Appeals Court Rejects FCC Authority Over $9 Billion Fund

The Fifth Circuit ruled that the FCC exceeded its authority when it created the Universal Service Administrative Co. in 1997 to collect telecom carriers’ contributions and set rates for the roughly $9 billion-a-year Universal Service Fund. The court said Congress had not specifically authorized the FCC to establish the private company, finding that the agency violated the Government Corporation Control Act. The fund supports phone and internet services for rural and low-income communities, tribal lands, schools, libraries and rural health care facilities; its future is now in question, though the FCC says the order will not take effect for at least two months and that it is considering its options. The decision concerns the fund’s administrative structure, following a 2025 Supreme Court ruling that upheld the FCC’s funding method.