Take the Fifth

Designated for publication

• Consumers’ Research v. Federal Communications Commission, 22-60008, petition for review of FCC order
  • Oldham, J. (joined by Jones, Smith, Elrod, Willett, Ho, Duncan, Engelhardt, Wilson, JJ.); Elrod, J., concurring (joined by Ho, Engelhardt, JJ.); Ho, J., concurring; Stewart, J., dissenting (joined by Richman, Southwick, Haynes, Graves, Higginson, Douglas, JJ.); Higginson, J., dissenting (joined by Stewart, Southwick, Graves, Douglas, JJ.); nondelegation doctrine
  • On en banc rehearing, granting petition for review of FCC action and holding unconstitutional the implementation of the universal service tax under the Telecommunications Act of 1996 as a violation of Article I, § 1 of the Constitution, the “legislative vesting” clause.
  • The Court summarized, “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.” Under the Act, Congress directed the FCC to facilitate “contributions” from telecommunications carriers to a “universal service fund” (“USF”), from which various programs are funded or subsidized for access to telephone and internet for rural, low-income, and public-service consumers. Telecommunications carriers typically pass this USF contribution amount on to consumers, as a “universal service fee” or “universal service tax.” The FCC has delegated to a private company, the Universal Service Administrative Company (“USAC”) both the administration of these programs and the responsibility to decide the quarterly USF contribution amount by telecommunications carriers. The FCC imposes this USF “contribution factor” on the telecommunication companies; “but we call it what it is,” writes the Court, “the ‘USF Tax.'”
  • After laying out various examples of fraud and waste in the USF system, the Court observed, “Section 254 reflects a policy goal of making telecommunications services available to all Americans. It is emphatically the province of Congress to make such policy choices. But it is our judicial duty to ensure that Congress pursued its goal through lawful means. And in that regard, our brief survey of the USF’s history makes three things clear. First, Congress’s instructions are so ambiguous that it is unclear whether Americans should contribute $1.37 billion, $9 billion, or any other sum to pay for universal service. Second, private entities bear important responsibility for universal service policy choices. And third, it is impossible for an aggrieved citizen to know who bears responsibility for the USF’s serious waste and fraud problems. All three of those things implicate bedrock constitutional principles.”
  • The Court held that at least one plaintiff had standing, and that the imposition of the quarterly contribution/tax amount was an action capable of repetition yet evading review.
  • The Court held that, even if issue preclusion were an available defense because the USF quarterly contribution factors had been challenged in the 6th and 11th Circuits and those challenges had been rejected, the FCC had waived that defense. “The policy underlying issue preclusion is based primarily on a defendant’s interest in avoiding the burdens of twice defending a suit and the avoidance of unnecessary judicial waste. Issue preclusion cannot serve either of those purposes if it is raised in the eleventh hour of proceedings, after the defendant and the court have already carried all the burdens necessary to decide the case. So even assuming FCC could defeat petitioners’ claims on the ground the Sixth and the Eleventh Circuits have rendered preclusive judgments, FCC was obliged to raise that issue ‘at the earliest moment practicable.” (Internal citations and quotation marks omitted).
  • The Court held, “(A) … that the power to levy USF ‘contributions’ is the power to tax—a quintessentially legislative power[;] (B) … that Congress through 47 U.S.C. § 254 may have delegated legislative power to FCC because it purported to confer upon FCC the power to tax without supplying an intelligible principle to guide FCC’s discretion[;] (C) … that FCC may have impermissibly delegated the taxing power to private entities[; and] (D) … that we need not definitively answer either delegation question because even if § 254 contains an intelligible principle, and even if FCC was permitted to enlist private entities to determine how much universal service tax revenue it should raise, the combination of Congress’s broad delegation to FCC and FCC’s subdelegation to private entities certainly amounts to a constitutional violation.”
  • Judge Elrod concurred in full. “I write separately to say that I would go one step further and address the lawfulness of each individual delegation. For the reasons explained in the majority’s thorough opinion, Congress’s delegation of legislative power to the FCC and the FCC’s delegation of the taxing power to a private entity each individually contravene the separation of powers principle that undergirds our Constitutional Republic.”
  • Judge Ho concurred, to cast the issue as one of an existential threat to the nation: “[T]he threats to democracy presented by the administrative state are not inadvertent, but intentional—a deliberate design to turn consent of the governed into an illusion. … We devote significant energy and resources to securing the right to vote for every citizen. But that right matters only if our elected officials matter. There’s no point in voting if the real power rests in the hands of unelected bureaucrats—or their private delegates. If you believe in democracy, then you should oppose an administrative state that shields government action from accountability to the people.”
  • Judge Stewart dissented. “The majority’s exhaustive exegesis about policy, history, and assorted doctrines does not eclipse the consistent holding of three sister circuits that have addressed constitutional challenges to Section 254. All have held it constitutional under the intelligible principle test. The majority has created a split in a sweeping opinion that (1) crafts an amorphous new standard to analyze delegations, (2) overturns—without much fanfare–circuit precedent holding that this program collects administrative fees and not taxes, (3) blurs the distinction between taxes and fees, and (4) rejects established administrative law principles and all evidence to the contrary to create a private nondelegation doctrine violation.”
  • Judge Higginson dissented. “[A]ccording to the majority, when Congress provides an intelligible principle to channel agency discretion (constitutional) and a private entity performs calculations under the agency’s supervision (also constitutional), it becomes—pursuant to an undefined, unannounced, and unprecedented test—unconstitutional. Make no mistake, there is nothing narrow about this ruling. This decision invites lower courts to leapfrog the Supreme Court; creates a split with all other circuits to have considered the issue; ignores statutory criteria and regulations; and upends the political branches’ decades-long engagement with each other, industry, and consumers to address the technology divide.”

• Taylor v. Root Insurance Co., 23-50667, appeal from W.D. Tex.
  • Southwick, J. (Southwick, Duncan, Kernodle, by designation), insurance
  • Affirming district court judgment that automobile insurer’s actual cash value total-loss settlement did not require the insurer to also pay the equivalent of what sales tax would be on the sale of the automobile.

Unpublished

• U.S. v. McIntosh, 23-20275, appeal from S.D. Tex.
  • per curiam (Haynes, Higginson, Douglas), criminal, sentencing, restitution
  • Affirming convictions of conspiracy to receive and distribute child pornography and conspiracy to advertise child pornography, affirming 240-month sentence, but vacating restitution award and remanding with instructions to allow defendant the assistance of counsel in the final determination of the restitution amount.

• U.S. v. Alejandro-Galvan, 23-20303, appeal from S.D. Tex.
  • per curiam (Graves, Willett, Wilson), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• U.S. v. Anim, 23-20371, appeal from S.D. Tex.
  • per curiam (Barksdale, Haynes, Wilson), criminal, restitution
  • Affirming restitution award of $2,233,265.25 on conviction of operating an unlicensed money transmitting business.

• Settoon Towing, L.L.C. v. Shelley, 23-30578, c/w 24-30044, appeal from E.D. La.
  • per curiam (Davis, Willett, Oldham), negligence, group liability
  • Affirming dismissal of plaintiff oyster-fishers’ claims against 18 and gas-related defendants arising from spike in salinity levels and resulting oyster mortality. The Court held that the plaintiffs had only stated a conceivable claim against the 18 defendants and not a plausible claim, by not alleging what each of the defendants did to be responsible for the spike in salinity.

• U.S. v. Fortia, 23-30873, appeal from E.D. La.
  • per curiam (Graves, Willett, Wilson), criminal, sentencing
  • Affirming judgment on resentencing of defendant on remand from first appeal.

• U.S. v. Vargas, 23-50705, appeal from W.D. Tex.
  • per curiam (Jolly, Jones, Willett), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• Garcia-Pena v. Garland, 23-60528, petition for review of BIA order
  • per curiam (Higginbotham, Elrod, Southwick), immigration
  • Denying Honduran citizen’s petition for review of BIA order dismissing her appeal from an order of an Immigration Judge ordering her removed and denying her application for, inter alia, asylum and withholding of removal.