Monday, July 27, 2015

The Triumph of Chevron Step Zero?

By Michael Dorf

Tomorrow I will be speaking at the Practicing Law Institute's annual Supreme Court Review session. This is the seventeenth such session and, if memory serves, I have been a panelist since just about the beginning. It's always a fun-filled day. UC-Irvine Dean Erwin Chemerinsky and Touro Emeritus Professor Marty Schwartz organize the festivities as we range over the SCOTUS Term just completed. PLI is a non-profit provider of continuing legal education but it has a lot of expenses (including travel expenses but no pay for us speakers) so it charges for attendance or remote access. That's my way of saying that if you want to attend or watch, you'll need to pay. (Some scholarships are available.)

In addition to commenting on cases presented by other speakers, each speaker is assigned the responsibility for presenting a portfolio of cases. My portfolio includes Texas Dep’t of Housing v. Inclusive Communities Project, Inc., which holds that disparate-impact claims are cognizable under the Fair Housing Act (FHA). Because the case was decided at the end of the Term, when my attention was mostly focused on other cases, I only recently had occasion to read it carefully in preparation for tomorrow's panel. My presentation will focus chiefly on the big-picture disagreement between the majority and dissent over the availability of disparate impact claims under the FHA and more broadly, but here I want to note something that cuts across the Court's statutory jurisprudence: the possibly declining influence of Chevron deference.

In 1984, in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. the Court held that where a statute contains unclear language, courts ought to defer to a reasonable agency interpretation of that language. Chevron was not the first case to say this but it became the standard citation for the proposition that courts defer to administrative agencies. And Chevron deference was grounded in principles of both expertise and accountability. As between agencies--staffed by experts and accountable to the People through the president--and courts--staffed by generalists with life tenure--it should be assumed that Congress preferred agencies to fill in statutory gaps. Over the years, Chevron was refined into a two-step test: (1) Is the statutory language unclear? and (2) If so, is the agency interpretation reasonable?

Yet as Cass Sunstein argued in an important paper ten years ago, borrowing a term coined by Tom Merrill and Kristin Hickman, there has emerged an important threshold question: Chevron step zero. In Chevron step zero the court asks whether the Chevron framework applies at all or whether instead the lack of clarity in a statute should be treated as calling for judicial rather than agency clarification. Sunstein argued that the emergence of Chevron step zero was a regrettable occurrence, as it marked a decline of deference to agencies. I'm not sure I agree with that normative assessment but my aim in this post is simply expository rather than normative. I want to suggest that two cases in the past Term vindicate the view that Chevron step zero is real and increasingly important.

The SCOTUS itself has never expressly used the term "Chevron step zero" but a few federal appeals court decisions have. More important than the terminology, however, is the substance of what the Supreme Court cases do, and there the evidence is quite clear.

In King v. Burwell, for example, CJ Roberts declines to decide the permissibility of subsidies on federal exchanges based on Chevron, even though his opinion makes clear that the Internal Revenue Service's interpretation of the Affordable Care Act would survive Chevron's two-step process. He offers a classic Chevron-step-zero account of why the issue goes to the Court rather than an agency:
Whether those credits are available on Federal Exchanges is thus a question of deep “economic and political significance” that is central to this statutory scheme; had Congress wished to assign that question to an agency, it surely would have done so expressly. [Citation] It is especially unlikely that Congress would have delegated this decision to the IRS, which has no expertise in crafting health insurance policy of this sort.
Perhaps even more striking than that passage is the Court's resolution of Texas Dep't of Housing at the Chevron-step-zero stage without even pausing to consider whether to apply the Chevron framework. Justice Kennedy's majority opinion simply assumes that the question presented is whether the FHA permits disparate impact claims rather than first considering the possibility that the issue should be whether the Housing and Urban Development (HUD) regulation interpreting the FHA to encompass disparate impact liability satisfies Chevron. The Court decides the case at the Chevron-step-zero stage without even discussing the Chevron-step-zero issue. It's a kind of Chevron-step-negative-one ruling. (Justice Alito, in dissent, rejects the HUD reg at Chevron step one, arguing that the statute's language clearly encompasses only intentional discrimination.)

King and Texas Dep't of Housing are somewhat unusual Chevron-step-zero decisions in that both cases uphold the underlying agency interpretation of the statute. Given that the Court thinks in each case that the agency got it right, it follows a fortiori that the Court would have thought Chevron was satisfied if the Chevron framework applied. As Adam White noted in a SCOTUSblog post  after King v. Burwell, Chevron step zero first emerged in cases in which the Court struck down administrative interpretations of statutes. It was a doctrine embraced by conservatives seeking to rein in the administrative state. Indeed, that's part of the reason why Sunstein--a fanboy of the administrative state if ever there was one--fretted over Chevron step zero.

Despite its conservative origins and what may yet prove to be its conservative bias, Chevron step zero has been most vigorously opposed on the Supreme Court by Justice Scalia. His lone dissent in the 2001 case of United States v. Mead Corp. provides a particularly vigorous defense of a presumption in favor of Chevron's applicability.  However, liberals who share Sunstein's concern about the long-term implications of Chevron step zero should not take too much comfort from Justice Scalia's opposition. As cases like King and Texas Dep't of Housing show, he is quite willing to reject agency interpretations that do not fit his normative views at Chevron step one, finding language that others deem unclear to be dispositive. Thus, to take an example I blogged about last week, even though Justice Scalia has argued for Chevron deference to the Equal Employment Opportunity Commission (EEOC), don't count on him voting to uphold the EEOC conclusion that sexual orientation discrimination violates Title VII's prohibition on sex discrimination.