Chapter 7

Part II

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Example - Court/Agency Conflicts in Interpretation

Portland wants to regulate broadband providers Industry says they are telecommunications providers, thus not

subject to local regulation 9th Cir agrees that only the FCC can regulate them

FCC then promulgates a rule defining broadband providers as information services, which can be regulated by the local government, in conflict with the appeals court What did the Appeals Court say? Did the United States Supreme Court agree that it was the 9th

Cir's call? Does this depend on the nature of the 1st court ruling?

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Miller v. AT&T Corp., 250 F.3d 820 (4th Cir. 2001)

The Family and Medical Leave Act (FMLA) does not define medical treatment The agency finds that visits to the doctor that do not

require specific treatment are covered by the act What is the ambiguity?

Did the court accept the agency interpretation? What did the dissent want?

Why does this decision make practical sense? Think about going to the doctor for H1N1 Are you going to get treatment?

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Opinions in Litigation

Chevron was a rule making, with all the attendant process and review

What if the agency takes a position for the first time during litigation? Why might the court not trust it? Bowen v. Georgetown University Hospital, 488 U.S.

204 (1988) Why might an amicus brief in a case where the agency

has no interest get more deference? Auer v. Robbins, 519 U.S. 452 (1997)

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What Agency do you Defer to?

While many agencies may have some responsibilities under a given law, the court will only defer to the agency with the primary responsibility for administering the law

Why would it be a problem to defer to more than one agency for the same statutory provisions?

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What if the question involves the jurisdiction of the agency?

Why might the court not defer? Why might Scalia have argued that deference on

jurisdiction was as valid as any other area of Chevron deference? Lower courts have agreed with Scalia

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Christensen v. Harris County, 529 U.S. 576 (2000)

What did the court rule? “Here . . . we confront an interpretation contained in an

opinion letter, not one arrived at after, for example, a formal adjudication or notice-and-comment rulemaking. Interpretations such as those in opinion letters--like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law--do not warrant Chevron-style deference.”

Why is this consistent with our definition of a guidance document?

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When does Chevron Apply? - United States v. Mead, 533 U.S. 218 (2001)

Chevron was a notice and comment rule Why does the notice and comment process better

assure that an agency legal interpretation is sound? Mead is letter ruling on the classification of a product for

tariff purposes (Daytimer calendars) No notice and comment, thus no vetting Can be changed at a latter date without notice and

comment - does not bind the agency Should this letter ruling get Chevron deference?

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The Mead Test

administrative implementation of a particular statutory provision qualifies for Chevron deference when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority.

What would you look for to decide if Mead applied?

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Back to Persuasiveness? - Barnhart v. Walton, 535 U.S. 212 (2002)

Barnhart factors The importance of interpretation to agency policy; The period that the agency has held the view; The legal expertise of the agency; The complexity of the problem;

These are neither Mead nor Chevron, but ad hoc What can the agency due to strengthen its case for

deference?

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Applying Barnhart

HUD issues guidance on construction of the anti-kickback provisions in a real estate act Published in the register, but no notice and

comment Are they binding under Barnhart?

Yes, according to the Second and Ninth Circuits; no, according to the Seventh Circuit.

You are not the only person who is confused

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Public Citizen v. U.S. Dept. of Health and Human Services, 332 F.3d 654 (D.C. Cir. 2003)

Is the Medicare Manual a notice and comment regulation? If not, what is it? Does this look more like Mead or Chevron?

Did the court find that the manual was a regulation with the force of law?

How can the Medicare Manual be binding on providers if it does not have the force of law?

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ABA Adlaw Conference 2008 - Justice Garland, 2nd Cir, on Chevron:

If you have an ambiguous statute, and need Chevron deference, do not say that the interpretation is clear and there is no other way to construe the law. Say it is ambiguous and you are making a reasonable interpretation based on your knowledge of the statute and the regulatory circumstances.

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Interpretation of Agency Rules

“‘‘a court must necessarily look to the administrative construction of the regulation if the meaning of the words used is in doubt. The intention of Congress or the principles of the Constitution in some situations may be relevant in the first instance in choosing between various constructions. But the ultimate criterion is the administrative interpretation, which becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation. Bowles v. Seminole Rock & Sand Co., 325 U.S. 410

(1945), upheld by Auer v. Robbins, 519 U.S. 452 (1997)

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Implications of Seminole Rock /Auer

Should interpretation of rules and statutes be the same standard? Does Seminole Rock /Auer look like Chevron?

What perverse incentives does this give the agency if it gets to resolve ambiguous rules? What if it just repeats the statute in it rule? Does it get more deference that way?

Judicial Review of Facts

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Scope of Judicial Review of Facts

Congress sets scope of review, within constitutional boundaries.

Since the Constitution is silent on agencies, Congress has a pretty free hand

Congress can allow anything from a trial de novo to no review, unless such an action otherwise runs afoul of the constitution.

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Trial De Novo

You start over at the trial court Agency findings can be used as evidence, but

there is no deference to the agency FOIA Used more by the states than the feds

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Independent Judgment on the Evidence

Decide on the agency record, but do not defer to the agency's interpretation of the record

Sort of like appeals in LA

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Clearly Erroneous

Definite and firm conviction that a mistake has been made on the facts or policy

Same as reviewing a verdict by a trial judge without a jury

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Substantial Evidence - Formal Adjudications

706(2)(E) - only applies to formal adjudications and formal rulemaking

Could a reasonable person have reached the same conclusion? Standard for reviewing a jury verdict or for taking a

case from the jury Should a jury get more or less deference than an

agency? Hint - substantial means some, not a lot, when you are

the agency

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Substantial Evidence - Informal Adjudications and Rulemaking

706(2)(A) Arbitrary and capricious or abuse of discretion Same assessment of reasonableness as 706(2)(E),

so the result is about the same as the substantial evidence test used for formal proceedings

This is the most common standard

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Some Evidence

Scintilla test The agency needs to show even less than in the

substantial evidence standard Only limited use

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Facts Not Reviewable At All

Congress can prevent certain types of judicial review

Compensation decisions under the Smallpox Vaccine Compensation Act are not reviewable

Enabling law is always reviewable unless Congress has taken away the court's subject matter jurisdiction

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What if the Court thinks the Agency's Policy Choice is Wrong?

Should the court defer to findings which it believes are clearly erroneous, but are supported by substantial evidence?

Why is this consistent with the political control of agencies?

When the legislature gives the agency the power, it is also saying that it only wants agency decisions overturned in the most serious cases

Courts have different political views than agencies and thus they should be esp. careful about reversing agency decisions.

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Agency/ALJ conflicts: Universal Camera v. NLRB, 340 US 474 (1951)

Employer fires chairman after he testified at an NLRB meeting

What did the hearing officer do? Believed the company and did not reinstate him

What did the NLRB do? NLRB rejects the hearing officer's finding Reinstated the chairman with back pay

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What is the key legal issue before the court?

Should the court reviewing the NLRB's action consider the hearing officer's recommendation? Is the agency bound by the hearing examiner's

opinion? Should the court look only to the part of the

record that the agency relies on for their decision or the record as a whole?

Court says you have to look at the whole record, including the ALJ's findings

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When Are the ALJ's Findings Most Persuasive?

What type of rulings by an ALJ carry the most weight with the court when there is conflict between the ALJ and the agency?

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ALJs v. Court Masters

Why is the deference due an ALJ different from the deference due a master appointed to a judge, whose findings can only be overruled if clearly erroneous?

Where does the Master get the power? What if the agency does delegate final

decsionmaking authority to the ALJ, then wants to change a decision?

What about Louisiana and the Central Panel?

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Do Chevron and Substantial Evidence Come to the Same Result?

Chevron is about interpretations of statutes Substantial evidence is about factual disputes What about mixed questions of law and fact? Does it really matter which standard we apply?

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Arbitrary and Capricious Review

Old definition Highly deferential to the agency Same as rational relationship test in conlaw

Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971) Added the notion of looking at the administrative

record before the agency Remember, this was about whether there was a

reasonable and prudent alternative to the road in the park.

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Mixed Law and Facts - Adjudications and Other Informal Actions

Applications of Law to Facts Usually arbitrary and capricious review Blurs the usual notions of deference because the

court does not defer much on the legal interpretations but does on the facts

Unless it is a facial challenge, most cases are mixed

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When Should the Court Allow the Record to be Supplemented by Agency?

This would result in de novo review of the new material Like a trial transcript on appeal, the record is usually closed

There can be an exception if the issue being appealed to the courts is the agency's failure to allow outside input and thus failing to consider all relevant factors. The court can allow the new material and give the agency a

change to supplement its record in response There can also be an exception if the plaintiff makes a credible

showing of significant bias by the agency and the court needs to evaluate it. The court can ask the agency to appoint an ALJ to take

evidence and present it to the court. RARE

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Challenging Agency Action - Review

First, you have to show it is final agency action Rules Orders Everything else

Then you argue about standard of review The more agency process, the more deference Unless the statute or congressional intent conflicts

with the agency action or interpretation

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"Hard Look" - National Lime Assn. v. EPA, 627 F.2d 416, 453 (D.C. Cir. 1980)

[judicial review should] evince a concern that variables be accounted for, that the representativeness of test conditions be ascertained, that the validity of tests be assured and the statistical significance of results determined. Collectively, these concerns have sometimes been expressed as a need for “reasoned decision-making.” . . . However expressed, these more substantive concerns have been coupled with a requirement that assumptions be stated, that process be revealed, that the rejection of alternate theories or abandonment of alternate course of action be explained and that the rationale for the ultimate decision be set forth in a manner which permits the . . . courts to exercise their statutory responsibility upon review.

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Hard Look at What?

The courts cannot use hard look to change the underlying requirement that they defer to agency decisionmaking on facts and policy.

Hard look analysis requires agencies to make sure that the record for the case provides a clear basis for their fact find and their policy decisions.

The court cannot change the decision, but it can require the agency to provide better support for its decisions.

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Remember State Farm?

If a rule was properly promulgated, it was based on a record justifying the need for the rule. If the agency wants to rescind the rule, it must do a

comment explaining why the underlying situation has changed, making the rule unnecessary.

The court took a hard look and found that the agency did not properly consider alternatives

State Farm found that it was arbitrary and capricious to rescind the seat belt rule without analyzing the factual basis for showing how circumstances had changed.

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Can the Agency Promise to not Enforce the Rule?

OSHA proposed a rule for protection from bloodborne pathogens in health care workplaces In all health care workplaces except home health, the

employer had control over the employee Home health agencies said they could not comply with

the rule because they did not have enough control OSHA says it will not enforce the rule against them

Is this enough to save the rule from being arbitrary and capricious?

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De Novo Review Under the APA

Section 706(2)(F) provides for setting aside agency action found to be “unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.”

Overton Park - such de novo review is authorized when the action is adjudicatory in nature and the agency factfinding procedures are inadequate Absent bad faith, the court never finds this In real life, you only get de novo rule by statute

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Forcing Agencies to Act

Courts recognize that agencies have limited resources Usually you have to have a statutory deadline or other limit on

discretion to force agency action The Regulators

Section 706(1) provides that a court is to compel agency action unlawfully withheld or unreasonably delayed. Sometimes the court will find that there has been too much

delay, such as in OSHA's decade long refusal to address drinking water standards for workers

Rare You are entitled to an answer on a petition requesting rulemaking -

Mass. v. EPA

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Judicial Remedies for Improper Rules

Remand but leave the rule in force Cannot do this for unconstitutional rules or rules that

exceed agency authority What is the impact of staying the rule?

Pulling a diabetes drug off the market? Remand and stay the rule

Will wild animals escape? Will there be risks? Is the court defeating agency policy making?

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Relying on Agency Advice - Equitable Estoppel

You cannot get money damages - no appropriations Not under the tort claims act

It is a defense to criminal claims Can be a defense to civil enforcement fines

How did you get the advice? IRS letter ruling v. advice over the phone?

Relying on an agency mistake or failure to enforce a law does not work

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Collateral Estoppel - Relying on Previous Court Decisions

Same facts, same parties Government is bound

Same facts, different parties Government is not bound

What if they are close? Fred loses on a FOIA claim, gets his friend Taylor to

ask for the same document 10 Cir says close enough, estoppel United States Supreme Court says no exception for

public litigation, no estoppel Taylor v. Sturgell, 128 S. Ct. 2161 (2008)

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Non-Acquiesce

The government can relitigate the same facts (different parties) in different circuits to get better results Or to get a split to get United States Supreme Court review

Intra-circuit non-acquiesce is more controversial Agency loses in the circuit in a specific case, but continues to

apply the same law to other parties Non-acquiesce only applies to adjudications

If a rule is found invalid, it is invalid everywhere Why?