Supreme Court Upholds USF
June 27, 2025: The Supreme Court issued a ruling validating the work of the Universal Service Fund and overturning a Fifth Circuit decision that found the $9 billion-per-year Universal Service Fund (USF) unconstitutional.
The Supreme Court said the USF contribution scheme and management were Constitutional in a 6-3 decision released today. Justice Elena Kagan wrote the majority opinion, while Justice Neil Gorsuch wrote a dissent, which was joined by Samuel Alito and Clarence Thomas. (See the SCOTUS Blog link below and the decision at: https://www.supremecourt.gov/opinions/24pdf/24-354_0861.pdf )
In the decision, Justice Kagan writes in the opening: “Nearly a century ago, Congress charged the then-new Federal Communications Commission with making communications services available, at affordable prices, to all Americans. That objective became known as “universal service.”
And, in the closing: “For nearly three decades, the work of Congress and the Commission in establishing universal service programs has led to a more fully connected country. And it has done so while leaving fully intact the separation of powers integral to our Constitution.
“We accordingly reverse the judgment of the Court of Appeals for the Fifth Circuit and remand for further proceedings consistent with this opinion.”
NATOA welcomes the Supreme Court affirmation of the Universal Service Fund’s funding scheme that provides affordable access and reliable communications services to schools, libraries, rural health care centers and millions of low-income households and seniors in need.
The Universal Service Fund (USF) supports four major programs: Connect America Fund, Lifeline, E-Rate and Rural Health Care with ~$9 billion per year in financial support:
- Lifeline (Link Up) provides monthly discounts to qualifying low-income consumers for voice and broadband services on Tribal and non-Tribal lands.
- High-Cost, a program for consumers in all regions of the nation to have access to telecommunications services at rates that are affordable and reasonably comparable to those in urban areas.
- Schools and Libraries, which makes discounts available to eligible schools and libraries for eligible telecommunications services, Internet access and internal connections so that schools and libraries may have access to affordable telecommunications and information services.
- Rural Health Care improves the quality of health care available to patients in rural communities by ensuring that health care providers serving those communities have access to telecom and broadband services.
The Supreme Court reviewed whether the Federal Communications Commission has the constitutional authority to assess fees on telecom companies to subsidize phone and broadband services through the Universal Service Fund (USF). The case followed the July 2024 Fifth Circuit Court of Appeals ruling that the FCC’s Universal Service Fund illegally taxing power from Congress. The Court agreed to review a decision from the 5th Circuit Court of Appeals, which ruled the USF is unconstitutional. Both the 6th Circuit and 11th Circuit ruled in similar cases that the USF is constitutional.
Consumers’ Research, a conservative 501(c)(3) non-profit organization, insisted universal-service contributions are taxes. Today, the Court rejected that argument. Today’s Supreme Court ruling preserves the future of the Universal Service Fund (USF). The Court decided Congress delegated the appropriate level of authority to the FCC to assess fees to fund USF and that the FCC is managing the fund appropriately.
NATOA also looks forward to Congress addressing the very real need to modernize the USF to meet the future needs of both households and communities in need. The re-launch earlier this month of the bipartisan Congressional Universal Service Fund Working Group underscores Congress’ “continued commitment to close the digital divide with solutions that support sustained access to universal connectivity while improving interagency coordination and eliminating waste, fraud, and abuse.”
Nota Bene: In the coming weeks, a USF Working Group request for comment portal will be open on Fischer’s website to allow for the submission of updated comments regarding the future outlook of the USF in the near and long terms. (See https://www.fischer.senate.gov/public/index.cfm/news?ID=D8ACC418-4EDB-46BB-AA04-50692166BD2B )
https://www.scotusblog.com/cases/case-files/federal-communications-commission-v-consumers-research/