Proposed Four Step Chevron Test to Isolate When Deference is Outcome Determinative (12/10/21; 12/11/21)

 I write to follow up on this blog entry: Sixth Circuit En Banc Panel Ties on the ATF Bump Stock Regulation, Thus Affirming Only the Judgment of the District Court Sustaining the Regulation (Federal Tax Procedure Blog 12/6/21), here.  Prior to the Gun Owners en banc disposition discussed in that blog entry, I had added to my draft article the following as a proposed test to isolate when Chevron is really outcome-determinative (footnotes omitted):

            D.        Proposal - Four Step Chevron to Isolate Chevron Deference.

            I think much of the commotion and angst about Chevron deference is driven by political ideology.  Chevron is the bogeyman proxy for the evils of the administrative state.  The notion is that the administrative state is inconsistent with freedom (whatever exactly that is in a large and diverse democracy where some freedom constraints are required), and Chevron is the poster child because it empowers the administrative state by taking away “rights” that should be in the legislature or the courts rather than evil administrators out to screw citizens.  I think that claim is overblown, as I discuss in the Categories discussed above showing the limits of Chevron deference.  To avoid the hyperbole to which Chevron has been subjected in political and legal discourse, I suggest reformulating Chevron into four steps which do not change the substance of the Chevron two step formulation but isolates when a court is actually deferring to an agency interpretation:

Step 1.  Is the statute ambiguous?  If no, stop here, with the court applying the unambigious interpretation.  If yes, go to Step 2.

Step 2.  Is the agency interpretation reasonable within the scope of ambiguous statutory text?  If no stop here, with the court applying its interpretation.  If yes, go to Step 3.

Step 3.  Is the agency interpretation the best interpretation within the scope of the ambiguous statutory text?  If yes, stop here, with the court applying the best interpretation.  If no, go to Step 4.  [*]

Step 4.  Is the agency interpretation a reasonable interpretation (but not best) within the scope of the ambiguous statutory text?  

a. If the answer is yes, defer to the less persuasive agency interpretation.  (Readers should note that this is the only circumstance that a court defers to the agency interpretation in an outcome determinative sense.)

b. If the answer is no, do not defer to the less persuasive agency interpretation.

Only at the Step 4a is there deference.  I suggest that, if the courts stepped through these questions (presented as Steps), there would be a better picture as to how pervasive actual deference to agency interpretations really is.  I suspect there is not as much real outcome-determinative deference as inferred in the claims of ideologically bent critics of Chevron.  And, to state that conversely, using these steps might show to fans of Chevron how infrequently it actually applies. 

I have now added the following to reflect Judge White’s analysis in his concurrence to the en banc panel disposition (affirming the district court judgment) in Gun Owners of America, Inc. v. Garland, ___ F.4th ___, 2021 U.S. App. LEXIS 35812 (6^th Cir. 12/3/21):

            In Gun Owners of America, Inc. v. Garland, ___ F.4th ___, 2021 U.S. App. LEXIS 35812 (6th Cir. 12/3/21), the en banc panel split 8-8 and affirmed the district court judgment (as opposed to district court opinion which had sustained the ATF bump stock regulation on a Chevron analysis).  One of the en banc panel judges concurring in affirming the district court judgment (Judge White, joined by three other judges) performed an analysis something like the analysis in the foregoing four steps, except that Judge White did not do it in the order I propose.  Judge White first performed a Chevron analysis, finding the agency interpretation reasonable (Step 4a above) and then found the agency interpretation the best interpretation (Step 3 above).  Of course, if the agency interpretation is the best interpretation, it is a reasonable interpretation under Chevron.  More importantly, though, if the agency interpretation is the best interpretation, the Chevron analysis is pointless because by applying the best interpretation a court is not deferring to the agency interpretation.  In other words, Judge White's analysis should have included only the determination that the agency interpretation was the best interpretation which meant he could sustain the interpretation without deferring to the agency interpretation.  Judge White's Chevron analysis was meaningless because the best interpretation is per se a reasonable interpretation but a reasonable agency interpretation is only important to Chevron analysis when the reasonable agency interpretation is not the best interpretation. 

Added 12/11/21 11:30 am:  My key point is that at Step 4a, which is the only Step at which there could be deference, deference requires that the court determine both that (i) the agency interpretation is reasonable and (ii) not the best interpretation.  If the court can, by rigorously applying the tools of statutory interpretation (including Skidmore "deference") actually determine that the best interpretation is not the agency interpretation, how often will the court forego the best interpretation in order to apply a lesser agency interpretation?  Sure, Chevron facially condones such deference to a reasonable but unpersuasive agency interpretation instead of the best interpretation.  But Chevron has the tools at Chevron Step One and Step Two to avoid that in most cases by declaring that, in light of the best interpretation, the statutory text is not ambiguous or, if ambiguous, the agency interpretation is unreasonable.

Thought experiment.  Let's say the court assesses the percentage confidence (i) in an interpretation other than the agency interpretation at 60% and (ii) the agency interpretation at 40% (even with Skidmore "deference").  Will the court determine that the agency lesser interpretation applies by deference?  Or, in the language of Chevron deference, is confidence in the agency interpretation reasonable enough at 40% to require that the court actually forego the best interpretation in favor of a 20% lesser agency interpretation at Chevron Step Two?  Or will the court say at Chevron Step Two that the agency interpretation is unreasonable because the agency did not do the hard work the judge just did to determine the best interpretation with 60% confidence?  Or, in this environment, would the court determine at Chevron Step One that a 60% confidence interpretation means that there is not sufficient ambiguity to get past Chevron Step One, so that the court does not apply the agency interpretation.

My sense is that courts want to achieve the best result which generally would mean making the best interpretation outcome determinative. If that is right, then, despite the license Chevron seems to allow or require, a court will be reticent to apply a lesser interpretation, particularly with tools at Chevron Step One and Step Two to avoid applying the lesser interpretation.

I encourage courts to go through the Four steps I outline above (or similar steps) to isolate when they are actually deferring to a lesser agency interpretation so that the lesser interpretation is outcome-determinative.

* I had an error here saying go to Step Three; I should have said go to Step Four.   I changed this on 12/11/21 at 10:45 am Eastern.