U.S. Supreme Court Substantially Limits Deference to Agency Statutory Interpretations
July 2001
A Summary of United States v. Mead Corp., decided June 18, 2001
The U.S. Supreme Court has substantially limited the circumstances in which a court is required to follow statutory interpretations of federal agencies. In many cases, the court held, courts may again decide statutory questions de novo and give only "weight" to agency interpretations. The decision could be important to companies subject to federal regulation.
The court so held in United States v. Mead Corp., 121 S.Ct. 2164 (2001) (No. 99-1434, June 18, 2001), a major decision addressing when a federal court is required to follow a federal agency’s interpretation of a statute it administers. Although Mead was foreshadowed by Christensen v. Harris County, 529 US 576 (2000) and elaborates upon it, Mead now makes clear that Christensen was not an aberration and that the court has deliberately decided to substantially limit the landmark case of Chevron USA. Inc. v. Natural Resources Defense Council, Inc., 467 US 837 (1984). Chevron held that an agency interpretation of an ambiguous statute prevails as long as it is merely "reasonable," thus preventing federal courts from interpreting statutes de novo.
The essence of Mead and Christensen together are that Chevron-style deference will apply only when an agency’s statutory interpretation emerged from a formal adjudication, a notice-and-comment rulemaking or some other comparable exercise of law-making authority. Interpretation letters will not do. Where Chevron does not apply, the agency’s statutory interpretation is reviewed de novo and is entitled only to "weight" under Skidmore v. Swift & Co., 323 US 134 (1944). The amount of weight given to an agency’s statutory interpretation under Skidmore depends upon "the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements and all those factors which give it power to persuade, if lacking power to control."
Background
The case arose after the headquarters office of the U.S. Customs Service issued a "ruling letter" stating that certain imported articles fell under a classification subject to a tariff. Mead filed suit in the Court of International Trade, a specialized tribunal, which granted the government summary judgment.
In reversing, the Federal Circuit found that ruling letters should not be treated like Customs regulations, which receive the highest level of deference under Chevron, because they are not preceded by notice-and-comment rulemaking, do not carry the force of law and are not intended to clarify importers’ rights and obligations beyond the specific case. The Federal Circuit gave neither deference nor weight to the ruling letter.
The Holdings of the Supreme Court
The court agreed with the Federal Circuit that Chevron deference did not apply, but it remanded for that court to assess the amount of weight to which the ruling letter is entitled under Skidmore.
The court first held that an agency’s statutory interpretation qualifies for Chevron deference only if the interpretation was promulgated during the exercise of statutory authority to prescribe norms carrying the force of law, i.e., adjudication, notice-and-comment rulemaking or some comparable law-making method. It also later appeared to hold, in response to Justice Scalia’s lone dissent, that Chevron deference does not apply to agency interpretations embodied in a brief written after the initiation of litigation.
The court then held that the ruling letter has no claim to Chevron deference because it did not emerge from any law-making process. It noted that no statute indicated that Congress intended to delegate to the Customs Service the authority to issue classification rulings with the force of law. "Any suggestion that rulings intended to have the force of law are being churned out at a rate of 10,000 a year at an agency’s 46 scattered offices is simply self-refuting." The court concluded that classification rulings are best treated like interpretations contained in policy statements, agency manuals and enforcement guidelines and thus beyond the Chevron pale.
The court then held that, even though the letter was not entitled to Chevron deference, it might still be entitled to weight under Skidmore. Any such weight would be proportional to its "power to persuade," which would depend on the writer’s thoroughness, logic and expertness, the interpretation’s fit with prior interpretations and any other sources of weight.
Practical Implications
The importance of Chevron is that, where it applies, the court does not decide the meaning of a statute, let alone decide it de novo. Instead, the court decides whether the agency’s statutory interpretation is merely "reasonable." For this reason, one scholar remarked that "[Chevron] has become a kind of Marbury, or counter-Marbury, for the administrative state." Cass R. Sunstein, "Law and Administration After Chevron," 90 Colum. L. Rev. 2071, 2075 (1990). (In Marbury v. Madison, 5 US 137 (1803), the Supreme Court held that "[i]t is emphatically the province and duty of the judicial department to say what the law is.")
Many courts and agencies had applied Chevron to statutory interpretations regardless of the formality of their adoption. Thus, informal interpretation letters had frequently received Chevron deference. After Mead, this will no longer happen. Chevron deference will, as a practical matter, be confined to statutory interpretations embodied in the products of notice-and-comment rulemaking, i.e., in substantive or interpretative rules or in formal adjudications. The catch-all category of Mead—i.e., an administrative process to which Congress intended to grant comparable law-making authority—is unlikely to arise with much frequency, if at all.
If Chevron does not apply, a court will interpret the statute de novo but give weight to the agency’s interpretation weight under Skidmore. Thus, a party opposing an agency’s statutory interpretation may once again argue that the interpretation is wrong, not merely "unreasonable."
What about an agency’s interpretation of its own regulations, as opposed to the statute it administers? The situation is now somewhat confusing. In Christensen, the court noted the doctrine of Auer v. Robbins, 519 US452 (1997), which held that an agency’s interpretation (apparently without regard to the form of the interpretation) of its own regulation is "controlling unless plainly erroneous or inconsistent with the regulation," quoting Bowles v. Seminole Rock & Sand Co., 325 US 410, 414 (1945). However, in Mead, the court cited Martin v. OSHRC (CF&I Steel Corp.), 499 US 144, 157 (1991), which concerned an agency’s interpretation of its regulation, as exemplifying the giving of weight under Skidmore, as opposed to deference under Chevron.
