Cabining the Chevron Doctrine the Kavanaugh Way

Last month, the United States Court of Appeals for the D.C. Circuit declined to reconsider its approval of the Federal Communications Commission’s “net neutrality” regulations. These rules, unsuccessfully challenged by telecommunications and other Internet providers, marked a reversal of course by the commission, which had previously applied a light touch when it came to regulation of the Internet.

Arguments about the wisdom of net neutrality and the FCC’s jurisdiction to regulate in this area are complex and fascinating matters I leave to more expert commentators. Judge Brett Kavanaugh’s thoughtful dissent from the decision in United States Telecom Association v. Federal Communications Commission, however, raises an important question that cuts across administrative law as a whole: When, if it all, should a reviewing court defer to executive branch agencies’ legal interpretations that implicate “major” questions of social and economic policy?

Many of Law and Liberty’s readers are (all too) aware of the administrative law doctrine known as Chevron deference. Chevron instructs courts to accept an agency’s legal interpretation so long as it is reasonable, even if that were not the interpretation the court would have adopted on its own. When should the doctrine be applied? Some say never—but though there have been calls to discard Chevron wholesale, to this point most of the critical judicial scrutiny has focused on limiting the kinds of questions on which courts will defer.

Most pertinent to the net-neutrality case is what is known as the “major questions” exception to deference. The animating idea is that it is unreasonable to treat statutory opacity as an implicit congressional delegation of authority to agencies when the interpretation implicates major questions of social policy. The most prominent recent deployment of this (controversial) exception occurs in Chief Justice Roberts’ majority opinion in King v. Burwell (2015). Although a majority of the Supreme Court upheld the government’s interpretation of the Affordable Care Act, it refused to place a deferential thumb on the scale in favor of the Internal Revenue Service’s conclusion that the Act permitted subsidies for federal exchanges. Finding the question one of “deep economic and political significance” that is “central to this statutory scheme,” the Court reasoned that “had Congress wished to assign that question to an agency, it surely would have done so expressly.”

Enter United States Telecom Association v. Federal Communications Commission. There, as noted, the FCC reversed its prior interpretation of the Telecommunications Act and held that it could and would subject broadband Internet services to more rigorous net-neutrality regulations. Chevron deference was central to the government’s defense of its action, and to the D.C. Circuit’s decision upholding that action. The Telecommunications Act, the majority held, was at least unclear enough to permit the FCC’s interpretation of its authority to impose more muscular regulations. And, in dissenting from the D.C. Circuit’s refusal to rehear the cases, not only Judge Kavanaugh but Kavanaugh joined by Judge Janice Rogers Brown contended that Chevron was inappropriate for the present case. The former in particular offered a scholarly restatement and refinement of the “major questions” exception to deference that raises important considerations worthy of our attention and analysis.

The Kavanaugh restatement of the doctrine came with a twist. After canvassing the Supreme Court’s jurisprudence and scholarly commentary, he identified what he dubbed the “major rule” exception to Chevron deference. He saw this Chevron carve-out as holding that if “an agency wants to exercise expansive regulatory authority over some major social or regulatory activity . . . an ambiguous grant of statutory authority is not enough.” (Emphasis in the original.) Rather than hiding regulatory elephants in mouse holes, Congress can extend the reach of the administrative state only through clear statements.

To appreciate the contours of Judge Kavanaugh’s approach, it is helpful to consider three ways in which one could craft a “major questions” exception to deference.

One way the exception could operate would be that the reviewing court would withhold deference but then decide, on its best reading of the statute, whether or not the agency’s decision was justified. An example of this would, again, be King v. Burwell. Another might be Gonzales v. Oregon (2006), although this opinion is  susceptible to a number of interpretations. In Gonzales v. Oregon, the Court withheld deference to the Attorney General’s interpretation of the Controlled Substances Act and then conducted a more or less de novo review to reject the federal government’s attempt to regulate physician-assisted suicide. In this scenario, it would not require a clear statement for the Court to give a green light to agency regulation on major questions. Rather, the most plausible reading of an unclear statute could confer regulatory authority—but it is for the reviewing court to decide whether the statute could be read in that way.

Alternatively, it could be that, rather than resolving the ambiguity itself, a reviewing court rejects any major administrative action—regulatory or deregulatory—not supported by a clear statement. Here, an agency would not be able to use legislative ambiguity to work major policy changes in either a regulatory or a deregulatory direction. Such a finding would be consistent with the Supreme Court’s rejection in FDA v. Brown and Williams Tobacco Corp. (2000) of the Food and Drug Administration’s attempt to regulate tobacco and cigarettes as drugs and drug-delivery devices. It also consistent, however, with the Supreme Court’s holding in the 1994 MCI case that the FCC cannot deregulate portions of the telecommunications industry by reading its power to “modify” rates regulations as including the broader power to eliminate them altogether.

A third alternative would be that the court requires a clear statement only when the administrative agency seeks to expand its regulatory power. By linking the doctrine to agencies exercising “expansive regulatory authority over some major social or regulatory activity” (emphasis added), the language of Judge Kavanaugh’s dissent arguably contemplates a clear statement rule that bridles administrative expansion while allowing agencies to leverage legislative ambiguity in a deregulatory direction.

Now, I only say “arguably” because it was not necessary for Judge Kavanaugh to choose between the second and third alternatives. Both would have the same bite in USTA v. FCC. Furthermore, the deregulation-foiling MCI case was one the four cases on which Judge Kavanaugh relied most heavily in arriving at his clear statement principle. Similarly, he grounded his explication of the major rule doctrine in concerns about having Congress make major policy choices, as opposed to worries about excessive regulation.

Either way, Judge Kavanaugh’s formulation of the doctrine favors these clear statement alternatives over the more judicially involved alternative with which I began. I do not have a firm stance on which of the three is best, but the Kavanaugh’s formulation tees up important questions for those discomfited by the administrative state. The contemporary critique of the administrative state contains a number of different strands; thinking about the kind of major question doctrine one might want helps to unwind these overlapping threads.

The major threads at play here are: legalism, delegation, and deregulation. The legalist critique of the administrative state is that it privileges unfettered policymaking discretion over judgment directed and constrained by legal craft. The delegation critique is that the administrative state shifts important policy choices from Congress to comparatively unaccountable administrative agencies. The deregulation critique thinks the federal governments simply does too much (as a matter of political theory, constitutional warrant, or both) and that the administrative state makes such overreach possible.

Many critics of the administrative state believe all three, but the three are not necessarily connected. One could doubt the autonomy of legal craft while wanting less regulation, for example, or be indifferent to the amount of regulation so long as Congress made more of the choices.

For present purposes, Judge Kavanaugh’s clear statement approach points to a greater concern about delegation and/or (possibly) excessive regulation. In this respect, it echoes Judge Easterbrook’s argument (in the context of ordinary statutory interpretation) that the threshold question of whether a statute applies is often more important than how a court construes it. Drawing on our Constitution’s content, structure and tradition, Judge Easterbrook argued that requiring a clear statement before applying a statute respects the legislative process and liberal principles. One could similarly argue that requiring a clear statement to justify major regulatory action curbs unjustified delegation and/or excessive federal power.

Compare this to a counterfactual in which the D.C. Circuit judges, mirroring the Chief Justice in King v. Burwell, decided on their own whether the Telecommunications Act allowed net-neutrality regulation. Proceeding in this way privileges autonomous legal craft over indirectly enforcing the non-delegation doctrine or curtailing federal power. Judicial judgment about the content of the statute may lead to a rejection of net neutrality, or it might not. The judicial duty is to identify the law on the question and enforce it, so long as it is within constitutional bounds (with the constitutional constraint being but another aspect of the law on the question).

Of course, one could blur these distinctions—our legal craft might include clear statement canons implementing constitutional values supporting the separation of powers, non-delegation principles, and limits on federal power. Or it might not include them. Deciding whether it does or does not requires answering broader and more complex questions of constitutional law. It remains possible that the “Rule of Law” case to be made against the administrative state could be a They, not an It. Judge Kavanaugh’s careful explication and reformulation of the “major questions” exception is an important development in its own right, and a rich source for further reflection on the role of the courts in the administrative state.