Deference to Administrators’ Interpretations of their Own Regulations
The Supreme Court of the United States recently cast a critical eye over the concept of Auer deference (so called even though the seminal case is actually Bowles v. Seminole Rock & Sand Co.). When administrative bodies promulgate rules, regulations and policies to fill in the gaps in statutory provisions, their promulgations may themselves have gaps and require further interpretation. Auer deference commands that any such further interpretation “becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation” (see here).
Whether this form of super-deference to administrative decision-makers’ interpretations of their own regulations is an unconstitutional fusion of the power to make and interpret laws has been questioned at some length. Indeed, Justice Scalia, previously a firm supporter of Auer deference, confessed in the recent Talk America case that he has become “increasingly doubtful of its validity”. Permitting administrative bodies to develop vague policies which can be implemented subsequently by way of case-by-case adjudication “frustrates the notice and predictability purposes of rulemaking, and promotes arbitrary government”, he argued. In some cases, the Court has been reluctant to grant Auer deference, especially where interpretations seem like attempts to game the system and avoid the rigours of notice-and-comment rulemaking required by the Administrative Procedure Act (an excellent overview can be found here).
Last month, in Christopher v. SmithKline Beecham Corp., the Court refused to accord Auer deference to an interpretation of regulations issued under the Fair Labor Standards Act by the Department of Labor. On the merits, there was a 5-4 split as to whether or not pharmaceutical detailers (who persuade doctors to prescribe their products) are entitled to receive overtime pay, an interesting issue of statutory interpretation turning on precisely what counts as a sale in the pharmaceutical setting.
Unanimity reigned, however, on the applicability of Auer deference. Indeed, Justice Scalia’s concurring opinion in Talk America was cited with approval.
The circumstances of Christopher demonstrate why it is inappropriate to accord this sort of super-deference automatically. The Department of Labor had first announced its view that pharmaceutical detailers were entitled to receive overtime in an amicus brief filed in 2009; moreover, after cert was granted, it subtly altered the basis for its conclusion in its submission to the Court. Its interpretation would have far-reaching consequences for established and entrenched patterns of behaviour (detailers have long been refused overtime by the pharmaceutical industry). No fair warning had been given to those affected of the Department’s new interpretation. Invitations to participate in the formulation of the new interpretation were never issued. As Justice Alito tartly concluded:
It 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 in an enforcement proceeding and demands deference (slip op. at p. 14).
One might add that whether the Department had applied its relevant expertise to the question could not be ascertained from such a flimsy record, further undermining the case for any deference at all, never mind Auer deference.
I would go further. Stated in such strong terms as “controlling…unless…plainly erroneous or inconsistent”, Auer deference can never be appropriate. What I think the Court was getting at in Seminole Rock and Auer is that situations can arise in which an administrative decision, while ultimately consistent with the governing statute, can be inconsistent with a rule, regulation or policy developed by the decision-maker. In such circumstances, it would be unfair to hold a person to an erroneous or plainly inconsistent interpretation of the rule, regulation or policy.
A moment’s reflection should cause one to appreciate that Auer deference can only arise in those cases. If the rule, regulation or policy is inconsistent with the governing statute, then the person affected should challenge the rule, regulation or policy (regardless of the actual decision at issue). If the decision is inconsistent with the governing statute, then the person affected should challenge the decision (regardless of whether it is consistent with the rule, regulation or policy). After all, the governing statute is always what governs. Indeed, in the case of the pharmaceutical detailers, that was ultimately the basis on which the majority resolved the questions at issue: the Department’s interpretation was “flatly inconsistent” with the governing statute and could not stand.
Once properly understood, Auer deference should really not be treated as deference at all. Rather, the focus on inconsistency and error suggests that where an individual can demonstrate that a decision was inconsistent or erroneous viewed in terms of the relevant rule, regulation or policy, a reviewing court will be justified in quashing the decision at issue. And if that is all Auer deference amounts to, the need for hand-wringing about the separation of powers is greatly reduced.
There ought to be some deference to internal interpretations (all seem to agree on that), but Auer super-deference is inappropriate and, I suggest, misunderstood.
This content has been updated on June 11, 2014 at 09:48.