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Justice Kavanaugh quietly rephrased the arbitrary-and-capricious standard in FCC v. Prometheus
Kavanaugh adopted the "zone of reasonableness" test he raised in his DHS v. Regents concurrence.
Today the Court decided FCC v. Prometheus Radio Project unanimously. This case upheld the Commission's decision to repeal or modify media ownership rules. Specifically, the Court found that the agency action was not arbitrary and capricious. Justice Kavanaugh wrote the majority opinion. In Part II, he described the Court's APA jurisprudence in a novel fashion:
The APA's arbitrary-and-capricious standard requires that agency action be reasonable and reasonably explained. Judicial review under that standard is deferential, and a court may not substitute its own policy judgment for that of the agency. A court simply ensures that the agency has acted within a zone of reasonableness and, in particular, has reasonably considered the relevant issues and reasonably explained the decision. See FCC v. Fox Television Stations, Inc., 556 U. S. 502, 513–514 (2009); Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U. S. 29, 43 (1983); see also FCC v. WNCN Listeners Guild, 450 U. S. 582, 596 (1981).
"Zone of reasonableness." Sounds like "zone of interests." At first blush, I couldn't quite place it. FCC v. Fox and State Farm did not use that phrase. Where have I heard that expression before? The answer is Justice Kavanaugh's concurrence from DHS v. Regents. Kavanaugh's analysis from Prometheus is copied, almost verbatim, from his Regents concurrence. Last June, he wrote:
The APA's arbitrary-and-capricious standard requires that agency action be reasonable and reasonably explained. As the Court has long stated, judicial review under that standard is deferential to the agency. The Court may not substitute its policy judgment for that of the agency. The Court simply ensures that the agency has acted within a broad zone of reasonableness and, in particular, has reasonably considered the relevant issues and reasonably explained the decision. See FCC v. Fox Television Stations, Inc., 556 U.S. 502, 129 S.Ct. 1800, 173 L.Ed.2d 738 (2009); Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U.S. 29, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983).
There is only one substantive difference. The concurrence refers to a "broad zone of reasonableness." And Prometheus refers to a "zone of reasonableness," presumably not broad. Here, Justice Kavanaugh has quietly rephrased the Court's approach to A&C review. The Court had never adopted this test before. But now lower courts will have to determine what the "zone of reasonableness" is.
I always read Kavanaugh's opinions very carefully and check his citations. He doesn't always show his work. Justice Kavanaugh resembles the Chief Justice in this regard. Here, Justice Kavanaugh had an idea in a 2020 concurrence, and buried it in a 2021 majority opinion without acknowledging its provenance. I don't know if the "zone of reasonableness" will have much of an impact on admin law. But the Court should recognize this change.
I don't know if this move represents a retreat from the Chief's stringent A&C review in Regents. This language seems quite deferential:
In short, the FCC's analysis was reasonable and reasonably explained for purposes of the APA's deferential arbitrary-and-capricious standard. The FCC considered the record evidence on competition, localism, viewpoint diversity, and minority and female ownership, and reasonably concluded that the three ownership rules no longer serve the public interest. The FCC reasoned that the historical justifications for those ownership rules no longer apply in today's media market, and that permitting efficient combinations among radio stations, television stations, and newspapers would benefit consumers. The Commission further explained that its best estimate, based on the sparse record evidence, was that repealing or modifying the three rules at issue here was not likely to harm minority and female ownership. The APA requires no more.
To be sure, in assessing the effects on minority and female ownership, the FCC did not have perfect empirical or statistical data. Far from it. But that is not unusual in day-to-day agency decisionmaking within the Executive Branch. The APA imposes no general obligation on agencies to conduct or commission their own empirical or statistical studies. Cf. Fox Television, 556 U. S., at 518–520; Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U. S. 519, 524 (1978). And nothing in the Telecommunications Act (or any other statute) requires the FCC to conduct its own empirical or statistical studies before exercising its discretion under Section 202(h). Here, the FCC repeatedly asked commenters to submit empirical or statistical studies on the relationship between the ownership rules and minority and female ownership. See, e.g., In re 2014 Quadrennial Review, 29 FCC Rcd., at 4460, and n. 595. Despite those requests, no commenter produced such evidence indicating that changing the rules was likely to harm minority and female ownership. In the absence of additional data from commenters, the FCC made a reasonable predictive judgment based on the evidence it had. See State Farm, 463 U. S., at 52.
And Justice Kavanaugh closes with a rehash of the "zone of reasonableness" language:
In light of the sparse record on minority and female ownership and the FCC's findings with respect to competition, localism, and viewpoint diversity, we cannot say that the agency's decision to repeal or modify the ownership rules fell outside the zone of reasonableness for purposes of the APA.
For those interested, the phrase "zone of reasonableness" often comes up in the interpretation of ambiguous contracts. I did some more digging. The Court denied cert in Scenic America v. Department of Transportation (2017). Justice Gorsuch wrote a statement respecting the denial of certiorari, which was joined by the Chief Justice and Justice Alito. In that statement, Justice Gorsuch seemed to cast some doubt on this "zone of reasonableness" test. He wrote:
But in relatively recent times some courts have sought to displace familiar rules like these in favor of a new one, suggesting that an administrative agency's interpretation of an ambiguous contractual term should always prevail—at least so long as the agency's interpretation falls within a (generously defined) zone of "reasonableness."
Of course, courts sometimes defer to an agency's interpretations of statutory law under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 866, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), and its progeny. But whatever one thinks of that practice in statutory interpretation cases, it seems quite another thing to suggest that the doctrine (or something like it) should displace the traditional rules of contract interpretation too.
Justice Thomas also wrote a concurrence in Prometheus. He wrote that the "FCC had no obligation to consider minority and female ownership." The majority declined to reach this issue.
Update: I dug a little deeper. Then-Circuit Judge Kavanaugh used a very description of A&C review in RIAA v. Librarian of Congress (D.C. Cir. 2010):
RIAA does not contend that the Board contravened any specific statutory limit. In other words, this is a State Farm case, not a Chevron case. The Board's rulings are subject to review in this Court under the arbitrary and capricious standard of the Administrative Procedure Act. 17 U.S.C. § 803(d)(3); see 5 U.S.C. § 706(2)(A). As a general matter, our review under that standard is deferential. See FCC v. Fox Television Stations, ––– U.S. ––––, 129 S.Ct. 1800, 1810, 173 L.Ed.2d 738 (2009); Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). And we give "substantial deference" to the ratemaking decisions of the Board because Congress expressly tasked it with balancing the conflicting statutory objectives enumerated in the Copyright Act. SoundExchange, Inc. v. Librarian of Congress, 571 F.3d 1220, 1225 (D.C.Cir.2009). "To the extent that the statutory objectives determine a range of reasonable royalty rates that would serve all [the] objectives adequately but to differing degrees, the [Board] is free to choose among those rates, and courts are without authority to set aside the particular rate chosen by the [Board] if it lies within a zone of reasonableness." Recording Indus. Ass'n of America v. Copyright Royalty Tribunal, 662 F.2d 1, 9 (D.C.Cir.1981) (internal quotation marks omitted).
The cited 1981 decision was written by Judge Mikva.
Judge Kavanaugh also used this phrase in Emily's List v. FEC (D.C. Cir. 2009):
Putting aside the constitutional and statutory-authority problems with the challenged rules, the provisions are not otherwise arbitrary and capricious. Agencies generally do not violate the APA's deferential arbitrary-and-capricious standard when they employ bright-line rules for reasons of administrative convenience, so long as those rules fall within a zone of reasonableness and are reasonably explained.
I've observed that Justice Kavanaugh often cited his circuit court opinions. Here, the Court adopted a new phrasing of a test. A citation to the D.C. Circuit would have been warranted.