On June 27, 2025, the U.S. Supreme Court released an Opinion in the Case of “Federal Communications Commission v Consumers Research” which reversed the Fifth Circuit Court of Appeals and found the Universal Service Fund (USF)to be lawful. The Opinion was 6-3 with “KAGAN, J., deliver[ing] the opinion of the Court, in which ROBERTS, C. J., and SOTOMAYOR, KAVANAUGH, BARRETT, and JACKSON, JJ., joined. KAVANAUGH, J., and JACKSON, J., filed concurring opinions. GORSUCH, J., filed a dissenting opinion, in which THOMAS and ALITO, JJ., joined.”
One year ago, the Fifth Circuit Court found that the USF was unconstitutional because it claimed Congress unlawfully turned over the ability to tax to the FCC without a sufficient limiting principle. Moreover, the Commission did not administer the Fund itself but instead turned it over to the Universal Service Administrative Company (USAC). According to that Court, USAC includes members with an incentive to keep the Fund growing and therefore, is illegal. According to the that Court,
Petitioners [Consumer’s Research] contend the universal service contribution mechanism violates the Legislative Vesting Clause. We agree. We (A) explain that the power to levy USF “contributions” is the power to tax—a quintessentially legislative power. Then we (B) explain that Congress through [section 254 of the Telecommunications Act] may have delegated legislative power to FCC because it purported to confer upon FCC the power to tax without supplying an intelligible principle to guide FCC’s discretion. Next, we (C) explain that FCC may have impermissibly delegated the taxing power to private entities. Finally, we (D) explain that we need not definitively answer either delegation question because even if [section] 254 contains an intelligible principle, and even if FCC was permitted to enlist private entities to determine how much universal service tax revenue it should raise, the combination of Congress’s broad delegation to FCC and FCC’s sub delegation to private entities certainly amounts to a constitutional violation. (Fifth Circuit Court of Appeals, Petition for Review from the Federal Communications Commission, Docket 96-45, On Petition for Rehearing En Banc, filed July 24, 2024, at pp. 17-18.).
The majority of Justices at the Supreme Court decided differently, as discussed below:
According to Consumers’ Research, universal-service contributions are taxes. And tax statutes, Consumers’ Research argues, must satisfy a special nondelegation rule. For those statutes, Congress must set a definite or objective limit on how much money an agency can collect—a numeric cap, a fixed tax rate, or the equivalent. Section 254 contains no such limit, so in Consumer’s Research’s opinion it is unconstitutional. The Court rejects this argument by precedent but also finds that it would throw a host of federal statutes into doubt, as Congress has often empowered agencies to raise revenue without specifying a numeric cap or tax rate.
Consumers’ Research responds that those other statutes can be distinguished as imposing fees, rather than taxes, and thus be exempted from its numeric-limit requirement. But [a previous case] made clear that whether a charge is a tax or a fee is irrelevant to the nondelegation inquiry. Finally, the Consumers’ Research position produces absurd results, divorced from any reasonable understanding of constitutional values. Under its view, a revenue-raising statute containing non-numeric, qualitative standards can never pass muster, no matter how tight the constraints they impose. But a revenue-raising statute with a numeric limit will always pass muster, even if it effectively leaves an agency with boundless power.
Section 254 directs the FCC to collect contributions that are “sufficient” to support universal service programs. The word “sufficient” sets both a floor and a ceiling—the FCC cannot raise less than what is adequate or necessary to finance its universal-service programs, but it also cannot raise more than that amount. And the “sufficiency” ceiling imposes a meaningful limit on the Commission, because Section 254 also provides appropriate guidance about the nature and content of universal service. The statute makes clear whom the program is intended to serve: those in rural and other high-cost areas (with a special nod to rural hospitals), low-income consumers, and schools and libraries. And it also defines the services those beneficiaries should receive. In order for the FCC to subsidize a service, the service must be subscribed to by a substantial majority of residential customers, available at affordable rates, and essential to education, public health, or safety. Those conditions, each alone and together, provide the FCC with determinate standards for operating the universal-service program. (Supreme Court Opinion at pp. 3-4.).
Although the Fund passed muster at the High Court, clearly in its present form its days are numbered. With a contribution factor nearing 40 percent and telecom revenues continuing to decline, something must change, and it must come from Congress. Hopefully, it is finally getting serious about this. Senators Deb Fischer of Nebraska and Ben Ray Lujan of New Mexico have recently reconstituted the USF Working Group originally formed in 2023. They will be taking comments later this summer on how to improve and modernize the Fund. The link to the Working Group can be found at: