The Lost History of Seminole Rock*, by Sanne H. Knudsen & Amy J. Wildermuth

by Guest Blogger — Monday, Sept. 12, 2016

Steeped in World War II and with inflation growing, the United States sought to avoid repeating the financial mistakes of the first World War and turned for one of the few times in its history to price controls. On the heels of the passage of the Emergency Price Control Act, the Office of Price Administration (OPA) brought an action to recover from Seminole Rock & Sand Company for overcharging customers for crushed rock. After engaging in its own independent analysis and interpretation of the regulation, the Supreme Court agreed that Seminole Rock had charged too much. The Court then bolstered this conclusion with a short final paragraph: “Any doubts concerning this interpretation of [this] rule” were eliminated because the agency’s own interpretation of the rule was consistent with the Court’s reading.

 

From that five-sentence added-on paragraph sprung what is better known today as Auer deference, which affords deference to agency interpretations of their own regulations. Courts regularly defer to agencies under this doctrine. How did so much weight get placed on so little? Digging through years of old cases and forgotten scholarship, we expected to find the answer—a theoretical justification and accompanying scholarly discourse—to explain the birth and expansion of this broadly applied doctrine. We found instead that Seminole Rock was the product of a unique time, an era of wartime price controls, and later cases divorced Seminole Rock from that context without explanation.

 

Through the 1950s, courts cited Seminole Rock in very few cases and largely limited to the context of price control regulations. In those cases, courts deferred to agency interpretations only when certain procedures ensured fair notice, such as publishing the interpretations alongside the adoption of the regulations themselves. They were quite skeptical of deferring to interpretations that clarified the regulations only after litigation ensued.

 

The 1960s were a time of great change. In this period, when price control cases had disappeared from the docket, courts began to shed the original contextual appreciation of Seminole Rock as a wartime relic. Much different from the de novo analysis that typically accompanied judicial review in the early days, the 1960s began an era when deference generally became a rebuttable presumption. As a result of this, by the end of the decade, the last vestiges of Seminole Rock’s origins were completely shed and the doctrine was applied to interpretations in a variety of contexts, including those provided merely in letters or in response to litigation.

 

As the late 1960s gave way to the 1970s, the final transformation of Seminole Rock was on full display in both the lower courts and the Supreme Court. Throughout this transformation, one pattern stands above the rest: the near lack of theoretical justification for Seminole Rock’s expansion. The nuance and contextual particularities of Seminole Rock’s birth were lost by later courts in their application of the doctrine.

 

Although little is written to explain the expansion of Seminole Rock beyond its modest origins, changes in the administrative state during the relevant period might offer some insight. First, as the administrative state expanded, so too did rulemaking. More rules in turn meant agencies provided more interpretations of those rules. Second, faced with concerns about judicial activism, courts came to embrace judicial restraint when reviewing agency action. The substantial deference that would be associated with Seminole Rock was solidified during this period.

 

This best guess for the remarkable transformation of Seminole Rock notwithstanding, the lack of written discourse and rationale remain troubling. With no acknowledgment of Seminole Rock’s unique context and history, a reconsideration of the modern day doctrine is not only appropriate, but needed.

 

* This post is based on our work Sanne H. Knudsen & Amy J. Wildermuth, Unearthing the Lost History of Seminole Rock, 65 Emory L.J. 47 (2015), and Sanne H. Knudsen & Amy J. Wildermuth, Lessons from the Lost History of Seminole Rock, 22 Geo. Mason L. Rev. 647 (2015). We are also deeply grateful for the helpful feedback we received as part of a series of events sponsored by the Law & Economics Center at George Mason University School of Law.

 

Sanne H. Knudsen is at the University of Washington School of Law and., Amy J. Wildermuth, is at the University of Utah.

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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