Notice & Comment

Dilution of Auer Deference? by Michael Herz

It is hornbook administrative law that agencies’ interpretations of their own regulations received heightened judicial deference.  The standard cites are Bowles v. Seminole Rock Co., 325 U.S. 410 (1945), and Auer v. Robbins, 519 U.S. 79 (1997).  The principle has a number of possible justifications: (a) the agency best understands what interpretation will make sense and advance statutory goals, (b) deference will help achieve national uniformity, (c) the agency knows what it meant, and (d) even if the agency is stretching, it could rewrite the regulation anyway, so there is not much point in rejecting the interpretation and thus forcing it to go the long way round to ending up in the same place.

Nonetheless, there is an undercurrent of doubt regarding Auer deference. Rubber-stamping an agency’s interpretations of its own regulations allows (and perhaps encourages) the agency to issue a vague or benign regulation with notice and comment, then “interpret” it aggressively, unpredictably, or in bad faith, without notice and comment.  A strong statement of doubts about Auer deference is John Manning, Constitutional Structure and Judicial Deference to Agency Interpretations of Agency Rules, 96 Colum. L. Rev. 612 (1996).

Unitl recently, the Manning critique impressed many scholars but was not influential in the courts.  That seems to be changing.  Last year saw a striking concurring opinion by Justice Scalia in Talk America v. Michigan Bell Telephone Co., 131 S. Ct. 2254 (2011).  Scalia endorsed the Manning position, expressed basic doubts about Auer deference, and declared himself open to abandoning Auer:

Now at least five Justices seem to have shifted toward that position.  Yesterday the Court decided Christopher v. Smithkline Beecham Corp.  The case concerned whether the time-and-a-half for overtime requirements of the FLSA apply to certain drug company sales reps.  The statute exempts “outside salesmen” from its coverage.  It does not define that term; it does authorize the Secretary of Labor to “define and delimit” its meaning by regulation.  Here the reps’ main activity was obtaining promises by doctors to prescribe the company’s products; if such agreements were “sales” then the reps were “salesmen” and the exemption applied.  Relying on an interpretation of its own regulations that had been set forth in several amicus briefs, the Department of Labor took the position that a “sale” requires actual transfer of title, and that therefore the reps were not salesmen.  In a 5-4 decision, the Court held that Auer deference did not apply and rejected the DOL’s interpretation on the merits.

Justice Alito’s opinion for the majority does not establish any hard and fast rules, and expressly acknowledges that Auer deference can apply to views set out in briefs, but finds Auer inapplicable in these circumstances.  The heart of his discussion rests on concerns about notice and fair warning to regulated entities — the industry had treated reps as “outside salesmen” for decades and DOL had never taken issue with that understanding until a 2009 amicus brief.

Justice Breyer’s dissenting opinion (joined by Justices Ginsburg, Sotomayor, and Kagan) has little to say about Auer.  The case is not cited, and the word “deference” does not appear.  However, Breyer does note in passing that in light of the fact that the government’s precise understanding of the meaning of the regulations had fluctuated during the litigation, “I . . . agree that we should not give the Solicitor General’s current interpretative view an especially favorable weight.”  He goes on to grapple with the DOL regulations and the statute without mentioning or relying on the agency’s views.

Thus, while the opinions leave a great deal of room for debate about just when Auer applies, all nine Justices found it inapplicable here, and that principle seems a good deal less rock solid today than it did yesterday.

This post was originally published on the legacy ABA Section of Administrative Law and Regulatory Practice Notice and Comment blog, which merged with the Yale Journal on Regulation Notice and Comment blog in 2015.

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