Tag Archives: Loper Bright

Another Significant Supreme Court Ruling

The Supreme Court came down with another decision last week that is going to further hobble administrative agencies like the FCC. The case is McLaughlin Chiropractic Associates, Inc. v. McKesson Corp., No. 23-1226.

This case started in 2013 as a class action lawsuit filed in federal court in the Northern District of California. The dispute between the parties began when McKesson Corporation sent unsolicited advertisements by fax to class members of the suit, including McLaughlin Chiropractic. The advertisements were sent to traditional fax machines as well as to online fax services.

The plaintiffs claimed that the unsolicited faxes were in violation of the Telephone Consumer Protection Act (TCPA) which forbids unsolicited communications with consumers without giving them a chance to opt out of the communications. The alleged damages come from recipients spending money on paper and toner to print the unsolicited faxes, which the TCPA refers to as advertiser cost-shifting.

While the case was pending in California courts for six years, the FCC issued an order that excluded online fax services from the TCPA since online faxes receive electronic files and don’t print hard copies of a received fax.

The McLaughlin case made it to the Supreme Court because the District Court found that it was required to follow the new FCC order, even though it disagreed with the FCC’s interpretation of the TCPA. The District Court also felt constrained by 1950 legislation referred to as the Hobbs Act, which has been interpreted as barring district courts from disagreeing with a federal agency’s interpretation of a statute.

The recent Supreme Court ruling sided with the District Court by a 6-3 vote. The Supreme Court ruled that “The Hobbs Act does not preclude district courts from independently assessing whether an agency’s interpretation of the relevant statute is correct.”

This is a significant ruling because it gives more explicit power to District Courts to disagree with an administrative ruling of a federal agency. It’s likely that there is a District Court somewhere in the country that will disagree with almost any federal agency ruling, meaning that it will be that much easier to tie up every decision made by the FCC or other federal agency in court.

When you tack this ruling onto the Supreme Court’s ruling last year in Loper Bright Enterprises v. Raimondo, it’s going to be increasingly difficult for federal agencies to issue decision that will stick. The Loper Bright ruling overturned a long-standing deferential approach to agencies’ interpretations of statutes, making it easier to sue them.

This new ruling also has practical implications since it explicitly weakens FCC enforcement of the TCPA. Among other things, the TCPA rules are the FCC’s primary tool for its effort to restrain the use of autodialers and artificial voices used in spam messages to consumers.

The Major Questions Doctrine

It’s becoming increasingly difficult for administrative agencies like the FCC to undertake substantial new initiatives, since doing so inevitably results in multi-year court cases that are increasingly ruling against the agency. We saw this in 2024 in the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo. This suit sides with fishermen over the National Marine Fisheries Service and has been widely interpreted to mean an end to the Chevron deference. That deference came from a 1984 case that said experts at federal agencies should be able to make policy decisions that fit within their overall mandate from Congress. The Chevron deference supported most of the decision made by FCC over the last forty years.

There is another Supreme Court case from 2022 that we are going to increasingly be hearing about. In the case of West Virginia v. EPA, the Supreme Court created what is being called the major questions doctrine, which bars federal agencies from resolving questions of “vast economic and political significance” without clear statutory authorization from Congress. This is a murky decision since it makes courts decide if an issue is of vast economic and political significance, and it’s not hard to envision courts with differing opinions on what that means.

But the real reason why these two Supreme Court decisions are momentous is that anything substantial ordered by the FCC or other administrative agencies is inevitably going to end up in court. There will always be somebody that dislikes any FCC decision, and they now have two ways to attack any ruling without even tackling the specific issue. These court precedents invite lawsuits that claim that the FCC didn’t have the authority to make a specific decision, and that the impetus for the change should have come from Congress.

To some degree, at least in the case of the FCC, it’s not hard to say this isn’t much of a change. After all, basically every important FCC decision over the last decade has been taken to court. However, due to these new court precedents there is a big difference than in the past. Historically, courts eventually resolved suit, either in favor of the FCC or the plaintiff – but many FCC rulings eventually went into effect.

It’s fundamentally different when lawsuits challenge the FCC’s authority to even consider an issue. There is little doubt that anything important the FCC tackles will be taken to court, and in many instances, the challenge will be that the FCC is investigating issues that don’t have a clear mandate from Congress.

New FCC Chairman Brendon Carr has announced an agenda to tackle new areas of investigation, such as regulating web companies through Section 230. Chairman Carr believes Section 230 of the Telecommunication Act of 1996 gives him the tool to take on tech companies. But any FCC action on Section 230 will likely trigger the major questions doctrine since Congress has never given the FCC any explicit direction on how to interpret or enforce Section 230. The statue language on Section 230 has quietly lain embedded in FCC regulations since 1996. If the courts stay consistent with the concept that only Congress can make major regulatory changes, the FCC will be hobbled in breaking new regulatory ground.

Of course, Congress can always intervene on any issue where the courts invoke the major issues doctrine by passing a law that describes its specific intentions. But in a world with strong lobbyists on both sides of many issues, that’s never going to be easy. For example, it’s been the inability of Congress to muster a majority that has stopped it from providing any direction to the FCC on whether broadband should be regulated or not regulated.

I’ve written about every major FCC decision over the last few decades. I’m starting to think my future blog headlines might be, “The FCC sends another decision into limbo in the courts”.

FCC Defends Itself Against Loper Bright

The FCC has gone on the offensive and defended itself against possible lawsuits that might claim that the FCC has overstepped its regulatory authority that was granted by Congress. The FCC’s position was stated in a series of letters sent to Senators. The Senators had made an inquiry to the FCC from the Post-Chevron Working Group that is assessing the impact of the recent Supreme Court ruling.

The Supreme Court ruling came from the Loper Bright case about a dispute where federal rules required that fishing boats carry and pay for a government-appointed inspector onboard. The Supreme Court ruled in favor of the fisherman, saying that the government agency that created the requirement didn’t have explicit direction from Congress to require fisherman to pay for inspectors.

This ruling is being widely interpreted as putting a huge dent in the Chevron deference, which was established by a Supreme Court ruling in 1984 in Chevron U.S.A. v. Natural Resources Defense Council.  The Chevron deference basically said that federal agencies should get to make policy decisions that fit within their overall mandate from Congress.

The FCC response, signed by Chairperson Jessica Rosenworcel says that she believes the FCC has “broad statutory authority granted by the Telecommunications Act of 1934 for “the purpose of regulating all interstate and foreign communications by wire or radio and all interstate and foreign transmission of energy by radio.”

She goes on further to explain that the FCC doesn’t make most decisions unilaterally and goes through a mandated regulatory process of following the “notice and comment” provisions of the Administrative Procedure Act. This process means that the FCC issues a Notice of Proposed Rulemaking and provides an opportunity for public comment on proposals.

Finally, she states that the FCC Commission staff works diligently to ensure that all regulations have a firm grounding in law, and she feels that the FCC’s rules and decisions will withstand judicial review under the Supreme Court’s decision.

Of course, none of this protects Chevron claims from being levied against the FCC, but the agency is taking a strong position that it has the regulatory authority from Congress to defeat any such attempts.

Interestingly, Congress always has the power to resolve any Chevron disputes. If a particularly sticky issue every arises at the FCC, Congress could cement the FCC’s authority to make a decision by passing a law that supports that FCC position. If Chevron is truly dead, then Congress might be reduced to taking these steps to implement policies that it supports. Congress has been quite happy over the years to let the experts at the FCC and many other similar agencies make the hard decisions without Congress having to dip into a host of technical issues.

I’ve already read a lot of speculation that the Supreme Court ruling is not going to mean much to agencies like the FCC. The big companies regulated by the FCC already take the agency to court for practically every major ruling that it makes, and the end of the Chevron deference likely won’t mean more suits. It’s more likely that ISPs and others will tack a Chevron argument onto whatever suits they were going to file anyway.