Congress Must Act to Restore Accountability to the Regulatory Process, by Senator Orrin G. Hatch

by Guest Blogger — Thursday, Sept. 22, 2016

“[I]t is emphatically the province and duty of the Judicial Department to say what the law is.” These simple, straightforward words constitute Chief Justice John Marshall’s foundational definition in Marbury v. Madison of “the judicial Power” that the Constitution vests in the federal courts. Repeated in countless court decisions, law review articles, and civics textbooks, Marshall’s formulation is today seen as an uncontroversial assertion of the proper role of the federal judiciary. It also squares neatly with the traditional separation of powers doctrine expressed in Federalist 47: “[t]he accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, and whether hereditary, self appointed, or elective, may justly be pronounced the very definition of tyranny.” To prevent the consolidation of power, the Constitution established a system of government that divides authority among the three branches, as well as between the states and the federal government. It is a system in which “[t]he interpretation of the laws is the proper and peculiar province of the courts.”

 

Contrast this understanding of the judicial power with what has come to be the judiciary’s role in modern administrative law. Under so-called Chevron deference, courts now defer to an agency’s interpretation of a statute so long as the statute is “ambiguous” and the agency’s reading is “permissible.” Similarly, under so-called Seminole Rock or Auer deference, “the ultimate criterion” for a court’s interpretation of an ambiguous regulation “is the administrative interpretation, which becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation.” Such deference is problematic in several respects.

 

First, judicial deference to administrative agencies lacks a clear constitutional basis. By transferring power to “say what the law is” from courts to agencies, Chevron and Seminole Rock conflict with the clear assignment of that power to the courts in Article III of the Constitution. In the words of one noted expert, the modern deference regime represents “a counter-Marbury for the executive branch.” Troublingly, some defenders of the current deference regime respond merely by noting that the modern administrative state as a whole “epitomizes the combination of functions the separation of powers is supposed to keep apart,” as if the number of constitutional infirmities in administrative law somehow excuses the problematic nature of Chevron and Seminole Rock. Indeed, while attention to the problems of judicial deference should not preclude efforts to enhance procedural protections in the rulemaking process or fix other ways in which the bureaucracy concentrates power to the detriment of our liberties, neither of these alternatives meaningfully mitigates the inconsistency between judicial deference and the text and structure of the Constitution.

 

Second, Chevron and Seminole Rock deference lacks a clear statutory basis. The Administrative Procedure Act (APA) defines the scope of judicial review of agency action thusly: “the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.” The Act contains no language to support the idea that courts should defer to agency interpretations. In the words of one astute commentator, the Act’s “text . . . is not just in tension with [deference] doctrine,” but “downright contrary to it.”

 

For those committed to the principle that judges should apply the law as written, modern deference doctrines are troubling. Even at the height of his enthusiasm for Chevron, Justice Scalia could muster only a weak reconciliation between the APA and judicial deference. In a 1989 law review article on the topic, after conceding that any “quest for ‘genuine’ legislative intent is probably a wild-goose chase” and that “[i]n the vast majority of cases . . . Congress [did not] mean to confer discretion upon the agency, but rather . . . didn’t think about the matter at all,” Scalia resorted to a functionalist justification for the contemporary deference regime. He cited benefits such as “needed flexibility, and appropriate political participation, in the administrative process”; predictability of outcomes; and making the legislative process “less of a sporting event [in which] those supporting and opposing a particular disposition do not have to gamble upon whether, if they say nothing about it in the statute, the ultimate answer will be provided by the courts or rather by the [agency].” While these features may represent benefits of deference for the efficient and fair operation of government, they do not address the fundamental disconnect between deference doctrines and the clear statutory language of the APA.

 

Third, Chevron and Seminole Rock create strong incentives for agency misbehavior. Courts have come to define with extraordinary breadth both the textual ambiguity that is a prerequisite for deference and the reasonableness of agencies’ proposed interpretations. In the case of Chevron analysis, these loose limits give agencies what amounts to broad authority to rewrite statutes as they please. Several recent high-profile examples—such as the Environmental Protection Agency’s decision to change statutorily prescribed pollutant levels by three orders of magnitude, or the Department of Health and Human Services’s redefinition of the term “exchange established by the state” in the Affordable Care Act to include exchanges established by the federal government—illustrate how courts’ permissive attitude toward agency interpretations breeds administrative hubris. And while courts do sometimes rein in agency misbehavior, such examples illustrate how far agencies sometimes go in twisting the law to serve their preferred policy goals.

 

In the context of Seminole Rock deference, an additional factor compounds the problem. By instructing courts to defer to agency interpretations of their own ambiguous regulations, Seminole Rock incentivizes agencies to write vague rules. Then, if an agency later wishes to change the rule, it can simply issue guidance rather than formally modifying or amending the rule, thereby bypassing the procedural protections built into the rulemaking process. Worse yet, the agency can leave the rule the way it is and simply change its application of the rule in future enforcement proceedings. Either way, under Seminole Rock, agencies’ freedom from scrutiny “frustrates the notice and predictability purposes of rulemaking, and promotes arbitrary government”—the type of governance the Constitution was structured to avoid. With empirical evidence indicating that two-in-five agency bureaucrats admit “using” Seminole Rock in drafting rules, this concern about improper incentives can hardly be dismissed as “a phantasmal terror.”

 

In response to these arguments, proponents of the current deference regime offer various unpersuasive rationales why agencies should receive deference. First, advocates frequently cite technical expertise as the foremost reason why agencies should be the preferred interpreter of the law. But a reliance on agency technical expertise is misplaced in an era in which numerous parties to regulatory litigation—from businesses and trade associations to non-profits and think tanks—can bring sophisticated expertise to the table that can rival or even surpass that of agencies. Moreover, this argument seems to discount, for no apparent reason, the ability of courts to digest an agency’s briefing as the appropriate vehicle for bringing the agency’s technical expertise to bear, even though numerous other legal proceedings—from expert witness testimony to patents—require courts to process complex technical information without deferring to one party or another. But most importantly, this argument obfuscates the issues at hand. An agency’s technical expertise is directly relevant to questions of fact, on which the APA grants significant discretion to agencies by directing courts to review such questions only for whether an agency’s action is “arbitrary, capricious, [or] an abuse of discretion.” On questions of law, however, the relevant expertise lies in textual interpretation, an area in which courts possess equal—if not greater—expertise than agencies.

 

Advocates also cite agencies’ superior policy judgment as a rationale for deference, claiming that technocratic know-how produces all sorts of benefits ranging from greater flexibility to improved responsiveness to stakeholder feedback. While the current deference regime may or may not yield benefits from a functional perspective—indeed, asserted benefits such as flexibility may also carry equally significant downside, such as reducing certainty for regulated parties—this argument fundamentally confuses what is at stake in the debate over Chevron and Seminole Rock. By the time a case ends up before a court, the policy judgment has already been made—through the legislative process in Chevron cases, and through the rulemaking process in Seminole Rock cases. Rather, the question is which organ of government is the proper forum for construing a binding legal text. The Constitution and the APA leave little doubt that this power of interpretation is firmly assigned to the judiciary.

 

The accountability deficit that Chevron and Seminole Rock create is only exacerbated by the difficulty the other branches of government encounter in attempting to oversee agency action. Put simply, the ever-expanding size and scope of the federal government complicate efforts by politically accountable executive branch officials and Congress to monitor and influence the full range of government operations. Although congressional staff budgets and the number of political appointees in the executive branch have grown in recent years, they have not kept pace with the vast expansion of the federal bureaucracy.

 

Examples abound of how the growth of the administrative state has diminished Congress’s ability to check agency actions that stretch statutory authority beyond the breaking point. Consider two of the Obama administration’s recent immigration programs—Deferred Action for Childhood Arrivals and Deferred Action for Parents of Americans. Both programs involve a series of administrative actions that not only shield individuals illegally in the country from immigration enforcement, but also affirmatively grant such individuals a quasi-legal status contrary to existing statute. Legislative proposals roughly similar to the administration’s programs have been the subject of intense political debate in recent years. As standalone bills, both programs would surely have been rejected by both the House and Senate. Despite intense disapproval of the administration’s actions by a majority of lawmakers, however, Republicans in Congress were unable to defund either program, and thus unable to undo the administration’s actions. This was because Democratic opposition to defunding meant that undoing the programs likely would have entailed a broader shutdown of the Department of Homeland Security (DHS). But because DHS administers a large number of crucial services, this outcome was politically untenable. The size and scope of the agency made it impossible for Congress effectively to exercise the power of the purse.

 

In a polarized political environment, courts thus stand as the only government actor truly capable of restraining overzealous regulators. But deference to agencies undercuts the judiciary’s ability to hold administrative officials accountable to the law. This grant of effectively unfettered discretion to the executive branch—largely to unelected bureaucrats subject to virtually no meaningful political accountability—has in turn incentivized a massive expansion of the administrative state. By some estimates, federal regulations now impose a burden of $1.885 trillion dollars on our economy. That amount equals roughly $15,000 per household per year and represents more than the entire nation’s corporate and individual income tax load combined. This burden has grown tremendously over recent years, with 20,642 new rules and 566 new major rules added over the last seven years alone. According to one study, by its sixth year in office the Obama administration had already surpassed every other presidential administration since 1976—when the study began—in the number of regulatory restrictions issued.

 

Restoring the constitutionally ordained judicial role is vital to returning accountability to the regulatory process and creating the conditions for economic growth. When reviewing agency actions, courts should say what the law is and not simply ratify what regulatory agencies want the law to be. To restore the judiciary’s proper role in interpreting statutes and regulations, Representative John Ratcliffe and I introduced legislation—S. 2724 and H.R. 4768, the Separation of Powers Restoration Act—grounded on the basic principle that courts, not agencies, have the power to decide questions of law and to hold agency officials accountable to the law.

 

The bill is remarkably straightforward: it merely clarifies the APA to restore de novo judicial review of questions of law. Such an approach is hardly a step into the radical unknown. Instead, the legislation would simply have courts employ, as Justice Scalia put it in Decker v. Northwest Environmental Defense Center, “familiar tools of textual interpretation to decide.” Today’s federal bench, consisting of intelligent, thoughtful, and well-educated jurists, consistently demonstrates its ability to do just that, tackling challenging areas of law such as high-technology patents and complex antitrust analysis. There is no reason to think that judges—with the help of thorough briefing from interested parties—are somehow incapable of correctly applying these same skills to administrative law. With the basic change that the Separation of Powers Restoration Act would enact, we can restore accountability to the regulatory process and begin to undo the damage Chevron and Seminole Rock have wrought.

 

Orrin G. Hatch is the President Pro Tempore of the United States Senate. He is the senior member and former Chairman of the Senate Judiciary Committee.

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This post is part of an online symposium entitled Reflections on Seminole Rock: The Past, Present, and Future of Deference to Agency Regulatory Interpretations. You can read the entire series here.

 

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