Chevron is out of gas. Will it fuel changes to the FCC?

In 1984, the U.S. Supreme Court issued a landmark holding in Chevron v. National Resources Defense Council. Under Chevron, when Congress ambiguously defined a term, the Court may defer to the agency’s reasonable interpretation of a statute. This granted agencies broad rulemaking authority, stretching the limits of their statutory authority and empowering the executive branch to create laws as well as to enforce them.

The Federal Communications Commission (FCC) enacted the Safeguarding and Securing the Open Internet Order earlier this year, once again classifying broadband service as a communications service under Title II of the Communications Act. Challenged immediately, this heavy-handed regulatory grab is currently under review in the Sixth Circuit.

On June 28, the Supreme Court issued a landmark ruling in Loper Bright Enterprises v. Raimondo that overturned the four-decade-old Chevron deference. This new legal precedent from the Supreme Court may undercut the FCC’s arguments, potentially bringing long-overdue certainty to the net neutrality issue. In 2016, the D.C. Circuit Court relied on Chevron to uphold the FCC’s Title II order and the subsequent Restoring Internet Freedom Order. However, the Court’s recent holding could signify a paradigm shift for agency rulemaking.  

By ending this precedent, the Court has placed the onus on agencies to promulgate narrower rules and on Congress to define agency terms and authority in statutes more clearly. With the Chevron deference overturned, the Court will revert to the Skidmore deference. Skidmore v. Swift and Company is a 1944 case that gave the Court greater latitude to interpret the intent of an agency’s rule. As Justice Elena Kagan said during an oral argument, “Skidmore means if we think you’re right, we’ll tell you you’re right.” Justice Brett Kavanaugh took it a step further, arguing that Skidmore was more “respect” than “deference”: “If an interpretation was contemporaneous and consistent, it’s more likely to be correct.”

In practice, Skidmore deference makes it harder for agencies to prevail in legal challenges when defining ambiguous terms. This could open the floodgates to litigation, with new obstacles to scores of regulatory actions reverberating through the lower courts.  

But as R Street has noted before, “[T]he Court has cited Chevron just a handful of times since 2016 … [i]nstead, the Court has interpreted the text of the statute for itself.” The unwinding has already begun—so will administrative jurisprudence face a major reckoning? Now that Skidmore is precedent, will rules otherwise upheld under Chevron be struck down? If so, what could this mean for future rulemaking? R Street has also stated that, at the end of the day, “[T]he demise of Chevron will delight many legal nerds, [but] we shouldn’t overestimate its practical effect, at least in the short term.”

As the majority opinion held, “At best, our intricate Chevron doctrine has been nothing more than a distraction from the question that matters: Does the statute authorize the challenged agency action? And at worst, it has required the courts to violate the [Administrative Procedure Act] by yielding to an agency the express responsibility, vested in ‘the reviewing court,’ to  ‘decide all relevant questions of law’ and ‘interpret … statutory provisions.’” The question of whether the FCC is authorized to impose net neutrality rules absent a congressional directive becomes clearer with this framing, but it is still not a guarantee.

While free-market scholars may have hoped the overturning of Chevron would be a slam dunk, it is always hard to infer how the Court will rule on a specific case. This debate has raged for decades, and while new Court precedent may help tip the scales against the FCC’s new net neutrality rules, a court could still uphold the rule, setting up a future wave of regulatory and legal battles. A Republican FCC could overturn it, but the back-and-forth would continue unless Congress intervened.

On the other hand, Congress has a few options at its disposal. In the short term, Congress could use the Congressional Review Act to block the rule and prevent the agency from implementing the same or substantially similar rule in the future. Between a divided Congress and a limited legislative calendar, this seems unlikely. Alternatively, Congress can finally speak its intent for broadband services and meaningfully update the Communications Act to reflect 21st-century technology. Because this also seems unlikely, stakeholders will look to the Court to bring long-overdue certainty to this unending debate.

Should the Supreme Court overturn the rule, the FCC would revert to the Restoring Internet Freedom Order or push to promulgate new regulations that appropriately classify broadband as an information service. This would restore the framework that has existed for decades since the internet first came online.

Ultimately, this issue remains far from resolved. While one can hope that recent court precedent would bring much-needed certainty and finality to this issue, it is hard to predict how the Court may rule. Truly, the best resolution is to avoid this judicial game entirely and urge Congress to modernize and update the Communications Act to reflect the broadband ecosystem’s current and future needs.