SCOTUS Rejects Non-Delegation Challenge to FCC Telecom Access Program

In Federal Communications Commission v. Consumers’ Research, 606 U.S. ____ (2025), the U.S. Supreme Court held that the universal-service contribution scheme does not violate the Constitution’s nondelegation doctrine. 

According to the six-member majority, Congress sufficiently guided and constrained the discretion that it lodged with the Federal Communications Commission (FCC) to implement that scheme, and the FCC has retained all decision-making authority within that sphere, relying on the Universal Service Administrative Company only for non-binding advice.

Facts of the Case

The Communications Act of 1934 established the FCC and empowered it to regulate communications services. The FCC, Congress stated, was “to make available, so far as possible, to all the people of the United States,” reliable communications services “at reasonable charges,” a goal now called universal service.

The universal-service project arose from the concern that pure market mechanisms would leave some population segments—such as the poor and those in rural areas—without access to needed communications services. Under the 1934 Act, the FCC pursued universal service primarily through implicit subsidies, using its rate-regulation authority to lower costs for some consumers at the expense of others.

In 1996, Congress amended the Act and created a new framework for achieving universal service. Section 254 of the amended statute requires every carrier providing interstate telecommunications services to “contribute” to a fund, known as the Universal Service Fund. The FCC must use the money in the Fund to pay for universal-service subsidy programs. The statute designates the beneficiaries of universal-service subsidies—low-income consumers, those in rural areas, schools and libraries, and rural hospitals. It also provides detailed guidance regarding the communications services to which those beneficiaries should have access.

In deciding what services to subsidize, the FCC must consider the extent to which a service is “essential to education, public health, or public safety” and has “been subscribed to by a substantial majority of residential customers.” The Commission must also evaluate whether a service can be made available at an “affordable rate[].” Section 254 also sets forth “principles” on which the FCC “shall base” its universal-service policies.

Among other things, those principles direct that all consumers, “including low-income consumers” and those in “rural” areas, should have access to quality services at affordable prices. The FCC also may add “other principles” found both “consistent with” the Act and “necessary and appropriate for the protection of the public interest, convenience, and necessity.”

To calculate how much carriers must contribute to the Fund, the FCC has devised a formula, known as the “contribution factor.” That factor is a fraction, expressed as a percentage, whose numerator is the Fund’s projected quarterly expenses (the subsidy payments it will make plus overhead) and whose denominator is contributing carriers’ total projected quarterly revenue. A carrier must pay into the Fund an amount equal to its own projected revenue multiplied by the contribution factor.

The FCC has appointed the Universal Service Administrative Company, a private, not-for-profit corporation, as the Fund’s “permanent Administrator.” The Administrator manages the Fund’s day-to-day operations and also plays a role in producing the financial projections that end up determining the contribution factor. Each quarter, the Administrator projects the Fund’s expenses, adds up revenue estimates it receives from carriers, and submits those figures to the Commission for approval and eventual use in calculating the contribution factor.

In December 2021, the FCC set a 25.2% contribution factor for the first quarter of 2022. Consumers’ Research petitioned for review in the Fifth Circuit Court of Appeals, contending that the universal-service contribution scheme violates the nondelegation doctrine, which limits Congress’ ability to delegate decision-making powers to executive branch agencies

The en banc court granted the petition, replacing a panel decision to the contrary. In the full Fifth Circuit’s view, the combination of Congress’s delegation to the FCC and the FCC’s “subdelegation” to the Administrator violated the Constitution, even if neither delegation did so independently.

Supreme Court’s Decision

The Supreme Court reversed. It held that the universal-service contribution scheme does not violate the nondelegation doctrine. “We hold that no impermissible transfer of authority has occurred. Under our nondelegation precedents, Congress sufficiently guided and constrained the discretion that it lodged with the FCC to implement the universal-service contribution scheme. And the FCC, in its turn, has retained all decision-making authority within that sphere, relying on the Administrative Company only for non-binding advice,” Justice Elena Kagan wrote on behalf of the majority. “Nothing in those arrangements, either separately or together, violates the Constitution.”

In reaching its decision, the Supreme Court refused to deviate from its existing intelligible-principle standard, which asks whether Congress has set out an “intelligible principle” to guide what it has given the agency to do. Under that test, “the degree of agency discretion that is acceptable varies according to the scope of the power congressionally conferred.”

Applying that test, the Court found that that Congress had provided an “intelligible principle” to guide the FCC’s actions, given that it “imposed ascertainable and meaningful guideposts for the FCC to follow when carrying out its delegated function of collecting and spending contributions from carriers.” Justice Kagan specifically noted that “the statute directs the FCC to collect the amount that is ‘sufficient’ to support the universal-service programs Congress has told it to implement.”
The Court went on to find that “the Commission’s transfer of accounting functions to the Administrator [USAC] offers no reason for holding the universal-service contribution scheme invalid.” In support, Justice Kagan emphasized that throughout the USF funding mechanism, the FCC remains “the final authority.” She added that while “[t]he Administrator, following the FCC’s rules, makes recommendations,” “[i]n every way that matters to the constitutional inquiry, the Commission, not the Administrator, is in control.”