United States Telecom Ass'n v. FCC - 360 U.S. App. D.C. 202, 359 F.3d 554 (2004)

Rule:

Separation of Powers, Constitutional Controls. When a statute delegates authority to a federal officer or agency, subdelegation to a subordinate federal officer or agency is presumptively permissible absent affirmative evidence of a contrary congressional intent. But the cases recognize an important distinction between subdelegation to a subordinate and subdelegation to an outside party. The presumption that subdelegations are valid absent a showing of contrary congressional intent applies only to the former. There is no such presumption covering subdelegations to outside parties. Indeed, if anything, the case law strongly suggests that subdelegations to outside parties are assumed to be improper absent an affirmative showing of congressional authorization.

Facts:

Petitioner incumbent local exchange carriers (ILECs) filed (1) mandamus petitions arguing that respondent Federal Communications Commission's order for unbundling telecommunications network elements violated the court's decision in a prior action, and (2) a petition for review of the order. Competitive local exchange carriers (CLECs), state commissions, and a state utility consumer advocate association petitioned for review in other circuits. Section 251(c)(3) of the Act imposes on each ILEC the duty to provide any requesting telecommunications carrier with access to network elements on an unbundled basis at any technically feasible point on rates, terms, and conditions that are just, reasonable, and nondiscriminatory in accordance with the requirements of this section and section 252 of this title. The Commission made a nationwide finding that CLECs are impaired without unbundled access to ILEC switches for the mass market, consisting of residential and relatively small business users. This finding was based primarily on the costs associated with "hot cuts,” which must be performed when a CLEC provides its own switch Order P P 464-75. Apparently, the Commission, concerned that a blanket nationwide impairment determination might be unlawfully overbroad in light of the record evidence of substantial market-by-market variation in hot cut costs, delegated authority to state commissions to make more nuanced and granular impairment determinations. The FCC acknowledged that § 251(d)(2) instructed "the Commission" to determine which network elements shall be made available to CLECs on an unbundled basis. However, it claimed that agencies have the presumptive power to subdelegate to state commissions, so long as the statute authorizing agency action refrains from foreclosing such a power. Given the absence of any express foreclosure, the Commission argued that its interpretation of the statute on the matter of subdelegation is entitled to deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984). It further claimed that its interpretation was reasonable given the state commissions' independent jurisdiction over the general subject matter, the magnitude of the regulatory task, and the need for close cooperation between state and federal regulators in this area.

Issue:

Was the Commission’s subdelegation of authority to the state commissions lawful?

Answer:

No.

Conclusion:

The Commission's position is based on a fundamental misreading of the relevant case law. When a statute delegates authority to a federal officer or agency, subdelegation to a subordinate federal officer or agency is presumptively permissible absent affirmative evidence of a contrary congressional intent. When an agency delegates authority to its subordinate, responsibility--and thus accountability--clearly remain with the federal agency. But when an agency delegates power to outside parties, lines of accountability may blur, undermining an important democratic check on government decision-making. See NARUC, 737 F.2d at 1143 n.41; cf. Printz v. United States, 521 U.S. 898, 922-23, 138 L. Ed. 2d 914, 117 S. Ct. 2365 (1997). Also, delegation to outside entities increases the risk that these parties will not share the agency's "national vision and perspective," Stanton, 54 F. Supp. 2d at 20, and thus may pursue goals inconsistent with those of the agency and the underlying statutory scheme. In short, subdelegation to outside entities aggravates the risk of policy drift inherent in any principal-agent relationship. The fact that the subdelegation in this case is to state commissions rather than private organizations does not alter the analysis. Although United States v. Mazurie, 419 U.S. 544, 42 L. Ed. 2d 706, 95 S. Ct. 710 (1975), noted that "limits on the authority of Congress to delegate its legislative power are less stringent in cases where the entity exercising the delegated authority itself possesses independent authority over the subject matter," that decision has no application here: it involved a constitutional challenge to an express congressional delegation, rather than an administrative subdelegation, and the point of the discussion was to distinguish the still somewhat suspect case of congressional delegation to purely private organizations.