Catherine M. Sharkey (New York University School of Law) has posted Cutting in on the Chevron Two-Step (Forthcoming, Fordham Law Review, Vol. 86, 2018) on SSRN. Here is the abstract:
This Article aims to address an all-too familiar scenario: a federal agency, under the guise of supposed legal interpretation of a statute, earns automatic judicial deference for what is, in reality, its policy-based interpretation—a scenario that, I argue, is translating into courts' insufficient oversight over agency action. Where an agency effectively uses Chevron Step One legal statutory interpretation arguments to justify its implicitly policy-based interpretation at Step Two, judicial oversight at Step Two is weakened, if not annulled.
This Article advocates incorporation of State Farm into the Chevron framework. Put simply, State Farm’s demand for “reasoned decision-making” from agencies mitigates Chevron's mandate for deference to agency statutory interpretations. The Chevron-State Farm model highlights the agency expertise rationale that infuses the implied delegation rationale for agency deference, particularly at Step Two. As a practical matter, the model expands the domain of State Farm, widening the scope of agency rules subject to hard look review, and, further, aims to increase the stringency of re-view. Perhaps most significantly, where the Chevron interpretive issue arises between private parties when the agency is not a party and litigants accordingly have no recourse to direct State Farm challenge to the rulemaking, the model would open the door to an indirect State Farm challenge.
The Article explores how this new doctrinal approach, one of hard look review at Chevron Step Two, will affect courts and, most of all, affect agency decisionmaking. Moreover, this particular form of Chevron retreat—widening the space for the application of State Farm—is fundamentally distinct from, and preferable to, setting Chevron aside. Whereas knocking down the Chevron pillar deals a blow to over-exuberant regulators and promises to stem the tide of over-regulation of the economy and health and safety, heightened judicial scrutiny of the Chevron-State Farm variety will force the agency’s hand in the context of deregulation as well.