On October 15, 2026, the U.S. Court of Appeals for the 5th Circuit issued a decision regarding the USF contribution factor and USAC’s role in establishing the quarterly contribution factors. The decision stems from a Petition for Review filed by Consumers’ Research, et al (Petitioners) in October, 2025. In this filing, the Petitioners claimed that the FCC’s approval of the 4th Quarter 2025 USF contribution factor exceeded the FCC’s statutory authority and violated the Constitution and other federal laws. In its decision, the Court concluded that Congress never specifically authorized the FCC to establish USAC and further that the FCC violated the Government Corporation Control Act (GCCA) by creating USAC. Thus, when the FCC relied on USAC to set the contribution factor it exceeded its statutory authority. The Court, therefore, granted the Petition for Review, vacated the 4th Quarter 2025 contribution factor, and remanded the matter to the FCC for further proceedings. The decision states that the GCCA forbids an agency (the FCC) to “establish or acquire a corporation to act as an agency” absent “a law of the United States specifically authorizing the action.” Further, the decision states that despite this clear instruction, the FCC established USAC to act as an agency in administering the USF even though Congress never authorized it to do so.
This decision brings to mind a July, 2024 ruIing by the U.S. Court of Appeals for the 5th Circuit that found that the USF was unconstitutional as currently administered. In that case, the FCC subsequently filed a Petition for Review with the U.S. Supreme Court in November, 2024. The Supreme Court issued a ruling in June, 2025 upholding the legality of the FCC’s USF (see ICORE Blog dated 6/30/2026).
This latest decision by the 5th Circuit is certain to illicit a response from the FCC possibly via an appeal to the 5th circuit or a petition to the Supreme Court and Congressional action is also a possibility. We will continue to follow this important development and will provide updates accordingly.
