The bulk of last week’s DC Circuit Court of Appeals opinion (0) rejecting various challenges to the Federal Communication Commission’s Open Internet order can be summarized succinctly: “we defer.” Following accepted principles of modern administrative law – the law that governs the relationship between Congress, agencies like the FCC, and the courts – in evaluating the FCC’s interpretation of ambiguous statutory definitions the court needed only to consider whether the FCC’s order was minimally reasonable in order to affirm it. And so it did.
I would suggest, however, that the DC Circuit followed these principles to a fault. The judges focused so narrowly on individual issues, accepting the “reasons” offered by the commission to support the Open Internet order without any scrutiny, that they missed the underlying incoherency and lack of reasoning in the order. Dissenting, Judge Williams argued that parts of the order were so self-contradictory that commission staff must have been “asleep at the switch.”
This is the core difference between the DC Circuit’s majority and dissenting views: whether it is sufficient that the agency supplied “reasons” in order to receive the benefit of deference, or whether those reasons must also have been arrived at through a reasonable decision-making process. If we accept the majority view, that the court need not inquire into the sufficiency of the agency’s decision-making process in order to receive the benefit of deference, then courts, too, may also be asleep at the switch.
Deference to a fault: When “reasonable” isn’t reasonably reasonable
To be clear, this is not a criticism of Judges Tatel and Srinivasan, the authors of the majority opinion. They set forth the limitations of their analysis, which are based in established administrative law precedent, at the outset of their opinion:
“Critically, we do not ‘inquire as to whether the agency’s decision is wise as a policy matter; indeed, we are forbidden from substituting our judgment for that of the agency.’ Nor do we inquire whether ‘some or many economists would disapprove of the agency’s approach’ because ‘we do not sit as a panel of referees on a professional economics journal, but as a panel of generalist judges obliged to defer to a reasonable judgment by an agency acting pursuant to congressionally delegated authority.’”
Similarly, they rely throughout the opinion on established precedent that requires that they be deferential, and even “particularly deferential” to an agency’s conclusion.
But, in order to receive the benefit of deference, an agency’s conclusions need to be “reasonable.” This is where the court’s analysis falters – or, more charitably, where the court follows precedents requiring deference to an insupportable conclusion. There are two ways one can think about whether a conclusion is “reasonable”: whether it is supported by reasons, or whether it was arrived at through a reasonable decision-making process. This is, in essence, the disagreement between the majority opinion and Judge Williams’ dissent.
The majority opinion is satisfied to defer to the commission if its conclusions are based in facts that were entered into the record as part of the FCC’s Open Internet proceeding. That is, the majority is willing to find that the commission’s conclusions are “reasonable” if it has provided “reasons” for them. This is perhaps most clearly seen in the court’s recitation of the commission’s factual basis for reclassification (pages 25-27 of the majority opinion). Here the court merely accepts the commission’s presentation of record evidence, without any effort to examine whether the commission’s interpretation of that evidence is itself reasonable. To take the starkest example, the court accepts the commission’s proffered facts as sufficient to support the commission’s dramatic change in policy from its prior classification of broadband Internet services as Information Services, finding them sufficient to “satisf[y] the APA’s requirement that an agency provide a reasoned explanation for disregarding facts and circumstances that underlay the prior policy.” Without any evaluation of the reasonableness of the FCC’s proffered facts, the judges say, literally, that “Nothing more is required.”
A more meaningful reasonableness requirement
Judge Williams expects more of an agency; he expects an agency not just to provide “reasons” justifying its conclusion, but for those “reasons” to have been arrived at through a reasonable decision-making process. Absent this requirement, and especially in an agency proceeding involving millions of entries into the record and in which advocates work closely with the agency (1) to develop the record, it is hard to imagine a situation in which an agency cannot identify “reasons” to support its conclusions. If the courts do not inquire more deeply into whether those reasons are actually reasonable, the courts have in effect abdicated their responsibilities under the Administrative Procedure Act (and Supreme Court precedent) to ensure that agencies have engaged in reasoned decision-making.
Judge Williams’ dissent takes the commission to task for its lack of reasoned decision-making. He does so most forcefully in his discussion of the commission’s justification for its ban on paid prioritization (2); a ban that “seems not to rest on any evidence or analysis,” and which the commission “fail[ed] to address critiques and alternatives” in adopting.
Judge Williams’ analysis spans nearly 20 pages (pages 32-51 of his opinion), documenting the inconsistencies, contradictions, and inaccuracies underlying the commission’s ban on paid prioritization, as well as the contrary facts entered into the record against such a ban and the commission’s failure to respond to that material. It is too voluminous to recount in detail here, though the bottom line is that “whatever the explanation, the order fails to offer a reasoned basis for its view that paid prioritization is ‘unjust or unreasonable’ within the meaning of § 201, or a reasoned explanation for why paid prioritization is problematic, or answers to commenters’ critiques and alternatives.”
Defining reasonable reasonableness procedures
This disagreement between Judges Tatel and Srinivasan on the one hand and Judge Williams on the other also raises an important procedural legal question – a question of the sort that perhaps only a lawyer can love: Whose responsibility is it in the first instance to delve into the reasonableness of an agency’s decision-making process?
Ordinarily, an issue will only properly be before the court if it is included in the initial petitions for review and petitioner’s briefs. This is, in a sense, the judiciary’s equivalent of the requirement that an agency give parties notice of proposed rules in an NPRM. The purpose, as with the NPRM notice requirement, is to ensure that all parties to the case have the opportunity to address the issue in their briefs and arguments to the court.
There is, however, an argument that a court can undertake a basic inquiry into the sufficiency of the agency’s decision-making process even absent such briefing, or with petitioners having only minimally raised the issue. This is because the universe of the agency’s decision-making process is necessarily encompassed in the text of the rules itself. The Administrative Procedure Act requires that an agency include with its rules a statement of the basis for the rules, and this is required to respond to any significant issues raised in the record. The court has access to the entire record that was before the agency and the agency’s response to that record – this is sufficient for the court to inquire at least minimally into the sufficiency of an agency’s decision-making process. Indeed, that would have been sufficient to support Judge Williams’ level on inquiry.
Importantly, engaging in this inquiry need not put the court in the position of “sit[ting] as a panel of referees on a professional economics journal.” As Judge Williams’ opinion makes clear, the commission’s order was, plain and simple, an incoherent mess. There is a difference between evaluating whether the evidence considered by the commission was reasonable and whether the commission reasonably considered the evidence. Judges ought not to do the former, which would put them in the position of journal referees. But they should – and in this case they failed to – do the latter.
Regardless, Petitioners did raise these issues before the court, citing to the key Supreme Court precedent requiring courts to look into the sufficiency of an agency’s decision-making process (State Farm), the Supreme Court’s recent case requiring independent agencies to conduct an economic analysis in adopting rules (Michigan v. EPA (3)), and the DC Circuit’s own recent case on point (Business Roundtable). Quoting from their brief (4) “The order thus flunks the APA standard because the FCC ‘offered … explanations for its decision that run counter to the evidence before the agency’ and because it ‘failed to consider’ seriously ‘important aspects of the problem.’”
The majority opinion seems to ignore these arguments. It does so by cabining them under the question of reclassification, which avoids consideration of the most egregious examples of the agency’s flawed decision-making relating to the specific rules that the commission adopts (especially its ban on paid prioritization). But as Judge Williams notes, the question of reclassification and the substance of the specific rules are inherently intertwined: The purpose of reclassification was instrumental, necessary to allow the commission to re-implement the ban on paid prioritization previously rejected by the DC Circuit in the Verizon case.
This easily opens the door for an interested court to engage in the analysis proffered by Judge Williams – the inquiry into the sufficiency of the commission’s decision-making process. The court needn’t have limited itself to impotently ask only whether the commission had provided “reasons.”
Unfortunately, the court’s reading of modern administrative law has led it to a point where the role of the judge is so curtailed that it can only be described as being “asleep at the switch.”