Chevron deference was an important factor in the U.S. Court of Appeals for the D.C. Circuit’s 180-page ruling, in United States Telecom Assoc. v. FCC, et al., on June 14 (Flag Day), upholding the Federal Communications Commission’s “Open Internet” rule. The Court of Appeals’ notes that “[f]or the third time in seven years, we confront an effort by the Federal Communications Commission to compel internet openness—commonly known as net neutrality—the principle that broadband providers must treat all internet traffic the same regardless of source.”

The majority opinion, jointly written by Circuit Judges Tatel and Srinivasan, relies on the principles of statutory interpretation established in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. (often referred to as Chevron deference) to uphold the FCC’s interpretation of relevant provisions of the 1996 Communications Act, and its reclassification of broadcast internet services as being subject to Common Carrier regulation. The majority also holds that that the FCC’s abrupt change in policy satisfies the Supreme Court’s ruling in FCC v. Fox Television Stations, Inc. Judge Williams, in dissent, stated he could not agree with the majority’s view of the Fox precedent.

Judge Williams’ dissent touches on the majority’s reliance on Chevron: “In short, the Commission has not taken the initial step of showing that this reading of Section 706 as a virtually limitless mandate to make the internet ‘better’ is a reasonable reading to which we owe deference. Entergy Corp. v. Riverkeeper, 556 US 208, 218 and n.4 (2009). Without such an interpretation, the Commission’s rules cannot be sustained under Section 706, even without regard to the reasoning gaps that were a primary subject t of [Judge Williams dissent at] Part II.A.”

Recall that in 1984, the U.S. Supreme Court issued a unanimous decision on the case of Chevron USA Inc. v. NRDC. Justice Stevens established a two-step approach to the task of analyzing an agency’s interpretation of a statue the agency administers. At step one, the court is to review, often intensely, the statutory language to determine whether the Congress has spoken on the issue. If the Congress has, “that is the end of the matter.” At step two, which comes into play if the statutory language is ambiguous, the court is to decide whether the agency’s interpretation of the statute is permissible and reasonable. By following this two-step approach, the court reviewing the agency’s action is engaging Chevron deference. Chevron progeny have held that Chevron deference will not be employed if the format in which the opinion is expressed does not have the force of law, such as agency opinion or policy statements.

If the U.S. Supreme Court is interested in putting the brakes on Chevron, this could be the case to do it. Judge Tatel’s greenhouse gas ruling, in Utility Air Regulatory Group v. EPA, a few years ago was reversed by the Court in a tight 5 to 4 vote. I call this ruling to your attention because it is bound to have a significant impact on administrative law practice in the DC Circuit. Moreover, it will be interesting to see how the litigants treat the June 20 decision of the Supreme Court in Encino Motorcars, LLC v. Navarro, et al., which withheld Chevron deference from a Department of Labor overtime pay rule the Court viewed as being “procedurally defective” and where the new rule was not accompanied by even a “ minimal level of analysis.” That rule was therefore determined to be arbitrary and capricious and without the force of law.