Of broadband, horseracing, and private delegations

To be sure, Congress can empower agencies and others to make discretionary decisions and even write regulations, but the Supreme Court has long insisted that not all delegations of lawmaking power are delegations of legislative power. To avoid being a forbidden delegation of legislative power, a delegation must be accompanied by an “intelligible principle” that guides the agency in its decision-making and lets courts exercise judicial review. 

But the nondelegation doctrine isn’t fully satisfactory. Except for two cases in 1935, the Court has spurned every nondelegation challenge, rubber-stamping every delegation of authority to the administrative state. The Court has even upheld statutes directing agencies to act “in the public interest” or to set “fair and equitable” prices—if those principles are “intelligent,” what isn’t? Several Justices have called for a stricter standard, but so far, they haven’t commanded a majority. 

Now, the day of reckoning may have arrived. In FCC v. Consumers Research, the Supreme Court may decide whether the nondelegation doctrine should have more teeth. The issue is how to provide “universal” telecommunications service. Congress has authorized the FCC to establish “mechanisms to preserve and advance universal service”; under that grant of authority, the FCC taxes telecommunications carriers, puts the money into a Universal Service Fund, and uses that money to fund various underserved people and entities, like schools, libraries, and rural healthcare providers. 

What’s the constitutional problem? The problem—challengers say—is that the FCC is given little guidance in determining what “universal service” means (how universal is universal?) and therefore in determining how much money would be “sufficient.” This, in turn, means the FCC has too much discretion in determining the level of the tax to be paid by telecommunications providers. Another problem is that the FCC has delegated the power to determine the amount of the tax to a private organization: the Universal Service Administrative Company (USAC), which is managed by representatives of various affected interest groups. USAC members are nominated by their respective interest groups, and in determining how much money would be necessary to achieve universal service, they use projections provided by the telecommunications carriers themselves—who have an incentive to increase the size of the program. And according to the challengers, the FCC has little power (and also little inclination in practice) to second-guess USAC’s projections. 

So, the challenge here involves two components: a traditional nondelegation challenge to Congress’s delegation to the FCC, and a “private nondelegation” challenge to the FCC’s delegation to USAC. We don’t yet know whether the Court will uphold the program, strike it down on traditional nondelegation grounds, or strike it down on private nondelegation grounds. 

The trouble with a private nondelegation theory—the idea that delegations to private entities are per se invalid or should be judged under a stricter standard than delegations to government agencies—is that there is no support for such a theory in Supreme Court caselaw. To the extent that judges or commentators have suggested reasons for a private nondelegation doctrine, those reasons already seem adequately addressed by other constitutional doctrines. First, under the Due Process Clause, people deciding on taxation or regulation shouldn’t have a financial stake in the matter. And second, under the Appointments Clause, people exercising substantial power under federal law should be politically accountable (e.g., through presidential nomination and Senate confirmation). The taxation power wielded by USAC may be constitutionally problematic on those grounds, but not on the grounds urged by challengers and relied on by the lower court. I filed an amicus brief, on behalf of the Reason Foundation, arguing exactly that. 

This issue shows up repeatedly. In 2020, Congress nationalized thoroughbred horseracing safety regulations and gave rulemaking and other powers to the private Horseracing Integrity and Safety Authority (HISA). The Fifth Circuit struck down part of the statute on private nondelegation grounds, and the Supreme Court has been sitting on the cert petition in that case, presumably pending a decision in Consumers Research. I filed an amicus brief in that case too, on behalf of the Reason Foundation and Goldwater Institute, making more or less the same arguments: HISA really is unconstitutional, but on Appointments Clause grounds, not private nondelegation grounds. 

This is an area where the Supreme Court can easily be tempted to do the wrong thing. The nondelegation doctrine is hard to police, because how much discretion is too much is inherently a matter of subtle degrees. It’s tempting to keep nondelegation doctrine as it is, while carving out specific areas where delegations are more problematic. Criminal law? Taxation? Delegation to private entities? So far, the Court has resisted this siren call, but then again, until recently, the Court hadn’t shown much interest in tightening up the nondelegation doctrine at all. By the end of June, we should know how this has all played out.