Today, the Supreme Court issued its decision in FCC v. Consumers’ Research (No. 24-354), upholding the constitutionality of the Universal Service Fund (“USF”).  The Court in a 6-3 majority opinion penned by Justice Kagan explained that the USF does not violate the “public nondelegation doctrine” or the “private nondelegation doctrine” because Congress provided adequate guideposts and guardrails for the Federal Communication Commission (“FCC”) to implement the USF, and because the FCC had not impermissibly subdelegated its implementation authority to a private entity.  Because the Court upheld the USF, it is unlikely that there will be any immediate implications for the telecommunications industry more broadly.  That said, in analyzing the legal issues, the Court clarified several limits on the FCC’s USF authority, which could constrain the scope of the USF program in the future, and likewise could serve as the basis for future legal challenges should the FCC transgress those limits.

Consumers’ Research Decision

This case involved the FCC’s authority to subsidize programs designed to further “universal service.”  Those subsidies are paid for by telecommunication carriers, who are each required to contribute an amount equal to a percentage of their projected annual revenues.  A not-for-profit corporation established by the FCC (the “Universal Service Administrative Company” or “USAC”) calculates and recommends this quarterly contribution percentage (or “contribution factor”), which the FCC then reviews and approves.  Consumers’ Research challenged this structure as violating both the nondelegation doctrine—a legal doctrine that generally prevents Congress from delegating legislative authority to federal agencies—and the private-delegation doctrine—which prohibits federal agencies from delegating their sovereign authorities to private individuals or entities.  In earlier proceedings, the Fifth Circuit held that the USF was unconstitutional and relied on a novel theory that the combination of Congress’s delegation to the FCC and the FCC’s sub-delegation to USAC was unconstitutional.  The Supreme Court reversed that ruling in today’s decision.Continue Reading Supreme Court Upholds Constitutionality of the Universal Service Fund