5th Circuit Presses USF Challenge on Nondelegation Doctrine
A three-judge panel on the 5th U.S. Circuit Court of Appeals in New Orleans questioned the procedure of Consumers’ Research’s challenge of the FCC’s method for funding the Universal Service Fund under the nondelegation doctrine, during oral argument Monday. Judges also pressed the FCC on whether Congress should be tasked with setting specific funding limitations and how the FCC reviews the quarterly contribution factor calculations made by the Universal Service Administrative Co.
Monday’s oral argument was the first to be held among Consumers’ Research’s several challenges of various contribution factors (see 2211230054). The group challenged the Q1 2022 contribution factor in the 5th Circuit, with pending ones in the 6th Circuit against the Q4 2021 factor and in the 11th Circuit against the Q4 2022 factor.
Chief Judge Priscilla Richman noted a "good bit" of Consumers' Research's brief cited dissents and asked what the best majority opinion or case was to support the group's argument that the USF funding mechanism violates the nondelegation doctrine. Consumers' Research attorney Trent McCotter of Boyden Gray cited a 1974 Supreme Court decision that phrases such as "in the public interest" didn't suffice with respect to revenue raising for an executive agency. The FCC's response to its brief citing its own regulations on funding limitations is "essentially irrelevant for a nondelegation challenge," McCotter said.
Judge Carl Stewart questioned the timing of the challenge and asked how the Hobbs Administrative Orders Review Act factored into the issue. FCC Associate General Counsel Jacob Lewis said "the odd thing about this case is that this is a proceeding that arises out of the commission's calculation of the contribution factor," saying Consumers' Research didn't challenge the calculation, and one of its fellow petitioners, Cause Based Commerce, has never refused to pay its USF contribution. “They’re trying to fit a square peg into a round hole,” Lewis said: "They should have either refused to pay the invoice or paid it under protest."
Judge Catharina Haynes asked whether the court should remand the case to the FCC. "Typically, when we have something that should've been raised first within the agency, we remand it to the agency because it started there," Haynes said, "but it didn't start there." Lewis said the petitioners could pay its next invoice under protest to challenge the contribution on procedural grounds, but “we do have extremely strong merits arguments.”
Haynes also questioned whether Congress should establish a percentage or dollar limit on the USF contribution factor. Lewis said it could, but it’s not required that Congress establish caps. “The petitioners' argument is entirely inconsistent with the governing standard for non-delegation and with a fair examination of the multiple ways" section 254 of the Communications Act "restrains the commission,” Lewis said. Haynes pressed Lewis on Consumers' Research's argument that the FCC "rubber stamps" USAC's quarterly contribution calculations. Lewis said the FCC has on occasion “tweaked” USAC’s calculations, but it “has been given a very straightforward task and USAC performs that task admirably.”