Consumers' Research v. FCC

Case: 25-60535 Document: 133-1 Page: 1 Date Filed: 10/15/2026 United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit ____________ FILED October 15, 2026 No. 25-60535 Thomas B. Plunkett, III ____________ Clerk Consumers’ Research; Cause Based Commerce, Incorporated; Edward J. Blum; Kersten Conway; Suzanne Bettac; Robert Kull; Kwang Ja Kirby; Tom Kirby; Joseph Bayly; Jeremy Roth; Deanna Roth; Lynn Gibbs; Paul Gibbs; Rhonda Thomas; James Romeo; Cody Carnett; Phillip Aronoff; Jacqueline Klein, Petitioners, versus Federal Communications Commission; United States of America, Respondents. ______________________________ Petition for Review of an Order of the Federal Communications Commission Agency No. 96-45 ______________________________ 1 Before Elrod, Chief Judge, and Clement and Oldham, Circuit Judges. 2 Edith Brown Clement, Circuit Judge: 3 In pursuit of “universal service,” the Federal Communications 4 Commission (“FCC”) collects billions of dollars from telecommunications 5 companies each year through “required payments, called contributions,” 6 which “subsidize basic communications services for consumers in certain  Case: 25-60535 Document: 133-1 Page: 2 Date Filed: 10/15/2026 No. 25-60535 7 underserved communities—particularly, rural and low-income areas.” FCC 8 v. Consumers’ Rsch., 606 U.S. 656, 663–64 (2025). To that end, the FCC 9 established a private corporation, the Universal Service Administrative 10 Company (“USAC”), to collect contributions and disburse payments via 11 the Universal Service Fund. Petitioners challenge the Fourth Quarter 2025 12 contribution factor—a figure the FCC calculated by relying on data from 13 USAC—which set the amount that each telecommunications company had 14 to pay into the Fund for that quarter. They raise several constitutional and 15 statutory arguments, but we address only one: whether the FCC had the 16 statutory authority to establish USAC. Because Congress never specifically 17 authorized the FCC to establish USAC, we hold that the agency violated 18 the Government Corporation Control Act (“GCCA”) by creating the 19 corporation. Thus, when the FCC relied on USAC to set the contribution 20 factor, it exceeded its statutory authority. We therefore GRANT the 21 petition for review, VACATE the Fourth Quarter 2025 contribution factor, 22 and REMAND for further proceedings. 23 I 24 A 25 In 1934, Congress created the FCC with the goal “to make available, 26 so far as possible, to all the people of the United States, . . . a rapid, efficient, 27 Nation-wide, and world-wide wire and radio communication service with 28 adequate facilities at reasonable charges.” 47 U.S.C. § 151. Early on, when 29 AT&T was a regulated monopoly, the FCC “used a combination of implicit 30 and explicit subsidies to achieve its goal” of universal service. Tex. Off. of 31 Pub. Util. Couns. v. FCC, 183 F.3d 393, 406 (5th Cir. 1999). But when 32 Congress deregulated the telecommunications sector in 1996, it 33 “overhauled” this patchwork of subsidies, eliminated implicit subsidies 34 altogether, and “substituted a plan for explicit transfer payments to ensure 2  Case: 25-60535 Document: 133-1 Page: 3 Date Filed: 10/15/2026 No. 25-60535 35 that basic communications services extend across the country.” Consumers’ 36 Rsch., 606 U.S. at 666. 37 Section 254 of the Telecommunications Act of 1996 sets forth the 38 modern framework for universal service. 47 U.S.C. § 254. Congress directed 39 the FCC to establish “specific, predictable and sufficient Federal and State 40 mechanisms to preserve and advance universal service.” Id. § 254(b)(5). The 41 statute broadly defines “universal service” as “an evolving level of 42 telecommunications services that the Commission shall establish periodically 43 under this section, taking into account advances in telecommunications and 44 information technologies and services.” Id. § 254(c)(1). When deciding what 45 services to support with its universal-service support mechanisms, the FCC 46 is to consider a set of four factors, id. § 254(c)(1)(A)–(D), and six principles, 47 id. § 254(b)(1)–(6). The FCC may also base policies on any additional 48 principles it deems “necessary and appropriate for the protection of the 49 public interest, convenience, and necessity.” Id. § 254(b)(7). And beyond the 50 “general” services the FCC can support under § 254(c)(1), it may fund 51 additional support mechanisms to provide “advanced” services to “schools, 52 libraries, and health care providers.” Id. § 254(c)(3), (h)(2). 53 The FCC currently operates four universal-service programs. 54 Consumers’ Rsch., 606 U.S. at 668. The first, Lifeline, “gives low-income 55 consumers a markdown on their monthly phone bills, usually of $9.25 per 56 month.” Id. (first citing 47 U.S.C. § 254(j); and then citing 47 C.F.R. 57 §§ 54.400–54.424). Second, the High Cost program “furnishes carriers with 58 funds enabling them to provide basic communications services in ‘rural, 59 insular, and [other] high cost areas’ at costs comparable to those charged in 60 urban areas.” Id. (alteration in original) (quoting 47 U.S.C. § 254(b)(3)) 61 (citing 47 C.F.R. §§ 54.302–54.322). Third, the “E-Rate program subsidizes 62 communications services for schools and libraries across the country, with 63 greater discounts going to facilities in rural or low-income areas.” Id. (first 3  Case: 25-60535 Document: 133-1 Page: 4 Date Filed: 10/15/2026 No. 25-60535 64 citing 47 U.S.C. § 254(b)(6), (h)(1)(B); then citing 47 C.F.R. §§ 54.500– 65 54.523; and then citing Wis. Bell, Inc. v. United States ex rel. Heath, 604 U.S. 66 140, 143–46 (2025)). Fourth, “the Rural Health program supports rural 67 hospitals and other health care facilities, enabling them to use telemedicine 68 in caring for far-flung patients and ensuring that they receive the needed 69 communications services at roughly the rates urban facilities pay.” Id. (first 70 citing 47 U.S.C. § 254(b)(6), (h)(1)(A); and then citing 47 C.F.R. §§ 54.600– 71 54.633). 72 To pay for these services, Congress requires “[e]very 73 telecommunications carrier that provides interstate telecommunications 74 services [to] contribute, on an equitable and nondiscriminatory basis, to the 75 specific, predictable, and sufficient mechanisms established by the 76 Commission.” 47 U.S.C. § 254(d). The FCC determines the amount 77 carriers must pay into the Universal Service Fund by calculating a quarterly 78 “contribution factor.” Consumers’ Rsch., 606 U.S. at 668 (citing 47 C.F.R. 79 § 54.709(a)). “That factor is a fraction, expressed as a percentage,” the 80 numerator of which “is the Fund’s projected expenses for the upcoming 81 quarter (the subsidy payments it will make plus overhead) and” the 82 denominator of which “is the total projected revenue of contributing carriers 83 during that same period.” Id. at 668–69 (citing § 54.709(a)(2)). A carrier 84 must pay “an amount equal to its own projected revenue multiplied by the 85 contribution factor,” id. at 669 (citing § 54.709(a)(3)), and it “may then pass 86 along to its customers the cost of its contributions,” id. (citing § 54.712(a)). 87 When calculating the contribution factor, the FCC relies on financial 88 projections produced by USAC. Id. USAC “is a private, not-for-profit 89 corporation owned by an association of carriers.” Id. To assist the FCC in 90 setting the contribution factor, USAC “estimates the Fund’s expenses,” 91 “adds up the estimates it receives from individual carriers about their 92 revenues,” and “then submits those figures, along with supporting 4  Case: 25-60535 Document: 133-1 Page: 5 Date Filed: 10/15/2026 No. 25-60535 93 documentation, to the Commission for approval and eventual use in 94 calculating required contributions.” Id. at 669–70 (citing § 54.709(a)(2)– 95 (3)). 96 Moreover, since 1998, USAC has served as “permanent 97 Administrator of the federal universal service support mechanisms.” 47 98 C.F.R. § 54.701(a). As administrator, USAC manages the “day-to-day 99 operations” of the Fund. Wis. Bell, 604 U.S. at 144. It “bills and collects 100 contributions from carriers,” id. (citing 47 C.F.R. § 54.702), and “distributes 101 the resulting pot of money, as FCC rules provide, to program beneficiaries,” 102 id. (citing § 54.702(b)). In addition, USAC’s directors sit on committees 103 that “oversee the administration” of the four universal-service programs. 47 104 C.F.R. § 54.705(a)(1), (b)(1), (c)(1). These committees “have [the] authority 105 to make decisions concerning” the operation of the programs, from 106 developing and administering applications to auditing beneficiaries. 107 Id. § 54.705(a)(1)(ii)–(iii), (x); id. § 54.705(b)(1)(ii)–(iii), (viii); id. 108 § 54.705(c)(ii)–(iv). 109 B 110 In August 2025, USAC sent the FCC the Fund’s projected expenses 111 and program demand for the fourth quarter of 2025: $2.25 billion. 112 Petitioners—Consumers’ Research (a nonprofit organization that aims to 113 educate consumers); Cause Based Commerce, Inc. (a reseller of 114 telecommunications services that pays directly into the Fund); and several 115 individual consumers—filed a comment with the FCC challenging this 116 projection. They argued that various aspects of the Fund are unlawful, so the 117 contribution factor should be set at 0.0% or at least reduced to account for 118 “any unlawful portions” of the factor. 119 After USAC sent the FCC the total projected revenue of 120 contributing carriers for the quarter, the FCC issued a public notice 5  Case: 25-60535 Document: 133-1 Page: 6 Date Filed: 10/15/2026 No. 25-60535 121 proposing a Fourth Quarter 2025 contribution factor of 38.1%. See Proposed 122 Fourth Quarter 2025 Universal Service Contribution Factor, 40 FCC Rcd. 7160, 123 7160 (2025); 47 C.F.R. § 54.709(a)(3). To reach this figure, the FCC largely 124 adopted USAC’s projections. It did, however, “direct[] USAC to apply 125 $100 million in unused Schools & Libraries (E-Rate) program funds to offset 126 the $628.68 million projected E-Rate program demand,” thus reducing the 127 contribution factor “to a level below what [it] would have been based on 128 USAC’s filings.” Id. The factor was therefore calculated by dividing 129 USAC’s adjusted expenses ($2,153,410) by USAC’s projection of the 130 participating telecommunications companies’ relevant revenue ($5,659,892) 131 and rounding up to the nearest tenth of a percentage: 38.1%. Id. at 7161–62. 132 The same day the FCC issued its notice, Petitioners filed another 133 comment, asserting the same arguments they raised in their first notice. The 134 FCC took no action in response, so the proposed contribution factor was 135 deemed approved fourteen days later. Id. at 7162–63. 136 Petitioners then filed a timely petition for review in this court. The 137 Supreme Court recently rejected Petitioners’ prior challenge to § 254, 138 holding that the statute as a whole does not violate the nondelegation 139 doctrine. Consumers’ Rsch., 606 U.S. at 698. But now, Petitioners contend 140 that the specific provisions of § 254 authorizing the FCC to fund 141 “advanced” and “additional” services for schools, hospitals, and libraries 142 impermissibly delegate legislative power to the FCC. See id. at 687 n.9 143 (declining to “address any nondelegation issues raised by Sections 254(c)(3) 144 and (h)(2) in particular”); see also id. at 733 (Gorsuch, J., dissenting) 145 (inviting parties to “attack . . . the constitutionality of whatever 146 contributions the FCC demands for its subsection (c)(3) and (h)(2) 147 programs”). Petitioners further argue that the FCC violated the 148 Administrative Procedure Act (“APA”) by failing to consider the Supreme 149 Court’s decision in Consumers’ Research or respond to their comment when 6  Case: 25-60535 Document: 133-1 Page: 7 Date Filed: 10/15/2026 No. 25-60535 150 setting the contribution factor. Lastly, they challenge the FCC’s reliance on 151 USAC in setting the contribution factor, asserting that the FCC established 152 the corporation in violation of the GCCA and that USAC’s directors are 153 appointed in violation of the Appointments Clause. 154 Because Petitioners’ GCCA challenge is dispositive, we do not 155 address their alternative arguments. 156 II 157 Under the APA, we must “hold unlawful and set aside agency 158 action” that is “not in accordance with law” or “in excess of statutory 159 jurisdiction, authority, or limitations.” 5 U.S.C. § 706(2)(A), (C). We review 160 issues of statutory interpretation de novo. Loper Bright Enters. v. Raimondo, 161 603 U.S. 369, 412 (2024) (“Courts must exercise their independent 162 judgment in deciding whether an agency has acted within its statutory 163 authority, as the APA requires.”). 164 III 165 We begin by assessing our jurisdiction, both constitutional and 166 statutory. See United States v. Pedroza-Rocha, 933 F.3d 490, 493 (5th Cir. 167 2019) (per curiam) (“This court has a continuing obligation to assure itself 168 of its own jurisdiction, sua sponte if necessary.” (citing Bass v. Denney, 171 169 F.3d 1016, 1021 (5th Cir. 1999))). 170 A 171 To establish Article III standing, at least one petitioner must have had 172 standing when the petition was filed. Biden v. Nebraska, 600 U.S. 477, 489 173 (2023) (“If at least one plaintiff has standing, the suit may proceed.”); see 174 Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc., 528 U.S. 167, 191 175 (2000) (evaluating a plaintiff’s standing “at the time the action 176 commence[d]”). Thus, a petitioner “must have suffered an injury in fact—a 7  Case: 25-60535 Document: 133-1 Page: 8 Date Filed: 10/15/2026 No. 25-60535 177 concrete and imminent harm to a legally protected interest, like property or 178 money—that is fairly traceable to the challenged conduct and likely to be 179 redressed by the lawsuit.” Nebraska, 600 U.S. at 489 (citing Lujan v. Defs. of 180 Wildlife, 504 U.S. 555, 560–61 (1992)). 181 For the same reasons our en banc court discussed in Petitioners’ 182 previous challenge, we are satisfied that at least one petitioner—Cause Based 183 Commerce—had Article III standing when the petition was filed. Consumers’ 184 Rsch. v. FCC, 109 F.4th 743, 752–53 (5th Cir. 2024) (en banc), rev’d on other 185 grounds, 606 U.S. 656 (2025); accord Consumers’ Rsch. v. FCC, 67 F.4th 773, 186 783–84 (6th Cir. 2023). Cause Based Commerce “incurred a classic 187 pocketbook injury” because it was required to contribute directly to the 188 Fund. Consumers’ Rsch., 109 F.4th at 753. That injury is fairly traceable to the 189 Fourth Quarter 2025 contribution factor, which dictates how much Cause 190 Based Commerce was required to pay into the Fund. Id. And at the time the 191 petition was filed, a favorable decision vacating the contribution factor would 192 have redressed this injury. Id. 193 Further, even though Cause Based Commerce has already paid into 194 the Fund for the fourth quarter of 2025, this action is not moot because the 195 quarterly contribution factor is “capable of repetition, yet evading review.” 196 Consumers’ Rsch., 606 U.S. at 671 n.1 (quoting Kingdomware Techs., Inc. v. 197 United States, 579 U.S. 162, 170 (2016)). Thus, this action is justiciable. 198 B 199 As for our statutory jurisdiction, Intervenor National 200 Telecommunications Cooperative Association (“NTCA”) argues that we 201 lack jurisdiction over Petitioners’ GCCA claim under the Hobbs Act. The 202 Hobbs Act grants the courts of appeals “exclusive jurisdiction to enjoin, set 203 aside, suspend (in whole or in part), or to determine the validity of” certain 204 “final orders” of the FCC. 28 U.S.C. § 2342(1); see 47 U.S.C. § 402(a) 8  Case: 25-60535 Document: 133-1 Page: 9 Date Filed: 10/15/2026 No. 25-60535 205 (requiring “[a]ny proceeding to enjoin, set aside, annul, or suspend any order 206 of the Commission under this chapter” to be brought under the Hobbs Act). 207 A party aggrieved by a final order must file a petition for review within sixty 208 days of the order’s entry. 28 U.S.C. § 2344; see also City of Arlington v. FCC, 209 668 F.3d 229, 237 (5th Cir. 2012) (noting that this requirement is 210 jurisdictional). Because Petitioners challenge the establishment of USAC, 211 which was established in 1997,NTCA argues that their claim is barred by the 212 Hobbs Act’s sixty-day time limit. 213 But this sixty-day limit does not bar review of agency action that is 214 “capable of continuing application.” Functional Music, Inc. v. FCC, 274 F.2d 215 543, 546 (D.C. Cir. 1958). The Hobbs Act “cut[s] off review directly from 216 the order promulgating a rule,” but it does not foreclose review of subsequent 217 agency actions applying that rule. Id. 218 When the FCC uses USAC’s projections to set the quarterly 219 contribution factor, it effectively reapplies its prior action establishing the 220 corporation. Thus, the FCC’s action establishing USAC has “continuing 221 application.” Id. That means that each time the FCC approves a new 222 contribution factor, it “restarts the sixty-day clock.” Consumers’ Rsch., 67 223 F.4th at 786; accord Consumers’ Rsch. v. FCC, 88 F.4th 917, 922 (11th Cir. 224 2023). Petitioners filed their petition for review two days after the Fourth 225 Quarter 2025 contribution factor was deemed approved by the FCC. Thus, 226 their challenge is timely, and we proceed to the merits. 227 IV 228 The federal government has a “long history” of creating and 229 participating in corporations “for the achievement of governmental 230 objectives.” Lebron v. Nat’l R.R. Passenger Corp., 513 U.S. 374, 386 (1995). 231 “The first was the Bank of the United States,” created in 1791, and while the 232 federal government continued to charter private corporations throughout the 9  Case: 25-60535 Document: 133-1 Page: 10 Date Filed: 10/15/2026 No. 25-60535 233 nineteenth century, the “first large-scale use of Government-controlled 234 corporations came with the First World War.” Id. at 386–88. “These entities 235 were dissolved after the war ended,” but not long after, the Great Depression 236 spurred the creation of longer-lasting government corporations “primarily 237 directed to stabilizing the economy and to making distress loans to farms, 238 homeowners, banks, and other enterprises.” Id. at 388. Congress created 239 many—but not all—of these corporations. Id. While entities like the Federal 240 Deposit Insurance Corporation and the Tennessee Valley Authority were 241 established by statute, Congress also empowered the Reconstruction Finance 242 Corporation “to create corporations without specific congressional 243 authorization.” Id. It did so “with gusto.” Id. at 389. Other government 244 entities also started forming corporations “without even the general 245 congressional authorization granted the [Reconstruction Finance 246 Corporation].” Id. 247 “By the end of World War II,” recognizing that these governmental 248 corporations “had gotten out of hand, in both their number and their lack of 249 accountability,” Congress “moved to reestablish order” by enacting the 250 Government Corporation Control Act of 1945, 31 U.S.C. §§ 9101–9110. 251 Lebron, 513 U.S. at 389. Under the GCCA, government corporations must 252 submit budgets for congressional approval, 31 U.S.C. § 9103, and be audited 253 by the Comptroller General, id. § 9105. Relevant here, the GCCA also 254 provides that an “agency may establish or acquire a corporation to act as an 255 agency only by or under a law of the United States specifically authorizing 256 the action.” Id. § 9102. 257 For USAC to fall within § 9102’s ambit, the FCC must have 258 “establish[ed]” or “acquire[d]” it “to act as an agency.” Id. If it did, and 259 Congress did not “specifically authoriz[e] the action,” then the FCC 260 violated the GCCA by establishing USAC. Id. 10  Case: 25-60535 Document: 133-1 Page: 11 Date Filed: 10/15/2026 No. 25-60535 261 A 262 The parties do not contest that the FCC established USAC. In the 263 early days of the modern universal service regime, the FCC appointed the 264 National Exchange Carrier Association, Inc. (“NECA”)—which it 265 established in 1983, see 47 C.F.R. § 69.601(a)—as temporary administrator 266 of the universal-service support mechanisms, In re Fed.-State Joint Bd. on 267 Universal Serv., 12 FCC Rcd. 8776, 8798 (1997). Two months later, the FCC 268 directed NECA “to create an independently functioning, not-for-profit 269 subsidiary, to be designated the Universal Service Administrative Company 270 (USAC) that will administer temporarily the universal service support 271 mechanisms.” In re Changes to the Bd. of Dirs. of the Nat’l Exch. Carrier Assoc., 272 Inc., 12 FCC Rcd. 18400, 18415 (1997). In September 1997, the FCC 273 approved the “proposed incorporation documents” submitted by NECA 274 and instructed NECA to file those documents “with the Secretary of State 275 of the State of Delaware on behalf of USAC.” Comm’n Approves 276 Incorporation Documents for Universal Serv. Admin. Co., Schs. and Librs. Corp., 277 & Rural Health Care Corp., 12 FCC Rcd. 14094, 14094 (1997). 278 In short, USAC was incorporated under Delaware law by NECA— 279 which itself was established by the FCC—at the behest of the FCC. Thus, 280 we conclude that it was “establish[ed]” by the FCC for purposes of the 281 GCCA. 31 U.S.C. § 9102. 282 We turn, then, to whether the FCC established USAC “to act as an 283 agency.” Id. The original text of the GCCA prohibited federal agencies from 284 “creat[ing], organiz[ing], or acquir[ing]” any corporation “for the purpose 285 of acting as an agency or instrumentality of the United States” absent “an Act 286 of Congress specifically authorizing such action.” Government Corporation 287 Control Act, ch. 557, § 304(a), 59 Stat. 597, 602 (1945) (emphasis added). 288 When Congress codified Title 31 in 1982, it revised this section to omit “or 11  Case: 25-60535 Document: 133-1 Page: 12 Date Filed: 10/15/2026 No. 25-60535 289 instrumentality,” leaving the currently operative language that requires 290 specific authorization for an agency to “establish or acquire a corporation to 291 act as an agency.” Act of Sept. 13, 1982, Pub. L. No. 97-258, sec. 1, § 9102, 292 96 Stat. 877, 1042 (codified at 31 U.S.C. § 9102). But Congress made clear 293 that although it rephrased this provision, it did so “without substantive 294 change.” Id. sec. 4(a), 96 Stat. at 1067 (“Those [restated] sections may not 295 be construed as making a substantive change in the laws replaced.”); see also 296 In re Benjamin, 932 F.3d 293, 297 (5th Cir. 2019) (describing the 297 “recodification canon, which states that ‘when legislatures codify the law, 298 courts should presume that no substantive change was intended absent a 299 clear indication otherwise’” (quoting In re Bayou Shores SNF, LLC, 828 F.3d 300 1297, 1314 (11th Cir. 2016)). Confirming this, Congress defined “agency” to 301 mean “a department, agency, or instrumentality of the United States 302 Government” throughout Title 31. 31 U.S.C. § 101. 303 Thus, even if USAC does not otherwise act as a freestanding federal 304 agency, it still falls within the GCCA’s ambit if the FCC established it to act 305 as an instrumentality. 306 When the GCCA was enacted in 1945, “instrumentality” meant a 307 “means” or “agency” used to reach an end. Federal Instrumentality, 308 Black’s Law Dictionary (4th ed. 1951) (“A means or agency used by 309 the federal government.”); see also 5 Oxford English Dictionary 310 357 (1933) (defining “instrumentality” as “[t]he quality or condition of being 311 instrumental; the fact or function of serving or being used for the 312 accomplishment of some purpose or end; agency”). So if the FCC 313 established USAC as a means to achieve a governmental purpose, then it 314 established the corporation “to act as an agency.” 31 U.S.C. § 9102; cf. 315 Lebron, 513 U.S. at 399 (“[A] corporation is an agency of the Government, 316 for purposes of the constitutional obligations of Government . . . , when the 317 State has specifically created that corporation for the furtherance of 12  Case: 25-60535 Document: 133-1 Page: 13 Date Filed: 10/15/2026 No. 25-60535 318 governmental objectives, and not merely holds some shares but controls the 319 operation of the corporation through its appointees.”). 320 The FCC originally established USAC to “administer temporarily 321 the universal service support mechanisms for high-cost areas and low-income 322 consumers, as well as perform billing and collection functions associated with 323 the universal service support mechanisms for schools and libraries and rural 324 health care providers.” In re Changes to the Bd. of Dirs., 12 FCC Rcd. at 18415. 325 It tasked USAC, as temporary administrator, with both “collecting 326 contributions” and “disbursing universal service support funds,” as well as 327 “determin[ing] quarterly projected demand” for the programs and using that 328 projection to “calculate the . . . contribution factor.” Id. at 18424–26. And it 329 reserved to its chairman the power to “select the members of the USAC 330 Board,” along with ensuring that that USAC would “be directly accountable 331 to the [FCC] for the performance of [its] respective responsibilities.” Id. at 332 18415, 18424. 333 A year later, the FCC appointed USAC “the permanent 334 Administrator” of the Fund and made it responsible for “administering the 335 universal service support mechanisms in an efficient, effective, and 336 competitively neutral manner.” 47 C.F.R. § 54.701(a). The FCC established 337 USAC to administer the universal-service support mechanisms in a manner 338 accountable to the FCC, meaning that USAC was established to act as an 339 instrumentality of the FCC. 340 A 2024 memorandum of understanding between the FCC and 341 USAC bolsters this conclusion. That memorandum describes USAC’s 342 “sole purpose” as “assist[ing] the FCC in the administration of the 343 [universal-service] programs (and such other programs as agreed upon and 344 directed by the FCC), as an agent and instrumentality of the FCC.” 345 Memorandum of Understanding Between the Federal Communications 13  Case: 25-60535 Document: 133-1 Page: 14 Date Filed: 10/15/2026 No. 25-60535 346 Commission and the Universal Service Administrative Company 2 (Oct. 17, 347 2024). 348 The FCC argues that when it comes to calculating the contribution 349 factor, USAC does not act as an agency because it gives recommendations 350 to the FCC in a strictly “advisory role.” But even in this capacity, USAC 351 acts as an instrumentality of the FCC. The FCC uses USAC as a means to 352 calculate the quarterly contribution factor, relying on its projections to 353 determine both the Fund’s expenses and carriers’ revenues. Consumers’ 354 Rsch., 606 U.S. at 669–70. It is true, as the FCC notes, that “[a]s long as an 355 agency . . . retains decision-making power,” it “may rely on advice and 356 assistance from private actors” without running afoul of the Constitution. Id. 357 at 692. But if that private actor is a corporation established by the agency, 358 such reliance can still run afoul of the GCCA absent specific congressional 359 authorization. 360 In sum, we conclude that the FCC established USAC to act as an 361 agency to administer the universal-service programs. The GCCA therefore 362 applies, which means that Congress must have “specifically authoriz[ed]” 363 the FCC to establish USAC. 31 U.S.C. § 9102. 364 B 365 Respondents point to three sources of congressional authorization for 366 the FCC’s creation of USAC. We consider each in turn. 367 1 368 First, NTCA asserts that Congress expressly authorized the FCC to 369 establish USAC via 47 U.S.C. § 154(i). That provision grants the FCC 370 authority to “perform any and all acts, make such rules and regulations, and 371 issue such orders, not inconsistent with this chapter, as may be necessary in 372 the execution of its functions.” 47 U.S.C. § 154(i). We have explained that 14  Case: 25-60535 Document: 133-1 Page: 15 Date Filed: 10/15/2026 No. 25-60535 373 this “necessary and proper” provision “suppl[ies] the FCC with ancillary 374 authority to issue regulations that may be necessary to fulfill its primary 375 directives contained elsewhere in the statute.” Tex. Off. of Pub. Util. Couns. 376 v. FCC, 183 F.3d 393, 443–44 (5th Cir. 1999) (alteration in original) (quoting 377 Iowa Utils. Bd. v. FCC, 120 F.3d 753, 795 (8th Cir. 1997), aff’d in part, rev’d 378 in part sub nom. AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366 (1999)). Since 379 § 254 tasks the FCC with implementing “specific, predictable, and 380 sufficient . . . mechanisms to preserve and advance universal service,” 47 381 U.S.C. § 254(b)(5), and § 154(i) grants the FCC ancillary authority to fulfill 382 that directive, NTCA argues that these provisions authorized the FCC to 383 establish USAC to administer the Universal Service Fund. 384 This argument is unavailing. True, we have recognized that § 154(i) 385 grants “the FCC broad authority to implement” § 254. Tex. Off. of Pub. Util. 386 Couns., 183 F.3d at 444. But § 154(i) “is not infinitely elastic.” N. Am. 387 Telecomms. Ass’n v. FCC, 772 F.2d 1282, 1292 (7th Cir. 1985). That 388 provision’s broad, generalized grant of authority does not provide the specific 389 congressional authorization the GCCA requires. 390 2 391 Next, the FCC and NTCA advance an implied-authorization theory. 392 To unpack this argument, we must consider the historical involvement of 393 USAC and its parent entity, NECA, in administering universal-service 394 programs. 395 Before Congress enacted the Telecommunications Act of 1996, the 396 FCC tasked NECA with calculating the charges that telecommunications 397 carriers paid into the Universal Service Fund. 47 C.F.R. § 69.116 (1996). 398 NECA was also responsible for billing and collecting those contributions, as 399 well as disbursing revenue to beneficiaries. Id. § 69.116(b). In a separate 400 section of the Code of Federal Regulations, the FCC assigned NECA the 15  Case: 25-60535 Document: 133-1 Page: 16 Date Filed: 10/15/2026 No. 25-60535 401 same duties—calculating, billing, and collecting the charge and disbursing 402 revenue—with regard to the Lifeline program in particular. 47 C.F.R. 403 § 69.117(b) (1996). When Congress enacted the 1996 Act, it specifically 404 authorized the FCC to continue using NECA to administer the Lifeline 405 program; the statute provides, “Nothing in this section shall affect the 406 collection, distribution, or administration of the Lifeline Assistance Program 407 provided for by the Commission under regulations set forth in section 69.117 408 of title 47, Code of Federal Regulations, and other related sections of such 409 title.” 47 U.S.C. § 254(j). 410 Thus, the FCC and NTCA assert that “Congress was aware of 411 NECA’s role when it adopted section 254, which affirmed and expanded the 412 Commission’s authority to direct the administration of universal service and 413 therefore, implicitly affirmed the Commission’s authority to employ an 414 independent entity to administer universal service.” In re Changes to the Bd. 415 of Dirs. of the Nat’l Exch. Carrier Assoc., Inc., 13 FCC Rcd. 25058, 25066 416 (1998) (footnote omitted). In other words, because Congress authorized the 417 FCC to use NECA to administer the Lifeline program, they argue it 418 implicitly authorized USAC, a later-formed subsidiary of NECA, to 419 administer the Universal Service Fund. 420 But § 254(j) does not provide the specific congressional authorization 421 the FCC needed to establish USAC. Authorization for one private entity to 422 administer a single universal-service program does not amount to specific 423 authorization for another private entity to administer the entirety of the 424 multi-billion-dollar Universal Service Fund. “If anything, the text of § 254 425 suggests Congress actually meant to preclude private entities from 426 administering [universal-service] programs other than Lifeline.” Consumers’ 427 Rsch., 109 F.4th at 777 (emphasis in original); see also Consumers’ Rsch., 88 428 F.4th at 933 n.4 (Newsom, J., concurring) (“[I]t strains credulity to read 429 subsection (j) as authorizing USAC’s participation in the universal-service 16  Case: 25-60535 Document: 133-1 Page: 17 Date Filed: 10/15/2026 No. 25-60535 430 scheme.”). Congress expressly authorized NECA to continue administering 431 Lifeline as provided in 47 C.F.R. § 69.117, “but it conspicuously did not 432 reference § 69.116,” the neighboring provision authorizing NECA to 433 administer the pre-1996 Fund. Consumers’ Rsch., 109 F.4th at 777. Section 434 254(j) demonstrates that Congress knew how to speak clearly to authorize a 435 private entity to administer certain universal-service programs. That it chose 436 not to do so with respect to § 69.116 supports the inference that Congress did 437 not intend to empower private entities to administer other programs or the 438 Fund as a whole. Cf. United States v. Vargas, 74 F.4th 673, 686 (5th Cir. 2023) 439 (en banc) (describing the expressio unius canon of construction, which 440 “teaches that the expression of one thing implies the exclusion of others” 441 (cleaned up)). 442 3 443 Lastly, the FCC and NTCA submit that even if the FCC lacked the 444 authority to establish USAC in 1997, Congress ratified the agency’s action 445 by authorizing it to use USAC to administer two temporary programs 446 created during the COVID-19 pandemic. 447 The first, the Affordable Connectivity Program, discounted the cost 448 of “broadband service and connected devices” for “eligible low-income 449 households.” In re Affordable Connectivity Program Emergency Broadband 450 Benefit Program, 37 FCC Rcd. 484, 485 (2022). Congress authorized the 451 FCC to “avail itself” of USAC’s services “to implement the Affordable 452 Connectivity Program, including developing and processing reimbursements 453 and distributing funds to participating providers.” 47 U.S.C. § 1752(i)(5). 454 The second program, the Emergency Connectivity Fund, provided funding 455 for schools and libraries to purchase “connected devices and broadband 456 connection for use by students, school staff, and library patrons.” In re 457 Establishing Emergency Connectivity Fund to Close the Homework Gap, 36 FCC 17  Case: 25-60535 Document: 133-1 Page: 18 Date Filed: 10/15/2026 No. 25-60535 458 Rcd. 8696, 8697 (2021). Congress authorized both the FCC and USAC to 459 administer this fund. American Rescue Plan Act of 2021, § 7402(c)(2)(A)(ii), 460 135 Stat. 4, 109 (2021). According to the FCC, these authorizations are 461 “inexplicable” if Congress “doubted the propriety” of the FCC appointing 462 USAC as administrator of the Universal Service Fund. 463 It is “a long-settled principle” that Congress can ratify and “give the 464 force of law to official action unauthorized when taken.” Kovac v. Wray, 109 465 F.4th 331, 340 (5th Cir. 2024) (quoting Swayne & Hoyt, Ltd. v. United States, 466 300 U.S. 297, 301–02 (1937)). “Ratification may occur, for example, when 467 ‘Congress has not just kept its silence by refusing to overturn the 468 administrative construction, but has ratified it with positive legislation.’” 469 Nat’l Religious Broads. v. FCC, 138 F.4th 282, 294 (5th Cir. 2025) (quoting 470 CFTC v. Schor, 478 U.S. 833, 846 (1986)). 471 Congress has not ratified the FCC’s establishment of USAC to act 472 as an agency in administering the Universal Service Fund. As the FCC 473 acknowledges, neither the Affordable Connectivity Program nor the 474 Emergency Connectivity Fund was part of the Fund. We are loath to 475 conclude that by authorizing the FCC to use USAC to administer two 476 temporary, emergency measures—both of which ended in June 2024— 477 Congress implicitly blessed USAC’s appointment as permanent 478 administrator of the entire Universal Service Fund. Congress acknowledged 479 USAC’s existence and empowered the FCC to use it to administer two non- 480 universal-service programs, but that does not amount to specific 481 authorization for USAC to fulfill its “sole purpose” of “assist[ing] the FCC 482 in the administration of the [universal-service] programs.” Memorandum of 483 Understanding Between the Federal Communications Commission and the 484 Universal Service Administrative Company 2 (Oct. 17, 2024). 18  Case: 25-60535 Document: 133-1 Page: 19 Date Filed: 10/15/2026 No. 25-60535 485 * * * 486 The FCC established USAC to act as an agency in administering the 487 Universal Service Fund. Because it did so without “a law of the United States 488 specifically authorizing the action,” the FCC violated the GCCA. 31 U.S.C. 489 § 9102. Thus, by relying on USAC in calculating the Fourth Quarter 2025 490 contribution factor, the FCC exceeded its statutory authority, and we must 491 “hold unlawful and set aside [the] agency action.” 5 U.S.C. § 706(2)(C). 492 C 493 That leaves the question of remedy. The “default rule is that vacatur 494 is the appropriate remedy” for unlawful agency action. Data Mktg. P’ship, LP 495 v. United States Dep’t of Lab., 45 F.4th 846, 859 (5th Cir. 2022). We depart 496 from this rule only if there is “a ‘serious possibility’ that the agency will be 497 able to correct the [action’s] defects on remand” and “vacating the 498 challenged action would produce ‘disruptive consequences.’” Chamber of 499 Com. v. SEC, 88 F.4th 1115, 1118 (5th Cir. 2023) (quoting Texas v. United 500 States, 50 F.4th 498, 529 (5th Cir. 2022)). 501 Here, USAC’s projections undergird the quarterly contribution 502 factor. With only one adjustment, the FCC adopted USAC’s projections in 503 toto and set the contribution factor accordingly. Its reliance on USAC was 504 therefore a “serious procedural” deficiency that the FCC would not be able 505 to correct on remand. Id. 506 Vacatur is therefore the proper remedy under our rule of orderliness, 507 by which we are bound to apply the precedent of past panels “absent an 508 intervening change in the law, such as by a statutory amendment, or the 509 Supreme Court, or our en banc court.” Mercado v. Lynch, 823 F.3d 276, 279 510 (5th Cir. 2016) (quoting Jacobs v. Nat’l Drug Intel. Ctr., 548 F.3d 375, 378 511 (5th Cir. 2008)). Though the state of courts’ “set aside” power under 19  Case: 25-60535 Document: 133-1 Page: 20 Date Filed: 10/15/2026 No. 25-60535 512 § 706(2) of the APA has come under scrutiny, 1 no “unequivocal” change in 513 the law has occurred to unseat past precedent. Mercado, 823 F.3d at 279 514 (“For a Supreme Court decision to satisfy this Court’s rule of orderliness, it 515 must ‘be unequivocal, not a mere “hint” of how the Court might rule in the 516 future.’” (quoting United States v. Alcantar, 733 F.3d 143, 146 (5th Cir. 517 2013)). Accordingly, remand with vacatur is the appropriate remedy. 518 V 519 The GCCA forbids an agency to “establish or acquire a corporation 520 to act as an agency” absent “a law of the United States specifically 521 authorizing the action.” 31 U.S.C. § 9102. Despite this clear instruction, the 522 FCC established USAC to act as an agency in administering the Universal 523 Service Fund even though Congress never authorized it to do so. Thus, by 524 relying on USAC’s projections in setting the Fourth Quarter 2025 525 contribution factor, the FCC exceeded its statutory authority. We therefore 526 GRANT the petition for review, VACATE the Fourth Quarter 2025 527 contribution factor, and REMAND to the FCC for further proceedings. _____________________ 1 Contrast United States v. Texas, 599 U.S. 670, 693–702 (2023) (Gorsuch, J., concurring) (expressing skepticism that § 706(2) of the APA authorizes universal vacatur), with Trump v. CASA, Inc., 606 U.S. 831, 847 n.10 (2025) (“Nothing we say today resolves the distinct question whether the Administrative Procedure Act authorizes federal courts to vacate federal agency action.”). See generally Mila Sohoni, The Past and Future of Universal Vacatur, 133 Yale L.J. 2304 (2024); John Harrison, Vacatur of Rules Under the Administrative Procedure Act, 40 Yale J. on Regul. Bull. 119 (2023). 20