Circuit Split No More: US Supreme Court Upholds FCC Universal Service Fund Authority

Schools, hospitals, and libraries in poor and rural areas and millions of low-income American consumers can breathe a sigh of relief: they will continue to receive uninterrupted service subsidies through the Federal Communications Commission’s (FCC) Universal Service Fund (USF or Fund). On June 27, 2025, the US Supreme Court issued a significant decision in FCC v. Consumers’ Research affirming the constitutionality of Congress’s delegation of authority to the FCC to administer the USF, thereby upholding the funding mechanism used to deliver subsidized phone, broadband, and telecommunications service to millions of American consumers and community institutions. By a 6-3 vote, the Court reversed a ruling by the Fifth Circuit Court of Appeals that held both Congress’s delegation of USF authority to the FCC and the FCC’s subsequent delegation of its authority to a private administrator violated the Constitution (read our article on the Fifth Circuit’s July 2024 decision here). The decision also resolved a split in the circuit courts, as the Sixth and Eleventh Circuit Courts of Appeal had decided in favor of the FCC in similar proceedings.

At issue in the case was the application of the “nondelegation doctrine,” a principle of constitutional law that says Congress cannot delegate legislative authority to any other branch of government or to a private entity. Specifically, Consumers’ Research challenged whether the discretionary power granted to the FCC to set and collect the “Contribution Factor”—the mandatory contribution assessed against the interstate end-user revenues of each telecommunication carrier on a quarterly basis—to fund a government initiative amounts to an unconstitutional delegation of legislative authority (“public” delegation). Consumers’ Research also asserted that the FCC then committed a further unconstitutional delegation of authority when it conferred its congressionally delegated authority to administer the USF to a private entity, the Universal Service Administrative Company (USAC) to permanently administer the Fund by calculating contribution rates, collecting contributions, and disbursing those contributions to subsidized projects (“private” delegation). USAC is subordinate to the FCC.

The Court rejected both delegation arguments and held that the USF program—and USAC’s administrative role in it—is constitutional. In reversing the lower court, the Supreme Court found that Congress had set out an “intelligible principle” establishing both the general policy the FCC must pursue and the boundaries of its authority to do so. By providing that the FCC must collect contributions “sufficient” to support universal service programs, Congress established both the floor and ceiling for what the FCC could collect from its contributors. The Court also found that the relationship between the FCC and USAC was valid, since the latter “function[ed] subordinately to” the FCC and was subject to its “authority and surveillance,” meaning any actions it takes are reviewable by the FCC before taking effect. FCC Chairman Brendan Carr and Commissioners Anna Gomez and Olivia Trusty each released statements in support of the Court’s ruling.

What does this mean for the public? The Universal Service Fund—with its roots dating back to the New Deal and the Communications Act of 1934—has been central in helping to ensure the availability of “universal” telecommunications service for low-income and rural areas, with a special focus on serving community institutions like schools, hospitals, and libraries. Due to growing demand for these programs and a corresponding reduction in revenue base, the Contribution Factor has risen significantly over the past decade. Carriers that pay into the Fund get to decide whether to pass those costs through to their customers or absorb it, and due to the high cost, most choose to pass some if not most of that fee on to customers in the form of a line-item USF charge on their phone bill (reflecting their own “contribution” to USF). Now that the Fund has survived judicial challenges, advocates will look to Congress and the FCC to expand the contribution base to ensure sustainable funding in the face of eroding revenues from traditional telecommunications sources and the rapid growth of broadband and other connectivity services.

For more information about this case or the Universal Service Fund, please contact a member of Pillsbury’s Communications Practice.

A PDF of this article is available at Circuit Split No More: U.S. Supreme Court Upholds FCC Universal Service Fund Authority.

The authors would like to thank summer law clerk Ethan Mack for his contributions to this client alert.