Nondelegation

Jonathan H. Adler | 7.24.2024 1:46 PM

Today, in Consumers' Research v. FCC, the en banc U.S. Court of Appeals for the Fifth Circuit concluded that the so-called "Universal Service" fee imposed by the Federal Communications Commission is unconstitutional. Specifically, by a vote of 9-7, the court concludes that this fee is a tax, the authority for which was delegated to the FCC which, in turn, subdelegated authority to set the ex to a private entity (the Universal Service Administrative Company). Whether or not either of these steps alone would create a constitutional problem under the nondelegation doctrine, the court concluded that the combination of the two delegations is unconstitutional.

Judge Oldham wrote for the court, joined by Judges Jones, Smith, Elrod, Willett, Ho Duncan, Englehardt and Wilson. His opinion begins:

In the Telecommunications Act of 1996, Congress delegated its taxing
power to the Federal Communications Commission. FCC then subdelegated
the taxing power to a private corporation. That private corporation, in turn,
relied on for-profit telecommunications companies to determine how much
American citizens would be forced to pay for the "universal service" tax that
appears on cell phone bills across the Nation. We hold this misbegotten tax
violates Article I, § 1 of the Constitution.

After dispensing with various preliminary matters, Judge Oldham outlines the substantive claim.

Petitioners contend the universal service contribution mechanism
violates the Legislative Vesting Clause. See U.S. Const. art. I, § 1 ("All
legislative Powers herein granted shall be vested in a Congress of the United
States, which shall consist of a Senate and House of Representatives."). We
agree. We (A) explain that the power to levy USF "contributions" is the
power to tax—a quintessentially........

© Reason.com