July 01, 2013

Decker v. NEDC: A new dispute over judicial deference to an agency’s interpretation of its own regulation

Quin M. Sorenson

Editor’s Note: For an earlier preview of the background and environmental regulations involved in this case, please see Decker v. NEDC: The Supreme Court may not be the end of the (unregulated) forest road.

The question addressed by the Supreme Court in Decker v. Northwest Environmental Defense Center (NEDC), 133 S. Ct. 1326 (2013), was a narrow one: whether stormwater runoff from logging access roads qualifies as a “point source” discharge subject to the permitting requirements of the Clean Water Act. The decision, however, may have significant downstream effects on a basic principle of administrative law that was previously thought settled. That principle, initially recognized more than fifty years ago in Bowles v. Seminole Rock & Sand Co.325 U.S. 410 (1945), and commonly known as the “Auer doctrine” (after Auer v. Robbins, 519 U.S. 452 (1997)), holds that an agency’s interpretation of its own regulation is entitled to deference by the federal judiciary. The decision in Decker, and most specifically Justice Scalia’s dissent, now calls that doctrine into doubt.

The litigation and appeal process

There was little to suggest, from the start of the litigation through argument before the Supreme Court, that Decker would be anything other than a relatively standard Clean Water Act citizen suit action. NEDC filed a complaint under the citizen-suit provision of the act, alleging that companies engaged in timber harvesting were allowing stormwater runoff to flow from logging access roads into local waterways without obtaining a required permit under the National Pollutant Discharge Elimination System (NPDES). The act provides that stormwater runoff qualifies as a “point source” discharge subject to NPDES permitting requirements if the runoff is “associated with industrial activity,” 33 U.S.C. § 1342(p). The U.S. Environmental Protection Agency (EPA) had by regulation defined the latter phrase as any runoff “directly related to manufacturing, processing or raw materials storage areas at an industrial plant . . . includ[ing] . . . storm water discharges from . . . immediate access roads,” 40 C.F.R. § 122.26(b)(14) (2006). Notwithstanding the facial breadth of this regulatory definition, EPA had consistently interpreted it as encompassing only runoff from “fixed” industrial facilities, such as sawmills or log-sorting facilities, and not stormwater runoff (rain) from temporary, outdoor logging operations of the type at issue. 133 S. Ct. at 1336.

The district court accepted EPA’s interpretation, citing the principle from Auer that “[a]n agency’s interpretation of its own ambiguous regulation is controlling unless the interpretation is ‘plainly erroneous or inconsistent with the regulation,’” and on that basis dismissed the complaint. Nw. Envtl. Def. Ctr. v. Brown476 F. Supp. 2d 1188, 1197 (D. Ore. 2007). The Ninth Circuit reversed. 640 F.3d 1063 (9th Cir. 2011). It agreed that courts must generally “defer to an agency’s interpretation of its own regulations,” but held that in this case the agency’s construction—holding that runoff from logging access roads is not “associated with industrial activity”—could not be squared with the broad regulatory definition of the phrase, particularly that language describing runoff from “immediate access roads” as an example of runoff “associated with industrial activity.” Id.

The Supreme Court granted review on June 25, 2012. Notably, on the Friday before the Monday oral argument, EPA issued a revised regulation redefining the phrase “associated with industrial activity” to expressly exclude stormwater runoff from logging roads. 77 Fed. Reg. 72,970 (Dec. 7, 2012). That regulation, however, did not render the case moot, insofar as the complaint requested relief for alleged past violations, when the prior regulation was in effect. 133 S. Ct. at 1335. But, EPA’s eleventh-hour revision to its regulation, did prompt some sharp questions by the Chief Justice to the Solicitor General’s office about the lack of notice to the Court during oral argument.

Supreme Court decision

The Supreme Court issued its decision on March 20, 2013. While the majority opinion had the immediate effect of reversing the Ninth Circuit’s judgment, the separate opinions of Justice Scalia and the Chief Justice (joined by Justice Alito) may provide the most long-term interest and impact.

The majority opinion, authored by Justice Kennedy and joined by six other Justices (with Justice Breyer, whose brother presided over the district court litigation, not participating), reflects a straightforward and essentially unquestioning application of the Auer doctrine. It explained that an agency is entitled to “interpret its own regulation” and that, when it does so, “the Court, as a general rule, defers to [that interpretation].” 133 S. Ct. at 1337. Without disagreeing that the regulatory definition of “associated with industrial activity” could reasonably be construed to include runoff from logging access roads, as the Ninth Circuit had held, the majority concluded that the phrase was not unambiguous and that EPA was therefore entitled to adopt its own interpretation. Id. Even if EPA’s construction was not “the only possible reading of [the] regulation”—“or even the best one”—it was entitled to deference. Id.

Justice Scalia’s dissenting opinion was unequivocal in tone, starting with a critical observation of the agency’s efforts to rewrite its own regulations even during the briefing of this very case. Stating that “[e]nough is enough,” Justice Scalia challenged the jurisprudential foundation of the Auer doctrine itself. He argued that there is no reason and no basis for courts to accord agencies deference in their interpretation of their own regulations. Id. at 1339. Whatever expertise an agency may possess, and whatever its underlying intent in promulgating a regulation, a regulation—once adopted—constitutes a rule of law binding on the public and, as such, it falls to the judiciary to “say what the law is.” Id. at 1340. While true that an agency has some discretion in interpreting the meaning of an ambiguous statute, under Chevron U.S.A. v. NRDC, 467 U.S. 837 (1984), it cannot be granted the same authority to construe its own regulations. 133 S. Ct. at 1340–41. That is because, in that instance, “the power to write a law and the power to interpret it [would] rest in the same hands.” Id. at 1341. Notwithstanding any pragmatic benefits the Auer doctrine may offer, including some reduction in uncertainty over the interpretation of agency regulations, “beneficial effect cannot justify a rule that not only has no principled basis but contravenes one of the great rules of separation of powers: He who writes a law must not adjudge its violation.” Id. at 1342.

The Chief Justice, in a separate concurring opinion joined by Justice Alito, agreed that Justice Scalia had “raise[d] serious questions about the [Auer] principle,” and stated further that “[i]t may be appropriate to reconsider that principle in an appropriate case.” Id. at 1338–39. “But this is not that case,” he concluded, because the issue had not been “brief or argued” by the parties. Id. He suggested, though, that an “appropriate” case should arise in short order, given that “[q]uestions of . . . Auer deference arise as a matter of course on a regular basis,” and ended his opinion with the less than subtle hint that “[t]he bar is now aware that there is some interest in reconsidering those cases.” Id.

An invitation—and perhaps more

There is no doubt, in light of the separate opinions in Decker, that a challenge to the Auer doctrine may be viable in the Supreme Court. Three Justices of the Court have affirmatively expressed an interest in reconsidering the doctrine, and it appears quite possible—if not likely—that at least one other Justice would join in voting for certiorari in such a case. For that reason, counsel in any administrative law case—in the environmental field or otherwise—in which the Auer doctrine may play a role would be well-advised to preserve and press that challenge throughout the proceedings, to ensure that their case, if it reaches the Court, qualifies as one in which (to quote the Chief Justice) “the issue is properly raised and argued.” 133 S. Ct. at 1339.

But, while Decker certainly suggests an increased likelihood of review, it does not necessarily portend any greater chance of success. The fact remains that seven Justices, including Justice Thomas, joined the majority opinion approving and applying traditional Auer deference. While those Justices may nevertheless harbor some of the same doubts as Justice Scalia, none of them expressed those reservations, despite the seemingly easy opportunity to do so afforded by the Chief Justice’s concurring opinion. Whether the Chief Justice’s invitation in Decker will lead to more than mere academic commentary may, in the end, depend on the facts of the case in which the question is ultimately presented, including how directly those facts illustrate and highlight the concerns highlighted by Justice Scalia.

It also remains to be seen whether and when these same concerns, raised here to challenge Auer deference, are raised in later cases to strike at the underlying concept of Chevron deference itself, calling into question another of the pillars of the modern administrative state. Only time, and further arguments and opinions, will tell whether Decker marks a milestone in administrative law, or simply another Clean Water Act case.

Quin M. Sorenson

Quin M. Sorenson is a partner at Sidley Austin LLP, and regularly represents clients in environmental appeals.