Beyond Chevron's Domain: Agency Interpretations of Statutory Procedural Provisions

JurisdictionUnited States,Federal
CitationVol. 30 No. 03
Publication year2007



Beyond Chevron's Domain: Agency Interpretations of Statutory Procedural Provisions

Melissa M. Berry(fn*)

Every new tribunal, erected for the decision of facts, without the intervention of jury, ... is a step towards establishing ... the most oppressive of absolute governments.(fn1)

I. Introduction

Trial of facts by jury is a deep-seated principle in American jurisprudence.(fn2) Enshrined in the Constitution,(fn3) it was considered by many as "the very palladium of free government."(fn4) In the administrative context, however, the right to a jury trial has been greatly curtailed.(fn5) Federal administrative agencies can essentially conduct trials without a jury or the protection of an Article III judge, and their decisions are afforded great deference on judicial review.(fn6) Agencies also can directly impact individual rights through much less formal, so-called informal, adjudications, accompanied by only minimal procedures that pale in comparison to a trial.(fn7) Because procedural protections are critical to protect substantive rights, we must closely monitor agency adjudications to ensure that these rights, and the general public, are properly protected.(fn8)

Indeed, the "[mjultiplication of federal administrative agencies and expansion of their functions to include adjudications which have serious impact[s] on private rights" was one of the developments of the modern administrative state that prompted Congress to enact the Administrative Procedure Act (APA).(fn9) The APA, which governs all federal agencies,(fn10) provides procedures for the two primary activities in which agencies engage: adjudication and rulemaking.(fn11) These activities are further categorized by the level of procedural formality: formal and informal.(fn12) Together, the type of activity and the level of formality determine the set of accompanying procedures that must be followed.(fn13) Formal procedures provide protections that are generally comparable to those available in a civil judicial trial.(fn14) By contrast, informal procedures require far fewer protections for individuals; although the APA specifies procedures for informal rulemaking, it does not mandate any particular procedures for informal adjudications.(fn15)

An agency must follow the APA's formal procedures when an agency adjudication is "required by statute to be determined on the record after opportunity for an agency hearing."(fn16) Accordingly, Congress, through an agency's organic or enabling act, dictates when an agency must follow formal procedures. An enabling statute can explicitly call for formal or informal procedures under the APA,(fn17) but when the statute is not explicit, agencies and courts end up determining which procedures are required. This Article will address whether agencies or courts are best suited for this task.

Given the opportunity, agencies will usually choose informal procedures over formal ones.(fn18) Not surprisingly, "the trend is toward the elimination of procedural formality in favor of procedural efficiency."(fn19) The Supreme Court first encouraged this trend in the 1970s by severely limiting the application of the APA's formal rulemaking procedures(fn20) and by denying courts the power to supplement the APA's informal rulemaking procedures with additional procedural protections.(fn21) Even in the adjudicative setting, where procedural protections are more rigorous, the Court's current constitutional prescription for procedural rights under the Due Process Clauses of the Fifth and Fourteenth Amendments is an informal hearing: "something less than an evidentiary hearing is sufficient prior to adverse administrative action."(fn22)

The Court's approach to judicial review of agency statutory interpretation has also followed this trend toward efficiency. Its 1984 decision in Chevron U.S.A. v. Natural Resources Defense Council (fn23) expanded the circumstances in which courts must defer to agency interpretations of regulatory statutes. Under Chevron, a court must first ask whether Congress has directly spoken to the precise question at issue.(fn24) If not, the court must defer to the agency's reasonable interpretation.(fn25) The adoption of the "Chevron doctrine," as it is commonly known, has spawned a vast range of issues for litigation and scholarly commentary.(fn26)

This Article does not seek to critique Chevron as an administrative or constitutional law doctrine. Rather, taking Chevron and its progeny as the current state of the law, it argues that agency interpretations of their enabling statutes' procedural provisions should lie beyond "Chevron's domain."(fn27) The Article specifically focuses on provisions that dictate whether formal adjudicatory procedures are required and how the type of procedures impacts individual rights.

Today, no uniform approach exists to determine what statutory language triggers the APA's formal adjudicatory procedures. Historically, courts have taken three divergent approaches when a statute is not clear. The first approach is a presumption in favor of informal procedures.(fn28) The second approach employs the opposite presumption; it requires formal procedures absent evidence of congressional intent to the contrary.(fn29) The third approach grants Chevron deference to the agency's reasonable interpretation.(fn30) This third and most recent approach appears to be a growing trend, one that in 2006 caused a federal circuit court to abandon its longstanding precedent calling for a presumption in favor of formal procedures and to defer to an agency's reinterpretation of statutory language in the name of efficiency.(fn31)

This Article is critical of this trend toward granting deference to agency interpretations of whether their enabling statutes require formal adjudicatory procedures. It argues that, in determining whether APA formal procedures are required, neither Chevron deference nor presumptions are the proper solution.(fn32) Instead, a case-by-case, de novo review is necessary, leaving courts, not agencies, to have the final word on such interpretations.(fn33)

Part II of the Article outlines the procedures required by the APA for agency adjudications. Part III discusses the three primary approaches that courts have followed to determine what triggers formal adjudicatory procedures and introduces the Chevron doctrine. Part IV examines how courts review agency interpretations of statutory provisions under Chevron and its progeny and explores two issues on the fringes of Chevron's domain-interpretations of agency jurisdiction and judicial review provisions-and the concerns that they raise. Next, using lessons from these analogous issues, Part V analyzes similar concerns about congressional intent, institutional competency, agency self-interest, and fairness in the procedural provision context. It then advocates for a contextual approach to judicial review, which rejects mandatory deference, and proposes an analytical framework for such review based on factors related to the goals served by procedural formalities. Part V argues that this is the best approach available to provide long-needed guidance to the courts. In Part VI, the Article concludes that courts, not agencies, should be the final interpreters of procedural provisions in enabling statutes.

II. Adjudications Under the Administrative Procedure Act

The interpretive issue that is the subject of this Article is grounded in the APA, and thus the APA is the starting point for any analysis. This Part outlines the APA's procedures for agency rulemaking and adjudication. It then discusses the question of what statutory language triggers the APA's requirement for formal procedures.

A. Procedural Packages Under the APA

Distinguishing adjudication from rulemaking is one of the most critical distinctions in administrative law.(fn34) Adjudications require the agency to act like a trial court resolving a dispute, whereas in rulemaking, the agency acts more like a legislature.(fn35) The most important distinction, however, is that rulemaking "affects the rights of individuals in the abstract and must be applied in a further proceeding before the legal position of any particular individual will be definitely touched by it; while adjudication operates concretely upon individuals in their individual capacity."(fn36) Because adjudications involve individual substantive rights that are concretely and immediately affected by an agency's action, agencies must comply with constitutional due process in addition to the APA and other statutory procedures.(fn37)

The APA sets up a "feast or famine"(fn38) paradigm for adjudicatory procedures. Under the APA, formal adjudications are governed by §§ 556 and 557,(fn39) which together contain a set of trial-type procedures that apply to only formal adjudications and formal rulemakings.(fn40) These formal procedures provide a host of procedural protections.

For example, the agency is required to provide notice of the hearing and afford an opportunity to participate in that hearing.(fn41) A qualified presiding officer is to conduct the hearing in a fair and impartial manner and is given the administrative powers to do so.(fn42) The APA also places the burden of proof on the proponent of an adjudicatory order and requires that such orders be supported by reliable, probative, and...

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