Aug 16, 2013 Christopher Walker
This coming year marks Chevron’s 30th anniversary. Westlaw reports that Chevron has been cited in over 66,000 sources, including in nearly 13,000 articles. Despite the ink already spilled, until now no one had empirically investigated the core assumption underpinning Chevron deference—that Congress actually intends to delegate interpretative authority to federal agencies when it leaves ambiguities in statutes the agencies administer.
Professors Abbe R. Gluck and Lisa Schultz Bressman recently sought answers to this question (and many others). They interviewed 137 congressional counsels, asking them 171 questions about the canons, legislative history, and administrative law doctrines. Their findings will appear in a two-part series in the Stanford Law Review. The 125-page part one was just published, along with a methods appendix, and there is a lot to like about this piece.
Because this is Jotwell’s Administrative Law Section, I’ll focus on the administrative law findings (Part IV). But for those (like me) who also teach legislation, the findings on Congress’s use of various interpretative tools are well worth a read. As set forth in a table perfect for classroom use, congressional drafters did not know many of our favorite Latin canons (expressio unius, noscitur a sociis, ejudsem generis) by name but actually used them in practice. Other court-created tools were well known but ultimately rejected. For instance, more than 50% said dictionaries were never or rarely used to determine what terms to use in statutes; as one drafter put it, “no one uses a freaking dictionary.” (I remain curious about the distinct and unasked question whether congressional drafters think courts should consult dictionaries to help discern the meaning of statutory terms.)
Gluck and Bressman asked 45 questions about administrative law. Chevron, it turns out, was the most known, by name, of any canon in the study. In other words, the overwhelming majority (82%) of drafters are aware of—and thus legislate against—this background principle. Of those interviewed, 58% said Chevron plays a role when drafting; 31% indicated in comments that statutory ambiguity results in judicial deference to agency interpretations; and 29% reported that Chevron forces them to think about how precisely to draft. Nine in ten (91%) stated that one reason for statutory ambiguity is to delegate decision-making to agencies, with lack of time (92%), complexity of issue (93%), and need for consensus (99%) being other predominant reasons. Gluck and Bressman conclude that Chevron deference is not the reason drafters leave ambiguities; instead, the reasons mirror those articulated in Chevron—delegation of decision-making, implementation, expertise, etc. Notwithstanding, Chevron forces agencies to think more about delegation and precision in drafting.
Mead is a different story. Unlike Chevron’s 82% name recognition, only 28% knew Mead by name. Yet, by concept, Gluck and Bressman conclude that Mead was a “big winner,” in that 88% indicated that the signal emphasized in Mead—authorization of notice-and-comment rulemaking—is always or often relevant to whether drafters intend for an agency to have interpretative authority. In other words, contrary to Justice Scalia’s Mead dissent, Congress’s authorization of agency rulemaking or formal adjudication may be one of the stronger signals of its intent to delegate interpretative authority to agencies. (To be sure, Justice Scalia has made clear—most recently this Term in City of Arlington v. FCC—that procedural formality is a sufficient, though not necessary, signal for deference.)
Speaking of City of Arlington, Gluck and Bressman asked drafters if they delegate major policy questions to agencies. Confirming Justice Scalia’s intuition that Congress does not “hide elephants in mouseholes,” more than 60% said Congress does not intend to delegate major policy questions. Gluck and Bressman provide another classroom-ready chart to illustrate the types of ambiguities drafters intend agencies to fill—with implementation details (99%) and areas of agency expertise (93%) leading the way and major questions garnering less than 40%. The survey did not ask whether drafters intend to delegate by ambiguity authority for agencies to determine the scope of their own statutory jurisdiction—the question City of Arlington answered in the affirmative. But based on their responses regarding major questions, it is probably sensible to infer that congressional drafters would take issue with the majority’s conclusion in City of Arlington.
Gluck and Bressman uncover many other insights, including how Congress deals with multiple federal agencies, federal/state agency interaction, and longstanding agency interpretations. But I’ll conclude with legislative history. As I have explored elsewhere, courts and scholars have long debated which (and when) interpretative tools should be used under Chevron. For instance, many judges use legislative history at Chevron step one to determine the meaning of ambiguous terms. This study’s findings suggest alternative uses. In particular, 94% of drafters indicated that one purpose of legislative history is to shape the way agencies interpret statutes, and 21% described it as a mechanism for agency oversight. Gluck and Bressman suggest that these findings support the use of legislative history “as a relevant signal of delegation” (perhaps at step zero or one). That’s not an unreasonable conclusion. If a main purpose of legislative history is to shape agency interpretation (beyond shedding light on ambiguous terms), however, there may be a stronger argument that it is best used at Chevron step two to ascertain the reasonableness of an agency’s interpretation.
In all events, to borrow a line from Justice Scalia, “[i]t is indeed a wonderful new world that the [Gluck and Bressman study] creates, one full of promise for administrative-law professors in need of tenure articles and, of course, for litigators.” I, for one, am following their lead and surveying agency rule drafters to explore their understanding and use of various interpretative tools and administrative law doctrines in the rulemaking process. I look forward to reading part two of their study when published later this year.
Jul 17, 2013 Jonathan Weinberg
David Markell and Emily Hammond Meazell, Administrative Proxies for Judicial Review: Building Legitimacy from the Inside-Out, 37 Harv. Envtl. L. Rev. (forthcoming 2013), available at SSRN.
The great question underlying American administrative law is that of agency legitimacy. Administrative agencies, whose heads don’t answer to the voters and whose decisions for the most part are not subject to effective popular checks, have dubious democratic bona fides. Where do they get off, then, mandating rules of conduct and imposing punishments backed up by the coercive power of the state? A crucial part of the answer, in American administrative-law thinking, has rested on the institution of judicial review: We can trust agencies to exercise their delegated authority, the classic argument runs, and we can treat that authority as legitimate, because we can rely on courts to take action if the agencies step out of line.
But as administrative-law scholars well know, the judicial-review focus has limitations. David Markell and Emily Hammond Meazell, in their paper Administrative Proxies for Judicial Review: Building Legitimacy from the Inside-Out, note that few administrative decisions ever go before a court. Judicial review of most agency decisions is neither cost-effective nor practical; review of others is precluded by law. This, the authors urge at the beginning of their paper, is one of the “great paradoxes of administrative law,” raising the question, “What else is there to legitimize unreviewable agency action?”
Markell and Meazell respond by studying the universe of 58 citizen petitions, filed over the past quarter-century, asking that EPA withdraw a state’s authorization to administer a federal environmental-law program. There’s reason to believe that these petitions would be ineffective, and that the agency’s response typically would be desultory. For one thing, it would be impractical—almost unthinkable—for the agency ever to grant such a petition: if EPA ever actually withdrew state authority to administer a regulatory program, it would have to take over administration of the program itself. The agency doesn’t have the resources to do that sort of thing. For another, a decision by EPA to ignore such a petition, or to investigate it only half-heartedly before moving on to other concerns, wouldn’t be subject to judicial review. Heckler v. Chaney provides secure protection against judicial oversight in these cases, and leaves the agency free to do what it will.
But that’s not what the authors found. Their study finds that interested parties have filed petitions at a steady pace of about three per year for the past 16 years; the typical petition is attorney-written and legally sophisticated, and includes a local environmental nonprofit among its signatories. EPA during the study period “virtually never simply denied a petition or ignored it.” Rather, it responded by launching an informal investigation into the concerns the petition raised. With respect to more than 80% of those concerns, EPA generated some document or set of documents acknowledging the concern and describing the outcome it reached. With respect to about 70%, it explained its decision in light of the relevant legal standards and the data available to it. And with respect to just over half of the concerns raised by the petitions, EPA’s process (informal investigation, followed by negotiations with the state) resulted in a formal commitment by the state to make measurable responsive changes in its program administration. The authors identify all of these (responsiveness, reason-giving, and results) as key internal metrics for agency legitimacy.
There are limits to Markell and Meazell’s data, and the authors acknowledge them. They code, for example, whether the agency negotiated an agreement with the state; they were unable to code whether it was a good agreement. The findings are nonetheless important.
What has caused EPA to internalize legitimacy principles as well as it has, engaging in public, reasoned decision-making coupled with reason-giving even in the absence of statutory constraint or judicial review? And why do withdrawal petitions work at all, given that actual withdrawal isn’t a credible threat? The authors suggest tentative answers. They note EPA’s agency culture, its network of regional offices (so that petitions are filed against a backdrop of relationships with local actors), and EPA’s need to support its political legitimacy in the eyes of local stakeholders. The petition mechanism puts local environmental actors at the table with governments; it gives EPA political cover, and targets of opportunity, in its dealings with state actors; and it gives actors inside state government political cover in their dealings with each other, so that state-government actors seeking change can point to the EPA investigation as forcing it. (The withdrawal proceeding thus has a lot in common with the AALS re-accreditation process, including the opportunity for the accreditor to exert useful pressure even though ultimate denial is implausible.)
Markell and Meazell’s paper is better at raising questions than at providing answers, but two things make it a thought-provoking and admirable one. One is the set of questions it addresses: What makes agency action legitimate? How can we work our way through to new thinking about agency legitimacy? What makes some agency processes work better—or less well—than others? The second is its eagerness to connect theory with practice. Rather than articulating a theoretical framework and stopping there, the authors use their framework to structure their examination of actual agency process, to see how well the data fits the theory. This is good work. We need more of it.
Cite as: Jonathan Weinberg,
Assessing Agency Legitimacy, JOTWELL
(July 17, 2013) (reviewing David Markell and Emily Hammond Meazell,
Administrative Proxies for Judicial Review: Building Legitimacy from the Inside-Out, 37
Harv. Envtl. L. Rev. (forthcoming 2013), available at SSRN),
https://adlaw.jotwell.com/assessing-agency-legitimacy/.
Jun 17, 2013 Anne Joseph O'Connell
Jon D. Michaels, Privatization’s Progeny, 101 Georgetown Law Journal (forthcoming 2013), available at SSRN.
Administrative law loves binaries. There are executive agencies and independent regulatory commissions. There are federal bureaucratic organizations and state entities. There are public agencies and private firms. In recent years, scholars have examined organizations from different sides of a “boundary” working together – for instance, executive agencies and private firms in the new governance literature and separate federal and state agencies in federalism work. There is little discussion, however, on organizations essentially operating at or near the boundary.
Jon Michaels’s previous work has focused on national security agencies turning outward from the public sphere, specifically using government contracting, for classic government tasks. In his forthcoming piece, Privatization’s Progeny, Michaels turns inward, exploring how privatization is reshaping a wider class of public institutions themselves, through “the marketization of bureaucracy” and “government by bounty.”
Michaels starts his article with a concise, straightforward summary of privatization’s economic and political benefits. Other scholars tend to emphasize the economic benefits; therefore, Michaels’s attention to how privatization can foster control over the administrative state demonstrates some novelty in well-worn discussions. He then takes a clever turn from the thought provoking privatization literature (including his past work): instead of showing how the national security apparatus reaches out to the private sector (through government contracting, for example), he looks at how the broader administrative state is transforming inward as well as shifting the terms of contracting itself.
Michaels concentrates on changes to the civil service and the growth in bounty initiatives in government contracting. For the former, Michaels examines “unprecedented revisions to civil servants’ (1) collective bargaining rights, (2) wages and benefits, (3) promotion protocols, and (4) job security.” For the latter, Michaels details how social-impact bonds have the “potential to outperform traditional contracting vis-à-vis efficiency, cost-savings, and political payout.” Others have written about the undermining of collective bargaining rights and government prizes, but not together. (Nicholas Parillo’s historical work makes some interesting connections between Michaels’s two case studies; Parillo examines “how American lawmakers remade governance by shifting public officers’ monetary compensation away from profit-seeking arrangements—such as fees-for-service and bounties—and toward fixed salaries.”).
The heart of the article rests in the implications for the administrative state. Michaels is ambitious here. Although he may not convince all readers of his normative conclusions, he succeeds in getting them to think seriously about important issues. As for the marketization of bureaucracy, Michaels largely bemoans the changes to the civil service. His account of the postal service is compelling (as is his analogy of educators teaching to the test). As for government by bounty, Michaels also worries about the ramifications. His analysis of the Food and Drug Administration’s priority-review voucher program raises interesting issues, though firms may not act in the way he predicts.
In both the marketization of the bureaucracy and government by bounty discussions, the consequences for administrative law are nicely sketched. For instance, Michaels has an interesting take on judicial review of questions of law in light of the marketization of the administrative state. Michaels argues that if marketization produces “greater efficiencies, budgetary savings, and more complete unitary control over the administrative state,” “we might finally see a sharper division between reversal rates under Skidmore and Chevron.” As Michaels explains, “[t]his would be so because marketization ought to heighten courts’ Chevron deference, and lessen Skidmore deference.” Perhaps because Chevron (and Skidmore) is such trampled-on ground in administrative law, I enjoyed the discussion of the government-contractor defense and state action (in some sense opposite sides of the same issue) even more.
There are very clever and striking insights in this article. I am already wrestling with its implications for a project I have about bureaucracy on the boundary. Administrative law scholars would be wrong to think of Michaels as only a national security scholar. He is a national security scholar, but he is also an administrative law scholar. In this forthcoming piece, as with his other work, Michaels shows that he can make significant contributions to our understanding of meaningful issues in administrative law.
May 10, 2013 Peter Shane
In July, 2012, the Obama administration invited states, which administer the Temporary Assistance for Needy Families (TANF) program, to apply for waivers from some federal requirements for that program. The states would have to have alternative programs in place for increasing employment among the poor. In short order, the presidential campaign of Republican candidate Mitt Romney charged the President with gutting federal law. Campaign commercials alleged that Obama was illegally ending the work requirements that had been a centerpiece of federal welfare reform in the 1990s.
Although the commercials had little political impact, they did bring to public attention a little-noticed feature of a surprising number of federal statutes – a feature that Professors David Barron and Todd D. Rakoff call “big waiver.” In their superb paper, “In Defense of Big Waiver,” they analyze a fascinating phenomenon. Congress sometimes will enact “a fully reticulated, legislatively defined regulatory framework” that contains within it a delegation of “broad, discretionary power to determine whether the rule or rules that Congress has established should be dispensed with.”
The waiver authority that the Obama Administration implemented in connection with the Temporary Assistance to Needy Families (TANF) Program is but one illustration. Other prominent examples appear in the No Child Left Behind Act, the Patient Protection and Affordable Care Act, and the National Defense Authorization Act for FY 2012. Such statutes, the authors point out, “share a basic feature that has significant implications for both regulatory design and administrative law: They confer broad policymaking discretion so that an agency may choose to displace a regulatory baseline that Congress itself has established.”
The Barron and Rakoff paper sets out to accomplish four ambitious goals. The first – and of no small importance by itself – entails identifying “big waiver” as a form of legislative innovation that is distinguishable from both “little waiver” and ordinary nonenforcement discretion, and documenting its widespread appearance. “Little waiver” is statutory authority to waive otherwise applicable legal requirements in extraordinary individual cases. “Big waiver” allows an agency to substantially supplant otherwise applicable legal requirements with an alternative regulatory regime it believes better serves Congress’s purposes. Nonenforcement decisions, which do not actually absolve anyone of legal liability, are usually “discrete, informal and wholly revisable” exercises of an agency’s implicit general administrative discretion. “Big waiver,” where it exists, rests on explicit statutory authority that permits agencies to change the legal rights and responsibilities of regulated parties.
The second is to set forth a somewhat speculative argument as to the conditions of the modern administrative state that have given rise to “big waiver.” The third is to demonstrate its lawfulness as a constitutional matter, and to set forth the conditions under which the exercise of “big waiver” ought to be deemed lawful under applicable administrative law doctrines. The fourth is to provide a normative defense of “big waiver” as a legislative innovation.
So much of the authors’ discussion is interesting and provocative that I will comment here only on a few highlights. One is the authors’ persuasive argument that courts ought to be as deferential to Congress’s judgments in conferring “big waiver” authority as they are in assessing the permissibility of broadly worded conventional delegations. Indeed, Barron and Rakoff point out, “big waivers” might be thought less vulnerable to the kinds of pathologies sometimes attributed to more conventional delegations. That conclusion may seem surprising if one thinks of waiver authority as permission to simply ignore an enacted statute. In reality, however, Congress’s delineation within the authorizing statute of a detailed regulatory regime – the regime that an agency is then allowed to waive – actually gives courts a much more concrete sense of congressional purpose. Congress’s regulatory specifics provide the court a far stronger baseline against which to measure whether an agency has acted in a non-arbitrary, legally permissible way in interpreting both the scope of its waiver authority and the conditions regulated parties must satisfy in order to obtain waiver. Judicial review thus promises to be a stronger tool of regulatory accountability as a result of “big waiver” than in the more conventional delegation case.
Another interesting point is the authors’ astute handling of Clinton v. City of New York, 524 U.S. 417 (1998), in which the Supreme Court invalidated the Line-Item Veto Act, and which thus might be thought to cast doubt on the constitutionality of “big waiver.” Giving the President a line-item veto is precisely to give him a kind of waiver authority, and the Court rejected the line-item veto as too creative a reworking of the constitutionally prescribed legislative process. Barron and Rakoff respond, however, with a convincing distinction. “Big waiver” authority must be exercised pursuant to statutory conditions and in a way that agencies may well have to justify in court based on reasoned elaboration and a factual record. In contrast, line-item veto authority was not exercised as a result of changing conditions or based upon discretion-limiting statutory criteria. The President could not plausibly have learned anything in the five days allowed for a line-item veto that would justify changing the law Congress enacted based on circumstances of which Congress was unaware. In that sense, the President’s “waiver” of an expenditure item really was a veto, not a friendly amendment in the name of accomplishing Congress’s objectives more effectively. “Big waivers” should not be thought of as vetoing Congress’s handiwork in the same way.
Of great interest also is the authors’ normative case for “big waiver.” In essence, they argue that, under conditions of divided government, “the delegation of an administrative veto affords Congress regulatory flexibility that enables it to codify fundamental policy choices that it otherwise might be unwilling (or unable) to specify, thereby making legislative policymaking viable—precisely because it can be monitored and altered through the administrative process.” “Big waiver” also provides a tool through which Congress can express fairly specific regulatory imperatives while reducing the risk of statutory inflexibility that can render regulatory programs dysfunctional in fairly short order.
The authors recognize, of course, that “big waiver” authority may be drafted well or badly. The Real ID Act, which authorized the Secretary of Homeland Security to waive the requirements of all other federal statutes in order to get a border fence built, is a glaring example of the latter. (I like to ask my administrative law students if the Secretary could legally have built the fence with undocumented immigrant labor.) On the whole, however, Barron and Rakoff are convincing that Congress should be allowed this newly prominent tool of regulatory authorization. Theirs is a paper likely to fuel much discussion and further scholarship in the years ahead.
Apr 10, 2013 Linda Jellum
When I returned from the 2013 AALS Annual Meeting, I discovered Professor Kevin M. Stack’s latest article, Interpreting Regulations, 111 Mich. L. Rev. 355 (2012), waiting patiently for me. As someone who teaches both Administrative Law and Statutory Interpretation/Legislation, I picked it up with interest; although, given all that has been written about statutory interpretation, I must confess that I really couldn’t imagine that there would be anything new to say about interpreting regulations. Yet, I remembered that each year, around the time my students realize that they will certainly be tested with a Chevron-like hypothetical on their final exam, I’m asked how to approach the analysis. After they’ve determined that Chevron applies (Chevron step zero), that Congress did not have an intent as to the precise issue before the court (Chevron step one), and that the agency’s interpretation of the statute is reasonable (Chevron step two), I have always told them that the final step is simply to apply the regulation to the fact pattern using the traditional tools of statutory interpretation. Was my direction wrong? I wondered.
Lest I hold you in suspense, let me explain Professor Stack’s thesis immediately. He believes that courts should use regulatory purposivism to interpret regulations. He defines regulatory purposivism in this way: a court should ask whether an interpretation of a regulation is (1) permitted by the regulation’s text, and (2) consistent with the purposes as stated in the regulation’s statement of basis and purpose (and/or text). If a court answers yes to both questions, then the interpretation is “reasonable,” “permissible,” “plainly” right, at essence, controlling. (If I may digress, I wondered, was he advocating a new two-step deference approach? God forbid!) He suggests that courts should not give meaning to a regulation that the text will not bear, but he adds that neither should courts give a regulation a meaning that the written statement of basis and purpose will not bear. In essence then, he advocates for a text-based approach to purposivism!
To support his approach, Professor Stack initially examines several well-known doctrines that require regulatory interpretation: Chevron, Auer, and Accardi. He concludes that, at least when using these doctrines, courts do not approach regulatory interpretation consistently: sometimes courts use a textualist approach; sometimes they use a purposivist approach; sometimes they turn to the statement of basis and purpose, and sometimes they do not; sometimes they use linguistic canons, and sometimes they do not. One might say that “[t]he hard truth of the matter is that American courts have no intelligible, generally accepted, and consistently applied theory of [regulatory interpretation].”
To support regulatory purposivism, Professor Stack argues that text alone does not sufficiently constrain the interpreter (whether it be the agency or a court), and that text alone fails to provide adequate notice to those regulated. Notably, these are arguments that might apply equally well to statutory interpretation. In any event, Professor Stack notes that regulations are different from statutes in three important ways that support his proffered approach. First, unlike statutes, regulations always contain statements of basis and purpose because APA section 553(c) so requires. The U.S. Constitution has no similar requirement. Second, agencies are required to act rationally under hard look review. Congress can act irrationally should it choose, in part, because hard look review is more demanding than rationality review. Third, agencies cannot explain their actions post-hoc, pursuant to the Chenery doctrine. Congress has no such timing limitation. These three distinctions are relevant to the role of purpose statements in interpretation: The two “form an intertwined couplet: the text without the statement is invalid, and the text is valid only so far as it is justified by the statement.”
Professor Stack likens regulatory purposivism to Hart and Sacks’s style of purposivism. He explains that his approach reaps all the benefits of this latter approach, while avoiding the criticisms. The most notable criticism is directed at Hart and Sacks’s suggestion that judges should presume that legislatures are comprised of “reasonable persons pursuing reasonable purposes reasonable.” Many have noted that legislatures do not always act reasonably. Further, many reject the imbedded idea that judges should independently determine the reason, or purpose, for legislation. But Professor Stack rejects these criticisms, explaining that they are not the defining element of Hart and Sacks’s purposivism. He reminds his reader that Hart and Sacks first direct interpreters to consider any “formally enacted statement of purpose.” Only when a court determines that such a statement is not useful or is unavailable should a court infer purpose. This step is the one that sends textualists screaming. But as Professor Stack notes, this inferring is to be done with the text and the specific provisions within it in mind. In other words, even purposivists want to understand the meaning of a statute within its whole statutory context, in light of the legal system as a whole. Finally, Professor Stack notes that Hart and Sacks’s criticized direction applies only when statutes do not include a formally enacted statement of purpose. Regulations always include such statements.
At bottom, Professor Stack’s article offers a new, but familiar, method for interpreting regulations; one that purposivists will certainly embrace, but one that textualists will likely rebuff.
Mar 6, 2013 Mark Seidenfeld
Jennifer Nou, Agency Self-Insulation under Presidential Review, ___ Harv. L. Rev. ___ (forthcoming 2013), available at SSRN.
Perhaps the hottest topic in administrative law of late is the propriety of presidential influence on agency action. To its credit, that literature distinguishes between the agencies and the White House as two distinct institutions that may not agree on particular regulatory outcomes. But, the literature does not go much beyond this simple distinction in its picture of the executive branch, treating both White House and agencies as black boxes, each of which acts with a consistent purpose. At the same time, scholarship has focused on agencies as strategic actors vis-à-vis the judiciary, choosing methods of policymaking to minimize the potential for courts to interfere with that endeavor. In “Self-Insulation under Presidential Review,” Jennifer Nou investigates the extent to which agencies might act strategically amidst resource constraints as a means of minimizing White House influence on their policymaking discretion. In so doing, Nou considers the internal structure and decisionmaking processes of both agencies and the “institutional presidency” to paint a sophisticated picture of their interaction. The result is an article that provides insight into the decisionmaking of both these institutions, and provokes much thought about how their interaction might affect administrative law.
Nou explicitly limits her investigation of White House influence to its formal review of agency rules, as mandated by various executive orders, which she dubs “presidential review.” She makes clear that while the Office of Information and Regulatory Affairs (OIRA) coordinates such review, it can involve many entities, including those within the Executive Office of the President (EOP) and other agencies. She begins by explaining why agency staff and in many cases agency heads can disagree with the preferences of the institutional President on many regulatory policy issues. She next explains that, from an agency’s perspective, presidential review poses constraints similar to judicial review in that, generally, both require the agency to invest precious resources to avoid reversal of its decision. But, she notes that presidential review is also costly for the executive branch reviewers; this cost allows agencies some strategic latitude to minimize its chances of policy reversal by increasing the White House’s costs of review, rather than by investing in more comprehensive and higher quality decision-making. For example, agencies can avoid review altogether by simply abandoning a policy change, by making policy through adjudication and perhaps even by guidance document. They may be able to avoid review or minimize the level of scrutiny to which a rule is exposed by designating the rule as not economically significant or not significant at all, or by providing only opaque and general information about costs and benefits. Finally, they may be able to parlay statutory deadlines or the end of a President’s term effectively to shorten the period for OIRA review, thereby decreasing the level of scrutiny.
Nou’s article becomes even more informative when she considers how agencies can use the structure and timing of White House oversight to help run the gauntlet of presidential review. She provides perhaps one of the clearest and most detailed descriptions in the legal literature of how OIRA forwards rules to other agencies and offices in the Executive Office of the President (EOP), and the dynamics of resulting consideration as part of presidential review. This description is not only valuable as support for her assertion that agencies can form coalitions with various entities within the Office of Management and Budget, EOP, and other agencies, but perhaps even more for those who write about the ability of the President to control White House influence on rulemaking and the extent to which the influence represents the President’s own policy preferences. Nou uses this description to evaluate the extent to which such agency choices as midnight rulemaking and poor quality CBAs might reflect agency self-insulation from presidential review.
Despite Nou’s interest in focusing administrative law scholarship on constraints other than judicial review, for those like me who focus their writing on this traditional administrative law constraint, the most interesting part of Nou’s paper may well be her discussion of the implications of agency self-insulation for judicial review. If one believes that courts should calibrate their level of scrutiny under hard look review to correspond with presidential influence, this paper identifies some interesting complexities in how courts might do so. For example, Nou notes that agency attempts at self-insulation may reflect efforts to prevent the President from dictating policy outcomes that cannot be justified under statutorily relevant criteria. I would add that it might also reflect agency reaction to the White House attempting to use the agency rulemaking as a means of obfuscating impacts that might generate a negative public reaction to a “raw” political choice by the President. Contrary to the recent recommendation by Kathryn Watts, Nou’s recognition that self-insulation might signal inappropriate presidential influence suggests that courts should actually increase their level of scrutiny in the face of failed attempts by the agency to insulate a rule from significant White House influence.
All in all, “Agency Self-Insulation under Presidential Review” is a well-executed piece of scholarship that provides a bounty of information as well as both insightful and inciteful ideas about presidential influence on agency policymaking and agency reactions to such influence.
Feb 8, 2013 Michael E Herz
Bruce Kraus & Connor Raso,
Rational Boundaries for SEC Cost-Benefit Analysis, 30 Yale J. on Reg. 2 (2013 forthcoming),
available at SSRN.
A happy account of judicial review of agency action holds that courts and agencies enjoy a “partnership.” Judge Leventhal provided a classic statement:
[A]gencies and courts together constitute a “partnership” in furtherance of the public interest, and are “collaborative instrumentalities of justice.” The court is in a real sense part of the total administrative process, and not a hostile stranger to the office of first instance.
Greater Boston Television Corp. v. FCC, 444 F.2d 841, 851-52 (D.C. Cir. 1970).
Judge Leventhal was writing just when the pre-Vermont Yankee D.C. Circuit was gathering steam, and agencies might be forgiven for wondering “with partners like that, who needs competitors?” Four decades later, the agency that likely most views the D.C. Circuit as a “hostile stranger” rather than a partner is the SEC, which has had a series of spectacular losses in which the court’s look has been hard indeed. The losses are sufficiently striking that articles have appeared in the popular press with titles like “The judicial jihad against the regulatory state” and “Circuit Court Needs to Let the S.E.C. Do its Job”.
The tone is more measured, but the general point the same, in an interesting new article by Bruce Kraus (former Co-Chief Counsel of the SEC’s Division of Risk, Strategy, and Financial Innovation) and Connor Raso. The authors provide an illuminating discussion of the “devastating” 2011 decision in Business Roundtable v. SEC, which held that the cost-benefit analysis underlying the SEC’s 2009 proxy access rule was so flawed as to be arbitrary and capricious, and also explore its consequences for the SEC and judicial review of cost-benefit analysis (CBA) generally.
Figuring prominently in the clash between the SEC and the D.C. Circuit is a 1996 statutory provision that requires the agency to consider the effect of any new rule upon “efficiency, competition, and capital formation.” The Commission has taken this as a prod to do a sort of “CBA lite”; the D.C. Circuit has read it to require something far more rigorous. The authors usefully describe the series of decisions finding that the agency had failed adequately to analyze impacts on “ECCF.” They then summarize the history of the proxy-access rule and critique the opinion in Business Roundtable. They concede that some of the errors identified by the court are indeed problematic, but on the central issue – whether the SEC had adequately shown that increasing the potential for election of directors nominated by shareholders would result in improved board performance and shareholder value – the authors convincingly argue that the court held the agency to a standard above what either the ECCF provision or traditional understandings of the arbitrary and capricious test require.
This sets the stage for a general discussion of what Kraus and Raso would like to see from both the agency and the court going forward. There’s lots of interesting stuff here; I’ll mention three issues in particular.
First, Kraus and Raso have their doubts about whether CBA can or should play the same central role in developing financial regulations that it does in developing health, safety, or environmental regulations. Here they take issue not just with CBA enthusiasts and the D.C. Circuit, but with Senator Shelby, sponsor of the proposed Financial Regulatory Responsibility Act. That bill, which can be seen as the codification of Business Roundtable, would mandate that any SEC rule-making could proceed only if a CBA — one that made twelve sweeping findings, after consideration of “all available alternatives” — demonstrated that the quantified benefits of the regulation exceed its quantified costs. Proposed rules with unquantifiable benefits would be recommendations, effective only if Congress waives the quantification requirements and directs the agency to publish the rule. The authors suggest that the bill’s analytic requirements would be impossible to meet. That assessment sounds right.
Second, the authors’ doubts are compounded by concerns about judicial review of agency CBA. Business Roundtable raises the question whether the art/science/voodoo of CBA is ready for judicial prime time. Kraus and Raso see SEC CBAs as especially vulnerable because of a pernicious synergy between (a) the challenge of quantifying regulatory impacts in the financial arena and (b) judges’ excessive confidence in their own expertise in financial economics. But the question whether and how searchingly judges should be reviewing CBAs goes back at least to Corrosion Proof Fittings (1991), which hobbled the Toxic Substances Control Act.
Finally, the authors stress that the independent commissions are “quasi-legislative.” They do not use this familiar label in the sense that the Supreme Court did in Humphrey’s Executor. Rather, their point is group decisionmakers necessarily compromise, logroll, and defer to their members’ pet projects. The result will sometimes be incoherence or internal contradiction; therefore, it is unrealistic for courts to insist on logical purity. The idea that courts should be more forgiving when reviewing multi-member bodies runs counter to another recent suggestion for adjusting the intensity of judicial review of independent agencies. Dissenting in FCC v. Fox Television Stations,Justice Breyer suggested that the relatively milder presidential control over independent agencies might justify more searching review of their decisions than of those from executive agencies. The majority rejected this trial balloon, but it has received some support from what might be seen as an unlikely quarter. Concurring in In re Aiken County (2011), Judge Brett Kavanaugh argued that concerns over “accountability, liberty, and government effectiveness” might be ameliorated through applying a more intensive arbitrary-and-capricious test to the independent commissions than is applied to executive branch agencies.
Kraus and Raso’s article is not the final word on any of this. As Congress considers not just Senator Shelby’s bill, but also proposals to require CBA in rulemakings generally and subject it to judicial review, see the Regulatory Accountability Act, or subject independent agencies to OIRA review, see the Independent Agency Regulatory Analysis Act, this is a helpful, thought-provoking, and timely contribution.
Dec 17, 2012 Richard Murphy
Richard H. Pildes & Samuel Issacharoff,
Targeted Warfare: Individuating Enemy Responsibility, New York University School of Law, Public Law & Legal Theory Research Paper Series, Working Paper No. 12-40,
available at SSRN. President Obama is a Nobel Peace Prize winner. He also orders missile strikes from drones against targeted individuals in Pakistan, Yemen, and Somalia. According to some vocal critics, such extra-judicial killing makes President Obama a murderer.
This conclusion rests in large part on the premise that the United States is not, properly speaking, in an armed conflict with al Qaeda, the Taliban, and associated forces. As such, the laws and norms of international human rights law (IHRL) and civil law enforcement should apply. Absent exigent circumstances, this legal regime expects judicial authorization of the use of lethal force. President Obama is not a judge, so, when he authorizes a killing, he commits murder. The picture looks different if we concede that the laws of armed conflict (LOAC) apply to the drone strikes. This legal regime requires an attacker to take feasible precautions to ensure that a target is legitimate but does not require judicial authorization for attacks.
So, do President Obama’s decisions to authorize targeted killings make him a murderer or perhaps an especially careful military commander? As Professors Pildes and Issacharoff ably demonstrate in Targeted Warfare: Individuating Enemy Responsibility, this question rests on a false dichotomy and unhelpful abstraction.
Neither the IHRL nor the LOAC models provide quite the right tools, yet, for guiding the use of lethal force in the current conflict. In al Qaeda, the United States confronts a criminal conspiracy that has committed devastating terrorist attacks and seems intent on committing more. Its members blend into civilian populations in remote areas subject to little or no state control. Reasonable people can conclude that the legal regime for civil law enforcement, broadly construed to include the criminal justice system, is not suited for dealing with the continuing threat posed by this organization.
But it is also the case that “there is a great deal about the laws of war that seems poorly addressed to the current circumstances.” Broadly speaking, this legal regime authorizes the use of force based on an opponent’s status as a member of an enemy armed force. The nature of the conflict with a terrorist group that eschews the laws of war, however, heightens focus on individualized facts concerning conduct. To determine whether a person is a proper target of a “personality strike,” the United States must gather specific information about that particular person’s actions.
Putting this point in the language of administrative law, both because of the nature of the enemy and the nature of the United States’ technological tools, decisions to use force against particular individuals will turn on issues of contestable adjudicative fact. And, as readers of a blog devoted to administrative law will recall, the famous Londoner/BiMetallic distinction teaches that fair resolution of contested matters of adjudicative fact implicates procedural due process.
The key insight of Targeted Warfare is to recognize that reliance on adjudicative facts about particular people to justify targeting will (and should) create a hydraulic force that causes the laws and practices of war to evolve suitable procedures for determining such facts.
Targeted Warfare discusses this evolution both in the context of detentions and targeted killings. Regarding detentions, the Article provides an informative survey of relevant international law, Supreme Court case law, and developing military practice. The authors also provide a preliminary assessment of six questions they submit must be answered by governments attempting to develop a detention policy suited for asymmetric warfare against non-state combatants (e.g., justifying initial detentions, determining the length of detentions, determining the role of judicial review, etc.).
Turning to targeted killing, the authors note that the focus on adjudicative facts naturally “fuels the demand in some quarters that the criminal justice system, rather than unilateral executive direction of military force, should be used.” Id. at 60. This demand is likely to go unsatisfied for some time as none of the three branches, notably including the courts themselves, seems to have much appetite for heavy judicial involvement in the process or substance of targeted killing in the current conflict—at least not yet. The executive branch is not, however, waiting for judicial review before developing procedures designed to determine individuated enemy responsibility.
Pildes and Issacharoff foresee that as such procedures evolve, “[m]ilitary forces will inevitably have to develop analogues appropriate to the military context for the procedural protections (hearings, evidence-based assessments, and the like) designed to ensure accuracy of adjudicative-like judgments of individual responsibility when coercive state power is deployed domestically.” In other words, the military will adopt the tools of administrative law. Eventually, as “the justification for force becomes more closely tied to ascriptions of individualized responsibility,” they foresee courts, too, “play[ing] a somewhat more significant role” in “assess[ing] the use of at least certain exercises of military force.” Of course, limited judicial review, too, is a familiar tool of administrative law.
The United States’ conduct of its “war on terror” has evoked intense controversy —as any quick Google search of “war crime” and “drone” can confirm. Some part of this controversy has arisen from legal uncertainty connected with combating an enemy that does not fit either the “war” or “crime” models very well. In Targeted Warfare, Professors Pildes and Issacharoff, through their detailed and thoughtful analysis, demonstrate how the impulses and tools of administrative law may provide a promising path forward. In the nature of things, the path they describe will not satisfy everyone, but everyone with an interest in this important subject should consider it.
Oct 16, 2012 Kathryn Watts
Joshua D. Wright & Angela M. Diveley,
Do Expert Agencies Outperform Generalist Judges? Some Preliminary Evidence from the Federal Trade Commission (2012),
available at SSRN.
Proponents of administrative agencies have long touted the expertise that specialized agencies enjoy. Indeed, perceived agency expertise helps to explain Congress’s willingness to delegate to agencies the authority to set policy through rulemaking, to render adjudicatory decisions, and to conduct other activities. Yet, as Joshua D. Wright and Angela M. Diveley point out in a study posted this past January to SSRN, the so-called “expertise hypothesis”—which posits that expert agencies will consistently produce higher quality outputs than generalists—lacks empirical support. In their recent study, Wright and Diveley seek to fill the void by conducting an empirical study that examines whether the Federal Trade Commission (FTC) performs as well as generalist judges in its adjudicatory antitrust decision-making role.
Specifically, Wright and Diveley’s study tests the expertise hypothesis by comparing antitrust decisions before the FTC with those issued by Article III courts. They use “appeal” as their primary measure of quality performance—comparing the appeal rates of federal district court judges and FTC Commissioners. They explain that appeals are a “useful indicator for whether the initial court made an error” because “a higher appeal rate implies the decision-maker has issued more opinions that leave at least one party feeling strongly enough to invest in the opportunity for another decision-maker to decide that he has committed reversible error.” (P. 12) Nonetheless, because they acknowledge that reversal rates also can contain some information on the quality of the underlying decision, Wright and Diveley also report their results about the differences between the FTC and generalist judges using reversal rates.
In terms of the study’s conclusions, Wright and Diveley ultimately find evidence that suggests—contrary to the expertise hypothesis—that the FTC’s decisions are more likely to be appealed and reversed than those of Article III judges and that the FTC does not perform as well as generalist judges in its adjudicatory antitrust decision-making role. Wright and Diveley acknowledge that these differences in appeal rates may be the result of various factors that could influence the decision to appeal from an FTC decision differently than from a district court judgment. For example, an overwhelming majority of Commission decisions favor the plaintiff (i.e., the FTC) and thus Wright and Diveley note that “appeals from Commission decisions may be systematically different in quality or other dimensions from the distribution of cases from which appeals from district court opinions are drawn.” (P. 21) Yet after Wright and Diveley attempt to control for such factors, they consistently observe higher appeal and reversal rates for the Commission. Hence, they claim that their basic results remain unchanged.
In terms of its overall contribution to the literature, the study—as the authors acknowledge—is fairly narrow in scope. It analyzes just one agency (the FTC), it examines only one aspect of the agency’s activities (agency decision-making in administrative litigation), and it presents what is described as merely “preliminary evidence” on the question studied. Nonetheless, despite its limits, the study is quite notable for the dialogue that it seeks to open on some very important questions of institutional competency and design. Specifically, the study is well worth a read because it highlights the need for more research on the relationship between institutional design and agency expertise, and for more analysis of the “expertise” hypothesis. This additional research is needed not just in the antitrust context where Wright and Diveley focus their attention, but also in many other areas that involve a choice of delegating to courts or agencies, such as bankruptcy administration, which Professor Rafael Pardo and I recently argued is in need of more careful study and attention.
In short, Wright and Diveley’s preliminary study gives some much-needed attention to the performance of courts versus agencies. Hopefully more scholars—inspired by Wright and Diveley’s work—will engage in additional empirical research about the relationship between institutional design and agency expertise. Such future research is needed to shed more light on the optimal roles of courts and agencies and on whether Congress should delegate certain powers to generalist courts or to specialized agencies. Scholars, such as Margaret Lemos, have recently focused on some of the theoretical and doctrinal implications of Congress’s decision to delegate to agencies versus courts in the policymaking context, and additional empirical work along the lines of what Wright and Diveley have produced would help to inform these broader theoretical and doctrinal discussions.
Cite as: Kathryn Watts,
Testing the Expertise Hypothesis, JOTWELL
(October 16, 2012) (reviewing Joshua D. Wright & Angela M. Diveley,
Do Expert Agencies Outperform Generalist Judges? Some Preliminary Evidence from the Federal Trade Commission (2012),
available at SSRN),
https://adlaw.jotwell.com/testing-the-expertise-hypothesis/.
Sep 25, 2012 Richard Pierce
Cynthia Farina, Mary Newhart & Josiah Heid,
Rulemaking vs. Democracy: Judging and Nudging Public Participation that Counts, 2 Mich. J. Envtl. & Admin. L. (2012),
available at SSRN.
In Rulemaking vs. Democracy: Judging and Nudging Public Participation that Counts, Cynthia Farina, Mary Newhart, and Josiah Heidt explain why the initial efforts to encourage use of electronic media to broaden participation in rulemaking have not, and can not, work. The opening paragraph of the article describes and criticizes the reasoning process that has inspired the initial efforts:
Open government enthusiasts (among which we certainly count ourselves) seem prone to magical thinking—i.e., the building of if-then links that are not objectively justifiable. Open government magical thinking has several strands. If we give people the opportunity to participate, they will participate. If we alert people that government is making decisions important to them, they will engage with the decisionmaking process. If we make relevant information available, they will use that information to engage meaningfully. If we build it, they will come. If they come, we will get better government. (P. 1.)
The authors describe the initiatives that are designed to broaden participation in the rulemaking process based on the magical belief that, since “participation is good, … more participation is necessarily better.” (P.5) They then describe the results of their extensive empirical analysis of the magnitude and nature of the increased public participation in the rulemaking process that has resulted from the efforts to date to encourage broader participation in rulemaking through use of electronic media.
The authors found that the efforts to obtain broader participation in rulemakings have produced primarily mass electronic submissions of tens of thousands or hundreds of thousands of virtually identical comments filed in response to electronic initiatives by advocacy groups. The authors contrast the democratic process with the rulemaking process by referring to the large body of case law that has developed to describe the process:
[D]ecades of judicial elaboration have constructed rulemaking as a process in which outcome legitimacy depends on a formally-transparent process of reasoned deliberation. . . . In rulemaking, the formal legal requirements of data-driven analysis, reason-giving, and consideration of alternatives reduce the risk of outcomes that are “wrong” because of low-information, low-thought decision making. (P.9.)
By contrast, the thousands of virtually identical comments that are submitted as a result of the efforts of advocacy organizations are thoughtless, uninformed and devoid of facts, analysis or reasoning. Thus, they are worthless to the agency decision makers who are expected to base their decisions on fact-intensive analysis. As the authors put it:
A reasonable agency, in short, would assume that mass comments suffer from the kinds of fundamental defects in information quality and deliberative judgment that would (justifiably) prompt judicial reversal were such flaws found in its own decisionmaking. Why would we want government decisionmakers to attend to such flawed preferences? (P.16.)
The mass comments submitted by members of the public are also worthless as evidence of public opinion on an issue. The authors found many cases in which mass comments reflected use of “the Chicago model of civic participation: Vote early and often.” (P. 16.) In some cases, 300 comments were submitted by the same individual. Even if 200,000 separate people submitted comments expressing the same view of an issue, the decision maker would have no way of knowing whether the other 300,000,000 members of the public agreed or disagreed with the views expressed in the comments. As the authors point out:
There are many recognized methods of sampling (i.e., selecting a subset of individuals) to estimate characteristics of the whole population. Persuasive solicitation of members by a limited range of advocacy groups does not satisfy any of them. (P. 15.)
The authors conclude by describing steps that might be taken to encourage submission of comments that would have potential value to decisionmakers, but they are highly critical of the efforts government has made so far. In their words: “A democratic government should not actively facilitate public participation that it does not value.” (P. 22.)
I found this article informative and persuasive. It may be that the electronic revolution will enhance the value of the rulemaking process through some means in the future. It is apparent, however, that the advocates of such beneficial changes must rethink their approach.
