Supreme Court Rejects Non-Delegation Challenge to FCC’s Universal Service Fund
Case Name and Number: FCC v. Consumers’ Research, No. 24-354
Introduction: Today, the Supreme Court held in a 6-3 decision that Congress’s delegation of authority to the FCC to set the rate for contributions to, and oversee disbursements from, the Universal Service Fund – as well as the FCC’s sub-delegation of authority to a private corporation to help with implementation – did not violate the non-delegation doctrine.
Background: In the Communications Act of 1934, Congress instructed the FCC to make communications services available at a reasonable rate to everyone in the United States, known as the universal-service requirement. When Congress amended the Act in 1996, it required every communications services carrier to contribute a to-be-determined percentage of the carrier’s projected revenue to the Universal Service Fund, which the FCC would then use to fund universal service, subject to certain statutory conditions and considerations. The FCC appointed a private corporation – the Universal Service Administrative Company – to help calculate carrier contributions and manage the Fund.
Consumers’ Research challenged this arrangement as a violation of the non-delegation doctrine, which holds that Congress may not delegate legislative power to Executive Branch agencies and, separately, that government authority may not be delegated to private entities. The Fifth Circuit held the Universal Service Fund arrangement unlawful. It concluded that Congress may have improperly delegated legislative power to the FCC by failing to specify sufficiently detailed limiting principles governing the FCC’s implementation of the universal-service requirement. And the court determined that the FCC may have improperly delegated governmental authority to a private company. The Fifth Circuit did not conclusively determine whether either delegation was independently unlawful, holding instead that the combination of the two delegations was unconstitutional.
Issue: Whether Congress’s delegation of authority to the FCC to manage the Universal Fund and the FCC’s sub-delegation of that authority to a private corporation violate the non-delegation doctrine.
Court’s Holding: In an opinion written by Justice Kagan and joined by Chief Justice Roberts and Justices Sotomayor, Kavanaugh, Barrett, and Jackson, the Supreme Court held that the Congress’s design of the Universal Service Fund and the FCC’s implementation of that plan did not violate the non-delegation doctrine.
First, the Court held that Congress’s delegation of authority to the FCC to manage a Universal Service Fund did not violate the non-delegation doctrine. Prior Supreme Court decisions held that there is no violation of the congressional non-delegation principle as long as Congress provides an “intelligible principle” to guide the agency. The Court today rejected Consumers’ Research’s argument that a stricter standard should apply when Congress authorizes an agency to determine the amount of a fee. It held that even a delegation involving revenue-raising is subject to the traditional intelligible-principle test. And the Court reasoned that Congress’s delegation satisfied that test because it allows the FCC to raise only a “sufficient” amount to implement universal service and set mandatory conditions for the FCC to consider when determining the amount of funds needed to satisfy that standard.
Second, the Court held that the FCC’s sub-delegation of authority to the private entity did not violate the non-delegation doctrine. The Court explained that sub-delegation was permissible here because the Universal Service Administrative Company was subordinate to the FCC and because the FCC retained final decision-making authority.
Finally, the Court rejected the Fifth Circuit’s combination theory, under which two constitutional non-violations taken together can amount to a constitutional violation. The Court reasoned that, because the two non-violations did not implicate the same issue – one dealt with Congress’s authority to delegate its legislative power, and the other dealt with allowing a private entity to govern – they did not compound to create a constitutional violation.
Justice Kavanaugh concurred. He wrote separately to emphasize that the intelligible-principle test varies based on the scope of the power Congress delegates, that the Court’s recent decisions cabining agencies’ power to implement legislation mitigate concerns over substantial delegations, and that the non-delegation doctrine plays only a limited role in the areas of national security and foreign policy. He also suggested that non-delegation concerns are especially elevated with respect to independent agencies, so the Court should consider either rendering independent agency heads removable at will by the President or more stringently applying the non-delegation doctrine to independent agencies. (Of course, in a recent order the Supreme Court essentially invalidated limits on Presidential authority to remove members of multi-member commissions that head independent agencies, except for the restrictions applicable to Federal Reserve Board members.)
Justice Jackson also concurred, writing that she viewed with skepticism the existence of legal principles barring delegations to private entities.
Justice Gorsuch authored a dissent, joined by Justices Thomas and Alito. He viewed the communications service providers’ contribution requirement as a tax, which he emphasized is one of the most significant powers that Congress could confer. As a result, he would have applied the intelligible-principle test “with greater force” and concluded that Congress’s conditions did not sufficiently cabin the FCC’s authority.
Read the opinion here.
Short Quote from Decision: “Under our nondelegation precedents, Congress sufficiently guided and constrained the discretion that it lodged with the FCC to implement the universal-service contribution scheme. And the FCC, in its turn, has retained all decision-making authority within that sphere, relying on the Administrative Company only for non-binding advice. Nothing in those arrangements, either separately or together, violates the Constitution.” – Justice Kagan