May 01, 1999
The Administrative Law and Regulation Practice Group of the Federalist Society hosted a breakout session during the National Lawyers Convention last November focusing on the doctrine established in Securities and Exchange Commission v. Chenery Corp., 318 U.S. 80, 63 S.Ct. 454 (1943). Under Chenery, courts may not consider post hoc rationalizations of counsel in defense of administrative agency decisions. In other words, government lawyers are not permitted to defend agency judgments on grounds that the agency itself did not originally, and explicitly rely upon in support of their decision.
Professor Tom Merrill of Northwestern University School of Law moderated the panel. The panel members included: Chris Wright, General Counsel of the Federal Communications Commission; The Honorable Lawrence Silberman of the United States Court of Appeals for the D.C. Circuit; and Professor Ron Levin of Washington University, a leading expert on judicial review of administrative action.
Professor Merrill explained that the normal rule in appellate litigation allows the appellee to defend the judgment below on any ground supported by the record. Chenery eliminates this flexibility for administrative agencies. First, restricting the available defenses for an agency decision in this way increases the frequency with which agency decisions are reversed and remanded. Second, though the Chevron decision indicates that agencies must show that their interpretations of statutes are reasonable, Chenery's limitations make this task more difficult.
Professor Levin defended the Chenery doctrine as fundamentally sound because it limits agency power. Congress entrusts responsibility to an agency, because the agency presumably has some specialized expertise or connection with the area of regulation. If a court can devise its own reasoning to justify an agency decision, it is exercising the discretion Congress vested with the agency.
Levin further noted that agency heads can be held politically accountable for agency decisions only if they are ultimately responsible for exercising the discretion granted by Congress. Chenery limits the court's power to intrude and creates accountability because the agency is the only entity that both regulates and proffers a justification for a regulation. Chenery helps the public know who created a regulation and why and protects its ability to influence decisions.
Finally, Levin argued that the doctrine offsets the tendency of an agency to want to win each case. Once a policy is decided and in place, the agency becomes vested in the policy. As such, the agency has an incentive to put forward any rationale that will keep it in place. Post hoc reasoning in such an environment may not reflect the most balanced judgment of an agency's exercise of discretion.
Nonetheless, Levin argued that there may be ways of relaxing Chenery without violating its spirit. Recognizing that institutional decisions do not always involve a conscious decision on every issue by the commissioners or agency heads themselves, courts could accept a wider range of rationales so long as they received proper deliberation. Levin posits that some courts appear to actually employ this approach in certain cases.1 Levin notes that courts could also allow agency counsel to argue that its appellate position, although not clearly articulated when the agency acted, was in fact part of the agency's thought process all along.
Wright explained why post hoc rationalization problems arise. First, different lawyers are employed by outside parties between different stages of litigation. One team of lawyers often prepares the public comments for a notice and comment proceeding. On appeal, that private party often hires another team of lawyers. The briefs are frequently better written, and clearer, and the agency's response reflects this new clarity. What seems like a post hoc rationalization may, in fact, be a clearer response to a clearer comment. Wright concluded that much of what is characterized as post hoc rationalization is merely an agency counsel responding to arguments raised in a brief that were never presented to the agency during the public notice and comment period. And often, arguments by agency counsel are merely applications of commissioners' reasons to new statements or comments by an appellant. Chenery, therefore, may be too restrictive and may unfairly advantage appellants.
Judge Silberman explained that Chenery's continued importance is grounded in the principle of judicial restraint. It is extremely easy for a judge to inject his own views. A judge, for example, could ask at oral argument, in a friendly manner, whether agency counsel means to argue a particular point. Agency Counsel, desiring a victory, responds in the affirmative. Chenery prevents a judge from converting his own arguments into the agency's position.
Silberman also underscored that Chenery supports the separation of powers. Most appellate litigation involves an appellate court reviewing another a lower court's ruling. Consideration of arguments presented to a district court but not relied upon by it poses no interbranch conflict. Chenery makes review of agency decisions different precisely because it involves the judiciary reviewing the decisions of another branch of government.
Judge Silberman also noted that the costs of Chenery are small. Remanding cases to the agency and forcing it to make a clear determination increases political responsibility and encourages reasoned decision making. The law does not become uncertain or unstable as a result. Moreover, the costs of relating the rule may be high. Chenery provides the agency with an incentive to closely examine and justify a policy before litigation.
The question and answer period touched upon the possible effects of remands. Remands might simply result in an agency affirming its prior decision based on the new rationale offered by appellate counsel, which greatly increases transaction costs. But, it is also possible that the agency may be hypersensitive to a court's vacating and remanding a decision, causing it to more often reverse its earlier decision. More data and analysis, the panel concluded, would help us understand not only some of Chenery's effects but also the general effect of judicial review in the area of administrative law.
1. See, e.g. National Wildlife Federation v. Browner, 127 F.3d 1126 (D.C. Cir.. 1997).
Donald Kochan is a law clerk to Judge Richard Suhrheinrich on the U.S. Court of Appeals for the Sixth Circuit.