Federal Communications Commission v. Consumers' Research

Oral argument transcript · No. 24-354 · October Term 2024 · argued March 26, 2025 · the petitioner won

Decision: votes, opinion and citations · Official transcript (PDF) · Argument audio at the Supreme Court

Advocates

• Sarah M. Harris, Office of the Solicitor General, for the petitioner
• Paul D. Clement, Alexandria, Virginia, for the petitioner

Transcript

From the Court's official transcript; speaker labels as in the transcript, with advocates' full names from its list of appearances.

Chief Justice Roberts: We will hear argument this morning in Case 24-354, Federal Communications Commission versus Consumers' Research, and the consolidated case. General Harris. ORAL ARGUMENT OF SARAH M. HARRIS ON BEHALF OF THE PETITIONERS IN CASE 24-

Sarah M. Harris: Mr. Chief Justice, and may it please the Court: Section 254 is no delegation running riot. Congress first told the FCC what policy to follow: To give all Americans access to basic telecommunications services at reasonable charges, i.e., universal service. So FCC can promote phone service but not faxes. Second, Congress said how to do it, by charging carriers a fee, then reimbursing carriers that serve universal service programs. Third, Congress dictated how much to charge, only what's sufficient to achieve universal service, so no more than needed to support specified programs. Fourth, Congress prescribed how to Official 1 allocate fees. They must be equitable and non-discriminatory. So FCC can't charge by carrier size or revenue. Fifth, Congress detailed what underserved areas FCC must target, low-income, rural, insular, and high-cost areas, plus schools, libraries, and healthcare providers. On top of that, Congress enacted 254 against the backdrop of a half-century history where FCC advanced universal service for rate subsidies. That delegation leaves key policy choices to Congress and is definite and precise enough for courts to tell if FCC followed Congress's limits when filling in details. Indeed, this scheme resembles the pipeline safety fee in Skinner, which this Court deemed an easy case. Like in Skinner, Respondents do not ask this Court to revisit precedents approving far broader delegations. Respondents instead press a special non-delegation rule for taxes, the very rule Skinner rejected. Respondents' private non-delegation challenge likewise fails. They challenged FCC's reliance on USAC to calculate carriers' proposed Official 1 contribution fee. But FCC itself reviews, publishes, and adopts the fee for it to take effect. That is a basic delegation of accounting tasks, not grounds for the Magna Carta. I welcome the Court's questions.

Justice Thomas: Do any of the principles that you just listed apply to the revenue-raising activities of the -- of -- of the FCC?

Sarah M. Harris: All of the principles I identified apply to them -- well, all of the principles I identified apply to them in that it's a -- a sort of unitary scheme in which the FCC is constrained and not raising more than is sufficient to support specified programs. So under the Fifth Circuit's Alenco decision, which we agree with, FCC can't just say wouldn't it be nice to have a rainy day fund where there's an additional $10 billion lying around. It has to be -- teed to the specific universal program -- service programs that have been in existence and that Congress prescribed for the FCC to pursue.

Justice Thomas: How does that constrain the revenue raising? Official

Sarah M. Harris: It constrains the revenue raising because it has to be sufficient. Congress uses that word three times in different parts of the statute, in 254(d), 254(e), and also in -- in also in (b)(5). And "sufficient" means it can't be, again, excessive. It -- and that's what the Fifth Circuit decision that we agree with is saying. So, again, if the programs are running at a particular rate, which they have been for the last 10 years, Congress -- the FCC can't just turn around and say: Why don't we charge more. Why don't we put more -- why don't we -- why don't we make the carriers pay more of a fee? And -- and so that is a real limit. It's a qualitative limit, and it is the type of limit that is common throughout statutory schemes. We cite a number of other ones at our reply brief at pages 8 to 9 where -- where various agencies, and indeed this Court, are allowed to -- are -- are allowed to charge reasonable fees, which is construed in -- against the backdrop of a statutory --

Justice Thomas: Can you -- do you Official 1 have any examples of fees that did not have a monetary limit or taxes that did not have monetary limits that were imposed either by agencies or by Congress?

Sarah M. Harris: Well, yes. Again, all of the ones on pages 8 to 9 are examples of that. They're all -- either -- you could classify them as either taxes or fees, but they involve such things as supporting the Office of the Comptroller of the -- of the currency's functions with fees from regulated parties --

Justice Thomas: And those have no limits and/or no rates?

Sarah M. Harris: So we are not arguing for a no limits at all approach where you can just raise whatever revenue we feel like -- you feel like. And we don't think 254 follows that approach either. It -- the idea is there are qualitative limits that are baked into the statutory scheme, not raise whatever amount of money; you know, a trillion dollars. And, again, I'll just point out it's a little perverse in two senses to think that you can cure a non-delegation problem and give no other guidance than giving a cap of, say, like $1 Official 1 trillion to raise and leave the rest for the agency to figure out. Not only is that a very arbitrary separation of powers rule but it would require overturning such cases as Skinner and J.W. Hampton, where this Court not only said there's no special non-delegation rule for taxes but did -- didn't seem to adopt that basic proposition.

Chief Justice Roberts: Should -- should we be looking to sort of a -- a common law -- approach, in other words, what the Commission has done, or instead what the Commission could do?

Sarah M. Harris: I think you should look first and foremost at the statutory text. And the statutory text itself incorporates the concept of universal service that applied from -- from the inception of the FCC Act. And so let me just sort of explain why that is. Section 254 obviously itself is a reticulated scheme that prescribes all the details and constraints that I described, but on top of that, it is preserving and advancing the concept of universal service that was set forth in Section 151 of the Act that harks back to Official 1 1934. So, for instance, when the FCC is directed to figure out what universal service entails, the FCC is not just looking to Section 254(c), which is defining universal service as an evolving level of telecommunications services that have to meet sort of four specified parameters, including the objective -- objective criterion of -- that a substantial majority of residential customers adopted it. The FCC also has to consider the backdrop of Section 151, which originally defined "universal service" as mandating the FCC to make available, so far as possible, to all the people of the United States, a rapid, efficient, nationwide wire and radio communications service with adequate facilities at reasonable charges. Congress was enacting this statute in 1996 against that backdrop and against the way the FCC had implemented this system.

Chief Justice Roberts: Well, what if the law said the level of service that the -- should be afforded is -- is service that is fair? Would that present a constitutional problem?

Sarah M. Harris: It could but not Official 1 against this statutory scheme because I think the level of service that could be fair would, again in this particular context -- and something this Court has recognized in other non-delegation cases with rate setting or other stuff, if you have a regulatory backdrop that Congress is acting against, a term that's otherwise amorphous like "fair" or "equitable" or whatever it is gets meaning through the -- through the particular regulatory context in which it exists. And, again, I'll also just point out Section 254 is a heck of a lot more specific than just do what is fair. Section (b)(3), for instance, is prescribing in like very specific detail how exactly --

Chief Justice Roberts: But your -- your answer, I guess, is that it could, that could be sufficient?

Sarah M. Harris: It could be a problem --

Chief Justice Roberts: In -- it --

Sarah M. Harris: -- or it could be --

Chief Justice Roberts: You would look -- in -- in a particular context or something, but -- Official

Sarah M. Harris: Absolutely. And that's exactly what this Court has done in other rate-setting contexts. So, for instance, in the Court's past cases with respect to Rock Royal, for instance, where the question is what is a reasonable rate for milk prices, to -- to achieve price parity, you could say in the abstract sort of just and reasonable, if you looked at it divorced from anything else, might be a pretty significant delegation of policy-making authority. But in the particular context of the history of rate-making, it gains meaning and gains teeth. And I think that's consistent with the objective when the Court is looking at a constitutional challenge. The aim is to look for constraints and means of -- and -- and -- and -- and constitutional avoidance, as opposed to saying Congress didn't give any meaningful limits. And again, that is very consistent with the highly detailed nature of 254 in this particular context, which is providing much more than just abstract rates. And again, looking back at the 19- -- Official 1 pre-1996 scheme, the FCC did, for, you know, a half century, use its power to impose just and reasonable rates to provide universal service through a system of implicit subsidies. Respondents aren't challenging that, and I think that history of what the FCC did just gives more substance and more guidance to what's happening here. And --

Justice Jackson: Can you speak to the combination theory or the combination argument?

Sarah M. Harris: Yes. It's meritless. And the reason is -- there's a couple of reasons for this. One is the idea that Congress can't delegate legislative power is a basic restriction on Congress -- on -- on what Congress can do and the constitutional design. Congress can't pass legislative power to anyone. It doesn't matter if it's an agency or a private party. And it doesn't matter if someone then sort of passes it along. Like, you just can't pass go. Congress can't do that. So the idea that there's sort of an aggravated constitutional offense just by having Official 1 a -- a -- a subdelegation, just really doesn't track the nature of the Article I challenge. The second issue is just the way in which the combination theory has kind of morphed in this Court. I am, candidly, not sure at this point whether we are dealing with an Article I sub -- delegation challenge from the FCC to USAC, where there's an additional pass-along of legislative power that's the problem, or if we're dealing with an Article II challenge, where there is a supposedly excessive delegation of executive power to USAC but the FCC would presumably be okay in at -- at least possessing that power. And if it's the latter category, I'm not sure what constraints Respondent is offering here or, you know, the -- the presentation of that particular argument. But what I can tell you is it's -- it's definitely meritless, because USAC is not exercising any kind of problematic power. It is just making recommendations --

Justice Jackson: Let me ask you. Does the private non-delegation theory suffer from the same kind of lack of clarity in terms of its origins? I mean, I -- I -- I'm trying to Official 1 understand its distinction with the traditional non-delegation theory. It seems as if, you know, if there's a problem with Congress delegating this power, this -- status of the party that receives it shouldn't matter. And if the party that receives it, being private is the problem, that seems more like an appropriations issue. So I -- I guess I'm just trying to understand what the source of that theory is as well.

Sarah M. Harris: Yes. So the -- the -- I think the source of the theory is in question in this case. I will say, again, for Article I, you can't delegate that power to anyone. So it wouldn't matter if it's the agency, if it's directly to a private party. But, like, there's no additional offense from subdelegating it.

Justice Alito: Ms. Harris --

Sarah M. Harris: With respect to Article II --

Justice Alito: Well, why is -- why -- why is that true? You -- you want to compartmentalize the delegation of authority from Official 1 Congress, the alleged delegation of authority from Congress, to an executive branch agency and -- and then separately look at the delegation of authority from the agency to a private party. But when it is alleged that Congress has delegated legislative authority to an executive branch agency, we run into the problem of drawing a line between the execution of the -- the -- the formulation of the law and the execution of the law. But when the agency then goes ahead and just passes that off to a private party, then doesn't the argument in favor of the position that all that the agency is doing is exercising -- executive authority in enforcing the law disappear, or at least is -- is diminished?

Sarah M. Harris: I don't think so. And I think this scheme, I mean, just on the merits would illustrate why. But just as a conceptual matter, we're talking about two different things. One is Congress can't pass off its power to anyone. And two is if Congress does give the FCC something to execute in its executive power, that's a separate category of Official 1 issues. The question in that case is, is there too much executive power being delegated to someone else? Appointments clause might be a sort of way of looking at it, but in this case I don't even think you need to get there, because the bottom line is I think the Fifth Circuit and Respondents are misconceiving of exactly what USAC does. It is doing math. It is saying we are looking to exactly how the projections for universal service, based on historical numbers, work and making a recommendation to the FCC on that score, 60 days before the quarterly contribution fee is due. And then on -- sort of for the denominator for the fee, it is summing up reports from telecommunications carriers as to what their eligible revenues are for a quarter. Both of those things get -- get passed on to the FCC, the FCC reviews them, it has to publish them in the Federal Register as its own, and then it has 14 days in which to revise what is essentially a proposed rate and make it its own.

Justice Alito: But when we're -- Official 1 we're inquiring whether the agency is -- has simply asked a private group to -- to perform some ministerial functions, why shouldn't we look at the record of what the FCC has actually done? And if you look at the record here, isn't it really hard to say anything other than the fact that they just have rubber-stamped whatever the USAC has -- has told them? Except -- there are a few exceptions, but basically they just say okay, fine. Right?

Sarah M. Harris: No. So two points of pushback, one on the law and one on the facts. With respect to the law, this Court has in no context of sort of looking at recommendations said: Who's really making the recommendations? Is there a lot of sway? So take Skinner, for instance. The Secretary of Transportation in that case, which, again, easy case, gave -- consulted the Private Surface Pipeline Carriers Association about, like, hey, what would be a good way of figuring out the usage fee in that case? And a PS rep just said great, you guys have a good idea. I'm going to run with it. This Court did not sort of peak behind Official 1 the hood and say: Was that, you know, too much influence by a private group or not? In Sunshine Anthracite, when there were coal producers who were proposing prices but -- that -- that had to be -- that actually had to be adopted by the federal agency, this Court didn't sort of ask for record evidence, or assessments of was that too much influence, how much independent work was actually done by the agency, should there be discovery? There are tons of blue ribbon commissions that do similar stuff like this, and this Court never says: Who is actually the driver -- in the driver's seat? Because it's a very formal inquiry in the non-delegation context. The actor is an officer of the United States who's adopting the actual form of policy. And, again, this sort of happens every day. But the fact --

Justice Alito: Well, I know -- I know that's true as a formal matter, but isn't it a fact that the GAO reports about what the USAC has been done'ing or has been doing are pretty damning? Official 1 I mean, they say that the -- the GAO couldn't verify the eligibility of 36 percent of those who receive USF benefits? Nearly 80 percent of the Lifeline Program users may -- may be legally ineligible for the benefits they're receiving?

Sarah M. Harris: So here's what I'll say on this. One, with respect to whether there's meaningful review of the contribution factor, which is the question in this particular case, there are four instances in which the FCC has, in fact, said USAC is not doing it right. Two of them, as Respondents point out, have happened since this lawsuit, but others happened in the third quarter of 2003. And in 2016 there was an award of relief when there was a disagreement with how the administrator calculated the contributions. So there are empirical examples of this not just being a rubber stamp. And more broadly, to the extent that GAO -- GAO report raises concerns with you with respect to how exactly these programs are administered, that sounds like the stuff of an APA challenge, not a non-delegation challenge. Official 1 Again, there are limits on what the FCC is supposed to be doing, the kinds of programs it's supposed to be supporting and --

Justice Gorsuch: Ms. -- Ms. Harris, I -- I -- I find it -- sorry, just to shift gears a little bit -- notable that in your reply brief, in terms of the legal task that you think we're -- we're supposed to be engaged in, made a couple of comments. And I would just like to confirm this is your thoughts. One is that in distinguishing between lawful conferrals of discretion from unlawful delegations, that that requires more than asking in the abstract whether there is an intelligible principle.

Sarah M. Harris: Yes, Justice Gorsuch, we think there are two paths for this Court to do. And one path could be just to sort of stay the course and say is this delegation any worse than ones the Court has approved? We think the -- to the extent the Court is interested in looking to past precedents to sort of tighten the reins, the better approach is not just say, you know, there is kind of mush for the intelligible principle, look to past Official 1 cases, but to look at the parameters I talked about. Including one of the most important is is there sufficiently definite and precise language in the statute to enable Congress, the courts, and the public to ascertain whether Congress's rules are followed? And, again, taking from Chief Justice Marshall's opinion of Wayman, if -- when you have a broad delegation, making sure there are sufficient rules.

Justice Gorsuch: And -- and I'm sorry to prolong this, Chief --

Chief Justice Roberts: Go ahead, please.

Justice Gorsuch: -- but -- but just to finish up. One -- one critical element you indicated is that there have to be sufficiently -- defined boundaries, that judicial review is -- is possible?

Sarah M. Harris: Absolutely. And we think 254 passes that with flying colors in -- in numerous respects, just with respect to how the fee has to be assessed. Official

Justice Gorsuch: And then finally, that it -- there not -- needs not just be a general policy for the agency to pursue but boundaries also clearly delineated; is that right?

Sarah M. Harris: Absolutely. And we think --

Justice Gorsuch: Okay.

Sarah M. Harris: And we think that --

Justice Gorsuch: All right.

Sarah M. Harris: -- 254 satisfies it.

Justice Gorsuch: No, I understand that.

Sarah M. Harris: Okay.

Chief Justice Roberts: Justice Thomas? Anything further?

Justice Thomas: Would you -- is there any direct statutory constraint on the revenue raising?

Sarah M. Harris: The direct statutory constraint is the sufficiency provision that appears three times throughout the statute. It is a qualitative limit. It is tied to -- you cannot raise more funds than would be needed to provide universal service to the standards that Official 1 are provided in the statute. So basic telecommunications services have to be at that level. Again, it's also historically defined by what the FCC has done. And I think this is telling because the -- the -- while Respondents are saying this is an out-of-control program, where it's gone from 3 percent to 35 percent contribution rate, the math is not -- is pretty misleading on that. This program actual -- the actual amounts for the revenues have stayed flat for 10 years. The complaint that they seem to have with respect to their percentage actually deals with -- is explainable because the -- it's technical -- but the contribution base for the telecommunications revenues has fallen from $288 billion in 2014 to $116 billion today. That has to do with the fact that the carriers' revenues for -- intrastate telecommunications has fallen, not with respect to some out-of-control program.

Justice Thomas: So -- if I understand your argument, it is that indirect constraints or at least constraints to the services being offered are sufficient to constrain the Official 1 revenue-raising side as far as non-delegation is -- is -- is concerned?

Sarah M. Harris: Absolutely. A couple of reasons for that. One is because that is the best reading of the statutory scheme. It would prevent the FCC, again, from doing like the rainy day fund or raising an indefinite amount of money. Two, it's consistent with upholding a range of other statutory schemes that similarly say that an agency or, again, this Court has the discretion as to how much fees or analogous devices to be charged. We think that that is tethered to the statutory structure and that there are real limits on what can be imposed.

Justice Thomas: And, finally, can you give me an example where this indirect approach has been accepted for non-delegation purposes?

Sarah M. Harris: So the Court's non-delegation cases don't really sort of map onto this, other than, I guess, in the tariff context. So if you want to accept the tariff context as on all fours, the tariff context has a number of examples in which the president was not just empowered to set tariffs to a particular Official 1 rate but where the tariffs were tethered to sort of qualitative judgments by the president with respect to what would promote trade or what would equalize production levels. And I think that's not uncommon. It's sort of if your teeing something to a level that requires some sort of expertise or might change over time, it kind of makes sense that that would be true. Again, you could also look to Skinner where there is a lot of discretion with respect to -- exactly what level the fee was going to be set at for surface pipeline fee purposes. It did have like an ultimate cap of 105 percent of, like, what the programs were running at for appropriations, but, like, within there, there's, like, a wide range of discretion. And I just think it just doesn't pan out, the idea that you have to have some sort of magic number inquiry. It's not consistent with how this Court has treated the Tax Clause as indistinguishable from other Article I powers. And it just doesn't make a lot of sense. Like, $2 trillion is where cap is constitutional without any other guardrails? That can't be Official 1 right.

Chief Justice Roberts: Justice Alito?

Justice Alito: Well, the amount to be raised is tied to the provision of universal services, so -- but universal services can evolve. How far can it evolve?

Sarah M. Harris: Not so far for two reasons. One is that evolving technological landscape is specifically tied to four different things that -- define universal service under 254(c). So the most objective of those, although there's a bunch of them, is one I mentioned, that it's a substantial majority of residential customers have chosen to subscribe. So, again, that would throw out faxes. Most people are not subscribing to faxes today as their means of communicating with each other. It's phones. And the other constraint is 151. You have to pick things that are similar to radio and wires as they were in -- sort of envisioned in 1934 and just this history of what universal service has been.

Justice Alito: So if a new form of very expensive telecommunications services popped up, then this -- that could be covered? Official

Sarah M. Harris: I don't think so because --

Justice Alito: If enough people subscribed to it?

Sarah M. Harris: Well, it would have to have a substantial majority of residential customers have chosen to subscribe through market forces. So, again, if the -- the entire country is suddenly able to afford extremely expensive telecommunications, that might be an issue --

Justice Alito: Well, what's a substantial --

Sarah M. Harris: -- but then you'd have other --

Justice Alito: What is a substantial portion?

Sarah M. Harris: A substantial majority.

Justice Alito: Substantial.

Sarah M. Harris: Substantial majority. So more than a majority.

Justice Alito: More --

Sarah M. Harris: Certainly, more than 50 percent. And I'll just also point out that (b)(1) would be an additional constraint in your Official 1 hypothetical because the quality services have to be available at just, reasonable, and affordable rates. And so, again, the scheme would work out so that you're not -- it's hard to imagine that you would have like Cadillac.

Chief Justice Roberts: Justice Sotomayor?

Justice Sotomayor: To that point, the Act has only subsidized two services, phone and Internet, correct?

Sarah M. Harris: So it's actually -- phone is the universal service --

Justice Sotomayor: Mm-hmm.

Sarah M. Harris: -- and then, for the Internet, it comes in under the express directive under (h)(2) that the FCC "shall establish competitively neutral rules to enhance, to the extent feasible [...]" -- advanced -- "access to advanced telecommunications and information services."

Justice Sotomayor: So --

Sarah M. Harris: Internet is an advanced information services.

Justice Sotomayor: So whatever, there Official 1 is a real constraint. Because only two services have been identified?

Sarah M. Harris: Yes. It is a very real constraint. And it's --

Justice Sotomayor: All right.

Sarah M. Harris: -- constrained further.

Justice Sotomayor: Justice Thomas and -- and the other side makes a great deal, and you've been answering it, about the fact that there has never been a tax-raising law that we have addressed where Congress has not put an upper limit on the tax. I think your -- you say that may be true, but we have a lot of tariff situations where historically, from the beginning of the country, Congress didn't set a limit, correct?

Sarah M. Harris: There's that and also just the -- the history on pages 8 to 9 of the reply brief --

Justice Sotomayor: Right.

Sarah M. Harris: -- where, like, there's a lot of statutory examples. The Court just hasn't addressed them.

Justice Sotomayor: Okay. So, Official 1 historically, we have a lot of examples of it?

Sarah M. Harris: Yes, and the only other thing on the history is the 1798 real estate tax, if we want to get there. The extent of the discretion there, while there was a cap, is just -- extremely broad.

Justice Sotomayor: Yeah. The federal boards, the -- the boards there could set different rates in different places and did a lot of -- gave it extraordinarily broad power, correct?

Sarah M. Harris: Exactly right. Allegheny County, Pennsylvania, for instance, got a 50 percent downward departure on their assessments because of the Whiskey Rebellion. That's a policy judgment.

Justice Sotomayor: All right. I want to -- so to -- now, I think why that's important is twice we've said that the taxing power shouldn't be looked at any differently than tariffs or customs or duties. And the reason for that is the Constitution itself, right? The Tax Clause is part of duties, it says, I think -- let me just get the language -- it -- basically, it's the Official 1 same clause with -- talking about the same power, correct?

Sarah M. Harris: Exactly right.

Justice Sotomayor: All right. Now, I want to go back to Justice Alito's questions with respect to the contribution limit and the -- these -- the complaints about whether some of the people who have received the funds are proper or not. I think the point you were making is that the delegation issue is the contribution base?

Sarah M. Harris: Yes.

Justice Sotomayor: Not whether or not the agency itself or the person it's delegated to is actually functioning properly and who it's identifying to receive the funds, correct?

Sarah M. Harris: Correct.

Justice Sotomayor: So the contribution limit, he says the history is very sparse that the agency has reviewed that contribution base that was recommended. The reason I see that's -- the reason for that, I think, is because the FCC controls every component of calculating that, correct? Official

Sarah M. Harris: Yes. It sure does.

Justice Sotomayor: So it tells -- it determines and tells USAC what information to get from the people that it's surveying, correct?

Sarah M. Harris: Yes.

Justice Sotomayor: And then the FCC says -- determines what the final contribution base calculation should be, correct?

Sarah M. Harris: Absolutely.

Justice Sotomayor: It determines what expenses should be covered?

Sarah M. Harris: Yes.

Justice Sotomayor: So what USAC is doing is a mathematical calculation?

Sarah M. Harris: That is correct.

Justice Sotomayor: So we would hope that there's not much more than four examples of them -- getting math wrong, correct?

Sarah M. Harris: That is certainly the hope.

Justice Sotomayor: If -- if there were a lot more, I'd be much more worried, but at the end, the number they're given is a number where each component has been set by the -- by the agency? Official

Sarah M. Harris: By the parameters the FCC sets, correct. Under the regulations.

Justice Sotomayor: All right. Now, Justice Gorsuch asked you a list of principles. And -- and you said -- I'm assuming he's asking whether, I think -- and he can speak for himself -- and he often does. (Laughter.)

Justice Sotomayor: But those principles are from our cases, correct?

Sarah M. Harris: Absolutely.

Justice Sotomayor: And the best example of what those principle mean -- principles mean is not us redefining them, but us looking to how they've been applied in our precedents, correct?

Sarah M. Harris: I would just give one caveat, which is I know members of the Court are concerned that specific cases have not followed the principles that the Court has actually laid out in the cases. And there is arguably some tension there. And so that's why we've identified two paths for the Court to go.

Justice Sotomayor: Okay. Official

Sarah M. Harris: One is the metrics of the cases. Just, you know, is the delegation worse or better? And two is what do the principles mean?

Justice Sotomayor: But none of our precedents have been rejected by the court below?

Sarah M. Harris: None -- none your -- correct. The court below and Respondents are not asking you to overturn any of them.

Justice Sotomayor: Any. And if we were going to overturn any precedent, we should have brief -- briefing on that, correct?

Sarah M. Harris: You certainly could.

Justice Sotomayor: Could. But we should?

Sarah M. Harris: Sure, yes.

Justice Sotomayor: Okay. It's a better practice, isn't it, if we're going to overturn precedent, to find out what -- what all the stare decisis factors are?

Sarah M. Harris: Stare decisis is important. Again, I think we're not saying that the Court cannot constrain or sort of revitalize the principles in the cases by overturning things, though. Official

Justice Sotomayor: Oh, sure. We're always free to do that, but we should proceed with caution when we're looking at overturning precedent.

Sarah M. Harris: Yes.

Justice Sotomayor: Thank you.

Chief Justice Roberts: Justice Kagan?

Justice Kagan: The easiest parts of an argument are where you just have to say yes to everything. (Laughter.)

Justice Sotomayor: Remember, I was a prosecutor. (Laughter.)

Justice Kagan: This is going to be just a little bit harder. But just a little bit. (Laughter.)

Justice Kagan: You mentioned to Justice Thomas when you were first talking to him that there are other schemes that function exactly like this one, in the sense of revenue-raising provisions that don't have specific numerical limits. And you pointed to your list on page 8, which is like the Federal Reserve and the FDIC Official 1 and a bunch of others. And I just want you to talk a little bit more about that and to tell me: How close are those? Or, you know, otherwise put, like, are there distinctions -- if I looked at all of these more carefully than I have, would I be able to say no, these are distinguishable in various ways? Or are these, like, really right there?

Sarah M. Harris: I think they are right there, in the sense that especially the ones that are the agencies using their fee-raising power to cover the cost of the agency's function -- the programs that the agencies are doing, it's going to the regulated party. So here, telecommunications carriers for their OCC banks, and saying: Please support the programs that we're doing. Even though, oftentimes the programs that are being supported are not things for the benefit of the bank's, per se. It's like enforcement proceedings, or here, it's not it -- the telecommunication carriers that participate in universal service are getting the money back at the back end. So I think it is on all fours in that Official 1 sense. The idea is you have a special fee-raising provision to a specific subcomponent of the industry that's used to sort of fund programs that affect that industry. So in that sense, it's on all fours.

Justice Kagan: Thank you, General.

Chief Justice Roberts: Justice Gorsuch?

Justice Gorsuch: They're going to get harder still. But you can handle it. (Laughter.)

Justice Gorsuch: Ms. Harris, let's suppose that Congress passed a statute saying that every American should pay an equitable and non-discriminatory contribution to paying down the national debt, sufficient to reduce the national debt by 1 percent a year. Okay? A lot of language sort of like what we have here, but then left it up to the IRS to figure out marginal tax rates, deductions, do you get your charitable deduction, unrealized income. You figure it out, IRS. Good to go or not?

Sarah M. Harris: Not good to go. Two differences from this particular scheme. Official

Justice Gorsuch: Okay.

Sarah M. Harris: One is the breadth of the delegation obviously matters. We talked about that before. The --

Justice Gorsuch: So it's okay if it does it to a subset of citizens, but it can't do it to all citizens?

Sarah M. Harris: It's not just a subset of citizens that's different for 254. It's the specified nature and the details of the programs. You are talking about a tax for the entire country that has no other parameters and wouldn't sort of be building on the history of IRS regulation. And we are talking here --

Justice Gorsuch: No, no, there would be IRS regulate -- there have been IRS regulations for some time.

Sarah M. Harris: I take the premise of the hypothetical to be --

Justice Gorsuch: Quite a few of them. So let's -- let's assume it's -- you know, you can make the same kind of old soil arguments, they know how to do this. They are very good at it. The IRS has been at it for a long time. Official

Sarah M. Harris: So I wouldn't say the old soil argument here is they're great at this. It is that Congress understood when enacting the particular scheme that it was incorporating those restraints and concepts --

Justice Gorsuch: Don't you think --

Sarah M. Harris: -- that go into universal soils --

Justice Gorsuch: -- you would have the -- make -- be making the same argument in the case that I just posited, that -- that -- that the IRS would? Or -- or maybe if you want to make it narrower. Same -- same delegation, but to secure universal healthcare, for example, sufficient to secure advanced universal healthcare on a non-discriminatory basis. That's a narrow one for you.

Sarah M. Harris: Again, I think the problem there is you are using the words of this particular statutory scheme out of context in ways that divorce it from the constraints in this particular scheme.

Justice Gorsuch: Okay.

Sarah M. Harris: It's the idea that Official 1 universal healthcare is a goal that has not sort of been a --

Justice Gorsuch: Well, then -- in this scheme there is no cap on how much can be raised, right?

Sarah M. Harris: I disagree. I think --

Justice Gorsuch: No numerical cap.

Sarah M. Harris: -- there is a -- there is a qualitative cap.

Justice Gorsuch: There's no numerical cap.

Sarah M. Harris: There is absolutely no numerical cap.

Justice Gorsuch: There is no rate.

Sarah M. Harris: There is no rate, but the rate is something that is historically defined in ways that your hypotheticals aren't. And --

Justice Gorsuch: Let's -- let's talk about your -- the constraints you do mention. What are advanced services?

Sarah M. Harris: Advanced information services or technical -- and -- or telecommunications services are things that are, Official 1 again, above the baseline of what's been considered universal services. So like existing telecommunications and -- are, again, a more novel technology.

Justice Gorsuch: Those evolve over time, right?

Sarah M. Harris: It could evolve over time --

Justice Gorsuch: Sure.

Sarah M. Harris: -- but the statutory parameter for (h)(2) would be something that someone could challenge. Again, an APA suit -- suit could be a great way to go if --

Justice Gorsuch: Okay.

Sarah M. Harris: -- you thought that it was misdefined.

Justice Gorsuch: Let's talk about (b)(6) in schools, for example, as well. The FCC's interpreted that to mean that it can provide mobile WiFi hotspots for off-premises use and in school buses, right?

Sarah M. Harris: It has. And I would also point you to (h)(1)(B), which is providing yet more specificity with respect to the how the school and library programs are supposed to go Official 1 and how the rates are charged. And, again, I'll just do the refrain. If you think that there is a problem, or people think that there is a problem, with the way in which the FCC's rules are interpreting the parameters of the program, you can bring a challenge to exceeding the scope of the statutory authority.

Justice Gorsuch: Could the FCC use the program to give everybody a mobile hotspot?

Sarah M. Harris: To give everyone a mobile hotspot? I do not --

Justice Gorsuch: Yeah, everybody who's a library patron at least.

Sarah M. Harris: Everyone who is a library patron? I think the question there would be whether it fits within (h)(2) to the extent feasible to give access to -- advanced telecom and information services for schools and libraries.

Justice Gorsuch: Yeah.

Sarah M. Harris: So, like --

Justice Gorsuch: It's -- it's feasible. It just costs a lot.

Sarah M. Harris: Right. And then the Official 1 other constraints with respect to the costs would be making sure that the ensuing -- any sort of ensuing program for that would not interfere with just reasonable and affordable rates for universal services. Again, I think when you see how the system works --

Justice Gorsuch: And then -- and then with respect to (b)(7), it -- it allows FCC to come up with new principles that aren't found anywhere in the statutory text, right?

Sarah M. Harris: I don't think that's quite right. And here's why.

Justice Gorsuch: Why -- why not?

Sarah M. Harris: Because the principles have to be consistent with the rest of the chapter. And the proof is how FCC has interpreted -- I think FCC's way of interpreting this shows that it's more of a belts-and-suspenders provision than a do-whatever-you-feel-like provision. The two things that FCC has done under (b)(7) are, one, to require competitive neutrality --

Justice Gorsuch: Well, now, hold on. Official 1 You say we shouldn't look at what's actually been done; we should look at the statute. So let's --

Sarah M. Harris: So --

Justice Gorsuch: -- let's look at the statute, okay? I mean, that's your argument everywhere else, so I think it's only fair to hold you to it here, Ms. Harris.

Sarah M. Harris: That's fine.

Justice Gorsuch: It says the -- the commission -- anything they determine is "necessary and appropriate for the protection of the public interest, convenience, and necessity," and are "consistent with" this chapter.

Sarah M. Harris: Yeah, "and are consistent with." And so --

Justice Gorsuch: Yeah -- well, how about everybody gets a Starlink account?

Sarah M. Harris: Why would -- I'm not sure why that would be sort of -- the idea that it's consistent with the rest of the chapter, they wouldn't need (b)(7) to do that. It would be are you pursuing the (h)(2) advanced services --

Justice Gorsuch: All right.

Sarah M. Harris: -- or something else Official 1 and --

Justice Gorsuch: They could do it under (7), too, right?

Sarah M. Harris: Well, then it wouldn't be an additive power. It would just be pursuing a different statutory command and --

Justice Gorsuch: So they don't even need (7) to -- to give everybody in America a Starlink account?

Sarah M. Harris: I'm not saying everyone in America is getting a Starlink account. What I am saying --

Justice Gorsuch: It sounds like it. It's a pretty good deal. I'd like one. And then what about (c)(3), which says that, "in addition to the services included in universal service ... the Commission may designate additional services for support mechanisms for schools, libraries, and healthcare providers"? At least -- at least one court has pointed out that that's not even limited to telecommunications services.

Sarah M. Harris: Again, I would read that alongside the many other provisions that Official 1 give content to exactly what the programs with respect to schools and libraries and healthcare providers are supposed to do, not only (b)(6) but 254(h)(1)(A) with respect to rural healthcare providers and exactly how their rates are supposed to work --

Justice Gorsuch: Mm-hmm.

Sarah M. Harris: -- and what the services are, and (h)(1)(B), which is with respect to the school and libraries, what the -- what the services are supposed to be, what the rates are supposed to look like. Again, I think you read this -- this scheme in context. And the goal in reading it is not to look for ways of reading the language in a -- one isolated provision in a way that would create non-delegation problems.

Justice Gorsuch: Yeah.

Sarah M. Harris: But you're looking at --

Justice Gorsuch: No, for sure, of course. I take that point. It -- it's interesting to me, though, that the cases that you cite on page 8 and 9 of your reply brief are all fees, basically. And Official 1 fees have been historically understood, as, in fact, we've said, this Court has said, and Judge Cooley has said, right, way back when, to cover the costs of the program in question or the services rendered, things like that. They're -- they're pretty particularly tied. And, in fact, many of the examples you cite, even the snippets you take, point that out.

Sarah M. Harris: Yeah.

Justice Gorsuch: And we don't have that here with respect to this tax.

Sarah M. Harris: I disagree because I think this is a similar -- and, again, I -- I think whether you think this is a fee or a tax, you have the same problem with a lot of the examples on pages 8 to 9. It's not so much that there is sort of like you're paying for the privilege of going to the OCC; it is that there is a regulated industry that is being asked to support the global costs of whatever the regulatory agency is doing --

Justice Gorsuch: Well, here's what we said in -- a National Cable, that fees are typically based on either the value to the recipient or the cost to the government. That's Official 1 -- that's what this Court -- that's how we've described fees. That's how Cooley 100 years ago described fees. That's how all your examples line up. Now, I take the just and reasonable rate argument with respect to rate setting, but that's rate setting for monopolies and public utilities. And their just and reasonable is a long-embodied common law tradition of trying to say, okay, you get your costs back and a reasonable profit to try and approximate a competitive market, acknowledging that we don't have a competitive market; we have a monopolist, a regulated utility. And that's what -- that's -- that's that body of law. So we've a fee body of law. We've got a rate-setting body of law. This isn't either one of those. This is -- this is just a straight-up tax without any -- any -- any numerical limit, any cap, any rate. And we -- we've never approved something like that before.

Sarah M. Harris: So here's what I would point you to. I think Skinner makes that a much harder argument in terms of this is so clearly a tax -- Official

Justice Gorsuch: It's --

Sarah M. Harris: -- versus a fee.

Justice Gorsuch: I -- I'm -- I'm not saying -- I'm not saying taxes are special. I'm just saying what's unique about this case is we have a tax that's unlike any other tax that this Court's ever approved. And -- and -- and -- and it's not a fee related to costs, and it's not rate setting of a monopolist. In fact, the '96 Act blew up the monopolies and said we're done with that. We're setting up a new regime with explicit, explicit subsidies. So --

Sarah M. Harris: So I would warn against overemphasizing the novelty. And the part of Skinner that I think is even more relevant than just saying there's no special rule for taxes is the fact that the Court thought it was actually unclear whether the surface pipeline fee, which was paid by the pipeline -- like, users of pipelines to support -- to support various things, including enforcement actions, it was unclear whether that was a tax or a fee. I'm not sure how that would fit within the framework of thinking that there is this sort Official 1 of very neat distinction among them. And I think it is a very good analogy to the way the telecommunication carriers are doing this here. It's not just that being they are being -- having things exacted from them for the benefit of a general welfare program. The carriers then themselves get the subsidy if they opt to support the universal service program. I just don't think these -- these --

Justice Gorsuch: And many of them are recipients, too, and sit on the board, but that's a whole 'nother set of issues. Yeah.

Sarah M. Harris: It is not a constitutional issue, though.

Justice Gorsuch: Okay. Thank you.

Chief Justice Roberts: Justice Kavanaugh.

Justice Kavanaugh: How exactly would you define tax versus fee, to the extent the other side's position could, or at least one version of the other side's position could, depend on this being a tax?

Sarah M. Harris: So for tax v. fee, I think we would point you to Skinner and the -- the lines that the Court was struggling to draw Official 1 in that case. A tax is something that is to raise general revenue. It can be on a specified set -- sort of a subset of someone. And a fee is often, but not always, conceived of as a payment for a particular service or license. That could be a line that you draw. Again, I think the problem with trying to draw that line, as Skinner points out, is it's unbelievably murky in practice, and the Court has not sort of -- at least in Skinner, was not even comfortable drawing it. And the other problem with that line is, if it's a murky line, it's going to be a pretty hard non-delegation test in any case that plausibly involves fees or taxes to -- to have the threshold question be is this a tax or a fee or something else, and then go on to which non-delegation lens are you supposed to go on.

Justice Kavanaugh: Based on the definition you just gave or the principles you just gave, is this a tax or a fee?

Sarah M. Harris: So the government is assuming it could be classified as a tax. Again, there -- like -- but I don't think you have -- I think under Skinner, there's genuine -- Official 1 ambiguity on that score.

Justice Kavanaugh: But your position, it's a tax?

Sarah M. Harris: We are willing to have it treated as a tax. We just don't think it matters for constitutional purposes because the non-delegation framework doesn't distinguish on this basis. And this is also a Commerce Clause power.

Justice Kavanaugh: Should it matter in how we think about this that the delegation is to an independent agency rather than to the president or to an executive agency? Does that heighten the concern about unaccountable power to, in some of Justice Gorsuch's questions, unaccountable power to raise money to determine the rate, to determine the amount, that it's not someone accountable to the president?

Sarah M. Harris: I don't think so for two reasons. One is that the FCC does not have statutory for-cause removal protections. It is something that's been read into the statutes. And so --

Justice Kavanaugh: So you don't -- okay. Your answer is the FCC is not an Official 1 independent agency?

Sarah M. Harris: Not in the sense of having for-cause removal protection. It's something -- it depends on what you mean. Is it one that sort of --

Justice Kavanaugh: That's usually what I mean about independent.

Sarah M. Harris: Okay.

Justice Kavanaugh: So --

Sarah M. Harris: So that is what I would mean. There's no statutory for-cause removal protections for the FCC. So in that sense, that's less of a concern. But even if you wanted to say, is there some sort of additional heightened concern with respect to accountability to the president, that's an Article II problem that's sort of separate from the broader non-delegation issues. And even if you wanted to sort of say it is a -- when executive power is being delegated to an agency that's not controlled by the president, that's the bigger problem, not is there then a body that is not performing things that are executive power that is then doing something. Official 1 It's sort of like if you have the FTC or other bodies accepting recommendations from someone, that's not a problem, but the problem may well be is the FTC accountable to the president?

Justice Kavanaugh: If the other side were correct that it's a tax, and you acknowledge that it could be considered a tax, and it was held that a tax has to have a -- a tax that's delegated to an agency has to have a cap or a rate, what other programs would be at risk?

Sarah M. Harris: A cap or a rate? I mean, I think, you -- again --

Justice Kavanaugh: If it's a -- so tax, if it's a tax, it has to have a cap or rate. Are there other programs that you think -- and this picks up on Justice Kagan's questions but I'm not sure those are taxes, that's why I'm asking the question.

Sarah M. Harris: Well, I think you would have a -- a heck of a lot of litigation over whether they are taxes, and we think they would probably qualify based on the nature of -- like, just depending on how you define a tax, how they would work. So, yes, I think you would have Official 1 a panoply of issues of are -- like various other measures that don't have a cap. And on top of that, you would sort of incentivize a system where Congress would think it could do its work just by saying a trillion dollars is a good cap and no other constraints are necessary. So, again, a very perverse separation of power scheme that would feel -- I think also require you to overturn a couple of cases, Skinner and J.W. Hampton to start.

Justice Kavanaugh: And then on Justice Gorsuch's hypothetical about the IRS, I just want to make sure I have this nailed down exactly what your answer is for why that's different.

Sarah M. Harris: Why it's different?

Justice Kavanaugh: Yeah, the delegation --

Sarah M. Harris: One is the breadth of the --

Justice Kavanaugh: -- of the IRS to set tax rates.

Sarah M. Harris: Yep. One is the breadth of the delegation. So I took the hypothetical to be it's sort of a tax rate for Official 1 the entire country. It is for the general -- it's supposed to be quote/unquote, "equitable" but a different meaning from, obviously, 254, which is a constraint on what you actually have to be imposing, and that it's to accomplish 1 percent of reducing the national debt. And so it gives the IRS plenary discretion to figure out exactly how else to operate the tax in ways that would be pretty -- that -- that I take it not to be drawing upon the ways in which the IRS had historically done so. And so if it's divorced from that context and you can't use the IRS's regulatory history because this is a novel type of tax, that would be a problem. Now, again, I think the outer limit of Justice Gorsuch's hypothetical is going to have to be the 1798 real estate tax. And that is because that was not too far apart from the idea of giving federal tax assessors the power to reach a cap of $2 million, a ton of money back then, and figure out how to calibrate the assessments in a very discretionary manner.

Justice Kavanaugh: Thank you.

Chief Justice Roberts: Justice Official 1 Barrett?

Justice Barrett: So, Ms. Harris, let me just narrow the hypothetical then, a little bit. What about a law that gave the IRS the authority to impose taxes on the sale of food in interstate commerce to fund programs that would provide food for the needy?

Sarah M. Harris: Provide food for the needy? So I think the deal there is you don't have a sufficiency limit. So provide food for the needy, two issues that would distinguish that potentially. One is what does provide food for the needy mean? Is it something similar to you need to provide a basic level of, you know, three -- like, two meals a day or something? Which is sort of more similar to this system.

Justice Barrett: Sure. Make it two meals a day.

Sarah M. Harris: Okay. So it's sufficient to provide two meals a day, and there is sort of -- I think then you'd be looking at are there other constraints on the statutory scheme on top. Official

Justice Barrett: What would -- what would -- so do you think if there were no other constraints, it would be too far? If it's just provide two meals a day for the needy.

Sarah M. Harris: If it's --

Justice Barrett: So impose taxes on the sales sufficient to fund programs that provide two meals a day to the needy.

Sarah M. Harris: I think the operative question ends up being is there an ability to figure out, as a qualitative matter, what that -- what that would look like.

Justice Barrett: Is there?

Sarah M. Harris: I think you can get it closer -- I think --

Justice Barrett: That's the question.

Sarah M. Harris: I know. I -- I think you can get it closer to being constitutional because of the limit of if it is something that you can measure that is sufficient to give two meals a day, I -- I might give them that one, but I think reasonable minds could disagree on exactly what other constraints you would look for, who -- who it's being assessed -- who is being assessed for it, and what exactly the Official 1 mechanism for delivering this -- this sort of food is.

Justice Barrett: Okay. Let me zoom out for a minute. In Mistretta, Justice Scalia said that once you agree that you can confer discretion, then we are just talking about matters of degree. You know, and ever since the beginning, founding error debates, or Wayman versus Southard, Justice -- Chief Justice Marshall says this is a delicate and difficult line-drawing task. And so it's obviously been a long time since we've held that something was unconstitutional under the non-delegation doctrine. Do you think this is an area in just which -- in which there are just not judicially manageable standards?

Sarah M. Harris: No. There are judicially manageable standards. And the two paths we've identified are both versions of that. One is your manageable standard is like a common law system, where you look to previous delegations and see how they stack up. And two is the standards that we are offering that are drawn from the Court's cases Official 1 where obviously there is a judgment line on how much discretion is too much, but at a minimum Congress is obviously having to provide parameters that you can tell, yes or no, did the agency transgress the boundaries? And this scheme is full of them.

Justice Barrett: So this doesn't have a cap, as, you know, many people have pointed out to you. And so you agree that there's a broad range. I mean, what is it, about $9 billion right now?

Sarah M. Harris: It's $9 billion, but it's dedicated to very specific programs. So it is a qualitative cap, in our view.

Justice Barrett: But it could be 3 billion?

Sarah M. Harris: It could be 3 billion if that were sufficient to support the way the programs operate.

Justice Barrett: Could be 30 billion?

Sarah M. Harris: Again, tied to the nature of the scheme. And that's no different from other delegations that are tied to some sort of qualitative number. The Court could have fees at all sorts of rates. The OCC could have fees Official 1 at all sorts of rates depending on what kind of functions it's performing and exacting them. And that has not been seen as something that is a problem because there are qualitative limits built into the scheme that constrain sort of -- that -- again, we think it is what's necessary to support the defined programs that Congress has provided.

Justice Barrett: Let me ask you about universal service. So Justice Gorsuch asked you about Starlink, but I'm going to ask you just about cell phone plans. Could universal service include having the FCC provide every American with a cell phone and a cell phone plan?

Sarah M. Harris: So the cell phone and cell phone plan, the question would be does that fit within the concept of the (h)(2) support for advanced services and the parameters of the specific programs that are supposed to be tethered to providing advanced services.

Justice Barrett: So it could or couldn't?

Sarah M. Harris: I think it could, but there would be questions with respect to whether Official 1 that's within bounds.

Justice Barrett: Okay.

Sarah M. Harris: And again, whether that would have collateral consequences for the other parameters in the scheme of would it be something that then imposed so many costs that there would no longer be universal services provided of -- at affordable charges, for instance, because of like the pass-on by the telephone -- by the telecom carriers. Again, I think this is a scheme. It -- it is hard to see how this scheme would be the thing that crosses the line for non-delegation purposes and yet much broader delegations are okay.

Justice Barrett: Last question. Can you think of any other statutory scheme that gives the agency the authority to identify the additional principles that constrain its power?

Sarah M. Harris: Yes. The Securities and Exchange Act gives the SEC -- there's -- there's -- I think there are a bunch of them that give agencies the power to say are there other consistent principles to consider in a multi-factor test? Official 1 And even in (2)(B), where this Court said it was a perfectly fine delegation for the AG to decide what is a controlled substance, there's often a balancing of factors that are kind of open-ended within the scheme. So that one is sort of the nature and pattern of the abuse -- of the controlled substance abuse, how -- how prevalent it is, how much of a danger to public safety. Sort of factors that -- each one of them might not be particularly strong, but the AG could decide would be enough, just in their judgment. So I don't think that's anything novel. And if you had a problem with (b)(7), there is a severability provision in the statute under 608, and so, again, you could sever that. It would be sort of pointless, because the only thing the FCC has ever done with this is hark to other principles in the statute.

Justice Barrett: Thank you.

Chief Justice Roberts: Justice Jackson?

Justice Jackson: So I guess I'm struggling with trying to understand what difference it makes that we do the hard work of Official 1 trying to characterize this as a tax or a fee. My understanding was that the non-delegation doctrine, as you've said a few times this morning, is that Congress is not allowed to give away or delegate legislative powers. And I don't hear any serious argument that Congress doesn't have both the power to tax and to levy fees. So I don't -- I -- it seems to me that any restriction on Congress's ability to do this would run to both. Is that right?

Sarah M. Harris: Not -- yes. That's not only right, but also perverse. Because the other issue here is even if you go through the tax-fee fee analysis, you have a separate inquiry. When Congress is doing overlapping powers, at is -- as it is here, using the commerce power and the tax power, you have to figure out which one you picking. There's no sort of, like, pick the more restrictive power and impose a special test rule. That's -- that's the exact opposite of what the Court has done in all sorts of cases that implicated both the tax power and the commerce power or the tax power and the war Official 1 powers. And so you're exactly right that the tax-fee fee inquiry doesn't have any constitutional rooting for which non-delegation test you pick, and it -- above -- above and beyond that, there is another layover -- layer of complexity that I don't think Respondents have dealt with on that.

Justice Jackson: And -- and you've said many times that there is a cap. I mean, there's sort of characterizations being made that there's no cap in this statute. And you say there's a qualitative cap. Can you just say more about how you see this as actually imposing a limit on the amount that can be collected through this program?

Sarah M. Harris: Yes. So in three different places of the statute, in 254(d) and 254(e) and also in -- in 254(b)(5), it is a sufficient -- the -- the -- it has been to be a sufficient mechanism to achieve the objectives of the programs that Congress has set out. The Fifth Circuit in Alenco interpreted that -- as we agree with -- to mean Official 1 you can't charge excessive things for the program. It can't be more than the programs need to accomplish the specified objective that Congress set out.

Justice Jackson: So this is not an opportunity to just raise money for the FCC to use for whatever reason or et cetera?

Sarah M. Harris: Exactly. It can't be used for whatever reason. There's also constraints on once you have raised this -- once -- once you essentially have the telecommunication carriers' contributions, how they are supposed to be allocated and how the carriers that participate in these specified programs are supposed to then not, themselves, be able to get too much money from the program. They only are able to get what they are spending to support universal service.

Justice Jackson: And so the call for a particular number, it's sort of hard to even figure out how Congress would do that in this situation, right?

Sarah M. Harris: That's exactly right, and why qualitative -- why sort of these qualitative judgments are common. Again, think Official 1 of the tariff system, where there were sort of judgments with respect to changing circumstances. There are programs where you can have qualitative limits that are trying to accomplish defined objectives that might change over time, and Congress can give that flexibility to an agency without violating the non-delegation --

Justice Jackson: And --

Sarah M. Harris: -- factors.

Justice Jackson: And you say in your page 8 here that there are a number of different agencies that have similar kinds of revenue generating -- I know some people call them fees and not taxes. I've already established that in my view that doesn't make a difference -- a number of agencies that have these kinds of general statements about raising revenue that they determine is necessary or appropriate to carry out responsibilities. So let me just say that if we find that this one is unconstitutional, are all of these programs in jeopardy, in your view?

Sarah M. Harris: Yes.

Justice Jackson: Thank you.

Chief Justice Roberts: Thank you, Official 1 Ms. Harris. Mr. Clement. ORAL ARGUMENT OF PAUL D. CLEMENT ON BEHALF OF THE PETITIONERS IN CASE 24-

Paul D. Clement: Mr. Chief Justice and may it please the Court: There is no delegation problem here. Congress did not decide out of the blue in 1996 that it wanted to impose a tax on certain telecommunication carriers to subsidize other carriers. Instead, what Congress did in 1996 was to make explicit the universal -- service subsidies that had long been implicit in rate -- monopoly rate regulation. Now, that rate regulation was classic Commerce Clause legislation that did no more to guide the agency than tell them to regulate in the public interest. So when Congress in 1996 decides not only to deregulate but to expressly embrace these subsidies, and then specified who should pay what, that is a victory both for competition and for non-delegation principles. The resulting statute is fully Official 1 consistent with all of this Court's precedents, none of which my friends on the other side ask this Court to overrule, nor do they confront the massive reliance interests on this program or many of the other programs that might be taken out by overruling this Court's cases. This is simply not the right vehicle for this Court to revamp its non-delegation doctrine. I welcome the Court's questions.

Justice Thomas: Do you agree with the government's argument as to the constraints on the revenue raising?

Paul D. Clement: I -- I do. We also think that sufficiency can be construed to be both a ceiling and a floor. But I guess the only thing I would add to the government's answer is I think where the real constraints come from are in the parameters of the universal service program itself. It is not a charge to the agency to just do anything it wants. With respect to rural customers, for example, what it's supposed to guarantee them is reasonably comparable services at reasonably comparable rates. Official 1 So if the agency wants to say, you know, actually, rural rates, it's -- it's hard to be a farm, the rural rates should be lower, that would violate the statute. It would also in the process make the program more expensive. And so one way to think about where the -- where the real caps are coming from is the fact that in the four major programs, rural, low-income, rural health, and the schools, none of those are things where the agency isn't constrained and can't just add sort of things willy-nilly to the program. And that's why, if you look at the -- the graph on page 3 of the SHLB reply brief where it shows you the total revenues of the fund over time, it has been remarkably flat. And I think that's a reflection of the basic parameters of universal service in the four major buckets that the agency has adopted have all been relatively stable over time, and that's why, though you might see that rate going up because the contribution base is shrinking, the total revenues raised are actually lower, inflation-adjusted terms, over the last decade.

Justice Thomas: Now to take the flip Official 1 side of this, what would a -- a -- a program look -- of this sort look like and -- in order to violate the non-delegation clause?

Paul D. Clement: So I think a program like this -- I mean, you know, the first thing you -- you would do is you would say, all right, if you gave some agency that doesn't have -- hadn't had -- previously had rate regulation authority, doesn't have jurisdiction over a industry where there's network effects and a reason to have some degree of regulation even after you get rid of the -- the monopolies, if in that kind of industry you just basically said, you know, have at it, do fair competition or do some kind of fund, I -- I think that would be problematic. And, you know, I mean, I'd start with this Court's cases. Obviously, there haven't been a lot of cases striking things down on delegation doctrine, but you do look to Schechter Poultry, that says if you try to do something that's economy-wide and you use a term that, because it's economy-wide, doesn't have any particular specialized meaning like fair competition, okay, that's out of bounds. Official 1 If, Panama Refining, you try to basically tell the executive branch, go -- go deal with hot oil, that's a problem, but you don't give them any direction --

Justice Gorsuch: So --

Paul D. Clement: -- and --

Justice Gorsuch: So -- so -- I'm sorry to interrupt there, but I think that's a -- a really interesting and a good point. So, for example, when you say just and reasonable rates and a regulated monopoly that's historically been understood to mean cost plus some reasonable profit approximating, what would happen in a competitive environment, that's -- that -- that's something. But if you were to say go forth and create a just and reasonable tax system, that would be different, even -- even though you're applying the same principle of -- intelligible principles across the board because one has historical content and the other doesn't. Is that -- is that the gist of it?

Paul D. Clement: That's the gist of it.

Justice Gorsuch: Okay.

Paul D. Clement: And I also would think, Official 1 just to take -- you know, because -- because this is I think all consistent --

Justice Gorsuch: So -- so -- so -- so if that's true, just -- I'm sorry to interrupt --

Paul D. Clement: Yeah.

Justice Gorsuch: -- but so that's true, you'd agree that there are some judicially manageable standards that we can apply when it comes to delegations?

Paul D. Clement: Absolutely. And, you know, I -- I mean, I would add to my list, I mean, just two other things. If you interpreted the statute at issue in Gundy the way that the dissenters interpreted the statute there, then that's just Panama Refining II, right? That's just the Attorney General can do whatever he wants with the preexisting sex offenders. And I think, as interpreted, that would claim -- plainly be a non-delegation problem. And then the other thing I would -- just to complete the cycle of this Court's cases, and I know it's not a huge cycle, but Carter Coal is also a situation where Congress itself tried to delegate in part to private entities. And Official 1 that may be a distinct problem, but that's not what happened here.

Justice Gorsuch: No, I understand. And with respect to, like, fees, again we have a classic understanding. We said it in National Cable, and, you know, the GAO has repeatedly said it. Those are designed to cover -- cover the costs or the expenses, right? Generally?

Paul D. Clement: That -- that -- that's right.

Justice Gorsuch: Yeah.

Paul D. Clement: And I would part company with the government on their answer that you should conceive of this as a tax. I would agree with them on the front-line answer, which is, I mean -- you know, I don't see how Skinner could have been much clearer that you don't have to determine definitively whether it's a tax or a fee. And I would caution that, you know, saying this is a tax could have some implications for the Origination Clause. I think the test is slightly different, but I think there's a lot to be said for not calling this either a tax or a fee. Official 1 But what I would say is in the universe of things that are -- can be understood like a fee like this, I -- which I think it can because part of the reason that Congress specified in 254(d) that it's the telecommunication carriers are the ones that are going to be -- make contributions to this, is they had, both historically and going forward, been ones that benefited quite considerably from the idea that there would be universal service --

Justice Gorsuch: Well --

Paul D. Clement: -- and a network that overcame networking --

Justice Gorsuch: -- that -- that's a little hard to understand, though, because we all benefit from tax collection too, right? I mean -- I mean, that's kind of circular. I'm not sure that really helps very much.

Paul D. Clement: So I -- I -- I -- I actually think it does in the following sense, which is I think --

Justice Gorsuch: Well -- and let me throw one more thing in --

Paul D. Clement: Okay. Official

Justice Gorsuch: -- before I forget it.

Paul D. Clement: Yeah.

Justice Gorsuch: And that is, of course, the '96 Act was new and -- and rejected the whole monopoly rate-making regime and -- and ignited competition and made these subsidies no longer part of the rate-making process, but very explicit.

Paul D. Clement: I -- I mean, I agree, but I think --

Justice Gorsuch: Okay.

Paul D. Clement: -- that's a feature and not a bug of my position because it would have been easy for Congress to say, all right, while we're introducing competition, universal service doesn't really work with competition. And Congress here made the critical policy judgment itself -- and I don't think it's at all ambiguous -- that we are going to continue to have universal service and universal service fees even once we get -- we go into a more deregulated environment. But just one --

Justice Gorsuch: If we -- if we reject your view that they're fees and accept the Official 1 government's willingness to characterize it as a tax, what difference does that make, in your mind?

Paul D. Clement: Well, under this Court's --

Justice Gorsuch: Because you're -- you're fighting it so hard. There -- must make a big difference to you.

Paul D. Clement: Well, two reasons. One is under this Court's precedents which haven't been asked to be overruled, like, it doesn't make any difference at all. So that would be my sort of front-line answer. But to give you my other answer, which is, look, I have the same instinct that I think underlies many of your questions, that if you just tried to delegate the tax power to the Internal Revenue Service, that there's something problematic about that. Now, I think that's in part because those are statutes where raising revenue is the end in itself; whereas I think with fees and whether you call this a fee or a tax --

Justice Gorsuch: Really? Raising revenues is an end in and of itself? I thought Official 1 it was to provide for the common good and protection of this country and all that other stuff.

Paul D. Clement: Yeah, but all that other stuff is taken care of by other agencies. When you're talking about the IRS -- (Laughter.)

Paul D. Clement: No, seriously.

Justice Gorsuch: So it depends on which agency it is?

Paul D. Clement: Well, if -- if you're delegating --

Justice Gorsuch: Really?

Paul D. Clement: If you're delegating something to the IRS --

Justice Gorsuch: That's what it all boils down to.

Paul D. Clement: -- you must be delegating to them revenue raising.

Justice Gorsuch: So if the IRS is spending the money, then it would be okay? So if the --

Paul D. Clement: No, no. But --

Justice Gorsuch: You know if we put the -- Department of Defense reported to the Official 1 Commissioner of the IRS, it would all be good?

Paul D. Clement: No. I think there is a material difference between a statute that says IRS, as to all the citizenry, raise some revenue, as opposed to a statute that says: Look, we've been doing universal service for 50 years. We want to continue to do it. It's always been implicitly the telecom carriers that are paying for that, and we want to continue to do that, and we're going to put a fee -- I'd call it a fee -- on those carriers for that purpose. And I think it's also consistent with the idea that I assume most of these hypotheticals -- where it's the IRS that's getting the delegation, Congress would be explicit. This is our taxing power. We're using Article I, Section 8, clause 1. I don't think the '96 Act at all conceptualized that what it was doing was using the taxing power, just like the '34 Act was a classic regulation of an instrumentality of commerce. When Congress was trying to deregulate that in 1996 --

Justice Kavanaugh: What do you think the role of novelty is in assessing the Official 1 constitutional issue here? In other words, we've said in other contexts that when Congress does something that it's never done before, that can be an indication of a problem. And that's where the tax/fee issue comes into play, as I see it, potentially, which is, yeah, there have been lots of fees, but this seems somewhat different from what has been done before in terms of the nature of it and how it works and operates. It falls, as the government says, on the tax side of the line. That seems different, novel, and raises the IRS hypothetical, if we go down this road. So how does -- should we think about that?

Paul D. Clement: Well, I -- I mean, that is part of the reason I take -- part -- part company with the government because, I -- I mean, I do take it, you know, it's -- it's -- we've been at this republic thing for quite a while, and when something hasn't been done before, you might think, well, that's at least something we have to look at more carefully. I don't really think this is something that hasn't been done before. In fact --

Justice Kavanaugh: And what -- and Official 1 what do you think are the best precedents in terms of what Congress has done for this?

Paul D. Clement: Well, I think all of this stuff in Section 8 and Section 9 are precedents for the idea that when you have something that's not a pure revenue-raising scheme, not a delegation to the IRS, but you give some other agency some kind of revenue-raising authority with respect to covering their services or what -- the programs they provide, this fits comfortably within that pretty long tradition that includes delegations to this Court to have fees to cover the cost of certain services. And those -- you know, it -- it -- is like this Court in Whitman, just to take a precedent that nobody is asking to be overruled, it looked at the statute there, and one of the arguments was -- that the lower court has accepted is: Uh, this isn't good enough. There has to be -- the words that they used was "a determinative criterion." And I think, at least in a statute like this where it's not pure revenue-raising, I don't think that asking for a determinant cap makes anymore sense here than asking for a Official 1 determinative criterion made in Whitman. And the reason is it's not that this is standardless; it's just that the criterion, rather than being a determinative cap, is all the different restrictions on this universal service fund. And there is so many ways -- and I think this was the government's point as well. There is so many ways that by changing a rule here -- I mean, if they -- if the agency, tomorrow, changed the eligibility requirements for the Lifeline Program and substantially loosened those eligibility requirements, that would increase the -- the burdens on the universal service fund. It would increase the -- the rate; it would increase the bate -- base. But if they did that, that is an agency action that could be challenged under the APA. If they tried to loosen the eligibility so that everybody who is making, you know, seven figures, six figures, whatever it is, can get the Lifeline Program, that would be invalidated in the courts. And so the -- the restraints on this are not a definitive cap, but they are from the substantive limits of the scope of the program. Official

Chief Justice Roberts: Thank you, counsel. Justice Thomas? Justice Alito?

Justice Alito: Well, just out of curiosity, the Court has said, as the Appellees note at the very beginning of their brief, an indefinite power to tax is a power to destroy. Do you think that can be said about every power that is conferred on Congress in Article I? The power to establish post -- post offices and post roads is the power to destroy? The power to establish uniform laws on the subject of bankruptcies is the power to destroy?

Paul D. Clement: I -- I'll give you coin money too.

Justice Alito: All right. (Laughter.)

Paul D. Clement: So -- so -- so -- so I don't think -- I don't think death by coining money is a possibility. Or destruction by coining money. But -- but -- but what I will say is there may be other ways in which you think of the tax power as being slightly different or slightly Official 1 more dangerous, but I don't think non-delegation is -- and this Court unanimously rejected that twice. But what I would say is there's a way to apply your existing jurisprudence. This is what I was trying to get at with my colloquy with Justice Gorsuch -- maybe not successfully -- is if you apply your basic approach to these issues, which does ask at some level has Congress made the basic policy judgment, I think when you're talking about a pure revenue-raising statute, I would say if Congress hasn't given you a cap or a rate, maybe Congress hasn't made the basic policy judgment. But when you're talking about something, whether you call it a fee or a tax, that's directed at a particular industry and is a judgment by Congress that we are going to continue to have universal service even in a deregulated environment, Congress has made the important policy judgment there.

Chief Justice Roberts: Justice Sotomayor?

Justice Sotomayor: You started at the beginning by talking about what -- invalidating Official 1 Section 254 would have disastrous effect for your clients. In which ways? And can you summarize why all of the ideas that have been floated as to how to say this is a tax that and -- and that as such, it needs some cap or something else, how -- what effects would that have on our precedents?

Paul D. Clement: So let me take them both in turn. I mean, the disastrous effects are not just for my clients. They're for all the various beneficiaries of this program. And so, like, start in rural Alaska, which is very dependent on this program. Talk about Native American reservations, where people are dependent on this program, both because they're rural and because they're low income. Talk about all the schools and libraries that benefit from this program. Talk about all the rural health providers. And that's an area of the statute where Congress has been very specific. The rural healthcare providers get the same rates or reasonably comparable rates to the urban health providers in the same states. Official 1 So you have very definitive guardrails on the system, and huge beneficiaries. And, of course, we all benefit from having a communication system that is truly universal. I mean, I might not live in rural -- you know, like, rural Alaska, but it's nice to be able to place a call there. And even beyond that, we all benefit from the fact that we have a -- a service network that everybody can use. And that includes, you know, as -- as broadband gets expanded, the fact that people all over the country can access these services. But I promise to get to the second part of this, which is this Court's jurisprudence. And, I mean, I'll tell you, I think all of those statutes at pages 8 and 9 of the government's reply brief are vulnerable. But I go further and say I don't know what else is at issue here. Because, as you pointed out, that's just not the way this case has been briefed. And typically in a -- in a universe where, you know, there's two unanimous Supreme Court cases that say we don't treat taxes Official 1 different from other legislation for non-delegation purposes, typically if you're going to go into the wall of that, you know, bravely go forth, but say why the stare decisis factors are satisfied in this particular context. And then we can have briefing that really gets to the idea: All right. You know, they have a theory that half those statutes on page 8 are still going to be okay, but we have a theory that other things are going to go. I'll just tack one on that's not on 8 and 9, but, you know, I took a look at the way the National Park Service funds itself. It's actually very similar to the way this works. The -- the fees are supposed to cover the services that are provided. If you cut down on the number of national parks, the fees are going to go down. If you add a couple national parks, the fees might go up because you have more to cover. And there's six factors, it turns out, that guide the Park Service on that. And the sixth one is something of a catch-all, a lot like -- (b)(7). So -- but, again, we just haven't had Official 1 the briefing that would allow me to definitely tell you I know exactly what the damage and the consequences are of overturning your precedents in this case.

Justice Sotomayor: On the first part of the answer, Respondents said at the end, recognizing the rather dramatic effects of invalidating this law would have on communications, that we had two alternatives. One, as we did in the bankruptcy context, tell Congress: Figure it out in six months before we made our judgment effective. I'm covering all options in my question. So I hope it's not a hypothetical that's necessary. But I'm covering options or I -- I don't know what the second -- but do you have a preferred manner to do this --

Paul D. Clement: So --

Justice Sotomayor: -- to minimize the disruption? Long term, you can't, because we're overruling precedent and putting a lot of programs at risk, but --

Paul D. Clement: Yeah. If the -- if the question is: Do we have a preferred way to Official 1 lose --

Justice Sotomayor: Right. (Laughter.)

Paul D. Clement: -- you know, it's not -- not, you know, high on my wish list. But, you know, I mean, look, I don't think the Northern Pipeline sort of -- six-month interregnum was necessarily the height of this Court's remedial jurisprudence. So I am somewhat reluctant to recommend that to you as an option. I actually kind of think it works the other way, which is if you really think you need to do Northern Pipeline, then maybe you shouldn't do what you were doing in the merits part of your opinion.

Justice Sotomayor: There's a whole lot of --

Paul D. Clement: But I know that's quite a question --

Justice Sotomayor: There's a whole lot of people in that area of law that agree with you.

Paul D. Clement: Yeah.

Justice Sotomayor: We shouldn't have done it, but -- Official

Paul D. Clement: Yeah. No. And -- and, you know, so -- so since I think that's doctrinally -- I think the second thing they suggested is you could make this relief only run to the particular parties here at issue. And since it's capable of repetition yet evading review -- I'm not even sure what that means -- and -- and -- and then you -- you could try to fix it. The other thing they suggest, of course, is you could fix this whole thing with half a sentence. Well, gee whiz, I mean -- I -- I like, I don't really think that that sort of is right. And I think -- you know, the -- what would -- what would the sentence say? Would the sentence say no more than $10 billion? Well, if you look at the way the program is operated, that's essentially how it's operated. And if this were delegation run riot, I just don't think you'd see that flat line in terms of the size of the fund.

Chief Justice Roberts: Justice Kagan?

Justice Kagan: Just on these eight to nine programs again. Official 1 I mean, I -- I -- I take it that maybe one argument is that, well, these are fee-for-service programs; and this is not a fee-for-service program, it's a -- it's a revenue raiser. You want to call it a fee? You want to call it a tax? Not sure, but it's a revenue raising for a program, not for a service. Is that a distinction that's worth making?

Paul D. Clement: So I don't know that that maps up to all of the different things on pages 8 or 9. But what I guess I would say is what -- what I think distinguishes this from almost everything else, in a good way, is that here you are continuing a tradition that predated the statute. In the way the statute worked before -- I mean, the way things worked before 1996, it was the same basic, you know, carriers that are covered by 20 -- 254(d), roughly speaking, that were implicitly subsidizing, or their customers were implicitly subsidizing, some rural service and some low-income service. And it's not -- you know -- and -- and just -- this is a historical point that I think Official 1 is actually relevant, because there was about a 10-year gap between when Ma Bell was broken up and the '96 Act. And during those 12 years, or whatever it was, there was something like a universal service fund already being developed through interchange fees and things like that. And Congress was clearly trying to preserve that. One place it's most clear is 254(j), little provision nobody looks at. But that says that Congress specifically looked at the Lifeline Program the agency was operating before 1996 and wanted to preserve it. And so this is a situation where there is a program that has always been understood to benefit particular classes because of the most obvious beneficiaries of having a truly universal network. And we're going to put a fee on those people. And then when you move from deregulation to the new system, you impose what I think is a fee, call it whatever you want, on those people for a very specific purpose, subject to very specific constraints. I think that probably does look like some of the things on pages 8 and 9, but in some Official 1 ways it looks better because of all that pre-history that you can borrow.

Justice Kagan: And -- and, Mr. Clement, you were asked to name some of what you thought were the manageable standards in this area, and you came up with a few. And you said, well, it hasn't often been done, but it's totally possible. And I just wanted to give you the opportunity to sort of do the flip half of that. I mean, you obviously don't think that in terms of the manageable standards that you, yourself, laid out, that this falls on the inappropriate side of the line. So why not?

Paul D. Clement: So I think that if you --

Justice Kagan: As to each of those things you said. I just wanted to peg it to your own sense of what the standards are here.

Paul D. Clement: Yeah. So one of the things I said was if it's economy-wide and it's a made-up new term, that's probably a problem. Well, this isn't economy-wide and it's an oiled -- old soil term. So we do really well on that. Official 1 And then the second thing is Panama Refining: Go solve a problem for me, hot oil, whatever that is. That's a problem. You go solve it. I'm not going to give you any standards. Or if you accepted the dissenters' view of the statute in Gundy, and I know you don't, but if you accepted their view where it's just --

Justice Kagan: Totally. And --

Paul D. Clement: -- past -- past offenders are a problem, go solve it, like -- you know, that -- that's a problem. But, of course, this is the opposite of that because there are all these different constraints, reasonably comparable rates and services for rural customers and urban customers, affordable for schools, it's got to be cheaper than other rates, and the discount has to be enough to make people take advantage of the program; for rural healthcare providers, it has to be the same rates as the urban healthcare providers in the same state. Like, that is so much better than so many of the statutes that this Court has overruled. But lest you think, to paraphrase Official 1 Judge Newsom in the Eleventh Circuit, that all of the current jurisprudence is a punch line, like, I -- you know, where this Court has approved the broadest language is typically in regulated industries or regulated circumstances. I suppose Yakus is an exception. That's wartime. You could do with that what you will. But for the most part when -- when -- when Congress has used broad language and this Court has approved it, it has been in the context of regulated industries where there actually are a lot of principles to draw from.

Justice Kagan: Thank you.

Chief Justice Roberts: Justice Gorsuch?

Justice Gorsuch: Just back to page 8 and 9. It does seem to me that they're -- they're all pretty easily distinguishable on the basis that it's an agency collecting fees from a regulated party in order to offset its own operating expenses or providing a service to offset the expenses of the service. Thoughts?

Paul D. Clement: So, I mean, if -- if that had to be the paradigm, I could put this in that paradigm in this -- Official

Justice Gorsuch: No, I -- fair enough. But if that's a paradigm and this doesn't fit, then what?

Paul D. Clement: It's still okay.

Justice Gorsuch: Yeah. (Laughter.)

Justice Gorsuch: Okay.

Paul D. Clement: And it's still okay, I think in part, because, like, even if you think this is sui generis -- and this gets back to the colloquy I was having with Justice Kavanaugh --

Justice Gorsuch: Yeah.

Paul D. Clement: -- I mean, the fact that something is unprecedented is like a yellow flag, but it's not a red flag.

Justice Gorsuch: Okay.

Paul D. Clement: There's no unprecedented clause in the Constitution.

Justice Gorsuch: Okay. Okay. And --

Paul D. Clement: And --

Justice Gorsuch: And -- and this is something Congress, you think, could -- could easily fix. Now, you think that's an argument in your favor, but they could easily put in a cap or a rate or something tomorrow? Official

Paul D. Clement: Sure, but why make them? I mean, is my point. Especially when they have put what I would say are the equivalent -- just to put it in Whitman terms --

Justice Gorsuch: Well, maybe because otherwise it's regulated parties who are self-interested in a program making the decisions for themselves.

Paul D. Clement: But they're not.

Justice Gorsuch: It's sort of like Schechter Poultry, right? I mean, it's the same -- it was a regulated industry there that was making those decisions for its own benefit. And one -- I'm not -- one can dispute that characterization, but -- but -- but maybe, huh?

Paul D. Clement: No. Give me half a chance to -- to dispute that characterization.

Justice Gorsuch: By all means.

Paul D. Clement: Because this is miles away. And this really gets to the sort of private delegation piece of this. That argument which hasn't gotten a lot of play -- I mean, let me first say I think --

Justice Gorsuch: I'm not talking about private delegation. I'm just saying maybe Official 1 this is an area that Congress might speak. How about that? Congress could decide.

Paul D. Clement: Congress can always do more. I mean, that's -- that's got to be the rule in every delegation issue, that Congress could always do more. And as an aspirational normative matter, wouldn't it be great --

Justice Gorsuch: In an unprecedented area where there's a yellow flag on the field, how about that?

Paul D. Clement: How about an unprecedented area that's not that unprecedented because universal service has been going on pursuant to congressional sanction under the 1934 Act for 50, 60 years --

Justice Gorsuch: Through --

Paul D. Clement: -- and --

Justice Gorsuch: Through rate making and a -- and a regulated monopoly that it -- it -- it -- it proceeded in the '96 Act to disavow and blow up.

Paul D. Clement: With all due respect, this is where the 12-year interregnum is actually quite important, because they -- Ma Bell gets blown up by the courts in 1984 -- Official

Justice Gorsuch: Sort of.

Paul D. Clement: So -- sort of. Sort of.

Justice Gorsuch: Sort of.

Paul D. Clement: I know you know this. But sort of. And as soon as it's blown up --

Justice Gorsuch: It created new monopolies in the process, but that's a whole 'nother story.

Paul D. Clement: And -- and -- and -- but when they do it, they don't say the agency is still operating under 150 -- 151, the '34 Act. They don't say, all right, well, we can no longer do any universal service subsidies through long-distance rates. Instead, they say, boy, this is really important. As a regulatory matter, we've been doing it this way for, at that point, 50 years, so let's use the exchange fees and let's create a universal service fund. Now, they did all that out of -- in the public interest. So if you're talking about what's -- what's good for delegation principles, boy, is it good that in 1996 Congress comes in and says we expressly bless that, 254(j), we expressly -- bless the exact program you were Official 101 doing for lifeline, and now we're going to put some guardrails on it that address this kind of unique phenomenon -- I don't know totally unique, but --

Justice Gorsuch: Okay.

Paul D. Clement: But --

Justice Gorsuch: Thank you.

Chief Justice Roberts: Justice Kavanaugh?

Justice Barrett: So, Mr. Clement, one of the -- one of the questions that we ask in the -- non-delegation context is whether the public or the courts could judge whether a particular policy adopted by the agency is unlawful. So there's no objective limit on the contribution, right, which is kind of what we've been going round and round about. How, if you had a client who wanted to challenge the contribution rate, would you argue that it exceeded the statutory authority?

Paul D. Clement: So I think the contribution rate is just a by-product of other things in the statute that I would tell my client to challenge. So, I mean, you know -- I mean, look, one of the things that is really driving Official 102 the contribution rate is that the contribution base has shrunk. So one of the things I might well tell my -- my client to do is to go to the agency and try to get the agency to expand the contribution base. And they might have the authority to do that. If they did it, it would probably be challenged by somebody under the arbitrary and capricious or consistent with the -- the statute, and we could sort that out. Or maybe the agency would tell me: No, we can't do that. We don't have enough statutory authority -- there's a recognizable limit -- so go to Congress. So if I really was concerned about the rate qua rate, then I would probably have to go at it that way. But I think most rational people aren't concerned with the rate qua rate. They're really concerned with that bottom line number --

Justice Barrett: Mm-hmm.

Paul D. Clement: -- where you see a flat line and you don't see much of a problem. But if I thought that there was something --

Justice Barrett: If you thought 35 percent was too high or something like that?

Paul D. Clement: Yeah, but, like, you Official 103 know, 35 percent of what?

Justice Barrett: Of what?

Paul D. Clement: That's like -- you know, like it's -- it's that bottom line number, is the money that's actually being funded by universal service. And that's been a flat line. But if I wanted to try to get at that, I would tell my clients: All right, let's look at this. Over half of this is the rural carriers program. So is there something the agency did in implementing the rural carrier program that created a lot of costs? And maybe I can identify something where they just funded a big project out in Montana somewhere and it's adding a lot of cost and it's not actually doing anything to lower rural rates or improve rural services. Well, then that gives me a statutorily enforceable standard. And I go in and I make an arbitrary and capricious standard, but I also make a "in excess of statutory authority" question. Or if the reason I perceive that the fund had become too big is that they monkeyed with the eligibility requirements for the lifeline program, so now virtually everybody gets Official 104 $9 off in this fee. Well, I could say that's arbitrary and capricious. That's in excess of the statutory authority. The statutory authority is to make it affordable. I can read from the context of this statute that that's supposed to be for low-income people. That's consistent with everything else in the statute. That's ultra vires. That's -- and -- and it's the way you limit the size of this fund is to bring challenges to the FCC action, and they're all FCC action. None of it's USAC. It's FCC actions that affect the scope and size of the program.

Justice Barrett: Okay. One last question. Now, this is a little bit of an unfair question, but you're pretty good, so we'll see. (Laughter.)

Justice Barrett: Justice Kagan -- in your colloquy with Justice Kagan, you were identifying some of the judicially manageable standards. And, you know, obviously your position is that, applied here, the program passes. Do you think there are any programs, any delegations of discretion in the U.S. Code Official 105 that would fail it?

Paul D. Clement: I -- I think there probably are. And I might, if I get the right client, spend some time looking for them. (Laughter.)

Paul D. Clement: You know, I -- I'm not here to tell you --

Justice Barrett: Yeah.

Blement: -- that there should be no non-delegation test. I am here to concede, as Justice Scalia, who didn't like -- flabby statutes, but he still said, you know, this is tough. And, you know, Chief Justice Marshall was pretty smart and he said this was delicate. Chief Justice Taft, in J.W. Hampton -- you know, pretty good judge for separation of powers, decided Myers like two years before -- he says, boy, this is common sense. And, you know, when judges try to just apply their common sense, that is its own separation of powers problem. So I'm not here to tell you it's easy, but I'm not here to tell you it's impossible. And I do think the Court's precedents provide a -- a good guide. I mean, I -- I will say that I think there's a lot in the Gundy dissent that Official 106 could say that certain things are out of bounds. It's just not this one.

Justice Barrett: Okay.

Chief Justice Roberts: Justice Jackson?

Justice Jackson: So I guess I'm -- I'm questioning your response to Justice Gorsuch in the colloquy about whether or not Congress could easily put a cap on this. I -- I -- I mean, I take your point that Congress can -- always do more, but if Congress actually wanted a -- a rational cap, if they wanted one that reflected the amount of money that would be sufficient to run this program, I would think they would need to have a lot more than just picking a number out of the air. And that's really what the function of giving it to an expert agency who's sort of focused on this issue, that -- that's what is happening in the delegation. Am I wrong about that?

Paul D. Clement: I -- I don't think you're wrong about that at all. Now, I mean, one way you could fix it in a trivial way that would really sort of allied your question, I suppose, Official 107 is what I think the Solicitor General was getting at, which is this idea that you just like make the cap a trillion dollars. And then there, it's your definitive cap and now we're done. Now --

Justice Jackson: And I guess we're done with delegation, but, again, the whole point is that we're in a policy system where Congress is trying to do something in this statute. And it would seem to me kind of at least weird to say Congress solves this constitutional problem by picking a number out of the air.

Paul D. Clement: I mean, I agree with that. And I think in a sense that does distinguish this again from some of the tax hypos. Because when you're talking principally about raising revenue, you're really focused on the number. How much are we going to raise? Like we have a deficit, and we're going to cover some of it and we're -- some of it with borrowing. And like all we really care about is how much we're going to raise. So for a statute where that's all you care about to not address that in Congress does seem like a problem. But, on the other hand, with this program, they clearly weren't that focused on is Official 108 this going to be a $10 billion -- program or an $11 billion program? What they wanted to do is provide reasonably comparable rates and services for rural customers and -- versus urban customers. They had a rough sense of what that was going to cost, but if it costs, like, you know, a hundred million dollars more to actually get universal service that worked for everybody in the country, I think Congress would have been fine with that because their principal judgment here was not a how much money judgment, but a how much universal service is going to survive in a competitive environment.

Justice Jackson: And am I right that that judgment and the program that was generated was enacted on a bipartisan basis, it's been wildly successful in terms of actually providing the services that Congress wanted?

Paul D. Clement: Yeah.

Justice Jackson: Am I right about that?

Paul D. Clement: Yes. And, you know, I'm not 100 percent sure, but my recollection is it started in the Senate too, which is why I really Official 109 think saying it's a tax is a mistake because it's not a tax. It's Commerce Clause legislation. And it's a program that was overwhelmingly popular. And you see a congressional amicus brief that I -- you know, I have to say in this era is refreshingly bipartisan.

Justice Jackson: And I guess I think that that's kind of important because there is an argument that some of the amici have raised that the reason why we need to get into this as a Court and have a more robust non-delegation doctrine is to promote democratic accountability. And I guess I'm just wondering whether it is really democracy-enhancing to create a doctrine that, at least in this case, would allow judges to strike down this very popularly-enacted law.

Paul D. Clement: Well, and -- two observations on that. One, there -- there's a certain perversity that the other side is like so confident that if you just said there needs to be a cap, Congress would snap to it and put in a cap. And the only reason they can be confident is that this is a really popular law. And so, of Official 110 course, Congress would do it because they don't want the sky to fall. So that's -- that's -- that's weird enough as it is. And then the second thing I would say is, like, on the one hand, I don't think that you can have a jurisprudence that says: Well, this -- this law passed unanimously and this one was on a party line vote, so we're going to apply a different test, but I do think where you -- and this is the point I was trying to make with Justice Barrett -- there is a problem that if you sort of come up with a test that is kind of like I know it when I see it, that is incredibly judicially empowering to the expense of the political branches. And I think that's why somebody like Justice Scalia, who was, you know, distressed at some of what he saw, but nonetheless said, you know, sort of too -- too big, too big, too much, that's just not the right test. You need to come at it from a different angle.

Justice Jackson: Thank you.

Chief Justice Roberts: Thank you, counsel. Mr. McCotter. Official 111 ORAL ARGUMENT OF R. TRENT McCOTTER ON BEHALF OF THE RESPONDENTS

McCotter: Mr. Chief Justice, and may it please the Court: At its heart, this case is about taxation without representation. Every year Americans pay billions for the universal service fund. The rate has increased ten-fold. The amount collected is now 20 times the size of the FCC's entire annual budget. The FCC -- the government and the FCC now agree, or at least do not dispute, that USF charges are, indeed, taxes; that the non-delegation inquiry is stricter in this domestic context; that the nature of the power is at least relevant; that the USF statute sets no objective rule to limit the amount raised; and that Congress has set such rules for every other domestic tax in American history. Those concessions doom their case. The amount of public revenue to raise is a quintessential legislative determination, not some minor detail to be filled in later. But in deciding how much to raise, the FCC is guided by aspirational-only principles in Official 112 254(b) and even gets to redefine universal service itself in 254(c) based on an evolving standard; the exact opposite of incorporating some preexisting framework. This broad delegation to the FCC was entirely by design, and this is before we get to USAC. Even now, the recent memorandum of understanding between the FCC and USAC says that it is USAC's projections, not the FCC's, that will be deemed approved. But passive acquiescence does not comply with this Court's non-delegation case law. To be clear, the Court can affirm without overturning any prior decision because this is the easy case. Neither the executive, nor private parties gets to set tax rates. But if Petitioners are right, then Congress could use similarly-vague language to let the executive decide any domestic legislative issue, even, for example, setting the size of lower federal courts. The Constitution prohibits that transfer of power. The en banc ruling below should be affirmed, and I welcome the Court's questions.

Justice Thomas: The Petitioners make Official 113 the argument that this isn't a particularly new program, it comes from the -- the old Bell system before we had deregulation. The other thing that they argue is that the constraints that are on the service delivery side are indirectly or at least sufficient, they are sufficient to regulate or to supply constraints on the revenue-raising side. I think that puts some degree of specificity on the argument, and I'd like to see you address those.

McCotter: Yes, Your Honor. So on the pre-1996 regime, this argument wasn't really developed below by the Petitioners, but, remember, 254(c) says the FCC gets to decide what universal service is, based on an evolving standard. The Petitioners themselves said in 1996 that there was a fundamental overhaul -- that's their opening brief -- fundamental overhaul of the regime. And that's because they are ditching whatever the prior understanding was, even assuming there was one -- and we dispute that -- but even if there were, in '96, Congress said we're completely changing, not just Official 114 how the system operates, but what it covers. It's dramatically larger. And even if you see our brief at pages 69 to 70, we cite some of the government's own briefs where they say we have no obligation. The statute imposes no obligation to raise the same amount of money that we did before the '96 regime. So the idea that somehow the old regime is incorporated, I think, is directly dispelled by the text of the language -- by the text of the statute itself. On the second part of your question, Your Honor, if I can make one point that you all remember today, it's that the principles in 254(b) are ones that the FCC does not have to substantively comply with. This is not some extreme, unusual reading as they try to make it sound. That's been their uniform interpretation for 25 years. They say each one of those, maybe we have to consider them. We can't ignore them altogether. But we only --

Justice Kagan: Well, Mr. McCotter, I mean, there are some real standards in this Official 115 program. So what this program covers is things that a substantial majority of residential customers already have, all right? So it's not like newfangled, go all get ourselves some Starlink accounts, it's substantial majority of residential customers already have that are essential to living in our world, that are essential to education, public health, and public safety. And those things have to be available at affordable rates. So the FCC can't do anything by way of this program that is not basically geared towards getting those who live in very rural areas or who are very low income, getting those -- access -- getting those people access to services that all the rest of us have. That's the nature of the program, and that's the limit of the program.

McCotter: So the substantial majority point, Your Honor, again, that's not listed as something that the FCC has to accomplish. It's listed only as something they must consider the extent to which communications are. So it's not even saying universal Official 116 service is this level -- it's not even saying --

Justice Kagan: I -- I -- I think if they -- if -- if the FCC walked into this Court and said we don't -- we can do something that, like, a tiny minority of residential customers have, I think that they would lose that case. I mean, there are constraints on this agency and on this -- and on their operation of the program. And if we're going to read the statute just -- I mean, honestly, I think that that's an -- a -- a not credible reading of this statute. This statute clearly puts constraints on these are the services that all the rest of us take for granted, that you can't take for granted in rural North Dakota. And what this program says is that rural North Dakota citizens should also get what all the rest of us have long had. That's the nature of this program, that the services that the rest of us have that are essential to life in a modern world, that are essential to education, public health, and public safety, which are providable at affordable rates. So if it really takes a lot of money, even then you can't get the program. You can't Official 117 get the service.

McCotter: Well, so I'll address the affordable point again because that came up a -- a lot in the opening section. Again, affordability under 254(b) is something the FCC itself has said it does not actually have to comply with. It can pick any 254(b) principle, including one that it comes up with on its own, and say that's what we're going for. That's the real limitation.

Justice Kagan: Mr. McCotter, I'm going to tell you again that if the FCC -- and -- and maybe the Solicitor General can -- can respond to this -- but if the FCC came in and said we don't have to worry about affordable rates and, you know, they -- they can be exorbitant rates and we're -- going to still go ahead and fund things from this program, I -- I mean, that's just not a reasonable reading of the statute.

McCotter: That's been their position for 30 years, Your Honor.

Justice Kagan: Okay. I'm -- I'm -- I'm --

McCotter: And they haven't Official 118 changed it.

Justice Kagan: I'm inclined to ask the Solicitor General to say whether that is their position.

McCotter: I understand. And the way to read the statute, as I said, is not some extreme version that we're offering. It's the version that they've proffered for 30 years.

Justice Kagan: It's the --

McCotter: They've always said --

Justice Kagan: But you just look at the text. The text, it leaps out at you, "substantial majority of residential customers;" "essential to education, public health, and public safety;" "available at reasonable and affordable rates."

McCotter: Again, those are things the FCC only must consider the extent to which. They don't even have to consider whether those are actually true. They have to say, do we think that this is true and, if so, to what extent. Okay, we've considered it. It's -- that's an important factor. It is no substantive limitation.

Justice Jackson: Why isn't that an Official 119 arbitrary and capricious challenge, though? I mean, it -- it seems to me that if you're complaining about the FCC and the way in which they have exercised its authority, you should be bringing that kind of case. That's not a non-delegation problem.

McCotter: I don't think it has to be one or the other, though, Your Honor. I think --

Justice Jackson: Well, there has to --

McCotter: -- if the agency --

Justice Jackson: -- be a distinction between the two if you're asking us to strike a -- a -- a statute down on a particular constitutional basis.

McCotter: But if the agency has such a broad scope in the first place --

Justice Jackson: I mean, don't we have constitutional avoidance as a principle? If we could do it under arbitrary and capricious, shouldn't we be doing that rather than striking the statute down as unconstitutional? Let me ask you another question. I -- I guess I'm confused about what you're asking us Official 120 to do. Your brief says that the Court should, quote, "take this opportunity to realign its non-delegation framework with its traditional understanding of the Constitution," end quote. But you also have said, both in your brief, I guess, and here, that you're not asking us to overrule any specific precedents. But I would think that a realignment would mean different outcomes from cases that we've decided under the standard that you want us to displace. So, I -- I mean, if the intelligible principle test, in -- in your view, has been yielding proper outcomes for the past century, then why do we need to revisit it?

McCotter: So we win even under the current framework. And that's why we say that the Court need not necessarily overturn any precedent.

Justice Jackson: So why do we need to revisit the framework? If you -- if you're -- if you're right about all the past cases, if we got them right, then what's the need for having a new standard?

McCotter: So the main reason is that the intelligible principle test as some Official 121 judges have interpreted it -- now, again, we don't quite agree with this view. In Judge Newsom's words, it's a punch line. It essentially allows transfers altogether of exclusive and strict legislative powers to agencies. And you could say --

Justice Jackson: But not apparently in all the cases that you say got it right. So --

Justice Kavanaugh: The solution -- oh, keep going. Sorry.

Justice Jackson: No, I just -- I just -- I guess I'm really hyper focused on the need for us to make any changes in terms of the legal standard that applies here. And the reason is, in part, because of what the Chief Justice Marshall said -- we've quoted it a couple of times -- this is delicate and difficult, this inquiry, but -- he goes on to say it's an inquiry into which a court will not enter unnecessarily, precisely because it's so hard. So I'm really trying to understand the need for us to come up with a different test or try to figure out something else, especially if you appear to concede that the outcomes of all Official 122 these prior cases are correct.

McCotter: I think the outcomes of the cases are arguably correct under the original understanding, but, again, part of that could just be coincidence. This Court has addressed certain statutes. We think a lot of them are distinguishable in certain ways that make them different from the statute here. The -- but, again, I don't think we should be slighted for saying that we win even under the modern test, though, because there is no clear boundary for the FCC's ability to set the amount to be raised. This Court has said that since American Power & Light, even under its most watered-down modern case law.

Justice Kavanaugh: Your -- your position would say, I think, that a solution to the problem you identify could be a -- a trillion dollar cap or $100 billion cap. And that makes the position seem -- what is -- what exactly are you trying to accomplish?

McCotter: And that's exactly what Justice Thomas said in his Whitman concurrence. He says, just because there is an intelligible principle, assuming there is one -- and, Official 123 obviously, we don't -- but even assuming there is one, it doesn't stop Congress from just handing over wholesale its power. Just like Justice Scalia said in his Mistretta dissent --

Justice Kavanaugh: Well -- maybe that's not -- maybe I didn't phrase my question correctly. I think your position is that it needs -- needs a cap, correct?

McCotter: There needs to be some kind of objective limit.

Justice Kavanaugh: Okay.

McCotter: Yeah.

Justice Kavanaugh: So cap. Yes.

McCotter: It doesn't have to be a number. Just -- there's another -- if I had to make a second point --

Justice Kavanaugh: But even if it has to be -- even if it has to be a number, you're not taking the further position, I don't think, that the number -- the number could be a cap. It could be very high, and then the question is what exactly are we accomplishing?

McCotter: Well, so if Congress did set a trillion-dollar cap, obviously it's unlikely, but at least then we would know that Official 124 Congress itself has made that determination. It says we think universal service is this important; we want the agency to be able to raise --

Justice Kavanaugh: And how -- how is that then different from saying we're not going to do a trillion-dollar cap, but we're uncertain about -- we're uncertain about the amount that will cover the costs of the program and so we're going to use the term "sufficient"? And so I think you need to zero in on this -- the word "sufficient" and why that's not enough of a constraint vis-à-vis the trillion dollar. Like, we would be saying, I think, if we agree with you, sufficient is not good enough but trillion dollar is. And I think a lot of people would say that doesn't make a lot of sense. So what's the answer to that?

McCotter: Well, so the answer with the trillion-dollar example is then we can say Congress has set the policy. Yes, the test this Court had for 150 years, Congress sets the policy. It can't use just vague aspirations, but it sets the policy, leaves only details to be filled in. Official 125 I think the -- in that case, they've set the policy, essentially, right? The policy that matters for this purpose, which is the amount to be raised. But if they just say raise a sufficient amount --

Justice Jackson: But -- but that's just because --

McCotter: -- first of all, that's --

Justice Jackson: -- you say the amount to be -- sorry. Go ahead.

Justice Barrett: That -- that seems pretty empty, right? I mean, isn't that Justice Kavanaugh's point, that if they say $3 trillion -- $3 trillion or $5 trillion, that's just kind of throwing a number out there for the sake of throwing a number. Why have they really set the policy in a way that's meaningfully different than they did in this statute?

McCotter: But I still think if they put a particular objective limit like that, they have set the policy. They've said this is how important universal service is to us. The agency can raise --

Justice Barrett: You're talking about Official 126 if they -- you're still talking about just if they raise money through the fund this way. You're not talking about them appropriating the money, right? You're just saying --

McCotter: Right, yes.

Justice Barrett: -- this is the cap. That just -- that seems a little bit hollow. Kind of seems like a meaningless exercise.

McCotter: Well, still there is accountability. At least then we know. If you think that's too much, if you think --

Justice Barrett: Counsel, let me just --

McCotter: -- that it's too low, you know it's Congress.

Justice Barrett: Let me switch gears for one minute and just ask you to respond to the page 8 and 9 reply brief statutes. You know, both Ms. Harris and Mr. Clement have said that your position is going to jeopardize a lot of laws.

McCotter: So the list of statutes there, they're kind of like the dog that didn't bark. All they have are a few relatively modern provisions, almost all of which are standard fee Official 127 provisions, like how much do you pay for a postal stamp, that sort of thing, which this Court addressed in National Cable, the 1974 case, and said maybe that has its own built-in limiting principle, because you're limited to the value to the recipient.

Justice Barrett: Okay. So --

McCotter: However --

Justice Barrett: -- you're saying that page 8 and 9, they're all distinguishable.

McCotter: Correct.

Justice Barrett: Okay. So do you think that our deciding this case in your favor would jeopardize other statutes that maybe aren't on pages 8 and 9 of the briefs? I mean, do you think it would be cataclysmic or do you think it would be pretty modest, like a -- this -- this statute only?

McCotter: So the proof is in the pudding here. The decision below has been binding in the Fifth Circuit for eight months now. They have repeatedly rejected non-delegation challenges, including to some relatively broad language. We cite these in our brief. The Mayfield case, for example, involved Official 128 a statute that referred to DOL regulations being detrimental to health, efficiency, general well-being. And the Court there unanimously said: No, that gives enough meat on the bones. This is not like what we saw with the universal service fund.

Justice Barrett: Okay.

McCotter: The government has never cited another one like this.

Justice Barrett: All right. Then last question. What about the consequences? You know, Mr. Clement said that the consequences of holding this statute unconstitutional would be devastating for universal service. What about that?

McCotter: Well -- just as a disclaimer, it's not relevant to the constitutional question, of course --

Justice Barrett: I -- I understand.

McCotter: -- but I will address it anyway.

Justice Barrett: I -- I understand that. But I think it's a fair question to consider the consequences of your position. Official

McCotter: So the more important that my friends on the other side make out this program to be, all it does is make my case stronger that it should have been Congress itself to set meaningful limits in it. In terms of how this would play out -- again, we offer options in our brief. They've never -- my friends on the other side don't respond to them; I think maybe they accept them -- the Court could limit relief to the named Respondents. This does challenge just one court order, remember. I realize there are others in the --

Justice Kavanaugh: And the -- well, on -- on your answer to Justice Barrett on the Fifth Circuit, and the proof is in the pudding, I guess I question that, because they relied on the combination theory.

McCotter: True, but the first part --

Justice Kavanaugh: So proof's not in the pudding. (Laughter.)

McCotter: True, but the first Official 130 part of their opinion goes right up to the line on the statutory delegation aspect --

Justice Kavanaugh: Well --

McCotter: -- as well.

Justice Kavanaugh: Well, they rely on the combination theory. You're barely defending that theory, right?

McCotter: We're not running away from it at all. We think it's correct. We think it flows directly from Free Enterprise Fund. Judge Newsom himself, in his concurrence, made the same argument, right, that with each delegation we run into -- or we move away from the locus of democratic accountability. And so that's --

Chief Justice Roberts: Well --

Justice Kavanaugh: That's a --

Chief Justice Roberts: Free Enterprise Fund was quite a different -- I mean, they had -- they both had two, but I don't think that's -- that's where the similarity ends. (Laughter.)

Chief Justice Roberts: Because it was a question of direct control by the -- by the president. And if -- if he can't control both of Official 131 them, then he's got no control at all. So I -- I think it was --

McCotter: Sure.

Chief Justice Roberts: -- quite a different case.

McCotter: Sure. But even then, the -- the concern, as you said, was the president's control. Here, the concern is democratic accountability. And the private non-delegation and the -- what I'll call the statutory --

Justice Sotomayor: Counsel --

Chief Justice Roberts: Well, but it's a much more --

McCotter: -- stack.

Chief Justice Roberts: -- I'll let it go in a second. But it's a much more precise straight line, direct, as opposed to a broad concept like democratic accountability --

McCotter: I understand. And if the Court doesn't want to go down the route of the combination theory, then I think the Petitioners agree that the Court could just aggress -- address QP 1 and 2 and resolve the statutory. Official

Justice Kavanaugh: And on the -- on your main position, not the combination theory, does it depend on drawing a distinction between tax and fee? I think it may, particularly when you answer the way you have on the examples on pages 8 and 9. And if so, can you tell us what the definition of tax and fee is? And then the follow-up question will be: The other side, the government, says that'll be a complete morass and just basically a jurisprudential disaster to try to figure out the difference between tax and fee. I'm characterizing what they say.

McCotter: So I'll say this: We're not saying taxing is in a category of one for non-delegation purposes. As we said, the test is the same for every strictly and exclusively legislative power. So whether you think it's a tax or a fee doesn't change the initial framework. We're not asking for some one-off special test for taxing. But it's true that applying that test is easier in the context of a tax, for two reasons. First, we all know that taxing is Official 133 strictly and exclusively legislative. That's been established for centuries. And second, we know what that required policy is. What is the sine qua non of a tax? Federalist 83 told us. It needs to be an amount. And we also have 250 years of tradition following that rule -- for those who look to kind of post-founding evidence -- 250-year unbroken history following that. That's not to say that if the Court for some reason thinks that it's not a tax, that we must lose. This Court said just last year in the CFPB case raising public money is a legislative task. Professor McConnell referred to it as raising domestic revenue. These are terms that I think would include fees. And so the reason why I think, if you go down that road, we are still different than the -- the statutes that the government cites on pages 8 to 9 of its reply is that those, either on their face or under the limiting construction that this Court required in National Cable in 1974, those would be construed as fees. They have a limiting principle of, you can only charge Official 134 the value of the benefit to the recipient. And maybe there's one statute, like the OCC one, that's kind of on the line. And that's tough. It's a more modern statute. You know, maybe that one is questionable.

Justice Jackson: I'm sorry, why isn't sufficiency a limit that is similar?

McCotter: Well, so sufficient -- well, as you said, sufficiency is not --

Justice Jackson: Sufficient to run this program?

McCotter: Sufficiency is not a mandate, first of all. They don't have to actually do that. In 254(b) it's listed as a principle, they've already said it for 30 years. They don't have to follow any particular principle. And 254(e), there's also a reference to sufficiency. It says "should." Again --

Justice Jackson: In -- in a hypothetical --

Justice Kagan: Again, you -- again, you -- you're saying that we should interpret this statute to say that that word, "sufficient," is not imposing a requirement, meaning Official 135 sufficient, what is required to do these services, but not more than that?

McCotter: Yes, because that's what the FCC itself has said for 30 years.

Justice Kagan: Okay. I'll add that to my list of things that I think would be an unreasonable statutory interpretation. Sufficiency means -- like when I call the pizza operator and say: I want you to send me pizza sufficient for 10 people, and then an 18 wheeler shows up -- (Laughter.)

Justice Kagan: -- that is not an accurate understanding of what I asked for. (Laughter.)

McCotter: Well, I think the key distinction there is at least you have an objective limitation on the end, right? Sufficient pizza for 10 people. Okay. We'll give -- give them the benefit of the doubt and assume sufficient to be --

Justice Kagan: Yeah, so I take that point. So it is sufficient for what. And then we go back to my earlier thing.

McCotter: So then -- Official

Justice Kagan: It's sufficient to get the people in these rural and low-income people, these -- these -- these populations, it's to -- it's to get them the -- services that the rest of us have, that a majority of other -- that the majority of us have that are necessary for education, public health, and safety, and -- and that can be accomplished at reasonable and affordable rates. That's -- that's -- that's the nature -- that's the substantive mandate. Sufficient is -- that's how much you have to raise, is to do that and nothing else.

McCotter: And again, I return to 254(c)(1), principles are not mandatory, except that the FCC must consider them. And even that --

Justice Sotomayor: I'm sorry, I --

McCotter: -- honestly, is too much.

Justice Sotomayor: The word -- statute says that the FCC -- uses the word "shall base its policies on the six universal service principles." You keep saying that for 30 years the Official 137 FCC has said it doesn't. I find two cases where briefs were submitted where it said that, but I don't see that anywhere in the SG's brief here. And I certainly don't see it controlling the outcome of at least two circuits, the Fifth and I think it was the Tenth, who -- who invalidated certain regulation -- certain things by the FCC because they ignored the principles. So you can't have it both ways.

McCotter: Well, so on your first --

Justice Sotomayor: So if we say they're just plain wrong, these principles are binding on their decision-making, which I don't think they're going to dispute, it may well be that they come in conflict at some point or they're not pertinent to another issue. That always happens. But you're sort of saying the principles set no limits.

McCotter: Well, so on the first part of your question, Your Honor, they do say -- in their reply brief, they say I quoted out of context one of their briefs saying that the 254 Official 138 principles don't have to be complied with.

Justice Sotomayor: Exactly.

McCotter: And they say: If you read the rest of what we said, we said was in light of other statutory obligations. And so what they are saying, as they have said for 30 years, is at most, we can -- have to consider the 254(b) principles. At most, we have to follow one of them. We can say one is more important than the other -- it could be one we came up with -- but we don't actually have to follow substantively any of them.

Justice Gorsuch: And don't they have to sometimes make choices between them? I mean, (1), for example, talks about reasonable and affordable. But then (2) says advanced telecommunications services should be provided in all regions of the nation. And that doesn't have a reasonable or financial limitation at all. And -- and I -- I -- I just -- I'm not sure I understand why you're fighting the notion that if -- if they were bound by them somehow, they would still provide guidance. Official

McCotter: Sure. So we obviously make that argument, that even if 254(b) principles are all mandatory in every way you could think of, as Justice -- or, excuse me, as Judge Newsom said in his concurrence, they are -- are all -- they are all mealy-mouthed shibboleths; they're just generic terms. And so even if the Court says: The position the FCC has provided for 30 years is wrong, no, you must try to meet every single one of these, we think we still win. And I think, to get back to Justice Kagan's question, it's because we still have the object. It's sufficient for what? Sufficient for universal service. And the FCC gets to redefine universal service based on an evolving standard.

Justice Kagan: Well, you know, there is something that says to the FCC, yes, you get to keep thinking about this. And, you know, Justice Jackson suggested that that's exactly when you want delegations. It's you get to keep thinking about this because we recognize that tech -- that the technology is going to change. And these very clear principles are going to be Official 140 in -- in a -- in -- in -- in 2025 different from what they were in 2010, which is different from what they were in 2000. So -- but the -- the -- the -- the -- the guidelines are quite clear. You know, a substantial majority of people already have to have them. They have to be at affordable and reasonable rates. And what's the one I'm missing? They -- and they have to be essential to, essentially, you know, live in our modern society for education and health and safety. I mean, if you go through what this program is providing, what -- what would you cut out?

McCotter: I'm sorry. What would I cut from this?

Justice Kagan: Yeah, because, you know --

McCotter: I would add things to the statute.

Justice Kagan: -- like, for -- to me, it's like, okay, you know, what it's providing is landline connections and now broadband in very rural areas, about a $9 per month subsidy for people who live just -- who live below the Official 141 poverty line, rural health -- to make -- to ensure that we facilitate telehealth services and allow rural clinics to operate. I mean, this is all basic stuff. These are not exorbitant things. These are not gratuitous things. This is just like -- the way the FCC has operated that program is consistent with the standards that have been set in this program, which is these -- these are providing basic services for people who live in North Dakota and for people who live below the poverty line. And, by the way, as Mr. Clement said, those basic services benefit all of us because we should all be able to talk to people in North Dakota.

McCotter: So on that point, I'd respectfully direct you to our opening brief, search for where we use the phrase "wealthy Montanans on ranchettes." It's a phrase used by a scholar saying this money gets used for things like that. They're taking money from people who are just above the line to receive, say, lifeline assistance, and it goes to help people who are rural but who are already wealthy and that sort Official 142 of thing. So the idea that this is just unalloyed good, we would respectfully disagree with.

Justice Gorsuch: On --

McCotter: GAO reports say that for 20 years --

Justice Kagan: I -- I think you can't have a government program that doesn't have a couple of instances, a few instances, some instances of -- you know, where somebody could come in and say this goes too far. Probably so.

McCotter: On the -- if I could --

Justice Kagan: Trying to make an arbitrary and capricious stand --

McCotter: If -- if I could --

Justice Kagan: -- challenge.

McCotter: Sorry. If I could address your prior point about the changing technology, so we're not challenging -- we made this very clear -- we're not challenging the spending on the back end. And the FCC can address changing technology on the back end by saying here's the new equipment that we think people should have. We've already -- in that case, if they've constitutionally raised the Official 143 money, have much broader leeway. You should see footnote 11 in our opening brief that explains the distinction. But the point is there are other programs like this, think like -- in the sense that they have changing technology, I mean, think of Medicare. They are obviously -- the -- the medical treatments are changing every day, but yet Congress has set objective rules on the Medicare tax.

Justice Gorsuch: I -- I would have understood your argument not to be that they're spending too much and subsidizing wealthy Montanans, which does happen, in rural areas, and -- and -- and Colorado too, but maybe that they're also spending too little and maybe -- maybe we should have cell phones for everyone under this standard. I mean, it -- wouldn't that be advanced telecommunications services for everybody? And don't most people have them? And, therefore, shouldn't everybody have them? And I -- I -- I had understood your argument to be not that they're spending too little or too much, but that nobody can tell what the right answer is. Official

McCotter: That's certainly right. There's nothing to stop the agency from doing that. And to respond on this point about advanced telecommunications services, the idea that's somehow limited only to schools and libraries, if we're going to make 254(b) mandatory, I'll point you to 254(b)(2), which says, "access to advanced telecommunications and information services should be provided in all regions of the nation." So there we go. Starlink for the whole nation. Maybe they're not spending enough. Who knows? And this kind of gets to one of the questions -- I think it was from Justice Barrett -- about whether there are kind of judicially manageable standards and that sort of thing. And, again, that's why I strongly push back on the idea that this in -- incorporated some preexisting framework. Congress made clear it was not. It fundamentally overhauled it by letting the FCC, on an evolving basis, redefine this. It's the exact opposite of a judicially manageable standard.

Chief Justice Roberts: Thank you, Official 145 counsel. Justice Thomas? Justice Alito?

Justice Alito: I -- I am quite concerned about the effects of a decision in your favor on the grounds that you have been pressing this morning. In the end, that may not matter, but I would like to know where -- what such a decision would mean. So to start out, what would be the effect on people in rural areas if this is held to be unconstitutional and Congress does not act? Where should I look to get an accurate picture of the answer to that question?

McCotter: So I would look to our response brief first, where we say the Court could limit relief to the named Respondents. I think that's one at least potential answer there. I think you could also --

Justice Alito: On -- no, go ahead.

McCotter: Sorry. And so you could also look to the Fifth Circuit en -- excuse me -- en banc opinion, which did not even vacate the quarterly contribution factor at issue here. It simply remand it to the agency. Official 146 And so I realize that that may turn in part on how the Court actually rules on the merits, but that's another possible remedy here, which is that the FCC decision isn't even vacated in the meantime.

Justice Alito: Well, the Fifth Circuit based its decision on the combination theory. And if we were to affirm on the basis of the combination theory, the problem could be fixed rather readily, I would think, by the FCC itself. Isn't that right?

McCotter: It could. And I -- I find it telling that in the eight months since the opinion came out, they haven't actually tried to do so for subsequent orders.

Justice Alito: So, again, where should I look to get a -- an -- an accurate picture of the empirical situation? Are there studies?

McCotter: I'm not sure the -- the best source I could give you, Your Honor, on that. I think the answer is that Congress would have an opportunity to take the reins and decide what do we really want universal service to be. It's so important. As I say, the friend -- my Official 147 friends on the other side insist this is the most important program in the country, but yet they think that perhaps it's not one where Congress itself needed to impose any real limits. And I think if it's that important, then Congress will step up. I think even Mr. Clement admitted essentially, of course Congress would step up here.

Justice Alito: Another concern is the effect on other statutes. And I -- I -- I sort of throw up my hands at dealing with this. This has come up before. This sort of argument made by the Solicitor General has come up before. It was made in the -- CFPB case last term. I don't blame the government at all for making it, but the argument is made that if you decide a case in a particular way, it is going to result in imperiling, dooming a whole list of statutes. And maybe that's true; maybe that's not true. But each one of those would require individual determination, and we don't have briefing on all of those, on all of those statutes. So maybe that's some -- something that the Solicitor General could -- could address. Maybe that's directed more to her than to you, Official 148 but do you have thoughts on that?

McCotter: Well, sure. So I think it's telling, again, that the best examples they could have, after almost four years of litigation, are the ones at pages 8 to 9 of their reply, which are distinguishable for all the reasons Justice Gorsuch has given. I think --

Justice Alito: They -- they're distinguishable on the grounds that those are fees and this is a tax; is that right?

McCotter: That's an easy distinction, yes. And even if you were to say this isn't a tax, again, as we say, we still win because there's no clear boundary. There's no clear principle. There's no clear rule for the statute. I think also the Court in its opinion, if it were to rule in our favor, would explain so why is this statute different than, say, ones like in NBC? And I think the Court would go through the fact that this did not bring the common law soil with it. It did the opposite. There are no other provisions around it that give it meaning like this Court has sometimes done to fill in vague terms. If Official 149 anything, every time you look at a different provision, it's just broader than the one before it. And so I think that would naturally limit the follow-on cases.

Justice Alito: Okay. And then, finally, maybe, potential ways of limiting the practical impact of the decision in this case, if the decision is in your favor along the lines that you're advancing this morning. One is Northern Pipeline. Some skepticism about whether that's a precedent that should be followed has been expressed. Another is limiting the relief to just the parties here. If we were to do that, how long would it be, do you think, before enough parties would bring suit and bring this whole thing down?

McCotter: Well, it's taken 25 years for someone to kind of get the gumption to challenge it in the first place. So I have some doubts, actually, that others would mount such challenges. But even if so, I think it would be past the time --

Justice Alito: Well, it -- it takes maybe -- it take -- it takes gumption to take the lead, but maybe it doesn't take very much Official 150 gumption to try to -- to -- to get the benefit of something that somebody else has done the work to enable you to get.

McCotter: True enough. I think however much time that would take, especially given that this is a quarterly process that doesn't play out on a daily basis in that sense, I think by that time, we would have had congressional action either saying we are going to say that this program is important as the Petitioners say and we're going to put some limits on it, or they'll say this thing is out of control, it's in a death spiral, we need to come up with something else altogether. There would be more than enough time to do that.

Justice Alito: It's not easy to get legislate -- it's never easy to get legislation enacted by Congress.

McCotter: True. Congress could also --

Justice Alito: Even more difficult right now than it has been at times in the past. Isn't that right?

McCotter: That's true. And I should also add, Congress could simply Official 151 appropriate money here. They could say: Here's 8 billion. You don't need to charge the fee in the meantime. It's kind of -- it's a bit like the with the Affordable Care Act tax where they zeroed it out, that sort of thing, where they went through some of their kind of Senate trickery and they figured out how to do this with a lesser number of votes or something and just say here's an amount of money, 8 billion, 9 billion, 20 billion, 5 billion, whatever, Congress is the one that gets to choose, right, and they should choose, they have to choose. And they could do that and you don't even have to change the statute.

Justice Alito: Do you think that would be a better solution to have the taxpayers pay for this rather than the -- the providers?

McCotter: Well, remember, this fee is already paid by the taxpayers.

Justice Alito: More -- let me not ask whether it's a better -- a better approach but one this Congress is more likely to be enthusiastic about?

McCotter: Well, as of now, it's already paid by the taxpayers because Americans Official 152 are really the ones who pay for it, but also on -- on the idea -- this -- I'll be brief -- but just on the idea that because it's, you know, a popular program or something, that that should somehow -- somehow matter, I think --

Justice Alito: It's not overt. But, anyway, go ahead.

McCotter: Right. I -- I -- I think it's right, it shouldn't matter. And the main reason for that, for this purpose is, of course, members of Congress love handing off taxing to someone else and say: Don't blame me, blame the FCC.

Justice Alito: Thank you.

McCotter: Blame USAC.

Justice Alito: Thank you.

Chief Justice Roberts: Justice Sotomayor?

Justice Sotomayor: Most taxpayers complain that when they're taxed, they don't know what the government is spending the money on. And certainly most of the time they don't like what the government's spending money on. But in terms of accountability, your monthly phone charge -- bill tells you that Official 153 you're paying for universal service charge because it has a line that says -- your bill, this is the amount of the federal universal service charge. What you're saying to Justice Alito is in a time in which the federal budget is being slashed dramatically, that Congress will now appropriate, we should ask Congress to appropriate something that taxpayers know they are already paying and have agreed to?

McCotter: Right, but that's what the Constitution requires. And the -- the thing is that --

Justice Sotomayor: Now Let me ask you another --

McCotter: -- if people don't like it, they can vote out Congress --

Justice Sotomayor: -- question. You told Justice Alito that every other law that might be affected could be distinguished. What can't be distinguished is that all of these are levying fees or assessments or charges based on agency determinations, the Office of the Comptroller, quote, "determines what is necessary or appropriate to carry out its Official 154 responsibilities." The FDI -- I -- IC, none of these are with limits, any fee which the corporation may be by regulation proscribed, after giving due consideration to the need to establish and maintain the -- reserve ratio of the Deposit Insurance Fund. The Federal Housing Finance Agency can levy upon regulated entities an assessment sufficient to pay its reasonable costs and expenses. I can go on and on, where agencies are being told levy fees, duties, tariffs. Tariffs are not even tied to a particular activity. Tariffs just say: Pay this tariff on this good and agencies have been permitted to assess -- the president has been permitted to assess tariffs to raise revenues for no reason or whatever reason he deems appropriate. That, I think, is much less guidance than this law. So I am not sure how you could answer that we can distinguish each one of them. Each one of them does not have a numerical cap. And yet we've said that they are sufficiently precise as to what the activities are being spent on, as to not be a non-delegation violation. Official

McCotter: So a few responses. On the statutes, on pages 8 to 9, none of those are being used to fund the multi-billion dollar social welfare program, which was the entire purpose of this statutory regime. I don't think my friends on the other side dispute that point. On --

Justice Sotomayor: You don't think that these programs are funding the banking system, funding the bank -- banking system? The housing system? They're all being used to fund programs that assist various groups in one form or another. So, yes, they are funding industries.

McCotter: Well, so the way that this Court described them in Skinner when it talked about National Cable was to say that those sorts of statutes refer to the administrative costs to -- internal to the agency. I think --

Justice Sotomayor: But the --

McCotter: -- if they are using --

Justice Sotomayor: -- administrative costs, they are all related to the programs. And this is related directly to specified programs.

McCotter: Right, but that Official 156 would --

Justice Sotomayor: So it's doing exactly the same thing.

McCotter: But that wouldn't be the administrative cost, Your Honor. That would be the actual program itself, funding --

Justice Sotomayor: But that's --

McCotter: -- the whole separate welfare or social welfare program.

Justice Sotomayor: But that's exactly what these other agencies are doing.

McCotter: Well --

Justice Sotomayor: They are running programs and services that are being funded in their determination of what's going to meet their obligations.

McCotter: I think, respectfully, Your Honor, that's just not how they actually work. That's not really what the text says. Some of them may seem a little broader. I think under this Court's National Cable decision, they would need to be limited. This Court already said in that case, 50 years ago, there's a major distinction from delegation purposes from letting an agency set a true fee Official 157 and letting an agency raise money in the public interest. I think that's a very important point here under current doctrine, as the phrases like "in the public interest" --

Justice Sotomayor: Thank you, counsel.

McCotter: -- just won't work here.

Chief Justice Roberts: Justice Kagan?

Justice Kagan: So one of the things that strikes me, Mr. McCotter, about this case is that when we typically interpret regulatory statutes, sometimes we just interpret them straight up, but to the extent we don't, what we usually do is that we interpret the statutes to limit agency authority. In other words, you know, like we narrowly construe the statute, as in Benzene, or the major questions doctrine is all about doing this. These look like very broad delegations. We can't really believe that's what Congress meant, so we're going to sort of impose some limits. And -- and what you're asking us to Official 158 do, I think, is kind of the opposite, is like instead of doing that or reading the statute straight up, what you're saying is that we should read this statute as expansively as possible to give the agency as much power as it could possibly be viewed as giving, and all in order to, in the end, blow the statute up. And I think that that's just not a right way to think about the interpretation of regulatory statutes. So, again, this sort of goes back to my -- this statute has plenty in it that imposes limits on what the FCC is doing. And why shouldn't we interpret the statute, which, you know, I think both sides in Gundy thought that -- the one thing that they agreed on was the first thing you do in a -- in a delegation case is interpret the statute. We interpret the statute. There's a lot of limits here. The agency can raise the money that's good enough, but no more to satisfy a pretty -- a pretty clear mandate, which is to provide basic services, those services necessary for public health and safety and education, basic services, for people of low-income and -- and rural areas who don't have what a substantial Official 159 majority of us do have. That's a pretty clear directive to the agency. And that seems to me consistent with the way we should interpret statutes in this context.

McCotter: So as the en banc decision below said, there are a lot of words here, but there are not a lot of limits, especially when it comes to raising the amount.

Justice Kagan: See, I think I -- can I just --

McCotter: And I realize we can disagree --

Justice Kagan: I'm just going to interrupt. I'm going to give you time to answer but I'm just going to interrupt. I actually think that the "lot of words" here makes it seem as though it's a little bit more loose than it, in fact, is; like the fact that there are six factors and stuff like that. The -- the lot of words are actually masking an extremely clear mandate to the agency. This -- this agency knows what it's supposed to do under this statute, which is exactly what this agency has been doing. This goes back to Official 160 Mr. Clement's historical point. It's basically what this agency has been doing since the 1930s.

McCotter: Well, again --

Justice Kagan: Okay. Sorry.

McCotter: Well, sorry. I was going to say, again, remember, the key inquiry here, what is the fundamental object, right, universal service. The FCC gets to define it on an evolving standard. And it's not an extraordinary interpretation to read it as it says, which is that in 254(c) the FCC need only consider the extent to which -- and then it lists some of these factors. And so we read it just straight up. Again, this is not -- respectfully, it's just not an unusual interpretation to say the FCC, sure, they must consider it. And if they don't, that could be an APA challenge, but we're going to assume they did consider it. And they're not actually substantively limited by these sorts of things. On the list of policies, in Schechter Poultry, there was a similar list of poultry -- list of principles -- excuse me, list of Official 161 policies, including, you know, non- -- non-discriminatory provisions. There -- the codes adopted needed to be equitable, things like that, words that may in other contexts have provided enough, but because they're added on with all these other provisions that make clear, Agency, you can go ahead and kind of do what you want here. And just to be clear, we're -- completely freeing you from the preexisting doctrine. So Mr. Clement said this isn't one of those cases where Congress said, hey, Agency, figure it out. Respectfully, we just disagree. I think that's exactly what happened here.

Justice Kagan: Thank you.

Chief Justice Roberts: Counsel. Justice Gorsuch? Justice Kavanaugh?

Justice Kavanaugh: I did have a few. On accountability, I assume because I haven't heard from you, you don't have any separate problem here with the fact that it's the FCC and that's commonly thought of to be independent, either it's not independent as the government says, or you don't think that's an additional Official 162 problem; is that correct?

McCotter: It's perhaps a minor plus factor. We're not raising a separate challenge on that basis, no.

Justice Kavanaugh: Okay. Second, are you asking us to do anything with Skinner?

McCotter: So the way we interpret Skinner -- I think this is the fair reading of it, given all the cases before and after -- is that the nature of the power at issue does matter. The Court's said that since Wayman. And to the extent the Court went further, all it said was something that we're willing to agree with, although we win either way, which is that taxing is not in a category of one, essentially. It's not some unique specific thing, although historically we think it is, we think that's important, but we don't want to tie the whole case to that point. And so, in our view, at most that's what Skinner said. And so whether you view it as a tax or a fee, we win either way. Skinner doesn't control beyond that.

Justice Kavanaugh: Is your argument that the word "sufficient" is too loose or the Official 163 back-end objects are too loose or both?

McCotter: It's not just "sufficient" is too loose. There are many principles in here that are too loose because even if you think they might have some meat on the bones, again, the FCC doesn't have to comply with any particular 254(b) principle.

Justice Kavanaugh: But you are arguing "sufficient," the word "sufficient," even if the back-end objects were more specific -- you understand the question?

McCotter: I think I do.

Justice Kavanaugh: Yeah.

McCotter: And I -- what I would say is it's not as if we have a statute where Congress said, FCC, please raise money and you can spend up to 8 billion. I think then the reasonable interpretation, as Justice Kagan would say, is, okay, let's kind of tie those two together there and put them, and let's try to avoid a constitutional problem. But here on the back-end spending, it's not like they suddenly have some real objective limits there either.

Justice Kavanaugh: Yeah. And then on Official 164 your point about limiting relief to the named parties, I guess I'm not understanding that at all because, you know, would not be a -- it's not a district court ruling. This ruling would be binding through vertical stare decisis throughout the country. And I assume -- and you want to react to that? I -- I -- I -- I think the named relief thing is -- doesn't help you at all.

McCotter: Well, so two responses. First, the government's always asking this Court to limit relief to the named parties. For once, they found someone who was willing to agree to it. So it must make some distinction. Second, I think that it's more applicable to the quarters that are kind of already in the hopper. So for all the ones that have already gone, already been approved, as it were, for those, limiting relief to the named parties, especially given that the time limit to bring --

Justice Kavanaugh: Well --

McCotter: -- FCC challenges --

Justice Kavanaugh: -- let's play this out. We've had this discussion before in past Official 165 years, the past few years, but if this Court were to say that it's unconstitutional for the FCC to continue in this way, even though the named parties are here before us, my understanding of what the government has said before is we would comply with what the Supreme Court said.

McCotter: Sure. And I think it's important that -- that they say that, but this is really important --

Justice Kavanaugh: You don't think they would do that? (Laughter.)

McCotter: I don't think they necessarily have a legal obligation --

Justice Kavanaugh: Really?

McCotter: -- to do so.

Justice Kavanaugh: What's -- what's your case for that?

McCotter: Well, the -- the case is that the judgment applies to the parties only, specifically if the Court has already said so, which again --

Justice Kavanaugh: What's your -- what's your response to vertical stare decisis and how that's traditionally been understood in Official 166 the country?

McCotter: So that's why I say I think the limiting it to the named parties is really most relevant for all the challenges that are already in the hopper, to say we're not going to unscramble all these statutes in the past, except for maybe these few named parties. Going forward, as people might bring new challenges -- and as I said in response to Justice Alito, I'm not convinced they will -- but even if they did, then, okay, well, that plays out well into the future. By then we think if the Court has actually reached this point, Congress would have done something --

Justice Kavanaugh: The --

McCotter: -- text forwardly.

Justice Kavanaugh: Sorry to prolong it. The premise of what you're saying right there is the FCC is just going to say we don't care what the Supreme Court said about the program. And I'm not sure that premise is -- is -- is accurate.

McCotter: I think what they -- sorry to -- if I'm not being clear. I'm saying for the program -- for the quarters that have Official 167 already been challenged, the past ones --

Justice Kavanaugh: Right.

McCotter: -- I think they would say, look, the Supreme Court has ruled in your favor, Respondents, and we will address that as necessary, as to you. Going forward, though, I do think that limiting it to the named parties is less effective. That's why we list other options, though. I'm not saying that that's like a cure-all, just to be clear. I think it is an important limitation, especially for the suits already filed.

Justice Kavanaugh: Thank you very much.

Chief Justice Roberts: Justice Barrett?

Justice Barrett: Mr. McCotter, I just want to clear something up about the 254(b) -- universal service principles. We've been kind of going round and round and round about whether these are mandatory factors or not. So I just want to be sure that I understand your position. So it begins under (b) by saying that the joint board and the Commission shall base Official 168 policies for the preservation and advancement of universal service on the following principles. And then each one of those principles has a "should." Is that your problem, that they say "should"? And would you feel differently if the principles were worded that quality services be available at just, reasonable, and affordable rates?

McCotter: That's one of the problems, is that it says "should." But I think, more fundamentally, the problem is, as the FCC itself has said for 30 years now almost, that any one of these --

Justice Barrett: Okay, but --

McCotter: -- problems --

Justice Barrett: -- put aside --

McCotter: All right.

Justice Barrett: This is a legal question. This is a statutory interpretation question. So the FCC can say that all it wants, but we still have to interpret the statute, right? So we're not bound by what the FCC says about its own authority. So, return to the question. Official

McCotter: True, although I think the fact that they've interpreted it the same way for 30 years --

Justice Barrett: Okay. Okay.

McCotter: -- is an indication.

Justice Barrett: Okay, I said, but don't -- don't fight the premise.

McCotter: All right. And so even then, let's say that they all are mandatory. We still run into the problem that I think Justice Gorsuch was getting at, which is that these terms, especially when you have them fighting against each other with no rules for how to balance them or pick and choose between them, it's just like Schechter Poultry. It's a lot of policies, some of which of which may actually have some meaning in some sense, but they're all fighting against each other, and the FCC gets to kind of pick and choose which ones are more -- more important.

Justice Barrett: Okay. And then second question. We've talked about the difficulty of having judicially manageable standards in this area. And when you and I talked before, we were talking about a cap, and Official 170 you said a cap would solve the problem. So is that a manageable principle, that you would be happy -- you said, well, then at least Congress would have decided the policy for itself and put a limit on it, so we know if it said 3 trillion, 3 billion, whatever, I understood you to tell me before that would solve the problem.

McCotter: Absolutely.

Justice Barrett: And so that would be the intelligible principle?

McCotter: If we're under the intelligible principle, yes --

Justice Barrett: Yeah.

McCotter: -- that's -- that's more than sufficient. And I think it's noteworthy that --

Justice Barrett: And we wouldn't have to worry about anything else in the statute, not this 350 -- 254(b) list or anything like that? Just the money would do it?

McCotter: Correct. Although we win even if you don't think that's the requirement.

Chief Justice Roberts: Justice Official 171 Jackson?

Justice Jackson: So you've said several times that you're not asking for a special rule for taxes versus fees, but you began today by saying that this case is about taxation without representation. And you say there has to be a cap because the amount of public revenue that is to be raised via, the -- you know, a mechanism is a legislative prerogative and can't be delegated. So it seems to me that you are relying to some extent on the characterization of this as a tax.

McCotter: So to be clear, we're making alternative arguments. We think it is a tax. We think that --

Justice Jackson: But does that matter?

McCotter: -- that should matter. But even --

Justice Jackson: Does it matter?

McCotter: But if even if you disagree --

Justice Jackson: No, I understand. I just want to understand whether your delegation Official 172 argument in substantial part is hinging on your point that the legislature has the power to tax and it can't be handed off, and unless the legislature has a cap that it says this is the amount that you can raise, it is doing something unconstitutional because of that structure?

McCotter: It matters in the sense that we know taxing is a strictly and exclusively legislative power. So we know that this is something Congress itself has to set the objective rule on. It's not necessarily that they have a cap in the numerical sense. In footnote 7 of our opening --

Justice Jackson: No, I understand --

McCotter: -- of our brief there are examples.

Justice Jackson: -- but you -- but -- but the thought is that -- that to the extent that you believe this is a tax, there has to be a cap set by Congress, is your basic point. Now, let me just ask you this: Mr. Clement says, okay, this statute is really not about raising public revenue. It is about providing universal services. So if we disagree, Official 173 if this comes down to how we're characterizing this statute, and we disagree with your view that this is a public revenue-raising vehicle and, therefore, Congress has to put a cap on it, do you lose? I mean --

McCotter: No.

Justice Jackson: -- why must there be a cap if this is not a tax?

McCotter: So, there -- again, there doesn't need to be a cap in the numerical sense.

Justice Jackson: No, I understand.

McCotter: There needs to be a rule.

Justice Jackson: Well, why if this is not a tax? Why can't Congress develop a policy that says we would like to have the following thing happen? We would like to have everybody in rural places throughout the country, everywhere, have this kind of service? And as Mr. Clement said, we don't really care about how much it costs to do that. We are trying to get to this objective. And you would come back and say: Ah, but you have to tell us, you know, there has to be a cap on the Official 174 amount of money that you have to raise for this. And Congress says: But that's not our objective. This is not about raising money. It's about providing a service; however much that costs. What's unconstitutional about that?

McCotter: It's still domestic revenue raising, as Professor McConnell describes it or as this Court last year in C -- CFPB described it. It's raising public moneys. And when you have that sort of exclusive legislative power, there needs to be a policy set by Congress.

Justice Jackson: All right.

McCotter: The policy can't be vague.

Justice Jackson: Let me just ask one more question. I know we're running a -- out of time here. Is it your first-line position that we should not be using the intelligible principle standard? Are you saying -- are you encouraging us -- I know you say you win under that standard, but is your first point that we should be doing something else?

McCotter: Yes. The Court should Official 175 at the very least -- return to the intelligible principle that I think J.W. Hampton itself laid out, which says that Congress must set the rule that shall prevail. And of -- as our argument is, there is no rule that shall prevail when it comes to the amount of money.

Justice Jackson: So you're not doing important subjects or something like that, is -- is that what you mean? Is that the test that you're -- I -- I'm just trying to understand what it is that you would have us do if we don't do intelligible principle?

McCotter: So we would say that the proper framework is what this Court applied for 150 years, if it's a strictly and exclusively legislative power, then Congress itself must set the policy. It can leave only fact-finding and details to the executive. And as I started off today saying, the amount of money to raise for an enormous social welfare program is not a minor detail to be left to someone else.

Justice Jackson: And -- and you don't see the risk that we judges would be overriding popular -- and I -- I know you don't care that Official 176 it's popular -- but popular in the sense that Congress has enacted it -- programs? I mean, Mr. -- Mr. Clement says that this could be -- the aggrandizement of power by the courts if we don't have a really clear standard for determining when we come in and say this is unconstitutional versus not?

McCotter: Well, I think -- he apparently prefers an aggrandizement by Article II executive. And Congress was more than happy to let that happen when it comes to taxes because nobody wants to take responsibility for that. So I think if we care about kind of democratic accountability I'll return to what Judge Newsom said in his concurrence, with each delegation here, each new layer, we move further and further away from that democratic accountability.

Justice Jackson: Thank you.

Chief Justice Roberts: Thank you, counsel. General Harris, rebuttal? REBUTTAL ARGUMENT OF SARAH M. HARRIS ON BEHALF OF THE PETITIONERS IN CASE 24-

Sarah M. Harris: Thank you. Just want Official 177 to go over three problems for Respondents. One, I candidly don't know what the rule is at this point. On the one hand, there is an anomalous rule that is foreign to the non-delegation precedents apparently for taxes, fees, and other revenue-raising actions, and I don't know how it can possibly be squared as something that preserves a separation of powers. When saying that an agency can raise up to 1 -- $1 trillion with no further restrictions is somehow not a non-delegation problem, but tying what an agency can extract from a particular set of people, tied to the specific needs of a program is somehow constitutionally unconscionable. I think there is a grave risk that if the Court went down that path, the Court would not be revitalizing the non-delegation doctrine or giving it meaningful teeth. It will just crop up case by case new, exclusively legislative powers, what is the new sort of limit that is going to be reverse-engineered for that one? That is chaos. Second, Respondent is ignoring the very real constraints in Section 254. This is a Official 178 little bit of an odd case in which the government is fervently insisting that the terms of the statute are mandatory, and yet Respondents won't take yes for an answer, that it is really, really a constraint. And you know that 254 is mandatory for a couple of reasons, not just the fact that 254 starts with "shall," as Justice Barrett and others have pointed out, but the fact that this is a highly repetitive statutory scheme. So all of the things in Section 254(b) actually recur elsewhere in the statute. 254(d) is a "shall" with respect to the equitable and non-discriminatory rates. Other parts of the program in 254(h) with respect to how the rural program is supposed to work or how the libraries are supposed to be funded. Those are shall's. And so there is no doubt that this is a mandatory system. The FCC has treated it as such, but the question is what the statute means. It is mandatory. Third of all, just the consequences of Respondents' position are really troubling -- the reply brief 8 to 9 examples are truly the tip of Official 179 the iceberg. It is a little bit strange that Respondents think that it is perfectly fine if there is some sort of fee system for the agency to decide how much its own costs or expenses are going to be, that that is not sort of the -- that is not sort of inviting the agency to raise whatever it sort of feels like, but that there is a problem when Congress is tethering the costs or fees or rates not to what the agency feels like doing to fund its own enforcement priorities and other things that it's doing, but instead to meet defined, external goals that Congress has required the program to meet a -- against a historical backdrop. That is a very, very strange position to be in. Now, on top of that, that's just the problem with a different rule for fees or taxes or just looking at statutory analogs for revenue raising. That really is the tip of the iceberg because Respondents' position also seems to have other built-in features that jeopardize, sort of create a mindfield for the U.S. code, one of which is if the idea is you can't ever have balancing of factors in a statute without running into a non-delegation problem, guess what? Official 180 Agencies are delegated with a lot of balancing of factors. It doesn't mean they have no constraints at all. It means they have to do both. So this Court should not stray from the path. Thank you.

Chief Justice Roberts: Thank you, counsel. The case is submitted. (Whereupon, at 12:50 p.m., the case was submitted.)