In a case with potentially sweeping implications for administrative and constitutional law, the Supreme Court is weighing whether the Federal Communications Commission’s (FCC) administration of universal telecommunications services violates the nondelegation doctrine—a principle that limits Congress’s ability to transfer legislative authority to agencies or private entities.

The dispute, Consumers’ Research v. FCC, centers on Congress’s 1996 directive to the FCC to expand access to telecommunications services nationwide. That directive launched the Universal Service Fund (USF), which is funded through mandatory contributions from interstate telecommunications carriers. To manage the billing, collection, and disbursement of these funds, the FCC created the Universal Service Administrative Company (USAC), a private nonprofit entity operating under FCC oversight.

Now, the Supreme Court must decide whether Congress impermissibly delegated legislative power to the FCC, and whether the FCC itself violated the doctrine by further delegating authority to USAC.

Respondents—a coalition of consumers, a telecommunications carrier, and an advocacy group collectively known as “Consumers’ Research”—argue that Congress unlawfully delegated its taxing power to the FCC without clear guidance or limits. They further contend that the FCC compounded this constitutional violation by abdicating key responsibilities to USAC, which operates without sufficient agency supervision. Petitioners, including the FCC, the federal government, and several supporting advocacy organizations, maintain that the USF structure is lawful because Congress provided an intelligible principle guiding the FCC’s administration of the program, and USAC’s role is limited to ministerial and technical tasks—subject to FCC oversight and approval.

The Fifth, Sixth, and Eleventh Circuits initially rejected the nondelegation claims. However, an en banc panel of the Fifth Circuit reversed course, characterizing the quarterly payments by carriers as a form of taxation—not regulatory fees—and finding that Congress may have delegated core legislative functions to the FCC without sufficient limitations. The Fifth Circuit did not find either delegation to be independently unconstitutional. Instead, it introduced a novel “combination” theory: that the sequential delegations—first from Congress to the FCC, then from the FCC to USAC—collectively violated the nondelegation doctrine, even if neither would be unconstitutional in isolation.

During oral argument on March 26, 2025, the Justices explored both the boundaries of congressional authority and the viability of the Fifth Circuit’s combination theory.

• Justice Jackson questioned whether the combination approach is a valid framework for assessing nondelegation claims.
• Justice Sotomayor noted historical precedents for broad delegations in tariff and rate-setting contexts and emphasized USAC’s limited, formula-based role.
• Justice Barrett raised concerns about the implications for other statutes that authorize similar delegations.
• Justice Thomas focused on whether any statutory limits constrained the FCC’s authority to impose financial obligations on telecommunications carriers.
• Justice Gorsuch drew an analogy to Congress’ potentially requiring Americans to pay a flat tax to reduce the national debt, suggesting discomfort with an unchecked delegation of fiscal authority.

The Court’s forthcoming decision could redefine the modern application of the nondelegation doctrine, particularly in regulatory schemes involving public-private partnerships and technical administration. It may also clarify the constitutional limits on agencies’ use of private entities in executing federal policy.

A decision is expected later in the term. Stay tuned for Dykema’s analysis of the Court’s opinion.

For more information, please contact Chantel Febus, James Azadian, Mark Magyar, or Christopher Sakauye.