Biestek v. Berryhill and Judicial Review of Agency Factfinding

Recently, the Supreme Court issued a decision in Biestek v. Berryhill, which construed the meaning of the substantial evidence standard in Administrative Law. While this sounds like a technical issue, it can be quite important. It involves the power of the courts to reverse administrative agency findings of facts. If there is a less deferential standard, then the agencies have less power and are more subject to review by the courts. If there is a more deferential standard of review, then administrative agencies have more power.

Thus, it seemed to be no surprise that in Biestek, the majority decision written by Justice Kagan appeared to favor more deference and the dissenting decision, written by Justice Gorsuch, appeared to favor less deference. While the case itself is interesting, it involves a relatively narrow issue. But the case may actually involve a wider and more important issue. Understanding that issue requires a bit of background.

The Administrative Procedure Act (APA) was passed in 1946 in part as reform legislation to address what were regarded as administrative excesses. One key provision was the standard of review of administrative fact findings in formal hearings (formal hearings being one of the most common forms of administrative action, especially at the time). The APA provided that findings of fact should be reviewed under a substantial evidence standard. The question is: What did this mean?

One answer—the one I believe is favored by textualists such as Justice Scalia—was that it had the same meaning as it did in the jury standard. In other words, a decision by the agency would be overturned by a court only if it would justify a directed verdict of a jury. The Supreme Court appeared to have adopted that in earlier cases prior to the APA, such as Consolidated Edison v. NLRB (1938). If that was the traditional meaning of substantial evidence, then one might argue that the APA’s use of that term indicates it should have the same meaning in the APA.

But that answer did not appear to win the day when the Supreme Court interpreted the standard in the Universal Camera case in 1951. In an opinion written by Justice Frankfurter, the Court seemed to acknowledge that the meaning of substantial evidence was the traditional jury standard. But Frankfurter believed that the “mood” of the Congress, as evidenced by legislative history, demonstrated a purpose to adopt a less deferential standard.

Frankfurter was cagey in the opinion, and he left himself some room to deny he was arguing that Congress had changed the traditional rule (as opposed to merely changing prior judicial misunderstanding of the traditional rule). But I think the better interpretation of his opinion is that he was claiming that the traditional rule should be changed and that something different than the jury standard should be applied to administrative agencies. Certainly, the courts have not applied as deferential a standard to administrative agencies as they have traditionally applied to juries.

What is interesting is that neither Justice Kagan nor Justice Gorsuch cited to Universal Camera. Instead, they both cited to Consolidated Edison. Thus, one might believe Justice Kagan was embracing a more deferential standard for judicial review of agency factfinding and Justice Gorsuch was adopting the more textualist approach that Scalia appeared to champion in this area.

If that is true, then the Supreme Court may be signaling that there should be less vigorous judicial review of agency factfinding. And that would mean more agency autonomy.