Will the Supreme Court stop unconstitutional delegations of the taxing power?
The Supreme Court heard oral argument on Wednesday in the case of FCC v. Consumers’ Research, which involves a nondelegation challenge to the Telecommunications Act of 1996. PLF filed an amicus brief in the case—because the nondelegation doctrine, which says Congress cannot delegate its lawmaking responsibilities, is key to PLF’s fight for the constitutional separation of powers.
Consumers’ Research is challenging the Universal Service fee imposed on telecom providers by the FCC and the subdelegation of power to a private entity, the Universal Service Administrative Company (USAC). The oral argument began with most of the justices echoing the important, yet rarely enforced, nondelegation doctrine. What proceeded was a question-and-answer session about the ways Congress has delegated its legislative powers with Supreme Court approval. So, what distinguishes this nondelegation case from those that came before it?
In the government’s view, nothing. Under existing Supreme Court precedent, a delegation is lawful if Congress provided an “intelligible principle” to guide an entity’s action. According to the acting solicitor general, Sarah Harris, Congress provided an “intelligible principle” when empowering the FCC to impose the Universal Service fee, which is indirectly funded by taxpayers as the telecom providers pass on the costs. Harris argued that the Fifth Circuit erred in holding that Congress’ delegation of the taxing power to the FCC, combined with the FCC’s subdelegation of determining the amount of the tax to USAC, ran afoul of the Constitution’s separation of powers. For the government, it makes no difference if one characterizes this scheme as a revenue-raising tax or a fee to cover administrative costs: The government argued that Congress set the policy when it declared that universal service was its goal and gave the FCC the power to achieve it by imposing the Universal Service fees.
Not so, argued counsel for Consumers’ Research. In their view, Congress has delegated a core, and exclusive, Article I power (taxation) to an agency without any meaningful boundaries or limitations on the amount that can be imposed. Whether the Court adheres to the original understanding of the nondelegation doctrine or the modern test, the scheme at issue in this case runs afoul of the constitutional separation of powers.
Beside that point, Consumers’ Research contends that USAC—a private company—actually sets the amount of the fee, which is effectively rubberstamped by the FCC (the fee becomes effective provided the FCC does nothing within fourteen days of receiving the “proposed” amount from USAC). The FCC admittedly has no documented mechanism of reviewing USAC’s work, and the fourteen-day window appears to provide very little time to effectively check its calculations each quarter. Under these circumstances, USAC effectively determines the amount of the tax, which poses a further nondelegation problem.
The questions posed by the justices tended to fall along familiar ideological lines. Justices Clarence Thomas and Samuel Alito pressed the government to identify analogous revenue-raising schemes that did not have a direct statutory restraint, as is the case with the Universal Service scheme. The government’s insistence that there were “qualitative” (i.e., nonmonetary) limits on the amount that the FCC could impose seemed to do little to assuage concerns about Congress’ open-ended delegation to the FCC.
Indeed, it is difficult to understand how the term “sufficient,” as used in the statute, is not so vague as to allow the FCC to impose any amount it deems “sufficient” to achieve the statute’s precatory goals. The Respondents argued that the statute doesn’t define “universal service” and, as such, it means nothing to say that the fee must be “sufficient” to cover the cost of universal service if the FCC decides what will constitute “universal service” in the first instance. Justice Alito recalled that the power to tax is the power to destroy and so, unlike other Article I powers, there is something about taxation that might be meaningful in the nondelegation context.
Justice Neil Gorsuch, who authored a compelling nondelegation dissent in Gundy v. United States, posed a hair-raising hypothetical: Suppose Congress declared a policy to lower the national debt and tasked the IRS with figuring out the rates on its own…would that be constitutional in the government’s view? It is not difficult to imagine such a scenario playing out if the Court were to side with the government here: Congress would be happy to pass the highly political buck of setting tax rates to the executive branch!
Justice Brett Kavanaugh and Justice Amy Coney Barrett each kept their cards close to the chest. Justice Kavanaugh questioned both sides on whether a distinction between taxes, on the one hand, and fees, on the other, made any meaningful difference to the constitutionality of Congress’ delegation. Both he and Justice Barrett appeared to be concerned about other potential government programs that might be put at risk if the Court were to rule against the government. Together with Chief Justice John Roberts, both Justice Kavanaugh and Justice Barrett remain in the relative center of the Court, and this oral argument was no different in that respect.
Justice Sonia Sotomayor was the most vociferous in support of the government’s position and was backed by Justice Ketanji Brown Jackson during the argument. In Justice Sotomayor’s view, Congress clearly set the policy (universal service for all Americans) and provided clear boundaries on the amount the FCC could impose. But this cannot be so when Congress also empowered the FCC to create its own guiding principles and define what “universal service” means as an evolving concept.
Moreover, according to Justice Sotomayor, USAC merely provides mathematical calculations based on components set by the FCC to set the Universal Service fee. As such, in her view, there is also no “private” nondelegation problem. Justice Elena Kagan asked more difficult questions of the government, especially relating to the distinction between taxes and fees and the other, analogous revenue-raising schemes identified by the government in its briefs. To her and Justice Gorsuch, the other schemes mentioned by the government were potentially distinguishable and may in fact support Consumers’ Research’s position that the universal service scheme is anomalous.
At the end of the day, it is usually a guessing game trying to figure out how the justices are going to vote on a case. One of my wise and thoughtful colleagues predicted last year that the Court is unlikely to adopt the Fifth Circuit’s nondelegation theory, which underlies Consumers’ Research case and the FCC’s petition to the Court. Her belief that the Court is likely to provide clarity on the continued viability of the nondelegation doctrine seems particularly prescient, given the Court’s current makeup.
Whether a majority of the Court will take this opportunity to revitalize and strengthen the nondelegation doctrine will become clearer when the Court releases its opinion. Regardless of the outcome, PLF will continue to fight for individual liberty and a robust separation of powers.
