By Randolph J. May
Legal Times, December 13, 1999
What the Supreme Court heard on Dec. 1 was a case about tobacco and the Food and Drug Administration. What the Court decides could affect the relationship between industries and government agencies with absolutely no interest in the sale of cigarettes.
The immediate issue in FDA v. Brown & Williamson Tobacco Corp., No. 98-1152, is whether the FDA has statutory authority to regulate the sale and distribution of cigarettes and smokeless tobacco to minors and to limit the advertising of tobacco products. But answering that question may require the Court to address an issue of broad significance to the entire "fourth branch": Should agencies be more or less free to act like common law courts and adapt their policies to changing circumstances and values?
Less, I'd say.
It is axiomatic that an agency may act only within the authority delegated to it by Congress. This fundamental principle is embodied in a provision of the Administrative Procedure Act, which states that: "A sanction may not be imposed or a substantive rule or order issued except within the jurisdiction delegated to the agency and as authorized by law."
In the parlance of the Federal Food, Drug, and Cosmetic Act, "drugs" and "devices" are products intended "to affect the structure or . . . function of the body." The FDA now asserts that tobacco products fall within its jurisdiction because they are drugs or devices that are intended to-and do-affect the structure or function of the body.
Obviously, Congress' intent is not clear in the sense that it would be if the Federal Food, Drug, and Cosmetic Act explicitly included or excluded tobacco products from its reach. That's why the U.S. District Court for the Middle District of North Carolina and the U.S. Court of Appeals for the 4th Circuit, after examining the same statutory text, its legislative history, and its relationship to other federal tobacco-specific legislation, could write plausible opinions reaching the opposite conclusions.
But note the difference in the way the District Court, which affirmed the FDA's jurisdiction, and the 4th Circuit, which didn't, framed the jurisdictional dispute. The District Court saw the issue as "whether Congress has evidenced its clear intent to withhold from [the] FDA jurisdiction to regulate tobacco products." The 4th Circuit declared that "the issue is correctly framed as whether Congress intended to delegate such jurisdiction to the FDA." (The dissenting appellate judge endorsed the District Court's approach, but then added an alternative: Is the FDA's assertion of jurisdiction "patently absurd"?)
Underlying the difference in semantics are two disparate views concerning the role of administrative agencies: Should they see themselves more as lawmakers or law implementers?
The Contextualists Have It
The FDA case presents fertile ground for the advocates of both approaches. If the statute is read literally, as textualists often advocate, then the FDA might well win. The argument goes that because recently discovered evidence shows that tobacco products are indeed intended to affect the structure or function of the body, they are "drugs." On the other hand, if the statutory definition of "drug" is considered in context, then the FDA might well lose.
Without elaborating on all the contextual arguments here, they run along the following lines: The definition of "drug" relied upon by the FDA was added to the statute to enable the agency to control unsafe products that are promoted as beneficial to one's health. Consistent with the most natural reading of the statute, the FDA typically bans such products from the market. But cigarettes are not promoted on the basis of health claims, and the agency, which has determined them to be detrimental to one's health, has nonetheless refused to ban them.
Moreover, with knowledge of the FDA's long-standing view that it lacked jurisdiction to regulate tobacco products, Congress has passed numerous tobacco-specific laws-for example, the Federal Cigarette Labeling and Advertising Act of 1965, the Comprehensive Smokeless Tobacco Health Education Act of 1986, and the Alcohol, Drug Abuse, and Mental Health Reorganization Act of 1992. In none of these laws regulating various aspects of the sale of tobacco products did Congress intimate that it thought the FDA had authority to regulate such products.
I believe that the contextualists have the better argument, so that the FDA should lose. But suppose that one considers the arguments of the textualists and contextualists to be pretty much in equipoise, and thus that Congress' intent is unknowable. How then should the Court decide the case?
One approach is to treat administrative agencies much like common law courts. Professor Cass Sunstein of the University of Chicago Law School, the most eloquent exponent of this view, has said: "The task of adapting the law to new circumstances, of both value and of fact, is largely an administrative responsibility. Agencies . . . are engaged in continuing processes of both 'updating' and particularization." Thus, for example, Professor Sunstein finds it perfectly appropriate for the Federal Communications Commission to apply a common law-like process to promulgate regulations, taking into account "new values and facts" under the Communications Act's public interest standard.
This common law approach to agency decision-making leans heavily on the Supreme Court's decision in Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc. (1984). There the Court said that, when a court reviews an agency's action, if the intent of Congress is clear "that is the end of the matter." But if the statute is ambiguous with respect to the specific issue, then "the question for the court is whether the agency's answer is based on a permissible construction of the statute."
Justice John Paul Stevens, writing for the Chevron Court, reasoned that, while agencies are not accountable to the people, "the Chief Executive is, and it is entirely appropriate for this political branch of the Government to make such policy choices-resolving the competing interests which Congress itself either inadvertently did not resolve, or intentionally left to be resolved by the agency charged with administration of the statute in light of everyday realities."
Note that this argument might not apply as comfortably to independent regulatory agencies like the FCC or the Securities and Exchange Commission, which are not really part of the executive branch. (The FDA is an office of the Department of Health and Human Services.) Professor Sunstein does not distinguish between such independent agencies and those directly responsible to the chief executive for purposes of advocating that agencies act like common law courts. The significance of the distinction is fodder for another day.
Not surprisingly, the FDA in Brown & Williamson relies very heavily on Chevron deference.
With all due respect to Professor Sunstein and the FDA, however, this is one precedent that would benefit from a little refinement. The Supreme Court should limit Chevron in a way that indicates that somewhat less deference is due when an agency seeks to extend its regulatory authority beyond widely acknowledged areas of core responsibility, as opposed to when it is more clearly filling in "gaps" in the statute.
Professors Ernest Gellhorn of George Mason University School of Law and Paul Verkuil of the Benjamin Cardozo School of Law, two leaders in the administrative law field, recently advocated such an approach. They pointed to cases in which the Environmental Protection Agency and the Nuclear Regulatory Commission, following the dictates of a recent executive order, incorporated "environmental justice" concerns into their decision making for the first time. The agencies used entirely new criteria in permitting and siting proceedings, thereby expanding their reach beyond what many considered to be the boundaries of their authority.
A refined rule of Chevron deference would recognize that less deference is appropriate where the agency has a natural incentive toward self-aggrandizement. It would make agencies a little less like common law courts engaged in law making, free to fashion new policies based on, in Professor Sunstein's words, "new values."
It is one thing for agencies to adjust their regulatory policies to take into account new facts. It is quite another to change policies-particularly those that reverse an agency's long-standing interpretation of the limits of its own authority-based on consideration of new values. That policy-making function, frequently involving a balancing of social, economic, and political considerations, is more appropriate for elected legislators.
I acknowledge, as Justice Antonin Scalia has pointed out, that often it may be difficult, if not impossible, for courts to draw a discernible line between actions that seek to extend an agency's regulatory authority and actions that merely fill in statutory gaps. See Mississippi Power & Light Co. v. Mississippi (1988) (concurring opinion). Possibly this could determine the outcome in Brown & Williamson, with the Court falling back on Chevron deference and holding the FDA's assertion of jurisdiction lawful.
If so, that will be one more reminder to Congress-and it needs many-that if it doesn't want to surrender too much of its law-making function to the agencies, it always has the option of making more of the difficult political choices itself. In other words, Congress can legislate more clearly, thereby mooting the issue of Chevron deference entirely. And thereby preventing the agencies from becoming even more like common law courts than they are today.
Randolph J. May is a senior fellow and director of communications policy studies at the Progress & Freedom Foundation in Washington, D.C. The views expressed are his own and do not necessarily reflect the views of the foundation. He may be reached at firstname.lastname@example.org. His column, “Fourth Branch,” appears regularly in Legal Times.
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