7.a. The Supreme Court does not clarify probabilistic injury at all. In Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138 (2013), the Supreme Court issued a majority opinion that essentially contradicts itself on the subject of probabilistic injury. The plaintiffs challenged a provision of the FISA Amendments of 2008, which authorized surveillance of individuals who are not “United States persons” and are reasonably believed to be outside the United States. The plaintiffs included attorneys and human rights organizations. They claimed injury-in-fact based on the “objectively reasonable likelihood” that authorized surveillance would compromise their communications with foreign contacts. They also claimed injury due to the costs they had incurred to try to preserve the confidentiality of their communications.
The Court rejected both theories by the usual 5-4 vote that tends to occur in politically charged cases. Writing for the conservative majority, Justice Alito stressed that the “objectively reasonable likelihood” standard espoused by the plaintiffs (and the Second Circuit) was inconsistent with Court’s requirement that “threatened injury must be certainly impending to constitute injury in fact and that allegations of possible future injury are not sufficient.” 133 S. Ct. at 1147 (emphasis added by Clapper). The Court then spent several pages explaining that the plaintiffs’ theory of injury depended on a long chain of speculative events (e.g., that the government would both target a plaintiff’s particular contacts and use its new authorities to do so, etc.).
Given just this much, one might read Clapper as a clear instruction to lower courts to take an extremely tough line on probabilistic injury. This reading would fail to take account of note 5 of the majority opinion:
Our cases do not uniformly require plaintiffs to demonstrate that it is literally certain that the harms they identify will come about. In some instances, we have found standing based on a “substantial risk” that the harm will occur, which may prompt plaintiffs to reasonably incur costs to mitigate or avoid that harm. Monsanto Co. v. Geertson Seed Farms, 561 U.S. __, 130 S. Ct. 2743, 2754–2755 (2010). See also Pennell v. City of San Jose, 485 U.S. 1, 8, (1988); Blum v. Yaretsky, 457 U.S. 991, 1000–1001, (1982); Babbitt v. Farm Workers, 442 U.S. 289, 298 (1979). But to the extent that the “substantial risk” standard is relevant and is distinct from the “clearly impending” requirement, respondents fall short of even that standard, in light of the attenuated chain of inferences necessary to find harm here.
133 S. Ct. at 1150 n.5. So—one of two standards should apply to a plaintiff’s claim based on a risk of future injury: Either (a) that a “substantial risk” of harm exists or else (b) that the harm is “certainly impending.” The Court offered no real guidance in Clapper on choosing between the two.
Writing for a four-justice dissent, Justice Breyer attacked the majority opinion on both factual and legal grounds. As to the facts, he spent several pages explaining why the harm of intercepted communications was “as likely to take place as are most future events that commonsense inference and ordinary knowledge of human nature tell us will happen” and more than likely enough for standing. 133 S. Ct. at 1155-60. As to the law, he toured through the Court’s precedents to demonstrate that it had frequently allowed standing based on a reasonable or substantial risk of injury. Id. at 1160-65.
It will likely take a while for lower courts to determine what, if anything, to make of Clapper. One possibility worth considering is that they will confine it to cases strongly implicating national security concerns—an area in which the courts tend to be extremely deferential.
p.626, edited opinions from FCC v. Fox Television Stations, Inc. (as supplement to note 7 at 626, which discussed this case)
We provide, click here for the pdf document, lightly edited versions of Justice Scalia’s (mostly) majority opinion, Justice Kennedy’s concurrence, Justice Stevens’ dissent, and Justice Breyer’s dissent. Justice Thomas’s concurrence and Justice Ginsburg’s dissent, both of which focused on First Amendment issues, are omitted.
Here are a few questions you might consider:
Was Justice Scalia or Justice Breyer truer to State Farm?
What, exactly, did the FCC do wrong according to Justice Breyer? How did Justice Scalia rebut Justice Breyer’s analysis?
Given Justice Kennedy’s concurrence, whose framework for review commanded the Court’s majority?
How did Justices Scalia, Stevens, and Breyer treat Pacifica?
What role did the doctrine of constitutional avoidance play in Justice Scalia’s and Justice Breyer’s opinions? Who had the better of this argument in your view?
What role did empirical evidence play in the various opinions?
Suppose an agency has no new data, but simply evaluates the significance of its old data differently (maybe because of a presidential election or two). May the agency abandon its old policy in favor of a new one based on this new evaluation of old data? What should it say in support of such a shift?
Click here for the pdf document
13.a. Justice Kagan tells us how to think about step-two’s relation to arbitrariness review. In Judulang v. Holder, 132 S. Ct. 476 (2012), Justice Kagan, an administrative-law expert, added her two cents, or at least an extremely interesting footnote, to this debate. This case concerned the “policy” of the Board of Immigration Appeals (BIA) for “deciding when resident aliens may apply to the Attorney General for relief from deportation under a now-repealed provision of the immigration laws.” Id. at 479.
The basic problem underlying the case was that aliens subject to exclusion proceedings to bar them from entry into the country could seek discretionary relief under § 212(c) of the Immigration and Nationality Act (repealed in 1996). By its terms, § 212(c) did not authorize aliens subject to deportation proceedings to force them out of the country to seek similar relief. Notwithstanding this gap, the courts and the BIA, motivated by equal protection concerns, adopted the position that potential deportees could also seek discretionary relief. See Francis v. INS, 532 F.2d 268, 273 (2nd Cir. 1976). Although § 212(c) was repealed in 1996, this avenue of relief remains available where the ground for removing a person from the country is a guilty plea entered prior to 1996. Judulang, 132 S. Ct. at 480. Note well: § 212(c)-style discretionary relief for deportees did not rest on language in § 212(c) itself at all. Rather, this form of relief filled a gap left by the language of § 212(c).
In 2005, the BIA adopted a “comparable grounds” approach to determining whether a potential deportee could seek § 212(c)-style discretionary relief—this had the effect of narrowing its availability. The Government urged that the courts should review the BIA’s decision under Chevron step-two. Justice Kagan, writing for a unanimous court, disposed of this argument with the following footnote:
The Government urges us instead to analyze this case under the second step of the test we announced in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), to govern judicial review of an agency's statutory interpretations. See Brief for Respondent 19. Were we to do so, our analysis would be the same, because under Chevron step two, we ask whether an agency interpretation is “‘arbitrary or capricious in substance.’” Mayo Foundation for Medical Ed. and Research v. United States, 131 S.Ct. 704, 711 (2011) (quoting Household Credit Services, Inc. v. Pfennig, 541 U.S. 232, 242 (2004)). But we think the more apt analytic framework in this case is standard “arbitrary [or] capricious” review under the APA. The BIA's comparable-grounds policy, as articulated in In re Blake, 23 I. & N. Dec. 722 (2005) and In re Brieva–Perez, 23 I. & N. Dec. 766 (2005), is not an interpretation of any statutory language—nor could it be, given that § 212(c) does not mention deportation cases, see infra, at 487 – 488, and n. 11.
132 S. Ct. at 484 n.7.
Thus, according to Justice Kagan, Chevron step-two asks the same basic question as arbitrariness review. Chevron step-two does so, however, solely in the context of choosing meanings for ambiguous statutory terms. Where, as in Judulang, there are no statutory terms to interpret, Chevron can’t apply.
18. A “no surprises” limit on Auer/Seminole Rock deference. In Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156 (2012), the Supreme Court adjusted Auer deference, which applies strong deference to an agency’s interpretation of its own regulations, to protect against surprise. The central interpretive issue in the case was whether pharmaceutical sales representatives (“detailers”) who promote prescription drug sales to doctors are “outside salesmen” within the meaning of the Fair Labor Standards Act (FLSA) and thus exempt from overtime protections. The Department of Labor (“DOL”) has issued several regulations bearing on the meaning of “outside salesmen.”
Detailers filed suit against SmithKline Beecham Corp. (“SKB”) for overtime. The district court granted summary judgment for SKB after concluding that the detailers were “outside salesmen.” The detailers moved to alter or amend the judgment on the ground that the district court had erred by failing to give controlling weight to a new DOL regulatory interpretation that the agency had filed in an uninvited amicus brief in similar litigation before the Second Circuit. The district court rejected this argument, as did the Ninth Circuit on appeal. The Ninth Circuit noted, in particular, that DOL had in the past interpreted its regulations as requiring only that an employee make sales “in some sense” to qualify as an “outside salesman.” Moreover, the agency had “acquiesce[d] in the sales practices of the drug industry for over seventy years.”
After the Supreme Court granted certiorari, DOL submitted an amicus brief in which it stuck to its earlier contention that detailers are not “outside salesmen” but offered yet another regulatory interpretation to justify this result. Under this most recent approach, “[a]n employee does not make a ‘sale’ for purposes of the ‘outside salesman’ exemption unless he actually transfers title to the property at issue.”
The Supreme Court affirmed the Ninth Circuit in a 5-4 decision, explaining:
Although Auer ordinarily calls for deference to an agency’s interpretation of its own ambiguous regulation, even when that interpretation is advanced in a legal brief, this general rule does not apply in all cases. Deference is undoubtedly inappropriate, for example, when the agency’s interpretation is “‘plainly erroneous or inconsistent with the regulation.’” And deference is likewise unwarranted when there is reason to suspect that the agency’s interpretation “does not reflect the agency’s fair and considered judgment on the matter in question.” This might occur when the agency’s interpretation conflicts with a prior interpretation, or when it appears that the interpretation is nothing more than a “convenient litigating position,” or a “‘post hoc rationalizatio[n]’ advanced by an agency seeking to defend past agency action against attack”[.]
In this case, there are strong reasons for withholding the deference that Auer generally requires. Petitioners invoke the DOL’s interpretation of ambiguous regulations to impose potentially massive liability on respondent for conduct that occurred well before that interpretation was announced. To defer to the agency’s interpretation in this circumstance would seriously undermine the principle that agencies should provide regulated parties “fair warning of the conduct [a regulation] prohibits or requires.” Indeed, it would result in precisely the kind of “unfair surprise” against which our cases have long warned. See Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 170–171 (2007) (deferring to new interpretation that “create[d] no unfair surprise” because agency had proceeded through notice-and-comment rulemaking); Martin v. Occupational Safety and Health Review Comm’n, 499 U.S. 144, 158 (1991) (identifying “adequacy of notice to regulated parties” as one factor relevant to the reasonableness of the agency's interpretation); NLRB v. Bell Aerospace Co., 416 U.S. 267, 295 (1974) (suggesting that an agency should not change an interpretation in an adjudicative proceeding where doing so would impose “new liability ... on individuals for past actions which were taken in good-faith reliance on [agency] pronouncements” or in a case involving “fines or damages”).
132 S. Ct. at 2167 (footnote and some citations omitted).
In short, DOL’s new regulatory interpretation sandbagged a large industry that had no notice until 2009 that its seventy-year old practices regarding payment of detailers ran afoul of the FLSA and might give rise to massive liability. Given this circumstance, Auer did not apply. Cf. 132 S. Ct. at 2175 (agreeing that the “Solicitor General’s current interpretive view” does not “[i]n light of important, near-contemporaneous differences in the Justice Department's views as to the meaning of relevant Labor Department regulations” deserve “any especially favorable weight”) (Breyer, J., dissenting).
The Court’s concern over unfair surprise certainly has a common-sense ring to it. But is the Court’s treatment of the surprise problem in Christopher consistent with its celebration of agency flexibility in Chevron?
At p. 689, new note 8.a:
8.a. City of Arlington disposes of the “jurisdiction” problem. The issue of whether Chevron should apply to an agency’s interpretation of the scope of its “jurisdiction” has been percolating through the case law and law reviews for some time. The key rationale for refusing to apply Chevron in this context is to block agency power grabs. The key rationale for applying Chevron is that it is a fool’s errand to try to pick out which agency statutory constructions are “jurisdictional” and which are not. In the Court’s most recent major Chevron effort, City of Arlington v. FCC, 133 S. Ct. 1863 (2013), the latter view won a decisive victory, taking the “jurisdictional” issue off the table.
Justice Scalia opened the majority opinion by characterizing the issue as “whether an agency’s interpretation of a statutory ambiguity that concerns the scope of its regulatory authority (that is, its jurisdiction) is entitled to [Chevron] deference.” Id. at 1866. This abstract issue was rooted in a tussle over FCC control over state and local siting decisions for cell phone towers. The Telecommunications Act of 1996 incorporated limits on state and local control over such siting decisions into the Communications Act. The Act expressly states that it imposes no other limits on state and local control.
One of these limits, codified at § 332(c)(7)(B)(ii), is that state and local governments must act on siting applications “within a reasonable period of time after a request is duly filed.” This vague language naturally raises the question: What is a “reasonable period of time”? The FCC has statutory authority to “prescribe such rules and regulations as may be necessary in the public interest to carry out” the provisions of the Communications Act. Responding to complaints of delay from wireless service providers, the FCC invoked this general rulemaking authority to issue a declaratory ruling setting presumptive time limits for siting applications.
The cities of Arlington and San Antonio challenged the declaratory ruling on a variety of grounds, all rejected by the Fifth Circuit. The Supreme Court granted a writ of certiorari solely on the recurring question of whether Chevron deference applies to agency assertions of “jurisdiction.” The justices devoted a great deal of the oral argument to trying to figure out just what “jurisdiction” might mean in this context.
Justice Scalia, ever the Chevron maximalist, explained that this confusion was understandable because the distinction between jurisdictional and non-jurisdictional decisions at the agency level is a “mirage.” Id. at 1868. Any claim that an agency has exceeded its statutory authority can be characterized as a “jurisdictional” question—or not. Id. at 1869-70. As the jurisdictional inquiry can add nothing but confusion to review of agency action, federal judges should avoid it. Id. at 1871 (“The federal judge as haruspex, sifting the entrails of vast statutory schemes to divine whether a particular agency interpretation qualifies as ‘jurisdictional,’ is not engaged in reasoned decisionmaking.”).
Chief Justice Roberts authored a dissent for three justices. He explained that the “jurisdiction” question, properly understood, inquires whether Congress wished an agency to enjoy Chevron authority to imbue its construction of a particular statutory provision with the force of law. Id. at 1879-80. Courts should not defer to an agency on this threshold question of whether Congress wanted courts to defer to the agency. Id. at 1880 (“But before a court may grant such [Chevron] deference, it must on its own decide whether Congress—the branch vested with lawmaking authority under the Constitution—has in fact delegated to the agency lawmaking power over the ambiguity at issue.”).
9.a. A recent Supreme Court application of Brand X principles. Or is it a non-application? To measure your profits from a sale of an item, you need to subtract what the item cost you in the first place. In tax terms, you must subtract your “basis.” If you report an inflated basis on your tax return, then you can make it appear that you made less money than you actually did. In United States v. Home Concrete & Supply, LLC, 132 S. Ct. 1836 (2012), the Supreme Court confronted the problem of determining the statutory period of limitations applicable to IRS assessments of deficiency based on overstatements of basis.
The usual rule is that the government must assess a deficiency within 3 years after the filing of a return. 26 U.S.C. § 6501(a). This period extends to 6 years if the taxpayer “omits from gross income an amount properly includible therein which is in excess of 25 percent of the amount of gross income stated in the return.” Id. at § 6501(e)(1)(A).
In 1958, the Supreme Court, construing identical language from an earlier version of the Code, held that the extension to 6 years did not apply where the understatement of gross income was caused by an overstatement of basis. Colony, Inc. v. Commissioner, 357 U.S. 28 (1958). The Colony Court admitted that “it cannot be said that the language is unambiguous.” Id. at 33. Still, it concluded that the more “plausible” interpretation was that Congress did not intend the extension to apply to overstatements of basis but instead intended it to apply only where the taxpayer left out a source of income entirely. The Colony Court based this conclusion on both textual analysis and available legislative history. Home Concrete, 132 S. Ct. at 1840.
In 2010, the IRS adopted a rule declaring that the 6-year limit, contra Colony, did apply where misreporting of gross income occurred due to overstatements of basis. Treasury Regulation § 301.6501(e)–1. To justify this move, the IRS naturally relied on the Supreme Court’s decision in National Cable & Telecommunications Assn. v. Brand X Internet Services, 545 U.S. 967 (2005). Recall that in Brand X, the Court had stated that a “court's prior judicial construction of a statute trumps an agency construction otherwise entitled to Chevron deference only if the prior court decision holds that its construction follows from the unambiguous terms of the statute.” Id. at 982. The Colony Court had conceded ambiguity, leaving room for the regulation to trump the Supreme Court.
Five justices rejected this argument. Justice Breyer, writing for a 4-justice plurality on this issue, explained that, although the Colony Court had conceded linguistic ambiguity, it had not, writing decades before Chevron, found the type of ambiguity that indicates that Congress granted gap-filling authority to an agency to determine meaning. Chevron observes that courts, when determining statutory meaning at step-one, should use all the “traditional tools of statutory construction.” If these tools enable a court to determine congressional intent, then courts and agencies must give effect to this intent. Along these lines, based on its reading of both the text and legislative history, the Colony Court had reached the conclusion that “that Congress had decided the question definitively, leaving no room for the agency to reach a contrary result. Home Concrete, 132 S. Ct. at 1844.
Justice Scalia concurred. Given his druthers, he would abandon Brand X outright and hold Colony controlling based on stare decisis. Home Concrete, 132 S. Ct. at 1848 (Scalia, J., concurring). That said, under a straightforward application of Brand X, the Colony Court had determined that the relevant statutory provision was ambiguous, and the IRS had general authority to resolve such ambiguities. Justice Scalia would not, however, apply Brand X to this effect because it would betray “justifiable taxpayer reliance.” Home Concrete, 132 S. Ct. at 1846 (Scalia, J., concurring).
Writing for 4 justices, Justice Kennedy managed to dodge the stare decisis issue altogether. Colony interpreted the Internal Revenue Code of 1939. Home Concrete implicates the 1954 revision of the Code. It is true that the 1954 code adopted the very same language as the 1939 code for extending the deadline for assessing deficiencies. It is also the case, however, that Congress made changes in related provisions. In light of these changes, Congress may have meant something different in the deadline language in the 1954 code than it did in the 1939 code. Id. at 1849-51. The Colony Court did not address this issue and therefore was not on point. As a result, Brand X principles were not in play. Id at 1852.