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Net Neutrality Implications

Student Loan Case Seen Having Implications for SCOTUS Review of FCC Actions

The U.S. Supreme Court’s 6-3 decision last week in the student loan case, Biden v. Nebraska, didn’t touch on communications law, but it delves deeper into the "major questions doctrine" laid out a year ago in West Virginia v. EPA (see 2206300066). Legal experts told us the opinion, by Chief Justice John Roberts, appears to further expand when the doctrine may apply and moves the court further away from the Chevron doctrine. The case also has implications for the most controversial items addressed by the FCC, including net neutrality, experts said.

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SCOTUS will take up a case next term, Loper Bright Enterprises v. Raimondo, which many observers consider likely to eliminate or severely limit Chevron deference (see 2306290063).

Justice Elena Kagan wrote a strongly worded dissent in Biden v. Nebraska, slamming “the Court’s made-up major questions doctrine,” joined by the court’s two other progressives, Justices Sonia Sotomayor and Ketanji Brown Jackson. Justice Amy Coney Barrett offered a concurrence raising some questions on the doctrine.

The decision shows SCOTUS “is very serious about the major-questions doctrine and is willing to apply it in a variety of settings,” said Morrison Foerster’s Joseph Palmore, former assistant to the solicitor general and former deputy FCC general counsel. The court also accepted review of a case for next term “that will allow it to consider overruling Chevron,” Palmore said: “All of this means that we are moving from a world of judicial deference toward agencies to one of judicial skepticism. Before asserting broad authority based on general statutory language, the FCC will undoubtedly be thinking hard about how it would be received in court.”

The case is “part of a pattern" where SCOTUS "has invoked the doctrine against agency claims to authority that a majority of the court views as dramatic,” said Daniel Deacon, University of Michigan Law School assistant professor: “In some sense, it’s important simply as a continuation of the trend away from Chevron and toward less deferential review.”

SCOTUS “for the first time clearly held" that the major question doctrine is "relevant to agency decisions that involve spending or benefits as opposed to direct regulation,” Deacon said. “Practically, that means that FCC decisions involving broadband subsidies, for example, might be challenged on major questions grounds,” he said.

The evolving doctrine “will at least make it more difficult for FCC counsel to defend significant decisions, and may make it practically impossible in many cases,” said HWG’s Christopher Wright, FCC general counsel under former Chairman William Kennard. “Since FCC decisions are often controversial and have multibillion dollar consequences, a lot of FCC decisions are likely to trigger application of the doctrine,” Wright said. Many provisions of the Communications Act aren't very precise, leaving room for challenges, he said.

Parties will likely raise major-questions issues “involving just about every regulatory agency in the federal government,” said Benton Institute for Broadband & Society Senior Counselor Andrew Schwartzman. SCOTUS “will have plenty of such cases to choose from in the coming terms,” he said. Schwartzman hopes the court will view the Communications Act as "a poor candidate for breaking new ground.” Unlike many statutes, the act is “90 years old, so there are decades of precedent that might have to be distinguished or overruled,” he said. Unless the court lays out clear principles, “there will be a period of great uncertainty,” Schwartzman predicted.

Agencies such as the FCC might seek to fracture their orders and approve them in smaller chunks that aren’t as easy to point to as major questions, said American University administrative law professor Jeffrey Lubbers. “But the courts are likely to see through that,” he conceded. The doctrine is likely to have a chilling effect on agency actions, Lubbers said.

Divided Court

While the major questions ‘label’ may be relatively recent, it refers to ‘an identifiable body of law that has developed over a series of significant cases’ spanning decades,” Roberts wrote. As the court said in West Virginia, “experience shows that major questions cases ‘have arisen from all corners of the administrative state,’ and administrative action resulting in the conferral of benefits is no exception to that rule,” he said.

Control of the purse” has always been one of Congress' most important responsibilities, Roberts wrote: “It would be odd to think that separation of powers concerns evaporate simply because the Government is providing monetary benefits rather than imposing obligations.” The dissent is right that this is a case about one branch of government “arrogating to itself power belonging to another. But it is the Executive seizing the power of the Legislature,” Roberts said.

Barrett expressed reservations. “I take seriously the charge that the doctrine is inconsistent with textualism,” she wrote: “I grant that some articulations of the major questions doctrine on offer -- most notably, that the doctrine is a substantive canon -- should give a textualist pause.” But seen in another light, the doctrine is “a tool for discerning -- not departing from --- the text’s most natural interpretation,” she said.

In every respect, the Court today exceeds its proper, limited role in our Nation’s governance,” Kagan wrote in the dissent: “For years, this Court has insisted that the way to keep judges’ policy views and preferences out of judicial decisionmaking is to hew to a statute’s text,” she wrote: “As in other recent cases, the rules of the game change when Congress enacts broad delegations allowing agencies to take substantial regulatory measures. . … Then, as in this case, the Court reads statutes unnaturally, seeking to cabin their evident scope.”

Net Neutrality Implications

The court’s application of the doctrine should give the agency “significant pause” before attempting Title II reclassification, said Wiley’s Tom Johnson, general counsel to former Chairman Ajit Pai. Barrett’s concurrence referenced a 2017 dissent by Justice Brett Kavanaugh in U.S. Telecom v. FCC, a reference that also cropped up in West Virginia, Johnson pointed out.

These decisions together are the writing on the wall that this Supreme Court would hold that Congress did not speak sufficiently clearly to subject modern broadband services to the Title II regulatory scheme designed for legacy telephone services,” Johnson said. The major-questions doctrine “is also likely to feature prominently in any challenge to the FCC’s expected rules later this year on digital discrimination,” he said.

Given the size of the economic impact of the Administration’s loan forgiveness program, and its political significance, it was easy for the Court to fit this case within its major-questions framework,” emailed Free State Foundation President Randolph May, who noted the decision doesn’t mention Chevron. If the FCC restores the 2015 net neutrality order, and reclassifies broadband under Title II, May predicted SCOTUS “ultimately, will consider the FCC’s action under the major question doctrine, and the FCC will lose. I don’t think that the fact that previous iterations regarding Title II classification have relied heavily on Chevron will save the Commission this time.”

The limits of the doctrine remain undefined, but that makes it an attractive weapon for any attorney seeking to challenge FCC actions, said Linda Jellum, University of Idaho College of Law administrative law professor. To defend against future major questions doctrine challenges, agency orders are likely going to need to be tighter, more specific and carefully worded, Jellum said. Previously agencies were able to rely on Chevron deference in circumstances where statutes and rules were ambiguous, but the major questions doctrine has effectively supplanted that, she said.

The movement on the court has “strong implications for political issues that could be in front of the FCC, like net neutrality or revising media rules," emailed Digital Progress Institute President Joel Thayer. “The FCC will need to proffer a strong textual justification in the event it wants to augment the scope of Title II, or statutes involving broadcasting rights, or even some cable rules,” he said: “Put simply, if it’s not in the text of the statute, it’ll be hard to move forward on political items before the commission."

The new direction of the court likely doesn’t put the FCC “at a disadvantage for all of its work,” said Joe Kane, Information Technology and Innovation Foundation director-broadband and spectrum policy. “Most of what the FCC does is enabled by the [Communications Act] and is consistent with decades of practice,” he said: “I wouldn't expect FCC orders to now lose consistently when they're engaged in run-of-the-mill regulation of the communications industry.”