E-Rate Legal and Policy Update
There have been several recent court cases related to E-Rate that we want to highlight, along with addressing some of the questions being raised regarding the new administration’s policies. We have noted a lot of confusion and concern, and want to try to clarify as much of that as possible.
Consumers’ Research Case
A group called Consumers’ Research has filed lawsuits in multiple appellate courts challenging the legality of the Federal Communications Commission’s (FCC) Universal Service Fund (USF). The USF is what funds E-Rate. The program is managed by the Universal Service Administrative Company (USAC), a nonprofit that administers funds collected from telecom providers. Consumers’ Research argues that the way the FCC raises and distributes these funds is unconstitutional. While some courts have upheld the program, a split decision has sent the case to the Supreme Court, which will issue a ruling in 2025.
Wisconsin Bell, Inc. v. United States, ex rel. Todd Heath Case
A related case examines whether E-Rate funds should be considered “federal funds” and, if so, whether violations of E-Rate rules fall under the federal False Claims Act. The False Claims Act is a federal law that imposes liability on individuals or entities that knowingly submit false claims for government funds. It allows the government to recover damages and penalties, and it includes provisions for whistleblower lawsuits, enabling private citizens to bring fraud claims on behalf of the government.
Court Cases, the Trump Administration, & What This Means for E-Rate
While legal uncertainty remains, the general advocacy and consultant community remains optimistic about the program’s continued stability in the face of these two cases.
In addition, for now, E-Rate seems relatively insulated from recent policy shifts under the current administration, partially due to the fact that unlike traditional federal grants, E-Rate operates via the USF, which - as described above - is funded via telecom providers as opposed to taxpayers or federal dollars. Historically, this structure has provided strong protection for E-Rate from federal budget appropriations and the whims of new administrations. The status of the court-ordered stay of the OMB budget freeze remains unclear in the long-term, but for the time being E-Rate is proceeding as normal. We will continue to monitor this.
There is one important exception: Congress is aimed to possibly overturn recent expansions in E-Rate eligibility for the Learn Without Limits initiatives - hotspots in particular. While this Congressional review raises questions about the future eligibility of hotspots, no final decisions have been made. It’s possible that school bus Wi-Fi as well as the Cybersecurity Pilot Program may be reconsidered in the future, or that some changes may be made to their eligibility. We have been in communication with schools and libraries applying for these services and equipment to keep them informed about potential upcoming impacts to this funding, and we will continue to reach out to any clients who may be impacted by any relevant developments.
What’s Next?
While some aspects of the program are still uncertain, there is no immediate cause for concern. Applicants should proceed with their FY25 applications. We remain in contact with our network of E-Rate consultants and other advocacy/lobbying groups that are currently all optimistic.
Because we have seen some misunderstandings among clients about this, it’s important to note that there has been zero discussion of certain types of schools - i.e., independent schools - becoming ineligible for E-Rate funding.
We will continue to monitor the situation and provide updates as we learn more. Any important news and updates will come directly from HWC as soon as we have it. In the meantime, please reach out with any questions.