Sunday, June 23, 2019

Supreme Court Again Weighs In At the Edges on Legislative and Interpretive Rules (6/23/19; 7/2/19)

The immediately preceding blog reported my new article posted on SSRN titled The Report of the Death of the Interpretive Regulation Is an Exaggeration.  See Article on the Continued Viability of the APA Category of Interpretive Regulations (Federal Tax Procedure 6/21/19), here.  One of the threads in the claim that the APA category of interpretive regulations is no longer viable is the notion that Chevron deference, when applied to interpretations in agency rule (regulations in specific), gives the interpretation the force of law, supposedly the hallmark of a legislative rule (which must be by notice and comment regulation) rather than an interpretive rule.  I argue in the article that "force of law" is a slippery concept, but in this context is the consequence of a regulation being legislative and not a test that a regulation is legislative.

I address in this blog a new development that, I think, refutes the notion that Chevron deference for agency interpretations is relevant to the issue of whether rules (including regulations) are legislative or interpretive.

I noted in the article that, on March 27, 2019, during oral argument in Kisor v. Willkie (Sup. Ct. No. 18-15), Justice Breyer, an administrative law expert (along with Justice Kagan), said: “there are hundreds of thousands, possibly millions of interpretive regulations.”  I noted in the footnote (p. 5 n. 14) that Justice Breyer was formerly a professor of administrative law at Harvard Law School and is the lead author on a leading administrative law book which continues with his name as a nominal author. Stephen G. Breyer, et al., Administrative Law and Regulatory Policy (8th ed. 2017 Walters Kluwer), co-authored with four other recognized administrative law experts, Richard B. Stewart, Cass R. Sunstein, Adrian Vermeule, and Michael E. Herz.  (Justice Kagan also taught administrative law at Harvard Law School.)

Justice Breyer is at it again, this time refuting the notion that Chevron sounded the death knell of the interpretive regulation.

In PDR Network, LLC v. Carlton & Harris Chiropractic, Inc., 588  U.S. ___, ___ S.Ct. ___, 2019 U.S. LEXIS 4181 (2019), here, decided June 20, 2019, the issue was judicial reviewability of final orders of the Federal Communication Commission (FCC).  The FCC had issued a final Order interpreting the prohibition on "unsolicited advertisement" as used in the Telephone Consumer Protection Act of 1991, 47 U. S. C. §227(b)(1)(C).  The statute gave courts of appeals “exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or to determine the validity of” certain “final orders of the Federal Communication Commission.” 28 U. S. C. §2342(1).  That "exclusive review" was required in a proceeding brought within 60 days after the entry of the order.  The issue was whether a district court, in an application of the law long after the FCC adopted the Order, precluded the district court from considering the merits of the interpretation in the Order.

Justice Breyer for the majority felt that the issue turned upon preliminary issues not yet addressed by the courts--whether Order was (p. 5, cleaned up)
  • "the equivalent of a legislative rule, which is issued by an agency pursuant to statutory authority and has the force and effect of law."
  • "the equivalent of an interpretive rule, which simply advises the public of the agency’s construction of the statutes and rules which it administers and lacks the force and effect of law?"
Note the phrasing of "equivalent of."
The Supreme Court remanded to the court of appeals to address the preliminary issues not previously addressed.

In elaborating on interpretive rules, Justice Breyer says (p. 5, cleaned up):
If the relevant portion of the 2006 Order is the equivalent of an interpretive rule, it may not be binding on a district court, and a district court therefore may not be required to adhere to it. That may be so regardless of whether a court of appeals could have determined during the 60-day review period that the Order is valid and consequently could have decided not to enjoin, set aside, or suspend it. 28 U. S. C. §2342. And that may be so no matter what degree of weight the district court ultimately gives the FCC’s interpretation of the statute under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984). 
As I read this quote, Justice Breyer is saying that giving Chevron deference to an agency interpretation did not bear on the issue of whether the rule is interpretive or legislative.  In other words, the rule could still be interpretive even though given Chevron deference, so that specifically in APA-speak Chevron deference does not give the interpretation the "force and effect of law."

The FCC "rule" was an Order and was not a regulation with notice and comment.  Legislative rules require regulations issued with notice and comment.  Hence, if the Order is deemed "the equivalent of" a legislative rule it is either (i) invalid for failure to be promulgated with notice and comment or (ii) the exclusive 60 day challenge period in effect is a legislative exception to the APA requirement that legislative rules be issued as regulations with notice and comment.  Since a modification to APA requirements are prohibited “except that it does so expressly” (5 U.S.C. § 559), and there is no express modification of the APA requirement for legislative regulations with notice and comment requirement, then if the Order is treated as the equivalent of a legislative rule, it is invalid because it was not promulgated as a regulation with notice and comment.

So, it seems to me that, at the end of the day, the Order must be an interpretive rule and tested as such.  And, as Justice Breyer notes, can remain an interpretive rule even if Chevron deference is conferred.

The concurring in the judgment opinions of Justices Thomas (joined by Justice Gorsuch), here, and Justice Kavanaugh (joined by Justices Thomas, Alito and Gorsuch), here, are interesting (Note that the links I provide are to the first page of the respective concurring opinions, which restart page numbering at page 1; hence my reference to the Slip Op. pages are to the page numbering as restarted for each concurring opinion).

Justice Thomas specifically thought the Order was interpretive.  He thus says in a footnote (See Slip Op. p. 2 fn. *, cleaned up.):
* Contrary to the majority’s suggestion, ante, at 5, it therefore makes no difference whether the FCC order at issue here is a legislative rule or an interpretive rule. In any event, the order is clearly interpretive—it was issued by an agency to advise the public of the agency’s construction of the term “unsolicited advertisement.”  Perez v. Mortgage Bankers Assn., 575 U. S. 92, ___ (2015) (slip op., at 3). 
But Justice Thomas concludes his short concurring opinion (Slip Op. p. 3):
The decision below rested on the assumption that Congress can constitutionally require federal courts to treat agency orders as controlling law, without regard to the text of the governing statute. A similar assumption underlies our precedents requiring judicial deference to certain agency interpretations. See Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984). This case proves the error of that assumption and emphasizes the need to reconsider it. 
Although this is cryptic on the legislative/interpretive point, I think Justice Thomas gets the interpretive category right (first quote above) but misreads Chevron (second quote above) to make an ideological point.  I infer that the swipe at Chevron is why Justice Gorsuch joined the opinion.  But Justice Thomas' characterization of the Order as interpretive may not be consistent with Justice Gorsuch's views on the legislative/interpretive issue.

Justice  Kavanaugh seems to treat the Government's argument about the preclusive effect of the interpretation if not contested in the 60 day window as being the equivalent of a legislative rule (which must be by regulation).  He says (Slip Op. 17-18):
To the extent we consider practical considerations, moreover, they cut against the Government. Under the  Government’s position, when the initial window for facial, pre-enforcement review closes, no one is able to argue in court that the regulation is inconsistent with the statute—no matter how wrong the agency’s interpretation might be. The effect is to transform the regulation into the equivalent of a statute. In other words, the Government’s argument means that the District Court would have to afford the agency not mere Skidmore deference or Chevron deference, but absolute deference. Not Skidmore deference or Chevron deference, but PDR abdication. See Skidmore v. Swift & Co., 323 U. S. 134 (1944); Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984).
Of course, this is just Justice Kavanaugh responding to his reading of the Government's argument and not to the Justice Breyer's majority opinion.  If the Order is interpretive, then Justice Breyer's opinion leaves it open to all challenges otherwise available under Chevron.  Only if the Order is legislative will it have preclusive effect just as any other legislative regulation clearing the arbitrary or capricious standard.

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