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Justices Thomas and Gorsuch Argue for Rejecting Deference to Agency Interpretation of Agency Regulations

An interesting dissent from denial of certiorari this morning.

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From today's Garco Construction, Inc. v. Speer, a dissent from denial of certiorari by Justice Thomas, joined by Justice Gorsuch:

Petitioner Garco Construction, Inc. … had a contract with the Army Corps of Engineers to build housing units on Malmstrom Air Force Base. As part of its contract, Garco agreed to comply with all base access policies. After construction began, the base denied access to certain employees of Garco's subcontractor.

Although the text of the base's access policy required only a "wants and warrants" check, the base clarified that the policy also required background checks and excluded many individuals with criminal histories—even if those individuals did not have any wants or warrants. Garco's request for an equitable adjustment of the contract was denied, and the Armed Services Board of Contract Appeals denied Garco's appeal.

The Court of Appeals for the Federal Circuit affirmed. Despite acknowledging "some merit" to Garco's argument that 'wants and warrants'" means only wants and warrants, the Federal Circuit deferred to the base's interpretation of its access policy under Auer v. Robbins, 519 U.S. 452 (1997).

Garco filed a petition for certiorari, asking whether this Court's decisions in Auer and Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945), should be overruled. I would have granted certiorari to address that question.

Seminole Rock and Auer require courts to give "controlling weight" to an agency's interpretation of its own regulations. To qualify, an agency's interpretation need not be "the best" reading of the regulation. Decker v. Northwest Environmental Defense Center, 568 U.S. 597, 613 (2013). It need only be a reading that is not "plainly erroneous or inconsistent with the regulation." Although Seminole Rock deference was initially applied exclusively "in the price control context and only to official agency interpretations," this Court has since expanded it to many contexts and to informal interpretations.

Seminole Rock deference is constitutionally suspect. It transfers "the judge's exercise of interpretive judgment to the agency," which is "not properly constituted to exercise the judicial power." It also undermines "the judicial 'check' on the political branches" by ceding the courts' authority to independently interpret and apply legal texts. And it results in an "accumulation of governmental powers" by allowing the same agency that promulgated a regulation to "change the meaning" of that regulation "at [its] discretion." This Court has never "put forward a persuasive justification" for Seminole Rock deference.

By all accounts, Seminole Rock deference is "on its last gasp." Several Members of this Court have said that it merits reconsideration in an appropriate case [citing opinions by Justices Alito and Thomas, and by Chief Justice Roberts]. Even the author of Auer [Justice Scalia] came to doubt its correctness.

This would have been an ideal case to reconsider Seminole Rock deference, as it illustrates the problems that the doctrine creates. While Garco was performing its obligations under the contract, the base adopted an interpretation of its access policy that read "wants and warrants" to include "wants or warrants, sex offenders, violent offenders, those who are on probation, and those who are in a pre-release program." The Federal Circuit deferred to that textually dubious interpretation.

Thus, an agency was able to unilaterally modify a contract by issuing a new " 'clarification' with retroactive effect." This type of conduct "frustrates the notice and predictability purposes of rulemaking, and promotes arbitrary government."

True, the agency here is part of the military, and the military receives substantial deference on matters of policy. But nothing about the military context of this case affects the legitimacy of Seminole Rock deference. "The proper question faced by courts in interpreting a regulation is … what the regulation means." While the military is far better equipped than the courts to decide matters of tactics and security, it is no better equipped to read legal texts. Pointing to the military's policy expertise "misidentifies the relevant inquiry."

Because this Court has passed up another opportunity to remedy "precisely the accumulation of governmental powers that the Framers warned against," I respectfully dissent from the denial of certiorari.

For more on this question, see this post by Jonathan Adler.