Commercial Litigation and Arbitration

Chevron Deference and the Arbitrary-and-Capricious Standard

From Wright v. Everson, 2008 U.S. App. LEXIS 20177 (11th Cir. Sept. 24, 2008):

"When a court reviews an agency's construction of the statute which it administers, it is confronted with two questions." Chevron, 467 U.S. at 842, 104 S. Ct. at 2781.

First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute.

Id. at 842-43, 104 S. Ct. at 2781-82 (footnotes omitted). If Congress explicitly leaves a gap in a statute for an agency to fill, "there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation." Id. at 843-44, 104 S. Ct. at 2782. A resulting regulation is reviewed only to see if it is arbitrary, capricious, or manifestly contrary to the statute. Id. at 844, 104 S. Ct. at 2782.

An agency rule is arbitrary and capricious if the agency relied on factors that Congress did not intend for it to consider, "entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Motor Vehicle Mfrs. Ass'n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S. Ct. 2856, 2867 (1983). A reviewing court may not supply a reasoned basis for the agency's action that the agency has not provided, although the court may uphold an agency decision if the agency's path to the decision may be reasonably determined. Id. If a delegation is implicit, but not explicit, then review is for whether the resulting regulation is a reasonable interpretation of the statute, and "considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer." Chevron, 467 U.S. at 844, 104 S. Ct. at 2782.

In discussing the limits of Chevron deference, the Supreme Court has held that such deference is appropriate "when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority." United States v. Mead Corp., 533 U.S. 218, 226-27, 121 S. Ct. 2164, 2171 (2001). The Court noted that a delegation may be demonstrated in several ways, including "an agency's power to engage in adjudication and notice-and-comment rulemaking, or by some other indication of a comparable congressional intent." Id. at 227, 121 S. Ct. at 2171; but see Ala. Power Co. v. U.S. Dep't of Energy, 307 F.3d 1300, 1312-13 (11th Cir. 2002) (noting that a settlement agreement was far removed from notice-and-comment rulemaking and any other circumstances reasonably suggesting that Congress thought deference was proper, but declining to determine whether Chevron deference was appropriate).

Share this article:


Recent Posts