Schechter Poultry at the millennium: a delegation doctrine for the administrative state.

• Author: Bressman, Lisa Schultz

Last term, the Supreme Court issued an opinion that may alter the longstanding debate on congressional delegation of lawmaking power to administrative agencies. The case primarily concerned a federalism issue. In AT&T Corp. v. Iowa Utilities Board,(1) the Court determined that the Federal Communications Commission (FCC), and not the states, possesses authority to implement the provisions of the Telecommunications Act of 1996 that pertain to local telephone competition.(2) Although this part of the Court's decision is likely to generate significant commentary, a less prominent part may have far

greater significance.

In that part, the Court for the first time invalidated an agency interpretation under the second step of the Chevron test.(3) Under Chevron, courts evaluating agency interpretations of statutory provisions must determine whether a provision is ambiguous, and, if so, defer to any reasonable agency construction.(4) In all prior cases reaching the second step of Chevron, the Supreme Court had deferred to the agency interpretation.(5) In this case, the Court invalidated one of the FCC's interpretations as unreasonable.(6) Moreover, it did so not simply for typical process failures such as lack of sufficient evidence or explanation supporting the interpretation, as lower courts had done in the past.(7) Instead, the Court invalidated the FCC's interpretation for more precise and provocative reasons: The interpretation failed to contain "limiting standard[s]" and allowed private parties to fix the content of the regulation.(8)

If this reasoning sounds familiar, it should. Almost sixty-five years ago, the Court struck down provisions of a central piece of New Deal legislation on analogous grounds under the nondelegation doctrine. The National Industrial Recovery Act (NIRA) delegated to the President substantial authority to promulgate regulations stabilizing the economy. In Panama Refining Co. v. Ryan,(9) the Court invalidated a provision of NIRA because "Congress ha[d] declared no policy, ha[d] established no standard, ha[d] laid down no rule" to guide the President's discretion in issuing regulations under the statute.(10) In A.L.A. Schechter Poultry Corp. v. United States,(11) the Court invalidated another provision of NIRA for the same reason.(12) As Justice Cardozo commented, "The delegated power of legislation which has found expression in this code is not canalized within banks that keep it from overflowing. It is unconfined and vagrant...."(13) Furthermore, the delegated power was so unbounded that it enabled the President to exercise his discretion by rubber-stamping regulations proposed by private parties.(14) The Court declared such private lawmaking "utterly inconsistent with the constitutional prerogatives ... of Congress."(15) The Court never again expressly applied the nondelegation doctrine to invalidate a statute.

Iowa Utilities Board may be understood to revive the dormant nondelegation doctrine. It did not cite Panama Refining or Schechter Poultry. Nor did it mention the word "delegation." Nevertheless, it undeniably invoked the principles that underlie those cases and are traditionally captured by the concept of delegation: the requirement of limiting standards and the prohibition on private lawmaking. But it did so in a new way. Instead of striking down the statutory delegation, as it had done in Panama Refining and Schechter Poultry, the Court upheld the "promiscuous" delegation to the FCC.(16) It then invalidated the FCC's rule for failing to supply the very limiting standards that had once been Congress's responsibility. The Court effectively required the agency to pick up where Congress had left off and to carry forward the lessons of the old nondelegation cases.

By requiring the agency to limit its own discretion, Iowa Utilities Board may be understood to endorse a persistent undercurrent in administrative law(17) and, strangely, to presage a subsequent D.C. Circuit decision that is drawing considerable scholarly attention.(18) Although that case differs from Iowa Utilities Board in many respects, it shares an essential feature. In American Trucking Ass'ns v. EPA,(19) the D.C. Circuit also invalidated agency regulations for failure to contain administrative limiting standards.(20) The court invalidated the regulations under the nondelegation doctrine itself. However, it applied a modified version of the doctrine that, as in Iowa Utilities Board, required the agency to supply the standards that Congress had failed to produce.

This Essay argues that American Trucking and Iowa Utilities Board confirm the emergence of a new delegation doctrine that has the potential to shift the terms of the current debate on delegation and democracy.(21) The new doctrine does not ask who ought to make law, which has been a central theme of scholarly interest in the delegation area. Rather, it asks how (or how well) the law is being made. Thus, it fundamentally alters the traditional scope of delegation review by refocusing the inquiry on the exercise of delegated lawmaking authority. In so doing, it reinforces a certain conception of democracy. By requiring agencies to articulate limiting standards, it ensures that agencies exercise their delegated authority in a manner that promotes the rule of law, accountability, public responsiveness, and individual liberty. Furthermore, it advances these values without having either to prohibit delegation or to approve delegation wholesale.

The new delegation doctrine also acknowledges and addresses an inherent limitation in the prevailing judicial strategy for constraining broad delegations--interpretive norms. Since the effective demise of the original nondelegation doctrine in 1935, the Court has searched for ways to assuage its abiding worry about broad delegations, it has turned, with apparent success, both to clear-statement principles and to ordinary tools of statutory construction under the first step of Chevron. However, such interpretive norms are unhelpful in many cases. In particular, they are of little value when Congress writes statutes to grant agencies policymaking authority to the fullest extent. The new delegation doctrine offers courts a meaningful tool for monitoring these types of delegations. Furthermore, it offers a tool that is more respectful of administrative discretion than either interpretive norms or the original nondelegation doctrine are.

Part I of the Essay sets forth the two views that dominate the current scholarly debate on the relationship between delegation and democracy. Part II discusses the use of interpretive norms to constrain broad delegations and identifies an inherent limitation of interpretive norms with respect to some delegations. Part III proposes a new doctrine that attempts at once to fill the gap created by interpretive norms, to mediate between the extremes of the scholarly debate, and to retain democratic values in the administrative age. Part III then illustrates this new doctrine with Iowa Utilities Board and American Trucking.

1. DELEGATION AND DEMOCRACY

   Although the current scholarly debate on the relationship between delegation and democracy has many complexities, it is composed at bottom of two opposing views. One side of the debate argues that delegation of legislative power disserves democracy and ought to be prohibited. The other side contends that delegation furthers democracy and generally ought to be respected. This Part explores the jurisprudential roots of the debate and then turns to the competing claims.

   1. The Judicial Framework

      Concerns about the transfer of lawmaking authority to administrative agencies originally found expression in the nondelegation doctrine. The evolution of the nondelegation doctrine has been well-charted.(22) It began with Article I, Section 1 of the United States Constitution, which provides that "[a]ll legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives."(23) For almost two centuries, the Supreme Court has understood these words to limit the extent to which, or the conditions under which, Congress may delegate its lawmaking powers to executive or administrative officials.

      In the early cases, the Court articulated a factfinding or "contingency" theory of delegation. Specifically, it held that Congress could condition implementation of statutes on a factual contingency, and could delegate to an executive official the authority to determine whether that contingency had occurred.(24) During this early period, the Court also upheld a number of statutory delegations on a "detail-filling" rationale. Specifically, the Court found that Congress could delegate to an administrative official the power to "fill up the details" of a statutory scheme.(25) Article I was satisfied as long as Congress retained for itself the responsibility for setting basic policy. Interestingly, many of the statutes upheld under this theory contained only vague legislative standards and allowed administrators significant latitude to make policy.

      The most familiar judicial formulation of the nondelegation doctrine first appeared in J.W. Hampton, Jr. & Co. v. United States,(26) which involved the Tariff Act of 1922.(27) The Act delegated to the President authority to adjust tariffs when the rates failed to "equalize ... differences in costs of production."(28) The Court acknowledged that the Act authorized the President to go beyond factfinding and make discretionary economic judgments.(29) However, the Court upheld the delegation because it found that Congress had set forth "an intelligible principle" to guide the President' s discretion.(30)

      In two cases decided in 1935, the Supreme Court applied Hampton's "intelligible principle" for the first time to invalidate provisions of a statute for impermissibly delegating lawmaking authority to an administrative agency. That statute was the National...