The Volokh Conspiracy
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Prof. John Harrison: Are Unlawful Regulations Void When Issued?
This is the second in a series of posts summarizing an article titled Remand Without Vacatur and the Ab Initio Invalidity of Unlawful Regulations in Administrative Law, which is forthcoming in the BYU Law Review. The current draft is available on SSRN.
As the previous post explained, most of the federal courts of appeals adopt an administrative law doctrine called remand without vacatur. These posts and the article on which they are based are concerned mainly with the doctrine's application to agency regulations that impose duties on private people. Under the doctrine, a court that finds that a regulation is unlawful has the option whether to eliminate the regulation's binding legal effect – to vacate the regulation – or to leave that binding effect in place, while directing the agency to conduct further proceedings – to remand without vacating.
That line of reasoning rests on the assumption that unlawful regulations are binding when issued, despite being unlawful, until a court displaces them. That assumption is incorrect.
This post and the next will show that unlawful regulations are in general void when issued. By unlawful regulation, I mean a regulation described as such in section 706(2) of the APA. Section 706(2) tells the courts to "hold unlawful and set aside agency action found to be (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (B) contrary to constitutional right, power, privilege, or immunity; (C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; (D) without observance of procedure required by law."
This post examines the APA's criteria, showing that satisfying one of them entails ab initio invalidity, not initial validity combined with voidability by a reviewing court. The next post sets out two more grounds for the conclusion that unlawful regulations are void ab initio.
Regulations that are unlawful on any of the grounds set out in section 706(2) are void when adopted. Ab initio invalidity is clearest with respect to regulations that satisfy section 706(2)(B). Congress cannot authorize an agency to do what Congress itself cannot do: make a binding rule that is contrary to the Constitution. An unconstitutional statutory rule "is never really part of the body of governing law (because the Constitution automatically displaces any conflicting statutory provision from the moment of the provision's enactment)." Collins v. Yellen, 141 S. Ct. 1761, 1788-1789 (2021). Just as unconstitutional statutes never become part of the body of governing law, unconstitutional regulations never have binding force. Their invalidity does not wait for judicial action.
Also clear as to ab initio invalidity is section 706(2)(C), which has a constitutional foundation. Because executive and legislative power are separated, executive officials can impose binding duties on private people only with statutory authorization. As a limit on the power to make binding rules, that principle operates ab initio, just as limits on Congress's enumerated powers operate ab initio. Regulations that go beyond statutory authorization, which section 706(2)(C) describes as unlawful, are invalid when promulgated. If they were not, agencies could issue regulations that did not rest on any statutory authorization at all, and private people would have to comply until a court said otherwise.
Section 706(2)(A) is especially familiar to administrative lawyers, and as they know, it deals with both the substance of agency action and an agency's rationale for its decision. A regulation is arbitrary and capricious if it is objectively unreasonable, or if it is unsupported by sound agency reasoning. Both aspects of the requirement call for ab initio invalidity, not voidability.
A substantively irrational regulation is, by definition, one with which regulated parties should not have to comply. Substantively irrational regulations have that feature when they are adopted, so the reason regulated parties should not have to comply with them operates ab initio. A court that directed a private party to comply with an objectively unreasonable regulation, as a court can do under the doctrine of remand without vacatur, would itself be acting irrationally.
Matters are slightly more complicated as to the requirement that agency decisions be reasonably explained. Courts devised remand without vacatur mainly in cases in which the agency's reasoning was inadequate and the court found that the agency likely could repair the flaws in its explanation. Objectively rational and otherwise lawful regulations should not be displaced, the courts reasoned, because the agency's stated rationale had defects. Although that line of thinking has surface attraction, it fails because of the main reason for giving agencies regulatory authority: agencies' combination of substantive expertise and political accountability. A regulation that does not rest on the agency's properly articulated judgment does not have the underpinnings that justify compliance with it. A system in which inadequately reasoned regulations are binding but voidable by courts calls on the courts to make the judgments that only agencies may properly make when the courts decide to continue in force an inadequately reasoned regulation.
Section 706(2)(D) describes as unlawful regulations adopted without procedures required by law. Adoption through required procedures is a standard prerequisite for validity elsewhere in public law. A bill that does not become a law through the process set out in Article I, section 7 is not a binding statute, for example. If remand without vacatur is an option, Congress has not made procedural regularity a necessary condition for validity – regulations adopted without proper procedure are binding, albeit unlawful and subject to some form of judicial displacement. Congress does occasionally impose a procedural requirement while telling the courts that failure to follow it does not automatically make a regulation invalid. In general, however, Congress imposes procedural requirements, like notice and comment, because it has concluded that if those requirements are not followed, the output cannot be relied on as sound policy. That rationale applies at the point of adoption.
Section 706(2) does not use "unlawful" lightly. That word describes regulations that do not have the force of law.