By Andrew H. Perellis and Craig B. Simonsen

In City of Arlington v. Federal Communications Commission, __ U.S. ___, No. 11-1545 (May 20, 2013), the Supreme Court re-affirmed the Chevron standard for deferring to an agency interpretation of an ambiguous statute even where the agency interpretation pertains to whether the agency possesses authority to act in the first instance. 

In this case the lower court considered whether an agency’s interpretation of a statutory ambiguity that related to its regulatory authority (its jurisdiction) was entitled to deference under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984).  The lower court decided it was.  The Supreme Court agreed, holding that courts must apply the Chevron framework to an agency’s interpretation of statutory ambiguities that concern the scope of the agency’s own statutory authority.

The Supreme Court concluded that a “general conferral of rulemaking authority validates rules for all the matters the agency is charged with administering. It suffices to decide this case that the preconditions to deference under Chevron are satisfied because Congress has unambiguously vested the FCC with general authority to administer the Communications Act through rulemaking and adjudication, and the agency interpretation at issue was promulgated in the exercise of that authority.”

The decision has broad implications for all of the various federal agencies vested with rulemaking authority, including, of course, the Environmental Protection Agency. Under the familiar two-step approach mandated by Chevron, the first step is whether the statutory language to be interpreted, on its face, is ambiguous, and whether Congress was silent regarding that ambiguity. If the answer to both of these questions is yes, then the second step is to evaluate whether the administering agency’s interpretation of that language is reasonable. Under the second step of Chevron, an agency’s interpretation of the statute it administers is afforded deference. If that interpretation is reasonable, it must be followed, regardless of whether or not the reviewing court would have come to the same conclusion.

Because the second step of Chevron requires deference, the holding of City of Arlington elevates the importance of Chevron’s first step when challenging whether the agency has authority to engage in a particular action or rulemaking under a statute. This requires arguing either that the statute is unambiguous in not providing such authority, or, although the particular statutory language is ambiguous, that Congress was not silent regarding the ambiguity – meaning that Congress resolved the ambiguity with other statutory language – so as to preclude the exercise of agency action.