Deference and Discretion: A Perfectly Fine Mess

Last week, the Supreme Court decided two big AdLaw cases, both having to do with agency discretion and judicial deference. Decker v. Northwest Environmental Defense Council dealt with the question of whether an agency (here, the EPA) gets judicial deference when it interprets its own regs—as opposed to its organic statute, where it gets Chevron deference. (For an earlier piece on a different aspect of Decker, see here.)  The traditional answer has been “yes.” That’s called Auer deference, and the Decker Court applied it (and upheld the agency). The lone dissenter was Justice Scalia, who has come to the conclusion that Auer deference shouldn’t exist. The basic idea: Auer deference invites the agency to write vague, ambiguous, and overbroad regulations, and that makes no sense. For my money, he’s exactly right. Chief Justice Roberts, joined by Justice Alito, submitted a concurrence, saying he’d be happy to revisit Auer—just not in this case, without full briefing by the parties. So the bar has been invited to mount a frontal attack, and that case will come soon in this theater. Jon Adler and Sasha Volokh have more here and here.

The second decision, Wos. v. E.M.A. (the case formerly known as Delia v. E.M.A.) asks and answers how many bloopers a Supreme Court majority can cram into a single opinion. I’ve described the case here; to recap:

State Medicaid programs will sometimes pay for medical expenses for which the beneficiary then recovers from a third party (typically, through settlement or judgment in a tort suit). The federal Medicaid statute says that a participating state “must have in place” a state law that allows Medicaid to recoup payments advanced. A separate provision forbids states from placing a lien on the beneficiary’s property on account of the Medicaid payments. States have found it difficult to negotiate these conflicting demands. Among the dangers: because plaintiff and defendant know that any recovery for medical expenses can be claimed by the state, they have every reason to conspire and to settle for close to zero damages and tons of pain-and-suffering. (That’s not a hypo; that’s a trial lawyer industry out there.) What to do? North Carolina enacted a statute entitling Medicaid to claim one-third of any recovery, up to expenses actually incurred by Medicaid. Per Justice Kennedy, the Supreme Court said that the federal Medicaid statute preempts North Carolina’s law.

How many things are wrong with this picture? I stand by my conviction—expressed in the earlier post—that Medicaid can’t preempt anything at all: it’s a spending statute. But since I appear to be howling at the moon, let’s move on to the objections expressed by Chief Justice Roberts (Scalia and Thomas joining) in a splendid dissent. The issues are tricky, so I translate:

Federal statutes preempt state law either expressly or by implication. There’s no express preemption provision here. (Editor’s remark: that’s because, to beat a dead horse, no one thought Medicaid preempts anything in the first place). Preemption is implied when congressional intent to that effect is clear. Here, the recovery provision points one way and the anti-lien provision another. North Carolina made a good faith effort to comply with both. And that’s clearly preempted?

Forget the federalism angle: what happened to (Chevron) deference here? Suppose the question over North Carolina’s law had arisen between the state and HHS: the agency would have made a determination one way or the other; and, given the ambiguous statutory commands, it would have gotten judicial deference of some sort. (What sort would depend on the form of the agency’s action. You’re now into Chevron and Mead metaphysics. But some deference.) The Court would fix the boundaries of permissible statutory interpretations; but within those bounds, the agency would remain free to adjust the program, so long as it provides sound reasons. (This isn’t uncontested, but I think it’s the dominant and correct position.) But the agency wasn’t a party in Wos. And the Court did what it would never have done in a straight-up administrative challenge: it declared that the statute has only one fixed, unambiguous meaning.  Thus, although the statute points this way and that and says nothing about the allocation of medical and nonmedical expenses, the discretion that Congress quite clearly intended the agency to possess and exercise is gone for good. In its place we have the Court’s funky construction.

Not so fast, Justice Breyer said in a remarkable concurrence. Here, the agency hadn’t engaged in any formal proceeding or notice-and-comment rulemaking, and its informal actions (a memo and letter going one way, the SG’s litigation position going another) merited no deference. However,

The agency, after looking into the matter more thoroughly (perhaps after notice-and-comment rulemaking), might change its mind. Given the nature of the question and of the agency’s expertise, courts, I believe, should then give weight to that new and different agency decision.

Let’s get this straight: per Wos, the statute has a clear meaning, and the Supreme Court has identified that meaning and said what the law is. And the agency can then invoke some never-before-heard-of deference and come up with some other meaning, because they’re the experts for whom the Court’s legal interpretation is merely a suggestion???

That’s not just weird (and, for AdLaw wonks, light years beyond Brand X). That’s unconstitutional. Marbury v. Madison.

Perhaps, the justices should move on the something on which they’re the experts. Like gay marriage.

Michael S. Greve is a professor at George Mason University School of Law. From 2000 to August, 2012, Professor Greve was the John G. Searle Scholar at the American Enterprise Institute, where he remains a visiting scholar. Before coming to AEI, Professor Greve cofounded and, from 1989 to 2000, directed the Center for Individual Rights, a public interest law firm. He holds a Ph.D. and M.A. in government from Cornell University, and completed his undergraduate studies at the University of Hamburg. Currently, Professor Greve also chairs the board of the Competitive Enterprise Institute and is a frequent contributor to the Liberty Law Blog. Professor Greve has written extensively on many aspects of the American legal system. His publications include numerous law review articles and books, including most recently The Upside-Down Constitution (Harvard University Press, 2012). He has also written The Demise of Environmentalism in American Law (1996); Real Federalism: Why It Matters, How It Could Happen (1999); and Harm-less Lawsuits? What's Wrong With Consumer Class Actions (2005). He is the coeditor, with Richard A. Epstein, of Competition Laws in Conflict: Antitrust Jurisdiction in the Global Economy (2004) and Federal Preemption: States' Powers, National Interests (2007); and, with Michael Zoeller, of Citizenship in America and Europe: Beyond the Nation-State? (2009).

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