Key Administrative Law Doctrine on the Congressional Chopping Block & Onerous Rule Hurdles

As pointed out in yesterday’s Top 5 PTAB Trial Developments of 2016, the Administrative Procedure Act (APA) is the constitution of Article I courts. In its 70 years of existence, the APA has never been modified. Yet, over time, common law developments have been intermingled with APA considerations — none more prominent than the “Chevron Doctrine.” Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). This judge made doctrine stands for the proposition that where there is silence or ambiguity in a statute conveying agency authority or action, that courts should apply deference to reasonable agency interpretations. Critics of Chevron argue that it cannot be reconciled with the APA, and has led to a highly inconsistent body of case law.

Politicians argue that Chevron allows regulatory agencies to create law independent of judicial review, and leads to an unwarranted expansion of costly bureaucracy.

Today, the House will begin to consider HR. 5, which not only proposes to eliminate the Chevron Doctrine by amending the APA to expressly exclude it, but also proposes to heap a boatload of additional regulatory roadblocks to the promulgation of agency rules.

H.R. 5 is a collection of bills put together in one package that have been around for a few Congresses. But, given the anti-government mandate of the incoming administration, and the republican majority in both houses, H.R 5 appears primed for passage in some form.

A copy of H.R. 5 is found (here).

Prior to the passage of the America Invents Act (AIA), the Chevron Doctrine was of little value to the USPTO. This is because the USPTO’s decisions on substantive patent law are reviewed de novo and the agency has consistently been found to lack substantive rule making authority.Tafas v. Doll, 559 F.3d 1345, 1352 (Fed. Cir. 2009).  This changed, however, with the passage of the America Invents Act (AIA).  In the AIA, the agency was expressly granted rule making authority. Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016).

As exemplified by Cuozzo, some of the more fundamental challenges to the AIA trial mechanisms have been settled independent of Chevron (side-stepped in Cuozzo based on direct rule making authority of the AIA). Others fundamental mechanisms are seemingly on their way to a recalibration in line with popular opinion. (e.g., In re Aqua Products, WiFi-One).  As such, it may be that the loss of the newly acquired Chevron Doctrine is not a meaningful change for an agency that is accustomed to living without it.

Below is H.R.. 5’s proposed change to the APA.

5 USC § 706
To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action and decide de novo all relevant question of law, including the interpretation of constitutional and statutory provisions, and rules made by agencies. Notwithstanding any other provision of law, this subsection shall apply in any action for judicial review of agency action authorized under any provision of law. No law may exempt any such civil action from application of this section.
The reviewing court shall—

The far bigger headache for the agency will likely be the new regulatory requirements of H.R. 5 for issuing new rules. The proposed requirements are onerous, some of which are to determine the cost and benefits of a proposed rule as it relates to “direct, indirect, and cumulative costs and benefits and estimated impacts on jobs (including an estimate of the net gain or loss in domestic jobs), wages, economic growth, innovation, economic competitiveness, and impacts on low income populations.” (emphasis added)  Even sponsors of the bill admit that these proposals are designed to make rule promulgation more difficult and time consuming.

If I am working on rules packages at the PTO, I’m clearing the decks before anything close to this legislation hits the streets.