subprocess.Popen() with universal_newlines=True does not convert line breaks correctly when the preferred encoding is UTF-16.  For example, the following code--

code = r"import sys; sys.stdout.buffer.write('a\r\nb'.encode('utf-16'))"
args = [sys.executable, '-c', code]
popen = Popen(args, universal_newlines=True, stdin=PIPE, stdout=PIPE)
print(popen.communicate(input=''))

yields--

('a\n\nb', None)

instead of--

('a\nb', None)

The reason is that the code attempts to convert newlines before decoding to unicode instead of after:

http://hg.python.org/cpython/file/85266c6f9ae4/Lib/subprocess.py#l830

I am attaching a failing test case.  I will upload a patch shortly.

Also see the related documentation issue 15561.