Consumers' Research v. Federal Communications Commission
78-1 (11th Cir. 2023) (2023)
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Rule of Law:
A statutory delegation of legislative power to an agency is constitutional if Congress provides an intelligible principle to guide the agency. An agency’s delegation of authority to a private entity does not violate the private nondelegation doctrine if the entity functions subordinately to the agency and the agency maintains authority and surveillance over its activities.
Facts:
- In 1934, Congress created the Federal Communications Commission (FCC) to regulate interstate communication, aiming to make rapid, efficient, nationwide service available to all people without discrimination.
- In 1996, Congress enacted 47 U.S.C. § 254, which instructed the FCC to establish and maintain a universal service fund (USF) to ensure equitable universal telecommunications services based on an “evolving” evaluation of four statutory factors.
- The FCC requires telecommunications carriers providing interstate services to contribute a specified amount of money to the USF quarterly.
- The FCC depends on the Universal Service Administrative Company (USAC), a private entity, to assist in carrying out Congress’s instructions for the USF, including determining contribution amounts.
- USAC uses detailed FCC-promulgated formulas to project demand for the USF and to calculate the total contribution base, submitting these projections to the FCC for approval.
- The Petitioners, including Consumers’ Research (a nonprofit), Cause Based Commerce, Inc. (a telecommunications reseller), and various individuals, pay into the universal service fund through monthly phone bills.
- The Petitioners challenged the constitutionality of the FCC’s and USAC’s roles in creating the 4th Quarter 2022 Contribution Factor.
Procedural Posture:
- The Federal Communications Commission (FCC) issued the 4th Quarter 2022 Contribution Factor, which determined the amount telecommunications carriers must contribute to the universal service fund.
- Consumers' Research, Cause Based Commerce, Inc., Edward J. Blum, Kersten Conway, Suzanne Bettac, et al. (Petitioners) filed a petition for review of the FCC's final agency action in the United States Court of Appeals for the Eleventh Circuit, challenging the 4th Quarter 2022 Contribution Factor.
- The FCC challenged the Eleventh Circuit's subject-matter jurisdiction, arguing that the petition was untimely under the Hobbs Act's 60-day limit (as the challenge was to the entire statutory scheme last amended in 2011) and that it was an invalid pre-enforcement challenge (as the contribution factor had not yet been applied to Petitioners).
- The Eleventh Circuit determined it had jurisdiction, finding the challenge timely because the 4th Quarter Contribution Factor reapplied the statutory delegation, restarting the 60-day clock, and ripe for review as a final and judicially reviewable agency action under FCC regulations, and alternatively as a proper pre-enforcement review.
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Issue:
Does 47 U.S.C. § 254 (universal service requirements) violate the nondelegation doctrine by failing to provide an intelligible principle to guide the FCC? Does the FCC impermissibly delegate authority over the universal service fund to a private entity (USAC) in violation of the private nondelegation doctrine?
Opinions:
Majority - Wilson, Circuit Judge
No, 47 U.S.C. § 254 does not violate the nondelegation doctrine, and the FCC’s delegation of authority to the USAC does not violate the private nondelegation doctrine. Section 254 provides an “intelligible principle” to guide the FCC, satisfying the nondelegation doctrine. The statute delineates the general policy (accessible, quality, affordable service), designates the FCC as the implementing agency, and sets boundaries for its authority, including specific principles such as ensuring quality services at reasonable rates, providing advanced services nationwide, and ensuring access for low-income and rural areas. Even the clause allowing the FCC to add other principles for “public interest, convenience, and necessity” is limited by being “necessary and appropriate” and “consistent with this chapter.” The court held that the standards for the nondelegation doctrine are “not demanding.” Regarding the private nondelegation doctrine, USAC functions subordinately to the FCC, and the FCC maintains sufficient authority and surveillance over USAC’s activities. USAC is prohibited from making policy, must seek FCC direction, and performs ministerial functions like billing, collecting, and disbursing funds according to strict FCC regulations. USAC’s quarterly projections are merely proposals that require FCC approval, and the FCC can adjust, set its own, or deem proposals approved by inaction, which is still an exercise of policymaking discretion. The FCC also sets requirements for and selects USAC’s directors and approves its CEO. Any party aggrieved by USAC’s decisions can seek FCC review, and FCC decisions are binding on USAC. Therefore, USAC acts as an aid to the FCC, subordinate to its authority.
Concurring in judgment - Newsom, Circuit Judge
While concurring in the judgment, Judge Newsom expressed deep skepticism that the outcome aligns with constitutional first principles, arguing that the nondelegation doctrine has become a “punchline.” He believes the universal service “contributions” are likely taxes, and setting tax rates is a core legislative function. The statutory guidance in § 254, using terms like “just,” “reasonable,” “affordable,” “equitable,” “predictable,” and “sufficient,” is “hazy” and “vacuous,” providing no meaningful constraint on the FCC’s policymaking discretion. The “evolving” definition of “universal service” and the broad “public interest, convenience, and necessity” clause further undermine clear guidance. However, due to Supreme Court precedent upholding similarly vague standards, he felt constrained to conclude that § 254 probably passes constitutional muster under existing law. Regarding private nondelegation, he clarified that USAC is not exercising legislative power because the FCC sets the formulas. Yet, he questioned whether USAC is impermissibly exercising executive power, noting that the Constitution's text and structure suggest private entities should not wield governmental power due to the Vesting Clauses and due process concerns. While acknowledging some historical counter-evidence for private involvement in governmental functions, he highlighted concerns about USAC’s lack of Presidential control, including the passive approval mechanism for contribution factors and the double-for-cause-removal protection for USAC’s board members, which breaks the ordinary chain of accountability. He ultimately declined to pursue these executive-delegation or statutory challenges further as they were not squarely presented by the petitioners.
Concurring - Lagoa, Circuit Judge
Judge Lagoa concurred with the majority opinion but shared Judge Newsom’s concerns about how the current nondelegation doctrine has diverged from constitutional first principles. She agreed that the “intelligible principle” test, as applied by the Supreme Court and this Court in previous cases to similarly broad statutory language, compels the conclusion that 47 U.S.C. § 254 satisfies the test.
Analysis:
This case reaffirms the highly deferential nature of the “intelligible principle” test for congressional delegations of legislative authority to administrative agencies, demonstrating the difficulty of successfully challenging such delegations under current Supreme Court precedent. It provides a clear framework for assessing the constitutionality of agency delegations to private entities under the private nondelegation doctrine, emphasizing the critical importance of agencies retaining substantial authority, oversight, and control over the private entity’s functions. The concurring opinions, particularly Justice Newsom's, signal growing judicial discomfort and skepticism regarding the effectiveness of the nondelegation doctrine and raise potential future challenges rooted in Article II (executive power) and the broader constitutional eligibility of private entities to exercise governmental authority.
