Scholar Doubles Down on Erroneous Claim that APA § 706 Precludes Deference (1/23/24; 4/4/24)

Introductory Note 4/4/24 10:00am: This blog post originally addressed a new draft article that Professor Bamzai posted on SSRN: Aditya Bamzai, On the Interpretive Foundations of the Administrative Procedure Act, 31 George Mason Law Review ___ (Forthcoming) (SSRN 4684895 1/17/24), here, Professor Bamzai's article has been published in final.  On the Interpretive Foundations of the Administrative Procedure Act, 31 Geo. Mason L. Rev. 439 (2024), html here and pdf here. I have not compared the draft with the final article, although the final seems to track the arguments made in the draft. I have, however, made certain changes to the blog entry below inspired by the Final. I note those changes in red font. I have no way of knowing whether Professor Bamzai was aware of my article or my blog posts about my article since he does not cite me in his article. I am not surprised Professor Bamzai does not cite my article or me since I circle in a lower administrative law orbit than he does. Finally, I have not attempted to go down some of the tangential rabbit trails Professor Bamzai goes down (such as Professor Dickinson's 1947 parallel articles misinterpreting and misapplyying Dobson, for, on the deference issue, those articles lapsed into the obscurity they deserved).

Now to the original posting on 1/23/24 (as amended on 1/24/24 with changes made today marked in red font):

I recently posted to SSRN an article arguing, in part, that the APA § 706 standard of review for legal questions is a deference standard via the requirement that agency interpretations be set aside only if “not in accordance with law.” § 706(2)(E). The Tax Contribution to Deference and APA § 706 (December 14, 2023 SSRN 4665227), here, hereafter referred to as Townsend Deference APA). In that article, I asserted that a prominent leading article missed or misunderstood key indicators of the meaning of the APA standard of review—“not in accordance with law.” Aditya Bamzai, The Origins of Judicial Deference to Executive Interpretation, 126 Yale L.J. 908 (2017), here.

Specifically, Professor Bamzai

• missed robust deference authority cited in the Final Report of the Attorney General’s Committee on Administrative Procedure (1941) which skewed his conclusion of limited deference authority in the Final Report and as of 1940.

• missed the deferential interpretation of “not in accordance with law” in Dobson v. Commissioner, 320 U.S. 489 (1943), reh. den., 321 U.S. 231 (1944).

I show in the article that the fair interpretation of the APA’s  “not in accordance with law” standard was the Dobson interpretation to require deference.

Professor Bamzai has published an article on SSRN that is scheduled for publication in the George Mason Law Review. Aditya Bamzai, On the Interpretive Foundations of the Administrative Procedure Act, 31 George Mason Law Review ___ (Forthcoming) (SSRN 4684895 1/17/24), here, hereafter referred to as Bamzai Interpretive Foundations APA. Professor Bamzai's Final is On the Interpretive Foundations of the Administrative Procedure Act, 31 Geo. Mason L. Rev. 439 (2024) 

In this new article (Draft and Final),

• Professor Bamzai again misses the robust statement of deference that he missed in his earlier article. (Townsend Deference APA pp, 5-9.)

• more importantly, although he now identifies Dobson as important to the discussion after ignoring Dobson in the earlier article, he misinterprets the meaning of Dobson.

I see no point in addressing in detail the first bulleted item. Professor Bamzai missed the robust deference discussion in the Final Report and does not attempt to correct that omission in his new article. Compare Townsend Deference APA 6 n. 22 and Bamzai Interpretive Foundations APA p. 15 n.. 93 [Final Article p.55 n. 100, referring to "sole case."] Missing the robust state of deference discussed in the Final Report is a foundational error to his argument in his original article. (I am not sure that Professor Bamzai even realizes that error since he gives no indication of awareness in his new article [either Draft or Final].)

I focus here on Dobson which Professor Bamzai missed in the earlier article. The problem is that Professor Bamzai spins Dobson in a way that, as spun, he argues is consistent with his earlier Dobson-less claims.

Suffice it to say, Justice Jackson, speaking for a unanimous court in Dobson, interpreted the “not in accordance with law” statutory standard in § 1141(c) for judicial review to require deference to Tax Court statutory interpretations. [Professor Bamzai says "deferential standard" (Draft p. 11; Final p. 450.] In my article, I analyze the development of the APA from the Final Report in 1941, through the ABA proposal in 1944, then through the introduction of a proposed bill (the ABA proposal) in 1945, and then through enactment in 1946 with the “not in accordance with law” standard for statutory interpretation. The only fair inference from that trajectory is that the APA use of the same text was informed by Dobson. Admittedly, I could find nothing in the legislative history that nailed that point with certainty, but Dobson was in the air at the time as the authoritative interpretation of the words and every knowledgeable player in the consideration and enactment of the APA would have known what those words meant. Those words were inserted in the statute during congressional consideration and were not created ex nihilo for the APA. [My research skill set did not uncover precisely how or why, during the consideration of the APA in 1945-1946, the "not in accordance with law" standard was inserted in § 10(e) [now § 706]; perhaps others with better skill sets could track that down; all I know is that it was inserted; Professor Bamzai does not engage the issue of how or why the text was inserted; as I note, the reasonable inference is that it was inserted with understanding of Dobson's interpretation of those precise words.]

Professor Bamzai seeks to buttress his argument by misinterpreting (Draft pp. 19-22; Final p. 462) a snippet from the legislative history of the 1948 amendment requiring judicial review of Tax Court statutory interpretations to be the same as review of district court interpretations--de novo without deference. The implication he seeks to draw is that everyone read the APA statutory text “not in accordance with law” to mean de novo review without deference despite Dobson’s holding that those words required deference. The concern leading to 1948 legislation was that, per Dobson’s interpretation, review of Tax Court statutory interpretations required deference whereas review of district court tax statutory interpretations did not include deference. Congress considered fixing that perceived anomaly by moving the Tax Court into the judicial branch which was a significant departure from its treatment as an agency. As Congressman Dingell noted, if the scope of judicial review with deference was the problem, it could be fixed simply by changing § 1141(c) which had the “not in accordance with law” standard.  (See 93 Congressional Record 8389, “[T]he desired result can be accomplished by a simple amendment to section 1141(c) of the Internal Revenue Code without disturbing the present status and functions of the so-called Tax Court.”). In other words, Dobson interpreted “not in accordance with law” in § 1141(c) to require deference, so that, if Congress did not want deferential review which was the law, it could simply amend § 1141(c). Professor Bamzai’s attempt to spin Dobson as irrelevant simply is illogical.

In both the Draft and Final articles, Professor Bamzai states in concluding this argument that (Draft p. 22; Final 462, bold-face supplied by JAT): 

Thus, although the 1948 legislation amended solely the Revenue Act (and not the APA), it did so in a fashion that suggested Congress’s understanding of the meaning of the statutory review phrase “not in accordance with law.” According to Representative Hobbs, all had agreed that, prior to Dobson, such language rendered questions of law “fully reviewable.”

Professor Bamzai stops there but seems to want readers to infer something in support of his claim as to the meaning of "not in accordance with law" in the APA. The key language is "prior to Dobson." I am not sure one sole representative's comment making an "all agreed" claim (surely a most expansive form of hearsay) in considering later legislation is relevant to interpreting the APA; in any event, after Dobson in 1943 and certainly at the insertion and enactment of the APA in 1946, "not in accordance with law" meant deference. If that language meant no deference, Congress would not have needed, in 1948, to legislate a fix in § 1141. As Congressman Dingell noted, if Congress did not like the Dobson interpretation of  § 1141(c), the simple fix was to amend § 1141(c) rather than the more drastic measures (such as moving the Tax Court to the judicial branch) Congress was considering.

I infer that Professor Bamzai suggests that the "not in accordance with law" standard remaining in § 1141(c) [§ 7482(c)] after the 1948 amendment somehow affects the meaning of that text. Not so. The continuing "not in accordance with law" text remains in 1141(c) [§ 7482(c)] as a vestige overruled by subsection (a) without changing its meaning. See Vukasovich v. Commissioner, 790 F.2d  1409, 1412 (9th Cir. 1986) (“Section 7482(c)(1) [same as 1939 Code 1141(c)] instructs us to reverse decisions ‘not in accordance with law,’ a standard akin to those used in reviewing administrative agencies;.”).

I offer a few more points, perhaps nit-picky, but at least marginally important in context of the overall argument. I could have further nit-picked but forego it now.

• Professor Bamzai claims (Draft p. 17; Final p. 457) that, with respect to the scope  of review provision, the authors of the APA “began with the Final Report’s minority proposal as a starting point.” As stated, that is not correct. The authors of the APA legislation started with the ABA 1944 proposal which, with respect to the scope of review provision was based on the Final Report Minority proposal but omitted the specific textual authority for deference contained in the Minority proposal. See Townsend Deference APA 16-17. This is important, because just as the Minority proposal with textual deference was merely stating the law as it was, so too the ABA proposal excluding the textual deference was merely stating the law as it was. In other words, the specific deference authority was not needed to carryforward then existing judicial review of agency statutory interpretation (which as the Final Report noted and Dobson held for agency interpretation was with deference).

• Professor Bamzai seems to treat various statements that § 706 requires de novo review, without engaging meaningfully the use of de novo review to include de novo review with deference or without deference. See Townsend Deference APA 3.

Finally, I should state the reason this is important. There is some possibility that the Supreme Court  in the pending cases involving the future of deference (whether Chevron or otherwise) may latch onto this type of erroneous reading of § 706 to hold that § 706 requires de novo review without deference.

Added 1/24/24 @ 11:30am:
 
I speculate (probably infer is a better word) based on my extensive reading into the history of the APA that Carl McFarland knew that § 706 contained the “not in accordance with law” review standard for agency statutory interpretation and, from his perch in the process, approved it as a deference standard as interpreted in Dobson.
 
Why do I feel comfortable making that speculation/inference? Carl McFarland was actively involved throughout the process. He was one of three members of the Minority on the Final Report 1941 that recommended specific language describing a form of deference in the scope of review provision. Certainly, it is a fair, perhaps even compelled inference, that he was aware of the robust deference described in the Final Report 1941 and approved deference by including it in the Minority recommendation. McFarland then was a mover and shaker in the ABA, although I could not find that he participated in the ABA proposed legislation which excluded the words for deference from the scope of review provision. The ABA proposed legislation was the starting point for Congress’ consideration starting in 1945 and, as indicated, did not contain words for deference. Sometime in the process in Congress, the “not in accordance with law” text was added to the scope of review provision. Since, McFarland was involved throughout the process, he would certainly have known the words were inserted. Consider the following from Paul R. Verkuil, The Administrative Procedure Act at 75: Observations and Reflections, 28 Geo. Mason L. Rev. 533, 535 (2021) (footnotes omitted). 

          Who is the real founder [of the APA] then? Aside from politicians like Senator McCarren, there is only one plausible candidate: Carl McFarland. McFarland was a complicated figure of the New Deal period. He studied law at the University of Montana and ultimately received his Doctor of Judicial Science from Harvard Law School, becoming one of the New Deal acolytes that Felix Frankfurter nurtured. But practicing law in the District of Columbia and serving as President of the University of Montana moderated his fervor. Taking over for Dean Pound, he led the ABA Committee that would finally propose the APA for enactment. In doing so, he became the catalytic figure who moved the ABA from archly conservative positions against regulatory administration to support for the procedural compromises that the APA contained. By turning the Attorney General’s Report’s minority position into law, McFarland effectively found a third way. He navigated between broad judicial control over the administrative process favored by the Walter–Logan ABA-backed coalition and the position advocating for no need of any new oversight favored by the Gellhorn–Davis majority on the Attorney General’s Report. While they viewed him as conservative, Walter and Ken admired McFarland’s work on the APA and his ability to convince Congress to get it passed. Ken also gave McFarland credit for the drafting, as well as political achievements, noting “[a]lthough I can’t prove it, I think he was probably the originator of notice and comment rulemaking.” Coming from Ken that is no small compliment. When one measures the APA’s true importance, section 553’s informal rulemaking provision may be its most impressive contribution. As commonly understood today, the real action in administrative law lies in rulemaking rather than adjudication, the 1930s’ bête noire of the conservatives. 

          In 1946, the ABA awarded McFarland the American Bar Association Medal, honoring his accomplishments in enacting the APA.

Based on this, I speculate/infer that Carl McFarland, having shown an interest in statutory approval for deference in his Minority recommendation, knew the words “not in accordance with law” were inserted in the scope of review and that they meant deference as Dobson had interpreted those words. Indeed, everyone working seriously in this area knew the Dobson decision and its interpretation of “not in accordance with law.” Carl McFarland knew the legislation better than anyone else from introduction in Congress to passage, and having previously shown a keen interest in the scope of review and deference, would have known precisely what “not in accordance with law” meant in § 706.
 
I reviewed Carl McFarland’s papers at the University of Virginia Law Library Archives where he taught before he died, but found nothing that would confirm this. I also took a deep dive into the legislative history of the APA from the Final Report 1941 to and after enactment in 1946 (through the 1948 amendments to change the Dobson deference requirement for review of Tax Court statutory interpretations). I found nothing in those readings that confirmed my speculation/inference that the “not in accordance with law” was inserted into what is now § 706 with the Dobson interpretation of those words. However, I am sure that the words were not created ex nihilo for the APA; any knowledgeable player reading those words in context in the drafts and final legislation would have known precisely what they meant.
 
Two asides, although not relevant to this discussion is that (i) I played Carl McFarland in UVA Law’s annual “Libel Show” in 1966 or 1967 and in preparation met with him perhaps two times (I don’t recall him mentioning deference); and (ii) Paul Verkuil, a giant in administrative law, who wrote the article above on McFarland’s role in passage of the APA was one of my classmates at UVA Law, although he, like me, never had a class taught by McFarland.