In a much anticipated decision with wide potential ramifications across all federal agencies charged with implementing federal statutes, the United States Supreme Court has permitted the so-called “shot clock” rules of the Federal Communications Commission (“FCC” or “Commission”) applicable to wireless siting applications to remain in effect. By a narrow margin on May 20, 2013, in City of Arlington, Texas v. Federal Communications Commission, the High Court affirmed that when the FCC interprets an ambiguous provision of a statute that concerns the scope of the FCC’s regulatory authority, that interpretation is entitled to the same Chevron deference as its interpretation of any other ambiguous statutory provision. Under Chevron, if a federal “statute is silent or ambiguous with respect to the specific issue [before an agency], the question for the [reviewing] court is [limited to] whether the agency’s answer is based on a permissible construction of the statute.” Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). The opinion in City of Arlington will affect court review of federal agency actions generally and is not easily limited to the facts in the case before the Court.

Justice Scalia delivered the opinion of the Court joined by four other justices. Justice Breyer concurred with the Court’s opinion in part and concurred in the judgment. Chief Justice Roberts delivered a dissenting opinion joined by two other justices.

Background

The matter under review by the Court was the Commission’s November 2009 declaratory ruling adopting an antenna-siting “shot clock” that would apply to state and local zoning authorities when reviewing wireless siting applications. The Communications Act of 1934, as amended (the Act”) imposes five substantive limitations on state and local government review of wireless siting applications, which are codified at Section 332(c)(7)(B). Section 332(c)(7)(B)(ii) requires state or local governments to act on wireless siting applications “within a reasonable period of time after the request is duly filed.” In 2009, the Commission declared in response to a petition filed by CTIA that the presumptively “reasonable period of time” for state and local zoning authorities to act under Section 332(c)(7)(B)(ii) is 90 days for an application to place a new antenna on an existing tower and 150 days to process all other applications. In re Petition for Declaratory Ruling, 24 FCC Rcd 13994 (2009) (subsequent history omitted). By doing so, the FCC provided that if a state or local government fails to act within the “shot-clock” time periods, an interested person could “commence an action in any court of competent jurisdiction” against the state or local government for failure to act. 47 U.S.C. §337(c)(7)(B)(v)

The dispute before the Supreme Court, as it had been before the U.S. Court of Appeals for the Fifth Circuit, which reviewed and affirmed the FCC’s underlying declaratory ruling, turned on whether the Commission even had the authority to interpret ambiguous provisions of Section 332(c)(7), and not on the agency’s interpretation of “reasonable period of time” per se. (In other words, the Court did not examine whether the FCC’s interpretation of “reasonable period of time” was permissible under the statute because that question was not presented to it by the Petitioners. The Court reviewed only the permissibility of the FCC determining its own jurisdiction.)

The City of Arlington and other Petitioners, who sought to vacate the FCC’s “shot clock” ruling, argued, in effect, that where the Act is ambiguous about whether the FCC possessed the authority to interpret an ambiguous provision of the Act, such as what constitutes a “reasonable period of time,” the courts must decide de novo as a matter of law whether the FCC has such authority. The Petitioners relied upon the “saving clause,” Section 332(c)(7)(A) of the Act, which provides that nothing in the Act, except the five limitations provided in Section 332(c)(7)(B), “shall limit or affect the authority of a State or local government” over siting decisions, and the judicial review provision where those limitations are allegedly exceeded, Section 337(c)(7)(B)(v). The Petitioners contended that these two provisions signaled congressional intent to withhold from the Commission the authority to interpret the limitations on state and local government authority in Section 332(c)(7)(B).

The FCC asserted, and the Fifth Circuit had agreed, that the FCC’s interpretation of the statute as to the scope of its authority was entitled to Chevron deference because the “savings clause’s” effect on the FCC’s authority to administer §332(c)(7)(B)‘s limitations was ambiguous and the presumptive 90- and 150-day deadlines were a “permissible construction” of the “reasonable period of time” language of §332(c)(7)(B)(ii). The FCC had relied on the authority of its general rulemaking powers under Section 201(b) of that Act to “prescribe such rules and regulations as may be necessary in the public interest to carry out [the Act’s] provisions.”

The Majority Opinion

The majority found that argument against according Chevron deference to the FCC’s interpretation of its authority to interpret the statute’s ambiguous provisions rests on a false premise, namely that there are two distinct classes of agency interpretations: “the big, important ones [that] define the agency’s ‘jurisdiction’ ” and “run-of-the-mill” interpretations that “are simply applications of jurisdiction the agency plainly has.” The Court ruled that such a distinction “is a mirage” in the case of federal agencies (in contrast to a fundamentally different jurisdictional/non-jurisdictional division applicable to courts). The Court concluded that “there is no difference, insofar as the validity of agency action is concerned, between an agency’s exceeding the scope of its authority (its ‘jurisdiction’) and its exceeding authorized application of authority that it unquestionably has.“

Among other decisions, the Court referred to its decision in National Cable & Telecommunications Assn., Inc. v. Gulf Power Co., 534 U. S. 327 (2002) where it reviewed the FCC’s jurisdiction to regulate the rents utility-pole owners charge for pole attachments when those attachments were used for Internet access as well as cable television service. The Court stated in City of Arlington that, “[w]hether framed as going to the scope of the FCC’s delegated authority or the FCC’s application of its delegated authority, the underlying question was the same: Did the FCC exceed the bounds of its statutory authority to regulate rents for ‘pole attachments’ when it sought to regulate rents for pole attachments providing commingled services? The label is an empty distraction because every new application of a broad statutory term can be reframed as a questionable extension of the agency’s jurisdiction.”

The Court characterized the ultimate target of the false dichotomy between jurisdictional and non-jurisdictional questions was the notion of Chevron deference itself, stating that “what the dissent proposes is a massive revision of our Chevron jurisprudence” while agreeing with the dissent that, “for Chevron deference to apply, the agency must have received congressional authority to determine the particular matter at issue in the particular manner adopted.” The Court explained that if “every agency rule must be subjected to a de novo judicial determination of whether the particular issue was committed to agency discretion,” then what would necessarily result is that the court’s would have “to make an ad hoc judgment regarding congressional intent,” typically without guidance. The Court summed up as follows: “Where Congress has established a clear line, the agency cannot go beyond it; and where Congress has established an ambiguous line, the agency can go no further than the ambiguity will fairly allow.”

Justice Breyer’s (Mostly) Concurring Opinion

Justice Breyer concurred with the majority opinion in part and concurred in its judgment. Justice Breyer differed with the majority in that he opined that “[t]he question whether Congress has delegated to an agency the authority to provide an interpretation that carries the force of law is for the judge to answer independently . . . considering ‘traditional tools of statutory construction.’ ” Where a statute is ambiguous, he continued, the courts must find that the Congress “would have intended the agency to resolve the resulting ambiguity” before it can accord deference to the agency’s interpretation. Otherwise, the agency’s special expertise will only have persuasive value for the court and will lack the power to control.

From this standpoint, Justice Breyer found that several factors favor concluding that Congress would have intended for the FCC to interpret what constitutes a “reasonable period of time,” including the FCC broad rulemaking authority under the Act, the ambiguous term at issue is one to which the agency’s expertise could have an important role to play, and the matter is complex, likely making the FCC’s expertise useful. By contrast, Justice Breyer found that the “savings clause” of Section 332(c)(7)(A) and the judicial review provision in Section 332 (c)(7)(B)(v) were both consistent with a statutory scheme that gives the FCC, as well as state and local governments, and courts, each some role to play in the siting of antennas. He added that these provisions did not constitute an exception to the FCC’s plenary authority to interpret the Act. He concluded, therefore, that the FCC had the authority to interpret what constitutes a “reasonable period of time” under Section 332(c)(7)(B)(ii).

The Dissenting Opinion

Chief Justice Roberts delivered a dissent joined by Justices Kennedy and Alito. Simply stated, the dissent reasoned that “[a]n agency cannot exercise interpretive authority until it has it; the question whether an agency enjoys that authority must be decided by a court, without deference to the agency.” Expressing a concern about overstating the scope of Chevron deference and the judiciary’s fulfillment of its obligation to ensure each branch of government is confined to its proper role, the dissent noted that “the danger posed by the growing power of the administrative state cannot be dismissed.” Citing Justice Breyer’s opinion, the minority admonished that “a court should not defer to an agency on whether Congress has granted the agency interpretive authority over the statutory ambiguity at issue,” but must first decide “whether Congress – the branch vested with lawmaking authority under the Constitution – has in fact delegated to the agency lawmaking power over the ambiguity at issue.“

The dissent caricatured the majority opinion as follows: “a court need only locate an agency and a grant of general rulemaking authority over a statute. Chevron deference then applies . . . to the agency’s interpretation of any ambiguity in the [statute], including ambiguity in a provision said to carve out specific provisions from the agency’s general rulemaking authority.” Unlike Justice Breyer, the dissent did not venture a view on whether Congress granted authority to interpret the scope of “reasonable period of time” in Section 332(c)(7)(B)(ii), but stated it would vacate the Fifth Circuit’s decision and remand the cases to the appellate court to inquire into the scope of the FCC’s authority in the instant case.

Ramifications of the Opinion

The ramifications of the Court’s decision in City of Arlington will go far beyond the bounds of the FCC’s declaratory ruling adopting the antenna siting “shot clock.” The decision is not easily limited to the facts in the case before the Court and will likely affect court review of other decision of the Commission, not to mention federal agencies across the board. For example, the pending appeals of the FCC’s 2010 Net Neutrality Order involve questions of the Commission’s interpretation of its own authority. City of Arlington may well influence the outcome of certain aspects of that case in the FCC’s favor. The opinion may also have the effect of emboldening agencies more frequently to make decisions that “push the jurisdictional envelope” under the statutes they administer. Going forward, in almost any situation involving the scope of the Commission’s authority, where the Act or other applicable statute is at least potentially ambiguous as to the FCC’s authority to adopt the regulations in question, parties will need to take heed of City of Arlington.

Kelley Drye & Warren LLP

For more information about this Client Advisory, please contact:Chip Yorkgitis
(202) 342-8540
cyorkgitis@kelleydrye.com

Supreme Court Confirms the FCC’s Ability to Interpret the Scope of its Own Authority and Allows the Antenna Siting Application ​“Shot Clock” To Remain in Effect