Comment on Item
| Memorandum To:
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The Center for Regulatory Effectiveness
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| From:
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Multinational Legal Services
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| Subject:
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The Mead Decision
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In his dissent to the United States
Supreme Court's opinion in United States v. Mead Corp., 120 S. Ct. 2164 (2001),
Justice Scalia stated that the Mead
decision is one of the most significant opinions
ever rendered by the Court dealing with the judicial review of administrative action. Its
consequences will be enormous, and almost uniformly bad.
Id. at 2188 (emphasis added).
One could disagree with Justice
Scalia as to whether the consequences of Mead will be "uniformly bad." He is,
however, correct as to the significance of this opinion. It changes judicial review of
federal agencies' interpretation of their governing statutes.
Many federal statutes contain
ambiguities, and there often are several reasonable interpretations of a statute.
Mead changes prior law by requiring a reviewing court to defer to agency
interpretation of their governing statutes only when those interpretations are reasonable,
authorized by Congress, and have "the force of law": e.g., an agency interpretation
promulgated after public notice and comment as part of a statutorily authorized legislative
rule making. Numerous agency interpretations embodied in opinion letters, guidance
documents, agency manuals, and guidelines do not meet this new standard because they do not
occur during an agency's exercise of its valid delegated lawmaking authority.
Mead also changes prior law
by requiring a reviewing court to apply the so-called Skidmore doctrine to an agency's
interpretation of a statute when deference to any reasonable agency interpretation is not
required. Under the Supreme Court's decision in Skidmore v. Swift & Co., 323 U.S. 134
(1944), an agency's statutory interpretations are "not controlling upon the courts," and
the weight accorded an agency interpretation "in a particular case will depend upon the
thoroughness evident in its consideration, the validity of its reasoning, its consistency
with earlier and later pronouncements, and all those factors which give it power to
persuade." While this rather vague standard of review does accord some deference to the
agency, it differs significantly from a standard requiring a court to affirm any reasonable
agency interpretation even if the court believes there are more reasonable interpretations.
The impact of Mead will be
determined by the lower courts' application of it to particular cases and by subsequent
Supreme Court review of the lower cases. As one example, in an opinion dated eleven days
after the Supreme Court's opinion, the United States District Court for the District of
Columbia applied the Mead standard for the first time to challenged EPA rules.
Tozzi v. EPA, 2001 WL 735752 (D.D.C. 2001). The Tozzi plaintiffs had challenged, inter
alia, EPA's failure to employ toxic equivalent (TEQ) methodology in rules establishing a
reporting threshold for dioxin and dioxin-like compounds. The court applied full deference
to EPA's rules because the court concluded that (i) they were promulgated with the force
of law after public-notice-and-comment; (ii) the statute required EPA to promulgate these
rules; and (iii) EPA's failure to use a TEQ approach was not unreasonable. Id. at *12.
The court also held that even if full deference were not required under Mead, then
the rules were still proper under Skidmore because the court concluded that "to the extent
that the plaintiffs argue that the EPA's interpretive guidelines for calculating dioxin are
release are arbitrary and capricious, there is nothing before the court demonstrating that
the EPA's dioxin calculation is unreasonable, or arbitrary and capricious as such." Id. at
*12.
One interesting aspect of the Tozzi
decision is that the court applied the Mead standard for judicial review to the
highly technical "nuts-and-bolts" of the rules. The plaintiffs' challenge to EPA's failure
to use a TEQ reporting mechanism seems rather far down the line from a pure and direct
issue of statutory construction. One implication of the Tozzi, opinion may be that if the
requirements for full deference are lacking, then a reviewing court under the Skidmore
standard has more discretion to substitute its judgment for an agency's on rather technical
issues.
The Supreme Court itself has already
applied Mead to another case in vacating and remanding the Seventh Circuit's
decision in Household Intern. Tax Inv. Plan v. Matz, 227 F. 3d 971 (7th Cir. 2000), one
week after the Mead decision. The Seventh Circuit in Matz had relied on a prior
decision by the Second Circuit that gave "great deference" to the IRS' interpretation of
the ERISA provision at issue in both cases. The IRS' interpretation was contained in an
amicus brief invited by the Second Circuit. The Seventh Circuit followed the Second
Circuit's opinion, which relied heavily on the IRS' interpretation in its amicus brief,
even though the Seventh Circuit believed another interpretation was better "[p]urely from a
policy standpoint." The Seventh Circuit explained that it was "constrained in our analysis
of the statute and must decide only whether the IRS' construction is reasonable." Matz,
227 F. 3d at 974-76.
The Mead case had nothing to
do with this ERISA provision. The Supreme Court's vacating and remanding the Seventh
Circuit's opinion "for further consideration in light of [Mead]" can only be based
on the new standard of judicial review established by Mead. After Mead, a
reviewing court has much more discretion to substitute its policy views for an agency's
except in those circumstances identified in Mead where full deference to any
reasonable agency view is required.
THE Mead STANDARD
In Mead, an importer filed
suit challenging the tariff classification of its day planners. The Court of International
Appeals, 17 F. Supp. 2d 1004, granted summary judgment to the government. The Court of
Federal Appeals for the Federal Circuit, 185 F. 3d 1304, reversed, holding that the tariff
classification was not entitled to full deference under Chevron U.S.A. Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837 (1984), or to any lesser degree of deference.
The Supreme Court granted certiorari "in order to consider the limits of Chevron deference
owed to administrative practice in applying a statute." Mead, 121 S. Ct. at 2171.
The Supreme Court held that the tariff classification was not entitled to Chevron deference;
but that it was entitled to some respect according to the degree of its persuasiveness
under Skidmore. The Supreme Court vacated and remanded the case back to the Court of
International Appeals for a Skidmore analysis of the tariff classification.
When Chevron Deference is Required
Until Mead, Chevron had been
the seminal case governing judicial review of an agency's interpretation of its governing
statute. As interpreted (or perhaps reinterpreted) by Mead, Chevron now only
requires a reviewing court to defer to any reasonable interpretation of a statutory
provision open to several reasonable interpretations
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.
Delegation of such authority may be shown in a variety of ways, as by an agency's power to
engage in adjudication or notice-and-comment rulemaking, or by some other indication of
comparable congressional intent.
Mead, 121 S. Ct. at 2171.
The Mead opinion discusses
the Chevron deference standard at some length, including the following passage:
The Court in Chevron recognized that congress not only
engages in express delegation of specific statutory authority, but that "[s]ometimes the
legislative delegation to an agency on a particular question is implicit." 467 U.S., at
844, 104 S. Ct. 2778. Congress, that is, may not have expressly delegated authority or
responsibility to implement a particular provision or fill a particular gap. Yet it can
still be apparent from the agency's generally conferred authority and other statutory
circumstances that Congress would expect the agency to be able to speak with the force of
law when it addresses ambiguity in the statute or fills a space in the enacted law, even
one about which "Congress did not actually have an intent" as to a particular result. Id.
at 845, 104 S. Ct. 2778. When circumstances implying such an expectation exist, a
reviewing court has no business rejecting an agency's exercise of its generally conferred
authority to resolve a particular statutory ambiguity simply because the agency's chosen
resolution seems unwise, see id., at 845-846, 104 S. Ct. 2778, but is obliged to accept the
agency's position if Congress has not previously spoken to the point at issue and the
agency's interpretation is reasonable....
We have recognized a very good indicator of delegation
meriting Chevron treatment in express congressional authorizations
to engage in the process of rulemaking or adjudication that produces regulations
or rulings for which deference is claimed.....It is fair to assume generally
that Congress contemplates administrative action with the effect of law when
it provides for a relatively formal administrative procedure tending to foster
the fairness and deliberation that should underlie a pronouncement of such
force.....Thus, the overwhelming number of our cases applying Chevron
deference have reviewed the fruits of notice-and-comment rulemaking or formal
adjudication.....That said, and as significant as notice-and-comment is in
pointing to Chevron authority, the want of that procedure here does
not decide the case, for we have sometimes found reasons for Chevron deference
even when no such administrative formality was required and none was afforded.....
Mead, 121 S. Ct. at 2172 (citations omitted).
The Mead opinion clearly
requires full Chevron deference to reasonable agency interpretations of ambiguous statutory
provisions if those interpretations are part of final legislative rules promulgated after
public notice and comment pursuant to an express statutory directive to the agency. The
same conclusion applies to interpretations that are part of administrative adjudicatory
proceedings that are statutorily authorized. The Mead opinion allows the
possibility of Chevron deference in other undefined contexts. There are, however, two
constant requirements for Chevron deference:
Some of the principles established
by Mead were discussed and applied in a previous case, Christensen v. Harris County,
120 S. Ct. 1655 (2000). There are, however, two important differences between Mead
and Christensen. First, there were five separate opinions in Christensen. By contrast,
eight justices joined the opinion in Mead, with only Justice Scalia dissenting.
Second, Mead added the Chevron deference requirement that the agency's interpretation
be statutorily authorized.
The Skidmore Deference Test Is Vague
Even when full Chevron deference is
inappropriate, under Mead a court must still apply Skidmore deference to the agency's
interpretation. Justice Scalia points out in his dissent that the Skidmore test is hardly a
bright line analysis. A test that "'var[ies] with the circumstances,' including 'the degree
of the agency's care, its consistency, formality, and and relative expertness, and the
persuasiveness of the agency's position,'" 121 S. Ct. at 2178 (Scalia, J., dissenting), can
and will probably will be applied with varying degrees of strictness. In the many cases
that do not involve an agency's interpretation embodied in a statutorily required
public-notice-and-comment legislative rulemaking, or in a statutorily authorized
adjudication, a court may use the Skidmore test to substitute its judgment for the
agency's, or it may use it to defer to the agency's judgment "under the circumstances."
Mead'S IMPACT
According to Justice Scalia's dissent in Mead:
Whereas previously a reasonable agency application of
an ambiguous statutory provision had to be sustained so long as it represented the agency's
authoritative interpretation, henceforth such an application can be set aside unless "it
appears that Congress delegated authority to the agency generally to make rules carrying
the force of law,' as by giving an agency 'power to engage in adjudication or
notice-and-comment rulemaking, or...some other [procedure] indicati[ng] comparable
congressional intent,' and 'the agency interpretation claiming deference was promulgated in
the exercise of that authority....' What was previously a general assumption of authority
in agencies to resolve ambiguity in the statutes they have been authorized to enforce has
been changed to a presumption of no such authority, which must be overcome by affirmative
legislative intent to the contrary. And whereas previously, when agency authority to
resolve ambiguity did not exist the court was free to give the statute what it considered
the best interpretation, henceforth the court must supposedly give the agency view some
indeterminate amount of so-called Skidmore deference. We will be sorting out the
consequences of the Mead doctrine, which today has replaced the Chevron doctrine,
for years to come.
121 S. Ct. at 2177-78 (citations and footnotes omitted).
Justice Scalia is probably correct
that the impact of Mead depends on its application by the courts, including most
importantly the Supreme Court. At this point in time, however, Mead clearly does
constrict the universe of full Chevron deference. A court does not have to accept any
reasonable agency interpretation of a statute unless (i) that interpretation is authorized
by "affirmative legislative intent"; and (ii) the agency's interpretation has the force of
law. This standard may be interpreted to exclude any agency interpretation that is not a
rule promulgated after public notice or comment, or that is not applied during a
statutorily authorized administrative adjudication.
On the other hand, there may also be
a limited and currently undefined category of cases where Chevron deference is required
because an agency is statutorily authorized to interpret a statute in a manner other than
rules or adjudications. This category would probably be circumscribed by the "force-of-law"
requirement which might, as a practical matter, require public notice and comment under the
Administrative Procedure Act, or an adjudicatory hearing in compliance with the APA, if the
interpretations have a substantive impact on the rights and duties of the public, and
either create new law or substantially change existing law. See, e.g., 5 U.S.C. §§ 551(4),
553, 554.
After Mead, one would also
expect agencies and parties challenging agency action to comb legislative history for
evidence of "affirmative legislative intent"-or lack thereof-authorizing the agencies'
statutory interpretations. Only subsequent case law will define the amount and type of
legislative intent necessary to carry the burden of establishing full Chevron deference.
The greatest uncertainty under
Mead is how courts will apply the Skidmore test in those many cases where Chevron
deference does not apply. Justice Scalia's opinion that this test will restrict courts'
review of agency interpretations is correct only if courts choose to apply it in that
manner. The Skidmore test is very broad and vague. Depending on the facts of a particular
case, it could easily allow a court to substitute its statutory/policy view for an agency's
even if the agency's view is one of several reasonable ones. This result could never have
happened under Chevron deference.
Conversely, courts could pay lip
service to the Skidmore test in their opinion and then conclude that deference is due given
the facts of the case, without much scrutiny of those facts or by manipulating the facts to
fit the Skidmore test.
The precise contours of Chevron
deference, and how generously Skidmore can be applied, will probably only be known after
years of litigation and subsequent Supreme Court opinions on these issues. Nevertheless,
Mead does give courts far more scrutiny and control over agencies' interpretations
of statutes. The primary and still unanswered question is whether and how the courts will
exercise their new scrutiny and control.
Scott Slaughter
SM: CRE Regulatory Action of the Week
