SCOTUS to Revisit Non-Delegation Doctrine

The U.S. Supreme Court will hear oral arguments in FCC v. Consumers’ Research next month. The case has the potential to be a blockbuster, as it is expected to clarify the boundaries of the non-delegation doctrine, the principle that Congress can’t delegate its power to legislate to other branches of government.  

Facts of the Case

Section 254 of the Telecommunications Act of 1996 (47 U.S.C. § 254) authorizes the FCC to establish “specific, predictable, and sufficient . . . mechanisms to preserve and advance universal service.” Congress, however, declined to define the term “universal service.” Instead, it delegated to the FCC the responsibility to periodically “establish” the concept of “universal service” by “taking into account advances in telecommunications and information technologies and services.”

Pursuant to this grant of authority, the FCC levies “contributions” to a Universal Service Fund (USF) from telecommunications carriers, and it distributes the monies raised to people, entities, and projects to expand and advance telecommunications services. FCC regulations expressly permit carriers to pass these “contributions” through to their customers, and the overwhelming majority of carriers do so.

The FCC relies on a private company called the Universal Service Administrative Company (USAC) to administer the USF. Most notably, USAC is responsible for deciding the quarterly USF contribution amount—a projection of the dollar value of demand for universal support programs and the costs of administering them.The contribution amount dictates the size of the universal service contributions levied on telecommunications carriers and, in turn, American telecommunications consumers.

On November 2, 2021, USAC proposed its Q1 2022 USF contribution amount. Several of the Petitioners subsequently filed a comment with the FCC challenging the constitutionality of the universal service contribution mechanism. On December 13, 2021, the FCC issued a public notice of its Proposed Q1 2022 USF Tax, which was derived directly from USAC’s proposed contribution amount. The FCC took no action with respect to USAC’s proposed contribution amount, so on December 27 the contribution factor was deemed approved.

Petitioners then filed suit, arguing that contribution factor was unlawful. Among other arguments, the challengers contended that the universal service contribution mechanism violates the Legislative Vesting Clause, which states that, “All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.”

Fifth Circuit’s Decision

The Fifth Circuit agreed. It held that the universal service contribution mechanism’s double-layered delegation is “incompatible with our constitutional structure.” 

In reaching its decision, the appeals court found that Congress may have improperly delegated legislative power to the FCC in failing to supply an intelligible principle to guide the agency’s discretion, and the FCC may have impermissibly delegated the taxing power to private entities. According to the Fifth Circuit,it “need not definitively answer either delegation question because even if § 254 contains an intelligible principle, and even if FCC was permitted to enlist private entities to determine how much universal service tax revenue it should raise, the combination of Congress’s broad delegation to FCC and FCC’s subdelegation to private entities certainly amounts to a constitutional violation.”

As the appeals court further explained, “an agency action involving a broad congressional delegation and an unauthorized agency subdelegation to private entities violates the Constitution even if neither of those features does so independently.”The Fifth Circuit’s en banc decision conflicts with Sixth Circuit and Eleventh Circuit, which rejected similar challenges.

Issues Before the Supreme Court

The FCC appealed. In its petition for certiorari, the agency argued that the fund relies on a constitutional delegation of congressional power because the relevant statute provides several “intelligible principles” to guide the FCC’s actions when setting fees. The FCC further argued that the private company wields administrative authority over the fund rather than any policymaking power to set fees or subsidy rates and is subject to significant agency control.

The Supreme Court granted certiorari on November 22, 2024. The justices agreed to consider the following questions:

 (1) Whether Congress violated the nondelegation doctrine by authorizing the Federal Communications Commission to determine, within the limits set forth in 47 U.S.C. § 254, the amount that providers must contribute to the Universal Service Fund; (2) whether the FCC violated the nondelegation doctrine by using the financial projections of the private company appointed as the fund’s administrator in computing universal service contribution rates; and (3) whether the combination of Congress’s conferral of authority on the FCC and the FCC’s delegation of administrative responsibilities to the administrator violates the nondelegation doctrine.

The Court also asked the parties to brief an additional question: “whether this case is moot in light of the challengers’ failure to seek preliminary relief before the 5th Circuit.” Oral arguments are scheduled for March 26, 2025. A decision in the case is expected before the end of the term.