Last week, the U.S. Supreme Court overturned the longstanding Chevron doctrine, which required courts to defer to expert regulatory agencies, like the FCC, when interpreting ambiguous statutes, unless the agency acted unreasonably. Since the decision, we have seen all sorts of TV pundits predicting the end of “the administrative state” (presumably meaning the end of the many rules passed by administrative agencies like the FCC). In the broadcast space, we’ve heard many suggest that this might mean that the broadcast ownership rules (most recently upheld by the FCC in their December decision on the 2018 Quadrennial Review) would soon be a thing of the past. As we wrote several months ago, when this case was argued before the Supreme Court, we think that many of these predictions are overblown. While certainly last week’s decision gives challengers to agency decisions more ammunition to use in bringing such challenges, and likely will cause the federal courts to be flooded with more challenges generally, the decision will not end the authority of administrative agencies to adopt rules affecting businesses, nor will it bring about any immediate change in rules adopted by the FCC on complex issues affecting broadcasters, like the local radio and television ownership rules.
First, we need to look at what the Chevron doctrine was all about. Chevron did not deal with the power of agencies themselves to make rules, but instead it dealt with the relatively narrow question of the standards that courts should use in evaluating challenges to those rules. Under Chevron, if an agency’s rules relied on an interpretation of arguably ambiguous Congressional legislation, the courts would defer to the agency’s interpretation of the law if that interpretation was a plausible one. In other words, under Chevron, the agency’s interpretation of the law would stand if there was a reasonable argument that the law meant what the agency said that it did, even if a reviewing court thought that there was a better reading of the law. So, the doctrine dealt only with issues that arose when there were arguably ambiguous statutes being interpreted by an agency like the FCC.
The Supreme Court’s decision last week said that it should be the courts that provide the final interpretation of ambiguous statutes, not the agencies. While the agencies will still look at the laws governing their actions when making decisions on whether or not to adopt various rules and policies, and the agencies will offer their interpretations of those statutes in making these decisions, the agency interpretations will no longer be deferred to by the courts. The courts can still look at those agency interpretations of the statutes under which they are acting, and the courts may find those agency interpretations instructive (particularly where the statutes deal with technical issues), but it will be the courts that make the final determination as to what is the best interpretation of the statute, even if the court’s reading of the statute is different than that of the agency.
It is important to note that last week’s decision deals only with the interpretation of ambiguous statutes. The Court makes clear that the agency is still entitled to deference in making policy decisions when the authority to make those decisions has clearly been delegated by a Congressional action. Similarly, agencies are entitled to deference in making fact-finding decisions used in adopting the rules that they do. These kinds of decisions can be challenged in court, but courts will still defer to the agency decision on factual matters unless those decisions are arbitrary or ignore the record evidence.
What does that mean for FCC decisions? Likely decisions relying on abstract Congressional grants of authority (like the public interest standard) will be subject to more scrutiny by Courts. In contrast, rules adopted to implement clearly worded Congressional statutes telling the FCC to make a particular decision will be less likely to be overturned by the courts Where the FCC is just making policy decisions that Congress told it to make, the role of last week’s decision will be limited.
To look at some examples, when the FCC adopted rules to implement the CALM Act – legislation to mitigate TV commercials louder than surrounding programming – it was specifically directed to adopt those rules by the statute that was passed by Congress with the express intent to curb loud commercials. That kind of action, where the FCC decision-making is pursuant to a clearly articulated grant of authority by Congress, is one where FCC decision-making will still be subject to judicial deference. In other words, to help avoid judicial review of agency actions, Congress should be adopting clear statutes telling agencies what to do, and agencies should be acting within the bounds of those grants of authority.
Where there will be increased scrutiny will be in areas where the agency’s statutory authority is not so clear. Currently, there are appeals pending of the FCC’s recent decision to bring back the FCC Form 395-B report on the race, ethnicity, and gender of all broadcast station employees. In adopting that requirement, the authority of the Commission to adopt that rule was challenged, so that question of whether the FCC properly interpreted its authority to adopt this requirement is sure to come up again in court, and the abolition of the Chevron doctrine will likely be raised in support of a challenge to the FCC decision. The parties in the challenge to the adoption of the Form 395-B just recently moved to stay the effect of the FCC’s action. In any decision on whether or not to put the decision on hold, if that issue gets to the courts, we may well see an early use of the court’s new authority to second-guess agency interpretations of their statutory authority.
Similarly, there have been questions about the FCC’s authority to adopt new rules requiring the labeling of the use of artificial intelligence in political advertising. In announcing the proposal, the FCC Chairwoman justified the proposed rules based on authority granted by the Bipartisan Campaign Reform Act – a view challenged by the Chair of the Federal Election Commission – and under the general “public interest” standard by which agency actions are governed. Again, given the broad, ambiguous nature of the public interest standard and the challenges already raised about the FCC’s authority to regulate campaign advertising, expect a challenge to the FCC’s claim of statutory authority if the FCC goes forward with the rulemaking and ultimately adopts rules in this area.
Broadcast ownership restrictions are also subject to an arguably ambiguous statute that instructs the FCC, in its Quadrennial Reviews, to review the local ownership rules to “determine whether any of such rules are necessary in the public interest as a result of competition.” The law goes on to say that the “Commission shall repeal or modify any regulation it determines to be no longer in the public interest.” The FCC has always interpreted this to allow the agency to look at all sorts of public interest factors in deciding whether it was in the public interest to retain the rules. But arguments have been raised before, and likely will be raised again in the current appeal of the FCC’s December decision, that competition should be the sole or overriding factor used in making decisions whether to retain the rules. But no decision will come overnight – court cases take months or years to play out.
The bottom line is that the abolition of the Chevron Doctrine will likely increase the frequency of agency decisions being overturned by court decisions. But courts have not, in the past, hesitated to find agency decisions arbitrary or unreasonable, so the difference may be at the margins . However, don’t look for agencies to stop regulating – or for Congress to stop delegating decision-making to these agencies – as the subjects overseen by the federal government are simply too complex for all details of every Congressional action to be specified in legislation. Agencies are still needed to provide the expert analysis, but they will have to do so while subject to more judicial scrutiny in the future.