Richard E. Levy

Judicial Incentives and Indeterminacy in Substantive Review of Administrative Decisions

It was not supposed to be like this. In Chevron and State Farm, the Supreme Court announced what appeared to be controlling standards for substantive review of administrative decisions. Chevron adopted a two-step approach to statutory interpretation under which courts were to overturn agency interpretations that were contrary to the clear intent of Congress, but defer to permissible agency constructions of a statute. State Farm indicated that an agency’s policy judgments should be analyzed according to a specific set of inquiries that focused on the agency’s reasoning process. Administrative law scholars, whether they agreed or disagreed with the Court’s standards, assumed that the two cases were landmark decisions that signaled a turning point in the substantive review of agency decisions. Instead, the Chevron framework has broken down, and State Farm has been all but ignored by agencies and the courts, including the Supreme Court.This article accounts for this breakdown by analyzing the impact of judicial incentives on substantive review in administrative law. Its centerpiece is a model of judicial behavior based on the “craft” and “outcome” components of judicial decisionmaking. Judges engage in the well-reasoned application of doctrine as a matter of craft, and they consider the implications of a result for the parties and society in general as a matter of outcome. When these components pull in opposite directions in a given case, our model suggests how judicial incentives influence the resolution of this tension. Our model of judicial behavior explains why Chevron and State Farm have not been as influential as commonly assumed. Judges have stronger incentives to control outcome and weaker incentives to develop determinate craft norms that limit pursuit of outcome in administrative law than in other areas of law. Because reliance on indeterminate craft norms enables judges to pursue outcome without sacrificing craft, judges have avoided applications of Chevron and State Farm that are determinate. Drawing on this model, we propose a modified approach to substantive judicial review that accounts for the way that judicial incentives influence substantive review doctrine. We recommend that Congress require courts to respond to a series of specific questions that would apply to substantive agency decisions. These questions would make it more difficult for judges to manipulate scope of review standards and would require more explicit reasons for affirming or reversing an agency decision.

Heightened Scrutiny of the Fourth Branch: Separation of Powers and the Requirement of Adequate Reasons for Agency Decisions

In recent years, the requirement that administrative agencies provide adequate reasons for their decisions has come to play a central role in judicial review of agency decisions. While the increasing importance of this requirement has been recognized, no systematic study of its history and doctrinal basis has been undertaken. Grounded in a survey of court of appeals decisions reviewing agency action, and a careful review of Supreme Court decisions, this article proposes that the requirement is best understood as a form of heightened scrutiny of the rationale of agency decisions and that the doctrine of separation of powers requires such scrutiny because of the unique position of administrative agencies in terms of the constitutional structure of government. The separation of powers conception of the reasons requirement derives from an analysis of political values underlying administrative law, the evolution of various models of judicial review, and the history of the reasons requirement itself.The article begins by considering the political values underlying our governmental structure and describes the apparent conflict between two competing sets of values. ‘Liberal’ values restrict government action in order to preserve individual freedoms and are reflected in the Constitution through principles such as representative government, separation of powers, and due process. ‘Progressive’ values promote government action in order to relieve social problems, and are implemented through delegation of legislative and judicial powers to unelected administrators functioning outside of the political and constitutional limitations originally established for the exercise of those powers. Thus, administrative law jurisprudence is faced with the difficult task of accommodating two sets of conflicting values.The article then examines the Supreme Court’s efforts to accommodate liberal and progressive values through its articulation of the scope of judicial review of agency decisions. This examination identifies three distinct models of review reflecting the Court’s evolving jurisprudence—a ‘structuralist,’ a ‘proceduralist’ and a ‘rationalist’ model. We argue that the structuralist and proceduralist models have failed to accommodate progressive and liberal values both as a theoretical and practical matter. These models could not explain how liberal values had been preserved in the face of acceptance of progressive programs; nor could they provide meaningful protection for affected parties without unduly impairing the administrative process. We suggest that as a result the Court is turning to the rationalist model of judicial review, which has as its central feature the requirement that agencies articulate adequate reasons for their decisions. However, the Court has not fully explained the significance of this requirement, or the doctrinal basis of the rationalist model.The article locates that doctrinal basis by tracing the heretofore unexplored origin and development of the adequate reasons requirement. This history reveals that the requirement originally had a separation of powers dimension which was later obscured by the influence of the proceduralist model. This separation of powers dimension provides the basis for a more complete articulation of the rationalist model of judicial review under which the requirement of adequate reasons is best understood as a product of the separation of powers doctrine. This understanding not only reflects the history of the requirement, but also enables the rationalist model to accommodate liberal and progressive values. At the theoretical level, the rationalist model explains how structural safeguards are preserved so as to protect liberal values. At the practical level, the rationalist model provides a meaningful check on administrative action without unduly impairing the implementation of progressive programs by administrative agencies.