Supreme Court Accepts Extreme Agency Deference Case

States and local governments have long been skeptical of the requirement that courts defer to agency interpretations of statutes because such deference gives unelected agencies a lot of power. In PDR Network, LLC v. Carlton & Harris Chiropractic Inc. the lower court required something worse: blind adherence to an agency order.

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 Federal Communications Commission (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 a 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 may find themselves 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.