Tag: administrative agencies

SCOTUS Deferred to Executive Agencies. What Happened Next Will Infuriate You!

In the 1996 case Auer v. Robbins, the Supreme Court ruled that where there is any ambiguity or disagreement over what a federal regulation means, courts should defer to the interpretation favored by the agency that issued the regulation. The practical consequence of this decision has been that government agencies have had the power not just to create and enforce their own rules but also to definitively interpret them. Given the mind-boggling number of federal regulations that exist—and the exceptional breadth of behavior that they govern—the importance of this “Auer deference” can’t be overstated.

While handing the powers of all three branches of government to the bureaucracy is problematic in and of itself, a recent decision by the U.S. Court of Appeals for the Ninth Circuit further extended the deference courts show to agency rulemakers by declaring that an agency’s interpretation of its own rule is authoritative even if the agency has altered its interpretation dramatically since the regulation came into effect. Under that logic, an agency could spend decades saying that its regulation governing footwear only applied to shoes—and then, without warning or consultation, unilaterally decide to extend the rule to sandals and slippers (despite explicitly saying for years that they were not covered by the regulation).

Such a power to rewrite regulations through after-the-fact “reinterpretation” is incredibly tempting, freeing agencies to change the rules of the game without further legislation or congressional oversight, or even the formalized rulemaking process required by the Administrative Procedure Act.

Peri & Sons, a family-run farm in Nevada (one of America’s largest onion producers), is caught in just such an Kafkaesque morass. In its case, the Ninth Circuit ruled that even though the Department of Labor for over five years interpreted regulations issued under the Fair Labor Standards Act to mean that employers aren’t required to pay employees for the costs of moving for a job (including passport and visa applications), DOL is free to change its interpretation to now require employers to cover those costs.

Cato, along with the Center for Constitutional Jurisprudence and the National Federation of Independent Business, filed a brief urging the Supreme Court to hear this case. We argue not just against the Ninth Circuit’s extension of Auer to cases where the agency has reversed its position, but also that Auer itself was incorrectly decided. Granting agencies post-hoc control over their regulations’ textual meaning is an abdication by the courts of their constitutional duty to zealously guard against executive encroachment on the judiciary’s role as interpreters of the law. And we’re not alone in questioning the wisdom of Auer; as recently as 2011, Justice Scalia criticized the ruling as being “contrary to [the] fundamental principles of separation of powers.”

The Supreme Court will be deciding this spring whether to hear Peri & Sons Farms v. Rivera.We urge the Court to take the case and restore a modicum of the Constitution’s separation and balance of powers.

Administrative Agencies Are Not a Power Unto Themselves

Cato legal associate Trevor Burrus co-authored this blogpost.

Administrative agencies are accorded huge deference — too much deference — by the courts. Acting as police, prosecutor, judge, jury, and executioner, agencies increasingly act as a law unto themselves and do a majority of the federal government’s work.

Through this arrangement, Congress is put in a win-win situation: the government can delegate decision-making to agencies and avoid political accountability. Because of these concerns, it is vitally important that courts’ deference to agencies not go too far.

In Christopher v. SmithKline Beecham Corp., two former pharmaceutical sales representatives sued to recover overtime pay. The Fair Labor Standards Act, however, exempts “outside salesmen” from overtime requirements and for over 70 years a Department of Labor rule has broadly defined “outside salesman” to include those who perform any part of the work required to sell goods. Pharmaceutical companies, as well as many other businesses, have long organized their business practices around this rule.

When former pharmaceutical employees brought a similar suit in the Second Circuit, the Secretary of Labor filed an amicus brief explaining that the rule would be thereafter changed not to exclude pharmaceutical employees. The Second Circuit deferred to this ad hoc rule change and held for the plaintiffs.

In Christopher, however, the Ninth Circuit refused to defer to the Labor Department’s attempt to change a long-standing rule. Cato thus joined the Washington Legal Foundation and the Allied Educational Foundation on an amicus brief to advise the Court that the Ninth Circuit was, believe it or not, correct. As the Ninth Circuit said, an “about-face regulation, expressed only in ad hoc amicus filings” does not deserve even the broad deference already accorded to agencies. Moreover, we stress that, if such deference were allowed, it would encourage agencies to avoid the regular rulemaking procedures that allow affected parties to give “notice and comment” on the proposed changes.

Administrative agencies should not be allowed any more leeway to increase their often unreviewable power.

Courts Must Review Agency Actions

There is a growing trend among federal agencies and courts to incrementally expand the government’s enforcement power by adopting statutory interpretations that go beyond their plain meaning and intent. National Corn Growers v. EPA exemplifies such government overreach.

Under the Federal Food, Drug, and Cosmetic Act, the Environmental Protection Agency establishes limits, or “tolerances,” for pesticide residues on food.  If a pesticide residue exceeds an established tolerance it is deemed “unsafe” and the product is removed from interstate commerce—effectively banned from use. The EPA must modify or revoke a tolerance it deems unsafe through a “notice and comment” process.  Both the FFDCA and its implementing regulations require the EPA to hold a public evidentiary hearing if any objections raise a “material issue of fact.”

In National Corn Growers, the pesticide carbofuran was registered for use in 1969 by the EPA and has been safely used for pest control for a variety of crops for more than 40 years.  Recently, however, the EPA overlooked “material issues of fact” raised by the National Corn Growers and revoked all tolerances for carbofuran without a public hearing. In a decision that gives sole discretion to the EPA to determine the fate of hundreds of thousands of products already in the market, the D.C. Circuit held that courts must defer to the agency.  The court declared that differences in scientific studies are insufficient for judicial review, essentially writing “material issue of fact” out of the Act.

Cato joined the Pacific Legal Foundation in filing a brief arguing that Supreme Court review is warranted because the D.C. Circuit undermined the legal requirement for a public hearing under the FFDCA.  Moreover, because this case sets a precedent for other regulated products and allows government agencies to unlawfully deprive citizens of their property without adequate access to court review, we argue that the Supreme Court should take this case to: (1) establish the proper standard for review under the FFDCA for a public hearing; (2) curtail abuse of the administrative process; and (3) establish that complete deference is not compatible with a summary-judgment-type proceeding.

The right not to be deprived of one’s property without fair process is a bedrock principle of American jurisprudence.  The Court should reinforce this principle and ensure that statutory safeguards intended to protect this right are not ignored. 

Thanks to Cato legal associate Caitlyn McCarthy for her help with the brief and with this summary.