What will the Supreme Court decide next for the administrative state?

Reuters

16-02-2025

February 06, 2025 - The Supreme Court's 2023 Term was an administrative law blockbuster. The Court's decisions undermined federal agencies' authority in several significant ways. The Court ended judicial deference to agency interpretations of statutes (Loper Bright Enterprises v. Raimondo). It invalidated a regulation restricting ownership of bump stocks, suggesting that courts shouldn't defer to agencies on mixed questions of law and fact, either (Garland v. Cargill). It exposed decades-old regulations to challenge, changing the long-held understanding of a key statute of limitations by ruling that the time limit runs from an injury rather than from when the agency first issues its regulation (Corner Post, Inc. v. Board of Governors of the Federal Reserve System). Finally, the Court reaffirmed that procedural requirements for agencies have teeth (Ohio v. EPA).
The question now is how much farther the Court will go to rein in the administrative state. Two consolidated cases could provide some answers, this time on the nondelegation doctrine: Federal Communications Commission v. Consumers' Research and Schools, Health & Libraries Broadband Coalition v. Consumers' Research.
A little context is helpful. Loper Bright's overruling of the longstanding Chevron doctrine is a good starting point. To recap, the Chevron doctrine was a boon to agencies: it required courts to defer to reasonable interpretations of statutes the agency administered. After Loper Bright, however, what statutes mean is a question for courts using tools of statutory construction, and courts won't defer to agencies.
But Loper Bright tees up further questions. While courts must interpret statutes, the Court noted, Congress may, within constitutional limits, expressly delegate discretionary decisionmaking authority to an agency. The Court suggested that Congress might use terms like "reasonable" or "appropriate" to indicate that it is empowering the agency to fill in gaps.
What are those constitutional limits, and what does it mean for an agency to have discretionary authority, especially where that authority looks like the agency is making legal rules?
For some Justices, the nondelegation doctrine is the answer. The basic idea is simple: The Constitution commits to Congress alone the power to make laws, so Congress cannot give others that authority. But the doctrine has been dormant since 1935, when the Court last struck down legislation as impermissible delegations of Congress' legislative authority.
First, in A.L.A. Schechter Poultry Corp. v. United States, the Court held unconstitutional part of the National Industrial Recovery Act empowering the President to approve "codes of fair competition," which could be proposed by trade associations.
Then, in Panama Refining Co. v. Ryan, the Court struck down another part of the same Act, which had authorized the President to prohibit certain interstate shipments of petroleum products, because Congress had not established "policy as to the transportation" or offered any "criterion to govern the President's course."
But the trend didn't last. After his landslide 1936 victory, Franklin Delano Roosevelt proposed packing the Court with Justices he could trust to uphold legislation. So threatened, some say, the Justices began upholding New Deal legislation. From then on, legislation would survive a nondelegation challenge so long as Congress had set out "an intelligible principle" for exercising the delegated authority. Since 1935, no law has failed that test in the Supreme Court.
That hasn't stopped litigants from asking the Court to revive the doctrine. In 2019, in Gundy v. United States, the Court rejected a nondelegation challenge, but in a split opinion signaling future interest in the issue. With Justice Brett Kavanaugh recused, five Justices upheld a broad delegation to the Attorney General. Justice Neil Gorsuch dissented, joined by Chief Justice John Roberts and Justice Clarence Thomas.
The dissent advocated three guiding principles for the nondelegation doctrine. First, "as long as Congress makes the policy decisions ... , it may authorize another branch to 'fill up the details.'" But Congress must offer "standards 'sufficiently definite and precise'" to enable others to determine "whether Congress's guidance has been followed."
"Second, once Congress prescribes the rule," it may make the rule's application "depend on executive fact-finding."
"Third, Congress may assign the executive and judicial branches certain non-legislative responsibilities." The dissent thought the Gundy delegation failed this test because Congress didn't provide sufficient guidance.
Those three votes for a more robust nondelegation doctrine could soon become five. Justice Samuel Alito played a pivotal role in upholding the statute in Gundy, but only because he thought the Court wasn't ready — as he was — to reexamine the doctrine. And Justice Kavanaugh later observed in a statement in Paul v. United States that Justice Gorsuch's analysis "may warrant further consideration in future cases."
As Justice Thomas recently put it in his dissent from denying review in Allstates Refractory Contractors, LLC v. Su, "[a]t least five Justices have already expressed an interest in reconsidering this Court's approach to Congress's delegations of legislative power."
The 5th U.S. Circuit Court of Appeals may have given them that opportunity. In Consumers' Research v. Federal Communications Commission, the en banc court split 9-7 to strike down the Universal Service Fund — USF — as violating the nondelegation doctrine, and the Justices granted two petitions to hear the case, with argument expected in March or April.
The USF is a program administered by the Federal Communications Commission (FCC) to provide "universal service" — telecommunications and broadband internet — by subsidy where it might otherwise not be economical or affordable: to rural areas, low-income individuals, schools and libraries, and certain health care providers.
In 47 U.S.C. § 254, Congress authorized the FCC to establish universal service based on six "principles," and also allows the FCC to come up with its own principles. The FCC, in turn, funds the USF by levying contributions from telecommunications carriers based on their interstate and international telecommunications revenues. The carriers, in turn, often pass those contributions on as fees to consumers (just check your cell phone bill).
The program brings in $9 billion a year. To keep up with the administrative load, the FCC has delegated certain powers to a private corporation, the Universal Service Administrative Company (USAC), whose board members include representatives from groups that receive USF money.
The challengers in Consumers' Research — a nonprofit organization, a telecommunications services reseller, and individual consumers, who all pay contribution fees — took issue with the USF contribution amount that the FCC set in Q1 2022 and argued that the USF violated the nondelegation doctrine. A 5th Circuit panel, applying the intelligible principle rule, disagreed.
But on rehearing en banc, a 9-7 majority held the scheme unconstitutional. The majority reasoned that the combination of two issues violated the Constitution and that it didn't need to decide whether each was independently problematic: Congress gave the FCC taxing power but no intelligible principle, and the FCC impermissibly delegated that taxing power to a private agency (USAC).
In November 2024, the Court took up both issues and the "combination" theory. It also added a question: whether the case is moot given that the challengers had already paid the challenged assessment, the government may have sovereign immunity against having to pay it back, and the challengers didn't seek preliminary relief from the 5th Circuit.
Consumers' Research gives the Court several options. The Court could reinvigorate the nondelegation doctrine and hold that Congress failed to give the FCC an intelligible principle for deciding how much money to charge telecommunications companies to subsidize what level of service. Alternatively, it could conclude that the FCC can't pass those important decisions to a private corporation, especially one whose board membership includes representatives from USF grant recipients.
The Court could do both, or, like the 5th Circuit, hold that the combination of both aspects is constitutionally problematic. Or the Court could balk and find the dispute moot, though to do so, the Court likely would have to impose new limitations on the mootness exception for questions capable of repetition, yet evading review.
Of course, the Court could simply disagree with the 5th Circuit and reverse — as it did over 70% of the time last Term. In the government's view, the FCC's delegation to USAC is limited and subject to FCC guidance and review. And the statute directs the FCC to run the USF so that rural consumers may access services comparable to those available in urban areas, at similar prices. Arguably, that is an intelligible principle requiring the FCC (with USAC's help) only to make determinations about what is available and how much it costs, well within the Gundy dissent's notion that Congress may task other actors with filling in details and finding facts. Articulating why that isn't the case, or how the nondelegation test should be refined, may prove challenging.
To be sure, the statute also authorizes the FCC to add principles for administering the USF, but the Justices could sever that broad delegation. Doing so would give the Justices an out to suggest what is unconstitutional even as they find the enumerated principles in the USF statute sufficient.
Consumers' Research is a key case to watch. It may deal another major blow to the administrative state or it may signal that the Court recognizes that more blows could cripple government functioning. Only time will tell.
Nicole Welindt, an associate in Skadden, Arps, Slate, Meagher & Flom LLP's Supreme Court and appellate practice, contributed to this article.
The writers are regular, joint contributing columnists on the U.S. Supreme Court for Reuters Legal News and Westlaw Today.