Overturning Auer Deference

In conjunction with the Supreme Court Clinic at Antonin Scalia Law School, Garco Construction, Inc. has filed a petition for writ of certiorari asking the Supreme Court to overturn the doctrine commonly known as Auer deference. Put simply, Auer deference—sometimes called Seminole Rock deference—requires federal courts to uphold an agency’s interpretation of its own regulation unless that interpretation is “plainly erroneous or inconsistent with the regulation.”[1] Experience has shown this form of deference can be quite pernicious and Garco’s dispute with the government in this case is just the latest example.

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Garco won a government contract to build housing on Malmstrom Air Force Base in Great Falls, Montana. That contract expressly allowed Garco and its subcontractors to use employees with criminal records on the project. And it was common in this area for contractors to use qualified employees who had criminal records because the labor pool was quite small. The contract also required that Garco and its subcontractors comply with all base regulations. One of those regulations allowed base officials to check if any workers had outstanding “wants and warrants” and to refuse entry to anyone with “unfavorable results.”

A subcontractor on the project employed some workers who happened to have minor criminal records, as it had done in the past for other projects on the base. At the start of this contract, and consistent with prior projects, base officials allowed several of those employees to enter the base without incident. That eventually changed. Without explanation, base officials started running full background checks and blocking entry to all workers with any criminal record, not just those with outstanding wants or warrants. This change in practice forced the subcontractor to incur substantial costs in hiring, training, and transporting new workers. Because the subcontractor relied on the prior practice when it bid on the project, it sought an equitable adjustment to recover those costs, which the government denied.

In legal proceedings seven years later, base officials testified that they interpreted the regulation permitting a check for “wants and warrants” to allow for full background checks too. The Armed Services Board of Contract Appeals recognized that the regulation’s “language only refers to running a … check for ‘wants and warrants’” but nonetheless sided with the government. On appeal, the Federal Circuit likewise found “merit to Garco’s argument that the plain meaning of ‘wants and warrants check’ in isolation suggests a check only for wants and warrants.” But it found the regulation to be ambiguous. As a result, the court deferred under Auer to the government’s interpretation that a check for “wants and warrants” also permitted a full background check.

Yet that official interpretation did not exist when the dispute began; there were only conflicting statements by base officials about who could enter the base. The government instead proffered its official interpretation of “wants and warrants” through the base officials’ testimony seven years after it started blocking workers. In other words, Garco did not know the government’s official interpretation—which contradicted the seemingly clear regulation—until well after Garco had already incurred damages due to that interpretation.

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The facts of this case demonstrate why the Supreme Court should abandon Seminole Rock/Auer deference. The notice problems and surprise that Garco experienced are hardly unique. There is no standardized process for issuing these “interpretations” and many of them appear in the most informal ways imaginable.[2] In addition, courts have repeatedly deferred to interpretations that appear for the first time after litigation begins over the disputed meaning of the regulation itself—like the Federal Circuit did here.[3] This lack of fair notice and due process is a primary driving force for abandoning the doctrine. “A fundamental principle in our legal system is that laws which regulate persons or entities must give fair notice of conduct that is forbidden or required.”[4] Seminole Rock/Auer deference deprives regulated parties of that notice.

As overturning precedent goes, discarding Seminole Rock/Auer deference should be relatively straightforward. Though it has been described in grander terms, the doctrine is merely a canon of interpretation. As Garco explains in its petition, Seminole Rock was decided in an era where the object of interpretation was to discern the “intention of [the law’s] makers.”[5] In 1945, then, it made sense to rely on an agency’s reading of its own regulation to learn the agency’s intent in issuing that regulation.[6] But discerning the legislature’s subjective intent (or here, the agency’s) is no longer a cornerstone of interpretation.[7] So, the Court can abandon Seminole Rock/Auer deference in the same way it would any other interpretive principle that it thought no longer had any value.

To be sure, there are other arguments for setting the canon aside. Many have argued persuasively that Seminole Rock/Auer deference violates the Constitution’s structure.[8] As the argument goes, the doctrine combines “the power to prescribe with the power to interpret,” when separating those powers was one of the Founders’ fundamental goals.[9]^,[10] Several Justices have questioned—or outright rejected—the doctrine’s legitimacy on that ground.[11]

There are also strong arguments that Seminole Rock/Auer deference violates the Administrative Procedure Act.[12] The APA provides that “the reviewing court shall decide all relevant questions of law … and determine the meaning or applicability of the terms of an agency action,” and it requires all legislative rules to go through notice-and-comment rulemaking.[13]^,[14] Seminole Rock/Auer deference undermines both principles. Agencies, not courts, “determine the meaning” of regulations via interpretive rules, which themselves are exempt from notice and comment.[15] In fact, Seminole Rock/Auer deference encourages agencies to evade the APA’s requirements. Instead of issuing detailed legislative rules through notice and comment—which takes time, forces agencies to account for the public’s views, and subjects the rules to simpler court challenges—agencies can instead “promulgate vague and open-ended regulations that they can later interpret as they see fit.”[16]

Yet the Court doesn’t need to address these concerns to overturn Seminole Rock/Auer deference because it is just an interpretive canon that has outlived its utility. On the contrary, if the Court doesn’t act, it will face these hard questions every time it decides a case where the deference appears in any fashion.[17] The Court can avoid that headache by rejecting the canon entirely, as it normally rejects “agency interpretations to which [it] would otherwise defer where they raise serious constitutional questions.”[18]

The only leg for the canon to stand on, then, is stare decisis. But it’s not even clear that stare decisis applies because the canon is not a prior binding construction of a particular statute or Constitutional provision. If anything, the canon is akin to the two-step procedure the Court created for evaluating qualified-immunity claims in Saucier v. Katz, 533 U.S. 194 (2001). In overturning Saucier, the Court explained that many of the stare decisis factors were “out of place” because the “two-step protocol [did] not affect the way in which parties order their affairs,” it was “a judge-made rule,” “experience ha[d] pointed up the precedent’s shortcomings,” and it merely “implicate[d] an important matter involving internal Judicial Branch operations.”[19] Seminole Rock and Auer are no different.

In any event, there are other reasons why stare decisis is no barrier. Neither Seminole Rock nor Auer were “well reasoned.”[20] Indeed, Seminole Rock “offered no justification whatever” for deferring to an agency’s interpretation of its own regulation.[21] And “intervening decisions ‘have removed or weakened [the canon’s] conceptual underpinnings,” because the lawmaker’s subjective intent is no longer the primary mode of interpretation.[22] For these and other reasons, stare decisis is not a basis to retain the canon.

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“For decades, and for no good reason, [courts] have been giving agencies the authority to say what their rules mean.”[23] “Enough is enough.”[24] The time has come for the Court to move on from this ill-conceived canon. Garco’s petition is the perfect vehicle for the Court to do so.