Tethering the administrative state: the case against Chevron deference for FCC jurisdictional claims.

• Date: 22 June 2011
• Author: Lyons, Daniel A.

1. Regulation, Deregulation, and Reregulation: Three Case Studies A. Cable Regulation B. Telephone Deregulation C. Broadband Reregulation II. The Case for Judicial Oversight of Agency Jurisdictional Claims A. Chevron and Congressional Intent B. Nondelegation Concerns C. Institutional Competence D. The Political Accountability of Independent Agencies III. Deciding Agency Jurisdictional Questions A. Distinguishing Jurisdictional from Policy Questions B. Skidmore and the Jurisdictional Inquiry C. Applying the Framework to the Commission's Proposed Broadband Rules IV. Judicial Oversight and the Virtuous Circle V. Conclusion Although it has made some recent moves toward regulatory reform, (1) reregulation has become a predominant theme of the early Obama administration. From the financial markets (2) and consumer lending (3) to the health care industry, (4) the President and Congress have enacted statutes designed to curb what they saw as prior administrations' deregulatory excesses. As a result, agencies throughout Washington are preparing to assume a more active role throughout the economy, overseeing and managing various markets in accordance with the will of the political branches.

   The Federal Communications Commission (FCC) has seen a similar sea change in its regulation of the telecommunications industry. since Julius Genachowski assumed the chairmanship in 2009, the number of open dockets at the Commission has ballooned to over three thousand. (5) Among other innovations, the Commission has released an ambitious roadmap to reallocate the electromagnetic spectrum (6) and has begun regulating services traditionally considered to be at the periphery of its authority, such as wireless data transmission. (7) Perhaps most notably, it has fired the opening salvos in the battle for net neutrality, a high-profile, high-stakes rulemaking proceeding that would extend the Commission's jurisdiction over broadband internet transmission. (8)

   But unlike its counterparts at the SEC or Health and Human Services, the FCC has begun reregulating telecommunications without a clear congressional mandate. This distinction is important because the telecommunications world has changed dramatically since Congress last overhauled the Communications Act in 1996--an overhaul that was largely deregulatory in focus and intent. (9) The Act provides little support for (and is arguably hostile to) the agency's efforts to enact comprehensive regulation beyond its traditional core of broadcasting, cable, and telephone communication. (10) Yet undaunted by this lack of a legislative rudder, the Commission has begun expanding its jurisdiction to develop the next generation of American telecommunications law. (11)

   The Commission's tendency toward aggrandizement is familiar to the old war horses of past telecommunications policy battles. When cable television emerged in the 1950s, the Commission recognized that it lacked authority to regulate this new technology under the Communications Act. (12) But as this new technology flourished, the Commission used its ancillary authority to build a complex lattice of regulations governing the new industry, until the Supreme Court struck down certain regulations as beyond the agency's statutory authority in 1979. (13) Similarly, when the Commission determined that that the statutory framework governing telephones was unsuited to the competitive landscape of the late 1980s, it began to rewrite the Communications Act and guide the industry toward deregulation--only to see the Court strike down its aspirations as ultra vires. (14) In each instance, the Court curbed the Commission's attempts to adopt a complex regulatory scheme without a clear legislative mandate, which in turn prompted Congress to provide the agency with more explicit authority to meet the industry's regulatory needs. (15) Thus far, it appears that the Commission's efforts to regulate broadband will meet a similar fate. (16)

   This history, and the Commission's current push toward reregulation, highlight an important but often ignored tension in modern administrative law. The Chevron doctrine generally requires courts to defer to an agency's interpretation of ambiguous language in a statute that the agency administers. (17) Chevron is premised on the assumption that agencies, not courts, should "fill any gap left ... by Congress" in the agency's organic statute. (18) But agencies should not receive this deference regarding questions about the scope of the agency's jurisdiction. In these cases, the agency is not merely filling a gap within a statutory framework, but is instead defining the outer limits of that framework. There is a difference in kind between the policy question "what rules should govern broadband?" and the legal question "does the Communications Act allow the Commission to make rules governing broadband?" Courts appropriately defer broadly to agency expertise when answering the former question, but should reserve the latter question for "the province ... of the judicial department." (19)

   This Article examines this distinction between policy and jurisdictional questions through the FCC's history of rulemaking at the horizon of its statutory authority. In the telecommunications context, courts have often viewed the Commission's efforts to expand its jurisdiction with skepticism, but do not often reconcile their decisions with Chevron's seeming grant of near-plenary authority to agencies in such matters. This judicial skepticism is well-grounded. As the Commission's net neutrality project makes its way through the judicial system, courts must tread carefully but firmly, respecting the Commission's primacy in the policymaking sphere but assuring that this rulemaking remains bound within the jurisdictional confines of the Communications Act.

1. Regulation, Deregulation, and Reregulation: Three Case Studies

   1. Cable Regulation

      Compared to the modern telecommunications regulatory landscape, the original 1934 Communications Act was elegantly simple. The Act charged the newly-created Federal Communications Commission with regulation of two primary areas of responsibility. A common carriage scheme--codified in Title II of the Act--governed two-way communication by wire, while a licensing system--described in Title III- -governed broadcast communication over radio waves. (20) When the cable industry was born in the 1950s as a service that retransmitted broadcast television stations by wire to homes with poor over-the-air reception, (21) the Commission initially disclaimed any jurisdiction to regulate it: the new service did not fit neatly into either of its clearly-defined statutory mandates. (22)

      By the 1960s, however, the Commission slowly began to regulate the cable industry using its ancillary authority under Title I. (23) Title I operates as an FCC "necessary and proper" clause. It allows the Commission to assert limited jurisdiction over services not directly within the Commission's purview if (1) the service in question involves communication by radio or wire, and (2) regulation of the service in question is reasonably ancillary to the Commission's performance of its duties under the Act. (24) The Commission asserted that cable regulation was necessary because the cable industry was increasingly affecting broadcasters in ways that threatened the Commission's efforts to discharge its Title III duties. (25)

      The Court initially agreed, allowing the Commission to adopt rules limiting cable companies' ability to rebroadcast out-of-market signals (26) and requiring large cable companies to offer original local programming as a condition of importing these distant signals (27) (though Chief Justice Burger noted in a concurrence that the latter restriction "strain[ed] the outer limits" of its jurisdiction). (28) But in United States v. Midwest Video (commonly called Midwest Video II), the Court struck down regulations that would have required cable companies to dedicate certain channels to public use. (29) The Court explained that such regulations treated cable companies as common carriers.30 The Act explicitly restricted the Commission from regulating broadcasters as common carriers, because such access would unduly infringe upon broadcasters' private journalistic integrity.31 As a result, the Court explained, the Commission could not claim that common carriage-like regulation of cable providers was reasonably ancillary to its Title III authority over broadcast.32 While the Title III prohibition did not explicitly forbid such regulation of cable companies, it reflected a policy of balancing public access against editorial discretion, with which the Commission interfered:

      [W]ithout reference to the provisions of the Act directly governing broadcasting, the Commission's [ancillary] jurisdiction ... would be unbounded. Though afforded wide latitude in its supervision over communication by wire, the Commission was not delegated unrestrained authority.... Though the lack of congressional guidance has in the past led us to defer--albeit cautiously--to the Commission's judgment regarding the scope of its authority, here there are strong indications that agency flexibility was to be sharply delimited. (33) Midwest Video II accompanied several D.C. Circuit Court decisions that cast additional doubt on the Commission's cable regulations. (34) In part because of this judicial backlash, Congress passed the 1984 Cable Act, which gave the Commission direct authority to regulate the industry while proscribing clear limits on the agency's jurisdiction. (35)

   2. Telephone Deregulation

      The Court again crossed swords with the agency in 1994, in response to the Commission's effort to deregulate parts of the telephone industry. Title II required each interstate telephone company to file tariffs with the Commission containing a list of the company's services and rates, which the Commission reviewed for reasonableness. (36) In 1934, tariffing helped...