Why It Matters
In 2025, the Supreme Court rejected a private nondelegation challenge involving universal service requirements for telecommunications carriers in Federal Communications Commission (FCC) v. Consumers' Research. The doctrine, described in the Congressional Research Service (CRS) report "The Private Nondelegation Doctrine", prohibits the government from conferring unsupervised governmental authority on a private actor. By statute, telecommunications carriers must contribute to the FCC's mechanisms for making telecom services available to the U.S. population at reasonable rates.
The Big Picture
The Supreme Court upheld an arrangement in which the FCC created the Universal Service Fund and has long used a private, nonprofit corporation, the Universal Service Administrative Company (USAC), to administer the Fund. The Court reasoned that USAC remains broadly subordinate to the FCC, which appoints USAC's board, approves its budget, and reviews its projections before setting contribution amounts carriers must pay.
The Court set a permissive standard for delegation: it is sufficient that a private party's recommendations cannot take effect without an agency's approval, regardless of how freely given.
After the Consumers' Research decision, the Supreme Court remanded several private nondelegation cases for further consideration. The pending cases involve the Horseracing Integrity and Safety Act (HISA), a federal statute that authorizes a private corporation, the Horseracing Integrity and Safety Authority, to propose and enforce nationwide rules governing doping, medication control, and racetrack safety in the thoroughbred horseracing industry, subject to FTC oversight.
The Fifth Circuit found a private nondelegation defect in the Horseracing Integrity and Safety Authority's enforcement powers, concluding the Authority, not the FTC, is in charge of enforcing HISA. The Authority can initiate investigations, impose fines, and sue a regulated entity in federal court to enjoin violations of rules promulgated under the act or to enforce its own sanctions. Although the FTC can reverse sanctions after an adjudication, the Fifth Circuit deemed this tail-end review insufficient to subordinate the Authority to the agency.
The Sixth Circuit reached a different conclusion, holding that the Authority is sufficiently subordinate to the FTC in the context of a facial challenge. The Sixth Circuit reasoned that the Authority may not impose a sanction without oversight in the form of administrative law judge and potentially FTC review. The Sixth Circuit also noted that the FTC could use its own rulemaking power to enhance its oversight by constraining the Authority's investigations, increasing the procedural rights of suspected rulebreakers, or requiring the Authority to seek the FTC's permission before pursuing any enforcement action.
Both sides have petitioned the Supreme Court for review.
The Bottom Line
The Supreme Court's permissive approach to private delegation in Consumers' Research sets a low bar for government oversight: agencies need only retain final approval authority, not active supervision. This standard will likely govern the pending HISA cases, potentially allowing the Horseracing Integrity and Safety Authority to proceed with enforcement despite the Fifth Circuit's concerns. For Congress and the Trump administration, the ruling provides flexibility in outsourcing regulatory functions to private entities, provided the government retains formal decision-making authority. However, the circuit split on HISA suggests the doctrine's boundaries remain contested, and the Supreme Court's resolution of the pending petitions will clarify whether passive agency approval suffices or whether more robust oversight is constitutionally required.
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