The Supreme Court offers a robust vision of hard look review in a polarized political climate.
The U.S. Supreme Court unanimously upheld this month one of hundreds of U.S. Food and Drug Administration (FDA) denials of applications to market millions of types of flavored e-cigarettes. To its credit, the Court decided FDA v. Wages & White Lion Investments on its merits docket rather than its emergency docket, meaning that the decision was based on full briefing, oral argument, and careful consideration of a complicated and lengthy record and the widely varying views of many lower court judges. Because the case was on the Court’s merits docket, the Court could explain its decision in detail in an opinion that has precedential effect whereas a decision on the Court’s emergency docket has none of those characteristics.
The Court’s decision was unanimous. It serves as a rare reminder that governmental institutions are sometimes capable of making nonpartisan decisions. At present, the judiciary is the only branch of government that is capable of making nonpartisan decisions on at least some occasions.
Justice Samuel Alito’s opinion in the case illustrates “hard look” review—a demanding approach to determining whether an agency’s action is arbitrary and capricious in which the court considers, in detail, the process through which the agency took the challenged action, the evidence supporting the action, and the agency’s stated bases for the action.
Hard look review is well-suited to our extremely polarized political environment. When a candidate of one party is elected to replace a President of the other party, the newly elected President attempts to reverse many of a predecessor’s major policy decisions. The incidence of this flip-flopping upon a change in administration has increased by 1,300 percent.
No one’s interests are well served by a government that changes its position on many major issues every four or eight years. Hard look review of agency decisions provides a much-needed limit on flip-flopping. It precludes an agency from flip-flopping unless the agency can explain to the satisfaction of a reviewing court why it changed its position.
Justice Alito combined a rigorous version of hard look review with pragmatism and empathy. He implicitly recognized that Congress gave FDA an impossible task that FDA implemented as well as could realistically be expected. In the Family Smoking Prevention and Tobacco Control Act, Congress told FDA to decide whether any new tobacco product can be marketed by granting or denying each application to market a new product within 180 days of receipt of each application. FDA received applications from more than 500 companies to market over 6.5 million new flavored e-cigarette products. When FDA was unable to comply with this absurd statutory deadline, a federal district court set a date by which FDA had to make decisions with respect to each of the millions of proposed products.
FDA’s first decision rejected the applications of three firms to market 55,000 e-cigarette products. The agency concluded that the firms failed to provide “sufficient product-specific scientific evidence to demonstrate enough of a benefit to adult smokers that would overcome the risk posed to youth.” Shortly thereafter, FDA rejected the application of the manufacturer in Wages & White Lion Investments for the same reason.
The manufacturer’s primary argument was that FDA’s action was arbitrary and capricious because FDA changed its position on four issues. According to the manufacturer, FDA denied the manufacturer’s application without acknowledging and explaining adequately its change of position or providing the manufacturer with timely notice of its new positions. The often-anti-agency U.S. Court of Appeals for the Fifth Circuit, with all active judges participating, or sitting en banc, agreed with the manufacturer and ruled that FDA acted arbitrarily and capriciously.
The Supreme Court’s opinion described in detail FDA’s continuously evolving approach to each of the four issues. With respect to three of the issues, the Court concluded that FDA had not actually changed its position—and so had not violated what is known as the “change-in-position doctrine”—but that even if it had, it provided adequate reasons for its change and adequate notice of its new position.
As for each of these three issues, the Court considered in detail each relevant communication that FDA made. The Court concluded that the agency’s communications did not state a position on each issue that was clear enough to be characterized as inconsistent with the position that the agency took on the issue when denying the manufacturer’s application. In addition, FDA explained and adequately supported its ultimate conclusions with respect to each issue. The Court’s pragmatic approach is illustrated by its summary of the agency’s communications on one of the issues: “We thus hold that the FDA’s treatment of device type, even if it evolved over time, did not violate the change-in-position doctrine.”
In the process of evaluating the adequacy of FDA’s communications and the explanations for its conclusions, the Court emphasized that “agencies are entitled to a presumption of regularity” and that, to overcome the presumption, a party that must make a “strong showing of bad faith or improper behavior.”
FDA conceded that it had changed its position with respect to the fourth issue. It argued, however, that any failure to provide adequate and timely notice of the position it ultimately took on that issue was harmless error. The Fifth Circuit rejected FDA’s claim of harmless error.
To its credit, the Supreme Court acknowledged that its own decisions created the source of the disagreement between FDA and the Fifth Circuit. The Court noted that FDA relied on an accurate characterization of one of the Court’s precedents, while the Fifth Circuit relied on an accurate characterization of a different and inconsistent precedent. The Supreme Court committed to resolving the difference between its precedents. It remanded the case to the Fifth Circuit to obtain that court’s views before it did so.
In the course of its opinion, the Supreme Court reaffirmed each of the three holdings of its famous SEC v. Chenery (Chenery II) decision, which have been the subject of attacks by some of the conservative activists who are persistent critics of agencies. First, the Court reiterated that “unless Congress has specified otherwise, agencies are generally free to develop regulatory standards ‘either by general legislative rule or by individual order’ in an adjudication.” Second, the Court noted that “an agency action cannot stand ‘unless the grounds upon which the agency acted in exercising its powers were those upon which its action can be sustained.’” Finally, the Court reaffirmed that “the better course when an agency error is identified is for the reviewing court, ‘except in rare circumstances,’ ‘to remand to the agency for additional investigation or explanation.’”
This well-reasoned opinion is a welcome source of reassurance at a time when President Donald J. Trump is waging an unprecedented attack on regulatory agencies.
