The Internationalization of Agency Actions
U.S. agencies routinely base their domestic regulations on international considerations, such as the benefits of coordinating U.S. and foreign standards or the foreign policy advantages of a particular policy. I refer to this phenomenon as the internationalization of agency actions. This Article examines what the internationalization of agency actions means for agency decision-making processes, institutional design, and legal doctrine. It creates a stylized model of how agencies determine whether to coordinate their standards with foreign regulations. Among other institutional design findings, it shows that court opinions that reduce the stringency of judicial review when agencies implement internationally coordinated standards make such coordination more likely to occur, but they simultaneously deprive the executive of bargaining power because U.S. agencies cannot credibly threaten that any coordinated agreement must align more closely with U.S. values or else risk being overturned in U.S. courts. This Article also develops a taxonomy of international factors relied on by agencies and applies that taxonomy to help clarify the doctrinal issue of whether and when agencies can use international factors to justify their actions in court. This taxonomical approach shows how the Supreme Court’s opinion in Massachusetts v. EPA can reasonably be read to allow agencies to invoke a far broader range of foreign policy rationales than some prevailing views suggest.
A Costly Signaling Theory of Hard Look Review
Judges often review decisions made by government actors, such as agencies or legislatures, with greater expertise about the effects of different policy choices. One judicial response to this asymmetric information problem has been to shift the focus of review from a substantive evaluation of the policy to an assessment of the quality of the explanation the government offers in support of that choice. Proponents of this type of “hard look” review argue that it improves the quality of government decisions; critics charge that it imposes costs on government policymakers without providing useful information to reviewing courts. This paper offers an alternative perspective: Judicially-imposed explanation requirements can help reviewing courts overcome their informational disadvantage for reasons that are independent of their ability to assess the substantive content of government explanations. If producing impressive explanations is expensive, then the court can reason that the government’s willingness to produce a high-quality explanation signals the government’s belief that the proposed policy has large benefits. Furthermore, if the preferences of the court and government are positively correlated in expectation, then the fact that the government places a high value on the policy means the policy is more likely to be acceptable to the court. Therefore, judicial evaluation of explanation quality ameliorates the court’s informational disadvantage, and may induce a court to uphold a government decision it would otherwise invalidate. The paper develops this costly signaling perspective on hard look review in the administrative law context, and then considers other applications in constitutional and criminal law. * Assistant Professor of Law, Harvard Law School. I am grateful to David Barron, Ethan Bueno de Mesquita, Jody Freeman, Barry Friedman, Elizabeth Garrett, Bert Huang, Howell Jackson, Louis Kaplow, Adriaan Lanni, Daryl Levinson, John Manning, Gerry Neuman, Eric Posner, Matt Price, Mark Ramseyer, Fred Schauer, Dan Schwarcz, Ken Shepsle, Jed Shugerman, Bill Stuntz, Cass Sunstein, Judge Stephen Williams, Adrian Vermeule, and the participants in the Harvard Law School Law & Economics Workshop for helpful comments on earlier drafts. A SIGNALING THEORY OF HARD LOOK REVIEW A COSTLY SIGNALING THEORY OF “HARD LOOK” JUDICIAL REVIEW Matthew C. Stephenson © 2006 Matthew C. Stephenson. All Rights Reserved. American public law entrusts judges with considerable power to review the decisions of other government actors. While judicial review sometimes involves only abstract questions of law, more often it entails implicit or explicit evaluation of a government decision-maker’s empirical or predictive judgments. Yet most judges are generalist lawyers with minimal experience in scientific, economic, or policy analysis. The government actors whose decisions are reviewed, on the other hand, are often thought to have considerable expertise in such matters. This creates a dilemma for reviewing courts and raises a more general puzzle regarding the design of American public law institutions. The dilemma for courts is that judges do not want to abdicate their responsibility or their power to constrain other government officials, but they are reluctant to second-guess the choices of more expert decision-makers, especially when complex or technical issues are involved. The institutional design puzzle is how one might account for pervasive review of expert decisions by non-expert courts, and whether mechanisms have emerged to address the difficulties inherent in this sort of arrangement. One judicial response to the dilemma just described is to require that the government provide a sufficient explanation for its proposed action, often in the form of a written record or statement. Proponents of this approach, which is sometimes referred to as “hard look” review, contend that judicial scrutiny of government explanations can reconcile the perceived need for expert decision-making and the perceived need for a judicial check. This proposed reconciliation, however, is problematic. The same lack of expertise that makes it hard for a generalist court to evaluate a government decision on the merits also makes it hard for the court to assess the coherence, accuracy, and methodological soundness of the government’s explanation for its action. Critics of hard look review have also raised serious questions about whether the kind of lawyerly rationality demanded by reviewing courts has any particularly strong connection to substantively rational policy-making. Therefore, in those cases where it is difficult or impossible for courts to assess the substance of the government’s explanation for its decision, it is not always clear what hard look review accomplishes, and some have suggested that it amounts to little more than meaningless theater. 1 The term “hard look” review was coined by Judge Harold Leventhal of the D.C. Circuit. See Pikes Peak Broadcasting Co. v. FCC, 422 F.2d 671, 682 (D.C. Cir. 1969); Greater Boston Television Corp. v. FCC, 444 F.2d 841, 851 (D.C. Cir. 1970). As originally formulated by Judge Leventhal, the term “hard look” review referred to the idea that reviewing courts are supposed to ensure that the agency has taken a “hard look” at salient aspects of the decision problem. Over time, however, the phrase has come to connote the idea that courts are supposed to take a “hard look” at the agency’s decision process. See National Lime Assoc. v. EPA, 627 F.2d 416, 451 n. 126 (D.C. Cir. 1980).
How MEAD Has Muddled Judicial Review of Agency Action
In United States v. Mead Corp., the Supreme Court held that an agency is entitled to Chevron deference for interpretations of ambiguous statutory provisions only if Congress delegates, and the agency exercises, authority to issue such interpretations with "the force of law." The Court did not define "force of law," and thus did not determine what type of agency procedures fit within Mead. Four years have passed since the Court decided Mead, and despite numerous Court of Appeals decisions, we still do not know when an agency is entitled to Chevron deference for interpretations issued through procedures less formal than notice-and-comment rulemaking or formal adjudication. Lower courts agree that, after Mead, agencies must issue interpretations in formats that reflect some indicia of lawmaking authority. But they lose focus thereafter. First, lower courts employ different analytical frameworks to determine the relevant indicia of lawmaking authority, making Chevron deference turn more on the decisional preference of a particular court than on the procedural choice of a particular agency. Second, lower courts cite uncertainty about Mead as reason to avoid extending Chevron deference exclusively or at all, taking easier routes that may restrict agency interpretive flexibility. Finally, lower courts read Mead to address a question more general than intended - namely, whether agencies possess delegated authority to issue interpretations governing the scope of their own authority, even through notice-and-comment rulemaking. In the process, they ignore what little guidance Mead provides on the significance of notice-and-comment rulemaking for Chevron eligibility. If justified in so doing, they nonetheless turn the decision somewhat on its head, reading it as relevant to determining when an explicit delegation of interpretive authority is necessary rather than when an implicit one is present. The consequences of Mead have not been good, as Justice Scalia predicted in his dissent. After surveying the chaos in the lower courts, this Article calls for clarification of Chevron analysis by accommodating procedural innovation within defined bounds. Thus, it neither advocates Justice Scalia's solution of abandoning the focus on procedural formality nor endorses the Court's current position, which recognizes the significance of procedural formality but permits Congress or agencies unbounded room to create procedures that are more efficient than the relatively formal ones we have come to accept for administrative lawmaking. While the Article could defend a formalistic approach that restricts Mead to notice-and-comment rulemaking or formal adjudication, it ultimately argues for more nuanced approach that allows Congress to design and agencies to invoke informal procedures without sacrificing Chevron eligibility so long as those procedures generate interpretations that are transparent, rational, and binding. It further contends that this approach is consistent with the best reading of Mead and its erstwhile partner, Barnhart v. Walton.