Kannon Shanmugam: Welcome to “Court Briefs,” a podcast from Paul, Weiss. The chair of the firm’s Supreme Court and Appellate Litigation practice and co-chair of our Litigation Department. In this podcast we analyze Supreme Court decisions of interest to the business community.
One of the most closely watched business cases this year was a case called FCC v. Consumers’ Research, which involved a doctrine known as the non-delegation doctrine. Joining me to talk about the court's decision in that case is my partner Will Marks. So, Will, tell us a little bit about the background to this case
Will Marks: Sure, so this case arose when a group of petitioners challenged the Federal Communications Commission system for collecting universal service contributions from telecommunications carriers. Under the Federal Communications Act, telecommunications carriers are required to contribute to a fund that subsidizes communication services for certain underserved areas and facilities like rural communities, low-income households, schools, and libraries.
The act requires the FCC to collect contributions (and this is the statutory language) “sufficient to advance universal service.” The statute provides details about what types of service constitute universal service and then sets forth principles on which the FCC’s policies should be based. The FCC then uses a private non-profit corporation owned by an association of carriers to administer and calculate the contributions.
The petitioners in Consumers’ Research argued that Congress's delegation of authority to the FCC violated the Constitution’s separation of powers. In particular, they argued that Congress had violated the so-called non-delegation doctrine because the direction for the FCC to collect funds sufficient to advance universal service gave the FCC too much policymaking power.
The petitioners also argued that the FCC had unconstitutionally sub-delegated its authority to the private non-profit entity on which the FCC was relying to administer the universal service fund.
Kannon Shanmugam: So the lower court in this case, the Fifth Circuit, applied the non-delegation doctrine and ruled in favor of the petitioners. But the Supreme Court reversed.
Will Marks: That's exactly right. In a six to three decision with Justice Kagan writing for the majority, the Supreme Court held that Congress and the FCC had acted within constitutional bounds.
Kannon Shanmugam: Will, what was the Court's reasoning in rejecting the non-delegation doctrine here?
Will Marks: Well, one of the principal issues at the Court was whether, when Congress enacts a revenue raising statute like the statute governing the universal service fund, Congress has to establish a definite or objective limit on how much money the agency can collect. So think of a numerical cap or a fixed rate.
The Supreme Court rejected that requirement and held that even for revenue raising statutes the normal standard for assessing non-delegation challenges applied. Under that standard a congressional delegation to an agency is constitutional if Congress provides a so-called intelligible principle to guide the agency's exercise of discretion.
Now, applying that intelligible principle standard, the Court held that Congress's direction for the FCC to collect sufficient funds to advance universal service was sufficient to guide the agency's policymaking decisions.
As the Court explained, that standard set both a floor and a ceiling. The FCC can raise no more than is adequate and also no less than is adequate to finance the universal service program.
Congress also provided significant guidance to the FCC about how the agency should operate the universal service program. And that means that the FCC has a determinant basis for assessing whether a particular level of funding is sufficient to meet the statutory goal.
Now with respect to the FCC's use of the private nonprofit to administer the universal service fund, the Court held there that there was no constitutional problem either. To use the Court's words, “even though the nonprofit engaged in some administration of the fund, the FCC dominated the nonprofit by appointing its board members, requiring it to follow all FCC rules, regulations, orders and instructions, and by reviewing the nonprofit’s decisions if a party asked it to do so.”
Kannon Shanmugam: Will, there's been a lot of talk about potentially using the non-delegation doctrine to limit the scope of agency power. Where does that stand in the wake of the Court's decision?
Will Marks: In this case, six justices voted for what I think is a relatively permissive view of the non-delegation doctrine and only justices Thomas, Alito and Gorsuch dissented.
Throughout the opinion there's language from Justice Kagan emphasizing that non-delegation challenges are rarely successful and that it's been a very long time since the Court has overturned a statute based on non-delegation grounds.
So given some of that language and the vote in the opinion, I think that suggests the Court is not particularly interested in reviving a strong form of the non-delegation doctrine as an additional check on the administrative state. And that's true even as the Court has issued other rulings that many see is placing greater limits on the powers wielded by federal agencies.
I'd also note one small practical effect here, which is that there are a lot of revenue raising statutes in the United States Code without numerical caps or fixed rates.
This decision explains that the lack of such objective standards in the statute doesn't necessarily mean that those revenue raising statutes are unconstitutional. And that means that a whole slew of statutes across federal law is not subject to a new challenge that would have been available had the court ruled that the Universal Service Fund was unconstitutional because the statute did not contain a ceiling and a floor for the amount of funds the agency could collect.
Kannon Shanmugam: Great. Well, I certainly expect that the scope of agency power more generally will be a central theme in the upcoming Supreme Court term to start next fall. But thank you for now, Will, for summarizing the Court's decision in Consumers’ Research. And if you have any questions about the decision, please feel free to reach out either to Will or to me.
And that brings us to the end of our second season of “Court Briefs.” We hope you enjoyed the podcast. For more information about Paul Weiss's Supreme Court and Appellate Litigation Practice, please visit us at our website paulweiss.com. Please subscribe to “Court Briefs” wherever you listen to your podcasts, and if you enjoyed this season, please rate and review us on your favorite platform.
We'll be back again next fall with another season of “Court Briefs.” But until then, thank you for joining us and enjoy the summer
