Court Opinion

ID: 9382046
Source: CourtListenerOpinion
Date Created: 2023-03-24 18:01:07.803311+00
Date Added: 2024-06-11T17:17:36.696386
License: Public Domain

Case: 22-60008     Document: 00516687858        Page: 1    Date Filed: 03/24/2023

           United States Court of Appeals
                for the Fifth Circuit                               United States Court of Appeals
                                                                             Fifth Circuit

                                                                           FILED
                                                                     March 24, 2023
                                 No. 22-60008
                                                                      Lyle W. Cayce
                                                                           Clerk
   Consumers’ Research; Cause Based Commerce,
   Incorporated; Kersten Conway; Suzanne Bettac;
   Robert Kull; Kwang Ja Kerby; Tom Kirby; Joseph Bayly;
   Jeremy Roth; Deanna Roth; Lynn Gibbs; Paul Gibbs;
   Rhonda Thomas,

                                                                    Petitioners,

                                      versus

   Federal Communications Commission; United States of
   America,

                                                                  Respondents.

                    On Petition for Review of an Order of the
                     Federal Communications Commission
                               Agency No. 96-45

   Before Richman, Chief Judge, and Stewart and Haynes, Circuit
   Judges.
   Carl E. Stewart, Circuit Judge:
         Consumers’ Research, along with other entities, (collectively
   “Petitioners”) challenge: (1) the constitutionality of Congress’s delegation
   of administration of the Universal Service Fund (the “USF”) to the Federal
   Communications Commission (the “FCC”); and (2) the FCC’s subsequent
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   reliance on a private entity for ministerial support. Because there are no
   nondelegation doctrine violations, we DENY their petition.
                             I.    Background
          Congress enacted § 254 of the Telecommunications Act of 1996,
   which established the USF and entrusted its administration to the FCC.
   Congress passed § 254 to ensure the facilitation of broad access to
   telecommunications services across the country. The USF accomplishes this
   goal by raising funds which are later distributed to people, entities, and
   projects to expand and advance telecommunications services in the nation.
   Funds are raised by periodic contributions to the USF from
   telecommunications carriers, who later pass those costs on to consumers via
   line-item charges in their monthly bills.
          The FCC relies on a private entity, the Universal Service
   Administrative Company (“USAC”), to aid it in its administration of the
   USF. USAC is comprised of industry experts and the FCC tasks it with
   certain ministerial responsibilities, including: (1) collecting self-reported
   income information from telecommunications carriers; (2) compiling data to
   formulate the potential contribution rate for the USF; and (3) proposing a
   quarterly budget to the FCC for the USF’s continued preservation. USAC
   proposals are approved by the FCC either expressly or after fourteen days of
   agency inaction.
          USAC submitted its 2022 first quarter projections to the FCC on
   November 2, 2021. The FCC published these projections for notice-and-
   comment in accordance with the Administrative Procedure Act. On
   November 19, 2021, Petitioners submitted comments challenging the
   constitutionality of the USF and the FCC’s reliance on USAC. The FCC
   weighed the comments and issued a Public Notice of Proposed First Quarter
   2022 Universal Service Contribution Factor (“the Proposal”). Petitioners filed

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   another comment, invoking the same arguments as their November
   comment and seeking the discontinuance of the USF. The FCC,
   nonetheless, approved USAC’s proposal on December 27, 2021. In
   response, Petitioners filed this petition on January 5, 2022.
          On appeal, Petitioners assert that: (1) the Hobbs Act is not a
   jurisdictional bar to their constitutional claims; (2) Section 254 violates the
   nondelegation doctrine because Congress failed to supply the FCC with an
   intelligible principle; and (3) the FCC’s relationship with USAC violates the
   private nondelegation doctrine because the FCC does not adequately
   subordinate USAC in its administration of the USF.
                       II.    Standard of Review
          This court reviews constitutional issues stemming from an agency’s
   action de novo. See Huwaei Tech USA, Inc. v. FCC, 2 F.4th 421, 434 (5th Cir.
   2021). We “hold unlawful and set aside” any agency action that is “contrary
   to constitutional right, power, privilege, or immunity.” Id. (citing 5
   U.S.C. § 706(2)(B)).
                             III.        Discussion
                                    A.      Jurisdiction
          The Hobbs Act “provides that a party aggrieved by a rule, regulation,
   or final order . . . must file a petition for judicial review within sixty days.”
   State of Tex. v. United States, 749 F.2d 1144, 1146 (5th Cir. 1985). This sixty-
   day period “is jurisdictional and cannot be judicially altered or expanded.”
   City of Arlington v. FCC, 668 F.3d 229, 237 (5th Cir. 2012). However,
   plaintiffs may “challenge . . . a regulation after the limitations period has
   expired if the claim is that the agency has exceeded its constitutional
   authority or statutory authority.” State v. Rettig, 987 F.3d 518, 529 (5th Cir.
   2021). “To sustain such a challenge, the claimant must show some direct,

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   final agency action involving the particular plaintiff within [sixty days] of
   filing suit.” Id. (quoting Dunn-McCampbell Royalty Int., Inc. v. Nat’l Park
   Serv., 112 F.3d 1283, 1287 (5th Cir. 1997)). An agency’s action is direct and
   final when two criteria are satisfied: First, the action must mark the
   “consummation of the agency’s decisionmaking process . . . [and] second,
   the action must be one by which rights or obligations have been determined,
   or from which legal consequences will flow.” Dunn-McCampbell, 112 F.3d at
   1287 (internal quotation and citation omitted).
          The FCC contends that Petitioners’ claims are time-barred by the
   Hobbs Act because: (1) any challenge to § 254 should have come when
   Congress originally enacted it and (2) the Proposal is not a direct and final
   agency action which creates legal consequences or new obligations for
   Petitioners. The FCC relies on Dunn-McCampbell, where we foreclosed a
   facial challenge to a National Park Service regulation because “the
   limitations period beg[an] to run when the agency publishe[d] the regulation
   in the Federal Register.” Id. But we also carved out a limited exception in
   that case when we recognized that “an agency’s application of a rule to a
   party creates a new . . . cause of action to the agency’s constitutional or
   statutory authority.” Id. Petitioners assert that they qualify for this exception.
   Whether they are correct depends on our determination that the Proposal:
   (1) constitutes application of a direct and final rule by the FCC; and (2)
   determines Petitioners’ rights or has legal consequences for non-compliance.
   We hold in Petitioners’ favor on both prongs.
          Here, the Proposal qualifies for the Dunn-McCampbell exception
   because it (1) is a direct and final order which consummates the FCC’s
   decisionmaking process; and (2) punishes telecommunications carriers for
   non-compliance. See 112 F.3d at 1287. Regarding prong one, the Proposal is
   distinguishable from the regulation in Dunn-McCampbell. In that case, we
   held that Dunn-McCampbell’s facial challenge was time barred because the

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   “Park Service ha[d] not yet applied the regulations to the companies.” Id. at
   1288–89. So, any challenge he brought before the Park Service ever applied
   the regulation was necessarily a challenge to the regulation itself. The reverse
   is true in the instant case, where the FCC has applied and reapplied § 254’s
   mandatory USF Contributions through its approval of the quarterly
   proposals. Each approval consummates the FCC’s decisionmaking process
   for that quarter and, thus, allows for a constitutional challenge if that
   challenge is brought within the sixty-day time limit.
          Prong two is also satisfied because the Proposal undoubtedly has legal
   consequences which flow to carriers that fail to meet their contribution
   obligations. See 47 C.F.R. § 54.713(b) (providing that “delinquent” USF
   contributors are subject to “interest at the rate equal to the U.S. prime
   rate . . . plus 3.5 percent, as well as administrative charges of collection
   and/or penalties and charges permitted by the applicable law”). Because
   Petitioners satisfy both Dunn-McCampbell prongs, the Hobbs Act does not
   bar their constitutional claims and we proceed to the merits of their
   nondelegation arguments. 112 F.3d at 1287; Rettig, 987 F.3d at 529.
                                B.     Nondelegation
          Article I of the United States Constitution provides that “[a]ll
   legislative Powers herein granted shall be vested in a Congress of the United
   States.” “Accompanying that assignment of power . . . is a bar on its further
   delegation.” Gundy v. United States, 139 S. Ct. 2116, 2123 (2019) (internal
   quotations and citation omitted). However, the Constitution does not deny
   Congress the necessary “flexibility and practicality” to perform its functions.
   Id. The Supreme Court has, therefore, recognized that “Congress may
   obtain the assistance of its coordinate Branches . . . and in particular, may
   confer substantial discretion on executive agencies to implement and enforce
   the laws.” Id. (quoting Mistretta v. United States, 488 U.S. 361, 372 (1989)).

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   To that end, the Constitution only requires Congress to provide an
   intelligible principle which adequately guides the Executive agency. See id.
   (holding “that a statutory delegation is constitutional as long as Congress lays
   down by legislative act an intelligible principle to which the person or body
   authorized to exercise the delegated authority is directed to conform”)
   (internal quotations and citation omitted).
           The intelligible principle standard is “not demanding.” Id. at 2129.
   The Supreme Court has rarely “second-guess[ed] Congress regarding the
   permissible degree of policy judgment that can be left to those executing or
   applying the law.” Id. Ultimately, “a nondelegation inquiry always begins
   (and often almost ends) with statutory interpretation. The constitutional
   question is whether Congress has supplied an intelligible principle to guide
   the delegee’s use of discretion.” Id. Put differently, we must construe § 254
   to discern what tasks it delegates and what instructions Congress provided
   therein. “Only after [we have] determined [§ 254’s] meaning can [we]
   decide whether the law sufficiently guides executive discretion to accord with
   Article I.” Id
           We recently grappled with the intelligible principle standard in
   Jarkesy v. SEC, 34 F.4th 446 (5th Cir. 2022). 1 In that case, we held that
   Congress failed to provide an intelligible principle when it gave “the SEC the
   ability to determine which subjects of its enforcement actions are entitled to
   Article III proceedings with a jury trial, and which are not.” Id. at 461. We
   acknowledged that the Supreme Court “has not in the past several decades
   held that Congress failed to provide a requisite intelligible principle.” Id. at

           1
             We have since denied petition to rehear this case before the en banc court. See
   Jarkesy v. SEC, 51 F.4th 644. On March 8, 2023, the Government filed a petition for a writ
   of certiorari with the Supreme Court. Jarkesy’s response to that petition is due April 10,
   2023.

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   462. But we also noted that the Court had not been presented an instance
   where “Congress offered no guidance whatsoever” to an executive agency in
   that same span of time. Id. (emphasis in original). Accordingly, we reasoned
   that “[i]f the intelligible principle standard means anything, it must mean
   that a total absence of guidance is impermissible under the Constitution.” Id.
          In Jarkesy, we stated that the nondelegation doctrine applies where
   Congress has provided “no guidance whatsoever” to an agency, Id. at 462
   (emphasis in original), citing to the most recent (though long ago) Supreme
   Court nondelegation violation decision. See Panama Refining Co. v. Ryan, 293
   U.S. 388, 405 (1935) (holding that there was a nondelegation violation when
   Congress gave the President broad authority to prohibit the transportation of
   oil-related products in interstate commerce, but failed to provide any policy,
   establish any standard, or lay down any rules to direct the President’s
   exercise of this authority).
          Having fleshed out what the intelligible principle standard requires,
   we now examine Petitioners’ assertions that § 254 violates the nondelegation
   doctrine because: (1) Congress failed to provide the FCC with an intelligible
   principle; and (2) to the extent Congress provided intelligible principles, they
   are merely aspirational and place no objective limits on the FCC in its
   administration of the USF.
          1.      Whether Congress Provided Intelligible Principles in § 254
          Petitioners argue that Congress has unconstitutionally delegated its
   authority to the FCC without providing an intelligible principle. For
   example, they point to the absence of a limit on how much the FCC can raise
   for the USF as evidence of a lack of proper guidance. With no objective
   ceiling on the amount that the FCC can raise each quarter, they contend that
   Congress’s alleged intelligible principles fail to place necessary limits on the
   FCC’s ability to assess fees from telecommunications carriers. Also,

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   Petitioners aver that § 254(b)(1)-(7) contains mere public policy statements
   which impose no meaningful limitations on or guidance to the FCC’s
   revenue-raising obligation in its administration of the USF. In sum,
   Petitioners maintain that Congress has not articulated any guidance to the
   FCC in its administration of the USF—and that this failure violates the
   nondelegation doctrine. We disagree.
           Congress passed § 254 for the express purpose of preserving and
   advancing universal telecommunications services. 2 See 47 U.S.C. § 254(b).
   To that end, § 254(b) provides that the FCC “shall base policies” on certain
   enumerated principles. 3 Petitioners maintain that these principles offer no
   guidance to the FCC as it attempts to realize § 254(b)’s purpose. Their
   position is untenable. Section 254 expressly requires the FCC to ensure that
   telecommunications services are: (1) of decent quality and reasonably priced;
   (2) equally available in rural and urban areas; (3) supported by state and
   federal mechanisms; (4) funded in an equitable and nondiscriminatory
   manner; (5) established in important public spaces (schools, healthcare
   providers, and libraries); and (6) available broadly across all regions in the
   nation. See § 254(b)(1)-(7). And should the FCC ever conclude that these
   principles were insufficient, the statute enables, and likely obligates, it to add
   principles “consistent with” § 254’s overall purpose. See § 254(b)(7).
   Rather than leave the FCC with “no guidance whatsoever,” Congress
   provided ample direction for the FCC in § 254. Jarkesy, 34 F.4th at 462.

           2
               See also 47 U.S.C. § 151 (noting the FCC’s original purpose of creating policies
   designed “to make available, so far as possible, to all the people of the United States . . . a
   rapid, efficient, Nation-wide . . . wire and radio communication service with adequate
   facilities at reasonable charges”).
           3
               See 47 U.S.C. § 254(b)(1)-(7) (providing a full list of principles).

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           Ultimately, in enacting § 254, Congress chose to “confer substantial
   discretion” over administration of the USF to the FCC. Gundy, 139 S. Ct. at
   2139. Petitioners take issue with how the FCC uses this discretion—arguing
   that the FCC operates the USF with no guidance from Congress. 4 But if the
   FCC had a question about how to manage the USF, it need only look to § 254
   to find an answer. Therefore, we conclude that Congress supplied the FCC
   with intelligible principles when it tasked the agency with overseeing the
   USF. Having established that § 254 contains intelligible principles, we next
   consider whether those principles adequately limit the FCC’s revenue
   raising function.
                      2.      Whether § 254 Properly Limits the FCC
           Petitioners contend that even if Congress provided the FCC with
   intelligible principles we should rule in their favor because those principles
   are nothing more than “vague aspirations” that fail to set objective limits on
   the FCC as they operate the USF. Gundy, 139 S. Ct. at 2133. They argue

           4
             We note that much of Petitioners’ nondelegation argument relies primarily on the
   dissents of the Supreme Court’s holding in Gundy and this court’s in Rettig, which, of
   course, are not binding on our court. See, e.g., Gundy, 139 S. Ct. at 2133, 2134, 2135–37
   (Gorsuch, J., joined by Roberts, C.J., and Thomas, J. dissenting); see also Rettig, 993 F.3d
   at 408, 409–10 (5th Cir. 2021) (Ho, J. joined by Jones, Smith, Elrod, and Duncan, JJ.,
   dissenting from denial of rehearing en banc). That some Justices of the Supreme Court and
   some judges of this circuit have opined on whether Congress is permitted to delegate
   “difficult policy choices” is not determinative that Congress impermissibly did so here
   when it delegated administration of the USF to the FCC. Moreover, the mere fact that
   Petitioners dispute the policy choices that the FCC has made in overseeing the USF does
   not translate to a constitutional or statutory violation. See Gundy, 139 S. Ct. at 2139
   (“Congress may confer substantial discretion on executive agencies to implement and
   enforce the laws.”). At best, Petitioners argue for different policy choices. But they provide
   no binding law to support such a request.

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   that § 254 is no different than the statute in Panama Refining. 5 In that case,
   the Supreme Court took issue with 15 U.S.C. § 701’s generally unhelpful
   guidance to the President as he tried to regulate the interstate hot oil industry.
   See Panama Refining, 293 U.S. at 419 (observing that § 701 failed to “limit[]
   or control[] the authority conferred” to the President). Petitioners argue
   that § 254 similarly fails to limit or control the FCC’s ability to raise revenue
   for the USF. We disagree.
           Here, § 254 provides limitations on the FCC’s revenue-raising ability,
   whereas the statute in Panama Refining is markedly different. In Panama
   Refining, the Supreme Court observed that:
                The Congress left the matter to the President without
                standard or rule, to be dealt with as he pleased. The effort
                by ingenious and diligent construction to supply a
                criterion still permits such a breadth of authorized
                action as essentially to commit to the President the
                functions of a Legislature rather than those of an
                executive or administrative officer executing a
                declared legislative policy.
   293 U.S. at 418–19 (emphasis added). Section 254 contains no such
   deficiencies, and certainly did not leave the matter to the FCC “without
   standard or rule, to be dealt with as [it] pleased.” Id. Instead, § 254 requires
   that the FCC only raise enough revenue to satisfy its primary function.
   See § 254(b).

           5
            See 293 U.S. at 417 (stating that the purpose of the challenges statute was “to
   eliminate unfair competitive practices, to promote the fullest possible utilization of the
   present productive capacity of industries, to avoid undue restriction of production (except
   as may be temporarily required), to increase the consumption of industrial and agricultural
   products by increasing purchasing power, to reduce and relieve unemployment, to improve
   standards of labor, and otherwise to rehabilitate industry and to conserve natural
   resources.”) (internal quotations omitted).

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             For example, § 254(c)(1)(A)-(D) limits distribution of USF funds to
   telecommunications services that: (1) “are essential to education, public
   health,       or   public   safety;” (2) “are being               deployed in         public
   telecommunications networks by telecommunications carriers;” and (3)
   “are consistent with the public interest, convenience, and necessity.”
   Likewise, § 254(b)(5) requires that the FCC ensure there are “specific,
   predictable and sufficient Federal and State mechanisms to preserve and
   advance universal service.” Furthermore, § 254(e) limits distribution of
   USF funds to eligible communication carriers under § 214(e)—and even
   those carriers may only receive support “sufficient to achieve the purposes
   of” § 254. Taken together, these provisions demonstrate that the FCC is not
   in the dark as to the amount of funding it should seek each quarter. Instead,
   § 254 sets out the FCC’s obligations with respect to administration of the
   USF and the FCC, in turn, calculates what funds are necessary to satisfy its
   obligations.
             Ultimately, § 254       reflects        Congress’s      understanding          that
   telecommunications services are constantly evolving. 6 That understanding
   also drove Congress to implement a unique revenue raising mechanism for
   the USF. That the mechanism is unique is not in itself a nondelegation
   violation—especially where Congress has placed identifiable limits on what
   USF distributions can fund. See, e.g., § 254(b)-(e). Congress failed to place
   these limitations on the President in Panama Refining—and that led the
   Supreme Court to hold that a nondelegation violation occurred. But
   Congress did not make that same mistake with § 254, instead, ensuring that

             6
              See, e.g., § 254(c)(1) (providing that “[u]niversal service is an evolving level of
   telecommunications services that the Commission shall establish periodically under this
   section, taking into account advances in telecommunications and information technologies
   and services”).

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   the statute is replete with intelligible principles to guide the FCC. Because
   Congress provided the FCC with numerous intelligible principles for its
   administration of the USF and those principles sufficiently limit the FCC’s
   revenue-raising activity, we hold that § 254 does not violate the
   nondelegation doctrine.
                              C.    Private Nondelegation
             The private nondelegation doctrine prevents “governments from
   delegating too much power to private persons and entities.” Boerschig, 872
   F.3d at 707. “Although this so-called private nondelegation doctrine has been
   largely dormant” for nearly a century, “its continuing force is generally
   accepted.” Id.; see also Nat’l Horsemen’s Benevolent & Protective Ass’n v.
   Black, 53 F.4th 869, 880–82 (5th Cir. 2022) (discussing the evolution of the
   private nondelegation doctrine). Functionally, the doctrine prevents
   agencies from giving private parties the “unrestrained ability to decide
   whether another citizen’s property rights can be restricted” because “any
   resulting deprivation happens without ‘process of law.’” Boerschig, 872 F.3d
   at 708.
             To be clear, agencies “may subdelegate to private entities so long as
   the entities ‘function subordinately to’ the federal agency and the federal
   agency ‘has authority and surveillance over [their] activities.’” Rettig, 987
   F.3d at 532 (quoting Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 399
   (1940)). Ultimately, a statute does not violate the private nondelegation
   doctrine if it “‘imposes a standard to guide’ the private party and (2)
   provides ‘review of that determination that prevents the [private party] from
   having the final say.’” Id. (alteration in original) (quoting Carter v. Carter
   Coal Co., 298 U.S. 238, 310−311 (1936)).
             Our decision in National Horsemen provides a timely comparator to
   the instant case. 53 F.4th 869 (5th Cir. 2022). There, multiple organizations

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   sued the Federal Trade Commission (“FTC”), alleging that the Horseracing
   Integrity and Safety Act’s (“HISA”) regulatory scheme violated the private
   nondelegation doctrine by giving government power to the Horseracing
   Integrity and Safety Authority (the “Authority”) without adequate agency
   supervision. Id. On appeal, we held that the FTC’s relationship with the
   Authority violated the private nondelegation doctrine.
          We first noted that, under HISA, the Authority had “sweeping
   rulemaking power,” with the ability to establish, enforce, and punish all
   entities involved in the horseracing industry. Id. at 882. We also observed
   that “HISA’s generous grant of authority to the Authority to craft entire
   industry programs strongly suggests it is the Authority, not the FTC, that is
   in the saddle.” Id. at 883 (internal quotations omitted). Finally, we
   highlighted that the FTC had no authority to conduct independent review of
   the Authority’s policy choices and did not possess final say on what rules the
   Authority promulgated. See id. at 884. Instead, the FTC could only
   “recommend changes to the Authority’s rules (and then, only to the extent
   that the rules are inconsistent with HISA).” Id. at 888. After considering the
   lack of oversight and control the FTC exercised over the Authority, we ruled
   against the FTC and held its redelegation of Congressional power
   unconstitutional.
          In this case, Petitioners argue that the FCC violated the private
   nondelegation doctrine when it redelegated its authority over the USF to
   USAC, a private entity. They aver that the FCC does not oversee USAC in
   its performance of its duties. For example, they highlight that the FCC rarely
   exercises its power to alter USAC’s proposed contribution factor under §
   54.709(a)(3). They assert that one reason that the FCC does not exercise this
   authority is because the statute affords the agency just fourteen days to
   review and alter any USAC determinations before they become binding on
   the telecommunications carriers. To Petitioners, such a small window for

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   review renders the FCC’s oversight over USAC meaningless. They suggest
   that the FCC is a rubber stamp for USAC’s proposals and that USAC
   effectively administers the USF. We disagree.
           Here, the FCC has not violated the private nondelegation doctrine
   because it wholly subordinates USAC. First, federal statutory law expressly
   subordinates USAC to the FCC. See 47 C.F.R. § 54.702(b) (providing that
   USAC “may not make policy, interpret unclear provisions of the statute or
   rules, or interpret the intent of Congress”). Second, unlike in National
   Horsemen, USAC does not enjoy the same type of sweeping rulemaking
   power—instead it makes a series of proposals to the FCC based off expert
   analysis, which are not binding on carriers until the FCC approves them. See
   47 C.F.R. § 54.709(a). Third, the FCC permits telecommunications carriers
   to challenge USAC proposals directly to the agency and often grants relief to
   those challenges. 7 Fourth, the FCC dictates how USAC calculates the USF
   contribution factor and subsequently reviews the calculation method after
   USAC makes a proposal. See 47 C.F.R. §§ 54.709(a)(2)-(3); 54.711(a).
           Ultimately, the FCC only uses USAC’s proposals after independent
   consideration of the collected data and other relevant information. We have
   expressly upheld these types of arrangements. See Rettig, 987 F.3d at 531
   (noting that agencies are permitted to “reasonably condition” their actions
   “on an outside party’s determination of some issue”). Because the FCC
   properly subordinates USAC, it has not violated the private nondelegation
   doctrine.

           7
             See, e.g., Streamlined Resol. of Requests Related to Actions by the Universal Serv.
   Admin. Co., DA 22-448, 2022 WL 1302467 (WCB rel. April 29, 2022); Alpaugh Unified
   Sch. Dist., 22 FCC Rcd. 6035 (2007)).

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                         IV.    Conclusion
         For the foregoing reasons we DENY the petition.

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