Fifth Circuit Rules FCC Lacked Authority to Create USAC; Vacates Q4 USF Contribution Factor

The U.S. Court of Appeals for the Fifth Circuit (Fifth Circuit or Court) has held that the Federal Communications Commission (FCC or Commission) created the Universal Service Administrative Company (USAC) without the specific congressional authorization required under the Government Corporation Control Act. Because the Commission relied on USAC’s projections to set the Universal Service Fund (USF) contribution factor, the Court has also vacated the fourth quarter 2025 factor at challenge. The case has been remanded to the Commission, which must now decide its next steps.

This challenge rests on different grounds than the previous 2025 Consumers’ Research case, in which the Supreme Court upheld the constitutionality of the USF contribution mechanism. The ruling in this decision applies only to the fourth quarter 2025 factor and does not address refunds or later quarters.

The decision will not take effect until the Court issues its mandate, which is delayed while the Commission seeks a rehearing or certiorari from the Supreme Court.

JSI is monitoring the Commission’s response, including whether it petitions the Supreme Court to review the decision, and will keep providers informed as the matter develops. For questions about the decision or its potential impact on your company, please contact Brett Hallagan.