A Crack in Judicial Deference to Federal Agency Rule Interpretation?

Some of the current Justices sitting on the U.S. Supreme Court have written that they are dissatisfied with the state of the law regarding the deference the courts must accord to a federal agency’s interpretation of its own regulations. A workplace safety case decided on October 13, 2015, by an en banc panel of the U.S. Court of Appeals for the Eighth Circuit may provide a vehicle for the U.S. Supreme Court to review these issues. The issue of what deference to apply in these situation arises from the U.S. Supreme Court’s decisions in Bowles, et al., v. Seminole Rock & Sand Co., 325 U.S. 410 (1945) and Auer, et al., v. Robbins, et al., 519 U.S. 452 (1997); these cases have been interpreted as granting federal agencies “substantial deference” when the courts are asked to review an agency’s interpretation of its own rules. However, the growth and reach of the federal government plainly concern some of the Justices, and if there is to be a case at hand to sort through these issues, then Perez, Secretary, U.S. Department of Labor, v. Loren Cook Company may be the case to do this if the government chooses to appeal.  There appears to be a trend that courts are paying very close attention to the text of the law, and less to what the agency says the law actually means in the eyes of the agency, especially when the agency is arguing that the Congress provided the agency with boundless power and discretion.

Loren Cook Company is a manufacturer of air circulating equipment. In May 2009, one of the company’s employees, a lathe operator, was killed when part of the lathe broke free, and flew out of the machine, fatally striking the employee.  Following an Occupational Safety and Health Administration (OSHA) investigation, the Secretary of Labor (Secretary) issued two citations against Loren Cook, citing the company for failing to provide barrier guards to protect its employees from  ejected work pieces, in violation of an OSHA rule, 29 C.F.R. § 1910.212(a)(1). Loren Cook was fined $490,000, but both the Administrative Law Judge and the Occupational Safety and Health Review Commission held that this rule did not apply to the conduct for which the company was being penalized. The citations were vacated, and the Secretary then filed an appeal with the Eighth Circuit.

The first panel to hear this case supported the Secretary’s appeal, but an en banc panel of the court, in an 8-to-4 decision, affirmed the rulings of the ALJ and the Commission. Examining the record, the plain text of the rule, agency guidance, and past circuit court decisions interpreting the rule, the majority of the panel held that no deference was to be accorded to the Secretary’s interpretation of the rule in this case. The Eighth Circuit noted that the courts will not defer to an agency’s interpretation of its own regulations when: (a) the interpretation is plainly erroneous or inconsistent with the regulation; (b) there is reason to believe that the agency’s interpretation does not reflect the agency’s fair and considered judgment  on the matter; and (c) when the agency’s new interpretation results in an unfair surprise to the regulated community. Applying this criteria, the Eighth Circuit held that the Secretary’s interpretation of 29 C.F.R. § 1910.212(a)(1) is not entitled to deference.

Additional Source:  The Problem of Judicial Deference to Federal Agencies