Federal Communications Commission v. Consumers’ Research

Facts of the Case

Provided by Oyez

The Federal Communications Commission (FCC) was established in 1934 to regulate interstate communications and ensure widespread access to telecommunications services. To further this mission, Congress in 1996 instructed the FCC to establish and maintain a universal service fund, requiring telecommunications carriers to contribute quarterly based on their revenues. The FCC partners with the Universal Service Administrative Company (USAC), a private entity, to manage this process—USAC calculates projected demand and contribution factors using FCC formulas, submits these proposals to the FCC for approval, and then uses the approved figures to determine individual contribution amounts.

Consumers’ Research challenged the constitutionality of the 1996 Telecommunications Act’s universal service requirements and the FCC’s implementation of those requirements. Their primary arguments were twofold: first, that Congress unconstitutionally delegated its legislative power to the FCC through the universal service provisions, and second, that the FCC improperly delegated its authority to a private entity (USAC) to manage the universal service fund.

The U.S. Court of Appeals for the Eleventh Circuit denied the petition, finding no constitutional violations in either delegation. The Court determined that Congress provided sufficient guidance (an “intelligible principle”) to the FCC in the statute, and that the FCC maintained adequate control and oversight over USAC’s activities in managing the universal service fund, preventing any improper delegation of government authority to a private entity.

Questions

Did Congress violate the Constitution in the way it delegated power to the FCC to collect Universal Service Fund money, and did the FCC violate the Constitution by letting a private, industry-controlled company make those collection decisions?

Conclusions

The statutory scheme that allows the FCC to collect “sufficient” contributions to fund universal-service programs does not violate the nondelegation doctrine. Justice Elena Kagan authored the 6-3 majority opinion of the Court.

The Communications Act directs the FCC to collect contributions that are “sufficient” to support universal-service programs, which sets both a floor and a ceiling on the agency’s authority. The FCC cannot raise less than what is adequate to finance the programs, but also cannot raise more than that amount. Congress provided adequate guidance by specifying whom the programs must serve (rural and high-cost areas, low-income consumers, schools, and libraries) and defining which services qualify for subsidies. To receive funding, services must be subscribed to by a substantial majority of residential customers, be available at affordable rates, and be essential to education, public health, or safety. These conditions create determinate standards that meaningfully constrain the FCC's discretion.

The FCC’s use of the Universal Service Administrative Company to help calculate contribution amounts also passes constitutional muster. The Administrator operates subordinately to the Commission, which appoints its Board of Directors, approves its budget, and retains final decision-making authority. While the Administrator produces initial projections of carrier revenues and Fund expenses, the Commission reviews, revises if needed, and approves these figures before setting the contribution factor. The arrangement mirrors the permissible structure approved in Sunshine Anthracite Coal Co. v. Adkins, where private parties could make recommendations to a government agency that retained ultimate authority.

Justice Brett Kavanaugh authored a concurring opinion, agreeing with the outcome but emphasizing concerns about delegations to independent agencies.

Justice Ketanji Brown Jackson authored a concurring opinion, expressing skepticism about the viability of the private nondelegation doctrine as an independent constitutional principle.

Justice Neil Gorsuch authored a dissenting opinion, joined by Justices Clarence Thomas and Samuel Alito, arguing that Section 254 impermissibly delegates Congress’s taxing power by failing to set a tax rate or meaningful cap on collections.