Eight Circuit Applies Loper Bright in FCC Quadrennial Review Dispute 

On July 23^rd, in Zimmer Radio of Mid-Missouri v. FCC, the Eighth Circuit applied the Supreme Court’s decision in Loper Bright to a dispute over the FCC’s quadrennial review of its media ownership rules in a way that highlights a few key themes in Loper Bright statutory interpretation cases. 

• Courts generally review an agency’s interpretation of a statute (a legal question) de novo, independently fixing the metes and bounds of the agency’s power and discretion using traditional canons of interpretation.  

• An agency’s contemporaneous and longstanding interpretation may shed light on a statute’s best reading. 

• Subject to constitutional limits, where a statute is best read to delegate discretion to an agency, how the agency exercises that discretion under the deferential arbitrary and capricious standard so long as the agency stays within the boundaries set by the statute, particularly for agency decisions that turn on factual findings, policy decisions, and/or implicate technical expertise.  

Background on the FCC Order

Under Section 202(h) of the Telecommunications Act of 1996, every four years the FCC is statutorily required to review its rules. Congress instructed that, as part of that review, the FCC “shall determine whether any of such rules are necessary in the public interest as the result of competition” and “shall repeal or modify any regulation it determines to be no longer in the public interest.” After conducting its 2018 review, the FCC decided to keep all of those rules on the books and tighten one of them. Petitioners challenged the FCC’s 2023 Order on multiple grounds, some of which elucidate Loper Bright’s impact.  

Eighth Circuit Decision on Agency Discretion

In rejecting the petitioners’ argument that the FCC’s 2023 Order’s narrow definition of “market” was inconsistent with Section 202(h), the Eighth Circuit read Loper Bright to, on the one hand, require courts to rigorously police the boundaries of an agency’s statutory authority and independently decide what the law is. But the Court also cited Loper Bright for the proposition that Congress often writes laws “intentionally [to] provide agencies with discretion.” And as Loper Bright teaches, “[w]hen the best reading of a statute is that it delegates discretionary authority to an agency,” the APA requires courts “to independently interpret the statute and effectuate the will of Congress subject to constitutional limits.”  

Applying these principles, the Eighth Circuit found that Section 202(h) is one such law, concluding that given the FCC’s “broad power to regulate in the public interest,” the agency “is best positioned to define ‘competition’ for purposes of Section 202(h).” The Court also invoked Loper Bright’s teaching that an agency’s contemporaneous and consistent interpretation can be evidence of a statute’s meaning as further supporting the FCC’s exercise of discretion to define “competition” for purposes of Section 202(h). As the Eighth Circuit put it, “[t]he Section 202(h) dispute here deals not with the meaning of competition, but with the degree—how much competition must be considered in analyzing the ownership rules subject to Section 202(h) review. . . . In essence, the question is one of line drawing.” Thus, while the FCC had to consider competition in its quadrennial review, it had discretion to decide how broad or narrow the relevant markets are. The Court framed that as a technical, policy-laden decision that Congress may delegate.  

The Court next addressed petitioners’ alternative argument that the FCC’s market definition was arbitrary and capricious. Quoting the Supreme Court’s recent decision in Seven County Infrastructure Coalition v. Eagle County, Colorado (a case which may further elucidate Loper Bright’s meaning), the Court also noted “[w]hile judicial review of an agency’s statutory interpretation is generally de novo, ‘when an agency exercises discretion . . . , judicial review is typically conducted under the Administrative Procedure Act’s deferential arbitrary-and-capricious standard.’” Applying this deferential standard, the Court “decline[d] to second-guess the FCC’s market definitions,” later noting that it was not judicial role to determine what decision the agency should have reached. 

The Court decided another statutory authority question in petitioners’ favor, quoting Loper Bright to reiterate that “[i]n evaluating the Section 202(h) challenge, we ‘must exercise [our] independent judgment in deciding whether [the FCC] has acted within its statutory authority.’” Petitioners argued that a provision of the 2023 Order that expanded a regulation exceeded the FCC’s authority under Section 202(h). The Court agreed. Again independently interpreting Section 202(h) to fix the bounds of the FCC’s authority, the Court concluded that it “provides for a two-step process. First, the Commission determines whether any of the regulations subject to review are necessary in the public interest as the result of competition. If the rules are no longer necessary, the Commission has two choices: repeal or modify.” Those choices are binary. By contrast, “[i]f the rules remain necessary in the public interest, . . . the inquiry and the FCC’s authority end.” In that case, the rule must remain in its current form unchanged. In other words, while Section 202(h) grants the FCC broad discretion in some areas, it is a one-way deregulatory ratchet that cannot be used to tighten regulations already on the books. The Court also rejected the FCC’s interpretation of “modify” to include the power to tighten regulations, using traditional tools of statutory construction. Based on that statutory interpretation, the Court found that the FCC’s decision to tighten a regulation it deemed “necessary in the public interest” was ultra vires. 

The Eighth Circuit’s thoughtful decision in Zimmer Radio is yet another example of Loper Bright’s continuing and emerging impact on administrative law and statutory interpretation.