ARTICLE
8 February 2024

How The Supreme Court's Blockbuster Chevron Case Might Affect The Future Of Tech Regulation

WR
Wiley Rein

Contributor

Wiley is a preeminent law firm wired into Washington. We advise Fortune 500 corporations, trade associations, and individuals in all industries on legal matters converging at the intersection of government, business, and technological innovation. Our attorneys and public policy advisors are respected and have nuanced insights into the mindsets of agencies, regulators, and lawmakers. We are the best-kept secret in DC for many of the most innovative and transformational companies, business groups, and nonprofit organizations. From autonomous vehicles to blockchain technologies, we combine our focused industry knowledge and unmatched understanding of Washington to anticipate challenges, craft policies, and formulate solutions for emerging innovators and industries.
This month, the U.S. Supreme Court heard argument in a pair of cases that have the potential to profoundly alter the landscape of technology regulation in the United States.
United States Technology
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This month, the U.S. Supreme Court heard argument in a pair of cases that have the potential to profoundly alter the landscape of technology regulation in the United States: Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce. The cases are nominally about the validity of fishing regulations, but petitioners in both cases seek to overturn a significant administrative law precedent: Chevron v. Natural Resources Defense Council, a 1984 opinion that obliges courts to defer to an agency's statutory construction in many circumstances. The Court's resolution of this question will extend far beyond fishing and could impact the federal government's regulation of new technologies for decades to come.

Chevron Deference

The Chevron doctrine arose as a means to standardize adjudication of federal agency decisions interpreting statutory language. Under Chevron, where statutory language is ambiguous or where Congress has left a gap for the agency to fill, courts give agencies the benefit of the doubt. They do so through a two-step inquiry. First, a reviewing court will apply ordinary principles of statutory interpretation to determine whether a statute is "ambiguous." If the statute is unambiguous, then the inquiry is at an end, and a court will give the statute its unambiguous meaning. However, if the statute is ambiguous, the reviewing court will defer to the agency's reasonable interpretation of it. This two-step framework has guided judicial decisions for four decades and has been cited nearly 18,000 times by federal courts during that time.

Chevron has drawn both applause and criticism over the years. Its supporters claim that the doctrine empowers subject-matter experts at federal agencies who know more than courts about the complexities of pollution mitigation, electromagnetic spectrum, or the countless other areas in which agencies regulate. They also argue that the doctrine provides democratic accountability by shifting responsibility for making policy judgments under ambiguous statutes to agencies accountable to an elected President. Moreover, proponents argue that Chevron affords flexibility for agencies to quickly respond to new developments. Notably, these points were argued perhaps most forcefully and most famously by the late Justice Scalia, in remarks made only a few years after Chevron's adoption. Critics argue that Chevron is unfair because it puts a thumb on the scale in favor of the government instead of the citizen. They also claim that it allows Congress to forgo its responsibility by delegating away tough policy choices to the agency, which may implement those choices based on tenuous interpretations of federal statutes. They also argue that Chevron aggregates to the Executive branch a responsibility that the Constitution assigns to the judiciary. And while Justice Scalia was an early defender of Chevron, commentators have noted that Justices Gorsuch and Kavanaugh have long been more skeptical of the doctrine.

Regardless of its merits, Chevron has been foundational to administrative law over the last four decades. One study found that courts of appeals applied Chevron deference 77% of the time and that agencies are significantly more likely to win when a court affords it deference. But it is not just the courts. Agencies also rely on Chevron when interpreting vague statutes they administer. For example, the Federal Communications Commission often invokes Chevron deference when interpreting capacious phrases – like "public interest, convenience, and necessity" and "just and reasonable" – to allocate spectrum and impose regulations on technologies that simply did not exist when the Communications Act was enacted in 1934.

The Challenges in Loper Bright Enterprises and Relentless

The Petitioners in Loper and Relentless are asking the Supreme Court to overrule Chevron on three grounds. First, they contend that Chevron is inconsistent with the Constitution's separation of powers because it improperly gives a judicial power – interpreting statutes – to the executive. Second, they argue that Chevron is inconsistent with due process because it requires courts to improperly favor one litigant (the Government) over all others. Third, they argue that Chevron contradicts Section 706 of the APA because that statute provides that "the reviewing court" – not the agency – "shall decide all relevant questions of law."

For its part, the Government defends Chevron from first principles and as a matter of stare decisis. On the former, the Government claims that Chevron is a sensible presumption that Congress intends for expert agencies in a politically accountable branch to best decide how to administer ambiguous statutes. It further argues that Chevron coherently articulated a long and preexisting tradition of deference to the executive. On stare decisis, the Government emphasizes the centrality of the Chevron framework to administrative law and suggests that the many cases applying Chevron would be called into question if it were to be overruled.

It is difficult to predict how the Court will rule, but following oral argument there are several reasonably likely possibilities. Of course, the Supreme Court could entirely overrule or entirely preserve Chevron. During oral argument, several Justices appeared receptive to each route, but it was not clear that either coalition commanded a majority – and, given the tenor of commentary about the Loper and Relentless cert grants, it seems perhaps least likely that the Court is inclined to simply reaffirm Chevron in an unchanged form.

A middle-ground possibility is for the Court to take a similar approach as it did in Kisor v. Wilkie. In that decision, written as an apparent compromise by Justice Kagan, the Court declined to overrule a different form of deference given to agencies when they interpret their own regulations. But in preserving that deference, the Court articulated some clear "limits" on the scope of the doctrine and instructed courts not to reflexively defer to agencies. Multiple Justices referred to the possibility that the Court could "Kisorize" Chevron.

Implications for Tech Regulation

If the Court chooses to overrule or "Kisorize" Chevron, it will have significant impacts on federal regulation of technology. Indeed, even though Loper and Relentless are technically about fishing regulations, technology regulation took center stage at oral argument.

For example, in the Relentless argument, Justice Kagan pressed the Petitioner on how the Government could regulate artificial intelligence in a post-Chevron world. She expressed concerns that "Congress can hardly see a week in the future with respect to this subject, let alone a year or a decade in the future." She predicted that Congress would need to enact a broad and flexible piece of legislation for the "countless factual situations that this country will have to address" on the topic and suggested that Congress would want agencies – and not judges – to decide "policy-laden questions of artificial intelligence."

In the Loper argument, Petitioner invoked a different technology: cryptocurrency. In Petitioner's view "the uniquely 21st Century phenomenon of cryptocurrency" should be "addressed by Congress." But, counsel argued, Chevron allows Congress to abdicate its duty to address this technology because an agency can claim to find ambiguity in "a couple of statutes passed in the 1930s" to bring "all of" cryptocurrency within its "regulatory ambit."

In the same argument, the parties and the Justices also discussed the application of Chevron to communications technologies. The Loper Petitioner claimed that NCTA v. Brand X Internet Services is "the best example" of a statute offering a "binary" interpretive question for a court – not an agency – to resolve. In its view, "broadband communications are either an information service or they are a telecommunication service," and "they can't be one on a Tuesday and the next on a Thursday." Justice Sotomayor pushed back on the premise, expressing her view that "with the development of technology and with the development of how that is implemented in terms of transmission and the Internet, that over time that's going to change."

These exchanges illustrate a fundamental aspect of technology regulation: sometimes Congress is slow to legislate, leaving agencies to act first. To do so, they often have to rely on statutes that predate the regulatory subject matter, sometimes by decades, and which offer no clear or unambiguous guidance about how general, perhaps ill-fitting provisions should be applied to new technologies. Chevron deference has historically tipped the interpretive scale in these agencies' favor and – for better or worse – allowed them to interpret ambiguities in these old statutes to extend their authority over new technologies or, in some cases, to take a deregulatory approach to new technologies.

This trend shows no signs of stopping. For example, the FTC is conducting a broad rulemaking in an attempt to regulate consumer privacy using a broad delegation of authority from a statute originally enacted in 1914, and the FCC recently sought comment on defining artificial intelligence for purposes of regulating robocalls under the Telephone Consumer Protection Act (TCPA). Although overruling or significantly curtailing Chevron would not automatically preclude agencies from addressing new technologies with old statutes, it would almost certainly make it more difficult. And while critics of Chevron have argued that the doctrine incentivizes Congress to take the easy path by deferring hard questions to administrative agencies, it is not clear that eliminating Chevron will be enough to break legislative deadlocks on critical technology policy issues – which could leave new technologies in regulatory limbo.

* * *

Whatever the Court's decision in Loper and Relentless, it will have a profound impact on technology regulation in the United States. Wiley has a deep bench of attorneys monitoring this issue in both its Issues and Appeals and Telecom, Media & Technology groups.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
8 February 2024

How The Supreme Court's Blockbuster Chevron Case Might Affect The Future Of Tech Regulation

United States Technology

Contributor

Wiley is a preeminent law firm wired into Washington. We advise Fortune 500 corporations, trade associations, and individuals in all industries on legal matters converging at the intersection of government, business, and technological innovation. Our attorneys and public policy advisors are respected and have nuanced insights into the mindsets of agencies, regulators, and lawmakers. We are the best-kept secret in DC for many of the most innovative and transformational companies, business groups, and nonprofit organizations. From autonomous vehicles to blockchain technologies, we combine our focused industry knowledge and unmatched understanding of Washington to anticipate challenges, craft policies, and formulate solutions for emerging innovators and industries.
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