FCC v. Consumers' Research
The Supreme Court upheld the FCC's Universal Service Fund contribution system, ruling that Congress gave the agency adequate guidance when it directed the FCC to collect amounts 'sufficient' to fund programs helping rural, low-income, and other underserved Americans afford phone and internet access.
The decision preserves a nearly $9 billion annual fund that subsidizes telecommunications for rural communities, schools, libraries, and low-income households, and rejects a theory that would have put a broad range of similar federal agency revenue programs in constitutional jeopardy.
How it got here: Consumers' Research petitioned the Fifth Circuit for review of the FCC's 2022 contribution factor; an en banc Fifth Circuit struck the scheme down on a 'combination' theory; the FCC and industry groups sought Supreme Court review and the Court agreed to hear the case.
The Case in Depth
What happened
Congress requires telecommunications companies to contribute money to the Universal Service Fund, which the FCC uses to subsidize phone and internet access for low-income households, rural communities, schools, libraries, and rural hospitals. A nonprofit organization called Consumers' Research, joined by a carrier and several individual consumers, argued that the contribution scheme is unconstitutional because Congress never set a specific tax rate or dollar cap — leaving the FCC to decide how much to collect — and that the FCC unlawfully handed that function to a private company.
The question before the Court
Can the FCC decide on its own how much telecommunications companies must contribute to a federal fund subsidizing phone and internet access for underserved Americans, without Congress setting a specific rate or numerical cap?
The Court's answer
Yes — the Court held that Congress gave the FCC sufficient guidance when it directed the agency to collect carrier contributions "sufficient" to fund specific universal-service programs. The word "sufficient" sets both a floor and a ceiling: the FCC cannot raise less than the programs need, but also cannot raise more. Combined with Congress's detailed rules about who benefits (rural and low-income communities, schools, libraries, rural hospitals) and what services qualify (widely used, affordable, and essential to education, health, or safety), the statute gives the FCC determinate standards — not a blank check.
The Court also rejected two further arguments. The FCC's use of a private nonprofit company to produce quarterly financial projections does not hand government power to a private actor, because the FCC reviews those projections and retains final authority over the resulting contribution amounts. And the Fifth Circuit's theory that two individually permissible delegations can combine into a constitutional violation was rejected — the public and private nondelegation doctrines operate on different legal axes and cannot compound each other into an unconstitutional arrangement.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
The roughly $9 billion Universal Service Fund — which subsidizes phone and internet bills for low-income Americans, pays for connectivity at schools and libraries, and supports rural hospitals' telemedicine programs — will keep operating as before. Telecommunications companies will continue paying into it, typically passing the cost to consumers as a line item on monthly phone bills. Similar agency funding structures across the federal government also remain on solid constitutional footing.
What changes now
The case returns to the Fifth Circuit for further proceedings consistent with the Supreme Court's ruling. The Universal Service Fund and its four programs — Lifeline, High Cost, E-Rate, and Rural Health — continue to operate. The Court explicitly left open whether two other statutory provisions (§§ 254(c)(3) and (h)(2)), which allow the FCC to fund "advanced" and "additional" services beyond the core universal-service definition, would survive a nondelegation challenge; Consumers' Research may pursue those arguments on remand.
What this does not decide
The Court explicitly declined to address whether §§ 254(c)(3) and (h)(2) — which let the FCC fund "advanced" and "additional" services for schools, libraries, and health care providers beyond the baseline universal-service definition — satisfy the nondelegation doctrine. Those provisions remain open to future challenge, and the dissent flagged this omission as significant.
Concurrences and dissents
How the Justices voted
Majority (6). Justice Kagan (author), joined by Justice Roberts, Justice Sotomayor, Justice Kavanaugh, Justice Barrett, and Justice Jackson.
Dissent (3). Justice Gorsuch (author), joined by Justice Thomas and Justice Alito.
Concurrence — Justice Kavanaugh
Justice Kavanaugh joined the majority in full but wrote separately to explain the historical and constitutional rationale behind the intelligible principle test and why it respects the President's Article II authority. He also flagged a separate concern: congressional delegations to independent agencies — whose heads the President cannot remove at will — raise serious democratic-accountability problems under Article II that the Court should address in a future case. He noted that the FCC may not technically be an independent agency because no statute restricts the President's authority to remove its commissioners.
Concurrence — Justice Jackson
Justice Jackson joined the majority in full but wrote separately to express skepticism that the 'private nondelegation doctrine' — the constitutional rule purporting to bar the government from delegating authority to private actors — is a valid, independent doctrine. She noted that nothing in the Constitution's text supports such a per se rule, and recent scholarship questions its historical basis as well. She urged the Court to proceed cautiously before entertaining future challenges under this theory.
Dissent — Justice Gorsuch
Justice Gorsuch, joined by Justices Thomas and Alito, would have affirmed the Fifth Circuit. He argued that Section 254 unconstitutionally delegates Congress's taxing power to the FCC without a prescribed tax rate or meaningful cap — a historically unprecedented arrangement in domestic taxation. He accused the majority of rewriting the statute to save it by converting the criteria the FCC must 'consider' into mandatory requirements, and warned that approving such an open-ended tax delegation moves the country further from self-governance and closer to rule by unaccountable agency officials. Read the full dissent →
How the Court got there
The legal reasoning, step by step
- The Court applied the longstanding 'intelligible principle' test — the standard for judging whether Congress has given an agency too much lawmaking-adjacent power. Under this test, Congress must make clear both the general policy an agency must pursue and the outer boundaries of its authority. The Court rejected calls to apply a stricter, special rule for tax statutes, reaffirming that two earlier decisions — J.W. Hampton (1928) and Skinner v. Mid-America Pipeline (1989) — already foreclosed any two-tiered nondelegation standard for revenue-raising laws.
- The Court found that the word 'sufficient' in Section 254, which requires the FCC to collect amounts sufficient to fund universal-service programs, sets both a floor and a ceiling. The FCC cannot raise less than the programs require, but it also cannot raise more — collecting twice what is needed would plainly not be 'sufficient.' This reading was reinforced by the FCC's own long-standing interpretation of the provision as requiring 'an affordable and sustainable amount of support that is adequate, but no greater than necessary.'
- Congress also specifically defined what the money can be spent on: subsidies for services that are subscribed to by a substantial majority of residential customers, available at affordable rates, and essential to education, public health, or safety — for a designated set of beneficiaries (rural and high-cost areas, low-income consumers, schools, libraries, and rural hospitals). The Court read each of these criteria as separately mandatory, giving the FCC concrete, bounded standards rather than open-ended discretion.
- On the 'private nondelegation' challenge — the argument that the FCC unconstitutionally transferred its authority to the private Universal Service Administrative Company — the Court applied the framework from Carter v. Carter Coal (1936) and Sunshine Anthracite Coal Co. v. Adkins (1940). The key distinction is whether the private party governs or merely advises: a private actor that is subordinate to a government agency and subject to its oversight may assist by making recommendations, but final authority must stay with the agency.
- The Court found that the Administrative Company occupies a purely advisory role. The FCC appoints the company's board, approves its budget, and requires it to follow all FCC rules and directives. Each quarter, the company submits financial projections to the FCC, which reviews them, revises them if needed, and then formally sets and publishes the contribution factor. The 'deemed approved' mechanism in the regulations simply closes a 14-day window for further revision — it does not substitute the company's judgment for the FCC's.
- The Fifth Circuit had struck down the scheme on a 'combination' theory: even if neither the Congress-to-FCC delegation nor the FCC-to-Administrator arrangement was independently unconstitutional, the two together crossed a constitutional line. The Court rejected this reasoning. In Free Enterprise Fund v. PCAOB (2010), two layers of removal protection compounded each other because both operated on the same axis — limiting the same presidential power. Here, the traditional nondelegation doctrine and the private nondelegation doctrine address entirely different concerns and do not reinforce each other, so a meritless challenge under one cannot combine with a meritless challenge under the other to produce a constitutional violation.
Doctrinal impact
Cases affected by this decision
Reaffirms J. W. Hampton, Jr., & Co. v. United States (276 U.S. 394)
The 'intelligible principle' test applies to all congressional delegations, including those involving tax or revenue-raising authority.
Reaffirms Skinner v. Mid-America Pipeline Co. (490 U.S. 212)
No special or stricter nondelegation standard applies when Congress delegates power to raise revenue; the usual intelligible-principle test governs.
Reaffirms Sunshine Anthracite Coal Co. v. Adkins (310 U.S. 381)
An agency may enlist private parties to make recommendations as long as the agency retains final decision-making authority.
Distinguishes Carter v. Carter Coal Co. (298 U.S. 238)
Carter Coal bars delegating governing power to private parties with adverse interests; the Administrative Company here only advises the FCC.
Distinguishes Free Enterprise Fund v. Public Company Accounting Oversight Bd. (561 U.S. 477)
The 'combination' logic from Free Enterprise Fund does not extend to pairing public and private nondelegation claims, which operate on different axes.