Formalism v. Functionalism Redux, by Richard J. Pierce, Jr.

by Guest Blogger — Wednesday, Jan. 23, 2019

In his January 15 opinion for a unanimous Court in New Prime v. Olveira, Justice Gorsuch stated that “words generally should be interpreted as taking their ordinary meaning at the time Congress enacted the statute.” Immediately after the Court issued that opinion Peter Strauss posted that quote on the administrative law listserve, with the suggestion that the Court might soon transform the notice and comment rulemaking process by interpreting the words “concise general statement of basis and purpose” in APA section 553 to mean that an agency’s statement of basis and purpose must be “concise” and “general.”

Such an interpretation would revolutionize the rulemaking process, particularly if it was combined with an interpretation of “notice” in section 533 that requires an agency to comply only with the ordinary meaning of the text of the APA when it was enacted in 1946. The text requires a notice to include only “the terms and substance of the proposed rule or a description of the subjects and issues involved.” Judge (now Justice) Kavanaugh argued in support of such an interpretation of “notice” in his separate opinion in American Radio Relay League v. FCC, 524 F. 3d 227, 245 (D.C. Cir. 2008).

For decades courts have interpreted “statement of basis and purpose” to require the agency to explain in detail why it issued a rule, including an adequate response to all well-supported comments that criticized the proposed rule and an adequate discussion of all alternatives to the final rule. Similarly, courts have long required an agency to issue a “notice” that adequately foreshadows all of the major elements of the final rule and that includes references to all of the studies and other potential sources of data that the agency might rely on when it issues the final rule.

The result of the past judicial interpretations of “notice” and “statement of basis and purpose” is a rulemaking process that is extremely resource-intensive and that takes many years to complete, with a 30% chance that a reviewing court will reject as inadequate either the “notice” that began the process or the “statement of basis and purpose” that ended the process. In a major rulemaking, the “notice” must be scores or even hundreds of pages of pages long to have any chance of satisfying a court. It always goes far beyond the scope of any “notice” that complies with the literal language of the APA. The “statement of basis and purpose” must be hundreds or even thousands of pages long to have a chance of satisfying a court. No one would characterize such a statement as “concise” or “general.”

The interpretative approach that the Court used in New Prime and that judge (now Justice) Kavanaugh urged in American Radio League is a formalist approach. The approach that courts have used historically to interpret “notice” and “statement of basis and purpose” is a functional approach.
Thus, courts concluded that the “notice” must refer to all of the characteristics of a proposed rule that the agency might include in its final rule in order to allow commenting parties to be able to know whether the final rule might adversely affect them and to be able to argue against versions of the proposed rule that might adversely affect them. The “notice” must include references to all of the sources of data the agency might rely on to support the rule to allow commenting parties to criticize the sources. The “statement of basis and purpose” must include detailed responses to all well-supported comments and adequate discussions of all alternatives to the final rule to insure that the final rule was the product of a reasoned decision making process that included serious consideration of all well-reasoned comments and all plausible alternatives.

Professor Strauss’s prediction may prove to be accurate. If so, we will witness a delicious irony. For the past decade conservative Republicans in the House attempted unsuccessfully to enact a variety of statutes that were designed to make it much more difficult for agencies to issue rules. Those statutes were based on the belief of House Republicans that it is far too easy to issue a rule. That belief was mistaken because it ignored the effects of judicial interpretations of “notice” and “statement of basis and purpose.” It would be ironic if the newly appointed conservative Republican Justices were to apply a formal approach in the process of reinterpreting the APA in ways that would make it much easier for agencies to issue rules.

As much as I like ironies, I doubt that we will see this irony unfold. I predict that the newly appointed conservative Justices will continue to use a functional approach when they interpret the APA. In 1987, Professor Strauss wrote an article that was awarded the Administrative Law Section’s prize for the best scholarly article written that year. Formal and Functional Approaches to Separation of Powers Questions—A Foolish Inconsistency? 72 Corn. L. Rev. 488. In that article, he documented the Court’s practice of vacillating between formal and functional approaches to administrative law issues, sometimes even in major cases decided during the same Term. He expressed his preference for functional approaches while acknowledging that “formalism has its advantages and functionalism its dangers.”

Nothing has changed. The Court continues to vacillate between formal and functional approaches. Thus, for instance, at the same time that the Court has used formal approaches in resolving many important administrative law issues, it has issued unanimous opinions in which it used a pure functional approach in the process of making it much easier for parties who are adversely affected by an agency action to obtain review of the action.

Thus, in Corps of Engineers v. Hawkes, 136 S. Ct. 1807 (2016), the Court held that an agency’s jurisdictional decision was an immediately reviewable final agency action. It characterized its approach to the question as “pragmatic” and it rejected alternative routes to court as inadequate because they were too long, too expensive or too risky. The Court took a similar pragmatic functional approach in Ross v. Blake, 136 S.Ct. 1850 (2016). The Court held that prisoners need not exhaust administrative remedies if they are “dead ends,” or “opaque,” or if administrators “thwarted” their attempt to use the remedies.

This might be a good time for Professor Strauss to reprise his wonderful article, but I suspect that he would find that nothing has changed over the past thirty years. The Court always has and always will vacillate between formal and functional reasoning. I also suspect that the conservative Republicans who now constitute a majority of the Court will not make it much easier for agencies to issue rules by adopting a formal, originalist approach to interpretation of section 553 of the APA.

Richard J. Pierce, Jr. is the Lyle T. Alverson Professor of Law at George Washington University Law School.

Cite As: Author Name, Title, 36 Yale J. on Reg.: Notice & Comment (date), URL.

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2 thoughts on “Formalism v. Functionalism Redux, by Richard J. Pierce, Jr.

  1. Peter Strauss

    Thanks for the shout-outs, Dick. I did not mean to suggest that “an agency’s statement of basis and purpose must be ‘concise’ and ‘general.'” “an agency’s statement of basis and purpose may permissibly be ‘concise’ and ‘general'” would be quite enough to accomplish all the mischief and irony you so persuasively suggest. In the longer run, of course, if Congress were to resume legislating, it might prove to be the catalyst for producing a better Section 553 than we currently have (though not what the RAA and REINS threaten, one certainly hopes).

    Reply
  2. William Yeatman

    Is the formalist/functionalist distinction always so easy to discern?

    It is said that the APA codified existing judicial approaches, many of which were far from certain in 1946. For example, who’s the formalist and who’s the functionalist in the dueling approaches to APA section 706’s language that “To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law … “? Are conservatives correct in claiming this language plainly precludes Chevron deference? Or are progressives correct in claiming this language plainly authorizes courts to “decide all relevant questions of law” by discerning a congressional intent for deference to agency statutory interpretations? To me, the imprecision of the 706 directive aptly reflects the pre-APA court’s struggle (or vacillation) on how to review agency statutory interpretations, and all that entailed (i.e., parsing questions of law, fact, and mixed). Accordingly, I don’t think this crucial provision lends itself to the formalist v functionalist dichotomy.

    In a slightly different vein, it also seems that there are instances where APA formalism could engender results 180 degrees from the delicious irony to which you refer–i.e., in ways that would make it much harder to regulate. For example, a formal interpretation of APA section 701(b) likely would subject the president to hard look judicial review under 706.

    In any case, I’m a big fan of both your work and marvel at your expertise. Also, how does one get on that listserv! It sounds really cool.

    Reply

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