Tuesday, June 21, 2016

admin. law - Chevron deference - procedure for adoption of regs - reasons for change of regs

Encino Motorcars v. Navarro – US SCt – June 20, 2016 (6-2)


1.  Chevron deference is not warranted where a regulation is “procedurally defective”—that is, where the agency errs by failing to follow the correct procedures in issuing the regulation.

A premise of Chevron is that when Congress grants an agency the authority to administer a statute by issuing regulations with the force of law, it presumes the agency will use that authority to resolve ambiguities in the statutory scheme. . . .  When Congress authorizes an agency to proceed through notice-and-comment rulemaking, that “relatively formal administrative procedure” is a “very good indicator” that Congress intended the regulation to carry the force of law, so Chev­ron should apply. . . But Chevron deference is not warranted where the regulationis “procedurally defective”—that is, where the agency errs by failing to follow the correct procedures in issuing the regulation.


2.  One basic procedural requirement of administrative rulemaking is that an agency must give adequate reasons for its decisions. Where the agency has failed to provide even a minimal level of analysis, its action is arbitrary and capricious and so cannot carry the force of law. Agencies are free to change their existing policies, but in explaining its changed position, an agency must be cognizant that longstanding policies may have “engendered serious reliance interests that must be taken into account.”  Here, the regulation in question, which involved a change of position, was issued without a reasoned explanation.

One of the basic procedural requirements of administrative rulemaking is that an agency must give adequate reasons for its decisions. The agency “must examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the factsfound and the choice made.” Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U. S. 29, 43 (1983) (internal quotation marks omitted). That requirement is satisfied when the agency’s explanation is clear enough that its “path may reasonably be discerned.” Bowman Transp., Inc. v. Arkansas-Best Freight System, Inc., 419 U. S. 281, 286 (1974). But where the agency has failed to provide even that minimal level ofanalysis, its action is arbitrary and capricious and so cannot carry the force of law. See 5 U. S. C. §706(2)(A); State Farm, supra, at 42–43.

Agencies are free to change their existing policies as long as they provide a reasoned explanation for the change. . . . .Chevron, 467 U. S., at 863–864. When an agency changes its existing position, it “need not always provide a more detailed justification than what would suffice for a new policy created on a blank slate.” . . . . But the agency must at least “display awareness that it is changing position” and “show that there are good reasons for the new policy.” . . . .“In such cases it is not that further justification is demanded by the mere fact of policy change; but that a reasoned explanation is needed for disregarding facts and circumstances that underlay or were engendered by the prior policy.” . . . .It follows that an “[u]nexplained inconsistency” in agency policy is “a reason for holding an interpretation to be an arbitrary and capricious change from agency practice.” . . . An arbitrary and capricious regulation of this sort is itself unlawful and receives no Chevron deference.



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