Respondents Brief — Federal Communications Commission, et al., Petitioners v. Consumers' Research, et al.
Supreme Court briefFeb 11, 2025
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Nos. 24-354 and 24-422
IN THE
Supreme Court of the United States
̴̴̴̴̴̴̴̴̴
FEDERAL COMMUNICATIONS COMMISSION, ET AL.,
Petitioners,
v.
CONSUMERS’ RESEARCH, ET AL., Respondents.
________
SHLB COALITION, ET AL., Petitioners,
v.
CONSUMERS’ RESEARCH, ET AL., Respondents.
________
On Writs of Certiorari to the United States Court of
Appeals for the Fifth Circuit
________
BRIEF FOR THE RESPONDENTS
________
ROBERT HENNEKE
R. TRENT MCCOTTER
CHANCE WELDON
Counsel of Record
TEXAS PUBLIC POLICY
JONATHAN BERRY
MICHAEL BUSCHBACHER
FOUNDATION
901 Congress Avenue
JARED M. KELSON
JAMES R. CONDE
Austin, TX 78701
JONATHAN FELD*
(512) 472-2700
rhenneke@texaspolicy.com BOYDEN GRAY PLLC
800 Connecticut Ave. NW
*Admitted in Pennsylvania; Suite 900
practice supervised by D.C.
Washington, DC 20006
Bar Members
(202) 706-5488
tmccotter@boydengray.com
QUESTIONS PRESENTED
1. Whether 47 U.S.C. § 254 violates the
nondelegation doctrine by imposing no objective limit
on the revenue to be raised for the Universal Service
Fund.
2. Whether the FCC violates the private
nondelegation doctrine by transferring its revenueraising power to the Universal Service Administrative
Company, a private company run by industry interest
groups.
3. Whether the combination of those
delegations violates the nondelegation doctrine.
two
4. Whether this case is moot in light of the
challengers’ failure to seek preliminary relief before
the Fifth Circuit.
ii
CORPORATE DISCLOSURE STATEMENT
Consumers’
Research
and
Cause
Based
Commerce, Inc., have no parent corporations, and no
publicly held company owns 10% or more of their
stock.
iii
TABLE OF CONTENTS
QUESTIONS PRESENTED ........................................ i
CORPORATE DISCLOSURE STATEMENT ........... ii
TABLE OF AUTHORITIES ....................................... iv
INTRODUCTION ........................................................ 1
STATEMENT OF THE CASE .................................... 5
SUMMARY OF THE ARGUMENT .......................... 18
ARGUMENT ............................................................. 19
I.
Revenue-Raising Is a Legislative Power ........... 19
II. Section 254 Violates the Original
Understanding of Nondelegation ....................... 29
III. Section 254 Violates the Modern
Nondelegation Test ............................................. 65
IV. The USF Revenue-Raising Scheme Also
Violates the Private Nondelegation
Doctrine ............................................................... 74
V. The Combination of Delegations Is
Unconstitutional ................................................. 88
VI. This Case Is Not Moot ........................................ 90
CONCLUSION .......................................................... 98
iv
TABLE OF AUTHORITIES
Page(s)
Cases
Nathan v. Louisiana,
49 U.S. 73 (1850) .............................................. 1, 31
A.L.A. Schechter Poultry Corp. v. United
States, 295 U.S. 495 (1935) ..... 3, 29, 47, 49, 50, 51,
57, 59, 60, 61, 74, 89
Airlines for Am., Inc. v. DOT,
___ F.4th ___, 2025 WL 313998 (5th
Cir. Jan. 28, 2025) ................................................ 64
Alenco Commc’ns, Inc. v. FCC,
201 F.3d 608 (5th Cir. 2000) .......................... 27, 50
Am. Power & Light Co. v. SEC,
329 U.S. 90 (1946) .................................... 52, 65, 69
Ass’n of Am. Railroads v. DOT,
721 F.3d 666 (D.C. Cir. 2013) .............................. 79
Bell v. Wolfish,
441 U.S. 520 (1979) .............................................. 93
Biden v. Nebraska,
143 S. Ct. 2355 (2023) .......................................... 61
Bowen v. Massachusetts,
487 U.S. 879 (1988) .............................................. 91
Bridas SAPIC v. Turkmenistan,
345 F.3d 347 (5th Cir. 2003) ................................ 73
Brock v. Roadway Express, Inc.,
481 U.S. 252 (1987) .............................................. 93
v
Brown v. Chote,
411 U.S. 452 (1973) .............................................. 94
Burlington N. R.R. Co. v. Bhd. of Maint.
of Way Emps., 481 U.S. 429 (1987) ..................... 93
Cal. Coastal Comm’n v. Granite Rock
Co., 480 U.S. 572 (1987)....................................... 93
Carroll v. President & Comm’rs of
Princess Anne, 393 U.S. 175 (1968) ..................... 94
Carter v. Carter Coal Co.,
298 U.S. 238 (1936) ............................ 74, 76, 85, 86
CFPB v. Cmty. Fin. Servs. Ass’n of Am.,
Ltd., 601 U.S. 416 (2024) ............................... 37, 39
CFPB v. Law Offs. of Crystal Moroney,
P.C., 63 F.4th 174 (2d Cir. 2023) ......................... 67
City of Arlington v. FCC,
569 U.S. 290 (2013) .............................................. 76
City of Springfield v. Ostrander (In re
LAN Tamers, Inc.),
329 F.3d 204 (1st Cir. 2003) .................................. 7
Consumers’ Rsch. v. FCC,
67 F.4th 773 (6th Cir. 2023) .......................... 45, 83
Consumers’ Rsch. v. FCC,
88 F.4th 917 (11th Cir. 2023) ....... 3, 17, 25, 27, 30,
36, 45, 48, 49, 50, 53, 54, 56, 82, 87
Currin v. Wallace,
306 U.S. 1 (1939) .................................................. 86
Davis v. FEC,
554 U.S. 724 (2008) ........................................ 91, 93
vi
Democratic Party of U.S. v. Wis. ex rel.
La Follette, 450 U.S. 107 (1981) .......................... 93
Does 1–3 v. Mills,
142 S. Ct. 17 (2021) ........................................ 80, 95
DOT v. Ass’n of Am. Railroads,
575 U.S. 43 (2015) ............ 40, 42, 69, 74, 76, 85, 88
Dunn v. Blumstein,
405 U.S. 330 (1972) .............................................. 94
Empower Texans, Inc. v. Geren,
977 F.3d 367 (5th Cir. 2020) ................................ 96
FEC v. Wis. Right to Life, Inc.,
551 U.S. 449 (2007) ........................................ 91, 93
First Nat’l Bank of Bos. v. Bellotti,
435 U.S. 765 (1978) .......... 54, 61, 84, 91, 92, 93, 95
FPC v. Hope Natural Gas Co.,
320 U.S. 591 (1944) .............................................. 71
Free Enter. Fund v. Pub. Co. Acct.
Oversight Bd.,
561 U.S. 477 (2010) .............................................. 89
Gaines v. Thompson,
74 U.S. 347 (1868) ................................................ 77
Gannett Co. v. DePasquale,
443 U.S. 368 (1979) .............................................. 93
Globe Newspaper Co. v. Superior Ct. for
Norfolk Cnty.,
457 U.S. 596 (1982) .............................................. 93
vii
Gundy v. United States,
588 U.S. 128 (2019) ..... 2, 19, 29, 30, 31, 33, 34, 40,
43, 46, 48, 58, 65, 66, 70, 71
Honig v. Doe,
484 U.S. 305 (1988) .............................................. 93
In re Incomnet, Inc.,
463 F.3d 1064 (9th Cir. 2006) ........................ 10, 12
Indus. Union Dep’t, AFL-CIO v. Am.
Petroleum Inst.,
448 U.S. 607 (1980) ................................................ 5
INS v. Chadha,
462 U.S. 919 (1983) .............................................. 79
J.W. Hampton, Jr., & Co. v. United
States, 276 U.S. 394 (1928) .................................. 46
Kingdomware Techs., Inc. v. United
States, 579 U.S. 162 (2016) ...................... 91, 93, 94
Lichter v. United States,
334 U.S. 742 (1948) ........................................ 68, 69
Loper Bright Enterprises v. Raimondo,
603 U.S. 369 (2024) .............................................. 61
M’Culloch v. Maryland,
17 U.S. (4 Wheat.) 316 (1819) .............................. 22
Marshall Field & Co. v. Clark,
143 U.S. 649 (1892) .............................................. 40
Mayfield v. DOL,
117 F.4th 611 (5th Cir. 2024) .............................. 64
Memphis Light, Gas & Water Div. v.
Craft, 436 U.S. 1 (1978) ....................................... 90
viii
Meyer v. Grant,
486 U.S. 414 (1988) .............................................. 93
Mistretta v. United States,
488 U.S. 361 (1989) .................................. 36, 66, 68
Moore v. United States,
602 U.S. 572 (2024) .............................................. 22
Morse v. Republican Party of Va.,
517 U.S. 186 (1996) ........................................ 90, 93
N. Pipeline Constr. Co. v. Marathon
Pipe Line Co., 458 U.S. 50 (1982) ........................ 63
Nat’l Cable & Television Ass’n, Inc. v.
United States, 415 U.S. 336 (1974) ... 20, 28, 67, 69
Nat’l Fed’n of Indep. Bus. v. Sebelius,
567 U.S. 519 (2012) .............................................. 26
NBC v. United States,
319 U.S. 190 (1943) ........................................ 68, 69
Ne. Fla. Chapter of Associated Gen.
Contractors of Am. v. City of
Jacksonville, 508 U.S. 656 (1993)........................ 92
Neb. Press Ass’n v. Stuart,
427 U.S. 539 (1976) .................................. 91, 92, 94
New York Central Securities Corp. v.
United States,
287 U.S. 12 (1932) ................................................ 69
New York v. United States,
505 U.S. 144 (1992) ................................................ 3
Norman v. Reed,
502 U.S. 279 (1992) .............................................. 93
ix
Oklahoma v. United States,
62 F.4th 221 (6th Cir. 2023) ................................ 63
Olmstead v. L.C. ex rel. Zimring,
527 U.S. 581 (1999) .............................................. 93
Opp Cotton Mills, Inc. v. Administrator,
312 U.S. 126 (1941) .............................................. 71
Panama Refining Co. v. Ryan,
293 U.S. 388 (1935) .................. 3, 40, 52, 59, 60, 68
Paul v. United States,
140 S. Ct. 342 (2019) ...................................... 30, 61
Press-Enter. Co. v. Superior Ct. of Cal.
for Riverside Cnty., 478 U.S. 1 (1986) ................. 93
Qwest Corp. v. FCC,
258 F.3d 1191 (10th Cir. 2001) ............................ 53
Richmond Newspapers, Inc. v. Virginia,
448 U.S. 555 (1980) .............................................. 93
Roe v. Wade,
410 U.S. 113 (1973) .............................................. 94
Rosario v. Rockefeller,
410 U.S. 752 (1973) .............................................. 94
S. Pac. Terminal Co. v. ICC,
219 U.S. 498 (1911) ........................................ 94, 96
Sandwich Isles Commc’ns, Inc. v.
United States,
992 F.3d 1355 (Fed. Cir. 2021) ............................ 91
Sapp v. Renfroe,
511 F.2d 172 (5th Cir. 1975) ................................ 90
x
SEC v. Sloan,
436 U.S. 103 (1978) .............................................. 93
Seila Law LLC v. CFPB,
591 U.S. 197 (2020) .......................................... 2, 59
U.S. ex rel. Shupe v. Cisco Sys., Inc.,
759 F.3d 379 (5th Cir. 2014) ................................ 74
Skinner v. Mid-Am. Pipeline Co.,
490 U.S. 212 (1989) ................ 26, 46, 65, 66, 67, 72
Spencer v. Kemna,
523 U.S. 1 (1998) ............................................ 92, 93
Storer v. Brown,
415 U.S. 724 (1974) .............................................. 94
Sunshine Anthracite Coal Co. v. Adkins,
310 U.S. 381 (1940) ............................ 46, 79, 85, 88
Super Tire Eng’g Co. v. McCorkle,
416 U.S. 115 (1974) .............................................. 94
Tex. Off. of Pub. Util. Couns. v. FCC,
183 F.3d 393 (5th Cir. 1999) .... 6, 47, 49, 53, 55, 56
Tex. Off. of Pub. Util. Couns. v. FCC,
265 F.3d 313 (5th Cir. 2001) .......... 7, 47, 49, 50, 75
Texas v. Rettig,
993 F.3d 408 (2021).............................................. 84
Trafigura Trading LLC v. United
States, 29 F.4th 286 (5th Cir. 2022) .................... 27
Turner v. Rogers,
564 U.S. 431 (2011) .............................................. 93
U.S. Dep’t of Navy v. FLRA,
665 F.3d 1339 (D.C. Cir. 2012) ............................ 24
xi
U.S. Telecom Ass’n v. FCC,
359 F.3d 554 (D.C. Cir. 2004) ........................ 76, 85
Union Bridge Co. v. United States,
204 U.S. 364 (1907) ........................................ 70, 71
United States v. Curtiss-Wright Exp.
Corp., 299 U.S. 304 (1936) ....................... 40, 41, 42
United States v. Grimaud,
220 U.S. 506 (1911) .............................................. 69
United States v. Mazurie,
419 U.S. 544 (1975) .................................. 40, 42, 68
United States v. N.Y. Tel. Co.,
434 U.S. 159 (1977) ........................................ 94, 95
United States v. Rock Royal Co-Op.,
307 U.S. 533 (1939) ................ 47, 48, 53, 54, 66, 85
United States v. U.S. Shoe Corp.,
523 U.S. 360 (1998) .............................................. 27
United States v. Wong,
575 U.S. 402 (2015) .............................................. 93
Veazie Bank v. Fenno,
75 U.S. 533 (1869) ................................................ 34
Wayman v. Southard,
23 U.S. (10 Wheat.) 1 (1825) .......................... 19, 31
Whitman v. Am. Trucking Ass’ns,
531 U.S. 457 (2001) ......... 19, 31, 45, 48, 50, 66, 70,
72, 83
Wis. Dept. of Indus., Lab., & Hum. Rels.
v. Gould Inc., 475 U.S. 282 (1986) ....................... 93
xii
Yakus v. United States,
321 U.S. 414 (1944) ........................................ 68, 71
Constitution and Statutes
U.S. Const. art. I ................................................. 19, 23
U.S. Const. amend. V ................................................ 76
U.S. Const. amend. VI ............................................... 76
U.S. Const. amend. VII ............................................. 76
8 U.S.C. § 1356 .......................................................... 39
12 U.S.C. § 243 .......................................................... 38
19 U.S.C. § 58c........................................................... 39
19 U.S.C. § 2111 ........................................................ 39
26 U.S.C. § 1 .............................................................. 36
26 U.S.C. § 11 ............................................................ 36
26 U.S.C. § 1401 ........................................................ 36
26 U.S.C. § 2001 ........................................................ 36
26 U.S.C. § 3101 ........................................................ 36
26 U.S.C. § 3301 ........................................................ 36
26 U.S.C. § 4081 ........................................................ 36
26 U.S.C. § 4131 ........................................................ 36
26 U.S.C. § 4401 ........................................................ 36
26 U.S.C. § 5001 ........................................................ 36
26 U.S.C. § 5701 ........................................................ 36
26 U.S.C. § 5891 ........................................................ 36
28 U.S.C. § 2342 ........................................................ 91
xiii
47 U.S.C. § 254 ................. 6, 10, 18, 26, 29, 44, 45, 46,
49, 54, 55, 57, 59, 60, 64, 65, 70, 72
47 U.S.C. § 254(b) ........ 7, 26, 47, 49, 50, 51, 53, 56, 59
47 U.S.C. § 254(c) ...................................... 8, 26, 54, 55
47 U.S.C. § 254(d) ................................ 8, 26, 56, 57, 59
47 U.S.C. § 254(e) ...................................................... 59
47 U.S.C. § 254(h)...................................................... 59
1 Stat. 24 (1789) ........................................................ 39
1 Stat. 27 (1789) ........................................................ 39
1 Stat. 29 (1789) ........................................................ 37
1 Stat. 68 (1789) ........................................................ 37
1 Stat. 109 (1790) ...................................................... 38
1 Stat. 135 (1790) ...................................................... 39
1 Stat. 138 (1790) ...................................................... 43
1 Stat. 145 (1790) ...................................................... 37
1 Stat. 180 (1790) ...................................................... 39
1 Stat. 186 (1790) ...................................................... 43
1 Stat. 199 (1791) .................................... 33, 39, 42, 43
1 Stat. 246 (1792) ...................................................... 37
1 Stat. 373 (1794) ...................................................... 34
1 Stat. 509 (1797) ...................................................... 44
1 Stat. 597 (1798) ................................................ 34, 41
3 Stat. 53 (1813) ........................................................ 35
3 Stat. 164 (1815) ...................................................... 35
xiv
3 Stat. 186 (1815) ...................................................... 34
3 Stat. 216 (1815) ...................................................... 35
3 Stat. 255 (1816) ...................................................... 35
Act of July 1, 1862, 12 Stat. 432 ............................... 35
18 Stat. 329 (1875) .................................................... 38
38 Stat. 251 (1913) .................................................... 38
Telecommunications Act of 1996, Pub.
L. No. 104-104, 110 Stat. 56 .................................. 6
Pub. L. No. 117-58, 135 Stat. 429 (2021) .................. 15
Other Authorities
47 C.F.R. § 54.308 ..................................................... 78
47 C.F.R. § 54.309 ..................................................... 78
47 C.F.R. § 54.322 ..................................................... 78
47 C.F.R. § 54.805 ..................................................... 78
47 C.F.R. § 54.407 ..................................................... 10
47 C.F.R. § 54.701 ....................................................... 8
47 C.F.R. § 54.703 ....................................................... 8
47 C.F.R. § 54.706 ................................................. 9, 58
47 C.F.R. § 54.709 ..................................... 9, 10, 16, 75
47 C.F.R. § 54.712 ..................................................... 10
A.J. Jeffries, Making the Nondelegation
Doctrine Work: Toward A Functional
Test for Delegations, 60 U. Louisville
L. Rev. 237 (2021) ................................................ 70
xv
Alexander Volokh, Judicial NonDelegation, the Inherent-Powers
Corollary, and Federal Common
Law, 66 Emory L.J. 1391 (2017) ................... 40, 68
An Act Declaring the Rights and
Liberties of the Subject, and Settling
the Succession of the Crown (Bill of
Rights) 1689, 1 W. & M., Sess. 2 ......................... 22
Annals of Cong. (1789) (Joseph Gales
ed., 1834) .............................................................. 24
Barbara A. Cherry & Donald D.
Nystrom, Universal Service
Contributions: An Unconstitutional
Delegation of Taxing Power, 2000 L.
Rev. Mich. St. U. Det. C.L. 107 ............................. 4
Benevolence, 3 Encyclopedia Britannica
728 (11th ed. 1911),
https://en.wikisource.org/wiki/Page%
3AEB1911_-_Volume_03.djvu/748 ................ 21, 26
Benjamin Herold, FCC Adds
Broadband to “Lifeline” Program in
Party-Line Vote, Educ. Week (Mar.
31, 2016), https://www.edweek.org/
technology/fcc-adds-broadband-tolifeline-program-in-party-line-vote/
2016/03 ................................................................. 78
xvi
Broadband Subsidies for Some,
Broadband Taxes for Everyone,
TechFreedom (May 28, 2015),
https://techfreedom.org/broadbandsubsidies-for-some-broadband-taxesfor/ ................................................................... 14, 15
Chad Squitieri, Towards Nondelegation
Doctrines, 86 Mo. L. Rev. 1239
(2021) .................................................................... 67
FCC, 2022 Budget Estimates to
Congress (May 2021), https://
docs.fcc.gov/public/attachments/DOC
-372853A1.pdf ...................................................... 12
FCC, Proposed First Quarter 2025
Universal Service Contribution
Factor, DA 24-1245 (rel. Dec. 12,
2024), https://docs.fcc.gov/public/
attachments/DA-24-1245A1.pdf ......................... 61
Ilan Wurman, Nondelegation at the
Founding, 130 Yale L.J. 1490 (2021) ............ 41, 43
In Re American Broadband &
Telecomms. Co.,
FCC 18-144 (rel. Oct. 25, 2020),
https://docs.fcc.gov/public/
attachments/DA-20-493A1.pdf ............................ 14
In re Federal-State Joint Board on
Universal Service,
12 FCC Rcd. 8776 (1997) ..................................... 10
xvii
In re Federal-State Joint Board on
Universal Service Access Charge
Reform, 20 FCC Rcd. 13779 (Aug. 22,
2005) ..................................................................... 90
In re Report on the Future of the
Universal Service Fund,
FCC 21-127 (rel. Dec. 15, 2021),
https://docs.fcc.gov/public/
attachments/FCC-21-127A1.pdf .......................... 15
In re Report on the Future of the
Universal Service Fund,
FCC 22-67 (rel. Aug. 15, 2022),
https://docs.fcc.gov/public/
attachments/FCC-22-67A1.pdf ................ 56, 58, 63
James E. Dunstan, The FCC, USF, and
USAC: An Alphabet Soup of Due
Process Violations (Pac. Legal
Found. Working Paper, Apr. 2023),
https://papers.ssrn.com/sol3/
papers.cfm?abstract_id=4599298 .................. 77, 79
Jennifer Mascott, Early Customs Laws
and Delegation, 87 Geo. Wash. L.
Rev. 1388 (2019) ............................................. 42, 43
John Harrison, Executive
Administration of the Government’s
Resources and the Delegation
Problem in The Administrative State
Before the Supreme Court (Peter J.
Wallison & John Yoo eds., 2022) ......................... 55
xviii
Jonathan Healey, The Blazing World: A
New History of Revolutionary
England, 1603–1689 (2023) ..................... 20, 21, 22
Joseph Story, Commentaries on the
Constitution of the United States
(1833) .................................................. 23, 31, 33, 73
Josh Chafetz, Congress’s Constitution:
Legislative Authority and the
Separation of Powers (2017) .......................... 24, 25
Kate Stith, Congress’ Power of the
Purse, 97 Yale L.J. 1343 (1988) ........................... 55
Mark Chenoweth & Richard Samp,
Reinvigorating Nondelegation with
Core Legislative Power in The
Administrative State Before the
Supreme Court (Peter J. Wallison &
John Yoo eds., 2022) ............................................ 72
Memo. of Understanding Between FCC
and USAC, https://www.fcc.gov/sites/
default/files/usac-mou.pdf .................................... 81
Michael W. McConnell, The President
Who Would Not Be King: Executive
Power Under the Constitution (2020) ....... 2, 19, 20,
24, 25, 31, 36, 39, 41, 55, 63, 64, 68, 72
Milan N. Ball, Cong. Rsch. Serv.,
R46551, The Federal Taxing Power:
A Primer,
https://crsreports.congress.gov/
product/pdf/R/R46551/3 ....................................... 35
xix
Paul Einzig, The Control of the Purse
(1959) ................................ 20, 21, 22, 25, 32, 40, 74
Peter Conti-Brown, The Institutions of
Federal Reserve Independence, 32
Yale J. on Regul. 257 (2015) ................................ 38
Robert M. Frieden, Universal Service:
When Technologies Converge and
Regulatory Models Diverge, 13 Harv.
J.L. & Tech. 395 (2000) .......................................... 6
Ronald J. Krotoszynski, Jr.,
Reconsidering the Nondelegation
Doctrine: Universal Service, the
Power to Tax, and the Ratification
Doctrine, 80 Ind. L.J. 239 (2005) ................. 5, 6, 15
Sam Dillon, School Internet Program
Lacks Oversight, Investigator Says,
N.Y. Times, June 18, 2004 ................................... 12
Sufficient, Merriam-Webster
Dictionary, https://www.merriamwebster.com/dictionary/sufficient........................ 56
The Debates in the Several State
Conventions on the Adoption of the
Federal Constitution (Jonathan
Elliot ed., 2d ed. 1836) ................. 23, 25, 31, 32, 44
The Federalist No. 48
(James Madison) .................................................. 23
The Federalist No. 58
(James Madison) .................................................. 20
The Federalist No. 83
(Alexander Hamilton) .................... 2, 24, 25, 32, 63
xx
The Lifeline Fund: Money Well Spent?:
Hearing Before the H. Subcomm. on
Commc’ns & Tech., H. Comm. on
Energy & Com., 113th Cong. (2013),
https://www.govinfo.gov/content/pkg/
CHRG-113hhrg82189/pdf/CHRG113hhrg82189.pdf ................................................ 11
Third Quarter 1998 Universal Service
Contribution Factors Revised and
Approved, 63 Fed. Reg. 35,930 (July
1, 1998) ................................................................. 11
U.S. Gov’t Accountability Off., GAO-1111, Improved Management Can
Enhance FCC Decision Making for
the Universal Service Fund LowIncome Program (2010),
http://www.gao.gov/assets/320/
312708.pdf ............................................................ 13
U.S. Gov’t Accountability Off., GAO-14587, FCC Should Improve the
Accountability and Transparency of
High-Cost Program Funding (2014),
https://www.gao.gov/assets/gao-14587.pdf .................................................................. 13
U.S. Gov’t Accountability Off., GAO-15335, FCC Should Evaluate the
Efficiency and Effectiveness of the
Lifeline Program
(2015), http://www.gao.gov/assets/
670/669209.pdf ......................................... 13, 14, 62
xxi
U.S. Gov’t Accountability Off., GAO-17538, Additional Action Needed to
Address Significant Risks in FCC’s
Lifeline Program (2017),
https://www.gao.gov/assets/gao-17538.pdf .................................................................. 13
U.S. Gov’t Accountability Off., GAO-2027, FCC Should Take Additional
Action to Manage Fraud Risks in its
Program to Support Broadband
Service in High-Cost Areas (2019),
https://www.gao.gov/assets/gao-2027.pdf .................................................................... 13
U.S. Gov’t Accountability Off., GAO-20606, FCC Should Take Action to
Better Manage Persistent Fraud
Risks in the Schools and Libraries
Program (2020),
https://www.gao.gov/assets/
d20606.pdf ............................................................ 13
U.S. Gov’t Accountability Off., GAO-2124, FCC Should Enhance
Performance Goals and Measures for
Its Program to Support Broadband
Service in High-Cost Areas (2020),
https://www.gao.gov/assets/gao-2124.pdf .............................................................. 13, 14
xxii
U.S. Gov’t Accountability Off., GAO-23105399, FCC Could Improve
Performance Goals and Measures,
Consumer Outreach, and Fraud Risk
Management (2023),
https://www.gao.gov/assets/gao-23105399.pdf ............................................................ 13
William Blackstone, Commentaries on
the Laws of England (1753) ................................. 22
1
INTRODUCTION
“[A]n indefinite power to tax is a power to destroy.”
Nathan v. Louisiana, 49 U.S. 73, 76 (1850).
Imagine Congress enacted a statute giving the
Internal Revenue Service the power to raise
“sufficient” revenue to “equitably” fund the federal
government. Unbounded by any caps or rates, the IRS
would instead be guided by a list of vague “principles”
that are precatory and “aspirational only,” and the
IRS could add new “principles” along the way. The IRS
would even have the power to broadly redefine its
scope based on an “evolving” standard the IRS itself
determines. To top it off, suppose the IRS lets a
privately-run tax association propose how much
money should be raised each quarter, and that figure
is passively “deemed approved” under penalty of law
a few days later, unless the IRS intervenes.
The result would be a bureaucrat’s dream.
Industry “experts” would decide how to fund the
federal government, with no more fights over
appropriations or political heat for income taxes. But
it would be a nightmare for the Constitution, the
separation of powers, and the liberty they protect.
As it turns out, no imagination is required. This
nightmare scenario already exists in the form of the
Universal Service Fund (USF). In 1996, Congress
created the USF with the “laudable objective” of
expanding telephone access at reasonable prices.
Pet.App.5a. Like any social welfare program, it
collects lots of money and then distributes it to benefit
others. But rather than fund this program with an
accepted mechanism like an appropriation or fixed
2
tax, Congress created an open-ended scheme that
even the USF’s supporters have acknowledged is
“unique” in the country’s history, Pet.App.137a, which
itself should raise alarm bells, see Seila Law LLC v.
CFPB, 591 U.S. 197, 220 (2020) (“Perhaps the most
telling indication of a severe constitutional problem
with an executive entity is a lack of historical
precedent to support it.”) (cleaned up).
In particular, Congress delegated power to the
Federal Communications Commission (FCC) to raise
revenue to fund the USF, but Congress omitted the
most important policy determination of all: “how
much” to raise. Michael W. McConnell, The President
Who Would Not Be King: Executive Power Under the
Constitution 103 (2020). As Hamilton explained, “the
AMOUNT of taxes to be laid” is a matter for “the
legislature,” The Federalist No. 83 (Alexander
Hamilton) (capitalization in original), not some
trifling “detail[]” that can be left to bureaucrats to “fill
up,” let alone for a multi-billion-dollar social welfare
program, Gundy v. United States, 588 U.S. 128, 157–
59 (2019) (Gorsuch, J., dissenting).
Unbounded by any statutory caps or rates, the
USF’s revenue-raising mechanism is a historic
anomaly at odds with 600 years of Anglo-American
practice. To be sure, the FCC claims to be guided by a
list of universal service “principles,” but courts and
the FCC itself have long said those principles are so
precatory and amorphous as to be “aspirational only.”
The FCC can even add new principles and—taking the
cake—redefine “universal service” itself, based on an
“evolving” standard the FCC determines. In sum “the
3
FCC is almost certainly exercising legislative power
when it decides … how big the universal-service
program should be.” Consumers’ Rsch. v. FCC, 88
F.4th 917, 930 (11th Cir. 2023) (Newsom, J.,
concurring in judgment) (emphasis in original).
One would be hard pressed to find a worse example
of delegation than an agency allowed to raise revenue
under penalty of law, bound only by its own
“aspirations,” and with broad power to redefine the
program on an “evolving” basis. That is delegation
running riot, at least as bad as the statutes in A.L.A.
Schechter Poultry Corp. v. United States, 295 U.S. 495
(1935), and Panama Refining Co. v. Ryan, 293 U.S.
388 (1935). And it is no answer that Congress itself
desired this broad delegation. Separation of powers
must be enforced even when “the encroached-upon
branch approves the encroachment.” New York v.
United States, 505 U.S. 144, 182 (1992). Perhaps
especially in that circumstance.
But wait, it gets worse. The FCC has largely
handed off this revenue power to the Universal
Service Administrative Company (USAC), a private
company run by self-described industry interest
groups. Each quarter, USAC issues “proposals” for
how much money to raise for the USF, which are
ministerially converted into a “Contribution Factor”
that is passively “deemed approved” fourteen days
later. The FCC does not even have mechanisms to
substantively review USAC’s figures. Letting private
proposals
become
binding
without
formal,
independent approval by government officials is the
4
very definition
delegation.
of
an
unconstitutional
private
Predictably, the USF tax rate has skyrocketed. It
was under 4% in 1998 but now approaches 37%, even
though the relevant statutory text hasn’t changed.
The USF has also been subject to extraordinary
peculation and ineffectiveness, and its regressive
nature means it hits low-income users the hardest.
Scholars have long flagged the USF’s serious
constitutional flaws, arguing that “this delegation is
unique because of the unfettered power given to the
FCC in defining the scope of universal service, and
because Congress delegated the power to levy a tax to
pay for the service with no limits, knowing that the
end user, the American public, would ultimately be
saddled with the burden.” Barbara A. Cherry &
Donald D. Nystrom, Universal Service Contributions:
An Unconstitutional Delegation of Taxing Power, 2000
L. Rev. Mich. St. U. Det. C.L. 107, 110.
Consistent with that scholarly view, the en banc
court below held this “misbegotten tax” is
unconstitutional. Pet.App.2a. The court observed that
no “other federal programs … have the same or
similar constitutional defects” as the USF,
Pet.App.80a, nor is there any “record of any
government program like [the USF] in all the U.S.
Reports,” Pet.App.67a.
That decision should be affirmed, which would
vindicate the separation of powers and even help
revitalize universal service itself. There is bipartisan
interest in fixing the USF, which is facing a death
spiral that will soon implode the program. Congress
5
could make the program both sustainable and
constitutional simply by appropriating money or
adding half a sentence setting a specific tax rate or
cap. That would ensure accountability for raising
revenue remains with the People’s representatives.
By contrast, the consequences of upholding this
scheme would be severe. If Congress replicated this
mechanism elsewhere, there would be no need to pass
budgets or make appropriations ever again. The
entire federal government could be funded with a
single, vague delegation to the IRS, which could then
hand over that power to a private group.
Courts should not “shy away from [their] judicial
duty to invalidate unconstitutional delegations,” and
this case presents an easy application under both
originalist and modern nondelegation frameworks.
Indus. Union Dep’t, AFL-CIO v. Am. Petroleum Inst.,
448 U.S. 607, 686–87 (1980) (Rehnquist, J.,
concurring in the judgment).
The Court should affirm.
STATEMENT OF THE CASE
A.
Statutory and Regulatory Background.
1.
Universal Service Before 1996.
“Since the inception of the Federal Radio
Commission in 1928, and continuing with the creation
of the Federal Communications Commission in 1934,
the federal government has pursued a policy of
providing ‘universal’ telephone service to all residents
and businesses in the United States.” Ronald J.
Krotoszynski, Jr., Reconsidering the Nondelegation
6
Doctrine: Universal Service, the Power to Tax, and the
Ratification Doctrine, 80 Ind. L.J. 239, 279 (2005). The
objective was for consumers to have access to roughly
the same telephone services and pricing regardless of
where they lived.
This narrow view of universal service was initially
a condition of the monopoly status granted to
incumbent telephone companies like AT&T, id. at
279–81, which agreed “not [to] discriminate among
‘similarly situated’ users, which in practice meant
that [AT&T] had a limited capacity to price service as
a function of demand and marketplace conditions,”
Robert M. Frieden, Universal Service: When
Technologies Converge and Regulatory Models
Diverge, 13 Harv. J.L. & Tech. 395, 401 (2000).
But AT&T was broken up in the 1980s, and the
resulting Regional Bell Operating Companies were no
longer able to subsidize certain local services through
other artificially increased rates, such as longdistance calls. Krotoszynski, Jr., supra, at 281; see
Tex. Off. of Pub. Util. Couns. v. FCC (TOPUC I), 183
F.3d 393, 406 (5th Cir. 1999).
2.
The Telecommunications Act of 1996.
In
response,
Congress
enacted
the
Telecommunications Act of 1996, Pub. L. No. 104-104,
110 Stat. 56, which created an explicit funding
system—the USF—to facilitate universal service and
broadened the concept dramatically from the historic,
narrow cross-subsidization program. See 47 U.S.C.
§ 254. Beyond basic telephone service for consumers
across the country, universal service now included
“‘advanced telecommunications and information
7
services,’ particularly high-speed internet access, for
schools (as well as for libraries and rural health care
providers).” City of Springfield v. Ostrander (In re
LAN Tamers, Inc.), 329 F.3d 204, 206 (1st Cir. 2003).
Congress did not appropriate funds for the USF,
however, nor did Congress impose any statutory rates
or limits on how much money the FCC could raise for
that purpose. Rather, the FCC would ostensibly be
guided by several “[u]niversal service principles,” 47
U.S.C. § 254(b), which are written in such vague and
precatory terms that courts and the FCC itself have
long labeled them “merely aspirational,” Tex. Off. of
Pub. Util. Couns. v. FCC (TOPUC II), 265 F.3d 313,
321 (5th Cir. 2001) (also labeling them as
“aspirational only”). Among those principles, for
example,
are
grandiose
statements
like:
“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.’”
Pet.App.4a (quoting 47 U.S.C. § 254(b)(1)–(3)).
Even more troubling, Congress gave the FCC
power to create new universal service “principles” in
“the public interest,” and then raise revenue for that
expanded scope, too. 47 U.S.C. § 254(b)(7).
Although the money collected must then be spent
on advancing “universal service,” “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
8
advances in telecommunications and information
technologies and services,’” Pet.App.3a, which was
expressly labeled in the statute as an “evolving”
inquiry, 47 U.S.C. § 254(c)(1). This lets the FCC
redefine universal service and then raise revenue
based on that new, expanded scope.
The money is drawn initially from thousands of
“telecommunications
carrier[s]
that
provide[]
interstate telecommunications services,” which must
“contribute, on an equitable and nondiscriminatory
basis, to the specific, predictable, and sufficient
mechanisms established by the Commission to
preserve and advance universal service.” Id. § 254(d).
The FCC has discretion to expand who must pay. See
id. The bill is then footed by millions of Americans,
who pay a separate line item for the USF on their
monthly phone bills. See Part A.4, infra.
3.
The FCC Redelegates Its Powers to a
Private Company.
The FCC subsequently re-delegated its revenueraising authority and administration of the USF to
USAC, a Delaware-registered non-profit company. 47
C.F.R. § 54.701(a); id. § 54.5.
USAC has a twenty-member Board of Directors
comprising individuals from various “interest groups
affected by and interested in universal service
programs” and who were “nominated by their
respective interest groups.” Pet.App.6a; 47 C.F.R.
§ 54.703(b). Board members are neither chosen by the
full FCC, nor nominated by the President and
confirmed by the Senate. 47 C.F.R. § 54.703(c).
9
“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.” Pet.App.6a. This
contribution amount directly “dictates the size of the
universal
service
contributions
levied
on
telecommunications carriers and, in turn, American
telecommunications consumers.” Id.
“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.’” Id.; see 47 C.F.R. § 54.709(a)(3). “In other
words, the contribution amount ultimately derives
from the universal service demand projections of
private, for-profit telecommunications carriers,”
which USAC funnels into a “projection of demand.”
Pet.App.6a. USAC also makes estimates for how
much revenue telecommunications carriers are
expected to generate from interstate and
international services over the upcoming quarter. See
47 C.F.R. § 54.709(a)(1)–(2).
The FCC’s Office of the Managing Director (OMD)
then ministerially divides those two USAC-provided
figures to create the “proposed” tax rate, or in FCCspeak, the “Contribution Factor.” Pet.App.7a. OMD
also applies two “routine adjustments,” Gov.Br.43, to
account for unrecoverable charges and to avoid taxing
USF contributions themselves (a “circularity factor”).
See 47 C.F.R. §§ 54.706(b), 54.709(a); Pet.App.144a.
This self-labeled Contribution Factor “proposal” is
not binding itself, nor is it labeled an “approval.”
10
Pet.App.141–49a. Rather, it simply takes USAC’s
numbers as gospel and plugs them into set formulas.
If the FCC “take[s] no action” within fourteen days,
USAC’s proposal is automatically “deemed approved.”
47 C.F.R. § 54.709(a)(3). Although the FCC “reserves
the right” to change the numbers during those
fourteen days, id., there is no pretense of substantive
review of USAC’s figures by government officials. The
FCC “never made a substantive revision to USAC’s
proposed contribution amount prior to this litigation,
and it does not even have a documented process for
checking USAC’s work.” Pet.App.7a.
USAC then sends out invoices imposing that rate
as a “percentage of end-user telecommunications
revenues [that] each carrier must contribute to USF
in a particular quarter.” Pet.App.7a. “So FCC has
delegated to USAC responsibility—de facto if not de
jure—for imposing the USF Tax.” Id.
4.
Carriers Pass Section
Through to Consumers.
254
Taxes
Although initially paid into the USF by thousands
of telecommunications carriers, they “pass this cost
through to their subscribers,” In re Incomnet, Inc., 463
F.3d 1064, 1066 (9th Cir. 2006), which the FCC’s
regulations expressly permit, see, e.g., 47 C.F.R.
§§ 54.407(c), 54.712(a). The “charge generally appears
on phone bills as the ‘Universal Service Fund Fee.’”
Incomnet, 463 F.3d at 1066. The FCC always
understood that consumers would bear the costs of the
USF through extra fees. See In re Federal-State Joint
Board on Universal Service, 12 FCC Rcd. 8776, 9199,
¶¶ 828–29 (1997); id. at 9211–12, ¶ 855.
11
The USF is—and was designed to be—financed by
“virtually every American’s money” because “at the
end of the day, it is still the same taxpaying people
who bear the cost.” The Lifeline Fund: Money Well
Spent?: Hearing Before the H. Subcomm. on Commc’ns
& Tech., H. Comm. on Energy & Com., 113th Cong. 1–
2 (2013) (statement of Rep. Greg Walden, Chairman,
Subcomm. on Commc’ns & Tech.), https://
www.govinfo.gov/content/pkg/CHRG-113hhrg82189/
pdf/CHRG-113hhrg82189.pdf.
5.
USAC Imposes Skyrocketing Rates,
Raising Tens of Billions of Dollars.
Without statutory limits on the amounts the FCC
or USAC can raise for the USF, the figures have
predictably skyrocketed. The quarterly tax rate has
gone from under 4% in 1998 to routinely over 35%
now. Pet.App.8a; Third Quarter 1998 Universal
Service Contribution Factors Revised and Approved,
63 Fed. Reg. 35,930, 35,931 (July 1, 1998).
USF Contribution Factor
Tax Rate (%)
35
30
25
20
15
10
5
0
12
The total amount raised has also increased
dramatically. “In 1995, the USF Tax was $1.37 billion.
But by the end of 2021, USAC ballooned the USF to
over $9 billion.” Pet.App.8a. The scheme now yields an
amount approaching 20 times the FCC’s entire annual
budget. FCC, 2022 Budget Estimates to Congress 8
(May 2021), https://docs.fcc.gov/public/attachments/
DOC-372853A1.pdf.
USAC takes these contributions from carriers and
deposits them into the USF, then disburses the funds
via a myriad of programs with the purported goal of
expanding telecommunication services for the masses.
Incomnet, 463 F.3d at 1066–67, 1072.
6.
Rampant Fraud, Waste, and Abuse.
Given its lack of accountability and the fact that
USAC is populated with self-acknowledged industry
interest groups, the USF has unsurprisingly
demonstrated a history of extensive fraud, waste, and
abuse, with the FCC’s then-Inspector General
agreeing that “applicants view this program as a big
candy jar, free money.” Sam Dillon, School Internet
Program Lacks Oversight, Investigator Says, N.Y.
Times, June 18, 2004, at A22.
Most notably, the Government Accountability
Office (GAO) has issued a series of reports about the
wasteful nature of the USF. The titles of those reports
illustrate the incorrigibility of USF management: the
USF needs “improved management” (2010); the USF
needs more “accountability and transparency” (2014);
the USF lacks “efficiency and effectiveness” (2015);
“additional action” is “needed” (2017); the FCC must
“manage fraud risks” (2019); the FCC must “better
13
manage persistent fraud risks” (2020); the USF lacks
“performance goals and measures” (2020); the FCC
must “improve performance goals” and “fraud risk
management” (2023).1
After sampling almost 3.5 million users, the GAO
was “unable to confirm” the eligibility of “36 percent”
of those who receive USF benefits. GAO-17-538, supra
note 1, at 38. For the Lifeline program, designed to
assist low-income users, nearly 80% of users in some
states may be legally ineligible. See id. at 42.
Fraud nonetheless continues. In one recent
example, the CEO of a provider for low-income
1 GAO-11-11, Improved Management Can Enhance FCC
Decision Making for the Universal Service Fund Low-Income
Program (2010), http://www.gao.gov/assets/320/312708.pdf;
GAO-14-587, FCC Should Improve the Accountability and
Transparency of High-Cost Program Funding (2014),
https://www.gao.gov/assets/gao-14-587.pdf; GAO-15-335, FCC
Should Evaluate the Efficiency and Effectiveness of the Lifeline
Program (2015), http://www.gao.gov/assets/670/669209.pdf;
GAO-17-538, Additional Action Needed to Address Significant
Risks in FCC’s Lifeline Program (2017), https://www.gao.gov/
assets/gao-17-538.pdf; GAO-20-27, FCC Should Take Additional
Action to Manage Fraud Risks in its Program to Support
Broadband
Service
in
High-Cost
Areas
(2019),
https://www.gao.gov/assets/gao-20-27.pdf; GAO-20-606, FCC
Should Take Action to Better Manage Persistent Fraud Risks in
the Schools and Libraries Program (2020), https://www.gao.gov/
assets/d20606.pdf;
GAO-21-24,
FCC
Should
Enhance
Performance Goals and Measures for Its Program to Support
Broadband
Service
in
High-Cost
Areas
(2020),
https://www.gao.gov/assets/gao-21-24.pdf; GAO-23-105399, FCC
Could Improve Performance Goals and Measures, Consumer
Outreach,
and
Fraud
Risk
Management
(2023),
https://www.gao.gov/assets/gao-23-105399.pdf.
14
broadband service fraudulently obtained over $10
million from the USF to pay for a new condo, a
Ferrari, yacht memberships, and a private jet. In Re
American Broadband & Telecomms. Co., FCC 18-144
¶¶ 135–40, at 45–46 (rel. Oct. 25, 2020),
https://docs.fcc.gov/public/attachments/DA-20-493A1.
pdf. He did so by having his company “receive[]
funding for tens of thousands of ineligible Lifeline
customer accounts” by “creat[ing] fake or duplicate
accounts by using the names of deceased people,”
among other tricks. Id. at 71 (statement of Ajit Pai,
Chairman, FCC).
7.
The USF Fails to Accomplish Its Goals
and Hurts the People It Should Be
Helping.
Unfortunately, the USF has often failed to
accomplish its goals and may even hurt the people it
is supposed to help. A GAO report found that the
USF’s Lifeline Program may not have played any
meaningful role in improving the “level of low-income
households’ subscribing to telephone service over the
past 30 years,” despite costing billions of dollars.
GAO-15-335, supra note 1. The GAO has also reported
that the USF is not focused on providing the basic
telephone services that low-income Americans
actually use, but instead is expanding advanced
telecommunications services for wealthier Americans.
GAO-21-24, supra note 1, at 17.
Moreover, the USF imposes a flat tax rate, making
it among the “most regressive taxes in America.”
Broadband Subsidies for Some, Broadband Taxes for
Everyone,
TechFreedom
(May
28,
2015),
15
https://techfreedom.org/broadband-subsidies-forsome-broadband-taxes-for/. Thus, even in the best
light, the USF “arguably hurts as many poor
consumers as it benefits.” Krotoszynski, Jr., supra, at
314. “A single, low-income mother, living in the Bronx,
with a cell phone for personal safety, pays 10% or
more of her monthly wireless telephone bill to support
universal service for wealthy Montana residents
living on ranchettes.” Id.
Further, by drawing more money from a dwindling
contribution base, the USF is widely recognized to be
in a “death spiral.” In re Report on the Future of the
Universal Service Fund, FCC 21-127, at 23 (rel. Dec.
15, 2021) (statement of Brendan Carr, Comm’r, FCC),
https://docs.fcc.gov/public/attachments/FCC-21127A1.pdf. There is bipartisan congressional interest
in fixing the USF, but thus far no statutory fix has
materialized. See Pub. L. No. 117-58, § 60104, 135
Stat. 429, 1205 (2021) (calling for a report on the
“future” of the USF).
B.
Proceedings Below and in Other Courts.
1.
Proceedings at the FCC and Fifth
Circuit.
Respondents comprise several organizations and
individuals adversely affected by USF charges. They
range from the consumer awareness group
Consumers’ Research (which itself pays a monthly
USF charge), to a reseller of telecommunications
services Cause Based Commerce (which pays directly
into the USF), to individual customers whose tight
budgets are stretched thinner from having to pay the
USF line-item tax each month. For example,
16
Respondent Bayly is a pastor and editor who resides
in the Midwest with his wife and six children. He
provides his family’s sole income but must pay into the
USF every month via his phone bill.
In Fall 2021, Respondents filed a lengthy comment
at the FCC challenging USAC’s proposed first quarter
2022 USF contribution amount, and they filed a
substantively identical comment after the FCC’s
Office of Managing Director ministerially converted
that amount into a “proposed” tax rate. Pet.App.11a,
141–49a.
Despite
Respondents’
objections,
USAC’s
projections were automatically “deemed approved by
the Commission” after the FCC took no action for
fourteen days, a process that plays out like clockwork
every quarter. See 47 C.F.R. § 54.709(a)(3). This
automatic approval occurred on the expiration of
December 27, 2021, just five days before the rate
became effective. Pet.App.11a.
Respondents promptly sued in the Fifth Circuit. A
three-judge panel rejected their arguments,
Pet.App.125a, but the court reheard the case en banc
and held the USF’s revenue raising is
unconstitutional under Article I of the U.S.
Constitution. “[T]he unprecedented nature of the
delegation” of broad taxing power from Congress to
the FCC, “combined with other factors” like the FCC’s
subsequent redelegation to USAC, was more than
“enough to hold [the USF] unlawful.” Pet.App.42a.
The government and its supporting intervenors
below sought review by this Court, which granted
17
their petitions for writs of certiorari in November
2024.
2.
Proceedings at Other Courts.
Respondents and other parties have challenged
different USF quarterly tax rates in other circuits.
Most notably, they sued in the Eleventh Circuit over
the fourth quarter 2022 rate. Although the court
rejected that challenge, Judge Newsom “reluctantly”
concurred because he was “deeply skeptical that [the]
result can be squared with constitutional first
principles.” Consumers’ Rsch., 88 F.4th at 928
(Newsom, J., concurring in judgment). He said that
“the FCC is almost certainly exercising legislative
power when it decides, among other things, how big
the universal-service program should be.” Id. at 930
(emphasis in original). He further concluded that the
USF charges are likely taxes, and “[s]etting tax rates
sure seems like a legislative power,” as does
“prescribing the universal-service program’s sweep
and scope.” Id. But Congress gave the FCC “only the
faintest, most vacuous guidance about how to exercise
its authority.” Id.
Judge Newsom concluded that “as a firstprinciples matter, I think that the agency is violating
the Constitution.” Id. at 932. But because, in his view,
the “non-delegation doctrine has become a punchline”
under current precedent, he voted to deny relief. Id. at
929. Judge Lagoa wrote separately, agreeing with
Judge Newsom that “the current nondelegation
doctrine … has strayed from constitutional first
principles.” Id. at 938 (Lagoa, J., concurring).
18
SUMMARY OF THE ARGUMENT
In Section 254, Congress handed its taxing power
to the FCC without objective or meaningful limits on
the size of the tax. The FCC is guided by its own
“aspirations,” and for good measure Congress let the
agency expand its own scope of authority at will by
adding new universal service principles and even
redefining “universal service” altogether. This scheme
violates both the original understanding of
nondelegation, which prohibits Congress from
delegating significant legislative policy judgments to
an executive agency, and also the modern
nondelegation framework test, which still requires
Congress to “clearly delineate” delegated power. Parts
II–III, infra. A constitutional fix would be simple but
meaningful: Congress could add a specific tax rate or
appropriate money directly. Petitioners are wrong
that the size of a multi-billion-dollar social welfare
program is a trifling detail that can be left to agency
bureaucrats to fill up.
This
scheme
also
violates
the private
nondelegation doctrine because the FCC has
abdicated substantive review and independent
approval of USAC’s proposals, which are ministerially
converted into a Contribution Factor that is “deemed
approved” after just fourteen days. Part IV, infra.
Further, the combination of these defects likewise
“violates
the
Legislative
Vesting
Clause.”
Pet.App.19a; Part V, infra.
Finally, this case is not moot. A contrary
conclusion would require overruling dozens of this
Court’s prior cases. Part VI, infra.
19
ARGUMENT
I.
REVENUE-RAISING IS A LEGISLATIVE
POWER.
Article I of the Constitution provides that “[a]ll
legislative Powers herein granted shall be vested in a
Congress of the United States” and nowhere else. U.S.
Const. art. I, § 1 (emphasis added). “Accompanying
that assignment of power to Congress is a bar on its
further delegation,” Gundy, 588 U.S. at 135 (plurality
op.), meaning Congress may not “delegate … powers
which are strictly and exclusively legislative,”
Wayman v. Southard, 23 U.S. (10 Wheat.) 1, 42–43
(1825); see Whitman v. Am. Trucking Ass’ns, 531 U.S.
457, 472 (2001) (Article I’s “text permits no delegation
of those powers”) (emphasis added).
Accordingly, the first task in an Article I
nondelegation challenge is to determine whether the
authority at issue implicates a legislative power at all.
Petitioners have never disputed that it does here. Nor
could they. Under our Constitution, Congress
“controls how much revenue to raise and how,”
McConnell, supra, at 103, especially in the “domestic”
context, id. at 334. That means the authority given by
Congress to the FCC to raise money for the USF
implicates Article I nondelegation scrutiny, which it
fails as explained in Parts II–III, infra.
Although this Court should affirm the decision
below regardless of whether the USF charges are
deemed “taxes” specifically, the en banc court below
correctly held that those charges are indeed taxes,
which raise special concerns because “[t]axation is a
legislative function, and Congress … is the sole organ
20
for levying taxes.” Nat’l Cable & Television Ass’n, Inc.
(NCTA) v. United States, 415 U.S. 336, 340 (1974).
A.
Historical Roots of the Legislative
Power to Raise Revenue.
The power of the purse has been the most
important legislative power for checking the executive
and advancing freedom for the People. In England, as
in America, “the Taxing Power—more so than the
power to enact laws—was the source of the ‘powerful
influence’” the legislature had over the executive,
McConnell, supra, at 100, allowing the legislature to
“reduc[e] … all the overgrown prerogatives of the
other branches of the government,” The Federalist No.
58 (James Madison).
“The English parliament … owed its origin and its
existence … almost entirely to the Englishman’s ageold determination not to be taxed without his
consent.” Paul Einzig, The Control of the Purse 17
(1959). Early Parliaments were convened primarily to
“grant taxes, not to have any direct control of the
actual government.” Jonathan Healey, The Blazing
World: A New History of Revolutionary England,
1603–1689, at 43, 81 (2023). It was only “through their
control of taxation [that] the Commons became the
supreme guardians of all rights and interests of the
citizen against despotic actions by Kings.” Einzig,
supra, at 44. Protecting the money let Parliament
protect everything else.
But continued legislative control over the purse
was not easily won. It was a “prolonged struggle” that
lasted for at least four centuries, and the pathway to
the Glorious Revolution in 1688 was littered with
21
failed efforts by the King to control taxation without
having to return to Parliament. Id. at 56.
Richard II convinced Parliament in 1398 to
“delegate[] its power” of raising certain taxes “to a
small committee” composed of individuals who were
“the King’s personal adherents,” and this committee
was “authorised” and “entrusted” to “raise tallage and
other forms of revenue at his will.” Id. at 51.
Parliament was thus a willing participant in the
delegation, but even in that age this was seen as an
outrageous transfer of power away from Parliament
to executive cronies. Richard II’s “success in evading
Parliamentary control subsequently avenged itself”
when he was deposed a year later and left to starve to
death in Pontefract Castle. Id.
Henry VIII similarly pushed Parliament in 1525 to
pass a statute “under which Parliament would ‘freely,
liberally and absolutely give and grant unto the King’s
highness … all and every sum’” he had spent or
promised to spend. Id. at 53. With that promise, of
course, came a commensurate obligation to raise the
funds.
Other Kings did not face such pliant Parliaments
and asserted a “royal prerogative” to raise taxes
without even pretending to involve Parliament,
sometimes referring to their collections as “loving
contribution[s]” and “benevolences.”2 Charles I
imposed a “forced loan” from citizens, then turned to
2 See Benevolence, 3 Encyclopedia Britannica 728 (11th ed. 1911),
https://en.wikisource.org/wiki/Page%3AEB1911_-_Volume_
03.djvu/748.
22
demanding “Ship Money” from citizens even beyond
the coasts, Einzig, supra, at 59–61, 80; Healey, supra,
at 81, all while “claim[ing] that there was no legal
basis to the idea that he couldn’t take taxes without
Parliamentary consent,” Healey, supra, at 113.
The resulting Glorious Revolution was, in large
part, “a revolution in public finance,” as “[t]axation
was now almost entirely controlled by Parliament,”
with the share of government revenues deriving from
Parliament increasing from 25% before 1640, to 90%
by 1660. Id. at 328. Afterwards, even the most
amenable Parliaments imposed limits on how much
revenue could be raised from Englishmen. See Einzig,
supra, at 63.
The English Civil War conclusively established
that the representative legislature alone had the
authority to access the pocketbooks of the people. See
An Act Declaring the Rights and Liberties of the
Subject, and Settling the Succession of the Crown (Bill
of Rights) 1689, 1 W. & M., Sess. 2, c. 2, § 4; see 1
William Blackstone, Commentaries on the Laws of
England *140 (1753) (“[N]o subject of England can be
constrained to pay any aids or taxes, even for the
defence of the realm or the support of government, but
such as are imposed by his own consent, or that of his
representatives in parliament.”).
This long history, combined with our Founders’
own “widespread distrust of taxation” from their
“colonial experience,” Moore v. United States, 602 U.S.
572, 626 (2024) (Thomas, J., dissenting), had made
clear that “the power to tax involves the power to
destroy,” M’Culloch v. Maryland, 17 U.S. (4 Wheat.)
23
316, 431 (1819). “[T]hat great principle, which was
asserted in our revolution” was “that representation
is inseparable from taxation.” 2 Joseph Story,
Commentaries on the Constitution of the United States
§ 1007, at 468 (1833). And as Patrick Henry
explained, “[t]he oppression arising from taxation is
not from the amount, but from the mode: a thorough
acquaintance with the condition of the people is
necessary to a just distribution of taxes.” 3 The
Debates in the Several State Conventions on the
Adoption of the Federal Constitution 320 (Jonathan
Elliot ed., 2d ed. 1836) (statement of Patrick Henry).
Accordingly, the Framers took steps to ensure that
“the legislative department alone has access to the
pockets of the people.” The Federalist No. 48 (James
Madison). Article I of our Constitution closely followed
the English practice but put it in writing to ensure no
future Congress or executive could create the same
problems that had once plagued England.
The Constitution thus provides that “[a]ll
legislative Powers herein granted shall be vested in a
Congress of the United States,” U.S. Const. art. I, § 1,
and the very first power granted is “to lay and collect
Taxes, Duties, Imposts and Excises,” id. § 8, cl. 1. The
Founders went even further with the Origination
Clause, which requires that “[a]ll bills for raising
Revenue shall originate in the House of
Representatives,” id. § 7, cl. 1, which was the only
chamber at the time to be popularly elected. According
to James Madison, the “principal reason” for the
Origination Clause was that House members are
“chosen by the People,” “best acquainted with their
24
interests,” and subject to “more frequent[]” elections.
1 Annals of Cong. 361 (1789) (Joseph Gales ed., 1834).
The House could not even delegate this power to the
Senate, let alone outside Congress.
The Federalist Papers confirm that “the AMOUNT
of taxes to be laid, … the OBJECTS upon which they
are to be imposed, [and] the RULE by which they are
to be apportioned” are matters for “the legislature.”
The Federalist No. 83 (capitalization in original). As
Professor McConnell aptly summarized, the
Constitution dictates that Congress “controls how
much revenue to raise and how.” McConnell, supra, at
103.
Accordingly, as then-Judge Kavanaugh explained,
the “power over the purse was one of the most
important authorities allocated to Congress in the
Constitution’s ‘necessary partition of power among
the several departments.’” U.S. Dep’t of Navy v.
FLRA, 665 F.3d 1339, 1346–47 (D.C. Cir. 2012)
(Kavanaugh, J.) (quoting The Federalist No. 51
(James Madison)). Congress’s powers over taxing and
spending are “a bulwark of the Constitution’s
separation of powers among the three branches of the
National Government. It is particularly important as
a restraint on Executive Branch officers.” Id. at 1347.
That is especially so because Congress can exercise its
power of the purse simply by refusing to act. Josh
Chafetz,
Congress’s
Constitution:
Legislative
Authority and the Separation of Powers 45 (2017).
The delegation of such powers to the executive
branch strikes at the very heart of our constitutional
system. In response to Anti-Federalist fears of a
25
tyrannical president, Madison said, “The purse is in
the hands of the representatives of the people.” 3 The
Debates in the Several State Conventions, supra, at
393; see Chafetz, supra, at 57. Except, it turns out,
when it comes to the USF.
B.
USF
Revenue-Raising
Nondelegation Scrutiny.
Triggers
Petitioners have never disputed that imposing
USF charges implicates a legislative power and thus
requires Article I nondelegation scrutiny. As Judge
Newsom explained, “prescribing the universal-service
program’s sweep and scope”—e.g., deciding how much
money it raises—is a “legislative power” regardless of
whether the charges are deemed fees or taxes.
Consumers’ Rsch., 88 F.4th at 930 (Newsom, J.,
concurring in judgment) (cleaned up); see The
Federalist No. 83.
That alone is sufficient to move to whether that
transfer of power passes muster under nondelegation
principles. See Parts II–III, infra. But merely skipping
ahead would elide an important aspect of the issue:
the USF charges are not just any form of revenue
raising but are “domestic tax[es],” perhaps the most
dangerous power the legislature can hand to the
executive. McConnell, supra, at 334; Pet.App.41–42a
n.13.
The USF charges thus directly invoke the sordid
history of late-medieval executives self-funding from
domestic coffers, even though sometimes Parliament
had blessed the enterprise by broadly “delegat[ing]”
its taxing power. Einzig, supra, at 51; see Part I.A,
supra. The label of forced USF payments as
26
“contribution[s]” to the executive, 47 U.S.C. § 254(d),
is even reminiscent of English kings demanding
“loving contributions.”3
But Congress’s statutory euphemisms make no
difference here. “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); contra
Gov.Br.34–35.4
The charges imposed for the USF are widely
recognized as taxes because they “inure[] to the
benefit of the public.” Skinner v. Mid-Am. Pipeline
Co., 490 U.S. 212, 223 (1989). The very title of the
program—“Universal Service”—is textual proof that
the funds are designed to “benefit the public” at large.
The FCC’s ability to define and implement “universal
service” based on its considerations of “public interest,
convenience, and necessity,” among other broad social
goals, reaffirms that purpose. 47 U.S.C. § 254(b), (c).
Indeed, as Respondents demonstrated with
uncontested expert analysis during the agency
proceedings, the USF redistributes funds and benefits
3 See supra note 2.
4 Petitioners contend that § 254 might have been enacted
pursuant to the Commerce Clause, rather than the Taxing
Clause. Gov.Pet.16–17. It does not appear Congress expressly
invoked either Clause, and under NFIB, Congress’s label would
be irrelevant for nondelegation purposes anyway. Similarly,
Wisconsin Bell, Inc. v. United States ex rel. Heath, No. 23-1127,
addresses a statutory question (how to treat USF disbursements
under the False Claims Act), not a constitutional one (how to
treat USF collections under the Constitution).
27
away from payors and towards “a galaxy of policy
concerns with no obvious connection to carrier
liabilities.” JA99. Courts and the FCC itself have long
recognized that the USF “benefit[s] the customer, not
the carrier.” Alenco Commc’ns, Inc. v. FCC, 201 F.3d
608, 621 (5th Cir. 2000); Br. for FCC at *48–49,
Alenco, 1998 WL 34084157 (Nov. 2, 1998) (“[T]he role
of universal service support … [is] to benefit high cost
subscribers,” not “carrier[s].”) (emphases removed).
And those aspects are “precisely what makes [the
USF charge] a tax.” Trafigura Trading LLC v. United
States, 29 F.4th 286, 293–94 (5th Cir. 2022). In other
words, it is “relevant to the contributions’ ‘tax’ status
that the statute itself designates the American
public—writ large, rather than the payor carriers—as
the
universal-service
program’s
principal
beneficiary.” Consumers’ Rsch., 88 F.4th at 930 n.1
(Newsom, J., concurring in judgment).
Petitioners claimed below that USF charges are
mere “fees.” But a fee is a charge that is “incident to a
voluntary act,” meaning an agency can “exact” a
charge in exchange for “bestow[ing] a benefit on the
applicant, not shared by other members of society.” Id.
at 340–41; see also United States v. U.S. Shoe Corp.,
523 U.S. 360, 363 (1998). Stated another way, a fee
represents a “value-for-value transaction[]” where “an
agency exacts” a “charge” “in return for a benefit
voluntarily sought by the payer.” Pet.App.21a.
But USF “contributions do not have any of these
characteristics.” Id. They “are not incident to a
voluntary act” but rather are compelled under penalty
of law simply by doing business in the
28
telecommunications industry. Id. The government
just told this Court in another case that “[c]arriers …
cannot choose whether to pay universal service
contributions.” Br. for U.S. as Amicus Curiae at 15,
Wisconsin Bell, Inc. v. United States ex rel. Heath, No.
23-1127 (U.S. Oct. 1, 2024). Similarly, no one would
argue that income tax is “incident to” the “voluntary
act” of making money, and therefore only a fee.
Further, most contributors receive nothing in
return—and certainly no “fair approximation of the
benefits conferred by [the] government.” Pet.App.21a.
The undisputed administrative record states that
those who “contribute large sums to the program
receive few benefits” while those who “contribute little
to the fund receive large benefits.” JA98. Some, like
Respondent Cause Based Commerce, are actually
injured beyond the amounts they pay because the
USF charges encourage customers to drop their
subscriptions. JA99. That is never true of a fee.
As a result, “the cost of universal service
contributions is widely shared by the population in a
manner reminiscent of a classic tax,” and the “benefits
associated with universal service contributions”
likewise “‘inure to the benefit of the public’ … rather
than to the benefit of the persons who pay them.”
Pet.App.22a (quoting NCTA, 415 U.S. at 343). The
sheer dollar values confirm these are no mere
“incident[al]” charges. NCTA, 415 U.S. at 340–41. The
USF collects nearly $10 billion a year, roughly twenty
times the FCC’s annual budget.
***
29
Again, to trigger Article I nondelegation scrutiny,
the Court need only accept the undisputed proposition
that USF charges implicate the legislative power to
raise revenue. But this Court should remain mindful
that these charges are “obviously taxes,” meaning the
regime implicates a “quintessentially legislative
power” that took centuries to wrest from the
executive. Pet.App.19a, 23a.
II.
SECTION 254 VIOLATES THE ORIGINAL
UNDERSTANDING OF NONDELEGATION.
The next step is to evaluate whether the relevant
statute provides sufficient direction such that
Congress itself can be said to have made the relevant
policy choices and left only the execution of them to
the executive branch.
The original understanding of nondelegation
precludes Congress from “merely announc[ing] vague
aspirations and then assign[ing] others the
responsibility of adopting legislation to realize its
goals.” Gundy, 588 U.S. at 153 (Gorsuch, J.,
dissenting). But that is precisely what Congress did
with the USF. As explained in detail below, rather
than appropriate a specific amount of money or set an
upper limit (e.g., cap or rate) for the FCC, Congress
handed the FCC the power to decide in the first
instance how big the USF would be, limited only by
the FCC’s own “aspirations.” Congress even let the
FCC redefine core statutory terms, including
“universal service” itself, and add new universalservice principles, reminiscent of a similar power in
Schechter Poultry that this Court found particularly
egregious. See 295 U.S. at 538–39 (explaining the
30
President could “add[] to … what is proposed, as ‘in
his discretion’ he thinks necessary ‘to effectuate the
policy’ declared by the act”).
“[T]his case illuminates deeper problems in
nondelegation precedent,” 88 F.4th at 938 (Newsom,
J., concurring in judgment), which “has strayed from
constitutional first principles,” id. (Lagoa, J.,
concurring). The Court should accordingly take this
opportunity to realign its nondelegation framework
with its traditional understanding of the Constitution,
as described in Justice Gorsuch’s Gundy opinion.
Petitioners practically invite the Court to do so by
arguing at length about “the Constitution’s original
meaning.” Gov.Br.21; SHLB.Br.35–39; CCA.Br.31–
34.
A.
Congress Must Set Definite Limits on
the Amount of Revenue to Raise.
Article I dictates that Congress—and Congress
alone—must “make[] the policy decisions when
regulating private conduct” and can only “authorize
another branch to ‘fill up the details’” or “make the
application of that rule depend on executive factfinding.” Gundy, 588 U.S. at 157–59 (Gorsuch, J.,
dissenting); see also Paul v. United States, 140 S. Ct.
342, 342 (2019) (Kavanaugh, J., statement respecting
the denial of certiorari) (“[M]ajor national policy
decisions must be made by Congress and the
President in the legislative process, not delegated by
Congress to the Executive Branch.”).
In terms of how specific Congress would need to be
when authorizing the executive branch to act,
Madison explained that “[i]f nothing more were
31
required, in exercising a legislative trust, than a
general conveyance of authority—without laying
down any precise rules by which the authority
conveyed should be carried into effect—it would follow
that the whole power of legislation might be
transferred by the legislature from itself, and
proclamations might become substitutes for law.” 4
The Debates in the Several State Conventions, supra,
at 560.
The requirement for “precise rules” is especially
true for certain “important subjects” that “must be
entirely regulated by the legislature itself.” Wayman,
23 U.S. (10 Wheat.) at 43. “[T]here are cases in which
… the significance of the delegated decision is simply
too great for the decision to be called anything other
than ‘legislative.’” Whitman, 531 U.S. at 487 (Thomas,
J., concurring).
1. As explained above, Part I.A, supra, chief among
such legislative powers is Congress’s “control[]” over
“how much revenue to raise.” McConnell, supra, at
103. This means not only must Congress authorize
revenue-raising, but at least in the “domestic” context,
id. at 334, it must also determine “how much,” which
is the paramount “policy decision[]” when it comes to
money, Gundy, 588 U.S. at 163 (Gorsuch, J.,
dissenting).
This Court has long recognized that “an indefinite
power to tax is a power to destroy.” Nathan v.
Louisiana, 49 U.S. 73, 76 (1850). “In arbitrary
governments the prince levies what money he pleases
from his subjects, disposes of it, as he thinks proper,
and is beyond responsibility or reproof.” 3 Story,
32
Commentaries, supra, § 1342, at 214. Recall the
example of Richard II, who convinced Parliament to
“delegate[] its power” of imposing certain taxes “to a
small committee … composed of the King’s personal
adherents,” who were “authorised” and “entrusted” to
raise certain taxes on their own. Einzig, supra, at 51.
But after 1688, taxes in England were “fixed on the
same principle as that of Income Tax today,” i.e., “at
the rate of so many shillings [per] the pound.” Id. at
136–37. Of course, “receipts necessarily fluctuated”
over time, id. at 137, but the rates themselves were
set by Parliament.
The requirement that the legislature itself must
set some kind of definite limit on raising revenue
likewise pervaded early American thinking. In the
Federalist Papers, Hamilton made clear that “the
AMOUNT of taxes to be laid, … the OBJECTS upon
which they are to be imposed, [and] the RULE by
which they are to be apportioned” are matters for “the
legislature.” The Federalist No. 83 (capitalization in
original).
When discussing Congress’s power to raise money,
Hamilton said, “Upon the constitutional plan, the only
inquiry will be, How much is actually wanted?” 2 The
Debates in the Several State Conventions, supra, at
368 (emphasis added). The answer was that only
“Congress … in laying the tax” could “calculate for” all
the various factors like “losses and inconveniences”
and “delays and delinquencies.” Id. Members of
Congress “are alone the judges whether five or one per
cent. is necessary or convenient” for “the common
defence.” Id. at 79 (statement of Rufus Choate).
33
Just as telling is the absence of any contrary notion
in the historical record, i.e., that Congress could let
the executive set specific revenue rates or sums. That
would have been an absurd notion to a Nation that
had fought for independence largely to rid itself of
abusive and unresponsive taxation.
As explained next, early congressional practice
uniformly followed Hamilton’s rule. The House was
“especially” attentive to its duty to identify “sums of
money, amount of penalties, and limitations of
numbers,” 2 Story, Commentaries, supra, § 893, at
359, which were not mere “details” that could be left
to executive officials to “fill up,” Gundy, 588 U.S. at
157–59 (Gorsuch, J., dissenting).
Taxes. In 1791, Congress enacted the whiskey tax
that led to The Whiskey Rebellion. The statute
imposed varying rates per gallon of liquor distilled in
the United States, based on the alcoholic content and
type of liquor. Congress itself set the rates. Rum, for
example: “For every gallon of those spirits more than
ten per cent. below proof,” pay “eleven cents”; all the
way up to “those spirits more than forty per cent.
above proof,” on which a tax of “thirty cents” per gallon
was imposed. Ch. 15, § 14, 1 Stat. 199, 202–03 (1791).
Spirits distilled using “any article of the growth or
produce of the United States” paid slightly less, but
again Congress set the rates. Id. at 203. Congress
even awarded a discount of “two cents for every ten
gallons” if the taxes were paid before the liquor was
removed from the premises. Id. Congress enlisted the
executive branch to collect the money, of course, but
Congress itself had set the determinative rate. Id.
34
In 1794, Congress passed a carriage tax and again
imposed the specific rates: “For and upon every coach,
the yearly sum of ten dollars”; for every chariot, eight
dollars; for every “phaeton” and “coachee,” six dollars;
and so on, down to one dollar for the simplest
carriages. Ch. 45, 1 Stat. 373, 374 (1794).
This rule continued well after the Founding. In
1815, for example, Congress taxed household goods
based on their value and set the specific rates by law:
“If not exceeding four hundred dollars” in goods, pay
“one dollar” in tax; if between four hundred and six
hundred dollars in goods, pay “one dollar and fifty
cents” in tax; and so on, all the way up to goods valued
above $9,000. Ch. 23, 3 Stat. 186, 186–87. Congress
even imposed a special tax of “two dollars on every
gold watch kept for use, and of one dollar on every
silver watch kept for use.” Id. at 187.
Early congresses also imposed direct taxes that
would raise a set sum. “In each instance, the total sum
… was assessed at prescribed rates” by law. Veazie
Bank v. Fenno, 75 U.S. 533, 543 (1869). When it
imposed a direct tax on houses in 1798, Congress set
the exact sum to be raised—“two millions of dollars,”
Ch. 75, § 1, 1 Stat. 597, 597—and also imposed ranges
with maximum amounts for each category of property
to be taxed, from the smallest houses up to the largest,
to count towards the $2 million cap: “Upon every
dwelling-house
which,
with
the
out-houses
appurtenant thereto, and the lot whereon the same
are erected, not exceeding two acres in any case, shall
be valued in manner aforesaid, at more than one
hundred, and not more than five hundred dollars,”
35
with increasing figures up to dwelling-houses valued
at more than $30,000, which “shall be assessed a sum
equal to one per centum on the amount of the
valuation.” Id. § 2, at 598.
To defray the costs of the War of 1812, Congress
enacted numerous direct taxes, each time setting it at
a specific amount, down to the cent. See Ch. 37, 3 Stat.
53, 53 (1813) (“three millions of dollars”); Ch. 21, 3
Stat. 164, 164 (1815) (“six millions of dollars”); Ch. 60,
3 Stat. 216, 216 (1815) (“nineteen thousand nine
hundred and ninety-eight dollars and forty cents”);
Ch. 24, 3 Stat. 255, 255 (1816) (“six millions of
dollars”).
Congress continued imposing caps or rates when it
first enacted income taxes during the Civil War.
Congress set a rate of 3% on persons residing in the
United States with “annual gains, profits, or income”
exceeding $600, and 5% on persons residing in the
United States with “annual gains, profits, or income”
exceeding $10,000. Act of July 1, 1862, ch. 119, § 90,
12 Stat. 432, 473. “Congress modified the Civil War
income tax several times,” and “the rates and the
thresholds” were “adjust[ed],” but they were always
set by Congress itself. Milan N. Ball, Cong. Rsch.
Serv., R46551, The Federal Taxing Power: A Primer 9
n.72
(updated
Dec.
9,
2024),
https://crsreports.congress.gov/product/pdf/R/R46551/
3 (listing numerous examples).
Even in modern times, with the exception of the
USF statute, Congress itself still sets precise
numerical limits on taxes of nearly every kind
imaginable, including individual income, capital
36
gains, corporate income, Social Security, Medicare,
estate, and unemployment taxes, and even more
obscure ones like on removal of certain fuels from
refineries, vaccines, wagering, liquor, small cigars,
cigarette papers, “structured settlement factoring
transactions,” and dozens of others. See, e.g., 26
U.S.C. §§ 1, 11, 1401, 2001, 3101, 3301, 4081, 4131,
4401, 5001, 5701, 5891.
Thus, “Congress has always relied on the executive
to execute tax laws,” Pet.App.69a, but those laws
always set some kind of objective limit. Otherwise, it
would be the executive, not Congress, making the
most important policy decision of all: “how much” to
raise. McConnell, supra, at 103.
Similarly, “prescribing the … sweep and scope” of
welfare programs is exactly “the sort of policy
judgment that Congress, and not the Executive
Branch, should make.” Consumers’ Rsch., 88 F.4th at
930 (Newsom, J., concurring in judgment) (cleaned
up). Such a choice is “heavily laden (or ought to be)
with value judgments and policy assessments” that
only Congress can make. Mistretta v. United States,
488 U.S. 361, 414 (1989) (Scalia, J., dissenting).
Fees. At the Founding, Congress also set the
specific rates for fees, i.e., “value-for-value
transactions” where “an agency exacts” a “charge” “in
return for a benefit voluntarily sought by the payer.”
Pet.App.21a.
Congress allowed “early executive agencies” to
“fund themselves directly from revenue collected,” but
Congress itself “imposed a detailed schedule of duties”
and “fees specified by law,” usually down to the penny.
37
CFPB v. Cmty. Fin. Servs. Ass’n of Am., Ltd., 601 U.S.
416, 433 (2024). For example, Congress allowed the
Post Office to self-raise revenue to pay its salaries but
statutorily imposed “an upper limit,” id. at 434
(majority op.), and “specified in minute detail the fees
that could be collected from those who used the Post
Office’s services,” id. at 465 (Alito, J., dissenting).
Eight members of this Court in CFPB highlighted
nearly a dozen times the historical importance of
objective upper limits in this context. See id. at 429,
431, 432, 433, 434, 435, 436 (majority op.); id. at 442
(Kagan, J., concurring); id. at 464–66 (Alito, J.,
dissenting).
Other early examples included:
x
Imposing rules for collecting “fees” for “every
entrance of any ship or vessel,” with those
“under the burthen of one hundred tons” paying
“one dollar and a half,” and so on, based on
increasing tons. Ch. 5, § 29, 1 Stat. 29, 44
(1789); see also Ch. 35, § 53, 1 Stat. 145, 171–
72 (1790).
x
Allowing the Mint to raise money on exchanges
of bullion and coins with a charge of “one half
per cent.” Ch. 16, § 14, 1 Stat. 246, 249 (1792).
x
Setting a specific rate (10 cents per 100-word
sheet) for the public to acquire copies of
government records. Ch. 14, § 6, 1 Stat. 68, 69
(1789).
x
Directing the patent office to charge “fifty
cents” for “receiving and filing the petition” for
38
a patent and “two dollars” for “making out [the]
patent.” Ch. 7, § 7, 1 Stat. 109, 112 (1790).
Many more examples could be cited, all following
the same format.
Further, although not indicative of original
understanding, in 1875, Congress followed suit with
early agencies by allowing the Office of the
Comptroller of the currency to pay its salaries via
assessments, which were set by statute, e.g., “For
examining national banks having a capital less than
one hundred thousand dollars, [impose] twenty
dollars” in assessments. Ch. 89, 18 Stat. 329, 329.
Congress later deviated on occasion from strict
adherence to numerical limits. These say nothing
about the original understanding of the Constitution,
but the most notable example is nonetheless
distinguishable. When Congress created the Federal
Reserve Board in 1913, it let the Board impose
assessments on reserve banks to fund salaries and
expenses (member salaries were set by statute, but
other expenses were not). Ch. 6, § 10, 38 Stat. 251,
260–61 (codified as amended at 12 U.S.C. § 243). The
reserve
banks,
however,
were
themselves
government-created entities, so this scheme
amounted to the government collecting revenue from
itself. Peter Conti-Brown, The Institutions of Federal
Reserve Independence, 32 Yale J. on Regul. 257, 279
(2015).
Duties and Imposts. Early American statutes
imposed detailed schedules for tariffs, customs, and
duties, too. For example, the Tariff Act of July 4, 1789,
which was the first substantive statute passed by the
39
federal government and provided the bulk of federal
revenues for decades, laid out duties for dozens of
products, literally down to the penny in every case.
Ch. 2, 1 Stat. 24, 24–27 (1789) (e.g., “On tarred
cordage, for every one hundred and twelve pounds,
seventy five cents. … On dried fish, per quintal, fifty
cents.”); see also Ch. 39, 1 Stat. 180, 180–82 (1790).
Congress also imposed tonnage down to the penny.
Ch. 3, 1 Stat. 27, 27–28 (1789); Ch. 30, 1 Stat. 135,
135–36 (1790); see CFPB, 601 U.S. at 433 (citing same
provisions).
The 1791 whiskey tax discussed above also
imposed duties on liquor being imported into the
United States, with varying rates per gallon based on
the alcoholic content: “For every gallon of those spirits
more than ten per cent. below proof,” pay “twenty
cents”; all the way up to the strongest stuff: “For every
gallon of those spirits more than forty per cent. above
proof, … forty cents.” Ch. 15, § 1, 1 Stat. at 199.
Modern statutes often still follow the same
pattern. E.g., 19 U.S.C. § 58c (setting out a detailed
table of charges for various customs services, ranging
from $1.75 to $397 per transaction); 8 U.S.C.
§ 1356(d), (e) (setting certain immigration fees). Even
where the President has been given broad power to
adjust duties, it is often within specific ranges set by
Congress. 19 U.S.C. § 2111; see also id. § 1981(a)–(b).
Although early congresses imposed tight
restrictions, they arguably possessed more flexibility
in this foreign-relations context than for “domestic”
revenue-raising.
McConnell,
supra,
at
334.
Nondelegation “limitations are … less stringent in
40
cases where the entity exercising the delegated
authority itself possesses independent authority over
the subject matter.” United States v. Mazurie, 419
U.S. 544, 556–57 (1975).5 And “many foreign affairs
powers are constitutionally vested in the president
under Article II.” Gundy, 588 U.S. at 159 (Gorsuch, J.,
dissenting).
Thus, “statutes relating to trade and commerce
with other nations,” Marshall Field & Co. v. Clark,
143 U.S. 649, 691 (1892), including “embargoes” and
“suspending commercial intercourse with certain
countries,” may not require the same specificity as
domestic
revenue-raising
statutes
because
authorizing foreign-facing powers “confide[s] to the
President … an authority which was cognate to the
conduct by him of the foreign relations of the
government,” Panama Refining, 293 U.S. at 422;
United States v. Curtiss-Wright Exp. Corp., 299 U.S.
304, 327 (1936); see DOT v. Ass’n of Am. Railroads,
575 U.S. 43, 80 (2015) (Thomas, J., concurring in the
judgment) (noting delegation of powers regarding
embargoes and tariffs “arguably did not involve an
exercise of core legislative power”).6
Professor McConnell has explained that this
approach “provide[s] a superior grounding for Field v.
5 See generally Alexander Volokh, Judicial Non-Delegation, the
Inherent-Powers Corollary, and Federal Common Law, 66 Emory
L.J. 1391 (2017).
6 This would also track English practice, where the King’s “role
in protecting shipping engaged in overseas trade” meant that
Parliament could grant customs powers on terms “much more
liberal[]” than for domestic taxation. Einzig, supra, at 65–66.
41
Clark, where Congress gave the President a
bargaining chip to use in foreign negotiations, and
Curtiss-Wright, which recognized a broader range of
legitimate delegation in the foreign affairs arena than
in domestic law,” and it “may also explain why
stronger nondelegation norms survive in the context
of power that is especially central to the legislative
branch, such as domestic taxation.” McConnell, supra,
at 334.7
2. Petitioners respond by claiming early
Congresses issued sweeping delegations of various
types. Gov.Br.21–23. But their examples miss the
target and ultimately prove Respondents’ point.
The relies heavily on the 1798 direct property tax
already discussed. Gov.Br.23, 36. But “the 1798 direct
tax is nothing like the USF Tax.” Pet.App.69a. As
explained above, Congress set the exact amount to be
raised and also maximum amounts for each type of
property. Ch. 75, §§ 1–2, 1 Stat. at 597–98; see also
Ilan Wurman, Nondelegation at the Founding, 130
Yale L.J. 1490, 1550–51 (2021). It thus fits neatly with
the historic rule that Congress must set an objective
upper limit on the size of taxes.
The government cites other statutes involving
money—but never taxes—while neglecting to mention
that these provisions likewise imposed definite limits.
For example, the government cites a 1791 statute
allowing the President to fix “reasonable and proper”
7 Curtiss-Wright itself acknowledged the delegation in that case
would have been invalid “if it were confined to internal affairs.”
299 U.S. at 315.
42
salaries for revenue officers, Ch. 15, § 68, 1 Stat. at
213; Gov.Br.22, but the government omits that
Congress dictated that “such allowance shall not
exceed the annual amount of forty-five thousand
dollars,” 1 Stat. at 213. The government’s invocation
of early postal statutes, Gov.Br.22 (citing 1 Stat. 234),
is also misplaced, given this Court’s recitation in
CFPB that early post office rates were laid down in
excruciating detail, CFPB, 601 U.S. at 433–34; id. at
465 (Alito, J., dissenting).
The government turns to provisions involving
powers that are not strictly legislative and thus not
subject to the same nondelegation rules. See Mazurie,
419 U.S. at 556–57. The government leads with a 1790
statute allowing the President to adopt “rules and
regulations” to govern “trade and intercourse with the
Indian tribes,” Gov.Br.21–22 (citing Ch. 33, 1 Stat.
137 (1790)), but “negotiat[ing] trading terms with
Native American tribes” was “then seen as foreign
affairs-related,” Jennifer Mascott, Early Customs
Laws and Delegation, 87 Geo. Wash. L. Rev. 1388,
1391 (2019). As noted above, the same analysis
applies to statutes involving embargoes, see Gov.Br.22
(citing Ch. 41, 1 Stat. 372 (1794)), which have long
been recognized as “cognate to the conduct by [the
President] of the foreign relations of the government,”
Curtiss-Wright, 299 U.S. at 327; see DOT, 575 U.S. at
80 (Thomas, J., concurring in the judgment) (“The
1794 embargo statute involved the external relations
of the United States, so the determination it
authorized the President to make arguably did not
involve an exercise of core legislative power.”).
43
The same holds true for the government’s
invocation of the President’s power to “restructure the
country’s foreign debt” under a 1790 statute,
Gov.Br.22, because “administration of debt
repayment” was an “executive function[],” Mascott,
supra, at 1392. In any event, Congress expressly said
the President’s borrowing could “not exceed[] in the
whole twelve million of dollars.” Ch. 34, 1 Stat. 138,
139 (1790). The same is true for another 1790 statute
regarding debt, see Gov.Br.22, which limited the
President to borrowing “a sum or sums not exceeding
in the whole two millions of dollars, at an interest not
exceeding five per cent,” Ch. 47, 1 Stat. 186, 187
(1790).8
Other examples involved “Congress prescrib[ing]
the rule governing private conduct” and then
“mak[ing] the application of that rule depend on
executive fact-finding.” Gundy, 588 U.S. at 158
(Gorsuch, J., dissenting). A 1791 statute allowed the
Secretary of Treasury to return the payment of certain
penalties on a case-by-case basis, see Gov.Br.22, but
only “if it shall appear to him that such penalty or
forfeiture was incurred without wilful negligence, or
any design or intention of fraud,” Ch. 15, § 43, 1 Stat.
at 209; see Wurman, supra, at 1542. The same applied
8 This statute elsewhere provides an example of early Congress
setting an objective limit without specifying a numerical rate or
cap per se. It authorized the government to pay down the
Nation’s debt by the exact amount in surplus collected from
duties and tonnage as calculated on “the last day of December
next, inclusively.” 1 Stat. at 186. Because Congress itself set the
duties and tonnage rates, see 1 Stat. at 24–28, this still laid down
a definite limit on the size of debt to be purchased.
44
to the 1797 statute (Gov.Br.22) authorizing case-bycase refund of a “just and reasonable” portion of a
license fee, but only when “by failure of water, or other
casualty, occurring to the mill or mills, or to the
implements or to the proprietor, or other person
licensed, the use and benefit of such license has been
lost, or considerably interrupted.” Ch. 18, § 2, 1 Stat.
509, 509 (1797). These statutes are a far cry from
delegating authority to set a tax that raises billions of
dollars from the pockets of millions of Americans.
The government’s examples thus unintentionally
drive home Respondents’ point that Congress must
set definite limits on domestic revenue-raising
because that represents the most important policy
decision of all, i.e. “how much” to raise. Statutory
delegations without such limits were ones that did not
involve strictly legislative powers in the first place.
As explained next, the USF statute lacks such
limits and thus is unconstitutional. And even if
objective limits are not strictly required, the USF
statute is still so vague and “aspirational” that it fails
the original understanding of nondelegation.
B.
Section 254 Violates the Original
Understanding of Nondelegation.
Recall Madison’s response to Anti-Federalist fears
of a tyrannical President: “The purse is in the hands
of the representatives of the people.” 3 The Debates in
the Several State Conventions, supra, at 393. When it
comes to the USF, however, that is not true. The USF
raises domestic revenue, see Part I.B, supra, but lacks
any of the requisite forms of historic limits on size
demanded by the Constitution.
45
For nondelegation purposes, the Court looks to the
maximum scope of the statutory grant of power,
regardless of whether the agency has fully exercised
that scope or hemmed itself in by regulation. See
Whitman, 531 U.S. at 473 (“[A]n agency’s voluntary
self-denial has no bearing upon” “[w]hether the
statute delegates legislative power[.]”). As explained
next, the FCC’s full statutory authority for raising
revenue for the USF is uniquely broad. To be sure,
§ 254 includes “a lot of words,” Pet.App.27a, but it
provides “only the faintest, most vacuous guidance
about how [the FCC could] exercise its authority” to
raise money, Consumers’ Rsch., 88 F.4th at 930
(Newsom, J., concurring in judgment).
As a “first-principles matter,” therefore, the FCC
“is violating the Constitution.” Id. at 928, 932.
1.
No Objective Limit on the Amount
Raised for USF.
It is common ground that there is “no objective
ceiling on the amount that the FCC can raise each
quarter,” Pet.App.132a, because “Congress neither
capped the amount that the FCC may raise in
contributions for the Fund nor imposed a formula for
how to calculate the contributions to the Fund,”
Consumers’ Rsch. v. FCC, 67 F.4th 773, 788 (6th Cir.
2023). As demonstrated above, such definite limits on
domestic revenue-raising have been a near-universal
aspect of Anglo-American constitutional law for
centuries and are required to ensure the legislature
sets the most important policy of all: how much to
raise.
46
This Court has found such limits relevant to the
nondelegation inquiry. For example, the Court
rejected a nondelegation challenge to a statute that
obligated the executive to collect import duties based
on a precise but fact-bound determination, with no
rate allowed to vary more than 50% from statutory
figures. J.W. Hampton, Jr., & Co. v. United States,
276 U.S. 394, 401 (1928); see also Sunshine Anthracite
Coal Co. v. Adkins, 310 U.S. 381, 397–99 (1940)
(rejecting nondelegation challenge where statute set
tax rates down to the penny). Later, the Court rejected
a nondelegation challenge where an agency was
statutorily barred from raising more than 105% of the
amount Congress had separately appropriated.
Skinner, 490 U.S. at 215, 220–22. Those statutes all
appropriately passed originalist muster.
The absence of any such limits in the USF revenueraising mechanism is itself a sufficient basis to hold it
unconstitutional.
That
holding
would
be
straightforward and narrow while enforcing an
important separation-of-powers principle: Congress
itself must decide how much to raise. It has some
flexibility in how to do so, but there must be some
definite limit to the size.
Even if objective limits are not strictly required,
however, § 254 still fails because it does no more than
announce “vague aspirations.” Gundy, 588 U.S. at 153
(Gorsuch, J., dissenting). History bears this out: the
relevant statutory language has not changed, but the
USF tax rate has increased tenfold, from under 4% to
nearly 37% (and still climbing). That is possible
47
because the statute imposes no meaningful limits on
size.
2.
Section 254(b): “Aspirational
Only.”
The government hangs its hat on § 254(b)’s list of
several universal service “principles” as ostensibly
limiting the FCC’s broad power to decide how much
money to raise for the USF. Gov.Br.24–26. Those
principles fail to impose meaningful restrictions.
Merely Precatory. This Court has long held that
“procedural
safeguards
cannot
validate
an
unconstitutional delegation.” United States v. Rock
Royal Co-Op., 307 U.S. 533, 576 (1939); see Schecter
Poultry, 295 U.S. at 523 n.4 (statute unconstitutional
even though affected parties had a “right to be heard
prior to approval” of codes).
But procedural hurdles are, at most, what § 254(b)
imposes—and extraordinarily weak ones, at that. The
FCC must “consider” the § 254(b) principles, which
are merely precatory. They are all things that
universal service “should” be, not must be, and thus
do not impose any substantive mandate. See TOPUC
I, 183 F.3d at 418 (emphasis added). The FCC has long
agreed that these principles are not “mandatory,” and
that the FCC “need not implement” them. Br. for FCC
at *26–27, TOPUC II, 2000 WL 34430695 (Nov. 30,
2000); see Br. for FCC at 12, U.S. W. Commc’ns, Inc.
v. FCC, Nos. 99-9546 et al. (10th Cir. May 30, 2000)
(“[T]he seven principles identified in section 254(b)
were not statutory requirements.”). And courts have
concurred, holding the principles are “aspirational
only.” TOPUC II, 265 F.3d at 321. That description is
48
almost verbatim the language in Justice Gorsuch’s
Gundy dissent that Congress cannot announce mere
“vague aspirations.” 588 U.S. at 153.
The government now backpedals, claiming for the
first time that each of the principles are things the
FCC “must ensure,” “must achieve,” and “must
obtain.” Gov.Br.26. That is the opposite of what the
statute says, what courts have held, and what the
FCC itself has long insisted. This volte-face is as good
as an admission that the government cannot prevail
under the statute as written and long interpreted by
courts.
The “aspirational only” nature is important
because the FCC is bound only if it chooses to bind
itself, and this Court has held that “an agency’s
voluntary self-denial has no bearing upon” “[w]hether
the statute delegates legislative power,” Whitman,
531 U.S. at 473. That is, the Court must assume the
agency will check the procedural boxes and then
exercise the full and outer limit of its substantive
power. See Rock Royal, 307 U.S. at 576 (“[P]rocedural
safeguards cannot validate an unconstitutional
delegation.”). The legislative non-delegation doctrine,
after all, is a limitation on Congress, not on the
executive.
Contentless. The § 254(b) principles also “are
contentless,” Pet.App.29a, and so “hazy” that they
“cannot possibly constrain the FCC’s policymaking
discretion in any meaningful way,” Consumers’ Rsch.,
88 F.4th at 931 (Newsom, J., concurring in judgment).
Examples include: “Quality services should be
available at just, reasonable, and affordable rates”;
49
“[t]here should be specific, predictable and sufficient
Federal and State mechanisms to preserve and
advance universal service”; and of course the catchall: “Such other principles as the Joint Board and the
Commission determine are necessary and appropriate
for the protection of the public interest, convenience,
and necessity and are consistent with [the Act].” 47
U.S.C. § 254(b) (emphases added).
As Judge Newsom observed: “As a matter of first
principles—as
in
real
life—such
empty,
mealymouthed shibboleths provide no meaningful
constraint; to the contrary, they confer front-line lawand policymaking power on unelected, unaccountable
agency bureaucrats.” Consumers’ Rsch., 88 F.4th at
931 (Newsom, J., concurring in judgment).
At the FCC’s insistence, lower courts have long
“avoided relying on the aspirational language in
§ 254(b) to bind the FCC to adopt certain cost
methodologies for calculating universal service
support,” TOPUC I, 183 F.3d at 421, and thus the
FCC is allowed to “roam at will” “in that wide field of
legislative possibilities,” Schechter Poultry, 295 U.S.
at 538.
The government seizes on § 254(b)(1)’s statement
that “quality services should be … affordable.” See
Gov.Br.30. Notably, the FCC itself has long denied
that the “affordability goals set out in section 254 are
mandatory.” Br. for FCC, TOPUC II, supra, at *26. In
any event, “saying telecommunications services
‘should’ remain ‘affordable’ amounts to ‘no guidance
whatsoever.’” Pet.App.30a (emphasis in original).
Given the importance of telecommunications, “the
50
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.” Pet.App.31a. A similar
proviso did not save the statute in Schechter Poultry.
See 295 U.S. at 523 n.4 (statute required codes to be
“truly representative of such trades”).
On that score, the government’s claim that “[t]he
affordability principle” precludes the FCC from
allowing “the universal service contribution … [to]
become so large as to risk making basic telephone
services unaffordable,” Gov.Br.30, is not just contrary
to its own prior statements that affordability is not a
mandate, see Br. for FCC, TOPUC II , supra, at *26–
27, but is also whistling past the graveyard, given the
USF’s current rate of nearly 37% and climbing. If that
is “affordable,” the term is toothless.9
The FCC Can Rewrite Its Own Authority. “[T]o
make matters even worse—even more open-ended—
§ 254(b) adds a catch-all clause” allowing the FCC to
add other principles as it determines are “necessary
and appropriate.” Consumers’ Rsch., 88 F.4th at 931
(Newsom, J., concurring in judgment); see 47 U.S.C.
§ 254(b)(7). Under Whitman, for nondelegation
purposes the Court must assume the FCC will
exercise the full extent of that power. 531 U.S. at 473.
The government argues this power is limited
because new principles must be “consistent with” the
9 Similarly, the “predictability” provision does “not [] require
predictable funding amounts.” Alenco, 201 F.3d at 623 (emphasis
omitted).
51
Communications Act. Gov.Br.32. But it adds nothing
to say the new agency-created universal-service
principles must be “consistent with” existing
provisions that are themselves “contentless.”
Pet.App.29a; see Schechter Poultry, 295 U.S. at 527
(statute likewise said any codes adopted must “tend to
effectuate the policy declared in title 1 of the act”).
Further, this Court has found similar multi-layer
delegations to be especially pernicious from a
nondelegation perspective. In Schechter Poultry, the
statute granted broad power to the executive and then
allowed him to “add[] to … what is proposed, as ‘in [the
executive’s] discretion’ he thinks necessary ‘to
effectuate the policy’ declared by the act,” an aspect
this Court cited as being particularly problematic. 295
U.S. at 538–39. Letting the executive branch redefine
the scope of its own power was “delegation running
riot.” Id. at 553 (Cardozo, J., concurring).10
The Few Cases Finding Violations of § 254(b)
Are Inapposite. The government cites two cases it
purports found violations of § 254(b). Gov.Br.34. The
government’s apparent premise is that there can be a
nondelegation violation only if a statute is impossible
to transgress. Under that view, there could be a
nondelegation violation only if Congress granted truly
infinite power to an agency.
10 The government suggests the Court could sever the open-
ended grant in § 254(b)(7), Gov.Br.32–33, but that argument is
forfeited because it was not raised below, and, in any event, the
statute is unconstitutionally broad even without that provision.
52
That is flatly inconsistent with this Court’s
precedent. In Panama Refining, the statute was
limited to the subject matter of “hot oil,” which had
been statutorily “defined” with particularity. 293 U.S.
at 414, 418. It would have been easy to transgress that
limitation, but what mattered was that within that
subject matter, the executive was “free to select as he
chooses from the many and various objects generally
described.” Id. at 432. The government’s view would
mean Panama Refining was wrongly decided. Even
cases upholding broad delegations recognize that
Congress must “clearly delineate[]” the delegated
authority’s “boundaries”—plural—meaning it won’t
suffice to point to any single “boundary” and be done.
Am. Power & Light Co. v. SEC, 329 U.S. 90, 105
(1946).
If the government were right, Congress could
delegate the entirety of its legislative power to the
President or an executive agency, so long as Congress
withheld the tiniest sliver, say, to select which
currency USF contributions must be paid in. The en
banc decision below recognized this point when it held
that a narrow set of statutory provisions “may supply
sufficient guidance for FCC to execute certain aspects
of the universal service program,” but those provisions
notably do not impose limitations on the FCC’s
revenue-raising writ-large. Pet.App.29–30a n.7
(emphasis added).
In any event, neither of the government’s cases
addressed nondelegation. Both involved the FCC’s
failure to comply with procedural requirements, not
substantive ones. Gov.Br.34 (noting both times the
53
FCC had “not adequately explained” a decision). But
“procedural
safeguards
cannot
validate
an
unconstitutional delegation.” Rock Royal, 307 U.S. at
576. Indeed, the Tenth Circuit was clear that “each of
the principles in § 254(b) internally is phrased in
terms of ‘should,’” which “indicates a recommended
course of action, but does not itself imply the
obligation associated with ‘shall.’” Qwest Corp. v.
FCC, 258 F.3d 1191, 1200 (10th Cir. 2001). The
government’s reliance on TOPUC I is especially
curious because that opinion recognized § 254(b) is
merely “aspirational” and that the FCC can raise
more money for the USF than it spends on USF
programs—points the en banc court below repeatedly
cited in support of its nondelegation holdings.
Pet.App.27a–28a.
All told, § 254(b) “leave[s] the agency all the room
it needs to do essentially whatever it wants” when
deciding how big the USF tax will be. Consumers’
Rsch., 88 F.4th at 931 (Newsom, J., concurring in
judgment).
3.
Section 254(c): An “Evolving”
Definition of “Universal Service.”
Nor is there a meaningful limit in the definition of
“universal service” itself. “Congress declined to define
‘universal service’” and instead “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.’” Pet.App.3a (quoting 47 U.S.C. § 254(c)(1)).
“[D]iminishing the likelihood of any real guidance,
the term ‘universal service’—the very object of the
54
entire program—is defined only in the most
ambiguous way” and will “‘evolv[e]’” over time as the
FCC itself sees fit. Consumers’ Rsch., 88 F.4th at 931
(Newsom, J., concurring in judgment).
Petitioners invoke § 254(c)(1)’s provision saying
that, when spending money on universal service, the
FCC must “consider the extent to which”
telecommunications services “are essential to
education, public health, or public safety”; “have,
through the operation of market choices by customers,
been subscribed to by a substantial majority of
residential customers,” etc. 47 U.S.C. § 254(c)(1); see
Gov.Br.27.
That clause fails to impose meaningful limits for
several independent reasons. First, “procedural
safeguards”—like having to “consider” or explain
something—“cannot validate an unconstitutional
delegation.” Rock Royal, 307 U.S. at 576. And here,
the FCC does not even have to consider certain
statutory definitions or imperatives, but rather
consider only “the extent to which” the FCC itself
thinks those factors might apply. The FCC must
ponder whether something might be applicable. A
weaker procedural requirement is hard to imagine.
Second, limitations on the USF’s back-end
spending are largely beside the point. The
government acknowledged in its brief below that
“spending decision[s]” under § 254 are “irrelevant to
this case,” Gov.CA5.Br.60 (filed June 10, 2022),
because Respondents’ challenge is to whether
Congress provided requisite limits on how much the
55
FCC can raise, not on how it ultimately spends the
funds.11
That distinction is important because the FCC can
raise more money than it spends. Courts and
Petitioners have long agreed that “nothing in the
statute” requires that “universal service support must
equal the actual costs incurred.” TOPUC I, 183 F.3d
at 412; Pet.App.27a; SHLB.Br.28 (§ 254 “may not
mandate support that precisely equals the actual
costs”) (cleaned up).
Third, the reference to spending money on
“telecommunications services” in § 254(c)(1) cannot
save the government. Gov.Br.27. The FCC can ignore
that rule for schools, libraries, and health care
providers, see 47 U.S.C. § 254(c)(3), and, in any event,
there are good reasons to doubt it serves as a real limit
anywhere else. The government suggests, for
example, that USF money cannot be spent on things
like “veterans’ benefits,” Gov.Pet.15, yet the FCC has
established “a $100 million, three-year program …
11 The nondelegation inquiry for government spending may be
less restrictive, assuming the funds were constitutionally raised
in the first place. See McConnell, supra, at 105; John Harrison,
Executive Administration of the Government’s Resources and the
Delegation Problem, in The Administrative State Before the
Supreme Court 232 (Peter J. Wallison & John Yoo eds., 2022).
But see Kate Stith, Congress’ Power of the Purse, 97 Yale L.J.
1343, 1386 (1988).
56
with a particular emphasis on low-income and veteran
patients.”12
Section 254(c), like § 254(b), fails to make the
requisite policy decision of “how much” money to raise.
4.
Section 254(d): “I Have No Idea
What That Means.”
The government also contends that § 254(d)
imposes caps on the size of the USF by stating that
charges must be paid into “sufficient mechanisms
established by the [FCC] to preserve and advance
universal service” and must be “equitable and
nondiscriminatory.” Gov.Br.26, 29 (quoting 47 U.S.C.
§ 254(d)). But this provision likewise provides
“essentially no” direction about how much “should
actually be charged.” Consumers’ Rsch., 88 F.4th at
931 (Newsom, J., concurring in judgment).
On the “sufficient mechanisms” aspect, Judge
Newsom put it best: “Candidly, I have no idea what
that means.” Id. (emphasis in original). Whatever it
means, it imposes at best a floor—not a ceiling—on
the FCC’s revenue-raising power. See Sufficient,
Merriam-Webster Dictionary, https://www.merriamwebster.com/dictionary/sufficient (“enough to meet
the needs of a situation or a proposed end”). As noted
above, courts and the FCC itself have long agreed that
the FCC can raise more than it spends. See TOPUC I,
183 F.3d at 412; Pet.App.27a.
12 In re Report on the Future of the Universal Service Fund, FCC
22-67, at 43 (rel. Aug. 15, 2022) (emphasis added),
https://docs.fcc.gov/public/attachments/FCC-22-67A1.pdf.
57
Further, the notion “[t]hat funding should be
‘sufficient … to preserve and advance universal
service’ is meaningful only if the concept of universal
service is sufficiently intelligible,” but as described
above, it isn’t. Pet.App.27a. Rather, “universal service
is ‘an evolving level of telecommunications services
that the Commission shall establish periodically.’” Id.
As for the requirement that USF funding be
“equitable and nondiscriminatory,” one need only look
to the statute in Schechter Poultry, which likewise
prohibited policies that imposed “inequitable
restrictions” or “discriminate[d] against” small
companies, 295 U.S. at 522–23. If aphorisms about
equity and nondiscrimination couldn’t save the
statute in Schechter Poultry, they can’t save § 254.
The government also cites § 254(d)’s requirement
that USF contributions be made by “[e]very
telecommunications carrier that provides interstate
telecommunications services.” Gov.Br.26. But that
still fails to say how much should be collected. And the
government elides mention of another clause that lets
the FCC expand the list of contributors whenever it
deems such an expansion in “the public interest.” 47
U.S.C. § 254(d). The FCC thus determines not just
how much to tax, but who should pay it.
With the world becoming increasingly connected,
little could escape the FCC’s grasp. It already taxes an
exceptionally broad range of services, including
mobile data, satellite service, and a dozen other
58
services most people have never even heard of,13 and
has suggested it could do the same for “broadband
Internet access service,” “streaming video” service,
“digital advertising,” “cloud service[],” and even
“private networks” owned by those companies.14 One
FCC report cites research indicating that if broadband
Internet were taxed at the USF’s current 36.3% rate,
it would yield nearly $100 billion a year, a ten-fold
increase.15
“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.” Pet.App.27a. That is the epitome of “merely
announc[ing] vague aspirations.” Gundy, 588 U.S. at
153 (Gorsuch, J., dissenting).
13 Services already taxed include: “Cellular telephone and
paging services; Mobile radio services; Operator services;
Personal
communications
services
(PCS);
Access
to
interexchange service; Special access service; WATS; Toll-free
service; 900 service; Message telephone service (MTS); Private
line service; Telex; … Video services; Satellite service; Resale of
interstate services; Payphone services; … Interconnected VoIP
services; Prepaid calling card providers.” 47 C.F.R. § 54.706(a).
14 FCC 22-67, supra note 12, at 48 & n.356, 50–51.
15 See id. at 48 & n.356 (citing Mattey Consulting, LLC,
USForward Report 16 (Sept. 2021), https://publicknowledge.org/
wp-content/uploads/2021/11/USForward-Report-2021-forRelease_September-2021.pdf (noting 2024 broadband revenues
expected to be over $260 billion, which at a 36.3% tax rate would
equate to over $90 billion)).
59
5.
Remaining Subsections: More of
the Same.
Petitioners also point to § 254(e), see Gov.Br.27, 29,
which says funding recipients “should” receive funds
“sufficient to achieve the purposes” of § 254—i.e., the
same purposes the FCC can perpetually re-define—
and to § 254(h), which imposes several discrete details
for discounts to be awarded to specific recipients of
USF dollars, based on what “is appropriate and
necessary to ensure affordable access to and use of
such services,” 47 U.S.C. § 254(h)(1)(B).
But (1) these sections are irrelevant because they
do not limit the amounts of money to be raised, see
Part II.B.3, supra; (2) in any event, “sufficiency” fails
to impose a meaningful limit in § 254(e) just as it did
in § 254(d), see Part II.B.4, supra; and (3) § 254(h)
uses equally vacuous terms like “appropriate and
necessary,” which mimic the language used in
§ 254(b) to describe the FCC’s open-ended power to
add new universal service principles, see Part II.B.2,
supra.
C.
Schechter
Poultry
and
Panama
Refining Confirm the USF Statute Is
Unconstitutional.
“Perhaps the most telling indication of a severe
constitutional problem with an executive entity is a
lack of historical precedent to support it,” Seila Law,
591 U.S. at 220 (cleaned up), and even the USF’s
supporters admit it uses a historically “unique
revenue raising mechanism,” Pet.App.137a (panel
decision). The en banc Fifth Circuit’s opinion likewise
surveyed centuries’ worth of this Court’s precedent on
60
delegations and concluded that “amidst all the
statutes that have survived nondelegation challenges,
§ 254 stands alone.” Pet.App.40a.
But if the USF scheme does have any analogues in
American jurisprudence, they would be the statutory
regimes this Court held unconstitutional in Schechter
Poultry and Panama Refining. Far from Petitioners’
revisionist suggestion that the statutes in those cases
“involved an absence of legislative guidance,”
CCA.Br.16, they actually featured pages of it,
requiring executive action to “eliminate unfair
competitive practices,” “avoid undue restriction of
production (except as may be temporarily required),”
prohibit “discriminat[ory]” codes, allow a “right to be
heard” before adoption of certain provisions, and
require codes to be “representative” of the relevant
industries. Panama Refining, 293 U.S. at 417;
Schechter Poultry, 295 U.S. at 521 & n.4, 535.
For the Court’s benefit, the Appendix to this brief
includes the full text of the relevant (and lengthy)
sections of the National Industrial Recovery Act of
1933.
The Fifth Circuit acknowledged that § 254
likewise contains “a lot of words,” Pet.App.27a, but it
imposes no meaningful “policy of limitation” on the
size of the USF as the FCC “chooses from the many
and various objects generally described,” Panama
Refining, 293 U.S. at 418, 431–32. Indeed, the FCC is
left free to “roam at will” “in that wide field of
61
legislative possibilities.” Schechter Poultry, 295 U.S.
at 538.16
D.
Affirming Would Help Revitalize
Universal Service and Strengthen the
Separation of Powers.
Petitioners point to alleged “reliance interests” in
the current nondelegation doctrine and the purported
benefits of the USF, CCA.Br.52–53, which they claim
will be “upend[ed]” by affirming the decision below,
Gov.Pet.10. These arguments are wrong on each
point.
First, there is no “too big to comply” exception to
the Constitution. Quite the opposite. If raising billions
of dollars for the USF is truly so important, that is all
the more reason it must be subject to political debates
in the halls of Congress, rather than delegated to
bureaucrats. See Biden v. Nebraska, 143 S. Ct. 2355,
2380 (2023) (Barrett, J., concurring) (noting that
“normally” we expect Congress “‘to make major policy
decisions itself’”); Paul, 140 S. Ct. at 342 (Kavanaugh,
J., statement respecting the denial of certiorari)
(“[M]ajor national policy decisions must be made by
Congress.”).
16 Petitioners suggest that Loper Bright Enterprises v.
Raimondo, 603 U.S. 369 (2024), might somehow cabin the FCC’s
broad authority to raise money. SHLB.Br.26. But the USF tax
rates post-Loper-Bright are noticeably higher than those
predating it. Compare Pet.App.146a (25.2% for First Quarter
2022), with FCC, Proposed First Quarter 2025 Universal Service
Contribution Factor, DA 24-1245 (rel. Dec. 12, 2024) (36.3% for
First Quarter 2025), https://docs.fcc.gov/public/attachments/DA24-1245A1.pdf.
62
Some cynics may think that determining the size
of a social welfare program is too important to be left
to legislators, but Congress sets specific taxes and
appropriations to address the most critical national
issues, as well as every other major federal program.
It beggars belief that the USF is so important that it
alone is entitled to a free pass.
Second, Petitioners overstate the real-world
effectiveness of the USF. As explained above, the USF
is notoriously ineffective for its intended recipients—
e.g., the GAO said the USF may not have played any
meaningful role in improving the “level of low-income
households’ subscribing to telephone service over the
past 30 years.” GAO-15-335, supra note 1. It is telling
that some Petitioners focus heavily on the companies
that make money from the USF, i.e., “investmentbacked reliance interests.” CCA.Br.49.
Third, Petitioners are also wrong that affirming
would upend the USF. The decision below did not
vacate the Contribution Factor but rather remanded
without vacatur. Pet.App.81a. Even if this Court
ordered vacatur, it could be limited to the named
Respondents, as they have long proposed.17
In fact, affirming the Fifth Circuit’s decision is
likely the best thing that could happen for universal
service. The USF’s sustainability and constitutional
flaws are well known, and there is bipartisan interest
in ensuring the continuity of USF.18 There is certainly
17 See, e.g., FCC.CA5.Reply.Br.7.n.2 (filed July 15, 2022).
18 See generally Br.Amici.Curiae.Members.of.Congress.
63
no shortage of ways for Congress to do so in a way that
would be sustainable and constitutional. See generally
FCC 22-67, supra note 12. Affirming the decision
below could very well provide the impetus for
Congress to act, as it has recently done elsewhere in
the face of a judicial ruling finding a nondelegation
violation.19
A corrective fix would be as straightforward as
adding half a sentence setting the specific USF tax
rate, or simply appropriating money instead. This
would ensure that Congress itself decides “how much”
is raised. McConnell, supra, at 103; The Federalist
No. 83 (“[T]he AMOUNT of taxes to be laid” is a
matter for “the legislature.”) (capitalization in
original).20
But reversing the decision below would yield
dramatic separation-of-powers harms. If the USF
scheme were replicated elsewhere, there would be no
need for budgets or appropriations ever again. If the
FCC can raise $10 billion a year based on its own
aspirations and evolving definitions, there is no
reason the IRS could not be similarly tasked with
funding the federal government as it sees fit.
19 See, e.g., Oklahoma v. United States, 62 F.4th 221, 225 (6th
Cir. 2023) (recounting Congress’s swift statutory amendments).
20 Even if the Court were worried about practical effects (and it
shouldn’t be), it could consider staying issuance of its judgment
as it has done in the past to give Congress time to pass a
statutory fix or simply appropriate money directly. N. Pipeline
Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 88 (1982).
64
Finally, the government suggests that affirming
the decision below will cause uncertainty across other
areas of law. See Gov.Br.18–21; Gov.Pet.27–28. The
government trots out this argument in every
important administrative-law case, only to be proven
wrong every time. See, e.g., Br. for Resp. at 33, Loper
Bright Enters., Inc. v. Raimondo, No. 22-451 (U.S.
Sept. 15, 2023) (“Overruling Chevron would thus
create ‘an upheaval.’”); Br. for Resp. at 39, Corner
Post, Inc. v. Bd. of Governors of the Fed. Rsrv. Sys.,
No. 22-1008 (U.S. Dec. 13, 2023) (following the APA’s
accrual language would “create serious problems for
agency and judicial administration”).
The doomsayers will be proven wrong here, too.
Nondelegation challenges are batting a whopping .000
at the Fifth Circuit since it issued the binding decision
below in July 2024, with the court since rejecting
numerous challenges even to broad statutory
transfers of authority. See, e.g., Airlines for Am., Inc.
v. DOT, ___ F.4th ___, 2025 WL 313998, at *11 (5th
Cir. Jan. 28, 2025); Mayfield v. DOL, 117 F.4th 611,
621–22, (5th Cir. 2024). The en banc court was right
when it said the USF funding scheme truly is
“unprecedented.” Pet.App.42a.
***
Despite putting a “lot of words” in § 254, Congress
“suppl[ied] no principle,” Pet.App.27a, for the single
most important policy determination of all: “how
much” to raise, McConnell, supra, at 103. Instead,
Congress told the FCC to “exact as much tax revenue
for universal service projects as FCC thinks is good,”
65
Pet.App.27a, and the FCC has been more than happy
to oblige.
Such an important aspect is no mere “detail” that
can be left to bureaucrats to “fill up.” Gundy, 588 U.S.
at 157–59 (Gorsuch, J., dissenting). Congress cannot
“merely announce vague aspirations and then assign
others the responsibility of adopting legislation to
realize its goals.” Id. at 153. Because that is precisely
what Congress did here, this Court should affirm.
III. SECTION 254 VIOLATES THE MODERN
NONDELEGATION TEST.
The USF revenue-raising scheme is so open-ended
that it violates even the modern interpretation of the
nondelegation doctrine.
A.
Section 254 Does Not Clearly Delineate
the FCC’s Revenue-Raising Power.
The modern framework requires Congress to
“clearly delineate[] … the boundaries of th[e]
delegated authority,” among other things. Skinner,
490 U.S. at 219. The government’s briefs (Gov.Br.19,
24; Gov.Pet.11) tellingly omit the requirement that
the boundaries be “clearly delineate[d].” Skinner, 490
U.S. at 219 (emphasis added); Am. Power, 329 U.S. at
105.
As explained above, § 254 contains no objective
limits on the amounts raised, imposes aspirationalonly principles, and lets the FCC redefine its subject
matter and add new principles at will. See Part II.B.2–
3, supra. Given all this, it begs reality to claim that
Congress “clearly delineate[d] … the boundaries of
th[e] delegated authority.” Skinner, 490 U.S. at 219
66
(emphasis added). Even if one does not agree with the
court below that the FCC has no real limits on USF
revenue-raising, there is nothing in the statute
“clearly” delineating the size of the USF. Id.
Even opinions blessing broad delegations have
said Congress must “specify” statutory details “so far
as is reasonably practicable.” Rock Royal, 307 U.S. at
574. Adding half a sentence imposing a statutory tax
rate or cap is as straightforward and “reasonabl[e]” a
“specif[ication]” as one could imagine. Id. For 600
years, legislatures have imposed such specifications,
yet Congress chose not to do so here.
The Court could therefore resolve this case simply
by applying its existing tests as written, rather than
trying to determine in the abstract whether there is
an “intelligible principle,” a term that has resulted in
far more confusion than clarity. See Gundy, 588 U.S.
at 164 (Gorsuch, J., dissenting).
B.
Petitioners’ Cases Are Distinguishable.
Petitioners’ primary response is a breezy syllogism
of sorts: because a few of this Court’s decisions have
upheld seemingly broad statutory delegations, pretty
much any statute will pass muster. Gov.Br.20–21, 30.
As the en banc decision below explained,
Pet.App.33a, Petitioners ignore this Court’s rule that
the level of statutory specificity required by the
nondelegation doctrine varies based on “the extent
and character” of the power delegated, Mistretta, 488
U.S. at 372, and “the degree of agency discretion that
is acceptable varies according to the scope of the
power congressionally conferred,” Whitman, 531 U.S.
67
at 475; see Chad Squitieri, Towards Nondelegation
Doctrines, 86 Mo. L. Rev. 1239, 1294–95 (2021)
(collecting examples of how “nondelegation principles
are regularly applied differently to different powers”
by courts).
This Court has explained, for example, that
statutory phrases like “in the public interest” raise
grave nondelegation concerns when appearing in
statutes allowing domestic revenue-raising by
agencies. NCTA, 415 U.S. at 341–42. In NCTA, the
Court held that giving the FCC the power to raise
money based on “‘public policy or interest served, and
other pertinent facts’” raises the specter of “forbidden
delegation of legislative power” by “carr[ying] [the]
agency far from its customary orbit and put[ting] it in
search of revenue in the manner of an Appropriations
Committee of the House.” Id. Applying that rule later
in Skinner, this Court correctly upheld a delegation
letting an agency raise no more than 105% of the
amount already appropriated by Congress. 490 U.S.
at 220–22; see also CFPB v. Law Offs. of Crystal
Moroney, P.C., 63 F.4th 174, 184 n.2 (2d Cir. 2023)
(finding the statutory “twelve-percent limit on the
amount of funding [the CFPB] may draw from the
Federal Reserve System” “clearly delineates the …
boundaries of this delegated budgetary authority”)
(cleaned up).
By contrast, the cases Petitioners cite involved
powers that are not strictly legislative in the first
place or featured more limitations than Petitioners
will admit.
68
Petitioners invoke cases arising in a wartime
posture, like Yakus v. United States, 321 U.S. 414
(1944), and Lichter v. United States, 334 U.S. 742
(1948); see Gov.Br.21. But nondelegation “limitations
are … less stringent in cases where the entity
exercising the delegated authority itself possesses
independent authority over the subject matter,”
Mazurie, 419 U.S. at 556–57, and thus war statutes
are different for nondelegation purposes because war
powers are “cognate to the conduct by [the President]
of the foreign relations of the government” and his
Commander-in-Chief powers, Panama Refining, 293
U.S. at 422.
The government also invokes Mistretta, which
addressed the U.S. Sentencing Guidelines, Gov.Br.24,
but that likewise is not a pure legislative-delegation
case, given that the judicial branch possesses inherent
power over sentencing, Mistretta, 488 U.S. at 390–91
& n.17; Pet.App.35a; Volokh, supra note 5, at 1401–
02.
Similarly misplaced is Petitioners’ reliance
(Gov.Br.11; CCA.Br.23) on NBC v. United States, 319
U.S. 190 (1943), which upheld a statute allowing the
FCC to regulate “chain broadcasting” in the “public
interest, convenience, or necessity,” id. at 194 n.1,
216. As Professor McConnell and the en banc court
below have explained, NBC addressed disposition of
government property because “the public owns the
airwaves,” Pet.App.35–36a (cleaned up), and the
“power to manage public property” is a long-time
executive power, McConnell, supra, at 334
69
(distinguishing NBC on this basis).21 This explains
why the statutory reference to “public interest”
sufficed here, yet that exact same term was so
problematic in NCTA, which involved revenue
raising, as discussed above.
In New York Central Securities Corp. v. United
States, 287 U.S. 12 (1932), the statute allowed the
setting of rates based on the “public interest,” id. at
24–25, but as the en banc court below explained, that
was “shorthand” for invoking the pre-existing
“common law of common carriers.” Pet.App.39a.22
But deeming pre-existing frameworks as
incorporated into the statute won’t work here because
the universal service scheme in existence pre-1996
was “nothing like the modern universal service
regime, which allows a greatly expanded class of
carriers to bill USF for a broad range of subsidized
services provided at no cost to themselves.”
Pet.App.61–62a. Petitioners acknowledge that
“Congress
adopted
fundamental
changes”
(SHLB.Br.3) and “overhauled” (Gov.Br.3) the
universal-service scheme in 1996. See also Br. for
FCC, U.S. W. Commc’ns, supra, at 32 (“Nothing in the
21 This also provides a second reason to distinguish Lichter,
which involved case-by-case determinations related to
“recapture” of government contracts, 334 U.S. at 784, an
executive function. Likewise distinguishable is United States v.
Grimaud, 220 U.S. 506 (1911); see Gov.Br.21, which addressed
rules for use of “public land,” DOT, 575 U.S. at 83 n.7 (Thomas,
J., concurring in the judgment).
22 A similar analysis explains American Power & Light Co., 329
U.S. at 104–05; see Pet.App.38a.
70
statute, however, requires the FCC to sustain existing
levels of universal service support.”).
Whitman likewise “does not implicate legislative
power,” as the relevant statute “govern[ed] the
allocation of federal funds” that had already been
properly raised by Congress. A.J. Jeffries, Making the
Nondelegation Doctrine Work: Toward A Functional
Test for Delegations, 60 U. Louisville L. Rev. 237, 259
(2021). The Clean Air Act instructed the EPA
Administrator to set national ambient air quality
standards, but those standards “did not put any
business or individual at direct risk of any penalty,
criminal or civil, because the provision imposed
obligations on states which were backed up
principally with the prospect of reductions in federal
funding or federal preemptive action.” Id. Whitman
itself explained that “[i]t is to the States that the
[Clean Air Act] assigns initial and primary
responsibility for deciding what emissions reductions
will be required from which sources.” 531 U.S. at 470.
Whitman therefore addressed a provision that
involved the federal government’s spending of its own
money and thus was not a core legislative power for
nondelegation purposes. See Gundy, 588 U.S. at 157–
59 (Gorsuch, J., dissenting). Further, this Court
interpreted the relevant statute in Whitman to impose
both a ceiling, 531 U.S. at 473, which is absent from
§ 254.
Another category of acceptable delegations is
present in Union Bridge Co. v. United States, 204 U.S.
364 (1907); see Gov.Br.20, where Congress authorized
case-by-case “determin[ations of] some fact or the
71
state of things upon which the enforcement” of the
statute would turn, 204 U.S. at 387 (identifying
particular bridges that hindered movement on rivers).
This is a textbook example of “mak[ing] the
application of that rule depend on executive factfinding.” Gundy, 588 U.S. at 157–59 (Gorsuch, J.,
dissenting).
In other cases, the statutes simply contained more
limitations than Petitioners disclose. In Opp Cotton
Mills, Inc. v. Administrator, 312 U.S. 126 (1941); see
Gov.Br.21, for example, Congress statutorily imposed
both a floor and a ceiling on the minimum wage the
executive could announce, 312 U.S. at 142 (between
30 and 40 cents per hour), ensuring an objective
range. The USF lacks such clear delineations. And in
Yakus, which is already distinguishable because of its
wartime posture, Congress pegged executive pricesetting to specific historic dates. See 321 U.S. at 419–
21.23
***
The
Court
should
reject
Petitioners’
oversimplification of nondelegation precedent, which
is far more nuanced. “Unlike delegations implicating
the power to impose criminal sentences, taxation has
always been an exclusively legislative function.
Unlike the power to impose conditions on the use of
public property, taxation involves the conversion of
private property. And unlike other congressional
23 The government also cites FPC v. Hope Natural Gas Co., 320
U.S. 591 (1944); see Gov.Br.21, but the majority opinion there did
not address nondelegation.
72
delegations implicating core legislative functions,
§ 254 is a hollow shell that Congress created for FCC
to fill.” Pet.App.40–41a.
C.
Petitioners’ Remaining Arguments Are
Unpersuasive.
The government objects to this approach
altogether by arguing that Skinner barred
distinguishing between different types of delegations.
Gov.Br.35. The government overreads Skinner, which
certainly did not purport to overrule the centuries-old
principle that what suffices under the nondelegation
doctrine will vary based on context—a principle this
Court expressly reaffirmed later in Whitman, 531
U.S. at 475; see also McConnell, supra, at 334. And far
from rejecting a requirement for clear boundaries,
Skinner reiterated that Congress must “clearly
delineate[]” its delegated power. Skinner, 490 U.S. at
214. But § 254 fails to do so, which is why
Respondents prevailed below even with the court
acknowledging Skinner. Pet.App.41–42a n.13.
Further, the portion of Skinner on which the
government relies is “likely dicta.” Mark Chenoweth
& Richard Samp, Reinvigorating Nondelegation with
Core Legislative Power, in The Administrative State,
supra note 11, at 81, 99. That is because the Court had
held that the mathematical cap on agency revenueraising was a key reason why the statute in that case
survived nondelegation, and only then did the Court
discuss the standards for delegating the taxing power
in particular. Id. If Skinner did hold that taxing
delegations are subject only to an extraordinarily
weakened test (which it did not), that would be
73
inconsistent with centuries of practice, as well as “the
Constitution’s original meaning,” which if anything
“would seem to compel a more restrictive test for
delegations of the taxing power.” Pet.App.41–42a
n.13.
The government alternatively claims in passing
that deciding how much money to raise for USF is a
technical determination that Congress could delegate
to the executive. Gov.Br.37–38. That argument is
forfeited.24 In any event, the government’s premise is
wrong. When it comes to deciding how much money to
raise for a social welfare program, Congress itself is—
and, under the Constitution, must be—the expert.
“[D]etermining the ideal size of a welfare program
involves policy judgments, not technical ones.”
Pet.App.35a.
As Joseph Story put it: “in respect to the particular
subject of taxation, there is quite as much reason to
suppose, that there will be an adequate assemblage of
experience, knowledge, skill, and wisdom, in congress,
and as adequate means of ascertaining the proper
bearing of all taxes.” 2 Story, Commentaries, supra,
§ 941, at 415. “To suppose otherwise, is to suppose the
Union impracticable, or mischievous.” Id.
24 The government raised the point below only in footnotes, see
Gov.CA5.EnBanc.Br.34
n.12
(filed
Aug.
30,
2023);
Gov.CA5.Br.38 n.20, which is insufficient under circuit
precedent, e.g., Bridas SAPIC v. Turkmenistan, 345 F.3d 347,
356 n.7 (5th Cir. 2003).
74
IV. THE USF REVENUE-RAISING SCHEME
ALSO
VIOLATES
THE
PRIVATE
NONDELEGATION DOCTRINE.
Delegation to “private persons” is “delegation in its
most obnoxious form” because “it is not even
delegation to an official or an official body,
presumptively disinterested, but to private persons
whose interests may be and often are adverse to the
interests of others in the same business.” Carter v.
Carter Coal Co., 298 U.S. 238, 311 (1936). “Could
trade or industrial associations or groups be
constituted legislative bodies … because such
associations or groups are familiar with the problems
of their enterprises? … The answer is obvious. Such a
delegation of legislative power is unknown to our law,
and is utterly inconsistent with the constitutional
prerogatives and duties of Congress.” Schechter
Poultry, 295 U.S. at 537.
“When it comes to private entities, … there is not
even a fig leaf of constitutional justification.” DOT,
575 U.S. at 62 (Alito, J., concurring). “Private entities
are not vested with ‘legislative Powers.’ Nor are they
vested with the ‘executive Power,’ which belongs to
the President.” Id. The Constitution thus reflects the
long-established practice in England, which required
that “taxes[] have to be approved by Parliament as
such and not merely by the merchants’
representatives in the Commons or outside it.” Einzig,
supra, at 109 (emphasis added).
Despite this, each quarter, USAC—a “private
corporation owned by an industry trade group,” U.S.
ex rel. Shupe v. Cisco Sys., Inc., 759 F.3d 379, 387 (5th
75
Cir. 2014)—undertakes the “imprecise exercise” of
deciding how much money will be needed to cover
universal service programs over the next quarter,
TOPUC II, 265 F.3d at 328. USAC also determines
expected
interstate
and
international
telecommunications revenues over the next quarter,
based on self-reporting from private carriers. 47
C.F.R. § 54.709(a)(2).
A component within the FCC ministerially divides
those two numbers, creating a proposed tax rate,
which will be “deemed approved” under penalty of law
fourteen days later unless the FCC affirmatively steps
in to stop it. 47 C.F.R. § 54.709(a)(3); Gov.Br.43
(admitting Office of Managing Director’s calculations
are “routine”).
In the 100-plus quarters of USAC’s involvement
before this suit was filed, the FCC had never
substantively changed USAC’s proposals. In fact, the
FCC does not engage even in the pretense of
substantive review, presumably because “it does not
even have a documented process for checking USAC’s
work.” Pet.App.7a. The FCC simply deems approved
whatever figures USAC sends. And “[w]ith such a
short time window, it appears FCC has no real choice
but to accept USAC’s proposed figures.” Pet.App.50a
n.17.
The government tries to analogize the FCC/USAC
relationship to “Members of Congress speak[ing] to
lobbyists” or “Presidents consult[ing] with private
groups before making nominations.” Gov.Br.40. To
make the analogy fit, Congress would need to say that
lobbyists’ proposed bills will be printed and “deemed
76
enacted” by Congress unless it intervenes within
fourteen days; or that private groups could propose
nominations that will be transcribed and “deemed
submitted” unless the President stops it. The
government even says USAC’s role is like letting
private individuals sit on federal juries, Gov.Br.41,
which is expressly required by the Constitution, U.S.
Const. amends. V–VII. The government declines to
identify which constitutional provision requires
USAC to set tax rates. The patent weakness of these
analogies only undermines the government’s position.
In addition to lacking any historical analogue, this
scheme fails to comply with this Court’s precedents on
private nondelegation, and the Court should reject the
government’s badly flawed counterproposal.
A.
USAC Exercises Governmental Power.
“[I]t is clear that delegations to private entities
raise constitutional concerns entirely distinct from
delegations to the executive.” Pet.App.43a. Although
Congress can give some discretion to executive
agencies carrying out the law, see, e.g., City of
Arlington v. FCC, 569 U.S. 290, 304 n.4 (2013), private
delegations are different because private actors have
no constitutional duties or powers, nor do they take an
Article VI oath to uphold the law, see, e.g., Carter Coal,
298 U.S. at 311; DOT, 575 U.S. at 62 (Alito, J.,
concurring); U.S. Telecom Ass’n v. FCC, 359 F.3d 554,
565 (D.C. Cir. 2004) (“[W]hen an agency delegates
power to outside parties, lines of accountability may
blur, undermining an important democratic check on
government decision-making.”).
77
1. Some Petitioners (but not the government, as
explained below) insist that USAC’s work is purely
ministerial and therefore does not implicate private
nondelegation principles at all. CCA.Br.35–37;
SHLB.Br.40–42.
It is unclear whether the ministerial versus nonministerial framework is dispositive, as presumably
even ministerial governmental powers cannot be
delegated to private parties. In any event, USAC’s
work is not ministerial. This Court has defined a
ministerial task as “one in respect to which nothing is
left to discretion.” Gaines v. Thompson, 74 U.S. 347,
353 (1868). But “discretion inheres in decisions about
how much money to allocate to a massive federal
welfare program,” Pet.App.54a, and the “budget for
the four USF Programs is not set by the FCC, which
Congress put in charge of the program, but rather by
USAC,” James E. Dunstan, The FCC, USF, and
USAC: An Alphabet Soup of Due Process Violations 3
(Pac. Legal Found. Working Paper, Apr. 2023),
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=
4599298.
USAC’s task is to make “projections” (a word its
quarterly filing uses over 80 times in various forms,
see JA1–82) about how much money to raise for an
expansive federal program aimed at achieving a
vague and largely undefined social goal. USAC makes
findings as to individual carriers’ eligibility, which
then are aggregated to form the demand projection,
i.e., how many billions of dollars to raise for universal
service. The amount to be raised is thus highly
dependent on USAC’s voluminous decisionmaking.
78
USAC makes dozens of determinations based on
discretion-inhering terms like “reasonable” or
“suitable,” see, e.g., 47 C.F.R. §§ 54.308(a), 54.309(a),
54.322(g), 54.805(a); and it faces ranges measured in
the hundreds of millions of dollars for some programs,
see, e.g., id. §§ 54.423(a), 54.507(a), 54.619(a). And
that is before it decides how much to pay itself, which
routinely tops $50 million every quarter. JA13. No
wonder one FCC Commissioner said program limits
on USAC were “a joke, not a budget.” Benjamin
Herold, FCC Adds Broadband to “Lifeline” Program
in Party-Line Vote, Educ. Week (Mar. 31, 2016),
https://www.edweek.org/technology/fcc-addsbroadband-to-lifeline-program-in-party-line-vote/
2016/03.
Two people working independently with the same
FCC regulations would never arrive at the same
number needed for universal service each quarter—
proof that discretion inheres in the exercise. Given
that USAC “dictate[s] the size of the universal service
contribution amount, which controls the size of a tax
levied on American consumers,” Pet.App.48–49a, it is
clear that USAC’s role is more than ministerial.
That presumably explains why the government
has suddenly abandoned the “ministerial” argument
after pushing it for years, including in its certiorari
petition. Gov.Pet.20, 24, 26. Not once does the word
“ministerial” appear in the government’s merits brief.
2. The government instead argues that USAC
“simply gives the FCC advice,” Gov.Br.13, and
therefore does not exercise “governmental power,”
Gov.Br.38. In this telling, USAC is the same as any
79
member of the public who merely submits ideas and
proposals to government officials. But that framing
fares no better. The FCC lets USAC’s proposals
become binding on the public without proper vetting
or formal approvals, meaning the “FCC has virtually
no input into setting the quarterly contribution
factor.” Dunstan, supra, at 5.
The en banc court below correctly recognized three
requirements that must be satisfied to ensure that
private entities remain subordinate to government
officials. “First, government officials must have final
decision-making authority. Second, agencies must
actually exercise their authority rather than
‘reflexively rubber stamp work product prepared by
others.’ 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.” Pet.App.46–47a (cleaned
up) (collecting authorities).
USAC’s involvement violates the second and third
requirements.
No Affirmative Approval. Under private
nondelegation principles, the FCC must formally
adopt USAC’s proposals before they bind the public.
Id.; see Sunshine Anthracite, 310 U.S. at 388, 399; cf.
INS v. Chadha, 462 U.S. 919, 958 n.23 (1983) (“To
allow Congress to evade the strictures of the
Constitution and in effect enact Executive proposals
into law by mere silence cannot be squared with Art.
I.”); Ass’n of Am. Railroads v. DOT, 721 F.3d 666, 671
(D.C. Cir. 2013) (“Even an intelligible principle cannot
80
rescue a statute empowering private parties to wield
regulatory authority.”).
But “FCC regulations provide that USAC’s
projections take legal effect without formal FCC
approval” because they are “deemed approved” after
fourteen days. Pet.App.49a (citing 47 C.F.R.
§ 54.709(a)(3)). The “FCC has, in effect, given private
entities the final say with respect to the size of the
USF Tax.” Pet.App.49a. “[D]ictating the contribution
amount” without formal FCC approval amounts to “an
exercise of government power.” Pet.App.54a.
The government makes an unpersuasive pass at
claiming it does formally approve USAC’s figures. The
government argues—for the first time—that courts
must “take at face value” the “FCC’s report that the
Commission independently approves the [USAC]
projections and determines the contribution factor.”
Gov.Br.46. But there is no such “report.” The
government apparently is referring to the Office of
Managing Director (OMD)’s quarterly release that
shows
the
proposed
Contribution
Factor,
Pet.App.141–49a, but nowhere does that document
say the FCC has “independently” reviewed USAC’s
figures, Gov.Br.46, and OMD’s breathless parroting of
USAC’s projections proves no such review occurs,
Pet.App.141–49a; Gov.Br.43 (acknowledging OMD
makes, at most, “routine adjustments”).
Nor does the OMD release say the FCC has
affirmatively “approve[d] the projections and
determine[d] the contribution factor.” Gov.Br.46. In
fact, it says the opposite. It is labeled as a “proposed”
81
figure that has not been “approved.” Pet.App.141a,
146a.
If further proof were needed, consider the current
memorandum of understanding (MOU) between
USAC and the FCC: “the Managing Director issues a
public notice announcing USAC’s projections and
proposing a contribution factor based on those
projections. The Commission reserves the right to
revise USAC’s projections within fourteen (14) days.”
Memo. of Understanding Between FCC and USAC
¶ 13, at 7, https://www.fcc.gov/sites/default/files/usacmou.pdf (last accessed Feb. 9, 2025) (emphases
added).
The MOU doesn’t say OMD announces its own
projections or that the Commission can revise “OMD’s
projections,” as would be the case if the government’s
rendition to this Court were accurate. Rather, the
MOU repeatedly calls them “USAC’s projections,”
even after the OMD release is issued. And “USAC’s
projections,” not the FCC’s, are passively “deemed
approved” fourteen days later.25
Recognizing this problem, some Petitioners
respond that the FCC’s lack of formal approval is
simply a form of “policymaking” where the agency
“decid[es] not to act” in the face of USAC’s proposals.
CCA.Br.41–42 (emphasis in original). But “not acting”
here means that a private proposal automatically
25 Petitioners’ amici acknowledge the emperor has no clothes:
“USAC[’s] … universal service rate projections take effect
without
formal
FCC
approval.”
Br.Amicus.Curiae.Ad.Hoc.Healthcare.Group.11.
82
becomes binding under penalty of law. That is not
“policymaking”—it is abdication, and it is a
paradigmatic example of a private nondelegation
violation.
No Pervasive Surveillance. The FCC also
violates the requirement that it exercise pervasive
surveillance over USAC. The FCC does not
“‘independently perform[] its reviewing, analytical
and judgmental functions’ with respect to the
privately supplied universal service contribution
amount.” Pet.App.49a. The FCC does not even have a
mechanism to “check[] USAC’s work. Instead, it
appears to ‘reflexively rubber stamp’ whatever
contribution amount USAC proposes.” Id. (cleaned
up). “[T]he FCC needn’t (and overwhelmingly doesn’t)
do anything at all.” Consumers’ Rsch., 88 F.4th at 937
(Newsom, J., concurring in judgment).
The government claims the FCC has on
“occasion[]” “conduct[ed] meaningful review” of
USAC’s Contribution Factor work, Gov.Pet.23, but
another Petitioner admits reality: “the FCC has never
publicly reversed USAC’s projections of demand,”
CCA.Br.42. The en banc court made swift work of the
government’s assertion, noting that even though the
“FCC claims it has made three alterations to USF
projections,” “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.”
Pet.App.7a n.1. Petitioners cite two revisions that
post-date the initiation of this suit, Gov.Br.47, but
those involved ministerial adjustments for excess
83
USF funds carried over from prior quarters. Again, if
anybody were conducting merely ministerial work
here, it’s the FCC, not USAC.
Petitioners note the FCC oversees dozens of
appeals from USAC invoicing disputes. Gov.Pet.21
(citing 47 C.F.R. § 54.719); SHLB.Br.42–43. This
process is unavailable to the millions of consumers
who never “receiv[e] an invoice” from USAC but have
to pay money because of USAC’s handiwork.
Consumers’ Rsch., 67 F.4th at 786 n.6. Further, this
appellate process directly refutes the notion that
USAC’s work is ministerial or nongovernmental. How
could there be so many vigorous disputes about simple
bean counting?
The government also cites a self-serving regulation
saying USAC “may not make policy.” Gov.Br.43. But
USAC inherently makes policy because it exercises
judgment and discretion. And even if it didn’t, it still
makes policy because the FCC does not formally
approve USAC’s proposals before they become
binding, nor does the FCC engage in pervasive
surveillance of USAC’s work. On that note, the court
below held that the FCC’s outsourcing to USAC is
problematic for the additional reason that “the
decision to delegate government power to a private
entity is itself a legislative one.” Pet.App.63a n.21; see
Whitman, 531 U.S. at 473. Petitioners respond that no
specific authority to involve USAC is needed because
USAC merely offers “advice,” Gov.Pet.13, 24, or
because its role is purely “ministerial,” SHLB.Br.47.
As explained above, both contentions are inconsistent
with reality.
84
B.
The Government Instead Proposes a
Badly Flawed Test.
Rather than seriously try to satisfy the threerequirement test dictated by precedent and applied by
the en banc court below, the government asks this
Court to adopt a brightline rule: there can never be a
private nondelegation violation if the agency “has
authority to reject” private proposals. Gov.Br.45.
(emphasis in original). In the government’s telling, it
is irrelevant whether the agency actually reviews or
affirmatively approves private proposals before they
become binding on the public, or whether the agency
even has the practical ability or time to do so. The
mere unexercised authority is categorically sufficient.
The government wants this test because it knows
the FCC does not engage in independent review and
approval of USAC’s figures, and the only way out is a
rule that unabashedly lets USAC sit in the driver’s
seat. The government’s test is wrong and would be
disastrous.
First, the government’s proposal is impossible to
reconcile with the existence of the private
nondelegation doctrine. “[A]ny agency can always
claw back its delegated power,” but if merely pointing
to the existence of that unexercised authority would
automatically defeat a private nondelegation claim,
then the “nondelegation doctrine [is] a dead letter.”
Texas v. Rettig, 993 F.3d 408, 416–17 (2021) (Ho, J.,
dissenting from denial of reh’g en banc). As Judge
Williams put it, “vague or inadequate assertions of
final reviewing authority” on the backend will not
85
“save an unlawful subdelegation” to a private entity.
U.S. Telecom, 359 F.3d at 568.
That rule makes good sense. In the context of
delegations from Congress to an agency, it is no
answer that Congress retains the right to enact a new
statute overruling an agency’s particular use of
delegated power. It makes even less sense to claim
that this trick defeats a private delegation, given that
such delegations are viewed more skeptically. See
Carter Coal, 298 U.S. at 311; DOT, 575 U.S. at 62
(Alito, J., concurring).
Second, the government misreads the caselaw it
believes supports its view. It invokes Sunshine
Anthracite, see Gov.Br.45, but that case involved a
critical difference: a government commission, “not the
[private] code authorities, determine[d] the prices” to
be charged, and the private proposals were null and
void until the Coal Commission affirmatively adopted
them, 310 U.S. at 388, 399 (emphasis added); see also
Rock Royal, 307 U.S. at 577–78.
“To make Sunshine Anthracite apposite [to USAC],
the Coal Commission’s discretion to set minimum
prices would have had to have been unfettered (it was
not); the Coal Commission’s passive acquiescence
would have had to make the code authorities’ price
recommendations legally binding (it did not); and
there would have to have been evidence that the Coal
Commission always agreed with the code authorities’
86
price recommendations (there was not).” Pet.App.68a
(emphasis in original).26
More apt is Carter Coal, where this Court held
unconstitutional a statute that allowed privately-set
minimum-price and labor codes to bind producers
“without approval by any federal official.”
Pet.App.44–45a (citing 298 U.S. at 282, 284). It is
difficult to believe, as Petitioners must, that Carter
Coal would have come out the other way if only the
National Bituminous Coal Labor Board had said in
advance that all codes proposed by private industry
would be passively “deemed approved” by the Board
after fourteen days.
Third, the government’s test would yield
disastrous consequences. Private entities could
directly exercise government powers. As the
government would have it, Congress could say, “The
defense budget is whatever Lockheed Martin wants it
to be, unless Congress [or an agency] intervenes to
revise it.” Pet.App.49a. Or the IRS could let private
tax associations set tax rates for the entire country.
See Introduction, supra. This would be catastrophic to
the separation of powers and the liberty it protects.
“[W]ith each successive delegation—from Congress to
agencies, and then from agencies to private parties—
we drift further and further from the locus of
26 Similarly, in Currin v. Wallace, 306 U.S. 1 (1939), “the
producers had no power to designate the markets in which
classification would be required; only the Secretary could do
that,” Pet.App.45a.
87
democratic accountability.” Consumers’ Rsch., 88
F.4th at 938 (Newsom, J., concurring in judgment).
Fourth, the government suggests its lethally
simple test is preferable because the en banc court
below “identified no workable standard” as an
alternative. Gov.Br.46. Wrong. To begin, “passive
acquiescence” in letting a private party’s
“recommendations [become] legally binding” is a clear
test—one the government just as clearly fails.
Pet.App.68a; see Pet.App.49a. That alone was
sufficient to resolve the matter, but the court below
gave the government the benefit of the doubt by
nonetheless searching for other forms of evidence that
the FCC exercises pervasive supervision and
approval. Every trail went cold.
The Court should emphatically decline Petitioners’
invitation to greenlight the transfer—really, the
abdication—of government power to private parties.
***
One of Petitioners’ amici argued that the FCC’s
delegation to USAC is fine because international
custom dictates that a “separate, independent
(autonomous) entity” should calculate and collect
universal service funds because it supposedly
improves “efficiency.”27 But constitutional separation
of powers is not designed to maximize “efficiency” and
“autonom[y].” Quite the opposite. “[B]icameralism
and presentment make lawmaking difficult by
design.” Pet.App.25a (emphasis in original). “It would
27 Br.Frieden.CA5.Amicus.Curiae.23 (5th Cir. June 17, 2022).
88
dash the whole scheme if Congress could give its
power away to an entity that is not constrained by
those checkpoints.” DOT, 575 U.S. at 61 (Alito, J.,
concurring).
V.
THE COMBINATION OF DELEGATIONS IS
UNCONSTITUTIONAL.
Rather than declare invalid both the statutory
delegation to the FCC and the FCC’s subsequent
delegation to USAC, the court below instead held that
“the combination … violates the Legislative Vesting
Clause in Article I, § 1.” Pet.App.64a (emphasis in
original). The “USF’s double-layered delegation is
unprecedented.” Pet.App.67a. It “combines a
sweeping delegation of the taxing power, with a
subdelegation of that power to private entities with a
personal financial interest in the size of the tax. It is
d
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