Auer Deference: Doubling Down on Delegation\u27s Defects

Together with the better-known Chevron deference rule, the doctrine articulated in Auer v. Robbins two decades ago—which makes reasonable administrative constructions of ambiguous administrative rules binding on courts in most circumstances—has become a focal point for concerns about the expanding administrative state. Auer deference, even more than Chevron deference, enlarges administrative authority in ways that are at odds with basic constitutional structures and due process requirements. Objections to Auer have provided cogent reasons for why courts should not grant deference to administrative interpretations merely because an agency’s rule is unclear. The most commonly voiced objections, however, do not explain why Congress should be disabled in all instances from granting administrators discretionary authority over rule interpretation—even in settings that do not raise serious risks of partiality or unfair surprise in administrative construction. Examining the relationship between statutorily directed deference and constitutional-structural principles clarifies the essential underlying objection to Auer and the limits of that objection. When Congress by law confers discretionary authority that does not exceed its constitutional power to delegate functions to an administrator, courts should respect that assignment of authority, unless it violates other specific constitutional commands. Yet, when delegations are at most only arguably consistent with the Constitution, extending deference—especially expanding deference as Auer does in successive determinations—exacerbates delegations’ difficulties. A reinvigorated nondelegation doctrine would solve the major Auer problem directly, and elimination of Auer-like deference would clearly be preferable to retaining the doctrine in its current form. Short of that, demanding that the statutory basis for deference is clearly articulated would provide a modest first step in cabining problems associated with constitutionally questionable delegations of lawmaking authority. Those who embrace the rule of law, whether advocates or opponents of the modern administrative state, should support that step

Looking With One Eye Closed: The Twilight of Administrative Law

n an article published recently in this Journal, Judge Loren Smith calls for a change in the focus of thinking and writing about administrative law. Attractive though his general themes are, in developing them Judge Smith passes much too quickly over two important points: the difficulty of arriving at political consensus, and the importance to political consensus of exactly those processes to which Smith objects

Property rights systems and the rule of law.

Property rights - rights to control, use, or transfer things (broadly conceived) - though not readily distinguished from other rights, comprise a category of rights that both strongly benefit from clear and well-designed legal rules and often are subject to "chiseling" from failures to follow legal rules or from ex post alterations of the rules. Governance systems that limit official discretion to impair property rights, that have institutions and rules that provide clear definition to property rights and that provide predictable and consistent applications of those rights, will accord with the rule of law and generally will also advance social welfare. Some systems will depart quite evidently from this pattern, to the detriment of those societies, allowing too ready changes in law at the discretion of too few officials, too unconstrained by law, as the example of Zimbabwe illustrates. But differences between the good and the bad will not be drawn along simple, discrete lines, a point made by comparing the Zimbabwe example with the United States. The systems most consistent with the rule of law will not be able effectively to bar all changes in the law or to eliminate official discretion. Instead, those systems will limit the avenues for change and the ambit of discretion in ways that make property more secure and impositions on it more predictable without reference to the identity of the individual official enforcing the law or the individual property owners subject to it.

Copyright, Licensing, and the First Screen

As patent, copyright, and other intellectual property rights have assumed greater economic importance, the manner in which those rights are used has come under increased scrutiny. Recently filed antitrust litigation against Microsoft Corporation, for example, focuses on the terms under which Microsoft has licensed its Windows® operating system to computer manufacturers (generally referenced as OEMs, for Original Equipment Manufacturers). In particular, parties to the litigation complain about the license agreements\u27 requirement that the first screen to appear when customers initially turn on ( boot up ) a computer display certain features common across all Windows-based platforms. The first screen provision has been portrayed as evidence that Microsoft seeks to undermine competitors in the computer software market.... Microsoft does supply a very large proportion of operating systems for personal computers, having dramatically outdistanced the competition with its Windows operating system for Intel-compatible computers. All of those challenging Microsoft start with the predicate that its Windows system is the de facto standard for most types of personal computer in the U.S. Plaintiffs assume that Microsoft has monopoly power as a result of Windows\u27 success and argue that Microsoft has misused the advantage it enjoys with the success of Windows by various actions, particularly provisions in contracts licensing others to use Windows. The plaintiffs do not claim that Microsoft is engaged in or is facilitating a horizontal conspiracy-as would occur if Microsoft agreed with competing software firms to restrain output in a given product line. Instead, plaintiffs allege that Microsoft\u27s vertical relations with other firms-in which Microsoft contracts with others in a principal-agent relationship-improperly use the power of its copyright for Windows and that system\u27s success in the marketplace. That is the essence of the complaint respecting the first screen provision: that the rights conferred by copyright do not permit Microsoft to ask its licensees to bind themselves in that way. That complaint is problematic in part because it seems on its face to stand copyright law on its head. Copyright law provides an exclusive right for the owner to decide when and how to allow the copyrighted material to be used. Antitrust law, consequently, long has applied different standards to ordinary vertical agreements and agreements licensing intellectual property rights. Unfortunately, court decisions have not followed a single, straight line respecting the relationship between antitrust and intellectual property right laws, as discussed below, and the Microsoft case requires delineation of the way antitrust law should deal with copyright licensing, if not with contract arrangements more generally. Even if that issue is resolved favorably to plaintiffs (who dispute Microsoft\u27s contention that intellectual property laws trump antitrust), there is a second problem. Antitrust analysis of vertical relationships under the rule of reason would require evaluation of the efficiency gains and costs of the challenged actions. Although such evaluations are done in many different settings, the complaints\u27 allegations of improper provisions in licensing contracts call for an analysis that parses particular contract terms. That analysis necessarily entails an artificial assignment of effects among contract terms and is likely to be distorted from the considerations informing parties to the contracts. This paper examines the first screen provision in the context of the law and practice respecting computer software licensing. The first section provides background on copyright. The second section explores the considerations relevant to licensing contracts. The third section addresses the intersection between antitrust and copyright licensing. The fourth section directly considers the first screen provision-what it does, what interests it serves, and what efficiencies it generates. A concluding section argues that, while the provision should pass antitrust muster, the process of examining such licensing provisions under the antitrust laws may do more harm than good