5.1.C. Administrative Procedure Act
Although some federal statutes that create rights include their own mechanisms for judicial review of agency action affecting those rights, most are silent with respect to judicial review. In the Administrative Procedure Act (APA), Congress expressly granted a private right of action to enforce federal rights against federal agencies.1 Because 5 U.S.C.§ 702 creates this right of action expressly, there is no need to look for an implied right of action against the federal government. The APA, then, waives the federal government's sovereign immunity over suits "seeking relief other than money damages and stating a claim that an agency or an officer or employee thereof acted or failed to act in an official capacity or under color of legal authority,"2 unless another statute "that grants consent to suit expressly or impliedly forbids the relief which is sought."3
5.1.C.1. Suit for Judicial Review
With many exceptions, the APA generally requires federal agencies to act through adjudication or rule making or both. Typical challenges to agency action contend that the agency misinterpreted its governing statute or made erroneous conclusions of law; that the agency’s rules or findings of fact were arbitrary or capricious; or that the agency used improper procedures in its decision making. As discussed below, due to the courts’ substantial deference to an agency’s interpretation of its governing statute and to its findings of fact, procedural challenges to an agency’s decision-making process may offer greater prospects for securing relief for your clients.4 State administrative procedure statutes similarly should not be overlooked as a potentially powerful tool against state actions that adversely affect your clients. However, at least two significant hurdles to judicial review must first be overcome: assertions that agency action is unreviewable and that the challenge was not filed at the appropriate time.
5.1.C.2. Unreviewable Agency Discretion
Although the APA may provide a right to sue, agency action may escape judicial review either under 5 U.S.C. § 701(a)(1), if it is exempted by statute from judicial review, or under § 701(a)(2), if it is committed to agency discretion. Section 701(a)(1) applies when a statute is sufficiently explicit and unequivocal to overcome the general presumption of reviewability first articulated in Abbott Laboratories v. Gardner.5 The First Circuit, for example, held that a hospital’s challenge to the U.S. Department of Health and Human Services’ refusal to reclassify it geographically was unreviewable in light of a provision of the Medicare Act that stated, “[T]he decision of the [Administrator] shall be final and shall not be subject to judicial review."6 When the extent of preclusion of review is less clear, the Supreme Court tends to interpret the asserted limitation narrowly.7 This approach is also commonly taken to avoid the very thorny constitutional question presented where a statute is interpreted to preclude review of a colorable constitutional claim.8
Section 701(a)(2), which precludes judicial review “to the extent that ... agency action is committed to agency discretion by law,” poses a more significant issue in APA litigation. Federal agencies routinely assert the Section 701(a)(2) exception, arguing that its seemingly limitless sweep precludes judicial review in all sorts of cases. As summarized below, early Supreme Court decisions limited the breadth of Section 701(a)(2), but more recently the trend has moved against the presumption of reviewability.
In Citizens to Preserve Overton Park Inc. v. Volpe, plaintiffs challenged a U.S. Department of Transportation decision to assist the construction of a highway through a public park as a violation of a federal statute requiring parks to be avoided when “feasible and prudent.”9 The Secretary argued that his decision was not subject to judicial review because the governing statute vested him with broad discretion relating to highway routes, did not expressly provide for judicial review and did not require the creation of a record for review. The Supreme Court, rejecting that assertion, held that Section 701(a)(2) was applicable only when there was “clear and convincing evidence” of legislative intent to bar review. Such is the case only in those rare instances where “statutes are drawn in such broad terms that in a given case there is no law to apply.”10 The “feasible and prudent” standard, in the Court’s view, supplied such a law.
By contrast, in Webster v. Doe, an agent who admitted that he was gay sought review of his discharge and asserted that his discharge was contrary to agency regulations, that it was arbitrary and capricious, and that it was unconstitutional.11 Relying on the language of the National Security Act, which authorizes the director of the Central Intelligence Agency to fire an employee whenever he “shall deem such termination necessary or advisable in the interests of the United States,” the Court held that the agency action was non-reviewable under the APA. The Court reasoned that the statute, empowering the director to make personnel decisions, not only provided no judicially manageable standards, but also seemed to vest the matter entirely in his discretion.12
Heckler v. Chaney elaborated on the “no law to apply” standard in the context of a challenge to an agency’s refusal act.13 The suit challenged the Food and Drug Administration’s refusal to begin enforcement proceedings against the use of unapproved drugs in “lethal injection” executions as a violation of the Food, Drug, and Cosmetic Act. The Court stated:
[E]ven where Congress has not affirmatively precluded review, review is not to be had if the statute is drawn so that a court would have “no meaningful standard against which to judge the agency’s exercise of discretion.” In such a case, the statute (“law”) can be taken to have “committed” the decisionmaking to the agency’s judgment absolutely. This construction avoids conflict with the “abuse of discretion” standard of review in § 706—if no judicially manageable standards are available for judging how and when an agency should exercise its discretion, then it is impossible to evaluate agency action for “abuse of discretion.”14
In applying the “meaningful standards” test to a claim challenging agency inaction, Chaney reversed the Overton Park presumption of reviewability. Chaney established a strong presumption against judicial review of an agency decision not to take enforcement action and suggested that the presumption could be overcome by a showing that the statute to be enforced specifically directed agency enforcement action and provided guidelines for doing so.15
Subsequent cases continued to chip away at the presumption of reviewability.16 Yet, the cases are very fact-specific, turning on a careful reading of the statute and its purpose.17 Two cases are illustrative, the first employing the logic of Overton Park, and the second following Chaney.18 They generally suggest a greater likelihood of reviewability when the case is framed as a challenge to agency action or decision-making than as a challenge to inaction or failure to enforce certain requirements.
In Beno v. Shalala, a group of Aid to Families with Dependent Children recipients challenged as arbitrary and capricious an Department of Health and Human Services grant of a waiver of maintenance-of-effort requirements; the waiver permitted California to embark on an experiment that reduced Aid to Families with Dependent Children benefits.19 The applicable statute authorized the Department of Health and Human Services secretary to grant waivers “to the extent and for the period [the Secretary] find[s] necessary” and for projects that “in the judgment of Secretary [are] likely to assist in promoting the objectives” of the Act.20 The Ninth Circuit held that the secretary’s decision was reviewable and noted that the granting of waivers was not traditionally unreviewable. The statute “does not reveal a congressional commitment to the unfettered discretion of the Secretary;”21 and judicial review did not interfere with the statutory scheme.
Despite the language of the statute, the court further held that it contained a meaningful standard for review because the Aid to Families with Dependent Children program’s objectives were specified in the statute.22 Although not the case in Beno, where the Ninth Circuit vacated the waiver and remanded the matter to the Department of Health and Human Services for development of the administrative record, reviewability victories are frequently short-lived as the deferential arbitrary and capricious standard makes reversal on the merits difficult.
In American Disabled for Attendant Programs Today v. U.S. Department of Housing and Urban Development, organizations advocating on behalf of the disabled sued the Department of Housing and Urban Development (HUD) under the APA for failing to ensure that multifamily housing was accessible to the disabled in alleged violations of the Fair Housing Act Amendment and Section 504 regulations.23 Plaintiffs alleged that HUD received many complaints of noncompliance but failed to investigate or take enforcement action against violators. Although HUD regulations state that HUD “shall” conduct a prompt investigation upon receipt of a complaint, the Third Circuit held that HUD’s failure to do so was unreviewable and that Congress established no guidelines limiting HUD’s discretion to investigate alleged violations.24 Despite the mandatory direction in the regulation, the court found this case to be controlled by Chaney. Again, even if the court had found HUD’s failure to be reviewable, the general absence of controlling limitations on enforcement actions would have made it very difficult to show that the agency behaved arbitrarily or capriciously. Reviewability is but the first battle in an Administrative Procedure Act war.
Should an agency decision be reviewable under Section 701, a court may still decline to review it on the ground that agency action is not final, that the plaintiff failed to exhaust administrative remedies, or that the case is not ripe for review. There is considerable overlap among these doctrines.25 But each is discussed briefly, and separately, below.
5.1.C.3.a. Final Agency Action
In the absence of a substantive statute specifying the prerequisites for judicial review, or deeming certain agency action to be final, the Administrative Procedure Act governs the timing of judicial review.26 Section 704 limits judicial review to final agency action.
The Supreme Court's current test for final agency action was articulated in Bennett v. Spear.27 There, the Court held that finality required satisfaction of two elements: (1) “the action must mark the ‘consummation’ of the agency’s decision-making process—it must not be of a merely tentative or interlocutory nature,” and (2) “the action must be one by which ‘rights or obligations have been determined,’ or from which ‘legal consequences will flow.’”28 The first element is satisfied when the agency offers its “last word” on the subject, even if that word is expressed less formally than a rule making or adjudication, and is subject to continuing agency review.29 The second element is met when the agency action “imposes an obligation, denies a right or fixes some legal relationship.”30 It is not satisfied when the agency action is no more than a nonbinding recommendation.31
The Supreme Court recently applied this test in Sackett v. Environmental Protection Agency.32 In Sackett, the plaintiffs challenged an Environmental Protection Agency compliance order issued under Section 309 of the Clean Water Act. That order found that the plaintiffs had discharged pollutants into a wetland and ordered them to restore the land. The Court held that the order determined the plaintiffs' rights and obligations and had consummated agency decision-making. Although plaintiffs were invited to inform the Environmental Protection Agency of errors in the order and to engage in informal discussions, no administrative hearings were permitted, making the order final.33
Final agency action can include, as 5 U.S.C. § 551(13) provides, agency inaction which is the failure to make an agency rule, order, license, sanction or relief. 5 U.S.C. § 706(1) requires a reviewing court to compel agency action that is “unlawfully withheld or unreasonably delayed.” In Norton v. Southern Utah Wilderness Alliance,34 the Court held that an Administrative Procedure Act inaction claim must challenge an agency’s fa ilure to take a legally required and discrete action. Legally required acts are those that would have been remediable by mandamus prior to the enactment of the Administrative Procedure Act.35 The requirement that a court can only compel discrete acts forecloses broad challenges to general agency inaction of the sort rejected in Lujan v. National Wildlife Federation.36
5.1.C.3.b. Exhaustion of Administrative Remedies
Common law or statutes may require the exhaustion of administrative remedies.37 Perhaps the leading case discussing the rationale for the common-law exhaustion requirement and its exceptions is McKart v. United States.38 According to the Supreme Court in McKart, a Vietnam War draft case, exhaustion serves to permit the agency that is delegated authority by Congress to make findings and conclusions based on its expertise to develop a full record for future judicial review, to avoid disruption of administrative process, and to reduce judicial appeals.39 At the same time, the Court recognized that the rationale for exhaustion may be outweighed by other considerations.40 Exhaustion may not be required where it would cause irreparable injury, the agency appears to lack jurisdiction over the matter, agency expertise is not implicated, an administrative record would not assist the reviewing court, or exhaustion would be futile.41
The degree to which exhaustion is required by statute, of course, depends on the terms of the statute. If required by statute, however, exhaustion may not be excused by a court or agency.42 Nevertheless, the Court frequently—but not consistently—excuses the exhaustion requirement when the plaintiff challenges aspects of the agency’s decision making on constitutional grounds.43 Nor is exhaustion generally required in Section 1983 cases.44 A court may not impose exhaustion requirements beyond that set forth in the statute or agency rule.45
While ripeness often overlaps with the doctrine of final agency action and exhaustion of administrative remedies, ripeness does have independent significance. Ripeness issues frequently arise when a challenge is made to agency rules before they are enforced and to agency action announced informally.46 In Abbott Laboratories v. Gardner, a pre-enforcement review case, the Supreme Court held that ripeness for review was presumed unless Congress specifically provided otherwise.47 The Court established a two-part ripeness test: “the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration.”48 Abbott Laboratories, therefore, suggests that, if declining pre-enforcement review would visit harm upon the plaintiff and if the issue presented is principally a legal one, or one that can be decided without factual development by the agency, the matter is regarded as ripe for review.49
This relatively forgiving standard was narrowed in a category of cases commonly encountered by legal aid attorneys—cases involving challenges to rules governing government benefits. In Reno v. Catholic Social Services, classes of undocumented aliens challenged Immigration and Naturalization Service regulations which made it more difficult for them to realize the benefits of an alien legalization statute on the ground that the regulations were inconsistent with the statute.50 The Court found the challenge distinguishable from Abbott Laboratories, in which the plaintiffs were placed in the “immediate dilemma to choose between complying with newly imposed, disadvantageous restrictions and risking serious penalties for violation.”51 The Court reasoned that, by contrast, the regulations challenged in Catholic Social Services limited access to a benefit rather than imposed penalties and required the applicant to satisfy requirements other than those challenged.52 As a result, challenges to the regulations would be ripe only if the application for the benefit were formally or informally rejected on grounds contained in the rules at issue. Ripeness was not satisfied even if the invalid regulation deterred applications for benefits.53
The Court also barred pre-enforcement challenges to rules in cases in which Congress is believed to have supplied sufficient and alternative administrative methods of review. In Thunder Basin Coal Company v. Reich, a coal company filed a pre-enforcement challenge to a mine safety rule that permitted non-employee union officials to serve as the employees’ representatives in statutorily required mine inspections.54 Although silent on pre-enforcement claims, the Court held that the detailed and comprehensive administrative review provisions of the Federal Mine Safety and Health Amendments Act suggested that Congress intended to preclude pre-enforcement challenges. Moreover, the fact that the nature of the claims presented was not “collateral to the administrative review provisions and within the agency’s expertise” supported that conclusion. Noting that the ultimate administrative entity was independent, had exclusive jurisdiction, had decided constitutional claims, and was subject to judicial review in the court of appeals, the Court rejected the company’s assertion that the constitutional nature of its claim required immediate judicial, rather than administrative, review.55
Courts generally find that challenges to informal agency action, such as the issuance of opinion letters, interpretive rules, policy statements and the like, are not ripe for review or are not reviewable agency action. As discussed below, such agency action is not subject to Chevron deference and ordinarily lacks the binding force or effect of law. Nevertheless, if such action is regarded as final and binding and the issue for review involves solely a question of law, or if failure to review would result in hardship to the plaintiff, then the case may suggest ripeness.
The Administrative Procedure Act prescribes three principal means for the adoption of agency regulations:
- formal rulemaking,56
- informal rulemaking, and
- the issuance of interpretative rules, procedural rules, general statements of policy, and other rules exempted from normal rulemaking requirements.
We focus on the second and third means here.57
Informal rulemaking is the three-step process governing the adoption of legislative rules. Legislative rules are as binding as statutes as they must be followed by the public and the agency issuing them. Agencies may issue legislative rules only if Congress has permitted them to do so. Informal rulemaking begins with the publication of a notice of proposed rulemaking in the Federal Register. The notice must describe the proposed rule or the subject and issues to be considered and must be sufficient to alert interested parties of the subject matter of the regulations and their probable impact.58 To assure public participation in the process, the notice of proposed rulemaking must solicit comments. In the second step, the agency receives and considers public comments. The process concludes with publication of final regulations and a basis and purpose statement reviewing the reasons for rulemaking, the agency’s consideration of comments received, and the rationale for the rule adopted.59 The basis and purpose statement must reflect that comments were considered in light of all factors that Congress directed the agency to consider even if ultimately rejected. The result of informal rulemaking is a set of legislative rules having the force and effect of law.
Each stage of the rulemaking process is subject to potential legal challenge. The rulemaking notice must explain what the agency proposes to do and why.60 The notice of proposed rulemaking must be sufficiently detailed to offer the public a reasonable opportunity to comment. When the final rule is sufficiently divergent from the proposed rule, it may be challenged on the ground that the initial notice was inadequate to put the public on notice that the resulting rule was contemplated by the agency and thus one that could have been commented upon. In this regard, the notice of proposed rulemaking may be found insufficient if the final regulations were not a "logical outgrowth" or not "sufficiently foreshadowed" in the notice of proposed rulemaking.61 In addition, the agency must disclose the technical data, if any, relied upon in developing the proposed rule so that it may be subject to comment.62 As explained further below, the agency is required to consider the comments and explain why it rejected plausible alternative approaches to the final rule as part of the general statement of "basis and purpose" required by 5 U.S.C. § 553(c).
Whether an agency engages in the three-step process for informal rulemaking is significant in two respects. First, if the agency issues a legislative rule without engaging in notice and comment rulemaking, the resulting rule is procedurally invalid. Second, whether the agency adopts a legislative rule through informal rulemaking, or an interpretative or other rule without informal rulemaking, has implications for the extent of deference given to the agency interpretation of its governing statute. The dividing line between rules requiring public participation in notice and comment rulemaking and those not, therefore, is an important but elusive one.
5.1.C.4.a. Exemptions from Rulemaking
The Administrative Procedure Act exempts certain rules from notice and comment rulemaking requirements.63 The most significant of these exemptions are for interpretative rules and general statements of policy.64 For years, the courts have struggled with distinguishing between legislative rules, which are required to be promulgated pursuant to notice and comment rulemaking, and interpretative rules, which are not. In American Mining Congress v. Mine Safety and Health Administration, the D.C. Circuit crafted a new test.65 It was subsequently adopted by at least seven other circuits:66
Accordingly, insofar as our cases can be reconciled at all, we think it almost exclusively on the basis of whether the purported interpretive rule has “legal effect,” which in turn is best ascertained by asking (1) whether in the absence of the rule there would not be an adequate legislative basis for enforcement action or other agency action to confer benefits or ensure the performance of duties, (2) whether the agency published the rule in the Code of Federal Regulations, (3) whether the agency explicitly invoked its general legislative authority, or (4) whether the rule effectively amends a prior legislative rule. If the answer to any of these questions is affirmative, we have a legislative, not an interpretive, rule.67
Interpretive rules, in contrast, generally alert the public to the agency’s interpretation of the laws and rules that it administers.68 An agency could circumvent the public participation requirements of the Administrative Procedure Act by issuing general and non-controversial legislative rules and, then, issuing more substantive and potentially controversial interpretations of its vague legislative rules. Courts of appeal have not taken kindly to this approach.69 American Mining Congress would regard such efforts as, in effect, amendments to legislative rules and, therefore, legislative themselves. A subsequent D.C. Circuit case, Paralyzed Veterans of America v. D.C. Arena, took this point one step further.70 The D.C. Court suggested in dicta that, when an agency significantly changes its interpretation of an interpretive rule that interprets a legislative rule, the agency must do so after engaging in notice and comment rule making.71
In an important 2015 case, the Supreme Court rejected the D.C. Circuit's approach in Paralyzed Veterans.72 The case involved the administrative exemption to the Fair Labor Standards Act. A 2004 Department of Labor regulation, promulgated pursuant to notice and comment procedures, provided examples of such exempt employees. In 2006, the Department issued an interpretive opinion letter concluding that mortgage-loan officers were exempt. In 2010, the Department reversed that interpretation without using notice and comment rulemaking. The Court held that the APA did not require government agencies to use notice and comment rulemaking in amending or repealing interpretive rules which themselves are issued without it.
Policy statements are exempted from notice and comment rule making by 5 U.S.C.§ 553(b). The D.C. Circuit has recently offered two tests for determining whether agency action is an unreviewable statement of policy or a reviewable agency action.73 The first deals with the effects of agency action: (1) whether it imposes rights or obligations and (2) whether the agency remains free to exercise discretion. The second focuses on the agency’s intentions: (1) its characterization, (2) whether it was published in the Federal Register or Code of Federal Regulations (CFR) or (3) whether the action is binding on the agencies or outsiders. At bottom, the central issue is whether the agency statement has a legally or “practically” binding effect on members of the public.74 If it has such an effect, particularly when the statement announces a departure from prior practice, it is likely a rule subject to notice and comment rule making, more likely to be regarded as ripe for judicial review and given a more deferential standard of substantive review.75 When, however, the agency issues a statement that either restates existing interpretations or retains discretion to act beyond it, the statement is likely not a rule.76
5.1.C.4.b. Deference to Agency Interpretation of Statutes
Even if the agency’s rule or statement is promulgated lawfully, it may be challenged on the ground that it exceeds the limits of the agency’s statutory authority or proceeds from a misinterpretation of the statute. In Chevron U.S.A. Inc. v. Natural Resources Defense Council, Incorporated, the Supreme Court articulated a two-step standard by which such claims should be reviewed:
When a court reviews an agency’s construction of the statute it administers, it is confronted with two questions. First, always, is the question of whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.77
In step 1, “the court’s job is to determine whether the scope of ambiguity of the relevant language is sufficiently broad to invalidate the agency’s construction.”78 If the language of the statute cannot bear the construction selected by the agency, the interpretation must be overturned.79 The Court typically consults dictionaries and prior judicial opinions for guidance on the meaning of statutory language. If the agency interpretation of the statute is supported by the statutory language in step 2, the court must uphold the interpretation if a reasonable one.80 If it is unreasonable, the policy decision implicit in the agency interpretation is arbitrary and capricious and should be struck down.81 Thus, as Professor Richard Pierce explains:
[A] court’s task in applying Chevron step two is to determine (1) whether the agency adequately discussed plausible alternatives, (2) whether the agency adequately discussed the relationship between the interpretation and pursuit of the goals of the statute, (3) whether the agency adequately discussed the relationship between the interpretation and the structure of the statute, including the context in which the language appears in the statute, and (4) whether the agency adequately discussed the relationship between the interpretation and any data available with respect to the factual predicates for the interpretation.82
Recent Court decisions concern the forms of agency interpretation to which the deferential Chevron doctrine applies. Chevron plainly applies to legislative rules and formal adjudications.83 The Court has also recently ruled that Chevron deference is due to agency interpretations of its jurisdictional statute.84 Informal announcements (such as opinion letters, policy statements, and interpretive rules) that lack the force and effect of law, however, are not subject to Chevron deference.85 Instead, such interpretations are treated with “respect” only to the extent that they have the “power to persuade.”86
The scope of Chevron was potentially broadened in United States v. Mead.87 In Mead, the Court considered an issue left unanswered in Christensen v. Harris County—whether to give Chevron deference to informal adjudications. The Court noted that Chevron deference was owed to formal adjudications and notice and comment rule making, but further noted that such deference might also be afforded to less formal modes of interpretation. The Court held that tariff classification ruling letters (at issue in Mead), which were not subject to notice and comment rule making, were not entitled to Chevron deference. The Court held that “the terms of the Congressional delegation give no indication that Congress meant to delegate authority to Customs to issue classification rulings with the force of law.”88 However, Chevron deference is owed when “it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority.”89 The difficulty in the aftermath of Mead is in determining when informal adjudications meet this standard.90
Nonetheless, Chevron and Mead suggest an avenue for challenging agency policies or interpretations that are not published through notice and comment rulemaking procedures or informal adjudications. If the plaintiff contends that the policy or interpretation is contrary to the statute or arbitrary and capricious, the government may argue that the interpretation should be subject to Mead or Chevron deference. If the court disagrees, plaintiff may reap the benefit of a less deferential standard of review.91 If the court agrees, then the agency interpretation must necessarily be a substantive or legislative rule that should have been promulgated through notice and comment rulemaking and can be challenged on the ground that it was not.92
When Chevron deference applies remains an important and controversial issue before the Supreme Court. In National Cable & Telecommunications Association v. Brand X Internet Services, the Court reviewed a Ninth Circuit decision striking down the Federal Communications Commission’s interpretation of the Communications Act of 1934, which was that cable companies that sell broadband internet services do not provide telecommunications services and are not, therefore, subject to common carrier regulation.93 This interpretation was asserted to be inconsistent with prior Federal Communications Commission rulings and foreclosed by a prior Ninth Circuit decision, in which the Federal Communications Commission was not a party, holding that cable companies were subject to the Act.
The majority held that unexplained inconsistency with prior agency interpretations may be a ground for finding a new interpretation arbitrary and capricious, but inconsistency alone is not a reason to withhold Chevron deference.94 More interesting, the majority held that the Federal Communications Commission was not bound to follow Ninth Circuit precedent so long as the court did not hold that the statute was unambiguous. Over Justice Scalia’s dissent, the Court put it this way:
… allowing a judicial precedent to foreclose an agency from interpreting an ambiguous statute ... would allow a court’s interpretation to override an agency’s. Chevron’s premise is that it is for agencies, not courts, to fill statutory gaps. The better rule is to hold judicial interpretations contained in precedents to the same demanding Chevron step one standard that applies if the court is reviewing the agency’s construction on a blank slate: Only a judicial precedent holding that the statute unambiguously forecloses the agency’s interpretation, and therefore contains no gap for the agency to fill, displaces a conflicting agency construction.95
Applying Chevron deference, the Court went on to uphold the Federal Communications Commission’s interpretation.96
The Administrative Procedure Act requires federal agencies to employ trial-like formal adjudication procedures set forth in 5 U.S.C.§§ 554–557 only when the “adjudication [is] required by statute to be determined on the record after opportunity for agency hearing.”97 In the relatively rare circumstances in which formal adjudications, or formal rule making, are required, agency finding of fact may be overturned only if unsupported by substantial evidence.98 The traditional and very deferential formulation of substantial evidence is “such evidence as a reasonable mind might accept as adequate to support a conclusion.”99 In Allentown Mack Sales and Service v. National Labor Relations Board, however, the Supreme Court appeared to impose a significantly more rigorous and less deferential sort of review on findings from a National Labor Relations Board formal adjudication.100 Such logic might be applied to other formal adjudications, such as social security appeals, although language in Allentown suggests that the Court’s approach in Allentown is confined to National Labor Relations Board hearings.
For informal adjudications and rule making, agency findings of fact are subject to an arbitrary and capricious standard of review.101 The Supreme Court recently described that standard of review as “extremely narrow.”102 But the extent to which it is different, if at all, from the substantial evidence test is unclear.103 The standard formulation is that the court upholds an agency’s findings, unless they are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.”104 Under this standard, “the [agency] must be able to demonstrate that it has made a reasoned decision based upon substantial evidence in the record,”105 or “reasonable [and] based upon factors within the [agency’s] expertise.”106 Yet, even if this demonstration is offered with “less than ideal clarity,” the Court will uphold it “if the agency’s path may reasonably be discerned.”107 Rescissions of regulations and decisions not to initiate rulemakings108 are also subject to the arbitrary and capricious standard of review.
In addition, the Supreme Court recently held, in Federal Communications Commission v. Fox Television, that a more searching review is not required in case in which an agency reverses policy. According to the Court, the agency must supply the usual "reasoned explanation" for agency action and that explanation must "display awareness that it is changing position."109 However, the court explained: "it need not demonstrate to a court's satisfaction that the reasons for the new policy are better than the reasons for the old one; it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency believes it to be better."110 The Court further held that arbitrary and capricious review is not applied more rigorously to agency actions that may implicate the Constitution."111 As a result of Fox Television, arguments premised on the need for more rigorous review of agency policy reversals or policies that have constitutional overtones will not be successful.
- 1. 5 U.S.C. § 702 (“A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial relief thereof.”). The Administrative Procedure Act (APA) and review under the Administrative Procedure Act apply only to federal agencies. See, e.g., Franklin v. Massachusetts, 505 U.S. 788, 801 (1992) (President is not an agency under the Administrative Procedure Act); Regional Management Corporation v. Legal Services Corporation, 186 F.3d 457, 462 (4th Cir. 1999) (Legal Services Corporation is not an agency).
- 2. 5 U.S.C. § 702.
- 3. Id. For a recent case considering whether a particular federal statute bars a suit that would otherwise fall within the Administrative Procedure Act's general waiver of sovereign immunity, see Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak, 132 S. Ct. 2199, 2204-10 (2012).
- 4. For an excellent discussion of this issue, see Gary F. Smith, The Quid Pro Quo for Chevron Deference: Enforcing the Public Participation Requirements of the Administrative Procedure Act, 30 Clearinghouse Review 1132 (March-April 1997).
- 5. Abbott Laboratories v. Gardner, 387 U.S. 136 (1967). For the factors employed to determine whether a statute precludes judicial review, see Block v. Community Nutrition Institute, 467 U.S. 340, 349 (1984).
- 6. See Jordan Hospital v. Shalala, 276 F.3d 72, 75 (1st Cir. 2002) (interpreting 42 U.S.C. § 1395ww(d)(10)(C)(iii)(II)); see also Briscoe v. Bell, 432 U.S. 404 (1977); National Coalition to Save Our Mall v. Norton, 269 F.3d 1092 (D.C. Cir. 2001) (finding statute bars judicial review), cert. denied, 537 U.S. 813 (2002).
- 7. See Sackett v. Environmental Protection Agency, 132 S. Ct. 1367, 1373-74 (2012) (Clean Water Act does not impliedly preclude review of compliance orders, distinguishing United States v. Fausto, 484 U.S. 439 (1988) and United States v. Erika, Incorporated, 456 U.S. 201 (1982)); Gutierrez de Martinez v. Lamagno, 515 US. 417 (1995); Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667 (1986); Adamo Wrecking Company v. United States, 434 U.S. 275 (1978). See also Mejia Rodriguez v. U.S. Department of Homeland Security, 562 F.3d 1137, 1142-45 (11th Cir. 2009) (decision that immigrant is not eligible for temporary protected status is reviewable); Alto Dairy v. Veneman, 336 F.3d 560 (7th Cir. 2003) (deciding not to infer from Congressional silence intent to preclude judicial review).
- 8. McNary v. Haitian Refugee Center, 498 U.S. 479 (1991); Webster v. Doe, 486 U.S. 592, 603 (1988); Johnson v. Robison, 415 U.S. 361, 366-67 (1974); Lepre v. Department of Labor, 275 F.3d 59 (D.C. Cir. 2001); cf. Dalton v. Specter, 511 U.S. 462 (1994) (ultra vires action is not alone unconstitutional). See also cases collected in Richard Pierce, Administrative Law Treatise § 17.9 at 1663 (5th ed. 2010).
- 9. Citizens to Preserve Overton Park Incorporated v. Volpe, 401 U.S. 402 (1971).
- 10. Id. at 410.
- 11. Webster v. Doe, 486 U.S. 592 (1988).
- 12. Id. at 600.
- 13. Heckler v. Chaney, 470 U.S. 821 (1985).
- 14. Id. at 830. Agency rules subject to notice and comment rule making and having the force and effect of law are generally held to serve as “law to apply,” while policy statements and interpretative rules are not. See Pierce, supra note 8, 1011-12.
- 15. Chaney, 470 U.S. at 832-35. Compare Massachusetts v. Environmental Protection Agency, 549 U.S. 497 (2007) (distinguishing between refusals to take enforcement action and refusals to initiate rulemakings). The Court also suggested that the presumption could be overcome if it were shown that the agency “has ‘consciously and expressly adopted a general policy’ that is so extreme as to amount to an abdication of its statutory responsibilities.” Id. at 833 n.4 (citation omitted). In Riverkeeper, Incorporated v. Collins, 359 F.3d 156 (2d Cir. 2004), the Second Circuit held the exception not to apply in a case challenging the Nuclear Regulatory Commission’s refusal to impose certain conditions on a license to operate two nuclear power plants.
- 16. Shalala v. Illinois Council on Long Term Care, 529 U.S. 1 (2000); Your Home Visiting Nurses Services v. Shalala, 525 U.S. 449 (1999); see also Lincoln v. Vigil, 508 U.S. 182, 192 (1993) (decision to reallocate funds from lump-sum appropriation is committed to agency discretion). An exception is Kucana v. Holder, 130 S. Ct. 827 (2010), which held that 8 U.S.C. § 1252(a)(2)(B)(iii) does not preclude judicial review of decisions to reopen removal proceedings that a regulation, rather than a statute, places within the Board of Immigration Appeals' (BIA) discretion.
- 17. See, e.g., Center for Policy Analysis on Trade and Health v. Office of the U.S. Trade Representative, 540 F.3d 940 (9th Cir. 2009) (Federal Advisory Committee Act's "fairly balanced" requirement is not reviewable); Tamenut v. Mukasey, 521 F.3d 1000 (8th Cir. 2008) (en banc) (Board of Immigration Appeal's decision not to reopen removal proceedings sua sponte is unreviewable); Port of Seattle v. Federal Energy Regulatory Commission, 499 F.3d 1016 (9th Cir. 2007) (Federal Energy Regulatory Commission's decision to deny refunds for energy transactions after adjudication that such refunds were warranted is reviewable), cert. denied, sub nom. Puget Sound Energy Incorporated v. California, 558 U.S. 1136 (2010); Ohio Public Interest Research Group v. Whitman, 386 F.3d 792 (6th Cir. 2004) (Environmental Protection Agency (EPA) decision not to issue notice of deficiency under Clean Air Act is not reviewable); Colorado Environmental Coalition v. Wenker, 353 F.3d 1221 (10th Cir. 2004) (finding Federal Advisory Committee Act challenges to advisory committees based on alleged violation of “inappropriate influence” provision non-reviewable but violation of “fair balance” requirement reviewable).
- 18. Citing neither Chaney nor Overton Park, the Supreme Court recently held that Title VII’s statutory requirement that the U.S. Equal Employment Opportunity Commission (EEOC) attempt conciliation prior to filing suit against an employer contains a judicially manageable standard for “relatively barebones” review. Mach Mining v. EEOC, 135 S. Ct. 1645, 1656 (2015). Such review can ordinarily be based on an affidavit supplied by the EEOC setting forth the notice and steps taken to comply with the statutory conciliation requirement.
- 19. Beno v. Shalala, 30 F.3d 1057 (9th Cir. 1994).
- 20. 42 U.S.C. § 1315(a).
- 21. Beno, 30 F.3d at 1067.
- 22. Id.
- 23. American Disabled for Attendant Programs Today v. U.S. Department of Housing and Urban Development, 170 F.3d 381 (3d Cir. 1999).
- 24. Id. at 386.
- 25. Pierce, supra note 8, § 15.1 at 1217-19; John Doe, Incorporated v. Drug Enforcement Agency, 484 F.3d 561, 567 (D.C. Cir. 2007).
- 26. See U.S. Department of Commerce v. U.S. House of Representatives, 525 U.S. 316 (1999).
- 27. Bennett v. Spear, 520 U.S. 154 (1997). See U.S. Army Corps of Engineers v. Hawkes Co., 136 S. Ct. 1807, 1813 (2016).
- 28. Id. at 178 (citations omitted).
- 29. The possibility of a revised determination based on new information does not make the decision non-final. Hawkes Co., 136 S. Ct. at 1814. See Fox Television Stations v. Federal Communications Commission, 280 F.3d 1027, 1038 (D.C. Cir. 2002), modified on reh’g by 293 F.3d 537 (D.C. Cir. 2002). See also Potash Association of New Mexico v. U.S. Department of the Interior, 367 F. App'x 960 (10th Cir. 2010) (agency opinion remanding matter is not final agency action); Fairbanks North Star Borough v. U.S. Army Corps of Engineers, 543 F.3d 586, 594 (9th Cir. 2008).
- 30. Reliable Automatic Sprinkler Company v. Consumer Products Safety Commission, 324 F.3d 726, 731 (D.C. Cir. 2003).
- 31. See Dalton v. Specter, 511 U.S. 462, 469-71 (1994); Franklin v. Massachusetts, 505 U.S. 788, 797-800 (1992). See National Association of Home Builders v. Norton, 415 F.3d 8, 16-17 (D.C. Cir. 2005) (no final agency action in issuing protocols that are recommended and non-coercive); Independent Equipment Dealers Association v. Environmental Protection Agency, 372 F.3d 420, 426-27 (D.C. Cir. 2004) (letter that imposed no new requirements is not agency action); Air Brake Systems, Incorporated v. Mineta, 357 F.3d 632 (6th Cir. 2004) (agency letters not entitled to Chevron deference that do not have effect of law do not satisfy this element).
- 32. Sackett v. Environmental Protection Agency, 132 S. Ct. 1367 (2012). The Supreme Court more recently decided another Clean Water Act case and similarly found that a jurisdiction determination by the Army Corps of Engineers that a parcel of land contained waters of the United States, thereby requiring a permit for the discharge of any pollutant into those waters, was final agency action. United States Army Corps of Engineers v. Hawkes Co., 136 S. Ct. 1807 (2016).
- 33. Id. at 1372.
- 34. Norton v. Southern Utah Wilderness Alliance, 542 U.S. 55 (2004).
- 35. Id. at 64.
- 36. Lujan v. National Wildlife Federation, 497 U.S. 871 (1990).
- 37. Examples of such statutes include the Social Security Act and 42 U.S.C. § 1997e(a) of the Prison Litigation Reform Act. See Porter v. Nussle, 534 U.S. 516 (2002); Booth v. Churner, 532 U.S. 731 (2001).
- 38. McKart v. United States, 395 U.S. 185 (1969).
- 39. Id. at 194-95.
- 40. See also McCarthy v. Madigan, 503 U.S. 140 (1992); Christopher S. v. Stanislaus County Office of Education, 384 F.3d 1205, 1212 (9th Cir. 2004).
- 41. See, e.g., United States v. Williams, 514 U.S. 527 (1995) (futility established); In Home Health, Incorporated v. Shalala, 272 F.3d 554 (8th Cir. 2001) (futility not established); Shawnee Trail Conservancy v. U.S. Department of Agriculture, 222 F.3d 383 (7th Cir. 2000) (futility requires certainty that agency action will be adverse). A form of futility may occur when agency administrative processes cannot provide the relief sought by the petitioner. Honig v. Doe, 484 U.S. 305, 327 (1988). This issue has, for example, divided the circuits in Individuals with Disabilities Education Act litigation seeking money damages. See Frazier v. Fairhaven School Committee, 276 F.3d 52 (1st Cir. 2002), and citations therein; M.Y. v. Special School District No. 1, 519 F. Supp. 2d 995, 1002 (D. Minn. 2007). In addition, courts frequently hold that exhaustion is excused in class actions seeking systemic relief because such relief is not available before administrative judges. See, e.g., J.S. v. Attica Central School, 386 F.3d 107, 114-15 (2d Cir. 2004), cert. denied, 544 U.S. 968 (2005); W.B. v. Matula, 67 F.3d 484, 495-96 (3rd Cir. 1995); M.O. v. Indiana Department of Education, 2008 U.S. Dist. LEXIS 66632 (D. Ind. Aug. 29, 2008); D.L. v. District of Columbia, 450 F. Supp. 2d 11, 18-21 (D.D.C. 2006).
- 42. The extent to which 42 U.S.C. § 405(g) requires exhaustion of remedies and to which the agency can waive the requirement is the subject of several arguably inconsistent decisions by the Supreme Court, most recently Shalala v. Illinois Council on Long Term Care, 529 U.S. 1 (2000); see Weinberger v. Salfi, 422 U.S. 749 (1975); Mathews v. Diaz, 426 U.S. 67 (1976); Mathews v. Eldridge, 424 U.S. 319 (1976); Heckler v. Ringer, 466 U.S. 602 (1984); Michigan Academy of Family Physicians, 476 U.S. 667; Bowen v. City of New York, 476 U.S. 467 (1986). The issue is a significant one for legal aid attorneys because it governs when a challenge to rules and actions of the Social Security Administration and the U.S. Department of Health and Human Services may be filed.
- 43. Barry v. Barchi, 443 U.S. 55, 63 n.10 (1979).
- 44. See Chapter 3.4 of this Manual.
- 45. Darby v. Cisneros, 509 U.S. 137 (1993).
- 46. These issues are discussed further in Chapter 3.2 of this Manual.
- 47. Abbott Laboratories v. Gardner, 387 U.S. 136 (1967).
- 48. Id. at 149. See National Association of Home Builders v. U.S. Army Corp. of Engineers, 417 F.3d 1272, 1281-84 (D.C. Cir. 2005).
- 49. See National Park Hospitality Association v. U.S. Department of the Interior, 538 U.S. 803 (2003) (applying Abbott to find challenge to interpretive rule unripe for review); Lujan v. National Wildlife Federation , 497 U.S. 871, 891 (1990) (challenge to regulation is ripe when there has been some “concrete action applying the regulation to the claimant’s situation in a fashion that harms or threatens to harm him”).
- 50. Reno v. Catholic Social Services, 509 U.S. 43 (1993).
- 51. Id. at 57.
- 52. Id. at 59.
- 53. For two post-Reno v. Catholic Social Services cases finding ripe challenges to restrictions on government benefits prior to application, see Freedom to Travel Campaign v. Newcomb, 82 F.3d 1431 (9th Cir. 1996), and Riva v. Massachusetts, 61 F.3d 1003 (1st Cir. 1995).
- 54. Thunder Basin Coal Company v. Reich, 510 U.S. 200 (1994).
- 55. Courts entertained constitutional challenges when the claim was collateral to the administrative review process, that process was not suitable for such claims, and preclusion of review would cause irreparable injury. See, e.g., Kreschollek v. Southern Stevedoring Company, 78 F.3d 868 (3d Cir. 1996).
- 56. Formal rulemaking is a procedure that resembles an adjudicatory hearing at which testimony is taken subject to cross-examination. 5 U.S.C. §§ 553(c), 556-557. Formal rulemaking rarely takes place and never occurs in the context of poverty law issues. For a discussion of formal rulemaking, see Pierce, supra note 8, § 7.2.
- 57. A fourth, negotiated rulemaking, is set forth in 5 U.S.C. §§ 561-583.
- 58. 5 U.S.C. § 553(b).
- 59. Courts do not have the authority to require agencies to follow procedures beyond those required under the APA, even when rulemaking requires resolution of contested issues of fact, absent extremely compelling and so far undefined circumstances. Vermont Yankee Nuclear Power Corporation v. Natural Resources Defense Council, Incorporated, 435 U.S. 519 (1978).
- 60. 5 U.S.C. § 553(b).
- 61. CSX Transportation v. Surface Transportation Board, 584 F.3d 1076 (D.C. Cir. 2009); National Mining Association v. Mine Safety and Health Administration, 116 F.3d 520 (D.C. Cir. 1997).
- 62. American Radio Relay League v. Federal Communications Commission, 524 F.3d 227, 236 (D.C. Cir. 2008).
- 63. Among these are exemptions for rules relating to “military or foreign affairs” and to matters relating to “agency management or personnel or to public property, loans, grants, benefits, or contracts.” 5 U.S.C. § 553(a). The good-cause exception is generally invoked when there is an urgent need to issue a rule, see, e.g., Jifry v. Federal Aviation Administration, 370 F.3d 1174 (D.C. Cir. 2004) (suspension of pilots' certificates in wake of 9/11); Hawaii Helicopter Operators Association v. Federal Aviation Administration, 51 F.3d 212 (9th Cir. 1995) (air safety rule), and when public notice of a proposed rule may result in economic or other harm. See, e.g., Reeves v. Simon, 507 F.2d 455, 458-59 (Temp. Emer. Ct. App. 1975) (finding good cause for regulation prohibiting preferential gasoline sales in light of nationwide shortage).
- 64. 5 U.S.C. § 553.
- 65. American Mining Congress v. Mine Safety and Health Administration, 995 F.2d 1106 (D.C. Cir. 1993).
- 66. Hemp Industries Association v. Drug Enforcement Administration, 333 F.3d 1082, 1087 (9th Cir. 2003); Warder v. Shalala, 149 F.3d 73, 80 (1st Cir. 1998); Mission Group Kansas v. Riley, 146 F.3d 775 (10th Cir. 1998); Appalachian States Low-Level Radioactive Waste Commission v. O’Leary, 93 F.3d 103, 113 (3d Cir. 1996); Hoctor v. U.S. Department of Agriculture, 82 F.3d 165, 170 (7th Cir. 1996); Chen Zhou Chai v. Carroll, 48 F.3d 1331 (4th Cir. 1995); New York City Employees’ Retirement System v. Securities Exchange Commission, 45 F.3d 7, 13 (2d Cir. 1995). See Richard J. Pierce, Jr., Distinguishing Legislative Rules from Interpretive Rules, 52 Administrative Law Review 547 (2000).
- 67. American Mining Congress, 995 F.2d at 1112. The third criterion was abandoned in Health Insurance Association of America v. Shalala, 23 F.3d 412 (D.C. Cir. 1994).
- 68. Shalala v. Guernsey Memorial Hospital, 514 U.S. 87, 99 (1995).
- 69. See Mission Group Kansas, 146 F.3d at 775; United States v. Picciotto, 875 F.2d 345 (D.C. Cir. 1989). The Supreme Court narrowly upheld interpretive rules in two such challenges. See Guernsey Memorial Hospital, 514 U.S. 87; Thomas Jefferson University v. Shalala, 512 U.S. 504 (1994).
- 70. Paralyzed Veterans of America v. D.C. Arena, 117 F.3d 579 (D.C. Cir. 1997), cert. denied, 523 U.S. 1003 (1998).
- 71. Id. at 586; Alaska Professional Hunters Association v. Federal Aviation Administration, 177 F.3d 1030, 1034 (D.C. Cir. 1999). The court observed in Paralyzed Veterans that the distinction between substantive and interpretive rules turns on how “distinctive” or “additive” the rule is to the statute. That is, if the interpretation defines vague statutory terms, like “fair,” it is more likely to be substantive. Paralyzed Veterans, 117 F.3d at 588.
- 72. Perez v. Mortgage Bankers Association, 135 S. Ct. 1199 (2015).
- 73. Croplife America v. Environmental Protection Agency, 329 F.3d 876, 883 (D.C. Cir. 2003).
- 74. National Mining Association v. Secretary of Labor, 589 F.3d 1368, 1371 (11th Cir. 2009); Appalachian Power Co. v. EPA, 208 F.3d 1015, 1021 (D.C. Cir. 2000). Compare Independent Equipment Dealers Association v. Environmental Protection Agency, 372 F.3d 420 (D.C. Cir. 2004) and General Motors Corporation v. Environmental Protection Agency, 363 F.3d 442, 450-51 (D.C. Cir. 2004) (letters that restated interpretation and imposed no new regulatory requirements were not reviewable) with Croplife, 329 F.3d at 883 (directive contained in press release stating, in departure with prior policy, that agency would not consider certain studies in its decision-making, was reviewable rule).
- 75. See Pacific Gas and Electric v. Federal Power Commission, 506 F.2d 33, 38-39 (D.C. Cir. 1974).
- 76. Center for Auto Safety v. National Highway Traffic Safety Administration, 452 F.3d 798, 806 (D.C. Cir. 2006); Professional and Patients for Customized Care v. Shalala, 56 F.3d 592, 600-601 (5th Cir. 1995); Rapp v. Office of Thrift Supervision, 52 F.3d 1510 (10th Cir. 1995).
- 77. Chevron U.S.A. Incorporated v. Natural Resources Defense Council, Incorporated, 467 U.S. 837, 842-43 (1984). Chevron deference is not owed to agencies without rulemaking power. Atchison, Topeka and Santa Fe Railway Company v. Peña, 44 F.3d 437, 441 (7th Cir. 1994) (en banc).
- 78. Pierce, supra note 8, § 3.6 at 215.
- 79. Cases rejecting an agency interpretation on step 1 grounds are Carcieri v. Salazar, 555 U.S. 379, 129 (2009); Barnhart v. Sigmon Coal Company, 534 U.S. 438 (2002). See also Immigration and Naturalization Service v. Cardoza-Fonseca, 480 U.S. 421 (1987); cf. Environmental Defense v. Duke Energy Corporation, 549 U.S. 561, 574 (2007) (rebuttable presumption that same term in two different sections of same statute must be interpreted same). Recent cases upholding agency interpretations of unambiguous statues are Zuni Public School District No. 89 v. Department of Education, 550 U.S. 81 (2007); National Cable Telecommunications Association v. Gulf Power Company, 534 U.S. 327 (2002); and U.S. Department of Housing and Urban Development v. Rucker, 535 U.S. 125 (2002).
- 80. See, e.g., Scialabba v. Cuellar de Osorio, 134 S. Ct. 2191, 2203 (2014) (deference to BIA interpretation of immigration statutes is particularly appropriate); EPA v. EME Homer City Generation, L.P., 134 S. Ct. 1584, 1609 (2014) (possibility that uncommon applications of rule could exceed agency authority does not justify invalidating otherwise reasonable rule in its entirety); Mayo Foundation for Medical Education and Research v. United States, 131 S.Ct 704, 714-15 (2011); Entergy Corporation v. Riverkeeper, 556 U.S. 208, 129 (2009); United States v. Eurodif, 555 U.S. 305 (2009) (upholding agency's new interpretation of ambiguous statue when courts upheld agency's prior interpretation as reasonable); Global Crossing Telecommunications v. Metrophones Telecommunications, 550 U.S. 45 (2007); Household Credit Services v. Pfennig, 541 U.S. 232 (2004); Barnhart v. Walton, 535 US. 212 (2002); Securities Exchange Commission v. Zandford, 535 U.S. 813 (2002); Verizon Communications, Incorporated v. Federal Communications Commission, 535 U.S. 467 (2002); Chevron U.S.A., Incorporated v. Echazabal, 536 U.S. 73 (2002); see also National Association of Home Builders v. Defenders of Wildlife, 551 U.S. 644 (2007) (deferring to reasonable agency regulation when agency was unable to comply with two conflicting statutory commands simultaneously). Similarly, when the statutory language leaves a "gap" for the agency to fill and it does so both reasonably and in compliance with procedural requirements, the result is binding. Long Island Care at Home v. Coke, 551 U.S. 158, 164 (2007).
- 81. Motor Vehicles Manufacturers Association v. State Farm Mutual Automobile Insurance Company, 463 U.S. 29 (1983); see Michigan v. Environmental Protection Agency, 135 S. Ct. 2699 (2015) (holding that EPA's interpretation of "appropriate and necessary" in Clean Water Act to exclude considerations of cost imposed by regulating power plant was unreasonable); Utility Air Regulatory Group v. EPA, 134 S. Ct. 2427, 2442-44 (2014); Negusie v. Holder, 555 U.S. 511, 129 (2009); Cuomo v. The Clearing House Association, 557 U.S. 519, 129 (2009); Ragsdale v. Wolverine World Wide, Incorporated, 535 U.S. 81 (2002); Animal Legal Defense Fund v. Glickman, 204 F.3d 229, 234 (D.C. Cir. 2000); cf. Strickland v. Commissioner, 48 F.3d 12 (1st Cir. 1995) (upholding secretary of agriculture’s decision to exclude depreciation from cost of producing self-employment income because it is not unreasonable interpretation of Food Stamp Act).
- 82. Pierce, supra note 8, § 3.6 at 219. The Court in United States v. Mead Corporation, 533 U.S. 218 (2001), explained that the carefulness of the agency’s consideration of the interpretive question; its consistency, formality, and persuasiveness; and the expertise of the agency are factors in determining the measure of deference owed to an agency interpretation. Id. at 228. The duration of an agency's interpretation, reflecting the carefulness of its consideration, is also a factor. Kasten v. Saint-Gobain Performance Plastics Corporation, 131 S. Ct. 1325, 1335 (2011).
- 83. See Christensen v. Harris County, 529 U.S. 576 (2000); Auciello Iron Works v. National Labor Relations Board, 517 U.S. 781 (1996). The Court has recently held that Chevron applies to the interpretation of tax regulations. Mayo Foundation, 131 S.Ct at 714. Generally agency positions adopted for purposes of litigation are not accorded deference. Bowen v. Georgetown University Hospital, 488 U.S. 204, 212 (1988); Natural Resources Defense Council, Incorporated v. Abraham, 355 F.3d 179, 201 (2d Cir. 2004).
- 84. City of Arlington v. FCC, 133 S. Ct. 1863 (2013).
- 85. See Federal Express Corporation v. Holowecki, 552 U.S. 389, 399 (2008) (compliance manuals and internal directives); Kentucky Retirement Systems v. Equal Employment Opportunity Commission, 554 U.S. 135, 128 (2008) (same); Alaska Department of Environmental Conservation v. Environmental Protection Agency, 540 U.S. 461, 487-88 (2004) (internal guidance memos do not qualify for Chevron deference); Christensen, 529 U.S. at 587.
- 86. Skidmore v. Swift and Company, 323 U.S. 134 (1944).
- 87. Mead Corporation, 533 U.S. at 231-32 (2001).
- 88. Id.
- 89. Id. at 226-27. For a case in which the Executive Branch office, here, the Attorney General, lacked the authority to issue an interpretive rule, which therefore was not entitled to Chevron deference, see Gonzales v. Oregon, 546 U.S. 243 (2006) (rejecting interpretive rule stating that Oregon Death With Dignity Act, which permitted use of controlled substances for physician-assisted suicides, was not legitimate medical purpose under Controlled Substances Act).
- 90. The Supreme Court’s opinion in Mead offers some insight into the nature of the relevant analysis. The Court examined the statute authorizing the tariff rulings (and noted that they were subject to judicial review in the Court of International Trade) and agency practice (rulings were not binding on third parties, generally lacked reasoning, and were issued in vast numbers and by many offices). In contrast, the Court in Walton, 535 U.S. at 222, suggested that agency interpretations of its governing statute—interpretations which are not the product of formal adjudication or notice and comment rulemaking—may be subject to Chevron deference, depending on the “interpretive method and nature of the question at issue.” Where, as in Walton, the agency has expertise, the issue is interstitial and important to the administration of the program, the program is complex, and the agency studied the issue carefully and consistently, Chevron deference is owed. Mead and Walton cast doubt on the lower deference previously accorded to social security rulings. See Bunnell v. Sullivan, 947 F.2d 341, 346 n.3 (9th Cir. 1991) (en banc). At the same time, Mead has caused considerable confusion. See Adrian Vermuele, Mead in the Trenches, 71 George Washington Law Review 347 (2003).
- 91. See, e.g., The Wilderness Society v. U.S. Fish and Wildlife Service, 353 F.3d 1051, 1067-69 (9th Cir. 2003) (en banc).
- 92. Smith, supra note 4, at 1151 & n.191, citing Cerventez v. Sullivan, No. CIVS-89-529 LKK, slip op. at 19 (E.D. Cal. Apr. 26, 1993); cf. Nebraska v. Department of Health and Human Services, 340 F. Supp. 2d 1 (D.D.C. 2004).
- 93. National Cable and Telecommunications Association v. Brand X Internet Services, 545 U.S. 967 (2005).
- 94. Id. at 981-82. See Mayo Foundation, 131 S. Ct. at 713. In Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2125-26 (2016), the Court cited Brand X and reiterated that "[a]gencies are free to change their existing policies as long as they provide a reasonable explanation for the change." However, it cautioned that the "agency must at least 'display awareness that it is changing position' and 'show that there are good reasons for the new policy.'" Encino Motorcars, 136 S. Ct. at 2126 (quoting FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009)). When, as was the case with the Department of Labor's interpretation of a provision of the Fair Labor Standards Act, the agency failed to make a reasoned explanation for its change of interpretation, that explanation is entitled to no Chevron deference.
- 95. Id. at 982-83 (citations omitted).
- 96. Administrative rules or interpretations of an agency’s ambiguous regulation are entitled to deference. Auer v. Robbins, 519 U.S. 452, 461-63 (1997). However, such deference is not due if the regulation interpreted merely parrots the governing statute. Gonzales, 546 U.S. at 256-57. In a recent Supreme Court decision on Auer deference, the Court upheld an agency's interpretation of an ambiguous banking regulation because it was not a post hoc rationalization, plainly erroneous, or inconsistent with the language of the regulation. Chase Bank USA v. McCoy, 131 S. Ct. 871, 881 (2011). See also Talk America Incorporated v. Michigan Bell Telephone Company, 131 S.Ct. 2254 (2011) (deferring to FCC's novel interpretation of regulation expressed in amicus brief). In 2013, several members of the Court indicated that, when presented with the proper case, they were poised to reconsider Auer deference and perhaps terminate the concept. See Decker v. Northwest Environmental Defense Center, 133 S.Ct. 1326, 1339 (2013) (Roberts, C.J., concurring); id. at 1340-42 (Scalia, J., concurring in part and dissenting in part).
- 97. 5 U.S.C. § 554(a).
- 98. Id. § 706(2)(E).
- 99. Interstate Commerce Commission v. Louisville and Nashville Railroad Company , 227 U.S. 88, 91 (1913).
- 100. Allentown Mack Sales and Service, Incorporated v. National Labor Relations Board, 522 U.S. 359 (1998).
- 101. 5 U.S.C. § 706(2)(A).
- 102. U.S. Postal Service v. Gregory, 534 U.S. 1, 7 (2001).
- 103. Bangor Hydro-Electric Company v. Federal Energy Regulatory Commission, 78 F.3d 659, 663 n.3 (D.C. Cir. 1996); Aman v. Federal Aviation Administration, 856 F.2d 946, 950 n.3 (7th Cir. 1983).
- 104. 5 U.S.C. § 706(2)(A).
- 105. Northern States Power Company v. Federal Energy Regulatory Commission, 30 F.3d 177, 180 (D.C. Cir. 1994).
- 106. AT&T Corporation v. Federal Communications Commission, 394 F.3d 933, 936 (D.C. Cir. 2005) (Roberts, J.).
- 107. Alaska Department of Environmental Conservation v. Environmental Protection Agency, 540 U.S. 461, 497 (2004) (citations omitted). See also National Association of Home Builders , 551 U.S. 644 (decision by higher office within agency to change decision of lower level decisionmaker is not, in and of itself, arbitrary and capricious).
- 108. Massachusetts v. Environmental Protection Agency, 549 U.S. 497 (2007) (Environmental Protection Agency's decision not to initiate rulemaking to address greenhouse gas emissions from new cars was arbitrary and capricious).
- 109. Federal Communications Commission v. Fox Television, 556 U.S. 552, 129 (2009).
- 110. Id.
- 111. Id.