Research Handbook on Public Choice and Public Law

Research Handbook on Public Choice and Public Law

Research Handbooks in Law and Economics series

Edited by Daniel A. Farber and Anne Joseph O’Connell

Public choice theory sheds light on many aspects of legislation, regulation, and constitutional law and is critical to a sophisticated understanding of public policy. The editors of this landmark addition to the law and economics literature have organized the Handbook into four main areas of inquiry: foundations, constitutional law and democracy, administrative design and action, and specific statutory schemes. The original contributions, authored by top scholars in the field, provide helpful introductions to important topics in public choice and public law while also exploring the institutional complexity of American democracy.

Chapter 9: Statutory Interpretation by Agencies

Matthew C. Stephenson

Subjects: economics and finance, public choice theory, politics and public policy, public choice


Matthew C. Stephenson1 We tend to think of legal interpretation as the business of courts, but much statutory interpretation in the United States is done, at least in the first instance, by administrative agencies. This is so in part because Congress and the courts permit, even encourage, an expansive role for agencies in determining statutory meaning. Congress does this by drafting vague statutory language and by authorizing (explicitly or implicitly) agencies to fill statutory gaps. The judiciary, meanwhile, has facilitated the expansion of agencies’ interpretive authority by adopting doctrines that call on courts to defer to an agency’s reasonable construction of the statutes it administers, even if the reviewing court would read the statute differently. Yet agencies are not fully autonomous when they make their interpretive decisions. Other political institutions – Congress, the President, and the courts – exert a powerful influence over how agencies interpret statutes. Agency statutory interpretation therefore involves complicated, and often subtle, interactions between and within the three branches of the federal government. Understanding these interactions is important both for making positive predictions regarding public policy outcomes and for normative assessment of legal doctrine and institutional arrangements. The analytical tools associated with positive political theory (PPT) (sometimes also referred to as ‘public choice’ or ‘positive political economy’) are designed for the analysis of complex strategic interactions in political settings. These tools therefore have the potential to deepen our understanding of important aspects of statutory interpretation by administrative agencies. The chapter provides an overview of PPT research on agency...

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