No Seminole Rocks in the Park: Perez v. Mortgage Bankers’ Association, 575 U.S. _____ (2015)

The Supreme Court of the United States decision in Perez v. Mortgage Bankers’ Association, 575 U.S. _____ (2015) (discussed here) is also notable for the concurring opinions of Justices Scalia and Thomas, which take aim at Seminole Rock deference. Pursuant to this concept, an administrative agency’s interpretation of its own regulations controls unless it is plainly erroneous. Justice Scalia saw this as circumventing the requirement that binding rules must go through the notice-and-comment procedures set out in the Administrative Procedure Act:

Because the agency (not Congress) drafts the substantive rules that are the object of those interpretations, giving them deference allows the agency to control the extent of its notice-and-comment-free domain. To expand this domain, the agency 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 (slip opinion, at p. 4).

Justice Thomas had constitutional concerns about the concentration of interpretive and decisional power that he summarized as follows:

Seminole Rock raises two related constitutional concerns. It represents a transfer of judicial power to the Executive Branch, and it amounts to an erosion of the judicial obligation to serve as a “check” on the political branches (at p. 8).

As I have written previously, I think the Seminole Rock deference problem is a little bit overstated. Say a statute says: “No Vehicles in the Park”. Then say the Parks Agency adopts a regulation prohibiting the operation of “motorized vehicular devices designed for travel from one fixed point to another”, listing cars, trucks and motorcycles as examples. This regulation is plainly a reasonable interpretation of the statute.

What if a Park Ranger stops a man in an electric wheelchair and gives him a ticket for disobeying the regulation? Or that his colleague tickets a child playing with a remote-operated toy car? The way American courts talk about Seminole Rock (or Auer deference) suggests that the only relevant question here is whether it is “plainly erroneous” to interpret the regulation as including an electric wheelchair and and a toy car.

That seems wrong to me. Rather, there are two problems with the decisions of the Park Rangers. First, they may be inconsistent with the statute. Whatever the regulation says, it is not clear that the wheelchair or the toy car is a “Vehicle” within the meaning of the statute. But if so, the regulation is simply irrelevant.

Second, given the language of the regulation, one might say that applying it in these cases is unfair or arbitrary because the individuals in question had no notice of how it might be applied. But if so, the regulation simply forms part of the context in determining whether the decision to issue the ticket was reasonable. A departure from the ordinary meaning of the regulation — read as it would be by an ordinary person* — might be unreasonable.

I agree with Justice Scalia that the “plainly erroneous” standard is inappropriate in these circumstances. I suspect, however, that the “plainly erroneous” language was developed to address cases where there was no departure at all from the regulation: that is, an appropriate interpretation of a regulation that embodies a reasonable interpretation of a statute. “Not plainly erroneous” is simply a conclusory statement that is not the true test for judicial intervention.

In sum, the question is always whether the ultimate decision is a reasonable construction of the statutory provision at issue. As I put it in my previous post:

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.

* That is certainly what the Court said in Seminole Rock, but I appreciate that in some situations the question will be more complex. Kevin Stack’s “Interpreting Regulations” is worth a read on this point.

This content has been updated on May 11, 2015 at 12:07.