Yearly Archives: 2010

Grappling with the (In?)significance of Doctrine in Judicial Review

Aug 16, 2010 Kathryn Watts

One of the “hotter” areas of administrative law scholarship in the last few years has been the empirical study of the role of legal doctrine in judicial review of agency action.  In a recent Virginia Law Review article titled Reasonable Agencies, Professor David Zaring adds to this growing body of scholarship by reporting new empirical research on appellate courts’ review of agencies’ formal findings of fact using substantial evidence review.  His main goal, however, is not simply to add yet another empirical study to the pile.  Rather, Professor Zaring draws upon the important empirical work done by others, such as Thomas Miles, Cass Sunstein, William Eskridge, Lauren Baer, Kristin Hickman and Matthew Krueger, and he aggregates the various studies in a way that has not been done before.  Ultimately, his goal is to draw broad conclusions about how courts apply administrative law’s complex judicial review doctrines and to argue that the law of judicial review descriptively has been and normatively should be simplified into one “reasonable agency” standard.

Professor Zaring begins by surveying the law of judicial review and summarizing six different administrative law doctrines that he identifies:  (1) Chevron deference used to review agency interpretations of ambiguous statutes; (2) the less deferential Skidmore standard, which applies when Chevron’s stronger version of deference is inapplicable; (3) de novo review; (4) arbitrary and capricious review applied to informal factual findings; (5) substantial evidence review applied to formal factual findings; and (6) general arbitrariness review used to test the rationality of agency decisions or the adequacy of reasons given.  As Professor Zaring describes, determining exactly which of these standards of review to apply can be a daunting task for courts and litigants, forcing them to sort through many complicated questions, such as whether the agency action involved fact finding, legal interpretation, or policymaking.

After describing what the different standards of review are supposed to do as a doctrinal matter, Professor Zaring steps back to consider whether administrative law really is as complicated as these six different standards of review might suggest.  In other words, do the fine doctrinal distinctions really matter?  He begins his attempt at answering this question by summarizing the voices of various judges and administrative law scholars who have analogized one standard to another or who have noted that they are unable to distinguish among the standards.   Then—getting to the real heart of his article—he synthesizes prior empirical scholarship in the field and adds some new empirical research of his own on substantial evidence review.  His synthesis of these various studies is quite valuable—perhaps the most valuable part of his piece—as it pulls various disparate empirical studies together and considers them in the aggregate.  In the end, when the studies are considered together, Professor Zaring concludes that they demonstrate that regardless of the doctrinal differences among the six standards, the ensuing result is the same:  Appellate courts affirm agencies’ actions slightly more than two thirds of the time.  In other words, as Professor Zaring puts it, “administrative law outcomes do not depend on hard looks, substantial evidence, or distinctions between Chevron and Mead.”

Finally, Professor Zaring concludes by making the case that judicial review of agency action should be simplified.  In his view, since studies indicate that doctrinal differences do not play a significant role in the outcome of administrative law disputes, our current doctrinal web should be replaced with a single, streamlined doctrine:  A reviewing court should uphold any “reasonable” agency decision. According to Professor Zaring, courts are already applying a “reasonable agency” standard and hence the explicit adoption of such a standard would lead to greater clarity and would better describe what courts are already doing.

In order to find Professor Zaring’s article important, useful and thought provoking, one need not necessarily agree with his ultimate push for a “reasonable agency” standard.  I, for example, happen to have serious reservations about whether courts can move on their own initiative toward a single “reasonable agency” standard without flouting congressional intent.  I am also concerned that a single standard might not recognize the different institutional strengths of courts and agencies in different contexts.  Yet despite my reservations about Professor Zaring’s ultimate proposal, I found Professor Zaring’s piece significant and well worth a careful read.  I was most struck by how his article encouraged me—someone who tends to gravitate toward the doctrinal camp of administrative law—to start thinking about how we all should respond to the ever growing body of scholarship that suggests that judges may not be deciding administrative law disputes based on fine doctrinal distinctions.

Specifically, Professor Zaring’s piece encouraged me to continue thinking about how an administrative law professor who heavily stresses doctrine in the classroom should handle these sorts of empirical studies in class.  How can the professor cover the studies without inducing an overly jaded perspective on judicial review and without discouraging students from devoting the requisite amount of time to learning the basic vocabulary of judicial review?  Or what about litigants?  How much time should litigants spend in their briefs on standards of review when they know that the choice of doctrine is not likely to be a significant determinant in the outcome of their dispute?  Professor Zaring’s article highlights the need for dialogue on these sorts of important questions.  In fact, Professor Zaring’s work already appears to have inspired Professor Richard Pierce to think through the answers to some of these questions in an essay titled What Do the Studies of Judicial Review of Agency Actions Mean?, which is forthcoming in the Administrative Law Review.  I hope that additional scholars, legislators, judges and practitioners—inspired by Professor Zaring’s article—will continue to think about these sorts of worthwhile questions in the future.

Institutional Design by Default

Jul 5, 2010 Michael E Herz

The central concern of administrative law is how to control agency discretion.  Agencies are handed enormous authority, and administrative law consists primarily – indeed, almost exclusively – of a set of doctrines designed to inform, curb, or enable other actors to oversee discretionary agency actions.   Administrative law is preoccupied with establishing procedures to prevent agency abuse and designing oversight by non-agency players – the President, Congress, private stakeholders, and, most obviously, the judiciary.    All the core doctrines of administrative law are generally understood as implementing basic decisions regarding institutional choice: who does what?  How should power be divided up amongst these institutions?

In Allocating Powers Within Agencies, Elizabeth Magill and Adrian Vermeule convincingly argue that in operation core administrative law doctrines are not only about institutional choice but also institutional design.  That is, they do not merely allocate authority between agencies and other actors; they also have important consequences for who does what within agencies, for how the institution is designed.  The paper elegantly reviews a number of familiar doctrines and explains the impact they have on how power is allocated within agencies.  The article’s title seems to portend a discussion of how to go about constructing agency organizational charts.  In fact, the article is not about such conscious allocation of responsibility at all.  Rather, it explains how doctrines established without consideration for their impact on internal agency operations do in fact significantly affect how power is allocated within agencies.  It thus makes an explicit and implicit plea that these impacts be thought through rather than incidental and haphazard.

The important, inarguable, but often overlooked starting point is that, to adapt Kenneth Shepsle’s famous article title about Congress, “an agency is a they, not an it.”  Judicial opinions and much scholarship tend to speak of “the agency,” as if it were a unitary entity.  But, as with the executive branch as a whole, “unitariness,” whatever its normative appeal, is hard to come by in the real world, where critical decisions result from the involvement of political and career appointees, of high-ranking and low-ranking staff, of lawyers, scientists, economists, technical experts, and public affairs departments.  There is an existing literature on conflicts and collaborations between individuals wearing different hats within agencies.  But Magill and Vermeule are (almost) the first to draw the link between administrative law doctrines that are always seen as involving institutional choice.  (I say almost, because there is at least one previous example of such an effort, duly credited by the authors.  That is Don Elliott’s article explaining how Chevron has made the lawyers at the Environmental Protection Agency relatively less important and the policy and technical people relatively more so.  E. Donald Elliott, Chevron Matters: How the Chevron Doctrine Redefined the Roles of Congress, Courts, and Agencies in Environmental Law, 16 Vill. Envtl. L.J. 1 (2005).)

So what are some examples?  One set of doctrines concerns, of course, judicial review.   For example, take the Chenery principle that agency action can be upheld only on the basis of the rationale offered by the agency at the time it took the challenged action – no post hoc rationalizations.  The Chenery principle actually has little bearing on the allocation of authority among government institutions; it comes into play in settings when the agency has authority to act, but will be allowed to do so only if it goes about it in the “right way,” which means getting the explanation right before the agency finds itself in court.  “So understood,” write Magill and Vermeule, “Chenery’s crucial effect is to reallocate power horizontally within agencies, away from the lawyers who rationalize policy after the fact and to agency personnel who formulate policy before the fact.”

Chenery is not alone.  Chevron operates in similar fashion; that was Don Elliott’s point.  This in turn means that the stakes in “Chevron step zero,” the yes/no decision controlled by United States v. Mead Co., 533 U.S. 218 (2001), are not merely about allocating authority between courts and agencies (the institutional choice question), but about allocating authority between different professionals within agencies (the institutional design question).  Hard look review has more complicated tendencies, in some settings tending to lead agencies to emphasize the scientific character of their analysis, in others empowering lawyers at the expense of scientists and other policy experts.  Magill and Vermeule’s analysis is not limited to doctrines of judicial review; they also consider doctrines concerning structure and process, such as executive-created agencies, OIRA review, and separation of functions.

The foregoing concerned horizontal allocation of functions – i.e., the question of which professionals will dominate agency decisionmaking at any given level of the agency hierarchy.  Magill and Vermeule offer a similar analysis regarding vertical allocation.  For example, an ongoing debate over Mead concerns when it is exactly that an agency will be deemed to have acted with the force of law, as required to trigger Chevron.  One school of thought, embraced, though in somewhat different fashion, by Justice Scalia and by David Barron and Elena Kagan, holds that deference is appropriate when the agency interpretation is sufficiently authoritative, or comes from a sufficiently high-ranking official.  While this approach has not been embraced by a Supreme Court majority, it would be a stark example of how a doctrine generally conceived as involving allocating authority between institutions (here, agencies and courts), would have a direct impact on the allocation of authority within agencies.  The authors also explore consequences for the level at which agency decisions are made of the principle that agencies are bound by their own rules, ALJ independence, and other doctrines.

The distinction between “institutional design” and “institutional choice” is somewhat slippery in this setting; it raises a classic level of generality issue here.  If the institution is “the government of the United States,” then we have only problems of institutional design (though federalism would then raise problems of institutional choice); if we label offices within agencies “institutions,” then we have only problems of institutional choice.  But that terminological point is hardly central.  Magill and Vermeule’s essential argument — that doctrines generally understood to be about the power of agencies within the government have important consequences for how power is allocated within agencies – is important and novel.  While the authors’ observations are preliminary and not empirically grounded, they trigger a new way of thinking about old problems, and point to an important and almost completely neglected field of inquiry.

“Probabilistic Injury”: The Odds Aren’t Good

May 10, 2010 William Funk

The case of Summers v. Earth Island Institute, 129 S.Ct. 1142 (2009), is notable from several administrative law perspectives, but potentially its major impact is one that many commentators have missed – its rejection of “probabilistic standing.”  In Summers, Justice Scalia, writing for the Court, rejected out of hand Justice Breyer’s suggestion that the plaintiff environmental groups had satisfied the “injury” prong of standing by showing “a realistic likelihood” of injury to one or more of their members.  Characterizing this suggestion as “a hitherto unheard-of test for organizational standing,” Justice Scalia wrote that to accept as “injury” the fact that “there is a statistical probability that some of those members are threatened with concrete injury” would “make a mockery of our prior cases, which have required plaintiff-organizations to make specific allegations establishing that at least one identified member had suffered or would suffer harm.”

If Justice Scalia had not heard of probabilistic injury before, he has not been reading the numerous circuit court decisions addressing the probability of injury and when it is sufficient for standing.  But Professor Mank has, and even before Summers he authored an article, Standing and Statistical Persons: A Risk-Based Approach to Standing, 36 Ecology L.Q. 665 (2009), dealing with the subject.  In his most recent article, however, he takes it a step further, addressing Justice Scalia’s opinion for the majority in Summers and Justice Breyer’s for the dissent, relating them to some of the lower court opinions dealing with probabilistic injury, in particular two D.C. Circuit decisions, Public Citizen v. National Highway Traffic Safety Administration, 489 F.3d 1279 (2007), modified on rehearing, 513 F.3d 234 (D.C. Cir. 2008), and Natural Resources Defense Council v. EPA, 440 F.3d 476, withdrawn, 464 F.3d 1 (D.C. Cir. 2006).  In addition, Professor Mank explains how all these cases relate to the Supreme Court’s earlier decision in Friends of the Earth, Inc. v. Laidlaw Env. Services, Inc., 528 U.S. 167 (2000).

In short, in Summers the concrete injury claimed by plaintiffs was the destruction of their recreational enjoyment from Forest Service timber sales in areas affected by forest fires, but their challenge was to a Forest Service regulation exempting such sales from prior notice and comment, as well as from administrative appeal.  While the plaintiff environmental organizations had affidavits from a few members who walked in areas that might be subject to such sales, they hundreds of thousands of members who generally enjoy the outdoors, and the Forest Service conceded they would likely have thousands of such timber sales.  The problem according to the majority was that there was no particular identified member for whom it could be said that he would indeed have his recreational enjoyment destroyed by such a timber sale.  The dissent argued that there was a realistic likelihood that one or more members of the organizations would in fact have their recreational enjoyment destroyed by a such a sale, even if the particular member or members could not be identified at this time.  This, the dissent believed, should qualify as constitutional injury for standing purposes.

Laidlaw involved persons who recreated on or around a river into which the defendant discharged mercury in violation of its permit under the Clean Water Act.  These persons sued under the citizens suit provision in the Act, alleging that they no longer engaged in their recreational activities on and around the river because of these illegal discharges.  Unfortunately, however, the plaintiffs could not provide any proof that there was actually any harm to the environment from the discharges or that they would in fact be harmed if they continued their recreational activities such as boating, swimming, and fishing on the river.  Nevertheless, the Supreme Court in an opinion by Justice Ginsburg held the plaintiffs had standing because their unwillingness to engage in the recreational activities was based upon a “reasonable fear” caused by the defendant’s discharges.

While the majority in Summers did not feel the need to distinguish Laidlaw, nor did the dissent cite it in support of its argument, Professor Mank rightfully recognizes that the standing decision in Laidlaw inevitably is a decision based upon a finding of probabilistic injury.  That is, to say that the plaintiffs’ fear was reasonable in the circumstances is necessarily to say that the plaintiffs would be subject to an increased risk of injury by recreating on and around the river, or stated otherwise, that they would be have a higher probability of injury than if the discharges did not take place.  Professor Mank points out the incongruity between Summers with its rejection of probabilistic injury and Laidlaw’s implicit acceptance of it, when the plaintiff forgoes recreational activity because of an increased probability of injury.

The two D.C. Circuit decisions Professor Mank analyzes both utilized a probabilistic injury standard to determine if the plaintiffs had standing.  In NRDC v. EPA, the court found standing because, on a statistical risk basis, 2-4 of NRDC’s 490,000 members would contract a non-fatal skin cancer as a result of EPA’s failure to regulate ozone depleting gases as strictly as NRDC had urged.  In Public Citizen, however, the court denied standing because Public Citizen could not quantify how many of its members would be injured by accidents caused as a result of NHTSA’s failure to require the tire pressure monitoring system advocated by Public Citizen. As Professor Mank notes, even if Public Citizen had provided a quantification of statistical injuries suffered by its members, neither that showing nor the showing accepted in NRDC v. EPA would satisfy the requirement stated by Justice Scalia in Summers – the need to identify a particular member of the organization who would be injured.

Finding neither the “reasonable fear” standard of Laidlaw nor the rejection of “probabilistic injury” in Summers acceptable, Professor Mank argues for the “realistic threat” standard espoused by the Summers’ dissent.  If he were arguing on a blank slate, I might agree with him, but he is not.  Summers is the law, even if Justice Kennedy penned another of his inscrutable concurrences about how he might have reacted if Congress “had sought to provide redress for a concrete injury.”  To distinguish Summers plaintiffs will have to characterize their “increased risk of injury” as a present and particularized concrete injury.  Such a characterization can reference Laidlaw as support, arguing that the “reasonable fear” standard there is equivalent to “increased risk” as a present injury.

Professor Mank’s article is a great introduction to these issues, and lawyers and academics concerned about standing should read it.

Might the Motivation for Agency Guidance Be the Public’s Need for Guidance?

Mar 22, 2010 Peter Shane

Ten years ago, Todd Rakoff observed that agencies seemed to be increasing their use of “guidance documents,” in possible preference to rulemaking or adjudication, as a newly preferred method of policy implementation.  Todd D. Rakoff, The Choice Between Formal and Informal Modes of Administrative Regulation, 52 Admin. L. Rev. 159, 167 (2000).  Others – including some casebook authors I know well – have since speculated that the trend might, at least in part, be a strategic reaction to the increased transaction costs associated with issuing substantive administrative rules – for example, having to deal with the Office of Information and Regulatory Affairs in negotiating an acceptable regulatory impact analysis.  See, e.g., Jerry L. Mashaw, Richard A. Merrill and Peter M. Shane, Administrative Law – The American Public Law System:  Cases and Materials 646-647 (6^th ed. 2009).

In Strategic or Sincere?, Connor Raso, who will graduate this spring with both a J.D. from Yale and a Ph.D. in political science from Stanford, has written what protocol requires me to describe as a “Note” casting doubt on this hypothesis.  The Note begins with a section recounting how guidance documents are treated under the law, especially in comparison to substantive or “legislative” rules. Raso then recounts a number of recent studies that assume “that agencies use guidance documents in place of the notice and comment process, and then [debate] reforms to reduce this behavior.”  (798). A third analytic section catalogues potential institutional differences between legislative rules and guidance documents:  guidance documents may attract less political attention (which could be especially attractive if Congress and the President are generating different political signals); they may be harder to challenge in court because of ripeness and standing problems; they are exempt from APA procedural requirements; and their issuance is likely to consume fewer resources of time, personnel, and budget.  On the other hand, guidance documents may be more difficult to enforce (although Raso seems to waiver on this point) and less durable than legislative rules.

The most interesting part of the Note, however, is its empirical analysis of agency behavior regarding guidance documents.  Raso’s analysis “includes the EPA, FDA, FCC, OSHA, and IRS over the years 1996 to 2006. These five agencies were selected to constitute a representative cross-section of the administrative state. The sample includes agencies engaged in high-profile rulemaking (EPA, FCC), agencies heavily involved in enforcement (FDA, OSHA, IRS), an agency providing large-scale service to the public (IRS), and an independent agency (FCC).”  (805)  He uses these data to support a number of intriguing inquiries.

First, Raso formulates five different hypotheses for how agencies would likely behave if they were motivated to issue guidance chiefly for strategic reasons, i.e., for reasons having to do with supposed disadvantages of ordinary rulemaking.  These hypotheses are:

• Agency heads would use guidance documents more frequently as their expected time in office decreased.
• Agencies would issue guidance documents more frequently in periods of divided government because their lower visibility would help cope with political differences between President and Congress.
• Agencies facing signals of congressional approval – because subject to relatively more frequent congressional oversight – would use guidance documents more frequently.
• Agencies facing signals of presidential disapproval would use guidance documents more frequently.
• Agencies more frequently subject to judicial review would use guidance documents more frequently because it is harder for disputants to establish standing and ripeness.

Although Raso concedes difficulties measuring some of the relevant variables, and small sample size may make some of his findings questionable, it is striking that his data do not support any of these hypotheses to a statistically significant degree (or at all).

Raso then investigates the frequency with which agencies have used guidance documents to resolve especially important policy questions.  He takes as his standard the Bush 43 definition of a “significant guidance document,” as specified in an OMB Bulletin.  He found 723 significant guidance documents to be currently in effect, as compared to 10,800 significant legislative rules reviewed by OIRA between 1993 and 2008.  (813)  This does not suggest that guidance documents, at least in the agencies scanned, are significantly displacing substantive rulemaking activity.  This is confirmed by inspection of many of the guidance documents that seem to turn on relatively technical matters.

Raso finally finds reason to doubt that agencies are cloaking ideologically laden policy moves in low-visibility guidance documents.  The Bush Administration revised only 11.8 percent of the guidance documents promulgated by prior Administrations.  Guidance documents were revised less often than legislative rules.  It is also intriguing that, when OMB invited the public in 2002 to nominate existing guidance documents for modification, interested parties came forward with only 49 suggested documents.  The low priority that interested parties apparently attach to guidance documents also casts doubt on the possibility that agencies are substituting guidance for otherwise controversial legislative rules.

Raso carefully notes that there are limits to his analysis, and his findings do not preclude the possibility that guidance documents are strategically deployed in some key cases.  It is quite possible, however, that fears of guidance abuse are overstated and that efforts to police guidance more intensely or to reduce the use of guidance documents outright are misguided and a waste of administrative resources.  One wishes that OMB would take Raso seriously.  Within his first two weeks in office, President Obama pointedly revoked the Bush order that tightened White House oversight of regulatory policy making and including guidance within OIRA’s ambit.  Exec. Order 13,497, 74 Fed. Reg.  6113 (1009). Within two months, however, OMB Director Peter Orszag issued a memorandum reclaiming much of the authority over guidance that the Obama order seemed to repudiate.  It’s time to rethink.

The Nineteenth Century Administrative State

Mar 17, 2010 Richard Pierce1 comment

Eminent historians, political scientists, and legal academics have long told us that the federal administrative state was almost non-existent until the twentieth century. They were wrong. In a series of four articles published in volumes 115 through 118 of the Yale Law Journal, Jerry Mashaw recounted the rich history of the federal administrative state in the nineteenth century.

The many scholars who believed that the federal administrative state did not exist in the nineteenth century were tricked by our tendency to rely primarily on judicial opinions to inform us of legal developments. There are very few court opinions involving judicial review of federal agency actions in the nineteenth century, but that lack of evidence of the administrative state was attributable to a characteristic of the administrative state at the time—federal agency actions rarely were reviewable in a federal court. The only way a citizen could obtain review of most federal agency actions in the nineteenth century was to sue the individual federal employee in a state court on the basis of some common law doctrine like trespass or conversion. The federal employee would defend his actions on the basis that he was performing duties authorized by federal law. A jury would then decide whether the employee was acting pursuant to law or had violated a common law right.

When Mashaw went beyond court opinions and began researching the national archives, he found abundant evidence of a robust federal administrative state in the nineteenth century. Many agencies had the power to issue binding legislative rules and to issue final orders in adjudicatory proceedings in a wide range of contexts. Mashaw’s findings include many that will surprise and disconcert members of every modern “school” of administrative law.

In many cases, an agency had a wide range of discretion because it was given authority to implement a broadly worded statute. Agencies were located in many places in government. Some were part of a cabinet agency, but many were free-standing. Some operated under the supervision of the President or of an officer who served at the pleasure of the President, but many seemed to have no connection with either the President or any cabinet officer. They were even more independent of presidential control than the modern “independent” agencies that provoke controversy today.

Agencies also were not subject to any judicial control. With rare exceptions, the legally binding rules and orders they issued were not subject to any form of judicial review. Moreover, agencies were not subject to any mandatory procedures except a statutory requirement that they provide a brief explanation for any rule or order they issued.

Mashaw gives detailed accounts of many of the powerful nineteenth century federal agencies. My personal favorite is the Steamship Safety Commission of 1852. During the 1830s and 1840s, there were many steamship explosions with enormous resulting property damage and loss of lives. Congress responded to this problem by creating the Steamship Safety Commission of 1852. Within three years, the Commission had issued rules and adjudicated licensing disputes that had the effect of reducing the incidence of steamship explosions and the resulting property damage and loss of lives by over 80 per cent! It issued legally binding rules quickly without using a notice and comment procedure and with no judicial review. It also issued and revoked operating licenses quickly with no oral adjudicatory hearing and no involvement of courts. As far as Mashaw could tell, the Commission employed no lawyers. Decisions were made by experts in the design and operation of steam engines.  

A few years ago, Mashaw and a co-author, David Harfst, conducted a comprehensive study of a modern agency that Congress assigned a function analogous to that of the Steamship Safety Commission of 1852. The resulting 1990 book, The Struggle for Auto Safety, did not paint a pretty picture of the efficacy of the actions of the National Highway Traffic Safety Commission (NHTSA). Mashaw and Harfst identified only one rule that NHTSA had issued that had a significant beneficial effect on highway traffic safety, and NHTSA required twenty-two years to issue that rule.

I recently asked Mashaw whether his research had persuaded him that the many “reforms” we have implemented over the last century have improved the administrative state. He was not willing to hazard an answer to that question. I think it is at least an open question whether the notice and comment rulemaking procedure subject to hard look judicial review that we take for granted today is an improvement over the relatively lawless but highly effective administrative state that thrived during the nineteenth century.