Notice & Comment

D.C. Circuit Review – Reviewed: Postscript

This has been a surprisingly quiet week in the D.C. Circuit: Only one new case — and it is not especially noteworthy. Yet the D.C. Circuit’s term is winding down and there are still many cases to decide. I expected more opinions. (On the other hand, for what it is worth, last year, the first week of May was also a quiet one.)

That said, there have been important developments regarding at least three of the Court’s prior cases. So let’s talk about those developments.

First, no matter what the D.C. Circuit decides en banc, I predict that the Supreme Court is going to determine whether the SEC’s administrative law judges have been appointed in a constitutional way. As you no doubt recall, there is a circuit split between the Tenth and D.C. Circuits on this question. Later this month, the full D.C. Circuit is slated to hear argument; previously, the Court upheld their constitutionality. The Tenth Circuit, however, is not going to rehear its decision that the appointments are unconstitutional. Whether there is a circuit split or not, the Supreme Court will be interested in a constitutional case like the Tenth Circuit’s — especially one that rules against the government. Hence my prediction: This question is going to the Supreme Court.

Second, the D.C. Circuit denied rehearing in United States Telecom Association v. FCC, i.e., the Net Neutrality case. This is another one that may be headed for the Supreme Court — that is, if the current FCC does not eliminate the scheme on its own. The order denying rehearing is over 100 pages long. Judge Srinivasan (joined by Judge Tatel) concurred. Judges Brown and Kavanaugh each dissented.

Here are some highlights (but trust me, you should read all three of these opinions).

From Judge Srinivasan’s concurrence:

  • “En banc review would be particularly unwarranted at this point in light of the uncertainty surrounding the fate of the FCC’s Order. The agency will soon consider adopting a Notice of Proposed Rulemaking that would replace the existing rule with a markedly different one.”
  • “While we concur in the court’s denial of en banc review, we write to respond to a particular contention pressed by one of our dissenting colleagues: that the FCC’s Order, and thus our panel decision sustaining it, departs from controlling Supreme Court precedent in two distinct ways. First, our colleague submits that Supreme Court decisions require clear congressional authorization for rules like the net neutrality rule, and the requisite clear statutory authority, he argues, is absent here. See infra at 3-18 (Kavanaugh, J., dissenting); accord infra at 18-23 (Brown, J., dissenting). Second, our colleague contends that the rule conflicts with Supreme Court decisions ostensibly arming internet service providers (ISPs) with a First Amendment shield against net neutrality obligations. See infra at 19-36 (Kavanaugh, J., dissenting).”
  • “We have no need in this case to resolve the existence or precise contours of the major rules (or major questions) doctrine described by our colleagues. Assuming the existence of the doctrine as they have expounded it, and assuming further that the rule in this case qualifies as a major one so as to bring the doctrine into play, the question posed by the doctrine is whether the FCC has clear congressional authorization to issue the rule. The answer is yes.”
  • “The First Amendment does not give an ISP the right to present itself as affording a neutral, indiscriminate pathway but then conduct itself otherwise. The FCC’s Order requires ISPs to act in accordance with their customers’ legitimate expectations. Nothing in the First Amendment stands in the way of establishing such a requirement in the form of the net neutrality rule.”

From Judge Brown’s dissent:

  • “An independent federal agency sits at the intersection of the road to the White House and Constitution
    Avenue. Two statues that capture struggle between man and horse flank the agency. The statues are called ‘Man Controlling Trade,’ and they depict a man, the government, restraining a horse, the marketplace. Though the statues look similar, they are not the same. On the President’s road, the horse — the marketplace — looks threatening, as if it will topple the brawny man trying to grasp the reins. On Constitution Avenue, the man — the government — is the threatening one, grasping the reins on both sides of the animal’s head; it appears he is trying to overpower a valiant and sympathetic horse. Here, as with the statues, an independent agency sits at the crossroads of competing visions — the President’s view of the Internet as threatening consumers, and the libertarian view of government as strangling the greatest market innovation of the last century. But an orthodox view of checks and balances leaves the choice of vision to Congress.”
  • “The Court’s Opinion is blasé about grafting public utility regulation on to an innovative enterprise. But, the conceit of regulatory capture is often fatal to growth, leading regulation to fail at its own aims by operating on only a pretense of knowledge. See F.A. Hayek, The Fatal Conceit: The Errors of Socialism 76 (W.W. Bartley, III ed. 1991) (‘The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.’).”
  • “There is a sad irony here. Both this Court and the Supreme Court admonished the FCC for asserting forbearance authority without congressional authorization when the Commission’s aim was deregulatory. Now, when the Commission’s aim is to increase regulation, this Court is willing to bless the Commission using forbearance without any satisfaction of the statutory requirements, and at odds with the nature of forbearance itself.”
  • “When all the statutory somersaults, revisionist history, and judicial abdication are done, we are still left with a lingering question: Why, on the verge of announcing a new Open Internet Order in 2014 that both implemented ‘net neutrality’ principles and preserved broadband Internet access as an ‘information service,’ would the FCC instead reclassify broadband Internet access as a public utility? Simple. President Obama pressured the FCC to do it. … The President’s conduct — and the involvement of White House staff more generally — raise questions about the form and substance of executive Power. Unfortunately, none of these questions were addressed by the Court. Given the salience of these questions to our Constitution’s separation of powers, this Court owed the American people a legal analysis, not silent obedience.”

And from Judge Kavanaugh’s dissent:

  • “The FCC’s 2015 net neutrality rule is one of the most consequential regulations ever issued by any executive or independent agency in the history of the United States.”
  • “If the Supreme Court’s major rules doctrine means what it says, then the net neutrality rule is unlawful
    because Congress has not clearly authorized the FCC to issue this major rule. And if the Supreme Court’s … decisions mean what they say, then the net neutrality rule is unlawful because the rule impermissibly infringes on the Internet service providers’ editorial discretion.”
  • “To be sure, determining whether a rule constitutes a major rule sometimes has a bit of a ‘know it when you see it’ quality. So there inevitably will be close cases and debates at the margins about whether a rule qualifies as major. But under any conceivable test for what makes a rule major, the net neutrality rule qualifies as a major rule.”*
  • “The FCC’s ‘use it or lose it’ theory of First Amendment rights finds no support in the Constitution or precedent. The FCC’s theory is circular, in essence saying: ‘They have no First Amendment rights because they have not been regularly exercising any First Amendment rights and therefore they have no First Amendment rights.’ It may be true that some, many, or even most Internet service providers have chosen not to exercise much editorial discretion, and instead have decided to allow most or all Internet content to be transmitted on an equal basis. But that ‘carry all comers’ decision itself is an exercise of editorial discretion. Moreover, the fact that the Internet service providers have not been aggressively exercising their editorial discretion does not mean that they have no right to exercise their editorial discretion. That would be akin to arguing that people lose the right to vote if they sit out a few elections. Or citizens lose the right to protest if they have not protested before. Or a bookstore loses the right to display its favored books if it has not done so recently. That is not how constitutional rights work. The FCC’s ‘use it or lose it’ theory is wholly foreign to the First Amendment.”
  • “According to the concurrence, Internet service providers may comply with the net neutrality rule if they want to comply, but can choose not to comply if they do not want to comply. To the concurring judges, net neutrality merely means ‘if you say it, do it.’ Concurrence at 21. If that description were really true, the net neutrality rule would be a simple prohibition against false advertising. But that does not appear to be an accurate description of the rule.”

Third, the D.C. Circuit’s merger decision from last week may also be headed to the Supreme Court. I checked How Appealing this morning (as I do every morning!) and saw this: “Anthem asks Supreme Court to review blocked Cigna deal.” Frankly, I admit that I don’t know enough about this particular case to predict its Supreme Court prospects. But I do know this: The Supreme Court must decide a merger case again at some point. In the words of Professor Hovenkamp (quoted by Professor Moffitt): “‘While antitrust casebooks continue to print 1960s-vintage merger decisions that have never been overruled, no one, not even federal judges and certainly not the government enforcement agencies, pay much attention to them.'” Whatever one thinks of merger law, that is no way to run a railroad.

The D.C. Circuit did decide one case this week: Oak Harbor Freight Lines, Inc. v. NLRB. Judge Rogers (joined by Chief Judge Garland and Judge Williams) ruled in favor of the agency. Here is the Court’s summary:

Oak Harbor Freight Lines, Inc. and several locals of the Teamsters Union established four health benefit and pension trusts, so-called “Taft-Hartley” trusts, as part of their collective bargaining agreement. Under that agreement, Oak Harbor was required to make monthly contributions to the trusts. When the agreement expired and no new agreement was reached after a year, Union employees went on strike. When Oak Harbor ceased making contributions to the trusts, the Union filed unfair labor practice charges. The National Labor Relations Board ruled the Union had waived its right to bargain over the cancellation of contributions in subscription agreements to three of the trusts after the collective bargaining agreement expired, and Oak Harbor, having failed to prove a fourth subscription agreement existed or other basis to find a union waiver, violated Sections (8)(a)(5) and (1) of the National Labor Relations Act by ceasing to make payments to the fourth trust. The Board also ruled that Oak Harbor’s unilateral imposition of its medical plan after the strike ended violated the Act. Both Oak Harbor and the Union filed petitions for review of the Board’s Decision and Order. For the following reasons, we deny the petitions for review and grant the Board’s cross-application to enforce its Order.

Based on the calendar, I suspect we’ll have more than one case next week.

* These opinions prompt a postscript of my own. Years ago I co-authored an article about the major questions doctrine. There, I defended the Supreme Court against the attack that its decisions in these cases reflect naked politics. I just don’t think that is true. But I was — and still am — concerned about the doctrine because it is hard to administer and there is something to the idea that “the rule of law [i]s a law of rules.” Yet on reflection, perhaps that view gives too much weight to administrability. Or better still, perhaps there are administrable lines — especially if Congress becomes involved. Hmmm. Maybe I’ll have to write a new article!

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