William Funk, Final Agency Action after
Hawkes, 11 N.Y.U. J.L. & Liberty
(forthcoming 2017), available at SSRN
Whenever I hear the phrase “force of law” in administrative law, I am inclined to reach for my wallet. Agency statutory interpretations with the “force of law” net Chevron deference; those lacking such force are stuck with Skidmore respect. Legislative rules have the “force of law,” but interpretive rules and general statements of policy (a/k/a guidance documents) do not. And then there is the second prong of the Bennett test for the finality of agency action, which checks whether an action has determined legal rights or obligations or otherwise has legal consequences. In other words, this prong checks whether the agency action has the “force of law.” It is not a coincidence that each of these corners of administrative law is something of a mess. The concept of “force of law” limits application of Chevron, requirements for notice and comment, and the availability of judicial review. But, often enough, courts encounter situations in which this approach seems under-inclusive. For instance, they confront agency interpretive rules that have such large practical impacts that they seem like they should be subject to judicial review—even though, technically lacking the “force of law,” they arguably should be regarded as non-final under Bennett. To accommodate such cases, courts sometimes stretch and tear the “force of law” concept, leaving doctrine confused and confusing.
Fortunately for us, Professor Bill Funk has written a concise and excellent essay, Final Agency Action after Hawkes, that offers a great deal of insight on how to clean up one of these messes. His jumping off point is the Supreme Court’s recent decision in United States Army Corps of Engineers v. Hawkes Co., 136 S. Ct. 1807 (2016), which held that “jurisdictional determinations” (JDs) issued by the United States Army Corps of Engineers stating whether land contains “waters of the United States” constitute final agency actions subject to review under the APA. This opinion strongly highlights but does not resolve the tension between formalism and pragmatism that has plagued the doctrine of finality. Professor Funk’s essay diagnoses this tension, carefully traces its roots, and offers several thoughtful suggestions for resolving it.
Hawkes Co. (“Hawkes”) wants to mine peat on some land that it owns, but this land is damp enough that it might contain “waters of the United States” within the meaning of the Clean Water Act. A landowner that discharges pollutants into “waters of the United States” without a permit from the Corps faces severe civil and criminal penalties. Regrettably, the process for obtaining such a permit can be long and expensive. Hoping to avoid this burden, Hawkes sought a JD from the Corps, which responded with a “positive JD” declaring that Hawkes was indeed the lucky owner of jurisdictional waters.
Unhappy at the news, Hawkes sought judicial review of the JD pursuant to the APA. The government responded that this suit did not satisfy Bennett’s test for finality because JDs do not actually have legal consequences. Hawkes’ obligations under the CWA turn on whether its land happens to contain “waters of the United States.” This condition either exists or doesn’t exist regardless of what the Corps might say in a JD. Before the Hawkes litigation, the Corps had used this type of argument with great success to block review of JDs as nonfinal.
It did not succeed at the Supreme Court, however, which managed, but not without strain, to find a formal “legal” consequence sufficient to satisfy Bennett. The Chief Justice’s opinion for the majority noted that under a memorandum of agreement between the Corps and EPA, issuance of a “negative JD” blocks these agencies from bringing enforcement actions for five years, creating a safe harbor for the landowner and altering the legal landscape. And a positive JD creates a legal consequence by denying this safe harbor. (As the Corps reads this memo, it should not apply to cases like Hawkes, but that did not bother the Court overmuch.)
Now we get to the interesting part. Rather than stop its analysis after finding or manufacturing a formal legal consequence, the majority opinion instead veered into a short discussion of the Court’s “pragmatic” approach to finality, hearkening back to cases such as Abbott Laboratories v. Gardner, 387 U.S. 136 (1967), and Frozen Food Express v. United States, 351 U.S. 40 (1956). Most notably, the Court observed that, in Frozen Food, it had ruled that an ICC order interpreting the scope of certain statutory exemptions from regulation was final and reviewable. This order did not change the law but instead merely stated the agency’s reading of the law. Still, the order had substantial practical impact given that it warned carriers that violated its terms that they risked the danger that the agency would initiate enforcement actions that could lead to criminal penalties. Likewise, even though a JD itself does not change anyone’s legal obligations, a positive JD warns a landowner that, if it discharges pollutants on its property without a permit from the Corps, it risks “significant criminal and civil penalties.”
This discussion prompted an interesting split among the justices. One might characterize Chief Justice Roberts’ majority opinion as attempting to infuse Bennett’s formalistic, force-of-law approach to finality with Frozen Food’s pragmatic focus on practical impacts and coercion. Justice Ginsburg wrote a one-paragraph concurrence that went considerably further. She would junk Bennett and, relying on Abbott Labs and Frozen Food, regard agency action as final so long as it is “definitive” and has “an immediate and practical impact.” And Justice Kagan, writing another a one-paragraph concurrence, made the opposite point that the Court should stick to Bennett’s focus on legal consequences.
Professor Funk’s essay traces the case law roots of these competing formalist and pragmatic approaches to finality. Spoiler alert: It turns out that Bennett’s formalist roots do not run deep. Professor Funk observes, among other interesting points, that Bennett’s rewrite of finality doctrine never bothered to cite Abbott Labs, which had been the leading case on the subject for thirty years, or even to “indicate any awareness that it was stating the question differently” than Abbott Labs had. It is also interesting to learn that “none of the authority cited by Bennett for its test for finality involved suits under the APA.” If Justice Ginsburg ever wants to aim serious fire at Bennett, Professor Funk has supplied doctrinal ammo.
More importantly, however, he also suggests sensible ways to alter doctrine to reflect the real concerns that animate both the formalist and pragmatic approaches. The formalist, “force of law” approach responds to the concern that we do not want agencies sued every time they say what they think a statute means or express future policy intentions. Such omnipresent judicial review would discourage agencies from providing valuable information to regulated parties and the broader public. On the other hand, agency actions, even though they do not technically change anyone’s legal obligations, may exercise great coercive force on regulated parties. There were very good reasons for Hawkes to be distressed by the Corps’ positive JD declaring that its peat mine site contained jurisdictional waters. The pragmatic approach responds to this danger of coercion (or extortion).
The key, then, is to find a way of defining finality that opens the door to judicial review of agency actions with genuinely coercive effects while still blocking judicial review of agency actions that lack such effects. Professor Funk offers several. For instance, courts might strike a better balance by focusing on the APA’s limitation that final agency action is reviewable only where there is “no other adequate remedy in a court.” He notes that, “where enforcement proceedings would have no other effect than to require the person to comply with the agency’s interpretation or policy, waiting for such proceedings would often provide an adequate alternative to pre-enforcement review.” By contrast, where an agency action notifies a regulated party that it risks severe penalties if it engages in certain conduct, the coercive effect justifies immediate, pre-enforcement review.
Final Agency Action After Hawkes is concise, careful, thoughtful, and informative. Thanks to these qualities, it also strikes me as one of those relatively rare pieces of legal scholarship that has a chance to be effective. It is easy to imagine a court seizing upon one or more of Professor Funk’s sensible prescriptions to clarify a needlessly confusing corner of administrative law. (Calling Justice Ginsburg!)
A quick afterword: Professor Funk’s essay makes a nice companion piece to Professor Cass Sunstein’s recent essay, “Practically Binding”: General Policy Statements and Notice-and-Comment Rulemaking, 68 Admin. L. Rev. 491 (2016). Sunstein’s essay addresses the notoriously awful problem of determining when a purported policy statement issued by an agency is really an improperly promulgated legislative rule that should have gone through notice and comment. As noted at the top of this post, this is another context in which administrative law turns to the “force of law” to draw the line but then has trouble dealing with rules that lack this force but have great practical impact. Professor Funk makes an able argument that courts should apply finality doctrine in a manner that allows judicial review of agency actions based on practical impacts. Professor Sunstein, by contrast, ably argues that courts should not, as a matter of law, require agencies to conduct notice and comment based on practical impacts. Seems to me that they are both right, which in turn suggests the importance of being careful whenever administrative law tosses around the phrase, “force of law.”
Jed Handelsman Shugerman, The Dependent Origins of Independent Agencies: The Interstate Commerce Commission, the Tenure of Office Act, and the Rise of Modern Campaign Finance
, 31 J.L. & Pol.
139 (2015), available at SSRN
Many law review articles fail to live up to the promise of their titles or abstracts, leaving disappointed readers in their wake. Others have titles that hide the ball. Behind the wordy and somewhat bland title of Jed Shugerman’s 2015 article—The Dependent Origins of Independent Agencies: The Interstate Commerce Commission, the Tenure of Office Act, and the Rise of Modern Campaign Finance—lies a fascinating new take on the origins of independent agencies.
The identification of the Interstate Commerce Commission (ICC) as the first modern independent regulatory agency is familiar to scholars of American administrative law. The ICC, created in 1887, was the first federal agency with the hallmarks of independence—multiple commissioners appointed by the President with the advice and consent of the Senate, staggered terms of specified duration (six years in this case), removal by the President only for “inefficiency, neglect of duty, or malfeasance and office,” and a requirement of bipartisan membership.
As Shugerman explains, the standard account for this innovation has been Congress’s desire to insulate the ICC from political influence, mainly from the President but also to an extent from Congress itself. Shugerman disputes this, claiming that “Congress designed the ICC to be politically accountable to the Senate, but the Commission was also envisioned to be accountable to the President.” (P. 172.) The true reason for the establishment of the ICC as a regulatory agency, as Shugerman’s research and analysis reveals, was to provide an incentive for interest groups to make campaign donations to politicians, mainly the President and Senators, as a substitute for the assessments that federal patronage employees previously paid to their political party.
In the early 1880s, the system of patronage assessments was breathing its last, and an alternative source of campaign funding was needed. At the same time, Congress repealed the Tenure of Office Act, which required Senate consent to the removal of many federal officers. The repeal is puzzling because the Senate joined in reducing its own power. Shugerman explains the repeal as a result of “the declining importance of assessments and patronage, a rise in intraparty factionalism, and the luck of personal animosities.” (P. 160.) And also about this time, “[f]armers, merchants and other shippers denounced the railroads’ predatory pricing and demanded regulation.” (P. 165.)
While this demand for regulation set the stage for the enactment of the Interstate Commerce Act, Shugerman’s thesis is that the need for a source of campaign funding heavily influenced the form of federal regulation. Railroads represented one of the most lucrative industries in the country, and their owners would eagerly use campaign contributions to procure favorable treatment by the Commission. As Shugerman colorfully puts it, while “[t]here was no smoking gun connecting the supporters of the commission to an agenda to extract railroad campaign contributions . . ., there is something of a bloody knife: the opponents of the commission made this link.” (P. 171.) As one opponent quoted by Shugerman put it, the Act would “force railroad capital into the canvass to secure the election of a man who will bend its knee to their wishes.” (P. 172.)
Shugerman’s other main piece of evidence is that the alternative offered in Congress to Commission enforcement was private enforcement through litigation in federal or state court. That alternative, however, would not provide any incentive for campaign contributions by either side, since the politically insulated courts would be where the actions is. Thus, Congress chose to create a Commission, under political influence, with enforcement powers. In fact, independence did not come until later: The ICC was initially located within the Department of the Interior, augmenting potential presidential influence over its actions. Subsequent legislative reform, discussed by Shugerman, in 1903, 1906, 1910 and 1920, removed the ICC from Interior and granted it greater political independence, but only after the ICC proved itself a reliable reflection of Congress’s policy preferences. So much for the standard account of the origins of the independent agency form.
In short, Jed Shugerman’s re-telling of the story of the origins of the ICC is fascinating and eye-opening, the sort of administrative law scholarship we need more of.
Cite as: Jack Beermann, The Surprising Origins of the Interstate Commerce Commission
(March 20, 2017) (reviewing Jed Handelsman Shugerman, The Dependent Origins of Independent Agencies: The Interstate Commerce Commission, the Tenure of Office Act, and the Rise of Modern Campaign Finance
, 31 J.L. & Pol.
139 (2015), available at SSRN), http://adlaw.jotwell.com/the-surprising-origins-of-the-interstate-commerce-commission/
For decades, controversy has brewed over agency (ab)use of and (over)reliance on guidance documents. On one account, agencies turn to guidance in an end run around notice-and-comment requirements, producing de facto legislative rules without either public input or, at least in some cases, judicial scrutiny. On another, guidance documents are good government in action, a helpful and illuminating benefit. In Preambles as Guidance, Kevin Stack does not take sides in this debate. But he does helpfully remind us that there is one type of guidance that (a) is not subject to the standard critique and (b) is often not appreciated as guidance at all. This overlooked creature, hiding in plain sight, is the preamble that accompanies every final rule.
The article is an exercise in APA originalism. Particularly since State Farm, the dominant understanding of the preamble has been that its central function is justificatory—in order to withstand judicial review, the agency must respond to significant comments, show that it engaged in reasoned decisionmaking, and thoroughly explain itself. But the APA’s requirement of a “statement of basis and purpose,” 5 U.S.C. §553(c), suggests a rather different goal: clarifying and helping readers understand the rule. Stack quotes the Attorney General’s Manual on the APA: “The required statement will be important in that the courts and the public may be expected to use such statements in the interpretation of the agency’s rules.” Stack’s article is an extended endorsement and elaboration of this model of rulemaking preambles, providing a clear, convincing, and elegantly written reconceptualization of a basic feature of agency rulemaking.
The article draws from a report Professor Stack prepared for the Administrative Conference of the United States, which in turn was the basis of Recommendation 2014-3, Guidance in the Rulemaking Process, 79 Fed Reg. 35,992 (June 25, 2014). The recommendation is focused on what agencies should put in their preambles; this article is focused on how the preamble should be treated once it is published. Part I shows that (I am tempted to say “reminds us that,” but most of “us” never held the conception Stack is pushing) that, both under the APA and in practice, preambles should be, and are, designed to provide guidance—they explain and clarify rather than justify the agency decision. Part II then argues for the “superiority” of preamble guidance. The preamble is produced right along with the rule. It is issued by the agency itself, after extensive internal vetting and deliberation (and, in the case of executive agencies, OIRA review), with every incentive for care and precision, and published in the Federal Register, where it is highly visible, searchable, and accessible.
The article then turns to discussion of what consequences flow from this understanding of preambles as especially reliable guidance documents. First, Stack argues that interpretations in preambles merit particular judicial deference. He does not seem to advocate giving them more weight than they would receive under the existing Auer doctrine (under which a court is to give an agency’s interpretation of its own regulation “controlling weight unless it is plainly erroneous or inconsistent with the regulation”). Instead, they get special weight within Auer. Thus, in deciding when Auer deference does and does not apply, these interpretations easily fall on the “apply” side of the line. Beyond that, should there be future inroads on Auer—an entirely plausible prospect given the current ferment over that decision—traditional Auer deference would remain appropriate when courts consider preamble guidance.
The article concludes with a few points about the implications for agency practice of Stack’s conceptualization of preambles. First, a preamble’s superiority means that it should be seen as superseding and displacing any prior guidance with which it is inconsistent. Second, preamble guidance constrains the agency. As a matter of best practices, an agency should not revise interpretations set out in a preamble unless the revision comes from an official at the same or higher level in the agency hierarchy as the original author, the revision is published in the Federal Register, and the revision is expressly justified.
This account raises one empirical question: On Stack’s account, the preamble should be required reading for, if not committed to memory by, any agency official who enforces, interprets, or seeks to modify an agency regulation. One wonders if that happens. Are preambles regularly consulted within the agency? Or are they no sooner published than forgotten (except by lawyers defending the rule in court)? The more the former is true, the stronger the arguments in this article; and to the extent the latter is the case, this article is a salutary reminder to agency personnel to go back and read this most useful of guidance documents.
Nicholas Bagley, Remedial Restraint in Administrative Law
, Columbia Law Review
(forthcoming 2017), available via SSRN
We have all heard the saying that you “don’t need a sledgehammer to kill a gnat.” Yet, when it comes to fashioning remedies for agencies’ transgressions of administrative law principles, the courts often use the equivalent of legal sledgehammers to remedy agency transgressions—no matter how minor the transgressions. This, at least, is the picture painted by Professor Nicholas Bagley in his draft article titled Remedial Restraint in Administrative Law, which will be published in 2017 in the Columbia Law Review.
As Professor Bagley’s article carefully describes, when a court determines that agency action violates the Administrative Procedure Act (APA), the usual response is for the reviewing court to reflexively invalidate the agency action and to remand to the agency. Administrative law’s adherence to this rigid, rule-like approach to remedies—one that generally vacates and remands without pausing to ask how the agency’s mistake harmed or prejudiced the complaining party—means that courts “treat every transgression as worthy of equal sanction.” (P. 4.) This, in turn, leads to what Professor Bagley perceives as a frequent mismatch between the underlying APA violation and the harshness of invalidating the agency action.
Until I picked up Professor Bagley’s piece, I must admit that I had not given the question of remedies in administrative law much sustained or critical thought. And, as it turns out, I am not alone. Indeed, as Professor Bagley describes it, “systematic inattention” plagues remedial questions in administrative law. (P. 2.) This is the main reason why I highly recommend that you read his article. Unless you are unlike most administrative law observers, the article will likely push you to consider issues that you have not carefully thought through before despite their central importance to administrative law disputes.
Second, I also highly recommend reading Professor Bagley’s piece because I love how it seeks to brush the dust off of an all but forgotten provision found in Section 706 of the APA. That provision expressly instructs courts to take account of the “rule of prejudicial error” when reviewing agency action. 5 U.S.C. § 706. Despite this textual command found in the APA and despite some recent attention given to the provision in cases like Shinseki v. Sanders, courts generally have had little to say about the rule of prejudicial error in administrative law cases. As a result, a great deal of murkiness surrounds the rule of prejudicial error, and we know little about what it means or where it should be applied.
Despite these reasons for strongly encouraging you to read Professor Bagley’s thought provoking piece, I must confess that, in the end, I was not convinced by Professor Bagley’s central argument, which contends that courts should replace the current rule-like approach to remedies with a much more context-specific, flexible, standard-based approach. For one thing, I am far less confident than Professor Bagley that agencies would not be tempted to cut important procedural corners if they thought that courts might excuse their mistakes (innocent or otherwise) after the fact. In addition, I worry about the potential harm that could be done to administrative legitimacy—specifically, to the public’s perception of the quality and legitimacy of the administrative state—if courts develop a variety of flexible standards. Procedural fastidiousness, in my mind, plays a very important role in bolstering public perceptions of agency legitimacy and attending to agencies’ democracy deficit.
Furthermore, I also wonder about the messiness that would likely flow from adoption of a more flexible, standard-based approach. Here, my hesitation is rooted in part in lessons that can be gleaned from the courts’ fairly convoluted attempts at defining procedural injury in the context of Article III standing. My hesitation also flows from the complexity and variety of possible APA transgressions. For example, should errors in the rulemaking and the adjudicatory contexts be handled with similar or different remedial rules? And what about substantive and procedural errors?
Finally, my skepticism about Professor Bagley’s call for a much more context-specific approach to remedies is also likely fueled by the fact that he leads with United States v. Texas as his first of many examples of what he sees as the disconnect between remedy and harm. (Pp. 1, 19-22.) In the Texas case, the U.S. Supreme Court upheld by an equally divided Court a nationwide preliminary injunction prohibiting the Department of Homeland Security (DHS) from implementing a deferred action program for certain undocumented immigrants. The DHS program had been preliminarily enjoined after a district court judge in Texas (and later the Fifth Circuit) found that Texas and other states were likely to succeed in claiming that DHS’s deferred action program, which was announced in a memo, amounted to a legislative rule that needed to go through notice-and-comment rulemaking under Section 553 of the APA.
In describing Texas as a prime example of a case in which the court’s remedy is disproportionate to the procedural notice-and-comment transgression, Professor Bagley argues that DHS’s failure to publish notice of its proposed program in the Federal Register caused little harm because DHS leaked aspects of its proposed program to the national media. (P. 19.) (“True, the agency never published the proposed policy in the Federal Register as the APA requires. But DHS provided notice in a much more effective manner: it leaked the proposal to the national media.”). In addition, Bagley also asserts that Texas and the other challengers cannot complain that they lacked a chance to voice their objections to DHS’s deferred action policy because there was lots of political discussion, including media reports, about possible executive action in the immigration realm. (Pp. 20-21.) (citing CNN and Fox News reports about potential action that the Obama administration might take in the immigration realm). In other words, Professor Bagley seems to suggest that, even if Section 553 of the APA required DHS to follow notice-and-comment rulemaking procedures, invalidation of DHS’s policy would be unwarranted because there was lots of general chatter in political channels and in the mainstream media about DHS’s plans and thus Texas was not surprised.
This kind of reasoning, in my mind, threatens to eviscerate Section 553 of the APA, allowing informal dialogue between an agency and interested parties to substitute for Section 553’s carefully defined procedures. Effectively, it would allow the LA Times, Fox News, CNN and other media channels to displace the Federal Register as the place where interested parties must look to find—and to learn how and when to comment on—proposed agency rules. That is not consistent with the APA. Nor would it help to bolster the public’s perception of the legitimacy of agency decisionmaking.
In the end, despite my own skepticism about the workability and the desirability of Professor Bagley’s call for a much more context-specific approach to remedies in administrative law, I highly recommend his article. It is thought-provoking, and it is full of illuminating examples that extend far beyond the Texas case. Even though my own perhaps overly cautious instinct is to stick with the status quo for now, I agree with Professor Bagley that the courts are killing gnats with sledgehammers in some cases, and I hope that his article inspires additional brainstorming and debate about possible alternatives to our current one-sized-fits-all approach to remedies.
Cite as: Kathryn Watts, Rethinking Remedies
(January 17, 2017) (reviewing Nicholas Bagley, Remedial Restraint in Administrative Law
, Columbia Law Review
(forthcoming 2017), available via SSRN), http://adlaw.jotwell.com/rethinking-remedies/
Hannah J. Wiseman, Negotiated Rulemaking and New Risks: A Rail Safety Case Study
, Wake Forest J.L. & Pol’y
(forthcoming 2017), available at SSRN
Hannah Wiseman’s insightful case study has forced me to rethink my views both on negotiated rulemaking and, more broadly, on all forms of notice and comment rulemaking. Negotiated rulemaking (Reg-Neg) adds one important step—negotiation—to the familiar notice and comment process. Reg-Neg got a lot of attention, both positive and negative, a quarter of a century ago. Many agencies experimented with the process. The D.C. Circuit expressed its approval of Reg-Neg in its 1988 opinion in NRDC v. EPA, 859 F. 2d 156, and Congress legitimated the process by enacting the Negotiated Rulemaking Act of 1990, 5 U.S.C. §§ 561-570.
After attracting an initial flurry of scholarship—pro and con—and after an initial period in which many agencies tried the process, Reg-Neg seemed to disappear both from the scholarly literature and from agency practice. Professor Wiseman has found, and studied, an important context in which Reg-Neg continues to be used, with results that do not fit well with either the views of its supporters or its detractors.
The Federal Railroad Administration (FRA) and the Pipeline and Hazardous Materials Safety Administration (PHMSA) have used Reg-Neg on a regular basis for over two decades. Most recently, FRA and PHMSA used Reg-Neg to issue rules governing the safe transport of crude oil and ethanol by rail and pipeline. As Professor Wiseman points out, this is a new risk, in the important sense that the combination of large increases in the amount of crude oil and ethanol transported have combined with the significantly increased volatility and toxicity of crude oil from some new sources to create risks that differ from, and are much larger than, the risks that the transporters and the regulators confronted in the past.
In this context, Professor Wiseman found that use of the Reg-Neg process had important advantages over traditional notice and comment rulemaking. Use of Reg-Neg in this situation, combined with the unusually close relationship between the agencies and the regulated firms that was created by the agencies’ regular use of Reg-Neg in the past, allowed the agencies to issue rules rapidly and to obtain an unusually high degree of voluntary cooperation from the regulated firms both in expediting the rulemaking process and in complying with the new rules. The agencies’ regular use of Reg-Neg in the past allowed them to develop a good baseline technical knowledge of the regulated industry and encouraged the regulated firms to be particularly forthcoming with the information, analysis and expertise that were critical to the process of issuing effective rules.
Professor Wiseman also identified serious disadvantages to the Reg-Neg process, however. They included: (1) little involvement of representatives of interests other than those of the regulated firms in the negotiation process; (2) lack of attention to the potential for broader harms, like long-term environmental damage, that accidents can cause; and (3) reluctance to question the opinions offered by regulated firms.
Professor Wiseman also emphasized the important roles that the National Transportation Safety Board (NTSB) played in the rulemaking process. NTSB prodded FRA and PHMSA to act rapidly and effectively to address the new risks, provided valuable expert knowledge of those risks, and “serve[d] as an important counterweight to the strong influence of industry and labor stakeholders who repeatedly interact with the rulemaking agency, whose interests do not always align with those of the broader public.” Professor Wiseman questioned whether the Reg-Neg process would have produced effective and expeditious results without the active involvement of an assertive expert agency that does not have the cozy relationship with regulated firms that characterizes FRA and PHMSA.
I have long shared the view of Reg-Neg that Judge Posner expressed in USA Group Loan Services v. Riley, 82 F.3d 708, 714 (1996): Reg-Neg represents “the final confirmation of the ‘capture’ theory of administrative regulation.” Professor Wiseman’s important contribution to the literature has not caused me to change that view. She has forced me to think about the merits and demerits of Reg-Neg in a different way, however.
Recent studies have found that regulated firms have “captured” the traditional notice and comment rulemaking process. See Elizabeth Warren, Corporate Capture of the Rulemaking Process, RegBlog (June 14, 2016); Richard Pierce, The Administrative Conference and Empirical Research, 83 Geo. Wash. L. Rev. 1564 (2015). Given large information asymmetries and systemic differences between the incentives of regulated firms and beneficiaries of regulation to devote significant resources to the decision-making process, we may have to choose between two forms of capture of the decision-making process. Professor Wiseman has persuaded me to consider the possibility that Reg-Neg may be a more benign form of capture in at least some important circumstances.
Cite as: Richard Pierce, Rethinking Negotiated Rulemaking
(December 2, 2016) (reviewing Hannah J. Wiseman, Negotiated Rulemaking and New Risks: A Rail Safety Case Study
, Wake Forest J.L. & Pol’y
(forthcoming 2017), available at SSRN
Christopher J. Walker, Legislating in the Shadows
, 165 U. Pa. L. Rev.
(forthcoming 2016), available at SSRN
It generally starts with a phone call. A Congressional staffer might ring up a federal agency and request the agency’s assistance in thrashing out the details of a new law. Usually, there’s already a working draft of the law; more rarely, the staffer just has parameters or specifications in mind for how the final law ultimately ought to look and what it ought to accomplish. Depending on the situation, the agency might send back a redlined mark-up of the draft bill, or else write a draft of the law from scratch. As the bill wends its way through Congress, the agency hovers on the sidelines, red pen in hand, ready and willing to offer additional technical drafting assistance as needed. The entirety of the exchange between staffer and agency—the request, the response, and any follow-ups—remains informal, off-the-record, undocumented, and confidential, hidden from view from the White House, from OMB, and (needless to say) from the public.
This is the zone of “Legislating in the Shadows” that Christopher J. Walker brings into the light in his thought-provoking forthcoming article. This article builds upon Professor Walker’s recent empirical study for the Administrative Conference of the United States (ACUS), which generated a list of recommendations that ACUS adopted in December 2015. In “Legislating in the Shadows,” Professor Walker moves from description to assessment and critique, deftly distilling from his findings their most pointed—and sometimes disquieting—implications for the doctrines of administrative law and statutory interpretation.
The nub of the issue, as Professor Walker explains, is that Congressional staffers often harness agency officials to draft statutory language, perhaps even quite consequential statutory language, but they do so in a way that is almost entirely non-transparent. Although this type of agency contribution to statutory language is meant to concern only “technical” details, the line between the “technical” and the “substantive” is blurry, poorly understood, and hard to enforce. (P. 14-15.) Ultimately, he notes, an agency will provide technical drafting assistance on “nearly all” of the bills that directly affect the agency. (P. 15.) And the overall tenor of agency drafting assistance is not random in its orientation: “[a] general theme emerged during the interviews that most legislative activity initiated in Congress has the potential to harm the agency’s current authority, so in many circumstances the agency’s primary objective is to minimize the harm and preserve the agency’s existing regulatory authority.” (P. 20.)
In the heart of the article, Professor Walker examines the implications of agencies’ shadow lawmaking for two aspects of administrative law: agency statutory interpretation and judicial deference to agency interpretation. As to agency statutory interpretation, he notes that his empirical findings lend support to Peter Strauss’s observation that agencies have privileged access to Congressional meaning and purpose, and to the mated argument that agencies should, for that reason, be regarded as authorized to lean more heavily upon purposivism in statutory interpretation.
As to judicial deference, the picture is more complicated. One justification for Chevron deference, Professor Walker notes, is agency expertise—including agency expertise in the craftsmanship of statutes. This justification for deference is “substantially bolster[ed]” by Professor Walker’s finding that agencies do some heavy lifting in the actual legislative drafting process. On the other hand, this very finding might also undercut the case for Chevron deference, he explains, because it raises the unappetizing prospect of agency self-dealing or “self-delegation.” (P. 38.) When they act as drafters, agencies and Congress might respond quite differently to the interpretive regime of Chevron: if it is concerned about preserving its own power, Congress might hesitate before drafting a vague statute, whereas an agency might be incentivized to smudge a statute’s lines to empower itself. For the same reasons as one might worry about Auer deference, one might also worry about agencies legislating in the shadows. Drawing again from his empirical findings, Professor Walker suggests reasons to be skeptical of the idea that Congress holds ultimate sway and can rein in agency shadow lawmaking: agency officials report that congressional staffers, who are frequently short-term players, lack knowledge of existing statutes and regulations, let alone knowledge of how to integrate new laws with the existing regime. The net result, he concludes, might be an “excessive delegation of interpretive and policymaking authority in ways that contravene the will of the collective Congress.” (P. 43.)
Professor Walker discerns a way to mitigate this morass of perverse incentives in Chief Justice Roberts’s approach to Chevron deference, which the chief justice articulated in his dissent in City of Arlington v. FCC and his opinion for the Court in King v. Burwell: a “case-by-case approach” to Chevron deference that would turn on an inquiry into whether Congress had meant to delegate interpretive authority over a particular statutory provision. This approach is “context specific” rather than “bright line”, or, if you prefer, retail rather than wholesale. In a similar vein, Professor Walker suggests that instead of treating all ambiguities alike, a reviewing court might instead ask “whether the ambiguity seems like a deliberate delegation by the collective Congress, or whether it seems more like the result of administrative collusion during the legislative process—or even just legislative inadvertence—that the collective Congress would not have intended to result in a delegation of interpretive authority to the agency.” (P. 48.)
Given the opacity of agency participation in legislative drafting, this seems like it would be quite a difficult question to answer. As Professor Walker says, “because technical drafting assistance occurs in the shadows, it is difficult if not impossible for a court to ascertain which parts of the statute the agency agreed with, much less actually drafted.” (P. 31.) As he also argues, a blanket public disclosure requirement of agency-staffer interactions would extract a significant toll: by chilling the provision of agency input, it would make the laws that get enacted worse. (P. 54-55.) Surely there will be cases in which neither the Congressional drafters nor their agency counterparts have any particular desire to own up in a court to the authorship of unappetizing or problematic bits of statutory language. And lobbyists, not just agencies, toil in the shadows, crafting legislative language for Congressional staffers. Adjusting Chevron deference in light of agency drafting, but not lobbyist drafting, would surely affect the overall mix of inputs into statutory drafting—but for good or for ill?
Of course, that a question is a difficult one does not mean it is not worth answering. If “the Congress of the United States” is but a well-known nom de plume used by an assortment of agency officials, then—as Professor Walker’s erudite and stimulating article makes abundantly clear—that poses many pressing challenges to administrative law theory and doctrine. Figuring out how to answer these unsettling questions is the next frontier. Here, as indeed with the process of legislative drafting itself, the devil will be in the details.
Editor’s Note: Reviewers choose what to review without input from Section Editors. Jotwell Administrative Law Section Editor Christopher Walker had no role in the editing of this article.
Aditya Bamzai, The Origins of Judicial Deference to Executive Interpretation
, 126 Yale L.J.
(forthcoming 2017), available at SSRN
In his concurrence in Perez v. Mortgage Bankers, Justice Scalia reiterated his historical justification for Chevron deference (first articulated in his Mead dissent): “the rule of Chevron, if it did not comport with the [Administrative Procedure Act], at least was in conformity with the long history of judicial review of executive action, where ‘[s]tatutory ambiguities . . . were left to reasonable resolution by the Executive.’” In a must-read article forthcoming in the Yale Law Journal, Aditya Bamzai casts serious doubt on Justice Scalia’s (and many others’) understanding of Chevron’s origin story.
There is so much to like about this article, and one should really read the full article. But I’ll highlight four main takeaways.
First and foremost, Bamzai exhaustively rebuts the historical argument that the case law and doctrine prior to the Twentieth Century supports the type of deference now being applied to agency statutory interpretations under Chevron. Instead, as documented in Part II of the article, the interpretive approach was traditionally to defer to executive interpretations of law that are longstanding and contemporaneous. Such “respect” or deference had nothing to do with agency expertise, congressional delegation, national uniformity in the law, or political accountability—the primary rationales invoked today to support Chevron deference. Instead, courts respected longstanding and contemporaneous executive interpretations because, under the traditional canons of statutory interpretation, courts respected longstanding and contemporaneous interpretations in general.
Second, Bamzai rejects the Chevron origin story based on Nineteenth Century mandamus doctrine and practice. Indeed, his review of the cases suggests the opposite: “Those cases distinguished between, on the one hand, the standard for obtaining the writ and, on the other, the appropriate interpretive methodology that would be applied in cases not brought using the writ.” (P. 31.) This finding has particular significance, as it suggests that Justice Scalia may well have been mistaken in relying on the mandamus cases as historical justification for Chevron deference in his Mead dissent and Mortgage Bankers concurrence.
Third, as detailed in Part III of the article, Chevron’s origin story doesn’t even really begin until the 1940s. To be sure, James Landis and others advocated for judicial deference to administrative interpretations of law before the 1940s. The Supreme Court, however, did not embrace such deference until in the 1940s, in cases with which administrative law professors are quite familiar (Gray v. Powell, NLRB v. Hearst, Skidmore v. Swift & Co.). (The one wrinkle to Bamzai’s Chevron origin story may be Bates & Guild Co. v. Payne, 194 U.S. 106, 110 (1904), in which the Supreme Court concluded that “even upon mixed questions of law and fact, or of law alone, [an agency’s] action will carry with it a strong presumption of correctness.” Bamzai explains why the opinion had limited immediate impact and did not upset the contemporary and customary canons that had predominated statutory interpretation generally during that era.)
Finally, Bamzai adds his take on what Section 706 of the Administrative Procedure Act (APA) intended to accomplish. Perhaps not surprisingly, Bamzai concludes that in passing the APA Congress sought to remove the deference the Supreme Court had just given to federal agency statutory interpretations earlier in the 1940s. Although many scholars have weighed in on this debate, Bamzai’s novel contribution is to read the APA against the historical development of judicial deference to agency statutory interpretations. As Bamzai explains:
The most natural reading of section 706—one that has, to my knowledge, heretofore escaped scholarly or judicial attention—is that the APA’s judicial-review provision adopted the traditional interpretive methodology that had prevailed from the beginning of the Republic until the 1940s and, thereby, incorporated the customary-and-contemporary canons of constructions. In other words, when Congress enacted the APA, it did in fact incorporate traditional background rules of statutory interpretation. It did not, however, incorporate the rule that came to be known as Chevron deference, because that was not (at the time) the traditional background rule of statutory construction. Under the incorporated approach, a court would “respect”—or, to use the modern parlance, “defer to”—an agency’s interpretation of a statute if and only if that interpretation reflected a customary or contemporaneous practice under the statute. (P. 61.)
I could spend much more time discussing in greater detail Bamzai’s rigorous examination of Chevron’s origin story and underscoring how his account should make many of us reconsider the historical foundation for Chevron deference. But I hope this brief summary encourages you to download and digest the full paper from SSRN.
In concluding, however, I cannot resist speculating a bit about the article’s origin story. After all, Bamzai clerked for Justice Scalia before joining the Justice Department and now (as of this Fall) the University of Virginia School of Law. In recent years Justice Scalia had begun to doubt the constitutionality of Auer deference—the deference owed to agency interpretations of their own regulations—but he had not (at least publicly) shared similar concerns about Chevron deference. As he noted in his Mortgage Bankers concurrence (and Mead dissent), Chevron deference “at least was in conformity with the long history of judicial review of executive action.”
I wonder if we can trace Bamzai’s interest in exploring the historical foundations of Chevron deference to his clerkship experience with a justice whose comfort with the doctrine may have been based on a historical misunderstanding. I further wonder whether this article would have changed Justice Scalia’s mind. That we will never know. What I do know, though, is that I very much look forward to reading more of Bamzai’s administrative law scholarship. This is just Bamzai’s first article in what I expect to be a series of articles that make us rethink the foundations of the modern administrative state.
Cite as: Christopher Walker, Chevron’s Origin Story
(October 5, 2016) (reviewing Aditya Bamzai, The Origins of Judicial Deference to Executive Interpretation
, 126 Yale L.J.
(forthcoming 2017), available at
Kent Barnett & Christopher J. Walker, Chevron in the Circuit Courts
, 115 Mich. L. Rev. (forthcoming 2017), available at SSRN
Kent Barnett and Chris Walker begin this fascinating article by describing the Chevron doctrine and its history. In its landmark 1984 opinion in Chevron v. NRDC, the Supreme Court announced a new, seemingly more deferential doctrine that it instructed lower courts to apply when they review agency interpretations of the statutes they administer. The Chevron opinion is one of the most cited opinions in history. It has been cited in “nearly 15,000 judicial decisions and in over 17,000 law review articles and other secondary sources.” (P. 2.)
Barnett and Walker agree with most scholars that the Supreme Court’s “choice to apply Chevron deference, as opposed to a less-deferential doctrine or no deference at all, does not seem to affect the outcome of the case.” (P. 4.) They note that the Supreme Court did not even mention Chevron in three-quarters of the cases in which it reviewed agency statutory interpretations during the twenty-two-year period immediately after it issued its opinion in Chevron. They then report the findings of their study—the largest empirical study of circuit court applications of Chevron ever undertaken. As they characterize the results of their study, what they call Chevron Regular seems quite different from Chevron Supreme.
Barnett and Walker read, analyzed, and coded 1330 opinions issued by circuit courts between 2003 and 2013. Their dozens of findings are surprising in many ways. I will discuss just the five that I found most surprising. First, “agency statutory interpretations were significantly more likely to prevail under Chevron deference (77.3%) than Skidmore deference (56.0%) or, especially, de novo review (38.5%).” (P. 5) (footnote omitted). Second, circuit courts upheld agency interpretations more frequently when they applied Chevron to interpretations adopted through informal means (78.4%) than to interpretations adopted in notice and comment rulemakings (74.2%). Third, when circuit courts applied Chevron, they upheld longstanding interpretations far more often (87.6%) than recent interpretations (74.5%) or changed interpretations (65.6%). Fourth, circuit courts varied greatly with respect to the proportion of cases in which they applied Chevron to agency statutory interpretations—from a high of 88.9% for the D.C. Circuit to a low of 60.7% for the Sixth Circuit. Fifth, circuit courts also varied greatly with respect to the proportion of cases in which they upheld agency statutory interpretations, albeit not with a high correlation between their rates of outcomes and their rates of invocation of Chevron. The First Circuit upheld interpretations most frequently (83.1%); the Ninth Circuit upheld interpretations least frequently (65.5%), while the D.C. Circuit was around the middle (72.6%).
Barnett and Walker are appropriately cautious in drawing inferences from their findings. Their findings raise far more questions than they answer. Here are just a few.
First, the findings are a major disappointment to those of us who initially saw in Chevron the potential for greater consistency and predictability in the process of judicial review of agency statutory interpretations. We have long been disappointed with the massive inconsistencies in the Supreme Court’s approach to Chevron, but many of us believed (or at least hoped) that circuit courts were applying Chevron in a relatively consistent and predictable way. We were wrong. Circuit court applications of Chevron are at least as inconsistent, unpredictable, and incoherent as Supreme Court applications of Chevron. Those findings raise the question of whether Chevron can, or should, continue to exist as a review doctrine.
Second, whatever Chevron means in circuit courts, the circuit court version differs from the Supreme Court version in many ways. The glaring inconsistencies between the Supreme Court’s approach to Chevron and the approach (more accurately the approaches) of the circuit courts raise the question whether a doctrine can, or should, survive in circuit courts when it bears no relation to the version of the doctrine that exists in the Supreme Court.
Third, it is impossible to determine whether, or to what extent, circuit courts use Chevron as a review doctrine rather than as a tool in writing opinions. The findings of the Barnett and Walker study are consistent with a legal regime in which courts first decide a case based on some undisclosed reasoning process and then use Chevron as a means of rationalizing that decision. In fact, some of the findings are more consistent with the use of Chevron as an after-the-fact justification for decisions than as a framework for making decisions. Thus, for instance, the finding that circuit courts uphold interpretations adopted through informal means more frequently than interpretations adopted in notice and comment rulemakings if, but only if, the court cites Chevron, suggests to me that circuit courts are first using some other method to decide to uphold an interpretation adopted through an informal means and then citing Chevron to justify that decision.
Fourth, the findings tell us nothing coherent about the views of the circuit courts with respect to the important debate the Supreme Court began when it issued its opinions in Mead, Christensen, and Barnhart—when, if ever, a court should apply the Chevron doctrine and when, if ever, a court should apply the putatively less deferential Skidmore doctrine. The finding that circuit courts uphold agency actions much more frequently when they apply Chevron than when they apply Skidmore suggests that circuit courts agree with the Supreme Court’s characterization of Chevron as more deferential than Skidmore. However, the finding that courts uphold longstanding interpretations far more frequently than recent or changed interpretations when they apply Chevron suggests strongly that courts actually use a decision-making framework like Skidmore and then cite Chevron when that method of decision-making yields a decision to uphold an agency interpretation of a statute. The Skidmore test identifies duration and consistency as important criteria in deciding whether to uphold an agency interpretation, while the Supreme Court has often said that neither duration nor consistency are important factors when a court applies Chevron.
Barnett and Walker have provided an extremely valuable database and set of findings, but they have created a situation in which they, and the rest of us, must do a tremendous amount of work to draw useful inferences from their pathbreaking study.
Editor’s Note: Reviewers choose what to review without input from Section Editors. Jotwell Administrative Law Section Editor Christopher Walker had no role in the editing of this article.
The passing of Justice Antonin Scalia removes from the Supreme Court its most strident modern advocate of the “unitary executive” idea—specifically, the view that Article II’s vesting of law execution power in the President forbids Congress to extend any such authority to individuals or entities not subject to “meaningful presidential control.” Printz v. United States, 521 U.S. 898, 922 (1997). I have long argued that this interpretation cannot be reconciled with our constitutional history. But an insightful, tightly argued new article by Leah Litman, a Harvard Law School Climenko Fellow and Lecturer in Law, demonstrates that this view of the separation of powers can also not be reconciled with the Court’s contemporaneous preemption jurisprudence. Put simply, despite the Court’s occasional pronouncements in separation of powers cases that “Article II requires the President alone to execute federal law,” the “preemption cases suggest that nonexecutive actors may likewise vindicate the public interest in seeing federal law enforced.” (P. 1293-94.)
Professor Litman’s thesis rests on an astute recognition of the relationship in separation of powers jurisprudence between two core ideas. One is the familiar truth that federal law execution is policy-laden at every stage. Implementing federal law entails the exercise of significant discretion, both in legal interpretation, Chevron v. Natural Resources Defense Council, 467 U.S. 837 (1984), and in deciding whether to move forward in individual cases, Heckler v. Chaney, 470 U.S. 821 (1985). Indeed, but for the ubiquitous presence of discretion in federal law execution, the unitary executive ideal would presumably carry very little real-world punch.
The second is that the President’s control of law enforcement discretion is implicated not only in disputes about agency design, e.g., Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S. 477 (2010), but also in cases involving Congress’s decisions to enlist the services of persons outside government in fulfilling government’s law execution function, i.e., cases on citizen standing, such as Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992). The latter cases are important because, barring some contractual relationship, persons outside the federal government are also outside presidential control, thus raising the same problem for unitary executive theory that federal independent administrative agencies pose.
Lujan is the Court’s clearest attempt to root the restrictiveness of Article III standing doctrine in Article II’s vesting of executive power in the President. Finding the environmentalist plaintiffs’ allegations of injury too general and speculative to support standing, the Lujan majority denied them a right to sue even in the face of an explicit citizen suit provision of the Endangered Species Act. The ESA authorizes “any person [to] commence a civil suit on his own behalf . . . to enjoin any person, including the United States and any other governmental instrumentality or agency . . . who is alleged to be in violation of any provision of this chapter.” 16 U.S.C. § 1540(g). Speaking through Justice Scalia, the Court insisted, however, that the category of persons authorized to sue could not constitutionally include plaintiffs asserting no more than the general “citizen’s interest in [the] proper application of the Constitution and laws.” To hold otherwise would ignore that “[v]indicating the public interest (including the public interest in Government observance of the Constitution and laws) is the function of Congress and the Chief Executive.” 504 U.S. at 576. By necessary implication, if Congress wants help via the judicial process in upholding the general public interest in observance of the law—that is, in the policy-laden activity of law execution by government—it can turn only to the executive branch of government, not to private citizens.
Yet as Professor Litman goes on to explain, Congress commonly and with the Supreme Court’s apparent approval does invite voluntary help from outside the federal executive branch in enforcing federal law, namely, from the states. Among the prominent examples she cites is the federal Immigration Reform and Control Act, which authorizes states to enforce IRCA’s prohibitions through “licensing and similar laws.” 8 U.S.C. § 1324a(h)(2). In Chamber of Commerce of the United States v. Whiting, 563 U.S. 582 (2011), the Supreme Court upheld an Arizona statute that permitted state officials to revoke state-issued business licenses where an entity had violated federal law. As summarized by Professor Litman:
The Court reasoned that although IRCA expressly preempted “any State or local law imposing civil or criminal sanctions . . . upon those who employ . . . unauthorized aliens,” Congress specifically authorized [state laws like Arizona’s]. Congress therefore intended to “preserve the ability of the States to impose their own sanctions through licensing” for violations of federal law. Whiting noted approvingly that Arizona had adopted the federal definition for unauthorized persons and relied on the federal government’s determination of who qualifies as an unauthorized person, thereby eliminating the possibility of “conflict . . . either at the investigatory or adjudicatory stage.” The Court explained, “Congress . . . . in IRCA . . . ban[ned] [the] hiring [of] unauthorized aliens, and the state law here simply seeks to enforce that ban.” (P. 1309-10.)
She goes on cite other significant statutes, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, which specifically authorize states and state attorneys general to bring civil actions to enforce federal law against private individuals, even without a showing of particularized harm to the state itself. Why Congress may constitutionally invite voluntary state efforts to help enforce federal law, but not the voluntary efforts of citizen litigants is a puzzle the Court never addresses.
Professor Litman anticipates and convincingly refutes a number of possible doctrinal ripostes to her thesis, but one is especially important. The preemption cases do not impose any constitutional requirement that the states respect presidential policy preferences in enforcing the laws that Congress has invited states to help execute. In other words, the fact that IRCA works to eliminate “conflict [between state and federal authority] either at the investigatory or adjudicatory stage” does not insure the absence of conflict at the enforcement stage. Nothing in IRCA or the Arizona law in question precludes Arizona’s enforcement of federal law against a business that the federal executive branch has independently decided not to pursue.
Justice Scalia, without elaboration, joined Chief Justice Roberts’s opinion upholding the business licensing law at issue in Whiting. His apparent indifference in Whiting to the potential conflict between state and presidential prosecution policies seems not to have been inadvertent. A year after Whiting, Justice Scalia dissented from those parts of a different ruling which invalidated portions of another Arizona immigration law, S.B. 1070, Arizona v. United States, 132 S. Ct. 2492 (2012). Among the provisions that the Court invalidated was the creation of a state misdemeanor for noncitizens who failed to comply with federal alien registration law. The Court deemed the law preempted because Congress had entirely occupied the field of noncitizen registration regulation. It further observed with disapproval that, were the statute upheld, Arizona “would have the power to bring criminal charges against individuals for violating a federal law even in circumstances where federal officials in charge of the comprehensive scheme determine that prosecution would frustrate federal policies.” Id. at 2503. Justice Scalia was scornful of the argument: “[T]o say, as the Court does, that Arizona contradicts federal law by enforcing applications of the Immigration Act that the President declines to enforce boggles the mind,” Id. at 2521 (Scalia, J., dissenting). So much for any unitary policy control over federal law enforcement that Justice Scalia might otherwise have attributed to Article II.
Professor Litman’s thorough analysis goes on to catalogue benefits that may flow from state involvement in the execution of federal law, notwithstanding the absence of “meaningful presidential control.” The bottom line seems to be that the Supreme Court regards it as within the discretion of Congress to weigh the advantages and disadvantages of letting states in on federal law execution. If Congress is constitutionally entitled to conclude that state involvement in vindicating the general public interest in law enforcement is a good thing, it is not obvious why reaching the same judgment as to citizen suits is constitutionally problematic. The basis for restrictive standing does not lie in Article II, which does not demand a unitary executive when it comes to taking care of federal law.
Cass R. Sunstein and Adrian Vermeule, The Unbearable Rightness of
Auer, U. Chi. L. Rev.
(forthcoming 2016), available at SSRN
In 1945 the Supreme Court decided the case of Bowles v. Seminole Rock & Sand Co., in which it stated without citation to precedent or other explanation that, when the meaning of the words in an agency’s regulation are in doubt, “the administrative interpretation . . . becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation.” Over the years, this language has been often quoted by the Supreme Court, including in 1997 by Justice Antonin Scalia in Auer v. Robbins. Subsequently, courts and commentators have usually referred to this doctrine as Auer deference, and until recently the doctrine generally occasioned little discussion in the courts except in some cases where there was a suggestion of a possible exception from the doctrine when the regulation in question was itself hopelessly vague. But recently, there has been a frontal attack on the Auer doctrine led by the late Justice Scalia and Justice Thomas and apparently viewed sympathetically by Justice Alito and the Chief Justice. Moreover, leaders in the House and Senate have introduced a bill essentially to overrule Auer.
Now come Professors Sunstein and Vermeule in The Unbearable Rightness of Auer to take up the cudgel in defense of Auer. Their article is the starting point for any further discussion of the Auer doctrine.
The first intimation of a problem with Auer occurred in 2011, when Justice Scalia wrote a concurring opinion in Talk America, Inc. v. Michigan Bell Telephone Co., in which he admitted to having uncritically accepted the doctrine in the past, but he indicated that, while in the case before him no one had asked for reconsideration of the doctrine, in the future he would “be receptive to doing so.” He summarized the structural constitutional arguments against the doctrine contained in Professor John F. Manning’s 1996 law review article, Constitutional Structure and Judicial Deference to Agency Interpretations of Agency Rules. Talk America was quickly followed by Christopher v. SmithKline Beecham Corp., Decker v. Northwest Environmental Defense Center, and Perez v. Mortgage Bankers Ass’n. In SmithKline, the Court refused to accord Auer deference to an agency’s interpretation of its regulation when first applied in an enforcement action, citing both to the Manning article and a more recent article by Professor Matthew Stephenson and Miri Pogoriler, Seminole Rock‘s Domain, suggesting limits to when Auer deference should apply.
In Decker, Justice Scalia dissented from the Court’s deference to the EPA’s interpretation of its own regulation, taking up the invitation by the respondent to reconsider the Auer doctrine and concluding that it should be overruled. The Chief Justice and Justice Alito noted that, while the respondents had in one sentence in a footnote invited the Court to reconsider Auer, the issue had not been briefed or argued. Consequently, although they believed Justice Scalia had raised “serious questions about the [Auer doctrine],” they said they would await a case when the issue was fairly raised.
Finally, in Mortgage Bankers, Justice Scalia, concurring, again indicated his desire to overrule the Auer doctrine, but now his position was joined by Justice Thomas, who wrote separately to explain his constitutional bases for objecting to the doctrine. Justice Alito also wrote separately to indicate his concern with the doctrine, but again he said that he would “await a case in which the validity of Seminole Rock may be explored through full briefing and argument.” And last month, leaders in the House and Senate introduced the Separation of Powers Restoration Act, which would require courts in reviewing agency action to interpret laws and regulations de novo, without showing any deference at all. In short, Auer has been under relentless attack recently.
Against this attack, Professors Sunstein and Vermeule provide a response. They begin by positing that there are three possible responses to an ambiguous regulation: first, the agency’s interpretation prevails, with certain exceptions; second, judges resolve the ambiguity without any deference to the agency’s view; and third, in the face of ambiguity the private sector is allowed to do what it wants. The first response is the current Auer doctrine. The second is what Justices Thomas and Scalia have suggested and what the Separation of Powers Restoration Act would require. The third, the authors point out, no one has suggested. It would be sort of a rule of lenity applicable to agency regulations. The third option is something of a strawman, which the authors put away rather quickly, noting that ambiguity does not mean authorization. There might be another option the authors don’t mention, which I will discuss later.
The authors take us over familiar ground with respect to Chevron v. NRDC, citing and quoting from a law review article by former Justice Scalia. First, Justice Scalia saw no conflict between affording Chevron deference and the text of the Administrative Procedure Act, which states that a “reviewing court … shall interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of agency action.” He found it self-evident that Congress could explicitly delegate to an agency the determination of the meaning of a statutory provision. Then, it would be for the courts to determine whether the agency acted reasonably within that delegation, not to determine for themselves the meaning of the provision. When a law is ambiguous, however, it is either because Congress had a particular intent, but failed to express it, or Congress had no particular intent, but meant to leave its resolution to the agency. While the former situation would call for judicial resolution of the ambiguity, the latter would be an implicit delegation to the agency.
The problem was how to tell what type of ambiguity was involved in a particular case. Justice Scalia believed this case-by-case resolution was “a font of uncertainty and litigation.” He believed the better approach was Chevron, which “represents merely a fictional, presumed intent [to confer discretion on the agency], and operates principally as a background rule of law against which Congress can legislate.” Even if this fiction was not 100% accurate, which the prior case-by-case approach certainly had not been, at least it provided a relatively clear rule, relatively easily applied. Antonin Scalia, Judicial Deference to Administrative Interpretations of Law, 1989 Duke L.J. 511, 516-17. Sunstein and Vermeule agree with Justice Scalia on all these points, “so long as it is understood that the choice of fiction depends on the consequences of adopting one or another.” In other words, if one is to adopt a legal fiction, it should be done in a matter that maximizes benefits (or minimizes costs) compared to the alternative. Justice Scalia, at least in 1989 and for years afterward, believed Chevron was indeed that best alternative.
In addition, Justice Scalia saw no conflict between Chevron and the separation of powers generally, because Congress was always in control. It could eliminate the doctrine by statute if it wished, and it was always able to make clear its intent if an agency, upheld by a court applying Chevron, adopted an interpretation not to its liking.
In light of this general agreement with Chevron, Professors Sunstein and Vermeule ask: Why isn’t Auer deference equally justified? First, it seems self-evident that Congress could explicitly authorize an agency to issue interpretations of its regulations with the force of law. Indeed, it does so occasionally without noticeable consternation. See, e.g., 12 U.S.C. § 2617(b). As with Chevron, however, usually Congress does not explicitly delegate that authority, but then, also like Chevron, it has not explicitly withheld that authority. So, why can’t Auer deference represent just another fictional, presumed intent? Isn’t Auer also just the better alternative to independent judicial interpretation?
And the advantages of Auer deference are clear and no doubt explain why the doctrine has for so long been unquestioned. The first is the “agency’s comparative epistemic advantage as interpreter.” That is, the agency is in the best position to know what the agency’s intent was underlying the legislative rule. The second is the agency’s comparative advantage as policymaker. If the ambiguity is such that it requires an exercise of policymaking to some degree, then just as with Chevron, the agency with its at least tangential political responsiveness is better placed to make policy judgments than the courts.
The authors then turn to the bases for the recent critiques. The first is that Auer creates an incentive for agencies to adopt legislative rules that are vague and broad so that the agencies may retain the flexibility to interpret them in the future, even with retrospective effect. The authors acknowledge this concern as theoretically valid, but it strikes them “as a phantasmal terror.” They say that no one has provided an example in the history of American regulation where an agency has designed a vague and broad regulation because of the advantages provided by Auer deference. Professor Sunstein notes that in his four years as director of the Office of Information and Regulatory Affairs, in which he dealt with well over two thousand rules, “he never heard even a single person suggest, or come close to suggesting, that a regulation should be written ambiguously in light of Auer.” I might add that in my three-plus years as the lawyer responsible for an agency’s regulations, albeit more than 30 years ago, I can say the same. This concern, the authors say, “is a reflection of a pervasive error within the economic analysis of law, which is to identify the likely sign of an effect and then to declare victory, without examining its magnitude – without asking whether it is realistic to think that the effect will be significant.” The authors dub this error “the sign fallacy.”
The other basis for the recent critique of Auer involves a question of the separation of powers. Basically, Auer “produces a constitutionally suspect combination of power to make law with the power to interpret law.” In Justice Scalia’s words, concurring in part and dissenting in part in Decker, “He who writes a law must not adjudge its violation.” In this way he can distinguish Chevron, where Congress enacts and agencies adjudge the violation, compared to Auer, where the agency adopts a regulation and then adjudges its violation. The authors spend some time on this critique, but their argument boils down to the fact that such a critique of Auer is a critique of almost all administrative law, which epitomizes the combination of functions the separation of powers is supposed to keep apart. Large numbers of agencies write binding rules, bring enforcement actions, and adjudicate violations. It is to combat that combination of functions that administrative law erects procedural requirements to mitigate the combination and provides judicial review of the administrative results. The authors recognize that Justice Clarence Thomas’s recent adoption of Professor Philip Hamburger’s thesis would indeed sweep away most of the modern administrative state, but aside from Justice Thomas they see little inclination or reason to overthrow a century of administrative law. In other words, Auer is a very little tail on the dog of a combination of functions and should not overcome its agreed-upon and identified real benefits.
Professors Sunstein and Vermeule end up stressing that Auer deference, no more than Chevron deference, is not an abandonment of judicial review. There is still a real check on agency interpretations of its own regulations. First, as Justice Scalia wrote with respect to Chevron, where the lawmaker has made a clear line, the agency cannot go beyond it in interpreting regulations, and where the lawmaker has left an ambiguous line, the agency cannot go further than the ambiguity will allow. See City of Arlington v. FCC, 133 S. Ct. 1863, 1874 (2013). The same applies to Auer deference. Moreover, as the authors point out, “the Court emphasized in Perez v. Mortgage Bankers, the ‘most notable’ constraint on agency decisionmaking is ‘the arbitrary and capricious standard,’ which serves to promote ‘procedural fairness’ by requiring agencies to give good reasons for their procedural choices – and, of course, for their interpretations.” And it is well to reiterate that Auer may not even be applicable when an agency’s regulation merely parrots the statute. See, e.g., Gonzales v. Oregon, 546 U.S. 243, 257 (2006).
All well and good. A frontal attack on Auer in the Supreme Court would not be likely to prevail, even if Justice Scalia were still on the Court. But wait. There still may be some smoldering embers below the smoke. What is missing from the Sunstein and Vermeule article is a different critique of Auer, one that has some empirical basis. An agency faced with the recognition that one of its regulations is ambiguous has options. It may issue an amendment to the regulation, clarifying it. Or it may issue an interpretive rule clarifying the regulation. If the agency is challenged in court, it does not matter which option the agency takes. In either case it will receive strong deference: Chevron deference under the former option, Auer deference under the second option. But it will be infinitely faster and easier for the agency to use the second option. It will avoid the requirements for notice-and-comment rulemaking under the APA and any requirements of the Regulatory Flexibility Act. It will as a practical matter avoid the requirements for regulatory review under E.O. 12866 and the requirements of the Congressional Review Act. Unlike the incentive to write ambiguous regulations in order to retain flexibility for later interpretation, for which there is no empirical support for agencies acting on that basis, the incentive to avoid notice-and-comment rulemaking altogether is strong and there is a wealth of empirical support for the fact that agencies indeed try to cut corners, especially given the number of cases challenging agency interpretive rules as improperly adopted legislative rules. Does Auer deference play a role? Yes, because there is no cost associated with adopting the clarification as an interpretive rule, rather than as a legislative rule.
What this may suggest is that Auer deference should not be at one with Chevron deference but instead should be equated with Skidmore deference – a lighter deference, one with the power to persuade if not to bind. Agencies then could make a choice between taking the longer route with resulting greater deference, or the shortcut and less deference. The more obviously correct (or inconsequential) the interpretation is, the stronger the case for the shortcut. The more the interpretation raises important policy issues that may be highly contested, the stronger the case might be for notice-and-comment rulemaking. And shouldn’t that be the correct direction for the incentives to work?
Professors Sunstein and Vermeule have provided a valuable service in starting the defense of Auer deference. They have provided convincing rebuttals of the critiques of Auer that have appeared in recent Supreme Court opinions and pointed out the obvious benefits of deference to an agency’s interpretation of its own regulations. Perhaps the only piece missing in the puzzle now is the effect of strong Auer deference on an agency’s choices of whether to clarify regulations by notice-and-comment rulemaking or by interpretive rule.
Cite as: William Funk, Saving Auer
(June 23, 2016) (reviewing Cass R. Sunstein and Adrian Vermeule, The Unbearable Rightness of
Auer, U. Chi. L. Rev.
(forthcoming 2016), available at SSRN), http://adlaw.jotwell.com/saving-auer/