As I was preparing my last post on Southwestern Electric Power Co. v. EPA, I found myself thinking about a great law review article by Aaron Nielson and Daniel Hemel titled "Chevron Step One-and-a-Half." As a quick aside, in addition to writing great law review articles like this one, Nielson summarizes the published decisions of the D.C. Circuit every week over at the Yale Journal on Regulation's Notice & Comment blog. If you aren't already reading his stuff, you're missing out.

Anyway, here's the abstract of the article:

The Supreme Court says that Chevron has two steps: Is the statute ambiguous (Step One), and, if so, is the agency’s interpretation of the ambiguous provision a permissible one (Step Two)? Yet over the last three decades, the DC Circuit has inserted an intermediate step between Steps One and Two: Did the agency recognize that the statutory provision is ambiguous? If not, then the DC Circuit refuses to proceed to Chevron Step Two and remands the matter to the agency. This doctrine— which we dub “Chevron Step One-and-a-Half”—has led to dozens of agency losses in the DC Circuit and DC federal district court, but it has gone entirely unmentioned in administrative law casebooks and is rarely referenced in the academic literature. The few who have not ignored the doctrine have treated it with skepticism. Chief among those skeptics is now–Chief Justice John Roberts, who while a DC Circuit judge criticized his colleagues for applying the doctrine.
This Article presents a more sympathetic account of Chevron Step One-and-a-Half. After providing an overview of the Chevron Step One-and-a-Half doctrine, we offer several theories why Chevron Step One-and-a-Half cases continue to arise, even though agencies can avoid the doctrine by stating that they would hew to their view regardless of whether the relevant statutory provision is ambiguous. Some number of Chevron Step One-and-a-Half cases might be explained by the fact that agencies are ignorant of the doctrine or ambivalent about their own policies, but we suggest that there also may be strategic reasons why agency actors might maintain that a statute is unambiguous. For instance, agency lawyers with a preference for a particular reading (or with patrons who have such a preference) might seek to increase influence over policy by declaring that a statute can be interpreted only one way. Alternately, an agency might claim that a statute is unambiguous in order to reduce the probability that the White House’s Office of Information and Regulatory Affairs will second-guess the agency’s choice. In a similar manner, an agency might attempt to evade political accountability for an unpopular policy by claiming that the choice was compelled by Congress. Finally, an agency might maintain that a statute is unambiguous in order to “lock in” an interpretation so that future administrations cannot undo it. After identifying the potential causes of Chevron Step One-and-a-Half cases, we consider how courts ought to respond to the potential for strategic agency behavior. We suggest that, when viewed in this light, Chevron Step One-and-a-Half helps to uphold the theoretical justifications for Chevron deference. While Chevron Step One-and-a-Half remands also impose undeniable costs on administrative agencies, we argue that these costs ought to be evaluated against the considerable benefits that the doctrine potentially brings.

The article is really worth reading in full, but I want to focus on Nielson and Hemel's argument about the interplay between step one-and-a-half and State Farm. They acknowledge that "there are affinities between Chevron Step-One-and-a-Half and State Farm" in the sense that "both doctrines look to the content of an agency’s explanation for adopting a particular position." But they conclude that not every case in which the agency runs into a Chevron Step One-and-a-Half problem is also a case in which the agency would flunk State Farm review (and, of course, vice versa)." Here is an example they cite in support:

[S]ome courts consider legislative history at Chevron Step One: on this view, legislative history can render a statute unambiguous under certain circumstances. Others consider legislative history only at Step Two. An agency and a court might disagree as to whether to resolve a statutory interpretation question at Step One or Step Two, but that does not mean that either holds an unreasonable view, much less that the agency has employed a faulty process or ignored key parts of the problem.

But State Farm also says that agency action must be "based on consideration of the relevant factors," which, naturally, includes the factors Congress intended it to consider. As my last post explained, that aspect of State Farm review was central to the Fifth Circuit's recent rejection of portions of EPA's final rule in Southwestern Electric Power Co.

That made me wonder: Can an agency that says that it acted the way it did because the statute gave it no other option ever be said to have made its decision "based on consideration of the relevant factors"? I took a quick look at Nielson and Hemel's article, but couldn't find any discussion of this particular aspect of State Farm there.  

I haven't thought this all the way through--not by a long shot. I suspect that there's a simple explanation that I'm overlooking. Thought I'd post the puzzle to see if anyone out there has an explanation. If you do, please let me know!

   

Chevron Step One-and-a-Half and State Farm
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