Does Anyone on the Supreme Court Believe in Chevron Anymore? A Squib on Chevron in SAS Institute

Yesterday the Court decided SAS Institute Inc. v. Iancu, a case on whether the Patent Office must decide the patentability of every patent claim challenged by a petitioner in an inter partes review (an adversarial review of previously issued patents), or may only rule on the petitioner's non-frivolous challenges.  The Patent Office had issued a regulation providing that in deciding whether or not to institute an inter partes review upon being petitioned to do so, it could limit that review to only the petitioner's serious challenges.  But in an opinion by Justice Gorsuch, the Court held 5-4 that the relevant statute unambiguously forbids that sensible procedure.  Both that opinion and the lead dissent augur radical change in Chevron doctrine.

The majority opinion claims that the petitioner suggested the Court overrule Chevron and hints at some doubt about whether Chevron should be overruled before deeming the question unnecessary to deciding the case.  One would think that if the petitioner in SAS Institute had asked the Court to overrule Chevron, we all would have heard much more about SAS Institute.  That's correct; the petitioner didn't suggest the Court overrule Chevron.

In SAS Institute, the Patent Office sought Chevron deference to its regulation.  The petitioner, which wanted inter partes review of all the claims it challenged in its petition for inter partes review, not just the ones to which the Patent Office initially thought it had serious challenges, argued at great length that this regulation was unambiguously foreclosed at Step One of Chevron, and was, if not unambiguously impermissible, at least unreasonable at Step Two.  

In the course of making its Step Two argument, the petitioner noted that "[t]there are strong, even powerful arguments for the Court to retreat from Chevron’s approach of agency deference, and instead favor the 'impressive body of law' that Judge Friendly identified, pre-Chevron, 'sanctioning free substitution of judicial for administrative judgment when the question involves the meaning of a statutory term.'"  But it didn't actually make those arguments.  

Instead, the petitioner proceeded to suggest that "[t]hose constitutional concerns [about Chevron] can be avoided here, however, either by holding that the Board’s practice of issuing partial final decisions fails Chevron step one, or by simply enforcing step two of Chevron by its terms . . . ."  Further still, the petitioner went on to argue that the constitutional concerns with Chevron could not only be avoided in its case were the Court to not defer to the Patent Office, but that Chevron was perfectly constitutional if correctly applied, concluding: "In short, Chevron can survive, and remain consistent with 'the Constitution of the framers' design,' [here quoting from then-Judge Gorsuch's concurring opinion in Gutierrez-Brizuela recommending Chevron's overruling] if its steps are enforced with vigor."

In his opinion, Justice Gorsuch summarizes this take on Chevron in a curious way, as a "suggest[ion] that we might use this case to abandon Chevron and embrace the ‘impressive body’ of pre-Chevron law recognizing that ‘the meaning of a statutory term’ is properly a matter for ‘judicial [rather than] administrative judgment.’"  Slip op. at 14 (quoting Petitioner's Br. at 41 (quoting Pittston Stevedoring Corp. v. Dellaventura, 544 F.2d 35, 49 (2d Cir. 1976) (Friendly, J.))).  He then goes on to write that, because the statute is clear, "whether Chevron should remain is a question we may leave for another day."  This is curious in a couple ways.  

First, the petitioner never suggested abandoning Chevron, but rather only noted "powerful [constitutional] arguments" to do so and ultimately both argued that the Court should avoid deciding Chevron's constitutionality and that Chevron, properly applied, is a constitutional standard under which the petitioner would win.  Justice Gorsuch would appear to be so interested in overruling Chevron that he's reading requests to overrule it into litigants' briefs  that aren't quite there, thereby availing himself of an opportunity to suggest in an opinion for the Court that "whether Chevron should remain" is a live question.

Second, and along similar lines, his quotation from the petitioner's brief repeats, and if anything substantially enhances, the deceptiveness of petitioner's selective quotation of Judge Friendly.  Judge Friendly's opinion in Pittston Stevedoring is famous for its description of pre-Chevron deference doctrine as an incoherent mess, not for its description of a cohesive "impressive body" of pre-Chevron law that rejected deference to agency statutory interpretation.  

In the passage in question, Judge Friendly wrote eight years before Chevron that "it is time to recognize . . . that there are two lines of Supreme Court decisions on this subject which are analytically in conflict, with the result that a court of appeals must choose the one it deems more appropriate for the case at hand.  Leading cases supporting the view that great deference must be given to the decisions of an administrative agency applying a statute to the facts and that such decisions can be reversed only if without rational basis are [collecting cases] . . . However, there is an impressive body of law sanctioning free substitution of judicial for administrative judgment when the question involves the meaning of a statutory term."

The petitioner, at least, suggested that the Court should "favor the 'impressive body of law' that Judge Friendly identified" counseling against deference, which implies that Judge Friendly at least might have identified another impressive body of law supporting it that the Court could favor instead—as he did.  Justice Gorsuch, on the other hand, paraphrases the petitioner as suggesting that the Court simply "embrace the 'impressive body' of pre-Chevron law recognizing that ‘the meaning of a statutory term’ is properly a matter for ‘judicial [rather than] administrative judgment,' and then cites the brief as quoting Friendly, leaving the reader with the impression that Judge Friendly described a homogeneous and impressive body of anti-deference pre-Chevron law.  

The Court's additions and alterations to Judge Friendly's language, which don't appear in petitioner's brief, are interesting too.  Judge Friendly wrote of a body of law that merely sanctioned the free substitution of judicial for administrative judgment, without recognizing any particular order of priority between the two.  But Justice Gorsuch has him (or petitioner's brief quoting him) describing a body of law that "recogniz[ed]" that statutory interpretation is "properly" a matter for "'judicial [rather than] administrative judgment'"—a recognition one could scarcely find were one to read the cases Judge Friendly cited as exemplary of his "impressive body of law."  These cases, rather, were merely instances where the Court appeared to review an agency interpretation with little or no deference and little or no self-consciousness about its lack of deference (as the Court often does today without mentioning Chevron).  There is nothing even like an argument in them for (or recognition of) judicial primacy in statutory interpretation.

The majority opinion's conjuring of a phantom attack on Chevron, and of an impressive body of Judge-Friendly-endorsed, anti-deference, pre-Chevron doctrine, though odd, is probably less odd than the lead dissent's commentary on Chevron.  Justice Breyer's dissent proposed that the Court defer under Chevron to the Patent Office's regulation.  In a paragraph of his dissent joined by Justices Ginsburg and Sotomayor, but not by Justice Kagan, who otherwise joined his dissent in full, Justice Breyer pauses to offer the following remarkable interpretation of Chevron before explaining why he would defer to the Patent Office:

In referring to Chevron, I do not mean that courts are to treat that case like a rigid, black-letter rule of law, instructing them always to allow agencies leeway to fill every gap in every statutory provision. See Mead Corp., supra, at 229–231. Rather, I understand Chevron as a rule of thumb, guiding courts in an effort to respect that leeway which Congress intended the agencies to have. I recognize that Congress does not always consider such matters, but if not, courts can often implement a more general, virtually omnipresent congressional purpose— namely, the creation of a well-functioning statutory scheme—by using a canon-like, judicially created construct, the hypothetical reasonable legislator, and asking what such legislators would likely have intended had Congress considered the question of delegating gap-filling authority to the agency.

Of course, Chevron is most definitely not a mere rule of thumb that guides courts to ask whether a hypothetical reasonable legislator would have wanted courts to defer to agency interpretations of a particular ambiguity in a particular statute.  Rather, Chevron is indeed "a rigid, black-letter rule of law" that instructs courts to always defer to reasonable agency interpretations of ambiguous statutes that they administer so long as agencies issue those interpretations in a sufficiently formal way, see Mead, City of Arlington, and sometimes even when they don't, see Barnhart.  

This rigidity is just what distinguishes Chevron from the pre-Chevron mess described in Judge Friendly's opinion; Justice Breyer's construct of the hypothetical reasonable legislator, on the other hand, is the signal feature of that pre-Chevron mess.  Prior to Chevron, courts attempted to determine whether Congress would have wanted them to defer to agency interpretations of particular ambiguities in particular statutes, just as Justice Breyer claims Chevron guides them to do today.  Because Congress does not, as Justice Breyer says, "always [or usually] consider such matters," courts were left to imagine how much deference hypothetical reasonable legislators would have wanted, and to construct such hypothetical preferences by recourse to ten or more factors.  This inevitably resulted in an unpredictable body of law that the Court ultimately resolved in Chevron.

Now, it comes as no great surprise that Justice Breyer subscribes to the pre-Chevron approach to deference doctrine and claims, however implausibly, that Chevron can be squared with it.  For he has been saying so for over thirty years, dating back at least to a law review article he wrote as a circuit judge two years after Chevron was decided, in which he argued that even after Chevron a court should decide whether a hypothetical reasonable legislator would want it to defer to a particular agency on a particular question by considering ten or so factors, including whether the question is "one that the agency or the court is more likely to answer correctly" (not an easy question for the court to answer neutrally, that), and "whether the agency can be trusted to give a properly balanced answer."

What is surprising, though, is that Justices Ginsburg and Sotomayor joined the section of his dissent arguing that Chevron merely guides courts to ask whether a hypothetical reasonable legislator would desire deferential review of agency interpretations in any particular case.  In the past, with the exception of an opinion, Barnhart, on when agencies should get Chevron deference to even their interpretations that aren't advanced in notice-and-comment rulemakings or formal adjudications, Justice Breyer has been alone on the Court in advancing his view of Chevron.  (In Barnhart, he was able to get most of the Court to agree that, when an agency doesn't promulgate its interpretation formally, courts should consider all the factors he's always thought generally relevant to deference in deciding whether or not to defer to the informal interpretation.)   

Most recently, in City of Arlington, he wrote a solo concurring opinion arguing that Chevron deference was appropriate in that case only because it satisfied his multi-factor approach to "approximat[ing] how Congress likely [i.e., hypothetically] would have meant to allocate interpretive law-determining authority between reviewing court and agency."  Justices Sotomayor and Ginsburg did not join that opinion; they joined Justice Scalia's opinion for the Court, which claimed that agencies must always receive Chevron deference to any sufficiently formal interpretation of statutes that they administer.  Of course, it would be difficult to find five votes for that opinion now; Scalia has been replaced by Gorsuch, and the fifth vote in City of Arlington, Justice Thomas, now believes Chevron is likely unconstitutional.

It's possibly a mistake to read too much into Justices Sotomayor and Ginsburg's joining this section of Justice Breyer's dissent; perhaps they only joined it out of collegiality or disinterest in fussing over the details of a dissent on a subject they don't tremendously care about.  On the other hand, given that one of their colleagues refused to join this thoroughly gratuitous discussion of Chevron and presumably asked if it could be removed, it could hardly have escaped their attention.  Perhaps, then, they now genuinely believe that lower courts should inquire into whether a hypothetical reasonable legislator would have wanted them to defer to an agency before granting deference.  Or, perhaps they hope that Justice Breyer's proposal to trim Chevron back could operate as an olive branch to those members of the Court who want to overrule it.

In any event, after SAS Institute there is really only one Justice, Justice Kagan, who is committed on paper to upholding Chevron.  Two members of the Court, Justice Thomas and Justice Gorsuch, have argued that deference to administrative agencies on statutory interpretation is unconstitutional; another three members, Chief Justice Roberts and Justices Kennedy and Alito, joined the former's dissent in City of Arlington, which argued that courts must somehow decide, in the case of every ambiguity in a statute over which an agency has general rulemaking authority, whether Congress implicitly delegated gap-filling authority to the agency as to that particular ambiguity; and Justice Breyer, now joined by Justices Ginsburg and Sotomayor, has argued much the same thing, albeit of course in a more distinctively Breyerian Legal-Process-School-influenced way.  

The Breyer/Roberts position is certainly more moderate than the Thomas/Gorsuch position, and purports to stop short of overruling Chevron, but overruling Chevron is exactly what it would do.  Inviting lower courts to decide in every case whether Congress would have wanted them to defer would simply reincarnate the bivalent pre-Chevron deference doctrine that Judge Friendly actually described in Pittston Stevedoring, and would inevitably lead to a great deal less deference than Chevron's mandatory deference regime currently requires, as courts would simply find that Congress wouldn't have wanted them to defer in those cases that they really want to decide for themselves.  To the extent that members of the Court are becoming more interested in Justice Breyer's long-held views in hopes that adopting them could stave off more extreme proposals to kill off deference altogether, they may want to ask themselves whether giving the lower courts unfettered discretion to grant or deny deference is what they really want.