Chapter 7
Part III
What is the Internet under the FCC?


The broadband provider - your connection to the
Internet backbone.
 May also be your ISP
Are broadband internet providers
telecommunications or information services?
 The FCC does regulate information services,
thus no preemption of state action.
2
National Cable & Telecommunications
Association et al. v. Brand X Internet Services
et al., 545 U.S. 967 (2005) - Background


Portland wants to regulate broadband providers
 Why might a locality want to regulate
broadband?
 How are the broadband providers determined in
Baton Rouge?
Industry says they are telecommunications
providers, thus not subject to local regulation
 9th Cir agrees that they are
telecommunications providers under FCC regs.
3
Brand X - 545 U.S. 967 (2005)


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FCC then promulgates a rule defining broadband
providers as information services
What did the Appeals Court say?
 Did the United States Supreme Court agree that
it was the 9th Cir's call?
Why didn't the earlier case bind the agency and
prevent the rule?
Why does this put the FCC in a bind over netneutrality?
4
Leading up to Mead: Christensen v. Harris
County, 529 U.S. 576 (2000)


What did the court rule?
 “Here . . . we confront an interpretation contained in an
opinion letter, not one arrived at after, for example, a
formal adjudication or notice-and-comment
rulemaking. Interpretations such as those in opinion
letters--like interpretations contained in policy
statements, agency manuals, and enforcement
guidelines, all of which lack the force of law--do not
warrant Chevron-style deference.”
Why is this consistent with our definition of a guidance
document?
5
When does Chevron Apply? - United
States v. Mead, 533 U.S. 218 (2001)



Chevron was a notice and comment rule
 Why does the notice and comment process better
assure that an agency legal interpretation is sound?
Mead is a letter ruling on the classification of a product
for tariff purposes (Daytimer calendars)
 No notice and comment, thus no vetting
 Can be changed at a later date without notice and
comment - does not bind the agency
Should this letter ruling get Chevron deference?
6
The Mead Test



...administrative implementation of a particular
statutory provision qualifies for Chevron
deference when it appears that Congress
delegated authority to the agency generally to
make rules carrying the force of law, and that the
agency interpretation claiming deference was
promulgated in the exercise of that authority.
Remanded for Skidmore analysis.
What would you look for to decide if Mead
applied?
7
Back to Persuasiveness (Skidmore)? Barnhart v. Walton, 535 U.S. 212 (2002)


This is a SSA interpretation of a statute that is in
various guidance documents.
This is post-Mead, so the court is now fleshing
out how to do Skidmore analysis on informal
agency documents.
8
The Barnhart Factors

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The importance of interpretation to agency policy;
The period that the agency has held the view;
The legal expertise of the agency;
The complexity of the problem;
This is persuasiveness analysis
What can the agency due to strengthen its case
for deference under Barnhart?
9
Applying Barnhart


HUD issues guidance on construction of the antikickback provisions in a real estate act
 Published in the register, but no notice and
comment
Should the court defer to these under Barnhart?
 Yes, according to the Second and Ninth
Circuits; no, according to the Seventh Circuit.
 You are not the only person who is confused
10
Public Citizen v. U.S. Dept. of Health and
Human Services, 332 F.3d 654 (D.C. Cir. 2003)



Is the Medicare Manual a notice and comment
regulation?
 Did the agency have the authority to make law
on this issue?
 Does this look more like Mead or Chevron?
Did the court find that the manual was a
regulation with the force of law as to a third party?
How can the Medicare Manual be binding on
providers if it does not have the force of law?
11
Whitman v. American Trucking Assns.,
531 U.S. 457 (2001)


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Chevron Step One
 The court found that the Clean Air Act was
ambiguous on the point
Chevron Step Two
 The court found that the agency had stepped
outside of the ambiguity and overreached its
authority.
Alternative reading – the agency went beyond
Congressional intent, i.e., Step One
12
Interpretation of an Agency's Own Rules

“‘‘a court must necessarily look to the administrative
construction of the regulation if the meaning of the words
used is in doubt. The intention of Congress or the
principles of the Constitution in some situations may be
relevant in the first instance in choosing between various
constructions. But the ultimate criterion is the
administrative interpretation, which becomes of
controlling weight unless it is plainly erroneous or
inconsistent with the regulation.
 Bowles v. Seminole Rock & Sand Co., 325 U.S. 410
(1945), upheld by Auer v. Robbins, 519 U.S. 452 (1997)
13
Implications of Seminole Rock /Auer



Should interpretation of rules and statutes be the
same standard?
 Does Seminole Rock /Auer look like Chevron?
What perverse incentives does this give the
agency if it gets to resolve ambiguous rules?
What if it just repeats the statute in the rule?
 Does this transform the statute into a
regulation entitled to more deference?
14
What has Changed Since Seminole Rock?

“In reaffirming Seminole Rock deference in recent
years, the Court has not acknowledged that one of
the underlying reasons for the original adoption of
the Seminole Rock doctrine no longer exists. That is,
in Seminole Rock the Court assumed that besides the
regulatory language itself there would be no guide to
the meaning of the rule other than administrative
practice, because in 1945 agencies did not have
preambles for rules, much less today’s extensive
preambles, explaining what the rule does and why it
is adopted.”
15
Do the Courts Really Follow
Chevron/Mead?

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Scholars have studied the actual behavior of the
appeals courts and the United States Supreme Court
in applying these tests
The courts are more likely to use Chevron when there
is notice and comment or formal adjudications, and
more likely to use Mead/Barnhart for less formal
actions.
However, there are a lot of cases where formal
actions get Mead and some cases in which less
formal actions get Chevron.
16
ABA Adlaw Conference 2008 - Justice
Garland, 2nd Cir, on Chevron:

If you have an ambiguous statute, and need
Chevron deference, do not say that the
interpretation is clear and there is no other way to
construe the law. Say it is ambiguous and you are
making a reasonable interpretation based on your
knowledge of the statute and the regulatory
circumstances.
17
The Implications of Ambiguous Standards


Assume you are agency council.
 Assume you have an ambiguous statute and
the agency wants to propose a new rule
 Also assume that you want to avoid reversal in
the courts because of the delay and cost
How does your advice differ if you are sure you
will get Chevron, versus if there is a significant
chance you will get Mead?
18
Judicial Review of Facts
Scope of Judicial Review of Facts

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Congress sets scope of review, within
constitutional boundaries.
Since the Constitution is silent on agencies,
Congress has a pretty free hand.
Congress can allow anything from a trial de novo
to no review, unless such an action otherwise
runs afoul of the constitution.
20
Trial De Novo

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You start over at the trial court
Agency findings can be used as evidence, but
there is no deference to the agency
FOIA
Used more by the states than the feds
21
Independent Judgment on the Evidence

Decide on the agency record, but do not defer to
the agency's interpretation of the record.
22
Clearly Erroneous

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Definite and firm conviction that a mistake has
been made on the facts or policy
Same as reviewing a verdict by a trial judge
without a jury
23
Substantial Evidence - Formal
Adjudications

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706(2)(E) - only applies to formal adjudications and
formal rulemaking
Could a reasonable person have reached the same
conclusion?
 Standard for reviewing a jury verdict or for taking a
case from the jury
 Should a jury get more or less deference than an
agency?
Hint - substantial means some, not a lot, when you are
the agency
24
Substantial Evidence - Informal
Adjudications and Rulemaking


706(2)(A)
 Arbitrary and capricious or abuse of discretion
 Same assessment of reasonableness as
706(2)(E), so the result is about the same as the
substantial evidence test used for formal
proceedings
This is the most common standard
25
Substantial Evidence - Universal Camera
v. NLRB, 340 US 474 (1951)

it is ‘‘such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion’’; it is evidence
sufficient to withstand a motion for a directed verdict. It is a
less rigorous standard than ‘‘clearly erroneous,’’ the
standard by which appellate courts review factual findings
made by a trial judge. It is more rigorous than ‘‘no basis in
fact.’’ The agency’s ‘‘findings are entitled to respect, but
they must nonetheless be set aside when the record before
a [court] clearly precludes the [agency’s] decision from
being justified by a fair estimate of the worth of the
testimony of witnesses or its informed judgment on matters
within its special competence or both. . . .’’
26
Some Evidence



Scintilla test
The agency needs to show even less than in the
substantial evidence standard
Only limited use
27
Facts Not Reviewable At All


Congress can prevent certain types of judicial
review
 Compensation decisions under the Smallpox
Vaccine Compensation Act are not reviewable
Enabling law is always reviewable unless
Congress has taken away the court's subject
matter jurisdiction.
28
What if the Court thinks the Agency's
Policy Choice is Wrong?


Should the court defer to findings which it believes are
clearly erroneous, but are supported by substantial
evidence?
 Why is this consistent with the political control of
agencies?
 When the legislature gives the agency the power, it is
also saying that it only wants agency decisions
overturned in the most serious cases
Courts have different political views than agencies and
thus they should be esp. careful about reversing agency
decisions.
29
Agency/ALJ Conflicts



Assume there is a hearing before an ALJ, the ALJ
prepares a recommended opinion, and the agency
wants to overrule the ALJ.
May the agency substitute its decision for that of
the ALJ?
 Why is the agency in a different position than
the court when reconsidering an ALJ decision?
What must the agency do when it wants to
overrule an ALJ?
30
ALJ Expertise



Which ALJ decisions are entitled to the most
deference?
 Can the agency really reevaluate witness
credibility decisions by the ALJ?
What ALJ decisions are entitled to the least
deference?
In the firing of the union organizer caught smoking,
why would evidence of an anti-smoking policy and
enforcement reduce the deference to the ALJ’s
determination of credibility of the witnesses?
31
O’Leary v. Brown-Pacific-Maxon, 340 U.S.
504 (1951)

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Was a worker within course and scope of
employment when he drowned trying to save a
foundering swimmer?
Were there any disputed facts?
Is this a legal question, entitled to less deference,
or a factual one, entitled to more deference?
32
Frankfurter’s Hybrid Decision Analysis

[This] only serves to illustrate once more the variety
of ascertainments covered by the blanket term ‘‘fact.’’
Here of course it does not connote a simple, external,
physical event as to which there is conflicting
testimony. The conclusion concerns a combination of
happenings and the inferences drawn from them. In
part at least, the inferences presuppose applicable
standards for assessing the simple, external facts.
Yet the standards are not so severable from the
experience of industry nor of such a nature as to be
peculiarly appropriate for independent judicial
ascertainment as ‘‘questions of law.’’
33
NLRB v. Bell Aerospace Co., 416 U.S. 267
(1974)



Company refuses to collectively bargain with buyers,
saying they are managers.
Agency finds that only managers whose interests align with
the company are exempted from unionization.
The court overruled the agency, holding that the law
exempted all managers.
 Why no substantial evidence review and Hearst/
Chevron deference?
 How might the agency still get deference on the remand
to determine whether buyers are managers?
34