The U.S. Supreme Court’s decision to overhaul the Chevron Deference precedent last June has ignited discussions about another key constitutional principle—nondelegation doctrine. With its potential to redefine the scope of federal power and reshuffle the regulatory landscape, nondelegation is poised to become the focal point of many legal debates in the coming years.
At its core, the nondelegation doctrine is rooted in Article I of the U.S. Constitution, which grants Congress the authority to make laws. This doctrine prohibits Congress from delegating its legislative power to the executive branch, particularly to federal agencies. While this principle has been a long-standing constitutional issue, it is now gaining renewed attention as several high-profile cases challenge how far Congress can go in outsourcing legislative authority.
In addition to the traditional nondelegation doctrine, another evolving principle—the private nondelegation doctrine—has emerged as a critical point of contention. This doctrine holds that neither Congress nor federal agencies can delegate governmental power to private entities. It is a critical issue in constitutional challenges against private regulation in industries like securities and horse racing, where private organizations wield significant rulemaking, enforcement, and investigative powers.
The Supreme Court has already agreed to hear cases addressing both nondelegation and private nondelegation issues, setting the stage for a potentially landmark shift in constitutional law. One case at the center of this debate involves the Federal Communications Commission (FCC), which levies fees on telecom companies to expand access to phone and internet services nationwide. The FCC relies on a private company to manage a multi-billion-dollar fund that is intended for these public services.
In July, the 5th U.S. Circuit Court of Appeals ruled that the delegation of taxing authority from Congress to the FCC—and its subdelegation to a private company—was unconstitutional. A group of conservative organizations, led by Consumers’ Research, successfully persuaded the 5th Circuit to block the program. The U.S. Justice Department has requested that the Supreme Court review the decision, citing a split between the 5th Circuit and other federal circuits, such as the 6th and 11th, which have upheld the program’s constitutionality.
While the FCC case primarily focuses on nondelegation, the issue of private nondelegation takes center stage in a separate challenge involving the horse-racing industry. Texas, along with several horse-racing groups, has questioned the constitutionality of a law empowering the Horseracing Integrity and Safety Authority (HISA) to regulate the industry under the Federal Trade Commission (FTC). The 5th Circuit recently ruled that HISA’s authority to enact rules was constitutional, but it also found that HISA’s power to enforce those rules—such as conducting investigations, imposing sanctions, and filing lawsuits—violated the private nondelegation doctrine, as these actions were taken without FTC oversight.
The Justice Department, along with HISA and other stakeholders, has filed petitions asking the Supreme Court to reconsider the 5th Circuit’s ruling. While the outcome of this case remains uncertain, the core issue centers on whether private entities can wield significant regulatory power without sufficient government oversight or accountability.
A similar challenge is currently playing out in the financial sector, where the Financial Industry Regulatory Authority (FINRA) acts as a private self-regulatory organization for the securities industry. In a recent ruling by the D.C. Circuit Court, FINRA was blocked from expelling a broker-dealer, Alpine Securities, without review by the U.S. Securities and Exchange Commission (SEC). This case raises broader concerns about whether private entities like FINRA can exercise governmental power—such as enforcing rules and imposing penalties—without direct accountability to elected officials.
In a partial dissent, Judge Justin Walker argued that allowing private organizations like FINRA to enforce laws undermines the Constitution’s design by enabling non-governmental bodies to wield too much regulatory power. The case’s outcome could have significant implications for the future of self-regulation in the financial sector, and may prompt further legal challenges in other industries.
As the Supreme Court prepares to hear cases related to both nondelegation and private nondelegation, the legal landscape is likely to shift dramatically. Legal scholars and policymakers are watching closely as the Court grapples with whether Congress and federal agencies can delegate significant powers to private organizations without violating the Constitution. The issue of self-regulation, particularly in industries like horse racing and securities, may soon become a central topic in constitutional debates.
In the coming years, the nondelegation doctrine is expected to be discussed more frequently in legal circles, as courts decide how much power can be delegated from the legislative branch to the executive—and whether private organizations can exercise governmental powers without direct oversight. As the U.S. legal system confronts these critical questions, the nondelegation doctrine is sure to become a defining issue for future Supreme Court rulings.
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