Why should we care about an agency's special insight?

• Author: DeGenaro, Stephen M.

INTRODUCTION

In the modern federal administrative state, agencies enjoy judicial deference to their reasonable interpretations of ambiguous statutes and regulations. (1) In Chevron U.S.A. Inc. v. Natural Resource Defense Council, Inc., (2) the Supreme Court held that an agency's "permissible construction" of an ambiguous statute is to be "given controlling weight" so long as the construction is reasonable. (3) Similarly, the Supreme Court's holding in Bowles v. Seminole Rock & Sand Co. (4) gave "controlling weight" to an agency's reasonable interpretation of its own ambiguous regulation. (5) Even though the doctrine of Chevron deference is "functionally similar" (6) to Seminole Rock deference, there is an important structural difference between the two. In both the Chevron and Seminole Rock contexts, the agency serves as an interpreter of the ambiguous source of substantive law, be it a statute or regulation. (7) The difference between Chevron deference and Seminole Rock deference is the process through which the ambiguous source of law comes into effect. Chevron concerns an agency's reasonable interpretation of an ambiguous statute. (8) Any ambiguity that exists is the product of the legislative process: both houses of Congress passed a (potentially ambiguous) bill and presented it to the President to be signed into law. (9) Even though the agency is responsible for clarifying any explicit or implicit gap in the statute, Congress still drafted the statute. (10)

Conversely, agencies are responsible for drafting regulations. In most instances, when an agency is engaged in rulemaking under section 553 of the Administrative Procedure Act (APA), (11) the agency is acting pursuant to some enabling organic statute that gives the agency power to promulgate rules. (12) The agency must publish "[g]eneral notice of proposed rule making" in the Federal Register. (13) The notice must provide "a statement of the time, place, and nature of public rule making proceedings," reference to the organic statute under which the agency is engaging in rulemaking, and "either the terms or substance" of the agency's proposed rule or a description of the subject of the proposed rulemaking. (14) In addition to this notice requirement, an agency must also provide the public with "an opportunity to participate," and "[a]fter consideration of the relevant matter presented," must provide a "concise general statement of their basis and purpose" with the promulgated rule. (15) Congress's only involvement in this rulemaking process is passing the statute which gives the agency authority to promulgate rules; any ambiguity in the regulation is the result of agency draftsmanship. (16)

This is the important distinction between Chevron deference and Seminole Rock deference: an agency serves as both the drafter and interpreter of ambiguous regulations in Seminole Rock. (17) The unity of drafter and interpreter raises a number of concerns about separation of powers, (18) the procedural safeguards of the APA, (19) and the incentives of ambiguous rulemaking. (20) At the same time, this dual role gives the agency special insight into the intent of the regulation. (21) In a recent article, Matthew Stephenson and Miri Pogoriler proposed a number of possible limitations to Seminole Rock deference, such as withholding deference from "placeholder" interpretations, (22) interpretations that create retroactivity problems, (23) and interpretations following more informal procedures. (24) Stephenson and Pogoriler argue that these limitations are effective means of overcoming the problems that uniquely arise from Seminole Rock deference. (25) These doctrinal limits follow from Seminole Rock's similarity to Chevron. (26) Much less attention is paid to potential limitations based upon the fact that the agency enjoys special insight into the meaning of its own regulations. (27)

This Note offers some additional thoughts on the outer limits of Seminole Rock deference. Part I discusses the three concerns associated with unchecked Seminole Rock deference that comprise the self-delegation problem--violation of constitutional norms, exploitation of a statutory loophole, and perverse incentives. It explores the potential for abuse they create and recommends what the limitations should look like in order to avoid this potential. (28) Part II explains the two rationales for Seminole Rock deference: the pragmatic and originalist rationales. It describes how the two rationales relate to each other, explains how courts use pragmatic and originalist arguments in their opinions, and recommends a new way to think about the two rationales in light of these considerations. (29) Part III traces the boundaries of Seminole Rock deference while taking into account how both rationales justify judicial deference to an agency's reasonable interpretation of its own regulation. This Note will indicate which of Stephenson and Pogoriler's proposed limitations are strengthened by considering the originalist rationale (30) and which of Stephenson and Pogoriler's proposed limitations are unaffected by considering the originalist rationale. (31) Finally, this Note will argue for the adoption of a limitation that flows from the originalist rationale: a consistency limitation. (32)

1. THE SELF-DELEGATION PROBLEM

   Deference under Seminole Rock creates a problem that has no analog in the Chevron context: if an agency knows it will receive deference for its own interpretation of a regulation, it can "delegate" to itself the power to clarify a regulation at a later time. (33) Conversely, when Congress drafts legislation, it cannot empower itself to control how the statute is interpreted or enforced. (34) Nor can Congress "reinterpret" a statute that has been enacted into law unless it passes another statute to modify the previous statutory language. (35) Therefore, Chevron deference does not have the "self-delegation" problem that Seminole Rock deference does. This raises a number of concerns about Seminole Rock's broad application. (36) Unbridled Seminole Rock deference, which empowers an agency to self-delegate, contravenes separation of powers norms, exploits a loophole within the Administrative Procedure Act, (37) and incentivizes behavior that is detrimental to good governance.

   First, separation of powers was one of the most important norms embodied within the Constitution. As James Madison stated in The Federalist Papers:

   No political truth is certainly of greater intrinsic value or is stamped with the authority of more enlightened patrons of liberty than [separation of powers]. The accumulation of all powers legislative, executive and judiciary in the same hands, whether of one, a few or many, and whether hereditary, self-appointed, or elective, may justly be pronounced the very definition of tyranny. (38) To prevent the consolidation of powers within a single entity, the drafters of the Constitution vested distinct powers among the coordinate branches of government. (39) The Constitution also contemplates certain circumstances where a branch appears to act in a way which crosses the lines drawn by the Vesting Clauses; these instances are textually-prescribed checks that functionally blend the powers of the federal government. For instance, the President is given the power to veto legislation under Article I. (40) Because this veto can only be overcome by a two-thirds vote in each house, the presidential veto is functionally equivalent to a one-third vote in each house of Congress. (41) Thus, the structure of the Constitution reflects the Founders' intent to create strict boundaries between the branches of government because of the fear of the consolidation of power. (42)

   Agencies are capable of exercising all three powers recognized in the Vesting Clauses, (43) although agency actions are usually subject to an independent check from the non-executive branches. (44) Even though legislative and enforcement powers are combined within agency rulemaking, the principle of separation of powers is maintained because agency action is subject to judicial review. (45) Where a reviewing court defers to the agency's interpretation of a statute under Chevron, the separation of powers norm persists because of "step one" in the Chevron analysis: if Congress has clearly and directly spoken on the issue within the statute, then Congress, not the agency, controls the interpretation. (46) In both instances, a separate branch of government maintains a check over agency action. However, Seminole Rock deference retains neither the judicial nor legislative check: in the Seminole Rock context, the agency--not Congress--makes the law, and the agency--not the Court--controls the interpretation of the law. (47) The idea that a single government entity is responsible for both drafting and interpreting a source of substantive law would be abhorrent to the Founding Fathers.

   Second, Stephenson and Pogoriler identified a separate facet of the self-delegation problem concerning the lack of notice and comment procedures applicable to an agency's interpretation of its own regulation. As discussed above, agency rulemaking is typically subject to a number of procedural constraints--namely, the requirement of providing notice of proposed rulemaking and an opportunity to comment. (48) Interpretive rules, however, are not subject to APA procedural safeguards. (49) Typically, a court will show an agency less deference under Skidmore v. Swift & Co. when working through less procedurally rigorous avenues. (50) As Stephenson and Pogoriler observe:

   In the statutory interpretation context, agencies have a choice: they can use notice-and-comment proceedings to promulgate their statutory interpretations as legislative rules, in which case they will presumptively receive Chevron deference, or they can opt to issue these interpretations informally as interpretive rules, in which case they will have to defend their interpretations...