FCC’s Request for Stay in Fifth Circuit Decision Concerning Universal Service Fund – Key Considerations and Expected Outcomes
On Friday, the Federal Communications Commission (FCC) submitted a request to the U.S. Court of Appeals for the Fifth Circuit to stay the issuance of its mandate in the ongoing litigation concerning the Universal Service Fund (USF). The mandate, scheduled for September 16, 2024, relates to a ruling that challenges the constitutionality of the USF’s funding mechanism. The FCC’s request seeks to maintain the status quo while the U.S. government files a petition for a writ of certiorari with the U.S. Supreme Court, a step the government has committed to taking by September 30, 2024.
FCC’s Strategic Considerations
It is important to note that the FCC may not have been legally required to seek this stay. The Fifth Circuit’s ruling struck down the rules but remanded them to the FCC without vacating them, meaning the rules technically remain in effect. Under these circumstances, the rules would continue to operate as usual. However, the FCC likely sought the stay—and obtained the petitioners’ consent to it—to provide greater certainty to the market during the period between the Fifth Circuit’s ruling and a potential Supreme Court decision.
Petitioners’ Motivation
The petitioners in this case may have agreed not to oppose the stay for strategic reasons. Their primary objective is to obtain a Supreme Court ruling on the constitutional questions raised by the case. By not opposing the stay and with the FCC agreeing to file a petition for certiorari, the chances that the Supreme Court will agree to take up the case are significantly enhanced. This mutual interest in securing a Supreme Court review likely influenced the petitioners’ decision to consent to the stay request.
Expected Outcome
Given these factors, we fully expect the Fifth Circuit to grant the FCC’s request for a stay. If granted, this stay will provide the public, industry, and other stakeholders with greater assurance that the USF program will remain in full force and effect during the interim period while the Supreme Court considers whether to take up the case. This continuity is crucial for maintaining the funding mechanisms that support essential communication services, particularly for underserved communities.
Implications for Your Business
The potential implications of this legal development for your business are significant:
- Continued Compliance: Assuming the stay is granted, your obligations to contribute to the USF will remain unchanged for the foreseeable future. It is essential to maintain compliance with all current requirements until a definitive ruling is issued by the Supreme Court.
- Financial Planning: The stay provides a temporary reprieve from the uncertainty that could have arisen had the mandate been issued. However, businesses should continue to monitor developments closely, as a Supreme Court ruling could still lead to significant changes.
- Strategic Considerations: Depending on the outcome of the Supreme Court’s decision, there could be long-term implications for how universal service contributions are calculated and collected. We recommend beginning to assess potential scenarios and their impact on your operations.
Next Steps
We recommend convening a meeting with your legal and financial teams to discuss the current situation and potential future developments. Key actions include:
- Reviewing Compliance Practices: Ensure that your current practices align with the ongoing requirements of the USF program.
- Monitoring Legal Developments: Stay informed about the Fifth Circuit’s decision on the stay and the Supreme Court’s response to the petition for certiorari.
- Scenario Planning: Consider the possible outcomes of a Supreme Court ruling and how each could impact your business.
We will continue to monitor this situation and provide updates as more information becomes available. Please do not hesitate to reach out to the attorney assigned to your account if you have any questions or need further assistance in preparing for these developments. Alternatively, contact Jonathan S. Marashlian at jsm@commlawgroup.com.
