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Case number 23.1091, Consumers Research Et al.

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Petitioners versus Federal Communications Commission and United States of America.

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Mr. Kelsen for the petitioners, Mr. Carr for the respondents.

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Good morning.

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May it please the court?

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Jared Kelsen for petitioners.

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I'd like to reserve four minutes.

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Each year, the FCC passively authorizes the collection of billions of dollars for telecommunication carriers from their customers and their customers for the Universal Service Fund.

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The money is then used to subsidize telecommunication services across the United States.

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The amount dwarfs the annual appropriation for the FCC many times over.

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To give perspective, the Universal Service Fund budget for the second quarter of 2023 at issue in this case

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was $1.95 billion, which alone was roughly four times the FCC's appropriation for the whole year.

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This funding mechanism is categorically unique, and it's premised on vague definitions of universal service and universal service principles, which the FCC and numerous courts have concluded are aspirational only.

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As Judge Newsom recently wrote, they provide no meaningful constraint, but confer frontline and law and policy making power on the agency.

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Such unbounded authority violates the non-delegation doctrine.

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Since you mentioned Judge Newsom's opinion, can we start there?

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Sure.

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And particularly on the private non-delegation issue, he said that USAC has little actual discretion because all the contribution calculating formulas are fixed by FCC regulation.

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Do you have a reason why you think he was not correct about that?

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I think that the guidance that is given by the FCC to USAC still allows significant discretion to determine the amount of money to be appropriated.

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What areas do they exercise discretion over?

[00:02:04] Speaker 07:
Well, for example, the USAC is the entity that makes the

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the grants in the first place, because they're projecting how much they're going to allotting to the different entities.

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So even within the guidelines that the SEC has set forth, USAC still has discretion about whether they're going to be appropriating the money.

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So USAC, are you talking about the decision, OK, we should spend a total of, let's say, $10 billion this year?

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Or are you talking about, OK, this particular carrier should contribute this amount of money?

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My understanding of, oh, so.

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What do you think, Yusek?

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You said USAC does this.

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Which of those two?

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USAC is looking at the grants it expects to be making in the upcoming quarter and using that to calculate.

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Oh, so you're talking about disbursements, actually.

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Well, my understanding from the SEC's position is that the way that this is limited is they look at the disbursements they anticipate.

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and then they create a budget, and that USAC sends that budget to the FCC, and the FCC ministerially calculates what contribution factor will be necessary to provide that money to USAC for the grants.

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And Judge Newsom's separate opinion said he thinks that USAC's hands are tied, I think, in everything you just described, particularly in deciding the total amount of disbursements that should be made.

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So is he wrong?

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I think if it were the case, we would disagree with that.

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If that were the case.

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What's your, like the Missouri show me state, like show me where I can look to and see Judge Newsom was wrong about that.

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There's nothing in the guidelines that tells USAC who to give the money to or how much to give to the entity.

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To the extent that those guidelines or those regulations limit the total amount that USAC can collect, there's still a significant amount of discretion that USAC has to operate within that world.

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I think the most unique aspect of the situation that... The regulations that say it has to be proportionately distributed and everyone should only have to carry their equal share.

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So that seems like a pretty significant limitation on what they charge each person.

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I think it's just math.

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They're just doing the math and dividing it up.

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So those terms are are necessarily vague, but equitable is a vague term.

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The fact that the contribution factor is fluctuating so much each quarter is evidence that there's a lot of discretion is going into play here.

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I think it shows discretion.

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It just shows math numbers change and so math calculations.

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I mean, do they have the ability to say, hey, I really like you, company X. I'm not going to give you any charge this month.

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And I really hate you, company Y. I had terrible service with you a few years ago.

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I'm going to triple up what you have to pay.

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Is it that kind of discretion you're talking about?

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I think USEC has the ability to discern where it decides the need is.

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and then to allocate the funds accordingly.

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There's an appeal process on the back.

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I can't do what I said.

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That type of discretion in the regulations.

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As far as I'm aware, that sort of who you like and who you don't is not counted in the regulations.

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Who has to pay how much?

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They can't do it in any way other than mathematical fact.

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According to the contribution factor?

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Is that the question?

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What I'm asking you is when they do the math and then figure out who, here's our contribution factor, now that means this company owes this and this company owes that much.

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That part is based on the revenues.

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Right, so that's not discretionary.

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No, well, no, it is not.

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It's getting to the contribution factor where the problem is.

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I think the biggest indication that there's a non-delegation issue here is the contribution.

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In this case, it's 29%.

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But can you define it?

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So a decision is made for, let's say, the first quarter that universal service will require $4 billion.

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I think that's not the contribution rate, right?

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That's not the contribution rate.

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OK.

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The contribution rate is, in order to reach $4 billion this quarter, we're going to need to take out a certain amount of money from each carrier.

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And that rate that decides what each carrier will pay is the contribution rate.

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This is a question.

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That's correct.

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Okay.

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And who takes a first shot at deciding what the contribution rate is?

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The contribution rate is calculated by the office of the managing director at the FCC.

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But that calculation is a ministerial calculation based upon projections, based on how USAC projects its budget and expects to send its budget.

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It seems to me, and I don't think that this necessarily hurts you, that although the contribution rate is kind of probably being decided

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the FCC itself.

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The contribution rate is going to be based on the total amount of funds that universal service requires for that core.

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Correct.

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And the decision on what the total amount of funds for universal service requires

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that first cut decision is being made by USAC.

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That is correct.

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I'm going to ask the FCC if they, he's nodding yes.

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I apologize if I misunderstood your question earlier, but that is a correct explanation.

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And then that leads to the question, you know, let's say that the USAC said, well, last quarter it was 4 billion, but we think this quarter it should be 4.5 billion.

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Is there, and let's say

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Is it possible that that could be wrong?

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Is there a reg that you would compare that to?

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By what standard is USAC making that decision?

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I think they're making it according to these general ideas about universal service.

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I think the important thing to recognize here is that that quarterly contribution factor, which is calculated based on USAC's projections,

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is subsequently deemed approved by the FCC if it takes no action within 14 days.

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And that is, I think, is the crux of this problem, is that the FCC is rubber stamping these things through.

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Deeming as- I think I, maybe you just answered this, but it makes sense that the FCC would rubber stamp it if USAC isn't really bound by FCC specific guidance.

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If USAC is bound by FCC-specific guidance and they got out of line, then, you know, FCC would kind of crack down on that.

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And your point, I think, is that the FCC has not given them specific guidance on what you're calling the contribution factor.

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I'm going to call it the total amount of money that's spent that quarter.

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You're saying FCC has not given them specific guidance.

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About the total budget, projected budget, that is correct.

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I want to ask them, FCC, about that too.

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So what's what's vague about universal service.

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This phrase has been around for 90 years.

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Do we know what you what what's that you keep saying these things are vague.

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What's vague about it.

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What's unconstitutionally about it.

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So I think that, first off, as an initial cut, the term universal service has no sort of objective limitation.

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It's a very open-ended, vague phrase that has left the discretion of the agency to define.

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Is it unconstitutional when universal service was implemented by the program with AT&T?

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Are you talking before the 1996 Act?

[00:09:37] Speaker 02:
Yes.

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That was implementing, collecting money to subsidize, to provide universal service.

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Was that an unconstitutional delegation to AT&T, a private entity?

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I think that the situation was different back then.

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It was different, but was it an unconstitutional delegation because universal service is too vague?

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What I'm saying is that it did not raise the same non-delegation issues.

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Why?

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If universal service is vague and unknowable, why wouldn't it?

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Because at the time, those decisions were being made in the private market.

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I think to- Excuse me.

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What was being made in the private market?

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What, universal services?

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That would seem to be Congress delegated to private market.

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I don't know why you wouldn't have a delegation problem there.

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I mean, this phrase has been around for a long, long time, including through that period.

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And I didn't see any delegation challenges.

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The private entity AT&T was imposing costs on users, certain users, to fund other users to obtain universal service.

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Prior to 1906, a significant portion of the universal service program was prices that were being set by the FCC itself.

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And that was allowed for the cross-subsidization.

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It was a totally different regime than we have now.

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I want to get back to my question again.

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You said the problem here is term universal services vague.

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That doesn't impose limits.

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So it was vague even under the AT&T scheme?

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Yes, it was vague under the AT&T standard.

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The mechanism which was being implemented was different.

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Why wasn't there an unconstitutional delegation?

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If you said it doesn't matter if it was FCC or AT&T that was trying to figure out what it meant and how much to collect, I don't understand why your argument wouldn't equally indict that program.

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To the extent universal service was being implemented by private companies, it does not implicate the non-delegation doctrine.

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I'm sorry, but it's so under the you just said under the direction of the FCC for delegation from Congress.

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This may just be my thickness, but I don't understand why under your theory of non delegation.

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You may maybe you think the CC road tighter heard on AT&T, but that doesn't answer the non delegation question.

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There was nothing more specific for Congress than there is here on Universal Service, right?

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To the extent the FCC had the same discretion, under the old program it would have raised similar concerns, yes.

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Did they have the same discretion?

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I believe so.

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Okay.

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It just seems odd that this thing's been around for almost 100 years and someone now is just challenging.

[00:12:28] Speaker 07:
Well, the mechanism by which the FCC was implementing, it didn't extract money.

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And in this case, we're

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Wait, wait, wait.

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It most certainly did.

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It imposed essentially a fee or a tax, however you want to describe it, on urban customers to subsidize customers who were rural or yet didn't have access to service.

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Am I misunderstanding that?

[00:12:48] Speaker 07:
The old system was based upon price fixing by the FCC that set standardized rates.

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It wasn't about introducing some sort of tax or fee that would then extract money from some consumers and give it to an agency to redistribute.

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So am I wrong in my understanding that the way it worked was AT&T would impose an additional charge?

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on, for example, urban consumers of their telephone service and use that money, the FTC, to provide service, subsidized service by AT&T to non-urban customers?

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I could be completely wrong.

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My understanding of the old system is the FCC was setting rates across the board, that it wasn't setting fees that were tacked on and then that were cross-subsidizing.

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Was there more direction from Congress as to what those rates should be to accomplish universal service?

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Was there any more direction from Congress or was there less?

[00:13:39] Speaker 07:
I am not entirely sure, but I think that it was probably less.

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It would still raise the same concerns.

[00:13:46] Speaker 02:
I was trying to understand the implications of your private delegation arguments.

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So the Medicare program uses private insurance companies, generally called fiscal intermediaries.

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I think they've changed the name recently.

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But I'm going to use fiscal intermediaries to do endless calculations, computations, and determinations of the amounts of people

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are going to get from Medicare to hear their appeals and to even make initial decisions on challenges.

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Is that an unconstitutional private delegation too?

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Because they actually get to hear the first round appeal of a challenge to a disbursement.

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We have an adjudicatory role which doesn't happen here.

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Is that unconstitutional too under your theory?

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I can't claim to be an expert on the Medicare.

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regime that Congress has implemented.

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What I can offer is that this court and U.S.

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Telecom made pretty clear that an agency can't simply rubber stamp the actions of private entities, that they have to actually independently exercise their reviewing authority and come to their own conclusion.

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Okay, but that, so is your, I'm just trying to understand your argument, is your private non-delegation argument

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is nothing more than a rubber stamp one.

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Otherwise, it was perfectly fine if we actually were to find record evidence that the FCC has in fact reviewed and altered USAC determinations.

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I had thought there was more to it.

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I had thought it was sort of a, it was not just that, but it was also too much delegation from Congress and then diluted even further by delegating to private entities.

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But am I wrong?

[00:15:27] Speaker 07:
The private non-delegation issue here is aggravated by the fact that the delegation from Congress has been so vague.

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But to finally tune exactly, I think, the question to your answer, the deemed approved RET mechanism is unconstitutional if the FCC had independently reviewed the data before them.

[00:15:46] Speaker 02:
They're deeming approved a number that they calculated.

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They're not deeming approved a number that USAC provided.

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They're deeming approved, kind of a weary, but they deem approved a number that the FCC calculated.

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So how is that improper?

[00:16:01] Speaker 07:
Because the number that the FCC calculated

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incorporated wholesale a projection from a private entity that was not reviewed.

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There's no evidence in the record that the FCC looked at the budget projections, that they agreed with them, that they made that determination on their own and then use that to calculate the contribution factor.

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Instead, they've offloaded that function to a private entity

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Who looks at your theory, though, then CMS for Medicare and Medicaid services is going to have to go back and double check the math of every physical intermediary on every competition they do for every Medicare recipient in this country.

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Otherwise, it will be rubber stamping.

[00:16:40] Speaker 07:
Again, I'm very hesitant to express expertise on the Medicaid regime.

[00:16:44] Speaker 02:
You have to have expertise.

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I'm not an expert on it either, but this is what happens.

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Fiscal intermediaries, that's what they do.

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They're intermediaries.

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They make the first round determinations and they can be appealed.

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Of course, the first appeal is decided by the intermediary and then that can be appealed to

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CMS.

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And so my question is, is it required that they go back and check, and it seems to be what you're arguing here, that they need to go back and check the math and computations of USAC in order to avoid this private non-delegation problem.

[00:17:19] Speaker 07:
That is correct.

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The FCC must review.

[00:17:21] Speaker 02:
And so the implications of your argument are going to reach pretty

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pretty far into other.

[00:17:27] Speaker 07:
I think that there are 40 years of precedent saying that rubber stamping is unconstitutional.

[00:17:31] Speaker 07:
What case do you have in mind that holds that?

[00:17:35] Speaker 05:
So the idea being, assume that the FCC's review authority here is just purely formal.

[00:17:43] Speaker 05:
Just going back to cases like Adkins, the problem before was a private entity was posing and enacting binding regulations, and the fix was give the agency

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authority to reject or modify that.

[00:17:58] Speaker 05:
There wasn't a further inquiry into how often the agency modified what the private entity was doing.

[00:18:05] Speaker 05:
So what, is there a case that actually engages in that type of analysis?

[00:18:11] Speaker 07:
So, I mean, I would start back with, for example, with the Sierra Club case that we cited, but up to like, for example, in 2008 in, or sorry, in 2004 in this court's decision in U.S.

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Telecom,

[00:18:24] Speaker 07:
The court said agencies may seek advice and recommendations from outside parties, but they may not rubber stamp decisions made by others under the guise of seeking their advice.

[00:18:32] Speaker 07:
I think that asking someone for their computations, for their assessment of data, it would fall under that broad category.

[00:18:38] Speaker 07:
Otherwise, it would allow... The point is that someone here is exercising authority.

[00:18:49] Speaker 07:
that is affecting the private rights of US citizens.

[00:18:51] Speaker 07:
And the agency is taking that face value, rubber stamping it through, and it's imposing significant burdens on members of society.

[00:18:57] Speaker 07:
Under the Constitution, the agency has to make that decision.

[00:19:01] Speaker 02:
How do you define private rights?

[00:19:03] Speaker 02:
You just referenced private rights.

[00:19:04] Speaker 02:
This is a heavily regulated industry that operates under a license from the FCC.

[00:19:10] Speaker 02:
They have no right to engage in telecommunications without that license.

[00:19:13] Speaker 02:
So define private rights for me.

[00:19:19] Speaker 07:
I think, at least in this case, the ability to impose fees on a marketplace would implicate their pocketbook.

[00:19:25] Speaker 02:
It can't be just this case.

[00:19:27] Speaker 02:
Are you bringing an as-applied challenge?

[00:19:29] Speaker 07:
Well, we are only challenging the FCC's program here.

[00:19:32] Speaker 02:
Are you bringing an as-applied challenge or a facial challenge to the non-delegation?

[00:19:38] Speaker 07:
We're bringing an as-applied challenge to the 2023 second quarter contribution factor.

[00:19:43] Speaker 07:
And as part of that challenge, this court's precedent and others allow the parties to raise challenges to the underlying statutory and constitutional authority of the agency's tax.

[00:19:53] Speaker 02:
And so you're not, how would one write an opinion in this case that would find an as-applied error here without taking down the entire scheme?

[00:20:04] Speaker 02:
How would you write that?

[00:20:11] Speaker 07:
This court's opinion only needs to address the 2023 second quarter.

[00:20:14] Speaker 02:
No, no, no, no, no.

[00:20:15] Speaker 02:
That's just not how these things work, all right?

[00:20:18] Speaker 02:
What is peculiar?

[00:20:20] Speaker 02:
I know you say in your reply brief, well, they didn't change the numbers from USAC this time.

[00:20:26] Speaker 02:
But that doesn't show rubber stamping.

[00:20:28] Speaker 02:
If we're only looking at this one quarter, you can't prove rubber stamping.

[00:20:32] Speaker 02:
You have no capacity.

[00:20:34] Speaker 02:
all your arguments about rubber stamping in your brief cover long periods of time.

[00:20:38] Speaker 02:
But you're telling us now to only look at the single event at which point we have no basis for finding rubber stamping.

[00:20:44] Speaker 02:
So I'm very confused as to this.

[00:20:48] Speaker 07:
The very nature of a deemed approved program is indicative of rubber stamping.

[00:20:56] Speaker 02:
But the very nature sounds like a facial challenge to me.

[00:20:59] Speaker 07:
The fact that the FCC has committed the same violation in other contexts may be true, and this court's decision may have implications for other quarters.

[00:21:09] Speaker 07:
which the FCC has considered?

[00:21:11] Speaker 02:
There's nothing as applied.

[00:21:13] Speaker 02:
I'm trying to figure out legally what is, because normally in an as applied constitutional challenge, one says, look, it could be perfectly constitutional as applied all these other times.

[00:21:22] Speaker 02:
But there's something about these peculiar facts in this case.

[00:21:25] Speaker 02:
That's what as applied is.

[00:21:27] Speaker 02:
I didn't read your argument to say all these other times, these other quarters,

[00:21:32] Speaker 02:
That can be perfectly constitutional, but there's something special about this quarter.

[00:21:36] Speaker 02:
And if I've misunderstood your argument, please help me to understand what is special about this quarter that creates a constitutional problem that other quarters in the scheme overall would not.

[00:21:49] Speaker 07:
All I can offer the court is what happened in this quarter.

[00:21:52] Speaker 07:
It may have implications for others, but looking about the facts... What happened in this quarter that's special, that's unique, constitutionally unique?

[00:22:02] Speaker 07:
The specific numbers and the contribution factor at issue are a unique application.

[00:22:06] Speaker 07:
That's what gave the parties standing to sue.

[00:22:08] Speaker 07:
That's what brought them before this court.

[00:22:11] Speaker 07:
If this court's decision has implications for other quarters, that might suggest a broader problem.

[00:22:17] Speaker 07:
But all I can offer the court is that in this case, there is no evidence in the record whatsoever that the commissioners actually reviewed the contribution factor, that they reviewed the projections by USAC, and that they came to their own independent determination that those were appropriate.

[00:22:32] Speaker 02:
And so it's rubber stamping.

[00:22:34] Speaker 02:
Because if it turned out that every other year of this program, they had reviewed them.

[00:22:43] Speaker 02:
And 50% of the time, they'd made some tweaks or changes.

[00:22:47] Speaker 02:
50% of the time, they hadn't needed to.

[00:22:50] Speaker 02:
And then you come here and pick out one quarter and say, aha, this is one they didn't need to ergo rubber stamping.

[00:22:58] Speaker 02:
Is that a plausible argument?

[00:23:00] Speaker 07:
I think it is a possible argument given the fact that there's no evidence in this record that the FCC reviewed this contract that the FCC commissioners reviewed this contribution factor or the underlying evidence that they didn't.

[00:23:09] Speaker 02:
I mean, we assume that agencies fulfill their legal that that's our starting assumption that agencies have properly executed their duties under the law and Constitution.

[00:23:19] Speaker 02:
So what evidence is there that they haven't?

[00:23:22] Speaker 07:
Well, when the petitioners raised the possibility that there were problems here, the FCC provided no additional evidence, but the commissioners had done that review.

[00:23:29] Speaker 02:
Okay, so absence of evidence does not mean a burden of proof.

[00:23:34] Speaker 07:
If your honor is looking for additional proof beyond that, then the history of the FCC not reviewing this.

[00:23:43] Speaker 02:
You raised these exact same challenges in a number of other circuits and laws.

[00:23:49] Speaker 02:
Why do you not face issue preclusion, raising those same arguments again in this court, since you haven't yet been able to identify anything particular to this quarter?

[00:24:02] Speaker 07:
Every time that the commission acts, it raises a new injury, and the parties are able to bring a challenge to that injury to the court.

[00:24:17] Speaker 03:
Go ahead.

[00:24:19] Speaker 03:
If you were to prevail here under the principle, the legal principles you're asserting, do you have a sense of how many other federal programs by that principle be unconstitutional delegations?

[00:24:43] Speaker 07:
I'm not aware of any other program that deems approved calculations that are wholly dependent upon the findings of private parties.

[00:24:52] Speaker 07:
So I can't point to any.

[00:24:56] Speaker 03:
I thought when I get my pay stub in Medicare, there's like a tax per cent.

[00:25:01] Speaker 03:
I think Congress has picked how much taxes I paid in Medicare.

[00:25:04] Speaker 02:
No, these are claims by hospitals for reimbursements or services.

[00:25:08] Speaker 03:
Sorry, go ahead.

[00:25:10] Speaker 03:
Well, I think on the disbursement side, there may be similarities with a lot of programs.

[00:25:14] Speaker 03:
I thought your main argument was on the contribution side, not who gets money, who has money taken away from them.

[00:25:24] Speaker 03:
Yes, and the assessments again.

[00:25:26] Speaker 03:
And I think what your answer to me was, this is an outlier program.

[00:25:31] Speaker 07:
Yes, I am not aware of any other agency that derives its funds, especially multiple times its own agency budget from private parties based on these projections by private entities.

[00:25:44] Speaker 03:
There's a CFPB case in front of the Supreme Court.

[00:25:47] Speaker 03:
They heard oral arguments already.

[00:25:48] Speaker 03:
They haven't issued the decision.

[00:25:49] Speaker 03:
It has to do with CFPB raising

[00:25:55] Speaker 03:
sort of determining its, arguably, allegedly determining its own budget.

[00:25:59] Speaker 03:
Assume CFPB wins that case.

[00:26:03] Speaker 03:
Actually, Mr., are you familiar, it's okay, are you familiar with the case?

[00:26:06] Speaker 03:
I'm generally familiar.

[00:26:07] Speaker 03:
Okay, if CFPB wins that case, does that hurt your argument here?

[00:26:15] Speaker 07:
The CFPB's funding is pegged to a statutory percentage that Congress has provided.

[00:26:20] Speaker 07:
There's no statutory percentage here.

[00:26:21] Speaker 07:
So that's the easiest distinction.

[00:26:24] Speaker 03:
What's the most sort of outlandish, expansive program that you think FCC or USAC, put aside distinction for now, could call an aspect of universal service?

[00:26:41] Speaker 03:
And then I'm gonna ask the government whether they think the statute allows the FCC to do.

[00:26:47] Speaker 03:
Well, as far as the statute goes,

[00:26:49] Speaker 03:
And part of a lot of your argument and part of your discussion with judgment that was their universal service is a clearly defined easily knowable concept or whether it's so vague that.

[00:27:00] Speaker 03:
you know, the FCC could say, you know, have to fund a missile defense system as part of universal service in order to protect everyone's internet from getting, you know, bombed or something.

[00:27:12] Speaker 03:
I think that would be outlandish.

[00:27:14] Speaker 03:
That would not be part of universal service.

[00:27:16] Speaker 03:
So my question for you is, what's the most extreme thing the FCC could do that would still be within the statutory concept of universal service?

[00:27:34] Speaker 07:
I don't know that I'm prepared to say what the most extreme is, but there has been public discourse about whether or not the SEC can extend charges to video streaming services to fund the Universal Service Fund.

[00:27:45] Speaker 03:
Video streaming services?

[00:27:47] Speaker 03:
Oh, so like Netflix?

[00:27:48] Speaker 03:
That's my understanding.

[00:27:49] Speaker 03:
And then, so the idea is maybe they would say rural areas, we need urban areas to pay the cost of rural areas getting Netflix.

[00:27:59] Speaker 07:
The FCC has already expanded voice analog services to broadband or telecommunication services, which originally were voice analog services, now to have broadband communication or broadband internet.

[00:28:12] Speaker 07:
So the point is that if the FCC determines that something has broad discretion to redefine universal service, to define what is encompassed within universal service, and it keeps reaching further and further.

[00:28:26] Speaker 07:
If you look at the history of this program,

[00:28:29] Speaker 07:
the universal service fee that quarterly contribution rate started out around.

[00:28:33] Speaker 03:
Right now I can now it's huge.

[00:28:38] Speaker 03:
Let me go to rural cellular to get and that opinion says number one this is not a tax number 2 there's an intelligible principle.

[00:28:49] Speaker 03:
The government won that case.

[00:28:54] Speaker 03:
Our court had said the opposite of those two statements.

[00:28:58] Speaker 03:
Let's just take the second statement.

[00:29:00] Speaker 03:
Our court had said the opposite of there is an intelligible principle, had instead said there is not an intelligible principle for this delegation.

[00:29:08] Speaker 03:
The government would have lost the case, because it would have been an unconstitutional delegation.

[00:29:14] Speaker 03:
Right?

[00:29:15] Speaker 03:
I don't think that's debatable.

[00:29:16] Speaker 03:
Correct.

[00:29:17] Speaker 03:
OK.

[00:29:18] Speaker 03:
So I think that means it was a holding, and we're bound by it, because I think

[00:29:25] Speaker 03:
A test for a holding is if the court could say the opposite of a statement and the judgment would be the same, fine, that's dicta.

[00:29:36] Speaker 03:
But if the court saying the opposite of a statement would, by necessity, change the judgment in the case, that's a holding.

[00:29:45] Speaker 03:
Maybe that's an overly simplistic test for holding versus dicta.

[00:29:48] Speaker 03:
But what do you think of that test?

[00:29:51] Speaker 07:
I think that in rural cellular too, the parties had not argued.

[00:29:56] Speaker 07:
Would you just want a question on that?

[00:29:57] Speaker 07:
Yeah, just in general, legal principles.

[00:29:59] Speaker 03:
And I'll give you a chance to talk specifically about rural cellular too.

[00:30:01] Speaker 03:
But I think that my test for holding indicted is a good test.

[00:30:06] Speaker 03:
It wouldn't be just applicable in this case.

[00:30:07] Speaker 03:
It would be applicable in every case we decide forever.

[00:30:09] Speaker 07:
I think that the test would require a little more nuance sometimes after the court has already resolved the case.

[00:30:16] Speaker 07:
It goes on to add additional factors or make additional statements that are not necessary to resolve it, even if they could have on their own.

[00:30:23] Speaker 03:
But here it was necessary to say whether the federal action was constitutional or not, because if it had been unconstitutional, the government would have had to lose that case.

[00:30:38] Speaker 07:
Correct the problem is in the cut area.

[00:30:41] Speaker 07:
The problem is that in rural so to the parties hadn't actually briefed a non-delegation problem under the intelligible principal test.

[00:30:48] Speaker 07:
They had focused purely on a clear statement rule.

[00:30:50] Speaker 07:
The Supreme Court in McCutcheon said pretty clearly that I remember the McCutcheon quote.

[00:30:55] Speaker 03:
I thought it was a good quotes helpful for you.

[00:30:57] Speaker 03:
I think star decisis here works.

[00:31:00] Speaker 03:
Our version of horizontal stare decisis works differently than the Supreme Court's version of horizontal stare decisis.

[00:31:06] Speaker 03:
The Supreme Court always sits the equivalent of en banc, so they're always at liberty to overrule one of their holdings.

[00:31:12] Speaker 03:
I think a three-judge panel here is not at liberty to overrule a three-judge panel precedent, so I'm not sure the McCutcheon quote gets you all the way there.

[00:31:19] Speaker 07:
The petitioner's position in this case is that the arguments were not raised in that case, and that the party should not be foreclosed from raising them here.

[00:31:27] Speaker 07:
If this panel determines that rural cellular two, that the statement about the non-delegation doctrine was a whole thing, then that would resolve the first issue in this case.

[00:31:36] Speaker 02:
What would it be?

[00:31:37] Speaker 02:
Because the argument there was there was an unconstitutional delegation of the taxing power.

[00:31:42] Speaker 02:
And the first thing, of course, well, it wasn't a tax, it was a fee.

[00:31:47] Speaker 02:
But that wouldn't answer whether it was an unconstitutional delegation of the taxing power.

[00:31:54] Speaker 02:
We just say,

[00:31:55] Speaker 02:
It was a fee.

[00:31:56] Speaker 02:
And then the court said in any event, there's an intelligible principle here.

[00:32:01] Speaker 02:
So there are two alternative holdings, right?

[00:32:03] Speaker 02:
The second one wasn't necessary, but there were two alternative holdings.

[00:32:08] Speaker 03:
I think that's a friendly question to you.

[00:32:11] Speaker 07:
Well, they were.

[00:32:13] Speaker 07:
The fact that we're alternative holding is the second one was not necessary.

[00:32:16] Speaker 02:
Not under our second preference precedent.

[00:32:17] Speaker 02:
We're quite clear that there's two alternative holdings for a ruling.

[00:32:21] Speaker 02:
They're both binding on another panel.

[00:32:23] Speaker 07:
Then again, I would just raise the fact that the arguments, that the parties never argue the intelligible principal test.

[00:32:28] Speaker 07:
They were arguing about a clear statement rule.

[00:32:30] Speaker 07:
And so the court was not faced with the difference.

[00:32:32] Speaker 02:
The court in the process.

[00:32:34] Speaker 02:
You've done excellent briefing in this case by both sides.

[00:32:37] Speaker 02:
Sometimes we don't always get the best briefing, but there are actually questions embedded in legal questions presented to us that are necessary for us to resolve to decide the case.

[00:32:46] Speaker 02:
At least I'm not aware of a principle that says if they didn't brief it, but the court determined it necessary to make a holding, it no longer has stare decisis.

[00:32:58] Speaker 02:
In fact, for every stare decisis case, we have to go back and read the briefs.

[00:33:02] Speaker 02:
Is that right?

[00:33:04] Speaker 07:
I think that if the parties raise that proposition and can point to where in the briefs it was missing, that that.

[00:33:09] Speaker 02:
For every Sarah Decises case, I have to go back and read the briefs in that case.

[00:33:12] Speaker 02:
I can't trust the panel.

[00:33:14] Speaker 07:
I think when the issue was not raised by the parties, I think that it raises the possibility.

[00:33:18] Speaker 02:
Maybe the court thought it was necessary to determine.

[00:33:20] Speaker 07:
If this court determines that that was a binding holding, then that would result in an issue.

[00:33:25] Speaker 02:
The court thought it was necessary to resolve, even though the briefing wasn't.

[00:33:29] Speaker 07:
I think, I think that if the court had gone into some sort of significant discussion about why it satisfied the intangible principle tasks.

[00:33:34] Speaker 02:
The question discussion wasn't long enough.

[00:33:36] Speaker 07:
It was a one sentence passing reference after the court had argued in any event.

[00:33:41] Speaker 02:
So if we deem it as an alter, it's not an act.

[00:33:44] Speaker 02:
And in any event, it's usually how any event is used, there's an intelligible principle.

[00:33:48] Speaker 02:
So even if it were a tax, it would be an intelligible principle guiding it here.

[00:33:55] Speaker 02:
So that's not just loose commentary.

[00:34:01] Speaker 07:
Under this circuit's panel rule, if you determined that that was a whole thing that abides this panel, then that would resolve the issue.

[00:34:11] Speaker 05:
all my questions were asked.

[00:34:14] Speaker 02:
I'm sorry.

[00:34:15] Speaker 05:
No, that's great.

[00:34:16] Speaker 03:
Thank you.

[00:34:19] Speaker 02:
Thank you very much for your time.

[00:34:19] Speaker 02:
We'll give you some time, everybody.

[00:34:38] Speaker 04:
Good morning, your honors.

[00:34:39] Speaker 04:
May it please the court?

[00:34:40] Speaker 04:
My name is James Carr, and I represent the Federal Communications Commission.

[00:34:44] Speaker 04:
Let me start with Rural Cellular 2.

[00:34:48] Speaker 04:
Just so you understand the background of that case, the petitioners in that case were making an argument under the Supreme Court's decision in NCTA that there needed to be a narrowing construction

[00:35:01] Speaker 04:
of Section 254.

[00:35:03] Speaker 04:
Their position was that the FCC's reading of Section 254 in that case would have resulted in unconstitutional delegation.

[00:35:11] Speaker 04:
They argued that to avoid that situation, the court, under the doctrine of constitutional avoidance, should adopt petitioners reading Section 254.

[00:35:25] Speaker 04:
The commission in its brief responded in a couple of ways.

[00:35:29] Speaker 04:
First, it said,

[00:35:32] Speaker 04:
This isn't a tax, so it doesn't get involved with the whole issue of taxing.

[00:35:39] Speaker 04:
But more importantly, regardless, the commission's interpretation doesn't raise constitutional issues because there is an intelligible principle in the statute.

[00:35:50] Speaker 04:
So the parties did brief, to some extent, the intelligible principle test.

[00:35:55] Speaker 04:
The commission specifically raised it.

[00:35:58] Speaker 04:
And the court, in Judge Ginsburg's opinion,

[00:36:01] Speaker 04:
addressed both issues.

[00:36:02] Speaker 04:
First, saying this wasn't a tax.

[00:36:05] Speaker 04:
Second, even if it was, under the Supreme Court Skinner decision, the same intelligible principle test applies to taxing allegations as to all other delegations.

[00:36:16] Speaker 03:
Can I ask you some questions along the lines of what I was asking the petitioner?

[00:36:21] Speaker 03:
I think if I remember right, universal service includes

[00:36:30] Speaker 03:
fast internet for schools?

[00:36:33] Speaker 04:
It does, it does include internet access for schools and libraries.

[00:36:38] Speaker 04:
That's correct.

[00:36:39] Speaker 03:
So, and I assume that if the internet service moved at the speed of mud, you know, like in the 1998 days of, you know, dial-up, that would probably not be good enough for the, for the schools.

[00:36:58] Speaker 04:
I think that's right, Your Honor.

[00:36:59] Speaker 04:
The Universal Service Guarantee, as Judge Pilger noted in the 2018 AT&T decision, is dynamic, and therefore the Commission takes account of technological changes.

[00:37:13] Speaker 03:
So who decides, when it comes to Internet for schools, who decides how fast is fast enough?

[00:37:20] Speaker 03:
Is it the FCC or is it USAC?

[00:37:23] Speaker 04:
Well, the FCC would make policy judgments regarding

[00:37:27] Speaker 04:
the kinds of service that would be provided to the schools and what would be suitable.

[00:37:36] Speaker 04:
It's also important to recognize, Your Honor, there are extensive rules and regulations governing the schools and libraries program that require each entity that's receiving discounted service to put out for competitive bidding.

[00:37:52] Speaker 04:
to all providers, the possibility of providing service and then to select the most cost-effective provider.

[00:38:03] Speaker 03:
And you may not know this, there's no reason to know this off the top of your head, but would it be possible to find out which FCC regulation says the internet service to the schools has to be a certain speed

[00:38:22] Speaker 04:
There may well be a regulation.

[00:38:24] Speaker 04:
I don't know off the top of my head that there's a regulation that specifies the amount of speed.

[00:38:31] Speaker 03:
What counts as universal service?

[00:38:38] Speaker 04:
Yes.

[00:38:40] Speaker 03:
Does the statute answer that?

[00:38:44] Speaker 04:
I think the statute does answer that, Your Honor, and I think you have to read the statute.

[00:38:48] Speaker 04:
The intellectual principle

[00:38:51] Speaker 04:
case law talks about how you don't just read the text of the statute in isolation.

[00:38:57] Speaker 04:
You look at the context, you look at the purpose of the statute, the underlying factual background.

[00:39:04] Speaker 04:
That's been the test for many decades, and this court has repeatedly applied that test.

[00:39:09] Speaker 04:
So here in 1996, Congress decided to open up

[00:39:15] Speaker 04:
local telecommunications markets to competition.

[00:39:18] Speaker 04:
As a result, the existing universal service program couldn't go on as it had before because it relied largely on implicit subsidies.

[00:39:26] Speaker 03:
What statutory standard would a court review if someone said the FCC has deemed something part of universal service, but we don't think it's part of universal service?

[00:39:42] Speaker 04:
Well, I think what you would look at is 254C talks about the definition of universal service.

[00:39:50] Speaker 04:
And it says that it is an evolving level of telecommunication services.

[00:39:55] Speaker 04:
So there's one limit right away.

[00:39:57] Speaker 04:
It's got to be a telecommunication service in order to qualify under section 254C1.

[00:40:02] Speaker 03:
Would a free cell phone for everyone in rural America be a telecommunication service?

[00:40:13] Speaker 04:
That would go more to equipment than to service.

[00:40:17] Speaker 04:
I think that raises an interesting question.

[00:40:21] Speaker 04:
That raises an interesting question.

[00:40:24] Speaker 04:
I think the commission, before it decided to authorize that sort of thing, would have to consider, among other things, the cost of providing that.

[00:40:32] Speaker 04:
And we've talked about that in the brief, that affordability, affordability.

[00:40:37] Speaker 04:
So the answer is made.

[00:40:40] Speaker 04:
I suppose it's maybe, but it is, but again, but again, your honor, it's, it's, it's subject to judicial review.

[00:40:46] Speaker 04:
The question here, remember what would we be reviewing by what standard would we be reviewing that?

[00:40:51] Speaker 04:
Well, you'd be reviewing the, the, the court talked about the standard under rural cellular one and, and AT&T that the commission can't just allow the system to grow unchecked because if it does, it creates affordability problems.

[00:41:11] Speaker 04:
or the people who are paying subsidies.

[00:41:14] Speaker 03:
And so there's, you would want an article three judge to be deciding that economics question.

[00:41:24] Speaker 04:
Well, under the, under the standards provided in, in the statute, affordability, you could see a situation services product service and products are different.

[00:41:36] Speaker 04:
It could, yes, that's right, your honor.

[00:41:38] Speaker 02:
It could certainly say that.

[00:41:40] Speaker 02:
The FCC thus far required, I don't have any idea, required the provision of iPads and everything?

[00:41:48] Speaker 04:
No, no.

[00:41:49] Speaker 02:
They didn't provide the provision of any equipment other than the stuff that's needed, the wires and stuff.

[00:41:54] Speaker 04:
It's required internal connections and it's required internet access.

[00:42:00] Speaker 04:
So it's required the transmission, but it hasn't required

[00:42:04] Speaker 04:
It hasn't required iPads or other facilities.

[00:42:06] Speaker 03:
Satellite internet service, a service, telecommunication service, satellite internet.

[00:42:14] Speaker 04:
Satellite services is different from telecommunication services, I understand.

[00:42:21] Speaker 03:
So FCC could not say enough, we're gonna use universal service to bring satellite internet service to all of rural America.

[00:42:35] Speaker 03:
I don't think so, Your Honor.

[00:42:36] Speaker 04:
No.

[00:42:37] Speaker 02:
There's a definition of telecommunications.

[00:42:39] Speaker 04:
There is a definition of telecommunications service in the statute.

[00:42:42] Speaker 04:
That's right, Your Honor.

[00:42:43] Speaker 04:
And that would limit the Commission's discretion in choosing how to define universal service.

[00:42:49] Speaker 04:
I think also in Section 254C1, there are various factors that the Commission has to consider.

[00:42:57] Speaker 04:
Again, taking into account technological developments.

[00:43:02] Speaker 04:
And the Court has found that

[00:43:05] Speaker 04:
perfectly reasonable statutory provision, it's meant to show that the guarantee of universal service is dynamic, so that it changes over time in response to the adoption of technology.

[00:43:18] Speaker 04:
So for example, in 1934, when the commission was concerned about promoting universal service, people were using rotary telephones.

[00:43:30] Speaker 04:
And nowadays, most people aren't using landline phones at all.

[00:43:34] Speaker 04:
They're using wireless phones.

[00:43:35] Speaker 04:
And so the commission has made a transition over time to promoting mobile telephony and broadband service, which are the more mentioned the possibility of funding Netflix for rural America.

[00:43:48] Speaker 03:
Is it conceivable that would be could be part of universal service?

[00:43:53] Speaker 04:
That's a trickier question, Your Honor, because it's not clear to me, again, that that falls within telecommunication service under Section 254C1.

[00:44:03] Speaker 03:
What about the question of how much money is needed to fund universal service?

[00:44:06] Speaker 03:
Ask the petitioner this.

[00:44:08] Speaker 03:
Yes.

[00:44:08] Speaker 03:
I think that first cut of how much money is needed to fund universal service is made by USAC.

[00:44:14] Speaker 03:
Is that correct?

[00:44:16] Speaker 04:
It is, but again, subject to FCC rules.

[00:44:20] Speaker 04:
I think this notion that somehow USAC is free to make these spending decisions.

[00:44:25] Speaker 03:
What are the, can you kind of describe in layman's term, what the rules on the front end are that USAC?

[00:44:31] Speaker 04:
Sure, sure, your honor.

[00:44:33] Speaker 04:
And we've listed some of the rules in footnotes 19 through 21 of the brief.

[00:44:38] Speaker 04:
First of all, you have eligibility requirements.

[00:44:41] Speaker 04:
So carriers cannot receive universal service funding.

[00:44:45] Speaker 04:
unless they meet the eligibility requirements.

[00:44:48] Speaker 04:
There are requirements for high cost funding, have to be an eligible telecommunications carrier is designated by a state commission.

[00:44:56] Speaker 04:
There are requirements for schools and libraries and rural telephone funding, or I'm sorry, rural health care funding.

[00:45:04] Speaker 04:
where parties have to show that they've put out for competitive bidding their request for service and that they've identified a provider that is cost effective, among other things.

[00:45:18] Speaker 04:
So there's a very formal process.

[00:45:20] Speaker 04:
So USAC is not at liberty to start handing out money to those who are not eligible.

[00:45:28] Speaker 04:
And the projections have to take account of

[00:45:31] Speaker 04:
of eligibility.

[00:45:32] Speaker 04:
They also have to take account of there are certain caps, limits on funding.

[00:45:36] Speaker 05:
This is my question.

[00:45:37] Speaker 05:
Don't the regulations specify the amount of funding, not in dollar amounts, but the method for calculating the amount that each eligible carrier can receive?

[00:45:48] Speaker 04:
They do, Your Honor.

[00:45:49] Speaker 04:
That was the third point I was moving to, that there are for individual

[00:45:54] Speaker 04:
elements of universal service.

[00:45:57] Speaker 04:
And we talk about some of those regulations in footnote 21.

[00:46:02] Speaker 04:
You have specific formulas for calculating the amount of discounts that schools and libraries receive or the amount of subsidies received by rural health care providers.

[00:46:11] Speaker 04:
And in addition, there are caps on funding.

[00:46:15] Speaker 04:
There's an annual cap on on rural health care funding, an annual cap on schools and libraries funding, a per line limit.

[00:46:23] Speaker 03:
And that's all by FCC regulation.

[00:46:24] Speaker 04:
That's all by FCC regulation.

[00:46:27] Speaker 04:
And so you think USAC's projections have to take account of all of those rules.

[00:46:32] Speaker 03:
When deciding how much total money is needed for universal service.

[00:46:37] Speaker 03:
Does USAC need to exercise judgment?

[00:46:43] Speaker 04:
If it is exercising any judgment under the FCC rules, if there's any question about how the rules were to apply, USAC is directed to come to the commission and make inquiries about if there's some ambiguity about how our rule would apply.

[00:47:04] Speaker 03:
USAC is... As you're describing, they would at least kind of have to make judgment about whether they have to make judgment.

[00:47:12] Speaker 03:
Well, yes.

[00:47:14] Speaker 04:
Yes.

[00:47:16] Speaker 04:
But it's also important to keep in mind, Your Honor, that the adoption of the contribution factor is not the end of the process either.

[00:47:25] Speaker 04:
USAC decisions are subject to appeal.

[00:47:29] Speaker 04:
So that if an aggrieved party thought that USAC made the wrong decision, misapplied an FCC rule,

[00:47:37] Speaker 04:
it could appeal the USAC decision to the FCC.

[00:47:41] Speaker 04:
And we've pointed to some situations where the FCC has in fact granted relief, reverse USAC.

[00:47:47] Speaker 03:
With regard to the total amount of money that USAC takes the first cut and deciding will be spent for commercial service that quarter, is it correct to say that FCC's active involvement is rare?

[00:48:05] Speaker 04:
I think that probably is fair to say.

[00:48:07] Speaker 04:
And again, your honor, I think that's largely because USAC is already confined by FCC.

[00:48:13] Speaker 04:
So typically when USAC is making its projections, those accurately reflect, yes.

[00:48:20] Speaker 02:
Your involvement isn't rare.

[00:48:20] Speaker 02:
Your involvement is there.

[00:48:22] Speaker 02:
It's there all the time.

[00:48:23] Speaker 04:
It's rare in the sense that there haven't been that many changes.

[00:48:32] Speaker 04:
at the stage where there is a deemed approval where the projections come ahead.

[00:48:38] Speaker 04:
But the guardrails are already there.

[00:48:40] Speaker 04:
That's right.

[00:48:41] Speaker 04:
And the commission's intervention is not non-existent because there have been cases.

[00:48:49] Speaker 04:
And in fact, twice in 2023, the commission actually said,

[00:48:55] Speaker 04:
We're not going to take sex projections at face value.

[00:48:59] Speaker 04:
There are some unused funds from previous quarters.

[00:49:02] Speaker 04:
We're going to roll them into the numbers.

[00:49:05] Speaker 03:
I understand that.

[00:49:07] Speaker 03:
And I think that you said earlier, and this would be good for you, that if USAC just said we're going to triple the budget of

[00:49:15] Speaker 03:
the universal service for the next quarter.

[00:49:19] Speaker 03:
So much so that it might be 100% of carriers revenues.

[00:49:26] Speaker 03:
You know, that would be, USAT couldn't do that.

[00:49:29] Speaker 03:
That would be contrary to regulation or contrary to statute.

[00:49:32] Speaker 04:
It would certainly be contrary to regulations.

[00:49:35] Speaker 04:
I think it would also.

[00:49:37] Speaker 04:
It would essentially be contrary to statute in the sense that, again, when you're talking about

[00:49:44] Speaker 04:
the basic concept of universal service.

[00:49:47] Speaker 04:
The goal, which has been the goal of Congress and the FCC since 1934, has been to try to maximize the number of subscribers in the United States who are on the telephone network, who have access to reliable, affordable telephone service.

[00:50:02] Speaker 03:
So that if FCC were to bless that, then someone could challenge that, and a court would say, ah, that's contrary to statute.

[00:50:08] Speaker 04:
It would be inconsistent with the goal of universal service, and it would drive people off the net.

[00:50:14] Speaker 03:
Can I run through?

[00:50:15] Speaker 03:
I've got about six, seven.

[00:50:17] Speaker 03:
things some of them may be products not services so you can that may be easy answers but okay if it's conceivable could be part of universal okay phone landlines yes what oh landline landline service landline service is definitely included service cellular phone service yes it's it's fast fast wired internet couldn't be not is it

[00:50:43] Speaker 04:
Internet service for schools and libraries already exists.

[00:50:48] Speaker 03:
Could fast-wired Internet service to rural America also be part of a universal service under the statute?

[00:50:55] Speaker 04:
Well, again, that would depend in part on whether that service is classified as a telecommunications service, as the court may well be aware.

[00:51:05] Speaker 04:
That subject is a rather fraught subject, and there is

[00:51:08] Speaker 04:
Considerable disagreement about that within the commission.

[00:51:11] Speaker 03:
So it's possible.

[00:51:12] Speaker 03:
Yeah, it's possible.

[00:51:14] Speaker 03:
It's possible.

[00:51:15] Speaker 03:
Maybe a reasonable people would disagree.

[00:51:16] Speaker 03:
Yes, each other.

[00:51:18] Speaker 03:
Yeah.

[00:51:19] Speaker 03:
A cellular flip phone.

[00:51:21] Speaker 04:
You know, you're talking about providing the phones that again, that's amazing is is is not would probably not be because it's not a product as opposed to a service.

[00:51:36] Speaker 03:
OK.

[00:51:37] Speaker 03:
And then what about funding for private research on rocket launching technology so that bringing satellite internet to rural America would eventually become cheap?

[00:51:54] Speaker 04:
With the statute.

[00:51:55] Speaker 04:
That's a really interesting hypothetical, Your Honor.

[00:51:59] Speaker 04:
Not something that had ever occurred to me, but I think that's well beyond what would be considered

[00:52:07] Speaker 03:
What if Congress said, we're going to abolish all current taxes and we're going to authorize the IRS to calculate how much money the government needs for all of its current programs, and the IRS will compel contributions from every American until the budget is met?

[00:52:21] Speaker 03:
Would that be an unconstitutional delegation?

[00:52:24] Speaker 04:
Again, it would depend on whether an intelligible principle has been applied.

[00:52:29] Speaker 04:
As the way you've described it, I don't think there is an intelligible principle there.

[00:52:33] Speaker 03:
I know what these petitioners have argued is that somehow... The principle would be... And the IRS will decide how much... They'll just do the math.

[00:52:43] Speaker 03:
They'll do some fact-finding how much money needs to be raised and then they'll set contributions.

[00:52:48] Speaker 04:
Again, there has to be some sort of specific guidance when it comes to what policies are they considering.

[00:52:58] Speaker 04:
The universal service program here is different from that scenario in the sense that one thing, there was a long history.

[00:53:07] Speaker 04:
For 60 years, there had been a universal service program when Section 254 was passed.

[00:53:13] Speaker 04:
And that history informs the way you read the statute.

[00:53:16] Speaker 03:
Let me ask about another program with a long history.

[00:53:19] Speaker 03:
Judge Millett mentioned Medicare.

[00:53:21] Speaker 03:
Medicare, sure.

[00:53:24] Speaker 03:
I'd be wrong with that discussion to be primarily about Medicare spending disbursements rather than revenue collection.

[00:53:31] Speaker 03:
That's my understanding, too.

[00:53:32] Speaker 03:
Do you think that Congress could, instead of setting the tax rate or Medicare withholding that I see on my pay stub every year, they could abolish that and just say to CMCS, you decide how much money needs to be raised each year for Medicare?

[00:53:56] Speaker 04:
If Congress did that, it would have to give more specific policy guidance to Medicare, to the HHS, as to how to determine those numbers, in the same way that Congress, in this statute, in Section 254, laid out specific principles.

[00:54:14] Speaker 03:
There's about six principles here, equitable, non-discriminatory.

[00:54:19] Speaker 03:
Affordability, reasonable comparability.

[00:54:22] Speaker 03:
So with those six principles, then Congress could give the CMCS those six principles and say, you decide how much money needs to be raised for Medicare.

[00:54:32] Speaker 03:
It's possible.

[00:54:33] Speaker 04:
The devil lives in the details.

[00:54:36] Speaker 04:
But again, this system, and I know there's a suggestion, there's a suggestion that the petitioners have made that somehow if this is upheld, that that sort of approach is going to sweep the government.

[00:54:48] Speaker 04:
Well, this statute has been in place for 25 years and it remains as these petitioners can say.

[00:54:55] Speaker 03:
Let's say you were to lose this case.

[00:54:57] Speaker 03:
Do you think it would bring down any other government programs with it?

[00:55:02] Speaker 04:
It's it's possible.

[00:55:04] Speaker 04:
I just don't know your honor.

[00:55:05] Speaker 03:
I don't know enough about and I'm so great sure colleagues for being so patient with my question.

[00:55:09] Speaker 03:
Who do you think are the primary beneficiaries of universal service?

[00:55:16] Speaker 03:
You need customers or carriers?

[00:55:21] Speaker 04:
Well, the

[00:55:23] Speaker 04:
both of them benefit.

[00:55:24] Speaker 04:
I guess if you're talking about the primary beneficiaries, and this is consistent with what Judge Ginsburg found in Rural Cellular 2, that carriers benefit from the expansion of universal service, the expansion of the network because- Judge Brown in Rural Cellular 1 said that the customers were the primary beneficiaries, but maybe they disagree with each other.

[00:55:47] Speaker 04:
You agree with Judge Ginsburg.

[00:55:49] Speaker 04:
The truth of the matter is, Your Honor, that this issue about whether it's a fee or a tax is a frolic and detour here.

[00:55:56] Speaker 04:
It doesn't matter because under Skinner, the Supreme Court has made clear the same test applies to taxing

[00:56:04] Speaker 04:
as to all other delegations.

[00:56:06] Speaker 04:
That's the intelligible principal test.

[00:56:07] Speaker 04:
And it's our position that this court has already decided that issue in rural cellular 2.

[00:56:14] Speaker 03:
And that precedent.

[00:56:16] Speaker 03:
Taxing means you're taking money from Peter to pay Paul.

[00:56:20] Speaker 03:
And traditionally, that decision is made by Congress.

[00:56:28] Speaker 03:
And had been made by Parliament shortly forever after they

[00:56:34] Speaker 04:
That's certainly what the petitioners are arguing.

[00:56:38] Speaker 03:
The Supreme Court has found... You think as a general principle, it's fine for Congress to delegate to agencies.

[00:56:44] Speaker 03:
How much money will be taken from Peter in order to pay Paul?

[00:56:46] Speaker 04:
I think the Supreme Court has said in Skinner that a delegation is permissible.

[00:56:51] Speaker 04:
And it pointed out that it may well be.

[00:56:55] Speaker 04:
that Congress, in delegating that sort of authority, should be especially circumspect about doing so.

[00:57:01] Speaker 04:
But it also said that level of prudence is not required by the Constitution.

[00:57:07] Speaker 02:
So Congress surpasses the statute that says this is how we're going to do our taxing, right?

[00:57:13] Speaker 04:
Yes, that is correct.

[00:57:15] Speaker 02:
So as to hypotheticals about rockets and things like that, is it

[00:57:20] Speaker 02:
Am I correct that the statute itself not only defines telecommunication services, but it says for something to qualify as a universal service in Section 254C that it has to be through the operation of market choices by customers, been subscribed to by a substantial majority of residential customers, and been deployed in a public telecommunications network by telecommunication.

[00:57:46] Speaker 04:
That's right, Your Honor.

[00:57:47] Speaker 04:
And that happened for Rockets yet?

[00:57:49] Speaker 04:
No, of course not.

[00:57:50] Speaker 04:
And the point there is, this again is the emphasis that it's not just about the FCC funding any new technology that comes down the pike.

[00:58:02] Speaker 02:
There has to be... There are statutory definitions and limitations in addition to your regulations.

[00:58:08] Speaker 02:
Congress can just throw open the doors here and say... Absolutely.

[00:58:11] Speaker 02:
Absolutely.

[00:58:13] Speaker 04:
And the Commission is bound to consider those factors when it decides to change the definition of universal service.

[00:58:22] Speaker 04:
And those considerations basically go to not just the evolution of technology, but the evolution of the marketplace.

[00:58:29] Speaker 04:
So that, for example, when Americans start abandoning their wireline phones and using more wireless phones, it makes sense

[00:58:38] Speaker 04:
Congress recognize this, it makes sense for the commission to shift its universal service efforts to promoting mobile telephony.

[00:58:47] Speaker 02:
I had just one on.

[00:58:48] Speaker 02:
I know you say it doesn't matter if it's a tax or a fee.

[00:58:54] Speaker 02:
But on the other hand, we as courts would want to be extra careful.

[00:58:57] Speaker 02:
Sure.

[00:58:57] Speaker 02:
about that line we want Congress to and I'm struggling with understanding how you would define and help us identify the difference between a tax and a fee.

[00:59:08] Speaker 02:
Because this isn't a fee like I pay for a parking spot where I pay I get and.

[00:59:15] Speaker 02:
How much each company pays and the relationship with that to how much they're going to get back and benefit is at least much less clear, less direct.

[00:59:25] Speaker 02:
Some may get more, some may get less.

[00:59:27] Speaker 02:
And so I don't have a sense for something to be a fee.

[00:59:33] Speaker 02:
What do I, what evidence do I need, what evidence do you need to show of, is it generic benefit to the industry, or is it that each, is the definition of covered carriers here ensure that at least they get some benefit from that, even if it isn't in proportion to what they're paying, or how does that work out?

[00:59:52] Speaker 04:
I think, again, going to the court's discussion of this issue with rural cellular two,

[01:00:00] Speaker 04:
Carriers benefit from the network effects of the expansion of the network.

[01:00:05] Speaker 04:
Their services, regardless of how much they're actually paying into the universal service fund, they benefit from a wider network where more people are on the internet, where more people are on the telephone network.

[01:00:21] Speaker 04:
their service becomes more valuable.

[01:00:24] Speaker 04:
And I think that's the, in this context anyway, that's the way you can distinguish between a fee and a tax.

[01:00:32] Speaker 02:
Congress made that finding or the FCC?

[01:00:35] Speaker 02:
Or does it, we don't need a finding?

[01:00:36] Speaker 04:
The court made that finding actually, but in discussing this issue in Cellular 2.

[01:00:46] Speaker 02:
Did you guys argued it?

[01:00:48] Speaker 02:
Do you have a factual basis for it?

[01:00:50] Speaker 02:
I'm just trying to figure out where it came from.

[01:00:53] Speaker 04:
Well, I think we did make the argument that, again, this was, I suppose,

[01:01:04] Speaker 04:
This is the basic theory of universal service, that carriers benefit from, not just consumers benefit, but carriers benefit from a broader network because their service becomes more valuable.

[01:01:15] Speaker 04:
The more people you have in the network, the more valuable your service is.

[01:01:22] Speaker 02:
All right, thank you very much.

[01:01:23] Speaker 04:
Thank you, yours.

[01:01:27] Speaker 02:
Mr. Carr will give you three minutes.

[01:01:30] Speaker 02:
And that's right, now Mr. Carr.

[01:01:31] Speaker 02:
Mr. Gelson, I apologize, Mr. Gelson.

[01:01:34] Speaker 07:
Thank you, your honor.

[01:01:35] Speaker 07:
I appreciate the time.

[01:01:37] Speaker 07:
I'd like to just add a few observations in response.

[01:01:41] Speaker 07:
The product service distinction, I'm not sure that the FCC has ever adopted that before.

[01:01:45] Speaker 07:
I would be surprised to know that the FCC would disclaim the ability, for example, to provide cell phones to facilitate telecommunications services.

[01:01:52] Speaker 02:
Is there a definition in the statute of telecommunications service?

[01:01:55] Speaker 07:
It's a pretty flexible definition, your honor.

[01:01:57] Speaker 02:
Where is that definition?

[01:01:59] Speaker 07:
I believe it's in section 251.

[01:02:04] Speaker 07:
Sorry, 53.

[01:02:05] Speaker 02:
You don't happen to have what it says, do you?

[01:02:08] Speaker 07:
I could grab it for you if you'd like.

[01:02:09] Speaker 07:
I don't have it.

[01:02:10] Speaker 07:
I didn't bring it up for rebuttal.

[01:02:11] Speaker 03:
Yeah, of course it's OK.

[01:02:14] Speaker 03:
Sorry to bother you.

[01:02:17] Speaker 03:
I have it if you want it.

[01:02:18] Speaker 02:
OK, that's OK.

[01:02:20] Speaker 03:
I'll hear it.

[01:02:20] Speaker 03:
I think if my clerk's right, it means the offering of telecommunications for a fee directly to the public or to such classes of users as to be effectively available directly to the public, regardless of the facilities used.

[01:02:37] Speaker 02:
Telecommunications defined.

[01:02:38] Speaker 03:
That's the definition of telecommunication service.

[01:02:40] Speaker 02:
And then telecommunications is, sorry, I'll figure this out later.

[01:02:44] Speaker 02:
You go ahead.

[01:02:44] Speaker 07:
I think the important point here is that the FCC won't disclaim the ability to tax internet streaming services.

[01:02:50] Speaker 07:
This definition is incredibly broad and malleable.

[01:02:54] Speaker 07:
And even if telecommunication services somehow did limit the area in which the FCC could roam free, the Supreme Court's decision in Panama refining forecloses that.

[01:03:05] Speaker 07:
as an escape from a non-delegation challenge.

[01:03:07] Speaker 07:
That case was limited to hot oil, which is significantly more narrow than here, and yet the Supreme Court still found.

[01:03:14] Speaker 02:
This is something we do do, right?

[01:03:16] Speaker 02:
We could look at a statue that says service.

[01:03:20] Speaker 02:
We could whip out our dictionaries and look at service and product and see how they're defined and figure out whether service includes equipment or not.

[01:03:29] Speaker 02:
If it hadn't been treated that way for 90 years, it would suddenly turn into equipment.

[01:03:37] Speaker 02:
It's an individualized property equipment as opposed to wires under the ground.

[01:03:44] Speaker 02:
Even if telecommunication services court could do, I mean, there's a, there's a principle here that not only would be intelligible to the FCC, but enforceable by a court.

[01:03:52] Speaker 02:
Now, maybe the answer would be, in fact, someone, Congress says something that suggests that it is cell phones or not, whatever it's, that would be Congress's choice subject to statutory interpretation, right?

[01:04:04] Speaker 02:
We're to decide that Congress said that we'd be able to do that.

[01:04:08] Speaker 02:
Right.

[01:04:10] Speaker 07:
If this this court could interpret telecommunication services.

[01:04:13] Speaker 07:
Yes, I agree.

[01:04:14] Speaker 02:
Maybe not.

[01:04:15] Speaker 02:
I don't.

[01:04:17] Speaker 02:
Haven't done the statutory interpretation inquiry, but it is something that courts could review and determine whether it was whether products.

[01:04:24] Speaker 02:
Visualized products are in or out correct.

[01:04:29] Speaker 07:
This court could do that review.

[01:04:30] Speaker 02:
And we have to still ensure that something that's a substantial number of consumers are signed up for and that telecommunications provider providing their public systems.

[01:04:40] Speaker 07:
The problem is that once you get into the definition of universal service and universal service principles, the principles are listed in precatory language, that they're all couched and should, and that multiple courts have held that they are vague and aspirational.

[01:04:55] Speaker 05:
I think it's respectfully not very true.

[01:04:58] Speaker 05:
So it says they shall follow those principles, right?

[01:05:00] Speaker 05:
And your argument is essentially they're non-binding guidance to the FCC.

[01:05:05] Speaker 05:
But by my count, we've got three courts of appeals that have actually remanded to the FCC for violating either the equitable and discriminatory requirement, the affordability requirement, or the sufficiency

[01:05:18] Speaker 05:
And every one of those cases, and us in the rural cellular cases, treat those as legal requirements that the FCC has to follow.

[01:05:25] Speaker 05:
How is your argument reconcilable with those decisions?

[01:05:31] Speaker 07:
So I have two points.

[01:05:32] Speaker 07:
The first one is that most of the remands were for failure to adequately explain the decision making.

[01:05:37] Speaker 05:
Toe Book 1 says, it is contrary to the statute to impose this scheme on ComSTAT because it was not equitable and nondiscriminatory.

[01:05:46] Speaker 05:
That is an enforceable legal limit.

[01:05:49] Speaker 05:
Right?

[01:05:51] Speaker 07:
Even if there is some enforceable legal limit, there still has to be clear delineations.

[01:05:56] Speaker 07:
And the best analogs for this case are going to be Panama Refining and Schechter Poultry, where even if you can find some limits when the executive is given the ability to balance and weigh multiple vague provisions that allow them to roam free in a field of legislative responsibility.

[01:06:11] Speaker 07:
Why isn't the best comparison Whitman?

[01:06:13] Speaker 05:
So there, it's a incredibly broad delegation, the EPA, to determine hair quality standards that are requisite to public health.

[01:06:21] Speaker 05:
And what the court essentially said is requisite means enough, but not too much.

[01:06:25] Speaker 05:
And you don't need determinate criteria.

[01:06:28] Speaker 05:
And here we've got sufficient, yet rates must remain affordable.

[01:06:32] Speaker 05:
Why isn't that sort of a direct analogy?

[01:06:36] Speaker 07:
The first distinction is that, in this case, we have a whole list of factors in that

[01:06:42] Speaker 07:
For example, Olenko and a few other courts have said that if an agency wants to disregard one in favor of the other, as long as they explain it, they can disregard some of these principles.

[01:06:52] Speaker 07:
So it's not like there is one determinant criteria.

[01:06:54] Speaker 07:
It's the agency's ability to pick and choose between those principles in any given case.

[01:06:59] Speaker 07:
That's what makes it more like Schechter poultry and Panama refining than it does Whitman.

[01:07:03] Speaker 07:
The other distinction is that in Whitman, the limitation that it's enough but no more than necessary came from a definition provided by the Solicitor General during oral argument.

[01:07:12] Speaker 07:
The FCC has never claimed a sufficient says enough, but no more than enough, but no more.

[01:07:18] Speaker 07:
In fact, they under collect and they over collect and they've been sued by carriers for not raising enough.

[01:07:22] Speaker 05:
It's certainly not a determinant amount, but what the court has said over and over cases like Whitman and others is that you can leave a measure of discretion so long as they're guiding principles.

[01:07:34] Speaker 05:
And it seemed to me that sufficient levels and keeping rates affordable in the ways we said in rural cellular

[01:07:42] Speaker 05:
are telling the agency what to do to a sufficient extent.

[01:07:47] Speaker 05:
And I think what was very clear in Whitman was the court was saying, there's still a lot of area for judgment here, and that's OK.

[01:07:56] Speaker 05:
It seems like you're imposing a much stricter test here.

[01:08:00] Speaker 07:
I would point to the government's own point that this situation, that this statute is unique.

[01:08:05] Speaker 07:
There hasn't been anything like this since Schechter Poultry or Panama refining.

[01:08:10] Speaker 07:
that not only does it have vague standards, which may be deficient in some of these variegated and technical areas, but it has multiple vague standards that the agency is then allowed to pick and choose from.

[01:08:21] Speaker 07:
And then it allows the agency to add its own principles and redefine universal service.

[01:08:26] Speaker 07:
The fact that that one standard as narrowed by the Solicitor General was sufficient in Whitman is not enough to resolve this case, especially given all those additional considerations.

[01:08:37] Speaker 02:
Does the Federal Reserve not raise money from member banks all over the country, fund services and security programs and things like that?

[01:08:47] Speaker 07:
The Federal Reserve has a fee collection structure.

[01:08:51] Speaker 02:
Is the exact amount prescribed by Congress?

[01:08:54] Speaker 07:
Again, I'm not an expert in the Federal Reserve, and I would be hesitant to delve into that one.

[01:08:59] Speaker 02:
But that one's definitely raising funds from banks, right, or reserve services.

[01:09:05] Speaker 07:
If Congress had given the Federal Reserve the same discretion that we see here, with no cap or rate, with multiple factors to balance, the ability to redefine the factors, then yes, it would raise an unconstitutional non-delegation problem.

[01:09:17] Speaker 07:
But that's not the regime that the Federal Reserve is under.

[01:09:20] Speaker 07:
As the government has stated, this is a unique case.

[01:09:22] Speaker 07:
The courts have not seen it since the 1930s with Panama refining checker poultry.

[01:09:27] Speaker 03:
I've been trying to think through.

[01:09:31] Speaker 03:
Imagine a regime that has one vague piece of statutory guidance.

[01:09:39] Speaker 03:
And then imagine another regime that has six vague pieces of statutory guidance.

[01:09:45] Speaker 03:
Is the latter a more intelligible principle

[01:09:50] Speaker 03:
A less intelligent, you could imagine it's more because there's more guidance.

[01:09:54] Speaker 03:
You could also imagine it's less because it's like vagueness to the sixth power.

[01:09:58] Speaker 03:
Or maybe it's just equally vague.

[01:10:01] Speaker 07:
In a situation where the agency can pick and choose between big principles, it's more vague.

[01:10:07] Speaker 03:
Maybe.

[01:10:08] Speaker 03:
I also have been thinking J.W.

[01:10:09] Speaker 03:
Hampton and customs versus taxes.

[01:10:13] Speaker 03:
I wonder if you could help me think this through.

[01:10:15] Speaker 03:
Taxes seem to be quintessentially legislative, domestic taxes.

[01:10:20] Speaker 03:
Customs seem both legislative and foreign affairs, which the executive has significant inherent discretion and has traditionally been given in exercises significant discretion in the realm of foreign affairs.

[01:10:36] Speaker 03:
Do you think that's a fair distinction between customs and taxes, or do you think it's an irrelevant one?

[01:10:43] Speaker 07:
Yes, that's a fair distinction.

[01:10:45] Speaker 03:
Why?

[01:10:46] Speaker 03:
I mean, just for the reason.

[01:10:47] Speaker 07:
Because in the context of non-delegation, multiple courts, I believe the Supreme Court, has recognized that when another entity has independent power in that area, the realm of discretion to delegate authority is broader.

[01:10:59] Speaker 07:
The president has authority over foreign affairs, and so the customs context can be different.

[01:11:02] Speaker 07:
It's the same as, for example, in Lictor, which is a wartime statute.

[01:11:07] Speaker 07:
The president is the commander in chief, has separate authority over wartime affairs.

[01:11:11] Speaker 07:
That makes the non-delegation calculus different.

[01:11:14] Speaker 03:
Any court has said that about about customs versus taxes.

[01:11:19] Speaker 07:
I don't know a court that has said it about customs specifically.

[01:11:23] Speaker 02:
You're saying that the principal would extend the express constitutional power to execute the laws does does not qualify.

[01:11:33] Speaker 02:
Is that the take care clause?

[01:11:37] Speaker 06:
Or the executive power?

[01:11:38] Speaker 02:
The executive power, are you saying it has to be like a specific little mentioned one like the chief power or, you know,

[01:11:50] Speaker 02:
foreign affairs, princes, these types of things, or is it the fact there's a constitutional assignment to the executive branch, to the president, to faithfully execute the laws enacted by Congress, which means put them into effect and enforce them, that would count the same as the commander-in-chief role?

[01:12:10] Speaker 07:
The executive power is about enforcing the laws passed by Congress.

[01:12:15] Speaker 07:
which is separate from areas where the Supreme Court has recognized that the executive might have its own independent power.

[01:12:20] Speaker 02:
Sorry, that's why I'm getting confused when you say where the executive has its own independent power.

[01:12:25] Speaker 02:
I thought its own independent power included execution of the laws.

[01:12:32] Speaker 02:
Is that not right?

[01:12:34] Speaker 07:
The president's power to execute the laws is wholly dependent on Congress passing those laws.

[01:12:38] Speaker 02:
I understand.

[01:12:39] Speaker 02:
That's all.

[01:12:41] Speaker 02:
I will give you that.

[01:12:42] Speaker 02:
But once a law is passed, does the president's authority to execute the law, does that count in the same way that you've said the president's commander-in-chief role or shared foreign relations role, does it answer those questions?

[01:13:00] Speaker 02:
Or do we don't get to count that?

[01:13:02] Speaker 07:
I don't believe it's the same because it's wholly dependent upon the statute passed by Congress.

[01:13:09] Speaker ?:
Okay.

[01:13:09] Speaker 02:
But the ability of the president to conduct a war is wholly dependent on declaring war.

[01:13:17] Speaker 07:
That is a fraught question, but the executive has long maintained for decades that the president has independent authority to engage in hostilities overseas.

[01:13:27] Speaker 07:
Not to declare war, but to engage in hostilities overseas.

[01:13:31] Speaker 07:
We could get into the technicalities of where that line is, but I mean, recently.

[01:13:35] Speaker 02:
So in fact, there's shared and there's debates about these lines.

[01:13:41] Speaker 02:
It's still a special power for the president in the way power to execute laws, even though there's some shared responsibility, perhaps, and executing and figuring out the details of the execution.

[01:13:55] Speaker 02:
That's no good.

[01:13:56] Speaker 02:
the the execution of the laws when they don't implicate one of the president's separate constitutional powers is just bound is bounded a different way by the non-delegation doctrine where is okay no court has said that there's absolutely nothing whatsoever in the text of the constitution that suggests that that suggests that the clandestine chief power is greater

[01:14:19] Speaker 02:
or more independent, for the reasons we just discussed, than the power to execute and enforce laws.

[01:14:25] Speaker 02:
So where are you getting that from?

[01:14:28] Speaker 07:
Courts have been willing to derive certain presidential powers directly from the Constitution.

[01:14:34] Speaker 07:
The executive power, the ability to execute the laws, is derived from... The ability to execute the laws is necessarily derivative from a statute passed by Congress.

[01:14:44] Speaker 07:
Therefore, the courts must look specifically to that statute.

[01:14:47] Speaker 02:
Your special powers to interpret statutes really isn't all that special because it's an entirely derivative Congress passing statute.

[01:14:55] Speaker 02:
So that's not really Article 3E enough.

[01:14:58] Speaker 07:
Well, I am not aware of a court ever interpreting a statute that wasn't passed by Congress.

[01:15:04] Speaker 07:
And so I think that... Right.

[01:15:05] Speaker 02:
So ours is completely conditional power.

[01:15:08] Speaker 07:
The courts have independent authority, have some sort of shared authority over their own procedures, for example.

[01:15:13] Speaker 02:
Well, I think Congress has said we can make rules.

[01:15:17] Speaker 02:
The Rules Enabling Act.

[01:15:20] Speaker 07:
I'm sorry, the Rules Enabling Act?

[01:15:22] Speaker 02:
Yeah, that's our procedures and rules.

[01:15:24] Speaker 02:
Are you talking about common law?

[01:15:27] Speaker 07:
I worry that we're getting far afield.

[01:15:28] Speaker 02:
Well, I'm just trying to understand.

[01:15:30] Speaker 02:
You were embracing a distinction here within the Article 2 power that I'm just trying to understand if there's any historical, precedential, or textual hook for it.

[01:15:41] Speaker 02:
And it sounds like no.

[01:15:43] Speaker 07:
I mean, I think that the Supreme Court has multiple times recognized that, for example, wartime statutes are different than other statutes.

[01:15:59] Speaker 07:
The easiest way to look at this, like the Youngstown tripartite distinction about when the president can act,

[01:16:03] Speaker 05:
distinguishes when the president has independent powers versus when it's... Can I just... I think this all started with your argument that somehow this being characterized as a tax would make the analysis different, right?

[01:16:15] Speaker 05:
And isn't this as simple as reading Skinner where it says, we hold that there is no difference?

[01:16:23] Speaker 05:
The best reading of Skinner is that the non-delegate... I cannot imagine this court writing an opinion that says, when the Supreme Court said,

[01:16:33] Speaker 05:
Quote, we hold that the delegation of discretionary authority under Congress's taxing power is subject to no constitutional scrutiny greater than that we have applied to other non-delegation challenges.

[01:16:44] Speaker 05:
What does the next sentence say?

[01:16:46] Speaker 05:
That the Supreme Court described that as a holding, but I think we would have to say, we just think that wasn't really that important in that case.

[01:17:02] Speaker 05:
I just don't think we can do that.

[01:17:04] Speaker 07:
Skinner did not purport to overrule NCTA.

[01:17:08] Speaker 07:
It said that they would be inconsistent.

[01:17:10] Speaker 07:
NCTA said that using the term public interest in raising revenue raised constitutional issues.

[01:17:16] Speaker 07:
Skinner did not purport to overrule cases like Mistretta that said that the scope of permissible delegations depends on context.

[01:17:22] Speaker 07:
And so while we may apply the same test here, and while the court may characterize it as stricter or not stricter, the fact is whenever Congress has been faced with a statute like this,

[01:17:34] Speaker 07:
The closest analogs, they said it wasn't sufficient.

[01:17:37] Speaker 07:
And in the cases where there has been revenue raising, a common theme is that there is some sort of objective limitation to stop those delegations.

[01:17:44] Speaker 07:
It would be the first time courts have sanctioned an unrestricted raising of revenues.

[01:17:49] Speaker 07:
Other than Lictor.

[01:17:51] Speaker 07:
Lictor was a wartime statute again.

[01:17:54] Speaker 03:
Some of the discussions have been about, I think, a distinction between carrier equipment, like the wires under the ground,

[01:18:04] Speaker 03:
and customer equipment, which maybe wouldn't be able to be covered under the Universal Service Fund.

[01:18:12] Speaker 03:
Do you know of any examples where the FCC has covered customer equipment under Universal Service?

[01:18:19] Speaker 03:
Maybe there are none.

[01:18:20] Speaker 03:
Maybe it's statutorily prohibited.

[01:18:23] Speaker 07:
Not that I'm prepared.

[01:18:24] Speaker 07:
Not that I don't have an answer for that for you at the moment.

[01:18:28] Speaker 01:
Any questions?

[01:18:29] Speaker 07:
Judge Garcia, in response to your Lictor question, Lictor was also individualized determinations

[01:18:33] Speaker 07:
It wasn't a broad rule.

[01:18:35] Speaker 07:
It wasn't legislative in nature.

[01:18:36] Speaker 07:
What the executive was doing, they were determining specific contracts on a case-by-case adjudicatory basis.

[01:18:41] Speaker 07:
It's not the same.

[01:18:43] Speaker 07:
Your Honor, if I may have 30 seconds to respond to two things which were asked earlier.

[01:18:49] Speaker 07:
Judge Walker, you asked about, and Judge Garcia, you asked about the regulations governing USAC.

[01:18:55] Speaker 07:
I would just point the court to language in topic two.

[01:18:57] Speaker 07:
It's on page 328, that identifying a precise amount

[01:19:00] Speaker 07:
is an imprecise exercise.

[01:19:02] Speaker 07:
Like whatever USAC is doing, whatever guidance they've been given, there's still discretion in that area.

[01:19:08] Speaker 07:
In addition, again, I would just emphasize that the Supreme Court's been clear the most telling indication of a severe constitutional problem is the lack of historical precedent.

[01:19:19] Speaker 07:
This hasn't been seen since Schechter Poultry in Panama refining, and those delegations were unconstitutional.

[01:19:24] Speaker 07:
We would ask the court to vacate the contribution factor for the second quarter of 2023.

[01:19:31] Speaker 02:
Okay, questions.

[01:19:32] Speaker 02:
Thank you very much.

[01:19:33] Speaker 02:
The case is submitted.