U.S. Supreme Court: The Universal Service Fund Is Constitutional
June 26, 2025 – The U.S. Supreme Court has issued a decision in FCC et al. v. Consumers’ Research which concludes that the federal universal service fund (USF) contribution system does not violate the nondelegation doctrine.
Justice Kagan delivered the 6-3 opinion of the Court, in which Chief Justice Roberts, Justice Sotomayor, Justice Kavanaugh, Justice Barrett, and Justice Jackson joined. Justice Kavanaugh and Justice Jackson filed concurring opinions. Justice Gorsuch filed a 37-page dissenting opinion, in which Justice Thomas and Justice Alito joined.
The Court’s opinion overturns a July 2024 en banc decision by the U.S. Court of Appeals for the Fifth Circuit which declared the USF contribution mechanism to be an unconstitutional tax and a violation of the nondelegation doctrine. Consumers’ Research, Cause Based Commerce, Inc., and various individual consumers brought the original legal challenge to the USF. The FCC (24-354) and a group of public interest and trade associations (24-422) sought Supreme Court review, with both petitions consolidated under Docket 24-354 for the Court’s 2024 October Term.
In the majority opinion, Justice Kagan framed the questions in the case as “whether the universal-service scheme—more particularly, its contribution mechanism—violates the Constitution’s nondelegation doctrine, either because Congress has given away its power to the FCC or because the FCC has given away its power to a private company.” The Court’s answer to both is a resounding no.
The Court applied its long-standing nondelegation doctrine analysis – did Congress set out an “intelligible principle” to guide the power delegated to the FCC, and did Congress make clear both “the general policy” the FCC must pursue and “the boundaries of the delegated authority.” Ultimately, the Court concluded that “under the usual intelligible-principle test, the universal-service contribution scheme clears the nondelegation bar.”
The Court rejected the argument put forth by challenger Consumers’ Research that a different or more stringent nondelegation test should be applied because USF contribution fees are taxes. The Court said Skinner v. Mid-America Pipeline Co. “made clear that whether a charge is a tax or a fee is irrelevant to the nondelegation inquiry.”
The Court found no violation of the private nondelegation doctrine. Consumers’ Research claimed that the FCC conferred governmental power on the Universal Service Administrative Company (USAC), a private party, by giving USAC “carte blanche” to set each quarterly USF contribution factor. The Court determined that USAC is “broadly subordinate” to the FCC, may not make policy, and must carry out all its tasks consistent with the FCC’s rules, orders, and directives. The Court stated that “as long as an agency thus retains decision-making power, it may enlist private parties to give it recommendations.”
Also, the Court rejected the nondelegation “combination theory.” In the decision below, the Fifth Circuit found that the combination of Congress’s delegation to the FCC and the FCC’s “subdelegation” to the USAC violated the Constitution, even if neither delegation did so independently. The Court said the Fifth Circuit’s logic does not work – a measure implicating (but not violating) one does not compound a measure implicating (but not violating) the other, in a way that pushes the combination over a constitutional line.
