Judicial review

• Pages: 79-143

79

Judicial Review*

CHAPTER 3

INTRODUCTION

This chapter examines the U.S. Supreme Court’s major decisions from

2019, discussing judicial review of agency action and access to the courts. In

addition, this chapter briefly addresses legislative attempts to rein in judicial

review.

Parts I through III of this chapter focus on the scope of review. As is

always the case, the federal courts this past year decided a variety of cases

involving different scope of review doctrines, including Chevron deference,1

Auer deference,2 substantial evidence review3 and arbitrary and capricious

review.4 The Court did not address Skidmore deference.5 The most notable

* Linda D. Jellum, Ellison Capers Palmer Sr. Professor of Tax Law, Mercer

University School of Law; Richard Murphy, AT&T Professor of Law, Texas

Tech University School of Law. Professor Jellum would like to thank R.

Stephen Poydasheff, J.D., expected 2020 for his help with this article. Addi-

tionally, writing this article is made significantly easier because of both the

Administrative Law Listserv Professor Edward Richards maintains, the

Notice & Comment blog maintained by the Professor Chris Walker and the

Yale Journal on Regulation (http://yalejreg.com), and The Regulatory Re-

view Professor Cary Coglianese and the Penn Program on Regulation main-

tain (https://www.theregreview.org/). I have without a doubt lifted any useful

contributions directly from these sources.

1. Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984)

(requiring judicial deference to an agency’s reasonable interpretation of

ambiguous statutory language).

2. Auer v. Robbins, 519 U.S. 452 (1997) (requiring judicial deference to an

agency’s interpretation of its own regulations so long as that interpretation

is neither plainly erroneous nor inconsistent with the regulation).

3. Substantial evidence review comes from section 706(2)(E) of the Adminis-

trative Procedure Act (APA).

4. Arbitrary and capricious review comes from section 706(2)(A) of the Ad-

ministrative Procedure Act (APA).

5. Skidmore v. Swift & Co., 323 U.S. 134 (1944).

80 Developments in Administrative Law and Regulatory Practice

developments from this past year include a transformation of Chevron defer-

ence into an ambiguity resolver (much like the rule of lenity), a

Chevronization6 of Auer deference, and a prohibition against pretextual ra-

tionales to justify agency policymaking under arbitrary and capricious re-

view.

PART I. FEDERAL JUDICIAL DEVELOPMENTS INVOLVING

SCOPE OF REVIEW DOCTRINES

A. Chevron in the Supreme Court

Not only are Chevron and Auer safe from congressional attack for now,

they weathered another year in the Supreme Court as well despite widespread

fear in the academic community that at least one, Auer, would be cut off at

the knees. As for Chevron, only Justices Thomas and Gorsuch continue to

criticize the doctrine at every opportunity.

The Court heard four cases this year that mentioned Chevron. None of-

fered much new. In all four, the Court made little more than passing refer-

ence to Chevron. First, in BNSF Railway Co. v. Loos,7 the majority did not

mention Chevron, while Justice Gorsuch, in dissent, questioned whether the

doctrine retained any force. Second, in Sturgeon v. Frost,8 the Court rejected

Chevron deference in a short footnote, noting simply that the statute was not

ambiguous so Chevron did not apply. Third, in Smith v. Berryhill,9 a unani-

mous Court held that Chevron analysis was inapplicable to questions involv-

ing the federal courts’ jurisdiction to hear social security appeals because

Congress would not implicitly delegate such interpretive responsibility to an

agency. And fourth, in PDR Network, LLC v. Carlton & Harris Chiropractic,

Inc.,10 the majority again ignored Chevron entirely. However, Justice Tho-

mas, joined by Justice Gorsuch, concurred solely to renew his attack on

Chevron’s validity, first articulated in his concurrence in Perez v. Mortgage

Bankers Ass’n.11

6. Professor Kristen Hickman coined this term. Kristen E. Hickman & Mark R.

Thomson, The Chevronization of Auer, 103 MINN. L. REV. HEADNOTES 103

(2019).

7. 139 S. Ct. 893 (2019).

8. 139 S. Ct. 1066 (2019).

9. 139 S. Ct. 1765 (2019).

10. 139 S. Ct. 2051 (2019).

11. 575 U.S. 92 (2015).

81Chapter 3: Judicial Review

1. BNSF Railway Co. v. Loos

In BNSF Railway Co. v. Loos,12 Loos, a railroad employee, was injured

while working at a railyard. He sued BNSF Railway Company under the

Federal Employer’s Liability Act (FELA) for his injuries.13 The jury awarded

him more than $126,200, ascribing $30,000 for lost wages for time Loos

could not work.14 BNSF claimed the lost wages portion of the award was

“compensation” under the Railroad Retirement Tax Act (RRTA) and asked to

withhold $3,765 to cover the employee’s share of the RRTA taxes.15 While

the lower courts agreed with Loos, the Supreme Court reversed, holding that

a railroad’s payment to an employee for working time lost due to an on-the-

job injury taxable is “compensation” under the RRTA.16

Congress enacted RRTA in 1937 as a self-sustaining retirement benefits

system for railroad workers.17 Both railroads and employees fund the system

through a payroll tax system. The railroads’ contributions are called “excise

taxes”18 while the employees’ contributions are called “income taxes.”19 The

Internal Revenue Service (IRS) collects the taxes.20

A second act, the Railroad Retirement Act (RRA) entitles railroad work-

ers to certain benefits and identifies eligibility requirements.21 The Railroad

Retirement Board administers the RRA.22 Taxes under the RRTA and benefits

under the RRA are both measured based on an employee’s “compensation.”23

Both acts define “compensation” as “‘any form of money remuneration paid

to an individuals for services rendered as an employee.’”24

The IRS has consistently defined “compensation” in the RRTA broadly:

‘“[t]he term compensation is not confined to amounts paid for active service,

but includes amounts paid for an identifiable period during which the em-

12. 139 S. Ct. 893 (2019).

13. Id. at 897 (citing 35 Stat. 65, as amended, 45 U.S.C. § 51 et seq.).

14. Id.

15. Id. (citing 26 U.S.C. § 3201 et seq.).

16. Id. at 897–904.

17. Id. at 897.

18. Id. (citing 26 U.S.C. § 3221).

19. Id. (citing 26 U.S.C. § 3201).

20. Id. at 897–98 (citing 26 U.S.C. §§ 3501, 7801).

21. Id. at 898 (citing 50 Stat. 307, as restated and amended, 45 U.S.C. § 231 et

seq.).

22. Id. (citing 45 U.S.C. § 231f(a)).

23. Id. (citing 26 U.S.C. §§ 3201, 3221; 45 U.S.C. § 231b).

24. Id. (citing 26 U.S.C. § 3231(e)(1); 45 U.S.C. § 231(h)(1)).