USF Challenges Pose Questions on Future of Nondelegation Doctrine

Challenges to the FCC’s USF program filed in three federal circuits by Consumers Research raise larger questions about the nondelegation doctrine and how the FCC interprets Section 254 of the Communications Act, lawyers said during an FCBA hybrid event Wednesday. The case could be headed to the Supreme Court, they said.

A three-judge panel on the 5th U.S. Circuit Court of Appeals in New Orleans heard oral argument in December (see 2212060070). Other challenges are pending in the 6th and 11th circuits.

The primary focus of the challenges is that Section 254 violates the nondelegation doctrine “both what they characterize as the modern interpretation of that doctrine as well as the original understanding,” said Wilkinson Barker’s Jennifer Tatel, who represents CTIA, NTCA and USTelecom in the case. The telecom groups argue Section 254 “satisfies that standard under Supreme Court precedent and the precedent of several of the appellate courts that have touched on this issue,” she said.

The Digital Progress Institute hopes the FCC is successful in defending the program, said President Joel Thayer. “We think it’s a stronger challenge than maybe has been pitched so we’re deeply concerned with how this case will turn out and, ultimately what this means for delegations moving forward,” he said.

The FCC argued in its initial brief with the 5th Circuit that delegation of authority to the FCC under Section 254 “is clearly constitutional under controlling Supreme Court precedent because Congress has provided an intelligible principle -- indeed, several such principles -- limiting the FCC’s discretion in implementing the statute.” The Supreme Court, under a long-standing doctrine, requires that Congress lay out an “intelligible principle” to govern and guide agencies acting under delegated authority, lawyers noted.

HWG’s Jason Neal, who represents the Schools, Health & Libraries Broadband Coalition in the cases, sees how the court interprets the intelligible principle doctrine as a key question before judges. "Section 254 is quite long, it’s quite detailed,” Neal said. “When we’re looking for an intelligible principle I think we have a host of principles here … quite a bit of direction, I think, from Congress,” he said. “We’ve had 20 years or so of the FCC building on that framework” in the Telecom Act of 1996 “and I think the FCC continues to be guided by those principles,” he said.

Thayer considers the question complicated. “Section 254 does provide at least some guidance -- the question is are these principles enough to get over some of the intelligibility tests,” he said. Supreme Court Justice Neil Gorsuch, in particular, raised questions about the doctrine, he said. Gorsuch laid down a marker on nondelegation in his dissent in Gundy v. U.S., a criminal case from 2019, speakers said.

Thayer said it’s more likely than not the 5th Circuit will side with the FCC. “You do have some nondelegation hawks, not just on the Supreme Court level but also at the 5th Circuit,” he said. “Although it looks good for the FCC, it’s not a clean shot,” he said.

USF would likely survive even under the test laid out by Gorsuch in Gundy, Tatel said. “I think it’s clear that the petitioners are hoping to get to the Supreme Court,” she said: “Most of the precedent is on our side. I think what they’re hoping” is that the current SCOTUS “has shown some tendencies to rein in agencies and that this might be another way that they do that.”

Consumer Research is likely “banking on” the high court taking the case to clarify its stance on nondelegation, Thayer agreed. “Gorsuch, and also the Supreme Court at large, seem to have a penchant for wanting to reel back some of what they call the agency state,” he said: “That’s weighing very heavily on the Supreme Court’s mind right now. … Gundy did the FCC no favors.”

“You read Gundy and you can count the five justices who are at least interested in sort of reconsidering what the nondelegation delegation should look like,” Neal said. Some justices “are interested in sort of reconsidering some long-held views,” he said: “There are a lot of things that this court could do if it chose to go down those routes. … They’re right because they’re final. They’re not final because they’re right. They get to make these choices.”