Another major shift in the role of executive administrative agencies and congressional delegations of power to agencies may be on the way. On November 22, the Supreme Court granted certiorari in Federal Communications Commission v. Consumers' Research (consolidated with SHLB Coalition v. Consumers' Research), a case that could revitalize the long-dormant nondelegation doctrine, which is intended to constrain 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, ending that streak would be in keeping with the Court's recent trend of 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.
As has been the case with all of the Court's recent administrative law opinions, the facts of Consumers' Research are relevant to how the Court may approach the nondelegation issue, but the repercussions far exceed the confines of the case. A revival of the nondelegation doctrine will encourage challenges to every agency, across the entire spectrum of regulated industries, including environmental, financial services, healthcare, and more.
In this 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.
Telecommunications providers typically pass USF fees on to their customers in the form of bill line items. USF revenues are used to fund subsidies for:
- Building and maintaining telecommunications infrastructure in rural/high-cost areas
- Phone and internet services for low-income households
- Discounted internet access for schools and libraries and
- Broadband services for healthcare providers in remote areas
The Court will consider two main questions:
- Does authorizing the FCC to determine the amount of fees that providers must contribute to the USF unconstitutionally violate the nondelegation doctrine by vesting too much legislative authority in the hands of the FCC?
- Does the FCC's subsequent delegation to USAC violate the private nondelegation doctrine?
Consumers' Research, the challenger in the case, argues 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 FCC has argued that the structure did 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. The U.S. Court of Appeals for the Fifth Circuit, sitting en banc, agreed with Consumers' Research.
This case has broader implications for administrative law generally, but in particular for agencies that are empowered to assess fees or that delegate to private entities. Affirming the Fifth Circuit would give new teeth to the nondelegation doctrine, continuing a recent jurisprudential shift limiting administrative agency power and changing how Congress delegates to agencies. An affirmance would also invite more aggressive challenges to any agency actions where arguably Congress's delegation is unclear or goes too far, but what constitutes "unclear" or "too far" remains to be seen.
The case will be briefed in the coming months, with oral argument later in the spring. We note that the tenor and substance of the government's briefing in the case could change with a new solicitor general under the Trump administration. The government's opening brief is due January 6, 2025, two weeks before the change in administration occurs on January 20, 2025.