Consumers’ Research Against Consumers

The Consumers’ Research case revolves around the Universal Service Fund, a fee imposed on telecommunication companies by a not-for-profit private company created by the Federal Communications Commission (FCC), which uses the funds to help subsidize infrastructure in rural communities. Consumers’ Research filed a series of similar lawsuits in the Fifth, Sixth, Eleventh, and the DC Circuit Courts challenging the constitutionality of the fund.

Consumers’ Research is arguing that it is unconstitutional for Congress to delegate fee structures and collections to a federal agency. The conservative nonprofit previously lost federal court cases in the Sixth and Eleventh Circuits on the matter.

In June, the Fifth Circuit Court of Appeals ruled in favor of Consumers’ Research, stating that the fund is a “misbegotten tax” that violates the Constitution because the FCC is determining fee amounts, collection, and disbursements, when Congress should be the entity in charge of these standards.

The FCC is suing to overturn the Fifth Circuit decision that ruled the infrastructure service fund is unconstitutional.

The Fifth Circuit ruling was supported by fifteen Republican state attorneys general in an amicus brief filed with the high court. West Virginia’s attorney general, the lead filer of the brief, stated that the Universal Service Fund was “yet another example of a problematic agency undertaking,” and that Congress should be the entity to delegate the funds, “not a private band of unaccountable industry participants.”

From 2022 to 2024, the Universal Service Fund provided West Virginia with more than $44 million for broadband internet connection service purposes for 766 schools and 168 libraries, benefiting more than 272,000 students, according to FCC data. West Virginia also received more than $15 million to fund broadband projects for health care providers and more than $55 million to provide high-speed internet services to West Virginia’s most rural communities.

At the heart of the Consumers’ Research case is the “nondelegation doctrine,” a conservative legal theory that advocates for strict limitations on Congress’ ability to hand off governing functions to federal agencies. The Supreme Court has used this theory twice in the 1930s to rein in sweeping powers handed to the Franklin D. Roosevelt administration during the Great Depression.

But since those two rulings, and even before them, the Supreme Court has ruled that Congress has the ability to hand off certain regulatory actions to federal agencies as long as there is a “legal framework to constrain the authority of the delegee, such as an administrative agency,” according to an analysis by congressional researchers.

“Reviving the doctrine would cripple agencies’ ability to govern consumer safeguards, social security, Medicare, and more during a time when the Trump administration has begun to slash federal agencies,” Accountable.US wrote in a memo detailing the case.

Critics say the Consumers’ Research case is the next step in the corporate-conservative movement to gut federal agencies and oversight. Last year, the Supreme Court issued two rulings that dramatically curtailed federal agencies’ ability to issue regulations.

In Loper Bright Enterprises v. Raimondo, the Supreme Court overturned the “Chevron doctrine,” a previous high court ruling that required federal courts to defer to federal agencies’ interpretations of vague statutes and laws. The ruling gutted environmental protections. Then, in Corner Post v. Board of Governors of the Federal Reserve System, the Supreme Court ruling extended the time frame in which parties can challenge a federal rule or regulation.

Public Citizen, a consumer rights group, also filed a brief with the Supreme Court for the Consumers’ Research case, urging the justices to protect Congress’s ability to delegate certain tasks to federal agencies, stating that if the high court rules in favor of Consumers’ Research, the consequences could be “extreme.”

“Countless statutory schemes confer broad authority on the executive — for example, authority to set natural-gas prices, to regulate product safety, and to calculate appropriate fees for all manner of government services,” the group wrote. “A holding that the [Universal Service Fund] scheme violates constitutional separation-of-powers principles would break with long-standing precedent and, in the process, open innumerable statutory enactments to novel constitutional attacks.”

A Powerful Friend of the Court

Amicus briefs, Latin for “friends of the court,” have been around for millennia, allegedly dating back to the Roman Empire, and are used to advocate for certain legal theories or on behalf of the parties involved in cases before a judge.

In recent years, powerful interest groups have used amicus briefs, sometimes funded by untraceable dark money donations, to surreptitiously lobby the courts to rule in their interest. Since 2010, the number of amicus briefs filed with the high court has skyrocketed, with groups filing briefs in 96 percent of Supreme Court cases. In 2023, justices cited these briefs nearly 150 times in their opinions.

Thirteen of the conservative groups that filed amicus briefs in the Consumers’ Research case — Americans for Prosperity Foundation, Foundation for Government Accountability, Competitive Enterprise Institute, the Cato Institute, the Manhattan Institute for Policy Research, America First Legal Foundation, Southeastern Legal Foundation, Buckeye Institute, the Pacific Legal Foundation, the Reason Foundation, the New Civil Liberties Alliance, the Advancing American Freedom Foundation, and the Mackinac Center for Public Policy — have received funding from Donors Trust, the nonprofit with deep financial connections to Leo. These groups’ briefs urge the high court to side with Consumers’ Research and gut federal agencies’ ability to issue rules and fees.

Americans for Prosperity, the Foundation for Government Accountability, and the Competitive Enterprise Institute all received Leo-connected funding. These groups are also funded by the Koch Network, a sprawling assortment of think tanks and legal groups founded and/or funded by petrochemical billionaires Charles and David Koch.

In their amicus briefs pushing the high court to side with Consumers’ Research, the three groups urge the justices to rein in the executive branch’s ability to issue rules and regulations and prevent Congress from outsourcing its tax-writing power to the executive branch.

Limiting the executive branch and federal agencies’ power “is deeply rooted in our history and tradition and enshrined in the Constitution to guard against tyranny and government oppression,” Americans for Prosperity wrote in its amicus brief.

Donors Trust gave $85,180 to Americans for Prosperity in 2023. That same year, the trust gave more than $2.5 million to the Foundation for Government Accountability and more than $2.7 million to the Competitive Enterprise Institute.

The Cato Institute and the Manhattan Institute for Policy Research filed a joint brief on the case with arguments similar to Americans for Prosperity, claiming that “Congress has attempted to outsource some of its most important Article I powers: the powers to tax and spend,” by allowing federal agencies to direct fee collection.

Donors Trust gave more than $4.3 million to the Cato Institute and more than $108,000 to the Manhattan Institute in 2023.

Additionally, Donors Trust gave more than $5.2 million to the Reason Foundation, $3.1 million to the America First Legal Foundation, $2.9 million to the Pacific Legal Foundation, $2.1 million to the Mackinac Center, $1.2 million to the New Civil Liberties Alliance, $250,000 to the Southeastern Legal Foundation, $142,500 to the Advancing American Freedom Foundation, and $50,000 to the Buckeye Institute.

The Pacific Legal Foundation has been a key player in the legal fight to overturn campaign finance limits and promote corporate interests at the Supreme Court. In its amicus brief for the Consumers’ Research case, the foundation urged the high court to “just to say that the Constitution requires Congress (not the Commission, or anyone else) to decide the amount of any tax,” or fee collection.

“Congress has no power to delegate significant discretionary power to the executive branch at all,” the foundation wrote. “At bottom, Congress alone must decide the amount to be exacted from private purses. When Congress tries to subdelegate that power away to the executive branch through nebulous standards, it has violated the Constitution’s separation of powers.”

Leo has a history of directing dark money funds to legal groups in order to fund the production of amicus briefs. In 2014, Leo directed a representative from the conservative nonprofit Bradley Foundation to the Judicial Education Project — a dark money nonprofit founded by Leo that eventually changed its name to the 85 Fund — to finance amicus briefs. The Bradley Foundation paid $150,000 to the project for its work on two amicus briefs, according to a 2021 letter from Sen. Whitehouse and Rep. Hank Johnson (D-GA).

Leo is also connected to other deregulatory cases previously considered by the Supreme Court. Nonprofits connected to Leo lobbied the court against consumer protection laws and environmental regulations.

The dark money funding of amicus briefs currently in front of the Supreme Court comes as Democratic lawmakers and a panel of federal judges are working on a rule requiring public disclosure of the funding sources behind amicus briefs filed in the lower courts. The Supreme Court often enacts similar rules for its own proceedings.

“Leonard Leo’s dark money network is once again stacking the deck, pouring millions into a case that could gut federal oversight,” said Accountable.US president Caroline Ciccone in a statement to the Lever. “This isn’t a coincidence — it’s part of a well-worn strategy to strip agencies of their power to protect consumers and workers.”

Leo also has deep connections to two Supreme Court justices currently hearing the case. He has known Thomas since the early 1990s, when Leo served as a law clerk for a Washington, DC, appeals court judge. Thomas is the godfather to one of Leo’s children and his wife, Virginia, served as president of a nonprofit that employed Leo as a director in 2010.

Leo also traveled with Alito, and the Federalist Society, an influential conservative nonprofit that Leo cochairs, has funded numerous vacations for the justice. Additionally, in his role at the Federalist Society, Leo played a crucial role in confirming all six current conservative justices by helping to select them and advocating on their behalf.

The justices’ ties to Leo are a reason why the Supreme Court needs an enforceable code of conduct, including requirements that compromised justices recuse themselves, said Ciccone with Accountable.US.

“The Supreme Court simply cannot be trusted to defend the Constitution if it doesn’t adopt an obligatory, enforceable code of conduct that cleans up the impropriety that’s existed on the court for years,” Ciccone said in a statement. “Thomas and Alito must recuse themselves and restore a semblance of integrity to the highest court.”