Friday, January 31, 2020

Legislative Rules And Chevron Deference An Oxymoron? (1/31/20; 2/10/20)

Today, I address courts frequent statements about Chevron deference applying to legislative rules.  I was reading the decision in Renewable Fuels Ass'n v. U.S. EPA (10th Cir. 1/24/20), here.  In the decision the Tenth Circuit says (cleaned up):
Legislative rules and formal adjudications are always entitled to Chevron deference, while less formal pronouncements like interpretive rules and informal adjudications may or may not be entitled to Chevron deference. 
This blog entry concentrates on the claim that legislative rules are always entitled to Chevron deference.  I claim that legislative rules are never entitled to Chevron deference because they are not interpretations of law; rather, legislative rules are the law, which means deference simply is not meaningful (just as courts do not defer to a statute).  (Caveat I do note one possible nuance in that, since the scope of a legislative rulemaking authority delegation is an interpretation, it is possible that the scope could be subject to agency interpretation and deference to that interpretation, although I argue that even as to scope deference is not appropriate.)

I start with an acknowledgement that the judges and scholars often claim that legislative rules (which must be regulations) are entitled to Chevron deference or some variant thereof.  E.g., Guedes v. Bureau of ATF, 920 F.3d 1, 17 (D.C. Cir. 2019), here (“Legislative rules generally Chevron deference,” quoting  Nat'l Mining Ass'n v. McCarthy, 758 F.3d 243, 251 (D.C. Cir. 2014)); Kristin E. Hickman, Unpacking the Force of Law, 66 Vand. L. Rev. 465, 509 (2013) (“Where an agency employs notice-and-comment rulemaking under clear congressional authority to adopt rules and regulations, there is little doubt that the courts will treat the rule both as legislative and as eligible for Chevron deference.”).  I could go on and on and on with variants of this claim.

Contrary to the this claim that legislative rules (regulations) are subject to Chevron deference, I claim that Chevron deference has a limited, if any, role for legislative rules.  I address this and other similar claims about Chevron in my article.  Townsend, John A., The Report of the Death of the Interpretive Regulation Is an Exaggeration (January 25, 2020). Available at SSRN: https://ssrn.com/abstract=3400489.  Because my claim is laid out in more detail in the article, I just set forth here my reasoning for the claim.

1.  Legislative rules which the APA commands be promulgated by notice and comment regulation and be prospective only are the law if within the scope of the legislative authority Congress delegated to the agency.  Courts say that such legislative rules are like statutes and have the force of law.

2.  Deference is a concept of deferring to an interpretation of ambiguous statutory text rather than deferring to the statutory text itself.  So, too for a legislative rule which has the effect of a statute.  Courts do not defer to statutes or their equivalent, legislative rules.

3.  There is a theoretically possible place for Chevron deference to legislative rules in the agency's interpretation of the scope of the legislative rulemaking authority in the statutory text.  (I discuss below in paragraph 7 why I don't think Chevron is applicable to the scope issue, so I flag here that that is the only possible application of Chevron to legislative rules.)  Once it is determined that the legislative rule is within the scope, the legislative rule is the law and deference to the law is an oxymoron.

4,  Of course, agencies can in other interpretive documents interpret the legislative rule and, if appropriate, have Chevron, Skidmore-type, or Auer deference apply to the interpretation of the legislative rule.  But the legislative rule within the scope of the delegation is the law without any deference whatever.  Indeed the concept of deference to the law -- whether the law is in a statute or a legislative rule -- is an oxymoron (except possible as to scope of the legislative authority delegation).

5.  Illustration, Reg. § 1.1502-2(a) defines tax liability of the group by including the income tax and other taxes.  That the income tax is included is not a matter of interpretation.  It is unambiguously the law because it is within the scope of the legislative rulemaking authority Congress delegated to Treasury.  Deference has no role to play in that proposition.  (Of course, if the IRS in some other nonlegislative rulemaking such as a Revenue Ruling were to interpret the legislative rule, that interpretation might receive some form of deference (probably Auer deference or Skidmore deference).)

6.  The legislative rule can be subject to arbitrary or capricious/State Farm review.  5 U.S.C. § 706(2)(A); and Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983), here.  But, contrary to the way some have read a footnote excursion in  Judulang v. Holder, 565 U.S. 42, 52 n. 7 (2011), here, arbitrary or capricious/State farm review is not the same as Chevron review.

7.  Now, returning to the issue of whether Chevron can apply to require deference to agency determinations as to the scope of a grant of legislative rulemaking authority, I make these points:  (i) there are some suggestions in cases that the agency's interpretation of the scope of the legislative rulemaking delegation is subject to Chevron; (ii) I don't think the suggestions are clear or conclusive on that point; and (iii) Chevron justifies deference because of the agency's special expertise in the regulated area, but the agency has no special expertise in determining the scope of a delegation of legislative rulemaking authority.  E.g., Kisor v. Wilkie, 588 U.S. ___, 139 S. Ct. 2400, 2417 (2019), here ("When the agency has no comparative expertise in resolving a regulatory ambiguity, Congress presumably would not grant it that authority."); Michael A. Herz, Chevron is Dead; Long Live Chevron, 115 Colum. L. Rev. 1867 (2015), here (developing an analysis where “applying Chevron to jurisdictional questions is deeply problematic. Chevron applies because the agency has been delegated authority; because the delegation is a condition precedent of deference, it is circular to defer to a determination that the delegation exists.”); Cf. King v. Burwell, 576 U.S. ___, 135 S. Ct. 2480, 2489 (2015), here (unlikely Congress would have delegated outside agency's area of expertise).  If my argument is true, then Chevron has no application at all to legislative rules.  But, even if I am wrong in arguing that Chevron has no application to the scope determination, then it is clear that, except for scope, Chevron has no application to legislative rules.

Conclusion:  Except possibly as to the scope of the legislative authority delegation, legislative rules are not subject to Chevron or any other form of deference.

JAT Comments:

1.  (Added 2/1/20 7:30pm):  There is a lot of confusion about what constitutes a legislative rule. Many claim that Chevron itself involved a legislative rule.  Trying to de-confuse that issue is a main theme of my article linked above.   Many of the people who make the claim that Chevron applies to legislative rules mistakenly claim that Chevron involved a legislative rule.  Chevron did not involve a legislative rule (regulation).  Rather, Chevron involved an interpretive rule.  Here is a cut and paste on the issue from a footnote my article cited above (at p. 73 n. 291) to support the statement that Chevron involved an interpretive rule (emphasis supplied by JAT for this blog entry):
Christensen v. Harris County, 529 U.S. 576, 589-90 (2000) (Scalia, concurring in part and concurring in the judgment) (“Chevron in fact involved an interpretive regulation”); Thomas W. Merrill & Kathryn Tongue Watts, Agency Rules with the Force of Law: The Original Convention, 116 Harv. L. Rev. 467, 587-590 (2002).  However, evidencing the confusion in the area, other scholars call the Chevron regulation legislative rather than interpretive.  Robert A. Anthony, Interpretive Rules, Policy Statements, Guidances, Manuals and the Like-Should Federal Agencies Use Them to Bind the Public?, 41 Duke L.J. 1311, 1325 n. 64 (1992) (citing Chevron as “A classic case of statutory interpretation by means of a legislative rule;” however, I am not sure that the context of the point he was making fully supports the statement); and Cass Sunstein, Law and Administration after Chevron, 90 Colum. L. Rev. 2071, 2093 (1990) (“Chevron involved a ‘legislative rule,’ that is a rule issued by an agency pursuant to a congressional grant of power to promulgate regulations”; but Professor Sunstein immediately then moved into the presumption of interpretive power from ambiguous statutory text and says “Chevron applies only when an agency is exercising the power to make rules or otherwise carrying out legislatively delegated interpretive authority.”; so it is not clear exactly that he really means the opening statement as he gives it.); and, finally, Professor Sunstein states in a later article (Cass R. Sunstein, Chevron as Law, 107 Geo. L.J. 1613, 1657 (2019) “the current consensus, which is that Chevron rests on an implied delegation of interpretive authority”).  I think the reading of Chevron as involving a legislative regulation is the crux of Professor Hickman’s claim (see the quote beginning on p. 3) that there are no such thing as interpretive Treasury regulations.  That claim is that § 7805(a) is a grant of “legislative rulemaking power” which she illustrates by Chevron where, she says, the regulations were issued “under a similar general authority rulemaking grant in the Clean Air Act.”  For the reasons I have addressed, perhaps at too much length in the article, the claims of legislative rulemaking for such general grants of authority are wrong.  See also Justice Gorsuch’s loose language in his hyperbolic concurring opinion (the one who could not get other panel members to join) in Gutierrez-Brizuela v. Lynch, 834 F.3d 1142, 1152 (10th Cir. 2016) (“When Congress passes ambiguous legislation, Chevron means we should read that as signaling a legislative ‘intention’ to ‘delegate’ to the executive the job of making any reasonable ‘legislative’ policy choices it thinks wise.”); I discuss Justice Gorsuch’s concurring opinion below (beginning on p. 109).
2. As somewhat of an aside, the Tenth Circuit in Renewable Fuels cited for the proposition quoted "Sinclair, 887 F.3d at 990."  The Tenth Circuit does not anywhere in the opinion provide the complete citation. The Court does cite Sinclair Wyo. Refining Co. v. EPA, 874 F.3d 1159 (10th Cir. 2017), here, but that Sinclair case has a different F.3d volume number.  That Sinclair opinion (the one in 874 F.3d) does have the following at 1164 (bold faced by JAT to show the relevant portion):
see also Richard J. Pierce, Jr., Administrative Law Treatise, § 3.5 (2010) ("After Mead, it is possible to know only that legislative rules and formal adjudications are always entitled to Chevron deference, while less formal pronouncements like interpretative rules and informal adjudications may or may not be entitled to Chevron deference."
That quote from Pierce is cited elsewhere in court opinions.  E.g. Krzalic v. Republic Title Co., 314 F. 3d 875, 879 (7th Cir. 2002).  And of course, the key point for which I cite the quote--that legislative rules are subject to Chevron deference--is cited elsewhere, such as the Pierce work cited.  And, as I argue above the claim that legislative rules are subject to Chevron deference is wrong except possibly as to the scope of the delegation.

3.  Added 2/10/20 2:00 pm:  I just found this note I made from Kristin E. Hickman & Richard J. Pierce, Jr., Administrative Law Treatise § 4.5, pp. 460-461 (Walters Kluwer  6th ed. 2019) back in 2019:
Many legislative rules "interpret" statutory language, in the sense that they announce the agency's construction of a statute it has the responsibility to administer.  A rule that performs that intepretative function is a legislative rule rather than an interpretative rule if the agency has the statutory authority to promulgate a legislative rule and the agency exercises that authority.
For the reasons I note above, I believe the authors are incorrect certainly in the tenor of the statement.  To be sure, carefully parsing the paragraph may save it.  The requirements (second sentence) are that the agency has authority to promulgate a legislative rule and the agency exercises the authority.  So, for example, Treasury has authority to promulgate consolidated return regulations per § 1502 and has exercised that authority in the § 1502 regulations.  The § 1502 regulations, however, do not interpret the sparse language of § 1502 (except, perhaps, as to scope of the authority) but rather state what the law is because Treasury has been delegated authority to create the law and not to interpret the law (again perhaps as to scope).  That law, just as a statute, may require interpretation but the law is different than an interpretation of the law.  And to close that loop (although repetitive to what was said earlier), interpretations of the law in the § 1502 regulations appear outside those § 1502 regulations (specifically subregulatory interpretations such as, in  the case of the tax law, revenue rulings and so forth).

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