CHAPTER 12 DEFERENCE TO ADMINISTRATIVE AGENCIES: SUBSTANTIVE REVIEW OF AGENCY DECISIONS

• Jurisdiction: United States

Challenging and Defending Federal Natural Resource Agency Decisions
(Sep 2016)
CHAPTER 12
DEFERENCE TO ADMINISTRATIVE AGENCIES: SUBSTANTIVE REVIEW OF AGENCY DECISIONS
Michael J. Malmquist
Shareholder
Parsons Behle & Latimer ¹
Salt Lake City, UT
Elizabeth A. Schulte ²
Attorney-Advisor
Office of the Solicitor
U.S. Department of the Interior
Salt Lake City, UT

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MICHAEL J. MALMQUIST is a shareholder of Parsons Behle & Latimer in Salt Lake City, Utah, and works in the firm's Environmental, Energy and Natural Resources practice group. He helps clients site and develop natural resource, energy, transportation, and other projects by advising them on environmental permitting, land use authorization, public lands, and NEPA issues and strategies. He also defends projects against permit appeals and lawsuits involving claims under NEPA, FLPMA, the Endangered Species Act, the Clean Water and Air Acts, and other environmental, wildlife, and public land laws. He has performed environmental and title diligence for various natural resource and energy acquisitions and mergers. Mr. Malmquist was previously with the United States Department of Justice, where his practice included trial and appellate litigation of cases involving NEPA, the Clean Air Act and Clean Water Act, and various Indian law and water law issues. He also represented the Department's position on legislative and policy issues with a focus on western natural resources and water rights. Mr. Malmquist was named 2010 Lawyer of the Year by the Utah Energy, Natural Resources and Environmental Bar Section. He is recognized in The Best Lawyers in America, Utah Business Magazine's Legal Elite, Chambers USA, and Mountain States Super Lawyers and was named 2016 Best Lawyers in America "Lawyer of the Year" in Salt Lake City for Energy Law. He has an AV® Preeminent™ Rating from Martindale-Hubbell.

ELIZABETH A. SCHULTE is an attorney-advisor for the Department of Interior, Office of the Solicitor, Intermountain Region. Liz has spent the majority of her legal career in private practice, helping clients site and develop projects both on federal and private land. Liz recently joined the Solicitor's Office and now represents the Department of Interior in a broad-range of natural resource issues, including permitting decisions, NEPA challenges, oil and gas leasing, rights-of-way, and other mineral development matters. Liz currently serves as the chair for the ABA's public land and resources committee and is the chair for the Utah State Bar's Energy, Natural Resources and Environmental Law section. Liz returned to law school after working for The Nature Conservancy, and received her J.D. in 2005 from the University of Utah, S.J. Quinney College of Law, where she was the editor-in-chief of the Journal of Natural Resources and Environmental Law. Liz is married to Rob Hess, owner of Jackson Hole Mountain Guides. Liz and Rob enjoy spending time with their dogs, climbing, skiing, traveling, and spending time in the mountains.

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TABLE OF CONTENTS

I. INTRODUCTION

II. POLICY: WHAT IS THE BASIS FOR JUDICIAL DEFERENCE TO AGENCY DECISIONS AND INTERPRETATIONS?

III. SOURCES OF JUDICIAL DEFERENCE GENERALLY

A. Caselaw

B. Statutory Authority

IV. TYPES OF DEFERENCE

A. Deference to Agency Interpretation of Statutes

1. Chevron Deference

2. Mead's Curtailment of Chevron

3. Burwell's Curtailment of Chevron

4. Skidmore Deference (when Chevron does not apply)

B. Deference to Agency Interpretation of Regulations

Auer/Bowles Deference

C. Select Examples of Deference to DOI Decisions/Guidance

D. Deference to Agency Decisions When Acting Within Appropriate Authority

1. Arbitrary and Capricious Standard

a. Legal standards of arbitrary and capricious conduct

i. Failure to consider mandatory factors

ii. Consideration of improper factors--agency prohibited from considering illegitimate factors

iii. Failure to explain decision (rational connection between facts found and choice made); conclusory decisions

iv. Failure to consider an important aspect of the problem

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v. Clear error/offered explanation counter to the evidence

vi. Unexplained changes in direction

b. Deference in the context of NEPA

i. "Rule of Reason"

ii. "Reasonableness"

iii. Deference to CEQ regulations

2. Substantial Evidence Standard

E. Deference to Agency Inaction

V. RECENT APPLICATIONS OF JUDICIAL DEFERENCE TO AGENCY ACTIONS

A. No Deference to BLM Hydraulic Fracturing Rules

B. EPA's Clean Power Plan Rule

C. Wetlands/Waters of the United States

D. Sage Grouse Litigation

VI. CONCLUSION

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"Administrative law is not for sissies"³

"Judicial deference is a mealy-mouthed word"⁴

"[T]he rules governing judicial review have no more substance at the core than a seedless grape"⁵

I. INTRODUCTION

The law of judicial deference, although seemingly simple, can be a deceptively complicated question as evidenced by the volume of commentary it has received over the years. At its heart, deference is an attempt to strike the right balance between the judiciary's Constitutional role to state what the law is against the Constitutional role of the executive branch to enforce the laws, as enacted by Congress, and presumably made with the benefit of agency expertise and experience. While some scholars have tried to distill the deference inquiry into a two-step dance, others have turned the question into a tango nearly impossible to follow, even for the well-initiated practitioner.

Agencies continually exercise their decision-making authority in a variety of ways, including by way of example, promulgating rules that regulate an industry or that govern the agency's own programs, approving or denying permits, providing grants and loans, adjudicating property rights or interests, adopting land use plans, adopting policy and guidance documents, and many others.

This paper discusses the gradation of judicial deference depending on the type of agency decision-making. The hope is to untangle the judicial deference morass by first providing a framework and explaining the general principles of judicial deference applicable to various types of agency decision-making, beginning with a review of the seminal cases that have shaped these principles. We then provide a brief review of the statutory structure for judicial review, largely provided by the Administrative Procedure Act. Lastly, we briefly explore several recent and pending applications of judicial deference in the context of agency decisions with potential interest to natural resource practitioners.

II. POLICY: WHAT IS THE BASIS FOR JUDICIAL DEFERENCE TO AGENCY DECISIONS AND INTERPRETATIONS?

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The doctrine of judicial deference to agency action operates within, and mediates between, the three branches of federal government. The Constitution, of course, creates three separate but ostensibly equal branches of government that interact with one another in a self-regulating manner: (1) the legislative branch (Congress) which makes the laws; (2) the executive branch (President) which enforces the laws; and (3) the judicial branch (Courts) which interprets the laws. In light of these respective capacities, courts are often asked to consider whether the executive branch, acting through an administrative agency, is interpreting and implementing the law in a manner consistent with what Congress intended, thereby advancing national policy as forged through the constitutionally prescribed political and law-making process.

The right to judicial review of agency action to ensure its consistency with governing law flows directly from the bedrock principle that "[i]t is emphatically the province and duty of the judiciary to say what the law is."⁶ As a previous Rocky Mountain Mineral Law Foundation author aptly stated: "The courts, through judicial review, are charged with preserving the boundaries of each participant's conferred authority within this balance of powers."⁷ Yet, this power of review must be weighed against the need for limited judicial scrutiny, as this respects the elected administration's choices and policies, which are reflected through the administrations' interpretations, and also gives agency expertise its due.⁸

As summarized by Justice Scalia, judicial deference is favorable, at times, because it recognizes the agency's "expertise" based on the agency's alleged familiarity with the history and purpose of the underlying legislation and "their practical knowledge of what will best effectuate those purposes."⁹ Additionally, deference provides for flexibility and political participation in the administrative process because agency interpretations may evolve in light of advancing knowledge, new social attitudes, and admittedly political pressures, whereas a court's resolution of the same question has a permanent effect until the decision is either overruled or Congress subsequently enacts new laws.¹⁰

Of course, over the years Scalia grew to be one of the most vocal critics of judicial deference, to the extent that an entire article could be written solely on Scalia's view of judicial deference and its evolution during his tenure. Once exclaiming deference to the executive

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branch as being "a striking abdication of judicial responsibility,"¹¹ Scalia later authored the notable decision extending Chevron deference to questions of jurisdictional authority as well.¹²

Primarily, critics of and commentators on judicial deference to agency decisions are concerned that deferring to administrative decisions undermines the Constitutional principle regarding the separation of powers. After all, as Scalia famously wrote: "He who writes a law must not adjudge its violation."¹³

Despite increasing criticism of judicial deference by Scalia, and many others, including several current Supreme Court Justices, the doctrine is...