Consumers' Research v. Federal Communications Commission

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[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-13315
____________________
CONSUMERS’ RESEARCH,
CAUSE BASED COMMERCE, INC.,
EDWARD J. BLUM,
KERSTEN CONWAY,
SUZANNE BETTAC, et al.,
Petitioners,
versus
FEDERAL COMMUNICATIONS COMMISSION,
UNITED STATES OF AMERICA,
Respondents,
BENTON INSTITUTE FOR BROADBAND & SOCIETY, et al.,
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2 Opinion of the Court 22-13315
Intervenors.
____________________
Petition for Review of a Decision of the
Federal Communications Commission
Agency No. 96-45
____________________
Before WILSON, NEWSOM, and LAGOA, Circuit Judges.
WILSON, Circuit Judge:
In this petition for review of final agency action, the Peti-
tioners ask us to declare 47 U.S.C. § 254—the Telecommunications
Act of 1996’s universal service requirements—unconstitutional as
a violation of the nondelegation doctrine. Additionally, they argue
that the Federal Communications Commission (FCC), the agency
Congress put in charge of § 254, has impermissibly delegated au-
thority over the universal service fund to a private entity in viola-
tion of the private nondelegation doctrine.
Because § 254 provides an intelligible principle and the FCC
maintains control and oversight of all actions by the private entity,
we hold that there are no unconstitutional delegations and there-
fore DENY the petition.
I. Background
The FCC was created in 1934 “[f]or the purpose of regulat-
ing interstate . . . commerce in communication . . . so as to make
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22-13315 Opinion of the Court 3
available, so far as possible, to all the people of the United States,
without discrimination . . . a rapid, efficient, Nation-wide, and
world-wide wire and radio communication service with adequate
facilities at reasonable charges.” 47 U.S.C. § 151. In 1996, Congress
instructed the FCC to establish and maintain a universal service
fund in furtherance of this purpose. Id. § 254. Congress enacted
§ 254 to provide equitable universal services. Id. The Act instructs
the FCC to determine the requisite level of universal service based
on an “evolving” evaluation of four statutory factors. Id. § 254(c).
The FCC requires contributors to submit a specified amount of
money to the Fund per quarter. Id. § 254(d).
The FCC depends on the Universal Service Administrative
Company (USAC), a private entity, to carry out Congress’ instruc-
tion. The USAC assists the FCC in determining the amount each
contributor must provide to the fund. See 47 C.F.R. §§ 54.701,
54.709. The USAC uses the FCC’s detailed formulas to determine
projections and demand for the universal service fund per quarter.
See id. §§ 54.303, 54.901, 54.1301, 54.711(a). The USAC must sub-
mit its “projections of demand for the federal universal service sup-
port mechanisms” to the FCC 60 days before the start of the quar-
ter, and then submit the total contribution base (i.e., the percent-
age of revenues that each carrier will have to pay) to the agency at
least 30 days before the start of the quarter. Id. § 54.709(a)(3). Only
after the FCC approves the USAC’s proposal is the USAC’s valua-
tion used to calculate that quarter’s contribution factor. Id. Then,
the contribution factor is used to determine the amount of individ-
ual contributions. Id.
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4 Opinion of the Court 22-13315
On appeal, the Petitioners—a nonprofit organization that
aims to increase consumer knowledge of issues, a corporation that
resells telecommunications services, and various individuals who
pay into the universal service fund through monthly phone bills—
challenge the FCC’s and USAC’s roles in creating the 4th Quarter
2022 Contribution Factor. They argue that the actions taken by
both entities are unconstitutional under nondelegation doctrine ju-
risprudence.
II. Jurisdiction
Because we have “an independent obligation to ensure that
subject-matter jurisdiction exists before reaching the merits of a
dispute,” we begin with a jurisdictional analysis before addressing
the Petitioners’ claims. Jacobson v. Fla. Sec’y of State, 974 F.3d 1236,
1245 (11th Cir. 2020).
The FCC challenges our jurisdiction to hear this appeal un-
der the Hobbs Act. A “proceeding to enjoin, set aside, annul, or
suspend any order of the Commission . . . shall be brought as pro-
vided by and in the manner prescribed in [the Hobbs Act].” 47
U.S.C. § 402(a). 1 The Hobbs Act gives Courts of Appeal exclusive
jurisdiction to “determine the validity of . . . all final orders of the
Federal Communications Commission.” 28 U.S.C. § 2342(1); see
also FCC v. ITT World Commc’ns, Inc., 466 U.S. 463, 468 (1984) (“Ex-
clusive jurisdiction for review of final FCC orders . . . lies in the
1 This direction is subject to exclusions not applicable in the case before us. See
47 U.S.C. § 402(b).
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Court of Appeals.”). However, the aggrieved party has only 60
days after the order’s entry to file a petition for review. 28 U.S.C.
§ 2344.
The FCC argues that the Hobbs Act bars us from exercising
jurisdiction for two reasons. First, because the Petitioners’ true
challenge is to the constitutionality of the entire statutory delega-
tion scheme, and not the 4th Quarter Contribution Factor specifi-
cally. The FCC asserts that analyzing jurisdiction under the Hobbs
Act requires looking at the impact of a proceeding rather than the
reason a plaintiff brought a suit. Thus, because the statute was last
amended in 2011, the Petitioners are far beyond their 60-day juris-
dictional limit to file this petition. Second, the FCC argues that a
challenge to a Contribution Factor is an invalid pre-enforcement
challenge because the Petitioners will not be harmed by the an-
nouncement of the Contribution Factor since it has not yet been
applied to them. We disagree on both points.
First, even if Petitioners challenge the entire statutory
scheme, we agree with the Sixth and D.C. Circuits that administra-
tive regulations “are capable of continuing application.” Functional
Music, Inc. v. FCC, 274 F.2d 543, 546 (D.C. Cir. 1958); see also Bennett
v. Spear, 520 U.S. 154, 177–78 (1997); Rettig v. State, 987 F.3d 518,
529 (5th Cir. 2021). When considering a challenge to FCC rules
under the Hobbs Act, the D.C. Circuit reasoned that the 60-day
limit does not affect review of the validity of agency action that re-
applies a rule. See Functional Music, 274 F.2d at 546. This is true
because “limiting the right of review of the underlying rule would
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6 Opinion of the Court 22-13315
effectively deny many parties ultimately affected by a rule an op-
portunity to question its validity.” Id. Such is the case here. The
Fourth Quarter Contribution Factor re-applies the statutory dele-
gation in § 254. Thus, “Petitioners’ challenge to the FCC’s consti-
tutional authority to implement § 254, reapply its prior regulations,
and issue the [4th Quarter 2022 Contribution Factor] restarts the
sixty-day clock.” Consumers’ Rsch. v. FCC, 67 F.4th 773, 786 (6th Cir.
2023).
Here, the challenge is timely. The Petitioners filed their
challenge to the 4th Quarter Contribution Factor twenty-one days
after public notice, and seven days after the Contribution Factor
was deemed approved by the FCC and therefore became effective.
The Petitioners were well within their 60-day jurisdictional limit.
Second, we find that the Contribution Factor is ripe for re-
view. The Contribution Factor itself is a final and judicially review-
able agency action—Petitioners need not wait for “harm.” Accord-
ing to FCC regulations, “Commission action shall be deemed final,
for purposes of seeking reconsideration at the Commission or judi-
cial review, on the date of public notice.” 47 C.F.R. § 1.103(b) (em-
phasis added); see also Bennett, 520 U.S. at 177–78; Consumers’ Rsch.,
67 F.4th at 785 (finding the text of 47 C.F.R. § 1.103(b) to be suffi-
cient indication that an FCC contribution factor is final and review-
able). Further, as we have explained, “[o]rders ‘adopted by the
Commission in the avowed exercise of its rule-making power’ that
‘affect or determine rights generally . . . have the force of law and
are orders reviewable under the’ Hobbs Act.” Mais v. Gulf Coast
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Collection Bureau, Inc., 768 F.3d 1110, 1121 (11th Cir. 2014) (quoting
Columbia Broad. Sys. v. United States, 316 U.S. 407, 417 (1942)). Here,
the challenge is properly brought because the Petitioners filed their
challenge after the Contribution Factor’s public notice date, and
the Contribution Factor affects or determines their rights.
Even it was not ripe for review, however, Petitioners have
demonstrated that their appeal presents a proper pre-enforcement
review. A threatened enforcement of a law creates an Article III
injury “[w]hen an individual is subject to such a threat, an actual
arrest, prosecution, or other enforcement action.” Susan B. An-
thony List v. Driehaus, 573 U.S. 149, 158 (2014). “[I]t is not necessary
that petitioner first expose himself to actual [harm] to be entitled
to challenge a statute that he claims deters the exercise of his con-
stitutional rights.” Steffel v. Thompson, 415 U.S. 452, 459 (1974). The
Supreme Court has “permitted pre-enforcement review under cir-
cumstances that render the threatened enforcement sufficiently
imminent.” Driehaus, 573 U.S. at 159. Here, Petitioners have met
this bar. Accordingly, we possess jurisdiction and proceed to the
merits.
III. Standard of Review
“We review questions of constitutional law de novo.” United
States v. Brown, 364 F.3d 1266, 1268 (11th Cir. 2004).
IV. Traditional Nondelegation Doctrine
Although all legislative powers granted by the Constitution
“shall be vested in a Congress of the United States,” U.S. Const. art.
I, “the Constitution does not deny to the Congress the necessary
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resources of flexibility and practicality that enable it to perform its
functions.” Gundy v. United States, 139 S. Ct. 2116, 2123 (2019) (plu-
rality opinion) (alterations adopted) (internal quotation marks
omitted). Consequently, Congress may “obtain the assistance of
its coordinate Branches—and in particular, may confer substantial
discretion on executive agencies to implement and enforce the
laws.” Id. (cleaned up). Thus, “a statutory delegation is constitu-
tional as long as Congress lays down by legislative act an intelligible
principle to which the person or body authorized to exercise the
delegated authority is directed to conform.” Id. (alterations
adopted) (internal quotation marks omitted).
The standards necessary to satisfy the nondelegation doc-
trine “are not demanding.” Id. at 2129; see also Brown, 364 F.3d at
1271 (“The government does not bear an onerous burden in
demonstrating the existence of an intelligible principle.”). “[A] del-
egation of legislative power will be ‘constitutionally sufficient if
Congress clearly delineates [1] the general policy, [2] the public
agency which is to apply it, and [3] the boundaries of this delegated
authority.’” Brown, 364 F.3d at 1271 (alterations in original) (quot-
ing Mistretta v. United States, 488 U.S. 361, 372–73 (1989)).
The Petitioners argue that because there is no limit on how
much the FCC can raise for the Fund, the statutory grant lacks any
concrete, objective guidance. The FCC responds that § 254 has
multiple standards. 2 “[A] nondelegation inquiry always begins (and
2 The general policy of § 254 is clear: it exists to make sure “[a]ccess to ad-
vanced telecommunications and information services [are] provided in all
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often almost ends) with statutory interpretation.” Gundy, 139 S. Ct.
at 2123. An analysis of § 254 confirms that Congress’ delegation
provides an intelligible principle and therefore passes constitutional
muster.
Section 254(b) expressly states many of the principles the
FCC must adhere to. We begin with the general principles that
guide the FCC. The FCC shall create “policies for the preservation
and advancement of universal service.” 47 U.S.C. § 254(b). Those
policies must be based on specifically identified principles: quality
services should be made available at just and reasonable rates; ad-
vanced services should be provided to the entire United States; and
“low-income consumers and those in rural, insular, and high cost
areas” should have access to advanced services at reasonably com-
parable rates to those in urban areas. Id. § 254(b)(1)–(3).
Next, § 254(b)’s limiting principles. All policies the FCC cre-
ates relating to the fund must be “specific, predictable and suffi-
cient . . . to preserve and advance universal service.” Id.
§ 254(b)(5). Congress assigns the responsibility for contributions to
the fund to “telecommunications carrier[s] that provide[] interstate
telecommunications services.” Id. § 254(d). It instructs the FCC to
charge contributors in an equitable and nondiscriminatory
regions of the Nation.” 47 U.S.C. § 254(b)(2). The agency to implement it is
likewise clear: the FCC must act to carry out this general policy. See id.§ 254(a)(2). The parties disagree only on whether Congress has properly de-
lineated “the boundaries of th[e] delegated authority.” Brown, 364 F.3d at
1271.
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manner. Id. § 254(b)(4), (d). The FCC must provide access to
“[e]lementary and secondary schools and classrooms, health care
providers, and libraries,” id. § 254(b)(6), and the funds can only be
disbursed to statutorily designated eligible telecommunications
carriers to provide support for universal services, id. § 254(e).
The last of the § 254(b) principles is more open ended, and
Petitioners take specific issue with it. Under § 254(b)(7), the FCC
“shall base policies . . . on . . . “[s]uch other principles as the . . .
[FCC] determine[s] are necessary and appropriate for the protec-
tion of the public interest, convenience, and necessity, and are con-
sistent with this chapter.” Id. § 254(b)(7). The Petitioners contend
that paragraph (b)(7) is proof of the FCC’s boundless authority. But
the grant itself comes with specific limits: the FCC may only add
principles that “are necessary and appropriate for the protection of
the public interest, convenience, and necessity and are consistent
with this chapter.” Id. Because Congress is afforded wide latitude
to delegate authority to executive agencies, these limits suffice.
Gundy, 139 S. Ct. at 2129; Brown, 364 F.3d at 1271. We agree with
the Sixth Circuit that the principles in § 254 collectively
direct the FCC on (1) what it must pursue: accessible,
quality, and affordable service. (2) How the FCC must
fund these efforts: by imposing carrier contributions.
(3) The method by which the FCC must effectuate the
goals of accessible, sound-quality, and affordable ser-
vice: by creating specific mechanisms for the Fund.
And (4) to whom to direct the programs: by identify-
ing the USF’s mechanisms’ beneficiaries.
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Consumers’ Rsch., 67 F.4th at 791 (emphases omitted). Thus, we
hold that 47 U.S.C. § 254 is permissible under the nondelegation
doctrine.
V. Private Nondelegation Doctrine
“[I]f people outside government could wield the govern-
ment’s power—then the government’s promised accountability to
the people would be an illusion. . . . This commonsense principle
has come to be known as the ‘private non-delegation doctrine.’”
Nat’l Horsemen’s Benevolent & Protective Ass’n v. Black, 53 F.4th 869,
880 (5th Cir. 2022). As the Fifth Circuit aptly explained, the appli-
cation of the doctrine is derived from an 80-year-old Supreme
Court analysis in Carter v. Carter Coal Co., 298 U.S. 238, 311–12
(1936) and Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 388,
399 (1940):
In Carter Coal, the Court invalidated a federal law that
authorized a majority of coal producers to fix wages
and hours for all producers. Giving regulatory power
to “private persons whose interests may be and often
are adverse to the interests of others in the same busi-
ness” was, the Court held, an unconstitutional “legis-
lative delegation” of a “governmental function.”
Congress then rewrote the law and, four years later,
the Court upheld it in Adkins. Under the new law, pri-
vate boards only proposed prices—and those prices
now had to be “approved, disapproved, or modified
by the [agency].” The private entities “operate[d] as
an aid” to the agency “but [were] subject to its perva-
sive surveillance and authority.” The Court found the
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new scheme “unquestionably valid.” The Court em-
phasized that the private entities “function[ed] subor-
dinately to the [agency],” that the agency and not the
private entities “determine[d] the prices,” and that the
agency had “authority and surveillance over the [pri-
vate entities].”
Nat’l Horsemen’s Benevolent & Protective Ass’n, 53 F.4th at 880–81 (al-
terations in original) (internal citations omitted).
From the Supreme Court’s guidance, our sister circuits have
held that there is no violation of the private nondelegation doctrine
where the private entity functions subordinate to an agency, and
the agency has authority and surveillance over the entity. See, e.g.,
United States v. Frame, 885 F.2d 1119, 1128–29 (3rd Cir. 1989) (“[N]o
law-making authority has been entrusted to” the private entity and
therefore “the [statute] does not constitute an unlawful delegation
of legislative authority. In essence, the [private entities] serve an
advisory function, and in the case of collection of assessments, a
ministerial one.”), abrogated on other grounds, Cochran v. Veneman,
359 F.3d 263 (3rd Cir. 2004); Pittston Co. v. United States, 368 F.3d
385, 396 (4th Cir. 2004) (holding that the private entity merely car-
ried out the ministerial tasks of doing calculations and collecting
funds, thus the “powers given to the [private entity] are of an ad-
ministrative or advisory nature, and delegation of them to the [pri-
vate entity] does not, we conclude, violate the nondelegation doc-
trine”); Ass’n of Am. R.R. v. U.S. Dep’t of Transp., 721 F.3d 666, 671
(D.C. Cir. 2013) (stating that private “entities may . . . help a gov-
ernment agency make its regulatory decisions” and “Congress may
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formalize the role of private parties in proposing regulations so
long as that role is merely ‘as an aid’ to a government agency that
retains the discretion to ‘approve[], disapprove[], or modif[y]’
them” (alterations in original)), vacated and remanded on other
grounds, Dep’t of Transp. v. Ass’n of Am. R.R., 575 U.S. 43 (2015); Nat’l
Horsemen’s Benevolent & Protective Ass’n, 53 F.4th at 881 (“If the pri-
vate entity does not function subordinately to the supervising
agency, the delegation of power is unconstitutional.”); Oklahoma v.
United States, 62 F.4th 221, 228–29 (6th Cir. 2023) (“Adkins shows
that a private entity may aid a public federal entity that retains au-
thority over the implementation of federal law. But if a private
entity creates the law or retains full discretion over any regula-
tions . . . it is an unconstitutional exercise of federal power.” (inter-
nal citation omitted)).
Today we join our sister circuits in holding that a govern-
ment agency may delegate statutory authority to private entities
without violating the private nondelegation doctrine so long as (1)
the entity “function[s] subordinately” to the agency, and (2) the
agency retains “authority and surveillance over the activities” of
the private entity. Adkins, 310 U.S. at 399 (alteration in original).
Private entities “may aid [a federal agency] that retains au-
thority over the implementation of federal law” by serving “as ad-
visors that propose regulations[,] . . . undertak[ing] ministerial
functions, . . . gather[ing] facts for the agency, or advis[ing] on or
mak[ing] policy recommendations to the agency.” Consumer’s
Rsch., 67 F.4th at 795 (internal citations omitted). Likewise, “a
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14 Opinion of the Court 22-13315
statute does not violate the private nondelegation doctrine if it ‘im-
poses a standard to guide’ the private party.” Consumers’ Rsch. v.
FCC, 63 F.4th 441, 451 (5th Cir. 2023) (quoting Texas v. Rettig, 987
F.3d 518, 532 (5th Cir. 2021), 3 vacated & reh’g en banc granted, 72
F.4th 107 (5th Cir. 2023) (mem.)).
The Petitioners argue that the FCC has impermissibly dele-
gated its statutory authority under § 254 to the USAC in violation
of the private nondelegation doctrine. Because the USAC func-
tions subordinately to the FCC, and the FCC maintains authority,
we disagree and hold that the USAC’s role in carrying out the uni-
versal service fund does not violate the private nondelegation doc-
trine.
a. The USAC’s Functions
In considering an identical private nondelegation challenge
to a previous FCC Contribution Factor, the Sixth Circuit found that
the USAC is “subordinate to the FCC and performs ministerial and
fact-gathering functions.” Consumers’ Rsch., 67 F.4th at 795–96. We
agree. The USAC cannot make policy or interpret unclear provi-
sions or rules. 47 C.F.R. § 54.702(c). Where there is confusion
about how it should act, it must seek direction from the FCC. Id.The USAC must act in accordance with FCC regulations, and those
regulations expressly limit the USAC’s functions to ministerial
functions like “billing contributors, collecting contributions to the
3 The Fifth Circuit mistakenly attributed the quoted portion to Rettig. It
properly appears in Boerschig v. Trans-Pecos Pipeline, LLC, 872 F.3d 701, 708 (5th
Cir. 2017).
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universal service support mechanisms, and disbursing universal
service support funds.” Id. § 54.702(b). The USAC must file annual
reports with the FCC and Congress that conform to specifications
outlined by the FCC. Id. § 54.702(g). The reports must detail the
USAC’s “operations, activities, and accomplishments” from the
prior year and all “administrative action intended to prevent waste,
fraud, and abuse.” Id. The report must also “include all expenses,
receipts, and payments associated with the administration of the
universal service support programs.” Id. Each year, the USAC
must consult with the FCC “to determine the scope and content of
the annual report.” Id.
The USAC’s actions are ministerial. It gathers facts to deter-
mine the Fund’s needs each quarter, then proposes a dollar amount
that would ensure those needs are met. Consumer’s Rsch., 67 F.4th
at 796. As discussed below, it collects and disburses the funds pur-
suant to statutory and FCC instruction. Finally, every decision
concerning the fund is submitted for review to both the FCC and
Congress. Therefore, the USAC is properly subordinate to the
FCC.
b. The FCC’s Authority
The Petitioners argue that the FCC’s use of the USAC vio-
lates the private nondelegation doctrine because: the USAC decides
how much money to raise and how to spend it, and the FCC exer-
cises no meaningful oversight of these decisions. We disagree. A
review of the regulations governing each point in the Petitioners
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16 Opinion of the Court 22-13315
argument reveals that the FCC maintains substantial authority
over the USAC.
First, the USAC’s projection for the 2022 Fourth Quarter
Contribution Factor is only a proposal. See id. (“[T]he FCC is not
bound by USAC’s projections.”). The regulations make clear that
“the quarterly universal service contribution factor shall be deter-
mined by the Commission.” 47 C.F.R. § 54.709(a)(2) (emphasis
added). Consequently, the USAC cannot “decide” how much
money the fund will make per quarter. Instead, it submits quar-
terly projected costs that “must be approved” by the FCC. Id.§ 54.709(a)(3). The FCC has the right to adjust the projection, set
its own, or take no action (in which case the USAC’s projection will
be deemed approved by the FCC). Id. If approved, the projected
expenses “are used to calculate the quarterly contribution factor.”
Id. Importantly, the USAC cannot apply the contribution factor to
the fund contributors until the factor has been approved by the
FCC. Id.
The Petitioners take issue with the FCC’s option to deem a
proposal approved through inaction. See id. (“If the Commission
take no action within fourteen (14) days of the date of release of the
public notice announcing the projections . . . the contribution fac-
tor shall be deemed approved by the Commission.”). But “an
agency exercises its policymaking discretion with equal force when
it makes policy by either deciding to act or deciding not to act.”
Consumer’s Rsch., 67 F.4th at 796 (alterations adopted) (internal quo-
tation marks omitted). Thus, the USAC simply acts as an advisor
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that proposes regulations subject to government approval. Adkins
310 U.S. at 388 (explaining that private entities that aid government
agencies “but [that are] subject to [the agency’s] pervasive surveil-
lance and authority” are permissible); see also Consumer’s Rsch., 67
F.4th at 795–96.
Second, the USAC must disburse the funds collected in the
manner prescribed by statute and FCC regulation.4 The FCC man-
dates that the USAC “shall account for the financial transactions of
the Universal Service Fund in accordance with generally accepted
accounting principles . . . and maintain the accounts of the Univer-
sal Service Fund in accordance with the United States Government
Standard General Ledger.” 47 C.F.R. § 54.702(n). Under the im-
plementing statute, the funds can only be disbursed to an eligible
telecommunications carrier. 47 U.S.C. § 254(e). The USAC must
report on the disbursement of the Fund to the FCC on a quarterly
basis. 47 C.F.R. § 54.702(g)–(h). If a party is aggrieved by the
USAC’s decision making, that party may seek review by the FCC,
id. § 54.719(b), and any decision rendered by the FCC becomes
binding on the USAC for future decisions. Thus, any discretion the
USAC purports to exercise in fund distribution is ultimately
4 The USAC also collects the Universal Service Fund contributions, but this
action is clearly ministerial and therefore permissible. Oklahoma, 62 F.4th at
229 (stating that decisions from courts of appeals hold that “[p]rivate entities
. . . may undertake ministerial functions, such as fee collection”); Pittston, 368
F.3d at 397 (“[T]he mere ability to receive governmental monies is clearly min-
isterial, so that the power to receive taxes (premiums) and other federal reve-
nues . . . does not violate the nondelegation doctrine.”).
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18 Opinion of the Court 22-13315
reviewable by the FCC to ensure it has been used in the manner
prescribed by the FCC and Congress.
Last, the FCC maintains deep and meaningful control over
the USAC. In addition to the ways the FCC maintains final deci-
sion-making authority regarding the universal service fund, the
FCC always maintains control of the USAC as an entity. It sets
requirements for selection and selects each of the USAC’s nineteen
directors, id. § 54.703(b)–(c), and the Chairman of the FCC must
approve or appoint the USAC’s Chief Executive Officer, id.
§ 54.704(b). A review of the USAC’s involvement with calculating
the contribution factor process reveals no unconstitutional delega-
tion of legislative authority. The USAC submits proposed projec-
tions of the fund’s needs, and the FCC reviews the USAC’s pro-
posal. If the FCC approves the projection, it is then used in the
FCC’s calculation of the contribution factor. The USAC collects
and disburses the funds but must do so according to statutory and
administrative directions. Parties can appeal any USAC action to
the FCC, and the FCC’s decisions in these cases bind USAC. In
sum, under § 254, the USAC is subordinate to and remains subject
to the authority of the FCC. Consequently, “[s]ince law-making is
not entrusted to the [USAC], this statutory scheme is unquestiona-
bly valid.” Adkins, 310 U.S. at 399.
VI. Conclusion
Today we hold that there are no unconstitutional delega-
tions under 47 U.S.C. § 254 because Congress has laid out the prin-
ciples the FCC must follow in bringing universal service to our
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22-13315 Opinion of the Court 19
Nation. Additionally, because all USAC action is subordinate to
the FCC, and the FCC retains ultimate decision-making power, we
further hold that there is no violation of the private nondelegation
doctrine. For these reasons, we DENY the petition.
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22-13315 Newsom, J., Concurring in the Judgment 1
NEWSOM, Circuit Judge, concurring in judgment:
Although I concur in the judgment denying the petition for
review, I do so reluctantly. I’m deeply skeptical that today’s result
can be squared with constitutional first principles. And even under
existing precedent, I’m not sure how the case would come out had
it been framed differently. Let me explain.
I
First, a brief tour of the statutory and regulatory landscape.
Congress has tasked the FCC with administering a program de-
signed to make telecommunications services widely available
throughout the United States. See generally 47 U.S.C. § 254. This
“universal service” program is funded through mandatory exac-
tions on telecom companies—euphemistically called “contribu-
tions”—that are then redistributed to cash-strapped carriers that
serve hard-to-reach areas, like rural and insular communities. Id.§ 254(b), (d). The FCC determines the program’s size and scope by
prescribing what “universal service” should entail, guided by an
“evolving” consideration of several statutory criteria. Id.
§ 254(c)(1). Having done so, the agency proceeds to decide how
much carriers should have to pay into the pot in order to make
“universal service” a reality. Id. § 254(d).
The FCC relies on a private entity called the Universal Ser-
vice Administrative Company to assist it in administering the uni-
versal-service program. USAC projects universal-service funding
demands, proposes contribution rates, bills and collects money
from carriers, and then disburses those funds to eligible providers.
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2 Newsom, J., Concurring in the Judgment 22-13315
See 47 U.S.C. § 254(e) (describing the basic requirements for dis-
bursement); id. §§ 54.701–02, 54.706, 54.708, 54.709, 54.712 (desig-
nating USAC as the administrator of the universal-service program
and outlining the rules for contributions and distribution). To cal-
culate demand, USAC uses detailed FCC-promulgated formulas,
inputting companies’ self-reported operating expenses and other
values. See 47 C.F.R. §§ 54.303, 54.901, 54.1301. After crunching
the numbers, USAC submits “projections of demand” to the
agency 60 days before the start of each quarter. Id. § 54.709(a)(3).
Thirty days later, the FCC publishes USAC’s proposed contribution
rate for all telecommunications carriers. Id.
If the FCC fails to countermand USAC’s contribution rate
within two weeks, the rate goes into effect for the quarter, and car-
riers are charged accordingly. Id. The agency apparently exercises
its oversight authority sparingly; so far as I can tell, it has disap-
proved or modified USAC’s rate only three times in the last 25
years. See First Quarter 1998 Universal Service Contribution Factors Re-
vised and Approved, CC Docket No. 96-45, Public Notice, 12 FCC
Rcd. 21881, 21886 (1997); Revised Second Quarter 2003 Universal Ser-
vice Contribution Factor, CC Docket No. 96-45, Public Notice,18
FCC Rcd. 5097 (2003); Proposed Third Quarter 2023 Universal Service
Contribution Factor, DA 23-507, 2023 WL 4012359 ( June 14, 2023).
In one instance, the FCC rounded the rate up fifty-six one-thou-
sandths of a percentage point, from 9.044% to 9.1%. See Revised
Second Quarter 2003, 18 FCC Rcd. 5097. Another occurred (seren-
dipitously or otherwise) during the pendency of this litigation and,
in fact, involved nothing more than a minor front-end adjustment
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22-13315 Newsom, J., Concurring in the Judgment 3
carrying unspent funds forward to a new quarter. See Proposed
Third Quarter 2023, 2023 WL 4012359; see also Proposed Fourth Quar-
ter 2023¸CC Docket No. 96-45, Public Notice, DA 23-843 (Sept. 13,
2023) (also noting the carryover funds for the fourth quarter).
USAC’s collections activity brings in real money. The record
indicates that USAC was projected to collect nearly $2 billion from
carriers in the final quarter of 2022 alone, a figure that dwarfs the
FCC’s entire annual budget. Compare FCC, Proposed Fourth Quarter
2022 Universal Service Contribution Factor, Public Notice, 2022 WL
424497 (Sept. 13, 2022) (projecting $1.914 billion in universal-ser-
vice program collection for the quarter), with FCC, 2022 Budget Es-
timates to Congress, DA 22-946, 2021 WL 2190014 (May 1, 2021) (re-
questing approximately $500 million for the year).
II
Petitioners principally contend that in 47 U.S.C. § 254 Con-
gress has unconstitutionally delegated its “legislative Powers” to
the FCC. See U.S. Const. art. I, § 1, cl. 1. As an original matter, I
suspect they may well be right. Their challenge fails, as I see it,
only because non-delegation doctrine has become a punchline.
First off, what exactly is “legislative Power[]”? In short, it’s
the authority “to adopt generally applicable rules of conduct gov-
erning future actions by private persons.” Gundy v. United States,
139 S. Ct. 2116, 2133 (2019) (Gorsuch, J., joined by Roberts, C.J.,
and Thomas, J., dissenting); accord Department of Transp. v. Associa-
tion of Am. R.Rs., 575 U.S. 43, 70 (2015) (Thomas, J., concurring)
(similar). By that measure, the FCC is almost certainly exercising
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4 Newsom, J., Concurring in the Judgment 22-13315
legislative power when it decides, among other things, how big the
universal-service program should be, what it should entail, and
how much carriers should have to chip in to bring it to fruition.
The contribution scheme, in particular, seems suspect. In
practical effect, the universal-service “contributions” are probably
taxes, in that they are exacted from all telecom carriers but are re-
distributed only to the subclass of those that are “eligible” on the
ground that they serve high-cost and underserved areas. See 47
U.S.C. § 254(d)–(e); 47 C.F.R. § 54.701(c)(1); see also National Cable
Television Ass’n, Inc. v. United States, 415 U.S. 336, 341–42 (1974) (dis-
tinguishing a tax from a fee on the ground that the latter “bestows
a benefit on the applicant, not shared by other members of soci-
ety”). 1 Setting tax rates sure seems like a legislative power to me.
See The Federalist No. 56 at 1 (James Madison or Alexander Ham-
ilton) (Clinton Rossiter ed., 1961) (“What are to be the objects of
federal legislation? Those which are of most importance, and
which seem most to require local knowledge, are commerce, taxa-
tion, and the militia.”); National Cable, 415 U.S. at 341–42 (“Taxa-
tion is a legislative function and Congress . . . is the sole organ for
levying taxes.”). 2 Likewise, prescribing the universal-service
1 It also seems to me relevant to the contributions’ “tax” status that the statute
itself designates the American public—writ large, rather than the payor carri-
ers—as the universal-service program’s principal beneficiary. See 47 U.S.C.
§ 254(b)(2).
2 I recognize that two other circuits have concluded that the universal-service
contributions constitute fees rather than taxes. See Rural Cellular Ass’n v. FCC,
685 F.3d 1083, 1091 (D.C. Cir. 2012); Texas Off. Pub. Util. Couns. v. FCC (TOPUC
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22-13315 Newsom, J., Concurring in the Judgment 5
program’s sweep and scope—determining what it should accom-
plish, to what extent, and where—strikes me as the sort of “policy
judgment[]” that “Congress, and not the Executive Branch,
[should] make.” Gundy, 139 S. Ct. at 2141 (Gorsuch, J., joined by
Roberts, C.J., and Thomas, J., dissenting).
Section 254 gives the FCC only the faintest, most vacuous
guidance about how to exercise its authority. For instance, in craft-
ing “policies for the preservation and advancement of universal ser-
vice,” the statute directs the agency to consider a handful of “prin-
ciples.” 47 U.S.C. § 254(b). Among them, the agency shall—
• aim to make “[q]uality services” available at “just, reasona-
ble, and affordable rates,” id. § 254(b)(1);
• endeavor to make telecom services available to “[c]onsum-
ers in all regions of the Nation” at rates that are “reasonably
comparable to rates charged for similar services in urban ar-
eas,” id. § 254(b)(3);
I), 183 F.3d 393, 440 (5th Cir. 1999). Respectfully, I’m not so sure. Notably,
one of those courts deemed the contributions fees in order to avoid the con-
stitutional difficulties that would arise were they instead deemed taxes. See
TOPUC I, 183 F.3d at 440 (stating that the “FCC’s decision to extend universal
service support to internet access and internal connections raises grave doubts
as to whether § 254(h) creates an unconstitutional tax” and accordingly “con-
stru[ing] the statute narrowly to avoid raising these constitutional problems”).
In any event, the Supreme Court’s decision in Skinner v. Mid-America Pipeline
Co. indicates that the tax-fee distinction shouldn’t affect the nondelegation
analysis. 490 U.S. 212, 222–23 (1989) (rejecting “the application of a different
and stricter nondelegation doctrine in cases where Congress delegates discre-
tionary authority to the Executive under its taxing power”).
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6 Newsom, J., Concurring in the Judgment 22-13315
• require all telecom carriers to make “an equitable and nondis-
criminatory contribution to the preservation and advance-
ment of universal service,” id. § 254(b)(4); and
• ensure that there are “specific, predictable and sufficient Fed-
eral and State mechanisms” to preserve and advance univer-
sal service, id. § 254(b)(5).
Those hazy “principles”—grounded in terms like “just,”
“reasonable,” “affordable,” “reasonably comparable,” “equitable,”
“predictable,” and “sufficient”—cannot possibly constrain the
FCC’s policymaking discretion in any meaningful way. They leave
the agency all the room it needs to do essentially whatever it wants.
And to make matters even worse—even more open-ended—
§ 254(b) adds a catch-all clause, which authorizes the FCC to con-
sider “[s]uch other principles” as it “determine[s] are necessary and
appropriate for the protection of the public interest, convenience,
and necessity and are consistent with this chapter.” Id. § 254(b)(7).
Further diminishing the likelihood of any real guidance, the
term “universal service”—the very object of the entire program—
is defined only in the most ambiguous way. “Universal service,”
the statute says, is an “evolving” concept that should “tak[e] into
account advances in telecommunications and information technol-
ogies and services.” Id. § 254(c)(1). In specifying the content of
that concept, the statute vaguely directs the FCC to “consider the
extent to which such telecommunications services” (a) are “essen-
tial to education, public health, or public safety,” (b) “have, through
the operation of market choices by customers, been subscribed to
by a substantial majority of residential customers,” (c) are “being
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22-13315 Newsom, J., Concurring in the Judgment 7
deployed in public telecommunications networks by telecommuni-
cations carriers,” and—the kicker—(d) are “consistent with the
public interest, convenience, and necessity.” Id.
Finally, § 254 provides similarly squishy (which is to say es-
sentially no) direction about how much telecom companies should
actually be charged: “Every telecommunications carrier that pro-
vides interstate telecommunications services shall contribute, on
an equitable and nondiscriminatory basis, to the specific, predicta-
ble, and sufficient mechanisms established by the Commission to
preserve and advance universal service.” Id. § 254(d). Candidly, I
have no idea what that means.
As a matter of first principles—as in real life—such empty,
mealymouthed shibboleths provide no meaningful constraint; to
the contrary, they confer front-line law- and policymaking power
on unelected, unaccountable agency bureaucrats. See Gary Law-
son, Delegation and Original Meaning, 88 Va. L. Rev. 327, 369 (2002)
(suggesting that a statute that allows a “ratemaking agency” to
“choose its own standard for the rate base” would be “invalid[]”).3
3 I’m aware of Founding-era evidence indicating that agency boards some-
times set real-estate valuations that served as the baselines for the imposition
of taxes. But I see that as a fact-finding exercise appropriate to Executive
Branch determination, not as the articulation of any generally applicable pol-
icy. Cf. Nicholas Parrillo, A Critical Assessment of the Originalist Case Against Ad-
ministrative Regulatory Power: New Evidence from the Federal Tax on Private Real
Estate in the 1790s, 130 Yale L.J. 1288, 1313 & n.102 (2021) (presenting “skep-
tics’” argument that setting valuations is a fact-finding exercise). In the cited
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8 Newsom, J., Concurring in the Judgment 22-13315
But—and herein lies the problem—I don’t think I can say
that the so-called “principles” that § 254 articulates are any less “in-
telligible” than those that the Supreme Court has explicitly sanc-
tioned as sufficiently clear to forestall a non-delegation challenge.
See Gundy, 139 S. Ct. at 2123 (2019) (“[W]e have held, time and
again, that a statutory delegation is constitutional as long as Con-
gress ‘lay[s] down by legislative act an intelligible principle to which
the person or body authorized to [exercise the delegated authority]
is directed to conform.’” (quoting J.W. Hampton, Jr., & Co. v. United
States, 276 U.S. 394, 409 (1928)). To take just one example, the
Court has upheld a statute directing the FCC to act in the “public
interest, convenience, or necessity” on the ground that it wasn’t “so
indefinite as to confer an unlimited power” and didn’t leave the
agency wholly “at large in performing this duty.” National Broad.
Co. v. United States, 319 U.S. 190, 216 (1943); see also, e.g., Whitman v.
American Trucking Ass’ns, 531 U.S. 457, 475–76 (2001) (“requisite”
“to protect the public health”); Yakus v. United States, 321 U.S. 414,
421, 427 (1944) (“so far as practicable,” “fair and equitable”). In light
of the decidedly “not demanding” standards that the Court has tol-
erated to date, Gundy, 139 S. Ct. at 2129, I think the majority here
is correct to conclude that, under existing precedent, § 254 proba-
bly passes constitutional muster.
To be clear, I’m not at all “convinced that the intelligible
principle doctrine serves to prevent all cessions of legislative
example, Congress set the tax rates via statute; the assessors merely deter-
mined the taxed property’s value. See id. at 2020–21.
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22-13315 Newsom, J., Concurring in the Judgment 9
power.” Whitman, 531 U.S. at 487 (Thomas, J., concurring). But
taking the intelligible-principle standard as I find it, I feel con-
strained to conclude that § 254 satisfies it.
III
Petitioners separately raise a “private nondelegation” chal-
lenge. See Br. of Petrs. at 64–70; Reply Br. of Petrs. at 43–49. I’ll
have to say, though, that it’s hard to discern precisely what they
mean by that. Clearly, they object to USAC’s participation in the
universal-service program. What’s less clear to me is on exactly
what ground. As I understand their position, petitioners contend
that USAC—the private entity that the FCC has tapped to help it
run the program—is impermissibly exercising legislative power.
Thus, for instance, petitioners conclude their brief by arguing that
USAC’s involvement “violates the private nondelegation doctrine,
contrary to Article I of the U.S. Constitution.” Br. of Petrs. at 70 (em-
phasis added); see also id. at 64 (“But that is exactly what has hap-
pened here—‘[w]hat [i]s essentially a legislative determination’ is
now ‘made not by Congress or even by the Executive Branch but
by a private group.’” (emphasis added) (alterations in original).
To the extent that’s the gist of petitioners’ private-delegation
challenge, I disagree with it. I don’t think that USAC is exercising
legislative power. So far as I can tell, the majority is right that the
FCC establishes the formulas from which USAC derives the contri-
bution rate. See Maj. Op. at 3; 47 C.F.R. §§ 54.303, 54.901, 54.1301.
Accordingly, to the extent that rate-setting is a legislative func-
tion—and I think it is, see supra at 3–5—it’s the FCC that’s exercising
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10 Newsom, J., Concurring in the Judgment 22-13315
legislative power. As I’ve said, as a first-principles matter, I think
that the agency is violating the Constitution in doing so. See supra
at 3–7. But if under existing precedent I’m stuck with the fiction
that the FCC isn’t acting legislatively when it sets the rates, then I
think it follows a fortiori that USAC isn’t doing so either. Cf. 47
C.F.R. § 54.702(c) (“[USAC] may not make policy . . . .”).
Even so, it might yet be the case that USAC is operating ultra
vires—for either of at least two reasons. Because petitioners ha-
ven’t teed up either objection, I offer only a few preliminary obser-
vations.
A
First, it may be that USAC is operating in contravention of
the governing statute, 47 U.S.C. § 254, which conspicuously never
even mentions USAC, let alone authorizes its involvement in the
universal-service program. As already explained, the statute
charges the FCC with establishing “mechanisms” to “preserve and
advance universal service” such that “[e]very telecommunications
carrier” will “contribute” to the program. 47 U.S.C. § 254(d). But
it says nary a word about USAC. That alone seems a pretty good
reason to think that USAC shouldn’t be exercising governmental
power. Cf. Carter v. Carter Coal Co., 298 U.S. 238, 311 (1936) (deem-
ing delegation of governmental power to a private entity “obnox-
ious” even where Congress had explicitly authorized it). 4 For
4 At oral argument, the FCC asserted that § 254(j) contains what is, in effect, a
veiled acknowledgement of USAC’s role. See Oral Arg. at 23:08–24:25. I’m
not convinced. All subsection (j) says is that “[n]othing in this section shall
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22-13315 Newsom, J., Concurring in the Judgment 11
whatever reason, though, petitioners haven’t framed their chal-
lenge in statutory terms, so I won’t pursue the matter further.5
affect the contribution, distribution, or administration of the Lifeline Assis-
tance Program . . . .” 47 U.S.C. § 254(j). That program was originally run by
the National Exchange Carrier Association, another private organization that
preceded USAC. See Allnet Comm. Serv., Inc. v. National Exch. Carrier Ass’n, Inc.,
965 F.2d 1118, 1119 (D.C. Cir. 1992) (observing that NECA collected access
charges for the Lifeline Assistance Program). Conspicuously, though, § 254(j)
never mentions NECA, much less sanctions a private entity’s involvement in
the program’s administration. I think it strains credulity to read subsection (j)
as authorizing USAC’s participation in the universal-service scheme.
5 I realize that some of my colleagues have found the lack of statutory author-
ization relevant to the question whether a private-delegation arrangement vi-
olates the Constitution. See Texas v. Rettig, 993 F.3d 408, 413–15 (5th Cir. 2021)
(Ho, J., dissenting from denial of rehearing en banc). To be sure, when the
operative statute requires an agency to act, as ours does, see 47 U.S.C. § 254(d),
and yet doesn’t authorize further subdelegation to a private entity, that subdel-
egation violates the statute. See, e.g., U.S. Telecom Ass’n v. FCC, 359 F.3d 554,
565–66 (D.C. Cir. 2004). I’m less convinced, though, that congressional au-
thorization (or the lack thereof ) has any real bearing on the constitutional ques-
tion, if only because we generally don’t take Congress’s word for whether a
scheme is constitutional. For the same essential reason, I think that Sierra Club
v. Lynn, 502 F.2d 43, 59 (5th Cir. 1974), is largely inapposite—to the constitu-
tional question, I mean. That case merely holds, as a statutory matter, that
when a provision says that the “applicable federal agency must bear the re-
sponsibility for the ultimate work product,” the agency “must independently
perform its reviewing, analytical and judgmental functions and participate ac-
tively and significantly in the preparation and drafting process.” Id. (internal
quotation omitted). I don’t think it bears on the constitutionality of the
agency’s subdelegation to a private party.
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12 Newsom, J., Concurring in the Judgment 22-13315
B
Second, and separately, even if USAC isn’t impermissibly ex-
ercising legislative power, its involvement in the universal-service
program may yet violate the Constitution. “[B]ound to apply [the]
‘intelligible principle’ test,” and thus to conclude that there’s been
no unlawful delegation of legislative power, Association of Am. R.Rs.,
575 U.S. at 90 (Thomas, J., concurring), I’m left to ask two follow-
on questions, neither of which the parties here have squarely teed
up: Is USAC exercising executive power, and if so, is it “constitu-
tionally eligible” to do so? Id.
The answer to the first of those two follow-ons is clear. The
majority opinion accurately describes USAC’s role in the universal-
service program: “The FCC depends on [USAC], a private entity,
to carry out Congress’s instruction[s].” Maj. Op. at 3; see also id. at
14 (referring to “USAC’s role in carrying out the universal service
fund”). And that description perfectly describes the “executive”
function. The term “execute” has long meant—and means to-
day—“to carry out or into complete effect.” Webster’s New Interna-
tional Dictionary (2d ed. 1944); accord Noah Webster, An American
Dictionary of the English Language (1828) (“to carry into complete
effect”); 1 Samuel Johnson, Dictionary of the English Language (6th
ed. 1785) (“[t]o put in act; to do what is planned or determined”).
So yes, it seems obvious to me that in collecting de facto taxes and
distributing benefits USAC is exercising “executive” power.
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22-13315 Newsom, J., Concurring in the Judgment 13
The critical question, then, is whether the Constitution per-
mits it to do so. 6 Let’s start with what we know for sure. First,
“[u]nder our Constitution, the ‘executive Power’—all of it—is
‘vested in a President,’ who must ‘take care that the Laws be
6 So far as I can tell, none of the pertinent Supreme Court decisions have tack-
led the question whether a private party was impermissibly exercising execu-
tive power; rather, all have addressed the allegedly unlawful exercise of legisla-
tive authority. In 1936, the Court in Carter Coal invalidated a statute that au-
thorized a group of private business owners to set maximum work hours. 298
U.S. at 311. In so doing, the Court called the scheme “legislative delegation in
its most obnoxious form.” Id. (emphasis added). Several years later, after the
infamous “switch in time” the Court twice upheld statutes that conferred au-
thority on private entities against challenges that they “involve[d] any delega-
tion of legislative authority.” Currin v. Wallace, 306 U.S. 1, 15 (1939) (emphasis
added); accord Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 398 (1940)
(“Nor has Congress delegated its legislative authority to the industry. . . . Since
law-making is not entrusted to the industry, this statutory scheme is unques-
tionably valid.” (emphasis added)).
Our sister circuits’ decisions have likewise focused on the question
whether private entities were unconstitutionally exercising legislative (rather
than executive) authority. See, e.g., Frame v. United States, 885 F.2d 1119, 1128–
29 (3d Cir. 1989) (observing that because “no law-making authority ha[d] been
entrusted to” the private entity, the statute in question did “not constitute an
unlawful delegation of legislative authority”); National Horsemen’s Benevolent
& Protective Ass’n v. Black, 53 F.4th 869, 880–83 (5th Cir. 2022) (criticizing a
scheme that gave “rulemaking power” to a private entity); cf. Pittston Co. v.
United States, 368 F.3d 385, 397 (4th Cir. 2004) (stating, without citation, that
“the mere ability to receive governmental monies is clearly ministerial”).
Only the Sixth Circuit in Oklahoma v. United States acknowledged the “[d]iffi-
cult and fundamental questions” that may “arise when private entities enforce
federal law.” 62 F.4th 221, 233 (6th Cir. 2023) (internal quotation omitted).
Notably, though, because the parties there (like those here) hadn’t “engaged
with this feature of the Act,” the court declined to do so. Id.USCA11 Case: 22-13315 Document: 78-1 Date Filed: 12/14/2023 Page: 33 of 42
14 Newsom, J., Concurring in the Judgment 22-13315
faithfully executed.’” Seila Law LLC v. Consumer Fin. Prot. Bureau,
140 S. Ct. 2183, 2191 (2020) (quoting U.S. Const. art. II, § 1, cls. 1;
id. § 3); see also id. at 2197 (“The entire ‘executive Power’ belongs to
the President alone.”). Second, “[b]ecause no single person could
fulfill that responsibility alone, the Framers expected that the Pres-
ident would rely on subordinate officers for assistance”—provided,
at least, that he maintains sufficient supervisory authority over
them. Id. at 2191; see also, e.g., Saikrishna Prakash, The Essential
Meaning of Executive Power, 2003 U. Ill. L. Rev. 701, 795 (2003); Tara
Leigh Grove, Standing as an Article II Nondelegation Doctrine, 11 J.
Const. L. 781, 790 (2009).
Beyond that, things get hazier. In particular, the question
whether (and to what extent) a private party or entity may share in
the Executive Branch’s implementation of federal policy is, to use
a buzzphrase du jour, undertheorized. There is, I think it’s fair to
say, evidence pointing in both directions.
On the one hand, the Constitution’s text and structure indi-
cate—admittedly without saying so explicitly—that private parties
may not be tasked with exercising governmental power of any sort.
Justice Thomas has explained the point well: “Although no provi-
sion of the Constitution expressly forbids private entities from ex-
ercising government authority,” the “so-called ‘private nondelega-
tion doctrine’ flows logically from the three Vesting Clauses”:
Because a private entity is neither Congress, nor the
President or one of his agents, nor the Supreme
Court or an inferior court established by Congress,
the Vesting Clauses would categorically preclude it
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22-13315 Newsom, J., Concurring in the Judgment 15
from exercising the legislative, executive, or judicial
powers of the Federal Government. In short, the
“private nondelegation doctrine” is merely one appli-
cation of the provisions of the Constitution that for-
bid Congress to allocate power to an ineligible entity,
whether governmental or private.
Association of Am. R.Rs., 575 U.S. at 87–88 (Thomas, J., concurring);
see also Gundy, 139 S. Ct. at 2133 (Gorsuch, J., joined by Roberts,
C.J., and Thomas, J., dissenting) (emphasizing that the three paral-
lel Vesting Clauses lodge “the authority to exercise different aspects
of the people’s sovereign power in distinct entities”). Put simply,
“when it comes to private entities” exercising governmental power,
“there is not even a fig leaf of constitutional justification.” Associa-
tion of Am. R.Rs., 575 U.S. at 62 (Alito, J., concurring).
And to be clear, it’s not all form and structure. Delegation
of government power to private entities also raises practical and
fairness concerns. As the Supreme Court said almost a century
ago, delegation of official power to a private party is “delegation in
its most obnoxious form; for it is not even delegation to an official
or an official body, presumptively disinterested, but to private per-
sons whose interests may be and often are adverse to the interests
of others in the same business.” Carter Coal, 298 U.S. at 311. Em-
phasizing the Court’s rationale there, at least two commentators
have described Carter Coal as turning, fundamentally, on the due-
process concerns that attend allowing one private, self-interested
party to harness the coercive power of the state to regulate others.
See Eugene Volokh, New Private-Regulation Skepticism: Due Process,
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16 Newsom, J., Concurring in the Judgment 22-13315
Non-Delegation, and Antitrust Challenges, 37 Harv. J. L. & Pub. Pol’y,
932, 980–81 (2014); see also Alexander Volokh, The Myth of the Fed-
eral Private Nondelegation Doctrine, 99 Notre Dame L. Rev. 203, 257
(2023)
All of this squares with what I’ve said before about the pro-
spect of private parties exercising executive power, in particular—
namely, that they can’t. That is so, I’ve said, for both “formal, struc-
tural reasons—in particular, Article II’s explicit vesting of federal
‘executive Power’ in the President”—and “instrumental ones”—
specifically, the risks inherent in giving enforcement power to those
not “subject to political and legal constraints.” Laufer v. Arpan LLC,
29 F.4th 1268, 1294–95 (11th Cir. 2022) (Newsom, J., concurring),
vacated, 77 F.4th 1366, 2023 (11th Cir. 2023); accord Sierra v. City of
Hallandale Beach, 996 F.3d 1110, 1133 (11th Cir. 2021) (Newsom, J.,
concurring) (“From [Article II’s] explicit vesting, it follows that the
‘executive Power’ can’t be exercised by private parties.”).
Now, in the interest of completeness, I should acknowledge
some historical counterevidence—areas and instances in which pri-
vate parties and entities seemingly have been allowed to exercise
what would certainly seem to be executive authority. One obvious
example: The Constitution itself contemplates that private individ-
uals—in essence, mercenaries—might play a role in international
law enforcement. See U.S. Const. art. 1 § 8, cl. 11 (allowing Con-
gress to “grant Letters of Marque and Reprisal”). There’s also a
fairly long history in this country of private entities managing pris-
ons. See, e.g., Gillian Metzger, Privatization as Delegation, 103
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22-13315 Newsom, J., Concurring in the Judgment 17
Colum. L. Rev. 1367, 1392–93 (2003) (noting that “[e]xtensive pri-
vatization characterized incarceration in the nineteenth century,”
waned during the early twentieth century, and has since come back
into vogue). The nation’s early years saw private parties bringing
criminal prosecutions—a practice that, needless to say, has died
out—and qui tam actions—a practice that has persisted. See, e.g.,
Zachary Price, Enforcement Discretion and Executive Duty, 67 Vand.
L. Rev. 671, 720–22 (2014); but see United States ex rel. Polansky v. Ex-
ecutive Health Res., Inc., 599 U.S. 419, 449 (Thomas, J., dissenting)
(“There are substantial arguments that the qui tam device is incon-
sistent with Article II . . . .”). And most recently, the Supreme Court
recognized that “[f ]or as long as the eminent domain power has
been exercised by the United States, it has also been delegated to
private parties.” PennEast Pipeline Co., LLC v. New Jersey, 141 S. Ct.
2244, 2255 (2021).
As best I can tell, the history of private-party involvement in
tax collection—a role roughly analogous to one that USAC seems
to play in § 254’s universal-service scheme—is mixed. In the
Founding era, private parties seem not to have been involved. The
First Congress created the Treasury Department in 1789 to, among
other things, collect federal taxes, and it has been doing so ever
since. See U.S. Dep’t of the Treasury, History Overview,
https://home.treasury.gov/about/history/history-overview (last
visited Sept. 22, 2023) (listing “collecting income and excise taxes”
as one of the Treasury’s “activities,” “formally established as an ex-
ecutive department by the First Session of Congress in 1789”); Pra-
kash, Essential Meaning, at 747 (citing Montesquieu for the
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18 Newsom, J., Concurring in the Judgment 22-13315
proposition that tax collection is a quintessential government task);
see also, e.g., Act of July 11, 1798, ch. 71, §§ 1–16, 1 Stat. 591, 591–94
(repealed) (setting compensation for tax collectors during the Fifth
Congress); id., ch. 70, §§ 2–9, 28–30, 1 Stat. 580, 583, 590–91 (1798)
(setting compensation and requiring oaths for federal real-estate as-
sessors); Act of July 14, 1798, ch. 75, § 2, 1 Stat. 597, 598 (1798)
(“That the said tax shall be collected by the supervisors, inspectors,
and collectors of the internal revenues of the United States . . . .”);
Act of Mar. 3, 1804, ch. 20, §§ 1–7, 2 Stat. 262, 262–64 (1804) (using
tax collectors for the direct tax); Oliver Wolcott, Compensation of
Officers of the Revenue (Apr. 17, 1798), in 1 American State Papers,
Finance 576, 576–79 (1832) (encouraging Congress to accept a pro-
posed “augmentation of compensation” for tax collectors to “pre-
vent the greatest embarrassments”).
For a brief period in the 1870s, and again more recently, the
federal government experimented with privatized tax collection.
The 19th-century effort failed spectacularly—and very publicly—
and was scrapped after just two years. See, e.g., H.R. Rep. No. 559
at 9 (1874) (“The committee are of [the] opinion that any system of
farming the collection of any portion of the revenues of the Gov-
ernment is fundamentally wrong; that no necessity for such laws
exist[s], for the reason that the Secretary of the Treasury and the
head of the Internal-Revenue Bureau are fully empowered by law
to make all collections of taxes . . . .”); 2 Cong. Rec. 2121 (1874)
(statement of Sen. Hale) (“[I]n [this law’s] inception it was, in my
view, wholly, radically, violently, wickedly wrong.”); The President
and the Sanborn Business, N.Y. Times, May 5, 1874 (describing one
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22-13315 Newsom, J., Concurring in the Judgment 19
of the private tax collectors as a “superlative rogue who has swin-
dled the Government from one month’s end to another with amaz-
ing impunity”). The more modern experiment began about 20
years ago and remains ongoing. IRS, Private Debt Collection (July 5,
2023), https://www.irs.gov/businesses/small-businesses-self-em-
ployed/private-debt-collection; Emily Rockwood, Privatizing Tax
Collection: A Case Study in the Outsourcing Debate, 36 Pub. Cont. L.J.
423, 427 (2007).
Candidly, I’m not quite sure what to make of all this—the
textual, structural, and historical indicators seem to point in differ-
ent (or multiple) directions. But of this much I’m confident: To
the extent that delegation of executive power to a private entity
outside the government is permissible at all, it is permissible only if
that entity “is adequately subject to Presidential control.” Assoc. of
Am. R.Rs., 575 U.S. at 91 (Thomas, J., concurring). So if I’m right
that USAC is exercising executive power, see supra at 12, then the
question becomes, at the very least, whether USAC is subject to
the sort of control that Article II demands. See generally Alexander
Volokh, supra, at 248, 254.
That, to my mind, is far from clear. To be sure, USAC op-
erates under some supervision. For example, it has to file annual
reports detailing its activities. See 47 C.F.R. 54.702(g). The FCC
retains the formal authority to reject USAC determinations, and a
party wishing to challenge one of those determinations is entitled
to a hearing before the agency. See id. §§ 54.709(a)(3); 54.719;
54.722. Critically, though, with respect to the proposed universal-
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20 Newsom, J., Concurring in the Judgment 22-13315
service “contribution factor,” in particular—the primary and most
direct way that USAC executes congressional directives—the FCC
needn’t (and overwhelmingly doesn’t) do anything at all. See supra
2–3. Unless and until the agency steps in to affirmatively counter-
mand USAC’s proposed exaction within 14 days, it goes into effect
by sheer force of inertia. Id. Accordingly, while the FCC maintains
a patina of control over USAC’s most important function, the fact
that agency approval can be entirely passive—and in fact, is effec-
tively presumed—calls into question how meaningful its control
really is.
In any event, the key isn’t the degree of the FCC’s control,
but the President’s. And in that connection, the Supreme Court’s
decisions “treat appointment and removal powers as the primary
devices of executive control.” Assoc. of Am. R.Rs., 575 U.S. at 91
(Thomas, J., concurring) (citing Free Enter. Fund v. Public Co. Ac-
counting Oversight Board, 561 U.S. 477, 492 (2010)). The removal
issues vis-à-vis USAC, it seems to me, are doubly fraught. First, the
only word regarding USAC’s removal comes from its own bylaws,
which authorize the entity’s board to remove one of its members
by a majority vote and with the approval of the FCC’s chairman.
See By-Laws of Univ. Serv. Admin. Co., art. 2 § 7
https://www.usac.org/wp-content/uploads/about/docu-
ments/leadership/usacbylaws.pdf. So far as the bylaws are con-
cerned, then, USAC is essentially in charge of its own continuance
in office. Second, and to compound matters, because the FCC is
an independent agency, whose commissioners may be removed
only for cause, see Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 537
USCA11 Case: 22-13315 Document: 78-1 Date Filed: 12/14/2023 Page: 40 of 42
22-13315 Newsom, J., Concurring in the Judgment 21
F.3d 667, 695–96 (D.C. Cir. 2008) (Kavanaugh, J., dissenting), aff’d
in part, rev’d in part and remanded, 561 U.S. 477 (2010), USAC’s board
members enjoy something akin to the double-for-cause-removal
protection that the Supreme Court has recently held to be uncon-
stitutional. See Seila Law, 140 S. Ct. at 2197; Free Enter. Fund, 561
U.S. 477 at 484 (2010). And, it seems to me, the removal-and con-
trol-related considerations that attend delegation of executive
power to a private entity are at least as acute as—if not demonstra-
bly more acute than—those that attend delegation to an adminis-
trative agency. Delegation to a private entity breaks the ordinary
chain of accountability that our “carefully calibrated” system of
government is designed to uphold. Seila Law, 140 S. Ct. at 2203. 7
* * *
Because petitioners didn’t squarely present either a statutory
or an executive-delegation challenge, I won’t go any further. Suf-
fice it to say, though, that nondelegation issues do not necessarily
7 I suppose the FCC (although not the President) retains some modicum of
authority over the appointment of USAC’s directors. See 47 C.F.R. § 54.703.
Even there, though, the agency’s oversight is minimal and is filtered through
private groups’ preferences: The FCC Chairman’s initial selection comes from
the “nominations submitted by industry and non-industry groups”; he can
make his own selection in the event they can’t “reach consensus on a nominee
or fail[] to submit a nomination.” Id. § 54.703(c)(3). USAC’s Chief Executive
Officer is selected in much the same way: first, the board forwards names for
the FCC Chairman’s review; then, if no consensus is reached, the Chairman
makes the selection. Id. § 54.704(b).
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22 Newsom, J., Concurring in the Judgment 22-13315
end with Article I. Article II provides important limits, as well,
however uncertain under current doctrine.
III
Bound by precedent and the parties’ framing of the issues, I
concur in the majority’s judgment. But this case illuminates deeper
problems in nondelegation precedent. After all, “[l]iberty requires
accountability.” Ass’n of Am. R.Rs., 575 U.S. at 57 (Alito, J., concur-
ring). But with each successive delegation—from Congress to
agencies, and then from agencies to private parties—we drift fur-
ther and further from the locus of democratic accountability. The
Constitution imposes important limits on how the government
goes about doing its job. If it can’t do everything it wants to do—
such that it has to outsource responsibilities to private parties—that
may indicate it’s trying to do too much.
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22-13315 LAGOA, J., Concurring 1
LAGOA, Circuit Judge, concurring:
I concur in the majority opinion. But I share much of the
same concerns expressed by Judge Newsom in his concurring opin-
ion about how the current nondelegation doctrine, which requires
courts to look to “whether Congress has supplied an intelligible
principle to guide the delegee’s use of discretion,” Gundy v. United
States, 139 S. Ct. 2116, 2123 (2019) (plurality opinion), has strayed
from constitutional first principles, see Newsom Conc. at 3–9; see
also Gundy, 139 S. Ct. at 2133–42 (Gorsuch, J., joined by Roberts,
C.J., and Thomas, J., dissenting). However, we are bound to apply
the intelligible principle test as set forth by Supreme Court prece-
dent. And given how both the Supreme Court and this Court have
applied the intelligible principle test in rejecting nondelegation
challenges to other statutes, see, e.g., Nat’l Broad. Co. v. United States,
319 U.S. 190 (1943); Yakus v. United States, 321 U.S. 414 (1944); Am.
Power & Light Co. v. SEC, 329 U.S. 90 (1946); Lichter v. United States,
334 U.S. 742 (1948); Whitman v. Am. Trucking Ass’ns, 531 U.S. 457(2001); United States v. Brown, 364 F.3d 1266 (11th Cir. 2004), I be-
lieve that those cases require us to find that 47 U.S.C. § 254’s statu-
tory language likewise satisfies the intelligible principle test, as the
majority opinion concludes.
With this understanding, I concur.