A group of Republican Senators have introduced the Separation of Powers Restoration Act of 2017 to eliminate “Chevron deference” that reviewing courts give to administrative agency decisions. [1] The bill, if passed, would amend Section 706 of the Administrative Procedure Act to require courts to decide all questions of law and interpret statutory provisions de novo. It has been referred to the Senate Committee on the Judiciary.

Critics of Chevron deference argue the doctrine allows administrative agencies to usurp core judicial and legislative branch power, a rationale that fits with the legislation. The Separation of Powers Restoration Act of 2017 represents yet another attack on Chevron deference. Legal experts predict that the newest Supreme Court Justice – Neil Gorsuch – will continue the assault on Chevron deference. He has complained that the Chevron doctrine permits agencies to reverse judicial decisions “like some sort of super court of appeals.”

The paragraphs below attempt to explain why the Separation of Powers Restoration Act of 2017 was introduced by providing a review of the Chevron doctrine and high-level explanation of Justice Gorsuch’s concurring opinion in Gutierrez-Brizuela v. Lynch in which he makes the case for eliminating Chevron deference.

Review & Overview of Chevron Deference

Federal agencies operate pursuant to authority delegated by Congress in their enabling statutes. For instance, The Federal Communications Commission’s (“FCC”) enabling statute is the Communications Act of 1934, as amended. Certain sections of the Communications Act expressly delegate authority to the FCC, but Congress has also included implied delegations of authority through ambiguities in other parts.

Using Congressionally-delegated authority, administrative agencies craft rules and regulations that affect every nook and cranny of the U.S. economy, as well as many aspects of American life. More often than not, federal regulations are the product of a proceeding in which competing interests strongly oppose or support an agency’s decision. The FCC’s open Internet rules are an excellent example of regulations borne out of a contentious proceeding, one that has arguably been ongoing since at least 2008.

Statutory authority is a constant theme in administrative agency proceedings. Whether an agency has adequate authority to undertake its proposed action is a question that must be addressed as part of the agency’s decision-making process. (Perhaps this helps explain why the FCC employs so many lawyers, and so few engineers and economists.) When a final agency action is challenged, the question must be answered again, but this time by a reviewing court.

A court’s review is guided by the well-known doctrine established in 1984 by the Supreme Court in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.. [2] “First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.” This is Chevron step one.

One example of Congress speaking directly to an issue is language in the Communications Act setting the limits of FCC jurisdiction. The Act provides the FCC authority over “all interstate and foreign communication,” but expressly denies the FCC jurisdiction over “intrastate communication service” rate regulation. [3] Of course, any seasoned communications law attorney could make a case that even these provisions, in certain contexts, do not constitute a clear, express delegation of authority. But, when compared to other parts of the Act that are ambiguous, it’s clear that this “dual state and federal regulation over [communication] service” is an example of Congress speaking directly to a question of an administrative agency authority. [4]

If Congress has not expressly addressed the issue at hand, the court precedes to Chevron step two. In the absence of clear Congressional intent, a reviewing court may not impose its own construction on the statute. “Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute.” Chevron step two requires a reviewing court to defer to a federal agency if the agency’s decision is merely reasonable; a very low bar. In other words, a court may not second-guess a federal agency if the agency’s decision fits “within the range of permissible interpretations.”

The Supreme Court has explained that ambiguities in statutes are purposeful, and that Congress expects federal agencies to fill those gaps:

We accord deference to agencies under Chevron, not because of a presumption that they drafted the provisions in question, or were present at the hearings, or spoke to the principal sponsors; but rather because of a presumption that Congress, when it left ambiguity in a statute meant for implementation by an agency, understood that the ambiguity would be resolved, first and foremost, by the agency, and desired the agency (rather than the courts) to possess whatever degree of discretion the ambiguity allows. [5]

An Elephant In The Room – Justice Gorsuch Revives Criticism of Chevron Deference

There has been an upsurge of criticism of Chevron deference over the past year due in large part to the appointment of Neil Gorsuch to the Supreme Court. During his time on the Tenth Circuit Court of Appeals, Justice Gorsuch was an outspoken critic of deference given by appellate courts to administrative agency interpretations of statutes. In his concurring opinion in Gutierrez-Brizuela v. Lynch written in 2016, Justice Gorsuch lays out his arguments against the modern administrative state’s ability to tread on the separation of powers, something he refers to as the “elephant in the room.” [6] To illustrate how Chevron deference is problematic, Justice Gorsuch uses the Supreme Court’s Brand X decision, one of the most important cases in communications and administrative law in the last ten years. [7] Chevron and Brand X, according to Justice Gorsuch, “permit executive bureaucracies to swallow huge amounts of core judicial and legislative power and concentrate federal power in a way that seems more than a little difficult to square with the Constitution of the framers' design.”

Why Brand X?

To fully understand Justice Gorsuch’s argument, the entire Brand X saga must be reviewed. First, we have to rewind all the way to AT&T Corp. v. City of Portland. [8]

In 1999, AT&T purchased Tele-Communications, Inc. (“TCI”), which at the time was the second largest cable television operator in the U.S. TCI also provided broadband access over its cable facilities in some areas. To complete the $48 billion merger, AT&T and TCI needed regulatory approval from local franchising authorities. TCI’s cable franchise agreement with Portland, Oregon allowed the city to place conditions on any transfer of the franchise. Using this provision, the local authority conditioned the transfer with a requirement that AT&T provide access to its cable facilities to unaffiliated Internet service providers. AT&T challenged the open access requirement in federal court.

The Ninth Circuit Court of Appeals had to determine how the Communications Act defines cable broadband service. It found that cable broadband includes both a telecommunications service and an information service. At that time, the FCC had not addressed the issue, so the court was not “presented with a case involving potential deference to an administrative agency's statutory construction pursuant to the Chevron doctrine.” For what it’s worth, the court held that the franchising authority could not impose the open access condition because the franchising authority was prohibited from regulating the transmission component of cable broadband service.

In an order a few years later, the FCC “conclude[d] that cable modem service...is properly classified as an interstate information service, not as a cable service, and that there is no separate offering of telecommunications service.” The order was challenged by multiple parties, and after judicial lottery, the petitions for review were consolidated and sent to the Ninth Circuit. Among other things, the Ninth Circuit vacated the FCC’s determination that cable broadband service did not include telecommunications service, and “grounded its holding in the stare decisis effect of AT&T Corp. v. City of Portland.” The court did not apply the Chevron doctrine because “Portland’s holding, the Court of Appeals reasoned, overrode the contrary interpretation reached by the [FCC].” The decision was appealed to the Supreme Court (and the case relabeled as Brand X). As we all know, the Supreme Court reversed, concluding that the Ninth Circuit was wrong when it declined to decide the case under step two of the Chevron doctrine.

Of course, the Ninth Circuit did what it normally did when deciding cases – it based its decision on stare decisis. The Ninth Circuit had already determined that cable broadband service was made up of both telecommunications and information services. That was the precedent it had set a few years earlier. In its view, there was no reason to change it.

With this in mind, here’s how Justice Gorsuch characterizes the upshot of Brand X: the Chevron doctrine lets administrative agency’s say what the law is. In Justice Gorsuch’s view, “[u]nder Brand X’s terms,...courts are required to overrule their own declarations about the meaning of existing law in favor of interpretations dictated by executive agencies.” Indeed, in Brand X, the FCC was allowed to effectively reverse a prior Ninth Circuit judicial decision, as if it were “some sort of super court of appeals.” For sure, this does not comport with the structure created by the Constitution. It is also the problem that the Separation of Powers Restoration Act of 2017 intends to fix.

[1] Separation of Powers Restoration Act of 2017, S. 1577, 115th Cong. (intr. July 18, 2017). Similar legislation was introduced in the House in January 2017. Separation of Powers Restoration Act of 2017, H.R. 76, 115th Cong. (intr. Jan. 3, 2017).

[2] Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-843 (1984).

[3] 47 U.S.C. §§ 151, 152(b).

[4] Louisiana Pub. Serv. Comm'n v. FCC, 476 U.S. 355, 360 (1986).

[5] Smiley v. Citibank (S.D.), N.A., 517 U.S. 735, 740-41 (1996).

[6] Gutierrez-Brizuela v. Lynch, 834 F.3d 1142, 1149-1158 (10th Cir. 2016) (Gorsuch, C.J., concurring).

[7] Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967 (2005).

[8] AT&T Corp. v. City of Portland, 43 F. Supp. 2d 1146 (D. Or. 1999), rev’d, 216 F.3d 871 (9th Cir. 2000).