[co-author: Maryam Alghafir]
On June 27, 2025, the United States Supreme Court decided FCC v. Consumers’ Research, Nos. 24-354 & 24-422, upholding the constitutionality of the federal “universal service” statute, which establishes a Universal Service Fund (USF, or the Fund) to subsidize the nationwide deployment of communications services. In a 6–3 opinion authored by Justice Elena Kagan, the Court held that Congress’s delegation of authority to the Federal Communications Commission (FCC) to assess contributions from telecommunications companies to fund the USF’s subsidies was constitutional and did not violate the so-called nondelegation doctrine.
Case background
Congress established the USF – which currently exceeds USD8 billion in funding – to promote universal access to communications services, particularly for low-income consumers, rural areas, schools, libraries, and healthcare providers. Section 254 of the Communications Act requires telecommunications carriers to contribute to the Fund and sets forth statutory principles guiding the FCC’s administration of the Fund. The FCC calculates the quarterly “contribution factor” based on projected program costs and carrier revenues. The Universal Service Administrative Company (USAC) – a private, not-for-profit corporation overseen by the FCC – assists with calculating the underlying projections for the contribution factor.
In 2021, Consumers’ Research and other petitioners challenged the FCC’s authority to set the USF contribution factor. They argued that Congress had improperly delegated taxing authority to the FCC without adequate statutory limits (violating the traditional nondelegation doctrine), and that the FCC had unlawfully subdelegated that authority to USAC (violating the private nondelegation doctrine). The en banc Fifth Circuit agreed, holding that the combination of Congress’s delegation to the FCC, and the FCC’s subdelegation of authority to the USAC, violated the Constitution.
The Supreme Court’s opinion
The Supreme Court reversed the Fifth Circuit. It first concluded that the USF contribution mechanism does not violate the nondelegation doctrine. The Court applied the longstanding “intelligible principle” test, which requires courts to consider “whether Congress has made clear both the general policy that the agency must pursue and the boundaries of its delegated authority.” In other words, courts applying the nondelegation doctrine assess whether “Congress ha[s] provided sufficient standards to enable the courts and the public to ascertain whether the agency has followed the law.”
Applying that test, the Supreme Court held that Congress’s delegation to the FCC in section 254 contained an intelligible principle, primarily because the statute requires the FCC collect only what is “sufficient” to support universal service. The Court understood this sufficiency standard to impose both a floor and a ceiling on the FCC’s authority to raise funds for the USF. As a result, the Court concluded that the standard meaningfully constrains the FCC’s discretion, particularly when read alongside other statutory “principles” that channel that discretion.
These include requirements that support services be (i) essential to education, public health, or safety, (ii) subscribed to by a substantial majority of residential customers, and (iii) available at affordable rates. According to the Court, these “conditions, each alone and together, have bite, creating a bounded program.”
The Court also rejected the Fifth Circuit’s reasoning – echoed by Consumers’ Research – that the FCC gave USAC a “blank check” to exercise unfettered discretion, thereby violating the “private nondelegation doctrine.” The Court concluded that although the FCC transferred certain “accounting” functions to USAC, “in every way that matters to the constitutional inquiry,” the FCC remains “in control.” In reaching this conclusion, the Court emphasized how the FCC–USAC relationship operates in practice, and it relied on and quoted an amicus brief filed by DLA Piper on behalf of a bipartisan group of former FCC Chairs and Commissioners.
Justice Brett Kavanaugh and Justice Ketanji Brown Jackson both authored concurring opinions.
In dissent, Justice Neil Gorsuch, joined by Justice Clarence Thomas and Justice Samuel Alito, argued that the USF contribution mechanism constitutes a tax and that Congress’s failure to set a rate or cap renders the statute unconstitutional.
Impact of the decision
The Court’s decision affirms the FCC’s authority to administer the USF under current law and provides regulatory certainty for the agency’s existing universal service programs. Practically speaking, it ensures that those public programs will continue to receive funding and access to certain telecommunications services. Doctrinally, the decision is notable in part for what it does not do: the Court did not meaningfully amend or reinvigorate the longstanding “intelligible principle” test by making it easier for litigants to challenge statutory delegations of authority to agencies based on the nondelegation doctrine.
The Court also approvingly cited precedent establishing that congressional delegations of authority cast in relatively broad terms (eg, provisions authorizing the FCC to evaluate whether transactions are in “the public interest,” or allowing the FCC to set “just and reasonable” rates) will not necessarily run afoul of the nondelegation doctrine. This is significant, as the contrary conclusion – or a more exacting test to sustain the constitutionality of legislation – could have cast doubt on the constitutionality of longstanding statutes.
Thank you to our summer associate, Maryam Alghafir, for assisting with this alert.
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