Notice & Comment

Ninth Circuit Review-Reviewed: Panel Ushers in Pretextual Review under Dept. of Commerce v. New York, by William Yeatman

Welcome back to Ninth Circuit Review-Reviewed, your monthly recap of administrative law before arguably “the second most important court in the land.” Let’s get straight to business.

Panel Nixes Rail Reg over Agency Pretext

The biggest development last month was the Ninth Circuit’s inaugural application of *pretextual review* as established by the Supreme Court in Department of Commerce v. New York.

In International Association of Sheet Metal, Air, Rail, and Transportation Workers v. FRA, a CA9 panel reviewed a 2019 order, issued by the Federal Railroad Administration, that regulates the size of train crews.

In setting forth its standard of review, the three-judge panel stated that “we take our guidance from two recent Supreme Court opinions, Department of Homeland Security v. Regents of the University of California and Department of Comm. v. New York.”

The panel took Regents to stand for the traditional tenets of “hard look” review. And, with New York, the panel explained that the Supreme Court supplemented hard look review with “four steps for reviewing whether an agency’s stated reasons for taking action are pretextual”:

First, in order to permit meaningful judicial review, an agency must disclose the basis of its action. Second, in reviewing agency action, a court is ordinarily limited to evaluating the agency’s contemporaneous explanation in light of the existing administrative record. Third, a court may not reject an agency’s stated reasons for acting simply because the agency might also have had other unstated reasons. Fourth, the Court “recognized a narrow exception to the general rule against inquiring into the mental processes of administrative decisionmakers where there is a strong showing of bad faith or improper behavior.  

Ultimately, the panel identified pretextual motivations at the FRA, explaining that “although the Order describes itself as withdrawing [a proposed rule from 2016], its real and intended effect is to authorize nationwide one-person train crews and to bar any contrary state regulations.” After “applying the approach set forth in New York,” the panel concluded that “the record does not support” the FRA’s 2019 order.

The opinion marks the first time that CA9 has employed the New York framework for probing agency pretext.

It will be interesting to see how the Biden administration responds. On the one hand, the incumbent administration supports the policy resulting from the panel’s opinion; on the other hand, the Biden administration surely is wary of “pretextual review” gaining a foothold in the circuit courts. Stay tuned.

CA9 Smacks Down SSA’s Attempt to Narrow Its Standard of Review 

In Ahearn v. Saul, a three-judge panel took the government to task for trying to tilt the playing field in administrative adjudications before the Social Security Administration.

Judge William Fletcher’s unanimous opinion begins by observing that this was a routine case that typically would *not* be worth publishing in the Federal Reporter. The panel, however, chose to publish its opinion “to draw attention to the government’s incorrect description, in its briefs in this and in other recent [related] cases, of the standard of review.”

By statute, an SSA ALJ’s factual findings are reviewed under the well-known “substantial evidence” standard. The court, however, claims that the government has been trying to import a more stringent standard from immigration law—one that permitted the court to reverse the agency’s factual determinations “only if the evidence in the record not only supports that conclusion, but compels it.”

The panel pooh-poohed this perceived power play. (“We are not restricted to setting aside the ALJ’s decision only when the evidence in the record compels a contrary conclusion.”). Instead, the court affirmed that it would continue to employ the “substantial evidence” standard to these sorts of SSA controversies. After applying the “substantial evidence” framework to the facts at hand, the panel upheld the agency’s determination.

Thus, the government won the case, but lost the opinion.

Whither Deference under Biden?

During the Trump administration, the Justice Department underwent a sea change in how it approached judicial deference.

Consider Kisor v. Wilkie, in which the Supreme Court “maimed and enfeebled” Auer deference. In that case, the government sought to limit the Auer doctrine, and Justice Kagan’s opinion borrowed liberally from the government’s arguments. Indeed, no one was more important to reforming Auer deference than Solicitor General Noel Francisco. 

Turning to Chevron, a pattern emerged during the Trump era, whereby the government would decline to argue in favor of binding deference where the agency’s interpretation did not flow from administrative procedures that convey the force and effect of law.

For example, in an immigration case last month (Tomczyk v. Wilkinson), a CA9 panel observed that “the government does not argue that its interpretation . . . in this litigation is entitled to deference under Chevron and related cases.” Ultimately, the court agreed that deference was not warranted.

Mind you, Tomczyk was argued and filed last May, during the Trump administration. Now, of course, the Justice Department is under new management. Over the next four years, will the Biden administration become more aggressive in its pursuit of deference? I’d guess “yes.” Stay tuned.

Quick Hits

  • A few months ago, I blogged about how politics seems to have infected CA9’s limited en banc proceedings. A fantastic new paper backs up my supposition with empirical data. I highly recommend you check out Weaponizing En Banc, a new paper by Neal Devins and Alli Orr Larsen.
  • In mid-February, the full court denied a petition for rehearing en banc in Juliana v. United States, also known as the “kids’ climate case.” I previously blogged about the controversy here.
  • Recently, I wondered if “CA5 Is Becoming the New CA9?” That is, I wondered whether the Fifth Circuit would start upholding nationwide preliminary junctions issued by district courts against the Biden administration’s policies. In the Los Angeles Times, Evan Halper has the same question. (“GOP Eyes Playbook California Used to Stymie Trump”)
  • Last month the newest CA9 Practice Guide came out.

William Yeatman is a research fellow at the Cato Institute

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