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Supreme Court Upholds FCC’s Universal Service Fund

The decision preserves billions in annual subsidies for underserved communities by upholding clear congressional constraints on FCC fee-setting power.

FILE - The Supreme Court is seen on Capitol Hill in Washington, Dec. 17, 2024. (AP Photo/J. Scott Applewhite, File)
FILE - Supreme Court is seen on Capitol Hill in Washington, April 25, 2024. (AP Photo/J. Scott Applewhite, File)
FILE - The Supreme Court is seen on Capitol Hill in Washington, Dec. 17, 2024. (AP Photo/J. Scott Applewhite, File)
United States Federal Communications Commission logo and U.S. flag are seen in this illustration taken April 23, 2025. REUTERS/Dado Ruvic/Illustration/ File Photo

Overview

  • The Supreme Court reversed the 5th Circuit’s 2024 ruling and, in a 6-3 decision, confirmed that the Universal Service Fund does not violate the Constitution’s nondelegation doctrine.
  • Justice Elena Kagan wrote that the 1996 Telecommunications Act provided an intelligible principle guiding the FCC’s authority and that the agency retained final decision-making power over contribution rates.
  • The majority held that classifying the fund’s charge as a tax or a fee is irrelevant to nondelegation analysis and does not affect its constitutionality.
  • Justices Neil Gorsuch, Clarence Thomas and Samuel Alito dissented, arguing that only Congress can determine tax rates and that the FCC overstepped its legislative bounds.
  • Administered by the nonprofit Universal Service Administrative Company under FCC oversight, the fund raises about $9 billion annually to subsidize phone and internet services for low-income households, rural health care providers, schools and libraries.