Deference under Chevron to an agency’s construction of a statute is premised on the theory that a statute’s ambiguity constitutes an implicit delegation from Congress to the agency to fill in the statutory gaps, but that is not always the appropriate conclusion (namely in situations of major economic or political significance.)
Majority (O’Connor): The FDA does not have this power. Congress clearly precluded them from asserting jurisdiction to regulate tobacco products. Plus, the major questions canon (Congress not taken to delegate power unless such delegation is clear) undermines an opposite ruling. (Also, the court considered ratification, absurdity, etc.)
Dissent (Breyer): The statute’s basic purpose supports the inclusion as well as a natural reading of the text. Breyer argues against the use of the major questions canon saying that it inverts Chevron. (Breyer may be right, major questions and Chevron cannot coexist, since the former says that the agency loses unless it clearly wins and Chevron says the opposite.)
Effect: At step 1, use all the traditional tools of statutory interpretation plus major questions with a presumption of non-delegation unless Congress says otherwise
Mass v. EPA (2007):
Background: Massachusetts wanted the EPA to promulgate regulations prohibiting the emissions of greenhouse gases including carbon dioxide. The EPA said that they did not have such authority under the CAA to address global climate change and that even if they did they would not in their discretion because of scientific uncertainty about climate change and the likelihood that it would undermine bargaining power with foreign nations. The EPA relied heavily on Brown and Williamson to say that Congress would not have delegated such a large issue without explicitly saying so.
Majority: Reading the term “air pollutant” broadly, the statute unambiguously gives the EPA the authority to rule. They had jurisdiction, and had no business disavowing it. Instead, they have to show that there is actually scientific uncertainty, not just that they believe that to be the case. (Under an Overton Park reading, the problem was that the EPA failed to form a true scientific judgment or express finding of uncertainty.)
Dissent (Scalia): The statute does not prevent the deferral of such a decision and the EPA’s behavior/interpretation should be allowed to stand under Chevron.
Chevron Step Two: Is the agency’s interpretation reasonable? The Supreme Court has only set aside an agency interpretation in step two twice, leading to the conclusion that unlike Skidmore deference, where the court only has to give the agency’s interpretation respect, in Chevron, the court must accept the agency’s interpretation unless it is unreasonable, arbitrary, or impermissible.
Background: The Clean Water Act required that “any standard applicable to a point source shall require…that reflects the best technology available for minimizing adverse environmental impact.” Under the CWA, the EPA promulgated regulations to require facilities to reduce the death of fish and shellfish by 80 to 95%. Although there was a feasible alternative technology that would achieve even greater reductions, the EPA concluded that requiring such a system would impose far greater compliance costs and achieve only small gains in performance (and was therefore not cost-benefit justified). Various environmental groups and states challenged the regulations and the 2nd Cir. held that the statute prohibited the use of such cost-benefit analysis.
Analysis: The EPA’s view was that a determination of the “best technology” permitted consideration of the technology’s cost in relation to the environmental benefits produced.
Majority (Scalia): The EPA’s interpretation that CBA could be included was a reasonable interpretation of the goals of the statute, in accordance with the dictionary definition of “best,” as well as a review of the other provisions of the Act. Scalia rejects the argument that Congress’ silence on the issue means that they rejected it, and instead says that they have to defer to the agency.
Concurrence/dissent (Breyer): The relevant statutory language authorized the EPA to compare costs and benefits, but it restricted such analysis. Thus, there’s no need to ever get to step 2-Congress is clear that the EPA does not have this power.
Dissent (Stevens): Congress does not permit them to use CBA so Step 1 is against the agency.
Effect: CBA is permissible unless there is a provision in the statute expressly forbidding it.
National Cable and Telecommunications Ass’n v. Brand X Internet Services (2005)
Background : After notice and comment, the commission decided that Internet services provided by cable companies was an “information service” and not a “telecommunication” for the purpose of regulation and that the Communications Act could not regulate it as a common carrier. Court of Appeals said that you had to follow the precedential case and regulate it as a telecommunications service (no Chevron deference).
Majority (Thomas): Chevron deference is not diminished by agency changing their policy over time (versus pre-Chevron idea that longstanding and consistent agency interpretations were entitled to special deference). “Unexplained inconsistency is at most a reason for holding an interpretation to be arbitrary and capricious.” A court’ prior judicial construction of a statute trumps an agency construction otherwise entitled to Chevron deference only if the prior court decision holds that its construction follows from the unambiguous terms of the statute (no room for any other interpretation of the statute-not just that they are picking the best from a permissible range). Otherwise, the agency may choose a different construction. (Remember, consistency is relevant only to a Skidmore inquiry.)
Dissent (Scalia): It is unconstitutional for Congress to give an agency the executive power to override a judicial decision by choosing an alternative other than that prescribed by the judiciary. (Vermuele disagrees with this conception under the idea that the Court just details the permissible range.) Note: The 9th Circuit opinion doesn’t speak to the particular issue of whether its interpretation is the sole interpretation or one in a permissible range.
Is Chevron really just one step?
The only thing we ever really need to know is whether the agency is within the bounds of permissible action as delegated by Congress. We don’t have to know if that range has more than one option or just a single point. It is irrelevant whether we have more than one permissible interpretation or only one when making a determination about the agency’s action. So long as we know that the agency had a range, anything they do will be permissible.
Each opinion can thus be written as one step: either it’s unreasonable and therefore outside the range (fails Step 2) or Congress has said that it is impermissible to be outside the range (fails Step 1). In other words: saying that the agency’s construction was not in the permissible range (was unreasonable) is equivalent to saying that it was contrary to clear congressional intent (and there can never not be clear intent, because in order to find an agency’s action unreasonable under Step 2, there has to be some presumption that Congress did have an intent-an intent to exclude the agency’s interpretation from the permissible range.)
In the end, none of this (Skidmore v. Chevron, etc.) matters. When regulations are ambiguous, agencies get to interpret them. So long as the agency is reasonable, they will win. The court seemed to affirm this view in Auer (1997), where it said that an agency’s interpretation of an agency’s rule is “controlling unless plainly erroneous or inconsistent” with the regulation.
Views expressed in briefs do not receive Chevron deference. The Supreme Court also follows the “anti-parroting canon,” refusing to defer to agency regulations that simply track the statutory language.
Questions of Policy: Arbitrariness Review (See p. 425)
Origin of “Hard look review”
Courts, under pressure to strengthen judicial review of agency rulemaking, moved from the requirement that all agencies consider in their proceedings and opinions all of the relevant policies and factors bearing on discretionary policy choice to a “hard look” at the logical and factual bases for the choices made.
The court looks to determine whether the agency reasonably exercised its discretion in a given case. Typically, courts do not condemn an agency’s policy choice as faulty, but instead concludes that the agency was not adequately justified in its choice and remands it for further consideration of the relevant analysis/explanation.
Overton Park (1971)
Background: The Department of Transportation Act of 1966 prohibited the Secretary of Transportation from authorizing the use of federal funds to finance the construction of highways thru public parks if a “feasible and prudent” alternative route exists. If such a route does not exist, the Secretary can approve only if there has been “all possible planning to minimize the harm” to the park. Petitioners claimed that the Secretary violated the statute by authorizing the expenditure of federal funds for the construction of a highway through a public park in Memphis. The District Court granted the Secretary’s motion for summary judgment and the Court of Appeals affirmed.
Majority (Marshall): Judicial review is proper here under §701 because it does not fall under that section’s exception. The Secretary failed to indicate why he believed there were no alternative routes and made no showing that he engaged in a wide-range balancing of competing interests. (Considered the purpose of the statute to preserve parkland). The Court has to determine whether the Secretary considered the relevant factors and whether there was a clear error of judgment. Remanded for review of the full administrative record before the Secretary when he made his decision.
Effect: For arbitrary and capricious review, the court examines whether the decision was made based on: 1) consideration of relevant factors and 2) whether there was a clear error in judgment. The factors that are relevant are outlined by statute (and statutory interpretation can be used to determine how to apply them in the case.) A&C review also requires that there be a record to review, so in cases without such a record (informal adjudication and rulemaking), a record may have to be developed after the fact. (Only applies when an agency has made no contemporaneous findings). 3) After the case, while there remain no direct procedural constraints on informal adjudication, Overton Park creates indirect procedural constraints by requiring that a record be available for a + c review. Applies only to informal adjudication, since formal adjudication and rulemaking (paper hearings or notice and comment) creates the record we want.
Note: the consideration of relevant factors prong is conventionally discussed as a+c review but is really just a review of law because it asks what factors the statute makes relevant.
Conflict with Chenery (no ad hoc post rationalizations) and Morgan (no probing into decisionmaking): The Court deals with this tension in Pension Benefit by disavowing their allowing the District to bring the Secretary before the court to ask questions and instead says that the proper remedy is to remand it all the way back to the agency to remake the decision.
Conflict with Vermont Yankee: Court determines that implicit in §706 is that there must be a record to review-as long as there is a textual hook in the APA, there is no Vermont Yankee problem.
The organic statute determines which factors are relevant (implicit or explicit):
Congress can say that an agency must consider certain factors (mandatory relevant factors)
Congress can say that an agency may not consider a certain factor (impermissible factors)
Congress can say that the agency has discretion to consider a factor (permissible)
If the statute is silent, the agency has legal discretion to consider it (thus unless a statute clearly make s a factor irrelevant/impermissible, the agency can consider it.). The agency cannot, however, indefinitely defer making a judgment
Motor Vehicle Manufacturer’s Ass’n v. State Farm (1983):
Background: The National Traffic and Motor Vehicle Safety Act directed the Secretary of Transportation or his delegate to issue motor vehicle safety standards that are practicable. First, the Secretary said that seat belts were required. Following the Carter Administration, the Secretary imposes a passive restraint rule (technology that operates even if you don’t) and gives manufacturers the option of automatic seatbelts or airbags. The Reagan Administration later rescinds the rule on the basis that people hate the automatic seatbelts, that the Secretary was no longer confident that seat belts produce significant safety benefits, and that creating detachable restraints would impose an impermissible cost. (Dealing with informal rule-making under §553.)
Issue: Was the Secretary’s rescinding of the requirement of passive restraints arbitrary and capricious?
Majority (White): yes. The agency failed to present an adequate basis and explanation for rescinding the requirement and must consider the matter further or adhere to or amend the original standard, depending on what result further analysis supports. (The agency never considered just imposing an airbag requirement). The Court notes that a revocation has a higher threshold of explanation than inaction or action.
Are policy considerations relevant? Rehnquist says no in Mass v. EPA, finding that the philosophy of an administration is irrelevant, however the Court here says that policy/pubic opinion is relevant with arbitrary and capricious review but political influence is suspicious (should have technocratic basis). Effect: Agencies have to supply a rational analysis supporting its decision in order to modify or rescind a previously promulgated rule. The agency must also consider the relevant factors, explore reasonable policy alternatives and articulate a satisfactory explanation for the choice it makes.
Concerns with this decision: ossification-the idea that we are freezing the status quo too much, and that it is an impossible standard because agencies cannot be expected to foresee and reject every possible policy alternative.
FCC v. Fox (2009):
Facts: The 1934 Communication Act forbade the use of obscene language on TV on radio. Congress gave the FCC various methods of enforcing the indecency ban include civil fines and license revocation. The FCC initially had a “safe harbor” rule, allowing the use of fleeting expletives, but outlawing “deliberate and repetitive use.” However, in 2004 the FCC changed that rule through adjudication to say that it was no longer in effect on the basis that they wanted to prevent children from enduring the “first blow” of hearing such language, even in passing, and so removed any literal/non-literal distinction that they used before. They also recognized that technology had changed to allow easier bleeping. Cher and Nicole Ritchie used vulgar words in a fleeting manner, but the FCC found the broadcasts indecent (though no fine was levied.)
Issue: Was the FCC’s order changing their standards arbitrary and capricious?
Majority (Scalia): Employs an a+c review rather than Chevron to avoid constitutional questions. While an agency has to show the rationale for its new policy, it does not have to show that the reasons for a new policy are better than an old one, only that it is permissible and that the agency believes it to be better. There are some decisions for which no reason can be given (necessarily arbitrary). The court rightfully replaces the President in reviewing independent agencies. Exception (an agency only has to provide more explanation for a change in policy than it would in making the policy initially when): 1) the new policy rests on factual findings that contradict prior factual findings or 2) when there are some serious reliance interests to be taken into account (no reliance on old issue)
Dissent (Breyer): A switch in policy requires an explanation. Agency should have to answer: “Why did you make the change?” In terms of politics, Congress should enforce legal constraints on the agencies and perhaps lay out criteria for consideration, but their policy should not interfere with agency action/inaction.
Seems inconsistent with State Farm in how much explanation they require for action and inaction, as well as the role of politics within that review.
State Farm v. Fox
State Farm says that:
Arbitrary and capricious review obligates agencies to respond to reasonable policy alternatives and to annex their decisions to policy showing why they chose it over the others;
The sequence of action followed by deregulatory rescission requires more of an explanation than agency inaction
Political influence on agency decision-making is suspicious and not a sufficient rationale for agency decision. Want a factual, technocratic reason for the change.
Fox is:
Much more hospital to political/policy rationale: agencies can change their minds because they like the new policy better, whether based on political influence, value judgments, or the like
Effect: Recent lower court cases say that action/inaction makes no difference for a+c purposes. If it fits within the text of the APA, it fits within the purpose as well. Court has been moving toward a standard of one arbitrary and capricious review, combining Overton Park and State Farm (relevant factors, no error of judgment, consideration of policy alternatives w/a clear explanation for a particular choice.)
Agency choices: (In)action and A+C Review
An agency can choose to take no action (A)
An agency can take action, in which case it has to give a reason to survive arbitrary and capricious review. (B)
Action followed by rescission (such as in State Farm) (C)
Action followed by a change in action (D)
Mass v. EPA: A and B require the same amount of explanation/get the same amount of scrutiny. A = B
State Farm: C demands more explanation than B, C > B
Fox: D requires the same amount of explanation as B, but not more and C should require more than A. D = B
In accordance with lower court decisions and the Fox exceptions, C = B = A = D i.e. there is one unitary standard-everything requires explanation.
