Loper Bright’s Penalty-Default Rule

Professor John Meisel’s recent post at the Yale Journal on Regulation’s Notice & Comment blog offers a fascinating framework for understanding how the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo creates an incentive for Congress to avoid “statutory vagueness” and “draft more precise statutes.”  Meisel characterizes the Court’s decision as establishing a “penalty default rule” and makes several predictions for how that “rule” might operate.  Those predictions are largely persuasive, but whether they bear out has yet to be seen, and there are some grounds to push back against what I sense to be Meisel’s unspoken pessimism.

A penalty-default rule is an interpretive concept drawn from the law of contracts.  It effectively directs a reviewing court to penalize at least one of the parties to a contract when filling any “gaps” in their agreement.  The idea behind the rule is that any threat of disfavored treatment will motivate the parties to do a better job setting forth the terms of their agreement on the front end.  Meisel explains how this “rule” applies in the Loper Bright administrative-law context:

Loper Bright and Political Accountability

I appreciate Meisel’s characterization of Loper Bright’s implications for Congress, as well as the Court’s interest in restoring a more traditional conception of the separation of powers.  I recently wrote a piece critiquing a report published by the Center for Progressive Reform that attempted to cast Loper Bright as the product of an “anti-democratic” “juristocratic regime” that seeks to “reinforce existing power disparities.”  In responding to that incredulous claim, I hinted at the very dynamics underlying Meisel’s framing:

Loper Bright is coherent and, while its implementation has not been uniform, that is hardly cause for concern.  The lower courts are reaching agreement about how de novo review under Loper Bright should operate after the forty-year-old Chevron experiment.  That is going to take some time to work its way through the system.  Plus, if anything, Loper Bright is best understood as a democratic and constitutional corrective.  Congress is the most politically accountable branch.  Ensuring that agencies follow Congress’s statutory directives—and not the President’s—allows our representatives to assume responsibility for legislating, rather than shifting that role to unelected bureaucrats.

To be sure, Loper Bright’s penalty-default rule will entail costs, especially for the legislative branch, if it is to respond honestly to the Court’s incentive.  Congress will need to be more specific when drafting statutes.  This doesn’t necessarily mean that Congress will write more detailed laws, in the sense of regulating minutiae, especially in highly technical or scientific contexts.  Congress can just as easily be clearer about its delegations of discretionary regulatory authority to administrative agencies.  Either approach, however, entails limiting statutory ambiguity.

Agency Practice in the Wake of Loper Bright

So, what should happen if Meisel’s penalty-default theory holds true?  He makes four predictions.  First, he argues that, on the agency side, we should see regulators “invest more heavily in statutory analysis and litigation defense.”  To a certain extent, this has already happened.  My piece in RealClear Policy last month explored how Loper Bright has transformed the executive branch’s approach to rulemaking and, specifically, regulatory reform.  The notion that all regulations must reflect the “best reading of the underlying statutory authority or prohibition,” for example, is now formalized in Executive Order 14219.

At the same time, agencies don’t seem to have embraced greater “procedural formality,” as Meisel also predicts.  Indeed, quite the opposite.  The White House Office of Information and Regulatory Affairs (“OIRA”), for example, issued a memo last year reinforcing an earlier presidential memo directing agencies to invoke the APA’s “good cause” exception to bypass notice-and-comment processes.  In the long term, though, it is still a safe assumption that agencies will provide more detailed bases for their regulatory actions, which are likely, in any event, to skew conservative in terms of their underlying presumptions about the scope of agency authority.  I discussed that expectation earlier this year when I reviewed a draft report (now finalized) prepared for the Administrative Conference of the United States:

Professor Deacon notes several [agency] drafters believed it “increasingly important” to “identify specific delegations,” as opposed to relying on general grants of regulatory authority.  Agency drafters also appeared to appreciate the importance of “leading with textualism’s traditional tools” before expounding on purposive or policy-based arguments.  Finally, experts “differed” somewhat on whether to frame agency interpretations “in terms of Skidmore’s factors or in reference to Loper Bright’s occasional nods towards agencies’ expertise.”

Loper Bright’s Potential Impact on Courts

Meisel’s third prediction is that “litigation itself may become a substitute regulatory instrument.”  It is not clear to me why Loper Bright would cause “more judicial involvement in regulatory policymaking,” as opposed to a different kind of engagement.  Although Loper Bright represents a paradigm shift in the standard of judicial review for APA cases, it has hardly opened the floodgates to litigation.  Nor has it proven to be an invitation for judges to insert themselves—as if they were able to do so sua sponte—into discretionary policymaking.  This is certainly the case where there is clear delegation of broad regulatory authority.  In any event, with some notable exceptions, even the Administration’s efforts to leverage Loper Bright as part of its deregulatory agenda has not resulted in a massive uptick in cases challenging regulations, as opposed to subregulatory policies or practices or discrete enforcement actions.  Whether Meisel’s prediction materializes at some later date is possible, of course, but even then, if disagreements about the meaning of the law arise with some new regulation, it is the province of the judiciary to resolve those disputes, not the agency.

The Big Question: How Does Congress Respond?

Finally, Meisel suggests that Loper Bright’s penalty-default rule may lead to “congressional adaptation” that is “selective rather than comprehensive.”  In other words, while Congress could “provide more detailed statutory instructions” in certain “highly salient” areas, it may otherwise be hindered by “existing political constraints” and fail to live up to the Court’s expectations.  The determining factor, Meisel argues further, is whether congressional decision-makers decide to build “legislative capacity” and push to reform internal “doctrines” and procedures.

Overall, this prediction seems right.  As Susan Dudley, the former OIRA administrator has argued, “Congress itself needs more resources” to respond effectively in a post-Chevron landscape.  And it is not just a question of financial resources.  Congress should retain subject-matter experts to make committees “sources of knowledge and deliberation,” especially in highly technical areas.  There also needs to be an improvement in legal expertise; legislative counsel should be able to anticipate how judges, under Loper Bright, will interpret the meaning of any given statute.  Avoiding ambiguity or being more comprehensive is only the beginning—drafting quality should be the overarching priority. 

Turning to other procedural or cultural adaptations that may be necessary to reach comprehensive congressional engagement, Senator Eric Schmitt’s Post-Chevron Working Group Report lays out a rather detailed plan for how Congress can pursue short-, medium- and long-term structural reforms that will, ultimately, lead to something more substantial than the piecemeal “adaption” that Meisel fears.  Even among progressives, some have proposed that the end of Chevron deference presents a “political opportunity” that will lead to widespread agreement about the advantages of Congress taking its role under Article I seriously once more.

Conclusion

Professor Meisel’s penalty-default framing captures something intuitively correct about Loper Bright’s constitutional logic.  Yet Meisel seems to imply quite subtly that the burden the Court has placed on Congress is something to be regretted or at least managed.  I am more optimistic.  In my mind, the penalty of statutory ambiguity is really the ordinary work of legislating, and something that Congress should always have sought to avoid.  If Loper Bright nudges Congress to draft more carefully, delegate clearly, and invest in its own capacity to do both, that is not a bug in the decision.  It is the driving force of its message on the separation of powers.  Loper Bright is a step towards restoring a healthier constitutional equilibrium.  That is worth defending on its own terms.

Ryan P. Mulvey is senior policy counsel at Americans for Prosperity Foundation.