Why Seminole Rock Should Be Overruled, by Allyson N. Ho

by Guest Blogger — Monday, Sept. 19, 2016

Seminole Rock (or Auer) deference requires courts to defer to an agency’s interpretation of its own regulation “unless that interpretation is plainly erroneous or inconsistent with the regulation.” Decker v. Northwest Environmental Defense Center, 133 S. Ct. 1326, 1337 (2013). Courts will defer even when the agency’s interpretation is not “the only possible reading of a regulation—or even the best one.” Id. But as several members of the Supreme Court have recognized, there is a wide gulf between deferring to agency interpretations of statutes—over which Congress has presumably delegated interpretive authority—and deferring to agency interpretations of regulations promulgated by the agency itself. Seminole Rock deference—especially as currently applied—violates separation of powers, thwarts the original design of the Administrative Procedure Act, and undermines the rule of law.

 

First, Auer deference is an affront to the separation of powers inherent in our constitutional structure. As Justice Scalia wrote in his concurrence in Talk America v. Michigan Bell Telephone Co., 131 S. Ct. 2254, 2266 (2011), “[i]t seems contrary to fundamental principles of separation of powers to permit the person who promulgates a law to interpret it as well.” This is because “‘[w]hen the legislative and executive powers are united in the same person . . . there can be no liberty; because apprehensions may arise, lest the same monarch or senate should enact tyrannical laws, to execute them in a tyrannical manner.’ ” Decker, 133 S. Ct. at 1341 (Scalia, J., concurring in part and dissenting in part) (quoting Montesquieu, Spirit of the Laws bk.XI, ch. 6, pp. 151-52 (O. Piest ed., T. Nugent transl. 1949)). The Framers took great care—and for good reason—to ensure that the separation of powers was fundamental to the very structure of the Constitution (and the government it established). Perez v. Mortgage Bankers Ass’n, 135 S. Ct. 1199, 1217-20 (2015) (Thomas, J., concurring in the judgment).

 

But instead of independently applying “recognized tools of interpretation to determine the best meaning of a regulation, [Auer] demands that courts accord ‘controlling weight’ to the agency interpretation of a regulation.” Id. at 1219. This “amounts to a transfer of the judge’s exercise of interpretive judgment to the agency.” Id. Without the structural protections of the judicial branch, the executive branch is “not properly constituted to exercise the judicial power under the Constitution [and] the transfer of interpretive judgment raises serious separation-of-powers concerns.” Id. at 1220.

 

Auer deference also diminishes a critical check the Founders intended the judiciary to perform over the executive branch by “enforcement of the rule of law through the exercise of judicial power.” Id. at 1221. The “abandonment” of judicial authority required by Seminole Rock “permits precisely the accumulation of governmental powers that the Framers warned against.” Id. (citing The Federalist No. 47, at 302 (James Madison) (Clinton Rossiter ed., 1961)).

 

Second, Auer deference is contrary to the original design of the Administrative Procedure Act. Section 706 states that courts are to determine the meaning of agency actions. Auer, however, rejects this judicial supremacy in favor of blanket deference—even to low-level bureaucrats on some issues (and even to positions taken in amicus briefs, as in Auer itself). But plenary review aligns with the APA drafters’ understanding that, while the Act must be interpreted and applied by agencies, “the enforcement of the bill, by the independent judicial interpretation and application of its terms, is a function which is clearly conferred upon the courts in the final analysis.” S. Rep. No. 79-752 (1945), reprinted in Administrative Procedure Act: Legislative History, 79th Congress, 1944-46 at 217 (1946). In fact, the drafters of the APA specifically indicated that agency interpretations should receive judicial review “precisely because the APA exempts them from the safeguards of notice-and-comment rulemaking.” Staff of S. Comm. On the Judiciary, 79th Cong. (Comm. Print 1945), excerpted in APA Legislative History 18. Auer deference, however, offends the principle that there should be either more rigorous process on the front end of agency action (i.e., notice-and-comment rulemaking) or less deference on the back end (i.e., plenary judicial review).

 

The Supreme Court has repeatedly applied that principle in the context of Chevron deference. See, e.g., United States v. Mead Corp., 533 U.S. 218, 232-34 (2001); Christensen v. Harris Cnty., 529 U.S. 576, 587 (2000). But agencies do not need Chevron deference so long as Auer is in place, because agency action that would not receive Chevron deference will receive Auer deference if made in the context of interpreting an agency rule instead of a statute.

 

In the typical scenario, Congress passes a broadly worded statute accompanied by an authorization for agency rulemaking. The agency then promulgates an ambiguous rule that, although preceded by notice and comment, does not address many critical issues. The agency then uses interpretive rules—issued without public feedback—to provide the only meaningful guidance on those issues—guidance that under Auer and Seminole Rock generally binds courts. See Mortgage Bankers, 135 S. Ct. at 1212 (Scalia, J., concurring in the judgment) (observing that agencies “need only write substantive rules more broadly and vaguely, leaving plenty of gaps to be filled in later, using interpretive rules unchecked by notice and comment” and that the APA “does not remotely contemplate this regime”).

 

Thus under Auer, agencies acquire the power to create binding norms without either procedural safeguards (“paying now”) or meaningful judicial review (“paying later”). See Matthew C. Stephenson & Miri Pogoriler, Seminole Rock’s Domain, 79 Geo. Wash. L. Rev. 1449, 1463-64 (2011). But the APA distinguishes between legislative rules (which have the force of law and require notice-and-comment rulemaking) and interpretive rules (which do not) precisely to prevent agencies from doing an end-run around the processes attendant to lawmaking. See Richard J. Pierce, Jr., Distinguishing Legislative Rules From Interpretative Rules, 52 Admin. L. Rev. 547, 555 (2000) (“[T]he agency has an incentive to mischaracterize a legislative rule as interpretative to circumvent the APA rulemaking procedure.”).

 

Auer opens a loophole through which interpretive rules receive the force of law without having gone through notice-and-comment rulemaking. The result is “[a]n unqualified version of Seminole Rock [that] threatens to undermine this doctrinal compromise by enabling agencies to issue binding legal norms while escaping both procedural constraints and meaningful judicial scrutiny.” Stephenson & Pogoriler, supra at 1464. Auer’s erasure of the line between legislative and interpretive rules thus sets it at odds with the APA’s fundamental structure.

 

Third, Auer deference has serious, practical consequences for the rule of law. As the Supreme Court has observed, “[i]t is one thing to expect regulated parties to conform their conduct to an agency’s interpretations once the agency announces them; it is quite another to require regulated parties to divine the agency’s interpretations in advance or else be held liable when the agency announces its interpretations for the first time . . . and demands deference.” Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156, 2168 (2012).

 

For example, in one recent case, the Seventh Circuit asked the Department of Education to file an amicus brief in a case involving a regulation that had been on the books for years. Bible v. United Student Aid Funds, Inc., 799 F.3d 633 (7th Cir. 2015), reh’g denied, 807 F.3d 839 (7th Cir. 2015), cert denied sub nom., United Student Aid Funds, Inc. v. Bible, 136 S. Ct. 1607 (2016) (petition here). Although the interpretation provided in the amicus brief was directly contrary to the agency’s own previous guidance—contrary even to the current guidance on the Department’s website—the court deferred to the Department’s interpretation. As Justice Thomas put it in dissenting from denial of certiorari, the case is “emblematic of the failings of Seminole Rock deference.” Id. at 1608.

 

To be sure, elections have consequences, and different administrations will naturally have different priorities and policy views when it comes to administrative agencies. But the APA “requires that the pivot from one administration’s priorities to those of the next be accomplished with at least some fidelity to law and legal process. . . . Otherwise, government becomes a matter of the whim and caprice of the bureaucracy . . . .” N.C. Growers’ Ass’n v. UFW, 702 F.3d 755, 772 (4th Cir. 2012) (Wilkinson, J., concurring).

 

Seminole Rock—especially as expanded in Auer—is the vehicle for precisely such caprice. As currently applied by courts, it violates separation of powers, conflicts with the APA, and offends the rule of law. It should be overruled.

 

*Allyson N. Ho is co-chair of the appellate group at Morgan Lewis. She represented respondent in Mortgage Bankers Ass’n and petitioner in United Student Aid Funds, Inc.

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This post is part of an online symposium entitled Reflections on Seminole Rock: The Past, Present, and Future of Deference to Agency Regulatory Interpretations.  You can read the entire series here.

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