Today’s post will be a bit more into the legal weeds than many of our articles, addressing the standards used by courts to review the decisions of administrative agencies like the FCC.  Last month, there was a Supreme Court argument in a case called Relentless, Inc. v. Department of Commerce that the popular press suggested was going to end the regulation of media companies.  Even the media trade press seemed to think that the decision could cut back on regulations that come from the FCC and other agencies.  As with much popular coverage of legal issues, the real-world impact of the case, while certainly significant in legal practice, is probably overstated.

The Relentless case challenges a judicial precedent in place since a 1984 decision in another case, Chevron [U.S.A.] Inc. v. NRDC, Inc.  The policy adopted in that case, referred to as the “Chevron Doctrine,” says that the courts will defer to the decision of an administrative agency interpreting an ambiguous Congressional statute unless the agency’s decision is arbitrary and capricious or contrary to law.  What that basically means is that, if a policy adopted by Congress is capable of many different interpretations, the Courts will defer to the interpretation of the expert agency that is supposed to enforce that statute, unless the interpretation cannot be squared with the language of the statute or the record before the agency.  We’ve written many times on this blog about this doctrine without necessarily identifying it by name, usually in connection with appeals of a Copyright Royalty Board or FCC decision and how difficult it is to convince a court to overturn these actions.

For instance, we’ve written about the difficult of convincing a court to overturn a decision of the Copyright Royalty Board when the CRB decides the royalty rates that a “willing buyer and a willing seller” would agree to in the marketplace, which is the ambiguous standard imposed by the Copyright Act (see, for instance, our articles here, here and here).  We’ve noted the issue in connection with the appeal of the FCC’s decision reinstating the UHF discount.  We mentioned the judicial policy in writing about the court’s refusal to overturn the FCC’s procedures for determining interference between TV stations after the TV incentive auction.  As illustrated in these cases, the courts will generally defer to the agency’s decisions and interpretations as the agency is presumed to be the expert on these matters.  Even if the judges on a court reviewing an agency decision may think that a particular decision is not necessarily the best interpretation of the agency’s statutory mandate, if the agency decision is a reasonable interpretation of the statute, the court will not substitute its own judgement for the agency decision.

The challenge in the Relentless case is whether Chevron cedes too much power to these agencies.  The parties suggest that the courts reviewing agency decisions should not be deferring to administrative agencies whose powers are really not clearly spelled out in the Constitution.  Instead, the courts should be deciding what the right interpretation of a Congressionally enacted statute is, not just whether the decision was reasonable. 

What a change in this judicial policy really means is unclear, as we would need to see what the Supreme Court specifically rules if it decides to abandon  Chevron.  But many of the headlines suggesting that abandoning the Chevron doctrine would gut the ability of agencies to regulate are probably overstated.  Instead, a change in the deference accorded under Chevron would simply give the courts greater discretion to question the decision of an agency and to substitute the decisions of the judges for that of the agency as to the correct interpretation of an ambiguous statute.  That could lead to more agency decisions being appealed and potentially overturned (though, potentially, it could also lead to more conflicting court decisions as to what the best interpretation is when an agency is asked to interpret and implement an ambiguous statute, as different courts may have differing opinions of what is the best interpretation of an ambiguous statute).  Many of the questions at the Supreme Court oral arguments, even from Justices who had previously questioned the Chevron doctrine, asked what would replace the deference given to agencies, and how to avoid the potential for judges to substitute their potentially contradictory interpretations of what Congress meant in enacting a regulatory scheme for the interpretation of the agency. 

In today’s complex world, it is simply impossible for Congress to pass laws addressing every detail of every program that they enact.  Agencies are needed to address those details, and to allow the details to evolve as conditions change in whatever industry the laws address.  Could you imagine Congress having to debate and enact laws governing every change in rules on children’s programming, interference standards, or streaming royalty rates?  Finding the time, will, and consensus to address these issues in Congress would mean paralysis in the regulated industries.

The Supreme Court in recent years has already taken actions to scale back the power of administrative agencies – for instance limiting agencies from making major decisions with significant effects on an industry unless there is clear statutory language telling the agency that it has authority to do what it proposes.  Any Supreme Court decision cutting back on “Chevron deference” would simply give those challenging agency rulings more ammunition to challenge the decision – they can argue that the agency did not make the right decision, and not be limited (as a challenger is now) to simply arguing that the agency decision that was unreasonable as it was contrary to the statute or lacking a basis in the administrative record.  It would not stop agency actions; it would just subject them to more scrutiny.  But it might also cause confusion should multiple courts come up with conflicting decisions on what regulatory statutes mean.  Along with folks in many industries, media companies will be closely watching where the Court comes out in this case.