Reforming Regulation: Eliminating Chevron Deference and Constraining Guidances

The words Court House outside the Supreme Court

In two prior posts here and here, I have been exploring possible reforms that Congress could enact to constrain executive power – asking whether such reforms would be desirable and whether a Republican Congress and President might enact them.

Another set of reforms involves shifts of power from the executive to the judiciary.  Here I will briefly discuss two such reforms: eliminating Chevron (and Auer) deference and subjecting guidance documents to increased judicial review.

1. Chevron deference provides that administrative agencies are entitled to deference when interpreting statutes that they administer. That is, even if a court believes that a statute means X, it will approve an agency’s interpretation of the statute to mean Y, so long as interpretation Y is not unreasonable.  Consequently, agencies get a special privilege as to determining the meaning of those statutes.

I favor largely eliminating this type of deference.  Chevron deference was largely made up by the courts, especially by the Republican judges of the D.C. Circuit and Justice Scalia on the Supreme Court.  The result of Chevron has been to greatly magnify executive discretion.  Not only do the agencies enjoy delegations from Congress, they also get signficant deference as to the scope of their power from Chevron.

The question is what to replace Chevron with.  In my view, the best reform would be to return to one of the traditional standards that existed prior to Chevron.  There should be plenary or de novo review – that is, no deference – for pure questions of law, but deference for mixed questions of law and fact.

This standard has the advantage of not overloading the courts with administrative cases, while at the same time placing a check on agencies as to the most important issues.  It is true that this has the disadvantage of requiring the courts to distinguish pure questions from mixed questions, but drawing this distinction is feasible and the costs of doing so are outweighed by the significant benefits of not reviewing all mixed questions.

2. Guidances are interpretations and policy positions of agencies. In effect, they announce rules that the public is to follow, but are not technically rules.  As a result, the agencies are not required to follow notice and comment procedures for guidances and it is often difficult to secure judicial review of them.

For guidances, I would institute a rule making it easier for them to be subject to judicial review.  It is not entirely clear what the best way of doing this is, but there are a couple of possibilities.   One possibility would enact a statute that allowed judicial review of a guidance in cases when a court determines that a guidance operates as a threat against a person.  One clear example are the guidances issued by the Office for Civil Rights of the Department of Education.  Those guidances indicate that if colleges do not follow them, the Office may act to eliminate any government grants to the college.  Another possibility is to adopt the old pre-Vermont Yankee standard of the substantial impact test – which would treat guidances as rules requiring notice and comment when they have a substantial impact on the parties.

3. Both of these reforms rely significantly upon the judiciary. Thus, their desirability as a policy matter turns on how one views the behavior of executive agencies versus the judiciary.  To my mind, the principal problem, especially in the last generation, comes from agencies and therefore I favor these reforms.  Moreover, judicial review of agencies operates to divide powers – with the executive normally taking the initiative and the judiciary operating as a check.  And therefore this separation operates to check government power.

But one should acknowledge that these reforms might look different under different circumstances.  While judicial review often functions as a check today, it can operate as a spur to regulation when run by willful judges, as the D.C. Circuit of the 1970s showed.  Still, I believe it will more often operate as a check on bad regulation than as a spur to it.

But even if such judicial review is desirable, will a Republican Congress be willing to authorize these reforms?  This is a tough call.  In the past, Republicans have often opposed the courts and favored agencies.  But times may have changed.

Mike Rappaport

Professor Rappaport is Darling Foundation Professor of Law at the University of San Diego, where he also serves as the Director of the Center for the Study of Constitutional Originalism. Professor Rappaport is the author of numerous law review articles in journals such as the Yale Law Journal, the Virginia Law Review, the Georgetown Law Review, and the University of Pennsylvania Law Review. His book, Originalism and the Good Constitution, which is co-authored with John McGinnis, was published by the Harvard University Press in 2013.  Professor Rappaport is a graduate of the Yale Law School, where he received a JD and a DCL (Law and Political Theory).

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Comments

  1. gabe says

    Mike:

    ” Still, I believe it will more often operate as a check on bad regulation than as a spur to it.”

    You may be right but I am not hopeful. remember it was the courts that not only permitted this to happen but created the Auer and Chevron Doctrines out of whole cloth. Too much depends upon the composition of the Court and the ideological predilections of its members. Look at whom Obama has placed on the Court and then let us reconsider the chances for change. (although in fairness, I must state that during some recent reading I came across a reference to Justice Kagan and a decision she co-authored in which she appeared to seriously question an Executive Agency’s interpretative *powers*). So who knows.

    I think that as you say such a change would be ameliorative, at best; what remains to be done is to re-invigorate the Legislative Branch to perform its constitutional duty to “make law” and not pass it off to some unknown factotum. But heck, I also wanted the Seahawks to win SB XLIX – look where that got me!!!

  2. Daniel Artz says

    What I find really fascinating is that the Chevron case, in which Chevron deference was invented, does not even discuss, or in fact even cite, Section 706 of the Administrative Procedures Act, which is supposed to govern the scope of judicial review of administrative agency action. Under that Section, a court, in reviewing agency action, “SHALL decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning and applicability of an agency action.” Chevron deference is a pleasant euphemism for a very dangerous phenomenon – the complete abdication by the courts of their duty, as an independent branch of government, to say what the law is.

  3. nobody.really says

    I could imagine a Republican/Tea Party Congress voting to eliminate Chevron deference, or the Supreme Court striking the doctrine. In contrast, I see less promise for alleged reform of “guidance.” As I have previously stated, I have difficulty distinguishing guidance from free speech.

    The problem Rappaport alleges regarding the guidance issued by the Office for Civil Rights does not arise from the guidance per se, but rather from the alleged scope of the office’s discretion to make or withhold grants. Rappaport’s remedy would simply send us into the world of Communist China, leaving us to interpret vague clues to discern the conduct that would render us eligible or ineligible for the agency’s favor. The more straightforward (and constitutional) remedy would be for Congress to clamp down on the scope of the agency’s discretion in giving or withholding grants. But ultimately, if an agency has this discretion, the agency will be able to reward the behavior it values — whether or not it issues “guidances.”

  4. gabe says

    ” But ultimately, if an agency has this discretion, the agency will be able to reward the behavior it values — whether or not it issues “guidances.”

    Well, you are certainly correct about that. However, it should not be too difficult to distinguish “guidance” from free speech as the former carries with it the imputation of “law” and the latter does not.
    Unless, of course, you are prepared to accept my usual ramblings here as “Gospel” and adjust your actions accordingly.

    Hah! didn’t think so.

    • nobody.really says

      [I]t should not be too difficult to distinguish “guidance” from free speech as the former carries with it the imputation of “law”….

      But that’s the point: No, “guidance” isn’t law. Rules are law. Guidance is just … speech. You are free to ignore it, and no one can deprive you of any legal right solely on that basis. Yes, if you deviate from the agency’s guidance you may suffer consequences — but you may have suffered those same consequences whether or not the agency issued the guidance.

      Imagine an agency is offering a grant to facilitate the development of new buildings, and offers guidance that the agency favors solar panels. If you don’t include solar panels in your proposed building, you will be unlikely to get the grant. But the same result would likely follow whether or not the agency officially issued such guidance. It is the agency’s preference for solar panels, not the guidance, that would drive the outcome. You are free to propose a building without solar panels, and you are likely to lose the grant. But you had no claim on that grant.

      Bottom line: You may not share an agency’s preferences — but those preferences exist regardless of the guidance the agency provides. Attacking the guidance is just attacking the symptom, not the cause, of your problem.

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