Chapter 7
Part II
Gonzales v. Oregon, 546 U.S. 243 (2006)

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Controlled Substances Act creates the prescription drug
requirement
 DOJ Reg: [prescriptions] 'be issued for a legitimate
medical purpose by an individual practitioner acting in
the usual course of his professional practice.''
AG says assisted suicide as authorized by Oregon
statute is not proper medical purpose
Who gets to define legitimate medical purpose?
 Why doesn't this allow medical marijuana?
2
Miller v. AT&T Corp., 250 F.3d 820 (4th Cir.
2001)

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The Family and Medical Leave Act (FMLA) does not
define medical treatment
 The agency finds that visits to the doctor that do not
require specific treatment are covered by the act
 What is the ambiguity?
Did the court accept the agency interpretation?
 What did the dissent want?
Why does this decision make practical sense?
 Think about going to the doctor for H1N1
 Are you going to get treatment?
3
Example - Court/Agency Conflicts in
Interpretation

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Portland wants to regulate broadband providers
Industry says they are telecommunications providers, thus not
subject to local regulation
 9th Cir agrees that only the FCC can regulate them
FCC then promulgates a rule defining broadband providers as
information services, which can be regulated by the local
government, in conflict with the appeals court
 What did the Appeals Court say?
 Did the United States Supreme Court agree that it was the 9th
Cir's call?
 When does the court ruling bind the agency?
4
Opinions in Litigation

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Chevron was a rulemaking, with all the attendant process
and review
What if the agency takes a position for the first time
during litigation?
 Why might the court not trust it?
Why might an amicus brief in a case where the agency
has no interest get more deference?
 Auer v. Robbins, 519 U.S. 452 (1997)
5
What Agency do you Defer to?


While many agencies may have some
responsibilities under a given law, the court will
only defer to the agency with the primary
responsibility for administering the law
Why would it be a problem to defer to more than
one agency for the same statutory provisions?
6
What if the question involves the
jurisdiction of the agency?


Why might the court not defer?
Why might Scalia argue that deference on
jurisdiction is as valid as any other area of
Chevron deference?
 Lower courts have agreed with Scalia
7
Leading up to Mead: Christensen v. Harris
County, 529 U.S. 576 (2000)


What did the court rule?
 “Here . . . we confront an interpretation contained in an
opinion letter, not one arrived at after, for example, a
formal adjudication or notice-and-comment
rulemaking. Interpretations such as those in opinion
letters--like interpretations contained in policy
statements, agency manuals, and enforcement
guidelines, all of which lack the force of law--do not
warrant Chevron-style deference.”
Why is this consistent with our definition of a guidance
document?
8
When does Chevron Apply? - United
States v. Mead, 533 U.S. 218 (2001)

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Chevron was a notice and comment rule
 Why does the notice and comment process better
assure that an agency legal interpretation is sound?
Mead is letter ruling on the classification of a product for
tariff purposes (Daytimer calendars)
 No notice and comment, thus no vetting
 Can be changed at a latter date without notice and
comment - does not bind the agency
Should this letter ruling get Chevron deference?
9
The Mead Test


administrative implementation of a particular
statutory provision qualifies for Chevron
deference when it appears that Congress
delegated authority to the agency generally to
make rules carrying the force of law, and that the
agency interpretation claiming deference was
promulgated in the exercise of that authority.
What would you look for to decide if Mead
applied?
10
Back to Persuasiveness (Skidmore)? Barnhart v. Walton, 535 U.S. 212 (2002)

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Barnhart factors
 The importance of interpretation to agency policy;
 The period that the agency has held the view;
 The legal expertise of the agency;
 The complexity of the problem;
These are neither Mead nor Chevron, but ad hoc
What can the agency due to strengthen its case for
deference?
11
Applying Barnhart


HUD issues guidance on construction of the antikickback provisions in a real estate act
 Published in the register, but no notice and
comment
Should the court defer to these under Barnhart?
 Yes, according to the Second and Ninth
Circuits; no, according to the Seventh Circuit.
 You are not the only person who is confused
12
Public Citizen v. U.S. Dept. of Health and
Human Services, 332 F.3d 654 (D.C. Cir. 2003)

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Is the Medicare Manual a notice and comment
regulation?
 If not, what is it?
 Does this look more like Mead or Chevron?
Did the court find that the manual was a
regulation with the force of law?
How can the Medicare Manual be binding on
providers if it does not have the force of law?
13
ABA Adlaw Conference 2008 - Justice
Garland, 2nd Cir, on Chevron:

If you have an ambiguous statute, and need
Chevron deference, do not say that the
interpretation is clear and there is no other way to
construe the law. Say it is ambiguous and you are
making a reasonable interpretation based on your
knowledge of the statute and the regulatory
circumstances.
14
Chevron and its Progeny: Wrapup
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These cases are all about questions of law
They deal with the interpretation of a statute as
embodied in a regulation, letter ruling, or other form
that is intended to be binding on the public or the
agency.
The unifying theme is that the more process, the
more deference
 This does not prevent the court from finding that a
regulation exceeds the statutory authority granted
the agency.
How do you make the argument for each side?
15
Interpretation of Agency Rules

“‘‘a court must necessarily look to the administrative
construction of the regulation if the meaning of the words
used is in doubt. The intention of Congress or the
principles of the Constitution in some situations may be
relevant in the first instance in choosing between various
constructions. But the ultimate criterion is the
administrative interpretation, which becomes of
controlling weight unless it is plainly erroneous or
inconsistent with the regulation.
 Bowles v. Seminole Rock & Sand Co., 325 U.S. 410
(1945), upheld by Auer v. Robbins, 519 U.S. 452 (1997)
16
Implications of Seminole Rock /Auer


Should interpretation of rules and statutes be the
same standard?
 Does Seminole Rock /Auer look like Chevron?
What perverse incentives does this give the
agency if it gets to resolve ambiguous rules?
 What if it just repeats the statute in the rule?
 Does it get more deference that way?
17
Judicial Review of Facts
Scope of Judicial Review of Facts

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Congress sets scope of review, within
constitutional boundaries.
Since the Constitution is silent on agencies,
Congress has a pretty free hand
Congress can allow anything from a trial de novo
to no review, unless such an action otherwise
runs afoul of the constitution.
19
Trial De Novo
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You start over at the trial court
Agency findings can be used as evidence, but
there is no deference to the agency
FOIA
Used more by the states than the feds
20
Independent Judgment on the Evidence

Decide on the agency record, but do not defer to
the agency's interpretation of the record.
21
Clearly Erroneous
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Definite and firm conviction that a mistake has
been made on the facts or policy
Same as reviewing a verdict by a trial judge
without a jury
22
Substantial Evidence - Formal
Adjudications
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706(2)(E) - only applies to formal adjudications and
formal rulemaking
Could a reasonable person have reached the same
conclusion?
 Standard for reviewing a jury verdict or for taking a
case from the jury
 Should a jury get more or less deference than an
agency?
Hint - substantial means some, not a lot, when you are
the agency
23
Substantial Evidence - Informal
Adjudications and Rulemaking


706(2)(A)
 Arbitrary and capricious or abuse of discretion
 Same assessment of reasonableness as
706(2)(E), so the result is about the same as the
substantial evidence test used for formal
proceedings
This is the most common standard
24
Some Evidence
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Scintilla test
The agency needs to show even less than in the
substantial evidence standard
Only limited use
25
Facts Not Reviewable At All

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Congress can prevent certain types of judicial
review
 Compensation decisions under the Smallpox
Vaccine Compensation Act are not reviewable
Enabling law is always reviewable unless
Congress has taken away the court's subject
matter jurisdiction
26
What if the Court thinks the Agency's
Policy Choice is Wrong?

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Should the court defer to findings which it believes are
clearly erroneous, but are supported by substantial
evidence?
 Why is this consistent with the political control of
agencies?
 When the legislature gives the agency the power, it is
also saying that it only wants agency decisions
overturned in the most serious cases
Courts have different political views than agencies and
thus they should be esp. careful about reversing agency
decisions.
27
Agency/ALJ conflicts: Universal Camera
v. NLRB, 340 US 474 (1951)

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Employer fires chairman after he testified at an
NLRB meeting
What did the hearing officer do?
 Believed the company and did not reinstate him
What did the NLRB do?
 NLRB rejects the hearing officer's finding
 Reinstated the chairman with back pay
28
What is the key legal issue before the
court?


Should the court reviewing the NLRB's action
consider the hearing officer's recommendation?
 Is the agency bound by the hearing examiner's
opinion?
 Should the court look only to the part of the
record that the agency relies on for their
decision or the record as a whole?
Court says you have to look at the whole record,
including the ALJ's findings
29
When Are the ALJ's Findings Most
Persuasive?

What type of rulings by an ALJ carry the most
weight with the court when there is conflict
between the ALJ and the agency?
30
Arbitrary and Capricious Review
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Old definition
 Highly deferential to the agency
 Same as rational relationship test in conlaw
Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S.
402 (1971)
 Added the notion of looking at the administrative
record before the agency
 Remember, this was about whether there was a
reasonable and prudent alternative to the road in the
park.
31
Mixed Law and Facts - Adjudications and
Other Informal Actions
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Applications of Law to Facts
Usually arbitrary and capricious review
Blurs the usual notions of deference because the
court does not defer much on the legal
interpretations but does on the facts
Unless it is a facial challenge, most cases are
mixed
32
When Should the Court Allow the Record
to be Supplemented by the Agency?
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This would result in de novo review of the new material
 Like a trial transcript on appeal, the record is usually closed
There can be an exception if the issue being appealed to the courts
is the agency's failure to allow outside input and thus failing to
consider all relevant factors.
 The court can allow the new material and give the agency a
chance to supplement its record in response
There can also be an exception if the plaintiff makes a credible
showing of significant bias by the agency and the court needs to
evaluate it.
 The court can ask the agency to appoint an ALJ to take
evidence and present it to the court.
RARE
33
Challenging Agency Action - Review

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First, you have to show it is a final agency action
 Rules
 Orders
 Everything else
Then you argue about standard of review
 The more agency process, the more deference
 Unless the statute or congressional intent conflicts
with the agency action or interpretation
34
"Hard Look" - National Lime Assn. v. EPA,
627 F.2d 416, 453 (D.C. Cir. 1980)

[judicial review should] evince a concern that variables be
accounted for, that the representativeness of test conditions be
ascertained, that the validity of tests be assured and the statistical
significance of results determined. Collectively, these concerns
have sometimes been expressed as a need for “reasoned decisionmaking.” . . . However expressed, these more substantive
concerns have been coupled with a requirement that assumptions
be stated, that process be revealed, that the rejection of alternate
theories or abandonment of alternate course of action be explained
and that the rationale for the ultimate decision be set forth in a
manner which permits the . . . courts to exercise their statutory
responsibility upon review.
35
Hard Look at What?
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The courts cannot use hard look to change the
underlying requirement that they defer to agency
decisionmaking on facts and policy.
Hard look analysis requires agencies to make
sure that the record for the case provides a clear
basis for their fact find and their policy decisions.
The court cannot change the decision, but it can
require the agency to provide better support for
its decisions.
36
Remember State Farm?


If a rule was properly promulgated, it was based on a
record justifying the need for the rule.
 If the agency wants to rescind the rule, it must do a
comment explaining why the underlying situation has
changed, making the rule unnecessary.
 The court took a hard look and found that the agency
did not properly consider alternatives
State Farm found that it was arbitrary and capricious to
rescind the seat belt rule without analyzing the factual
basis for showing how circumstances had changed.
37
Can the Agency Promise to not Enforce an
improper Rule?


OSHA proposed a rule for protection from bloodborne
pathogens in health care workplaces
 In all health care workplaces except home health, the
employer had control over the employee
 Home health agencies said they could not comply with
the rule because they did not have enough control
OSHA says it will not enforce the rule against them
 Is this enough to save the rule from being arbitrary
and capricious?
38
De Novo Review Under the APA

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Section 706(2)(F) provides for setting aside
agency action found to be “unwarranted by the
facts to the extent that the facts are subject to trial
de novo by the reviewing court.”
Overton Park - such de novo review is authorized
when the action is adjudicatory in nature and the
agency factfinding procedures are inadequate
 Absent bad faith, the court never finds this
 In real life, you only get de novo rule by statute
39
Forcing Agencies to Act
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Courts recognize that agencies have limited resources
Usually you have to have a statutory deadline or other limit on
discretion to force agency action
 The Regulators
Section 706(1) provides that a court is to compel agency action
unlawfully withheld or unreasonably delayed.
 Sometimes the court will find that there has been too much
delay, such as in OSHA's decade long refusal to address
drinking water standards for workers
 Rare
You are entitled to an answer on a petition requesting rulemaking Mass. v. EPA
40
Judicial Remedies for Improper Rules

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Remand but leave the rule in force
 Cannot do this for unconstitutional rules or rules that
exceed agency authority
What is the impact of staying the rule?
 Pulling a diabetes drug off the market?
Remand and stay the rule
 Will wild animals escape?
 Will there be risks?
 Is the court defeating agency policy making?
41
Relying on Agency Advice - Equitable
Estoppel

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You cannot get money damages - no appropriations
 Not under the tort claims act
It is a defense to criminal claims
Can be a defense to civil enforcement fines
 How did you get the advice?
 IRS letter ruling v. advice over the phone?
Relying on an agency mistake that you know about or
failure to enforce a law does not work
42
Collateral Estoppel - Relying on Previous
Court Decisions



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Same facts, same parties
 Government is bound
Same facts, different parties
 Government is not bound
What if they are close?
 Fred loses on a FOIA claim, gets his friend Taylor to ask for the
same document
 10 Cir says close enough, estoppel
United States Supreme Court says no exception to identity of the
parties for virtual representation - no estoppel
 Taylor v. Sturgell, 128 S. Ct. 2161 (2008)
43
Non-Acquiesce



The government can relitigate the same facts (different parties) in
different circuits to get better results
 Or to get a split to get United States Supreme Court review
Intra-circuit non-acquiesce is more controversial
 Agency loses in the circuit in a specific case, but continues to
apply the same law to other parties
Non-acquiesce only applies to adjudications
 If a rule is found invalid, it is invalid everywhere
 Why?
44