The Law of Rules

By
Cory Marsolek
38 Mitchell Hamline L.J. of Pub. Pol’y and Prac. article 5 (2017)

“Administrative Law is not for sissies—so you should lean back, clutch the sides of your chairs, and steel yourselves for a pretty dull lecture.” The essence of this Note is that courts should treat agency rules that have “the force and effect of law” the same as statutes when courts determine at what point in time an agency rule becomes enforceable. Additionally, is the idea that courts retain the judicial power to interpret the statute. Only after a court has interpreted the statute does it then determine whether the agency action is harmonious with the law. Thus, courts do not abdicate their Article III role when deferring to agency rules in the Chevron/Brand X contexts.

The Court’s landmark holding in National Cable & Telecommunications Association v. Brand X Internet Services creates a conundrum in administrative law. To illustrate, consider the following scenario: First, the agency takes a position that allows certain litigants to adjust their immigration status. Second, a court defers to that agency position. Third, the agency changes its position to no longer allow this particular class of litigants to adjust their status. After the agency changes its tune, a litigant within the class, ostensibly relying on the court’s precedent, seeks to have their immigration status adjusted. Meanwhile, the court in a different case, defers to the agency’s second interpretation. Which interpretation of the statute should control the litigant’s ability to adjust their immigration status: the first court precedent, or the second agency rule?

To illustrate the dilemma with an algebraic flourish: a first-in-time court (T1) is asked to interpret a statute, finds the statute ambiguous, and interprets the statute to mean A. Subsequently, an agency (T2) with the power to promulgate rules under the statute comes along and decides that a better interpretation of the statute is B, not A. Finally, a third-in-time court (T3) comes along and defers to the agency’s interpretation (B) as reasonable. Which interpretation, A or B, should control a litigant who files after T2 but before T3?

We know from Brand X that an agency’s reasonable interpretation is controlling even when it conflicts with a prior court’s interpretation of an ambiguous statute.3 But the scenario above raises several important and problematic questions around retroactivity that Brand X does not directly answer. The ques tions that arise are when did the law change, and when are litigants subject to that law? Did the law change when the agency changed its interpretation to B, or did it change when the court deferred to the agency’s interpretation of B? And who decides?

Two authorities—Guiterrez-Brizuela v. Lynch, and Retroactivity Analysis after Brand X5—take the position that the agency’s ability to enforce the rule turns on judicial acquiescence to the new rule. Their propositions boil down to the idea that an agency in the Brand X context may not apply its rule until after a court has deferred to the agency’s new interpretation of the statute under Chevron.

This Note takes a different position: In the Brand X context, courts should treat agency rules that have ‘the force and effect of law’ as essentially that—laws. Because agency rules are essentially laws, when agencies change their “interpretation” of a statute—when agencies change their implementation of the statute—even that interpretation conflicts with a prior court precedent, courts should analyze the agency’s change through a lens similar to the legislature passing a law that overrides a contrary prior court decision. Thus when the agency promulgates a new rule at T2, this new rule is enforceable until a court strikes it down. Therefore, litigants should rely on the agency’s new rule rather than prior court precedent.

When the agency promulgates a rule, the agency is implementing the law pursuant to its statutory and, for executive branch agencies, constitutional authority. Moreover, agency rules have a similar legal impact as statutes, and courts analyze them under comparable rubrics.

When viewed through the rules-as-laws lens, the Brand X problem is not as problematic. Upon this foundation, agencies do not infringe on the courts province to interpret the law when an agency changes its implementation of a statute in a way that is contradicts a court’s prior interpretation. This foundation also alleviates the number of hoops that agencies, courts, and litigants must jump through to determine whether the rule can be applied. Once the rule is promulgated it has “the force and effect of law,” and it is valid unless, and until, a court strikes the rule down.

There are serious constitutional separation of powers questions that underlie the Brand X problem. Those issues are inherent in the modern administrative state. The modern administrative state hinges on the legal fiction that congressional delegation to agencies to promulgate and interpret rules are really agencies executing the law, rather than creating the law, and/or interpreting the law. To solve the Brand X problem, we must place agency actions, and judicial review of those actions, in the proper constitutional orbit. The purpose of this Note, in part, is to reconcile agency action with the separation of powers ratified in the Constitution that the framers considered necessary to the continued existence of the republic.