What the end of the Chevron doctrine means for media and tech

Last month, the U.S. Supreme Court - split along ideological lines - upended the Chevron doctrine in its ruling on the case of Loper Bright Enterprises v. Raimondo (Loper Bright). The 1984 Chevron doctrine, which has served as the bedrock of administrative law, held that where a federal agency is tasked with enforcing an ambiguous statute with multiple reasonable interpretations, a court must defer to the agency's expertise.

One prominent example of the doctrine's application is the Federal Communications Commission's (FCC) Net Neutrality orders. Under President Trump, a Republican-led FCC rescinded the Net Neutrality rule, which was issued during the Obama Administration and the courts deferred to the agency's expertise. Fast forward to the Biden Administration's FCC, which pushed a new Net Neutrality rule. Again, the courts deferred to the agency's expertise. Critics of the Chevron doctrine will often point to Net Neutrality as an example of how it breeds regulatory uncertainty.

The Court's new ruling in the Loper case explicitly invalidated the Chevron doctrine and stated that the 1946 Administrative Procedures Act (APA) requires federal courts, not administrative agencies, to independently assess whether an agency's actions fall within its statutory authority as expressed by Congress. This shift in the character of judicial oversight is a win for the opponents of federal regulations. It heralds the beginning of an era characterized by intensified examination of agency decisions. That is because federal courts will now decide whether an agency has acted within its statutory authority where congressional intent is ambiguous.

In the Net Neutrality cases above, this means that courts, and ultimately the Supreme Court, will decide whether the FCC has the authority to issue a Net Neutrality rule. A conservative court is likely to rule that an aggressive Net Neutrality rule will have overstepped the FCC's statutory authority, which means that Congress will have to pass specific authorizing legislation for the FCC to move forward.

Welcome to legal limbo

While the implications will play out for decades, there are some important near-term impacts for publishers and the tech industry. For starters, we are likely to be in legal limbo for the next few years. The upending of Chevron means that federal judges must now interpret whether a federal agency has overreached its statutory authority.

Many predict a flood of new litigation to challenge existing and pending regulations. Indeed, some groups have already hinted at their plans to do so. That said, not all federal judges share the same philosophy. Therefore, we can expect conflicting rulings in the near term as various judges will interpret the breadth of an agency's authority differently. Ultimately, those conflicting rulings will make their way to the Supreme Court, though that will likely take a few years. In the short term, companies may be left with a patchwork of regulations with which to comply. For media companies, this could mean conflicting legal guidance on what kinds of personal data can be collected and used by advertisers and ad tech companies among other things.

Throttling the FTC

Beyond the general legal uncertainty, we should also expect a significant curtailment of the Federal Trade Commission's (FTC) rulemaking. For better or worse, the FTC's main statutory authority resides in Section 5 of the FTC Act, which charges the agency with enforcing against "unfair or deceptive" business practices.

Under Chair Lina Khan, the FTC has used this broad authority to aggressively pursue data brokers and publish new regulations to curb collection and use of sensitive data. However, that authority may come under scrutiny now that Chevron deference has been swept away.

Here are some specific FTC initiatives worth watching:

1. Commercial Surveillance Rule. In 2022, the FTC requested comments on whether it should issue a rule to regulate the ubiquitous collection of consumer data across the web. Ever since, we have been expecting the agency to issue a proposed rule to regulate the "commercial surveillance" economy. Given the importance of third party and webwide data collection to the largest tech companies, any FTC rule is now more likely to be met with an immediate lawsuit challenging the agency's authority to issue such rules. What's more, the undoing of Chevron may change the FTC's decision about whether to proceed with the rule at all since a court challenge will be expensive and could lead to a damaging precedent.

• COPPA enforcement. Congress granted the FTC specific authority to issue rules and enforce the Children's Online Privacy Protection Act in 1998. Over the years, the agency has routinely updated its guidance on how companies should comply to include limits on what kinds of data companies can collect. Even though the FTC has clear statutory authority to enforce COPPA, In the wake of Chevron's undoing, we are likely to see some industry groups file suit to argue that the FTC exceeded its authority to block some types of data from being collected and used.

• Artificial intelligence. The FTC has announced investigations into various leading AI companies with an eye toward better understanding the relationship between tech giants and AI companies. The agency is concerned that undisclosed or creative partnerships among a few large companies could lock out competition in the burgeoning AI marketplace. However, Congress has not passed any AI legislation much less anything that would grant the FTC jurisdiction. As a result, the FTC investigation may not yield much and, even if the FTC were to move forward with fines and/or remedies, we should expect a well-funded tech sector to challenge the FTC's authority in court.

Significant impact for the future

Even though the Court's ruling is still new, the full impact on federal rulemaking and, subsequently, on the tech sector is likely to be massive. In the short-term, confusion will be prevalent and media organizations may struggle to balance the various legal rulings and interpretations that impact digital businesses.

As more and more regulations are scrutinized and as lower courts issue new rulings based on the Supreme Court's new guidance, we could see regulations dialed back or eliminated altogether that could open a new era of aggressive data collection and marketing. All of this serves as an important reminder that Congress needs to act now more than ever on issues like data privacy, AI and competition.

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