Perez v. Mortgage Bankers Assn.
Perez v. Mortgage Bankers Assn.
Opinion
When a federal administrative agency first issues a rule interpreting one of its regulations, it is generally not required to follow the notice-and-comment rulemaking procedures of the Administrative Procedure Act (APA or Act). See
I
A
The APA establishes the procedures federal administrative agencies use for "rule making," defined as the process of "formulating, amending, or repealing a rule." § 551(5). "Rule," in turn, is defined broadly to include "statement [s] of general or particular applicability and future effect" that are designed to "implement, interpret, or prescribe law or policy." § 551(4).
Section 4 of the APA,
Not all "rules" must be issued through the notice-and-comment process. Section 4(b)(A) of the APA provides that,
*1204
unless another statute states otherwise, the notice-and-comment requirement "does not apply" to "interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice."
B
These cases began as a dispute over efforts by the Department of Labor to determine whether mortgage-loan officers are covered by the Fair Labor Standards Act of 1938 (FLSA),
The FLSA grants the Secretary of Labor authority to "defin[e]" and "delimi[t]" the categories of exempt administrative employees.
In 1999 and again in 2001, the Department's Wage and Hour Division issued letters opining that mortgage-loan officers do not qualify for the administrative exemption. See Opinion Letter, Loan Officers/Exempt Status, 6A LRR, Wages and Hours Manual 99:8351 (Feb. 16, 2001); Opinion Letter, Mortgage Loan Officers/Exempt Status, id., at 99:8249. (May *1205 17, 1999). In other words, the Department concluded that the FLSA's minimum wage and maximum hour requirements applied to mortgage-loan officers. When the Department promulgated its current FLSA regulations in 2004, respondent Mortgage Bankers Association (MBA), a national trade association representing real estate finance companies, requested a new opinion interpreting the revised regulations. In 2006, the Department issued an opinion letter finding that mortgage-loan officers fell within the administrative exemption under the 2004 regulations. See App. to Pet. for Cert. in No. 13-1041, pp. 70a-84a. Four years later, however, the Wage and Hour Division again altered its interpretation of the FLSA's administrative exemption as it applied to mortgage-loan officers. Id., at 49a-69a. Reviewing the provisions of the 2004 regulations and judicial decisions addressing the administrative exemption, the Department's 2010 Administrator's Interpretation concluded that mortgage-loan officers "have a primary duty of making sales for their employers, and, therefore, do not qualify" for the administrative exemption. Id., at 49a, 69a. The Department accordingly withdrew its 2006 opinion letter, which it now viewed as relying on "misleading assumption[s] and selective and narrow analysis" of the exemption example in § 541.203(b). Id., at 68a. Like the 1999, 2001, and 2006 opinion letters, the 2010 Administrator's Interpretation was issued without notice or an opportunity for comment.
C
MBA filed a complaint in Federal District Court challenging the Administrator's Interpretation. MBA contended that the document was inconsistent with the 2004 regulation it purported to interpret, and thus arbitrary and capricious in violation of § 10 of the APA,
The District Court granted summary judgment to the Department.
Mortgage Bankers Assn. v. Solis,
The D.C. Circuit reversed.
Mortgage Bankers Assn. v. Harris,
We granted certiorari, 573 U.S. ----,
II
The
Paralyzed Veterans
doctrine is contrary to the clear text of the APA's rulemaking provisions, and it improperly imposes on agencies an obligation beyond the "maximum procedural requirements" specified in the APA,
Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc.,
A
The text of the APA answers the question presented. Section 4 of the APA provides that "notice of proposed rule making shall be published in the Federal Register."
Rather than examining the exemption for interpretive rules contained in § 4(b)(A) of the APA, the D.C. Circuit in
Paralyzed Veterans
focused its attention on § 1 of the Act. That section defines "rule making" to include not only the initial issuance of new rules, but also "repeal[s]" or "amend[ments]" of existing rules. See § 551(5). Because notice-and-comment requirements may apply even to these later agency actions, the court reasoned, "allow[ing] an agency to make a fundamental change in its interpretation of a substantive regulation without notice and comment" would undermine the APA's procedural framework.
This reading of the APA conflates the differing purposes of §§ 1 and 4 of the Act. Section 1 defines what a rulemaking is. It does not, however, say what procedures an agency must use when it engages in rulemaking. That is the purpose of § 4. And § 4 specifically exempts interpretive rules from the notice-and-comment requirements that apply to legislative rules. So, the D.C. Circuit correctly read § 1 of the APA to mandate that agencies use the same procedures when they amend or repeal a rule as they used to issue the rule in the first instance. See
F.C.C. v. Fox Television Stations, Inc.,
*1207 B
The straightforward reading of the APA we now adopt harmonizes with longstanding principles of our administrative law jurisprudence. Time and again, we have reiterated that the APA "sets forth the full extent of judicial authority to review executive agency action for procedural correctness."
Fox Television Stations, Inc.,
These foundational principles apply with equal force to the APA's procedures for rulemaking. We explained in
Vermont Yankee
that § 4 of the Act "established the maximum procedural requirements which Congress was willing to have the courts impose upon agencies in conducting rulemaking procedures."
Id.,
at 524,
The
Paralyzed Veterans
doctrine creates just such a judge-made procedural right: the right to notice and an opportunity to comment when an agency changes its interpretation of one of the regulations it enforces. That requirement may be wise policy. Or it may not. Regardless, imposing such an obligation is the responsibility of Congress or the administrative agencies, not the courts. We trust that Congress weighed the costs and benefits of placing more rigorous procedural restrictions on the issuance of interpretive rules. See
id.,
at 523,
III
MBA offers several reasons why the Paralyzed Veterans doctrine should be upheld. They are not persuasive.
A
MBA begins its defense of the Paralyzed Veterans doctrine by attempting to bolster the D.C. Circuit's reading of the APA. " Paralyzed Veterans, " MBA contends, "simply acknowledges the reality that where an agency significantly alters a prior, definitive interpretation of a regulation, it has effectively amended the regulation itself," something that under the APA requires use of notice-and-comment procedures. Brief for Respondent 20-21.
The act of "amending," however, in both ordinary parlance and legal usage, has its own meaning separate and apart from the act of "interpreting." Compare Black's Law Dictionary 98 (10th ed. 2014) (defining "amend" as "[t]o change the wording of" or "formally alter ... by striking out, inserting, or substituting words"), with
id.,
at 943 (defining "interpret" as "[t]o ascertain the meaning and significance of
*1208
thoughts expressed in words"). One would not normally say that a court "amends" a statute when it interprets its text. So too can an agency "interpret" a regulation without "effectively amend[ing]" the underlying source of law. MBA does not explain
how,
precisely, an interpretive rule changes the regulation it interprets, and its assertion is impossible to reconcile with the longstanding recognition that interpretive rules do not have the force and effect of law. See
Chrysler Corp.,
MBA's "interpretation-as-amendment" theory is particularly odd in light of the limitations of the Paralyzed Veterans doctrine. Recall that the rule of Paralyzed Veterans applies only when an agency has previously adopted an interpretation of its regulation. Yet in that initial interpretation as much as all that come after, the agency is giving a definite meaning to an ambiguous text-the very act MBA insists requires notice and comment. MBA is unable to say why its arguments regarding revised interpretations should not also extend to the agency's first interpretation. 4
Next, MBA argues that the
Paralyzed Veterans
doctrine is more consistent with this Court's "functional" approach to interpreting the APA. Relying on
Christensen v. Harris County,
Neither of the cases MBA cites supports its argument. Our decision in
Christensen
did not address a change in agency interpretation. Instead, we there refused to give deference to an agency's interpretation of an unambiguous regulation, observing that to defer in such a case would allow the agency "to create
de facto
a new regulation."
As for Guernsey, that case is fully consistent with-indeed, confirms-what the text of the APA makes plain: "Interpretive rules do not require notice and comment."
*1209
B
In the main, MBA attempts to justify the Paralyzed Veterans doctrine on practical and policy grounds. MBA contends that the doctrine reinforces the APA's goal of "procedural fairness" by preventing agencies from unilaterally and unexpectedly altering their interpretation of important regulations. Brief for Respondent 16.
There may be times when an agency's decision to issue an interpretive rule, rather than a legislative rule, is driven primarily by a desire to skirt notice-and-comment provisions. But regulated entities are not without recourse in such situations. Quite the opposite. The APA contains a variety of constraints on agency decisionmaking-the arbitrary and capricious standard being among the most notable. As we held in
Fox Television Stations,
and underscore again today, the APA requires an agency to provide more substantial justification when "its new policy rests upon factual findings that contradict those which underlay its prior policy; or when its prior policy has engendered serious reliance interests that must be taken into account. It would be arbitrary and capricious to ignore such matters."
In addition, Congress is aware that agencies sometimes alter their views in ways that upset settled reliance interests. For that reason, Congress sometimes includes in the statutes it drafts safe-harbor provisions that shelter regulated entities from liability when they act in conformance with previous agency interpretations. The FLSA includes one such provision: As amended by the Portal-to-Portal Act of 1947,
*1210 C
MBA changes direction in the second half of its brief, contending that if the Court overturns the Paralyzed Veterans rule, the D.C. Circuit's judgment should nonetheless be affirmed. That is so, MBA says, because the agency interpretation at issue-the 2010 Administrator's Interpretation-should in fact be classified as a legislative rule.
We will not address this argument. From the beginning, the parties litigated this suit on the understanding that the Administrator's Interpretation was-as its name suggests-an interpretive rule. Indeed, if MBA did not think the Administrator's Interpretation was an interpretive rule, then its decision to invoke the
Paralyzed Veterans
doctrine in attacking the rule is passing strange. After all,
Paralyzed Veterans
applied only to interpretive rules. Consequently, neither the District Court nor the D.C. Circuit considered MBA's current claim that the Administrator's Interpretation is actually a legislative rule. Beyond that, and more important still, MBA's brief in opposition to certiorari did not dispute petitioners' assertions-in their framing of the question presented and in the substance of their petitions-that the Administrator's Interpretation is an interpretive rule. Thus, even assuming MBA did not waive the argument below, it has done so in this Court. See this Court's Rule 15.2;
Carcieri v. Salazar,
* * *
For the foregoing reasons, the judgment of the United States Court of Appeals for the District of Columbia Circuit is reversed.
It is so ordered.
Justice ALITO, concurring in part and concurring in the judgment.
I join the opinion of the Court except for Part III-B. I agree that the doctrine of
Paralyzed Veterans of America v. D.C. Arena L.P.,
Justice SCALIA, concurring in the judgment.
I agree with the Court's decision, and all of its reasoning demonstrating the incompatibility of the D.C. Circuit's
Paralyzed Veterans
holding with the Administrative Procedure Act.
Paralyzed Veterans of Am. v. D.C. Arena L.P.,
"The [APA] was framed against a background of rapid expansion of the administrative process as a check upon administrators whose zeal might otherwise have carried them to excesses not contemplated in legislation creating their offices."
United States v. Morton Salt Co.,
The APA exempts interpretive rules from these requirements. § 553(b)(A). But this concession to agencies was meant to be more modest in its effects than it is today. For despite exempting interpretive rules from notice and comment, the Act provides that "the reviewing court shall ... interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action." § 706(emphasis added). The Act thus contemplates that courts, not agencies, will authoritatively resolve ambiguities in statutes and regulations. In such a regime, the exemption for interpretive rules does not add much to agency power. An agency may use interpretive rules to advise the public by explaining its interpretation of the law. But an agency may not use interpretive rules to bind the public by making law, because it remains the responsibility of the court to decide whether the law means what the agency says it means.
Heedless of the original design of the APA, we have developed an elaborate law of deference to agencies' interpretations of statutes and regulations. Never mentioning § 706's directive that the "reviewing court ... interpret ... statutory provisions," we have held that
agencies
may authoritatively resolve ambiguities in statutes.
Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.,
By supplementing the APA with judge-made doctrines of deference, we have revolutionized the import of interpretive rules' exemption from notice-and-comment rulemaking.
*1212 Agencies may now use these rules not just to advise the public, but also to bind them. After all, if an interpretive rule gets deference, the people are bound to obey it on pain of sanction, no less surely than they are bound to obey substantive rules, which are accorded similar deference. Interpretive rules that command deference do have the force of law.
The Court's reasons for resisting this obvious point would not withstand a gentle breeze. Even when an agency's interpretation gets deference, the Court argues, "it is the court that ultimately decides whether [the text] means what the agency says." Ante, at 1208, n. 4. That is not quite so. 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. The Court continues that "deference is not an inexorable command in all cases," because (for example) it does not apply to plainly erroneous interpretations. Ibid. True, but beside the point. Saying all interpretive rules lack force of law because plainly erroneous interpretations do not bind courts is like saying all substantive rules lack force of law because arbitrary and capricious rules do not bind courts. Of course an interpretive rule must meet certain conditions before it gets deference-the interpretation must, for instance, be reasonable-but once it does so it is every bit as binding as a substantive rule. So the point stands: By deferring to interpretive rules, we have allowed agencies to make binding rules unhampered by notice-and-comment procedures.
The problem is bad enough, and perhaps insoluble if Chevron is not to be uprooted, with respect to interpretive rules setting forth agency interpretation of statutes. But an agency's interpretation of its own regulations is another matter. By giving that category of interpretive rules Auer deference, we do more than allow the agency to make binding regulations without notice and comment. 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. The APA does not remotely contemplate this regime.
Still and all, what are we to do about the problem? The Paralyzed Veterans doctrine is a 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. 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.
But I think there is another solution-one unavailable to the D.C. Circuit since it involves the overruling of one this Court's decisions (that being even a greater fault than merely ignoring the APA). As I have described elsewhere, the rule of
Chevron,
if it did not comport with the APA, at least was in conformity with the long history of judicial review of executive action, where "[s]tatutory ambiguities ... were left to reasonable resolution by the Executive."
United States v. Mead Corp.,
Justice THOMAS, concurring in the judgment.
I concur in the Court's holding that the doctrine first announced in
Paralyzed Veterans of America v. D.C. Arena L.P.,
I write separately because these cases call into question the legitimacy of our precedents requiring deference to administrative interpretations of regulations. That line of precedents, beginning with
Bowles v. Seminole Rock & Sand Co.,
I
The doctrine of deference to an agency's interpretation of regulations is usually traced back to this Court's decision in
Seminole Rock, supra,
which involved the interpretation of a war-time price control regulation,
id., at 411,
The lower courts agreed with the manufacturer's interpretation, id., at 412-413, 65 S.Ct. 1215but this Court reversed. In setting out the approach it would apply to the case, the Court announced-without citation or explanation-that an administrative interpretation of an ambiguous regulation was entitled to "controlling weight":
"Since this involves an interpretation of an administrative regulation a court must necessarily look to the administrative construction of the regulation if the meaning of the words used is in doubt. The intention of Congress or the principles of the Constitution in some situations may be relevant in the first instance in choosing between various constructions. But the ultimate criterion is the administrative interpretation, which becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation." Id., at 413-414,65 S.Ct. 1215 .
*1214
The Court then concluded that the rule "clearly" favored the Administrator's interpretation, rendering this discussion dictum.
Id., at 415-417,
From this unsupported rule developed a doctrine of deference that has taken on a life of its own.
1
It has been broadly applied to regulations issued by agencies across a broad spectrum of subjects. See,
e.g.,
Robertson v. Methow Valley Citizens Council,
The Court has even applied the doctrine to an agency interpretation of a regulation cast in such vague aspirational terms as to have no substantive content. See
Thomas Jefferson Univ. v. Shalala,
On this steady march toward deference, the Court only once expressly declined to apply
Seminole Rock
deference on the ground that the agency's interpretation was plainly erroneous.
2
In that case, we
*1215
were faced with the predictable consequence of this line of precedents: An agency sought deference to an opinion letter that interpreted a permissive regulation as mandatory. See
Christensen v. Harris County,
II
We have not always been vigilant about protecting the structure of our Constitution. Although this Court has repeatedly invoked the "separation of powers" and "the constitutional system of checks and balances" as core principles of our constitutional design, essential to the protection of individual liberty, see,
e.g.,
Stern v. Marshall,
564 U.S. ----, ---- - ----,
A
The Constitution's particular blend of separated powers and checks and balances was informed by centuries of political thought and experiences. See M. Vile, Constitutionalism and the Separation of Powers 38, 168-169 (2d ed. 1998) (Vile). Though the theories of the separation of powers and checks and balances have roots in the ancient world, events of the 17th and 18th centuries played a crucial role in their development and informed the men who crafted and ratified the Constitution.
Over a century before our War of Independence, the English Civil War catapulted the theory of the separation of powers to prominence. As political theorists of the day witnessed the conflict between the King and Parliament, and the dangers of tyrannical government posed by each, they began to call for a clear division of authority between the two. Id., at 44-45, 48-49. A 1648 work titled The Royalist's Defence offered perhaps the first extended account of the theory of the separation of powers: "[W]hilst the Supreamacy, the Power to Judge the Law, and Authority to make new Lawes, are kept in severall hands, the known Law is preserved, but united, it is vanished, instantly thereupon, and Arbytrary and Tyrannicall power is introduced." The Royalist's Defence 80 (1648) (italics in original).
John Locke and Baron de Montesquieu endorsed and expanded on this concept. See Vile 63-64. They agreed with the general theory set forth in The Royalist's Defence, emphasizing the need for a separation of powers to protect individual liberty. J. Locke, Second Treatise of Civil Government §§ 143-144, p. 72 (J. Gough ed. 1947); Montesquieu, Spirit of the Laws bk. XI, ch. 6, pp. 151-152 (O. Piest ed., T. Nugent transl. 1949). But they also advocated a system of checks and balances to *1216 reinforce that separation. Vile 72-73, 102. For instance, they agreed that the executive should have the power to assemble and dismiss the legislature and to consent to laws passed by it. See Locke, supra, §§ 151, 156, at 75, 77-78; Montesquieu, Spirit of the Laws, at 157, 159. Montesquieu warned that "power should be a check to power" lest the legislature "arrogate to itself what authority it pleased ... [and] soon destroy all the other powers." Id., at 150, 157.
The experience of the States during the period between the War of Independence and the ratification of the Constitution confirmed the wisdom of combining these theories. Although many State Constitutions of the time included language unequivocally endorsing the separation of powers, they did not secure that separation with checks and balances, Vile 147, and actively placed traditional executive and judicial functions in the legislature, G. Wood, The Creation of the American Republic 1776-1787, pp. 155-156 (1969). Under these arrangements, state legislatures arrogated power to themselves and began to confiscate property, approve the printing of paper money, and suspend the ordinary means for the recovery of debts. Id., at 403-409. 3
When the Framers met for the Constitutional Convention, they understood the need for greater checks and balances to reinforce the separation of powers. As Madison remarked, "experience has taught us a distrust" of the separation of powers alone as "a sufficient security to each [branch] [against] encroachments of the others." 2 Records of the Federal Convention of 1787, p. 77 (M. Farrand rev. 1966). "[I]t is necessary to introduce such a balance of powers and interests, as will guarantee the provisions on paper." Ibid. The Framers thus separated the three main powers of Government-legislative, executive, and judicial-into the three branches created by Articles I, II, and III. But they also created checks and balances to reinforce that separation. For example, they gave Congress specific enumerated powers to enact legislation, Art. I, § 8, but gave the President the power to veto that legislation, subject to congressional override by a supermajority vote, Art. I, § 7, cls. 2, 3. They gave the President the power to appoint principal officers of the United States, but gave the Senate the power to give advice and consent to those appointments. Art. II, § 2, cl. 2. They gave the House and Senate the power to agree to adjourn for more than three days, Art. I, § 5, cl. 4, but gave the President the power, "in Case of Disagreement between them," to adjourn the Congress "to such Time as he shall think proper." Art. II, § 3, cl. 3. During the ratification debates, Madison argued that this structure represented "the great security" for liberty in the Constitution. The Federalist No. 51, p. 321 (C. Rossiter ed. 1961) (J. Madison).
To the Framers, the separation of powers and checks and balances were more than just theories. They were practical and real protections for individual liberty in the new Constitution. See
Mistretta v. United States,
B
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.
1
When a party properly brings a case or controversy to an Article III court, that court is called upon to exercise the "judicial Power of the United States." Art. III, § 1. For the reasons I explain in this section, the judicial power, as originally understood, requires a court to exercise its independent judgment in interpreting and expounding upon the laws.
Those who ratified the Constitution knew that legal texts would often contain ambiguities. See generally Molot, The Judicial Perspective in the Administrative State: Reconciling Modern Doctrines of Deference with the Judiciary's Structural Role,
The judicial power was understood to include the power to resolve these ambiguities over time. See
ibid.
Alexander Hamilton lauded this power, arguing that "[t]he interpretation of the laws is the proper and peculiar province of the courts."
Although the Federalists and Anti-Federalists engaged in a public debate about this interpretive power, that debate centered on the dangers inherent in the power, not on its allocation under the Constitution. See, e.g., Letters from The Federal Farmer XV (Jan. 18, 1788), in 2 The Complete Anti-Federalist 315-316 (H. Storing ed. 1981) (arguing that the interpretive power made the Judiciary the most dangerous branch). Writing as "Brutus," one leading anti-Federalist argued that judges "w[ould] not confine themselves to any fixed or established rules, but w[ould] determine, according to what appears to them, the reason and spirit of the constitution." Essays of Brutus (Jan. 31, 1788), in 2 id., at 420. The Federalists rejected these arguments, assuring the public that judges would be guided "by strict rules and precedents which serve to define and point out their duty in every particular case that comes before them." The Federalist No. 78, at 471 (A. Hamilton). Those rules included principles of interpretation that had been set out by jurists for centuries. See, e.g., 2 S. von Pufendorf, De Officio Hominis Et Civis Juxta Legem Naturalem Libri Duo 83-86 (1682) (F. Moore transl. 1927); see also 1 W. Blackstone, Commentaries on the Laws of England 59-61 (1765).
One of the key elements of the Federalists' arguments in support of the allocation of power to make binding interpretations of the law was that Article III judges would exercise independent judgment. Although *1218 "judicial independence" is often discussed in terms of independence from external threats, the Framers understood the concept to also require independence from the "internal threat" of "human will." P. Hamburger, Law and Judicial Duty 507, 508 (2008); see also The Federalist No. 78, at 465 (A. Hamilton) ("The judiciary ... may truly be said to have neither FORCE nor WILL but merely judgment ..."). Independent judgment required judges to decide cases in accordance with the law of the land, not in accordance with pressures placed upon them through either internal or external sources. Internal sources might include personal biases, while external sources might include pressure from the political branches, the public, or other interested parties. See Hamburger, supra, at 508-521.
The Framers made several key decisions at the Convention with these pressures in mind. For example, they rejected proposals to include a federal council of revision after several participants at the Convention expressed concern that judicial involvement in such a council would foster internal biases. Rufus King of Maryland, for example, asserted that "the Judges ought to be able to expound the law as it should come before them, free from the bias of having participated in its formation." 1 Records of the Federal Convention of 1787, at 98. Alexander Hamilton repeated these concerns in The Federalist, arguing that "the judges, who are to be interpreters of the law, might receive an improper bias from having given a previous opinion in their revisionary capacities" or "be induced to embark too far in the political views of [the Executive]" from too much association with him. The Federalist No. 73, at 446; see also Hamburger, supra, at 508-512.
The Framers also created structural protections in the Constitution to free judges from external influences. They provided, for example, that judges should "hold their Offices during good Behaviour" and receive "a Compensation, which shall not be diminished during their Continuance in Office." Art. III, § 1. Hamilton noted that such unequivocal language had been shown necessary by the experience of the States, where similar state constitutional protections for judges had not been "sufficiently definite to preclude legislative evasions" of the separation of the judicial power. The Federalist No. 79, at 472. Because "power over a man's subsistence amounts to a power over his will," he argued that Article III's structural protections would help ensure that judges fulfilled their constitutional role. Ibid. (emphasis deleted).
The Framers made the opposite choice for legislators and the Executive. Instead of insulating them from external pressures, the Constitution tied them to those pressures. It provided for election of Members of the House of Representatives every two years, Art. I, § 2, cl. 1; and selection of Members of the Senate every six years, Art. I, § 3, cl. 1. It also provided for the President to be subject to election every four years. Art. II, § 1, cl. 1. "The President is [thus] directly dependent on the people, and since there is only
one
President,
he
is responsible. The people know whom to blame...." See
Morrison v. Olson,
Given these structural distinctions between the branches, it is no surprise that judicial interpretations are definitive in cases and controversies before the courts. Courts act as "an intermediate body between the people and the legislature, in order, among other things, to keep the latter within the limits assigned to their authority." Federalist No. 78, at 467 (A. Hamilton). The Legislature and Executive may be swayed by popular sentiment to abandon the strictures of the Constitution or other rules of law. But the Judiciary, insulated from both internal and external sources of bias, is duty bound to exercise independent judgment in applying the law.
Interpreting agency regulations calls for that exercise of independent judgment. Substantive regulations have the force and effect of law. See,
e.g.,
United States v. Mead Corp.,
Seminole Rock deference, however, precludes judges from independently determining that meaning. Rather than judges' applying recognized tools of interpretation to determine the best meaning of a regulation, this doctrine demands that courts accord "controlling weight" to the agency interpretation of a regulation, subject only to the narrow exception for interpretations that are plainly erroneous or inconsistent with the regulation. That deference amounts to a transfer of the judge's exercise of interpretive judgment to the agency. See 1 S. Johnson, Dictionary of the *1220 English Language 499 (4th ed. 1773) (defining "[d]efer" as "to leave to another's judgment"). But the agency, as part of the Executive Branch, lacks the structural protections for independent judgment adopted by the Framers, including the life tenure and salary protections of Article III. Because the agency is thus not properly constituted to exercise the judicial power under the Constitution, the transfer of interpretive judgment raises serious separation-of-powers concerns.
2
Seminole Rock is constitutionally questionable for an additional reason: It undermines the judicial "check" on the political branches. Unlike the Legislative and Executive Branches, each of which possesses several political checks on the other, the Judiciary has one primary check on the excesses of political branches. That check is the enforcement of the rule of law through the exercise of judicial power.
Judges have long recognized their responsibility to apply the law, even if they did not conceive of it as a "check" on political power. During the 17th century, for example, King James I sought to pressure Chief Justice Coke to affirm the lawfulness of his efforts to raise revenue without the participation of Parliament. Hamburger, Law and Judicial Duty, at 200-201. Coke sought time to confer with his fellow jurists to "make an advised answer according to law and reason."
Case of Proclamations,
12 Co. Rep. 74, 75, 77 Eng. Rep. 1352, 1353 (K.B. 1611). But the King's representative, Lord Chancellor Ellesmere, responded that "he would advise the Judges to maintain the power and prerogative of the King" and suggested that, "in cases in which there is no authority and precedent," the judiciary should "leave it to the King to order in it according to his wisdom."
The Framers expected Article III judges to engage in similar efforts, by applying the law as a "check" on the excesses of both the Legislative and Executive Branches. See,
e.g.,
3 J. Elliot, Debates in the Several Conventions on the Adoption of the Federal Constitution 553 (1863) (J. Marshall) ("If [the Government of the United States] make a law not warranted by any of the powers enumerated, it would be considered by the judges as an infringement of the Constitution which they are to guard.... They would declare it void"); see also Vile 174. The Framers "contemplated [the Constitution], as a rule for the government of
courts,
as well as of the legislature."
Marbury v. Madison,
Article III judges cannot opt out of exercising their check. As we have long recognized, "[t]he Judiciary has a responsibility to decide cases properly before it, even those it 'would gladly avoid.' "
Zivotofsky v. Clinton,
566 U.S. ----, ----,
But we have not consistently exercised the judicial check with respect to administrative agencies. Even though regulated parties have repeatedly challenged agency interpretations as inconsistent with existing regulations, we have just as repeatedly declined to exercise independent judgment as to those claims. 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. That abandonment permits precisely the accumulation of governmental powers that the Framers warned against. See The Federalist No. 47, at 302 (J. Madison).
C
This accumulation of governmental powers allows agencies to change the meaning of regulations at their discretion and without any advance notice to the parties. It is precisely this problem that the United States Court of Appeals for the D.C. Circuit attempted to address by requiring agencies to undertake notice and comment procedures before substantially revising definitive interpretations of regulations. Paralyzed Veterans, supra . Though legally erroneous, the Court of Appeals' reasoning was practically sound. When courts give "controlling weight" to an administrative interpretation of a regulation-instead of to the best interpretation of it-they effectively give the interpretation-and not the regulation-the force and effect of law. To regulated parties, the new interpretation might as well be a new regulation.
These cases provide a classic example of the problem. The Fair Labor Standards Act of 1938 establishes federal minimum wage and overtime requirements, but exempts from these requirements "any employee engaged in a bona fide executive, administrative, or professional capacity ..., or in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary)."
Unsure whether certain mortgage-loan officers qualified as employees whose primary duty is selling financial products, the *1222 Mortgage Bankers Association asked the Department of Labor for advice. In 2006, the Department concluded that the officers are not employees whose primary duty is selling financial products. But in 2010, the Department reversed course, concluding exactly the opposite. If 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.
This practice turns on its head the principle that the United States is "a government of laws, and not of men." Marbury, supra, at 163. Regulations provide notice to regulated parties in only a limited sense because their meaning will ultimately be determined by agencies rather than by the "strict rules and precedents" to which Alexander Hamilton once referred. 5
III
Although this Court offered no theoretical justification for Seminole Rock deference when announcing it, several justifications have been proposed since. None is persuasive.
A
Probably the most oft-recited justification for
Seminole Rock
deference is that of agency expertise in administering technical statutory schemes. Under this justification, deference to administrative agencies is necessary when a "regulation concerns 'a complex and highly technical regulatory program' in which the identification and classification of relevant 'criteria necessarily require significant expertise and entail the exercise of judgment grounded in policy concerns.' "
Thomas Jefferson Univ.,
This defense of
Seminole Rock
deference misidentifies the relevant inquiry. The proper question faced by courts in interpreting a regulation is not what the best policy choice might be, but what the regulation means. Because this Court has concluded that "substantive agency regulations have the 'force and effect of law,' "
Chrysler Corp. v. Brown,
Fundamentally, the argument about agency expertise is less about the expertise of agencies in interpreting language than it is about the wisdom of according agencies broad flexibility to administer statutory schemes.
6
"But policy arguments supporting even useful 'political inventions' are subject to the demands of the Constitution which defines powers and ... sets out ... how those powers are to be exercised."
INS v. Chadha,
B
Another oft-recited justification for
Seminole Rock
deference is that agencies are better situated to define the original intent behind their regulations. See
Martin v. Occupational Safety and Health Review Comm'n,
This justification rings hollow. This Court has afforded
Seminole Rock
deference to agency interpretations even when the agency was not the original drafter. See
Pauley,
Even if the scope of
Seminole Rock
deference more closely matched the original-drafter justification, it would still fail. It is the text of the regulations that have the force and effect of law, not the agency's
*1224
intent. "Citizens arrange their affairs not on the basis of their legislators' unexpressed intent, but on the basis of the law as it is written and promulgated."
Zuni Public School Dist. No. 89 v. Department of Education,
C
A third asserted justification for
Seminole Rock
deference is that Congress has delegated to agencies the authority to interpret their own regulations. See,
e.g.,
Martin,
This justification fails because Congress lacks authority to delegate the power. 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."
Bowsher v. Synar,
To hold otherwise would be to vitiate the separation of powers and ignore the "sense of a sharp necessity to separate the legislative from the judicial power ... [that] triumphed among the Framers of the new Federal Constitution."
Plaut v. Spendthrift Farm, Inc.,
D
A final proposed justification for Seminole Rock deference is that too much oversight of administrative matters would imperil the "independence and esteem" of *1225 judges. See, e.g., Charles Evans Hughes, Speech before the Elmira Chamber of Commerce, May 3, 1907, in Addresses of Charles Evans Hughes, 1906-1916, p. 185 (2d ed. 1916). The argument goes that questions of administration are those which "lie close to the public impatience," id., at 186, and thus the courts' resolution of such questions could "expose them to the fire of public criticism," id., at 187.
But this argument, which boils down to a policy judgment of questionable validity, cannot vitiate the constitutional allocation of powers. The Judicial Branch is separate from the political branches for a reason: It has the obligation to apply the law to cases and controversies that come before it, and concerns about the popular esteem of individual judges-or even the Judiciary as a whole-have no place in that analysis. Our system of Government could not long survive absent adherence to the written Constitution that formed it.
* * *
Although on the surface these cases require only a straightforward application of the APA, closer scrutiny reveals serious constitutional questions lurking beneath. I have "acknowledge[d] the importance of
stare decisis
to the stability of our Nation's legal system." "But
stare decisis
is only an 'adjunct' of our duty as judges to decide by our best lights what the Constitution means."
McDonald v. Chicago,
The latter is the more common phrasing today, and the one we use throughout this opinion.
Buck, Henry, and Nickols are petitioners in No. 13-1052 and respondents in No. 13-1041.
MBA did not challenge this aspect of the District Court's decision on appeal.
MBA alternatively suggests that interpretive rules have the force of law because an agency's interpretation of its own regulations may be entitled to deference under
Auer v. Robbins,
The United States acknowledged at argument that even in situations where a statute does not contain a safe-harbor provision similar to the one included in the FLSA, an agency's ability to pursue enforcement actions against regulated entities for conduct in conformance with prior agency interpretations may be limited by principles of retroactivity. See Tr. of Oral Arg. 44-45. We have no occasion to consider how such principles might apply here.
Although the Court has appeared to treat our agency deference regimes as precedents entitled to stare decisis effect, some scholars have noted that they might instead be classified as interpretive tools. See, e.g., C. Nelson, Statutory Interpretation 701 (2011). Such tools might not be entitled to such effect. Because resolution of that issue is not necessary to my conclusion here, I leave it for another day.
The Court has also twice expressly found
Seminole Rock
deference inapplicable for other reasons.
Christopher v. SmithKline Beecham Corp.,
567 U.S. ----, ---- - ----,
Occasionally, Members of this Court have argued in separate writings that the Court failed appropriately to apply Seminole Rock deference, but in none of those cases did the majority opinions of the Court expressly refuse to do so. See Ballard v. Commissioner,544 U.S. 40 ,125 S.Ct. 1270 ,161 L.Ed.2d 227 (2005); Allentown Mack Sales & Service, Inc. v. NLRB,522 U.S. 359 ,118 S.Ct. 818 ,139 L.Ed.2d 797 (1998); Director, Office of Workers' Compensation Programs v. Greenwich Collieries,512 U.S. 267 ,114 S.Ct. 2251 ,129 L.Ed.2d 221 (1994); United States v. Swank,451 U.S. 571 ,101 S.Ct. 1931 ,68 L.Ed.2d 454 (1981); Peters v. Hobby,349 U.S. 331 ,75 S.Ct. 790 ,99 L.Ed. 1129 (1955).
The practices of the time can perhaps best be summarized by the following commentary from a contemporaneous magazine: "[S]o many legal infractions of sacred right-so many public invasions of private property-so many wanton abuses of legislative powers!" Giles Hickory (Noah Webster), Government, The American Magazine, Mar. 1788, p. 206.
These cases also raise constitutional questions about the distinction in administrative law between "substantive" (or "legislative") and interpretative rules. The United States Court of Appeals for the D.C. Circuit has defined a legislative rule as "[a]n agency action that purports to impose legally binding obligations or prohibitions on regulated parties" and an interpretative rule as "[a]n agency action that merely interprets a prior statute or regulation, and does not itself purport to impose new obligations or prohibitions or requirements on regulated parties."
National Mining Assn. v. McCarthy,
The notice problem is exacerbated by agency departures from the procedures established for rulemaking in the APA. 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. See
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. 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. See United States v. Florida East Coast R. Co.,410 U.S. 224 , 237-238,93 S.Ct. 810 ,35 L.Ed.2d 223 (1973) (concluding that the APA's formal procedures, which were to apply "[w]hen rules are required by statute to be made on the record after opportunity for an agency hearing," § 553(c), were not triggered by a statute that permitted an agency to engage in rulemaking only " 'after [a] hearing' ").
Many decisions of this Court invoke agency expertise as a justification for deference. This argument has its root in the support for administrative agencies that developed during the Progressive Era in this country. The Era was marked by a move from the individualism that had long characterized American society to the concept of a society organized for collective action. See A. Link, Woodrow Wilson and the Progressive Era 1910-1917, p. 1 (1954). That move also reflected a deep disdain for the theory of popular sovereignty. As Woodrow Wilson wrote before he attained the presidency, "Our peculiar American difficulty in organizing administration is not the danger of losing liberty, but the danger of not being able or willing to separate its essentials from its accidents. Our success is made doubtful by that besetting error of ours, the error of trying to do too much by vote." Wilson, The Study of Administration, 2 Pol. Sci. Q. 197, 214 (1887). In President Wilson's view, public criticism would be beneficial in the formation of overall policy, but "a clumsy nuisance" in the daily life of Government-"a rustic handling delicate machinery." Id., at 215. Reflecting this belief that bureaucrats might more effectively govern the country than the American people, the progressives ushered in significant expansions of the administrative state, ultimately culminating in the New Deal. See generally M. Keller, Regulating a New Economy: Public Policy and Economic Change in America, 1900-1933 (1990).
Reference
- Full Case Name
- Thomas E. PEREZ, Secretary of Labor, Et Al., Petitioners v. MORTGAGE BANKERS ASSOCIATION Et Al. Jerome Nickols, Et Al., Petitioners v. Mortgage Bankers Association.
- Cited By
- 462 cases
- Status
- Published