No. 17-498

IN THE

Supreme Court of the United States

DANIEL BERNINGER,Petitioner,

v.

FEDERAL COMMUNICATIONS COMMISSION, et al.,Respondents.

On Petition for Writ of Certiorari to the United StatesCourt of Appeals for the District of Columbia Circuit

BRIEF OF AMICUS CURIAEINTERNATIONAL CENTER FOR LAW &

ECONOMICS IN SUPPORT OF PETITIONER

Geoffrey A. ManneINTERNATIONAL CENTER FORLAW & ECONOMICS3333 NE Sandy Blvd.Suite 207Portland, OR 97232

Justin (Gus) HurwitzUNIVERSITY OF NEBRASKACOLLEGE OF LAW209 Ross McCollum HallP.O. Box 830902Lincoln, NE 68583-0902

Jeffrey A. MandellCounsel of Record

STAFFORD ROSENBAUM LLP222 W. Washington Ave.Suite 900Madison, WI 53703(608) 256-0226jmandell@staffordlaw.com

Counsel for Amicus Curiae

November 2, 2017

TABLE OF CONTENTSPage

TABLE OF AUTHORITIES ....................................... iiINTEREST OF AMICUS CURIAE............................. 1INTRODUCTION AND SUMMARY OFARGUMENT ................................................................ 1ARGUMENT ................................................................ 5I. The Circuit court was exceptionally

deferential in this case. ....................................... 5II. Courts should be skeptical—not

“particularly deferential”—whereagencies reverse existing policy. ....................... 12A. Empirical data suggests widespread

flaws in agencies’ “reasonable basis”justifications proffered to supportchanged policies. ........................................ 13

B. This Court’s precedents suggestconcern about agencies’ changedfactual and legal interpretations. ............. 15

III. The OIO and the D.C. Circuit opinionimplicate concerns about the proprietyof extreme deference to agencydecisionmaking involving changes ofpolicy. ................................................................. 19

CONCLUSION .......................................................... 25

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TABLE OF AUTHORITIESPage

Cases

Ass’n of Am. R.R.s v.Interstate Commerce Comm’n,978 F.2d 737 (D.C. Cir. 1992) .................................. 6

Burlington Truck Lines, Inc. v.United States,371 U.S. 156 (1962) ................................................. 8

Chevron U.S.A., Inc. v.Nat. Res. Def. Council, Inc.,477 U.S. 837 (1984) ..................... 3, 4, 11, 13, 14, 15 15, 16, 17, 18, 25

Comcast Corp. v. FCC,600 F.3d 642 (D.C. Cir. 2010) ................................ 24

EarthLink, Inc. v. FCC,462 F.3d 1 (D.C. Cir. 2006)...................................... 8

Encino Motorcars, LLC v. Navarro,136 S. Ct. 2117 (2016) ..................................... 12, 17

FCC v. Fox Television Stations, Inc.,556 U.S. 502 (2009) ............... 6, 7, 12, 16, 17, 18, 20

iii

FERC v. Elec. Power Supply Ass’n,136 S. Ct. 760 (2016) ......................................... 6, 25

Food & Drug Admin. v.Brown & Williamson Tobacco Corp.,529 U.S. 120 (2000) ................... 9, 10, 11, 12, 15, 24

Gas Transmission Nw. Corp. v. FERC,504 F.3d 1318 (D.C. Cir. 2007) ................................ 7

King v. Burwell,135 S. Ct. 2480 (2015) ........................................... 12

Michigan v. EPA,135 S. Ct. 2699 (2015) ........................................... 24

Motor Vehicle Mfrs. Ass’n of U.S., Inc. v.State Farm Mut. Auto. Ins. Co.,463 U.S. 29 (1983) ..................................... 12, 13, 16

Nat’l Cable & Telecomm. Ass’n v.Brand X Internet Servs.,545 U.S. 967 (2005) ........... 3, 4, 9, 10, 11, 12, 16, 17

New York v. United States,342 U.S. 882 (1951) ................................................. 8

U.S. Telecom Ass’n. v. FCC,825 F.3d 674 (D.C. Cir. 2016) .......................... 10, 20

Util. Air Regulatory Grp. v. EPA,134 S. Ct. 2427 (2014) ............... 9, 10, 12, 15, 18, 24

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Verizon v. FCC,740 F.3d 623 (D.C. Cir. 2014) ................................ 20

Whitman v. Am. Trucking Ass’ns, Inc.,531 U.S. 457 (2001) ............................................... 23

Other Authorities

Cass R. Sunstein & Adrian Vermeule,The Morality of Administrative Law,HARV. L. REV. (forthcoming 2018) ................. 3, 4, 17

George S. Ford,Net Neutrality, Reclassification, & Inv.:A Counterfactual Analysis,PHOENIX CTR. PERSP. 17-02 (2017) ........................ 20

In re Deployment of Wireline Servs. OfferingAdvanced Telecomms. Capability,13 FCC Rcd. 24,012 (1998) .................................... 23

In Re Inquiry Concerning the Deployment ofAdvanced Telecomm. Capability to All Am. in aReasonable & Timely Fashion, & Possible Steps toAccelerate Such Deployment Pursuant to § 706 ofthe Telecomm. Act of 1996, as Amended by theBroadband Data Improvement Act,30 FCC Rcd. 1375 (2015) ................................. 21, 22

Kathryn A. Watts,Proposing a Place for Politics inArbitrary and Capricious Review,119 YALE L.J. 2 (2009) ........................................... 17

v

Kent Barnett & Christopher J. Walker,Chevron In the Circuit Courts,116 MICH. L. REV. 1 (2016) .............................. 13, 17

L. Gordon Crovitz,‘Economics-Free’ Obamanet,WALL ST. J., Jan. 31, 2016,https://www.wsj.com/articles/economics-free-obamanet-1454282427 ................................... 22

Note, Major Questions Objections,129 HARV. L. REV. 2191 (2016) .............................. 17

Preserving the Open Internet BroadbandInd. Prac., Rep. & Ord.,25 FCC Rcd. 17905 (Dec. 23, 2010) ....................... 20

Telecommunications Act of 1996,47 U.S.C. § 1302 ........................................ 20, 21, 22

Tim Brennan,Is the Open Internet Order an“Economics-Free Zone”?,11 FSF PERSP. 22 (2016) .................................. 22, 23

BRIEF OF AMICUS CURIAEINTERNATIONAL CENTER FOR LAW &

ECONOMICS IN SUPPORT OF PETITIONERThe International Center for Law & Economics

(“ICLE”) submits this brief as amicus curiae in supportof certiorari.1

INTEREST OF AMICUS CURIAEICLE is a nonprofit, non-partisan global research

and policy center. ICLE works with more than fiftyaffiliated scholars and research centers around theworld to promote the use of evidence-based method-ologies in developing sensible, economically groundedpolicies that will promote consumer welfare and enablebusiness and innovation to flourish. ICLE’s advocacyfor evidence-based methodologies gives it a significantinterest in helping shape the law governing judicialreview of agency decisionmaking.

INTRODUCTION AND SUMMARYOF ARGUMENT

This case raises significant questions about thethoroughness with which a court must review agencydecisionmaking—or the extent to which a court mayinstead defer to that decisionmaking—when the

1 All parties have consented to the filing of this brief. Nocounsel for a party authored this brief in whole or in part, and noparty or counsel for a party made a monetary contributionintended to fund the preparation or submission of the brief. Noperson other than amicus curiae or its counsel made a monetarycontribution to the preparation or submission of this brief.

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agency has reversed a prior policy determination in theabsence of a change in applicable law.

The Open Internet Order (“OIO”) issued by theFederal Communications Commission (“FCC” or“Commission”) presents such a policy reversal. TheFCC ostensibly rooted the OIO in sufficient factual andlegal analysis, but closer examination reveals that theOIO is based upon implausible factual assertions,questionable factual reinterpretations, and thestrategic disavowal of long-defended statutoryinterpretation, all in support of a radical change infederal telecommunications policy that raisesquestions of vast economic and political significance.

Nevertheless, as discussed in Part I, the D.C.Circuit opinion affirming the OIO reflexively affordedsubstantial deference to the FCC, declining to considerserious questions about the reasonableness orpermissibility of the FCC’s decisionmaking process.That decision is both in tension with this Court’sprecedents and, more, raises exceptionally importantand previously unaddressed questions about thisCourt’s precedents on judicial review of agencychanges of policy.

As discussed in Part II, recent empirical worksuggests that there are systematic problems withjudicial review of agency changes in policy. Theseproblems—respecting the substantive quality ofagency and judicial decisions as well as judicialunderstanding of, or compliance with, this Court’sprecedents governing such review—have led toconsistently inconsistent review of agency policy

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changes in the circuit courts. Judicial review of agencypolicy changes thus presents a certiorari double-whammy: there is a need for this Court to clarifyexisting precedent regarding judicial review of suchpolicy changes and to address inconsistent applicationof that precedent, as well as for this Court to considerwhether evidence of systematically problematic deci-sionmaking when agencies change policies militates infavor of a more searching standard of review.

Part III discusses how the D.C. Circuit and theCommission’s OIO implicate these concerns.

A new article by Professors Cass Sunstein andAdrian Vermeule highlights the exceptional signifi-cance of this issue. See Cass R. Sunstein & AdrianVermeule, The Morality of Administrative Law, HARV.L. REV. (forthcoming 2018). In discussing empiricalevidence collected by Professors Kent Barnett andChristopher Walker (discussed in Part II), Sunsteinand Vermeule note that there is a “discrepancybetween the law on the books and the law in action”when it comes to how courts review changes in agencypolicy. Id. (manuscript at 24) (https://papers.srn.-com/abstract_id=3050722).

In National Cable & Telecommunications Ass’n v.Brand X Internet Services, 545 U.S. 967 (2005), thisCourt held that an agency’s alteration of policy is notgrounds for heightened scrutiny. Id. at 981 (“Agencyinconsistency is not a basis for declining to analyze theagency’s interpretation under the Chevron framework.Unexplained inconsistency is, at most, a reason forholding an interpretation to be an arbitrary and

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capricious change from agency practice under theAdministrative Procedure Act.”). But, as Sunstein andVermeule observe, “Brand X notwithstanding, theCourt just isn’t particularly clear or consistent aboutthe role of consistency under Chevron.” Sunstein &Vermeule, supra (manuscript at 23-24 n.159).

Indeed, “[a]t the level of individual cases, althoughno subsequent case has denied the rule expressly laidout in Brand X, opinions have occasionally adverted toconsistency as a Chevron factor—including opinions forthe Court.” Id. (ms. at 23). Moreover, contrary to therule laid out in Brand X, “[a]t the level of large-Nresearch, recent work by Chris Walker and KentBarnett shows that judges in fact tend to defer moreheavily to consistent agency interpretations.” Id. (ms.at 23-24).

In this instance, it seems likely that the policyunder review will reverse course yet again, with theagency returning to the pre-OIO interpretation of thelaw and issuing new rules consistent with thatinterpretation. Indeed, it must be acknowledged thatthe FCC could reverse the OIO as soon as December ofthis year. Under ordinary circumstances this wouldappear to moot, or at least substantially lessen, theconcerns raised by petitioners here.

But the foreseeability of significant administrativepolicy changes—in this case and elsewhere—abettedby the precedent of substantial deference establishedin this case, militates in favor of the Court grantingcertiorari. Should the FCC reverse the OIO, it is aforegone conclusion that supporters of the current

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order will challenge that reversal in a proceeding thatwill raise many of the same legal concerns currently atissue. The issuance of a new rule will thus not moot theissues in this case, but simply raise the precise issuesyet again. Indeed, without clear guidance from thisCourt, there is every reason to believe the process willbecome an endless feedback loop—in the case of thisregulation and others—at great cost not only toregulated entities and their consumers, but also to theintegrity of the regulatory process.

ARGUMENTI. The Circuit court was exceptionally

deferential in this case.The level of deference afforded an agency decision

is particularly important where, as here, an agency hasreversed established policy. In affirming the OIO,however, the D.C. Circuit evinced mechanical andexceptional deference to both legal and factualdeterminations by the FCC, and, at the same time, wasnotably dismissive of arguments challenging thosedeterminations. As addressed in Part II, an analysis ofcases where courts review changes in agency policysuggests that, in such instances, agencies employsystematically problematic decisionmaking. Suchflawed agency process militates in favor of moresearching judicial review. As discussed in Part III,there is reason to be particularly concerned that theseproblems infected the FCC’s decisionmaking withrespect to the OIO.

The D.C. Circuit adopted an unflinchinglydeferential posture, dutifully articulating the well-

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worn legal principles of judicial deference to a fault.The panel decision parrots this Court’s most restrictivelanguage about judicial review without acknowledgingthe necessary nuances implicit in these bedrockstandards. Thus the D.C. Circuit admonished that thejudiciary’s “role in reviewing agency regulations…is alimited one,” insisting the panel was “forbidden fromsubstituting our judgment for that of the agency.” App.A at 17a-18a (quoting Ass’n of Am. R.R.s v. InterstateCommerce Comm’n, 978 F.2d 737, 740 (D.C. Cir. 1992))(emphasis added).

With respect to factual assertions, the D.C. Circuitopined that, “[p]rovided that the Commission hasarticulate[d]…a rational connection between the factsfound and the choice made, we will uphold its decision.”App. A at 38a (internal quotation marks omitted).Nominally, this conditioned affirmance on a showingthat the agency “weighed competing views, selected [anapproach] with adequate support in the record, andintelligibly explained the reasons for making thatchoice.” App. A at 38a (quoting FERC v. Elec. PowerSupply Ass’n, 136 S. Ct. 760, 784 (2016)). The panelmajority made clear that, so long as the agencysatisfied this condition, “it need not demonstrate to acourt’s satisfaction that the reasons for the new policyare better than the reasons for the old one.” App. A at38a (quoting FCC v. Fox Television Stations, Inc., 556U.S. 502, 515 (2009) (emphasis in original)).

But the D.C. Circuit then affirmed the OIO eventhough the FCC did not satisfy the requisite condition.In reviewing the agency’s factual assertions, the paneloften required merely that the agency articulate any

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factual support for its position. The court neitherassessed the reasonableness or adequacy of support forthose facts on its own, nor did it meaningfully considerthe petitioners’ challenges to the reasonableness oradequacy of support for those facts.

For example, in rejecting petitioners’ concern thatthe OIO failed to account for reliance interests, asrequired by Fox, the court expressed satisfaction thatthe Commission “expressly considered” and rejectedthose claims. App. A at 44a (emphasis added). Thecourt failed, however, to inquire whether theCommission’s consideration was adequate or itsrejection reasonable. Only Judge Williams, dissentingin part, considered these questions. App. A at 120a. Bycontrast, the majority, “defer[ing] to policydeterminations invoking the [agency’s] expertise inevaluating complex market conditions,” App. A at 46a(quoting Gas Transmission Nw. Corp. v. FERC, 504F.3d 1318, 1322 (D.C. Cir. 2007)), accepted withoutanalysis the Commission’s factual determination thatreclassification of broadband under Title II did notdeviate from ISPs’ reasonable expectations.

In other words, the panel majority held that theCommission’s decision was reasonable because anagency’s expertise renders its decisionmakinginherently reasonable, regardless of process. Of coursethat cannot be the case. As this Court has noted,“[e]xpert discretion is the lifeblood of theadministrative process, but ‘unless we make therequirements for administrative action strict anddemanding, expertise, the strength of moderngovernment, can become a monster which rules with

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no practical limits on its discretion.’” Burlington TruckLines, Inc. v. United States, 371 U.S. 156, 167 (1962)(quoting New York v. United States, 342 U.S. 882, 884(1951) (Douglas, J., dissenting)). To do as the D.C.Circuit did here—merely accepting the agency’sdecisionmaking as reasonable by virtue of the agency’spresumed expertise—abdicates the judiciary’s assertedresponsibility to ensure not only that the agencyjustifies its policy decisions, but also that the profferedjustifications are reasonable.

Similarly, petitioners below argued that the OIOwould undermine investment in broadband networks,contrary to the Commission’s assertion that it wouldenhance investment. The D.C. Circuit evaluated thisunder a “particularly deferential” standard: “Anagency’s predictive judgments about areas that arewithin the agency’s field of discretion and expertise areentitled to particularly deferential review, as long asthey are reasonable.” App. A at 91a (quotingEarthLink, Inc. v. FCC, 462 F.3d 1, 12 (D.C. Cir. 2006)(emphasis in original)). Without analysis, the D.C.Circuit declared that “[t]he Commission has satisfiedthis highly deferential standard.” App. A at 40a. Thispassive acceptance of the FCC’s assertions—withoutevaluating their merits based on the record evidence orweighing them against the challenges raised bypetitioners—abdicated the court’s responsibility todefer only “as long as [the agency’s judgements] arereasonable.” App. A at 91a.

The Circuit court was also overly deferential in itsreview of the FCC’s legal conclusions, where, as withfact issues, it was dismissive of challenges to the

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reasonableness of the agency’s decisionmaking. Ascharacterized by Judge Brown in her dissent from theD.C. Circuit’s denial of the petition for rehearing enbanc, “[o]n issue after issue, the Court puts agency ipsedixit where reasoned analysis should be” and “fails tofairly engage this standard of review, both overratingthe role of the statutory ambiguity here andunderrating the application of the clear statement ruleto major questions.” App. E at 1406a, 1401a.

This is clear in the Circuit court’s handling ofarguments that the OIO’s reclassification ofBroadband Internet Access Service as a Title IItelecommunications service presents a “majorquestion” under Food & Drug Administration v. Brown& Williamson Tobacco Corp., 529 U.S. 120 (2000), andUtility Air Regulatory Group v. EPA, 134 S. Ct. 2427(2014). To be sure, this Court’s major-questionsprecedents do not clearly establish that thereclassification of Broadband Internet AccessService—a composite service distinct from thestandalone transmission component at issue in BrandX—is a major question. But the D.C. Circuit dismissedthe arguments that reclassification does present amajor question without even considering their merits.

Contrary to the panel majority’s blithe assertionthat “[t]his case is nothing like Utility Air,” App. A at37a, Judge Williams (concurring in part and dissentingin part from the panel decision) and both JudgesBrown and Kavanaugh (dissenting from denial ofrehearing en banc) assert that it is. App. A at 115a(Williams, J.); App. E at 1413a-14a (Brown, J.); App. Eat 1429a-30a (Kavanaugh, J.). To avoid the question,

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the majority mischaracterized the teaching of UtilityAir. The majority focused on whether the FCC islegally authorized to “tailor” the statute, see App. A at37a, and, in so doing, it sidestepped the moreimportant issue that “the need to rewrite clearprovisions of the statute [whether or not statutorilyauthorized] should have alerted [the agency] that ithad taken a wrong interpretive turn,” Util. Air, 134 S.Ct. at 2446. The agency’s “tailoring” of the statute toconform to its policy preferences was not faciallyimpermissible, but it was certainly questionable anddemanding of careful review. Or, as articulated byJudge Brown, Utility Air “cited generally-applicabletenets of administrative law and the separation ofpowers…. If the FCC is to possess statutory forbear-ance authority, it should conform to forbearance’sstatutory conditions and the overall statutory scheme.Neither is the case here. The FCC’s abuse of forbear-ance amounts to rewriting the 1996 Act….” App. E at1413a-14a (Brown, J. dissenting from denial ofrehearing en banc).

Similarly, the panel blithely dismissed relatedarguments under Brown & Williamson that theCommission’s reclassification decision exceeds thescope of its delegated authority. See Br. for Intervenorsfor Pet’rs TechFreedom, Cari.net, Jeff Pulver, ScottBanister, Charles Giancarlo, Wendell Brown & DavidFrankel at 15-21, U.S. Telecom Ass’n. v. FCC, 825 F.3d674 (D.C. Cir. 2016) (No. 15-1063). Again, the courtsidestepped a fundamental legal question, assertingsimply that the argument “ignores Brand X,” withoutresponding to the extensively briefed arguments to the

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contrary. App. A at 33a. The majority instead rested,without elaboration, on a contested characterization ofBrand X as “expressly recogniz[ing] that Congress, byleaving a statutory ambiguity, had delegated to theCommission the power to regulate broadband service.”App. A at 33a.

Amicus takes no position here whether the Brown& Williamson argument is correct. Amicus’s point isthat there is a dispute, and that the D.C. Circuit failedto consider and evaluate reasonable argumentscontrary to its own. Those arguments have at leastsome force. See App. E at 1401a-02a (Brown., J.,dissenting from denial of rehearing en banc) (“TheCourt fails to fairly engage this standard of review,both overrating the role of the statutory ambiguityhere and underrating the application of the clearstatement rule to major questions. After jumping rightinto Chevron’s two-step deference analysis, the Court’sopinion treats Brand X as the coup de grace for anyrequirement of clear congressional authorization. Yes,Brand X did uphold the FCC’s determination that the‘offering’ of ‘telecommunications service’ in Title II ofthe Communications Act is ambiguous. But this‘statutory ambiguity’ does not allow the FCC toreclassify broadband Internet access without anyserious judicial scrutiny.” (internal citations omitted));App. E at 1431a (Kavanaugh, J., dissenting fromdenial of rehearing en banc) (“If the Supreme Court’smajor rules doctrine means what it says, then the netneutrality rule is unlawful because Congress has notclearly authorized the FCC to issue this major rule.”).

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The D.C. Circuit need not have—and as arguedbelow should not have—afforded the FCC the degree ofdeference that it did. This Court’s decisions in MotorVehicle Manufacturers Ass’n of the United States, Inc.v. State Farm Mutual Automobile Insurance Co., 463U.S. 29 (1983), Fox, and Encino Motorcars, LLC v.Navarro, 136 S. Ct. 2117 (2016) (decided after thepanel opinion was issued and before consideration ofpetitions for en banc rehearing), all require a morethorough vetting of the reasons underlying an agencychange in policy. Similarly, Brown & Williamson,Utility Air, and King v. Burwell, 135 S. Ct. 2480 (2015),all present circumstances in which an agencyconstruction of an otherwise ambiguous statute is notdue deference, including when the agencyinterpretation is a departure from longstanding agencyunderstandings or when the agency is not acting in anexpert capacity (e.g., its decision is based on changingpolicy preferences, rather than changing factual ortechnical considerations).II. Courts should be skeptical—not

“particularly deferential”—where agenciesreverse existing policy.

In the particular circumstance of agencydecisionmaking at issue here—where an agency hasreversed a long-established course of action andjustified its decision with reference to changed factualand legal predicates—courts have rightly demandedsomewhat-heightened justification. Indeed, despitethis Court’s nominal indifference to changed agencypolicies or interpretations in determining the appro-priate level of review, see, e.g., Brand X, 545 U.S. 967,

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lower courts—and even this Court itself—haveregularly required that agencies changing theirpolicies provide something more to meet the requisitestandard, whether under Chevron’s step-two“reasonableness” analysis, see Chevron U.S.A., Inc. v.Natural Resources Defense Council, Inc., 477 U.S. 837(1984), or APA arbitrary-and-capricious analysis, see,e.g., State Farm, 463 U.S. 29.

A. Empirical data suggests widespreadflaws in agencies’ “reasonable basis”justifications proffered to supportchanged policies.

A court’s decision to defer to an agency’s changedpolicy is exceptionally important, and courts generallydo not undertake the task lightly. Although thenominal analysis may not appear significantlydifferent in any particular case, this dynamic is clearlyseen at an aggregate level.

In a large-scale study of every federal appellatedecision between 2003 and 2013, Professors KentBarnett and Christopher Walker found that a court’sdecision of how much deference to afford agency actionis uniquely determinative in cases where an agency ischanging established policy. Kent Barnett &Christopher J. Walker, Chevron In the Circuit Courts,116 MICH. L. REV. 1 (2016). This is illustrated in theirFigure 13 (in which “Evolving” refers to cases wherecourts review changing agency interpretations):

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Id. at 64. In such cases, agency action is affirmed in themajority of cases in which Chevron deference isafforded, whereas it is rejected in the majority of casesin which courts review agency action under a less-deferential standard.

There is a stark difference in the importance of thedeference regime applied to reviewing an agency’schanged policies compared with reviewing consistentagency policies. Even when Chevron is applied,changed policies are affirmed less often (65.6% of thetime) than are longstanding policies (87.6% of the time)or recent (but not inconsistent) policies (74.7% of thetime). But when agency actions are reviewed under aless-deferential standard, courts have beensignificantly more likely to reject an agency’s changedpolicy. In such cases, courts reviewing the new policyde novo see fit to reject it nearly 70% of the time; courtsapplying Skidmore deference find the agency’s

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rationale unpersuasive a remarkable near-80% of thetime; and in no cases do courts affirm the agency’saction where the court does not specify a regime.

Relative to consistent agency interpretations, andeven new interpretations that do not reject priorpolicies, qualitative research illustrates that courtsclearly find changed agency policies problematic. Thedata reflect that agency decisions to changeestablished policy often present serious, systematicdefects. As a result, the data also demonstrate why itis important that courts review such decisions with askeptical eye, not a “particularly deferential” one. App.A at 40a.

Regardless of whether these data demonstrate asystematic problem with agency decisionmaking, at aminimum they show a disconcerting “discrepancybetween the law on the books and the law in action” asto how courts review changes in agency policy.Sunstein & Vermeule, supra (ms. at 24).

B. This Court’s precedents suggestconcern about agencies’ changedfactual and legal interpretations.

The data above further underscore the importanceof this Court’s command in Fox and Encino thatagencies show good reason for a change in policy; itsrecognition in Brown & Williamson and Utility Airthat departures from existing policy may fall outside ofthe Chevron regime; and its admonition in King thatpolicies developed by agencies in areas beyond theirtechnical expertise may fall outside of the Chevronregime. In such cases, this Court has indicated that

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reflexive and unrelenting application of deference—tofactual findings or legal conclusions—may not beappropriate. This accords with a reasonable concernthat these circumstances may be particularly prone toproduce agency action that is arbitrary, capricious,unreasonable, in excess of statutory authority, orotherwise unlawful. In these instances, courts mustapply more probing judicial review to ensure that theagency’s decisionmaking process reflects the sort ofexpert judgment that merits deference.

To be sure, State Farm, Fox, and Brand X (amongothers) contemplate that policies can change; Chevronitself was an example of a changing policy. Moreover,as this Court held in Fox, a changed policy orinterpretation need not be demonstrably better; “itsuffices that the new policy is permissible under thestatute, that there are good reasons for it, and that theagency believes it to be better, which the consciouschange of course adequately indicates.” Fox, 556 U.S.at 515 (emphasis in original).

Nevertheless, these requirements (i.e., statutoryauthority, good reasons, and adequate indication ofbelief in improvement) demand an agency justify itschange of course: “[A] reasoned explanation is neededfor disregarding facts and circumstances that underlay…the prior policy.” Id. at 516. And while it is clear thatchanges in agency policy do not automatically trigger aheightened standard of review, it is equally clear thatchanges in policy demand more than de minimissupport to withstand judicial review. “Agencyinconsistency is not a basis for declining to analyze theagency’s interpretation under the Chevron framework.

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Unexplained inconsistency is, at most, a reason forholding an interpretation to be an arbitrary andcapricious change from agency practice under theAdministrative Procedure Act.” Brand X, 545 U.S. at981. Thus, for example, Chevron deference is notnecessarily inappropriate in reviewing a changedagency interpretation, but the assessment of thereasonableness of the change under Chevron step-twomay be more exacting.2

Fox, meanwhile, highlights two circumstances inparticular when an agency’s shift in policy demands

2 There is persistent confusion over the relationship betweenarbitrary-and-capricious review and the application of Chevron.See Sunstein & Vermeule, supra (ms. at 23-24 n.159) (“Brand Xnotwithstanding, the Court just isn’t particularly clear orconsistent about the role of consistency under Chevron.”); Barnett& Walker, supra, at 65 (noting “judicial discomfort with APAarbitrary-and-capricious review, which some decisions havefolded into Chevron step two (as opposed to treating it as a distinctstep)”) (citing Kathryn A. Watts, Proposing a Place for Politics inArbitrary and Capricious Review, 119 YALE L.J. 2 (2009)); Note,Major Questions Objections, 129 HARV. L. REV. 2191, Part III.B(2016) (discussing the Supreme Court’s recent major-questionscases and relating them to arbitrary-and-capricious review, andnoting that “[m]ost of the latent concerns in the cases are lessabout ‘majorness’ as such and more about ‘big changes’—concernsabout the destabilizing effect of an agency’s changing itsinterpretation, usually in a charged political setting.… TheCourt’s apparent concerns about ‘big changes’ are betteraddressed under § 706(2)(A) of the APA…. Unfortunately…,confusion surrounds the precise relationship between Chevronand arbitrary and capricious review, [which] the Supreme Courthas done little to dispel.”). See also Encino, 136 S. Ct. at 2126(citing Brand X’s statement that “an ‘[u]nexplained inconsistency’

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heightened justification: First, when the agency’s “newpolicy rests upon factual findings that contradict thosewhich underlay its prior policy”; and, second, “when itsprior policy has engendered serious reliance intereststhat must be taken into account.” Fox, 556 U.S. at 515.Both are applicable here.

This Court has held that sometimes agency changesin policy or interpretation demand more probingreview in order to ensure that courts do not, under theguise of judicial deference to agency expertise, permitagencies to exceed the scope of their authority. Thus,for example, in Utility Air, this Court warned that“[t]he power of executing the laws necessarily includesboth authority and responsibility to resolve somequestions left open by Congress that arise during thelaw’s administration. But it does not include a powerto revise clear statutory terms that turn out not towork in practice.” 134 S. Ct. at 2446. “An agency…maychange its own conduct, but it cannot change the law.”Id. Utility Air reflects the important recognition thatan agency may deviate from past practice not onlywhere doing so reflects its expert judgment that such adeviation is required to maintain consistency with itsstatutory mandate in the face of changedcircumstances, but also where it seeks to evadestatutory constraints.

in agency policy is ‘a reason for holding an interpretation to be anarbitrary and capricious change from agency practice,’ and addingthat “[a]n arbitrary and capricious regulation of this sort is itselfunlawful and receives no Chevron deference”).

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III. The OIO and the D.C. Circuit opinionimplicate concerns about the propriety ofextreme deference to agency decision-making involving changes of policy.

This case presents the Court with an acute exampleof changed agency policy demanding greaterscrutiny—one in which there are strong indicationsthat the agency’s decisionmaking is suspect—and thusa compelling opportunity to clarify the proper approachto such circumstances. The panel majority affordedgreat deference, despite the clear and unaddressedevidence of serious flaws in the FCC’s process ofdeciding to subvert its prior regulatory approach andreclassify broadband access under Title II. Suchreflexive deference risks permitting agencies, underthe guise of exercising considered expertise, to evadestatutory constraints by interpreting facts anddrawing legal conclusions that justify their preferredpolicy outcomes.

For example, the D.C. Circuit accepted withminimal consideration the FCC’s remarkable assertionthat there are no reliance interests at stake in theCommission’s decision whether to regulate broadbandaccess lightly under Title I or as common carriageunder Title II of the Communications Act. Thisassertion defies economic logic and contradicts theFCC’s long-asserted position. See App. A at 119a-24a(Williams, J., concurring in part and dissenting inpart); Joint Pet. for Reh’g En Banc of Pet’rs Nat’l Cable& Telecomm. Ass’n & Am. Cable Ass’n at 5, U.S.Telecom v. FCC, 825 F.3d 674 (D.C. Cir. 2016) (No. 15-1063). See also George S. Ford, Net Neutrality,

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Reclassification, & Inv.: A Counterfactual Analysis,PHOENIX CTR. PERSP. 17-02 (2017) (empiricallydemonstrating that ISPs’ expectations of reclass-ification under Title II significantly affected theirbroadband investment decisions). The agency mayhave deemed such a statement necessary for the OIOto survive judicial review under Fox, but it cannot bejustified as a reasonable characterization of the facts.

The D.C. Circuit similarly deferred to other factualCommission assertions that seem to be post hocrationalizations masquerading as expert decision-making. The FCC had tried for nearly a decade toadopt or enforce any form of net neutrality regulationit could convince a court to uphold. Twice it failed, butin failing learned the superficial signals it needed tosend in order to clear the very low bar of judicialdeference. Key to this strategy was for the FCC toprogressively tweak parts of its ancillary activitiesaround broadband regulation in a way that wouldmake an industry that had been deemed competitivefor twenty years suddenly look like it was failingconsumers.

For example, in 2010 the Commission adopted itsfirst comprehensive set of net neutrality regulations,asserting statutory authority under Section 706 of theTelecommunications Act of 1996, 47 U.S.C. § 1302. SeePreserving the Open Internet Broadband Ind. Prac.,Rep. & Ord., 25 FCC Rcd. 17905, ¶8 (Dec. 23, 2010).The 2010 OIO was struck down by the D.C. Circuit in2014. Verizon v. FCC, 740 F.3d 623 (D.C. Cir. 2014).Nonetheless, the court upheld the Commission’sassertion of authority under Section 706 to enact some

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form of net neutrality rules. Id. at 628. Under Section706, “the Commission shall determine whetheradvanced telecommunications capability is beingdeployed to all Americans in a reasonable and timelyfashion. If the Commission’s determination is negative,it shall take immediate action to acceleratedeployment of such capability.” 47 U.S.C. § 1302(b).

In anticipation of the Commission’s next attempt(the 2015 OIO) to enact net neutrality rules, the FCCset out to ensure that this trigger was met byarbitrarily changing the performance thresholddefining broadband service, increasing it six-foldovernight. The result was to manufacture the requisitescarcity—scarcity that did not exist on the ground but,rather, was artificially conjured by regulatory fiat.Press Release, FCC, FCC Finds U.S. BroadbandDeployment Not Keeping Pace (Jan. 29, 2015).Importantly, this determination itself was based on analmost certainly arbitrary and capricious lack of data:As the Commission acknowledged, it made the decisionto set the performance threshold for “broadband” at25 Mbps downstream, even though it “ha[d] data for10 Mbps downstream and 25 Mbps downstream butnothing between those speeds.” See In Re InquiryConcerning the Deployment of Advanced Telecomm.Capability to All Am. in a Reasonable & TimelyFashion, & Possible Steps to Accelerate SuchDeployment Pursuant to § 706 of the Telecomm. Act of1996, as Amended by the Broadband DataImprovement Act, 30 FCC Rcd. 1375, ¶48 (2015). Thislack of data results from the inadequacy of theCommission’s own data collection practices, Id. at

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n.215, and resulted in the exclusion of the many ISPsthat offered 16 Mbps and 20 Mbps Internet servicefrom the definition. By dramatically redefiningbroadband in a way that excluded many ISPs thatoffered competitive Internet access services, theCommission created the conditions necessary for it toassert the need for action under Section 706.

These deficiencies, among others, did not gounnoticed. Tim Brennan, chief economist of the FCCduring the OIO’s drafting, infamously declared theOIO an “economics-free zone.” See L. Gordon Crovitz,‘Economics-Free’ Obamanet, WALL ST. J., Jan. 31, 2016,https://www.wsj.com/articles/economics-free-obamanet-1454282427. As Brennan further wrote inclarification of his assertion, “[e]conomics was in theOpen Internet Order, but a fair amount of theeconomics was wrong, unsupported, or irrelevant.”3

3 Brennan’s discussion bears quoting in full:Economics was in the Open Internet Order, but

a fair amount of the economics was wrong,unsupported, or irrelevant. Some examples:

Wrong. Even if broadband providers havemarket power because subscribers are slow toswitch broadband services, as the FCC claims, theFCC incorrectly found such providers lack anincentive to provide high-quality service.…

Unsupported. The FCC claims that a “virtuouscircle” preventing broadband providers fromcharging content suppliers for delivery will lead tomore content suppliers…. But the circle can workin reverse…. The FCC didn’t use its bestsupporting evidence—that broadband providers

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That the agency’s own chief economist so characterizedthe OIO should have caused the D.C. Circuit at leastsome unease with the soundness of the FCC’spurported analysis. As it was, however, only JudgeWilliams, dissenting in part from the panel majority,noted Brennan’s concern at all. See App. A at 158a.

Crucially glossed over by the panel majority, all ofthese changes came in the face of the FCC’slongstanding view that Section 706 “does notconstitute an independent grant of authority.” In reDeployment of Wireline Servs. Offering AdvancedTelecomms. Capability, 13 FCC Rcd. 24,012, 24,047,¶77 (1998). The changes also relied upon the notionthat the Commission could extensively tailor the OIOin order to avoid applying large sections of Title II—anotion that itself brings to mind this Court’s reluctanceto permit agencies to discover regulatory elephantshidden in statutory mouseholes. Whitman v. Am.Trucking Ass’ns, Inc., 531 U.S. 457, 468 (2001).

had already largely adopted net neutrality—asthat would have undermined the necessity ofregulation.

Irrelevant. In arguing against “paidprioritization,” the FCC cited articles on whateconomists call “price discrimination” to suggestpossible harms when a broadband providercharges different prices to content providers thatcompete with each other. But paid prioritizationisn’t price discrimination; it’s charging higherprices for better service.

Tim Brennan, Is the Open Internet Order an “Economics-FreeZone”?, 11 FSF PERSP. 22 (2016).

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It must be noted that nothing significant in termsof broadband deployment or performance actuallychanged between the 2010 OIO and the drafting of the2015 OIO, other than the agency’s characterization ofthe facts and its nominal interpretation of Section 706.The only difference now is that, as a purely technical,legal matter, the FCC is in a better position to pursueits “stand-alone policy objective,” Comcast Corp. v.FCC, 600 F.3d 642, 659 (D.C. Cir. 2010), withoutinterference from the courts. As Justice Thomaswarned, this sort of manufactured justification for apredetermined policy objective smacks of the agencyimpermissibly aggrandizing to itself “the power todecide—without any particular fidelity to the text—which policy goals [it] wishes to pursue.” Michigan v.EPA, 135 S. Ct. 2699, 2713 (2015) (Thomas, J.,concurring).

It is difficult not to conclude, if one applies even ascintilla of skepticism, that the FCC views theCommunications Act as an impediment in its path toenacting preferred policy goals. The Commission’schanged interpretations and factual characterizationsunderlying the OIO reflect not the careful exercise ofits expertise, but an effort to evade statutorylimitations. As this Court has observed, “when anagency claims to discover in a long-extant statute anunheralded power to regulate ‘a significant portion ofthe American economy,’ we typically greet itsannouncement with a measure of skepticism.” Util.Air, 134 S. Ct. at 2444 (quoting Brown & Williamson,529 U.S. at 159).

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The D.C. Circuit failed to adequately consider anyof these factors, instead treating this case as anunremarkable application of Chevron. Indeed, asdiscussed in Part I, above, that review wasexceptionally deferential. But the decision whether toafford an agency deference cannot itself be based upondeference to the agency’s assertions that it is duedeference.

The mere acceptance of the assertion that theagency “considered” the issues, without requiringevidence of the adequacy of its consideration, negatesvital safeguards that constrain agencies fromoperating outside the scope of effective judicial review.As this Court has explained, insisting upon such ashowing “ensur[es] that [the agency] engaged inreasoned decisionmaking—that it weighed competingviews, selected [an approach] with adequate support inthe record, and intelligibly explained the reasons formaking that choice.” Elec. Power Supply Ass’n, 136 S.Ct. at 784. Such a showing is particularly essentialwhere the agency’s conclusions are faciallyquestionable.

CONCLUSIONJudicial review of the OIO presents a case that lies

at the nexus—or perhaps the vortex—of several recentcases in which this Court has addressed agencydecisionmaking. This case presents an issue offundamental importance to the administrative state.This Court would not have heard the previous cases, ordecided them as it has, if it were not exceptionallyconcerned about lower courts’ application of

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substantial deference in cases such as this one. Whilethis Court has not spoken definitively on this issue, thepanel majority’s opinion, considered in the bestpossible light, lies at the extreme edge of existingprecedent. Moreover, it runs counter to the directionsuggested by this Court’s most recent decisions. It failsto recognize, much less resolve, the important issuesthat this Court has been struggling with and that arecentral to the present case.

For these reasons, the Court should grantcertiorari.Respectfully submitted,

Geoffrey A. ManneINTERNATIONAL CENTER FORLAW & ECONOMICS3333 NE Sandy Blvd.Suite 207Portland, OR 97232

Justin (Gus) HurwitzUNIVERSITY OF NEBRASKACOLLEGE OF LAW209 Ross McCollum HallP.O. Box 830902Lincoln, NE 68583-0902

Jeffrey A. MandellCounsel of Record

STAFFORD ROSENBAUM LLP222 W. Washington Ave.Suite 900Madison, WI 53703(608) 256-0226jmandell@staffordlaw.com

Counsel for Amicus Curiae

November 2, 2017