Petition for Writ of Certiorari — Federal Communications Commission, et al., Petitioners v. Consumers' Research, et al.

Supreme Court briefSep 30, 2024

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No. XX-XX

In the Supreme Court of the United States

FEDERAL COMMUNICATIONS COMMISSION, ET AL.,

PETITIONERS

CONSUMERS’ RESEARCH, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

P. MICHELE ELLISON

General Counsel

JACOB M. LEWIS

Deputy General Counsel

JAMES M. CARR

MATTHEW J. DUNNE

Counsel

Federal Communications

Commission

Washington, DC 20554

ELIZABETH B. PRELOGAR

Solicitor General

Counsel of Record

BRIAN M. BOYNTON

Principal Deputy Assistant

Attorney General

MALCOLM L. STEWART

Deputy Solicitor General

VIVEK SURI

Assistant to the Solicitor

General

MARK B. STERN

GERARD J. SINZDAK

Attorneys

Department of Justice

Washington, D.C. 20530-0001

SupremeCtBriefs@usdoj.gov

(202) 514-2217

QUESTIONS PRESENTED

In 47 U.S.C. 254, Congress required the Federal

Communications Commission (Commission) to operate

universal service subsidy programs using mandatory

contributions from telecommunications carriers. The

Commission has appointed a private company as the

programs’ Administrator, authorizing that company to

perform administrative tasks such as sending out bills,

collecting contributions, and disbursing funds to beneficiaries. The questions presented are as follows:

1. Whether Congress violated the nondelegation

doctrine by authorizing the Commission to determine,

within the limits set forth in Section 254, the amount

that providers must contribute to the Fund.

2. Whether the Commission violated the nondelegation doctrine by using the Administrator’s financial projections in computing universal service contribution

rates.

3. Whether the combination of Congress’s conferral

of authority on the Commission and the Commission’s

delegation of administrative responsibilities to the Administrator violates the nondelegation doctrine.

(I)

PARTIES TO THE PROCEEDING

The following parties are petitioners here and were

respondents below: the Federal Communications Commission and the United States of America.

The following parties are respondents here and were

petitioners below: Consumers’ Research; Cause Based

Commerce, Inc.; Joseph Bayly; Suzanne Bettac; Kersten Conway; Lynn Gibbs; Paul Gibbs; Kwang Ja

Kerby; Tom Kirby; Robert Kull; Deanna Roth; Jeremy

Roth; and Rhonda Thomas.

The following parties were intervenors below: Benton Institute for Broadband and Society; Center for Media Justice, d/b/a MediaJustice; Competitive Carriers

Association; National Digital Inclusion Alliance; National Telecommunications Cooperative Association,

d/b/a NTCA—The Rural Broadband Association;

Schools, Health and Libraries Broadband Coalition;

and U.S. Telecom—The Broadband Association.

RELATED PROCEEDING

United States Court of Appeals (5th Cir.):

Consumers’ Research v. FCC, No. 22-60008

(July 24, 2024)

(II)

TABLE OF CONTENTS

Page

Opinions below .............................................................................. 1

Jurisdiction .................................................................................... 1

Statutory provisions involved ...................................................... 2

Statement:

A. Universal Service Fund .................................................... 2

B. Proceedings below ............................................................. 6

Reasons for granting the petition ............................................... 9

A. The Fifth Circuit’s decision is incorrect ....................... 10

1. Congress did not delegate legislative power to

the Commission ......................................................... 10

2. The Commission did not delegate governmental

power to the Administrator ..................................... 19

3. The court of appeals’ “combination” theory is

wrong.......................................................................... 24

B. The questions presented warrant this Court’s

review ............................................................................... 26

C. This case is an appropriate vehicle for resolving the

questions presented ........................................................ 29

D. In the alternative, the Court should hold this

petition for a writ of certiorari pending the Court’s

resolution of Wisconsin Bell .......................................... 32

Conclusion ................................................................................... 33

Appendix A — En banc court of appeals opinion

(July 24, 2024) ............................................. 1a

Appendix B — Court of appeals panel opinion

(Mar. 24, 2023) ........................................ 125a

Appendix C — FCC public notice (Dec. 13, 2021) ............ 141a

Appendix D — USAC contribution base report

(Dec. 2, 2021) ........................................... 150a

Appendix E — Court of appeals order granting

rehearing (June 29, 2023) ...................... 160a

Appendix F — Statutory provision.................................... 162a

(III)

TABLE OF AUTHORITIES

Cases:

Page

Agency for International Development v. Alliance

for Open Society International, Inc.,

591 U.S. 430 (2020).............................................................. 28

A.L.A. Schechter Poultry Corp. v. United States,

295 U.S. 495 (1935).............................................................. 11

Alenco Communications, Inc. v. FCC,

201 F.3d 608 (5th Cir. 2000) ............................................... 14

American Power & Light Co. v. SEC,

329 U.S. 90 (1946) ............................................................... 11

AT&T, Inc. v. FCC, 886 F.3d 1236 (D.C. Cir. 2018) ............. 2

Blodgett v. Holden, 275 U.S. 142 (1927) .............................. 27

Carter v. Carter Coal Co., 298 U.S. 238 (1936) ................... 19

CFPB v. Community Financial Services Ass’n of

America, Ltd., 601 U.S. 416 (2024) ................................... 18

Changes to the Board of Directors of the National

Exchange Carrier Ass’n, In re,

12 FCC Rcd 18,400 (1997) .................................................... 4

Consumers’ Research v. FCC:

67 F.4th 773 (6th Cir. 2023), cert. denied,

144 S. Ct. 2628 (2024) .......................................... 14, 26

88 F.4th 917 (11th Cir. 2023), cert. denied,

144 S. Ct. 2629 (2024) .......................................... 26, 27

Davis v. FEC, 554 U.S. 724 (2008) ....................................... 30

DHS v. Thuraissigiam, 591 U.S. 103 (2020) ...................... 28

Exxon Mobil Corp. v. Saudi Basic

Industries Corp., 544 U.S. 280 (2005) ............................... 31

Federal Energy Administration v. Algonquin SNG,

Inc., 426 U.S. 548 (1976) ..................................................... 17

Free Enterprise Fund v. PCAOB,

561 U.S. 477 (2010).............................................................. 25

Gibbons v. Ogden, 9 Wheat. 1 (1824) ................................... 17

Cases—Continued:

Page

Gundy v. United States, 588 U.S. 128 (2019)...................... 11

Helix Energy Solutions Group, Inc. v. Hewitt,

598 U.S. 39 (2023) ............................................................... 29

Iancu v. Brunetti, 588 U.S. 388 (2019) ................................ 27

J.W. Hampton, Jr., & Co. v. United States,

276 U.S. 394 (1928)........................................................ 11, 17

Kingdomware Technologies, Inc. v. United States,

579 U.S. 162 (2016).............................................................. 30

Lichter v. United States, 334 U.S. 742 (1948) ..................... 16

National Broadcasting Co. v. United States,

319 U.S. 190 (1943).............................................................. 11

Pensacola Telegraph Co. v. Western Union

Telegraph Co., 96 U.S. 1 (1877) ......................................... 17

Pierce County v. Guillen, 537 U.S. 129 (2003) ................... 17

Qwest Communications International, Inc. v. FCC.,

398 F.3d 1222 (10th Cir. 2005) ..................................... 13, 16

Qwest Corp. v. FCC, 258 F.3d 1191 (10th Cir. 2001) .... 13, 16

Rural Cellular Ass’n v. FCC:

588 F.3d 1095 (D.C. Cir. 2009) ....................................... 14

685 F.3d 1083 (D.C. Cir. 2012) ....................................... 27

Skinner v. Mid-America Pipeline Co.,

490 U.S. 212 (1989).............................................................. 17

Sunshine Anthracite Coal Co. v. Adkins,

310 U.S. 381 (1940)............................................ 19, 20, 22, 25

Texas Office of Public Utility Counsel v. FCC,

183 F.3d 393 (5th Cir. 1999) ............................................... 16

United States v. Arthrex, Inc., 594 U.S. 1 (2021) ............... 22

Universal Service Contribution

Methodology, In re, 31 FCC Rcd 13,220 (2016)............... 23

Verizon Communications Inc. v. FCC,

535 U.S. 467 (2002)................................................................ 2

Vidal v. Elster, 602 U.S. 286 (2024) ..................................... 28

Cases—Continued:

Page

Whitman v. American Trucking Ass’ns,

531 U.S. 457 (2001).................................................. 12, 16, 18

Yakus v. United States, 321 U.S. 414 (1944) ................. 11, 18

Constitution, statutes, and regulations:

U.S. Const.:

Art. I, § 1 .......................................................................... 11

Art. I, § 8, Cl. 3 ................................................................ 17

Art. II ............................................................................... 25

Communications Act of 1934, 47 U.S.C. 151 et seq............... 2

47 U.S.C. 151 ...................................................................... 2

47 U.S.C. 153(53) ............................................................. 13

47 U.S.C. 254 ............ 1, 7-9, 11, 15-18, 24, 26, 27, 32, 162a

47 U.S.C. 254(a) ....................................................... 3, 162a

47 U.S.C. 254(b) ............................................3, 12, 13, 163a

47 U.S.C. 254(b)(1) .......................................... 12, 14, 163a

47 U.S.C. 254(b)(2) ................................................ 12, 163a

47 U.S.C. 254(b)(3) ............................................ 3, 12, 163a

47 U.S.C. 254(b)(4) ................................................ 12, 163a

47 U.S.C. 254(b)(5) ................................................ 12, 164a

47 U.S.C. 254(b)(6) ................................................ 12, 164a

47 U.S.C. 254(b)(7) ................................................ 16, 164a

47 U.S.C. 254(c) ..................................................... 13, 164a

47 U.S.C. 254(c)(1) ........................................3, 13, 15, 164a

47 U.S.C. 254(c)(1)(A) ............................................. 3, 165a

47 U.S.C. 254(d) ................................................. 3, 13, 165a

47 U.S.C. 254(e) ............................................3, 13, 14, 166a

47 U.S.C. 254(h) ............................................... 13, 14, 167a

False Claims Act, 31 U.S.C. 3721 et seq. ............................. 32

31 U.S.C. 3729(b)(2)(A)(i) ............................................... 32

31 U.S.C. 3729(b)(2)(A)(ii)(I) .......................................... 32

VII

Statutes and regulations—Continued:

Page

Telecommunications Act of 1996,

Pub. L. No. 104-104, 110 Stat. 56 ........................................ 2

28 U.S.C. 2344 ........................................................................ 30

47 C.F.R.:

Section 54.101 .................................................................... 3

Sections 54.302-54.322....................................................... 3

Section 54.410 .................................................................. 20

Sections 54.500-54.523....................................................... 3

Section 54.502(a) ................................................................ 3

Section 54.507 .................................................................. 20

Sections 54.600-54.633....................................................... 3

Sections 54.604-54.606..................................................... 20

Section 54.701(a) ................................................................ 4

Sections 54.701-54.717....................................................... 4

Section 54.702(b)................................................................ 4

Section 54.702(c) .......................................................... 4, 21

Sections 54.400-54.424....................................................... 3

Section 54.703(b)................................................................ 4

Section 54.709 ................................................................ 4, 5

Section 54.709(a) .............................................................. 20

Section 54.709(a)(2) ............................................... 5, 20, 22

Section 54.709(a)(3) ......................................... 5, 20, 21, 22

Section 54.711(a) .............................................................. 20

Section 54.712(a) ................................................................ 6

Section 54.715(c) ................................................................ 4

Section 54.717 ................................................................ 2, 3

Sections 54.719-54.725....................................................... 5

Section 54.719(b).............................................................. 21

Sections 54.801-54.1524..................................................... 3

VIII

Miscellaneous:

Page

Amended and Restated By-Laws of Universal

Service Administrative Company

(rev. Jan. 26, 2024), https://www.usac.org/

wp-content/uploads/about/documents/

leadership/usacbylaws.pdf ................................................... 4

Federal Communications Commission:

Proposed Fourth Quarter 2023 Universal Service

Contribution Factor, DA 23-843,

2023 WL 6036327 (released Sept. 13, 2023) ............ 23

Proposed Third Quarter 2023 Universal Service

Contribution Factor, DA 23-507,

2023 WL 4012359 (released June 14, 2023) ............. 23

Revised Second Quarter 2003 Universal Service

Contribution Factor, 188 FCC Rcd 5097

(released Mar. 21, 2003) ............................................ 23

Letter from Mark Stephens, Managing Dir., FCC,

to Radha Sekar, Chief Executive Officer,

Universal Service Administrative Co.

(Jan. 14, 2021), https://www.fcc.gov/sites/

default/files/fcc-letter-to-usac-01142021.pdf .................... 24

In the Supreme Court of the United States

No. XX-XX

FEDERAL COMMUNICATIONS COMMISSION, ET AL.,

PETITIONERS

CONSUMERS’ RESEARCH, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

The Solicitor General, on behalf of the Federal Communications Commission and the United States of

America, respectfully petitions for a writ of certiorari to

review the judgment of the United States Court of Appeals for the Fifth Circuit in this case.

OPINIONS BELOW

The opinion of the en banc court of appeals (App., infra, 1a-124a) is reported at 109 F.4th 743. The opinion

of the court of appeals panel (App., infra, 125a-141a) is

reported at 63 F.4th 441.

JURISDICTION

The judgment of the en banc court of appeals was entered on July 24, 2024. The jurisdiction of this Court is

invoked under 28 U.S.C. 1254(1).

(1)

STATUTORY PROVISIONS INVOLVED

Pertinent statutory provisions are reproduced in the

appendix. App., infra, 162a-187a.

STATEMENT

A. Universal Service Fund

1. In the Communications Act of 1934 (Act), 47

U.S.C. 151 et seq., Congress established the Federal

Communications Commission (FCC or Commission).

One of the Act’s fundamental goals, and one of the

FCC’s core missions, is promoting universal service—

i.e., ensuring the availability of affordable and reliable

telecommunications services throughout the United

States. See AT&T, Inc. v. FCC, 886 F.3d 1236, 1241

(D.C. Cir. 2018). Congress referenced that mission in

the statutory text, directing the agency to “make available, so far as possible, to all the people of the United

States, * * * a rapid, efficient, Nation-wide, and worldwide wire and radio communication service with adequate facilities at reasonable charges.” 47 U.S.C. 151.

For the first half-century of its existence, the FCC

achieved universal service primarily by regulating

rates. See Verizon Communications Inc. v. FCC, 535

U.S. 467, 480 (2002). For example, the Commission required telephone monopolies to charge below-cost rates

in rural areas, while allowing them to charge above-cost

rates in cities. See ibid. Through that approach, urban

customers effectively subsidized the provision of telephone service to rural customers. See ibid.

In 1996, Congress overhauled the Act in order to

promote competition and eliminate monopolies in the

telecommunications industry. See Telecommunications

Act of 1996, Pub. L. No. 104-104, 110 Stat. 56. As part

of those reforms, Congress established a new framework for achieving universal service. See 47 U.S.C. 254.

The amended Act directs the FCC to establish a set of

programs known collectively as the Universal Service

Fund (Fund). See 47 U.S.C. 254(a). It requires carriers

that provide interstate telecommunications services to

“contribute” to the Fund “on an equitable and nondiscriminatory basis.” 47 U.S.C. 254(d). The Commission

must use the money in the Fund to subsidize universal

service. See 47 U.S.C. 254(e).

The Act’s provisions guide and limit the FCC’s exercise of that authority. The Act requires the Commission

to “base policies for the preservation and advancement

of universal service” on a series of specific “principles”

—for example, the principle that consumers in rural areas “should have access to telecommunications and information services * * * that are reasonably comparable to those services provided in urban areas.” 47

U.S.C. 254(b)(3); see 47 U.S.C. 254(b). The Act also requires the Commission, when deciding whether to subsidize a service, to consider certain factors—for example, the extent to which the service in question is “essential to education, public health, or public safety.” 47

U.S.C. 254(c)(1)(A); see 47 U.S.C. 254(c)(1).

In accordance with the Act, the Commission has established four universal service programs, which assist

(1) deployment in remote areas, (2) low-income consumers, (3) schools and libraries, and (4) rural healthcare

providers. See 47 C.F.R. 54.302-54.322, 54.400-54.424,

54.500-54.523, 54.600-54.633, 54.801-54.1524. All four

programs subsidize telephone and broadband services,

see 47 C.F.R. 54.101, and the program for schools and

libraries subsidizes internal connections as well, see 47

C.F.R. 54.502(a).

2. In 1997, the FCC directed the creation of the Universal Service Administrative Company (Company) to

help it administer the Fund. See In re Changes to the

Board of Directors of the National Exchange Carrier

Ass’n, Inc., 12 FCC Rcd 18,400, 18,418-18,419 (1997).

The Company is a private, not-for-profit corporation

chartered in Delaware. See App., infra, 59a.

Although the Company is a private body, it remains

subject to the Commission’s oversight and control. Its

sole stockholder, an association of carriers, must “act in

compliance with the [FCC’s] Rules and Orders when exercising its stockholder duties and powers.” Amended

and Restated By-Laws of Universal Service Administrative Company, Art. I, ¶ 1 (rev. Jan. 26, 2024). FCC

rules identify the groups represented on the Company’s

Board of Directors (e.g., consumers, carriers, and recipients of universal service funding), and the FCC Chair

selects directors after reviewing nominations from

those groups. See 47 C.F.R. 54.703(b). The Company

also must obtain the Commission’s approval of its

budget. See 47 C.F.R. 54.715(c).

The FCC has “appointed” the Company as the

Fund’s “permanent Administrator.” 47 C.F.R. 54.701(a).

In that role, the Company provides financial projections

that the FCC uses each quarter in computing the

amounts of universal service contributions. See 47

C.F.R. 54.709. The Administrator also sends out bills

and collects contributions. See 47 C.F.R. 54.702(b). Finally, the Administrator disburses money to program

beneficiaries in accordance with FCC rules. See ibid.

Although the Administrator performs administrative tasks on the FCC’s behalf, it exercises no independent regulatory power. It “may not make policy, interpret unclear provisions of the statute or rules, or interpret the intent of Congress.” 47 C.F.R. 54.702(c). It

must comply with the Commission’s rules, see 47 C.F.R.

54.701-54.717, and any party that is aggrieved by its decisions may request de novo review by the Commission,

see 47 C.F.R. 54.719-54.725.

3. The FCC’s rules prescribe a process for computing each carrier’s quarterly contribution to the Fund.

See 47 C.F.R. 54.709. At least 60 days before the beginning of each quarter, the Administrator must submit to

the Commission its projections of the expenses (benefits plus administrative overhead) that the four universal service programs will incur, along with “the basis for

those projections.” 47 C.F.R. 54.709(a)(3). And at least

30 days before the beginning of each quarter, the Administrator must submit a projection of the total revenues that telecommunications carriers will earn from

interstate and international telecommunications services, based on financial information provided by those

carriers. See ibid.

The FCC uses those projections to calculate a “contribution factor”—i.e., a number that is based on the ratio of the projected expenses to the projected revenues.

47 C.F.R. 54.709(a)(2). The Commission then announces

the projections and proposed contribution factor to the

public. See 47 C.F.R. 54.709(a)(3). The FCC may revise

the projections (and thus the contribution factor) and

may set them “at amounts that the Commission determines will serve the public interest.” Ibid. If the Commission takes no action within 14 days after the announcement, however, the projections and contribution

factor are “deemed approved.” Ibid.

Once the FCC approves the contribution factor, the

Administrator calculates each carrier’s contribution by

applying the factor to that carrier’s “contribution base”

(generally, the carrier’s interstate and international telecommunications revenues). 47 C.F.R. 54.709(a)(3).

For example, if the contribution factor is 25%, each carrier would owe 25% of its interstate and international

telecommunications revenues. Carriers may pass the

cost of their contributions on to customers. See 47

C.F.R. 54.712(a).

B. Proceedings Below

1. In November 2021, the Administrator submitted

its projections of expenses and revenues for the first

quarter of 2022. See App., infra, 150a-159a. Based on

those projections, the Commission proposed a contribution factor of 25.2%. See id. at 141a-149a.

Respondents—a nonprofit organization, a carrier,

and a group of consumers—filed comments requesting

that the FCC set the contribution factor at 0% instead.

See Gov’t C.A. Br. 17. Respondents did not object to

the Administrator’s projections or to the Commission’s

computation of the contribution factor based on those

projections. Respondents instead argued that the universal service program was itself unlawful. See App.,

infra, 11a. They contended that Congress had unconstitutionally delegated legislative power to the FCC and

that the Commission had unconstitutionally redelegated

power to the Administrator. See ibid.

The Commission took no further action within 14

days after publishing the proposed contribution factor.

See App., infra, 11a. As a result, the factor was deemed

approved. See ibid.

2. Respondents filed a petition for review in the

Fifth Circuit. See App., infra, 11a. A unanimous panel

denied the petition. See id. at 125a-140a.

The panel first rejected the FCC’s argument that the

petition for review was untimely because “any challenge

to § 254 should have come when Congress originally enacted it.” App., infra, 128a. The panel reasoned that

the Commission had “reapplied” Section 254 when it

adopted the contribution factor for the first quarter of

2022 and that respondents therefore could properly

raise their constitutional claim as part of their challenge

to that agency action. Id. at 129a.

On the merits, the panel rejected respondents’ claim

that Congress in enacting Section 254 had unconstitutionally delegated legislative power to the FCC. See

App., infra, 132a-137a. The panel determined that Section 254 sets forth “numerous intelligible principles”

that constrain the FCC’s exercise of its authority. Id.

at 137a. The panel also rejected respondents’ claim that

the Commission had unconstitutionally delegated governmental power to the Company. See id. at 137a-140a.

The panel emphasized that the Company lacks independent regulatory authority and functions “subordinate[ly]” to the Commission. Id. at 140a.

3. The court of appeals granted respondents’ petition for rehearing en banc. See App., infra, 160a-161a.

The en banc court granted respondents’ petition for review by a vote of 9-7. See id. at 1a-118a.

The en banc court held that no procedural obstacle

prevented it from reaching the merits of the petition for

review. See App., infra, 11a-18a. The court observed

that respondents’ challenge to the specific FCC action

at issue here—i.e., the contribution factor that the Commission had established for the first quarter of 2022—

“might be moot” because sovereign immunity might

preclude recovery of money already paid into the Universal Service Fund. Id. at 13a. The court held, however, that the case “is nonetheless justiciable because it

is capable of repetition yet evading review.” Ibid. The

court then rejected the argument that, because the

Commission had prevailed against respondents in par-

allel cases in the Sixth and Eleventh Circuits, principles

of issue preclusion prohibited respondents from relitigating their nondelegation challenges in the Fifth Circuit. See id. at 14a-18a. The court concluded that the

FCC had forfeited that defense by raising it only after

this Court’s denials of certiorari in the Sixth and Eleventh Circuit cases, rather than immediately after the

Sixth and Eleventh Circuits’ judgments. See id. at 18a.

On the merits, the en banc court stated that “Congress through [Section] 254 may have delegated legislative power to FCC because it purported to confer

upon FCC the power to tax without supplying an intelligible principle to guide FCC’s discretion.” App., infra,

19a. The court characterized Section 254’s limits on the

Commission’s authority as “minimal,” “contentless,” “a

hollow shell,” and “so amorphous that no reviewing

court could ever possibly invalidate any FCC action.”

Id. at 27a, 29a, 41a. The court found those nondelegation concerns to be “especially salient” because Section

254 “implicates the taxing power”—a “quintessentially

legislative” power. Id. at 19a, 41a n.13.

The en banc court then stated that the FCC “may

have impermissibly delegated the taxing power to private entities.” App., infra, 19a. The court concluded

that the Company’s projections could “take legal effect

without formal FCC approval.” Id. at 49a. The court

also expressed the view that, as a practical matter, the

Commission “ ‘rubber stamp[s]’ whatever contribution

amount [the Company] proposes.” Id. at 50a (citation

omitted). Finally, the court stated that Section 254 does

not authorize the FCC to delegate power to the Company in the first place. See id. at 55a.

Although the en banc court was “highly skeptical” of

the constitutionality of Congress’s grant of power to the

Commission, and of the Commission’s delegation of administrative responsibilities to the Company, the court

did not decide whether either conferral of authority

standing alone would violate the Constitution. See

App., infra, 64a. The court instead held that “the combination of Congress’s sweeping delegation to FCC and

FCC’s unauthorized subdelegation to [the Company] violates the Legislative Vesting Clause.” Ibid. In the

court’s view, the “double-layered delegation” at issue in

this case constituted “a historical anomaly” and undermined “democratic accountability.” Id. at 73a-74a.

Judge Elrod, joined by two other judges, issued a

concurring opinion in which she concluded that “Congress’s delegation of legislative power to the FCC and

the FCC’s delegation of the taxing power to a private

entity each individually contravene[s] the separation of

powers.” App., infra, 82a. Judge Ho issued a concurring opinion in which he emphasized that “all legislative

powers” are “exercised by the people we elect.” Id. at

85a.

Judge Stewart, joined by six judges, dissented. See

App., infra, 88a-114a. He expressed the view that Section 254 “evinces a clear intelligible principle delimiting

agency discretion”; that the en banc court of appeals’

analysis reflected an “exaggerated conception of [the

Company’s] role and discretion”; and that “delegations

of the taxing power are not subject to stricter scrutiny.”

Id. at 97a, 103a-104a. Judge Higginson, joined by four

judges, also dissented. See id. at 115a-124a. He criticized the court’s “ ‘combination’ theory” as inconsistent

with this Court’s precedents. Id. at 116a.

REASONS FOR GRANTING THE PETITION

Universal service has been an essential component

of federal telecommunications policy ever since the

FCC was established in 1934. Today, universal service

programs ensure the availability of vital telecommunications services to schools, libraries, rural health care

providers, and rural and low-income customers.

In the decision below, however, the en banc Fifth

Circuit held that the universal service contribution system violates the nondelegation doctrine. That decision

conflicts with decisions of the Sixth and Eleventh Circuits, which have rejected similar nondelegation challenges. It also invalidates the system that the Commission has used for a quarter century to implement an important Act of Congress. If left in place, the decision

will upend the universal service programs, to the detriment of millions of consumers nationwide. This Court

should grant the petition for a writ of certiorari and reverse.

A. The Fifth Circuit’s Decision Is Incorrect

The en banc Fifth Circuit erred in concluding that

“the combination” of Congress’s delegation of power to

the Commission and the Commission’s delegation of administrative responsibilities to the Administrator violates the Constitution. App., infra, 19a. Congress did

not delegate legislative power to the Commission. The

Commission did not delegate governmental power to

the Administrator. Nor did the combination of those

two conferrals of responsibility create a constitutional

violation.

1. Congress did not delegate legislative power to the

Commission

The court of appeals concluded that Congress “may

have delegated legislative power” to the FCC by empowering the Commission to determine the amount of

universal service contributions. App., infra, 19a. Section 254 does not effect any such delegation.

a. Article I vests Congress with “[a]ll legislative

Powers” granted by the Constitution. U.S. Const. Art.

I, § 1. Congress may not delegate those legislative powers to the Executive Branch. See A.L.A. Schechter

Poultry Corp. v. United States, 295 U.S. 495, 529 (1935).

But Congress may authorize executive agencies to exercise substantial “discretion” in implementing and enforcing the laws that Congress enacts. J.W. Hampton,

Jr., & Co. v. United States, 276 U.S. 394, 406 (1928).

So long as a statute sets forth an “intelligible principle” to guide the executive agency’s actions, it effects a

lawful grant of discretion rather than an unlawful delegation of legislative power. See J.W. Hampton, 276

U.S. at 409. A statute satisfies that requirement if it

identifies “the general policy, the public agency which

is to apply it, and the boundaries of this delegated authority.” American Power & Light Co. v. SEC, 329 U.S.

90, 105 (1946). That test is “not demanding.” Gundy v.

United States, 588 U.S. 128, 146 (2019) (plurality opinion). “Only twice in this country’s history” has the

Court held that a statute crossed that line—“in each

case because ‘Congress had failed to articulate any policy or standard’ to confine discretion.” Ibid. (citation

omitted).

By contrast, this Court has “over and over upheld

even very broad delegations.” Gundy, 588 U.S. at 146

(plurality opinion). The court has held, for example,

that Congress may empower agencies to regulate in the

“public interest,” see National Broadcasting Co. v.

United States, 319 U.S. 190, 225-226 (1943); to set “fair

and equitable” prices, see Yakus v. United States, 321

U.S. 414, 422 (1944); or to establish air-quality stand-

ards that are “requisite to protect the public health,”

see Whitman v. American Trucking Ass’ns, 531 U.S.

457, 472-476 (2001).

The statute at issue here provides far more detailed

guidance than others that this Court has upheld. First,

the Act requires the Commission to “base policies for

the preservation and advancement of universal service”

on six specific “principles,” 47 U.S.C. 254(b):

•

“Quality services should be available at just, reasonable, and affordable rates.” 47 U.S.C. 254(b)(1).

•

“Access to advanced telecommunications and information services should be provided in all regions of

the Nation.” 47 U.S.C. 254(b)(2).

•

“Consumers in all regions of the Nation * * * should

have access to telecommunications and information

services * * * that are reasonably comparable to

those services provided in urban areas and that are

available at rates that are reasonably comparable to

the rates charged for similar services in urban areas.” 47 U.S.C. 254(b)(3).

•

“All providers of telecommunications services should

make an equitable and nondiscriminatory contribution to the preservation and advancement of universal service.” 47 U.S.C. 254(b)(4).

•

“There should be specific, predictable and sufficient

Federal and State mechanisms to preserve and advance universal service.” 47 U.S.C. 254(b)(5).

•

“Elementary and secondary schools and classrooms,

health care providers, and libraries should have access to advanced telecommunications services.” 47

U.S.C. 254(b)(6).

Section 254(b) allows the FCC to “balance the principles

against one another when they conflict.” Qwest Corp. v.

FCC, 258 F.3d 1191, 1200 (10th Cir. 2001) (Qwest I). But

the Commission “may not depart from them altogether

to achieve some other goal.” Ibid.; see Qwest Communications International, Inc. v. FCC, 398 F.3d 1222,

1234 (10th Cir. 2005) (Qwest II).

Second, the Act specifies the entities that must pay

universal service contributions and the terms on which

they must do so. See 47 U.S.C. 254(d). “Every telecommunications carrier that provides interstate telecommunications services” must contribute toward universal

service. Ibid. Those contributions must be “equitable

and nondiscriminatory.” Ibid.

Third, the Act specifies the types of services that the

FCC may fund. See 47 U.S.C. 254(c). Generally, only

“telecommunications services” may receive universal

service support. 47 U.S.C. 254(c)(1); see 47 U.S.C.

153(53) (defining “telecommunications service”). And

in determining which telecommunications services to

fund, the Commission must consider the extent to which

such services “are essential to education, public health,

or public safety”; have “been subscribed to by a substantial majority of residential customers”; “are being

deployed in public telecommunications networks by telecommunications carriers”; and “are consistent with

the public interest, convenience, and necessity.” 47

U.S.C. 254(c)(1).

Fourth, the Act identifies the beneficiaries that may

receive subsidies and the ways in which the subsidies

may be used. See 47 U.S.C. 254(e) and (h). “[O]nly an

eligible telecommunications carrier designated under

[47 U.S.C. 214(e)] shall be eligible to receive specific

Federal universal service support.” 47 U.S.C. 254(e);

see 47 U.S.C. 214(e) (specifying criteria for designating

telecommunications carriers eligible to receive universal service funding). A carrier may use the funds “only

for the provision, maintenance, and upgrading of facilities and services for which the support is intended.” 47

U.S.C. 254(e). The Act also includes detailed provisions

governing subsidies for rural healthcare providers,

schools, and libraries. See 47 U.S.C. 254(h).

Finally, the Act requires universal service support to

be “sufficient to achieve the purposes” of Section 254,

47 U.S.C. 254(e), and specifies that services should be

“affordable,” 47 U.S.C. 254(b)(1). Those provisions constrain the program’s overall size and budget. The sufficiency requirement precludes the Commission from expanding the program beyond “what is ‘sufficient to

achieve the purposes of ’ universal service.” Consumers’

Research v. FCC, 67 F.4th 773, 794 (6th Cir. 2023) (citation omitted), cert. denied, 144 S. Ct. 2628 (2024); see

Alenco Communications, Inc. v. FCC, 201 F.3d 608, 620

(5th Cir. 2000) (“[E]xcessive funding may itself violate

the sufficiency requirements of the Act.”). And the affordability principle precludes the FCC from allowing

the universal service contribution to become “so large it

actually makes telecommunications services less ‘affordable.’ ” Rural Cellular Ass’n v. FCC, 588 F.3d 1095,

1103 (D.C. Cir. 2009) (citation omitted); see Alenco, 201

F.3d at 620 (“Because universal service is funded by a

general pool subsidized by all telecommunications providers —and thus indirectly by the customers—excess subsidization in some cases may detract from universal service by causing rates unnecessarily to rise, thereby

pricing some consumers out of the market.”).

The Act, in short, provides comprehensive guidance

to the FCC on how to implement Congress’s universal

service policy. It sets out “from whom funds are exacted,” “who receives the benefit of the funds,” and “what

minimum standards of service must be provided.” App.,

infra, 93a (Stewart, J., dissenting). The Act therefore

effects a permissible grant of discretionary authority,

not an impermissible delegation of legislative power.

b. The court of appeals nonetheless concluded that

Section 254 provides the Commission with “no guidance

whatsoever.” App., infra, 30a (citation and emphasis

omitted). The court’s stated bases for that conclusion

lack merit.

The court of appeals first stated that the FCC is authorized to use contributions “to fund whatever projects

it might like.” App., infra, 27a-28a. That is incorrect.

The Act defines “universal service” as a “level of telecommunications services” established by the Commission. 47 U.S.C. 254(c)(1). The Commission accordingly

may use the Fund only for telecommunications services

—not for foreign aid, veterans’ benefits, highway maintenance, or other “projects” that the government “might

like.” App., infra, 28a. Further constraining the FCC,

the Act lists factors that the FCC must consider in deciding which telecommunications services to fund. See

47 U.S.C. 254(c)(1).

The court of appeals also stated that the Act’s standards are “amorphous”; that they leave the Commission

“at sea”; and that “no reviewing court could ever possibly invalidate any FCC action” under those standards.

App., infra, 27a, 31a, 41a. But the Act constrains the

FCC’s implementation of universal service programs

more than the en banc court suggested. Although the

court viewed the Act as imposing no judicially enforceable limits on the Commission’s authority, “reviewing

court[s],” including the Fifth Circuit itself, previously

have “invalidate[d] FCC action” when the Commission

has deviated from the statutory principles. Id. at 41a;

see, e.g., Qwest II, 398 F.3d at 1232-1238; Qwest I, 258

F.3d at 1199-1200; Texas Office of Public Utility Counsel v. FCC, 183 F.3d 393, 406 (5th Cir. 1999). And while

the Act’s standards do not take the form of bright-line

rules, the nondelegation doctrine does not require Congress to adopt a “determinate criterion,” American

Trucking Ass’ns, 531 U.S. at 475 (citation omitted), or

“a specific formula,” Lichter v. United States, 334 U.S.

742, 785 (1948).

The court of appeals emphasized that Section 254 authorizes the FCC to adopt additional universal service

principles beyond those listed in the Act. See App., infra, 28a. But the Commission’s power to adopt such

principles is itself constrained by an intelligible standard: the additional principles must be “necessary and

appropriate for the protection of the public interest,

convenience, and necessity,” and must be “consistent

with” the Act. 47 U.S.C. 254(b)(7). And in any event,

this case presents no question concerning the scope of

that authority, since the specific FCC order that respondents challenge does not adopt any such additional

principles.

c. The court of appeals stated that “the scope of permissible delegation varies with context,” and it cited

various factors that, in its view, distinguished Section

254 from other delegations that this Court has upheld.

App., infra, 33a. Those arguments, too, lack merit.

The court of appeals found it “especially salient” that

Section 254 “implicates the taxing power.” App., infra,

41a n.13. But Congress did not need to rely on its taxing

power to enact Section 254. The Constitution empowers

Congress to regulate “Commerce” “among the several

States.” U.S. Const. Art. I, § 8, Cl. 3. The commerce

power includes the authority to regulate the channels

and instrumentalities of interstate commerce, see

Pierce County v. Guillen, 537 U.S. 129, 147 (2003), such

as telecommunications networks, see Pensacola Telegraph Co. v. Western Union Telegraph Co., 96 U.S. 1, 9

(1877). And Congress may regulate commerce by requiring those engaged in commerce to pay money. See

Gibbons v. Ogden, 9 Wheat. 1, 202 (1824) (“[D]uties may

often be, and in fact often are, imposed on tonnage, with

a view to the regulation of commerce.”). The commerce

power therefore provides an independently sufficient

basis for Section 254’s requirement that carriers pay

universal service contributions.

In any event, this Court has specifically rejected “the

application of a different and stricter nondelegation

standard in cases where Congress delegates discretionary authority to the Executive under its taxing power.”

Skinner v. Mid-America Pipeline Co., 490 U.S. 212,

222-223 (1989). The Constitution’s text does not “distinguish Congress’ power to tax from its other enumerated

powers * * * in terms of the scope and degree of discretionary authority that Congress may delegate to the

Executive.” Id. at 220-221. “From its earliest days to

the present,” Congress “has varied the degree * * * of

discretionary authority delegated to the Executive” in

tax statutes. Id. at 221. And the Court has repeatedly

applied ordinary nondelegation principles in reviewing

tax laws. See, e.g., Federal Energy Administration v.

Algonquin SNG, Inc., 426 U.S. 548, 558-560 (1976); J.W.

Hampton, 276 U.S. at 409.

The court of appeals also found Section 254 “especially troubling because the statute insulates FCC from

the principal tool Congress has to control FCC’s univer-

sal service decisions—the appropriations power.” App.,

infra, 31a. But Congress exercised the appropriations

power in Section 254 itself by authorizing the FCC to

use the Fund for universal service programs. Congress

retains the authority to repeal that appropriation. The

court of appeals noted that Section 254 operates “outside the [annual] appropriations process,” id. at 32a, but

the Constitution does not require an annual appropriations process. It allows Congress to make “standing appropriations,” CFPB v. Community Financial Services

Ass’n of America, Ltd., 601 U.S. 416, 436 (2024), and a

court may not penalize Congress’s exercise of that

power by applying a stricter nondelegation standard.

Finally, the court of appeals asserted that Section

254 invites the Commission to make “policy” judgments

rather than purely “technical” judgments. App., infra,

34a. But a “certain degree of discretion,” and thus of

policymaking, “inheres in most executive” action.

American Trucking Ass’ns, 531 U.S. at 475 (citation

omitted). This Court has accordingly rejected the argument that the nondelegation doctrine precludes Congress from vesting executive agencies with authority to

make policy judgments. See, e.g., Yakus, 321 U.S. at

425-426 (“It is no objection that the [statute] * * *

call[s] for the exercise of judgment, and for the formulation of subsidiary administrative policy within the

prescribed statutory framework.”). And the Court has

“almost never felt qualified to second-guess Congress

regarding the permissible degree of policy judgment

that can be left to those executing or applying the law.”

American Trucking Ass’ns, 531 U.S. at 474-475 (citation omitted).

2. The Commission did not delegate governmental

power to the Administrator

The court of appeals separately determined that the

FCC “may have” unlawfully “subdelegat[ed]” legislative power to the Administrator, a private corporation.

App., infra, 19a. But the court’s analysis reflected an

“exaggerated conception of [the Administrator’s] role

and discretion.” Id. at 103a (Stewart, J., dissenting).

a. In Carter v. Carter Coal Co., 298 U.S. 238 (1936),

this Court explained that the Constitution prohibits the

federal government from transferring unchecked governmental power to a private entity. The statute at issue in that case allowed producers of two-thirds of the

coal in a particular district to set wages and hours for

all producers in that district, without review by any federal agency. See id. at 281-283. The Court held that the

statute violated the Constitution by delegating to “private persons” the unchecked “power to regulate the affairs of an unwilling minority.” Id. at 311.

In Sunshine Anthracite Coal Co. v. Adkins, 310 U.S.

381 (1940), however, this Court clarified that the federal

government may rely on private entities to assist it in

the performance of its functions. The statute at issue in

that case authorized local boards consisting of private

coal producers to propose minimum prices for coal, but

empowered the National Bituminous Coal Commission

(a governmental body) to approve, disapprove, or modify those prices. See id. at 388. The Court upheld the

scheme because the private boards “function[ed] subordinately” to a federal agency. Id. at 399. The Court

emphasized that the agency, not the boards, ultimately

“determine[d] the prices” and that the agency “ha[d]

authority and surveillance over the [private boards’] activities.” Ibid.

Here, as in Sunshine Anthracite, the relevant nongovernmental actor “function[s] subordinately to the”

responsible federal agency and is subject to the agency’s

“authority and surveillance.” Sunshine Anthracite,

310 U.S. at 399. The FCC, not the Administrator, determines, within the limits set by Congress, how much

carriers must pay. Under the FCC’s rules, the amount

of a carrier’s contribution depends “on a contribution

factor determined quarterly by the Commission.”

47 C.F.R. 54.709(a) (emphasis added). The Administrator simply helps the Commission compute the contribution factor by providing “projections” of the universal

service programs’ expenses and the carriers’ revenues.

47 C.F.R. 54.709(a)(3).

In making the required projections, the Administrator must act in accordance with the Commission’s rules.

Those rules establish detailed eligibility requirements

for universal service beneficiaries, see, e.g., 47 C.F.R.

54.410; impose caps on particular types of support, see,

e.g., 47 C.F.R. 54.507; and prescribe precise formulas

for calculating the amount of the subsidy, see, e.g., 47

C.F.R. 54.604-54.606. Those rules also require the Administrator to project total carrier revenues based on

the information contained in forms that the carriers file

each quarter. See 47 C.F.R. 54.709(a)(2), 54.711(a). The

specificity of those rules ensures that, in making the

projections, the Administrator performs a ministerial

task.

The FCC may exercise additional powers of supervision after the Administrator makes its projections for a

particular quarter. Projections of program expenses

“must be approved by the Commission before they are

used to calculate the quarterly contribution factor.” 47

C.F.R. 54.709(a)(3). To that end, the Administrator

must submit projections of the programs’ expenses at

least 60 days before the start of the quarter. See ibid.

It must also submit “the basis for those projections.”

Ibid. Those rules enable the Commission and its staff

to review (and if necessary revise) the projections before using them to calculate the contribution factor.

The Commission then uses those projections to compute a quarterly contribution factor, which it announces

in a public notice and on its website. See 47 C.F.R.

54.709(a)(3). The Commission “reserves the right” to

revise the factor within the 14-day period following the

issuance of the public notice. Ibid. Only if the FCC fails

to take further action during that 14-day period is the

factor “deemed approved.” Ibid. The Administrator

must then “calculate the amount of individual contributions” by “apply[ing] the quarterly contribution factor”

to each individual carrier’s revenues. Ibid.

Further limiting the Administrator’s role, a carrier

that is aggrieved by the Administrator’s actions may

seek de novo review before the Commission. See 47

C.F.R. 54.719(b). The FCC’s rules provide, moreover,

that the Administrator “may not make policy, interpret

unclear provisions of the statute or rules, or interpret

the intent of Congress.” 47 C.F.R. 54.702(c). If the statute or the rules “are unclear, or do not address a particular situation, the Administrator shall seek guidance

from the Commission.” Ibid. Thus, if the Administrator confronts an unsettled legal or policy issue in the

course of calculating projections (or taking any other

action), it must seek guidance from the FCC rather than

resolving the issue itself.

The Administrator, in short, performs an advisory

role; it has no independent substantive power to set the

contribution factor or the amount of individual carriers’

contributions. In performing that role under the FCC’s

“authority and surveillance,” Sunshine Anthracite, 310

U.S. at 399, the Administrator does not exercise governmental power.

b. The court of appeals nevertheless concluded that

the Commission “may have impermissibly delegated

the taxing power” to the Administrator. App., infra,

19a. The court’s analysis was flawed.

The court of appeals stated that, under the FCC’s

rules, the Administrator’s “projections take legal effect

without formal FCC approval” if the Commission takes

no further action within 14 days after announcing the

contribution factor. App., infra, 49a. But the projections have no independent legal effect. Only the contribution factor has legal effect, and it is “determined by

the Commission.” 47 C.F.R. 54.709(a)(2). The projections, in any event, “must be approved by the Commission before they are used to calculate the quarterly contribution factor.” 47 C.F.R. 54.709(a)(3). And the Commission may review the Administrator’s projections not

only during the 14-day period after the FCC announces

the contribution factor, but also before announcing the

factor in the first place. See pp. 20-21, supra.

The court of appeals also asserted that the Commission “rubber stamp[s]” the Administrator’s projections,

so that the FCC exercises only “de jure” rather than “de

facto” control. App., infra, 7a. That claim is both legally irrelevant and factually incorrect. As a legal matter, the relevant question is whether the Commission

has the “authority” to reject or modify the Administrator’s proposals, not how often the Commission exercises

that power in practice. Sunshine Anthracite, 310 U.S.

at 399; cf. United States v. Arthrex, Inc., 594 U.S. 1, 27

(2021) (plurality opinion) (“[A principal officer] need not

review every decision of the [inferior officer]. What

matters is that the [principal officer] have the discretion

to review decisions rendered by [inferior officers].”).

The court of appeals did not deny that the FCC retains

plenary authority to review and revise the projections.

As a factual matter, moreover, the FCC does conduct

meaningful review of the Administrator’s actions. On

several occasions, including twice in 2023, the Commission has departed from the Administrator’s projections

when calculating the quarterly contribution factor. See,

e.g., FCC, Proposed Fourth Quarter 2023 Universal Service Contribution Factor, DA 23-843, 2023 WL 6036327,

at *1 (released Sept. 13, 2023); FCC, Proposed Third

Quarter 2023 Universal Service Contribution Factor,

DA 23-507, 2023 WL 4012359, at *1 (released June 14,

2023); FCC, Revised Second Quarter 2003 Universal

Service Contribution Factor, 18 FCC Rcd 5097, 5097

(released Mar. 21, 2003). The Commission also has

awarded relief when it has disagreed with the Administrator’s calculation of the contributions owed by individual carriers. See, e.g., In re Universal Service Contribution Methodology, 31 FCC Rcd 13,220, 13,220 (2016).

The relative infrequency with which the FCC revises

the Administrator’s decisions reflects the Administrator’s limited role, the detailed regulations constraining

its actions, and the Commission’s general oversight of

its activities. See App., infra, 121a (Higginson, J., dissenting).

The court of appeals cited previous instances of

fraud in the program. See App., infra, 8a. But FCC

rules require the Administrator to undergo annual audits to prevent waste, fraud, and abuse. See 47 C.F.R.

54.717. The Commission also regularly directs the Administrator to take corrective action to recover improper

payments made in the past and eliminate such payments

in the future. See, e.g., Letter from Mark Stephens, Managing Dir., FCC, to Radha Sekar, CEO, USAC (Jan. 14,

2021), https://www.fcc.gov/sites/default/files/fcc-letterto-usac-01142021.pdf. More fundamentally, although

past instances of waste and fraud are “concerning,”

“this has never been enough to declare a coequal political branch’s act unconstitutional.” App., infra, 122a

(Higginson, J., dissenting).

Finally, the court of appeals stated that Section 254

“does not authorize” the Commission to delegate power

to the Administrator. App., infra, 55a. But as the court

acknowledged, respondents have not challenged the

Administrator’s role on statutory grounds. See id. at

63a n.21. In any event, for the reasons discussed above,

the FCC did not delegate governmental power to the

Administrator. It assigned the Administrator a ministerial task—which the en banc court acknowledged is

permissible. See id. at 56a-57a.

3. The court of appeals’ “combination” theory is wrong

As explained above, the court of appeals was “highly

skeptical” that the quarterly contribution factor at issue

here comports with either “the bar on congressional

delegations of legislative power” or “the general rule

that private entities may not wield governmental power.”

App., infra, 64a. The court declined, however, to definitively “resolve either question in this case.” Ibid. The

court instead held that “the combination” of Congress’s

“delegation” to the FCC and the FCC’s “subdelegation”

to the Administrator “violates the Legislative Vesting

Clause.” Ibid.

The court of appeals’ “combination” theory conflicts

with this Court’s decision in Sunshine Anthracite. See

App., infra, 116a-117a (Higginson, J., dissenting). In

that case, as discussed above, an agency set coal prices

based on proposals made by private coal producers. See

p. 19, supra. The challengers argued that the scheme

violated both the public nondelegation doctrine (by empowering the agency to set prices) and the private nondelegation doctrine (by allowing private entities to play

a role in the process by which those prices were determined). See Sunshine Anthracite, 310 U.S. at 397-399.

This Court rejected the public nondelegation claim, explaining that Congress had specified “wholly adequate”

“criteria” to guide the agency. Id. at 398. The Court

then rejected the private nondelegation claim, noting

that the agency had “authority and surveillance” over

the private entities’ activities. Id. at 399. The Court

“ended its analysis of both delegation challenges there”;

it did not suggest that the combination of the two conferrals of authority required a further analysis beyond

that needed to evaluate each challenge taken on its own.

App., infra, 116a (Higginson, J., dissenting).

The court of appeals drew an analogy to this Court’s

holding in Free Enterprise Fund v. PCAOB, 561 U.S.

477 (2010), that Article II precludes Congress from

granting two layers of tenure protection to certain executive officers. See App., infra, 66a. That analogy is

inapt. In Free Enterprise Fund, the Court emphasized

that a “second level of tenure protection” “transforms”

an agency’s independence by “chang[ing] the nature of

the President’s review.” 561 U.S. at 496. By contrast,

the supposed second level of delegation in this case—

the FCC’s reliance on the Administrator’s non-binding

projections in computing the contribution factor—has

no such transformative effect. The FCC still decides,

within the bounds set by Congress, how much carriers

must pay; the Administrator simply provides data to assist the Commission in making that decision.

The court of appeals’ theory fails on its own terms

anyway. The court acknowledged that “[t]here cannot

be a combined public/private delegation without a private delegation.” App., infra, 79a. No private delegation exists here. As discussed above, the Administrator

makes recommendations but exercises no independent

governmental power in the quarterly process of setting

the contribution factor. See pp. 19-24, supra.

B. The Questions Presented Warrant This Court’s Review

1. The en banc Fifth Circuit’s decision warrants this

Court’s review because it creates a circuit conflict. In

addition to their present challenge, respondents also

filed petitions for review in the Sixth and Eleventh Circuits to pursue nondelegation challenges to other FCC

orders setting quarterly contribution factors for different time periods. See Consumers’ Research, 67 F.4th

at 778 (6th Cir.); Consumers’ Research v. FCC, 88 F.4th

917, 921 (11th Cir. 2023), cert. denied, 144 S. Ct. 2629

(2024). Unlike the Fifth Circuit, the Sixth and Eleventh

Circuits rejected those challenges.

The Sixth Circuit held that Section 254 “does not violate the nondelegation doctrine” because the statute

“contains an intelligible principle.” Consumers’ Research, 67 F.4th at 797. That court also held that “there

is no private-nondelegation doctrine violation” because

the Administrator is “subordinat[e] to the FCC” and

provides only “ministerial support.” Ibid. The Eleventh Circuit similarly concluded that “there are no unconstitutional delegations under [Section 254] because

Congress has laid out the principles the FCC must follow.” Consumers’ Research, 88 F.4th at 928. It also

concluded that “there is no violation of the private non-

delegation doctrine” because the Administrator “is subordinate to the FCC” and “the FCC retains ultimate decision-making power.” Ibid. Neither the Sixth nor the

Eleventh Circuit suggested that the combination of the

two nondelegation challenges required an additional

analysis beyond that needed to resolve the challenges

separately.

The decision below also is in tension with the D.C.

Circuit’s decision in Rural Cellular Ass’n v. FCC, 685

F.3d 1083 (2012). In that case, the D.C. Circuit held that

Section 254 does not unconstitutionally delegate legislative power to the Commission. See id. at 1091-1092.

The court explained that Section 254 “clearly provides

an intelligible principle to guide the Commission’s efforts.” Id. at 1091. That case did not, however, involve

any challenge under the private nondelegation doctrine.

2. Even apart from the circuit conflict, the decision

below warrants further review because it invalidates

the FCC’s implementation of a federal statute. Judging

the constitutionality of an Act of Congress is “the gravest and most delicate duty” that courts are called on to

perform. Blodgett v. Holden, 275 U.S. 142, 148 (1927)

(opinion of Holmes, J.). Accordingly, “when a lower

court has invalidated a federal statute,” this Court’s

“usual” approach is to grant review. Iancu v. Brunetti,

588 U.S. 388, 392 (2019).

Although the court of appeals stated that it was not

holding Section 254 unconstitutional, see App., infra,

19a, the court’s analysis reflected its “grave concerns

about § 254’s constitutionality,” id. at 42a. The court’s

view that Section 254 “may have delegated legislative

power” to the FCC was one of two conclusions that, in

“combination,” led the court to find a constitutional violation. Id. at 19a. And while the court did not invalidate

the statute on its face, it did invalidate the way in which

the Commission has implemented the statute for more

than two decades (i.e., using the Administrator’s projections in setting the quarterly contribution factor). The

Fifth Circuit’s decision is therefore analogous to a decision invalidating a federal statute as applied to particular circumstances—a type of decision that this Court

routinely reviews even in the absence of a circuit conflict. See, e.g., Vidal v. Elster, 602 U.S. 286, 292 (2024);

Agency for International Development v. Alliance for

Open Society International, Inc., 591 U.S. 430, 433

(2020); DHS v. Thuraissigiam, 591 U.S. 103, 116 (2020).

3. The practical consequences of the decision below

underscore the need for this Court’s review. For more

than a quarter-century, the universal service programs

have made telephone service affordable for rural and

low-income consumers. Those programs have supported the provision of essential services by rural health

care providers. And they have facilitated internet access in schools and libraries across the Nation.

The decision below, however, threatens to nullify the

universal service programs—to the detriment of the “millions of Americans” whom those programs serve. App.,

infra, 123a (Higginson, J., dissenting). If the Fifth Circuit’s decision is allowed to take effect, carriers in that

circuit (and perhaps elsewhere) are likely to argue that

they no longer have a legal obligation to make universal

service contributions because the FCC and the Administrator lack the power to collect such payments. Such

a development would devastate the FCC’s ability to ensure sufficient funding for universal service subsidies

going forward.

4. This Court should grant certiorari on all three

questions presented: whether Congress impermissibly

delegated legislative power to the FCC, whether the

Commission impermissibly delegated governmental

power to the Administrator, and whether the combination of the two alleged delegations violates the Constitution. Although the court of appeals ultimately rested

its decision on its resolution of the third issue, consideration of the other two issues is a necessary “predicate

to an intelligent resolution” of the third question. Helix

Energy Solutions Group, Inc. v. Hewitt, 598 U.S. 39, 50

n.3 (2023) (citation omitted). It would make little sense

to analyze the Fifth Circuit’s “combination” theory,

App., infra, 19a, without considering the components of

that combination. Although the Court might ultimately

resolve this case without answering all three questions,

granting review on all three would ensure that the

Court can fully consider all aspects of respondents’

challenge.

C. This Case Is An Appropriate Vehicle For Resolving The

Questions Presented

1. The en banc court of appeals and the panel discussed three threshold procedural issues. But none of

those issues would prevent this Court from reaching the

questions presented.

First, the en banc court suggested sua sponte that

the case “might be moot” because sovereign immunity

might preclude respondents from recovering money already paid into the Fund. App., infra, 13a. The court

correctly held, however, that this case is “nonetheless

justiciable because it is capable of repetition yet evading review.” Ibid. That exception to mootness applies

where “(1) the challenged action is in its duration too

short to be fully litigated prior to cessation or expiration, and (2) there is a reasonable expectation that the

same complaining party will be subject to the same ac-

tion again.” Davis v. FEC, 554 U.S. 724, 735 (2008) (citation omitted). This case satisfies the first requirement because an FCC order setting the quarterly contribution factor lasts just one quarter. See Kingdomware Technologies, Inc. v. United States, 579 U.S. 162,

170 (2016) (explaining that “a period of two years” is often “too short to complete judicial review”). And this

case satisfies the second requirement because the Commission calculates a new contribution factor every quarter. See App., infra, 14a.

Second, the FCC argued to the panel that respondents’ petition for review was untimely because “any

challenge to § 254 should have come when Congress

originally enacted it.” App., infra, 128a. The panel rejected that contention, see ibid., and the Commission

did not renew the argument at the en banc stage. The

panel’s rejection of that argument was correct. The applicable judicial-review provision states that “[a]ny

party aggrieved by the [agency’s] final order may,

within 60 days after its entry, file a petition to review

the order.” 28 U.S.C. 2344. Respondents filed their petition “within 60 days after” the “final order”—i.e., the

FCC order that established the applicable contribution

factor for the first quarter of 2022—that respondents

sought to challenge. Ibid.

Finally, the en banc court rejected the argument

that, under the doctrine of issue preclusion, the Sixth

and Eleventh Circuits’ decisions precluded respondents

from relitigating their nondelegation claims in this case.

See App., infra, 14a. The court held that the government had forfeited that argument by raising it after this

Court denied certiorari rather than immediately after

the Sixth and Eleventh Circuits issued their decisions.

See ibid. The government does not seek this Court’s

review of that holding. As the en banc court noted, if

the Fifth Circuit did not reach the merits here, it would

still need to decide them in a separate pending case

“that includes petitioners who were not parties to the

Sixth or Eleventh Circuit proceedings.” Id. at 18a;

see Pet. for Review, Consumers’ Research v. FCC, No.

24-60330 (5th Cir. Jun. 27, 2024). And since issue preclusion does not concern subject-matter jurisdiction,

see Exxon Mobil Corp. v. Saudi Basic Industries Corp.,

544 U.S. 280, 293 (2005), this Court would have no independent obligation to address the issue. *

2. After this Court denied the petitions for writs of

certiorari in the Sixth and Eleventh Circuit cases, the

challengers filed petitions for rehearing asking the

Court to reconsider those denials. See Pet. for Reh’g,

Consumers’ Research, supra (No. 23-456); Pet. for Reh’g,

Consumers’ Research, supra (No. 23-743). The Court

has not yet acted on those rehearing petitions. In the

government’s view, the best course would be to grant

certiorari in this case, rather than in one or both of

those cases. Granting certiorari in this case would ena* Contrary to the Fifth Circuit’s suggestion, the government did

not seek to “evade” this Court’s review in its brief in opposition to

the petitions for writs of certiorari in the Sixth and Eleventh Circuit

cases. App., infra, 18a n.5. In those petitions, which were filed before the en banc court issued the decision below, the challengers asserted that the en banc Fifth Circuit was “poised to create” a circuit

conflict. Pet. at 34, Consumers’ Research v. FCC, 144 S. Ct. 2628

(2024) (No. 23-456); Pet. at 38, Consumers’ Research v. FCC, 144 S.

Ct. 2629 (2024) (No. 23-743). The government simply responded

that “the en banc Fifth Circuit ha[d] not yet issued its decision” and

that, “[o]nce it does so, the parties can determine whether to seek,

and this Court can determine whether to grant, certiorari to review

that decision.” Gov’t Br. in Opp. at 17-18, Consumers’ Research,

supra (No. 23-456).

ble this Court to directly review the reasoning of the

only court that has found a nondelegation violation in

the FCC’s implementation of Section 254.

D. In The Alternative, The Court Should Hold This Petition For A Writ Of Certiorari Pending The Court’s Resolution Of Wisconsin Bell

This Court has granted review in Wisconsin Bell,

Inc. v. United States ex rel. Heath, No. 23-1127 (oral argument scheduled for Nov. 4, 2024), in order to consider

whether a request for reimbursement under a universal

service program is a “claim” governed by the False

Claims Act, 31 U.S.C. 3721 et seq. Congress defined

the term “ ‘claim’ ” to include requests for money presented to an “agent of the United States,” 31 U.S.C.

3729(b)(2)(A)(i), as well as certain requests for money if

the government “provides” any portion of the funds requested, 31 U.S.C. 3729(b)(2)(A)(ii)(I). This Court’s

resolution of those issues in Wisconsin Bell could shed

light on the nature of the FCC’s relationship with the

Company—which, in turn, could affect the nondelegation analysis in this case. The challengers’ rehearing

petitions in the Sixth and Eleventh Circuit cases recognized Wisconsin Bell’s relevance to the nondelegation

issues raised here. See Pet. for Reh’g at 3, Consumers’

Research, supra (No. 23-456); Pet. for Reh’g at 3, Consumers’ Research, supra (No. 23-743).

In the government’s view, the best course would be

to grant review in this case and to resolve the uncertainty created by the Fifth Circuit’s decision. But if this

Court does not grant review in this case, it should hold

this petition for a writ of certiorari pending the Court’s

resolution of Wisconsin Bell.

CONCLUSION

The petition for a writ of certiorari should be

granted. In the alternative, the petition should be held

pending this Court’s resolution of Wisconsin Bell v.

United States ex rel. Heath, No. 23-1127 (oral argument

scheduled for Nov. 4, 2024), and then disposed of as appropriate.

Respectfully submitted.

P. MICHELE ELLISON

General Counsel

JACOB M. LEWIS

Deputy General Counsel

JAMES M. CARR

MATTHEW J. DUNNE

Counsel

Federal Communications

Commission

SEPTEMBER 2024

ELIZABETH B. PRELOGAR

Solicitor General

Counsel of Record

BRIAN M. BOYNTON

Principal Deputy Assistant

Attorney General

MALCOLM L. STEWART

Deputy Solicitor General

VIVEK SURI

Assistant to the Solicitor

General

MARK B. STERN

GERARD J. SINZDAK

Attorneys

APPENDIX

TABLE OF CONTENTS

Page

Appendix A

Appendix B

Appendix C

Appendix D

Appendix E

Appendix F

— En banc court of appeals opinion

(July 24, 2024) ......................................... 1a

— Court of appeals panel opinion

(Mar. 24, 2023) ..................................... 125a

— FCC public notice (Dec. 13, 2021) ......... 141a

— USAC contribution base report

(Dec. 2, 2021) ........................................ 150a

— Court of appeals order granting

rehearing (June 29, 2023) ................... 160a

— Statutory provision:

47 U.S.C. 254........................................ 162a

(I)

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 22-60008

CONSUMERS’ RESEARCH; CAUSE BASED COMMERCE,

INCORPORATED; KERSTEN CONWAY; SUZANNE BETTAC;

ROBERT KULL; KWANG JA KERBY; TOM KIRBY; JOSEPH

BAYLY; JEREMY ROTH; DEANNA ROTH; LYNN GIBBS;

PAUL GIBBS; RHONDA THOMAS, PETITIONERS

FEDERAL COMMUNICATIONS COMMISSION;

UNITED STATES OF AMERICA, RESPONDENTS

Filed:

July 24, 2024

Petition for Review from the

Federal Communications Commission

Agency No. 96-45

ON PETITION FOR REHEARING EN BANC

Before RICHMAN, Chief Judge, and JONES, SMITH,

STEWART, ELROD, SOUTHWICK , HAYNES, GRAVES, HIGGINSON , WILLETT, H O, DUNCAN , ENGELHARDT, OLD1

HAM, WILSON, and DOUGLAS, Circuit Judges.*

* JUDGE RAMIREZ joined the court after this case was submitted

and did not participate in the decision.

(1a)

ANDREW S. OLDHAM, Circuit Judge, joined by JONES,

SMITH, ELROD, WILLETT, HO, DUNCAN, ENGELHARDT,

and WILSON, Circuit Judges:

In the Telecommunications Act of 1996, Congress

delegated its taxing power to the Federal Communications Commission. FCC then subdelegated the taxing

power to a private corporation. That private corporation, in turn, relied on for-profit telecommunications

companies to determine how much American citizens

would be forced to pay for the “universal service” tax

that appears on cell phone bills across the Nation. We

hold this misbegotten tax violates Article I, § 1 of the

Constitution.

Congress has long “pursued a policy of providing

‘universal’ [telecommunications] service to all residents

and businesses in the United States.” Ronald J. Krotoszynski, Jr., Reconsidering the Nondelegation Doctrine: Universal Service, the Power to Tax, and the

Ratification Doctrine, 80 IND. L.J. 239, 279 (2005).

For half a century Congress pursued this policy through

a complicated cross-subsidy regime. Back when the

old AT&T was a regulated monopoly, Congress allowed

it to charge supra-competitive rates to urban customers

in exchange for requiring it to provide services it might

not otherwise provide to high-cost rural customers.

But “[f ]or obvious reasons, this system of implicit subsidies can work well only under regulated conditions. In

a competitive environment, a carrier that tries to subsidize below-cost rates to rural customers with above-cost

rates to urban customers is vulnerable to a competitor

that offers at-cost rates to urban customers.” Tex. Off.

of Pub. Util. Couns. v. FCC (“TOPUC I”), 183 F.3d 393,

406 (5th Cir. 1999). So when Congress deregulated

AT&T and other telecommunications companies, it had

to abandon the old way of pursuing universal service.

Congress’s new way is 47 U.S.C. § 254. Section 254

authorizes FCC to establish “specific, predictable, and

sufficient . . . mechanisms to preserve and advance

universal service.” Id. § 254(b)(5). Pursuant to this

grant of authority, FCC levies “contributions” to a Universal Service Fund (“USF”) from telecommunications

carriers, id. § 254(b)(4), and it distributes the monies

raised to people, entities, and projects to expand and advance telecommunications services. FCC regulations

expressly permit carriers to pass these “contributions”

through to their customers, see 47 C.F.R. § 54.712(a),

and the overwhelming majority of carriers do so, see

FCC, FCC 22-67, Report on the Future of the Universal

Service Fund 10084-85, (Aug. 15, 2022) (“Report to Congress”).

Notably, Congress declined to define “universal service” itself. Instead, it delegated to FCC the responsibility to periodically “establish” the concept of “universal service” by “taking into account advances in telecommunications and information technologies and services.”

47 U.S.C. § 254(c)(1). In making this determination,

Congress directed 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;

(D) are consistent with the public interest, convenience, and necessity.

Id. § 254(c)(1).

Section 254(b) also suggests principles for FCC to

“base policies for the preservation and advancement of

universal service.” Telecommunications services “should”

be “available at just, reasonable, and affordable rates”;

accessible “in all regions of the Nation”; and available to

“low-income consumers and those in rural, insular, and

high cost areas” at rates “reasonably comparable to

rates charged for similar services in urban areas.” Id.

§ 254(b)(1)-(3). FCC also may develop “such other

[universal service principles it] determine[s] are necessary and appropriate for the protection of the public interest, convenience, and necessity and are consistent

with this chapter.” Id. § 254(b)(7).

Section 254 further provides that “[e]lementary and

secondary schools and classrooms, health care providers, and libraries should have access to advanced telecommunications services.” Id. § 254(b)(6). Accordingly, “telecommunications carrier[s] shall, upon receiving a bona fide request, provide telecommunications services which are necessary for the provision of health

care services in a State . . . to any public or nonprofit health care provider that serves persons who reside in rural areas in that State at rates that are reason-

ably comparable to rates charged for similar services in

urban areas in that State.” Id. § 254(h)(1)(A). And

“telecommunications carriers . . . shall, upon a bona

fide request for any of its services that are within the

[FCC’s] definition of universal service . . . , provide

such services to elementary schools, secondary schools,

and libraries for educational purposes at rates less than

the amounts charged for similar services to other parties.” Id. § 254(h)(1)(B). FCC then reimburses telecommunications providers for the costs of providing this

subsidized service. Id. § 254(h)(1)(A), (B)(i)-(ii).

Presently, USF supports telecommunications projects through four major programs: the High-Cost

Program (see 47 C.F.R. §§ 54.302-54.322), the Lifeline

Program (see id. §§ 54.400-54.423), the E-rate Program

(see id. §§ 54.500-54.523), and the Rural Health Care

Program (see id. §§ 54.600-54.633).

Each program has a laudable objective. The HighCost Program subsidizes the provision of voice and internet services in rural communities. The Lifeline Program subsidizes the provision of phone service to lowincome consumers. The E-Rate Program subsidizes

the provision of broadband connectivity and Wi-Fi to

schools and libraries. And the Rural Health Care Program subsidizes the provision of telecommunications

services to rural healthcare providers.

FCC regulations establish the services supported by

each of these programs and the eligibility criteria applicants must satisfy to obtain assistance. But FCC does

not administer all these universal service programs itself. Instead, it relies on a private company called the

Universal Service Administrative Company (“USAC”).

USAC is managed by representatives from “interest

groups affected by and interested in universal service

programs” who are “nominated by their respective interest groups.” See Leadership, UNIVERSAL SERV. ADMIN. CO., https://perma.cc/9W92G4Z9 (last accessed

Sept. 11, 2023); see also 47 C.F.R. § 54.703(b) (providing

for the composition of USAC’s board of directors).

FCC has charged USAC with myriad tasks: “billing

contributors, collecting contributions to the universal

service support mechanisms, and disbursing universal

service support funds.” 47 C.F.R. § 54.702(b).

Most prominently, though, USAC is responsible for

deciding the quarterly USF contribution amount—a

projection of the dollar value of demand for universal

support programs and the costs of administering them.

See id. § 54.709(a)(3). The contribution amount dictates the size of the universal service contributions levied on telecommunications carriers and, in turn, American telecommunications consumers. To set the contribution amount, USAC relies on “information from universal service program participants” to “estimate[] how

much money will be needed each quarter to provide universal service support.” See Universal Service, UNIVERSAL SERV. ADMIN . C O., https://perma.cc/B5NN-AVF8

(last accessed Oct. 10, 2023). In other words, the contribution amount ultimately derives from the universal

service demand projections of private, for-profit telecommunications carriers, all of whom have “have financial incentives” to increase the size of universal service

programs. U.S. GOV ’T ACCOUNTABILITY OFF., GAO17-538, ADDITIONAL A CTION NEEDED TO ADDRESS SIGNIFICANT RISKS IN FCC’S LIFELINE PROGRAM 1 (2017),

https://perma.cc/K5J9-L89K (“FCC’s

gram”).

Lifeline

Pro-

FCC then uses USAC’s contribution amount to impose a tax on America’s telecommunications carriers.

(FCC calls this tax the USF “contribution factor”; but

we call it what it is—the “USF Tax.”) The USF Tax is

the percentage of end-user telecommunications revenues each carrier must contribute to USF in a particular

quarter. As a practical matter, USAC sets the USF

Tax—subject only to FCC’s rubber stamp.

True,

FCC “reserves the right to set projections of demand

and administrative expenses at amounts that [it] determines will serve the public interest.” See 47 C.F.R.

§ 54.709(a)(3). But FCC never made a substantive revision to USAC’s proposed contribution amount prior to

this litigation, 1 and it does not even have a documented

process for checking USAC’s work. Instead, FCC

has provided that if it “take[s] no action within fourteen

(14) days of the date of release of the public notice announcing [USAC’s] projections of demand and administrative expenses, the projections of demand and administrative expenses . . . shall be deemed approved by

the Commission.” See ibid. (emphasis added). So

FCC has delegated to USAC responsibility—de facto if

not de jure—for imposing the USF Tax.

FCC claims it has made three alterations to USF projections.

But one of those was a ministerial change of the rate from .09044

to .091 because some carriers’ computers could not handle five decimal places. And the other two were not even initiated by FCC.

See Petrs’ EB Br. 63.

In 1995, the USF Tax was $1.37 billion. JA62. But

by the end of 2021, USAC ballooned the USF to over $9

billion. See UNIVERSAL SERV. ADMIN. CO., 2021 Annual Report 20 (2023) https://perma.cc/9CPT-H5LM.

The proposed USF Tax at issue in this case is 25.2%, up

from just over 5% in 2000. See FCC, DA 00-517, PROPOSED SECOND QUARTER 2000 UNIVERSAL SERVICE

CONTRIBUTION FACTOR (Mar. 7, 2000), https://perma.

cc/4BSK-6QZR. Recent USF Taxes have been set as

high as 34.5%. See FCC, DA 23-843, PROPOSED FOURTH

QUARTER 2023 UNIVERSAL SERVICE CONTRIBUTION

FACTOR (Sep. 13, 2023), https://perma.cc/Y2QW-6HBD.

Many of the billions injected into the USF have undoubtedly been deployed to support the important goal

of universal service. But waste and fraud have also

contributed to the USF’s astronomical growth. For

example, in 2004, FCC’s Inspector General affirmed

that schools view the E-Rate Program as “a big candy

jar” of “free money.” Sam Dillon, School Internet Program Lacks Oversight, Investigator Says, N.Y. Times

(June 18, 2004), https://perma.cc/9PZY-ED3K. The

Inspector General’s primary concern was FCC’s heavy

and longstanding reliance on self-certified eligibility determinations in the E-rate Program. See U.S. GOV ’T

ACCOUNTABILITY OFF., GAO-20-606, FCC SHOULD

TAKE ACTION TO BETTER MANAGE PERSISTENT FRAUD

RISKS IN THE SCHOOLS AND LIBRARIES PROGRAM18

(Sep. 2020), https://perma.cc/5EK4-Q8V8 (“FCC’s Erate Program”). A 2008 GAO report demonstrated

that, in a single year, USAC made almost a billion dollars of High-Cost Program payments that “should not

have been made, or were not made, in the correct

amount, when viewed from the perspective of applicable

Federal Communications Commission rules, orders and

interpretative opinions.”

OFF. OF THE I NSPECTOR

GEN., FCC, THE HIGH COST PROGRAM 2 (Nov. 26, 2008),

https:// perma.cc/WJG3-6PJ6 (“The High-Cost Program”). In 2013, one Congressman noted:

The [Lifeline] fund [] increased 266 percent [between

2008 and 2013], . . . all while the cost of phone

service [went] down. Despite the limit of one subsidized subscriber per household, published reports

suggest some subscribers have eight or more phones

with subsidized service, with one woman saying that

to get one “she just goes across the street and gets

it.” One man has claimed to have a bag full of 20

phones on the program that he sells “for about 10, 15,

20 bucks” each.

The Lifeline Fund: Money Well Spent?: Hearing

Before the H. Subcomm. on Commc’n & Tech., H.

Comm. On Energy & Comm., 113th Cong. 2 (2013)

(opening statement of Chairman Greg Walden),

https://perma.cc/ 4DAWUERW. And in 2018, FCC’s

managing director reported a GAO audit that uncovered

gross improper payments of $336.39 million in the Lifeline Program alone. See Letter from Mark Stephens,

Managing Director, FCC, to Ron Johnson, Chairman, S.

Comm. On Homeland Sec. & Gov’t Affs. (Aug. 27, 2019),

https:// perma.cc/VNQ6-N3WB. While earth’s only

two certainties are death and taxes, the USF Tax manages to cheat the grave: It is well-documented that

FCC disburses USF money to dead people. See FCC’s

LIFELINE PROGRAM, supra, at 43.

USAC’s role in perpetuating USF waste is equally

well known. In 2010, GAO concluded that USAC “lacks

10a

key features of effective internal controls.” U.S. GOV ’T

ACCOUNTABILITY OFF., GAO-11-11, IMPROVED MANAGEMENT CAN ENHANCE FCC DECISION MAKING FOR

THE UNIVERSAL SERVICE FUND LOW-INCOME PROGRAM i (Oct. 2010), https://perma.cc/9YHE-8YE9

(“FCC’s Low-Income Program”); see also FCC’s ERATE PROGRAM , supra, at 20-21.

The Low-Income

Program report noted that while USAC primarily uses

audit findings to monitor compliance with USF rules,

“the number and scope of USAC’s audits have been limited and there is no systematic process in place to review

the findings of those audits that are conducted.”

FCC’s LOW-INCOME PROGRAM, supra, at cover page.

Moreover, the GAO noted USAC had not even considered “the possibility that multiple carriers may claim

support for the same telephone line and that households

may receive more than one discount, contrary to program rules.” Ibid. In 2017, GAO explained that

USAC “relies on over 2,000 Eligible Telecommunication

Carriers that are Lifeline providers to implement key

program functions, such as verifying subscriber eligibility,” which is problematic because “companies may have

financial incentives to enroll as many customers as possible.” FCC’s LIFELINE PROGRAM, supra, at cover page.

And in 2019, FCC acknowledged that USAC was out of

compliance with improper payment reporting requirements. See Letter from Mark Stephens, supra, at 1.

* * *

Section 254 reflects a policy goal of making telecommunications services available to all Americans. It is

emphatically the province of Congress to make such policy choices. But it is our judicial duty to ensure that

Congress pursued its goal through lawful means. And

11a

in that regard, our brief survey of the USF’s history

makes three things clear. First, Congress’s instructions are so ambiguous that it is unclear whether Americans should contribute $1.37 billion, $9 billion, or any

other sum to pay for universal service. Second, private

entities bear important responsibility for universal service policy choices. And third, it is impossible for an

aggrieved citizen to know who bears responsibility for

the USF’s serious waste and fraud problems. All three

of those things implicate bedrock constitutional principles.

II.

On November 2, 2021, USAC proposed its Q1 2022

USF contribution amount. A subset of the Petitioners

in this action filed a comment with FCC challenging the

constitutionality of the universal service contribution

mechanism on November 19. On December 13, 2021,

FCC issued a public notice of its Proposed Q1 2022 USF

Tax, which was derived directly from USAC’s proposed

contribution amount. Petitioners re-filed their comment on December 22. FCC took no action with respect to USAC’s proposed contribution amount, so on

December 27 the contribution factor was deemed approved. See 47 C.F.R. § 54.709(a)(3). Petitioners

then filed a timely petition for review in our court.

We have statutory jurisdiction under 47 U.S.C. § 402

and 28 U.S.C. § 2342.2 FCC does not contest our conBefore the panel, FCC argued that we lack statutory jurisdiction because the petition was not timely filed. The panel rejected

12a

stitutional jurisdiction, but we have an obligation to consider jurisdictional questions sua sponte even when they

are not raised by the parties. See E.T. v. Paxton, 41

F.4th 709, 718 n.2 (5th Cir. 2022).

Consistent with that obligation, we note that at least

one petitioner—Cause Based Commerce—had Article

III standing when the petition was filed. See Biden v.

Nebraska, 143 S. Ct. 2355, 2365 (2023) (“If at least one

plaintiff has standing, the suit may proceed.”); Advanced Mgmt. Tech., Inc. v. FAA, 211 F.3d 633, 636

(D.C. Cir. 2000) (“Standing is assessed at the time the

action commences.” (citation and quotation omitted)).

Cause Based Commerce incurred a classic pocketbook

injury as a result of its legal obligation to pay the USF

Tax. Its injury is fairly traceable to the challenged

conduct because the size of its Q1 2022 USF liability was

controlled by the contribution factor set by USAC.

And, at the time the petition was filed, its injury could

have been redressed by a favorable judicial decision because vacatur of FCC’s approval of the proposed contribution factor would have prevented collection of the

USF Tax. See 47 C.F.R. § 54.709(a)(3) (“[T]he Administrator shall apply the quarterly contribution factor,

once approved by the Commission, to contributor’s interstate and international end-user telecommunications

revenues to calculate the amount of individual contributions.” (emphasis added)).

that argument, see Consumers’ Rsch. v. FCC, 63 F.4th 441, 446 (5th

Cir. 2023), reh’g en banc granted, opinion vacated, 72 F.4th 107

(5th Cir. 2023), and FCC has abandoned it.

13a

It is not clear that Cause Based Commerce’s pocketbook injury is still redressable because sovereign immunity may bar recovery of the monies it paid into USF

pursuant to the Q1 2022 USF Tax. See 5 U.S.C. § 702

(waiving sovereign immunity for actions against agencies seeking relief “other than money damages”). If

that is right, Cause Based Commerce’s challenge might

be moot because no court-ordered relief could redress

the injuries it incurred as a result of the Q1 2022 USF

Tax. See Already, LLC v. Nike, Inc., 568 U.S. 85, 91

(2013) (“A case becomes moot—and therefore no longer

a ‘Case’ or ‘Controversy’ for purposes of Article III—

when the issues presented are no longer live or the parties lack a legally cognizable interest in the outcome.”

(quotation and citation omitted)).

We need not reach that question, however, because

even assuming Cause Based Commerce’s injury is no

longer redressable, it is nonetheless justiciable because

it is capable of repetition yet evading review. See, e.g.,

S. Pac. Terminal Co. v. Interstate Com. Comm’n, 219

U.S. 498, 515 (1911) (establishing the exception and noting that jurisdiction “ought not to be . . . defeated,

by short term orders, capable of repetition, yet evading

review” because otherwise the government and regulated parties would “have their rights determined by the

Commission without a chance of [judicial] redress”).

The Q1 2022 USF Tax evades review because it was in

force for just one quarter—“too short [a] duration to be

fully litigated in the United States Supreme Court before it expire[d].” Ralls Corp. v. Comm. on Foreign

Inv. in U.S., 758 F.3d 296, 321 (D.C. Cir. 2014); see ibid.

(“As a rule of thumb, agency actions of less than two

years’ duration cannot be fully litigated prior to cessation or expiration, so long as the short duration is typical

14a

of the challenged action.” (quotation and citation omitted)). And it is capable of repetition because there is

“a reasonable expectation”—indeed, a near certainty—

“that [Cause Based Commerce] will be subjected to the

same action again.” Id. at 323; see id. at 324 (“The

same action generally refers to . . . recurrent identical agency actions.” (quotation and citations omitted));

see also 47 C.F.R. § 54.709(a)(3) (providing that a new

contribution factor is calculated each quarter).

Accordingly, we have jurisdiction to decide the merits of petitioners’ constitutional claims.

We must decide one more threshold issue. On June

17, 2024, FCC filed a motion to dismiss on the that

ground issue preclusion bars the petition for review.

In FCC’s view, that is because petitioners raised identical challenges to different USF quarterly contribution

factors in the Sixth and Eleventh Circuits, and those

courts rejected petitioners’ arguments. But even if

there were something to FCC’s issue preclusion argument, it fails because FCC forfeited it.

“[I]ssue preclusion[] is an affirmative defense.” Taylor v. Sturgell, 553 U.S. 880, 907 (2008). That means

the party asserting preclusion ordinarily must timely

raise it. Ibid.; see 18A CHARLES ALAN WRIGHT, ARTHUR R. MILLER, & EDWARD H. COOPER, FEDERAL

PRACTICE & PROCEDURE § 4405 (3d ed. 2017). Where,

as here, an allegedly preclusive judgment is rendered

after suit is filed, the party “wishing to raise [preclusion]

is obliged to assert it at the earliest moment practicable.” Home Depot, Inc. v. Guste, 773 F.2d 616, 620 n.4

(5th Cir. 1985); see Evans v. Syracuse City Sch. Dist.,

15a

704 F.2d 44, 47 (2d Cir. 1983) (“[T]he party wishing to

raise [preclusion as a] defense is obliged to plead it at

the earliest possible moment.” (quotation omitted));

Aetna Cas. & Sur. Co. v. Gen. Dynamics Corp., 968 F.2d

707, 711 (8th Cir. 1992) (issue preclusion must be raised

“at the first reasonable opportunity after the rendering

of the decision having the preclusive effect”); Davignon

v. Clemmey, 322 F.3d 1, 15 (1st Cir. 2003) (holding that

district court abused its discretion by allowing defendant to assert preclusion defense “at the eleventh hour”);

Georgia Pac. Consumer Prod., LP v. Von Drehle Corp.,

710 F.3d 527, 533 (4th Cir. 2013) (“Even when a preclusion defense is not available at the outset of a case, a

party may waive such a defense arising during the

course of litigation by waiting too long to assert the defense after it becomes available.”); Arizona v. California, 530 U.S. 392, 413 (2000) (holding that party could

not raise preclusion as a defense when party could have

raised the defense earlier in the proceedings but did not,

“despite ample opportunity and cause to do so”).

That makes sense. The policy underlying issue preclusion is based primarily on a “defendant’s interest in

avoiding the burdens of twice defending a suit” and “the

avoidance of unnecessary judicial waste.” Arizona,

530 U.S. at 412 (quoting United States v. Sioux Nation,

448 U.S. 371, 432 (1980) (Rehnquist, J., dissenting)).

Issue preclusion cannot serve either of those purposes if

it is raised in the eleventh hour of proceedings, after the

defendant and the court have already carried all the burdens necessary to decide the case. So even assuming

FCC could defeat petitioners’ claims on the ground the

Sixth and the Eleventh Circuits have rendered preclusive judgments, FCC was obliged to raise that issue “at

16a

the earliest moment practicable.”

620 n.4.

Guste, 773 F.2d at

It did not. The first allegedly preclusive judgment

FCC cites is the Sixth Circuit’s judgment in Consumers’

Research v. FCC. See 67 F.4th 773 (6th Cir. 2023), cert.

denied Consumers’ Rsch. v. FCC, No. 23-456, 2024 WL

2883753 (U.S. June 10, 2024). That judgment bound six

of the named petitioners in this case. 3 And it was final

on June 7, 2023. See Mandate Issued, Consumers’ Rsch.,

67 F.4th 773 (No. 21-3886) (Jun. 7, 2023). True, the petitioners sought certiorari in that case. But “the general rule in American jurisprudence [is] that a final

judgment of a court . . . can be given [preclusive] effect even while an appeal is pending.” Prymer v. Ogden, 29 F.3d 1208, 1213 n.2 (7th Cir. 1994); see WRIGHT

& MILLER, supra, § 4433 (“[I]t is . . . held in federal

courts that the preclusive effects of a lower court judgment cannot be suspended simply by taking an appeal

that remains undecided.”); RESTATEMENT (SECOND) OF

JUDGMENTS § 13, cmt. f (explaining a “judgment otherwise final” for purposes of the law of res judicata should

“remain[] so despite the taking of an appeal”).

That means FCC could have asserted preclusion

against six petitioners on June 7, 2023. At the very

least, FCC could have raised preclusion in its supplemental brief, which it filed on August 30, 2023. But

FCC did not do so. Instead, it waited more than a year

and then filed a tardy motion to dismiss at the eleventh

hour. FCC therefore forfeited its preclusion defense

Consumers’ Research, Cause Based Commerce, Deanna Roth,

Jeremy Roth, Joseph Bayly, Lynn Gibbs, and Paul Gibbs.

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with respect to at least six petitioners. 4 So there is no

doubt we may proceed to the merits of those petitioners’

claims.

FCC also cites the Eleventh Circuit’s judgment in

Consumers’ Rsch. v. FCC, 88 F.4th 917, 923 (11th Cir.

2023), cert. denied Consumers’ Rsch. v. FCC, No. 23-743,

2024 WL 2883755 (U.S. June 10, 2024). That judgment

bound all the petitioners in this case, including the six

who were parties to the Sixth Circuit proceeding. But

that another allegedly preclusive judgment was rendered during the course of this proceeding does not

change the fact that FCC had a purported preclusion

defense against six petitioners as of June 7, 2023. And

even if the Eleventh Circuit’s judgment somehow gave

FCC a new window to raise a preclusion defense against

those petitioners, the window closed before FCC raised

it. The Eleventh Circuit’s judgment was final (and

therefore had preclusive effect) on February 5, 2024.

See Mandate Issued, Consumers’ Research v. FCC, 88

F.4th 917 (No. 22-13315) (Feb. 5, 2024). FCC nonetheless waited to file a motion to dismiss on the basis of that

judgment until June 17, 2024—more than four months

later.

There may sometimes be ambiguity about whether a

defendant carried its obligation to raise a preclusion defense “at the earliest moment practicable.” Guste, 773

F.2d at 620 n.4. But this is not a close case. Litigants

ordinarily have 21 days to plead an affirmative defense.

See FED. R. CIV. P. 12(a)(1)(A)(ii); see also WRIGHT &

MILLER, supra, § 1394 (noting affirmative defenses are

Including Cause Based Commerce, who certainly has standing.

See supra, at 11.

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forfeited if they are not raised in responsive pleadings).

There is no reason a party should have six times that

many days to raise an affirmative defense to a petition

for review. So even if we thought FCC could have asserted preclusion against all the petitioners within a reasonable time after the Eleventh Circuit rendered judgment, we would hold FCC failed to do so.

In sum, FCC forfeited any preclusion defense.

True, we have discretion to forgive a forfeiture in “extraordinary circumstances”—as where “a miscarriage

of justice would result from our failure to consider” the

forfeited argument. See, e.g., AG Acceptance Corp. v.

Veigel, 564 F.3d 695, 700 (5th Cir. 2009). But FCC does

not supply any reason to think a miscarriage of justice

would result from our reaching the merits of petitioners’

claims. See ibid. (explaining the burden of establishing

extraordinary circumstances is on the party seeking review). And we cannot think of one. In fact, if we do

not decide the constitutional questions presented in this

case, we will have to decide them in a pending challenge

that includes petitioners who were not parties to the

Sixth or Eleventh Circuit proceedings. See Petition

for Review, Consumers’ Research v. FCC, No. 24-60330

(5th Cir. Jun. 27, 2024). It effects no injustice to hold

FCC to its forfeiture. 5

FCC convinced the Supreme Court to deny certiorari in the

Sixth and Eleventh Circuit cases in part by explaining the Court

would have another chance to consider the constitutionality of the

USF after this court’s en banc ruling. See Br. in Opp’n 17-18,

Consumers’ Rsch. v. FCC, Nos. 23-456, 23-743 (U.S. May 3, 2024)

(“[T]he en banc Fifth Circuit has not yet issued its decision in that

case. Once it does so, the parties can determine whether to seek,

and this Court can determine whether to grant, certiorari to review

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* * *

We therefore proceed to the merits. Our review is de

novo. See Huwaei Tech. USA, Inc. v. FCC, 2 F.4th 421,

434 (5th Cir. 2021).

III.

Petitioners contend the universal service contribution mechanism violates the Legislative Vesting Clause.

See U.S. Const. art. I, § 1 (“All legislative Powers herein

granted shall be vested in a Congress of the United

States, which shall consist of a Senate and House of Representatives.”). We agree. We (A) explain that the

power to levy USF “contributions” is the power to tax—

a quintessentially legislative power. Then we (B) explain that Congress through 47 U.S.C. § 254 may have

delegated legislative power to FCC because it purported to confer upon FCC the power to tax without supplying an intelligible principle to guide FCC’s discretion. Next, we (C) explain that FCC may have impermissibly delegated the taxing power to private entities.

Finally, we (D) explain that we need not definitively answer either delegation question because even if § 254

contains an intelligible principle, and even if FCC was

permitted to enlist private entities to determine how

much universal service tax revenue it should raise, the

combination of Congress’s broad delegation to FCC and

FCC’s subdelegation to private entities certainly amounts

to a constitutional violation.

that decision.”). Had FCC told the Supreme Court it thought petitioners’ claims in this court were issue precluded, the Court might

have granted certiorari in those other cases. It would be unjust

to allow FCC to raise an issue to evade en banc review so soon after

it hid that issue to evade Supreme Court review.

20a

Section 254(d) provides that “[e]very 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.” 47 U.S.C.

§ 254(d). Pursuant to this authority, FCC mandates

that “telecommunications carriers . . . must contribute to the universal service support mechanisms.”

47 C.F.R. § 54.706(a). USAC determines carriers’

USF contribution obligations on a quarterly basis by

“apply[ing] the quarterly contribution factor . . . to

[each carriers’] interstate and international end-user

telecommunications revenues.” Id. § 54.709(a)(3).

The result is a USAC-fashioned USF Tax.

FCC’s principal defense of the USF scheme is that

the USF Tax is not really a tax at all. Rather, FCC

contends, it is a fee. That is because, FCC reasons, a

fee is a charge that “bestows a benefit on the [payor],

not shared by other members of society.” Nat’l Cable

Television Ass’n v. United States, 415 U.S. 336, 341

(1974). And FCC thinks universal service contributions comport with that definition because telecommunications carriers pay them, and because they are used to

fund the universal service program, which “confers special benefits on contributing carriers by (among other

things) expanding the network such carriers can serve.”

FCC EB Br. 51.

But FCC misunderstands the nature of the inquiry.

A fee has three characteristics: First, fees are incurred “incident to a voluntary act.” Nat’l Cable, 415

U.S. at 341; see also Krotoszynski, Jr., Reconsidering

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the Nondelegation Doctrine, supra, at 270 (“A ‘fee’ constitutes a charge that an agency exacts in return for a

benefit voluntarily sought by the payer.”). For example, “[a] public agency might charge a user fee to visit a

public park, tour a museum, or enter a toll road.”

Trafigura Trading LLC v. United States, 29 F.4th 286,

293 (5th Cir. 2022) (Opinion of Ho, J.); see also ibid. (noting that fees “arise in the context of value-for-value transactions” between individuals and government). The

government may also charge fees designed to defray the

cost of providing benefits to a regulated party, but only

if the fees charged represent a “fair approximation of

services, facilities, or benefits furnished.”

United

States v. U.S. Shoe Corp., 523 U.S. 360, 363 (1998).

Second, a fee generally is “imposed by an administrative

agency upon only those persons, or entities, subject to

its regulation for regulatory purposes.” Valero Terrestrial Corp. v. Caffrey, 205 F.3d 130, 134 (4th Cir.

2000). And third, the revenue the government raises

through its collection of fees is used to supply benefits

inuring to the persons or entities paying them rather

than to the public generally. See Skinner v. Mid-Am.

Pipeline Co., 490 U.S. 212, 223 (1989) (quoting Nat’l Cable, 415 U.S. at 343).

Universal service contributions do not have any of

these characteristics. First, they are not incident to a

voluntary act but rather are a condition of doing business in the telecommunications industry.

See 47

U.S.C. § 254(d). Nor do they represent a fair approximation of the benefits conferred by government regulation on telecommunications carriers. In fact, they are

not related to regulatory costs at all. They are designed to fund telecommunications subsidies to schools,

libraries, healthcare facilities, and low-income individu-

22a

als. Second, the cost of universal service contributions

is not borne by parties FCC regulates. While FCC formally imposes the charges on telecommunications carriers, carriers overwhelmingly pass the cost of contributions on to consumers, as is expressly permitted by FCC

regulation. See FCC, REPORT TO CONGRESS , supra, at

45-46; 47 C.F.R. § 54.712(a). So the cost of universal

service contributions is widely shared by the population

in a manner reminiscent of a “classic tax.” See Valero,

205 F.3d at 134 (“The ‘classic tax’ is imposed by the legislature upon a large segment of society.”). And third,

the benefits associated with universal service contributions “inure to the benefit of the public”—or more accurately to the benefit of those fortunate enough to receive

subsidies from USAC—rather than to the benefit of the

persons who pay them. Skinner, 490 U.S. at 223 (quoting Nat’l Cable, 415 U.S. at 343). There is no overlap

at all between the class of USF beneficiaries (recipients

of subsidized telecommunications services) and the class

of USF contributors (American telecommunications

consumers who see USF charges on their phone bills

each month).

Think about the consequences of FCC’s position:

• Congress could fund Medicare and Medicaid without “taxing” anyone. It could simply allow hospital executives to set the Medicare-Medicaid budget,

then have HHS rubber-stamp the hospitals’ healthcare taxes, which could then be passed through to

consumers’ hospital bills.

• Congress could fund the Supplemental Nutrition

Assistance Program (“SNAP”) without “taxing”

anyone. It could simply allow grocery store executives to set the SNAP budget, then have USDA

23a

rubber-stamp the grocers’ SNAP taxes, which

could then be passed through to consumers at the

checkout register.

• Congress could fund affordable housing without

“taxing” anyone. It could simply allow real estate

companies to set the affordable housing budget,

then have HUD rubber-stamp the companies

affordable-housing taxes, which could then be

passed through to consumers as new line items at

closing or in monthly surcharges for rent.

We could go on. But you get the point: All of these

are obviously taxes. So while “[d]istinguishing a tax

from a fee often is a difficult task,” Tex. Ent. Ass’n, Inc.

v. Hegar, 10 F.4th 495, 505 (5th Cir. 2021) (citation omitted), the analysis here is straightforward. Congress

has bestowed upon FCC the power to levy taxes, and we

accordingly conclude that it has delegated its taxing

power.6

In § 254 of the Telecommunications Act, Congress

delegated its taxing power to FCC. The power to tax

is a quintessentially legislative one. See U.S. CONST.

art. 1, § 8, cl. 1; see also Nat’l Cable, 415 U.S. at 340

(“Taxation is a legislative function, and Congress . . .

is the sole organ for levying taxes.”); MICHAEL W.

MCCONNELL, THE PRESIDENT WHO WOULD NOT BE

The fact that Congress euphemistically labeled these universal

service charges “contribution[s],” 47 U.S.C. § 254(d), is irrelevant.

“Congress cannot change whether an exaction is a tax . . . for

constitutional purposes simply by” relabeling it. Nat’l Fed’n of

Indep. Bus. v. Sebelius, 567 U.S. 519, 544 (2012) (emphasis in original).

24a

KING 334 (2020) (noting that domestic taxation is “especially central to the legislative branch”). So § 254 is

constitutional only if it passes nondelegation muster.

We (1) explain the nondelegation doctrine as articulated

by the Supreme Court. Then we (2) explain the breadth

of Congress’s delegation to FCC. Lastly, we (3) explain that the Supreme Court has never upheld a delegation of core legislative power as sweeping as the one

contained in § 254.

The Constitution vests “[a]ll legislative Powers

herein granted” “ in a Congress of the United States.”

U.S. Const. art. I, § 1. “Accompanying that assignment of power to Congress is a bar on its further delegation.” Gundy v. United States, 588 U.S. 128, 135

(2019) (plurality op.). Moreover, “the principle of separation of powers that underlies our tripartite system of

Government” independently compels the conclusion

that Congress, not agencies, must make legislative decisions. Mistretta v. United States, 488 U.S. 361, 371

(1989); see Gundy, 588 U.S. at 153 (Gorsuch, J., dissenting) (“[I]t 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.”

(quotation omitted)). So there is no doubt that “the

lawmaking function belongs to Congress,” Loving v.

United States, 517 U.S. 748, 758 (1996), and that Congress “may not constitutionally delegate that power to

another” constitutional actor, Touby v. United States,

500 U.S. 160, 165 (1991).

But “[t]he Constitution has never been regarded as

denying to the Congress the necessary resources of flexibility and practicality, which will enable it to perform

25a

its function.” Panama Refin. Co. v. Ryan, 293 U.S.

388, 421 (1935). So the Supreme Court has held that

delegations are constitutional so 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.” J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409 (1928).

Still, “there are limits of delegation which there is no

constitutional authority to transcend.” Panama Refin., 293 U.S. at 430. And for good reason. Vague

congressional delegations undermine representative

government because they give unelected bureaucrats—

rather than elected representatives—the final say over

matters that affect the lives, liberty, and property of

Americans. See Tiger Lily, LLC v. U.S. Dep’t of Hous.

& Urb. Dev., 5 F.4th 666, 674 (6th Cir. 2021) (Thapar, J.,

concurring) (“By shifting responsibility to a less accountable branch, Congress . . . deprives the people

of the say the framers intended them to have.”).

Overly broad delegations also obscure accountability:

When elected representatives shirk hard choices, constituents do not know whom to hold accountable for government action. See Gundy, 588 U.S. at 156 (Gorsuch,

J., dissenting).

And they offend the deliberationforcing features of the constitutionally prescribed legislative process. See U.S. CONST. art. I, § 7; John Manning, Lawmaking Made Easy, 10 GREEN BAG 2d 191,

202 (2007) (“[B]icameralism and presentment make lawmaking difficult by design.” (emphasis in original));

see also THE FEDERALIST No. 73 (A. Hamilton) (noting

that the Constitution prescribed elaborate procedures

for lawmaking because “[t]he oftener the measure is

brought under examination, the greater the diversity in

the situations of those who are to examine it, the less

26a

must be the danger of those errors which flow from want

of due deliberation, or of those missteps which proceed

from the contagion of some common passion or interest.”).

So while “the Supreme Court has not in the past several decades held that Congress failed to provide a requisite intelligible principle,” Jarkesy v. SEC, 34 F.4th

446, 462 (5th Cir. 2022), aff ’d on other grounds, 144 S.

Ct. 2117 (2024), “[t]hat does not mean . . . we must

rubber-stamp all delegations of legislative power,” Big

Time Vapes, Inc. v. FDA., 963 F.3d 436, 443 (5th Cir.

2020). Rather, “[w]e ought not to shy away from our

judicial duty to invalidate unconstitutional delegations.”

Ibid. (quotation omitted).

Nondelegation inquiries “always begin[]

. . .

with statutory interpretation” because the constitutional question is whether Congress has supplied a sufficiently intelligible principle to guide an agency’s discretion. Gundy, 588 U.S. at 135 (plurality op.). So we

must construe “the challenged statute to figure out what

task it delegates and what instructions it provides.”

Id. at 136. Petitioners challenge the USF’s funding

mechanism, so we must consider whether 47 U.S.C.

§ 254 sufficiently instructs FCC regarding how much it

should tax Americans to pay for the universal service

program.

Two of § 254’s subsections are relevant: § 254(d)

provides that USF funding should be “sufficient . . .

to preserve and advance universal service,” and § 254(b)(1)

suggests that telecommunications services “should be

available at . . . affordable rates.”

27a

These statutory phrases supply no principle at all.

Start with sufficiency. That funding should be “sufficient . . . to preserve and advance universal service” is meaningful only if the concept of universal service is sufficiently intelligible. It is not. Rather, universal service is “an evolving level of telecommunications services that the Commission shall establish periodically” by determining what telecommunications services are “essential to education, public health, or public

safety”; are “subscribed to by a substantial majority of

residential customers”; are “deployed . . . by telecommunications carriers”; or are otherwise “consistent

with the public interest, convenience, and necessity.”

47 U.S.C. § 254(c). That is a lot of words, but they

amount to a concept of universal service so amorphous

that Congress’s instruction to raise “sufficient” funds

amounts to a suggestion that FCC exact as much tax

revenue for universal service projects as FCC thinks is

good. Cf. Gary Lawson, Delegation and Original Meaning, 88 VA. L. REV. 327, 339-40 (2002) (describing consequences of congressional enactment that requires

“ ‘goodness and niceness’ ”).

That § 254(b) supplies minimal guidance on the contours of Congress’s idea of an ideal universal service policy is no answer. That is for three reasons. First, we

have previously accepted FCC’s contention that “nothing in [§ 254] defines ‘sufficient’ to mean that universal

service support must equal the actual costs incurred by”

telecommunications carriers contributing to the USF.

TOPUC I, 183 F.3d at 412. So FCC’s universal service

taxation is not formally limited by the amount it disburses on universal service projects. Nothing in the

statute precludes FCC from, for example, imposing the

USF Tax to create an endowment that it could use to

28a

fund whatever projects it might like. FCC has never

done so, but the fact “that the recipients of illicitly delegated authority opted not to make use of it is no antidote. It is Congress’s decision to delegate that is unconstitutional.” Dep’t of Transp. v. Ass’n of Am. Railroads (“Amtrak II”), 575 U.S. 43, 62 (2015) (Alito, J.,

concurring) (emphasis in original) (quotation omitted)

(quoting Ass’n of Am. Railroads v. U.S. Dep’t of Transp.

(“Amtrak I”), 721 F.3d 666, 674 (D.C. Cir. 2013), vacated

and remanded sub nom. Amtrak II, 575 U.S. 43); see

Whitman v. Am. Trucking Ass’n, 531 U.S. 457, 472

(2001) (“We have never suggested that an agency can

cure an unlawful delegation of legislative power by

adopting in its discretion a limiting construction of the

statute.”).

Second, even if FCC’s power to levy taxes were limited by the amount it disburses on universal service projects, subsection (b) still would not curb FCC’s discretion because we have explained it sets out “aspirational”

principles rather than “inexorable statutory command[s].” TOPUC I, 183 F.3d at 421; see also Tex. Off.

of Pub. Util. Couns. v. FCC, 265 F.3d 313, 321 (5th Cir.

2001). And even if the principles in subsection (b) were

more than aspirational, they still would not meaningfully limit FCC because § 254(b)(7) vests FCC with discretion to formulate “other principles” so long as it considers the additional principles to be “necessary and appropriate for the protection of the public interest, convenience, and necessity and . . . consistent with”

the rest of Chapter 5 of Title 47 of the United States

Code. In other words, FCC “may roam at will,” A.L.A.

Schechter Poultry Corp. v. United States, 295 U.S. 495,

538 (1935), disregarding § 254(b)’s enumerated principles altogether when it thinks the “public interest”

29a

warrants the journey.

§ 254(b)(7).

47 U.S.C. § 254(c)(1)(D); id.

Third, even if the principles in § 254(b) in some way

bind FCC, they are contentless in important respects.

For example, § 254(b)(6) suggests that “[e]lementary

and secondary schools and classrooms . . . and libraries should have access to advanced telecommunications services as described in subsection (h).” But subsection (h) says only that “elementary schools, secondary schools, and libraries” should have access to telecommunications services “for educational purposes at

rates less than the amounts charged for similar services

to other parties.” Id. § 254(h)(1)(B). Which services?

Presumably those FCC thinks are “essential to education” or otherwise within the ambit of its self-defined

universal service utopia. Id. § 254(c). But how is

FCC to make that determination? And which schools

and libraries should receive subsidized services? And

how much less should they pay?

Congress never said. FCC has answered some of

these questions, see 47 C.F.R. §§ 54.501, .502, .505, but

it remains a mystery how we are supposed to “ascertain

whether the will of Congress has been obeyed.” Mistretta, 488 U.S. at 379 (citation omitted). Each of the

“aspirational” universal service principles in § 254(b) &

Section 254(c)(1)(B) suggests low-income consumers should

have access to telecommunications services comparable to those

subscribed to by unsubsidized residential customers. And § 254(b)(3)

tells FCC to make telecommunications services available in rural

areas at rates comparable to those charged in urban areas. Those

provisions may supply sufficient guidance for FCC to execute certain aspects of the universal service program. But nothing in the

30a

as ours is as good as FCC’s is as good as any random

American taxpayer’s. And funding for schools and libraries is not merely an interstitial gap in the statutory

scheme. It constituted more than a third of the contribution amount that gave rise to these proceedings. See

JA.101.8

So if § 254(b) binds at all, it is apparent that the only

real constraint on FCC’s discretion to levy excise taxes

on telecommunications carriers (and American consumers in turn) is that rates “should” remain “affordable.”

47 U.S.C. § 254(b)(1); see Consumers’ Rsch., 67 F.4th at

794 (“[E]xcess subsidization in some cases may detract

from universal service by causing rates unnecessarily to

rise, thereby pricing some consumers out of the market.” (citation omitted)). But saying telecommunications services “should” remain “affordable” amounts to

“no guidance whatsoever.” Jarkesy, 34 F.4th at 462

(emphasis in original). How is FCC to determine

whether the USF Tax it mandates has made telecommunications services unaffordable? The demand for cell

phones is uncommonly inelastic because cell phones are

statute remotely suggests FCC should provide universal service

funding only to low-income or rural schools. So §§ (b)(3) and

(c)(1)(B) cannot supply the limiting principle that § (h)(1)(B) lacks.

And the fact that FCC has limited universal service funding to lowincome schools is, once again, irrelevant. See Am. Trucking, 531

U.S. at 472. The question is whether the statute itself in any way

limits FCC’s discretion to supply universal service funding for educational programs, and it plainly does not.

Both dissenting opinions contend 47 U.S.C. § 254 is loaded with

intelligible principles. See post, at 77-82 (Stewart, J., dissenting);

id. at 101-02 (Higginson, J., dissenting). But neither identifies

any principle that might guide FCC in determining how much less

schools and libraries should pay for telecommunications services.

31a

essential to participation in the modern world. See

Carpenter v. United States, 138 S. Ct. 2206, 2220 (2018)

(“[C]ell phones and the services they provide are such a

pervasive and insistent part of daily life that carrying

one is indispensable to participation in modern society.”

(citation and quotation omitted)).

That means the

FCC could impose eye-watering USF Taxes while also

arguing with a straight face that cell phones remain “affordable” in the sense that most Americans would choose

to keep using them. And that means § 254 leaves FCC

—and as importantly reviewing courts 9—utterly at sea.

Is a 25% excise tax excessively burdensome under

§ 254(b)(1)? 250%? 2500%? There are no answers

because Congress never gave them.

Finally, the breadth of § 254’s delegation is especially

troubling because the statute insulates FCC from the

principal tool Congress has to control FCC’s universal

service decisions—the appropriations power. See U.S.

Const. art. I, § 9, cl. 7 (“No Money shall be drawn from

the Treasury, but in Consequence of Appropriations

made by Law.”). Ordinarily, when Congress delegates

broadly, it retains a residuum of control over agency action because the agency is powerless to act without a

congressional appropriation of funds. See CFPB v. All

Am. Check Cashing, Inc., 33 F.4th 218, 232 (5th Cir.

2022) (Jones, J., concurring) (“Congress’s supremacy in

fiscal matters makes the executive branch dependent on

the legislative branch for subsistence, thereby forging a

See Mistretta, 488 U.S. at 379 (noting courts are “justified” in

invalidating delegations where it would be “impossible in a proper

proceeding to ascertain whether the will of Congress has been

obeyed”) (quoting Yakus v. United States, 321 U.S. 414, 425-26

(1944)).

32a

vital line of accountability between the executive branch

and the legislative branch and, therefore, the people.

Recent history confirms that Congress’s appropriations

powers have proven a forcible lever of accountability:

Congress has tightened the purse strings to express displeasure with an agency’s nefarious activities and even

to end armed combat.”). So even when statutes vest

agencies with significant discretion, the appropriations

process generally ensures agencies remain subservient

to the will of the people as expressed through their elected representatives. See Jonathan H. Adler & Christopher J. Walker, Delegation and Time, 105 IOWA L.

REV. 1931, 1957 (2020) (cataloguing examples and noting

that “[l]imiting appropriations is an effective way to

limit an agency’s exercise of delegated power”).

Here, though, Congress cannot exercise control by

limiting appropriations because the whole point of USF

is to fund universal service outside the regular appropriations process. 10 And since FCC commissioners are

FCC has concluded that 47 U.S.C. § 254 constitutes “a permanent indefinite appropriation.” GAO-05-151, GREATER INVOLVEMENT NEEDED BY FCC IN THE MANAGEMENT AND OVERSIGHT OF

THE E-RATE PROGRAM 11 (2005), https://perma.cc/QNU6-YEFS.

If we had to decide whether § 254 comports with the Appropriations Clause, U.S. Const. art. I, § 1, cl. 9, we would apply the Supreme Court’s decision in CFPB v. Cmty. Fin. Servs. Ass’n of Am.,

Ltd., 601 U.S. 416 (2024). But we need not decide that question

because Petitioners did not formally raise an Appropriations

Clause challenge. Our point is only that, to the extent Congress’s

ability to control agencies through regular appropriations supplies

some justification for broad delegations, see, e.g., Christopher J.

Walker, Restoring Congress’s Role in the Modern Administrative

State, 116 MICH. L. REV. 1101, 1116 (2018) (explaining the tools

Congress has, including the appropriations power, “to rein in the

administrative state and prevent federal agencies from abusing

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removable by the President only for-cause, see 47 U.S.C.

§ 154(c)(1)(A), the connection between FCC policy decisions made pursuant to § 254 and any democratically accountable federal official is extremely attenuated.

The Supreme Court has “over and over upheld even

very broad delegations.” Gundy, 588 U.S. at 146 (plurality op.). But it has also suggested the scope of permissible delegation varies with context. See Am. Trucking, 531 U.S. at 475 (“[T]he degree of agency discretion

that is acceptable varies according to the scope of the

power congressionally conferred.”); J.W. Hampton, 276

U.S. at 406 (“In determining what [Congress] may do in

seeking assistance from another branch, the extent and

character of that assistence [sic] must be fixed according to common sense and the inherent necessities of the

governmental co-ordination.”); Loving, 517 U.S. at 768

(noting the general rule that “a constitutional power implies a power of delegation of authority under it sufficient to effect its purposes” (emphasis added)) (quoting

Lichter v. United States, 334 U.S. 742, 778 (1948));

Lichter, 334 U.S. at 778-79 (suggesting Congress may

delegate its war powers more broadly); Panama Refin.,

293 U.S. at 422 (same). So the fact that the Court has

upheld certain broad delegations does not necessarily

dictate that we uphold § 254’s delegation of power to

FCC to levy taxes on American consumers. And § 254

appears unlike any delegation the Court has ever

blessed.

their consolidated lawmaking and law-execution powers”), that justification is absent here.

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For starters, the Supreme Court’s nondelegation “jurisprudence has been driven by a practical understanding that in our increasingly complex society, replete with

ever changing and more technical problems, Congress

simply cannot do its job absent an ability to delegate

power under broad general directives.” Mistretta, 488

U.S. at 372 (emphasis added). So the Court has deemed

it constitutionally sufficient for Congress to make a policy judgment and then direct an agency to give that

judgment effect through the application of technical

knowledge.

For example, in American Trucking, 531 U.S. 457,

the Court considered a congressional directive to EPA

to set ambient air quality standards for certain pollutants. Id. at 472. It held that the statute supplied an

intelligible principle because it required EPA to set air

quality standards “requisite to protect the public

health” “for a discrete set of pollutants” based on “the

latest scientific knowledge.” Id. at 472-73. In other

words, the statute was constitutional because Congress

made the crucial policy judgment—that the public

should be protected from harmful pollutants— and then

relied on EPA to give effect to that judgment through

the application of its scientific expertise. 11 See Gundy,

588 U.S. at 166 (Gorsuch, J., dissenting) (explaining that

the “most important[]” question in the intelligible principle inquiry is whether “Congress, and not the Executive Branch, ma[d]e the policy judgments”).

The Court upheld the delegation only after deciding that the

statute in question “unambiguously bar[red] cost considerations

from the NAAQS-setting process.” Id. at 471; see also id. at 47374 (noting the statute “did not permit economic costs to be considered”).

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Here, in contrast, Congress did not delegate because

FCC has some superior technical knowledge about the

optimal amount of universal service funding. No such

knowledge exists because determining the ideal size of

a welfare program involves policy judgments, not technical ones. And under our Constitution, those judgments usually are Congress’s to make.

In fact, in every case where the Court has upheld a

congressional delegation of its prerogative to make significant policy judgments, there has been some special

justification. In Mistretta, for example, the Court considered a congressional delegation of authority to Article III judges to promulgate sentencing guidelines.

Few things are more policy-laden than criminal sentencing decisions, but the Court found the delegation permissible because “the Judiciary always has played, and

continues to play, [a role] in sentencing.” Mistretta,

488 U.S. at 391; see also ibid. (“Just as the rules of procedure bind judges and courts in the proper management of the cases before them, so the Guidelines bind

judges and courts in the exercise of their uncontested

responsibility to pass sentence in criminal cases. In

other words, the Commission’s functions, like this

Court’s function in promulgating procedural rules, are

clearly attendant to a central element of the historically

acknowledged mission of the Judicial Branch.”).

Similarly, in National Broadcasting Co. v. United

States, 319 U.S. 190 (1943), the Court upheld a delegation to FCC to regulate broadcasting “as public convenience, interest, or necessity requires. . . . ” Id. at

214. But licensing of broadcasting rests on the principle “that the public . . . own[s] the airwaves,” and

that private people may use that resource only on terms

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the government sets. John Harrison, Executive Administration of the Government’s Resources and the

Delegation Problem, in THE ADMINISTRATIVE STATE

BEFORE THE SUPREME COURT 232, 250 (Peter J. Wallison & John Yoo eds., 2022); see also MCCONNELL, THE

PRESIDENT WHO WOULD NOT BE KING, supra, at 334

(noting that the Communications Act of 1934 “can be

seen as merely a transfer back to the executive branch

of a power to manage public property”). “[S]ecur[ing]

the maximum benefits of ” a public resource “to all the

people of the United States,” Nat’l Broad. Co., 319 U.S.

at 217, is “within the core of the executive power,” Harrison, Executive Administration, in THE ADMINISTRATIVE STATE BEFORE THE SUPREME COURT , supra, at

238. And “when a congressional statute confers wide

discretion to the executive, no separation-of-powers

problem may arise if the discretion is to be exercised

over matters already within the scope of executive

power.” Gundy, 588 U.S. at 159 (Gorsuch, J., dissenting) (citation and quotation omitted); see Wayman v.

Southard, 23 U.S. 1, 42-43 (1825) (“It will not be contended that Congress can delegate

. . .

powers

which are strictly and exclusively legislative. But Congress may certainly delegate to others, powers which

the legislature may rightfully exercise itself.”); United

States v. Curtiss-Wright Exp. Corp., 299 U.S. 304, 31920 (1936) (explaining that Congress may delegate more

broadly in the foreign affairs context because “the President [is] the sole organ of the federal government in the

field of international relations.”); see also MCCONNELL,

THE PRESIDENT WHO WOULD N OT BE KING , supra, at

334 (“[S]ome of Congress’s enumerated powers are

strictly and exclusively legislative but some are not, and

Congress may either exercise the latter powers itself or

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delegate them.”); Phillip Hamburger, Nondelegation

Blues, 91 GEO. WASH. L. REV. 1083, 1148 (2023) (noting

that “the shared reach of the” legislative, executive, and

judicial “powers occasionally allows different branches

to do the same thing even under their different and separated powers.”).

Section 254, in contrast, did not delegate to the executive any power even remotely executive in character.

It delegated the power to tax, which “is a legislative

function.” Nat’l Cable, 415 U.S. at 340.

True, the Supreme Court has upheld seemingly

broad congressional delegations of core legislative functions. See, e.g., Yakus, 321 U.S. at 420 (upholding a delegation to the agency to fix the prices of commodities at

a level that “will be generally fair and equitable and will

effectuate the purposes of the Act.” (citation omitted)); Am. Power & Light Co. v. SEC, 329 U.S. 90, 97

(1946) (upholding a delegation to SEC to modify the

structure of holding company systems so as to ensure

that they are not “unduly or unnecessarily complicated”

and do not “unfairly or inequitably distribute voting

power among security holders.” (citation omitted)).

But careful consideration reveals that the statutes considered in all these cases limited agency discretion enough

that, at the very least, reviewing courts could “ascertain

whether the will of Congress ha[d] been obeyed.” Mistretta, 488 U.S. at 379 (quoting Yakus, 321 U.S. at 42526).

In Yakus, for example, Congress directed the administrator responsible for ensuring “fair and equitable”

prices to “ascertain and give due consideration to the

prices prevailing” in a particular two-week period, and

to make adjustments for relevant factors including

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“[s]peculative fluctuations, general increases or decreases in costs of production, distribution, and transportation, and general increases or decreases in profits

earned by sellers of the commodity or commodities, during and subsequent to the year ended October 1, 1941.”

321 U.S. at 421 (citation omitted). It can hardly be contended that the executive wanted for legislative direction under this statute, or that reviewing courts lacked

workable standards. See id. at 426 (noting that “the

standards prescribed by the . . . Act” were “sufficiently definite and precise to enable Congress, the

courts and the public to ascertain whether the Administrator, in fixing the designated prices, has conformed to

those standards”). Similarly in American Power &

Light Co., the Court found that “a veritable code of

rules” set out in other sections of the statute clarified

the ambiguities inherent in the phrases “unduly or unnecessarily complicate[d]” and “unfairly or inequitably

distribute[d]” such that courts would have no trouble

testing SEC’s policies against the law. 329 U.S. at 10405.

The Court’s other nondelegation precedents are in

accord. The statute considered in J.W. Hampton, 276

U.S. 394, simply directed the President to impose tariffs

that would “equalize” the relative costs of production for

American companies and their foreign counterparts—a

fact-finding role. Id. at 401; see also Gundy, 588 U.S. at

163 (Gorsuch, J., dissenting) (noting that the statute

may have required the President to make “intricate calculations, but it could be argued that Congress had

made all the relevant policy decisions, and the Court’s

reference to an ‘intelligible principle’ was just another

way to describe the traditional rule that Congress may

leave the executive the responsibility to find facts and

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fill up details.”). And the term “public interest” in

§ 407 of the Transportation Act of 1920 was shorthand

for a congressional instruction to the Interstate Commerce Commission to ensure that proposed railroad

consolidation would not result in deteriorating service

quality or unreasonable or discriminatory rates—an instruction with discernible content in light of the common

law of common carriers. See N.Y. Cent. Sec. Corp. v.

U.S., 287 U.S. 12, 25 (1932); see also id. at 24 (“It is a

mistaken assumption that [the term ‘public interest’] is

a mere general reference to public welfare without any

standard to guide determinations. The purpose of the

Act, the requirements it imposes, and the context of the

provision in question show the contrary.”); Herbert

Hovenkamp, Regulatory Conflict in the Gilded Age:

Federalism and the Railroad Problem, 97 YALE L.J.

1017, 1045 (1988) (“As early as the 17th century, the

common law had derived the duty to charge reasonable

rates from the common carrier’s obligation to serve everyone.

. . .

”).

And the statute considered in

Touby “meaningfully constrain[ed] the Attorney General’s discretion” because it directed the Attorney General to ban drugs only after making a factual determination that there was a history of significant abuse that

threatened the public health. See 500 U.S. at 166; see

also Gundy, 588 U.S. at 166 (Gorsuch, J., dissenting)

(noting that in Touby the Court “stressed all [the statutory] constraints on the Attorney General’s discretion

. . . to indicate that the statute supplied an ‘intelligible principle’ because it assigned an essentially factfinding responsibility to the executive.” (emphasis in

original)). And the statute considered in Lichter, 334

U.S. 742—which authorized the executive to recoup “excessive profits” on wartime government contracts—was

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likewise judicially workable. As the Court noted, ‘excessive’ simply means “[g]reater than the usual amount

or degree.” Id. at 785 n.37 (quoting WEBSTER’S NEW

INTERNATIONAL DICTIONARY (2d ed. 1938)). A reviewing court would thus have no trouble discerning

whether a contractor reaped in excess because it could

easily compare his profits to those of his peers. 12 And

so on and so forth.

* * *

So amidst all the statutes that have survived nondelegation challenges, § 254 stands alone. Unlike delegations implicating special agency expertise, § 254 delegates to FCC the power to make important policy judgments, and to make them while wholly immunized from

the oversight Congress exercises through the regular

appropriations process. Unlike delegations implicating the power to impose criminal sentences, taxation has

always been an exclusively legislative function. Unlike

Moreover, as we have noted, context matters to the intelligibleprinciple inquiry. So assuming arguendo Lichter blessed a delegation more sweeping than any other (we think it did not), it is

surely relevant that the Court emphasized that the statute in question came about because of the necessities of war, “sprang from

[Congress’s] war powers,” and operated only for “the duration of

the war or . . . a short time thereafter.” Id. at 755; 787. As

the Court explained, because “[t]he power to wage war is the power

to wage war successfully,” “[r]easonable regulations to safeguard

the resources upon which we depend for military success must be

regarded as being within the powers confided to Congress to enable it to prosecute a successful war.” Id. at 780-81. The Panama

Refining Court similarly deemed the wartime posture of certain

broad delegations meaningful to the delegation inquiry because the

President himself has war powers “cognate to the conduct by him

of the foreign relations of the government.” 293 U.S. at 422.

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the power to impose conditions on the use of public property, taxation involves the conversion of private property. And unlike other congressional delegations implicating core legislative functions, § 254 is a hollow shell

that Congress created for FCC to fill—so amorphous

that no reviewing court could ever possibly invalidate

any FCC action taken in its name. 13

Section 254 also implicates the taxing power, which makes the

nondelegation concerns it raises especially salient. See Nat’l Cable, 415 U.S. at 341 (“It would be such a sharp break with our traditions to conclude that Congress had bestowed on a federal agency

the taxing power that we read [the relevant statute] narrowly as

authorizing not a ‘tax’ but a ‘fee.’”). That is because limitations on

the taxing power have long been the mechanism through which the

people curb the excesses of unelected power. See The Federalist

No. 58 (J. Madison) (“[The House], in a word, hold[s] the purse that

powerful instrument by which we behold, in the history of the British Constitution, an infant and humble representation of the people

gradually enlarging the sphere of its activity and importance, and

finally reducing, as far as it seems to have wished, all the overgrown prerogatives of the other branches of the government.”).

For that reason, the framers through the Origination Clause

took special care to ensure that the taxing power remained intimately connected with the people. See U.S. CONST. art. I, § 7, cl.1

(“All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.”); 1 THE RECORDS OF THE FEDERAL CONVENTION of 1787 544 (Max Farrand ed., 2d ed. 1937) (George Mason)

(“[T]he consideration which weighed with the Committee [when

drafting the Origination Clause] was that the [House] would be the

immediate representatives of the people, the [Senate] would not.”).

In fact, “vesting the origination power with the House was an integral part of the deal that resolved the conflict over congressional apportionment: seats in the Senate would not be apportioned based on

population, but only the House of Representatives would have the

power to initiate legislation that raises or spends money.” Krotoszynksi, Jr., Reconsidering the Nondelegation Doctrine, supra, at

42a

We therefore have grave concerns about § 254’s constitutionality under the Supreme Court’s nondelegation

precedents. See Gundy, 588 U.S. at 136 (plurality op.)

(noting that the Court “would face a nondelegation question” if the statutory provision at issue had “grant[ed]

the Attorney General plenary power to determine [the

statute’s] applicability to pre-Act offenders—to require

them to register, or not, as she sees fit, and to change

her policy for any reason and at any time” (emphasis

added) (citation omitted)). Nevertheless, we need not

hold the agency action before us unconstitutional on that

ground alone because the unprecedented nature of the

delegation combined with other factors is enough to hold

it unlawful. See infra, Part III.D.

The Q1 2022 USF Tax is not only difficult to square

with the Supreme Court’s public nondelegation precedents. It was also formulated by private entities.

That raises independent but equally serious questions

about its compatibility with Article I, § 1, which requires

“[a]ll legislative Powers herein granted shall be vested

in a Congress.” We (1) explain that the scope of FCC’s

delegation to private entities may violate the Legislative

Vesting Clause by allowing private entities to exercise

252. Benjamin Franklin, among others, noted that “the two clauses,

the originating of money bills, and the equality of votes in the Senate,

[are] essentially connected by the compromise which had been

agreed to.” 2 THE RECORDS OF THE FEDERAL CONVENTION, supra, at 233.

So the Constitution’s original meaning would seem to compel a

more restrictive test for delegations of the taxing power. Nevertheless, the Supreme Court has declined to apply heightened scrutiny to tax-related delegations, see Skinner, 490 U.S. at 223, and we

are not authorized to depart from that holding.

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government power. Then we (2) explain that even if

FCC’s delegation could be constitutionally justified,

FCC may have violated the Legislative Vesting Clause

by delegating government power to private entities

without express congressional authorization.

The Supreme Court has held Congress has broad discretion to empower executive agencies to “execute” the

law. See City of Arlington v. FCC, 569 U.S. 290, 304

n.4 (2013). “When it comes to private entities, however, there is not even a fig leaf of constitutional justification. Private entities are not vested with legislative

Powers.

Nor are they vested with the executive

Power, which belongs to the President.” Amtrak II,

575 U.S. at 62 (Alito, J., concurring) (quotation and citations omitted). So it is clear that delegations to private

entities raise constitutional concerns entirely distinct

from delegations to the executive.

Only four times has the Supreme Court considered

whether a delegation to private entities violates Article

I’s Vesting Clause. 14

First, in Schechter Poultry, the Court considered a

constitutional challenge to the National Industrial ReThe parties in Amtrak II raised a private delegation challenge,

but the Court did not reach it because it determined that, for relevant purposes, Amtrak was a governmental entity. See 575 U.S.

at 55. The Court has also several times considered whether state

delegations of legislative power to private entities violated due process, see Paul J. Larkin, The Private Delegation Doctrine, 73 Fla.

L. Rev. 31, 45-47 (2021), but those cases present a question different from the one before us.

44a

covery Act (“NIRA”) of 1933, 48 Stat. 195. See 295

U.S. at 519-21. That statute delegated to trade or industrial groups the authority to develop codes defining

“unfair method[s] of competition.” Id. at 521 n.4 (quotation omitted). If the codes were approved by the

President, they were to become law under “such exceptions to and exemptions from the provisions of such

code, as the President in his discretion deem[ed] necessary to effectuate the policy” of the NIRA. Ibid. The

Court held that the statute was unconstitutional. In

part, it reasoned the idea that “Congress could delegate

its legislative authority to trade or industrial associations or groups so as to empower them to enact the laws

they deem to be wise and beneficent for the rehabilitation and expansion of their trade or industries,” or that

“trade or industrial associations or groups be constituted legislative bodies for that purpose because such

associations or groups are familiar with the problems of

their enterprises” was “utterly inconsistent with the

constitutional prerogatives and duties of Congress.”

Id. at 537.

The next year, in Carter v. Carter Coal Company, 298

U.S. 238, 278 (1936), the Court considered a delegation

challenge to the Bituminous Coal Conservation Act of

1935, 49 Stat. 991 (repealed 1937). That statute authorized the district board in local coal districts (the

“code authority”) to adopt a code that included agreedupon minimum prices for coal. Carter Coal, 298 U.S. at

282-83. It also allowed an agreement between producers of more than two-thirds of the annual tonnage of coal

and a majority of mine workers to set industry-wide

minimum wage and maximum working-hour agreements. Id. at 283-84. Both the minimum price codes

and the labor codes bound producers—i.e., obtained le-

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gal force—without approval by any federal official. Id.

at 282, 284. The Court explained the statute amounted

to “delegation in its most obnoxious form” because it

purported to delegate regulatory power not “to an official or an official body, presumptively disinterested,”

but rather “to private persons whose interests . . .

often are adverse” to those whom the statute authorized

them to regulate. Id. at 311. That, the Court held,

was “an intolerable and unconstitutional interference

with personal liberty and private property.” Ibid.15

In Currin v. Wallace, 306 U.S. 1, 5-6 (1939), the Court

considered a delegation challenge to the Tobacco Inspection Act of 1935, 49 Stat. 731 which authorized the

Secretary of Agriculture to designate markets in which

no tobacco could be sold unless it had “been inspected

and certified by an authorized representative of the Secretary according to the established standards.” One of

the bases for the challenge was that the Secretary could

not designate a market unless two-thirds of the growers

voting at a prescribed referendum favored the designation. See Currin, 306 U.S. at 6, 15. But the producers

had no power to designate the markets in which classification would be required; only the Secretary could do

that. Nor did the statute even provide that the producers would help craft regulations. So unlike the private

bodies in Carter Coal, the tobacco producers had no

The Court did not clearly specify which constitutional provision

—the Legislative Vesting Clause or the Fifth Amendment Due

Process Clause—the statute offended. See id. at 310-12; see also

Nat’l Horsemen’s Benevolent & Protective Ass’n v. Black, 53 F.4th

869, 881 n.23 (5th Cir. 2022). But because the relevant portion of

the Carter Coal cited Schechter Poultry, a Vesting Clause case,

alongside Due Process cases, the Court presumably held the delegation was unlawful on both grounds.

46a

power to “make the law and force it upon a minority.”

Id. at 15-16 (citation omitted). Congress merely gave

them the ability to prevent certain regulations from taking effect. See ibid. The Court accordingly rejected

the challenge on the ground that the statute did not delegate any legislative power to private entities. Ibid.

Finally, in Sunshine Anthracite Coal Company v.

Adkins, 310 U.S. 381, 387 (1940), the Court considered a

private delegation challenge to The Bituminous Coal Act

of 1937, 50 Stat. 72 (repealed 1966), a revised version of

the statute the Court held unlawful in Carter Coal.

Congress’s most important revision was to relegate the

code authorities from lawmakers to “aid[s]” subject to

the “pervasive surveillance and authority” of the National Bituminous Coal Commission. Sunshine Anthracite, 310 U.S. at 388. Under the revised statute,

code authorities could “propose” minimum prices, but

their proposals were legal nullities until they were expressly “approved, disapproved, or modified” by the

Coal Commission. Ibid. Thus, the Court concluded

that the Commission, “not the code authorities, determine[d] [coal] prices,” id. at 399, and it therefore held

that the statute did not unconstitutionally delegate government power to private entities.

Lower courts have discerned from these cases the

“cardinal constitutional principle [] that federal power

can be wielded only by the federal government.”

Black, 53 F.4th at 872. Private delegations are thus

constitutional only on three conditions. First, government officials must have final decision-making authority. See Larkin, The Private Delegation Doctrine,

supra, at 50-51 (noting that in every case in which the

Supreme Court has upheld a private delegation, “the

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law[] at issue . . . left final decision-making authority in the hands of a government official”). Second,

agencies must actually exercise their authority rather

than “reflexively rubber stamp [work product] prepared

by others.” Sierra Club v. Lynn, 502 F.2d 43, 59 (5th

Cir. 1974); see State v. Rettig, 987 F.3d 518, 531 (5th Cir.

2021), cert. denied, Tex. v. Comm’r of Internal Revenue,

142 S. Ct. 1308 (2022) (“A federal agency may not abdicate its statutory duties by delegating them to a private

entity.” (quotation and citation omitted)). 16 And third,

the private actors must always remain subject to the

“pervasive surveillance and authority” of some person

or entity lawfully vested with government power. Sunshine Anthracite, 310 U.S. at 388.

In light of these strictures on private delegations, we

held unconstitutional a statute that vested a private entity with the power to make rules regulating an industry

where those rules were subject only to limited agency

review. See Black, 53 F.4th at 884-89. And the D.C.

Circuit similarly held unconstitutional a statute that empowered Amtrak to work jointly with the Federal Railroad Administration to develop binding railroad performance standards because the statute did not vest FRA

with complete regulatory control. See Amtrak I, 721

F.3d at 670-74, vacated and remanded sub nom. Amtrak

Lynn arose under the National Environmental Policy Act

(“NEPA”), not the Constitution. But Rettig repeatedly cited Lynn

to expound the level of control agencies must retain over private

actors wielding governmental power for constitutional purposes.

Rettig, 987 F.3d at 532. The central question in Lynn was whether an agency bore ultimate responsibility for work product prepared by a private entity, see 502 F.2d at 59, which is required not

only by NEPA but also by the Legislative Vesting Clause, see, e.g.,

Black, 53 F.4th at 881.

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II, 575 U.S. 43; see also Black, 53 F.4th at 889-90 (relying on Amtrak I ).

In contrast, where courts have deemed delegations to

private entities constitutional, they have uniformly emphasized the agency’s actual decision-making authority

and control. For example, when the Third Circuit approved the National Association of Securities Dealers’

role in securities regulation, it explained industry selfregulation raises “serious constitutional challenges.”

Todd & Co. v. SEC, 557 F.2d 1008, 1014 (3d Cir. 1977).

Accordingly, the Court held securities self-regulation

was constitutional only after emphasizing that SEC was

obliged to “insure fair treatment of those disciplined by”

NASD. Ibid. It also stressed that SEC was statutorily required to review NASD orders, make de novo

findings, and come to an “independent decision on” securities’ violations and penalties. See id. at 1012; see

also id. at 1012-13 (“[NASD’s] rules and its disciplinary

actions were subject to full review by the S.E.C., a

wholly public body, which must base its decision on its

own findings.” (emphasis added)). Similarly, when

we approved a private entity’s role in drafting an environmental impact statement, we emphasized that “the

applicable federal agency [bore] the responsibility for

the ultimate work product” and “independently perform[ed] its reviewing, analytical and judgmental functions.” Lynn, 502 F.2d at 59 (quotation and citation

omitted); see also Rettig, 987 F.3d at 531-32 (citing Lynn

in an Art. I, § 1 challenge).

FCC has delegated government power—the power to

dictate the size of the universal service contribution

amount, which controls the size of a tax levied on Amer-

49a

ican consumers—to USAC and private telecommunications carriers. That delegation is lawful only if FCC (1)

has final decision-making authority, (2) actually exercises that authority, and (3) exercises “pervasive surveillance and authority” over the private entities exercising power in its name. Black, 53 F.4th at 884 (quoting Sunshine Anthracite, 310 U.S. at 388).

FCC’s subdelegation of its taxing power violates this

test in two ways. The first problem is that FCC regulations provide that USAC’s projections take legal effect

without formal FCC approval.

See 47 C.F.R.

§ 54.709(a)(3). FCC has, in effect, given private entities the final say with respect to the size of the USF Tax.

That FCC retains discretion to revise the proposed contribution amount, see ibid., is insufficient. Congress

could not say: “The defense budget is whatever Lockheed Martin wants it to be, unless Congress intervenes

to revise it.” To make law, Congress must affirmatively adopt the statutory text, pass it bicamerally, and

present it to the President for signature.

INS v.

Chadha, 462 U.S. 919, 959 (1983). Legislation requires

action not acquiescence. Similarly, while FCC may solicit advice from USAC and private carriers, it must affirmatively act to give legal effect to that advice because

it alone has constitutional authority to execute 47 U.S.C.

§ 254.

The second problem is that FCC does not appear to

“independently perform[] its reviewing, analytical and

judgmental functions” with respect to the privately supplied universal service contribution amount. Rettig,

987 F.3d at 532 (quoting Lynn, 502 F.2d at 59). FCC

has not pointed us to anything that suggests it even

checks USAC’s work. Instead, it appears to “reflex-

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ive[ly] rubber stamp” whatever contribution amount

USAC proposes. Lynn, 502 F.2d at 59. The record

before us shows that, before this litigation started, FCC

never made a single substantive change to the contribution amounts proposed by USAC. See supra, at 6 &

n.1.17

That is a de facto abdication. And when an agency

de facto abdicates to a private entity its responsibility to

make governmental decisions, that entity becomes more

than a mere “aid” to the agency. See Black, 53 F.4th at

881 (quoting Sunshine Anthracite, 310 U.S. at 388).

The private company becomes a lawmaker in its own

right. So de jure approval alone is not enough. If

FCC is going to rely on a non-governmental actor to

supply a revenue requirement that dictates the size of a

tax levied on American consumers, it must at the very

least do something to demonstrate that it applied its independent judgment.

The Government’s principal counterargument is that

FCC—not USAC—is exercising governmental power.

Its argument goes like this: FCC sets out detailed regulations specifying who is eligible for what kinds of universal service subsidies. Private companies merely

project the costs they will incur supplying the FCCspecified subsidized services and report that information to USAC. And then USAC merely aggregates

Even if FCC wanted to change USAC’s proposals, it is not at

all clear it could. Petitioners contend, and FCC does not dispute,

that the “approval” process for USAC’s proposals plays out just

days before the new quarter begins. With such a short time window, it appears FCC has no real choice but to accept USAC’s proposed figures.

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that information into a contribution amount, which FCC

turns into the contribution factor that is levied on telecommunications revenues as a USF Tax. FCC regulations even preclude USAC from making policy. So in

determining the contribution amount, which directly

controls the size of the tax levied on American telecommunications consumers, USAC and private carriers perform a simple, ministerial task—a mere “fact gathering

function for the FCC.” FCC EB Br. 56 (quotation

omitted).

But FCC obfuscates how the universal service sausage is really made. FCC would have us believe its universal service policy necessarily dictates the size of the

contribution amount, and so FCC really controls the size

of the USF Tax. But that cannot be right because USF

disbursements often do not comply with FCC policy.

See supra, Part I.C. Instead, large swaths of USF

funds—perhaps at one point close to one-quarter—are

disbursed to ineligible recipients. See, e.g., THE HIGHCOST PROGRAM, supra, at 2. That FCC sets universal

service policy obviously does nothing to limit the revenue FCC allows private entities to exact from consumers to fund payments made in violation of FCC’s universal service policy.

Put differently, FCC policy would dictate the contribution amount only if it in fact dictated how private companies raised and spent USF monies. The problem is

that FCC has abdicated responsibility for ensuring compliance to the very entities whose universal service demand projections dictate the size of the contribution

amount. See, e.g., FCC’s LIFELINE PROGRAM, supra,

at executive summary page (noting that FCC “relies on

over 2,000 Eligible Telecommunication Carriers that are

52a

Lifeline providers to implement key program functions,

such as verifying subscriber eligibility,” which is problematic because “companies may have financial incentives to enroll as many customers as possible”); FCC’s

E-RATE PROGRAM, supra, at 21-22 (noting that telecommunications service providers have opportunities to

“make misrepresentations . . . during the funding

phase” that “may not be discovered due to the selfcertifying nature of the program”).

Moreover, the entity most responsible for snuffing

out wasteful or fraudulent disbursements—USAC—is

run almost entirely by stakeholders who stand to benefit

financially when universal service subsidies grow. See

Leadership, UNIVERSAL SERV. ADMIN. CO., supra; see

also FCC’s E-RATE PROGRAM, supra, at 15 (noting that

FCC relies on USAC to ensure compliance carrier compliance with FCC rules). And that is no accident.

USAC is run by self-interested stakeholders because

FCC regulations require it. See 47 C.F.R. § 54.703(b).

FCC mandates that nine of USAC’s nineteen directors

represent companies in the telecommunications industry who are compensated by the very same USF funds

they raise. See id. § 54.703(b)(1)-(6). It mandates that another seven represent the schools, libraries, health care

providers, and low-income consumers who are direct recipients of USF funds. Se

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