Judge Kavanaugh and “Weaponized Administrative Law,” by Daniel Deacon

by Guest Blogger — Wednesday, July 11, 2018

In her recent dissent in Janus v. AFSCME, Justice Kagan accused the majority of “weaponizing the First Amendment, in a way that unleashes judges, now and in the future, to intervene in economic and regulatory policy.”  Judge Kavanaugh, now nominated to fill Justice Kennedy’s seat on the Supreme Court, might be accused of doing the same in his dissent from denial of rehearing en banc in United States Telecom Association v. FCC (USTA), where he wrote that the FCC’s 2015 net neutrality rule violated the First Amendment rights of Internet service providers.  Although some commentators have focused on that aspect of Judge Kavanaugh’s dissent, I want to zoom in on a different section, which applied the “major questions” doctrine in administrative law to provide an independent basis to strike down the rule.  Judge Kavanaugh’s reasoning there, I’ll argue, reflects a similarly “weaponized” version of that doctrine.

First, some background. USTA concerned the FCC’s 2015 rule reclassifying ISPs as “telecommunications carriers” under the 1934 Communications Act.  Under the statute, that classification decision boils down to whether ISPs (companies like Comcast, which provide access to the broader Internet) offer their users a “pure transmission service” or something more.

Although I’m simplifying the issue a bit, it doesn’t matter.  That’s because both the panel majority and Judge Kavanaugh accepted, at least arguendo, that whether ISPs qualify as telecommunications carriers under the Act is ambiguous—that is, either a “yes” or a “no” answer would be permissible when the statute is read as a whole.  Nor does Judge Kavanaugh appear to argue that the FCC’s interpretation was otherwise unreasonable.  At that point, normal deference principles, enshrined in Chevron v. NRDC, would dictate ruling for the FCC and upholding the reclassification.

Enter the “major rules” (usually called the “major questions”) doctrine.  Applying that doctrine, Judge Kavanaugh would have held the FCC’s reclassification illegal because the FCC’s decision that ISPs qualify as telecommunications carriers represented a “major rule,” and therefore Congress must “clearly authorize” it.  That is, the FCC could not stand on ambiguity alone.

To understand how he got there, it’s important to know that the FCC’s reclassification decision automatically triggered a number of obligations under the Act that apply only to telecommunications carriers. That was, in fact, an important purpose of the reclassification.  The FCC hoped to use the Act’s obligations to ground a set of “net neutrality” rules that the Commission had previously tried to apply to ISPs before getting stymied in the courts.  Kavanaugh’s dissent maintained that, by virtue of applying such obligations to an important sector of the economy, the FCC’s rule became a “major” one and thus required clear congressional authorization.  And because ISPs were only debatably and not clearly telecommunications carriers, the Commission did not have the requisite authority.

The response by Judge Srinivasan, who wrote to concur in the denial of rehearing en banc, focused mainly on a prior Supreme Court case, Brand X, which he maintained held that the FCC was free to decide the classification decision either way.  I want to pull back a bit, however, and examine what Judge Kavanaugh’s dissent might mean for the future of administrative law more broadly, now that Judge Kavanaugh will almost certainly be receiving a promotion.

As an initial matter, Judge Kavanaugh’s framing of the issue as whether the FCC had been granted “authority” to issue “the rule” in question involved a bit of obfuscation.  As far back as AT&T Corp. v. Iowa Utilities Board, the Supreme Court has recognized that the FCC possesses global rulemaking authority to implement the various provisions of the Communications Act.  Therefore, the FCC clearly possessed rulemaking authority as a general matter.

What Judge Kavanaugh was really asking was whether the FCC could legally use its rulemaking power to answer the underlying substantive question in this way.  And importantly, even assuming that underlying substantive question was a “major” one—because it implicated important economic and social issues—the FCC’s rule still might have survived, at least under one reading of the Supreme Court’s precedent.  Per Chief Justice Roberts’ version of the “major questions” doctrine in King v Burwell, the court would have simply had to decide the issue itself de novo.  And a court may well have decided that ISPs were, under the best reading of the statute, telecommunications carriers.  That was, in fact, Justice Scalia’s conclusion, in dissent, in Brand X.  Judge Kavanaugh, however, never entertained that possibility.  Instead, he limited King’s domain, somewhat inexplicably, to cases about “government benefits or appropriations.”

In lieu of King, Kavanaugh relied on a series of other cases, such as MCI v. AT&T, FDA v. Brown & Williamson, and Utility Air Regulatory Group.  In them, he discovered the rule that an agency cannot take a “major regulatory action without clear congressional authorization.”  I can’t spend the time here that it would take to go through these cases one by one.  (For a deeper dive I would recommend this contemporaneous post on USTA by Asher Steinberg, whose analysis shares several similarities with my own.)  Suffice it to say the prior cases do not justify the rule that Judge Kavanaugh advocates.  To be sure, those cases stand for the proposition that a given interpretation’s potentially “major” consequences may bear on whether the interpretation is permissible (under Chevron Step One) or reasonable (under Chevron Step Two).  But they do not say that every time an agency adopts an interpretation with such consequences that the agency must meet a special burden to show that its interpretation is not only both permissible and reasonable but also the result of a clear congressional command.

This brings us to the most troubling part of Judge Kavanaugh’s dissent from denial, which is its hidden baseline problem.  Again, Judge Kavanaugh admits that the classification question is ambiguous—that is, an agency could under normal circumstances answer it either way.  So why does the answer “yes, ISPs are telecommunications carriers” require a “clear” grounding in the statute whereas a “no” answer seemingly would not?  After all, a “no” decision by the agency also has “major” consequences (indeed, the consequences could be seen as the mirror image of those triggered by the “yes” decision).  And, in many cases, a failure to regulate has costs greatly exceeding its benefits.

One answer to this question is that by choosing “no” initially (i.e., prior to the 2015 rule) the agency essentially locked itself in, especially in light of subsequent acquiescence by Congress.  This answer has problems of its own, including being inconsistent with agencies’ generally recognized ability to shift interpretations over time.  And while it is arguably in line with Brown & Williamson, which denied the FDA’s attempt to regulate tobacco products after having failed to do so for many years, it would seem to yield a rule different than what Judge Kavanaugh purported to be adopting.  Instead of his rule, the rule would be something like “when it comes to major questions, the agency gets only one shot.”

My fear is that Judge Kavanaugh’s version of the “major rules” doctrine in fact reflects a privileging of industry compliance costs over the costs associated with failing to regulate.  In some places, Judge Kavanaugh appears sensitive to this concern, indicating in his footnote on King, for example, that the “major rules” doctrine might extend to actions that “de-regulate” as well as regulate (as was the case in MCI).  But the overall logic and tenor of his argument is largely anti-regulatory.  In explaining why the FCC’s rule was a “major” one, Judge Kavanaugh argued that the rule “fundamentally transforms the Internet by prohibiting Internet service providers from choosing the content they want to transmit” and “wrests control of the Internet from the people and private Internet service providers and gives control to the government.”  And in explaining why the FCC’s prior decision to classify ISPs as something other than telecommunications carriers was not a “major rule,” he points to the fact that the decision did not involve placing onerous obligations on ISPs.  That is, for Kavanaugh, majorness seemed to turn mostly—if not completely—on whether the decision in question placed obligations on industry (in which case, the rule is major and must be clearly authorized) or not.

In sum, the fundamental problem for Judge Kavanaugh seemed to be that the FCC had moved away from a non-regulatory status quo and toward a pro-regulatory rule.  It’s hard to read his dissent and come away thinking that if the shoe had been on the other foot—that is, had the FCC decided in 2015 to free the Internet from the shackles of government control—he would have concluded that the move required clear congressional authorization.

This brings me back to the topic of “weaponized” law.  In their article Libertarian Administrative Law, Cass Sunstein and Adrian Vermeule documented the rise of various “judge-made doctrines that are designed to protect private ordering from national regulatory intrusion.”  Although Judge Kavanaugh’s dissent from denial in USTA is ambiguous in key respects, it certainly leaves the impression that its author has a healthy skepticism not just of administrative discretion per se but of regulatory power more broadly.  Getting rid of Chevron altogether may be one thing and, at least on its face, would favor neither regulation nor deregulation (Chevron was birthed, after all, from the deregulatory actions of the Reagan administration).  But we should be particularly wary of attempts by judges to use administrative law to put their thumb on the scale.  And while I don’t expect that my pet concerns can or should derail Judge Kavanaugh’s nomination, I do hope that he is pushed to clarify his position on these issues in the process.

 

Daniel Deacon is a Visiting Assistant Professor of Law at University of California, Irvine School of Law, where he teaches and writes about topics involving both administrative law and telecommunications.

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