Supreme Court’s likely leashing of ‘Chevron Deference’ is FCC game changer

Scott Cleland Contributor
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Next week the Supreme Court will hear a “sleeper” legal challenge to existing precedent that could end up being a game changer for the FCC and other regulatory agencies.

Arguably the most strategically-important legal decision pending for the FCC is the Supreme Court’s foundational review of its 1984 “Chevron Deference” precedent. If that core administrative precedent is changed, which appears very likely, the Supreme Court could restrict the FCC’s current perceived freedom to self-arbitrate the boundaries of its own authority and power going forward.

I posit this case is more important than the high-profile Verizon challenge to the FCC’s Open Internet Order and net neutrality price regulations, because the Supreme Court is deciding the core principle which undergirds Verizon’s specific legal challenge before the D.C. Court of Appeals. As the Supreme Court goes, so go the lower courts.

This revisiting of the Burger Court’s Chevron doctrine not only could threaten the FCC’s Open Internet Order, but also its future latitude to reclassify broadband as a Title II service, and its prospects for extending much of its 20th century technology-specific authority to the 21st century Internet where the law is largely silent.

Simply, this case is about whether or not the FCC will need to seek new modern legislation to fully function as it believes it needs to in the modern Internet era. Continued Chevron Deference is increasingly critical to the FCC’s actual and perceived authority going forward.

January 16th, the Supreme Court will hear oral arguments on this specific question in a subset case of Arlington vs. FCC. Given the stakes, interested parties should pay very close attention.

There is no good reason for the Supreme Court to be revisiting this long-established, heavily-cited, very-general-administrative precedent unless it intends to change it. Thus the open question is how much. I believe it is very likely that the Supreme Court will end the current abuse of Chevron’s flaw of perceived open-ended regulatory agency authority by requiring courts to limit an agency’s regulatory authority to what Congress has directly authorized in statute.

Why is this case a potential game changer for the FCC?

This case is about whether regulatory agencies unilaterally can fill a vacuum and accomplish via regulation, what Congress has not authorized, does not want authorized, or cannot reach consensus to authorize. It’s about whether the judicial default will remain set for expansion of regulatory authority to address unforeseen developments or be reset for regulatory inaction unless authorized by Congress.

At core, it’s about a rebalancing of Constitutional power from the executive back to the legislative branch to limit regulatory activism going forward.

This case’s potential reining in of regulatory free agents logically could have the most impact where the law has been made most obsolete by technology change — just like the situation the FCC currently faces.

The FCC appreciates its core legal authority is suffering from natural obsolescence. The FCC’s raison d-etre is based on obsolete copper telephone technology invented in 1881, a 36-year-obsolete railroad common carrier regulation model, and century-old radio spectrum assumptions.

Moreover, the FCC’s economic and social authority is predicated on 1934 Depression-era assumptions that have been made largely obsolete by: seventy years of America’s progress; Congress’ 1996 shift from monopoly to competition law; and revolutionary technologies like the transistor, computer, Internet and smart-phone.

Tellingly, the FCC chose to not appeal Comcast vs. FCC to the Supreme Court because they were skeptical of their chances on the merits, and more importantly they did not want to kick the sleeping guard-dog next to the FCC’s yard. They did not want to appeal an issue that spotlighted that the FCC was running free without a leash in the process of a massive authority and jurisdiction grab.

To carry this leash metaphor further, rather than having regulatory agencies roving free from their Congressional masters’ control, this likely Supreme Court Chevron-limiting decision would be like the court installing “invisible fences” to ensure that agencies live within their Congressionally-authorized and defined “territories.”

Thus the FCC faces a potential existential problem. Its core statutory authority and Congressional guidance is appearing more obviously obsolete to everyone over time. And its obsolescence is creating increasing government and market dysfunction because the “round-peg” of the modern 21st century issues that the FCC is increasingly confronting, doesn’t fit into the “square-hole” of the FCC’s 20th century authority.

For example, the FCC’s recent self-defined purposes/terms of: “openness,” “open Internet,” and “net neutrality” are found nowhere in law. To the extent the FCC wants to legitimately make these principles the FCC’s new purposes, the FCC will need Congressional action to accomplish it.

At bottom, if the Supreme Court establishes an effective “invisible fence” around existing statutory authority it could fetter the current unfettered regulatory creep by the FCC and other administrative agencies, and strengthen Congress’s Internet policy in statute: “to preserve the vibrant and competitive free market that presently exists for the Internet… unfettered by Federal or State regulation.”

The real game changer here is that the Supreme Court could flip the current political and institutional dynamic, from the FCC and the Administration not wanting or thinking it needs to seek authority from Congress, to needing to seek authority to remain relevant and accomplish its vision of the future.

Scott Cleland is Chairman of NetCompetition® a pro-competition e-forum supported by broadband interests and President of Precursor LLC, a research consultancy for Fortune 500 companies.