Reason-Giving, Rulemaking, and the Rule of Law

Abstract

The requirement that agencies give reasons for their actions and in support of their interpretations in administrative law serves important Rule of Law values. It forces agencies to consider how and whether their actions can be justified and provides a means of accountability, allowing the public to judge the agency actions by the reasons offered. One of the areas where reason-giving is most debated is in the face of a new administration that seeks to alter, amend, or repeal a rule that has already gone through the strenuous notice and comment rulemaking process. Administrative law allows such changes so long as the new interpretation is reasonable and so long as the new rule follows the same notice and comment processes to replace the old.

If there is not a single unambiguous interpretation of a statute, then Chevron necessarily opens the door to the possibility of multiple reasonable interpretations which means that an agency might still be reasonable even if it adopts different interpretations at different times. Thus, a shift in agency interpretation is not per se invalid, but it is still subject to reason-giving hurdles. Curiously, the courts have generally not required a heightened standard of reason-giving to change a rule from an earlier adopted one. The agency need not prove that its new rule is better, just that it is reasonable as much as the first rule only had to show that it flowed from a reasonable interpretation (not necessarily proving itself as the best interpretation).

The recent U.S. Supreme Court case of Encino Motorcars, LLC v. Navarro revisited these standards. This Article examines that case and how its holdings fit within existing precedent to remind us of the standards at play for reason-giving in administrative law. If it had not been clear before, Encino starkly places reason-giving in its rightful place as a fundamental prerequisite to a complete and lawful notice-and-comment rulemaking process. If an agency does not fulfill the reason-giving requirement then it has not completed the process necessary for its action to carry the force of law. But the Article concludes that it is unlikely that Encino heightened the reason-giving standards, including for changes in policy precipitated by new presidential administrations.

Nevertheless, the Article advocates for a greater agency sensitivity to the benefits of going beyond what is legally required in reason-giving to add credibility to agency decision-making. Robustly providing reasons and thoroughly explaining changes goes a long way to increasing legitimacy for agency rules and for encouraging public buy-in for the regulations offered. Those are outcomes that agencies should strive to achieve even if the law is not mandating such a higher level of persuasion.

Keywords: Encino Motorcars, Navarro, Reason-Giving, Chenery, State Farm, Rulemaking, Administrative Law, Administrative Procedure Act, Chevron deference, Rule of Law