Dive Brief:
- The 5th U.S. Circuit Court of Appeals ruled Wednesday that the current mechanism for funding the Federal Communications Commission’s Universal Service Fund, which operates the E-rate program, is unconstitutional.
- However, the E-rate program remains in effect — for the time being — meaning schools and libraries should still be able to receive federal funds to pay for affordable internet services as the 2024-25 school year approaches, according to Funds For Learning, a firm that consults with schools and libraries on the E-rate program.
- E-rate experts expect the FCC to appeal the ruling, which must be done by Sept. 16, and take the matter to the U.S. Supreme Court before the 5th Circuit’s mandate goes into effect.
Dive Insight:
In the 9-7 decision in Consumers’ Research v. FCC, the 5th Circuit Court judges ruled that the commission’s delegation of taxing power to a private corporation, which then decides how much U.S. citizens have to pay to finance the Universal Service Fund, is a “misbegotten tax.”
Congress established the FCC’s authority over the Universal Service Fund in the Telecommunications Act of 1996. What’s really at the center of the matter is whether the mechanism paying for the Universal Service Fund is a tax or a user fee, and the FCC can’t levy taxes, said John Harrington, CEO of Funds For Learning.
Nearly every school district in the U.S. benefits from the E-rate program, Harrington said, and schools and libraries have requested $3.2 billion in E-rate funding for fiscal year 2024.
Even with the latest ruling, schools shouldn’t expect any immediate changes to the program, and they should still prepare for the application process this fall to receive future funding, he added. The case could take up to three years before it gets resolved, Harrington said.
Meanwhile, FCC Chair Jessica Rosenworcel released a statement denouncing the 5th Circuit’s decision, adding that the agency will “pursue all available avenues for review.”
“This decision is misguided and wrong,” Rosenworcel said. “It upends decades of bipartisan support for FCC programs that help communications reach the most rural and least-connected households in our country, as well as hospitals, schools, and libraries nationwide.”
The Education and Libraries Networks Coalition, which includes AASA, The School Superintendents’ Association, released a statement vowing to work with Rosenworcel and members of Congress to reverse the 5th Circuit Court’s ruling.
“If this decision stands, the E-Rate, Rural Health Care, High Cost and Lifeline programs, which comprise the Universal Service Fund, will come to an abrupt halt,” the coalition said. “In the case of E-Rate, this decision could lead to cutting off broadband access for tens of millions of students, educators and library patrons. We cannot let that happen.”
If the FCC takes the case to the Supreme Court, Harrington said, he thinks there’s a small chance the court will side with the 5th Circuit Court’s decision. However, he added, there’s a lot of precedent supporting the program in the courts, including two recent decisions in the 11th and 6th Circuit Courts. When both of those rulings favoring the Universal Service Fund were appealed to the Supreme Court, the justices refused to hear either case.
“It’s just kind of an odd situation, and again, there’s no short-term changes, which is the most important thing for schools and libraries to understand. Their internet is safe, their Wi-Fi is safe. Those dollars are there,” Harrington said.
