Statutory Rights, Related Regulations, and the Bounds of “Interpretation”

The following post was contributed by a HarvardCRCL.org executive board member. The article offers a critique of the recent Second Circuit decision in Shaknes v. Berlin.

In Gonzaga University v. Doe,[1] the Supreme Court set a high bar for find­ing that a statute cre­ates a private right of action un­der 42 U.S.C. § 1983.[2] But the Court has not ad­dressed wheth­er regulations can establish enforceable rights. Some federal courts of ap­peals have con­cluded that a regula­tion cannot itself create a right but “may [still] be rel­evant in deter­min­ing the scope of [a] right confer­red [in a statute]” insofar as it amounts to “an agency in­ter­­pre­­­ta­tion of [that] stat­ute.”[3] In multiple cases, the Second Circuit has declined to an­swer this ques­­­tion, de­ciding the issues before it assuming that those circuits’ position is cor­rect.[4] Re­cently, in Shakh­nes v. Ber­lin,[5] the court considered whether a particular regulation was a “valid in­ter­preta­tion” of a statutory right.[6] Proceeding on the assumption that the statute at issue defined a right with a flexible stan­dard, the court held that a related regula­tion was actionable as a “valid interpretation” under 42 U.S.C. § 1983 even though it imposed a rigid rule where none existed before.[7] Un­for­tu­nate­ly, the de­ci­sion pro­vides no clear prin­ciple by which future courts may decide when a regu­la­tion in­ter­prets a statute in the context of 42 U.S.C. § 1983. Mean­while, a Sev­enth Cir­­cuit opinion resolves an analogous issue in the context of notice-and-comment rulemaking with a prin­ci­pled distinc­tion between rule inter­preta­tion and rule creation.[8] It is even con­sist­ent with the precedent upon which Shakhnes relies. The Second Circuit would have established a more manageable test for questions like the one at issue in Shakhnes had it drawn a similar distinction.

The provision of the Medicaid Act[9] at issue in Shakhnes requires states administering Medi­caid programs to “grant[] an opportunity for a fair hearing before the State agency to any individual [in certain circumstances].”[10] A regulation further describing the Medicaid fair hearing process pro­vides that “[t]he agency must take final administra­tive action . . . within 90 days” of the request of a fair hearing except under particular circumstances.[11]

The Shakhnes plaintiffs were a class of Medicaid applicants and recipients who had re­quest­ed, or would request, fair hearings to challenge unfavorable decisions by the defendants, state and local agencies administering the program. The plaintiffs alleged that the Medicaid agen­cies violated their statutory fair hearing rights by failing to take action within the 90-day post-hearing window set forth in a regulation accompanying the statute.[12]

Applying Gonzaga, the district court decided that the statutory provision at issue estab­lish­ed a right to a fair hearing and a right to agency action at some point after such a fair hear­ing.[13] In light of the accompanying regulation, it also held that the plaintiffs had a right to agen­cy action with­in 90 days of the fair hear­ing.[14] The court ordered declaratory and injunctive relief.[15] On appeal, the defendants argued in part that the plaintiffs had no enforceable right to agency action within 90 days because the reg­u­la­tion containing the 90-day deadline was not a valid interpretation of the statutory right.[16] The Sec­ond Circuit affirmed as to the scope of the statutory right and va­cat­ed and remanded for further proceedings on other grounds.[17] Writing for the panel, Judge Straub concluded that the regula­tion’s 90-day deadline was enforceable as an interpretation of the statute’s fair hearing guarantee.[18]

The court purported to apply a standard “well-settled” in precedent to decide the scope of what 42 U.S.C. § 1983 rendered actionable.[19] To illumi­nate the standard, it first looked to the Su­preme Court’s decision in Wright v. City of Roanoke Redevelopment & Housing Authority.[20] In Wright, the plaintiffs sued a housing auth­ority un­der 42 U.S.C. § 1983 for billing more than thirty percent of each plaintiff’s income for the total of his or her rent and utilities.[21] A statute provided that “ten­ants could be charged as rent no more and no less than 30 percent of their income,” while a cor­res­pond­­ing “regulation[] . . . expressly re­quired that a rea­son­able amount for utilities be in­cluded in rent.”[22] The Court de­cid­ed that the plaintiffs had an enforce­able right to a calculation of “rent” that included the cost of utilities be­cause the reg­u­­la­tion merely defined the ambiguous term “rent.”[23]

Next, the panel turned to D.D. v. New York City Board of Education,[24] in which parents, suing on behalf of their children, alleging that delays in delivery of special education services in a New York City public school violated their children’s rights to such services.[25] The Individuals with Disabilities Education Act (IDEA) required “special education . . . services [to be] provided in conformity with [an] in­di­vid­ualized education program [IEP].”[26] A cor­res­ponding regulation required that IEPs be “imple­ment­ed as soon as possible” fol­­lowing their finalization.[27] The court held that the school sys­tem’s fail­ure to implement the IEPs “as soon as possible” pursuant to the regulation’s require­ment violated the plain­tiffs’ right to IEP-conforming services because the reg­ulation “define[d] the scope” of the statutory right.[28]

Finally, the court turned to another circuit’s reasoning about the enforceabili­ty of a reg­ulation and cer­tain related Medicaid Act provisions (all different from the provisions considered in Shakh­nes).[29] In Harris v. James,[30] the plaintiffs sued under 42 U.S.C. § 1983, arguing that the state violated their right to transportation to and from Medicaid service providers by failing to provide this transportation.[31] The Harris court con­sidered whether the guarantee of such trans­portation in a regulation[32] was enforceable under 42 U.S.C. § 1983, given that var­i­ous statutory provisions in the Medicaid Act arguably guaranteed certain related rights.[33] The Act required, for example, that the state agency “provide medical assistance ‘with reason­able prompt­ness.’”[34] The Shakhnes court reasoned that the regulation went “beyond ex­pli­cating the spe­cific content of the statu­tory provision and impose[d] dis­tinct obligations[; accord­ingly it was] too far removed from Con­gressional intent to constitute a federal right en­force­able under § 1983.”[35]

These three decisions that Shakhnes addressed were all appropriate analogies be­­cause each considered whether a regulation was a valid interpretation of — or went beyond inter­­pre­t­ing — a statute. But the court did not adequately derive a unifying principle from these cases. Instead, it merely quoted conclusory language to support its conclusion. In discussing Wright, the Shakhnes court adverted to the Third Circuit’s observation about the case that “the regulation at issue . . . merely defined the spe­cific right that Con­gress already had con­ferred through the stat­ute.”[36] In reviewing D.D., the pan­el quoted multiple times the conclusion that the regulation “merely defines the scope” of the stat­u­tory right.[37] It never explained further what it was about the regulation’s relation to the stat­ute that led the court to its conclusion. In dis­tin­guish­ing the case at bar from Harris, the court re­lied on the Eleventh Circuit’s statement that the regula­tion considered in that case could not “‘rea­son­­­ably [be] un­derstood to be part of the content of’ [the allegedly predicate] statutory right,”[38] and that the regu­la­tion went “beyond explicating the specific con­tent of [a] statutory provi­sion.”[39] Unfor­tunately, none of the lan­guage quoted from these cases meaningfully guides future courts decid­ing wheth­er a regu­lation is a valid inter­pretation of a statutory right. Instead, each quotation effec­tive­ly re­states the issue that it purports to resolve — that is, it begs the question.

However, a principled distinction does exist between a regulation that is a valid interpre­tation of a stat­u­tory right and one that imposes new obligations. Although not rendered in the con­text of private rights of action under 42 U.S.C. § 1983, a decision from the Seventh Circuit explains just this dis­tinc­tion. The issue before the court in Hoctor v. Department of Agricul­ture[40] was whether an agency’s internal memo­­ran­dum could bypass the Administrative Pro­cedure Act’s notice-and-com­ment rule­mak­ing requirements thanks to a provision in the Act exempting agency state­ments that merely interpret prior regulations.[41] The unchal­lenged regu­la­tion in Hoctor required that a “facility [housing ani­mals] be con­structed of such ma­terial and of such strength as appropriate for the ani­mals in­volved [and that t]he in­door and out­door housing facilities . . . be structurally sound and . . . main­tained in good repair to pro­tect the animals from injury and to contain the an­i­mals.”[42] The year after the agency adopted this regula­tion, it issued an internal memo­randum re­quiring that “all danger­ous ani­mals, defined as includ­ing, [e.g.,] lions, tigers, and leopards, . . . be [kept] inside a peri­meter fence at least eight feet high.”[43] Hoctor kept a variety of such ani­mals inside a perimeter fence six feet high.[44] The De­partment of Agriculture sanc­tion­ed Hoctor for the inadequacy of his fence, although not be­cause the fence was imper­mis­sible under the (unchal­lenged) regulation.[45] Rather, “[t]he only ground on which the Depart­ment de­fend­[ed] sanc­tion­ing Hoctor . . . [wa]s that requiring an eight-foot-high peri­me­ter fence for dan­­gerous animals is an inter­pre­ta­tion of the Department’s own structural-strength regulation.”[46]

The Seventh Circuit panel explained that the rule was not a valid interpretation of the reg­u­lation and that it was instead a novel rule inspired by the regu­la­tion.[47] Resolv­ing this famil­iar question about the legislative/interpretive divide in administrative law, the court distinguished statements that “par­tic­u­larize [prior statements of law] through in­ter­pre­ta­tion” from those that “impose a[n independent] du­ty” by reasoning that strict numeri­cal lim­its gen­er­ally can­not be derived from flexible standards.[48] This objection to the alleged “in­ter­pre­tation” is intuitive: that a fence must be eight feet high does not obvi­ous­ly follow from the stat­ute’s require­ments since, absent further evidence, a fence of such height can­not be ex­pect­ed to meet the regulation’s goals substantial­ly better than a fence one inch short­er.[49] The partic­ular height of eight feet has no special signifi­cance. A rule like this, not derived from the under­ly­ing statute, is “leg­is­la­tive” (or “sub­stan­tive”).[50]

But numerical limits can play a part (albeit a bounded one) in interpretation:

[h]ad the Department of Agriculture said in the internal memorandum that it could not imagine a case in which a perimeter fence for dangerous animals that was low­­er than eight feet would provide secure containment, and would there­fore presume, sub­ject to rebuttal, that a lower fence was insecure, it would have been on stronger ground. For it would have been tying the rule to the animating standard, that of se­cure contain­ment, rather than making it stand free of the standard, self-contained, un­­bending, ar­bitrary. To switch me­ta­phors, the ‘flatter’ a rule is, the harder it is to con­ceive of it as merely spell­ing out what is in some sense latent in a statute or reg­ulation, and the eight-foot rule in its present form is as flat as they come.[51]

The understanding of the legislative/interpretive divide described in Hoctor boils down to this: one cannot generally interpret an existing command by im­pos­ing an inflexible rule where no such rule already existed. If the prior command in­cludes some vague­ness, res­o­lution of that vagueness into a strict rule is a legislative (not merely an inter­pretive) function.

The Shakhnes defendants failed to make a clear Hoctor-style argument to the court. At times their brief seems to sug­gest that as between “rigid” and “flexible” language in putatively interpretive regulations, only the latter is genuinely “tied . . . to the underlying statute itself.” [52] But the brief does not elaborate on this point. At oral argument, too, counsel for the defendants failed to explain this distinction.

Despite counsel’s failure to raise this precise argument, the Second Circuit might have drawn the Hoctor distinction on its own. Had it done so, it would still have remained faith­ful to Wright, D.D., and Harris. Applying the reasoning in Hoctor leaves the holdings of all three of those cases undisturbed. In Wright, the regula­tion interpreted a statutory re­quire­ment that a fam­ily “‘shall pay as rent’ a specified percentage of its income” to encompass pay­ment not just for “the use of the dwelling accommodation” but also for “reasonable amounts of utilities.”[53] It did not veer from the un­der­lying statutory guarantee that a certain amount will be paid for rent. It did not im­pose a strict rule where the statute was vague. It simply interpreted the mean­ing of the am­big­u­ous term “rent.” In D.D., the Second Circuit enforced a flex­ible interpretation (“as soon as possible”) of a vague stand­ard (“spe­cial education . . . services [shall be] provided in con­formity with the [IEP]”).[54] This, too, is permitted under Hoctor. The “as soon as possible” stan­d­ard im­poses no new absolute require­­­ments. It infers from the statu­to­ry guar­­antee of services that those services will come quick­­ly. It leaves the issue wheth­er a giv­en IEP has been im­ple­ment­ed soon enough to triers of fact in indi­vid­­ual law­suits. It does not make a legislative deter­mination that after, say, two weeks, a school has failed to pro­vide “spe­cial educa­tion . . . ser­­vices in con­form­ity with the [IEP].”[55] In sum, the reg­u­la­tions at issue in Wright and D.D. avoid imposing new requirements. The regula­tion in Wright in­ter­­prets a specific (but am­biguous) statutory guar­an­tee by imposing a specific regu­la­tory guar­an­tee. The regulation in D.D. inter­prets an open-ended statutory guarantee with an open-ended regula­tion.

Unlike the regulations in Wright and D.D., the regulation in Harris falls on the legislative side of the legislative/interpretive divide under the reasoning in Hoctor. In Harris, the plaintiffs pointed to several statutory provisions that made broad, stand­ard-based guarantees — for exam­ple, that state agencies would provide services “promptly.”[56] They argued that a regu­la­tion describing a right to transportation to medical service pro­vid­­­ers interpret­ed these sta­t­­u­to­ry pro­visions.[57] The Eleventh Circuit disagreed, finding the nexus between the statutory and regu­latory guarantees to be “too tenuous.”[58] The Harris court respected the legislative/interpretive di­vide under the Hoctor approach because it held that a regulation that imposed a strict rule was not sufficiently related to statutory provisions that imposed no such requirements.

Although none of these cases cites Hoctor, they all comply with the Seventh Circuit’s dis­­tinction between rule interpretation and rule creation, which, admittedly, Hoctor draws in the context of administrative law. None calls it “inter­pre­ta­tion” when a regulation imposes a rigid rule although the underlying statute imposes none itself.

The legislative/interpretive distinction described in Hoctor is readily applicable to the facts of Shakhnes. The underlying statute guarantees “an opportunity for a fair hear­ing.”[59] This statute im­poses no strict require­ments as to the timing of post-hearing agency action. Thus, under Hoctor, an enforceable timing-oriented regulation that is a valid interpretation of this statute would itself have to re­frain from imposing any strict timing require­ment. Such a regulation could provide a qual­ified deadline for ad­min­­i­stra­tive ac­tion: “in gen­­eral, within 90 days,” or “except un­der exten­­­u­­at­ing circumstances, within 90 days.”[60] Al­ter­na­tively, it could interpret the “opportunity for a fair hearing” to imply a gener­al right to sub­sequent agency action “within a reason­able time.”[61] But the actual regulation’s inflexible timing re­quire­­ment — “within 90 days”[62] — fails the Hoc­tor test: it imposes a strict rule where none existed before. Accordingly, had it followed the dis­tinc­tion just described, the Shakh­nes court would have held that the regulation at issue imposes an inde­pendent duty where the statute is silent and is thus not enforce­able under 42 U.S.C. § 1983.

Unfortunately, the Shakhnes court noted no such distinction between rule inter­pre­ta­tion and rule creation. Instead, the Second Circuit rest­ed its decision primarily on unhelpful lan­­­guage from prior decisions.[63] It ulti­mate­­ly held that “the 90-day require­ment in the regulation here at issue merely defines the time frame with respect to Plain­tiffs’ right to an op­por­tunity for Medi­caid fair hear­ings.”[64] But the opinion did not distin­guish mean­ing­fully be­tween reg­u­lations that “mere­ly define” the content of a stat­u­to­ry right and those that impose addi­tional ob­­­ligations.

Of course, this decision appears to be a particular boon for civil rights plaintiffs, whether suing individually or in class actions. Shakhnes affirms that no plaintiff need prove that a particular delay deprived her of a right when suing under this regulation; it is hereafter settled that after 90 days, a violation of a right has oc­curred. Even defendants will benefit from the Second Circuit’s settling of the issue by confirming that a bright-line rule determines the scope of the right: the decision forecloses thorny disputes about whether an agency was “reasonabl[y] prompt[]” in a given case and the resulting possibility that experts and discovery will be needed to answer the question. This should reduce litigation expenses for all parties in such cases.

But while the Hoctor rule draws a clean line forbidding imposi­tion of strict rules where none existed prior, the decision provides little guid­ance for future courts inquiring whether a reg­ulation is a valid interpretation of a statute. The reasoning leaves judges unconstrained when deciding whether a given regula­tion does or does not “interpret” the content of an underlying statutory right in future cases. This is a blow to the rule of law.

The decision also imposes other costs. While it may increase efficiency in a small set of cases, it also invites regulators to tangle with the cre­­a­tion, modi­fication, or elim­i­nation of rights inde­pend­ently of congressional control. This is a bargain of dubious worth. Under this scheme, agen­cies may change the scope of individual rights markedly from admini­stration to ad­min­istration, and Congress may be tempted to relin­quish more control of policymaking in the future.

The Shakhnes court would have been better off leaving the plain­tiffs free to vindi­cate their stat­u­tory rights and holding, following the rea­son­ing in Hoctor, that the regula­tion’s 90-day deadline imposed an independent obliga­tion and was thus unen­force­able under 42 U.S.C. § 1983.