Last term’s opinion in Loper Bright Enterprises v. Raimondo was a landmark in the U.S. Supreme Court’s administrative law jurisprudence, overturning 40 years of Chevron deference with a pen stroke. The Loper Bright/Chevron body of case law addresses the degree to which courts must defer to a regulatory agency’s legal position, with the six-justice Loper Bright majority answering that question “not at all,” aside from acknowledging the agency’s position as a matter of intra-government comity. A new set of challenges just taken up by the Supreme Court will examine agencies’ authority to act in the first instance, through invocation of the long dormant nondelegation doctrine.
Professor Cass Sunstein once remarked that the nondelegation doctrine has had “one good year,” 1935, before President Franklin Roosevelt threatened to expand the court in response to its repeated invalidation of New Deal initiatives. Article I of the Constitution vests legislative power exclusively in Congress, and the nondelegation doctrine restricts Congress’ power to delegate that power to another branch. Fundamentally, the doctrine fosters accountability in government by enabling citizens aggrieved by government action to know who to blame.
But since the court’s decisions 90 years ago in Panama Refining Co. v. Ryan and A.L.A. Schechter Poultry Corp. v. United States, it has not invalidated a single agency action on nondelegation grounds. Instead, courts have upheld delegations if Congress supplies an “intelligible principle” to constrain the delegation’s use in a material way. In practice, courts always find some limiting principle in the legislative scheme no matter how broadly written.
By granting cert in FCC v. Consumers’ Research and SHLB Coalition v. Consumers’ Research, the Supreme Court will put the nondelegation doctrine’s long losing streak to the test. Both cases concern Congress’ delegation of authority to the Federal Communications Commission to operate a “universal service fund” (USF), intended to ensure the availability of affordable and reliable telecommunications services throughout the nation. Under this program, regulated telecom providers are assessed an annual fee based on a percentage of their revenues. The fund has ballooned in size in recent years to more than $10 billion, funded by an eye-popping assessment of 29% of telecom carriers’ revenues. A private company retained by the FCC administers the fund and is responsible for, among other things, proposing the amount of the assessment for (nominally) the commission’s approval, which may be provided by agency silence.
Litigants in the Fifth, Sixth, and Eleventh Circuit challenged the USF program on nondelegation grounds, contending its funding depends on an unconstitutional delegation of Congress’ taxing authority. The challengers also asserted that under the “private nondelegation doctrine” government power may not be delegated to a private party, in the form, here, of a fund administrator.
Three-judge panels in each circuit rejected the challenges, but on en banc review, the full Fifth Circuit reversed. The court’s opinion was peculiar. It found that Congress “may” have impermissibly delegated taxing authority to the FCC, and the FCC “may” have impermissibly delegated its authority to a private company, but did not decide whether each act alone violated separation of powers principles. It found instead that “the combination of Congress’s sweeping delegation to FCC and FCC’s unauthorized subdelegation to [the Company] violates the Legislative Vesting Clause” in Article I, and with it the long-slumbering nondelegation doctrine.
The importance of the doctrine’s potential revival warrants emphasis. Agencies routinely exercise quasi-legislative and quasi-judicial authority based on extraordinarily broad delegations of authority. If an agency’s delegation is overbroad, rules issued under such authority may be invalidated, and enforcement activity grounded in those delegations will be impermissible.
To grasp the interplay between the deference principles in Loper Bright and the delegation principles in Consumer Research, consider the issues in Loper Bright. There, petitioners challenged another industry-funded regulatory initiative, operated by the National Marine Fisheries Service (NMFS), which interpreted a provision of the Magnuson-Stevens Act (MSA) as authorizing it to require that commercial fishing vessels permit federal monitors on their ships and to pay the fees of those observers. The court held that the deference to NMFS’ interpretation demanded by Chevron could not be squared with the Administrative Procedure Act, which vests courts, not agencies, with authority to decide “all relevant questions of law” arising on review of agency action.
The court did not address whether the interpretive authority and tax-like power the MSA vests in the NMFS was constitutional, and not in violation of the nondelegation doctrine. But its penultimate paragraph presaged such challenges:
Chevron is overruled. Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires. Careful attention to the judgment of the Executive Branch may help inform that inquiry. And when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation, while ensuring that the agency acts within it.
For the last 90 or so years, agencies did not have to worry much about the nondelegation doctrine being one of the “constitutional limits” imposed on their activities. The latest cert grants point in another direction. That said, there are a number of reasons why the Consumers’ Research cases may sputter relative to what Loper Bright has wrought, with the court giving itself a potential off-ramp on mootness grounds in the cert grant itself. We will address the arguments and potential outcomes in a future update.
