Fifth Circuit Court of Appeals finds FCC’s universal service fee unconstitutional under the nondelegation doctrine

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Late yesterday, the Fifth Circuit Court of Appeals issued an opinion in Consumer Research v. FCC that breathes new life into the nondelegation doctrine. This monumentally important decision is very likely to be reviewed by the Supreme Court: it might create limits on how vague Congress is allowed to be when delegating authority to federal agencies.

Congress has given the FCC a slush fund called the "universal service fee" tax on all telecommunication providers, for which the FCC can set the amount of the tax and determine what it should be used to pay for. CEI filed an amicus brief in the Fifth Circuit, arguing that the universal service fee violated the nondelegation doctrine because it was unconstrained by any intelligible principle. On March 24, 2023, a panel of Fifth Circuit judges rejected the petition for review and found that the universal service fee did not violate the nondelegation doctrine. The petitioners sought rehearing from the entire Fifth Circuit, and after CEI filed an amicus brief supporting rehearing, that request was granted.

Yesterday, the entire Fifth Circuit overturned the panel's decision in a 9 to 7 decision and found that the universal service fee violates the nondelegation doctrine. This doctrine requires that Congress provide agencies with an "intelligible principle" to guide their exercise of delegated authority.

The Fifth Circuit found that the "statutory phrases supply no principle at all" and the relevant congressional statutes "amount to a concept of universal service so amorphous that Congress's instruction to raise 'sufficient' funds amounts to a suggestion that FCC exact as much tax revenue for universal service projects as FCC thinks is good."

This is a monumental step forward, and CEI played a critical role in it by advocating the revival of the nondelegation doctrine. CEI has long supported challenges to the universal service fee through years of advocacy, including submitting amicus briefs to the Fifth, Sixth, and Eleventh Circuits. Furthermore, a pending Supreme Court petition for certiorari has been instrumental in this journey. Now, given a circuit split on this critically important issue, it appears very likely that the Supreme Court will consider this issue, presumably next term.