The Nondelegation Doctrine Returns to the Supreme Court

T hese are heady times for constitutional conservatives bent on reviving and fortifying the original separation of powers. One of the less-used weapons in the constitutional tool kit is the nondelegation doctrine. The Supreme Court, despite several invitations, hasn’t used the doctrine against a delegation of congressional powers since 1935. But it is squarely facing a request to reinvigorate the doctrine in Federal Communications Commission v. Consumers’ Research, which is being argued Wednesday morning.

One Congress at a Time

The central idea of the nondelegation doctrine comes from the first sentence of Article I: “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.” If all of the federal government’s legislative powers are vested in Congress, that means that none of those powers can be vested anywhere else — even if Congress chooses to hand them off to some executive agency, let alone a self-interested private entity. In short: If a power is legislative, it may only be exercised by Congress.

As Justice John Marshall Harlan wrote in Marshall Field & Co. v. Clark (1892): “That Congress cannot delegate legislative power to the President is a principle universally recognized as vital to the integrity and maintenance of the system of government ordained by the Constitution.” John Locke’s Second Treatise on Government, in arguing against Parliament having the right to hand over lawmaking powers to the Crown, explained the underlying philosophical case:

The Legislative cannot transfer the Power of Making Laws to any other hands. For it being but a delegated Power from the People, they, who have it, cannot pass it over to others. . . . And when the people have said, We will submit to rules, and be govern’d by Laws made by such Men, and in such Forms, no Body else can say other Men shall make Laws for them; nor can the people be bound by any Laws but such as are Enacted by those, whom they have Chosen, and Authorised to make Laws for them. The power of the Legislative being derived from the People by a positive voluntary Grant and Institution, can be no other, than what the positive Grant conveyed, which being only to make Laws, and not to make Legislators, the Legislative can have no power to transfer their Authority of making laws, and place it in other hands. [Emphasis added.]

The application of the principle, however, runs into the practical difficulty that Congress has always allowed for some level of executive and administrative action in detailing how laws will work. Chief Justice John Marshall, as far back as Wayman v. Southard (1825), recognized both the principle of nondelegation and its limits: “It will not be contended that Congress can delegate to the courts, or to any other tribunals, powers which are strictly and exclusively legislative. But Congress may certainly delegate to others, powers which the legislature may rightfully exercise itself.” (Emphasis added.)

In order to police the line, the Supreme Court has required that an act of Congress lay down an “intelligible principle” that an agency must follow in promulgating rules, so that it is possible for a court to judge whether the agency stayed within its mandate to apply the law rather than make it. That rule derived from J.W. Hampton, Jr. & Co. v. United States (1928), which upheld a delegation of tariff-setting power to the president — an issue of newly vivid relevance today. The principle is contested by some originalists, who argue that Congress could delegate authority to the executive not to make rules, but to apply them when it found that certain factual conditions existed. By contrast, some defenders of the FCC’s position argue that the doctrine has no originalist roots, and others argue that it applies only when lawmaking powers are delegated to the president — not to “independent” agencies (which raises the question of when there can be executive agencies independent of the president).

The last major victory for the doctrine came in A.L.A. Schechter Poultry Corporation v. United States (1935), a case brought by kosher chicken butchers in Brooklyn who convinced the Court to strike down portions of the National Industrial Recovery Act of 1933 for delegating to private trade and industrial groups the power to write price, wage, work hours, and health codes for industries. The involvement of private trade groups becomes important in Consumers’ Research. As Justice Clarence Thomas wrote in his separate concurring opinion in Department of Transportation v.Association of American Railroads (2015), in a case in which Amtrak was statutorily empowered to join with the Federal Railroad Administration in issuing “standards and metrics” to judge other passenger rail lines:

The Government may create generally applicable rules of private conduct only through the proper exercise of legislative power. I accept that this would inhibit the Government from acting with the speed and efficiency Congress has sometimes found desirable. . . . We have too long abrogated our duty to enforce the separation of powers required by our Constitution. . . .The end result may be trains that run on time (although I doubt it), but the cost is to our Constitution and the individual liberty it protects.

The Court has more recently managed to avoid ruling on the doctrine by means of close reading of statutes or rulings on other constitutional grounds. Under the major questions doctrine, for example, the Court presumes that statutes don’t intend to hand over power over big national issues to agencies unless the statute says so explicitly. As a result, the Court ducked the issue even when invited to do so in West Virginia v. EPA (2022) or Securities and Exchange Comm’n v. Jarkesy (2024).

There’s a very big nondelegation case working its way up the pipeline: United States v. Pheasant, which involves a two-level delegation to the Bureau of Land Management (BLM) to make rules for federal land, and then to state-level BLM administrators to detail those rules for their states — resulting in statewide BLM bureaucrats promulgating entire criminal codes for the majority of land in states such as Nevada without Congress signing off on any of the specific criminal prohibitions. This resulted in a federal prosecution of a man who rode a dirt bike in the Moon Rocks desert without a taillight, a thing Congress itself never made a federal crime. Pheasant has been argued before the Ninth Circuit federal appeals court but has yet to be decided.

Phone Home

At issue in Consumers’ Research is a $9 billion tax that never passed Congress. If Pheasant involves one of the two most essential legislative powers (the creation of crimes that can get you sent to jail), Consumers’ Research involves the other: the power to tax. That’s a power so essential that the Constitution not only limits it to Congress, but insists that a bill to raise revenue can’t even start anywhere but the House, the most democratic part of Congress.

What happened here is that the Telecommunications Act of 1996 created the Universal Service Fund (USF). The idea was that telecom companies would contribute to the USF, which would be used not as a user fee but as a pot of general revenue to fund public goods — specifically, to fund the expansion of telecom services such as high-speed internet access for schools, libraries, and rural health-care providers. These would benefit consumers, but also ultimately enlarge the market for the services of the telecom companies.

Since 1997, the collected funds have been both raised and redistributed by a private company, the Universal Service Administrative Company (USAC), to entities and projects that are meant to expand telecommunications services. The rate of the USF assessments, which are designed and expected to be passed on by the telecoms to consumers, are set not by Congress or the FCC but by USAC. Indeed, unlike rulemaking powers delegated by the Securities and Exchange Commission to self-regulatory organizations such as the New York Stock Exchange and NASDAQ, the FCC doesn’t even need to affirmatively approve the rates; it merely has the option to veto them, without which they go into effect automatically without reasoned explanation. As the challengers’ brief notes, “predictably, the USF tax rate has skyrocketed. It was under 4% in 1998 but now approaches 37%, even though the relevant statutory text hasn’t changed.”

That’s a tax, enabled by Congress but never set by it. It’s not just a user fee, in which end users pay for how much they use and get services in exchange. It’s the raising of revenue for a more general public purpose, which is the definition of a tax. As Judge Andrew Oldham of the Fifth Circuit concluded:

American telecommunications consumers are subject to a multibillion-dollar tax nobody voted for. The size of that tax is de facto determined by a trade group staffed by industry insiders with no semblance of accountability to the public. And the trade group in turn relies on projections made by its private, for-profit constituent companies, all of which stand to profit from every single tax increase. This combination of delegations, sub delegations, and obfuscations of the USF Tax mechanism offends Article I, § 1 of the Constitution.

The Fifth Circuit’s decision was at odds with the Sixth, Eleventh, and D.C. Circuits, which is how the case landed at One First Street. There’s a side issue of whether the case is moot due to abstruse procedural issues, but none of the parties is really pressing that argument, so the Court may be presented with the dispute in its starkest form.

Taxes, Fees, and Tariffs

The implications may not be instantly dramatic, but the stakes are high. The change of administrations led to the solicitor general, in the reply brief, backing away from Biden administration attacks on the nondelegation doctrine’s validity. The solicitor general’s reply brief lists the fee-setting programs that might be called into question as those imposed by the Office of the Comptroller of the Currency on banks, by the Federal Reserve Board on Federal Reserve banks, by the National Credit Union Administration Board on credit unions, by the Federal Deposit Insurance Corporation on banks, by the Farm Credit Administration upon financial institutions, by the Federal Housing Finance Agency and the Animal and Plant Health Inspection Service upon regulated entities, by the Postal Service in setting postage rates, and by the Supreme Court itself in setting court fees. But a number of these are more properly understood as user fees; the Postal Service is also subject to detailed regulation of its rates under a statutory list of factors by the Postal Regulatory Commission. Thus, while a decision against the FCC here could unsettle a number of these rate-setting schemes, few are as egregious abdications of the taxing power as what Congress has permitted here.

Of course, while the Trump administration is not as doctrinaire as its predecessor about defending the administrative state, it, too, has irons in the fire here in defending the core and dubious J.W. Hampton doctrine in favor of a broad delegation to the president of the power to impose tariffs more or less at whim, on the theory that tariffs entail fact-bound executive determinations about foreign relations that require dispatch in their execution. That’s its own day’s debate. But it can’t even happen until the Court lays down the law again: Only Congress has the power to tax.