Client Advisory | General Regulatory & Legal Advisory

Fifth Circuit Upholds Constitutionality of the Universal Service Fund and Legality of FCC’s Reliance on USAC for its Administration

On Friday, March 24, the U.S. Court of Appeals for the Fifth Circuit denied a petition challenging the constitutionality of Congress’s delegation of authority to the FCC to create and oversee the Universal Service Fund (USF) program that has existed since shortly after the Telecommunications Act of 1996. The petition also challenged the FCC’s reliance on a private entity, the Universal Service Administration Corporation (USAC), for managing and administering the USF program. 

Under the non-delegation doctrine, Congress may not delegate its power to raise revenue to other entities unless it has provided “intelligible principles” to the body tasked with collecting the money. Judge Carl E. Stewart, writing for the unanimous panel of three judges, held that Congress has adequately constrained and directed both the amounts to be collected and the methods of doing so, and thus there was no constitutional violation.

The Fifth Circuit’s ruling deals a severe blow to the Petitioners’ efforts to derail and throw the USF program into turmoil.  However, the Petitioners have similar suits still pending before the Sixth and Eleventh Circuits, remaining hopeful that they can engineer a circuit split, thereby pressuring the Supreme Court to intervene at some point in the future. But with the, arguably, most conservative of the three circuits ruling unanimously in favor of the FCC, prospects of the Supreme Court taking the case are slim and the likelihood the Petitioners’ goal of toppling the USF program –as we have known it for nearly a quarter century– have considerably dimmed.

The CommLaw Group continues to monitor these and other USF/USAC litigation questions closely. In the meantime, and for the foreseeable future, the USF program, USAC, and the sky-high USF contribution will remain firmly intact. 

To learn more about developments in the USF program, join Marashlian & Donahue’s managing partner as he hosts a panel of experts at the upcoming TeleStrategies Communications Tax conference!  

For more info on the Fifth Circuit ruling or, more generally, compliance with the FCC’s rules & regulations (including the USF program), do not hesitate to contact Jonathan Marashlian at


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