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Did Judge Tatel Tattle on Title II Trouble with Chevron Deference for FCC?

The likelihood improved this week, that the Supreme Court could have an interest in hearing an appeal of the recent USTelecom v. FCC court decision that granted the FCC complete Chevron deference to uphold the FCC’s Title II reclassification of ISPs as utilities. That’s because a new unanimous 8-0 Supreme Court decision suggests that the USTelecom Court may have granted the FCC too much legal Chevron deference on its Title II reclassification. (A hat tip to Gus Hurwitz’ tweet for flagging the Title II relevance of this SCOTUS case and his great legal analysis is here.)    

While getting any appeal heard by the Supreme Court is always a high bar, directionally and on the margin, this new additional Chevron-limiting decision by SCOTUS should hearten those appealing and should result in less confidence from those thinking the FCC decision faces little to no SCOTUS risk upon appeal.

This new SCOTUS precedent also merits close attention because apparently in oral arguments, Judge Tatel unintentionally spotlighted and exposed potentially the FCC’s greatest Chevron deference vulnerability in his persistent public questioning of the FCC last December. 

In a nutshell, first, we’ll consider the crux of this latest SCOTUS Chevron case: that a “lack of reasoned explication… does not receive Chevron deference....” Second, we’ll consider the eerie coincidence of Judge Tatel’s repeated questioning of the FCC on “What’s the policy explanation for that decision? …I couldn’t find it in the order…” the very same issue that the SCOTUS just ruled did not warrant Chevron deference. And third, we’ll consider how Judge Williams’ prescient dissent presents an expertly detailed case for the SCOTUS that FCC’s order was not “reasoned decisionmaking,…” and that “…its explanation of the policy is watery thin and self-contradictory.”     

First, an 8-0 Supreme Court decision this week, Encino MotorCars v. Navarro, vacated a Ninth Circuit Court of Appeals decision that granted strong Chevron Deference to the Department of Labor despite the Department not providing a reasoned explanation of why it changed its longstanding policy.

From the summary conclusion of the Encino decision:

“It is not the role of the courts to speculate on reasons that might have supported an agency’s decision.  “[W]e may not supply a reasoned basis for the agency’s action that the agency itself has not given.” State Farm, 463 U. S., at 43 (citing SEC v. Chenery Corp., 332 U. S. 194, 196 (1947)). Whatever potential reasons the Department might have given, the agency in fact gave almost no reasons at all. In light of the serious reliance interests at stake, the Department’s conclusory statements do not suffice to explain its decision. See Fox Television Stations, 556 U. S., at 515–516. This lack of reasoned explication for a regulation that is inconsistent with the Department’s longstanding earlier position results in a rule that cannot carry the force of law. See 5 U. S. C. §706(2)(A); State Farm, supra, at 42–43. It follows that this regulation does not receive Chevron deference in the interpretation of the relevant statute.” [Bold added for comparison to Judge Tatel’s questions below.]  

Second, Judge Tatel repeatedly stated in his persistent questioning of the FCC’s General Counsel that he couldn’t discern/find the FCC’s policy rationale for the FCC’s change in policy in the FCC’s order.

From the Court’s audio of the oral argument here from 35:00-38:45:

Judge Tatel: “I ask you a non-Brand X, non statutory question which is that, it seems to this court’s Verizon decision, the Commission seemed headed for regulating under 706,  you know, that the Commission even called it, the blue print offered by the DC Circuit  … that’s the Commission’s word -- not mine. And so what, how do you describe the Commission’s reason for abandoning that approach? What’s the policy explanation for that decision? …”

“The question is what after the Verizon decision; after this Verizon’s court’s decision, after the Commission focused its attention on proceeding under 706? What changed its mind?  It couldn’t have been a change in circumstances -- right? The circumstances are all essentially the same. What is the crispest answer? …I couldn’t find it in the order. …”

What drove the Commission to conclude that the authority it had over 706 wasn’t adequate and that it mattered to reclassify? That’s my question. It couldn’t be changed facts; it had to be a different perception of what was happening. What is that?”  [Bold added to ease comparison with the Encino decision conclusion.]

Third, the summary of Judge Williams’ USTelecom v. FCC dissent at page 116, echoes the arbitrary and capricious problem SCOTUS found in its recent Encino decision.

Judge Williams: “The Commission’s justification of its switch in classification of broadband from a Title I information service to a Title II telecommunications service fails for want of reasoned decisionmaking. (a) Its assessment of broadband providers’ reliance on the now-abandoned classification disregards the record, in violation of its obligation under F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009). Furthermore, the Commission relied on explanations contrary to the record before it and failed to consider issues critical to its conclusion. Motor Vehicles Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). (b) To the extent that the Commission relied on changed factual circumstances, its assertions of change are weak at best and linked to the Commission’s change of policy by only the barest of threads. (c) To the extent that the Commission justified the switch on the basis of new policy perceptions, its explanation of the policy is watery thin and self-contradictory.” [Bold added to ease comparison with the Encino decision conclusion.]

In sum, comparing the obvious common thread of a lack of reasoned explanation for a policy change -- in the Encino SCOTUS case, in Judge Tatel’s repeated questioning of the FCC in USTelecom, and in Judge Williams’ USTelecom dissent -- the FCC appears to have a more significant SCOTUS appeal risk than they may have previously thought, if the appellants can meet the high bar of convincing the Supreme Court to hear the case.

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Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, a research consultancy for Fortune 500 companies, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests.

 

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