In "indecency" case, SCOTUS eases APA test for policy reversals

The Supreme Court held 5-4 that the Federal Communications Commission’s reversal of a longstanding policy permitting “fleeting expletives” on broadcast television was not arbitrary and capricious under the Administrative Procedure Act (APA).

The Court said that an agency’s decision to reverse prior policy does not necessarily require a more detailed explanation than is necessary to adopt a policy in the first instance. Nevertheless, the Court suggested that an agency might have to justify disregarding previous factual findings, or the costs of upsetting private parties’ reliance on an old rule. In concurrence, Justice Kennedy amplified this concern, agreeing with the dissenters that an agency must not only justify the rule it adopts but the decision to change the rule. Justice Scalia wrote for the Court’s conservative members; Justices Thomas and Kennedy wrote separate concurrences. Justices Breyer, Stevens and Ginsburg each wrote dissents. FCC v. Fox Television Stations, Inc. (Apr. 28, 2009) (No. 07–582).

 

          Given the wide media coverage of this case, this posting will focus on the Justices’ discussion of the “arbitrary and capricious” standard in the context of rule changes generally, rather than the specifics of the case. In brief, however, Fox challenged the FCC’s change of a 30-year-old safe harbor policy for “fleeting expletives” in broadcasts. The Court held that the new policy was justified by (1) the patent offensiveness of these expletives, (2) the tendency of the safe-harbor policy to promote their use, and (3) technological advances making it easier to “bleep” offending words. The dissenters contended that these reasons did not justify abandoning the prior policy, which was based on the FCC’s understanding of First Amendment law; and that the FCC failed to even acknowledge the new policy’s chilling effect on independent stations who cannot afford state-of-the-art “bleeping” technology. More generally, the Court said much and resolved little about how to evaluating policy reversals under the APA. (The Court did not reach the First Amendment implications of the rule, though Thomas and Ginsburg spoke to them in their separate opinions.)

 

          Justice Scalia began by saying there was “no basis in the [APA] or in our opinions for a requirement that all agency change be subjected to more searching review.” He went on to say that an agency ordinarily must simply “display awareness that it is changing position,” and “show that there are good reasons for the new policy.” The majority acknowledged, however, that “a more detailed justification” is necessary in some situations, such as (a) when a new policy “rests upon factual findings that contradict those which underlay its prior policy,” and (b) “when its prior policy has engendered serious reliance interests that must be taken into account.” In these cases, it is not the change itself that matters but the agency’s “disregarding facts and circumstances that underlay or were engendered by the prior policy.”

 

          Justice Kennedy joined of the Court’s opinion, except for a discussion of the significance of the FCC’s role as an independent, rather than an Executive-controlled, agency. (The plurality found this insignificant.) Kennedy wrote separately to elaborate his view of why a policy reversal may be impermissible absent “a reasonable explanation” for the change. Whether such additional justification is needed, he said, is a question “not susceptible…to an answer that applies in all cases.” Specifically, he said that “an agency’s decision to change course may be arbitrary and capricious if the agency ignores or countermands its earlier factual findings without reasoned explanation for doing so.” More generally, he wrote,

There may be instances when it becomes apparent to an agency that the reasons for a longstanding policy have been altered by discoveries in science, advances in technology, or by any of the other forces at work in a dynamic society. If an agency seeks to respond to new circumstances by modifying its earlier policy, the agency may have a substantial body of data and experience that can shape and inform the new rule. In other cases the altered circumstances may be so new that the agency must make predictive judgments that are as difficult now as when the agency’s earlier policy was first announced. Reliance interests in the prior policy may also have weight in the analysis.

 

The question in each case is whether the agency’s reasons for the change, when viewed in light of the data available to it, and when informed by the experience and expertise of the agency, suffice to demonstrate that the new policy rests upon principles that are rational, neutral, and in accord with the agency’s proper understanding of its authority….

Notably, Kennedy agreed with (and quoted) the dissenters that “the agency must explain why ‘it now reject[s] the considerations that led it to adopt that initial policy.’” His concurrence thus provides additional grist for challenges to agency reversals.

 

          Speaking for all the dissenters, Justice Breyer said that explaining a policy reversal “requires more than setting forth the reasons why the new policy is a good one.” The agency must also explain why it made the change. He recognized that “sometimes the ultimate explanation for a change may have to be, ‘We now weigh the relevant considerations differently.’” Breyer identified three examples of situations where this would not be enough: where the prior policy was based on (a) specific factual findings, (b) its view of the governing law, and (c) “a special need to coordinate with another agency.” Breyer found it particularly troubling that the FCC did not explain why it changed its view of controlling First Amendment law. At the same time, he rejected Scalia’s charge that he would require agencies to show the new rule is “better” than the old rule.

 

          Writing separately, Justice Stevens argued that the FCC’s independent status makes it different from other agencies controlled by the Executive branch. Accordingly, he argued for “a strong presumption that the FCC’s initial views, reflecting the informed judgment of independent commissioners with expertise in the regulated area, also reflect the views of the Congress.” Presumably, this reasoning would apply to other independent agencies more responsive to Congress than to the President.

 

          All the Justices appeared to agree that additional explanation is required when a policy reversal disregards prior factual findings, or impinges on significant reliance interests in the prior rule. But the majority, apparently including Justice Kennedy, implicitly rejected the dissenters’ view that the detailed explanation is required for a policy change based on a changed interpretation of the governing law. Instead, the majority said “it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency believes it to be better, which the conscious change of course adequately indicates.”

 

          At the same time that it might make judicial challenges to some Bush-era policies more difficult, commentators have already noted that it will also make it easier for the Obama administration to repeal those old policies. Regardless of its precise implications, the various opinions in FCC v. Fox will no doubt be important for any future APA challenges to agency policy reversals.