On Wednesday, the Supreme Court heard oral arguments in Federal Communications Commission v. Consumers’ Research (consolidated with SHLB Coalition v. Consumers’ Research), a case about the role of executive administrative agencies and congressional delegations of power to those agencies that could revitalize the long-dormant nondelegation doctrine.
This case has broad implications for administrative law generally, but for agencies that are empowered to assess fees or that delegate to private entities in particular. Notably, similar arguments about the doctrine were used to challenge some of the FTC’s more aggressive efforts under Lina Khan, former chair of the Federal Trade Commission (FTC) . An affirmance would invite more aggressive challenges to all sorts of agency actions where arguably Congress’s delegation is unclear or goes too far.
The nondelegation doctrine constrains the ability of Congress to delegate its core legislative powers to agencies or private entities. Although the Court has not invalidated an agency action based on the nondelegation doctrine in 90 years, a decision in this case could be a vehicle for reviving that doctrine and further the Court’s recent movement curtailing agency power, as seen in Loper Bright Enterprises v. Raimondo, Corner Post v. Board of Governors of the Federal Reserve System, SEC v. Jarkesy, and West Virginia v. EPA. A revival of the nondelegation doctrine would also encourage challenges to every agency, across the entire spectrum of regulated industries, including environmental, financial services, healthcare, and more.
In the case, Consumers’ Research is challenging the Federal Communications Commission’s (FCC) $8.1 billon Universal Service Fund (USF), which is administered by the Universal Service Administrative Company (USAC), a private, nonprofit, but marginally independent company whose operation and budget are highly controlled by the FCC. A provision of the Telecommunications Act of 1996 requires the FCC to operate a universal service subsidy program using mandatory contributions from telecommunications carriers. The FCC directed USAC to administer the program. USAC sets contribution rates, sends invoices, collects fees, and disburses funds to beneficiary programs.
Consumers’ Research argued that the scheme violated the doctrine, as it results in a situation where “[a] private company is taxing Americans in amounts that total billions of dollars every year, under penalty of law, without true governmental accountability.” The acting solicitor general and the private industry attorney defending the program argued that the structure does not violate the nondelegation doctrine because Congress established “intelligible principles” directing the FCC how to act, which under current nondelegation doctrine precedent is all that is required, and USAC is only exercising administrative authority over the fund, rather than policymaking, which the FCC closely supervises.
At argument, the justices’ questioning on the broader concept of the nondelegation doctrine broke along the conservative and liberal ideological leanings of the justices—Justices Gorsuch and Thomas were the most aggressive in support of finding a violation, and Justices Sotomayor and Jackson were the most aggressive in stating that the program was sufficiently bounded by the statutory language. Notably, however, both liberal and conservative justices voiced concerns that striking down the USF funding mechanism could imperil the agency’s universal service effort and cause widespread industry disruption, in addition to imperiling similar funding mechanisms at the Federal Reserve Board and the Federal Deposit Insurance Corporation.
