ECONOMY

280 the judiciary and the role of law
look;” and this mechanism of review has been described by scholars as enforcing a
requirement that agency decisions be substantively “reasonable” (Shapiro 1988). The
courts’ sensitivity to the political dimensions of judicial control can be seen in the
ways in which they practice this “hard look” review. PPT scholars have explained how
hard look review in administrative law is, by contrast to the traditional view among
legal scholars, politically sophisticated. 7
3.2 The Chevron Decision
To suggest how the courts are embedded within the political system and use their
jurisprudential decisions to further political goals, we discuss the Chevron puzzle,
first articulated by Cohen and Spitzer (1994). In Chevron v. Natural Resources Defense
Council (1984), the Supreme Court ruled that courts were to defer to agency interpretations
of the statutes they administer unless Congress had directly spoken to the issue
and the agency interpretation contradicted Congress’s expressed wish or unless the
agency’s decision was “unreasonable.” The puzzle is why the Supreme Court should
announce a doctrine that seemed to limit the courts’ role in agency decision-making.
Cohen and Spitzer’s resolution of the puzzle concerns the political configuration
across American national institutions that held at the time of Chevron, namely,
Congress, the presidency, the judiciary, and the bureaucracy. By the mid-1980s,
President Ronald Reagan was in command of the presidency and had peopled the
bureaucracy with a wide range of conservatives whose views contrasted with the
more progressive views in Congress and the bureaucracy throughout the late 1960s
and 1970s. Republicans had also recaptured the Senate in 1980 and held it in the next
congressional election, making this institution considerably more conservative than
in previous years. By 1984, the Supreme Court also had a conservative cast. The lower
courts, however, remained largely appointees of the Democrats and therefore more
liberal.
Though Reagan officials throughout the bureaucracy began cutting back on regulation,
many lower courts prevented this change in approach. The issues in Chevron
were a case in point: The DC Circuit overturned an Environmental Protection Agency
decision, which would have permitted the use of a market-like mechanism for the
control of air pollution. In overruling the lower court’s decision and announcing a
rule that would instruct courts to defer to agencies’ interpretative judgements, the
Supreme Court furthered the Republicans’ agenda, thus allowing Reagan officials in
the bureaucracy to alter a wide range of public policies. The limitation imposed on
courts is rational, in this argument, because it helped the Supreme Court limit the
lower courts’ ability to forestall conservative-motivated policy change.
The main conclusion reached by the PPT approach to studying the political and
legal controls of the bureaucracy is that these two dimensions of control are both
⁷ See, e.g., McNollgast 1989, 1987. While this seminal work focused on the role of ex ante procedural
rules and structures, more recent work focuses on the role of the courts. See, e.g., Rodriguez and
Weingast 2006b.