State and Local Legal Center Files Supreme Court Amicus Brief in Agency Authority Case

In an amicus brief in PDR Network, LLC v. Carlton & Harris Chiropractic Inc. the State and Local Legal Center (SLLC) argues that federal courts should be able to refuse to apply federal agency orders which they deem inapplicable even if the orders are covered by the Hobbs Act. While case sounds obscure, numerous Federal Communications Commission (FCC) orders are covered by the Hobbs Act including the small cell order, which preempt local regulations to facilitate the deployment of small cells for 5G.

The Hobbs Act vests the federal courts of appeals with “exclusive jurisdiction” to “enjoin, set aside, suspend (in whole or in part), or to determine the validity of” certain orders made by the FCC and orders of the Secretary of Agriculture, Secretary of Transportation, Federal Maritime Commission, Atomic Energy Commission, and others.

According to one lower court the Hobbs Act “promotes judicial efficiency, vests an appellate panel rather than a single district judge with the power of agency review, and allows uniform, nationwide interpretation of the federal statute by the centralized expert agency.”

In this case PDR Network claims the Fourth Circuit improperly interpreted the Hobbs Act to require a federal district court (and the Fourth Circuit as well) to accept an FCC order which no one questioned was valid but which PDR Network claims should not be deferred to.

PDR Network sent Carlton & Harris, a chiropractic office, a fax about receiving a free Physicians’ Desk Reference eBook. Carlton & Harris sued PDR Network claiming it violated the Junk Fax Prevention Act, which prohibits the use of a fax machine to send “unsolicited advertisement[s].”

PDR Network argued that the fax could not be considered an unsolicited advertisement because it did not offer anything for sale. Carlton & Harris countered that the FCC has adopted a rule stating that “facsimile messages that promote goods or services even at no cost . . . are unsolicited advertisements under the Act.”

Typically, when a court interprets a statute it first determines if the statute is ambiguous. If it is, the court applies so-called Chevron deference, deferring to an agency’s reasonable interpretation of the statute.

In this case the district court concluded that the statute isn’t ambiguous and doesn’t apply to a fax offering something for free. So the district court didn’t defer to the FCC interpretation. The Fourth Circuit disagreed holding that the Hobbs Act required the district court not just to defer to the FCC order but to accept it. A dissenting judge argued that the Hobbs Act is implicated only if there is a challenge to the “validity” of an agency’s order. There was no such challenge in this case.

States and local governments aren’t typically senders of junk faxes. But they are subject to agency orders covered by the Hobbs Act which they may view as valid but which they don’t think should receive deference. This case requires courts to go even further than deferring to such orders.  

The SLLC amicus brief argues that the Fourth Circuit’ construction of the Hobbs Act “work[s] an unprecedented transfer of judicial and legislative power to agencies, which would be free to construe federal law without any opportunity for judicial review.” The Hobbs Act requires that challenges to the validity of covered agencies’ actions be brought within 60 days after the entry of a final order. As a practical matter the lower court’s ruling would require states and local governments “to anticipate and challenge possible future unlawful applications of an agency order [in that 60 day window] when they were still theoretical or lose the chance to do so forever.” Many FCC order aren’t as monumental as for example the small cell order meaning state and local governments may not immediately realize they should challenge their validity.   

Ashley E. Johnson, Bradley G. Hubbard, and Elizabeth A. Kiernan of Gibson, Dunn & Crutcher wrote the SLLC amicus brief which the following organizations joined:  the National Association of Counties, the National League of Cities, the United States Conference of Mayors, and the International Municipal Lawyers Association.