Arbitrariness review made reasonable: structural and conceptual reform of the "hard look."

Author:Shapiro, Sidney A.


As Representative John Dingell remarked in the best sentence ever said on the power of procedure over substance, "I'll let you write the substance ... you let me write the procedure, and I'll screw you every time." (1) Accordingly, designing procedures for legislative rulemaking, a dominant feature of modern governance, has spawned one of the most contentious debates in all of administrative law. Compounding the stakes, over the last fifty years, the courts, with help from Congress and presidents, have relentlessly made rulemaking procedures more burdensome, impeding efforts to preserve the environment, protect workers, and forestall financial collapse, among other important agency missions.

Review for "arbitrariness" is the source of most of the burdens that courts have imposed on agency rulemaking. Modern doctrine, often called "hard look review, " requires an agency to have, at the moment it adopts a rule, a justification strong enough to satisfy the demands of "reasoned decisionmaking. " As a corollary, an agency can never rely on post hoc justifications to save a rule. This requirement of reasoned decisionmaking might itself sound eminently reasonable. As implemented in rulemaking, however, its demands are highly artificial, force agencies to waste time and resources on developing impenetrable explanations for their rules, encourage regulated parties to bloat the process, and increase the risk of judicial vacation of reasonable rules.

To correct these problems, courts should allow agencies to defend their rules based on post hoc justifications--so long as they are based on information exposed to public scrutiny during the rulemaking process itself. This proposal may sound like administrative law heresy, but it has surprisingly strong roots both in historical and current practice. Adopting it would enhance agency effectiveness without undermining other important values, notably including accountability, fairness, and accuracy, served by current doctrine. The proposal also highlights a better, more flexible conception of "arbitrariness" review. Ai they discharge this ambiguous task, courts have an ongoing duty to recognize and balance the various competing values served by both rulemaking and its judicial review. Courts should abandon their current rigid orthodoxy and adopt the proposal because, in short, it strikes a better balance among these values.


"Explain all that," said the Mock Turtle.

"No, no! The adventures first," said the Gryphon in an impatient tone: "explanations take such a dreadful time." (2)


Just last year, in Perez v. Mortgage Bankers Association, the Supreme Court reiterated the forty-year-old Vermont Yankee principle, insisting that courts have no authority to impose rulemaking procedures on agencies to serve judicial "notion [s] of which procedures are 'best' or most likely to further some vague, undefined public good." (3) Given the central role of agency rulemaking in modern American governance, the importance of this stance is hard to exaggerate. In terms of sheer quantity, the Code of Federal Regulations is far longer than the United States Code. (4) Many agency rules, such as the Obama Administration's recently promulgated Clean Power Plan, determine critical policies with massive national or even global impacts. (5) The power to write procedures for these rules carries with it a great deal of power to impact substance because, as Representative John Dingell remarked in the best sentence ever said on this subject, "I'll let you write the substance ... you let me write the procedure, and I'll screw you every time." (6)

Considered in this light, the Court's categorical refusal to allow judicial usurpation of control over rulemaking procedures has a noble, even majestic, air. It is also pretty hilarious, proving that the Justices are masters of that obscure and underappreciated art: administrative law comedy. In point of well-known fact, the courts, led by the D.C. Circuit in the late 1960s and 1970s, essentially rewrote the statutory procedures for notice-and-comment rulemaking, which is the default method for promulgating legislative rules under the Administrative Procedure Act (APA). (7) Thanks to this judicial transformation, the marvelously simple and speedy rulemaking procedures of 1946, when the APA was adopted, bear about as much resemblance to the rulemaking procedures of 2016 as an acorn does to a mighty seventy-year-old oak.

One of the most important elements of the judicial transformation of rulemaking involved a radical shift in how courts review agency rules for arbitrariness under section 706 of the APA. (8) Back in 1946, a plaintiff challenging a rule on this ground needed to demonstrate to a court that no plausible, reasonable set of facts could be conceived to support the rule. (9) By contrast, under modern "hard look" review for arbitrariness, an agency must establish that, at the time it took its action, it had a contemporaneous rationale sufficient to satisfy the requirements of "reasoned decisionmaking." (10) This approach imposed on rulemaking the Chenery principle that courts should determine whether to uphold an agency's discretionary action based on the actual reasons that motivated the agency at the time that it acted. (11) Applying this principle, a post hoc rationale, no matter how sensible, should not be able to save an agency action from condemnation as arbitrary.

In the abstract, nothing could sound more reasonable than for courts to insist that agencies actually base their actions on good reasons. As implemented, however, modern arbitrariness review has made the rulemaking process unduly onerous and time-consuming, with important rules often taking many years to complete. (12) Once completed, these rules are then subject to judicial review that can be political and unpredictable, (13) making it difficult for agencies to guess whether an explanation for a rule will be upheld under hard look review. This state of affairs is all the more problematic given agencies' notorious lack of sufficient resources to carry out their assigned statutory missions.

What, if anything, should be done to correct this situation has been widely debated among administrative law scholars, who have proposed a range of solutions from the elimination of hard look review to retaining it pretty much in its present form, with most proposals focusing on modulating the strictness of judicial review for rationality--e.g., making "hard looks" into something softer. (14) Notwithstanding all this criticism, hard look review has been extremely stable since the Supreme Court gave its stamp of approval over thirty years ago in Motor Vehicles Manufacturers Association v. State Farm Mutual Automobile Insurance Co. (15)

This lack of success suggests that a different and more structural approach is appropriate. In this spirit, this Article proposes a simple reform that may, on first hearing, sound heretical but that proves to have surprisingly strong roots in both the history of administrative law and current judicial practice. Specifically, courts should relax their bar on post hoc rationales, allowing agencies to rely upon them so long as they are based on information exposed to outside scrutiny during the notice-and-comment process. (16) Adopting this proposal would correct distortions in the rulemaking process that make agencies' task of defending their rules needlessly costly and difficult. Most notably, it would reduce the incentive that the current system creates for agencies to pour excessive time and energy into developing exhaustive, impenetrable explanations for rules sufficient to answer any question that a generalist (and perhaps ill-disposed) judge might deem material years later. (17) It would also curb the incentives of special interests to bloat the rulemaking process with excessive comments and to seek judicial review on relatively trivial grounds. (18) In addition, adopting the proposal would decrease the danger of courts vacating rules that further agency statutory missions, based on readily curable defects in official explanations.

Still, a practically-minded reader might well wonder: Why might anyone think that the courts would consider abandoning application of the contemporaneous rationale principle, a core doctrine of modern administrative law, to notice-and-comment rulemaking? This very good question happens to have a very interesting answer: courts, although they do not seem quite ready to admit it, already ignore the contemporaneous rationale principle in a class of important cases. The primary evidence of this impulse comes from the practice of remand without vacation. Applying this remedy, a court, after determining that an agency action suffers from a defective explanation, does not throw it out but instead leaves the action in effect while the agency takes post hoc steps to correct it. (19) Our proposal thus seeks to encourage courts to follow, in a more open and systematic way, an impulse that they already display--if one knows where to look.

Our proposal recognizes and builds on the fact that Congress's command to courts to set aside "arbitrary" agency actions is fundamentally ambiguous. To implement this command responsibly, courts must identify and balance the various legitimate and competing interests that rulemaking and its judicial review should serve. When they reformed notice-and-comment rulemaking procedures, the courts advanced legitimate administrative law values, including accountability, accuracy, and fairness, but with a loss of agency effectiveness and efficiency, which are also administrative law values of the first rank. The courts can restore some of this lost effectiveness and efficiency by adopting our proposal to relax the Chenery ban on post hoc justifications--and they can do so without significantly undermining other important values served by modern arbitrariness review.

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