Well, that complaint just dropped. In a filing with the Federal Communications Commission on Monday, Commercial Network Services (CNS) claims that it’s being charged unjust rates to deliver its streaming Web cam video to consumers.
CNS wants Time Warner Cable to carry its traffic for free. But TWC is telling CNS’s chief executive, Barry Bahrami, that his company doesn’t qualify for what’s called a “settlement-free” deal.
“TWC is acting as gatekeeper and degrading our ability to exercise free expression,” Bahrami writes in the complaint. “TWC’s management policy is restricting the open exchange of Internet traffic.”
TWC has said that its behavior is consistent with industry standards and that it’s confident the FCC will reject Bahrami’s claims.
It’s unclear how much traction Bahrami will get with the commission. His argument is that Time Warner Cable has violated the FCC’s rules against paid prioritization, or the tactic where Internet providers charge a fee to selectively speed up certain Web sites. That behavior was labeled illegal under the FCC’s net neutrality rules.
But that part of the FCC’s rules only cover the so-called “last mile” between a consumer’s device and his Internet provider. It doesn’t address the part of the Internet where Time Warner Cable and Bahrami are having their dispute. So the FCC could find that, in fact, TWC hasn’t broken any rules after all.
While the Federal Communications Commission passed its net neutrality rules on February 26, they weren’t published in the Federal Register until today.
Internet providers are now common carriers, and they’re ready to sue.
The publication means a couple of things: the rules go into effect 60 days from today, and parties that oppose the rules have 10 days to file lawsuits against the FCC. Almost immediately after publication, a trade group representing ISPs called USTelecom filed suit in the US Court of Appeals for the District of Columbia Circuit.
USTelecom’s petition said the FCC’s ruling is “arbitrary, capricious, and an abuse of discretion” and “violates federal law, including, but not limited to, the Constitution, the Communications Act of 1934, as amended, and FCC regulations promulgated thereunder.”
You may recall that this same group sued the FCCover the net neutrality rules last month. That was done just in case the 10-day deadline could be applied after the rules were posted to the FCC’s website, which happened before publication to the Federal Register. In either case, the initial challenge is mostly a procedural matter; detailed briefs laying out a legal argument against the FCC’s rules will probably come this summer.
The FCC’s vote reclassified fixed and mobile broadband providers as common carriers and imposed rules against blocking or throttling Internet content and a ban on prioritizing content in exchange for payment.
USTelecom represents both large and small service providers and suppliers for the telecom industry. AT&T, Verizon, and numerous other companies serve on its board of directors.
While Verizon sued the FCC over its 2010 net neutrality rules (and ultimately won), this time the legal challenges are expected to be led by consortiums rather than individual companies.
The National Cable & Telecommunications Association, the top group representing cable companies, declined to comment today on whether it plans a lawsuit.
Perez v. Mortgage Bankers Ass’n is another Supreme Court opinion that came down on Monday, just like the Amtrak decision that I’ve written about here, here, and here.
The majority opinion is entirely correct and should be uncontroversial. (The result was 9-0, and Justice Sotomayor’s majority opinion was joined by almost 7 Justices — Justice Alito joined all but a small section, and also wrote separately. Justices Scalia and Thomas wrote concurrences in the judgment.)
When agencies promulgate rules, they often have to go through “notice-and-comment rulemaking” under the Administrative Procedure Act. But some kinds of rule are exempt from these requirements: this exemption includes “interpretative rules” (or, as we now call them, “interpretive rules”). So for example, if Congress passes a statute with an ambiguous term, an agency can issue a memo saying “We think this term means X,” and it doesn’t have to go through a round of notice-and-comment rulemaking. (At the same time, the memo has no binding force in court.) The same is true if an agency promulgates a notice-and-comment regulation with an ambiguous term, and later clarifies that term’s meaning using a similar memo.
So far, so good. But the D.C. Circuit had its own special doctrine, which it developed in a 1997 case called Paralyzed Veterans. If an agency has an ambiguous regulation and clarifies a meaning via interpretive memo, no notice-and-comment rulemaking is required. On the other hand, if it later on changes its mind and issues a second interpretive memo that contradicts the first, then notice-and-comment rulemaking is required.
This doctrine is so clearly contrary to the APA that the Supreme Court had no trouble overruling it. (Why do they hate paralyzed veterans?)
Justice Alito’s concurrence and Justices Scalia and Thomas’s concurrences in the judgment make the separate point that, while the Paralyzed Veterans doctrine was legally wrong, it did address a real problem, which is that, thanks to judicial deference to agency interpretations of their own regulations (so-called Auer deference), agencies can radically change the meaning of regulations after the fact without much judicial review — and, if there’s no notice-and-comment rulemaking, without much scrutiny on the front end either. As Jonathan Adler has written earlier, the Auer doctrine’s days may be numbered; it’s clear that several Justices are waiting for a proper case to arise. (Though Justice Scalia’s opinion was primarily about Auer, I did find the tone unusually lukewarm toward Chevron as well; Scalia has always been a huge fan of Chevron, ever since his days on the D.C. Circuit.)
Justice Thomas’s concurrence in the judgment is of extra interest because it goes together with his concurrence in the judgment in the Amtrak case, DOT v. Ass’n of American Railroads.
In this separate opinion, Justice Thomas writes that Auer deference is unconstitutional. The Founders’ design was to leave all interpretation of the law in the hands of the judiciary, and this is why they designed the federal judiciary with tenure and salary protection, two measures to promote judicial independence. The judiciary is required to exercise its independent judgment; transferring the exercise of judgment to the executive branch is unconstitutional, and dilutes the judiciary’s ability to operate as a check on the other branches. This part of the opinion is full of historical citations to Federalists, Anti-Federalists, and Chief Justice Coke and James I.
He goes on to say that, in practical effect, deference to agency interpretations allows agencies to change the substantive content of the law. This connects directly to Justice Thomas’s Amtrak opinion: deference (particularly Chevron deference) has always been justified as an implicit delegation of gap-filling power to agencies. But if Justice Thomas is right that agencies lack the power to make substantive rules governing private conduct, then in many cases (but not all: only those involving substantive rules governing private conduct) such a delegation would be unconstitutional. So while Justice Thomas focuses primarily on Auer deference, his arguments here and in the Amtrak case seem to imply that he believes that Chevron deference is likewise invalid.
(Note that Thomas hasn’t joined some of Scalia’s Chevron-maximalist opinions, like Mead. [NOTE: He did join the big-Chevron opinion in Arlington v. FCC — thanks, commenter “Asher on Volokh.”] Thomas did write Brand X, where Scalia dissented, and that could be characterized as somewhat pro-Chevron with Scalia’s dissent being anti-Chevron, but that case had special considerations in it, like the finality of judicial interpretations, which make it hard to map onto a pro-/anti-Chevron spectrum.)
(Fun extra fact: Justice Thomas’s footnote 5 suggests that he also disapproves of the widespread use of “informal” notice-and-comment rulemaking: he cites Florida East Coast Railway disapprovingly and suggests that formal rulemaking under §§ 556 and 557 should be the norm.)
The Supreme Court ruled today in Perez v. Mortgage Bankers Association that the Department of Labor need not engage in notice-and-comment rule-making when it changes a Department interpretation of an existing rule. At the same time, the Court overturned the D.C. Circuit rule that forced agencies to do this whenever an agency wished to issue a new interpretation that deviated significantly from an old one.
The ruling thus re-shifts power back to executive agencies in determining the meaning of their own regulations. That’s because Congress didn’t require agencies to use notice-and-comment rule-making for interpretations, but the D.C. Circuit did, when a new interpretation deviated significantly from an old one–that is, when an agency changed its interpretation. By overturning that decision, and putting interpretive decisions back in the exclusive hands of the agencies (with loose, deferential judicial oversight), the Court re-set the balance that Congress struck. The ruling is thus a victory for agencies and their power to interpret their own regulations without notice-and-comment rule-making and with deferential judicial review. (More on that last part below.)
The case grows out of DOL’s re-interpretation of its FLSA rule on minimum wage and overtime for mortgage-loan offices. The agency’s rule exempts certain classes of employees, including individuals who are “employed in a bona fide executive, administrative, or professional capacity . . . or in the capacity of outside salesman . . . .” In 1999 and 2001, DOL issued interpretive letters opining that mortgage-loan officers did not qualify for this exemption. In 2006, however, DOL reversed course and opined that mortgage-loan officers did meet the exemption. But in 2010, DOL went back to its old position, withdrew the 2006 interpretation, and opined that mortgage-loan officers didn’t meet the exemption.
The Administrative Procedure Act requires agencies to provide public notice and an opportunity to comment when they propose new rules and regulations under an authorizing statute. But the APA does not require this notice-and-comment rule-making when an agency simply issues an interpretation. Seeing the potential for abuse, the D.C. Circuit devised a court-created rule that said that agencies still had to use notice-and-comment rule-making, even for a mere interpretation. The D.C. Circuit rule is called the Paralyzed Veterans rule, after the case that established it.
So the question in Mortgage Bankers Association was whether DOL had to use notice-and-comment rule-making in issuing its 2010 interpretation.
The Supreme Court said no. The Court, in an opinion by Justice Sotomayor, ruled that the APA by its plain terms exempts interpretative decisions from the notice-and-comment requirement, and that the D.C. Circuit’s Paralyzed Veterans rule violated those plain terms. Justice Sotomayor wrote that Congress, in enacting the APA, considered the costs and benefits of applying notice-and-comment rule-making requirements to agency interpretations, and that Congress decided that notice-and-comment procedures weren’t necessary.
All nine justices agreed on the result, but Justices Scalia, Thomas, and Alito each wrote separately to take issue in different ways and to different degrees with judicial deference to agency interpretations. In other words, they’re not sure that the courts should defer to agency interpretations (even if courts do validly defer to agency rules), or they reject deference altogether. Judicial deference to agency interpretations comes from Bowles v. Seminole Rock & Sand Co. and Auer v. Robbins. In Auer (relying on Seminole Rock) the Court held that agencies may authoritatively resolve ambiguities in their own regulations.
The rule that courts defer to an agency’s interpretation of its authorizing statute is well settled in Chevron v. Natural Resources Defense Council. This is called Chevron deference. But Auer extended that deference to an agency’s interpretation of its own rules. This Auer deference is what caught the eyes of Justices Scalia, Thomas, and Alito.
They all indicated that they’d reconsider Auer deference if given the chance. Justices Scalia and Thomas both outlined their (separate) separation-of-powers objections to Auer deference. In short, Justice Scalia expressed concern that an agency could both write its own rule and then interpret that rule without meaningful oversight; Justice Thomas explained why Auer deference took power away from the judiciary and gave it to the executive agencies.
Both Chief Justice Roberts and Justice Kennedy signed on in full to Justice Sotomayor’s opinion (as did Justices Ginsburg, Breyer, and Kagan). None of these joined Justice Scalia, Justice Thomas, or Justice Alito and the concerns with Auer deference that they expressed.
the docket 