Petition for Writ of Certiorari — Consumers' Research, et al., Petitioners v. Federal Communications Commission, et al.
Supreme Court briefJan 5, 2024
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No. 23-____
IN THE
Supreme Court of the United States
̴̴̴̴̴̴̴̴̴
CONSUMERS’ RESEARCH, ET AL.,
Petitioners,
v.
FEDERAL COMMUNICATIONS COMMISSION, ET AL.,
Respondents.
________
On Petition for a Writ of Certiorari to the
United States Court of Appeals for the Eleventh
Circuit
________
PETITION FOR A WRIT OF CERTIORARI
________
ROBERT HENNEKE
R. TRENT MCCOTTER
CHANCE WELDON
Counsel of Record
TEXAS PUBLIC POLICY
JONATHAN BERRY
FOUNDATION
MICHAEL BUSCHBACHER
901 Congress Avenue
JARED M. KELSON
Austin, TX 78701
JAMES R. CONDE
(512) 472-2700
BOYDEN GRAY PLLC
rhenneke@texaspolicy.com 801 17th St. N.W., Suite 350
Washington, DC 20006
(202) 706-5488
tmccotter@boydengray.com
i
QUESTIONS PRESENTED
Petitioners challenge the unprecedented revenueraising mechanism for the Universal Service Fund, a
nationwide social program aimed at expanding
telecommunications
services.
Rather
than
appropriating funds, Congress has authorized the
Federal Communications Commission to levy taxes
for the USF without any statutory cap or formula,
guided only by a list of “aspirational” principles.
Congress even authorized the FCC to redefine
“universal service” altogether and raise funds for that
expanded scope. The FCC then redelegated operation
of the USF to a private company run by self-described
industry “interest groups.”
With no meaningful limits or accountability, the
USF has ballooned, with Americans now paying
nearly $10 billion every year—approaching 25 times
the FCC’s annual budget. The Eleventh Circuit
upheld this unique scheme below, over two
concurrences arguing the outcome is inconsistent with
the original understanding of nondelegation. The
questions presented are:
(1) Whether 47 U.S.C. § 254 violates the
nondelegation doctrine by imposing no limit on the
FCC’s power to raise revenue for the USF.
(2) Whether the FCC violated the private
nondelegation doctrine by transferring its revenueraising power to a private company run by industry
interest groups.
ii
PARTIES TO THE PROCEEDING
Petitioners are Consumers’ Research; Cause
Based Commerce, Inc.; Edward J. Blum; Kersten
Conway; Suzanne Bettac; Robert Kull; Kwang Ja
Kirby; Tom Kirby; Joseph Bayly; Jeremy Roth;
Deanna Roth; Lynn Gibbs; Paul Gibbs; and Rhonda
Thomas.
Respondents are the Federal Communications
Commission and the United States of America.
Intervenors below are Benton Institute for
Broadband & Society; Center for Media Justice d/b/a
MediaJustice; USTelecom – The Broadband
Association; Schools, Health & Libraries Broadband
Coalition; National Telecommunications Cooperative
Association; National Digital Inclusion Alliance; and
Competitive Carriers Association.
iii
CORPORATE DISCLOSURE STATEMENT
Consumers’
Research
and
Cause
Based
Commerce, Inc., have no parent corporations, and no
publicly held company owns 10% or more of their
stock.
iv
STATEMENT OF RELATED PROCEEDINGS
This case arises from the following proceeding:
x
Consumers’ Rsch. v. FCC, No. 22-13315
(11th Cir.) (opinion issued Dec. 14, 2023).
The same legal issues for different quarterly
contribution rates arise in the following related
proceedings:
x
Consumers’ Rsch v. FCC, No. 23-456 (U.S.).
x
Consumers’ Rsch. v. FCC, Nos. 22-60008,
22-60195, 22-60363, 23-60359, 23-60525,
24-60006 (5th Cir.).
x
Consumers’ Rsch. v. FCC, Nos. 21-3886, 224069 (6th Cir.).
x
Consumers’ Rsch. v. FCC, No. 23-1091 (D.C.
Cir.).
There are no additional proceedings in any court
that are directly related to these cases within the
meaning of this Court’s Rule 14.1(b)(iii).
v
TABLE OF CONTENTS
QUESTIONS PRESENTED ........................................ i
PARTIES TO THE PROCEEDING ........................... ii
CORPORATE DISCLOSURE STATEMENT .......... iii
STATEMENT OF RELATED PROCEEDINGS........ iv
TABLE OF AUTHORITIES ......................................vii
PETITION FOR A WRIT OF CERTIORARI ............. 1
OPINIONS BELOW .................................................... 1
JURISDICTION .......................................................... 1
STATUTORY PROVISION INVOLVED .................... 1
INTRODUCTION ........................................................ 2
STATEMENT OF THE CASE .................................... 9
A. Statutory and Regulatory Background ......... 9
B. Proceedings Below and in Other Courts ..... 16
REASONS FOR GRANTING THE PETITION ....... 21
I.
The Court Should Review Petitioners’
Nondelegation Challenge to 47 U.S.C. § 254 ..... 22
A. Section 254 Violates the Original
Understanding of Nondelegation ................ 23
B. Section 254 Violates the IntelligiblePrinciple Test ............................................... 27
C. Multi-Layer Delegation ............................... 31
D. The USF Collects Taxes............................... 32
II. The Court Should Review Petitioners’
Private Nondelegation Challenge ...................... 34
vi
III. The Questions Presented Are Important,
and This Is an Excellent Vehicle ....................... 38
CONCLUSION .......................................................... 43
Appendix A
Consumers’ Rsch. v. FCC, No. 22-13315, 88 F.4th
917 (11th Cir. 2023) ................................ Pet.App.1a
Appendix B
Fed. Commc’ns Comm’n, Proposed Fourth Quarter
2022 Universal Service Contribution Factor, CC
Docket No. 96-45, Public Notice, DA Docket No. 22946 (rel. Sept. 13, 2022) ........................ Pet.App.44a
Appendix C
47 U.S.C. § 254 ...................................... Pet.App.53a
vii
TABLE OF AUTHORITIES
Page(s)
Cases
A.L.A. Schechter Poultry Corp. v. United
States,
295 U.S. 495 (1935) ........ 3, 5, 21, 23, 31, 32, 38, 39
Carter v. Carter Coal Co.,
298 U.S. 238 (1936) .............................................. 34
Cmty. Fin. Servs. Ass’n of Am., Ltd. v.
CFPB, 51 F.4th 616 (5th Cir. 2022) .................... 41
Consumers’ Rsch. v. FCC, 63 F.4th 441
(5th Cir. 2023) ................ 3, 8, 19, 22, 24, 38, 40, 41
Consumers’ Rsch. v. FCC,
67 F.4th 773 (6th Cir. 2023) ............................ 4, 22
Dep’t of Transp. v. Ass’n of Am. R.Rs.,
575 U.S. 43 (2015) .......................................... 34, 37
Free Enter. Fund v. Pub. Co. Acct.
Oversight Bd., 561 U.S. 477 (2010) ..................... 32
Fund for Animals v. Kempthorne,
538 F.3d 124 (2d Cir. 2008) ................................. 37
Gundy v. United States,
139 S. Ct. 2116 (2019) .......................... 6, 24, 25, 26
In re Incomnet, Inc.,
463 F.3d 1064 (9th Cir. 2006) .................. 10, 12, 14
viii
Indus. Union Dep’t, AFL-CIO v. Am.
Petroleum Inst., 448 U.S. 607 (1980) ..................... 9
J.W. Hampton, Jr., & Co. v. United
States, 276 U.S. 394 (1928) ...................... 27, 29, 31
Mistretta v. United States,
488 U.S. 361 (1989) .................................. 25, 28, 35
National Horsemen’s Benevolent &
Protective Ass’n v. Black,
53 F.4th 869 (5th Cir. 2022) ................................ 42
NCTA v. United States,
415 U.S. 336 (1974) ........................ 6, 28, 29, 32, 39
Oklahoma v. United States,
62 F.4th 221 (6th Cir. 2023) ................................ 42
Panama Refining Co. v. Ryan,
293 U.S. 388 (1935) ............ 3, 21, 23, 30, 31, 38, 39
Paul v. United States,
140 S. Ct. 342 (2019) ............................................ 24
Pittston Co. v. United States,
368 F.3d 385 (4th Cir. 2004) ................................ 37
Seila Law LLC v. CFPB,
140 S. Ct. 2183 (2020) ............................................ 3
Skinner v. Mid-Am. Pipeline Co.,
490 U.S. 212 (1989) .................................. 27, 29, 33
ix
State v. Rettig,
987 F.3d 518 (5th Cir. 2021) ................................ 35
Tex. Off. of Pub. Util. Couns. v. FCC,
183 F.3d 393 (5th Cir. 1999) .................................. 4
Tex. Off. of Pub. Util. Couns. v. FCC,
265 F.3d 313 (5th Cir.
2001) ........................... 10, 11, 22, 25, 26, 30, 34, 37
Texas v. Comm’r of Internal Revenue,
142 S. Ct. 1308 (2022) .......................................... 40
Texas v. Rettig,
993 F.3d 408 (5th Cir. 2021) ...................... 7, 37, 40
Trafigura Trading LLC v. United
States, 29 F.4th 286 (5th Cir. 2022) .................... 33
U.S. Dep’t of Navy v. FLRA,
665 F.3d 1339 (D.C. Cir. 2012) ............................ 25
Wayman v. Southard,
23 U.S. 1 (1825) .................................................... 24
Whitman v. Am. Trucking Ass’ns,
531 U.S. 457 (2001) .............................. 4, 25, 28, 30
Constitution & Statutes
U.S. Const. art. I ....................................................... 24
28 U.S.C. § 1254 .......................................................... 1
47 U.S.C. § 254 .... 1, 4–6, 9–11, 17, 18, 22, 23, 25–27,
x
29–31, 42
47 U.S.C. § 254(b) ........ 5, 10, 17, 18, 23, 26, 27, 30, 31
47 U.S.C. § 254(c) ............................................ 5, 10, 23
47 U.S.C. § 254(d) .................................................. 5, 27
Other Authorities
47 C.F.R. § 54.407 ..................................................... 12
47 C.F.R. § 54.701 ..................................................... 10
47 C.F.R. § 54.703 ..................................................... 10
47 C.F.R. § 54.706 ..................................................... 11
47 C.F.R. § 54.709 ............................................... 11, 16
47 C.F.R. § 54.712 ..................................................... 12
In re Federal-State Joint Board on
Universal Service,
12 FCC Rcd. 8776 (1997) ............................... 12, 33
Broadband Subsidies for Some,
Broadband Taxes for Everyone,
TechFreedom (May 28, 2015),
https://techfreedom.org/broadbandsubsidies-for-some-broadband-taxesfor/ ......................................................................... 15
ENCYCLOPEDIA BRITANNICA (11th ed.
1911) ....................................................................... 5
xi
Leadership, USAC,
https://www.usac.org/about/
leadership/ ............................................................ 10
Proposed Second Quarter 2000
Universal Service Contribution
Factor, CC Docket No. 96-45, Public
Notice, DA Docket No. 00-517 (rel.
Mar. 7, 2000), https://docs.fcc.gov/
public/attachments/DA-00-517A1.pdf ....... 4, 12, 41
THE DEBATES IN THE SEVERAL STATE
CONVENTIONS ON THE ADOPTION OF
THE FEDERAL CONSTITUTION
(Jonathan Elliot ed., 2d ed. 1836) ....................... 24
The Lifeline Fund: Money Well Spent?:
Hearing Before the H. Subcomm. on
Commc’n and Tech., H. Comm. on
Energy and Com., 113th Cong.
(2013), https://www.govinfo.gov/
content/pkg/CHRG-113hhrg82189/
pdf/CHRG-113hhrg82189.pdf ........................ 12, 14
Amy Coney Barrett, Suspension and
Delegation, 99 Cornell L. Rev. 251
(2014) ...................................................................... 8
Barbara A. Cherry & Donald D.
Nystrom, Universal Service
Contributions: An Unconstitutional
Delegation of Taxing Power, 2000 L.
Rev. Mich. St. U. Det. C.L. 107 ............................. 5
xii
Cong. Rsch. Srv., LSB10904, Fifth
Circuit Considers Constitutionality
of the Universal Service Fund (2023),
https://crsreports.congress.gov/
product/pdf/LSB/LSB10904 ................................. 41
Sam Dillon, School Internet Program
Lacks Oversight, Investigator Says,
N.Y. Times, June 18, 2004 ................................... 14
Fed. Commc’ns Comm’n, 2022 Budget
Estimates to Congress (May 2021),
https://docs.fcc.gov/public/attachmen
ts/DOC-372853A1.pdf .......................................... 13
Philip Hamburger, IS ADMINISTRATIVE
LAW UNLAWFUL? (2014)........................................ 32
Ronald J. Krotoszynski, Jr.,
Reconsidering the Nondelegation
Doctrine: Universal Service, the
Power to Tax, and the Ratification
Doctrine, 80 Ind. L.J. 239 (2005) ......................... 16
U.S. Gov’t Accountability Off., GAO-2124, FCC Should Enhance
Performance Goals and Measures for
Its Program to Support Broadband
Service in High-Cost Areas (2020),
https://www.gao.gov/assets/gao-2124.pdf .................................................................... 15
xiii
U.S. Gov’t Accountability Off., GAO-15335, FCC Should Evaluate the
Efficiency and Effectiveness of the
Lifeline Program (2015), http://
www.gao.gov/assets/670/669209.pdf ................... 15
1
PETITION FOR A WRIT OF CERTIORARI
Petitioners respectfully petition this Court for a
writ of certiorari to the United States Court of Appeals
for the Eleventh Circuit.
OPINIONS BELOW
The Eleventh Circuit’s December 14, 2023, opinion
(Pet.App.1a) is reported at 88 F.4th 917.
JURISDICTION
This Court has jurisdiction under 28 U.S.C.
§ 1254(1). The Eleventh Circuit entered its judgment
on December 14, 2023.
STATUTORY PROVISION INVOLVED
The relevant portions of 47 U.S.C. § 254 are
reproduced at Pet.App.53a.
2
INTRODUCTION
Petitioners raise core separation-of-powers
challenges to the revenue-raising mechanism for the
Federal Communications Commission’s Universal
Service Fund (“USF” or “Fund”), which now collects
nearly $10 billion every year—approaching 25 times
the FCC’s annual budget—by imposing a tax on
consumers’ monthly phone bills and then
redistributing the money with the purported goal of
expanding telecommunications services.
The Eleventh Circuit upheld this scheme against
Petitioners’ nondelegation challenges, but Judge
Newsom “reluctantly” concurred in the judgment
because he was “deeply skeptical” that the USF
funding program “can be squared with constitutional
first principles.” Pet.App.20a (Newsom, J., concurring
in judgment). “Setting tax rates sure seems like a
legislative power to me,” Pet.App.23a, yet Congress
has given the FCC “only the faintest, most vacuous
guidance about how to exercise [this] authority,”
which “cannot possibly constrain the FCC’s
policymaking discretion in any meaningful way,”
Pet.App.24a–25a. He argued that “this case
illuminates deeper problems in nondelegation
precedent,” concluding that Petitioners’ challenge
“fails, as I see it, only because non-delegation doctrine
has become a punchline.” Pet.App.22a, 42a. Judge
Lagoa also separately concurred, saying she “share[s]
much of the same concerns expressed by Judge
Newsom.” Pet.App.43a (Lagoa, J., concurring).
3
As explained below, Judges Newsom and Lagoa
are correct that the USF funding scheme violates the
original understanding of nondelegation, but it also
fails the current “intelligible-principle” framework.
“Perhaps the most telling indication of a severe
constitutional problem with an executive entity is a
lack of historical precedent to support it,” Seila Law
LLC v. CFPB, 140 S. Ct. 2183, 2201 (2020) (cleaned
up), and the USF statute undoubtedly hands the FCC
a historically “unique revenue raising mechanism,”
Consumers’ Rsch. v. FCC, 63 F.4th 441, 450 (5th Cir.
2023), reh’g en banc granted, opinion vacated, 72 F.4th
107 (5th Cir. 2023).
It is “unique” because the statute delegates
Congress’s revenue-raising and taxing powers to an
unelected agency bureaucracy without clear and
meaningful limitations. Pet.App.23a–27a (Newsom,
J., concurring in judgment). This delegation was
accomplished through a combination of factors that
track the regimes in A.L.A. Schechter Poultry Corp. v.
United States, 295 U.S. 495 (1935), and Panama
Refining Co. v. Ryan, 293 U.S. 388 (1935), which
likewise featured statutes with lengthy lists of vague,
precatory, and competing policies, but no directions on
how to balance or limit them. If anything, the USF
scheme is worse because it gives an executive agency
the power to lay taxes.
First, there is an “absence of a[n objective] limit on
how much the FCC can raise for the USF.” Consumers’
Rsch., 63 F.4th at 448. Unlike other programs,
“Congress neither capped the amount that the FCC
4
may raise in contributions for the Fund nor imposed a
formula for how to calculate the contributions to the
Fund.” Consumers’ Rsch. v. FCC, 67 F.4th 773, 788
(6th Cir. 2023), cert. pending, No. 23-456; see 47
U.S.C. § 254.
Nor are there meaningful implied limitations. The
statute lists universal service “principles,” but courts
and the FCC have long insisted they are merely
“aspirational.” Tex. Off. of Pub. Util. Couns. v. FCC
(“TOPUC I”), 183 F.3d 393, 421 (5th Cir. 1999). As
Judge Newsom explained below, Congress gave the
FCC “only the faintest, most vacuous guidance about
how to exercise its authority,” using vague
terminology that “cannot possibly constrain the FCC’s
policymaking discretion in any meaningful way.”
Pet.App.24a–25a (Newsom, J., concurring in
judgment). “As a matter of first principles—as in real
life—such empty, mealymouthed shibboleths provide
no meaningful constraint; to the contrary, they confer
front-line law- and policymaking power on unelected,
unaccountable agency bureaucrats.” Pet.App.26a–27a
(Newsom, J., concurring in judgment). And this Court
has recognized in the nondelegation context that an
agency constrained only by its own “voluntary selfdenial” has no limit at all. Whitman v. Am. Trucking
Ass’ns, 531 U.S. 457, 473 (2001).
Second, “to make matters even worse” and “even
more open-ended,” Pet.App.25a (Newsom, J.,
concurring in judgment), the USF statute features a
rare “dual-layer” delegation, where Congress not only
allowed the FCC to raise money for universal service,
but also allowed the FCC itself to redefine “universal
5
service” virtually at will and even add new universal
service “principles.” 47 U.S.C. § 254(c)(1), (b)(7).
Letting an agency daisy-chain the scope of its own
power is “delegation running riot.” Schechter Poultry,
295 U.S. at 553 (Cardozo, J., concurring).
Third, the USF charges are taxes, and “[s]etting
tax rates sure seems like a legislative power.”
Pet.App.23a (Newsom, J., concurring in judgment).
Thus, “the FCC is almost certainly exercising
legislative power when it decides, among other things,
how big the universal-service program should be.” Id.
The taxing power is—or should be—the most jealously
guarded legislative prerogative. Even the label of
these forced payments as “contribution[s]” to the
executive, 47 U.S.C. § 254(d), is reminiscent of
English kings avoiding Parliament’s purse strings by
demanding payment from subjects under the
euphemistic title of “loving contributions.”1
No wonder scholars have explained that “[u]nlike
the thousands of responsibilities carried out by
governmental agencies on behalf of Congress, this
delegation is unique because of the unfettered power
given to the FCC in defining the scope of universal
service, and because Congress delegated the power to
levy a tax to pay for the service with no limits,
knowing that the end user, the American public,
would ultimately be saddled with the burden.”
Barbara A. Cherry & Donald D. Nystrom, Universal
1 See Benevolence, 3 ENCYCLOPEDIA BRITANNICA 728 (11th ed.
1911),
https://en.wikisource.org/wiki/Page%3AEB1911_-_
Volume_03.djvu/748.
6
Service
Contributions:
An
Unconstitutional
Delegation of Taxing Power, 2000 L. Rev. Mich. St. U.
Det. C.L. 107, 110.
As Judges Newsom and Lagoa explained below,
the USF scheme violates the original understanding
of nondelegation, which precludes Congress from
“merely announc[ing] vague aspirations and then
assign[ing] others the responsibility of adopting
legislation to realize its goals.” Gundy v. United
States, 139 S. Ct. 2116, 2133 (2019) (Gorsuch, J.,
dissenting); see Pet.App.23a (Newsom, J., concurring
in judgment); Pet.App.43a (Lagoa, J., concurring).
The USF also violates the intelligible-principle
test. This Court has expressly warned—in a case
involving the FCC, no less—that allowing an agency
to raise money based only on vague statutory phrases
like “‘public policy or interest served, and other
pertinent facts’” would raise the specter of “‘forbidden
delegation of legislative power’” by “carr[ying] [the]
agency far from its customary orbit and put[ting] it in
search of revenue in the manner of an Appropriations
Committee of the House.” NCTA v. United States, 415
U.S. 336, 341–42 (1974). And this Court has found an
intelligible principle in delegations of revenue-raising
only where there was some objective statutory limit—
like a cap or formula—on the executive’s ability to
self-fund. The USF funding mechanism in 47 U.S.C.
§ 254 lacks such a limit.
Accordingly, the USF scheme violates every
formulation of the nondelegation doctrine.
7
But it gets worse. The FCC has subsequently
delegated determination of the quarterly USF tax to a
private
corporation,
the
Universal
Service
Administrative Company (“USAC”), led by a group of
self-described industry “interest groups.” Each
quarter, USAC proposes the new USF budget—
typically
several
billion
dollars—which
is
ministerially converted to a tax and automatically
“deemed approved” if the FCC Commissioners do
nothing during the next fourteen days. There is not
even a pretense of review by the Commissioners
themselves, and the process is designed to occur so
close to the start of a new quarter that the FCC has
no choice but to accept USAC’s underlying figures.
Unsurprisingly, the FCC has never meaningfully
changed USAC’s proposals over the last 25 years.
The Eleventh Circuit majority opinion, however,
endorsed this scheme because the FCC “has the right”
to review USAC determinations, and it makes little
difference whether the FCC actually reviews them,
because “‘an agency exercises its policymaking
discretion with equal force when it … decid[es] not to
act.’” Pet.App.16a. But letting private proposals
automatically become binding—i.e., “not acting”—is
the definition of a private nondelegation violation.
Further, if the mere possibility of oversight could
defeat a nondelegation challenge, it “would render the
nondelegation doctrine a dead letter” because “any
agency can always claw back its delegated power.”
Texas v. Rettig, 993 F.3d 408, 416–17 (5th Cir. 2021)
(Ho, J., dissenting from denial of rehearing en banc).
***
8
The legality of this scheme is eminently worthy of
this Court’s review. See Parts I & II, infra. Although
there is no circuit split yet on these issues, the Fifth
Circuit is poised to create one. After a panel of that
court rejected Petitioners’ nondelegation arguments
in a parallel suit about a different quarterly
Contribution Factor, the Fifth Circuit granted
Petitioners’ request for rehearing en banc, see
Consumers’ Rsch., 72 F.4th at 108, and the full court
heard oral argument in that case in September 2023.
A decision is pending.
Even without a circuit split, this case warrants
review. The current approach to nondelegation is
“notoriously lax,” Amy Coney Barrett, Suspension and
Delegation, 99 Cornell L. Rev. 251, 318 (2014), thereby
diminishing the likelihood of a split, even when
numerous jurists have recognized that the USF
scheme is unprecedented and violates core
constitutional principles.
The stakes couldn’t be higher. Americans already
foot the USF’s bill to the tune of nearly $10 billion
every year. If Congress were to replicate this scheme,
it would never again have to appropriate funds or pass
a budget. Congress could replace the Internal
Revenue Code with a single sentence authorizing the
Internal Revenue Service to collect mandatory
“contributions” that are “sufficient and equitable” to
fund the entire federal government or pay off the
national debt, even giving the IRS discretion to decide
for itself which agencies or programs to fund. And
then the IRS could outsource this process to a private
group. “[W]ith each successive delegation—from
9
Congress to agencies, and then from agencies to
private parties—we drift further and further from the
locus of democratic accountability.” Pet.App.42a
(Newsom, J., concurring in judgment).
Courts “ought not to shy away from [their] judicial
duty to invalidate unconstitutional delegations.”
Indus. Union Dep’t, AFL-CIO v. Am. Petroleum Inst.,
448 U.S. 607, 686–87 (1980) (Rehnquist, J.,
concurring in the judgment).
The Court should grant the Petition.
STATEMENT OF THE CASE
A.
Statutory and Regulatory Background.
1.
Telecommunications Act of 1996.
The Telecommunications Act of 1996, Pub. L. No.
104-104, created an explicit funding system to
facilitate universal service, i.e., the expansion of
telecommunications services across the country at
more affordable rates, and required the FCC to create
and implement the USF. See 47 U.S.C. § 254.
But unlike other social programs, Congress did not
appropriate funds, nor did it impose any statutory
formula, rate, or cap on how much money the FCC
could raise to support the USF. And although the
money must be spent on “universal service,” that term
was defined generically as “an evolving level of
telecommunications services that the [FCC] shall
establish periodically under this section, taking into
10
account advances in telecommunications and
information technologies and services.” Id. § 254(c)(1).
In other words, the FCC could redefine universal
service and then raise revenue based on that new,
expanded scope.
Congress also announced several “universal
service principles” to guide the FCC, id. § 254(b), but
they are written in such grandiose and ephemeral
language—and aren’t binding anyway—that courts
and the FCC itself have long labeled them as merely
“aspirational.” Tex. Off. of Pub. Util. Couns. v. FCC
(“TOPUC II”), 265 F.3d 313, 321 (5th Cir. 2001). For
good measure, Congress also handed to the FCC the
power to create new universal service “principles” and
then raise revenue for that expanded scope. 47 U.S.C.
§ 254(b)(7).
2.
The FCC Redelegates Its Powers to
a Private Company.
The FCC almost immediately redelegated
operation of the USF to USAC, a private company
registered in Delaware. 47 C.F.R. § 54.701(a); In re
Incomnet, Inc., 463 F.3d 1064, 1067 (9th Cir. 2006).
USAC has a 19-member Board of Directors
comprising individuals from various “interest groups
affected by and interested in universal service
programs” and who are nominated “by their
respective interest groups.” Leadership, USAC,
https://www.usac.org/about/leadership/ (last accessed
Jan. 4, 2024); see 47 C.F.R. § 54.703(b).
11
USAC is charged with establishing the budget for
the USF. Id. § 54.709(a). Each quarter, USAC
announces a proposed budget, which is essentially
how much money USAC wants for “universal service”
for the next quarter for the entire country, an
“‘imprecise exercise’” inherently fraught with policy
judgments. TOPUC II, 265 F.3d at 328. The FCC’s
Office of Managing Director then ministerially
calculates what percentage of all telecommunication
carriers’ expected interstate and international enduser revenues would be necessary to reach that target.
47 C.F.R. §§ 54.706(a), 54.709(a). This number is
published as the proposed quarterly “Contribution
Factor.”
A quarterly Contribution Factor is then
automatically “deemed approved” by the FCC and
becomes binding unless the Commissioners act within
14 days of publication. Id. § 54.709(a)(3). The FCC has
never meaningfully modified USAC’s proposed
budget. The entire process is automated, as the rate is
deemed approved only a few days before the start of
the new quarter.
As a result, USAC sets the quarterly taxing rate
paid by millions of Americans, without the FCC
Commissioners ever affirmatively adopting or even
substantively reviewing that rate.
3.
Carriers Pass Section 254 Taxes
Through to Consumers.
Although technically paid into the USF by
telecommunications carriers, the USF charge is
12
“pass[ed] through to [the carriers’] subscribers,”
Incomnet, 463 F.3d at 1066, which the FCC’s
regulations expressly permit, see, e.g., 47 C.F.R.
§§ 54.407(c), 54.712(a). The “charge generally appears
on phone bills as the ‘Universal Service Fund Fee.’”
Incomnet, 463 F.3d at 1066.
It was always understood that consumers would
bear the costs of the USF through extra fees and
increased telephone rates. See In re Federal-State
Joint Board on Universal Service, 12 FCC Rcd. 8776,
9199, ¶ 828–29 (1997); id. at 9211–12, ¶ 855.
In the end, the USF is—and was designed to be—
financed by “virtually every American’s money”
because “at the end of the day, it is still the same
taxpaying people who bear the cost.” The Lifeline
Fund: Money Well Spent?: Hearing Before the H.
Subcomm. on Commc’n and Tech., H. Comm. on
Energy and Com., 113th Cong. 1–2 (2013) (statement
of Rep. Greg Walden, Chairman, Subcomm. on
Commc’n and Tech.), https://www.govinfo.gov/
content/pkg/CHRG-113hhrg82189/pdf/CHRG113hhrg82189.pdf.
4.
USAC Imposes Skyrocketing Rates,
Raising Tens of Billions of Dollars.
The USF rate has skyrocketed since its inception.
In 2000, the tax was around 5%,2 but by the early
2 Fed. Commc’ns Comm’n, Proposed Second Quarter 2000
Universal Service Contribution Factor, CC Docket No. 96-45,
13
2020s the rate had reached unprecedented levels. For
the fourth quarter of 2022—at issue in this suit—
USAC set the rate at 28.9%, representing a nearly
600% relative increase. Pet.App.44a.
Contribution Factor (%)
35
Quarterly USF Contribution Factor (2000Q2 to
2022Q4)
30
25
20
15
10
5
0
The scheme now yields nearly $10 billion annually,
approaching 25 times the FCC’s entire annual budget.
Fed. Commc’ns Comm’n, 2022 Budget Estimates to
Congress (May 2021), https://docs.fcc.gov/public/
attachments/DOC-372853A1.pdf.
Public Notice, DA Docket No. 00-517 (rel. Mar. 7, 2000), https://
docs.fcc.gov/public/attachments/DA-00-517A1.pdf.
14
$10,000,000,000
$8,000,000,000
$6,000,000,000
$4,000,000,000
$2,000,000,000
$FCC's Entire Annual
Budget 2021
USAC's Collections
2021
USAC takes these contributions from carriers and
deposits them into the USF, then disburses the funds
with
the
purported
goal
of
expanding
telecommunication services for the masses. Incomnet,
463 F.3d at 1067, 1072.
5.
Rampant Fraud, Waste, and Abuse
in the USF.
Given the lack of accountability, the USF has
predictably demonstrated—in the words of thenSenator Claire McCaskill—a “history of extensive
waste and abuse.” The Lifeline Fund: Money Well
Spent?, supra, at 2 (quoting Sen. McCaskill).
The GAO and the FCC’s internal watchdogs have
issued numerous reports on USF’s waste and abuse
over the past 15 years, cataloguing not just billions of
dollars wasted but also a lack of responsiveness by the
FCC and USAC to prior reports of waste and fraud.
The FCC’s Inspector General summed it up when he
agreed that “applicants view this program as a big
candy jar, free money.” Sam Dillon, School Internet
15
Program Lacks Oversight, Investigator Says, N.Y.
Times, June 18, 2004, at A22.
For example, the GAO has reported that the USF
is not focused on providing the basic telephone
services that low-income Americans actually use, but
instead is expanding advanced telecommunications
services for wealthier Americans. U.S. Gov’t
Accountability Off., GAO-21-24, FCC Should Enhance
Performance Goals and Measures for Its Program to
Support Broadband Service in High-Cost Areas 17
(2020), https://www.gao.gov/assets/gao-21-24.pdf.
A separate GAO report found that the FCC had not
bothered to evaluate the USF’s effectiveness. The lowincome Lifeline Program, for example, may not have
played any meaningful role in improving the “level of
low-income households’ subscribing to telephone
service over the past 30 years,” despite costing billions
of dollars, footed by American consumers at the
discretion of USAC and the FCC. U.S. Gov’t
Accountability Off., GAO-15-335, FCC Should
Evaluate the Efficiency and Effectiveness of the
Lifeline Program (2015), http://www.gao.gov/assets/
670/669209.pdf.
Moreover, because the USF imposes a flat tax,
customers pay the same rate regardless of their
income or bill amount, making it among the “most
regressive taxes in America.” Broadband Subsidies
for Some, Broadband Taxes for Everyone,
TechFreedom (May 28, 2015), https://techfreedom.org/
broadband-subsidies-for-some-broadband-taxes-for/.
“A single, low-income mother, living in the Bronx,
16
with a cell phone for personal safety, pays 10% or
more of her monthly wireless telephone bill to support
universal service for wealthy Montana residents
living on ranchettes.” Ronald J. Krotoszynski, Jr.,
Reconsidering the Nondelegation Doctrine: Universal
Service, the Power to Tax, and the Ratification
Doctrine, 80 Ind. L.J. 239, 314 (2005).
B.
Proceedings Below and in Other Courts.
1.
Proceedings at
Eleventh Circuit.
the
FCC
and
Petitioners comprise several organizations and
individuals adversely affected by USF charges. They
range from the consumer awareness group
Consumers’ Research (which pays a monthly USF
charge), to a reseller of telecommunications services
Cause Based Commerce (which pays directly into the
USF), to individual customers whose tight budgets
are stretched thinner from having to pay the USF
charge each month. For example, Petitioner Joseph
Bayly is a pastor and editor who resides in Ohio with
his wife and six children. He provides his family’s sole
income but has to pay into the USF every month via
his phone bill.
In Fall 2022, Petitioners filed two substantively
identical comments at the FCC challenging the
proposed fourth quarter 2022 Contribution Factor,
which was automatically “deemed approved by the
Commission” after the Commissioners took no action.
See 47 C.F.R. § 54.709(a)(3). This automatic approval
17
occurred just a few days before the rate became
effective on October 1, 2022. Pet.App.44a, 50a.
Petitioners sued in the Eleventh Circuit, and the
panel issued its opinion on December 14, 2023. It
correctly concluded the suit was timely, Pet.App.3a–
7a, but then upheld the USF’s revenue-raising
mechanism against Petitioners’ nondelegation
challenges.
The majority opinion spent only two pages on the
lead nondelegation argument, relying exclusively on
47 U.S.C. § 254(b) as providing “limiting principles,”
including that universal service charges “should” be
“specific, predictable and sufficient … to preserve and
advance universal service.” Pet.App.9a–10a. The
majority opinion also rejected Petitioners’ private
nondelegation challenge because the FCC allegedly
“maintains deep and meaningful control over the
USAC.” Pet.App.17a. When confronted with the lack
of evidence that the FCC exercises supervision over
USAC with respect to the quarterly Contribution
Factor in particular, the majority opinion concluded
that the FCC “has the right” to review USAC
determinations, and it made little difference whether
the FCC actually reviews them, because “‘an agency
exercises its policymaking discretion with equal force
when it … decid[es] not to act.’” Pet.App.16a.
Judge Newsom “reluctantly” concurred in the
judgment, stating he was “deeply skeptical that [the]
result can be squared with constitutional first
principles.” Pet.App.20a (Newsom, J., concurring in
judgment). He first concluded that “the FCC is almost
18
certainly exercising legislative power when it decides,
among other things, how big the universal-service
program should be.” Pet.App.23a. He further
concluded that the USF charges are likely taxes, and
“[s]etting tax rates sure seems like a legislative
power,” as does “prescribing the universal-service
program’s sweep and scope.” Pet.App.23a–24a. That
is “the sort of policy judgment that Congress, and not
the Executive Branch, should make.” Pet.App.24a
(cleaned up).
But Congress gave the FCC “only the faintest,
most vacuous guidance about how to exercise its
authority.” Id. The § 254(b) principles are so “hazy”
that they “cannot possibly constrain the FCC’s
policymaking discretion in any meaningful way” and
instead “leave the agency all the room it needs to do
essentially whatever it wants.” Pet.App.25a. Then, “to
make matters even worse—even more open-ended—
§ 254(b) adds a catch-all clause” allowing the FCC to
add other principles as it determines are “‘necessary
and appropriate.’” Id.
“Further diminishing the likelihood of any real
guidance, the term ‘universal service’—the very object
of the entire program—is defined only in the most
ambiguous way” and will “‘evolv[e]’” over time.
Pet.App.26a. Section 254 also provides “essentially
no” direction about how much telecom companies
“should actually be charged.” Id.
He concluded that “as a first-principles matter, I
think that the agency is violating the Constitution.”
Pet.App.29a. But because the “non-delegation
19
doctrine has become a punchline” under current
precedent, he felt constrained to reject Petitioners’
nondelegation arguments. Pet.App.22a.
Addressing the private nondelegation claim, Judge
Newsom concluded that “if under existing precedent
I’m stuck with the fiction that the FCC isn’t acting
legislatively when it sets the rates, then I think it
follows a fortiori that USAC isn’t doing so either.”
Pet.App.29a.
Judge Lagoa separately concurred, stating she
“share[d] much of the same concerns expressed by
Judge Newsom in his concurring opinion about how
the current nondelegation doctrine … has strayed
from constitutional first principles.” Pet.App.43a
(Lagoa, J., concurring).
2.
Proceedings at Other Courts.
Petitioners have challenged other USF quarterly
tax rates in other circuits. They currently have a
petition for a writ of certiorari pending before this
Court, arising from the Sixth Circuit’s review of the
fourth quarter 2021 Contribution Factor. See
Consumers’ Rsch. v. FCC, No. 23-456.
Further, a panel of the Fifth Circuit rejected
Petitioners’ nondelegation challenges to the first
quarter 2022 Contribution Factor, Consumers’ Rsch.,
63 F.4th 441, but the en banc Fifth Circuit granted
rehearing en banc in that case, 72 F.4th at 108, and
held oral argument in September 2023. A decision is
pending.
20
Petitioners also brought a challenge in the D.C.
Circuit,
where
briefing
recently
concluded.
Consumers’ Rsch. v. FCC, No. 23-1091 (D.C. Cir.).
21
REASONS FOR GRANTING THE PETITION
As Judges Newsom and Lagoa explained below,
Congress has delegated to an executive agency the
power to raise billions of dollars in taxes without
meaningful limits, constrained only by the agency’s
own “aspirations,” and with the authority to redefine
the scope of its own taxing power at will. The agency
has handed off this awesome power to a private
company full of industry interest groups, which make
the policy judgment of how much money to raise, a
process that plays out on the eve of each quarter
without meaningful governmental oversight.
This Court should grant review and reverse. The
USF is the poster child for the problems that result
from
the
unconstitutional
delegation
of
constitutionally vested authority. Nobody takes
responsibility for a program vacuuming nearly $10
billion a year out of Americans’ pockets, with rates
that climb ever higher.
This scheme violates both the original
understanding of nondelegation, which prohibits
Congress from delegating difficult policy judgments to
an executive agency, and also the intelligible-principle
test, which requires Congress to impose clear limits
on agency power, most of all in the context of revenueraising. Indeed, the USF resembles the statutory
schemes this Court held unconstitutional in Schechter
Poultry and Panama Refining. And by handing off this
power to a private entity, the FCC has violated the
private nondelegation doctrine. The Court should
grant the Petition and reverse.
22
I.
THE
COURT
SHOULD
REVIEW
PETITIONERS’
NONDELEGATION
CHALLENGE TO 47 U.S.C. § 254.
The Court should review the constitutionality of
the USF statute’s “unique revenue raising
mechanism,” Consumers’ Rsch., 63 F.4th at 450,
which now approaches 25 times the FCC’s annual
budget. Several aspects demonstrate why this scheme
is so problematic from a nondelegation perspective:
x
Congress allows the FCC to raise money
directly, with the general public footing the bill,
but “Congress neither capped the amount that
the FCC may raise in contributions for the
Fund nor imposed a formula for how to
calculate the contributions to the Fund.”
Consumers’ Rsch., 67 F.4th at 788.
x
The statutory “universal service principles”
that might limit the FCC are in fact
“aspirational only.” TOPUC II, 265 F.3d at 321.
Congress gave the FCC “only the faintest, most
vacuous guidance about how to exercise its
authority.”
Pet.App.24a
(Newsom,
J.,
concurring in judgment). The § 254(b)
principles are so “hazy” that they “cannot
possibly constrain the FCC’s policymaking
discretion in any meaningful way” and instead
“leave the agency all the room it needs to do
essentially whatever it wants.” Pet.App.25a
(Newsom, J., concurring in judgment).
Accordingly, Congress imposed no “policy of
23
limitation” on the FCC. Panama Refining, 293
U.S. at 418.
x
“[T]o make matters even worse—even more
open-ended—§ 254(b) adds a catch-all clause”
allowing the FCC to add other principles as it
determines are “‘necessary and appropriate,’”
Pet.App.25a (Newsom, J., concurring in
judgment), and the FCC can redefine “universal
service” and raise money to cover that
expanded scope, 47 U.S.C. § 254(c)(1). This
makes § 254’s dual-layer delegation even
broader than the one this Court found
problematic in Schechter Poultry, 295 U.S. at
538–39.
x
USF charges are not just any revenue but are
taxes, and “[s]etting tax rates sure seems like a
legislative power,” as does “prescribing the
universal-service program’s sweep and scope.”
Pet.App.23a–24a (Newsom, J., concurring in
judgment).
The Court should grant review of this historical
anomaly, which violates both the original
understanding of nondelegation and also the
intelligible-principle test.
A.
Section 254 Violates the Original
Understanding of Nondelegation.
The amorphous grant of extensive revenue-raising
powers to an executive agency violates the original
understanding of nondelegation. Pet.App.23a–27a
24
(Newsom, J. concurring in judgment); see also
Consumers’ Rsch., 63 F.4th at 449 n.4.
Article I of the Constitution begins: “All legislative
Powers herein granted shall be vested in a Congress.”
U.S. Const. art. I, § 1 (emphases added). The
Constitution vests legislative power nowhere else.
That means Congress must “make[] the policy
decisions when regulating private conduct” and can
only “authorize another branch to ‘fill up the details’”
or “make the application of that rule depend on
executive fact-finding.” Gundy, 139 S. Ct. at 2135–37
(Gorsuch, J., dissenting); see also Paul v. United
States, 140 S. Ct. 342, 342 (2019) (Kavanaugh, J.,
statement respecting the denial of certiorari).
James Madison explained during the ratification
debates that “[i]f nothing more were required, in
exercising a legislative trust, than a general
conveyance of authority—without laying down any
precise rules by which the authority conveyed should
be carried into effect—it would follow that the whole
power of legislation might be transferred by the
legislature from itself, and proclamations might
become substitutes for law.” 4 THE DEBATES IN THE
SEVERAL STATE CONVENTIONS ON THE ADOPTION OF
THE FEDERAL CONSTITUTION 560 (Jonathan Elliot ed.,
2d ed. 1836). Accordingly, under the Constitution,
certain “important subjects … must be entirely
regulated by the legislature itself.” Wayman v.
Southard, 23 U.S. 1, 43 (1825). “[T]here are cases in
which … the significance of the delegated decision is
simply too great for the decision to be called anything
25
other than ‘legislative.’” Whitman, 531 U.S. at 487
(Thomas, J., concurring).
Chief among those important subjects is raising
revenue. The “power over the purse was one of the
most important authorities allocated to Congress in
the Constitution’s ‘necessary partition of power
among the several departments.’” U.S. Dep’t of Navy
v. FLRA, 665 F.3d 1339, 1346–47 (D.C. Cir. 2012)
(Kavanaugh, J.). Congress’s powers over taxing and
spending are “a bulwark of the Constitution’s
separation of powers among the three branches of the
National Government. It is particularly important as
a restraint on Executive Branch officers.” Id. at 1347.
As Judge Newsom explained below, “[s]etting tax
rates sure seems like a legislative power to me,” as
does “prescribing the universal-service program’s
sweep and scope.” Pet.App.23a–24a (Newsom, J.,
concurring in judgment). That is “the sort of policy
judgment that Congress, and not the Executive
Branch, should make.” Pet.App.24a (cleaned up).
Such a choice is “heavily laden (or ought to be) with
value judgments and policy assessments” that only
Congress can make. Mistretta v. United States, 488
U.S. 361, 414 (1989) (Scalia, J., dissenting).
Section 254 violates the requirement that
Congress itself “make[] the policy decisions when
regulating private conduct.” Gundy, 139 S. Ct. at 2136
(Gorsuch, J., dissenting) (emphasis added). Indeed,
§ 254 purposefully “‘delegate[d] difficult policy choices
to the Commission’s discretion,’” including how much
revenue to raise for universal service. TOPUC II, 265
26
F.3d at 321. That alone violates the original
nondelegation doctrine.
Stated another way, “it would frustrate ‘the system
of government ordained by the Constitution’ if
Congress could merely announce vague aspirations
and then assign others the responsibility of adopting
legislation to realize its goals,” Gundy, 139 S. Ct. at
2133 (Gorsuch, J., dissenting) (emphasis added), but
that is exactly what § 254 does: it imposes merely
“aspirational” limits on the FCC’s revenue-raising
powers, TOPUC II, 265 F.3d at 321 (emphasis added).
As Judge Newsom explained, Congress gave the
FCC “only the faintest, most vacuous guidance about
how to exercise its authority.” Pet.App.24a (Newsom,
J., concurring in judgment). The § 254(b) principles
are so “hazy” that they “cannot possibly constrain the
FCC’s policymaking discretion in any meaningful
way” and instead “leave the agency all the room it
needs to do essentially whatever it wants.”
Pet.App.25a. Then, “to make matters even worse—
even more open-ended—§ 254(b) adds a catch-all
clause” allowing the FCC to add other principles as it
determines are “‘necessary and appropriate.’” Id.
“Further diminishing the likelihood of any real
guidance, the term ‘universal service’—the very object
of the entire program—is defined only in the most
ambiguous way” and will “‘evolv[e]’” over time.
Pet.App.26a. Section 254 also provides “essentially
no” direction about how much telecom companies
“should actually be charged.” Id. The statute says
charges should be “equitable and nondiscriminatory”
27
and paid into “sufficient mechanisms established by
the [FCC] to preserve and advance universal service,”
47 U.S.C. § 254(d), but, in the words of Judge
Newsom, “[c]andidly, I have no idea what that
means,” Pet.App.26a (Newsom, J., concurring in
judgment).
For all these reasons, as Judge Newsom explained
below, “as a first-principles matter,” the FCC “is
violating the Constitution” by raising taxes without
sufficient congressional direction and limitation.
Pet.App.29a; see also Pet.App.43a (Lagoa, J.,
concurring) (“[S]har[ing] much of the same concerns
expressed by Judge Newsom in his concurring opinion
about how the current nondelegation doctrine … has
strayed from constitutional first principles.”).
B.
Section 254 Violates the IntelligiblePrinciple Test.
The FCC’s power to raise revenue under § 254 runs
afoul even of the intelligible-principle test, see J.W.
Hampton, Jr., & Co. v. United States, 276 U.S. 394,
409 (1928), which requires Congress to “clearly
delineate[] … the boundaries of th[e] delegated
authority.” Skinner v. Mid-Am. Pipeline Co., 490 U.S.
212, 219 (1989).
The Eleventh Circuit majority opinion relied
exclusively on § 254(b) to conclude that Congress
satisfied the intelligible-principle test. That court
stated that § 254(b) imposed “limiting principles,”
most notably that universal service charges “should”
be “specific, predictable and sufficient … to preserve
28
and advance universal service.” Pet.App.9a. The
opinion acknowledged the FCC has the power to add
“‘other principles,’” but that grant “comes with specific
limits: the FCC may only add principles that ‘are
necessary and appropriate for the protection of the
public interest, convenience, and necessity and are
consistent with this chapter.’” Pet.App.9a–10a.
This Court has held that what suffices as an
“intelligible principle” varies based on “‘the extent and
character’” of the power delegated, Mistretta, 488 U.S.
at 372, and “the degree of agency discretion that is
acceptable varies according to the scope of the power
congressionally conferred,” Whitman, 531 U.S. at 475.
In other words, there must be an intelligible principle,
but what suffices will vary depending on context.
Pursuant to that precedent, Petitioners argued to
the Eleventh Circuit that it should not rely on
distinguishable cases upholding vague delegations
involving complex scientific matters, and instead
should follow cases that involved objective limits on
core government revenue-raising, as here.
This Court has held there is a difference between
revenue-raising and other types of statutes when it
comes to nondelegation. In NCTA, for example, this
Court held that giving an agency the power to raise
money based only on vague statutory phrases like
“‘public policy or interest served, and other pertinent
facts’” would raise the specter of “‘forbidden
delegation of legislative power’” and “carr[y] [the]
agency far from its customary orbit and put[] it in
search of revenue in the manner of an Appropriations
29
Committee of the House.” NCTA, 415 U.S. at 341–42.
Those vague statutory phrases may be sufficiently
intelligible in complex scientific contexts, but not
when it comes to deciding how much money to raise
from the general public, where Congress itself is—
and, under the Constitution, must be—the expert.
Similarly, this Court rejected a nondelegation
challenge to the statute in J.W. Hampton, which
allowed the executive to raise import duties but
prohibited any charge that deviated more than 50%
from the statutory figures Congress provided. 276
U.S. at 401. And similarly in Skinner, the Court found
no nondelegation problem because the agency was
statutorily barred from raising more than 105% of the
amount already appropriated by Congress. 490 U.S.
at 215.
There is no dispute that § 254 lacks any kind of
objective limit. That alone renders it unconstitutional
because there is no “clearly delineate[d]” limit.
Skinner, 490 U.S. at 219. But the Eleventh Circuit’s
decision below never even addressed this distinction
or the on-point cases like NCTA. That led the court
erroneously to conclude that the nondelegation
challenge here must fail simply because this Court
previously blessed broad delegations in other
contexts. Pet.App.8a.
Moreover, as noted above in Part I.A, Judge
Newsom’s concurrence explained that there are no
meaningful implied limits in § 254, either.
Pet.App.24a–26a (Newsom, J., concurring in the
judgment). The language is entirely vacuous and
30
almost never mandatory in any event. The FCC itself
has long insisted that § 254(b)’s principles, for
example, are “merely aspirational,” TOPUC II, 265
F.3d at 321, and “need not [be] implement[ed],” Br. for
Resp’t FCC 26–27, TOPUC II, 2000 WL 34430695, at
*26–27 (Nov. 30, 2000).
That means the FCC is bound (or not) based only
on its own discretion and self-restraint. This Court
has previously held that “an agency’s voluntary selfdenial has no bearing upon” “[w]hether the statute
delegates legislative power.” Whitman, 531 U.S. at
473. We must therefore assume an agency will
exercise the full and outer limit of its statutory power,
and the non-binding principles here impose no limits
in the first place.
Further, § 254(b)’s vague list is eerily similar to the
statute in Panama Refining, which likewise featured
a list of “policies,” such as “eliminat[ing] unfair
competitive practices,” “promot[ing] the fullest
possible utilization of the present productive capacity
of industries,” and “avoid[ing] undue restriction of
production (except as may be temporarily required).”
293 U.S. at 417. That list, like the one in § 254(b),
certainly announced “policies” in the general sense,
but this Court held that there was no meaningful
“policy of limitation” on the President’s discretion. Id.
at 418 (emphasis added). The President was still “free
to select as he chooses from the many and various
objects generally described,” id. at 431–32, just like
the FCC.
31
The Eleventh Circuit also invoked § 254’s
requirement that USF funding be “equitable and
nondiscriminatory,” Pet.App.9a, but the statute in
Schechter Poultry likewise prohibited policies that
imposed “inequitable restrictions on admission” or
“discriminate[d] against” small companies, 295 U.S.
at 522–23. If aphorisms about equity and
nondiscrimination couldn’t save the statute in
Schechter Poultry—even under the intelligibleprinciple test—they can’t save § 254, either. See 295
U.S. at 541 (considering J.W. Hampton); see also
Panama Refining, 293 U.S. at 429 (same).
Congress, not an executive agency, is the expert at
making the policy judgment of how much money can
be raised for the USF. It was Congress’s constitutional
obligation to clearly delineate a limit on the FCC’s
power. Congress failed to “constrain the FCC’s
policymaking discretion in any meaningful way” and
instead left the FCC “all the room it needs to do
essentially whatever it wants.” Pet.App.25a (Newsom,
J., concurring in judgment).
C.
Multi-Layer Delegation.
Independently warranting review under even
current doctrine is § 254’s unique multi-layer
delegation, which allows the FCC not just to raise
money for universal service but also to redefine the
already-vague definition of “universal service” and
add new “universal service principles”—and then
raise money for those expanded concepts. 47 U.S.C.
§ 254(b)(7), (c)(1)(D). As Judge Newsom explained
below, this “make[s] matters even worse—even more
32
open-ended.” Pet.App.25a (Newsom, J., concurring in
judgment).
Even if the statute were otherwise constitutional,
this unprecedented second layer would warrant
finding it unconstitutional. This Court has
emphasized in analogous contexts that “[t]he added
layer … makes a difference” from a constitutional
perspective. Free Enter. Fund v. Pub. Co. Acct.
Oversight Bd., 561 U.S. 477, 495 (2010) (multiple
layers of removal protection). And this Court labeled
an even narrower multi-layer delegation in Schechter
Poultry as especially egregious, again en route to
finding a violation of the intelligible-principle test. See
295 U.S. at 538–39 (statute allowed President to
“impose his own conditions, adding to or taking from
what is proposed, as ‘in his discretion’ he thinks
necessary ‘to effectuate the policy’ declared by the
act”).
D.
The USF Collects Taxes.
Review is also warranted because Congress
offboarded the power to raise taxes. “Setting tax rates
sure seems like a legislative power,” and that is “the
sort of policy judgment that Congress, and not the
Executive Branch, should make.” Pet.App.23a–24a &
nn.1–2 (Newsom, J., concurring in judgment) (cleaned
up). Hard-fought tradition dating back to England
established that “[t]axation is a legislative function,”
and thus the legislature “is the sole organ for levying
taxes.” NCTA, 415 U.S. at 340; see Philip Hamburger,
IS ADMINISTRATIVE LAW UNLAWFUL? 63 (2014).
33
Allowing an executive agency to raise taxes is
therefore the most egregious form of delegation.
A tax for constitutional purposes is typically a
charge where “some of the administrative costs at
issue ‘inure[] to the benefit of the public.’” Skinner,
490 U.S. at 223; Pet.App.23a–24a & nn.1–2 (Newsom,
J., concurring in judgment). But nearly all, if not all
of the universal service charges “inure to the benefit
of the public.” Indeed, the stated purpose of the
program is to provide Universal Service at the
expense of the general public. Pet.App.23a n.1
(Newsom, J., concurring in judgment) (“It also seems
to me relevant to the contributions’ ‘tax’ status that
the statute itself designates the American public—
writ large, rather than the payor carriers—as the
universal-service program’s principal beneficiary.”).
These are not mere “fees,” which represent “a
‘value-for-value’ transaction, in which a feepayer pays
the fee to receive a service or benefit in return, and is
thus better off as a result of the transaction.”
Trafigura Trading LLC v. United States, 29 F.4th 286,
294 (5th Cir. 2022) (collecting authorities). For the
USF, most contributors receive nothing in return—
and certainly no proportional “value-for-value.”
Pet.App.23a–24a & nn.1–2 (Newsom, J., concurring in
judgment).
Whatever the precise line between a fee and a tax,
the USF crosses it. That makes the delegation of that
power to an executive agency all the more dangerous.
***
34
Congress handed over its taxing power to an
agency without objective limits, hemmed in only by
the agency’s own “aspirations,” and then for good
measure let the agency expand its own scope of
authority at will. The Court should review the
constitutionality of this unprecedented revenueraising mechanism.
II.
THE
COURT
SHOULD
PETITIONERS’
PRIVATE
DELEGATION CHALLENGE.
REVIEW
NON-
The Eleventh Circuit’s rejection of Petitioners’
private nondelegation challenge also warrants review.
Delegation to “private persons” is “delegation in its
most obnoxious form” because “it is not even
delegation to an official or an official body,
presumptively disinterested, but to private persons
whose interests may be and often are adverse to the
interests of others in the same business.” Carter v.
Carter Coal Co., 298 U.S. 238, 311 (1936). “Private
entities are not vested with ‘legislative Powers.’ Nor
are they vested with the ‘executive Power,’ which
belongs to the President.” Dep’t of Transp. v. Ass’n of
Am. R.Rs., 575 U.S. 43, 62 (2015) (Alito, J.,
concurring).
Each quarter, USAC—a purely private corporation
run by self-described industry “interest groups”—
undertakes the “‘imprecise exercise’” of deciding how
much money will cover universal service over the next
quarter. TOPUC II, 265 F.3d at 328. That proposed
amount is converted to a Contribution Factor and
35
automatically “deemed approved” by the FCC after a
mere fourteen days, without the FCC substantively
reviewing the figures or the Commissioners
themselves even lifting a finger, on the eve of each
new quarter.
The Eleventh Circuit majority opinion defended
the FCC’s decision to let USAC act with near-absolute
deference when setting the quarterly taxing figure.
The FCC “has the right” to review USAC
determinations, and it made little difference whether
the FCC actually reviews them, because “‘an agency
exercises its policymaking discretion with equal force
when it … decid[es] not to act.’” Pet.App.16a.
But letting private proposals automatically
become binding under penalty of law—i.e., “not
acting”—is the very definition of a private
nondelegation violation. Under the Eleventh Circuit’s
view, there can never be a nondelegation violation, as
any transfer of authority could be reframed as merely
deciding “not to act” going forward. Congress could
simply “vote all power to the President and adjourn
sine die,” Mistretta, 488 U.S. at 415 (Scalia, J.,
dissenting), and any resulting actions by the
President would be construed as Congress deciding
“not to act” to stop it. That view is just as wrong in the
context of private delegations, which is why the
private nondelegation doctrine requires an agency to
“independently perform its reviewing, analytical and
judgmental functions,” rather than rubber stamp a
private proposal. State v. Rettig, 987 F.3d 518, 532
(5th Cir. 2021) (cleaned up).
36
The Eleventh Circuit also claimed the FCC
“maintains deep and meaningful control over the
USAC.” Pet.App.17a. But as Judge Newsom
explained, “[W]ith respect to the proposed universalservice ‘contribution factor,’ in particular—the
primary and most direct way that USAC executes
congressional directives—the FCC needn’t (and
overwhelmingly doesn’t) do anything at all.”
Pet.App.40a (Newsom, J., concurring in judgment).
The FCC does not even engage in the pretense of
review of USAC’s figures, which are ministerially
converted into the quarterly taxing rate. The FCC
never issues a separate approval document, nor
responds to comments filed by the public. In fact, the
FCC criticizes public comments like Petitioners’ as
being “uninvited” and “unrelated to the matter at
hand”3—as if the constitutionality of agency action
could ever be “unrelated” to that action. And because
the FCC designed this “approval” process to play out
on the eve of each new quarter, the FCC conveniently
has no choice but to accept whatever figures USAC
proposes.
Given all this, it’s no surprise that the FCC has
never meaningfully changed USAC’s proposals over
25 years, amounting to over 100 quarters “deemed
approved.” See Pet.App.40a (Newsom, J., concurring
in judgment).
3 Br. for Resp’t 28, Consumers’ Rsch. v. FCC, No. 22-13315 (11th
Cir. Dec. 22, 2022).
37
USAC’s role here puts to shame those cases where
courts allowed agencies to “employ private entities for
ministerial or advisory roles.” Pittston Co. v. United
States, 368 F.3d 385, 395 (4th Cir. 2004) (citing United
States v. Frame, 885 F.2d 1119, 1129 (3d Cir. 1989)).
There is not some simplistic and objectively ideal
amount needed for “universal service” each quarter,
especially because the term is so vague. See
Pet.App.26a (Newsom, J., concurring) (noting that
universal service is “defined only in the most
ambiguous way”). The determination of that figure
thus inherently requires considerable policy and
judgment calls. See TOPUC II, 265 F.3d at 328. It is
the FCC, not USAC, that performs the ministerial role
here.
To be sure, the FCC could revoke the power it has
handed over to USAC, but “[i]f all it reserves for itself
is ‘the extreme remedy of totally terminating the
[delegation agreement],’ an agency abdicates its ‘final
reviewing authority.’” Fund for Animals v.
Kempthorne, 538 F.3d 124, 133 (2d Cir. 2008) (citation
omitted); see Rettig, 993 F.3d at 416–17 (Ho, J.,
dissenting from denial of rehearing en banc). There is
an ongoing constitutional violation unless and until
the agency actually does rescind that power.
Under the Eleventh Circuit’s framing, there is
nothing stopping agencies from handing over vast
powers to private companies run by industry interest
groups. “[T]here is not even a fig leaf of constitutional
justification” for such a scheme, yet the decision below
wholeheartedly endorsed it. Ass’n of Am. R.Rs., 575
U.S. at 62 (Alito, J., concurring).
38
The Court should review this private delegation.
III.
THE QUESTIONS PRESENTED ARE
IMPORTANT,
AND
THIS
IS
AN
EXCELLENT VEHICLE TO ADDRESS
THEM.
The questions presented are eminently worthy of
review. The Fifth Circuit’s decision to grant rehearing
en banc to consider Petitioners’ arguments in a
parallel case confirms their importance and merit.
Consumers’ Rsch., 72 F.4th at 108. Although there is
no circuit split yet, the en banc Fifth Circuit is poised
to create one, at which point the FCC itself would
likely agree certiorari is warranted.
But even without a split, this Court should grant
review. The USF scheme is historically unique both in
terms of the authority delegated to the executive
branch to raise taxes itself, and also the subsequent
transfer of that power to a private company. This level
of delegation surpasses even those in Schechter
Poultry and Panama Refining.
Further, as Judge Newsom argued below, “this
case illuminates deeper problems in nondelegation
precedent,” Pet.App.42a (Newsom, J., concurring in
judgment), and Judge Lagoa’s concurrence agreed
with how far “the current nondelegation doctrine …
has strayed from constitutional first principles,”
Pet.App.43a (Lagoa, J., concurring); see also Barrett,
supra, at 318 (describing the current doctrine as
“notoriously lax”). This case presents an ideal vehicle
to address those problems.
39
The consequences of upholding this scheme are
profound. The FCC has never disputed that if
Congress replicated this mechanism elsewhere, there
would be no need to pass budgets or make
appropriations ever again. The entire federal
government could be funded with a single sentence
telling the IRS to raise sufficient revenue for the
entirety of federal operations, and the IRS could even
be given wide-ranging discretion to redefine what
agencies and programs are included or excluded. If
such a scheme can legally raise $10 billion a year, why
not $10 trillion? And if the FCC can let a private
company run the show, the IRS could, too. “[W]ith
each successive delegation—from Congress to
agencies, and then from agencies to private parties—
we drift further and further from the locus of
democratic accountability.” Pet.App.42a (Newsom, J.,
concurring in judgment).
This case presents an ideal vehicle. The USF
funding mechanism violates both the original
understanding of nondelegation and the modern
nondelegation test, and has a clear historical analog
considered by this Court in Schechter Poultry and
Panama Refining. This Court’s decision in NCTA
further emphasizes that revenue-raising—and
especially taxation—requires Congress itself to
impose real limitations on executive agencies’
fundraising. The Court could also separately address
the private nondelegation violation arising from the
FCC’s near-absolute deference to a private company’s
quarterly taxing demands.
40
There are no procedural hurdles to review.
Petitioners have raised their nondelegation
challenges at every step. And although the FCC
argued below that this challenge was untimely, the
FCC has since expressly abandoned that view,4 which
had been unanimously rejected even by those judges
who sided with the FCC on other issues. Pet.App.3a–
7a; Consumers’ Rsch., 67 F.4th at 783–87; Consumers’
Rsch., 63 F.4th at 446–47.
This case also lacks the vehicle flaws present in the
petition arising out of Rettig, where the statute had
been changed in the interim and the government still
pressed untimeliness arguments. See Texas v. Comm’r
of Internal Revenue, 142 S. Ct. 1308, 1309 (2022)
(Alito, J., respecting the denial of certiorari). Three
Justices noted that, absent those flaws, they would
have voted to review the private-nondelegation
challenge in that case, which “present[ed] an
important separation-of-powers question.” Id.
Petitioners’ case presents an even greater issue
because the “hundreds of millions of dollars” at issue
in Rettig pale in comparison to the nearly $10 billion
raised for the USF every year. Id.; Pet.App.22a
(Newsom, J., concurring in judgment) (“USAC’s
collections activity brings in real money. The record
indicates that USAC was projected to collect nearly $2
billion from carriers in the final quarter of 2022 alone,
a figure that dwarfs the FCC’s entire annual
4 En Banc Br. for Resp’t 1 n.1, Consumers’ Rsch. v. FCC, No. 22-
60008 (5th Cir. Aug. 30, 2023) (“[R]espondents no longer press
the argument.”).
41
budget.”). That amount is almost fourteen times
bigger than the CFPB’s annual budget, the
constitutionality of which this Court granted review
to consider. See Cmty. Fin. Servs. Ass’n of Am., Ltd. v.
CFPB, 51 F.4th 616, 638 n.12 (5th Cir. 2022), cert.
granted, 143 S. Ct. 978 (2023) (mem.).
The government has previously suggested that a
ruling in Petitioners’ favor would somehow cause
practical difficulties. But that is wrong for numerous
reasons. First, the magnitude of a constitutional
violation should not be a reason to let it persist. It’s a
reason to grant review.
Second, in any event, Petitioners have made clear
that any relief granted here could be limited to the
named Petitioners, i.e., a handful of private citizens,
a consumer protection organization, and a small
telecommunications reseller.5
Third, Congress is well aware of the constitutional
flaws with the USF statute. The Congressional
Research Service warned Congress in January 2023 of
the potential nondelegation issue and advised that it
consider “limit[ing] the FCC’s discretion over the
program by placing a cap on the total revenue the FCC
may collect from interstate carriers” or by
“articulat[ing] a formula for how the contribution
factor should be calculated.” Cong. Rsch. Srv.,
LSB10904, Fifth Circuit Considers Constitutionality
of the Universal Service Fund 4 (2023), https://
5 See Reply Br. of Pet’rs 7 n.2, Consumers’ Rsch., No. 22-13315
(11th Cir. Feb. 3, 2023).
42
crsreports.congress.gov/product/pdf/LSB/LSB10904.
A bipartisan group of Members of Congress even
submitted an amicus brief in support of the FCC in
Petitioners’ lead Fifth Circuit case, demonstrating
they are well aware of the issues here.6
The high level of congressional interest in § 254,
combined with Congress’s recent prompt statutory
response to the Fifth Circuit’s invalidation of another
statute on nondelegation grounds, provides strong
reason to believe Congress would take similar action
here if it considered doing so necessary. See Oklahoma
v. United States, 62 F.4th 221, 225 (6th Cir. 2023)
(recognizing Congress’s statutory response to
National Horsemen’s Benevolent & Protective Ass’n v.
Black, 53 F.4th 869 (5th Cir. 2022)).
That would ensure that Congress remains
accountable to the public for raising revenue for the
USF, in accordance with the Constitution’s separation
of powers.
***
This case presents an excellent vehicle for
addressing the contours of nondelegation in the
context of a program whose abuses highlight the
dangers of delegated and politically unaccountable
power. The Court should grant review.
6 Br. of Amici Curiae Members of Congress in Support of Resp’t,
Consumers’ Rsch. v. FCC, No. 22-60008 (5th Cir. June 17, 2022).
43
CONCLUSION
The petition for a writ of certiorari should be
granted.
ROBERT HENNEKE
CHANCE WELDON
TEXAS PUBLIC POLICY
FOUNDATION
901 Congress Avenue
Austin, TX 78701
(512) 472-2700
rhenneke@texaspolicy.com
January 5, 2024
R. TRENT MCCOTTER
Counsel of Record
JONATHAN BERRY
MICHAEL BUSCHBACHER
JARED M. KELSON
JAMES R. CONDE
BOYDEN GRAY PLLC
801 17th St. N.W., Suite 350
Washington, DC 20006
(202) 706-5488
tmccotter@boydengray.com
APPENDIX
i
TABLE OF CONTENTS
Opinion of the United States Court of Appeals for
the Eleventh Circuit, Consumers’ Research, et
al. Federal Communications Commission, et
al., No. 22-13315 (December 14, 2023) . . . . . . . 1a
Federal Communications Commission, Proposed
Fourth Quarter 2022 Universal Service
Contribution Factor CC Docket No. 96-45
(September 13, 2022) . . . . . . . . . . . . . . . . . . . . 44a
47 U.S. Code § 254 - Universal Service . . . . . . . . . . 53a
1a
APPENDIX A
United States Court of Appeals
for the Eleventh Circuit
CONSUMERS’ RESEARCH, CAUSE BASED
COMMERCE, INC., EDWARD J. BLUM,
KERSTEN CONWAY, SUZANNE BETTAC, et al.,
Petitioners,
v.
FEDERAL COMMUNICATIONS COMMISSION;
UNITED STATES OF AMERICA,
Respondents,
BENTON INSTITUTE FOR
BROADBAND AND SOCIETY, et al.
Intervenors.
No. 22-13315
Petition for Review of a Decision of the
Federal Communications Commission
No. 96-45
FILED: December 14, 2023
Before WILSON, NEWSOM and LAGOA, Circuit Judges.
WILSON, Circuit Judge:
In this petition for review of final agency action, the
Petitioners ask us to declare 47 U.S.C. § 254—the
Telecommunications Act of 1996’s universal service
requirements—unconstitutional as a violation of the
nondelegation doctrine. Additionally, they argue that
2a
the Federal Communications Commission (FCC), the
agency Congress put in charge of § 254, has
impermissibly delegated authority over the universal
service fund to a private entity in violation of the
private nondelegation doctrine.
Because § 254 provides an intelligible principle and
the FCC maintains control and oversight of all actions
by the private entity, we hold that there are no
unconstitutional delegations and therefore DENY the
petition.
I. Background
The FCC was created in 1934 “[f]or the purpose of
regulating interstate . . . commerce in communication
. . . so as to make available, so far as possible, to all the
people of the United States, without discrimination . .
. a rapid, efficient, Nation-wide, and world-wide wire
and radio communication service with adequate
facilities at reasonable charges.” 47 U.S.C. § 151. In
1996, Congress instructed the FCC to establish and
maintain a universal service fund in furtherance of this
purpose. Id. § 254. Congress enacted § 254 to provide
equitable universal services. Id. The Act instructs the
FCC to determine the requisite level of universal service
based on an “evolving” evaluation of four statutory
factors. Id. § 254(c). The FCC requires contributors to
submit a specified amount of money to the Fund per
quarter. Id. § 254(d).
The FCC depends on the Universal Service
Administrative Company (USAC), a private entity, to
carry out Congress’ instruction. The USAC assists the
3a
FCC in determining the amount each contributor must
provide to the fund. See 47 C.F.R. §§ 54.701, 54.709.
The USAC uses the FCC’s detailed formulas to
determine projections and demand for the universal
service fund per quarter. See id. §§ 54.303, 54.901,
54.1301, 54.711(a). The USAC must submit its
“projections of demand for the federal universal service
support mechanisms” to the FCC 60 days before the
start of the quarter, and then submit the total
contribution base (i.e., the percentage of revenues that
each carrier will have to pay) to the agency at least 30
days before the start of the quarter. Id. § 54.709(a)(3).
Only after the FCC approves the USAC’s proposal is the
USAC’s valuation used to calculate that quarter’s
contribution factor. Id. Then, the contribution factor is
used to determine the amount of individual
contributions. Id.
On appeal, the Petitioners—a nonprofit
organization that aims to increase consumer knowledge
of issues, a corporation that resells telecommunications
services, and various individuals who pay into the
universal service fund through monthly phone bills—
challenge the FCC’s and USAC’s roles in creating the
4th Quarter 2022 Contribution Factor. They argue that
the actions taken by both entities are unconstitutional
under nondelegation doctrine jurisprudence.
II. Jurisdiction
Because we have “an independent obligation to
ensure that subject-matter jurisdiction exists before
reaching the merits of a dispute,” we begin with a
jurisdictional analysis before addressing the Petitioners’
4a
claims. Jacobson v. Fla. Sec’y of State, 974 F.3d 1236,
1245 (11th Cir. 2020).
The FCC challenges our jurisdiction to hear this
appeal under the Hobbs Act. A “proceeding to enjoin,
set aside, annul, or suspend any order of the
Commission . . . shall be brought as provided by and in
the manner prescribed in [the Hobbs Act].” 47 U.S.C. §
402(a).1 The Hobbs Act gives Courts of Appeal exclusive
jurisdiction to “determine the validity of . . . all final
orders of the Federal Communications Commission.” 28
U.S.C. § 2342(1); see also FCC v. ITT World Commc’ns,
Inc., 466 U.S. 463, 468 (1984) (“Exclusive jurisdiction
for review of final FCC orders . . . lies in the Court of
Appeals.”). However, the aggrieved party has only 60
days after the order’s entry to file a petition for review.
28 U.S.C. § 2344.
The FCC argues that the Hobbs Act bars us from
exercising jurisdiction for two reasons. First, because
the Petitioners’ true challenge is to the
constitutionality of the entire statutory delegation
scheme, and not the 4th Quarter Contribution Factor
specifically. The FCC asserts that analyzing jurisdiction
under the Hobbs Act requires looking at the impact of
a proceeding rather than the reason a plaintiff brought
a suit. Thus, because the statute was last amended in
2011, the Petitioners are far beyond their 60-day jurisdictional limit to file this petition. Second, the FCC
argues that a challenge to a Contribution Factor is an
1
This direction is subject to exclusions not applicable in
the case before us. See 47 U.S.C. § 402(b).
5a
invalid pre-enforcement challenge because the
Petitioners will not be harmed by the announcement of
the Contribution Factor since it has not yet been
applied to them. We disagree on both points.
First, even if Petitioners challenge the entire
statutory scheme, we agree with the Sixth and D.C.
Circuits that administrative regulations “are capable of
continuing application.” Functional Music, Inc. v. FCC,
274 F.2d 543, 546 (D.C. Cir. 1958); see also Bennett v.
Spear, 520 U.S. 154, 177–78 (1997); Rettig v. State, 987
F.3d 518, 529 (5th Cir. 2021). When considering a
challenge to FCC rules under the Hobbs Act, the D.C.
Circuit reasoned that the 60-day limit does not affect
review of the validity of agency action that reapplies a
rule. See Functional Music, 274 F.2d at 546. This is
true because “limiting the right of review of the
underlying rule would effectively deny many parties
ultimately affected by a rule an opportunity to question
its validity.” Id. Such is the case here. The Fourth
Quarter Contribution Factor re-applies the statutory
delegation in § 254. Thus, “Petitioners’ challenge to the
FCC’s constitutional authority to implement § 254,
reapply its prior regulations, and issue the [4th Quarter
2022 Contribution Factor] restarts the sixty-day clock.”
Consumers’ Rsch. v. FCC, 67 F.4th 773, 786 (6th Cir.
2023).
Here, the challenge is timely. The Petitioners filed
their challenge to the 4th Quarter Contribution Factor
twenty-one days after public notice, and seven days
after the Contribution Factor was deemed approved by
the FCC and therefore became effective. The
6a
Petitioners were well within their 60-day jurisdictional
limit.
Second, we find that the Contribution Factor is ripe
for review. The Contribution Factor itself is a final and
judicially reviewable agency action—Petitioners need
not wait for “harm.” According to FCC regulations,
“Commission action shall be deemed final, for purposes
of seeking reconsideration at the Commission or
judicial review, on the date of public notice.” 47 C.F.R.
§ 1.103(b) (emphasis added); see also Bennett, 520 U.S.
at 177–78; Consumers’ Rsch., 67 F.4th at 785 (finding
the text of 47 C.F.R. § 1.103(b) to be sufficient
indication that an FCC contribution factor is final and
review- able). Further, as we have explained, “[o]rders
‘adopted by the Commission in the avowed exercise of
its rule-making power’ that ‘affect or determine rights
generally . . . have the force of law and are orders
reviewable under the’ Hobbs Act.” Mais v. Gulf Coast
Collection Bureau, Inc., 768 F.3d 1110, 1121 (11th Cir.
2014) (quoting Columbia Broad. Sys. v. United States,
316 U.S. 407, 417 (1942)). Here, the challenge is
properly brought because the Petitioners filed their
challenge after the Contribution Factor’s public notice
date, and the Contribution Factor affects or determines
their rights.
Even it was not ripe for review, however,
Petitioners have demonstrated that their appeal
presents a proper pre-enforcement review.
A
threatened enforcement of a law creates an Article III
injury “[w]hen an individual is subject to such a threat,
an actual arrest, prosecution, or other enforcement
action.” Susan B. Anthony List v. Driehaus, 573 U.S.
7a
149, 158 (2014). “[I]t is not necessary that petitioner
first expose himself to actual [harm] to be entitled to
challenge a statute that he claims deters the exercise of
his constitutional rights.” Steffel v. Thompson, 415 U.S.
452, 459 (1974). The Supreme Court has “permitted
pre-enforcement review under circumstances that
render the threatened enforcement sufficiently
imminent.” Driehaus, 573 U.S. at 159. Here,
Petitioners have met this bar. Accordingly, we possess
jurisdiction and proceed to the merits.
III. Standard of Review
“We review questions of constitutional law de
novo.” United States v. Brown, 364 F.3d 1266, 1268
(11th Cir. 2004).
IV.
Traditional Nondelegation Doctrine
Although all legislative powers granted by the
Constitution “shall be vested in a Congress of the
United States,” U.S. Const. art. I, “the Constitution
does not deny to the Congress the necessary resources
of flexibility and practicality that enable it to perform
its functions.” Gundy v. United States, 139 S. Ct. 2116,
2123 (2019) (plurality opinion) (alterations adopted)
(internal quotation marks omitted). Consequently,
Congress may “obtain the assistance of its coordinate
Branches—and in particular, may confer substantial
discretion on executive agencies to implement and
enforce the laws.” Id. (cleaned up). Thus, “a statutory
delegation is constitutional as long as Congress lays
down by legislative act an intelligible principle to which
the person or body authorized to exercise the delegated
8a
authority is directed to conform.” Id. (alterations
adopted) (internal quotation marks omitted).
The standards necessary to satisfy the
nondelegation doctrine “are not demanding.” Id. at
2129; see also Brown, 364 F.3d at 1271 (“The
government does not bear an onerous burden in
demonstrating the existence of an intelligible
principle.”). “[A] delegation of legislative power will be
‘constitutionally sufficient if Congress clearly delineates
[1] the general policy, [2] the public agency which is to
apply it, and [3] the boundaries of this delegated
authority.’” Brown, 364 F.3d at 1271 (alterations in
original) (quoting Mistretta v. United States, 488 U.S.
361, 372–73 (1989)).
The Petitioners argue that because there is no limit
on how much the FCC can raise for the Fund, the
statutory grant lacks any concrete, objective guidance.
The FCC responds that § 254 has multiple standards.2
“[A] nondelegation inquiry always begins (and often
almost ends) with statutory interpretation.” Gundy,
139 S. Ct. at 2123. An analysis of § 254 confirms that
Congress’ delegation provides an intelligible principle
and therefore passes constitutional muster.
2
The general policy of § 254 is clear: it exists to make sure
“[a]ccess to advanced telecommunications and information services
[are] provided in all regions of the Nation.” 47 U.S.C. § 254(b)(2).
The agency to implement it is likewise clear: the FCC must act to
carry out this general policy. See id. § 254(a)(2). The parties
disagree only on whether Congress has properly delineated “the
boundaries of th[e] delegated authority.” Brown, 364 F.3d at 1271.
9a
Section 254(b) expressly states many of the
principles the FCC must adhere to. We begin with the
general principles that guide the FCC. The FCC shall
create “policies for the preservation and advancement
of universal service.” 47 U.S.C. § 254(b). Those policies
must be based on specifically identified principles:
quality services should be made available at just and
reasonable rates; advanced services should be provided
to the entire United States; and “low-income consumers
and those in rural, insular, and high cost areas” should
have access to advanced services at reasonably comparable rates to those in urban areas. Id. §
254(b)(1)–(3).
Next, § 254(b)’s limiting principles. All policies the
FCC creates relating to the fund must be “specific,
predictable and sufficient . . . to preserve and advance
universal service.” Id. § 254(b)(5). Congress assigns the
responsibility for contributions to the fund to
“telecommunications carrier[s] that provide[] interstate
telecommunications services.” Id. § 254(d). It instructs
the FCC to charge contributors in an equitable and
nondiscriminatory manner. Id. § 254(b)(4), (d). The
FCC must provide access to “[e]lementary and
secondary schools and classrooms, health care
providers, and libraries,” id. § 254(b)(6), and the funds
can only be disbursed to statutorily designated eligible
telecommunications carriers to provide support for
universal services, id. § 254(e).
The last of the § 254(b) principles is more open
ended, and Petitioners take specific issue with it. Under
§ 254(b)(7), the FCC “shall base policies . . . on . . .
“[s]uch other principles as the . . . [FCC] determine[s]
10a
are necessary and appropriate for the protection of the
public interest, convenience, and necessity, and are consistent with this chapter.” Id. § 254(b)(7). The
Petitioners contend that paragraph (b)(7) is proof of the
FCC’s boundless authority. But the grant itself comes
with specific limits: the FCC may only add principles
that “are necessary and appropriate for the protection
of the public interest, convenience, and necessity and
are consistent with this chapter.” Id. Because Congress
is afforded wide latitude to delegate authority to
executive agencies, these limits suffice. Gundy, 139 S.
Ct. at 2129; Brown, 364 F.3d at 1271. We agree with the
Sixth Circuit that the principles in § 254 collectively
direct the FCC on (1) what it must pursue:
accessible, quality, and affordable service. (2)
How the FCC must fund these efforts: by
imposing carrier contributions. (3) The method
by which the FCC must effectuate the goals of
accessible, sound-quality, and affordable service: by creating specific mechanisms for the
Fund. And (4) to whom to direct the programs:
by identifying the USF’s mechanisms’
beneficiaries.
Consumers’ Rsch., 67 F.4th at 791 (emphases omitted).
Thus, we hold that 47 U.S.C. § 254 is permissible under
the nondelegation doctrine.
V. Private Nondelegation Doctrine
“[I]f people outside government could wield the
government’s power—then the government’s promised
accountability to the people would be an illusion. . . .
This commonsense principle has come to be known as
11a
the ‘private non-delegation doctrine.’” Nat’l
Horsemen’s Benevolent & Protective Ass’n v. Black, 53
F.4th 869, 880 (5th Cir. 2022). As the Fifth Circuit aptly
explained, the application of the doctrine is derived
from an 80-year-old Supreme Court analysis in Carter
v. Carter Coal Co., 298 U.S. 238, 311–12 (1936) and
Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381,
388, 399 (1940):
In Carter Coal, the Court invalidated a federal
law that authorized a majority of coal producers
to fix wages and hours for all producers. Giving
regulatory power to “private persons whose
interests may be and often are adverse to the
interests of others in the same business” was,
the Court held, an unconstitutional “legislative
delegation” of a “governmental function.”
Congress then rewrote the law and, four years
later, the Court upheld it in Adkins. Under the
new law, private boards only proposed
prices—and those prices now had to be
“approved, disapproved, or modified by the
[agency].” The private entities “operate[d] as
an aid” to the agency “but [were] subject to its
pervasive surveillance and authority.” The
Court found the new scheme “unquestionably
valid.” The Court emphasized that the private
entities “function[ed] subordinately to the
[agency],” that the agency and not the private
entities “determine[d] the prices,” and that the
agency had “authority and surveillance over the
[private entities].”
12a
Nat’l Horsemen’s Benevolent & Protective Ass’n, 53
F.4th at 880–81 (alterations in original) (internal
citations omitted).
From the Supreme Court’s guidance, our sister
circuits have held that there is no violation of the
private nondelegation doctrine where the private entity
functions subordinate to an agency, and the agency has
authority and surveillance over the entity. See, e.g.,
United States v. Frame, 885 F.2d 1119, 1128–29 (3rd
Cir. 1989) (“[N]o law-making authority has been
entrusted to” the private entity and therefore “the
[statute] does not constitute an unlawful delegation of
legislative authority. In essence, the [private entities]
serve an advisory function, and in the case of collection
of assessments, a ministerial one.”), abrogated on other
grounds, Cochran v. Veneman, 359 F.3d 263 (3rd Cir.
2004); Pittston Co. v. United States, 368 F.3d 385, 396
(4th Cir. 2004) (holding that the private entity merely
carried out the ministerial tasks of doing calculations
and collecting funds, thus the “powers given to the
[private entity] are of an administrative or advisory
nature, and delegation of them to the [private entity]
does not, we conclude, violate the nondelegation doctrine”); Ass’n of Am. R.R. v. U.S. Dep’t of Transp., 721
F.3d 666, 671 (D.C. Cir. 2013) (stating that private
“entities may . . . help a government agency make its
regulatory decisions” and “Congress may formalize the
role of private parties in proposing regulations so long
as that role is merely ‘as an aid’ to a government agency
that retains the discretion to ‘approve[], disapprove[],
or modif[y]’ them” (alterations in original)), vacated
and remanded on other grounds, Dep’t of Transp. v.
13a
Ass’n of Am. R.R., 575 U.S. 43 (2015); Nat’l Horsemen’s
Benevolent & Protective Ass’n, 53 F.4th at 881 (“If the
private entity does not function subordinately to the
supervising agency, the delegation of power is
unconstitutional.”); Oklahoma v. United States, 62
F.4th 221, 228–29 (6th Cir. 2023) (“Adkins shows that
a private entity may aid a public federal entity that
retains authority over the implementation of federal
law. But if a private entity creates the law or retains full
discretion over any regulations . . . it is an
unconstitutional exercise of federal power.” (internal
citation omitted)).
Today we join our sister circuits in holding that a
government agency may delegate statutory authority to
private entities without violating the private
nondelegation doctrine so long as (1) the entity
“function[s] subordinately” to the agency, and (2) the
agency retains “authority and surveillance over the
activities” of the private entity. Adkins, 310 U.S. at 399
(alteration in original).
Private entities “may aid [a federal agency] that
retains authority over the implementation of federal
law” by serving “as advisors that propose regulations[,]
. . . undertak[ing] ministerial functions, . . . gather[ing]
facts for the agency, or advis[ing] on or mak[ing] policy
recommendations to the agency.” Consumer’s Rsch., 67
F.4th at 795 (internal citations omitted). Likewise, “a
statute does not violate the private nondelegation
doctrine if it ‘imposes a standard to guide’ the private
party.” Consumers’ Rsch. v. FCC, 63 F.4th 441, 451
(5th Cir. 2023) (quoting Texas v. Rettig, 987 F. 3d 518,
14a
532 (5th Cir. 2021),3 vacated & reh’g en banc granted,
72 F.4th 107 (5th Cir. 2023) (mem.)).
The Petitioners argue that the FCC has
impermissibly delegated its statutory authority under
§ 254 to the USAC in violation of the private
nondelegation doctrine. Because the USAC functions
subordinately to the FCC, and the FCC maintains
authority, we disagree and hold that the USAC’s role in
carrying out the universal service fund does not violate
the private nondelegation doctrine.
a. The USAC’s Functions
In considering an identical private nondelegation
challenge to a previous FCC Contribution Factor, the
Sixth Circuit found that the USAC is “subordinate to
the FCC and performs ministerial and fact-gathering
functions.” Consumers’ Rsch., 67 F.4th at 795–96. We
agree. The USAC cannot make policy or interpret
unclear provisions or rules. 47 C.F.R. § 54.702(c).
Where there is confusion about how it should act, it
must seek direction from the FCC. Id. The USAC must
act in accordance with FCC regulations, and those
regulations expressly limit the USAC’s functions to
ministerial functions like “billing contributors,
collecting contributions to the universal service support
mechanisms, and disbursing universal service support
funds.” Id. § 54.702(b). The USAC must file annual
reports with the FCC and Congress that conform to
3
The Fifth Circuit mistakenly attributed the quoted
portion to Rettig. It properly appears in Boerschig v. Trans-Pecos
Pipeline, LLC, 872 F.3d 701, 708 (5th Cir. 2017).
15a
specifications outlined by the FCC. Id. § 54.702(g). The
reports must detail the USAC’s “operations, activities,
and accomplishments” from the prior year and all
“administrative action intended to prevent waste,
fraud, and abuse.” Id. The report must also “include all
expenses, receipts, and payments associated with the
administration of the universal service support
programs.” Id. Each year, the USAC must consult with
the FCC “to determine the scope and content of the
annual report.” Id.
The USAC’s actions are ministerial. It gathers facts
to determine the Fund’s needs each quarter, then
proposes a dollar amount that would ensure those needs
are met. Consumer’s Rsch., 67 F.4th at 796. As
discussed below, it collects and disburses the funds
pursuant to statutory and FCC instruction. Finally,
every decision concerning the fund is submitted for
review to both the FCC and Congress. Therefore, the
USAC is properly subordinate to the FCC.
b. The FCC’s Authority
The Petitioners argue that the FCC’s use of the
USAC violates the private nondelegation doctrine
because: the USAC decides how much money to raise
and how to spend it, and the FCC exercises no
meaningful oversight of these decisions. We disagree. A
review of the regulations governing each point in the
Petitioners argument reveals that the FCC maintains
substantial authority over the USAC.
First, the USAC’s projection for the 2022 Fourth
Quarter Contribution Factor is only a proposal. See id.
(“[T]he FCC is not bound by USAC’s projections.”). The
16a
regulations make clear that “the quarterly universal
service contribution factor shall be determined by the
Commission.” 47 C.F.R. § 54.709(a)(2) (emphasis
added). Consequently, the USAC cannot “decide” how
much money the fund will make per quarter. Instead, it
submits quarterly projected costs that “must be
approved” by the FCC. Id. § 54.709(a)(3). The FCC has
the right to adjust the projection, set its own, or take no
action (in which case the USAC’s projection will be
deemed approved by the FCC). Id. If approved, the
projected expenses “are used to calculate the quarterly
contribution factor.” Id. Importantly, the USAC cannot
apply the contribution factor to the fund contributors
until the factor has been approved by the FCC. Id.
The Petitioners take issue with the FCC’s option to
deem a proposal approved through inaction. See id. (“If
the Commission take no action within fourteen (14)
days of the date of release of the public notice
announcing the projections . . . the contribution factor
shall be deemed approved by the Commission.”). But
“an agency exercises its policymaking discretion with
equal force when it makes policy by either deciding to
act or deciding not to act.” Consumer’s Rsch., 67 F.4th
at 796 (alterations adopted) (internal quotation marks
omitted). Thus, the USAC simply acts as an advisor
that proposes regulations subject to government
approval. Adkins 310 U.S. at 388 (explaining that
private entities that aid government agencies “but [that
are] subject to [the agency’s] pervasive surveillance and
authority” are permissible); see also Consumer’s Rsch.,
67 F.4th at 795–96.
17a
Second, the USAC must disburse the funds
collected in the manner prescribed by statute and FCC
regulation.4 The FCC mandates that the USAC “shall
account for the financial transactions of the Universal
Service Fund in accordance with generally accepted
accounting principles . . . and maintain the accounts of
the Universal Service Fund in accordance with the
United States Government Standard General Ledger.”
47 C.F.R. § 54.702(n). Under the implementing statute,
the funds can only be disbursed to an eligible
telecommunications carrier. 47 U.S.C. § 254(e). The
USAC must report on the disbursement of the Fund to
the FCC on a quarterly basis. 47 C.F.R. § 54.702(g)–(h).
If a party is aggrieved by the USAC’s decision making,
that party may seek review by the FCC, id. § 54.719(b),
and any decision rendered by the FCC becomes binding
on the USAC for future decisions. Thus, any discretion
the USAC purports to exercise in fund distribution is
ultimately reviewable by the FCC to ensure it has been
used in the manner prescribed by the FCC and
Congress.
Last, the FCC maintains deep and meaningful
control over the USAC. In addition to the ways the FCC
4
The USAC also collects the Universal Service Fund
contributions, but this action is clearly ministerial and therefore
permissible. Oklahoma, 62 F.4th at 229 (stating that decisions
from courts of appeals hold that “[p]rivate entities. . . may
undertake ministerial functions, such as fee collection”); Pittston,
368 F.3d at 397 (“[T]he mere ability to receive governmental
monies is clearly ministerial, so that the power to receive taxes
(premiums) and other federal revenues . . . does not violate the
nondelegation doctrine.”).
18a
maintains final decision-making authority regarding the
universal service fund, the FCC always maintains
control of the USAC as an entity. It sets requirements
for selection and selects each of the USAC’s nineteen
directors, id. § 54.703(b)–(c), and the Chairman of the
FCC must approve or appoint the USAC’s Chief
Executive Officer, id. § 54.704(b). A review of the
USAC’s involvement with calculating the contribution
factor process reveals no unconstitutional delegation of
legislative authority. The USAC submits proposed
projections of the fund’s needs, and the FCC reviews
the USAC’s proposal. If the FCC approves the
projection, it is then used in the FCC’s calculation of
the contribution factor. The USAC collects and
disburses the funds but must do so according to
statutory and administrative directions. Parties can
appeal any USAC action to the FCC, and the FCC’s
decisions in these cases bind USAC. In sum, under §
254, the USAC is subordinate to and remains subject to
the authority of the FCC. Consequently, “[s]ince
law-making is not entrusted to the [USAC], this
statutory scheme is unquestionably valid.” Adkins, 310
U.S. at 399.
VI. Conclusion
Today we hold that there are no unconstitutional
delegations under 47 U.S.C. § 254 because Congress has
laid out the principles the FCC must follow in bringing
universal service to our Nation. Additionally, because
all USAC action is subordinate to the FCC, and the FCC
retains ultimate decision-making power, we further
hold that there is no violation of the private
19a
nondelegation doctrine. For these reasons, we DENY
the petition.
20a
NEWSOM, Circuit Judge, concurring in judgment:
Although I concur in the judgment denying the
petition for review, I do so reluctantly. I’m deeply
skeptical that today’s result can be squared with
constitutional first principles. And even under existing
precedent, I’m not sure how the case would come out
had it been framed differently. Let me explain.
I
First, a brief tour of the statutory and regulatory
landscape. Congress has tasked the FCC with
administering a program designed to make
telecommunications services widely available
throughout the United States. See generally 47 U.S.C.
§ 254. This “universal service” program is funded
through mandatory exactions on telecom
companies—euphemistically called “contributions”—that
are then redistributed to cash-strapped carriers that serve
hard-to-reach areas, like rural and insular communities.
Id. § 254(b), (d). The FCC determines the program’s size
and scope by prescribing what “universal service”
should entail, guided by an “evolving” consideration of
several statutory criteria. Id. § 254(c)(1). Having done
so, the agency proceeds to decide how much carriers
should have to pay into the pot in order to make
“universal service” a reality. Id. § 254(d).
The FCC relies on a private entity called the
Universal Service Administrative Company to assist it
in administering the universal-service program. USAC
projects universal-service funding demands, proposes
contribution rates, bills and collects money from
carriers, and then disburses those funds to eligible
21a
providers. See 47 U.S.C. § 254(e) (describing the basic
requirements for disbursement); id. §§ 54.701–02,
54.706, 54.708, 54.709, 54.712 (designating USAC as
the administrator of the universal-service program and
outlining the rules for contributions and distribution).
To calculate demand, USAC uses detailed
FCC-promulgated formulas, inputting companies’
self-reported operating expenses and other values. See
47 C.F.R. §§ 54.303, 54.901, 54.1301. After crunching
the numbers, USAC submits “projections of demand” to
the agency 60 days before the start of each quarter. Id.
§ 54.709(a)(3). Thirty days later, the FCC publishes
USAC’s proposed contribution rate for all
telecommunications carriers. Id.
If the FCC fails to countermand USAC’s
contribution rate within two weeks, the rate goes into
effect for the quarter, and carriers are charged
accordingly. Id. The agency apparently exercises its
oversight authority sparingly; so far as I can tell, it has
disapproved or modified USAC’s rate only three times
in the last 25 years. See First Quarter 1998 Universal
Service Contribution Factors Revised and Approved, CC
Docket No. 96-45, Public Notice, 12 FCC Rcd. 21881,
21886 (1997); Revised Second Quarter 2003 Universal
Service Contribution Factor, CC Docket No. 96-45,
Public Notice,18 FCC Rcd. 5097 (2003); Proposed Third
Quarter 2023 Universal Service Contribution Factor,
DA 23-507, 2023 WL 4012359 (June 14, 2023). In one
instance, the FCC rounded the rate up fifty-six
one-thousandths of a percentage point, from 9.044% to
9.1%. See Revised Second Quarter 2003, 18 FCC Rcd.
5097. Another occurred (serendipitously or otherwise)
22a
during the pendency of this litigation and, in fact,
involved nothing more than a minor front-end
adjustment carrying unspent funds forward to a new
quarter. See Proposed Third Quarter 2023, 2023 WL
4012359; see also Proposed Fourth Quarter 2023 CC
Docket No. 96-45, Public Notice, DA 23-843 (Sept. 13,
2023) (also noting the carryover funds for the fourth
quarter).
USAC’s collections activity brings in real money.
The record indicates that USAC was projected to collect
nearly $2 billion from carriers in the final quarter of
2022 alone, a figure that dwarfs the FCC’s entire
annual budget. Compare FCC, Proposed Fourth Quarter
2022 Universal Service Contribution Factor, Public
Notice, 2022 WL 424497 (Sept. 13, 2022) (projecting
$1.914 billion in universal-service program collection
for the quarter), with FCC, 2022 Budget Estimates to
Congress, DA 22-946, 2021 WL 2190014 (May 1, 2021)
(requesting approximately $500 million for the year).
II
Petitioners principally contend that in 47 U.S.C. §
254 Congress has unconstitutionally delegated its
“legislative Powers” to the FCC. See U.S. Const. art. I,
§ 1, cl. 1. As an original matter, I suspect they may well
be right. Their challenge fails, as I see it, only because
non-delegation doctrine has become a punchline.
First off, what exactly is “legislative Power[]”? In
short, it’s the authority “to adopt generally applicable
rules of conduct governing future actions by private
persons.” Gundy v. United States, 139 S. Ct. 2116, 2133
23a
(2019) (Gorsuch, J., joined by Roberts, C.J., and
Thomas, J., dissenting); accord Department of Transp.
v. Association of Am. R.Rs., 575 U.S. 43, 70 (2015)
(Thomas, J., concurring) (similar). By that measure, the
FCC is almost certainly exercising legislative power
when it decides, among other things, how big the
universal-service program should be, what it should
entail, and how much carriers should have to chip in to
bring it to fruition.
The contribution scheme, in particular, seems
suspect. In practical effect, the universal-service
“contributions” are probably taxes, in that they are
exacted from all telecom carriers but are redistributed
only to the subclass of those that are “eligible” on the
ground that they serve high-cost and underserved
areas. See 47 U.S.C. § 254(d)–(e); 47 C.F.R. §
54.701(c)(1); see also National Cable Television Ass’n,
Inc. v. United States, 415 U.S. 336, 341–42 (1974) (distinguishing a tax from a fee on the ground that the
latter “bestows a benefit on the applicant, not shared by
other members of society”).1 Setting tax rates sure
seems like a legislative power to me. See The Federalist
No. 56 at 1 (James Madison or Alexander Hamilton)
(Clinton Rossiter ed., 1961) (“What are to be the objects
of federal legislation? Those which are of most
importance, and which seem most to require local
knowledge, are commerce, taxation, and the militia.”);
1
It also seems to me relevant to the contributions’ “tax”
status that the statute itself designates the American public—writ
large, rather than the payor carriers—as the universal-service
program’s principal beneficiary. See 47 U.S.C. § 254(b)(2).
24a
National Cable, 415 U.S. at 341–42 (“Taxation is a
legislative function and Congress . . . is the sole organ
for levying taxes.”).2 Likewise, prescribing the
universal-service program’s sweep and
scope—determining what it should accomplish, to what
extent, and where—strikes me as the sort of “policy
judgment[]” that “Congress, and not the Executive
Branch, [should] make.” Gundy, 139 S. Ct. at 2141
(Gorsuch, J., joined by Roberts, C.J., and Thomas, J.,
dissenting).
Section 254 gives the FCC only the faintest, most
vacuous guidance about how to exercise its authority.
For instance, in crafting “policies for the preservation
and advancement of universal service,” the statute
2
I recognize that two other circuits have concluded that
the universal-service contributions constitute fees rather than
taxes. See Rural Cellular Ass’n v. FCC, 685 F.3d 1083, 1091 (D.C.
Cir. 2012); Texas Off. Pub. Util. Couns. v. FCC (TOPUC I), 183
F.3d 393, 440 (5th Cir. 1999). Respectfully, I’m not so sure.
Notably, one of those courts deemed the contributions fees in order
to avoid the con- stitutional difficulties that would arise were they
instead deemed taxes. See TOPUC I, 183 F.3d at 440 (stating that
the “FCC’s decision to extend universal service support to internet
access and internal connections raises grave doubts as to whether
§ 254(h) creates an unconstitutional tax” and accordingly
“constru[ing] the statute narrowly to avoid raising these
constitutional problems”). In any event, the Supreme Court’s
decision in Skinner v. Mid-America Pipeline Co. indicates that the
tax-fee distinction shouldn’t affect the nondelegation analysis. 490
U.S. 212, 222–23 (1989) (rejecting “the application of a different
and stricter nondelegation doctrine in cases where Congress
delegates discretionary authority to the Executive under its taxing
power”).
25a
directs the agency to consider a handful of “principles.”
47 U.S.C. § 254(b). Among them, the agency shall—
• aim to make “[q]uality services” available at
“just, reasonable, and affordable rates,” id. §
254(b)(1);
• endeavor to make telecom services available to
“[c]onsumers in all regions of the Nation” at
rates that are “reasonably comparable to rates
charged for similar services in urban areas,” id.
§ 254(b)(3);
• require all telecom carriers to make “an
equitable and nondiscriminatory contribution to
the preservation and advancement of universal
service,” id. § 254(b)(4); and
• ensure that there are “specific, predictable and
sufficient Federal and State mechanisms” to
preserve and advance universal service, id. §
254(b)(5).
Those hazy “principles”—grounded in terms like
“just,” “reasonable,” “affordable,” “reasonably
comparable,” “equitable,” “predictable,” and
“sufficient”—cannot possibly constrain the FCC’s
policymaking discretion in any meaningful way. They
leave the agency all the room it needs to do essentially
whatever it wants. And to make matters even
worse—even more open-ended—§ 254(b) adds a
catch-all clause, which authorizes the FCC to consider
“[s]uch other principles” as it “determine[s] are
necessary and appropriate for the protection of the
26a
public interest, convenience, and necessity and are
consistent with this chapter.” Id. § 254(b)(7).
Further diminishing the likelihood of any real
guidance, the term “universal service”—the very object
of the entire program—is defined only in the most
ambiguous way. “Universal service,” the statute says,
is an “evolving” concept that should “tak[e] into
account advances in telecommunications and
information technologies and services.” Id. § 254(c)(1).
In specifying the content of that concept, the statute
vaguely directs the FCC to “consider the extent to
which such telecommunications services” (a) are
“essential to education, public health, or public safety,”
(b) “have, through the operation of market choices by
customers, been subscribed to by a substantial majority
of residential customers,” (c) are “being deployed in
public telecommunications networks by
telecommunications carriers,” and—the kicker—(d) are
“consistent with the public interest, convenience, and
necessity.” Id.
Finally, § 254 provides similarly squishy (which is
to say essentially no) direction about how much telecom
companies should actually be charged: “Every
telecommunications carrier that provides interstate
telecommunications services shall contribute, on an
equitable and nondiscriminatory basis, to the specific,
predictable, and sufficient mechanisms established by
the Commission to preserve and advance universal
service.” Id. § 254(d). Candidly, I have no idea what
that means.
As a matter of first principles—as in real life—such
empty, mealymouthed shibboleths provide no
27a
meaningful constraint; to the contrary, they confer
front-line law- and policymaking power on unelected,
unaccountable agency bureaucrats. See Gary Lawson,
Delegation and Original Meaning, 88 Va. L. Rev. 327,
369 (2002) (suggesting that a statute that allows a
“ratemaking agency” to “choose its own standard for
the rate base” would be “invalid[]”).3
But—and herein lies the problem—I don’t think I
can say that the so-called “principles” that § 254
articulates are any less “intelligible” than those that
the Supreme Court has explicitly sanctioned as
sufficiently clear to forestall a non-delegation challenge.
See Gundy, 139 S. Ct. at 2123 (2019) (“[W]e have held,
time and again, that a statutory delegation is
constitutional as long as Congress ‘lay[s] down by
legislative act an intelligible principle to which the
person or body authorized to [exercise the delegated
authority] is directed to conform.’” (quoting J.W.
Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409
(1928)). To take just one example, the Court has upheld
3
I’m aware of Founding-era evidence indicating that
agency boards some- times set real-estate valuations that served as
the baselines for the imposition of taxes. But I see that as a
fact-finding exercise appropriate to Executive Branch
determination, not as the articulation of any generally applicable
policy. Cf. Nicholas Parrillo, A Critical Assessment of the
Originalist Case Against Administrative Regulatory Power: New
Evidence from the Federal Tax on Private Real Estate in the 1790s,
130 Yale L.J. 1288, 1313 & n.102 (2021) (presenting “skeptics’”
argument that setting valuations is a fact-finding exercise). In the
cited example, Congress set the tax rates via statute; the assessors
merely determined the taxed property’s value. See id. at 2020–21.
28a
a statute directing the FCC to act in the “public
interest, convenience, or necessity” on the ground that
it wasn’t “so indefinite as to confer an unlimited power”
and didn’t leave the agency wholly “at large in
performing this duty.” National Broad. Co. v. United
States, 319 U.S. 190, 216 (1943); see also, e.g., Whitman
v. American Trucking Ass’ns, 531 U.S. 457, 475–76
(2001) (“requisite” “to protect the public health”);
Yakus v. United States, 321 U.S. 414, 421, 427 (1944)
(“so far as practicable,” “fair and equitable”). In light of
the decidedly “not demanding” standards that the
Court has tolerated to date, Gundy, 139 S. Ct. at 2129,
I think the majority here is correct to conclude that,
under existing precedent, § 254 probably passes
constitutional muster.
To be clear, I’m not at all “convinced that the
intelligible principle doctrine serves to prevent all
cessions of legislative power.” Whitman, 531 U.S. at 487
(Thomas, J., concurring). But taking the
intelligible-principle standard as I find it, I feel
constrained to conclude that § 254 satisfies it.
III
Petitioners separately raise a “private
nondelegation” challenge. See Br. of Petrs. at 64–70;
Reply Br. of Petrs. at 43–49. I’ll have to say, though,
that it’s hard to discern precisely what they mean by
that. Clearly, they object to USAC’s participation in the
universal-service program. What’s less clear to me is on
exactly what ground. As I understand their position,
petitioners contend that USAC—the private entity that
the FCC has tapped to help it run the program—is
29a
impermissibly exercising legislative power. Thus, for
instance, petitioners conclude their brief by arguing
that USAC’s involvement “violates the private
nondelegation doctrine, contrary to Article I of the U.S.
Constitution.” Br. of Petrs. at 70 (emphasis added); see
also id. at 64 (“But that is exactly what has happened
here—‘[w]hat [i]s essentially a legislative
determination’ is now ‘made not by Congress or even by
the Executive Branch but by a private group.’”
(emphasis added) (alterations in original).
To the extent that’s the gist of petitioners’
private-delegation challenge, I disagree with it. I don’t
think that USAC is exercising legislative power. So far
as I can tell, the majority is right that the FCC
establishes the formulas from which USAC derives the
contribution rate. See Maj. Op. at 3; 47 C.F.R. §§
54.303, 54.901, 54.1301. Accordingly, to the extent that
rate-setting is a legislative function—and I think it is,
see supra at 3–5—it’s the FCC that’s exercising
legislative power. As I’ve said, as a first-principles
matter, I think that the agency is violating the
Constitution in doing so. See supra at 3–7. But if under
existing precedent I’m stuck with the fiction that the
FCC isn’t acting legislatively when it sets the rates,
then I think it follows a fortiori that USAC isn’t doing
so either. Cf. 47 C.F.R. § 54.702(c) (“[USAC] may not
make policy . . . .”).
Even so, it might yet be the case that USAC is
operating ultra vires—for either of at least two reasons.
Because petitioners haven’t teed up either objection, I
offer only a few preliminary observations.
30a
A
First, it may be that USAC is operating in
contravention of the governing statute, 47 U.S.C. § 254,
which conspicuously never even mentions USAC, let
alone authorizes its involvement in the
universal-service program. As already explained, the
statute charges the FCC with establishing
“mechanisms” to “preserve and advance universal
service” such that “[e]very telecommunications carrier”
will “contribute” to the program. 47 U.S.C. § 254(d).
But it says nary a word about USAC. That alone seems
a pretty good reason to think that USAC shouldn’t be
exercising governmental power. Cf. Carter v. Carter
Coal Co., 298 U.S. 238, 311 (1936) (deeming delegation
of governmental power to a private entity “obnoxious”
even where Congress had explicitly authorized it).4 For
whatever reasaon, though, petitioners haven’t framed
4
At oral argument, the FCC asserted that § 254(j) contains
what is, in effect, a veiled acknowledgement of USAC’s role. See
Oral Arg. at 23:08–24:25. I’m not convinced. All subsection (j) says
is that “[n]othing in this section shall affect the contribution,
distribution, or administration of the Lifeline Assis- tance Program
. . . .” 47 U.S.C. § 254(j). That program was originally run by the
National Exchange Carrier Association, another private
organization that preceded USAC. See Allnet Comm. Serv., Inc. v.
National Exch. Carrier Ass’n, Inc., 965 F.2d 1118, 1119 (D.C. Cir.
1992) (observing that NECA collected access charges for the
Lifeline Assistance Program). Conspicuously, though, § 254(j)
never mentions NECA, much less sanctions a private entity’s
involvement in the program’s administration. I think it strains
credulity to read subsection (j) as authorizing USAC’s participation
in the universal-service scheme.
31a
their challenge in statutory terms, so I won’t pursue the
matter further.5
B
Second, and separately, even if USAC isn’t
impermissibly exercising legislative power, its
involvement in the universal-service program may yet
violate the Constitution. “[B]ound to apply [the]
‘intelligible principle’ test,” and thus to conclude that
there’s been no unlawful delegation of legislative power,
Association of Am. R.Rs., 575 U.S. at 90 (Thomas, J.,
concurring), I’m left to ask two follow-on questions,
5
I realize that some of my colleagues have found the lack
of statutory authorization relevant to the question whether a
private-delegation arrangement violates the Constitution. See
Texas v. Rettig, 993 F.3d 408, 413–15 (5th Cir. 2021) (Ho, J.,
dissenting from denial of rehearing en banc). To be sure, when the
operative statute requires an agency to act, as ours does, see 47
U.S.C. § 254(d), and yet doesn’t authorize further subdelegation to
a private entity, that subdelegation violates the statute. See, e.g.,
U.S. Telecom Ass’n v. FCC, 359 F.3d 554, 565–66 (D.C. Cir. 2004).
I’m less convinced, though, that congressional authorization (or
the lack thereof ) has any real bearing on the constitutional
question, if only because we generally don’t take Congress’s word
for whether a scheme is constitutional. For the same essential
reason, I think that Sierra Club v. Lynn, 502 F.2d 43, 59 (5th Cir.
1974), is largely inapposite—to the constitutional question, I mean.
That case merely holds, as a statutory matter, that when a
provision says that the “applicable federal agency must bear the
responsibility for the ultimate work product,” the agency “must
independently perform its reviewing, analytical and judgmental
functions and participate actively and significantly in the
preparation and drafting process.” Id. (internal quotation omitted).
I don’t think it bears on the constitutionality of the agency’s
subdelegation to a private party.
32a
neither of which the parties here have squarely teed up:
Is USAC exercising executive power, and if so, is it
“constitutionally eligible” to do so? Id.
The answer to the first of those two follow-ons is
clear. The majority opinion accurately describes USAC’s
role in the universal-service program: “The FCC
depends on [USAC], a private entity, to carry out
Congress’s instruction[s].” Maj. Op. at 3; see also id. at
14 (referring to “USAC’s role in carrying out the
universal service fund”). And that description perfectly
describes the “executive” function. The term “execute”
has long meant—and means today—“to carry out or
into complete effect.” Webster’s New International
Dictionary (2d ed. 1944); accord Noah Webster, An
American Dictionary of the English Language (1828)
(“to carry into complete effect”); 1 Samuel Johnson,
Dictionary of the English Language (6th ed. 1785)
(“[t]o put in act; to do what is planned or determined”).
So yes, it seems obvious to me that in collecting de facto
taxes and distributing benefits USAC is exercising
“executive” power.
The critical question, then, is whether the
Constitution permits it to do so.6 Let’s start with what
6
So far as I can tell, none of the pertinent Supreme Court
decisions have tackled the question whether a private party was
impermissibly exercising executive power; rather, all have
addressed the allegedly unlawful exercise of legislative authority.
In 1936, the Court in Carter Coal invalidated a statute that
authorized a group of private business owners to set maximum
work hours. 298 U.S. at 311. In so doing, the Court called the
scheme “legislative delegation in its most obnoxious form.” Id.
33a
we know for sure. First, “[u]nder our Constitution, the
‘executive Power’—all of it—is ‘vested in a President,’
who must ‘take care that the Laws be faithfully
executed.’” Seila Law LLC v. Consumer Fin. Prot.
Bureau, 140 S. Ct. 2183, 2191 (2020) (quoting U.S.
Const. art. II, § 1, cls. 1; id. § 3); see also id. at 2197
(“The entire ‘executive Power’ belongs to the President
alone.”). Second, “[b]ecause no single person could
(emphasis added). Several years later, after the infamous “switch
in time” the Court twice upheld statutes that conferred authority
on private entities against challenges that they “involve[d] any
delegation of legislative authority.” Currin v. Wallace, 306 U.S. 1,
15 (1939) (emphasis added); accord Sunshine Anthracite Coal Co.
v. Adkins, 310 U.S. 381, 398 (1940) (“Nor has Congress delegated
its legislative authority to the industry. . . . Since law-making is
not entrusted to the industry, this statutory scheme is
unquestionably valid.” (emphasis added)).
Our sister circuits’ decisions have likewise focused on the
question whether private entities were unconstitutionally
exercising legislative (rather than executive) authority. See, e.g.,
Frame v. United States, 885 F.2d 1119, 1128–29 (3d Cir. 1989)
(observing that because “no law-making authority ha[d] been
entrusted to” the private entity, the statute in question did “not
constitute an unlawful delegation of legislative authority”);
National Horsemen’s Benevolent & Protective Ass’n v. Black, 53
F.4th 869, 880–83 (5th Cir. 2022) (criticizing a scheme that gave
“rulemaking power” to a private entity); cf. Pittston Co. v. United
States, 368 F.3d 385, 397 (4th Cir. 2004) (stating, without citation,
that “the mere ability to receive governmental monies is clearly
ministerial”). Only the Sixth Circuit in Oklahoma v. United States
acknowledged the “[d]iffcult and fundamental questions” that may
“arise when private entities enforce federal law.” 62 F.4th 221, 233
(6th Cir. 2023) (internal quotation omitted). Notably, though,
because the parties there (like those here) hadn’t “engaged with
this feature of the Act,” the court declined to do so. Id.
34a
fulfill that responsibility alone, the Framers expected
that the President would rely on subordinate officers
for assistance”—provided, at least, that he maintains
sufficient supervisory authority over them. Id. at 2191;
see also, e.g., Saikrishna Prakash, The Essential
Meaning of Executive Power, 2003 U. Ill. L. Rev. 701,
795 (2003); Tara Leigh Grove, Standing as an Article II
Nondelegation Doctrine, 11 J. Const. L. 781, 790 (2009).
Beyond that, things get hazier. In particular, the
question whether (and to what extent) a private party
or entity may share in the Executive Branch’s
implementation of federal policy is, to use a buzzphrase
du jour, undertheorized. There is, I think it’s fair to say,
evidence pointing in both directions.
On the one hand, the Constitution’s text and
structure indicate—admittedly without saying so
explicitly—that private parties may not be tasked with
exercising governmental power of any sort. Justice
Thomas has explained the point well: “Although no
provision of the Constitution expressly forbids private
entities f rom exercising government authority,” the
“so-called ‘private nondelegation doctrine’ flows
logically from the three Vesting Clauses”:
Because a private entity is neither Congress,
nor the President or one of his agents, nor the
Supreme Court or an inferior court established
by Congress, the Vesting Clauses would
categorically preclude it from exercising the
legislative, executive, or judicial powers of the
Federal Government. In short, the “private
nondelegation doctrine” is merely one
35a
application of the provisions of the Constitution
that forbid Congress to allocate power to an
ineligible entity, whether governmental or
private.
Association of Am. R.Rs., 575 U.S. at 87–88 (Thomas,
J., concurring); see also Gundy, 139 S. Ct. at 2133
(Gorsuch, J., joined by Roberts, C.J., and Thomas, J.,
dissenting) (emphasizing that the three parallel Vesting
Clauses lodge “the authority to exercise different
aspects of the people’s sovereign power in distinct
entities”). Put simply, “when it comes to private
entities” exercising governmental power, “there is not
even a fig leaf of constitutional justification.”
Association of Am. R.Rs., 575 U.S. at 62 (Alito, J.,
concurring).
And to be clear, it’s not all form and structure.
Delegation of government power to private entities also
raises practical and fairness concerns. As the Supreme
Court said almost a century ago, delegation of official
power to a private party is “delegation in its most
obnoxious form; for it is not even delegation to an
official or an official body, presumptively disinterested,
but to private persons whose interests may be and often
are adverse to the interests of others in the same
business.” Carter Coal, 298 U.S. at 311. Emphasizing
the Court’s rationale there, at least one commentator
has described Carter Coal as turning, fundamentally, on
the due process concerns that attend allowing one
private, self-interested party to harness the coercive
power of the state to regulate others. See Alexander
Volokh, New Private-Regulation Skepticism: Due
Process, Non-Delegation, and Antitrust Challenges, 37
36a
Harv. J. L. & Pub. Pol’y 931, 980–81 (2014); see also
Alexander Volokh, The Myth of the Federal Private
Nondelegation Doctrine, 99 Notre Dame L. Rev. 203,
257 (2023).
All of this squares with what I’ve said before about
the prospect of private parties exercising executive
power, in particular— namely, that they can’t. That is
so, I’ve said, for both “formal, structural reasons—in
particular, Article II’s explicit vesting of federal
‘executive Power’ in the President”—and
“instrumental ones”— specifically, the risks inherent in
giving enforcement power to those not “subject to
political and legal constraints.” Laufer v. Arpan LLC, 29
F.4th 1268, 1294–95 (11th Cir. 2022) (Newsom, J.,
concurring), vacated, 77 F.4th 1366, 2023 (11th Cir.
2023); accord Sierra v. City of Hallandale Beach, 996
F.3d 1110, 1133 (11th Cir. 2021) (Newsom, J.,
concurring) (“From [Article II’s] explicit vesting, it
follows that the ‘executive Power’ can’t be exercised by
private parties.”).
Now, in the interest of completeness, I should
acknowledge some historical counterevidence—areas
and instances in which private parties and entities
seemingly have been allowed to exercise what would
certainly seem to be executive authority. One obvious
example: The Constitution itself contemplates that
private individuals—in essence, mercenaries—might
play a role in international law enforcement. See U.S.
Const. art. 1 § 8, cl. 11 (allowing Congress to “grant
Letters of Marque and Reprisal”). There’s also a fairly
long history in this country of private entities managing
prisons. See, e.g., Gillian Metzger, Privatization as
37a
Delegation, 103 Colum. L. Rev. 1367, 1392–93 (2003)
(noting that “[e]xtensive privatization characterized
incarceration in the nineteenth century,” waned during
the early twentieth century, and has since come back
into vogue). The nation’s early years saw private parties
bringing criminal prosecutions—a practice that,
needless to say, has died out—and qui tam actions—a
practice that has persisted. See, e.g., Zachary Price,
Enforcement Discretion and Executive Duty, 67 Vand. L.
Rev. 671, 720–22 (2014); but see United States ex rel.
Polansky v. Executive Health Res., Inc., 599 U.S. 419,
449 (Thomas, J., dissenting) (“There are substantial
arguments that the qui tam device is inconsistent with
Article II . . . .”). And most recently, the Supreme Court
recognized that “[f]or as long as the eminent domain
power has been exercised by the United States, it has
also been delegated to private parties.” PennEast
Pipeline Co., LLC v. New Jersey, 141 S. Ct. 2244, 2255
(2021).
As best I can tell, the history of private-party
involvement in tax collection—a role roughly analogous
to one that USAC seems to play in § 254’s
universal-service scheme—is mixed. In the Founding
era, private parties seem not to have been involved. The
First Congress created the Treasury Department in
1789 to, among other things, collect federal taxes, and
it has been doing so ever since. See U.S. Dep’t of the
Treasury, History Overview, https://home.treasury.
gov/about/history/history-overview (last visited Sept. 22,
2023) (listing “collecting income and excise taxes” as
one of the Treasury’s “activities,” “formally established
as an ex- ecutive department by the First Session of
38a
Congress in 1789”); Prakash, Essential Meaning, at 747
(citing Montesquieu for the proposition that tax
collection is a quintessential government task); see also,
e.g., Act of July 11, 1798, ch. 71, §§ 1–16, 1 Stat. 591,
591–94 (repealed) (setting compensation for tax
collectors during the Fifth Congress); id., ch. 70, §§ 2–9,
28–30, 1 Stat. 580, 583, 590–91 (1798) (setting
compensation and requiring oaths for federal
real-estate assessors); Act of July 14, 1798, ch. 75, § 2,
1 Stat. 597, 598 (1798) (“That the said tax shall be
collected by the supervisors, inspectors, and collectors
of the internal revenues of the United States . . . .”); Act
of Mar. 3, 1804, ch. 20, §§ 1–7, 2 Stat. 262, 262–64
(1804) (using tax collectors for the direct tax); Oliver
Wolcott, Compensation of Officers of the Revenue (Apr.
17, 1798), in 1 American State Papers, Finance 576,
576–79 (1832) (encouraging Congress to accept a
proposed “augmentation of compensation” for tax
collectors to “prevent the greatest embarrassments”).
For a brief period in the 1870s, and again more
recently, the federal government experimented with
privatized tax collection. The 19th-century effort failed
spectacularly—and very publicly— and was scrapped
after just two years. See, e.g., H.R. Rep. No. 559 at 9
(1874) (“The committee are of [the] opinion that any
system of farming the collection of any portion of the
revenues of the Government is fundamentally wrong;
that no necessity for such laws exist[s], for the reason
that the Secretary of the Treasury and the head of the
Internal-Revenue Bureau are fully empowered by law to
make all collections of taxes . . . .”); 2 Cong. Rec. 2121
(1874) (statement of Sen. Hale) (“[I]n [this law’s]
39a
inception it was, in my view, wholly, radically, violently,
wickedly wrong.”); The President and the Sanborn
Business, N.Y. Times, May 5, 1874 (describing one of
the private tax collectors as a “superlative rogue who
has swindled the Government from one month’s end to
another with amazing impunity”). The more modern
experiment began about 20 years ago and remains
ongoing. IRS, Private Debt Collection (July 5, 2023),
https://www.irs.gov/businesses/small-businessesself-employed/private- debt-collection; Emily Rockwood,
Privatizing Tax Collection: A Case Study in the
Outsourcing Debate, 36 Pub. Cont. L.J. 423, 427 (2007).
Candidly, I’m not quite sure what to make of all
this—the textual, structural, and historical indicators
seem to point in different (or multiple) directions. But
of this much I’m confident: To the extent that
delegation of executive power to a private entity outside
the government is permissible at all, it is permissible
only if that entity “is adequately subject to Presidential
control.” Assoc. of Am. R.Rs., 575 U.S. at 91 (Thomas,
J., concurring). So if I’m right that USAC is exercising
executive power, see supra at 12, then the question
becomes, at the very least, whether USAC is subject to
the sort of control that Article II demands. See
generally Alexander Volokh, supra, at 248, 254.
That, to my mind, is far from clear. To be sure,
USAC operates under some supervision. For example,
it has to file annual reports detailing its activities. See
47 C.F.R. 54.702(g). The FCC retains the formal
authority to reject USAC determinations, and a party
wishing to challenge one of those determinations is
entitled to a hearing before the agency. See id. §§
40a
54.709(a)(3); 54.719; 54.722. Critically, though, with
respect to the proposed universal-service “contribution
factor,” in particular—the primary and most direct way
that USAC executes congressional directives—the FCC
needn’t (and overwhelmingly doesn’t) do anything at
all. See supra 2–3. Unless and until the agency steps in
to affirmatively countermand USAC’s proposed
exaction within 14 days, it goes into effect by sheer
force of inertia. Id. Accordingly, while the FCC
maintains a patina of control over USAC’s most
important function, the fact that agency approval can
be entirely passive—and in fact, is effectively
presumed—calls into question how meaningful its
control really is.
In any event, the key isn’t the degree of the FCC’s
control, but the President’s. And in that connection, the
Supreme Court’s decisions “treat appointment and
removal powers as the primary devices of executive
control.” Assoc. of Am. R.Rs., 575 U.S. at 91 (Thomas,
J., concurring) (citing Free Enter. Fund v. Public Co.
Accounting Oversight Board, 561 U.S. 477, 492 (2010)).
The removal issues vis-à-vis USAC, it seems to me, are
doubly fraught. First, the only word regarding USAC’s
removal comes from its own bylaws, which authorize
the entity’s board to remove one of its members by a
majority vote and with the approval of the FCC’s
chairman. See By-Laws of Univ. Serv. Admin. Co., art. 2
https://www.usac.org/wp-content/uploads/about/
documents/leadership/usacbylaws.pdf. So far as the
bylaws are concerned, then, USAC is essentially in
charge of its own continuance in office. Second, and to
compound matters, because the FCC is an independent
41a
agency, whose commissioners may be removed only for
cause, see Free Enter. Fund v. Pub. Co. Acct. Oversight
Bd., 537F.3d 667, 695–96 (D.C. Cir. 2008) (Kavanaugh,
J., dissenting), aff’d in part, rev’d in part and
remanded, 561 U.S. 477 (2010), USAC’s board members
enjoy something akin to the double-for-cause-removal
protection that the Supreme Court has recently held to
be unconstitutional. See Seila Law, 140 S. Ct. at 2197;
Free Enter. Fund, 561 U.S. 477 at 484 (2010). And, it
seems to me, the removal-and control-related
considerations that attend delegation of executive
power to a private entity are at least as acute as—if not
demonstrably more acute than—those that attend
delegation to an administrative agency. Delegation to a
private entity breaks the ordinary chain of
accountability that our “carefully calibrated” system of
government is designed to uphold. Seila Law, 140 S. Ct.
at 2203.7
* * *
7
I suppose the FCC (although not the President) retains
some modicum of authority over the appointment of USAC’s
directors. See 47 C.F.R. § 54.703. Even there, though, the agency’s
oversight is minimal and is filtered through private groups’
preferences: The FCC Chairman’s initial selection comes from the
“nominations submitted by industry and non-industry groups”; he
can make his own selection in the event they can’t “reach
consensus on a nominee or fail[] to submit a nomination.” Id. §
54.703(c)(3). USAC’s Chief Executive Officer is selected in much
the same way: first, the board forwards names for the FCC
Chairman’s review; then, if no consensus is reached, the Chairman
makes the selection. Id. § 54.704(b).
42a
Because petitioners didn’t squarely present either
a statutory or an executive-delegation challenge, I won’t
go any further. Suffice it to say, though, that
nondelegation issues do not necessarily end with Article
I. Article II provides important limits, as well, however
uncertain under current doctrine.
III
Bound by precedent and the parties’ framing of the
issues, I concur in the majority’s judgment. But this
case illuminates deeper problems in nondelegation
precedent. After all, “[l]iberty requires accountability.”
Ass’n of Am. R.Rs., 575 U.S. at 57 (Alito, J.,
concurring). But with each successive delegation—from
Congress to agencies, and then from agencies to private
parties—we drift further and further from the locus of
democratic accountability. The Constitution imposes
important limits on how the government goes about
doing its job. If it can’t do everything it wants to do—
such that it has to outsource responsibilities to private
parties—that may indicate it’s trying to do too much.
43a
LAGOA, Circuit Judge, concurring:
I concur in the majority opinion. But I share much
of the same concerns expressed by Judge Newsom in his
concurring opinion about how the current
nondelegation doctrine, which requires courts to look to
“whether Congress has supplied an intelligible principle
to guide the delegee’s use of discretion,” Gundy v.
United States, 139 S. Ct. 2116, 2123 (2019) (plurality
opinion), has strayed from constitutional first
principles, see Newsom Conc. at 3–9; see also Gundy,
139 S. Ct. at 2133–42 (Gorsuch, J., joined by Roberts,
C.J., and Thomas, J., dissenting). However, we are
bound to apply the intelligible principle test as set forth
by Supreme Court precedent. And given how both the
Supreme Court and this Court have applied the
intelligible principle test in rejecting nondelegation
challenges to other statutes, see, e.g., Nat’l Broad. Co.
v. United States, 319 U.S. 190 (1943); Yakus v. United
States, 321 U.S. 414 (1944); Am. Power & Light Co. v.
SEC, 329 U.S. 90 (1946); Lichter v. United States, 334
U.S. 742 (1948); Whitman v. Am. Trucking Ass’ns, 531
U.S. 457 (2001); United States v. Brown, 364 F.3d 1266
(11th Cir. 2004), I believe that those cases require us to
find that 47 U.S.C. § 254’s statutory language likewise
satisfies the intelligible principle test, as the majority
opinion concludes.
With this understanding, I concur.
44a
APPENDIX B
Federal Communications Commission
445 12th St., SW
Washington, D.C. 20554
New Media Information 202/418-0500
Internet: http://www.fcc.gov
TTY: 1-888-835-5322
PUBLIC NOTICE
DA 22-946
Released: September 13, 2022
Proposed Fourth Quarter 2022
Universal Service Contribution Factor
CC Docket No. 96-45
In this Public Notice, the Office of Managing
Director (OMD) announces that the proposed universal
service contribution factor for the fourth quarter of
2022 will be 0.289 or 28.9 percent.1
Rules for Calculating the Contribution Factor
Contributions to the federal universal service
support mechanisms are determined using a quarterly
contribution factor calculated by the Federal
Communications Commission (Commission).2 The
Commission calculates the quarterly contribution factor
based on the ratio of total projected quarterly costs of
1
See 47 C.F.R. § 54.709(a).
2
See id.
45a
the universal service support mechanisms to
contributors’ total projected collected end-user
interstate and international telecommunications
revenues, net of projected contributions.3
USAC Projections of Demand and Administrative
Expenses
Pursuant to section 54.709(a)(3) of the
Commission’s rules, 4 the Universal Service
Administrative Company (USAC) submitted projections
of demand and administrative expenses for the fourth
quarter of 2022.5 Accordingly, the projected demand
and expenses are as follows:
3
See 47 C.F.R. § 54.709(a)(2).
4
See 47 C.F.R. § 54.709(a)(3).
5
See Federal Universal Service Support Mechanisms Fund
Size Projections for the Fourth Quarter 2022, available at
<https://www.usac.org/fcc-filings> (filed August 2, 2022) (USAC
Filing for Fourth Quarter 2022 Projections; See also Federal
Universal Service Support Mechanisms Quarterly Contribution
Base for the Fourth Quarter 2022, available at
<https://www.usac.org/fcc-filings> (filed September 1, 2022) (USAC
Filing for Fourth Quarter 2022 Contribution Base).
46a
($ millions)
Program
Demand
Projected
Program
Support
Admin.
Expenses
Applicatio
n of TrueUps &
Adjustme
nts
Total
Program
Collection
(Revenue
Requirem
ent)
Schools
and
Libraries
593.30
21.69
(5.92)
609.07
Rural
Health
Care6
0
0
0.11
0.11
High-Cost
1,100.74
17.94
(33.62)
1,085.06
Lifeline
290.07
29.09
(107.73)
211.43
Connected
Care
8.33
0.12
(0.09)
8.36
1,992.44
68.84
(147.25)
1,914.03
Total
6
$152.64 million projected program demand for Rural
Health Care was funded with available funds rolled forward from
prior years’ collections. Rural Health Care administrative costs of
$6.79 million are funded within the program cap. See Federal
Universal Service Support Mechanisms Fund Size Projections for
the Fourth Quarter 2022, available at <http://www.usac.
org/fcc-filings> (filed August 2, 2022) (USAC Filing for Fourth
Quarter 2022 Projections).
47a
USAC Projections of Industry Revenues
USAC submitted projected collected end-user
telecommunications revenues for October 2022 through
December 2022 based on information contained in the
Fourth Quarter 2022 Telecommunications Reporting
Worksheet (FCC Form 499-Q).7 The amount is as
follows:
Total Projected Collected Interstate and
International End-User Telecommunications
Revenues for Fourth Quarter 2022: $8.624083
billion.
Adjusted Contribution Base
To determine the quarterly contribution base, we
decrease the fourth quarter 2022 estimate of projected
collected interstate and international end-user
telecommunications revenues by the projected revenue
requirement to account for circularity and decrease the
result by one percent to account for uncollectible
contributions. Accordingly, the quarterly contribution
base for the fourth quarter of 2022 is as follows:
Adjusted Quarterly Contribution Base for
Universal Service Support Mechanism
(Fourth Quarter 2022 Revenues - Projected
Revenue Requirement) * (100% - 1%)
= ($8.624083 billion – $1.914030 billion) * 0.99
=$6.642952 billion.
7
at 4.
USAC Filing for Fourth Quarter 2022 Contribution Base
48a
Unadjusted Contribution Factor
Using the above-described adjusted contribution
base and the total program collection (revenue
requirement) from the table above, the proposed
unadjusted contribution factor for the fourth quarter of
2022 is as follows:
Contribution Factor for Universal Service Support
Mechanisms
Total Program Collection / Adjusted Quarterly
Contribution Base
=$1.914030 billion / $6.642952 billion
=0.288129
Unadjusted Circularity Factor
USAC will reduce each provider’s contribution
obligation by a circularity discount approximating the
provider’s contributions in the upcoming quarter.
Accordingly, the proposed unadjusted circularity factor
for the fourth quarter of 2022 is as follows:
Unadjusted Circularity Factor for Universal Service
Support Mechanisms
= Total Program Collection / Projected Fourth
Quarter 2022 Revenues
= $1.914030 billion / $8.624083 billion
= 0.221940
49a
Proposed Contribution Factor
The Commission has directed OMD to announce
the contribution factor as a percentage rounded up to
the nearest tenth of one percent.8 Accordingly, the
proposed contribution factor for the fourth quarter of
2022 is as follows:
28.9%
Proposed Circularity Discount Factor
The Commission also has directed OMD to account
for contribution factor rounding when calculating the
circularity discount factor.9 Accordingly, the proposed
circularity factor for the fourth quarter of 2022 is as
follows:
8
See Federal-State Joint Board on Universal Service, 1998
Biennial Regulatory Review – Streamlined Contributor Reporting
R equir ements As s ociated w ith Adminis tr ation of
Telecommunications Relay Service, North American Numbering
Plan, Local Number Portability, and Universal Service Support
Mechanisms, Telecommunications Services for Individuals with
Hearing and Speech Disabilities, and the Americans with
Disabilities Act of 1990, Administration of the North American
Numbering Plan and North American Numbering Plan Cost
Recovery Contribution Factor and Fund Size, Number Resource
Optimization, Telephone Number Portability, Truth-in- Billing and
Billing Format, CC Docket Nos. 96-45, 98-171, 90-571, 92-237,
99-200, 95-116, 98-170, Order and Second Order on
Reconsideration, 18 FCC Rcd 4818, 4826, para. 22 (2003) (Second
Order on Reconsideration).
9
Id.
50a
0.22428410 10
Conclusion
If the Commission takes no action regarding the
projections of demand and administrative expenses and
the proposed contribution factor within the 14-day
period following release of this Public Notice, they shall
be deemed approved by the Commission.11 USAC shall
use the contribution factor to calculate universal service
contributions for the fourth quarter of 2022. USAC will
reduce each provider’s contribution obligation by a
circularity discount approximating the provider’s
contributions in the upcoming quarter.12 USAC includes
contribution obligations less the circularity discount in
invoices sent to contributors. Contribution payments
are due on the dates shown on the invoice. Contributors
will pay interest for each day for which the payments
are late. Contributors failing to pay contributions in a
timely fashion may be subject to the enforcement
provisions of the Communications Act of 1934, as
amended, and any other applicable law. In addition,
10
The proposed circularity discount factor = 1 +
[(unadjusted circularity discount factor – 1) * (unadjusted
contribution factor / proposed contribution factor)]. The proposed
circularity discount factor is calculated in a spreadsheet program,
which means that internal calculations are made with more than
15 decimal places.
11
12
See 47 C.F.R. § 54.709(a)(3).
USAC will calculate each individual contributor’s
contribution in the following manner: (1-Circulatory Factor) *
(Contribution Factor*Revenue)
51a
contributors may be billed by USAC for reasonable
costs of collecting overdue contributions.13
We also emphasize that carriers may not mark up
federal universal service line-item amounts above the
contribution factor.14 Thus, carriers may not, during the
fourth quarter of 2022, recover through a federal
universal service line item an amount that exceeds 28.9
percent of the interstate telecommunications charges
on a customer’s bill.
In addition, under the limited international
revenues exception (LIRE) in section 54.706(c) of the
Commission’s rules, a contributor to the universal
service fund whose projected collected interstate enduser telecommunications revenues comprise less than
12 percent of its combined projected collected interstate
and international end-user telecommunications
revenues shall contribute based only on projected
collected interstate end-user telecommunications
revenues, net of projected contributions.15 The rule is
intended to exclude from the contribution base the
international end-user telecommunications revenues of
any entity whose annual contribution, based on the
provider’s interstate and international end-user
telecommunications revenues, would exceed the
13
See 47 C.F.R. § 54.713.
14
See 47 C.F.R. § 54.712.
15
See 47 C.F.R. § 54.706.
52a
amount of its interstate end-user revenues.16 The
proposed contribution factor exceeds 12 percent, which
we recognize could result in a contributor being
required to contribute to the universal service fund an
amount that exceeds its interstate end-user
telecommunications revenue. Should a contributor face
this situation, the contributor may petition the
Commission for waiver of the LIRE threshold.17
For further information, contact Thomas Buckley
at (202) 418-0725 or Kim Yee at (202) 418- 0805, TTY
(888) 835-5322, in the Office of Managing Director.
16
See Federal-State Joint Board on Universal Service,
Sixteenth Order on Reconsideration, CC Docket No. 96-45, Eighth
Report and Order, CC Docket No. 96-45, Sixth Report and Order,
Docket No. 96-262, 15 FCC Rcd 1679, 1687-1692, paras. 17-29
(1999) (Fifth Circuit Remand Order).
17
Generally, the Commission’s rules may be waived for
good cause shown. 47 C.F.R. § 1.3. The Commission may exercise
its discretion to waive a rule where the particular facts make strict
compliance inconsistent with the public interest. Northeast
Cellular Telephone Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir.
1990) (Northeast Cellular). In addition, the Commission may
consider considerations of hardship, equity, or more effective
implementation of overall policy on an individual basis. WAIT
Radio v. FCC, 418 F.2d 1153, 1159 (D.C. Cir. 1969); Northeast
Cellular, 897 F.2d at 1166. Waiver of the Commission’s rules is
therefore appropriate only if special circumstances warrant a
deviation from the general rule, and such deviation will serve the
public interest. Northeast Cellular, 897 F.2d at 1166; 47 C.F.R. §
54.802(a).
53a
APPENDIX C
47 U.S. Code § 254 - Universal service
(a) Procedures to review universal service
requirements
(1) Federal-State Joint Board on universal
service
Within one month after February 8, 1996, the
Commission shall institute and refer to a
Federal-State Joint Board under section 410(c) of
this title a proceeding to recommend changes to any
of its regulations in order to implement sections
214(e) of this title and this section, including the
definition of the services that are supported by
Federal universal service support mechanisms and
a specific timetable for completion of such
recommendations. In addition to the members of
the Joint Board required under section 410(c) of
this title, one member of such Joint Board shall be
a State-appointed utility consumer advocate
nominated by a national organization of State
utility consumer advocates. The Joint Board shall,
after notice and opportunity for public comment,
make its recommendations to the Commission 9
months after February 8, 1996.
(2) Commission action
The Commission shall initiate a single
proceeding to implement the recommendations
from the Joint Board required by paragraph (1)
and shall complete such proceeding within 15
54a
months after February 8, 1996. The rules
established by such proceeding shall include a
definition of the services that are supported by
Federal universal service support mechanisms
and a specific timetable for implementation.
Thereafter, the Commission shall complete any
proceeding to implement subsequent
recommendations from any Joint Board on
universal service within one year after receiving
such recommendations.
(b) Universal service principles
The Joint Board and the Commission shall base
policies for the preservation and advancement of
universal service on the following principles:
(1) Quality and rates
Quality services should be available at just,
reasonable, and affordable rates.
(2) Access to advanced services
Access to advanced telecommunications and
information services should be provided in all
regions of the Nation.
(3) Access in rural and high cost areas
Consumers in all regions of the Nation, including
low-income consumers and those in rural, insular,
and high cost areas, should have access to
telecommunications and information services,
including interexchange services and advanced
telecommunications and information services, that
55a
are reasonably comparable to those services
provided in urban areas and that are available at
rates that are reasonably comparable to rates
charged for similar services in urban areas.
(4) Equitable
and
contributions
nondiscriminatory
All providers of telecommunications services should
make an equitable and nondiscriminatory
contribution to the preservation and advancement
of universal service.
(5) Specific and
mechanisms
predictable
support
There should be specific, predictable and sufficient
Federal and State mechanisms to preserve and
advance universal service.
(6) Access to advanced telecommunications
services for schools, health care, and
libraries
Elementary and secondary schools and classrooms,
health care providers, and libraries should have
access to advanced telecommunications services as
described in subsection (h).
(7) Additional principles
Such other principles as the Joint Board and the
Commission determine are necessary and
appropriate for the protection of the public interest,
convenience, and necessity and are consistent with
this chapter.
56a
(c) Definition
(1) In general
Universal service is an evolving level of
telecommunications services that the
Commission shall establish periodically under
this section, taking into account advances in
t e le c o mmunic at io ns and informatio n
technologies and services. The Joint Board in
recommending, and the Commission in
establishing, the definition of the services that
are supported by Federal universal service
support mechanisms shall consider the extent to
which such telecommunications services—
(A) are essential to education, public health, or
public safety;
(B) have, through the operation of market
choices by customers, been subscribed to by
a substantial majority of residential
customers;
(C) are
being
deployed
in
public
telecommunications networks by
telecommunications carriers; and
(D) are consistent with the public interest,
convenience, and necessity.
(2) Alterations and modifications
The Joint Board may, from time to time,
recommend to the Commission modifications in the
57a
definition of the services that are supported by
Federal universal service support mechanisms.
(3) Special services
In addition to the services included in the definition
of universal service under paragraph (1), the
Commission may designate additional services for
such support mechanisms for schools, libraries, and
health care providers for the purposes of subsection
(h).
(d) Telecommunications carrier contribution
Every telecommunications carrier that provides
interstate telecommunications services shall contribute,
on an equitable and nondiscriminatory basis, to the
specific, predictable, and sufficient mechanisms
established by the Commission to preserve and advance
universal service. The Commission may exempt a
carrier or class of carriers from this requirement if the
carrier’s telecommunications activities are limited to
such an extent that the level of such carrier’s
contribution to the preservation and advancement of
universal service would be de minimis. Any other
provider of interstate telecommunications may be
required to contribute to the preservation and
advancement of universal service if the public interest
so requires.
(e) Universal service support
After the date on which Commission regulations
implementing this section take effect, only an eligible
telecommunications carrier designated under section
58a
214(e) of this title shall be eligible to receive specific
Federal universal service support. A carrier that
receives such support shall use that support only for the
provision, maintenance, and upgrading of facilities and
services for which the support is intended. Any such
support should be explicit and sufficient to achieve the
purposes of this section.
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