Defying Auer Deference

DEFYING AUER DEFERENCE: SKIDMORE AS A SOLUTION TO CONSERVATIVE CONCERNS IN PEREZ v. MORTGAGE BANKERS ASSOCIATION

Nicholas R. Bednar, Volume 100, Lead Articles Editor*

On March 9, 2015, the Supreme Court of the United States handed down its decision in Perez v. Mortgage Bankers Association.[1]F The Court overturned the D.C. Circuit’s decision in Paralyzed Veterans of America v. D.C. Arena L.P. The rule created in Paralyzed Veterans required agencies to “use the APA’s notice-and-comment procedures when it wishes to issue a new interpretation of a regulation that deviates significantly from one the agency has previously adopted.”[2] The Paralyzed Veterans rule addressed policy concerns that agencies use interpretive rules to evade APA notice-and-comment procedures.[3] According to Professor Sasha Volokh, the overturning of Paralyzed Veterans is uncontroversial and founded in sound understandings of statutory interpretation.[4] The opinions of Justices Alito, Thomas, and Scalia, however, suggest that the conservative wing of the Supreme Court may be seeking to overturn another longstanding rule: Auer deference (a.k.a. Seminole Rock deference).[5]

When an agency interprets its own regulation it is entitled to near-absolute deference unless it “is plainly erroneous or inconsistent with the regulation.”[6] This level of judicial deference is commonly called Seminole Rock or Auer deference—coined from the two premier cases to elicit the rule. This Essay argues that the Supreme Court should eliminate Auer deference. In its place, the Court should begin using the familiar Skidmore deference to weigh agency interpretations of their own regulations. The Essay proceeds in three parts. Part I surveys Auer deference and scholarship. Next, Part II summarizes the opinions of Justices Scalia and Thomas in Perez v. Mortgage Bankers Association—unveiling that a future review of Auer deference is almost certain. Finally, Part III briefly analyzes potential paths the Supreme Court may take in a review of Auer. This Essay concludes that one of two outcomes is probable: deference to Auer or its destruction.

I. Seminole Rock and Auer

In 1945, the Supreme Court decided Bowles v. Seminole Rock & Sand Co.[7] Seminole Rock concerned the interpretation of a price control regulation issued by the Administrator of the Office of Price Administration under the Emergency Price Control Act of 1942.[8] The Court reversed the holding of the Court of Appeals, finding that the agency’s interpretation of the regulation was correct.[9] In reaching this conclusion, the Court stated that an agency’s interpretation of its own regulation is “of controlling weight unless it is plainly erroneous or inconsistent with the regulation.”[10]

In 1997, the Supreme Court revisited Seminole Rock in Auer v. Robbins.[11] In Auer, the Supreme Court considered whether the Secretary of Labor’s interpretation of its “salary-basis  test” regulation—a regulation used in determining exemptions from overtime pay requirements under the Fair Labor Standards Act—was reasonable.[12] The Secretary of Labor interpreted its ‘salary-basis regulation’ “in an amicus brief filed at the request of the Court.”[13] Petitioners complained that the interpretation—first promulgated in a legal brief—was unworthy of deference as a “‘post hoc rationalization[n]’ advanced by an agency seeking to defend past agency action against attack.”[14] Writing for the majority, Justice Scalia concluded “[t]here is simply no reason to suspect that the interpretation does not reflect the agency’s fair and considered judgment on the matter in question.”[15] The Court—citing to Seminole Rock—deferred to the Secretary of Labor’s interpretation as it was neither “‘plainly erroneous or inconsistent with the regulation.’”[16] As such, Auer deference accords agencies with a high level of deference when interpreting their own regulations.

According to Professors William N. Eskridge and Lauren E. Baer, “Seminole Rock recognizes the practical reality that an agency interpretation of its own (valid-under-the-statute) concept or complex web of regulations should be followed by judges unless there is a strong statutory reason to reject it.”[17] Indeed, empirical studies suggest courts defer significantly to agencies under Seminole Rock deference. At the Supreme Court, agencies win 90.9% of cases where the Court invokes Seminole Rock.[18] In comparison, when the Supreme Court applies Chevron deference, studies suggest the overall agency win rate is 76.2%.[19] Likewise, lower courts uphold agency interpretations under Seminole Rock in approximately 76.26% of cases.[20] From this data, it is apparent that Seminole Rock is an inordinately strong level of judicial deference.

Scholars have been critical of the Supreme Court’s application of Seminole Rock. Professor John F. Manning posits that “Seminole Rock contradicts the constitutional premise that lawmaking and law-exposition must be distinct. Rather it presumes an administrative agency should have binding authority over both functions, and that a delegation of rulemaking power implicitly assigns the agency a concomitant power to say what its own rules mean.”[21] Professor Kevin O. Leske notes that the “[i]nconsistency and widespread confusion regarding the precise parameters of the proper analysis under Seminole Rock have led to conflicting interpretations and application of the doctrine by the courts of appeals.”[22] Scholars have called for a “re-examination” of Auer.[23] This re-examination could take many forms: “the outright rejection of the doctrine; the creation of a consistent framework or test . . . ; or the addition of more chaos by endorsing the doctrine without adding limits or parameters for the lower courts to apply.”[24]

Recently, the Supreme Court has taken notice of scholars’ pleas. In Talk America v. Michigan Bell Telephone, Justice Scalia cited Manning’s concerns suggesting that Auer deference be overturned.[25] In 2012, the Court decided Christopher v. SmithKline Beechman Corp. in a way that restricted the application of Auer deference. The Court held that Auer is inappropriate “when the agency’s interpretation is plainly erroneous or inconsistent with the regulation” or “when there is reason to suspect that the agency’s interpretation does not reflect the agency’s fair and considered judgment.”[26] Finally, in a concurring opinion in NEDC v. Decker, Chief Justice Roberts acknowledged that the Court had some interest in overturning Auer deference.[27] In the same case, Justice Scalia declared “[e]nough is enough.”[28] According to Justice Scalia, Seminole Rock “offered no justification whatever” for agency deference.[29] Therefore, it appears that for some time, Seminole Rock has been eroding in the minds of the conservative wing of the Court.

II. Perez v. Mortgage Bankers Association

Perez v. Mortgage Bankers Association offers another example of the conservative wing’s effort to overturn Seminole Rock and Auer. The majority opinion offers little with respect to a discussion of Auer. In Footnote 4, the Court acknowledged that—even under Auer deference, “it is the court that ultimately decides whether a given regulation means what the agency says.”[30] More damning than the majority’s opinion, Justice Alito’s concurrence acknowledges concerns about Auer and refers readers to the opinions of Justices Scalia and Thomas.[31] Justice Alito suggests that Auer must be revisited, but in cases in which that claim is “explored through full briefing and argument.”[32] While Alito’s opinion suggests he is skeptical of Auer deference, it is truly Justices Scalia and Thomas concurrences’ which bring out the true feelings of the conservative-wing.

i. Justice Scalia’s Concurrence

In his concurrence, Justice Scalia suggests the Court has been “[h]eedless of the original design of the APA” in developing “an elaborate law of deference to agencies’ interpretations of statutes and regulations.”[33] According to Justice Scalia, the Court has ignored APA § 706 in its adherence to Auer deference.[34] APA § 706 provides that the “reviewing court shall . . . determine the meaning or applicability of the terms of an agency action.”[35] Yet, instead of allowing courts to interpret agency regulations, Auer deference permits agencies to interpret agency regulations.

Justice Scalia contends that by deferring to agency interpretations of their own regulations (often promulgated in interpretive rules), interpretative rules no longer serve an advisory function, but legally-bind the regulated party.[36] “So long as the agency does not stray beyond the ambiguity in the text being interpreted, deference compels the reviewing court to ‘decide’ that the text means what the agency says.”[37] Therefore, the majority’s contention that the Court ultimately interprets the regulation is, in practice, erroneous. Agencies are incentivized to promulgate vague rules through notice-and-comment, which can later be interpreted in whichever manner the agency prefers without notice-and-comment.[38]

Justice Scalia seems to commend the D.C. Circuit for its “courageous (indeed, brazen) attempt to limit the mischief by requiring an interpretive rule to go through notice and comment if it  revises an earlier definitive interpretation of a regulation.”[39] He, however, acknowledges that such a solution conflicts with the requirements of the APA.[40] According to Scalia, “there are weighty reasons to deny a lawgiver the power to write ambiguous laws and then be the judge of what the ambiguity means.”[41] He concludes by suggesting that the solution is not with the legislature, but rather to abandon Auer deference and to apply the APA as intended.[42]

ii. Justice Thomas’ Concurrence

Of the four opinions in Perez, Justice Thomas’ concurrence is the longest, spanning a total of twelve pages (nearly twice the length of Justice Scalia’s opinion). While Justice Scalia’s opinion focused on policy concerns of granting agencies the authority to interpret their own regulations, Justice Thomas’ concurrence raises two constitutional concerns with Auer deference: the “transfer of judicial power to the Executive Branch” and the “erosion of the judicial obligation to serve as a ‘check’ on the political branches.”[43] Further, Thomas addresses many of the same policy considerations of Scalia.[44] His opinion finally addresses the theoretical arguments in defense of Auer deference.[45]

a. The Transfer of Judicial Power to the Executive Branch

In addressing this first concern, Thomas begins with a discussion of historical Federalist and Anti-Federalist understandings of the three branches of government. Thomas quotes James Madison for the proposition that “All new laws . . . are considered as more or less obscure and equivocal. . . .”[46] According to Thomas, while other branches may interpret the law, the judicial power includes the power to “resolve these ambiguities over time” and is authoritative interpretation in a judicial proceeding.[47] To ensure neutral resolution of these ambiguities, the Constitution insulates judges from external pressures by providing them with indefinite tenure.[48] In contrast, legislators and the Executive are subjected to the political pressure of elections.             According to Thomas, “[i]nterpreting agency regulations calls for that exercise of independent judgment.”[49] Auer “precludes judges from independently determining” the meaning of the agency regulation.[50] “Rather than judges’ applying recognized tools of interpretation to determine that best meaning of a regulation, . . .” Judges grant agency interpretations controlling weight unless the interpretation falls within the narrow exception of “plainly erroneous or inconsistent with the regulation.”[51] Seminole Rock deference transfers the judicial power of interpretive judgment to Executive agencies—which are not insulated from external pressures.

b. Checks and Balances

Article III judges are expected to ensure that laws created by the legislature comply with the Constitution and that the Executive Branch does not extend those laws beyond their meanings.[52] Thomas claims that the Court has “not consistently exercised the judicial check with respect to administrative agencies.”[53] Thomas concludes:

Instead, we have deferred to the executive agency that both promulgated the regulations and enforced them. Although an agency’s interpretation of a regulation might be the best interpretation, it also might not. When courts refuse even to decide what the best interpretation is under the law, they abandon the judicial check.[54]

c. Policy Arguments

Thomas echoes many of the policy concerns Scalia raises. Agency interpretations of their own regulations are practically given “the force and effect of law” by Auer deference.[55] “To regulated parties, the new interpretation might as well be a new regulation.”[56] Thomas notes that in the case before the Court, in 2006 the Department of Labor concluded that mortgage-loan officers “are not employees whose primary duty is selling financial products.”[57] In 2010, the Department of Labor concluded “exactly the opposite.”[58] Regulations provide notice to regulated parties only to the extent that the agency consistently interprets them.[59]

In a footnote, Thomas extends his argument to suggest the decline of formal APA rulemaking has exacerbated this problem.[60] “Today, however, formal rulemaking is the Yeti of administrative law. There are isolated sightings of it in the ratemaking context, but elsewhere it proves elusive.”[61] In addition to eliminating Auer deference, Thomas seemingly suggests that a return to formal rulemaking is necessary to ensure proper notice to regulated parties.[62]

d. Counterarguments Against Theoretical Justifications of Auer Deference

Justice Thomas raises counter-arguments to three theoretical justifications for Auer deference.[63] Note, none of these justifications were raised by the majority in their scant, footnoted discussion of Seminole Rock and Auer. In turn, Thomas counters arguments that: (1) agency expertise warrants agency deference “in administering technical statutory schemes;”[64] (2) “agencies are better situated to define the original intent behind their regulations;”[65] and (3) “Congress has delegated to agencies the authority to interpret their own regulations.”[66]

First, Thomas suggests justifying Auer deference on the basis of agency expertise ignores that the inquiry is not what is the “best policy,” but “what the regulation means.”[67] The Court should “ ‘assum[e] that the ordinary meaning of the regulation’s language expresses’ its purpose and enforce it ‘according to its terms.’ ”[68] Agency expertise relates not to the interpretation of regulations, but rather according agencies “broad flexibility to administer statutory schemes.”[69] Quoting INS v. Chadha, Thomas asserts that even policy arguments must give way to the “demands of the Constitution.”[70]

Second, Thomas states that claims that agencies “are better situated to define the original intent behind their regulations” “rings hollow.”[71] First, the Court has accorded Auer deference in situations where the interpreting agency is not the original drafter of the regulation.[72] Second, “[i]t is the text of the regulations that have the force and effect of law, not the agency’s intent.”[73] It is the text of the regulation that goes through notice-and-comment, the text on which the public is “entitled to rely,” and therefore, according to Thomas, the Court “should not accord controlling weight to expressions of intent by administrators of agencies.”[74]

Third, Thomas states that “Congress lacks authority to delegate” the power for agencies to interpret their own regulations.[75] Drawing upon his previous discussion, he suggests that “the Constitution does not empower Congress to issue a judicially binding interpretation of the Constitution or its laws.”[76] Therefore, Congress cannot delegate this power to an agency. Such a justification would violate the Constitutional underpinnings of the separation of powers and undermine the judiciary’s power to “create legally binding interpretations.”[77]

Justice Thomas concludes his concurrence by acknowledging the importance of stare decisis, but contends such a strict adherence would interfere with the judiciary’s duty to uphold the Constitution in this instance.[78] As such, “the entire line of precedent beginning with Seminole Rock raises serious constitutional questions and should be reconsidered in an appropriate case.”[79]

III. The Future of Auer Deference

As discussed, Perez v. Mortgage Bankers Association is not the first case in which the conservative wing has called for the Court to revisit Auer deference.[80] Justices Alito taunts practitioners to raise these issues as a central concern in their brief by insisting that Auer be “explored through full briefing and argument.”[81] The opinions of Justices Scalia and Thomas have outlined the statutory interpretation, constitutional, and policy arguments a practitioner would adopt in this hypothetical future case. The foundation is laid for revisiting Auer deference. The question remains: If the Court reconsiders Auer, what will be the result? Three primary results emerge: a new rule, the destruction of Auer, or nothing. Ultimately, this section will focus on the creation of a new form of deference, or rather the adherence to an old favorite: Skidmore.

Three general observations inform this analysis. First, any decision resulting in a significant departure from Auer is likely to be written by the conservative wing of the Court. As Perez illustrates, Scalia and Thomas are by far the most vocal members of the Court with respect to the issue of Auer deference.[82] Second, none of the liberal members of the bench—notably administrative law experts Justice Breyer and Kagan—have directly commented on Auer deference.[83] Justice Breyer’s dissent in Christopher v. SmithKline Beecham focuses on the merits of the case rather than Auer deference.[84] In a recent podcast, Professor Jeffrey Pojanowski suggests that Justice Breyer may be willing to move Auer deference from a “hard-and-fast rule” to a more situational rule, but notes he has never explicitly given this opinion.[85] The largest implication of these two related points is that it is hard to determine how the Court will decide a reconsideration of Auer deference. In a more nuanced sense, the conservative-wing will need to negotiate with the liberal wing if it wishes to see Auer altered or overruled.

Finally—and perhaps most obviously—the destruction of Auer deference will not end agency interpretations of their own regulations. Regulated parties require guidance in determining how to comply with otherwise vague regulations. Agencies are permitted under APA § 553(b)(3)(A) to issue interpretative rules, without notice and comment, for this purpose.[86] Thus, the issue is not how does the Court stop agencies from interpreting their own regulations. The issue is how much deference these regulations should be given.

i. A New Level of Deference

The Court could construct a new form of deference in way that leads to more critical analysis of agency interpretations. This new form of deference would need to meet—at minimum—two criteria. First, the solution cannot impose additional burdens upon the agency beyond those enumerated in the APA. As the Court declared in Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., “courts lack authority ‘to impose upon [an] agency its own notion of which procedures are ‘best’ or most likely to further some vague, undefined public good.’ ”[87] Because of Vermont Yankee, Justice Scalia is quick to dismiss the Paralyzed Veterans doctrine as a “brazen attempt” to correct the problems with Auer deference.[88] “That solution is unlawful for the reasons set forth in the Court’s opinion: It contradicts the APA’s unqualified exemption of interpretive rules from notice-and-comment rulemaking.”[89]

Second, the solution must return the majority of the interpretative power to the courts. To satisfy Scalia, the alternative test will need to conform to APA § 706’s “directive that the ‘reviewing court . . . determine the meaning or applicability of the terms of an agency action.’”[90] Scalia admonishes the Court for being “[h]eedless of the original design to the APA . . . . [by holding] that agencies may authoritatively resolve ambiguities in regulations.’”[91] Therefore, any solution will necessarily have to restore the balance of power by granting the judiciary the ultimate authority to determine how much deference to accord an agency.

A balancing test would address Scalia’s concerns as it would not require additional agency action and would permit the judiciary more authority to determine how much deference to accord the agency’s interpretation. A balancing test protects regulated parties who rely on agency interpretations by allowing the Court to defer to these interpretations should the court find the interpretation persuasive. In addition, a balancing test would allow courts to more critically evaluate agency interpretations and overturn those that interpret vague regulations into more specific law without notice-and-comment. With stricter scrutiny, agencies will promulgate better defined regulations for fear of the court overturning vaguer regulations. Furthermore, the conservative wing may be able to draw the vote of Justice Breyer in case overturning Auer in favor of a balancing test, given his disdain for “hard-and-fast rule[s].”[92]

ii. The Skidmore Solution

Thankfully, such a solution would require little creativity on the part of the Court. The Court already uses a balancing test—Skidmore deference—in many cases involving agency interpretations of statutes they are charged with implementing.[93] In Skidmore v. Swift & Co., the Supreme Court deferred to the Administrator of the Department of Labor’s Wage and Hour Division’s interpretation of “working time” under the Fair Labor Standards Act.[94] According to Justice Jackson:

[T]he rulings, interpretations and opinions of the Administrator under this Act, while not controlling upon the courts by reason of their authority, do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance. The weight of such a judgment in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all of those factors which give it power to persuade, if lacking control.[95]

Modern Skidmore deference is appropriate for statutory interpretations contained in “policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law.”[96] Skidmore, however, applies “to a broad array of administrative interpretations that lack[] the force of law and result[] from relatively informal procedures. . . .”[97] The modern Skidmore interpretation involves evaluating interpretations on a sliding-scale.[98] The level of deference accorded to the agency along this sliding scale is determined by the following factors:

  1. Thoroughness of Consideration: The extent to which the agency examined the interpretive problem;
  2. Formality of the Agency’s Procedure and Interpretation: The procedures used to adopt the interpretation and its subsequent publication, or lack thereof, in agency manuals or the code of federal regulations;
  3. Validity of the Agency’s Reasoning: The substantive merits of the agency’s argument for the adoption of a particular interpretation;
  4. Consistency of the Agency’s Interpretation: Whether the agency interpretation remains sufficiently stable; and
  5. Agency Expertise: The expertise of the agency with respect to the law, policy, and procedures surrounding the interpretation.[99]

These factors can apply just as well to agency interpretations of their own regulations as they do to agency interpretations of statutes. Courts can evaluate the agencies’ thoroughness of consideration, reasoning, and consistency in the same way they currently do under Skidmore deference. When discussing the formality of an agency interpretation of its own regulation, Courts should consider whether the interpretation was released in an interpretive rule or a less-formal policy statement, as well as how widely the agency distributed the interpretation. Courts should consider whether or not the agency frequently changes its interpretation of the regulation. Finally, the Court should determine whether or not the interpretation is a persuasive and natural outgrowth of the initial regulation. Such consideration would prevent the agency from adopting vague regulations and subsequently using interpretative rules to manipulate the meaning of the regulations. As Skidmore deference is already in use by lower courts, there is no need for the Supreme Court to consider adopting an alternative deference test.

In fact, the Court already struggles with determining when to apply Skidmore deference over Auer deference.[100] According to Eskridge and Baer, the Supreme Court invoked Skidmore deference in 5.7% of cases where the agency was interpreting its own rules.[101] In Martin v. Occupational Safety and Health Review Commission, the Supreme Court cited Skidmore in suggesting that interpretations of agency regulations in less formal settings may be entitled to a lower level of deference.[102]

More recently, in Christoper v. SmithKline Beecham, the Court withheld Auer deference of an agency interpretation promulgated in an “uninvited” amicus brief prepared by the Department of Labor.[103] The Court held that Auer is inappropriate “when the agency’s interpretation is ‘plainly erroneous or inconsistent with the regulation’” or “when there is reason to suspect that the agency’s interpretation ‘does not reflect the agency’s fair and considered judgment.’”[104] Furthermore, Auer deference is not warranted where “the agency’s interpretation conflicts with a prior interpretation . . . or when it appears that the interpretation is nothing more than a ‘convenient litigating position’ . . . or a ‘post hoc rationalization[n]’ advanced by an agency seeking to defend past agency action against attack.’ ”[105] Granting Auer deference to an interpretation promulgated in an amicus brief prepared by the agency in defense of a particular case would “seriously undermine the principle that agencies should provide regulated parties ‘fair warning of the conduct [a regulation] prohibits or requires.’ ”[106] Instead of applying Auer, the Court applied Skidmore.[107]

Christopher illustrates that Skidmore can be easily applied in lieu of Auer. In fact, the Court does this when it is uncertain whether or not Auer should apply. Therefore, applying Skidmore in every case involving an agency interpretation of its own regulations would alleviate lower court confusion of when Skidmore or Auer should apply.

iii. Skidmore, Scalia, and Thomas

A deference test (i.e. Skidmore) can be used to alleviate some of the concerns Justices Scalia and Thomas raised in Mortgage Bankers. Skidmore would return the interpretative power to the Courts by permitting them to reject unpersuasive interpretations—as the Court would reject any defendant’s unpersuasive interpretative argument. At the same time, it would preserve some level of deference for agencies, acknowledging their expertise and the importance of continued predictability in a regulatory setting. Any sort of deference to agencies in this realm will be unappealing to Justice Scalia and Thomas.[108] Still, the concerns they raise are valid and should be addressed by the other members of the Court.

The Supreme Court defers to agency interpretations at lower rates when applying Skidmore than when applying Auer. In cases where the Court applies Skidmore deference, the agency wins at a rate of 73.5%.[109] In contrast, where the Court applies Auer deference, the agency wins at a rate of 90.9%.[110] Admittedly, Skidmore deference still strongly favors the agency interpretation. Justice Scalia and Thomas would contend that any favoritism must be eliminated—ultimately by eliminating the deference regime. Yet, more liberal members of the Court can justify Skidmore as an acknowledgement that the agency does possess expertise with respect to its own regulations.

In this respect, Skidmore returns some interpretative power to the Court. The Court begins by examining “all of those factors which give it power to persuade.”[111] If the Court is left unpersuaded by the agency’s interpretation, it is free to conduct its own interpretation of the regulation. Most importantly, Skidmore would eliminate agency’s reliance on interpretations of otherwise vague regulations. The Court could reject agencies’ interpretative rules, which go above-and-beyond the textual meaning of the regulation. If agencies know the Court will overturn expansive interpretations of intentionally vague regulations, they will have to be more diligent in promulgating specific regulatory text during notice-and-comment procedures. In the words of Scalia, no longer will “deference compel[] the reviewing court to ‘decide’ that the text means what the agency says.”[112]

CONCLUSION

Auer deference presents a troubling problem for the administrative state. Agencies adopt vague regulations in order to comply with the APA’s notice-and-comment procedures. These regulations are then twisted and expanded through interpretative rules. Regulated parties are given neither notice nor the opportunity to comment on these expansive interpretive rules. Auer deference rewards agencies for this bad behavior.

Justices Scalia and Thomas’s concurrences in Perez raise valid concerns. If notice-and-comment procedures are to mean anything, the Court must abandon Auer. On April 28, 2015, the Senate Committee on Homeland Security & Governmental Affairs began exploring legislative options to fix these concerns.[113] While legislative action is unlikely, the Court can be fix these concerns by replacing Auer deference with Skidmore deference. The Court already uses Skidmore deference when it believes Auer is inappropriate. Skidmore deference permits the Court to actually evaluate the agency’s interpretative methods, rather than deferring only in instances of arbitrariness. As such, Skidmore deference would alleviate many of the problems recognized by the conservative wing of the Supreme Court, while preserving the necessary ability of agencies to interpret their own regulations.

 


* J.D. Candidate, 2016. I would like to thank Professor Kristin Hickman for all of her assistance as I researched this topic. My gratitude goes to Maxwell Mensinger, Online Articles Editor of the Minnesota Law Review. Without Max, there would be no De Novo. Without De Novo, this Essay would be a jotted note on the margins of a slip opinion.

[1] Perez v. Mortgage Bankers Ass’n, 135 S. Ct. 1199 (2015).

[2] Id. at 1203.

[3] See id. at 1209; see also, e.g., Brian Wolfman & Bradley Girard, Opinion Analysis: The Court Slays the D.C. Circuit’s Paralyzed Veterans Doctrine, Leaving Bigger Issues for Another Day, SCOTUSblog (Mar. 10, 2015, 9:22 AM), http://www.scotusblog.com/2015/03/opinion-analysis-the-court-slays-the-d-c-circuits-paralyzed-veterans-doctrine-leaving-bigger-issues-for-another-day/; Rich Samp, Supreme Court Observations: Interpreting ‘Perez v. Mortgage Bankers Assoc.’, Forbes (Mar. 24, 2015, 1:06 PM), http://www.forbes.com/sites/wlf/2015/03/24/supreme-court-observations-interpreting-perez-v-mortgage-bankers-assoc/.

[4] Sasha Volokh, Perez, Another Iceberg Supreme Court Opinion: The Best Lies Beneath, Washington Post (Mar. 12, 2015), http://www.washingtonpost.com/news/volokh-conspiracy/wp/2015/03/12/perez-another-iceberg-supreme-court-opinion-the-best-lies-beneath/.

[5] See Perez, 135 S. Ct. at 1210 (Alito, J., concurring); id. at 1211-12 (Scalia, J., concurring); id. at 1213-25 (Thomas, J., concurring).

[6] See Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945); see also Auer v. Robbins, 519 U.S. 452, 461–463 (1997).

[7] See generally Seminole Rock, 325 U.S. at 410.

[8] See id. at 411–14.

[9] Id. at 419.

[10] Id. at 414.

[11] See generally Auer, 519 U.S. at 452.

[12] See Auer, 519 U.S. at 454–56 (“Under regulations promulgated by the Secretary, one requirement for exempt status under [FLSA] § 213(a)(1) is that the employee earn a specified minimum amount on a ‘salary basis.’ ” (citing 29 C.F.R. §§ 541.1(f), 541.2(e), 541.3(e) (1996)).

[13] See Auer, 519 U.S. at 461 (“The Secretary of Labor . . . interprets the salary-basis test to deny exempt status when employees are covered by a policy that permits disciplinary or other deductions in pay ‘as a practical matter.’ That standard is met, the Secretary says, if there is either an actual practice of making such deductions or an employment policy that creates a ‘significant likelihood’ of such deductions.”).

[14] See id. at 462 (citing Bowen v. Georgetown Univ. Hospital, 488 U.S. 204, 212 (1988)).

[15] Id. at 462.

[16] Id. at 461–64 (citing Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945)).

[17] See William N. Eskridge & Lauren E. Baer, The Continuum of Deference: Supreme Court Treatment of Agency Statutory Interpretation from Chevron to Hamdan, 96 Geo. L.J. 1083, 1103 (2008).

[18] See id. at 1104 (“This is significantly higher than the win rate for those Seminole Rock-eligible cases where Seminole Rock was not invoked, which was 75.0% (not unimpressive)”).

[19] See id. at 1128–29 (presenting data on Chevron cases analyzing issues of congressional delegation of authority).

[20] See Richard J. Pierce & Joshua Weiss, An Empirical Study of Judicial Review of Agency Interpretations of Agency Rules, 63 Admin. L. Rev. 515, 519–20 (2011) (“There was no significant difference between the rate at which district courts upheld agency interpretations (75.93%) and the rate at which circuit courts upheld agency interpretations (76.58%).”).

[21] John F. Manning, Constitutional Structure and Judicial Deference to Agency Interpretations of Agency Rules, 96 Colum. L. Rev. 612, 654 (1996).

[22] Kevin O. Leske, Splits in the Rock: The Conflicting Interpretations of the Seminole Rock Deference Doctrine By the U.S. Courts of Appeals, 66 Admin L. Rev. 787, 832 (2014).

[23] See id. at 833.

[24] Id. at 833.

[25] See Talk America v. Michigan Bell Telephone, 131 S. Ct. 2254, 2266 (2011).

[26] Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156, 2166 (2012).

[27] See Decker v. Northwest Environmental Defense Center, 133 S. Ct. 1326, 1338–39 (2013) (Roberts, J., concurring); see also Benjamin Clements, Note, Departing from Seminole Rock Deference: In Decker, a Shift in Tide, 47 Loy. L.A. L. Rev. 539 (2014) (analyzing the Court’s critical response to Seminole Rock in Decker).

[28] Decker, 133 S. Ct. at 1339 (Scalia, J., concurring in part and dissenting in part).

[29] See id. at 1340.

[30] Perez v. Mortgage Bankers Assoc., 135 S. Ct. 1199, 1208 n. 4 (2015).

[31] See id. at 1210 (Alito, J., concurring).

[32] See id. at 1211.

[33] Id. at 1211 (Scalia, J., concurring).

[34] Id. at 1211.

[35] 5 U.S.C. § 706 (2012).

[36] See Perez, 135 S. Ct. at 1212 (Scalia, J., concurring).

[37] Id. at 1212.

[38] See id. at 1212.

[39] Id. at 1212.

[40] See id. at 1212. (“It contradicts the APA’s unqualified exemption of interpretive rules from notice-and-comment rulemaking.”).

[41] Id. at 1212.

[42] See id. at 1213.

[43] Id. at 1217 (Thomas, J., concurring).

[44] See id. at 1219–22.

[45] See id. at 1222–25.

[46] See id. at 1217 (citing The Federalist No. 37, at 229 (James Madison)).

[47] See id. at 1217.

[48] See id. at 1217.

[49] Id. at 1219.

[50] Id. at 1219.

[51] See id. at 1219.

[52] See id. at 1220.

[53] Id. at 1220.

[54] Id. at 1220.

[55] See id. at 1221.

[56] Id. at 1221.

[57] See id. at 1222.

[58] See id. at 1222.

[59] See id. at 1222 (noting the facts of Perez and suggesting that “[i]f courts accord ‘controlling weight’ to both the 2006 and 2010 interpretations, the regulated entities are subject to two opposite legal rules imposed under the same regulation”).

[60] Id. at 1222 n. 5 (“Although almost all rulemaking is today accomplished through informal notice and comment, the APA actually contemplated a much more formal process for most rulemaking. To that end, it provided for elaborate trial-like hearings in which proponents of particular rules would introduce evidence and bear the burden of proof in support of those proposed rules.” (citing 5 U.S.C. § 556 (2012)).

[61] Id. at 1222 n. 5.

[62] Id. at 1222 n. 5 (“It is somewhat ironic for the Court so adamantly to insist that agencies be subject to no greater procedures than those required by the APA when we have not been adamant in requiring agencies to comply with even those baseline procedures.”).

[63] Id. at 1222–25 (raising also a fourth justification regarding the independence and esteem of judges).

[64] Id. at 1222.

[65] Id. at 1223.

[66] Id. at 1224.

[67] Id. at 1222.

[68] Id. (citing Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 251 (2010)).

[69] Id. at 1223

[70] See id. (citing INS v. Chadha, 462 U.S. 919, 945 (1983)).

[71] Id.

[72] See id.

[73] See id. at 1223–24.

[74] See id. at 1224.

[75] Id. at 1224 (“As we have explained in an analogous context, ‘[t]he structure of the Constitution does not permit Congress to execute the laws; it follows that Congress cannot grant to an officer under its control what it does not possess.’” (citing Bowsher v. Synar, 478 U.S. 714, 726 (1986)).

[76] See id. at 1224.

[77] See id. at 1224.

[78] See id. at 1225 (“I have ‘acknowledge[d] the importance of stare decisis to the stability of our Nation’s legal system.’ ‘But stare decision is only an ‘adjunct’ of our duty as judges to decide by our best lights what the Constitution means.’ ” (citing McDonald v. Chicago, 561 U.S. 742, 812 (2010) (Thomas, J., concurring in part and concurring in judgment)).

[79] Id. at 1225.

[80] See supra Part I.

[81] See Perez v. Mortgage Bankers Assoc., 135 S. Ct. 1199, 1211 (Alito, J., concurring).

[82] See supra Parts II.A-B.

[83] See Podcast of the Administrative Law & Regulation Practice Group, held by the Federalist Society (Mar. 19, 2015), available at http://www.fed-soc.org/multimedia/detail/the-future-of-auer-deference-podcast (time stamps 21:20–26:00) (hereinafter “Podcast”).

[84] See Christopher v. SmithKline Beecham, 132 S.Ct. 2156, 2174–80 (2012) (Breyer, J., dissenting); see also Podcast, supra note 84.

[85] Podcast, supra note 84.

[86] See 5 U.S.C. § 553 (2012) (“Except when notice or hearing is required by statute, this subsection does not apply— (A) to interpretative rules . . . .”).

[87] Perez v. Mortgage Bankers Assoc., 135 S. Ct. 1199, 1207 (2015)(citing Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 519, 549 (1978)).

[88] See id. at 1212 (Scalia, J., concurring).

[89] Id.

[90] Id. at 1211.

[91] See id.

[92] See Podcast, supra note 84.

[93] See United States v. Mead Corp. 533 U.S. 218, 227–28 (2001); Skidmore v. Swift & Co., 323 U.S. 134, 139–140 (1944).

[94] See Skidmore, 323 U.S. at 135–137.

[95] Id. at 140 (emphasis added).

[96] See Kristin E. Hickman & Matthew D. Krueger, In Search of the Modern Skidmore Standard, 107 Colum. L. Rev. 1235, 1245 (2007). Where the interpretation is arrived at through “a formal adjudication or notice-and-comment rulemaking,” a different form of deference applies—Chevron deference. Id. at 1245.

[97] Id. at 1245–46.

[98] Id. at 1281.

[99] Id. at 1281 –91 (noting also a sixth consideration, “Longstanding or Contemporaneous Interpretations”).

[100] See id. at 1307.

[101] See Eskridge & Baer, supra note 17, at 1104.

[102] See Martin v. Occupation Safety & Health Com’n, 499 U.S. 144, 157 (1991).

[103] See Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156, 2165 (2012).

[104] Id. at 1266.

[105] Id.

[106] Id. at 1267.

[107] See id. at 2168–69 (“[W]hatever the general merits of Auer deference, it is unwarranted here. We instead accord the Department’s interpretation a measure of deference proportional to the ‘thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade.’ ” (citing United States v. Mead Corp., 533 U.S. 218, 228 (2001)).

[108] Accord Perez v. Mortgage Bankers Assoc., 135 S. Ct. 1199, 1213–15 (Thomas, J., concurring); id. at 1212–13 (Scalia, J., concurring).

[109] See Eskridge & Baer, supra note 17, at 1100.

[110] Id. at 1100.

[111] Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944).

[112] Perez, 135 S. Ct. at 1212.

[113] See Examining the Proper Role of Judicial Review in the Federal Regulatory Process, U.S. Senate Committee on Homeland Security & Governmental Affairs (Apr. 28, 2015, 10:00am), http://www.hsgac.senate.gov/ hearings/examining-the-proper-role-of-judicial-review-in-the-federal-regulatory-process.

 

Posted in De Novo, Essays and Policy Briefs | Tagged |

Our Tweets

Minnesota Law Review @MinnesotaLawRev
Check out this WSJ article exploring the movement that would push more junior lawyers into the courtroom. https://t.co/kCcmHJYnin
h J R
Minnesota Law Review @MinnesotaLawRev
Professor Richard Painter discusses the insider trading allegations against Leon Cooperman. https://t.co/rxT5GnnA4o
h J R
Minnesota Law Review @MinnesotaLawRev
Amar & @OrinKerr discuss 4th Amend w/o Scalia on Ct: https://t.co/kRSsOeqfHJ. More analysis of Scalia contributions: https://t.co/KJbCzn36WY
h J R

© 2011-2016 Minnesota Law Review. All Rights Reserved.