The Supreme Court today issued its decision in City of Arlington v. FCC—the case challenging the FCC’s 2009 “Shot Clock” declaratory ruling. The Supreme Court affirmed the Fifth Circuit, holding that Chevron deference applies to the FCC’s own interpretation that it has authority to interpret Section 332(c)(7)(B) of the Communications Act, including authority to establish a shot clock, as well as to the details of the shot clock it set. Although the case was a challenge to the FCC’s declaratory ruling, the decision of the Court has broad implications for all federal agency actions, as the Court ruled that deference is due when an agency interprets ambiguous provisions in its statute, even when the ambiguity goes to the scope of the agency’s own authority.

As discussed in our prior advisories, in 2009, the FCC issued a Declaratory Ruling in which it addressed the problem of municipal delay of applications to install wireless facilities. The FCC held that under Section 332(c)(7)(B)(ii), 90 days was a presumptively reasonable time for a local government to act on an application to collocate and 150 days was a presumptively reasonable time for local government action on any other wireless facility application. The FCC also addressed a split among the federal Circuit Courts of Appeal regarding the Section 332(c)(7)(B)(i)(II) “effective prohibition” claim, rejecting the “one provider” rule adopted in the First and Third Circuits, as well as the “blanket ban” standard adopted by the Fourth Circuit. The FCC declared that those standards were inconsistent with the language and purpose of the Act. Several local governments appealed the so-called “Shot Clock Order,” alleging among other things that the FCC lacked authority to interpret Section 332(c)(7). In 2012, the Fifth Circuit rejected the municipal challenges to the Shot Clock Order.

Municipal interests, led by the City of Arlington, Texas, petitioned for certiorari. In 2012, the Supreme Court granted cert, but only on the specific issue of whether Chevron deference applies when the agency’s interpretation of a statutory ambiguity concerns the scope of the agency’s authority (i.e., the scope of its jurisdiction).

Because of the fairly narrow issue on which cert was granted, the decision is primarily a debate between the justices regarding the appropriate scope of Chevron and the balance between agency and judicial power. Nonetheless, the decision contains several statements that are important to clarify the preemptive effect of Section 332(c)(7). For example, citing the Court’s decision in Rancho Palos Verdes v. Abrams, the Court confirms that Section 332(c)(7)(B) was intended to limit the scope of local governments’ authority. This is contrary to the view advanced by many cities and even some courts that Section 332(c)(7) was intended to preserve and protect municipal authority.

Moreover, the Court rejected the argument by municipal amici curiae that Chevron deference was inappropriate because the FCC had “assert[ed] jurisdiction over matters of traditional state and local concern.” The Court responds that the case has “nothing to do with federalism” because Section 332(c)(7)(B)(ii) “explicitly supplants state authority.” While brief, this recognition that Section 332 supplants traditional state and local authority is critical, as some courts continue to grant cities significant deference in Section 332(c)(7) cases, mistakenly believing that “traditional” local authority was preserved by Section 332(c)(7).

The Court’s decision is ultimately about much more than wireless deployment and the FCC. As expected, the decision reflects differences among the justices regarding the Chevron doctrine and ultimately even the role and power of administrative agencies. The majority opinion by Justice Scalia rejects attempts to label the question as one of the agency’s “jurisdiction,” calling the distinction between jurisdiction and non-jurisdictional interpretations a “mirage” and a “false dichotomy.” Instead, the majority holds that Chevron deference applies without reference to whether the issue concerns the agency’s authority. Ultimately, Justice Scalia’s opinion is premised on the idea that “[n]o matter how it is framed, the question a court faces when confronted with an agency’s interpretation of a statute it administers is always, simply, whether the agency has stayed within the bounds of its statutory authority.” (Emphasis in original). Because the Fifth Circuit applied Chevron deference in upholding the FCC’s declaratory ruling, the Court affirms the Fifth Circuit.

Justice Breyer filed a separate opinion in which he concurs in part and concurs in the judgment. Justice Breyer’s opinion appears primarily intended to address Justice Scalia’s strict textualism, explaining that “the statute’s text, its context, the structure of the statutory scheme, and canons of textual construction are relevant in determining whether the statute is ambiguous and can be equally helpful in determining whether such ambiguity comes accompanied with agency authority to fill a gap.” Fundamentally, Justice Breyer would go beyond even a statute’s text to determine whether deference to an expert agency’s interpretation is appropriate.

The three-justice dissent, written by Chief Justice Roberts and joined by Justices Kennedy and Alito, opens with a lengthy discussion of the perceived problems of the “administrative state,” with “hundreds of federal agencies poking into every nook and cranny of daily life,” that appears to reflect those justices’ desire to reign in the authority of administrative agencies. The dissent argues that no deference should be given to questions about whether an agency has authority to take certain actions or make certain interpretations. Notably, however, for the Shot Clock Order, the dissent never says that the FCC lacked authority to adopt the shot clock rules, only that the Fifth Circuit should have looked at that question without deference to the FCC’s interpretation of the Act.

The Court’s opinion in this case has been widely anticipated, including beyond the confines of the wireless industry or even the communications industry. The Court’s decision makes it more difficult to challenge agency actions based on claims that the agency “lacks jurisdiction,” but Chevron still provides the latitude to challenge agency action as beyond the bounds of its statutory authority or permissible construction of statute.