Notice & Comment

Barnett on Dodd-Frank as an Agency Deference Pioneer (AdLaw Bridge Series)

This is the second time in the AdLaw Bridge Series where I’m highlighting excellent scholarship inspired by the  Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank). As I mentioned in my prior post and as Paul Rose and I have explored elsewhere ( here and here), Dodd-Frank has raised the stakes for financial regulation by requiring more than twenty federal agencies to promulgate hundreds of new rules and regulations. And it has also kept scholars busy, due in part to the high stakes involved but also in part to the various novel approaches to administrative law and regulation that Dodd-Frank has pioneered.

In “Codifying Chevrmore,” which is forthcoming in the NYU Law Review and available on SSRNhere, Kent Barnett* explores one of these novel Dodd-Frank inventions: the codification of a judicial review standard less deferential than the default Chevron standard.  In particular,  Congress directed courts to review for Skidmore weight any decision to preempt state law made by the Office of the Comptroller of the Currency (OCC).  The paper’s abstract does a nice job of summarizing the effect of such “Chevmore codification” on agency decisionmaking:

This article considers the significance and promise of Congress’s unprecedented codification of administrative law’s well-known Chevron and Skidmore judicial-deference doctrines (to which I refer collectively as “Chevmore”). Congress did so in the Dodd-Frank Act by instructing courts to apply the Skidmore deference factors when reviewing certain agency preemption decisions and by referring to Chevron throughout.

This codification is meaningful because it informs the delegation theory that undergirds Chevmore (i.e., that Congress intends either to delegate interpretive primacy to agencies or, at least, allow courts to defer to agency views when courts retain interpretive primacy). Scholars and at least three Supreme Court justices have decried the judicial inquiry into congressional intent as “fictional” or “fraudulent.” They argue that Congress doesn’t think about interpretive primacy, courts don’t really try to divine congressional intent, and courts use overbroad assumptions when deciphering congressional intent.
Dodd-Frank provides the best direct evidence to date that Chevmore is not a fiction. Dodd-Frank reveals that Congress knows of Chevmore, legislates with it in mind, and acquiesces to it. But Dodd-Frank’s preemption provisions—giving an agency rulemaking power but subjecting its decisions to Skidmore review—undermine the Supreme Court’s recent statement in City of Arlington v. FCC, 133 S. Ct. 1863 (2013), that Congress intends agencies to receive interpretive primacy (via Chevron’s more deferential review) whenever they use rulemaking. These insights support the delegation theory and earlier precedents (like United States v. Mead) that did not treat rulemaking as a talisman. If courts apply these earlier precedents, Chevmore is neither fiction nor fraud.
Dodd-Frank also shows Chevmore codification’s promise for addressing longstanding administrative-law issues. With “Chevron rewards” and “Skidmore penalties,” Congress—as it did in Dodd-Frank—can clarify how agencies must act to obtain Chevron deference, balance “hard look” judicial review with regulatory ossification, and respond to regulatory capture. Chevmore codification thereby can become a key legislative tool for overseeing the administrative state.
This is an important paper for both the theory and the practice of administrative law, and Professor Barnett’s analysis and discussion are top rate. The paper raises a number of questions about delegation theory, including whether courts or Congress should set the deference standard, whether agency expertise should play a role in judicial deference, and whether a presumption of delegation is preferable to a case-by-case inquiry into congressional intent.
There’s also an empirical question about whether congressional modification of the administrative law deference standard would actually change agency interpretive practices. In my empirical study on agency statutory interpretation, I asked a number of questions to agency rule drafters about whether they are familiar with and use these doctrines when interpreting statutes. The findings seem to support Professor Barnett’s conclusion that Chevmore codification could affect agency interpretive practices. As I explore more fully in my contribution to the recently published Fordham Law ReviewChevron at 30 Symposium, the vast majority of agency rule drafters surveyed think about judicial review when drafting statutes and understand Chevron and Skidmore and how their chances in court are better under Chevron. Indeed, two in five rule drafters surveyed agreed or strongly agreed—and another two in five somewhat agreed—that a federal agency is more aggressive in its interpretive efforts if it is confident that Chevron deference (as opposed to Skidmore deference or de novo review) applies.  In other words, at least with respect to the agency rule drafters surveyed, congressional modification of the default deference standard would affect agency interpretive behavior in the way that Professor Barnett theorizes.
There’s one qualification relevant to the Dodd-Frank provision at issue here: Regarding preemption of state law, fewer than half (46 percent) of the rule drafters surveyed agreed that Congress intends to delegate preemption questions by ambiguity. Similarly, roughly half (47 percent) indicated that they use the presumption against preemption when interpreting statutes. These findings cast some doubt on the efficacy of Chevmore codification in the preemption context. If over half of the rule drafters surveyed already do not assume Chevron deference applies to agency preemption decisions—and, indeed, half apply the presumption against preemption when there is an ambiguity—then congressional modification from Chevron deference to Skidmore weight would have no effect on agency statutory interpretation at least with respect to those rule drafters. (Such Skidmore codification may, of course, still have an effect on judicial behavior.)
In all events, it will be interesting to see whether Chevrmore codification is just a one-off legislative phenomenon or becomes a regular tool in the legislative toolbox to help reign in congressional delegation to federal agencies. If Congress does end up embracing this tool, I’m also curious to see how agencies and courts respond to Chevmore codification.
* I should disclose that Professor Barnett and I are presently collaborating on a project looking at administrative law deference in over 2,000 court of appeals decisions published over a ten-year period. Although the project codes for a number of variables, we are particularly interested in whether circuit courts treat agency statutory interpretation differently depending on whether the interpretation is a product of rulemaking or adjudication.
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