Chevron Undermined Legal Stability, Loper Bright Will Help Restore It

On December 27, Free State Foundation President Randolph May published "Demise of Chevron Deference Promotes Regulatory Certainty," a Perspectives from FSF Scholars. In the Perspectives, President May defended the Supreme Court’s June 2024 decision in Loper Bright Enterprises v. Raimondo – which overturned the "Chevron doctrine" – against the claim that the decision would undermine stability or certainty in the law and undermine economic activity such as that private investment. 

In reality, the "Chevron doctrine" that required courts to defer to agency interpretations of statutory terms claimed to be ambiguous created a tremendous lack of stability and uncertainty in the law. 

 

To reinforce the points made in President May's Perspectives, the opinion of the court in Loper Bright is worth quoting: 

Nor has Chevron been the sort of "'stable background' rule" that fosters meaningful reliance. Post, at 8, n. 1 (opinion of KAGAN, J.) (quoting Morrison v. National Australia Bank Ltd., 561 U.S. 247, 261 (2010)). Given our constant tinkering with and eventual turn away from Chevron, and its inconsistent application by the lower courts, it instead is hard to see how anyone-Congress included-could reasonably expect a court to rely on Chevron in any particular case. And even if it were possible to predict accurately when courts will apply Chevron, the doctrine "does not provide 'a clear or easily applicable standard, so arguments for reliance based on its clarity are misplaced.'" Janus, 585 U.S., at 927 (quoting South Dakota v. Wayfair, Inc., 585 U.S. 162, 186 (2018)). To plan on Chevron yielding a particular result is to gamble not only that the doctrine will be invoked, but also that it will produce readily foreseeable outcomes and the stability that comes with them. History has proved neither bet to be a winning proposition.

 

Rather than safeguarding reliance interests, Chevron affirmatively destroys them. Under Chevron, a statutory ambiguity, no matter why it is there, becomes a license authorizing an agency to change positions as much as it likes, with "[u]nexplained inconsistency" being "at most . . . a reason for holding an interpretation to be . . . arbitrary and capricious." Brand X, 545 U.S., at 981. But statutory ambiguity, as we have explained, is not a reliable indicator of actual delegation of discretionary authority to agencies. Chevron thus allows agencies to change course even when Congress has given them no power to do so. By its sheer breadth, Chevron fosters unwarranted instability in the law, leaving those attempting to plan around agency action in an eternal fog of uncertainty. Chevron accordingly has undermined the very "rule of law" values that stare decisis exists to secure. Michigan v. Bay Mills Indian Community, 572 U.S. 782, 798 (2014).

In his Perspectives, President May included a brief quotation from Justice Neil Gorsuch's concurring opinion in Loper Bright. A fuller quotation is also worth reading:  

Far from engendering reliance interests, the whole point of Chevron deference is to upset them. Under Chevron, executive officials can replace one "reasonable" interpretation with another at any time, all without any change in the law itself. The result: Affected individuals "can never be sure of their legal rights and duties." Buffington, 598 U.S., at__ (slip op., at 12).

 

How bad is the problem? Take just one example. Brand X concerned a law regulating broadband internet services. There, the Court upheld an agency rule adopted by the administration of President George W. Bush because it was premised on a "reasonable" interpretation of the statute. Later, President Barack Obama's administration rescinded the rule and replaced it with another. Later still, during President Donald J. Trump's administration, officials replaced that rule with a different one, all before President Joseph R. Biden, Jr.'s administration declared its intention to reverse course for yet a fourth time. See Safeguarding and Securing the Open Internet, 88 Fed.Reg. 76048 (2023); Brand X, 545 U.S., at 981-982. Each time, the government claimed its new rule was just as "reasonable" as the last. Rather than promoting reliance by fixing the meaning of the law, Chevron deference engenders constant uncertainty and convulsive change even when the statute at issue itself remains unchanged.

 

Nor are these antireliance harms distributed equally. Sophisticated entities and their lawyers may be able to keep pace with rule changes affecting their rights and responsibilities. They may be able to lobby for new "'reasonable'" agency interpretations and even capture the agencies that issue them. Buffington, 598 U.S., at__,__ (slip op., at 8, 13). But ordinary people can do none of those things. They are the ones who suffer the worst kind of regulatory whiplash Chevron invites.

Notably, Justice Gorsuch's concurring opinion in Loper Bright identified the FCC's flip-flopping on the regulatory classification status of broadband Internet access service under the Court's 2005 NCTA v. Brand X Internet Services decision as a prime example of how the “Chevron doctrine” warped the rule of law and undermined legal certainty.  The legal challenge to the FCC's decision to reclassify broadband Internet services as a Title II "telecommunications service" and subject it to public utility regulation is presently before the Sixth Circuit, and a decision is expected in 2025.

Chevron enabled Administrations to twist and abuse the law. Thankfully, the decision in Loper Bright ends the Court's runaway experiment with regulatory agency supremacy in statutory interpretation and brings those issues back within the wheelhouse of the judicial branch.  

D.C. Circuit Affirms APA Reviewability of Copyright Exemptions Rules

On June 7, the U.S. Court of Appeals for the District of Columbia issued its decision in Medical Imaging & Technology Alliance v. Library of Congress. The case presents the question of whether copyright rules adopted under the Digital Millennium Copyright Act (DMCA) are reviewable under the Administrative Procedure Act (APA). In a 2-1 decision that brought to the fore the unusual structure and operation of the U.S. Copyright Office, the court answered "Yes."

The court's opinion was authored by Judge Neomi Rao. At issue in the case was a legal challenge to an exemption from the DMCA's anti-circumvention provisions that were granted by the Librarian of Congress following a triennial DMCA rulemaking. The exemption allowed for independent service operators to bypass technological protective measures (TPMs) on medical devices for purposes of diagnosis, modification, or repair of those devices. The Library of Congress disputed that its rulemaking was subject to APA review.

According to the D.C. Circuit:

In the Copyright Act [of 1976], Congress provided that copyright regulations are reviewable under the APA. The Act expanded the Register's rulemaking authority and provided that, with one exception not relevant here, "all actions taken by the Register of Copyrights under [Title 17] are subject to the provisions of the Administrative Procedure Act." 17 U.S.C. § 701(e). We have previously reviewed actions of the Register based on this provision. See, e.g., Atari Games Corp. v. Oman, 888 F.2d 878, 879 & n.1 (D.C. Cir. 1989); Universal City Studios LLLP v. Peters, 402 F.3d 1238, 1242 (D.C. Cir. 2005). Although section 701(e) refers to actions of the Register, the Register is subordinate to the Librarian and 'shall act under the Librarian's ... direction and supervision." 17 U.S.C. § 701(a). More specifically, "[a]ll regulations established by the Register under [Title 17] are subject to the approval of the Librarian of Congress." Id. § 702…

Congress conferred authority for the triennial rules at issue here in the DMCA, which added the following provision to Title 17: "[T]he Librarian of Congress, upon the recommendation of the Register of Copyrights, ... shall make the determination in a rulemaking proceeding" whether to waive the anti-circumvention provision for certain classes of copyrighted works. Id. § 1201(a)(1)(C). In other words, the DMCA authorized a new type of copyright regulation that would be formulated by the Register and approved by the Librarian. 

 

Reading the two statutes as a comprehensive statutory scheme, DMCA rules are also subject to the APA under 17 U.S.C. § 701(e). The Copyright Act plainly applies the APA to "all actions" of the Register under Title 17, including rulemaking subject to the approval of the Librarian. See id. §§ 701(e), 702…

The court concluded that because Congress applied the APA's waiver of sovereign immunity to actions of the register and Librarian in adopting copyright regulations it is immaterial as to whether the Library is an "agency" under the APA. As the court recognizes, the Copyright Office is peculiarly subordinated to the Librarian of Congress and deemed an "agency" of Congress. The court acknowledged that the Librarian's decisions about the Library's internal workings are not reviewable under the APA, and the court's ruling in the case was limited to the issue of copyright regulation. But the essentially executive character of the copyright regulation adopted by the Librarian on the recommendation of the Register of Copyrights was noted in a commendable section on judicial review of administrative agency action for conformity with the law: 

Reading section 701(e) to provide for judicial review of triennial DMCA rules aligns with fundamental principles regarding the protection of individual rights against unlawful government action. To begin with, the Copyright Act and the DMCA give the Register and Librarian significant authority to "promulgate copyright regulations" and "apply the statute to affected parties.” See Intercollegiate [Broadcast System, Inc. v. Copyright Royalty Board, 684 F.3d 1332,1342 (D.C. Cir. 2012)]. As we have recognized, and no party disputes, these powers are "generally associated in modern times with executive agencies.” Id. When enacting regulations and enforcing the law, "the Library is undoubtedly a component of the Executive Branch." Id. (cleaned up). Moreover, the triennial rules directly affect valuable property rights, such as a copyright holder’s ability to limit access to a digital creation and to prevent intellectual property theft. The triennial rules also provide exemptions from civil and criminal liability that would otherwise attach to individuals who circumvent technological protective measures. 17 U.S.C. §§ 1201(a)(1)(B), 1203–04. The exemptions are not left solely to the Librarian's discretion, but instead must be determined according to specific statutory criteria. Id. § 1201(a)(1)(C). There is no indication in the DMCA that Congress, having allocated this substantial regulatory power to the Librarian and Register and identified the legal criteria they must apply, would leave such power unchecked by judicial review. 

In sum, the court held that DMCA triennial rulemakings are subject to APA review. Judge Rao deserves credit for writing a well-reasoned and perceptive judicial opinion. 

Free State Foundation President Randolph May and I explored the structural history of the U.S. Copyright Office and its relationship with the Library of Congress in our book Modernizing Copyright Law for the Digital Age: Constitutional Foundations for Reform (Carolina Academic Press, 2020).

FCC's General Counsel Sums Up Commission's Courtroom Successes

At the FCC's public meeting on January 13, the Commission's General Counsel Thomas Johnson presented on the accomplishments of the Office of the General Counsel during the past four years. As General Johnson sums things up in his presentation:  

Our Litigation team… won in whole or in substantial part 28 out of 31 appeals (or 90%) filed against the agency. We achieved these results despite being challenged on several of this administration's highest-profile items. When we restored a light-touch regulatory framework to broadband in the Restoring Internet Freedom Order, we were challenged in court. Yet, after our defense of the Order—in which I participated in a marathon 5 1⁄2 hour oral argument on a snowy February day following a government shutdown—the D.C. Circuit upheld our reclassification of broadband as a Title I information service. When we modernized our approach to state and local infrastructure siting requirements to accelerate American leadership in 5G deployment, we were challenged in court. But after no fewer than three of my attorneys defended our 5G infrastructure orders before the Ninth Circuit, the court upheld nearly all of our reforms. When we took an innovative and thoughtful approach to reallocating critical "C-Band" spectrum for 5G services, we again were challenged in court. But the D.C. Circuit in short order rejected all legal challenges to our C-Band Order, clearing the way for a record-breaking auction of the spectrum. 

Slides of the presentation are available here.

 

Prior FCC administrations have had notably less success in defending their policy agendas in court. The Commission's legal victories during the last four years demonstrates Chairman Ajit Pai's commitment to the rule of law as well as the able advocacy of General Johnson and his team. Congratulations to General Johnson and the Office for a job well done. 

"The Supreme Court, the FCC, and Communications Law" - Register Now for January 22!

The Free State Foundation's Virtual Webinar 

with Ilya Shapiro

 

REGISTER TO RECEIVE ZOOM LINK!

 

WHAT: "The Supreme Court, the FCC, and Communications Law," a webinar featuring the Cato Institute's Ilya Shapiro

 

WHERE: Via Zoom

 

WHEN: Friday, January 22 – 11:00 AM - 12:15 PM EST

The Free State Foundation will host a webinar featuring remarks by Ilya Shapiro, director of the Cato Institute's Robert A. Levy Center for Constitutional Studies, and publisher of the Cato Supreme Court Review. He is the author of the recently acclaimed book "Supreme Disorder: Judicial Nominations and the Politics of America's Highest Court."

 

Mr. Shapiro will address the Supreme Court's current and prospective jurisprudence regarding the nondelegation doctrine, Chevron deference, the status of independent agencies, and other administrative law doctrines as they impact communications law and policy and FCC decisions such as net neutrality and speech regulation.

 

Following Mr. Shapiro's initial remarks, Christopher Yoo, John H. Chestnut Professor of Law, Communication, and Computer & Information Science, and Director of the Center for Technology, Innovation & Competition at the University of Pennsylvania Law School, and Seth Cooper, Director of Policy Studies and Senior Fellow at the Free State Foundation, will offer comments.

 

Register Now to Receive the Zoom Link!

 

#FSFShapiro

 

MARK YOUR CALENDAR NOW FOR JANUARY 22!

Chevron Deference and Independent Agencies

Tomorrow (January 16) the Supreme Court will hear oral argument in City of Arlington v. FCC. As we have observed previously, City of Arlington is likely to be one of the most important administrative law decisions of the last quarter century, impacting not only the FCC but most other federal agencies as well.

The question before the Court is whether courts, upon judicial review, should give Chevron deference to an agency’s determination of its own jurisdictional boundaries. When Chevron deference applies, courts give what the Court called "controlling weight" to an agency's statutory interpretations. While, at times, an agency's statutory interpretation may not prevail even if Chevron deference is held to apply, this is rare.

In my December 27 Washington Times opinion piece and in FSF Academic Board Member Jonathan Adler's November 26 Perspectives from FSF Scholars, we explained why the Supreme Court should hold that deference should not apply to agency determinations concerning the bounds of an agency's own jurisdiction. As Professor Adler concluded: "There are good reasons for [the Supreme Court] to make clear that agencies should only receive Chevron deference when they are exercising that authority Congress has delegated, and they should not receive deference when facing the question of whether the agency has authority at all."

And, as I explained in my Washington Times commentary:

"The very separation of powers principles upon which the Chevron deference doctrine primarily rests should mean that such deference doesn’t apply to agencies’ interpretations regarding the bounds of their own authority….If agencies themselves are allowed, by virtue of receiving extraordinary judicial deference, to presumptively resolve statutory ambiguities over the outer bounds of their own power, then it is far easier for legislators to avoid political accountability for decisions Congress makes regarding the expansive reach of the regulatory state. Finally, if agencies’ decisions about the scope of their own jurisdictions are given 'controlling weight' under the Chevron doctrine, the bureaucratic imperative naturally will be for officials to continue enlarging the limits of their regulatory authority."

Before Wednesday's argument, I want to call your attention to another point, one not addressed directly either in my piece or Professor Adler's. For a long time, I have suggested that independent agencies should not receive Chevron deference in the same way that Executive Branch agencies do. In other words, I have argued there ought to be a difference in application of the deference standard depending on whether the agency is an Executive Branch agency – like EPA, the agency whose ruling was at issue in Chevron itself – or an independent agency like the FCC, whose ruling is before the Court in City of Arlington.

The principal reason I have advocated this difference in judicial review deference standards has to do with constitutional separation of powers principles. In Chevron, the Court grounded the deference doctrine primarily (but not exclusively) in notions of political accountability inherent in separation of powers principles. In this regard, the Court explained that when congressional intent regarding delegated authority is not clear:

"[A]n agency to which Congress has delegated policymaking responsibilities may, within the limits of that delegation, properly rely upon the incumbent administration's views of wise policy to inform its judgments. While agencies are not directly accountable to the people, the Chief Executive is, and it is entirely appropriate for this political branch of the Government to make such policy choices -- resolving the competing interests which Congress itself either inadvertently did not resolve, or intentionally left to be resolved by the agency charged with the administration of the statute in light of everyday realities."

Simply put, because independent agencies such as the FCC are, as a matter of our current understanding of the law and of historical practice, mostly free from executive branch political control, Chevron’s political accountability rationale should imply that independent agencies' statutory interpretations receive less judicial deference because such agencies, including the FCC, are less politically accountable.

I have published two articles in the Administrative Law Review articulating my position at some length and won't elaborate further here. The first, published in 2006, is titled, Defining Deference Down: Independent Agencies and Chevron Deference, and the second, published in 2010, Defining Deference Down, Again: Independent Agencies, Chevron Deference, and Fox. You may find these law review articles interesting if you are following the City of Arlington case.

A final intriguing note: Then Harvard Law School Dean Elena Kagan – now Justice Kagan – took essentially the same position that I have advocated regarding the judicial deference owed independent agencies in her widely-praised 2001 Presidential Administration law review article. And she based her view on the same rationale that I have suggested – that independent agencies are not as politically accountable as Executive Branch agencies because the President cannot control the independent agencies to the same degree. We'll see whether in City of Arlington Justice Kagan, or any other Justice, finds the differences between executive and independent agencies relevant for Chevron purposes.   

Defining Deference Down, Again: Independent Agencies, Chevron, Fox, Scalia, and Kagan

In 2006, I published an article in the Administrative Law Review entitled "Defining Deference Down: Independent Agencies and Chevron Deference." In that article I posed the question: “Should the statutory interpretations of independent regulatory agencies, such as the FCC’s determination at issue in Brand X, be accorded a lesser degree of judicial deference than those accorded to executive branch agencies?” In response, I suggested that “a reading of Chevron that accords less deference to independent agencies’ decisions than to those of executive branch agencies would be more consistent with our constitutional system and its values.”

Whether the decisions of independent agencies such as the FCC should receive less deference on judicial review than those of executive branch agencies is not only a matter of constitutional concern, but of significant practical import to those who are regulated by independent agencies or who otherwise are affected by their decisions.

In a follow-on article just published in the latest issue of the Administrative Law Review, I discuss the Supreme Court's decision last Term in FCC v. Fox Television Stations, Inc. The new article is entitled, "Defining Deference Down, Again: Independent Agencies, Chevron Deference, and Fox." In the Fox case, the Supreme Court affirmed a change of FCC policy to the effect that even isolated, non-repetitive incidents of indecent speech could be sanctioned. While the Court in Fox did not address Chevron deference directly, there were definitely Chevron-like echoes as the Justices debated the relevance of the FCC’s political accountability (or lack thereof) to determine whether the proper standard of review should be more or less searching.

With the original Defining Deference Down article, based on what I see as the principal political accountability rationale underpinning Chevron, my project was to begin a more robust dialogue concerning whether a less deferential judicial review standard of independent agency actions would be more consistent with core separation-of-powers values. While I expect Fox will be seen foremost through the lens of a more conventional administrative law “change of agency policy” case, I have hopes it will also be an impetus for the ongoing dialogue that I aim to further with this new article, "Defining Deference Down, Again."

An interesting aspect discussed in my new Administrative Law Review article relates to Justice Scalia's (somewhat misleading) citation of Solicitor General Elena Kagan's Presidential Administration law review article in support of his view that decisions of independent agencies should not be subject to more searching judicial scrutiny than those of executive agencies. In fact, in Presidential Administration, Kagan explicitly advocates that independent agencies should receive less Chevron deference than executive agencies because they are less politically accountable: "A Chevron-type doctrine attuned to the role of the President would respond to this disparity by giving greater deference to executive than to independent agencies."

In other words, put in terms of the Fox decision's juducial review debate, Elena Kagan has contended that decisions of independent agencies like the FCC should be subject to more searching judicial scrutiny than executive branch agency decisions.