Hard to Predict SCOTUS Decision on 5th Circuit USF Case: New Street's Levin
In an investors' note Monday, New Street’s Blair Levin discussed reasons why the U.S. Supreme Court may overturn the 5th U.S. Circuit Court of Appeals' 9-7 en banc decision, which found the USF contribution factor is a "misbegotten tax.” Consumers' Research, a conservative group, challenged the contribution factor in the 5th Circuit and other courts.
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When the circuit heard the case en banc, three judges that Republican presidents appointed joined with Democratic-appointed judges in dissent, Levin said. “If one more Republican had joined them, the original decision would have been upheld, suggesting there is significant Republican support for the idea that the current system is constitutional.”
Levin predicted the three SCOTUS justices appointed by Democrats will vote to overturn the decision, but conservative Justices Clarence Thomas, Samuel Alito and Neil Gorsuch will oppose them. That means Chief Justice John Roberts and Justices Brett Kavanaugh and Amy Coney Barrett “will essentially decide the case." Those three justices “have a long and consistent record of voting for the side business interests favor,” Levin said: “Here, the businesses implicated wish to uphold the current system, making us think they will vote to overturn the 5th Circuit. But that is far from certain.”
Levin noted that SCOTUS has already reversed other 5th Circuit decisions that also “disrupted existing precedent.”
FCC Chairwoman Jessica Rosenworcel, meanwhile, welcomed SCOTUS review (see 2410010024). “For decades, there has been broad, bipartisan support for the Universal Service Fund and the FCC programs that help communications reach the most rural and least-connected households in the United States, as well as hospitals, schools, and libraries nationwide,” Rosenworcel said: “I am hopeful that the Supreme Court will overturn the decision that put this vital system at risk.”
The FCC argued last month that the 5th Circuit stood alone in finding that the USF contribution factor is a “nondelegation violation in the FCC’s implementation” of the law governing the USF. Granting cert in the case “would allow the Court to directly review the Fifth Circuit’s reasoning,” the agency said.
“Americans currently are forced to pay a tax with every phone bill, set by unelected bureaucrats, at the recommendation by the same private corporation that receives the revenue,” Consumers' Research said Monday: “This is absurd, and we believe SCOTUS will agree as the 5th circuit did.”
Steve Vladeck, professor at Georgetown University Law School, blogged Monday that “right away, this becomes one of the biggest and most important cases the Court is going to hear this term.” That’s “not just because of what it would mean legally if the justices were to re-invigorate the non-delegation doctrine, but because of the potential practical consequences for the USF itself, a multi-billion-dollar pool of money that, among lots of other things, helps to subsidize internet access to large swaths of the country.” If the 5th Circuit decision were affirmed, “the USF would become effectively un-administrable, with potentially staggering consequences for internet access and other digital communications across much of the country.”