

and its contribution mechanism. Finally, in its normal

course of operations, the FCC is in near-constant contact

with USAC and provides direct oversight of USAC’s

operations. 2

Below, we explain first that USAC is subordinate

to the FCC: in the specific and limited responsibilities

assigned to USAC by the FCC, which give USAC no

authority to enact or interpret rules or to create policy;

in its organizational structure and governance; and

specifically in the FCC’s calculation of the quarterly

contribution factor for the universal service program.

2. As former USAC board members and employees, we

worked with FCC staff on a near-daily basis. To be clear,

USAC’s employees have more frequent contact with FCC staff

than USAC’s board members do, but the members of the board

nonetheless have routine contact with FCC staff.

4

We then explain that the FCC has authority over

and oversees every aspect of USAC’s performance of

its ministerial duties. The FCC exercises its oversight

by reviewing and resolving appeals of USAC decisions

by universal service program participants, reviewing

audits of USAC’s performance, reviewing various reports

that USAC is required to file with the FCC, and issuing

formal and informal guidance to USAC through various

other means. In particular, the FCC has adopted rules

establishing the parameters for, and continues to exercise

stringent oversight of, the demand and revenue projections

that enable the FCC to set the quarterly contribution

factor for the universal service program. Finally, we

explain why the delegation of responsibilities from the

FCC to USAC is lawful under the standard established

by this Court.

ARGUMENT: THE DELEGATION OF MINISTERIAL

DUTIES TO USAC BY THE FCC IS LAWFUL UNDER

THIS COURT’S PRECEDENT

Under this Court’s longstanding precedent, a federal

agency may delegate ministerial tasks to a private entity

as long as (1) the private entity “function[s] subordinately

to” the federal agency, and (2) the federal agency “has

authority and surveillance over the activities” of the

private entity. Sunshine Anthracite Coal, 310 U.S. at

399. The FCC’s delegation of ministerial duties to USAC

complies with this standard and is therefore lawful.

I.

USAC Is Subordinate to the FCC

The goal of universal telecommunications service has

long been an objective of U.S. policymakers, going back as

far as the Communications Act of 1934, which established

5

the FCC. 3 47 U.S.C. § 151 et seq. Policymakers have

correctly recognized that ensuring all Americans’ access

to telecommunications services—and in the twenty-first

century, broadband service as well—benefits society as a

whole. Universal service promotes economic development,

as well as the dignity and freedom of individual Americans,

by improving their access to employment opportunities,

education, and health care.

Congress established the modern federal universal

service program in Section 254 of the Telecommunications

Act of 1996. 47 U.S.C. § 254. At its core, the universal

service program involves the collection of fees from

telecommunications providers that are then used to fund

the four support mechanisms that constitute the universal

service program. The largest of these four support

mechanisms, by far, is the high-cost program. This

program subsidizes telecommunications and broadband

service in rural America, where the cost of providing

service would otherwise be both prohibitively expensive

for consumers and unprofitable for telecommunications

providers. In 2023, 53 percent of all universal service

disbursements nationwide (approximately $4.3 billion)

were for the high-cost program.4

3. The preamble of the Communications Act of 1934 stated that

its purpose was to make available to “all the people of the United

States . . . rapid, efficient, Nation-wide, and world-wide wire and

radio communication service with adequate facilities at reasonable

charges.” 47 U.S.C. § 151.

4. 2023 Annual Report 3, Universal Serv. Admin. Co.,

https://w w w.usac.org/wp-content/uploads/about/documents/

annual-reports/2023/2023_USAC_Annual_Report.pdf. This

report covers universal service funding year 2023, which began

on July 1, 2023, and ended on June 30, 2024.

6

The other three support mechanisms receive

the remaining funding (in 2023, $3.8 billion of the

approximately $8.1 billion in total universal service

support disbursed). They are the schools and libraries

program, commonly known as the E-Rate program, which

subsidizes eligible telecommunications and broadband

services for schools and libraries throughout the country

($2.46 billion disbursed in 2023); the Lifeline program,

which provides a small monthly telecommunications or

broadband subsidy for low-income Americans ($870 million

disbursed in 2023); and the rural health care program,

which subsidizes telecommunications and Internet access

services for health care providers ($468 million disbursed

in 2023).

A.

USAC’s Limited Role and Organizational

Structure Demonstrate It Is Subordinate to

the FCC

To implement the universal service program that

Congress mandated, the FCC directed the creation of a

not-for-profit entity, USAC, to carry out the ministerial

tasks associated with collecting and distributing universal

service program funds. The relationship between the FCC

and USAC is defined by the FCC’s rules and orders and

by a memorandum of understanding (MOU) between the

FCC and USAC. 5 These sources make clear that USAC

is subordinate to the FCC and that the FCC retains final

decision-making authority with respect to the universal

service program.

5. Memorandum of Understanding Between the Federal

Communications Commission and the Universal Ser vice

Administrative Company (Oct. 17, 2024) (MOU), https://www.fcc.

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

7

USAC’s Limited Role. When it designated USAC

the administrator of the universal service program, the

FCC adopted rules laying out the core responsibilities

assigned to USAC: (1) administering the four support

mechanisms of the universal service program (47 C.F.R.

§ 54.702(a)); and (2) billing contributors, collecting

contributions to the universal service support mechanisms,

and disbursing universal service support funds (47 C.F.R.

§ 54.702(b)). The MOU between the FCC and USAC makes

clear that USAC’s “sole purpose is to assist the FCC in

the administration of the [universal service] programs

. . . as an agent and instrumentality of the FCC,” and that

USAC’s “operations are narrowly prescribed by FCC

regulations and day to day oversight.” MOU at 2.

In addition to identifying exactly what USAC is

authorized to do, the FCC’s rules also clearly explain what

USAC is not authorized to do. The rules explicitly prohibit

USAC from making policy or from interpreting unclear

statutory language, unclear provisions of the FCC’s rules,

or the intent of Congress. 47 C.F.R. § 54.702(c). Where the

FCC’s rules or the intent of Congress are unclear, USAC

is required to seek guidance from the FCC. Id. USAC also

has no authority to waive the FCC’s rules; only the FCC

itself may grant waivers. 47 C.F.R. § 54.719(c).

USAC’s Organizational Structure and Governance.

Furthermore, USAC’s very organizational structure

and governance reflect its subordinate status. USAC

has a 20-member board of directors whose membership

is defined in the FCC’s rules. 47 C.F.R. § 54.703(b). The

board membership represents universal service program

participants (service providers, schools, libraries, rural

health care providers, and low-income consumers) as well

as state telecommunications regulators, state consumer

8

advocates, and Tribal communities. Id. Each represented

group nominates board members to represent them, and

the FCC must approve those nominees before they may

serve on the board. 47 C.F.R. § 54.702(c)(3).

To select USAC’s chief executive officer, who also

serves as a permanent member of USAC’s board of

directors, the board submits a nominee to the chair of

the FCC, who then reviews the nomination and appoints

the CEO. 47 C.F.R. § 54.704(b). If the board of directors

cannot reach consensus on a nominee or fails to submit

a nomination, the chair of the FCC selects the CEO. 47

C.F.R. § 54.704(c). The Fifth Circuit’s concern about

private entities that are not accountable to government

officials, Consumers’ Rsch. v. FCC, 109 F.4th at 783, is

not warranted here, as the FCC’s selection of the CEO

and board chair demonstrates that USAC is accountable

to government officials at the FCC, who in turn are

accountable to Congress.6

The FCC does not just make the final decision

on USAC ’s leadersh ip, though; the FCC is the

final decision-maker on all significant aspects of

USAC’s governance and operations. USAC must

submit its proposed budget to the FCC for review and

6. FCC commissioners are routinely called before Congress

to provide reports and respond to questions. See, e.g., Testimony

of Jessica Rosenworcel, Chairwoman, Fed. Commc’ns Comm’n,

Before the Subcomm. on Commc’ns & Tech. of the H. Comm.

on Energy & Com., 118th Cong. (Nov. 30, 2023), https://docs.fcc.

gov/public/attachments/DOC-398881A1.pdf; Letter from Jessica

Rosenworcel, Chairwoman, Fed. Commc’ns Comm’n, to Sen. Ben

Ray Luján (Jan. 12, 2024), https://docs.fcc.gov/public/attachments/

DOC-400113A1.pdf.

9

approval.7 47 C.F.R. § 54.715(c). USAC must seek FCC

approval before conducting procurements. 8 USAC must

submit its application review procedures for the E-Rate

and rural health care programs for the FCC’s review

and approval.9 USAC must submit its audit procedures

7. In 2018, the FCC set forth a specific schedule for its review

and approval of USAC’s budget. Letter from Mark Stephens,

Managing Director, Fed. Commc’ns Comm’n, to Radha Sekar,

Chief Exec. Officer, Universal Serv. Admin. Co. (Dec. 19, 2018),

https://www.fcc.gov/sites/default/files/2018-procurement-reviewltr121918.pdf. USAC must submit, by budget category defined

by the Office of Management and Budget, a detailed proposed

budget that the FCC will then review and approve. The directive

established a two-tiered review and approval process with specific

deadlines for all of USAC’s administrative expenses. The FCC’s

direct oversight of USAC is apparent in the statement that the

FCC “looks forward to continuing to work closely with USAC to

ensure that the FCC’s review and approval of USAC’s budget and

administrative expenses runs smoothly.” Id.

8. The MOU requires USAC to provide the FCC’s managing

director with an annual procurement plan, provide quarterly

reports to the managing director on the status of its procurement

activity and advance notice of upcoming procurement activity,

meet regularly with the Office of the Managing Director over

the course of the year to review its procurement activity, and

provide a year-end procurement report to the managing director.

MOU at 8–9. USAC must seek approval of procurements from

the managing director in advance, unless they fall below a dollar

threshold established by the managing director. Id. at 9. As a

practical matter, the FCC routinely reviews, revises, and approves

the need for those vendors, the procurement documents, and

USAC’s selection of vendors. FCC staff have regularly consulted

with USAC’s subcontractors and have participated in contract

negotiations to reduce contract pricing.

9. E-Rate FY 2024 Program Integrity Assurance FCC Form

471 Review Procedures, Letter, 39 FCC Rcd. 2922 (2024); Rural

10

to the FCC for review and approval.10 USAC must submit

all draft universal service forms and form changes to

the FCC for review and approval. MOU at 5. The FCC’s

rules limit what USAC can pay its employees. 47 C.F.R. §

54.715(b). USAC is not even permitted to make substantive

changes to its website without prior approval from the

FCC. MOU at 6.

In short, USAC is subordinate to the FCC in its

operations and governance. As the Sixth Circuit Court

of Appeals has concluded, “[t]he FCC has not afforded

USAC any authority to make actual decisions or establish

or define standards.” Consumers’ Rsch. v. FCC, 67 F.4th

773, 796 (6th Cir. 2023), cert. denied, 144 S. Ct. 2628 (2024).

B. USAC Ha s a Subord inat e R ole in the

Calculation of the Quarterly Universal Service

Contribution Factor

Of particular relevance to this case is the FCC’s

process of calculating the contribution factor, which

informs contributing telecommunications providers how

much they must contribute to the universal service fund

each quarter. The Fifth Circuit’s description of USAC

Health Care Program Funding Year 2024 Funding Request

Review Procedures, Letter, 39 FCC Rcd. 4125 (2024).

10. Rural Health Care Committee Briefing Book, Universal

Serv. Admin. Co. (Oct. 28, 2024), https://www.usac.org/wp-content/

uploads/about/documents/leadership/materials/rhc/2024/2024-1028-RHC-Briefing-Book-Public.pdf; Audit Committee Briefing

Book, Universal Serv. Admin. Co. (Oct. 28, 2024) (USAC Audit

Comm. Briefing Book), https://www.usac.org/wp-content/uploads/

about/documents/leadership/materials/audit/2024/2024-10-28AC-Briefing-Book-Public.pdf.

11

receiving a “blank check” from the FCC to “fill it out

however it saw fit,” Consumers’ Rsch., 109 F.4th at 773, and

of “rel[ying] on for-profit telecommunications companies

to determine how much American citizens would be forced

to pay,” Id. at 748, bears no resemblance whatsoever to how

the contribution factor is actually developed. In reality,

USAC does nothing more than collect data and provide

projections of estimated revenues and program demand.

The FCC’s rules define and constrain the inputs on each

side of this equation, and USAC operates within this

framework. USAC’s projected demand and revenues are

not binding on the FCC; the FCC may revise any aspect

of USAC’s estimates. The quarterly contribution factor

is then calculated by the FCC by dividing the projected

costs of the universal service support mechanisms by the

projected revenues reported by universal service program

contributors. Thus, USAC has no decision-making role in

the quarterly universal service contribution factor.

Universal Service Program Costs. The numerator

for calculating the contribution factor is the projected

quarterly costs for the universal service program. USAC

estimates these costs based on the projected demand for

support from each of the four universal service support

mechanisms (high cost, Lifeline, E-Rate, and rural health

care), plus USAC’s projected administrative costs. USAC

must base its cost projections on the limitations that the

FCC has established in its rules and orders (including

eligibility requirements and spending limits) for each of

the four universal service support mechanisms.

The high-cost program operates to reduce the cost

of providing telephone and Internet service to rural

12

consumers, so that people in rural areas of the country pay

rates that are comparable to rates paid by people in urban

areas. The FCC has constrained funding for this program

by adopting a budget target of $4.5 billion per year and

establishing caps on certain types of funding within the

high-cost program.11 The Lifeline program is also subject

to a budget. In 2016 the FCC adopted an annual budget

of $2.25 billion for the program with an annual inflation

adjustment.12 The size of the Lifeline program also is

limited by parameters the FCC has set: (1) the Lifeline

discount is only available to households with an income

at or below 135 percent of the federal poverty guidelines

or that qualify for other types of federal low-income

assistance; (2) the discount is capped at $9.25 per month

for most areas of the country, with Tribal households

eligible for an additional $25 per month; (3) only one

discount is available per household; and (4) the discount

is only provided by a limited number of service providers

that have been designated eligible to participate in the

program by the FCC or a state public utility commission.13

11. Connect America Fund, Report and Order and Further

Notice of Proposed Rulemaking, 26 FCC Rcd. 17663, 17710–12

(2011), pets. for review denied, In Re FCC 11-161, 753 F.3d 1015

(10th Cir. 2014); Rural Digital Opportunity Fund; Connect

America Fund, WC Docket Nos. 19-126 and 10-90, Report and

Order, 35 FCC Rcd. 686, 688 ¶ 5 (2020).

12. Lifeline and Link Up Reform and Modernization,

Third Report and Order, Further Report and Order, and Order

on Reconsideration, 31 FCC Rcd. 3962, 4110 ¶¶ 400, 403 (2016).

13. Lifeline Support for Affordable Communications, FCC,

https://www.fcc.gov/lifeline-consumers (last visited Jan. 6, 2025);

Lifeline Program for Low-Income Consumers, FCC, https://www.

fcc.gov/general/lifeline-program-low-income-consumers (last

visited Jan. 6, 2025).

13

The FCC has capped support for the other two

support mechanisms—the E-Rate program and the rural

health care program—with annual adjustments to reflect

inflation. E-Rate has a cap of $4.94 billion for the current

funding year, and the rural health care program is capped

at $707 million.14 Congress and the FCC have defined

exactly which entities and services are eligible for support

under these two programs; USAC has no discretion. See,

e.g., 47 U.S.C. § 254(h)(1)(A)–(B) (authorizing universal

service support for health care providers, schools, and

libraries); 47 C.F.R. § 54.502 (identifying services eligible

for E-Rate support).15

14. Wireline Competition Bureau Announces E-Rate and

RHC Programs’ Inflation-Based Caps for Funding Year 2024,

Pub. Notice, 39 FCC Rcd. 2206 (Mar. 8, 2024). Current demand

for these two programs is below the caps. Actual disbursements

for these two programs depend on approved funding applications

by eligible program participants, and the FCC rules require

that these applications must be supported by contracts with

service providers. However, disbursements typically are below

demand estimates due to several factors, including that applicants

sometimes do not move forward with planned projects in any

given funding year. In addition, the FCC’s rules provide that any

monies collected that are not used in these two programs in a

given funding year is carried over to subsequent years to reduce

program demand—and thus the contribution factor—in those

years. 47 C.F.R. § 54.709(a)(3).

15. The Fifth Circuit incorrectly stated that Section 254

does not limit the FCC’s discretion to supply universal service

funding for educational programs. Consumers’ Rsch. v. FCC, 109

F.4th at 761 n.7. In fact, Congress specified that only elementary

and secondary schools were eligible, that schools had to be nonprofit, and that a school could not have an endowment of more than

$50 million. 47 U.S.C. § 254(h)(1)(B), (h)(4). Libraries have to be

eligible for assistance under the Library Services and Technology

Act. 47 U.S.C. § 254(h)(4). The FCC has not limited E-Rate

support to low-income schools, as stated by the Fifth Circuit,

14

USAC’s administrative expenses are similarly

restrained by the FCC’s rules. 47 C.F.R. § 54.715(a). The

rules cap the pay of all USAC officers and employees

such that their compensation cannot exceed the rate

of basic pay for Level 1 of the Executive Schedule for

federal government employees. 47 C.F.R. § 54.715(b).

(USAC board members are reimbursed for expenses but

otherwise receive no compensation.) In addition, USAC

employees’ benefits must be reasonably comparable to

benefits provided to employees of the federal government.

Id. The FCC reviews USAC’s budget to ensure that

USAC is operating efficiently and closely manages

USAC’s spending by working with USAC on its selection

of subcontractors, including for information technology,

audits, and legal assistance, among other work.

Universal Service Contribution Base. On the

revenue side of the calculation, the FCC has set the

rules for the contributions that telecommunications

providers must make to the universal service fund.

The Communications Act and the FCC’s rules define

which entities must contribute and which revenues those

contributions are to be based on. 47 U.S.C. § 254(d);

47 C.F.R. § 54.706. To determine projected quarterly

revenues, the FCC requires telecommunications providers

to file “Telecommunications Reporting Worksheets” on

a quarterly and annual basis. 47 C.F.R. § 54.711(a). The

rules require contributors to retain relevant records for at

least five years, to ensure compliance with the contribution

requirements. 47 C.F.R. § 54.706(e).

Consumers’ Rsch., 109 F.4th at 761 n.7, but the E-Rate program

does provide increased levels of support if the school has a higher

percentage of students that qualify for the school lunch program

or if the school is located in a rural area. 47 C.F.R. § 54.505(c).

15

Calculation of the Quarterly Contribution Factor.

The FCC’s rules set forth the formula used to determine

the quarterly contribution factor—the ratio of total

projected quarterly expenses of the universal service

support mechanisms to the total projected collected

revenues—and provide that the FCC must approve

USAC’s quarterly projected costs for the universal service

program. 47 C.F.R. § 54.709(a)(2). USAC is required

to submit its projected demand for the four support

mechanisms and its projected administrative expenses for

each quarter (which are constrained by the FCC’s rules, as

explained above), along with an explanation of the basis for

its projections, to the FCC at least 60 calendar days prior

to the start of that quarter. 47 C.F.R. § 54.709(a)(3). USAC

must submit the total projected contribution base for

the quarter—calculated from the quarterly worksheets

submitted by telecommunications providers—to the FCC

30 days before the start of each quarter. Id.

Based on this information, the FCC issues a public

notice that contains USAC’s projected program costs and

projected revenues and the resulting contribution factor

that the FCC has determined.16 47 C.F.R. § 54.709(a)(3).

The FCC’s rules provide that if the FCC takes no action

within 14 days after the release of the public notice, the

projected costs and the contribution factor are deemed

approved by the FCC. Id. The Fifth Circuit Court of

Appeals has asserted that this provision of the rules

means that “USAC’s projections take legal effect without

formal FCC approval.” Consumers’ Rsch., 109 F.4th at

771. But the rules explicitly state that it is the FCC that

16. E.g., Proposed Fourth Quarter 2024 Universal Service

Contribution Factor, Public Notice, DA 24-494 (rel. Sept. 11, 2024).

16

determines the quarterly contribution factor, and the fact

that the contribution factor is deemed approved 14 days

after the FCC announces it in no way changes the fact that

the FCC makes the final decision. “An agency exercises its

policymaking discretion with equal force when it makes

policy by either ‘decid[ing] to act’ or ‘decid[ing] not to act.’”

Consumers’ Rsch., 67 F.4th at 796 (quoting Oklahoma v.

United States, 62 F.4th 221, 230 (6th Cir. 2023)).

In short, USAC’s projected program demand and

administrative costs are constrained by the FCC’s

rules and orders, as are the projected revenues. These

projections are not binding on the FCC, which reviews

USAC’s projections and determines the quarterly

contribution factor. The FCC has ample time to review

the projections and ask questions of USAC before it

approves the projections and determines the contribution

factor. This process is not a “rubber stamp,” as the Fifth

Circuit characterized it. Consumers’ Rsch., 109 F.4th

at 771. In fact, the FCC conducts a thorough review of

USAC’s projections every quarter and has adjusted those

projections several times. See Fed. Pet’rs’ Br. 42–43. But it

is no surprise that modification is generally not necessary

because the FCC has defined the inputs to the contribution

factor up front. As a result, USAC has no decision-making

role in the determination of the quarterly contribution

factor. By extension, the telecommunications industry has

no decision-making role in setting the contribution factor,

as the Fifth Circuit Court of Appeals has suggested.

Consumers’ Rsch., 109 F.4th at 772–73. Even if industry

representatives made up a majority of USAC’s board

of directors, which they do not, they would still have no

decision-making authority regarding the contribution

factor.

17

II. USAC Is Subject to the FCC’s Authority and

Surveillance

The second requirement of Sunshine Anthracite

Coal is that the private entity must be subject to the

federal agency’s authority and surveillance. Sunshine

Anthracite Coal, 310 U.S. at 399. This is clearly the case

with USAC, as the FCC exercises pervasive authority

over USAC, continuously reviewing USAC’s performance

of its administrative duties at a very granular level and

frequently providing guidance and direction to USAC.

This guidance and direction is provided through FCC

review and resolution of appeals of USAC decisions by

universal service program participants; audits of USAC’s

performance and of the effectiveness of USAC’s review

process; the review of reports that USAC submits to the

FCC; and various other formal and informal means.

Appeals of USAC Decisions. One way the FCC

monitors USAC’s performance is through its review of

hundreds of appeals of USAC decisions that are filed

with the FCC each year. The FCC’s rules allow any party

aggrieved by an action taken by USAC to seek review from

the FCC, after first seeking review from USAC itself.

47 C.F.R. § 54.719. The FCC conducts de novo review of

all appeals of USAC decisions, so no decision of USAC is

binding upon the FCC. 47 C.F.R. § 54.723(a). The FCC

decides dozens of appeals of USAC decisions every month.

The primary purpose of the FCC’s review is to determine

whether USAC reached the right decision with respect to

the individual program participant submitting the appeal.

However, through its review of appeals, the FCC can also

identify areas where USAC may be misunderstanding the

requirements of an FCC rule or order, or where program

18

efficiency calls for additional guidance to program

participants. In many appeal decisions, the FCC directs

USAC to take specific action to correct a mistake it made

in its original decision. For example, the FCC has directed

USAC to provide adequate explanation for the basis of its

decision where USAC’s original explanation was too vague

and has ruled that USAC has incorrectly found issues with

program applicant rule compliance.17

The FCC monitors USAC’s performance with respect

to the contribution factor in particular by reviewing

contributors’ appeals of USAC decisions regarding their

contribution obligations. Over the past three years, the

FCC has decided more than 50 appeals of USAC decisions

and requests for waiver submitted by universal service

contributors.18 As explained above, the process of making

these decisions not only ensures that these particular

contributors are fairly assessed; it also helps the FCC

identify areas where USAC’s procedures or training

materials may require adjustment or improvement to

17. See, e.g., Streamlined Resolution of Requests Related

to Actions by the Universal Service Administrative Company,

Public Notice, DA 24-482, 16 n.24 (rel. June 3, 2024), https://

docs.fcc.gov/public/attachments/DA-24-482A1.pdf; Streamlined

Resolution of Requests Related to Actions by the Universal

Service Administrative, Public Notice, DA 24-1169, 2 n.6 (rel. Dec.

2, 2024), https://docs.fcc.gov/public/attachments/DA-24-1169A1.

pdf; Streamlined Resolution of Requests Related to Actions by

the Universal Service Administrative, Public Notice, DA 24-973, 6

nn.17–18 (rel. Oct. 1, 2024), https://docs.fcc.gov/public/attachments/

DA-24-973A1.pdf.

18. See, e.g., Streamlined Resolution of Requests Related to

Actions by the Universal Service Administrative Company, Public

Notice, DA 24-862, 9–10, nn.26–27 (rel. Sept. 3, 2024), https://docs.

fcc.gov/public/attachments/DA-24-862A1.pdf.

19

ensure that universal service program contributors

understand what is required of them.

Audits of USAC’s Performance. Another important

way the FCC reviews USAC’s performance is through

audits. First, the FCC requires that USAC be audited

annually by an independent auditor to ensure proper

administration of the universal service fund and to prevent

waste, fraud, and abuse. 47 C.F.R. § 54.717. The FCC’s

Office of Managing Director oversees every aspect of

this audit, from reviewing and revising the preliminary

audit requirements drafted by USAC, to approving and

modifying the independent auditor’s audit program, to

reviewing the auditor’s findings and USAC’s responses

to those findings. Id. These audits in turn may identify

process changes that should be made to ensure program

integrity.

The FCC also monitors USAC’s performance through

the audits that USAC itself conducts (or outsources

to third-party auditing firms) of universal service

program participants pursuant to the FCC’s rules. See,

e.g., 47 C.F.R. § 54.420(b); 47 C.F.R. § 54.516; 47 C.F.R.

§ 54.631. There are two types of audits of program

participants conducted by USAC: (1) audits conducted in

accordance with generally accepted government auditing

standards through the Beneficiary and Contributor

Audit Program (BCAP);19 and (2) “desk audits” through

19. Beneficiary & Contributor Audit Program (BCAP),

Universal Serv. Admin. Co., https://www.usac.org/about/appealsaudits/beneficiary-and-contributor-audit-program-bcap/ (last

visited Jan. 8, 2025).

20

the Payment Quality Assurance Program to determine

program improper payment rates. 20

USAC conducts these program participant audits

under the oversight of, and in consultation with, the

FCC. 21 In addition to FCC approval of audit procedures

before the audits are conducted, as explained in Part

I.A., the FCC’s Wireline Competition Bureau reviews

programmatic draft audits before the auditors issue a final

report. In addition to ensuring beneficiary compliance

with program rules, the FCC uses the results of USAC’s

audits of program participants to identify areas where

USAC’s procedures may require improvements. If

numerous program participants are making the same

mistakes, the FCC works with USAC to modify USAC’s

procedures and training materials as needed to ensure

20. PQA Program, Universal Serv. Admin. Co., https://www.

usac.org/about/appeals-audits/pqa-program/ (last visited Jan.

8, 2025). As of fiscal year 2024, both the E-Rate program and

the rural health care program were below OMB’s benchmark

for improper payments. FCC Agency Financial Report for

Fiscal Year 2024, Report, DA-24-1142, 98, 100 (OMD rel. Nov.

15, 2024), https://docs.fcc.gov/public/attachments/DA-24-1142A1.

pdf. (The rate for the rural health care program has been below

the benchmark for multiple years, so the FCC does not have to

include it in its annual financial report.) Improper payments are

not necessarily indicators of waste, fraud, or abuse. Oftentimes,

payments are improper simply because the program beneficiary

provided insufficient documentation to support its funding request.

In addition, the term “improper payments” refers not just to

overpayments, but to underpayments as well.

21. MOU at 14; USAC Audit Comm. Briefing Book at 16

(noting submission of fiscal year 2025 audit plan and procedures

to FCC for approval).

21

that program participants understand the applicable

requirements. 22

The FCC works closely with USAC to implement

plans to correct audit findings. For example, after the

2019 independent audit, the FCC’s Office of Managing

Director sent a corrective action letter to USAC requiring

that USAC, among other things, take steps to improve

information security controls at USAC. 23 USAC was

required to provide the FCC with a corrective action

plan describing the specific steps USAC would take to

implement each recommendation. Id.

Review of Mandatory Reports By USAC. USAC

is also required to prepare and submit a variety of

reports to the FCC, to help the FCC monitor USAC’s

performance. USAC must submit to the FCC and to

Congress an annual report detailing its operations,

activities, and accomplishments for the previous year.

47 C.F.R. § 54.702(g). On a monthly basis, USAC is

required to provide the FCC with a report setting forth

performance metrics for USAC for each of the four support

mechanisms, in categories including program operations,

USAC’s administrative performance, and USAC customer

experience. 24 In addition, on a quarterly basis, USAC

2 2 . FCC Agency Financial Repor t for Fiscal Year

2024, Report, DA 24-1142, 101–04 (OMD rel. Nov. 15, 2024),

https://docs.fcc.gov/public/attachments/DA-24-1142A1.pdf.

23. Letter from Mark Stephens, Managing Dir., Fed.

Commc’ns Comm’n, to Radha Sekar, Chief Exec. Officer, Universal

Serv. Admin. Co. (Jan. 14, 2020), https://www.fcc.gov/sites/default/

files/fcc-afr-findings-ltr-to-usac-01142020.pdf.

24. MOU at 12; see also, e.g., Modernizing the E-rate Program

for Schools and Libraries, Report and Order, 29 FCC Rcd. 8870,

22

must report to the FCC on the disbursement of universal

service funds. 47 C.F.R. § 54.702(h). The FCC has access

to all of the underlying data and analytics used to generate

the periodic reports. 47 C.F.R. §§ 54.711(b), 54.702(j); MOU

at 12. These reporting requirements ensure that the FCC

keeps a close watch on USAC’s operations.

Other Forms of O versight. The FCC often

communicates its directives to USAC through formal

orders. An example of this is a 2014 E-Rate order that,

among other things, directed USAC to modernize

its information technology systems, improve public

access to E-Rate data, and use simpler language in its

communications with program participants. 25 Another

example comes from a 2023 order in which the FCC

directed USAC to allow participants in the E-Rate

program to correct typographical errors on the invoicing

forms they submit to USAC for reimbursement. 26 This

order in particular highlights how limited USAC’s

authority is. Prior to its release, USAC had to deny

invoices that contained even the smallest typos, simply

because the FCC had not given USAC explicit permission

to let program participants correct those errors so they

could receive their funding.

8893 ¶ 59 (2014) (E-Rate Modernization Order) (requiring monthly

reports from USAC on its performance administering the E-Rate

program).

25. E-Rate Modernization Order, 29 FCC Rcd. at 8972–74

¶¶ 256, 258, 260.

26. Requests for Review and/or Waiver of Decisions of the

Universal Service Administrator by Accomack County Public

School, Order, 38 FCC Rcd. 330, 336-37 ¶¶ 12–13 (WCB 2023).

23

In addition, the FCC’s Office of the Managing

Director, which has primary responsibility for the

oversight of USAC’s operational and financial processes,

has sent USAC dozens of formal management and

oversight letters over the years, providing USAC direction

on various operational matters. 27 The FCC’s Wireline

Competition Bureau, which is responsible for substantive

implementation of the universal service program and

for reviewing appeals of USAC decisions, also routinely

provides guidance to USAC on the implementation of

the FCC’s rules, particularly after the FCC adopts new

rules. 28

The FCC oversees USAC through less formal means

as well. FCC and USAC staff have regular meetings

to identify administrative and substantive issues in the

programs to determine the best course of action. For

example, staff may discuss whether additional guidance

to program beneficiaries would help clarify a rule.

Additionally, program stakeholders often meet with FCC

staff to discuss USAC performance issues. These meetings

with program stakeholders help the FCC monitor USAC’s

administrative performance.

27. These letters can be found at Universal Service Fund

General Management & Oversight, FCC, https://www.fcc.gov/

universal-service-fund-general-management-and-oversight (last

visited Jan 9, 2025).

28. For a recent example of a guidance letter from the

Wireline Competition Bureau, see FCC Guidance to USAC on

E-rate Competitive Bidding Rules, Letter, DA 24-1287 (WCB

rel. Dec. 20, 2024), https://docs.fcc.gov/public/attachments/DA24-1287A1.pdf (providing guidance to USAC regarding an FCC

order revising service eligibility rules in the E-Rate program).

24

Finally, the FCC’s oversight of USAC is itself subject

to review. The FCC’s Inspector General routinely reviews

the FCC’s policies and implementation of the universal

service program as part of its mission to ensure the

proper use of government resources. 29 The Government

Accountability Office (GAO) also regularly reviews both

USAC’s performance and the FCC’s oversight of the

universal service program. Most recently, in July 2024,

the GAO concluded that, for the requirements it reviewed,

USAC is managing its operating budget in accordance

with FCC requirements and that USAC processes align

with FCC requirements. 30

III. USAC’s Role Satisfies This Court’s Standard for

Lawful Agency Delegation to a Private Entity

The explanation we have provided of USAC’s

subordinate role and the FCC’s pervasive authority

and surveillance of USAC’s operations makes clear that

the FCC’s delegation of ministerial duties to USAC is

lawful under this Court’s precedent. Where this Court

has previously found fault with agency delegation to a

private entity, it has been because the private entity was

authorized to take actions that were not subject to agency

authority or review. In Carter v. Carter Coal, private coal

authorities were allowed to enact industry-wide minimum

29. FCC Off. Inspector Gen., FCC’s Top Performance and

Management Challenges for FY 2025 7–12 (2014), https://www.

fcc.gov/sites/default/files/fy25_fcc_tmpc_10012024.pdf.

30. U.S. Gov’t Accountability Of f., GAO-24-106967,

Telecommunications: Administration of Universal Service

Program Is Consistent with Selected FCC Requirements 10, 15

(2024).

25

price codes and labor codes without approval by any

federal official. 298 U.S. 238, 310–11 (1936). By contrast,

where the private entity could merely make proposals that

required approval by the federal agency before they could

take effect, as in Sunshine Anthracite Coal, this Court

found the delegation of duties to the private entity to be

constitutional. 310 U.S. at 388, 399.

Above, we have explained that USAC takes no

significant action with respect to the universal service

program that is not subject to a directive from the FCC,

up-front review and approval by the FCC, after-the-fact

review by the FCC, or all three. No action of USAC

is binding upon the FCC. In particular, the projected

demand and revenues associated with the quarterly

contribution factor undergo thorough review and approval

by the FCC, as described above, and the FCC makes the

final decision on the contribution factor. For all of these

reasons, the FCC’s delegation of ministerial duties to

USAC is lawful under this Court’s precedent.

26

CONCLUSION

In its performance of the ministerial duties the FCC

has assigned it, USAC is subordinate to the FCC in

every respect and is subject to the pervasive authority

and surveillance of the FCC. Accordingly, the FCC’s

delegation of responsibilities to USAC is lawful under

this Court’s precedent. For that reason, the decision of

the Fifth Circuit Court of Appeals should be reversed.

Respectfully submitted,

Gina Spade

Counsel of Record

Carol Simpson

Jennifer McKee

Broadband Legal Strategies, LLC

1118 Rankin Drive

Lawrence, KS 66049

(202) 789-3530

gina@broadbandlegal.com

Counsel for Former Leadership

of the Universal Service

Administrative Company