Administrative Law Prof Blog

Sales and Adler on Chevron deference and agency jurisdiction

Nathan Alexander Sales (George Mason) and Jonathan H. Adler (Case Western Reserve) have posted "The Rest is Silence: 'Chevron' Deference, Agency Jurisdiction, and Statutory Silences" on SSRN.  Abstract:

Should agencies receive Chevron deference when interpreting the reach of their own jurisdiction? This article argues that, in general, they should not. We begin by identifying and detailing the various different types of jurisdictional questions that may arise in statutory interpretation. The article then surveys how the Supreme Court and lower federal courts have analyzed these different aspects of the jurisdiction problem, with a particular attention to statutory silences. The Court's Chevron jurisprudence strongly suggest that deference to agency determinations of their own jurisdiction should be disfavored, particularly where a statute is silent (and not merely ambiguous) about the existence of agency jurisdiction. In particular, we argue that courts should deny Chevron deference regardless of whether an agency is asserting or disclaiming jurisdiction. This no-deference rule should apply in both existence- and scope-of-power cases, but courts should continue to show deference where agencies assert the existence of a factual predicate that triggers jurisdiction. We support our proposal with arguments drawing on both traditional administrative law norms and public choice analyses of the incentives faced by agencies and other relevant actors. While there are strong counterarguments to our proposal - particularly the potential difficulty in distinguishing between jurisdictional and non-jurisdictional questions - this article maintains that denying deference in the jurisdictional context is desirable and consistent with Chevron principles.

EMM

"Mere unevenness in the application of a sanction will not render its application in a particular case unwarranted in law"

The FDA Law Blog points out a recent D.C. Circuit opinion confirming that under the Administrative Procedure Act (APA) an agency’s choice of sanction will be overturned only if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law”, and that “mere unevenness in application” is not enough to make the decision “not in accordance with law”.

The Court found noteworthy that the practitioner failed to demonstrate that DEA has a “consistent” policy of allowing a practitioner to retain his registration under similar circumstances and “never accepted responsibility for his misconduct,” nor “cooperated with DEA.”

“DEA Actions Upheld by D.C. Court of Appeals”

EMM

Deference is due an agency's application of an ordinance, but not to its "pure legal interpretation"

In the Law of the Land blog, Patty Salkin reviews a New York appellate opinion on the deference due a zoning board's interpretation of an ordinance - "Zoning Board’s Interpretation of Ordinance Not Upheld Where it Was Contrary to Clear Wording". 

While a zoning board’s interpretation is entitled to deference with respect to specific application of a term of an ordinance to a particular property, when the question is one of pure legal interpretation, such as here, deference is not required. Further, where the zoning board’s determination is counter to the clear wording of the statutory provision, little weight is given to the interpretation.

EMM

Deference to Agency Interpretation - Statutes Compared to Rules

The Statutory Construction Blog points out a Wisconsin Supreme Court case discussing Chevron deference.  "What is interesting is that the concurring judge agreed that the standard of review was the 'key' to the appeal, and the Chief Judge of the court dissented on that same point. Interesting debate."

EMM

More Special Solicitude for State AG's?

This Times-Picayune article reports that a federal judge in New Orleans has appointed the state AG to bring Katrina-related claims on behalf the the plaintiffs who are at risk of missing their deadlines.  It follows the pattern that I predicted here of the state AGs having an enhanced role in the post-Massachusetts era.

Here's an excerpt:

Taking a step he called unprecedented but necessary to preserve the rights of thousands of lawyerless Hurricane Katrina flood victims who have until Wednesday -- the storm's second anniversary -- to sue the government, a New Orleans federal judge Friday appointed state Attorney General Charles Foti Jr. to bring a case on their behalf .

"The situation before the court is unique," U.S. District Judge Stanwood Duval said in his seven-page ruling. "The claimants who filed Form 95s were victims of the most massive natural and man-made disaster in this country's history. Hundreds of thousands of residents were compelled to leave the New Orleans metropolitan area and vicinity in Katrina's immediate aftermath, and many thousands have not returned."

-Dru Stevenson

Medicaid: States' Control of Drug Coverage Rules

This article describes an important new precedent in Florida regarding the states' control of Medicaid payouts for prescriptions of off-label uses for medicines.  Some excerpts:

Lawyers who won a ruling blocking the Florida Medicaid program from restricting coverage of a popular prescription drug say the state's recent decision to drop its appeal sets an important precedent for what Florida and other states can and cannot do on drug coverage rules. A key dispute in the case was over whether Congress intended Medicaid programs to cover all prescription drug uses listed in three congressionally approved drug compendia whether they're FDA-approved or not. Or, did the lawmakers designate only those drugs listed in the compendia as being supported by research as effective? The issue remains disputed by both sides...

Federal law requires states to provide coverage for drugs that are either approved under the Federal Food, Drug and Cosmetic Act, or under three congressionally approved drug compendia. State Medicaid programs follow those compendia to determine which drugs and their FDA and non-FDA approved uses are to be covered.  In July 2004, AHCA began requiring physicians to contact the agency for prior authorization to prescribe Neurontin and Gabapentin for Medicaid recipients for most uses that weren't approved by the FDA. But AHCA began denying coverage of every Neurontin and Gabapentin prescription that wasn't for one of two FDA-approved uses, or the two off-label uses the agency decided to cover...

In response to AHCA's Neurontin policy, Florida Legal Services, the Legal Aid Society of the Orange County Bar Association, Legal Aid Service of Broward County and the National Health Law Program filed a class action lawsuit in May 2005 in U.S. District Court in Miami...

Klein ruled that Congress intended state Medicaid programs to cover both FDA-approved and non-FDA-approved uses cited in the three compendia. He said Congress did not intend for prescription drugs and their uses to be rated by the compendia according to efficacy...

...Following Klein's ruling, the Centers for Medicare and Medicaid Services issued a letter stating the federal Medicaid statute "requires coverage of off-label uses of FDA-approved drugs for indications that are supported (as opposed to listed) in the compendia specified in section 1927 (g) (1) (B)(II). Prior approval policies may be put in place, the letter said, but prior authorization cannot be used to deny the off-label indications supported by citations included or approved for inclusion in the above-referenced compendia."

-Dru Stevenson

Indian Casinos, Standing, The Nondelegation Doctrine, and Chevron - All in One Case!

I really enjoyed reading the new Fifth Circuit opinion in Texas v. United States, __ F.3d __, 2007 WL 2340781 (5th Cir. Aug 17, 2007); it is rich with issues relevant for several different areas of law.  The majority opinion provides a thought-provoking discussion of whether a state should have standing to sue when the requisite "injury in fact" is merely being dragged into an unwanted administrative proceeding with an Indian Tribe, and the fact that the state has less bargaining power as a result of losing the right to give ultimatums (i.e., walking away from negotiations with tribes). The majority (Chief Justice Edith Jones writing) says that both of these harms provide a sufficient basis for standing. This seemed like a somewhat new development in the rules for standing.

Although the decision nowhere cites Massachusetts v. EPA, it seems to follow that case's approach of "special solicitude for states" (at least regarding standing to sue the federal government).  The majority opinion in Texas v. U,S. seems to incorporate a lot of arguments about Eleventh Amendment state sovereignty creating unique circumstances where courts could find an injury-in-fact that would not apply to private parties (or tribes, for that matter).  In that sense, it is a victory for federalists. 

The Chevron analysis in the case is also interesting, because it turns on whether regulatory "gaps" created by courts invalidating certain portions of the enabling statutes can imply a legitimate delegation (warranting Chevron-style judicial deference). The majority says no, and I think the Court got this right. The Chevron doctrine is more properly about agency interpretations of statutory verbiage (a linguistic issue, really), not about agencies' implied authority. This is the main issue the dissenting opinion attacks, citing contrary decisions from two or three other Circuit courts - indicating there is a growing split of circuit authority on this nuance of Chevron (hence it would be a fertile subject for academic commentary and an eventual Supreme Court decision).  I also liked how the Chevron issue here was interwoven with delegation concerns, nicely illustrating a point Cass Sunstein made a few years ago that Chevron really is a "nondelegation canon."

This is also one of the somewhat-rare examples of an agency losing on Chevron step 2.  The low threshold for states to meet (reasonableness), and the long-standing precedent for judicial deference to agency interpretations, make it unusual for a court to rule against the agency at that stage in the analysis.  In this case, the Court held that the state lost on both Chevron step 1 and step 2.

I confess I also liked it that the casinos lost; gaming presents serious public policy concerns (there are overt economic benefits for the states, but also troubling externalities that affect the local area), and it seems to be an area where states should decide what is best for their citizenry. 

-Dru Stevenson

FDA Medical Device Approval Preempts State Law Claims

This opinion by the Wisconsin Supreme Court holds that the Food and Drug Administration's pre-market approval of a defibrillator device constitutes a specific federal requirement warranting preemption of state law tort claims.

-D.S.

New Direction for FISA?

This post from SCOTUS blog describes a first for the Foreign Intelligence Surveillance Court, asking the government to file a response brief to pleadings by the ACLU asking for access to the court's secret records. 

-D.S.

A Single Case That Could Someday Fill A Casebook?...

In her article 13 Years and Still Filing Appeals to Recover a Lost Federal Job, Susan Smith describes the plight of a tenacious former postal worker who really really wants his job back.  As an indication that things are not yet "looking up" for the petitioner, the Federal Circuit began its May 11 opinion this way:

This is yet another chapter in the protracted saga of the petitioner Ronald L. Green’s unsuccessful attempt to require the United States Postal Service ("postal Service") to rehire him, following his alleged recovery from the disability that led to the termination of his employment. The story includes three trips to this court, one to the Ninth Circuit and several to the Merit Systems Protection Board ("Board") and his filing of two district court suits against the Postal Service...

-Dru Stevenson

Article Spotlight: "Overlapping and Underlapping Jurisdiction in Administrative Law"

Professor Jacob Gersen has a terrific new article on SSRN entitled Overlapping and Underlapping Jurisdiction in Administrative Law, forthcoming in the Supreme Court Review. He addresses the (growing?) problem of Congress delegating simultaneously to multiple agencies and organs of the states, sometimes creating competing (overlapping) jurisdiction, and other times creating gaps between the areas each entity covers (underlapping jurisdiction).  Either scenario becomes particularly thorny when appellate courts must sort out which agency has authority over a particular piece of the regulatory framework, as in the Supreme Court's 2006 Gonzales case.  The problems presented by overlapping and underlapping jurisdiction touch on Chevron deference (especially Chevron Step Zero analysis), preemption analysis, etc.  The Supreme Court seems to operate with a presumption of exclusive jurisdiction, ignoring the realities of the modern regulatory (and delegatory) world.  My summary, however, cannot substitute for the author's own, as stated in his abstract:

Congress regularly enacts statutes that share government authority among many political institutions. This paper analyzes how administrative law does and should treat agency statutory interpretation in these overlapping and underlapping jurisdictional schemes. Shared jurisdiction statutes alter the incentives of administrative agencies, and can sometimes be effective tools for managing the principal-agent problems inherent in delegation. Unfortunately, judges regularly employ interpretive practices that undermine, rather than support these regimes. Particularly, in the context of Chevron doctrine - where problems of this sort arise most often - current judicial practices are in tension with the most sensible reconstruction of congressional intent.

This is a really valuable contribution to the literature, long overdue in my opinion.  I have a clumsy section in this forthcoming article about the issue of shared jurisdiction between agencies, but Gersen's article provides a much more precise analytical framework (and useful terminology) for discussing the issues involved.  This was an issue in Massachusetts v. EPA  - the EPA contended that the DOT had jurisdiction over regulating gas mileage in cars, which would overlap almost completely (in an undesirable way) with any EPA attempts to regulate car emissions of greenhouse gases.  The Supreme Court simply acknowledged the overlap and then said it should not pose any real problems for either agency - and moved on.  Gersen nicely explains in his article that this type of scenario can either lead the agencies to compete in their regulatory activities, or to shirk their responsibilities (I think the latter is a bit more likely that he does). He does out, in the section on preemption, that the Supreme Court's underlying assumption is that agencies tend toward overreaching, and Gersen questions whether this is really the natural inclination of bureaucrats.  This reminded me of a funny passage in Frank Knight's classic text Risk, Uncertainty, and Profit, where Knight talks about the conventional assumption that bureaucrats will be careless with public resources, and counters this with a a little diatribe about how bureaucrats do the exact opposite - they are overly cautious, to the point of being nearly inert and accomplishing little.

Gersen's focus is judicial treatment of shared jurisdiction between agencies (and he does a fantastic job analyzing this); I think a topic for future research or discussion would be the impact of shared regulatory jurisdiction on the regulated industry itself.  At first blush, it might seem that overlapping jurisdiction would simply compound the regulatory burden, with an arithmetic increase in rules, monitoring, enforcement, etc.  But I wonder (and alluded to this in the piece mentioned above) if there is a diminishing marginal value or cost to regulations; once the regulated party has a "compliance" department in place, awareness of the need to steer clear of various regulatory violations, etc., if the cost of each new related regulation has a decreasing or vanishing value.  And to the extent that agencies are prone to shirk - either because of laziness, or cautiousness (as Knight says), or fear of encroaching on another administrator's turf - the regulated industry gets the benefit or free ride of gaps in the regs, monitoring, and enforcement.  Comments welcome.

-Dru Stevenson

New 11th Cir. Case on Administrative Appeals...

For those interested in legal responses to disasters/catastrophes (which seems to be one of the current "hot topics" in Admin Law), this recent decision from the 11th Circuit, Mahon v. USDA, __ F.3d __, 2007 WL 1365976 (11th Cir. May 10, 2007), addresses the somewhat-tortuous appeals process for those applying for federal relief funds in the wake of natural disasters (in this case, a 2000 freeze that destroyed orange trees in Florida).   It also seems to be a useful case for teaching the subjects of issue exhaustion, standards of review, incorporation of state regulations into administrative proceedings, etc., because it sets forth these issues in a clear, simple manner with a concrete fact scenario.

The issue-exhaustion section of the case is interesting, because it carefully distinguishes between the more commonplace statutory or regulatory preclusions (i.e., the requirement that each claim be adjudicated first by the administrative agency before it goes to court) and "judicially-created issue exhaustion requirements," and then using a "Sims v Apfel" test to determine whether the latter was applicable in the present case.  Somewhat surprisingly (to someone who used to do a lot of ALJ hearings), the court concludes that USDA administrative proceedings are inherently "adversarial" and thus justify a judicially-created issue exhaustion requirement.  The finding that the proceedings are adversarial was based entirely on standard due-process boilerplate in the agency's own regs about its hearing procedures.  I found this unconvincing, but again I am biased from doing dozens of SSI hearings before ALJs, without ever encountering opposing counsel.  It is not clear that the agency sent lawyers to the administrative hearings in the Mahon case, either.

This seems to present a series of paradoxes: 1) hearing-procedure regs designed to protect the due process rights of petitioners (private citizens vs the govt) can actually deprive the petitioners of the right to bring claims in court if they failed to articulate them at the agency stage; 2) proceedings can be deemed "adversarial" for one side even if the other side is voluntarily absent or unrepresented; 3) the petitioners would have been better off if there was opposing counsel at the administrative hearing stage, because it probably would have prompted them to raise & articulate more "potential" issues that could affect the result later.

This case is also interesting because it provides an example of a relatively rare instance where a court finds against an agency after the it won at the first step of Chevron analysis; and it may be an argument that a third step of Chevron analysis has evolved.  The relevant statute in the case covered disaster relief for certain trees "held for commercial sale."  Without guidance about the meaning of this verbiage, the USDA looked to Florida state law, and concluded that the petitioners were ineligible because their state commercial license had lapsed (oops!), thereby technically disqualifying their plants from legal commerce.  The 11th Cir finds this approach to be "Chevron-reasonable" (to coin a phrase?).  But the court noted that the USDA takes inconsistent positions about this particular Florida statute in other cases pending in the Eleventh Circuit, sometimes ignoring the state's licensing requirements, etc. - making the agency's application of its otherwise reasonable interpretation arbitrary and capricious, which is the unforgivable sin in judicial review of agency actions.  So, under its Chevron analysis, the agency wins at step one (the court agrees that the statue is hopelessly ambiguous); wins at step 2 (the court agrees that it might be reasonable to use state laws to settle the question), and loses at a final step (Chevron 3? Or, if you believe there are already three steps because of the requisite determination of whether Chevron even applies, this could be Chevron step 4), because it was inconsistent in its application of its reasonable interpretation.  Note that the concurrence argues that Chevron does not apply at all; that this was more like an Overton Park "hard look" case, which the agency would have lost on other grounds.

Comments welcome!

-Dru Stevenson

Prisons' "Boot Camp" Closing Immune to Judicial Review

I confess I thought this was more interesting because of the facts than the legal question it addresses (whether the agency's decision is subject to judicial review - it's not).  The Ninth Circuit recent decision (May 9, 2007) in Serrato v. Clark, __ F.3d __, 2007 WL 1344024 (9th Cir. 2007) addresses (and punts) the termination of the federal Bureau of Prison's "Boot Camp" -

...its early-release correctional program for penal inmates known variously as the shock incarceration program, intensive confinement center or ICC program, and boot camp (hereinafter, “boot camp”). Boot camp was established to provide a highly regimented schedule with strict discipline and physical training for inmates. By promoting personal development, self-control, and discipline, the program aimed to reduce recidivism and control prison populations and costs. Upon successful completion of the program, inmates were eligible to have BOP reduce their sentence by up to six months. In 2004, citing budgetary constraints and a study which showed the program ineffective to reduce recidivism, BOP terminated the program.

The statutory authorization for this non-military "boot camp" is 18 U.S.C. § 4046, enacted in 1990, which Congress called the "Shock incarceration program.”  I didn't know.  In any case, a female inmate, Nora Serrato, was really counting on going to boot camp in order to get an early release, and was crushed when the program folded.  The court found that it had jurisdiction over the matter, but that the decision to terminate the program was no subject to judicial review.

-Dru Stevenson

DC Cir. Dismisses "Moms Against Mercury" Case

In a recent case about a federal agency refusing to regulate, the DC Circuit has sided with the agency and dismissed the claim: Moms Against Mercury v. Food & Drug Admin., __ F.3d __, 2007 WL 1094313 (D.C. Cir. April 13, 2007).  I just noticed the case because the Andrew's Litigation Reporter update for yesterday featured it.

I think this case arguably contradicts Mass v. EPA, which I have written at length about here, and that the Moms case might face reversal if the Supreme Court takes the case.  The DC Cir. never cites the Massachusetts case (are they trying to ignore it?).  I understand, of course, that the court treats this as a subject matter jurisdiction case instead of a standing case (Massachusetts was mostly a standing case), but both cases involve an agency's refusal to regulate something, and the Supreme Court held in Massachusetts that 1) there are statutory provisions of general applicability to all agencies, such as 5 U.S.C. § 555(e), that allow judicial review of agency refusals; and 2) agency's receive far less judicial deference for refusals to regulate than they would, say, for refusals to enforce or prosecute.  I can anticipate a chorus of objections that Massachusetts also involved a CAA provision for citizen suits, but the Court relied on that only for the standing issue, not for the compel-agencies-to-regulate question.  (again, I argue about this at length in my article on SSRN). In any case, if Massachusetts is superficially on point but technically distinguishable, then I would have expected the DC Cir. to mention the case in passing and distinguish it based on the CAA citizen suit provision.  Instead, they ignore it.

The case itself is about the FDA's refusal to regulate mercury dental fillings; a number of concerned citizen groups, including "Moms Against Mercury," ("Fighting for Truth and Justice for Our Children...and Yours") asked the agency to please regulate it, given the well-known health risks of mercury and the agency's clear statutory mandate for regulating dental fillings (acknowledged by the court).  The FDA said they aren't ready, so the Moms and the other groups sued. The court acknowledged that the agency had raised a standing issue, but held that it did not have to reach the question because it could dismiss the case just as easily for lack of subject matter jurisdiction. 

                                                                                                                       -Dru Stevenson

When is Judicial Review Limited to the Agency Record?

This new case, Stone v. Unocal Termination Allowance Plan, 2007 WL 1341441 (S.D.Tex., May 4, 2007), is a ruling on a motion in limine within an ERISA appeal; the federal court denied the defendant's motion to limit their review to the administrative record.  The court cites the Fifth Circuit's "sliding scale" rule for judicial deference, i.e., that judicial deference is inversely proportional to the administrator's potential conflict of interest. 

-D.S.

New Case about Sub-Agencies of the Dept of Energy

Those interested in Energy law, judicial review of agency actions, and agencies settling contracts outside their statutory authority, may find this new case from the 9th Circuit useful: Portland General Elec. Co. v. Bonneville Power Admin., __ F.3d __, 2007 WL 1288786 (May 3, 2007).  The factual background discussion about the power companies in the Pacific Northwest is very complicated but provides a detailed history - especially of the Bonneville Power Administration, an agency within the U.S. Dept. of Energy.  On the other side of the aisle were a number of municipalities, local power agencies, etc.

-D.S.

New "Kentucky Fried Chicken" Case Could Be Useful Teaching Tool

I find that students are more entertained by cases relating to 1) items related to "hot topics" in the news media, and 2) parties whose products are familiar to the students. 

This new case might be both.  Fraker v. KFC Corp., Slip Copy, available at 2007 WL 1296571 (S.D.Cal. Apr 30, 2007). If someone knows of a URL I could use to allow readers to click to the case directly, PLEASE send it. 

This is the latest in the line of lawsuits against fast food restaurants for making us fat, and it ends in dismissal, as most do. Personally, I am a fan of this type of litigation because I think it does push the franchises to consider (internalize) some of the externalities of their products.  I also think it can be valuable to have a class discussion about whether it would be better to have a regulatory agency impose controls on the healthfulness of foods, or to use private tort litigation (based on ideas like lowest-cost-avoider and private information, similar to the OSHA vs. Workers' Comp debate for workplace safety).  The students usually have very strong opinions about fast food, and the class discussion becomes fairly spirited.  This case even focuses on particular verbiage from the KFC advertising, which students are likely to have heard before.

This case seems particularly suited for Admin class because of the court's discussion about the doctrine of exclusive administrative remedies; the regulatory schemes where only the government, not private parties, can bring actions against violators; the definition of "comprehensive" as it pertains to regulatory regimes; and the judicial practice of analogizing to other (non-applicable but similar) enabling statutes, administrative agencies, and regs. 

I think I could illustrate each of these important concepts of Admin Law, which otherwise might seem excessively abstract/arcane for students, using this single entertaining case (not to the exclusion of the cases in my casebook, but as a supplement).

                                                                                                                                                    -Dru Stevenson

Chevron Narrowed By Mass v. EPA?

It seems to me that in Massachusetts v. EPA, Justice Stevens, who also authored the landmark decision in Chevron, may have narrowed it (or at least added a significant wrinkle to Chevron jurisprudence) by saying that "more" Chevron deference applies to agency discretion abotu enforcement than to agency decisions about whether to regulate in the first place.  Any comments about Chevron, post-Massachusetts?