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Another OLC Opinion Published:

The Justice Department's Office of Legal Counsel released another opinion today/yesterday (depending on what time zone you're in). Its subject matter is a real bread-and-butter OLC issue, and thus characteristically (to use a term that has fallen into regrettable desuetude since I was a kid) "dullsville." To paraphrase the opinion, it presents the question whether "[t]he Small Business Act . . . compel[s] the prioritization of awards under the Historically Underutilized Business Zone Program over those under the 8(a) Business Development Program and the Service-Disabled Veteran-Owned Small Business Concern Program"--in other words, whether "contracting officers must set aside federal contracts to qualified HUBZone small businesses . . . before they can set aside such contracts for award to small businesses under the 8(a) or SDVO Programs."

For those of you who have not fallen into a stupor or lapsed into hysterical blindness as a result of reading the issue, the reason this is of interest is that the SBA regulations indicate that it has the discretion to award set-asides under 8(a) or SDVO before HUBZone. And the Government Accountability Office, an agency of Congress, has concluded that "the [Small Business] Act mandates that priority be given to the HUBZone Program when certain statutory conditions are met." (The Ninth Circuit has expressed a view of the relevant language similar to GAO's, based on the characterization of the HUBZone language as "mandatory" and the language of the other programs as "discretionary." See Contract Mgmt., Inc. v. Rumsfeld, 434 F.3d 1145, 1149 (9th Cir. 2006).)

In an opinion signed on August 21 and published today/yesterday, OLC concludes that the statute is ambiguous, and thus the SBA has discretion under Chevron to interpret the Act as its regulations have. The opinion concludes by saying that "Our conclusion . . . is binding on all Executive Branch agencies, notwithstanding any GAO decisions to the contrary." It is the longstanding view of OLC that it, and not GAO (which is, after all, a legislative entity), provides authoritative legal interpretation for the Executive Branch, and the new opinion duly underscores that point by citing precedents from each of the past three presidential administrations for that proposition. That won't cut any ice on the Hill if the relevant committee chairs are inclined to agree with the GAO, but perhaps the volume of any disagreement will be muted since the relevant personae are all from the same political party.

Following up on my post last week, today's opinion is another in a line of decisions published very promptly after signing, although there is an obvious reason for prompt publication here. The SBA undoubtedly has been feeling increasingly uncomfortable with the GAO opinions out there (the most recent one was handed down in May 2009), and I'm sure it was eager to be able to point to a published OLC opinion that validates the reasoning of its regulations.

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9.3.2009 5:24am
martinned (mail) (www):
Is that how they use Chevron? As a carte blanche for the agency to do as it chooses? I would have thought that Chevron would not enter into an OLC opinion trying to advise the agency about the best reading of the statute(s).
9.3.2009 7:13am
David Hecht (mail):
Interesting. Assuming that the policy on 8(a) contracts hasn't changed in its essentials, what this means is that agencies retain the latitude to award some contracts non-competitively (under 8(a)) rather than being required to compete them under one of the other set-aside programs.
9.3.2009 10:31am
John Thacker (mail):
Is that how they use Chevron? As a carte blanche for the agency to do as it chooses?


That's how the executive branch is always going to want to use Chevron. "Congress crafted this law ambiguously, so we get to decide how to implement it." Sometimes, of course, they have a point.
9.3.2009 10:38am
no comment:
Significant in government contracting sphere - thanks for the post.
9.3.2009 12:19pm
mls (www):
I guess the specific question is whether OLC addresses the legal issue in the same way as a court does, ie, is the statute ambiguous so that the agency's decision requires deference, or does it have a different function/duty as an executive office? OLC, in theory, might conclude the statute is best read to say x, but that the question is close enough that Chevron deference should (or might) apply. In that case, does OLC or the agency make the decision?
9.3.2009 1:19pm
straight as a banana:
Maybe this should be a regular feature - "OLC Watch."
9.3.2009 1:35pm
learned intermediary:
"As a carte blanche for the agency to do as it chooses?"

Then you need to learn what Chevron means. If it is limited to ambiguous statutes, then clearly it's not "carte blanche."

"In that case, does OLC or the agency make the decision?"

The agency has its own lawyers. Chevron deference is agency deference, not executive branch deference. I wonder if they hash it out before issuing an opinion?
9.3.2009 1:44pm
martinned (mail) (www):
@learned intermediary: My apologies for the short cut. What I meant is, of course, carte blanche given an ambiguous statute.

What I had expected is that the OLC would not look at this as if they were a court. I'd expect them to "hash it out" with the agency's lawyers, trying to find the best reading of the ambiguous statute. And then, in the end, I'd expect them to say something like: "While we think X is the best reading, Y and Z would probably be OK as well, since they are within the margin of freedom created by Chevron."

After all, it is my understanding that the idea behind the Chevron docrine is not that Congress is assumed to have delegated any great decision making power to the agency per se, but rather that the agency is expected to be better at understanding the statute than a court would be. It's not that there isn't a correct answer to the question - which would leave the agency free to choose from the alternatives, but rather that the agency is more likely than the court to figure out what the correct answer is, i.e. what the intention of Congress was.

So I don't see why Chevron would play such a big part in an OLC opinion formulated without any of the procedural and other difficulties that would affect a court's ability to fathom the true meaning of a stattue. Chevron would only come up when the OLC steps into the shoes of the SG's office, and gives advice on what the agency can get away with. Confusing those two was one of the (many) problems with the Yoo memos, if memory serves.
9.3.2009 2:12pm
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