Chevron has only one step

Virginia Law Review

Volumn 95, Issue 3, 2009, Pages 597-609

  Stephenson, Matthew C ^a   Vermeule, Adrian ^a  

^a HARVARD LAW SCHOOL   (United States)

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[No Author keywords available]

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EID: 67650498408     PISSN: 00426601     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (72)

1. No. 07-588, slip op. at 7 & n.4 (U.S. Apr. 1, 2009).
2. 467 U.S. 837 (1984).
3. We are not the first to point out the difficulties of distinguishing between Chevron's two steps as well as between Chevron and other strands of judicial review doctrine. See, e.g., Sweet Home Chapter of Cmtys. for a Great Or. v. Babbitt, 30 F.3d 190, 193 (D.C. Cir. 1994), rev'd, 515 U.S. 687 (1995);
4. Clark Byse, Judicial Review of Administrative Interpretation of Statutes: An Analysis of Chevron's Step Two, 2 Admin. L.J. 255, 256 n.10 (1988);
5. Colloquy, Developments in Judicial Review with Emphasis on the Concepts of Standing and Deference to the Agency, 4 Admin. L.J. 113, 123-24, 126 (1990)
6. (remarks of Hon. Stephen F. Williams) [hereinafter Williams];
7. Gary Lawson, Outcome, Procedure and Process: Agency Duties of Explanation for Legal Conclusions, 48 Rutgers L. Rev. 313, 338 (1996);
8. Ronald M. Levin, The Anatomy of Chevron: Step Two Reconsidered, 72 Chi.-Kent L. Rev. 1253, 1260-61 (1997). Indeed, leading casebooks point out the difficulties of drawing these distinctions.
9. See Stephen G. Breyer et al., Administrative Law and Regulatory Policy 327-29 (6th ed. 2006);
10. Ronald A. Cass et al., Administrative Law 143-44 (5th ed. 2006);
11. Peter L. Strauss et al, Gellhorn and Byse's Administrative Law 1034, 1036-40 (10th ed. 2003). These teaching materials, however, typically equivocate on whether these doctrinal distinctions are ultimately sustainable, often suggesting that they are. We want to argue unambiguously that they are not.
12. A semantic difficulty with our assertion that Chevron has only one step involves the question whether Chevron applies in the first place. Commentators sometimes say that Chevron has no fewer than three steps: the two steps recited in Chevron itself and an antecedent step at which courts decide whether Chevron or instead the older Skidmore analysis supplies the legal standard of deference. See United States v. Mead Corp., 533 U.S. 218, 226-27 (2001). This antecedent step is sometimes referred to as "Chevron Step Zero."
13. See Cass R. Sunstein, Chevron Step Zero, 92 Va. L. Rev. 187 (2006). If one accepts that terminology, then our claim is that Chevron has two steps rather than three: Step Zero, plus the single step created by collapsing what courts currently describe as Steps One and Two. Alternatively, some prefer to describe the antecedent issue of whether Chevron applies at all as the question of "Chevron's Domain." See Thomas W. Merrill & Kristin E. Hickman, Chevron's Domain, 89 Geo. L.J. 833 (2001). In that formulation, our thesis is that once a case falls within Chevron's domain, the Chevron analysis has only one step, rather than two. For simplicity, we use the latter formulation.
14. Administrative Procedure Act, 5 U.S.C. 706(2)(A) (2006).
15. Chevron, 467 U.S. at 843 n.9.
16. Id. at 842.
17. Id. at 843.
18. 9Id.
19. Id. at 843 n.9.
20. Id. at 843.
21. See 1 Richard J. Pierce, Jr., Administrative Law Treatise 170-71 (4th ed. 2002);
22. see also Levin, supra note 3, at 1282-83 (noting how judicial opinions that invalidate an agency's interpretation under Step Two could easily have been written as Step One opinions);
23. Byse, supra note 3, at 256 n.10 ("[O]ne could, with considerable logic, conflate the two steps of Chevron into one . . . because if the intent of Congress is clear, a nonconforming interpretation would necessarily be unreasonable.").
24. 529 U.S. 120 (2000).
25. Id. at 132-33.
26. See, e.g. Whitaker v. Thompson, 353 F.3d 947, 949-52 (D.C. Cir. 2004);
27. Ala. Tissue Ctr. of Univ. of Ala. Health Serv. Found, v. Sullivan, 975 F.2d 373, 378 (7th Cir. 1992);
28. E.R. Squibb & Sons v. Bowen, 870 F.2d 678, 682-84 (D.C. Cir. 1989).
29. 451 F.3d 873 (D.C. Cir. 2006).
30. Id. at 880-81.
31. See Williams, supra note 3, at 123-24, 126;
32. see also Patricia M. Wald, Judicial Review in Midpassage: The Uneasy Partnership Between Courts and Agencies Plays On, 32 Tulsa L.J. 221, 243 (1996) (suggesting that whether a case is decided at Step One or Step Two depends on "how judges identify the precise question at issue, since at one level of generality the statute may answer it under Chevron step one, but at a more refined level there may be an ambiguity").
33. The size of the zone need not be fixed by the statute itself; the amount of interpretive latitude the court gives the agency-the amount the court would permit the agency to deviate from the court's ideal reading-may depend in part on other factors, such as the court's confidence in the agency's expertise, its sympathy for the agency's policy goals, or its assessment of the importance of the interpretive issue. See Matthew C. Stephenson, The Strategic Substitution Effect: Textual Plausibility, Procedural Formality, and Judicial Review of Agency Statutory Interpretations, 120 Harv. L. Rev. 528, 547-48 (2006).
34. See E. Donald Elliott, Chevron Matters: How the Chevron Doctrine Redefined the Roles of Congress, Courts and Agencies in Environmental Law, 16 Vill. Envtl. L.J. 1, 11 (2005).
35. Id. at 12.
36. See Nat'l Ass'n of Regulatory Util. Comm'rs v. ICC, 41 F.3d 721, 726-27 (D.C. Cir. 1994);
37. Gen. Am. Transp. Corp. v. ICC, 872 F.2d 1048, 1053 (D.C. Cir. 1989);
38. Pierce, supra note 12, at 172-74; Gary S. Lawson, Reconceptualizing Chevron and Discretion: A Comment on Levin and Rubin, 72 Chi.-Kent L. Rev. 1377, 1377-79 (1997);
39. Levin, supra note 3, at 1276; Laurence H. Silberman, Chevron-The Intersection of Law & Policy, 58 Geo. Wash. L. Rev. 821, 827-28 (1990). For a useful summary of D.C. Circuit opinions that have treated Chevron Step Two and hard look review as overlapping,
40. see Levin, supra note 3, at 1263-66. Others, however, have criticized the attempt to collapse Step Two and hard look review.
41. See e.g., Arent v. Shalala, 70 F.3d 610, 619-20 (D.C. Cir. 1995) (Wald, J., concurring);
42. Continental Air Lines v. Dep't of Transp., 843 F.2d 1444, 1452 (D.C. Cir. 1988);
43. Wald, supra note 18, at 244.
44. Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42-34 (1983).
45. See Animal Legal Def. Fund v. Glickman, 204 F.3d 229, 234 (D.C. Cir. 2000) (noting this redundancy);
46. Pierce, supra note 12, at 172-74 (same).
47. Chevron, 467 U.S. at 844-15, 864-66 ;
48. see also Health Ins. Ass'n of Am. v. Shalala, 23 F.3d 412, 416 (D.C. Cir. 1994) ("[R]eview of an agency's construction of an ambiguous statute is review of the agency's policy judgments.").
49. State Farm, 463 U.S. at 42-44;
50. see also Lawson, supra note 3, at 326 ("[A]n agency can satisfy the Chevron test and still lose the case . . . if the agency reaches its interpretation through a decisionmaking process that is 'arbitrary' or 'capricious'. . . ."); cf. Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 981 (2005) (stating that although interpretive inconsistency is irrelevant to the Chevron inquiry, if this inconsistency is not adequately explained it might render the agency's interpretation arbitrary and capricious under State Farm).
51. See Lawson, supra note 22.
52. Gary Lawson initially took the position that Chevron's two steps should simply be collapsed into one inquiry, but he was subsequently persuaded by Ronald Levin's analysis that Chevron Step Two should be read as coterminous with State Farm-style hard look review. Compare Lawson, supra note 3, at 340 (1996)
53. ("[S]ubstantive reasonableness under Chevron step two should be judged solely by reference to the organic statute under consideration, while substantive reasonableness under the arbitrary or capricious test can be judged by anything that is generally relevant to reasoned decisionmaking."), with Lawson, supra note 22, at 1377-80 (1997) (noting that in contrast to Professor Lawson's own earlier argument, "Professor Levin would convert step one into an all-thingsconsidered assessment of the substantive reasonableness of the agency's interpretation and make step two a straightforward application of arbitrary or capricious review," concluding that this analysis is "almost certainly right," and declaring, "Sign me up"). We think Professor Lawson had it right the first time around.
54. Professor Levin-one of the principal advocates of reconceptualizing Step Two as nothing more than standard arbitrary and capricious review-has indicated that he takes this position in part because it "is too late in the day to simply abrogate the second step as excess baggage; the prestige of the Chevron formula makes such a development unlikely." Levin, supra note 3, at 1296. It seems (though this is not entirely clear) that Professor Levin may share our view that simply eliminating the distinction between Step One and Step Two would be the best and clearest solution to the doctrinal overlap. We tend to agree with Professor Levin that if this turns out to be impossible, explicitly collapsing Step Two and State Farm is better than continuing to suggest some special, independent role for each of Chevron's two steps. We differ from Professor Levin only insofar as we do not believe Chevron's two-step structure is so sacrosanct that it must now be accommodated. In our view, it takes no more intellectual work, and no more disruption of existing doctrine, to collapse Steps One and Two than it does to collapse Step Two and State Farm.
55. Global Crossing Telecomms. v. Metrophones Telecomms., 550 U.S. 45, 47-48 (2007).
56. See Orin S. Kerr, Shedding Light on Chevron: An Empirical Study of the Chevron Doctrine in the U.S. Courts of Appeals, 15 Yale J. on Reg. 1, 30 (1998) (finding, in a sample of over 200 court of appeals cases decided in 1995-1996, that the courts applying Chevron "condensed the two-step test into a single question of whether the interpretation was 'reasonable' in 28% of the applications");
57. id. at 31 (finding that courts that collapsed Chevron into one step upheld the agency interpretation 78% of the time, while those courts that preserved the two-step framework upheld the agency interpretation 71% of the time).
58. It is not clear whether this is in fact a problem, and if it is, how large a problem it may be. For discussion, compare Jacob E. Gersen & Adrian Vermeule, Chevron as a Voting Rule, 116 Yale L.J. 676, 693-98 (2007) (suggesting that this psychological claim is plausible), with
59. Matthew C. Stephenson, The Costs of Voting Rule Chevron: A Comment on Gersen and Vermeule's Proposal, 116 Yale L.J. Pocket Part 238, 239-42 (2007), available at http://yalelawjournal.org/images/pdfs/99.pdf (expressing doubts).
60. See Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 982-85 (2005). The decision whether or not to collapse Chevron's two steps has no effect whatsoever on the question whether a prior judicial construction of a statute in a non-Chevron case will preclude an agency from later adopting a different interpretation (the issue with which the Brand X case was principally concerned). Under Brand X, a prior judicial construction binds the agency only if the earlier court's holding clearly indicated that the alternative interpretation now favored by the agency was unambiguously forbidden. Id. Under our framework, Brand X operates exactly the same way: if the prior court stated clearly that the agency's (current) interpretation was outside the zone of the permissible, then the agency may not now adopt that interpretation. Here too, nothing in the logical structure of the inquiry requires a distinction between cases in which the zone of the permissible reduces to a single point, and cases in which it does not-the distinction at the heart of the current two-step framework.
61. See Cont'l Air Lines v. Dep't of Transp., 843 F.2d 1444, 1452 (D.C. Cir. 1988) (insisting that Chevron Step Two involves a fundamentally different sort of "reasonableness" inquiry than standard hard look review, such that the latter body of doctrine cannot be applied wholesale in the statutory interpretation context);
62. Lawson, supra note 3, at 341 ("[T]he standard of review for agency outcomes under the arbitrary or capricious test may be more deferential than the standard of review under Chevron step two.");
63. Wald, supra note 18, at 244 (arguing that failing to recognize the distinction between Chevron and hard look review will lead courts to be too aggressive in reviewing agency interpretations);
64. Williams, supra note 3, at 123-24, 126 (hypothesizing that Chevron's two-step structure creates the misleading impression that rationality review in the statutory interpretation context is less demanding than in other contexts). It is important here to distinguish those considerations that determine the bounds of the zone of ambiguity-the application of the traditional tools of statutory construction-from those considerations that bear on the reasonableness of the agency's selection of one interpretation rather than another (assuming, perhaps provisionally, that the agency's interpretation falls within the zone of ambiguity). The former set of considerations may be unique to statutory interpretation. The latter set, however, are no different in kind from those that would be applied to any discretionary agency policy choice. There may still be a tricky doctrinal classification problem for those rare cases when an agency's only (or principal) explanation for its interpretative choice is its legal conclusion that this choice is required by the statute (that is, the agency has no lawful discretion to do anything else). Assuming that the agency's interpretation is permissible under Chevron, the reviewing court would have to decide whether the agency's reason for selecting this particular interpretation (that it is required by the statute) is adequate under State Farm. In this limited class of cases, then, a reviewing court may have to address the question whether the statute is ambiguous (that is, whether the zone of ambiguity contains more than one element) separately from the question whether the agency's interpretation is within that zone. But we do not find this especially troubling. As in all other State Farm cases, the reviewing court would decide whether the agency's explanation for its decision is arbitrary and capricious. As long as the agency's arguments as to why its interpretive choice is legally required are reasonable (that is, non-arbitrary), the agency should prevail under State Farm. If, however, the court concludes that the agency's claims of legal constraint are not reasonable-if, for example, the statute obviously permits more than one interpretation, or a challenger made timely comments to that effect which the agency did not adequately address - then the agency should lose under State Farm.
65. 486 F.3d 484, 492-93 (9th Cir. 2007) (en banc);
66. id. at 504 (Thomas, J., dissenting). The constitutional avoidance canon instructs courts to avoid interpreting statutes in ways that raise serious constitutional questions when a reasonable alternative interpretation is available.
67. See Edward J. DeBartolo Corp. v. Fla. Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575 (1988);
68. NLRB v. Catholic Bishop of Chi., 440 U.S. 490, 499-501 (1979).
69. Morales-Izquierdo, 486 F.3d, at 504 (Thomas, J., dissenting).
70. Id. at 492-93.
71. Kenneth A. Bamberger, Normative Canons in the Review of Administrative Policymaking 118 Yale L.J. 64, 66-69 (2008).
72. See Levin, supra note 3, at 1280 (arguing that there is "no evident reason" why Chevron's two-step framework should affect the debate over the use of canons of construction).