The Nickel Report

The U.S. Supreme Court is not the only one keen on taking a closer look at deference to agency interpretations. Just as the Supreme Court will have an opportunity “to rein in a particularly aggressive use of agency deference” later this year, the House of Representatives is also set to take aim at judicial deference to agency interpretations through the recently proposed Regulatory Accountability Act (the Act) — a compilation of several earlier reform bills. A similar act was proposed last July and passed the House, but was ultimately not considered by the Senate. With the new incoming administration, however, the Act may have an increased chance of success.

In short, the judicial deference doctrine provides for a reviewing court to defer to an agency’s reasonable interpretation of a statute it administers if the law is silent or ambiguous on the relevant issue. See Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). It also requires deference to an agency’s interpretations of its own ambiguous regulations. See Auer v. Robbins, 519 U.S. 452 (1997). While judicial deference has long been established, several recent EPA rulemakings, such as the Waters of the United States rule and President Obama’s Clean Power Plan, have put judicial deference issues front and center for some. Many Members of Congress saw these rulemakings as EPA’s overreaching its statutory authority. Yet, a reviewing court must defer to EPA if the agency’s interpretation of the relevant, ambiguous statute was reasonable.

In comes the Regulatory Accountability Act (HR 5).

The Act’s sponsor, Representative Bob Goodlatte from Virginia, has stated that the Act would “repeal the Chevron and Auer doctrines to end judicial deference to bureaucrats’ statutory and regulatory interpretations.” Practically, the Act would amend several provisions of the Administrative Procedure Act (APA) relating to the scope of judicial review, rulemaking and guidance documents, as well as insert several new definitions. In terms of amending judicial review provisions, the Act makes two significant revisions:

(1) courts “shall” not defer to an agency’s guidance, determinations made when adopting interim rules and cost benefit analysis if they do not meet certain guidelines; and

(2) courts would “decide de novo all relevant questions of law, including the interpretation of constitutional and statutory provisions, and rules made by agencies.”

Both could significantly limit judicial deference, but they may not go as far as to end deference to agency interpretations as Representative Goodlatte intends. While the Act may disallow explicit deference to an agency’s interpretations, a judge who lacks the expertise on a particular issue may indeed still rely on an agency’s interpretation whether or not he or she actually says as much. And to the extent a particular issue is not entirely a legal one, the Act may require a judge to perform a specialized, technical analysis he or she is not well suited for. On the other hand, the Act’s straightforward mandate that agency guidance is not legally binding and “may not be relied upon by an agency as legal grounds for agency action” could reverse the current trend of abrupt policy changes in informal guidance documents that are later relied on by an agency to penalize regulated entities for failure to comply.

Representative Goodlatte’s additional goal to cut out “overly burdensome red tape and regulations” may succeed. The Act amends APA rulemaking provisions to add several layers of procedural requirements to the rulemaking process, such as advance notices for newly defined “major rules,” “high-impact rules” (those likely to impose an annual cost on the economy of $1 billion or more) and “novel legal or policy issues.” The Act would also require agencies to consider “any reasonable alternatives for a new rule,” which includes no federal response, amending or rescinding existing rules, and potential state or local regulation actions in lieu of federal agency action — all measures intended to prevent new, unnecessary regulations. If it passes, the Act’s additional procedural provisions could weed out and discourage new rules that may be viewed as overly burdensome, as Representative Goodlatte suggests.

The Act was passed by the House yesterday in a 283-183 vote and will now move to the Senate.