Last week, a sequel led the box office at 333 Constitution Ave., NW. With a script by Judge Millett, it featured the FCC, a star of administrative law opinions at the D.C. Circuit. While Northstar Wireless, LLC v. FCC did not break new ground, those looking for the comfort of the familiar will find something to enjoy in this telecommunications dispute.
The case concerned an FCC auction of licenses to wireless spectrum. Northstar Wireless, LLC and SNR Wireless LicenseCo., LLC claimed very-small-business discounts on their winning bids. The FCC denied their claims, finding that DISH Network – not a very small business – de facto controlled both companies. Northstar and SNR petitioned for review and won in part. In 2017, the D.C. Circuit held that the FCC’s precedent afforded the companies a chance to cure the problems that precluded them from claiming the discount. The matter went back to the FCC. The companies tried to cure by amending their agreements with DISH. Nice try, the FCC concluded as it denied the companies’ claims of a discount. The companies again petitioned for review, citing the D.C. Circuit’s 2017 decision.
Which brings us to last week’s sequel. The panel that decided the case included Judge Millett and Senior Judge Edwards, while Judge Jackson, also on the panel and soon to make history as she is sworn in as an associate justice of the Supreme Court, did not participate in the opinion. Writing for the D.C. Circuit, Judge Millett rejected all of the companies’ challenges to the FCC’s order. The Court’s prior decision “required only that the Companies be allowed the opportunity for a cure, not that the Commission staff prescribe the cure.”
This sequel isn’t leaving the door open to a trilogy. The FCC has a six-factor test – from the memorably titled Intermountain Microwave decision – for determining whether a company is under the de facto control of another company. While the FCC’s application of that test wasn’t without flaw – on one point, for instance, the D.C. Circuit called its reasoning “relatively thin” – its overall reasoning and balancing of the various factors was reasonable. The Court put it thus (minus the citations):
In 2015, the Commission was troubled by the Companies’ joint bidding behavior in the spectrum auction. Yet nothing seemed to change on remand. SNR and Northstar continued to act in concert by amending their agreements with DISH in “virtually identical” fashion. Though Northstar had borrowed almost $2 billion more from DISH than SNR had, both reduced their DISH debts to exactly $500 million apiece in exchange for preferred equity.
On top of that, despite Northstar’s more valuable spectrum holdings, the Companies agreed to similar limits on their ability to borrow from DISH to finance network construction. The Companies’ put rights were also virtually identical, and both firms gave DISH the same expanded veto over spectrum leasing. On this record, the Commission reasonably found that SNR and Northstar, rather than acting like individual businesses with their own interests and identities, only pantomimed independence, while functionally operating at DISH’s beck and call.
Last week’s second opinion was also a sequel of sorts, having twice been before the D.C. District Court. In Air Transport Association of America v. U.S. Department of Agriculture, the Court addressed a challenge to fees for the federal Agricultural Quarantine and Inspection Program. This Program, administered by the Animal and Plant Health Inspection Service (APHIS), monitors arrivals at U.S. ports for animals, plants, pests, and diseases. Since 1990, the Program has been funded in part by user fees. Air carrier trade associations challenged aspects of a 2015 rule concerning those fees. The District Court granted partial summary judgment for the challengers and remanded to APHIS, which in turn issued a final interpretive rule providing a new justification for the challenged fees.
Stop me if you’ve heard this one before: The parties went back to the District Court, and then from there to the D.C. Circuit. Senior Judge Sentelle wrote the opinion for the Court, which was joined by Judge Tatel, who assumed senior status after the case was argued, and Judge Pillard.
Chevron, by some reports in the fading twilight of its career, was the star of the statutory analysis on appeal. The FACT Act of 1990 authorized the Secretary of Agriculture to collect fees to cover three types of costs. One type was time-limited on its face: The Secretary was authorized “through fiscal year 2002” to collect fees “to maintain a reasonable balance in the Agricultural Quarantine Inspection User Fee Account.” In other words, as the D.C. Circuit put it, “between 1990 and 2002, Congress explicitly authorized APHIS to collect fees to maintain a reserve in the User Fee Account.”
Did Congress also implicitly authorize APHIS to collect a reserve surcharge after 2002? The question answered itself, or so the D.C. Circuit suggested. APHIS argued that it could set fees to collect a reserve surcharge after 2002. That position, the Court concluded, “blinks reality”:
Appellants offer that Congress spoke to this issue in § 136a(a)(1)(C), where it stated that APHIS had the authority to collect fees to maintain a reserve “through fiscal year 2002.” APHIS counters that subparagraph (a)(1)(C) functioned independently to specify the location for storing the reserve surcharge—the “Agricultural Inspection User Fee Account”— through 2002, rather than merely speaking to the authority to collect fees. Therefore, APHIS argues that Congress only limited the location for the surcharge funds after 2002 and not the agency’s authority to collect them, and that we must defer to its interpretation of the FACT Act so long as it is reasonable.
APHIS contends that the authority to continue collecting a reserve fee after 2002 exists in subparagraphs (a)(1)(A)-(B) and that (a)(1)(C) is of no consequence now that fiscal year 2002 has come and gone. But this reading of the statute conflicts with its plain meaning and violates the canon against surplusage. “It is a familiar canon of statutory construction that, ‘if possible’, we are to construe a statute so as to give effect to ‘every clause and word.’” Amoco Production Co. v. Watson, 410 F.3d 722, 733 (D.C. Cir. 2005) (quoting United States v. Menasche, 348 U.S. 528, 538–39 (1955)). Surplusage can significantly weaken a Chevron Step One argument. See N.L.R.B. v. Fed. Labor Relations Auth., 952 F.2d 523, 532 (D.C. Cir. 1992).
That last one – “Surplusage can significantly weaken a Chevron Step One argument” – is a candidate for top Chevron quotes of 2022. (See it before it leaves theaters!) While the D.C. Circuit remanded the matter to the District Court with instructions to vacate the reserve surcharge, it rejected the challengers’ remaining arguments.
The other two opinions from last week, both briefly scripted, will be briefly noted. In City of Scottsdale v. FAA, Judge Walker (joined by Judge Wilkins and Senior Judge Randolph), held that the City of Scottsdale had failed to produce evidence of an injury-in-fact and therefore lacked standing to petition for review of an FAA decision concerning flight paths out of Phoenix Sky Harbor International Airport. And in Bohon v. FERC, Judge Walker (joined by Judges Pillard and Wilkins) held that the Natural Gas Act’s exclusive-review provision precluded a suit by two landowners seeking to challenge FERC’s approval of a natural-gas pipeline through their property.