The nondelegation doctrine prevents Congress from giving away too much of its legislative power to other entities. After a strong showing in 1935, the nondelegation doctrine has remained dormant, with the Supreme Court refusing to strike down delegations of legislative authority so long as Congress provides an “intelligible principle” to guide the exercise of delegated power. In Consumers’ Research v. Federal Communications Commission, 109 F.4th 743 (5th Cir. 2024), the Fifth Circuit tried to give the nondelegation doctrine another good year, finding that Congress’s delegation of revenue-raising power to the Federal Communications Commission (FCC) and the agency’s subsequent redelegation of administrative power to the Universal Service Administrative Company (USAC) are unconstitutional. In a 6-3 decision, the Supreme Court sustained its 90-year streak, upholding both delegations as constitutionally permissible and reversing the Fifth Circuit.
FCC Oversees Telecommunications
The Communications Act of 1934 created the FCC and entrusted the agency with the establishment of reliable, universal telecommunications service across the United States. In 1996, Congress amended the Act to require all interstate telecommunications carriers to contribute annually to the Universal Service Fund (USF). The FCC uses the USF funds to subsidize telecommunications services for beneficiaries designated by the Act—including low-income consumers, rural communities, schools, libraries, and hospitals. To develop these subsidies, the FCC must follow principles set forth in Section 254 of the Act.
The FCC appointed the Universal Service Administrative Company (USAC), a private entity, to serve as the permanent administrator of the USF. USAC manages the USF and calculates the “contribution factor” charged to telecommunications carriers each year following a formula established by FCC regulations. The FCC has the opportunity to review and revise the calculations before the contribution factor takes effect.
In FCC v. Consumers’ Research, several organizations and consumers challenged the FCC’s proposed contribution factor for FY2021, alleging that the USF scheme violates the nondelegation doctrine. After the Fifth Circuit ruled in the plaintiffs’ favor, the Supreme Court granted certiorari to address two 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?
Writing for a six-justice majority, Justice Kagan held that neither the delegation from Congress to the FCC, nor the delegation from the FCC to USAC, ran afoul of the nondelegation doctrine. Justices Jackson and Kavanaugh authored concurring opinions, while Justices Gorsuch, Alito, and Thomas dissented.
Qualitative Limits Can Be Intelligible Principles
In briefing and at oral argument, respondent Consumers’ Research characterized contributions to the USF as taxes, rather than fees. Highlighting the importance of the legislative taxation power, the respondent argued that Congress must supply a definite, quantitative limit to the FCC’s revenue-raising for the USF. The Court disagreed, concluding that long-standing precedent foreclosed any argument that delegations of the taxing power require any stricter showing than the usual “intelligible principle” requirement. The Court also declined to impose strict numerical limits on delegations of the taxing power—noting that Congress could satisfy such a standard by imposing a $5 trillion ceiling on the USF, effectively granting the FCC “boundless power.” Such an arbitrary, quantitative cap would not effectively restrict the agency’s discretion, “whereas a statute with qualitative limits well might.”
Applying the intelligible principle test, the Court held that Congress’s guidance in Section 254 survived nondelegation muster. In accordance with the guidelines provided in other revenue-raising statutes, Congress directed the FCC to only collect funds “sufficient” to achieve the goals expressly outlined in the Act. Furthermore, Section 254(b) provides six core principles on which the FCC “shall” base all universal-service policies. Because any discretion left to the FCC under this scheme is intelligibly bound by Congress’s determinations about the scope of universal service, the Court held that Congress did not impermissibly bestow legislative power upon the FCC by permitting the agency to calculate the amount of the annual contribution factor.
The FCC Is in Control, Not USAC
The Court also rejected the contention that the FCC’s delegation to USAC violated the private nondelegation doctrine, which bars delegation of government power to private entities without adequate agency supervision. Under long-standing precedent, agencies may not pass lawmaking powers to private entities—but may rely on advice and assistance from private entities operating in a subordinate capacity. Rejecting arguments by the respondent and supportive amici, the Court concluded that USAC makes recommendations, not laws. The Court observed that the FCC retains all policymaking and discretionary authority over the USF, with USAC only calculating initial projections that are reviewable and revisable by the FCC. Because USAC remained “broadly subordinate” to the FCC under this scheme, the FCC could permissibly rely on USAC to calculate and propose the annual USF contribution factor.
Justice Jackson’s brief concurring opinion went further, expressing skepticism about the viability of the private nondelegation doctrine altogether. Citing recent scholarship, Justice Jackson noted that the Constitution does not textually prohibit delegations to private actors—and cautioned courts against imposing judicially created limits on the constitutional text.
Multiple Layers of Delegation May Survive Muster
Finally, the Court dismissed the Fifth Circuit’s holding that the “combination” of the two delegations at issue created independent constitutional concerns. That theory, which suggested that “a constitutional non-violation plus a constitutional non-violation may equal a constitutional violation” ran counter to the Court’s precedent permitting agencies to rely on private entities as an aid. Citing that authority, the Court held that the layers of delegation involved in the USF scheme do not compound to impede executive or legislative authority.
Do Independent Agencies Deserve Greater Scrutiny?
In his concurring opinion, Justice Kavanaugh affirmed the Court’s application of the intelligible principle test, observing that the Court’s articulation of the major questions doctrine in West Virginia v. EPA, 597 U.S. 697 (2022), and its reinforcement of stricter judicial review of agency decisions in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), have already provided sufficient judicial checks on agency action. But he suggested that delegations to independent agencies, which operate further removed from presidential oversight and democratic accountability, may raise “serious” delegation concerns.
A Measureless Delegation?
In a dissenting opinion, Justice Gorsuch, joined by Justice Alito and Justice Thomas, asserted that the Court’s holding “swallows a delegation beyond anything yet seen in the U.S. Reports.” The dissent asserted that taxation “ranks among the government’s greatest powers,” and thus the framers intended for Congress, and Congress alone, to facilitate revenue raising and taxation. While the majority claimed that differentiating between taxes and fees is “unbelievably murky in practice,” the dissent argued that “[c]ourts must, and do, routinely distinguish between taxes and fees in many contexts.” Justice Gorsuch found that Section 254 creates a “classic tax-and-spend scheme” that imposes costs on carriers to fund libraries, schools, and other societal benefits.
The dissent also argued that this scheme fails the intelligible principle test by offering no meaningful constraints on either the FCC or USAC. Although the Court has granted Congress some flexibility to delegate power, the dissent stressed the importance of evaluating each delegation in context. In the context of a tax-and-spend scheme, the dissent found that Section 254’s vague directions to set “just and reasonable” rates in the “public interest” provide no meaningful guidance, such that “the FCC truly must blaze its own trail.”
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Venable’s experienced appellate attorneys filed an amicus brief in this case on behalf of the National Federation of Independent Business Small Business Legal Center and Technology Channel Sales Professionals, arguing for a more robust approach to the private nondelegation doctrine. Venable will continue to monitor developments related to this case that affect our clients.
* The authors thank Anna Fortunato, a summer associate in our Washington, DC office, for her assistance in writing this article.