PDR Network or: Why the Hobbs Act Doesn’t Incorporate Chevron Doctrine (Part II), by James R. Conde

by Guest Blogger — Friday, Feb. 8, 2019

In this second post, I will explain two ways in which the Supreme Court could avoid the constitutional concerns posed by the Fourth Circuit’s decision in PDR Network.

First, echoing and augmenting on themes developed in a characteristically thoughtful amicus brief filed by Professor Aditya Bamzai, and separately by Professor Bell, I argue that the Fourth Circuit misunderstood the scope of the Hobbs Act. The court’s error appears to stem from its implicit assumption that Chevron’s framework is incorporated into the Hobbs Act, a statute that precedes the Chevron decision by 34 years and that was enacted under quite different legal premises. Under modern Chevron doctrine, agency interpretations made during a notice-and-comment rulemaking are often said to carry “the force of law.” See United States v. Mead Corp., 533 U.S. 218, 226–27 (2001). Because an agency’s interpretations are often said to carry the force of law under Chevron doctrine, the Fourth Circuit appears to have assumed that agency interpretations reviewed under the Chevron framework must be binding “orders” that can be invalidated within the meaning of the Hobbs Act.

The court’s assumption is wrong. The Hobbs Act’s drafters would not have understood administrative interpretations, not promulgated through regulations, to be “orders” within the meaning of the Hobbs Act. The Supreme Court could avoid the constitutional problem by refusing to read Chevron doctrine into the statute and by reaffirming its own precedents interpreting the meaning of the term “orders.”

Second, even if the Supreme Court believes the Fourth Circuit’s application of the statute is correct, the Supreme Court could avoid the constitutional controversy in this and future cases by dusting off the administrative law doctrine of “primary jurisdiction,” and referring the case to the FCC for an adjudication, subject to appellate review in the courts.

The Supreme Court can avoid the constitutional issue because the Hobbs Act doesn’t apply to legal interpretations that are not given the force of law through binding regulations.

The Supreme Court can avoid confronting the constitutional questions in PDR. As Professor Bamzai argues in his amicus brief, the Hobbs Act does not prevent courts from disagreeing with agency interpretations, even those made during a rulemaking proceeding. The Hobbs Act prevents courts from “determin[ing] the validity of,” in this case, “final orders” reviewable under 47 U.S.C. § 402(a). 28 U.S.C. § 2342. But the FCC’s 2006 interpretation of the TCPA, even if made in the preamble of an order, is not a “final order” in the Hobbs Act’s sense. Only binding regulations or adjudications that finally decide a person’s rights are orders under the Hobbs Act.

The Fourth Circuit rejected this as a “fine distinction” without a practical difference. “In its view [i]nvalidation by any other name still runs afoul of the Hobbs Act’s constraints. To hold that a district court cannot enjoin or set aside a rule but is nevertheless free to ignore it (or “decline[ ] to defer” to it) would allow a party to perform an end run around the administrative process Congress created.” 883 F.3d at 445 (citation omitted).

The Fourth Circuit’s conclusion rests on embedded, modern assumptions that would not have been shared by the drafters of the Hobbs Act. The Fourth Circuit appears to have viewed the Hobbs Act through the lens of the Chevron doctrine, under which courts give “binding” legal effect to agency interpretations made during the course of a notice-and-comment proceeding. See Mead Corp., 533 U.S. at 226–27. Because an agency’s interpretations are said to carry the force of law under Chevron, the Fourth Circuit assumed that agency interpretations must also be binding “orders” within the meanings of the Hobbs Act. But Chevron doctrine should play no role in interpreting the Hobbs Act, a statute that precedes Chevron by 34 years, and that was enacted under quite different legal premises. As the Supreme Court reminds us, it is “a fundamental canon of statutory construction that words generally should be interpreted as taking their ordinary meaning at the time Congress enacted the statute.” New Prime Inc. v. Oliveira, 586 U.S. ____ (2019) (slip op., at 6) (alterations and quotation marks omitted). The Hobbs Act’s drafters would have rejected the idea that interpretations that are not promulgated in regulations enforceable through sanctions qualify as reviewable “orders” under 47 U.S.C. § 402(a).

For the drafters of the Hobbs Act, the key case defining the outer limits of § 402(a) orders was CBS v. United States, 316 U.S. 407 (1942). CBS concerned the FCC’s issuance of “Chain Broadcasting Regulations” applicable to broadcasting stations, which the FCC characterized as an “expression of general policy” it would “follow in exercising its licensing power.” Id. at 411. The FCC conceded that its chain broadcasting rules required it to deny or terminate licenses for broadcasting stations that had certain contractual relationships with CBS. Id. at 415. CBS brought suit under the Urgent Deficiencies Act, but the district court, in an opinion written by Judge Learned Hand, held that the FCC’s action was not an “order” reviewable under § 402(a). Nat’l Broad. Co. v. United States, 44 F. Supp. 688, 691 (S.D.N.Y. 1942). As Learned Hand reasoned, in the many cases defining the term “order” under the Urgent Deficiencies Act, “the Supreme Court has never declared that that statute authorizes review of any decision of an administrative tribunal which neither directs anyone to do anything, nor finally adjudicates a fact to exist upon which some right or duty immediately depends. We agree that it is no answer that the decision challenged is ‘legislative’ in character.” Id.

The Supreme Court reversed, in a narrow opinion that addressed “whether the Commission’s order is an ‘order’ review of which is authorized by § 402(a) of the Act.” Id. at 415. The Court held that “because [the rules are] an exercise of the rule-making power, and because they presently determine rights on the basis of which the [FCC] is required to withhold licenses and authorize to cancel them,” they were “an order within the meaning of § 402(a) of the Urgent Deficiencies Act.” Id. at 421; see also id. at 417 (same). Justice Frankfurter, joined by Justices Reed and Douglas, argued with some force in dissent, that § 402(a) orders were limited to penal regulations or final orders imposing a sanction. See id. at 433–35 (Frankfurter J., dissenting).

As would seem evident from CBS, however, at a minimum, an “order” had to be a promulgated rule that imposes sanctions (like the denial of a broadcasting license) on those who fail to obey it. No Justice at the time argued that an agency’s statutory interpretation, not promulgated in regulations, could be a reviewable order under § 402. That argument would have been untenable based on the Court’s precedents. The drafters of the Hobbs Act would have understood these limits, and they did not seek to broaden the legal meaning of the term order. Thus, the Fourth Circuit’s assumption that the term order includes agency interpretations finds no support in contemporary understandings of the law when the Hobbs Act was adopted.

The Supreme Court can avoid Yakus through the doctrine of primary jurisdiction.

There is another, more creative way the Supreme Court could avoid the constitutional concerns in PDR, which hasn’t been raised by the parties. Under the doctrine of “primary jurisdiction,” the Supreme Court could reverse and remand, with instructions to refer the TCPA dispute to the FCC for adjudication, subject to appellate review. See, e.g., Port of Boston Marine Terminal Ass’n v. Rederiaktiebolaget Transatlantic, 400 U.S. 62, 68–69 (1970). As Justice Breyer lamented a few terms ago, while the doctrine of primary jurisdiction was once “a fairly well established doctrine at the Civil Aeronautics Board, of blessed memory,” the doctrine of primary jurisdiction is not “too live” among current practitioners. However, consistent with caselaw dating all the way back to the Interstate Commerce Commission, see Texas & P. Ry. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 448 (1907), the Supreme Court could resurrect the doctrine in this case.

This could be an attractive resolution if a majority of the Supreme Court cannot resolve the statutory question in favor of PDR. But primary jurisdiction should be disfavored in this legal context. Courts are well equipped to interpret the meaning of the TCPA, so the need for a specialized agency determination in this context is relatively weak. The Court’s best option to hold that the Hobbs Act did not require the district court to accept the FCC’s interpretation, and reverse the Fourth Circuit.

James R. Conde is an associate at Boyden Gray & Associates PLLC, a constitutional and regulatory law firm in Washington, D.C.

Cite As: Author Name, Title, 36 Yale J. on Reg.: Notice & Comment (date), URL.

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