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-' Congressional ______
-L Research Service
~nforming the legislative debate since 1914____________________
FCC v. Consumers' Research: High Court
Hears Challenge to Universal Service Fund
May 1, 2025
In the Communications Act of 1934, Congress directed the Federal Communications Commission (FCC)
to make available, so far as possible, to all the people of the United States, wire and radio
communications services with adequate facilities at reasonable charges. Pointing to this language, some
courts have called universal service a basic goal of' Congress's telecommunications regulation.
Today, the FCC's authority to promote universal service is governed in part by 47 U.S.C. § 254.
Enacted as part of the Telecommunications Act of 1996, Section 254 codified the [FCC's] long-standing
commitment to ensuring universal service, while requiring the FCC to restructure [its] universal service
support mechanisms. Relying on Section 254, the FCC requires providers of telecommunications
services to make contributions to a Universal Service Fund (USF). The USF then subsidizes a set of
programs designed to make telecommunications services available and affordable throughout the country.
The FCC has appointed a non-profit entity called the Universal Service Administrative Company (USAC)
to administer the USF and its programs. Each quarter, USAC makes projections that the FCC uses to
calculate a contribution factor-the percentage of telecommunications carriers' projected revenues that
the carriers must pay to the USF.
After the FCC and USAC finalized the USF contribution factor for the first quarter of 2022, several
organizations and individuals-led by Consumers' Research, a non-profit organization that seeks to
increase understanding of issues of concern to consumers-challenged the constitutionality of the
procedure for funding the USF in court. In July 2024, the en banc U.S. Court of Appeals for the Fifth
Circuit (U.S. Courts of Appeals will be referenced per their regional or jurisdictional short form
hereinafter) held that the funding procedure is unconstitutional on the ground that the combination of
delegations, subdelegations, and obfuscations in the funding process offends Article I, § 1 of the
Constitution. The FCC appealed to the Supreme Court, arguing in part that the decision conflicts with
cases Consumers' Research brought in other circuits and lost. The Supreme Court decided to review the
Fifth Circuit's judgment and is expected to issue an opinion in the case this summer.
This Legal Sidebar describes the Fifth Circuit's decision and the issues before the Supreme Court. It also
raises some related considerations for Congress.
Congressional Research Service
https://crsreports.congress.gov
LSB11301
CRS Legal Sidebar
Prepared for Members and
Committees of Congress](ViewImageLocal?handle=hein.crs/fccvcnssrsch0001&div=1&collection=&method=preview&ext=.png&size=3)