THE WORLD AFTER SEMINOLE ROCK AND AUER.

• Author: Larkin, Paul J., Jr.

For more than seventy years, the Supreme Court of the United States has consistently held that the federal courts must defer to an agency's interpretation of its own vague or ambiguous rule. The Court first adopted that principle in 1945 in Bowles v. Seminole Rock & Sand Co. (1) and reaffirmed Seminole Rock two decades ago in Auer v. Robbins. (2) Moreover, from 1945 to today, the Court has consistently treated Seminole Rock as if it were a statute rather than an opinion by applying its ruling in a wide range of contexts with little regard to whether their facts resemble the ones that gave rise to the Court's original decision. (3) The upshot is that Seminole Rock produced what has become a well-settled administrative law rule, one that the Supreme Court and lower courts have cited on more than one thousand occasions. (4)

Despite all that, the Supreme Court should "retire" the Seminole Rock rule. (5)

Wrong when decided in 1945, Seminole Rock should have passed into history when Congress enacted the Administrative Procedure Act (APA) the following year. The APA directs courts to review and set aside agency actions that rest on an erroneous view of the law. (6) This command forbids the courts from granting agencies final law-interpreting authority, as Seminole Rock directs. The strongest argument for retaining Seminole Rock rests on the need to trust the expert judgment of agency officials on how to implement complex regulatory regimes. Yet, we can retain the value of that expert judgment without divesting the courts of their historic responsibility to define the law. Giving an agency's opinion the same heft that a court would afford a treatise by Phil Areeda or Charles Allen Wright or a Restatement of the Law by the American Law Institute would preserve both the courts' historic role and the benefits of agency expertise. In Kisor v. Wilkie, the Supreme Court has an opportunity this Term to correct its mistake in Seminole Rock. (7) It should.

1. OF ARTICLE III COURTS, ARTICLE II AGENCIES, AND LAW INTERPRETING POWER

   The ruling in Seminole Rock stands in tension with two far more deeply settled principles of Anglo-American law. One is the proposition set forth by Chief Justice John Marshall in 1803 in Marbury v. Madison that it is "emphatically the province and duty of the judicial department to say what the law is." (8) That was no novel pronouncement. English courts crafted a common law of torts, contracts, and crimes for centuries before England populated North America. (9) American colonial and state courts exercised the same common law decision-making authority as English courts from the nation's earliest days. (10) The Judicial Power Clause of Article III of the Constitution vested the authority to decide questions of law in federal courts. (11)

   The second doctrine can be seen in the maxims "Nemo judex in cause sua"--"No one may be a judge in his own cause"--and "Audi alteram partem"--" A judge must hear both sides of a case before deciding it." The former principle traces its lineage to Judge Edward Coke's 1610 decision in Dr. Bonham's Case. (12) Coke does not stand alone. William Blackstone, (13) James Madison, (14) a host of Supreme Court justices, (15) and others have endorsed that principle without hesitation or qualification since Coke first applied it. The second maxim reaches back even further--to Demosthenes, Euripides, and Cicero (16)--and reaches forward to both old and contemporary English and American law. (17) The English courts developed an adversarial system of adjudication, rather than the inquisitorial system used on the European continent. Together those maxims presume that judges will be independent from the parties to a dispute. The Seminole Rock decision, however, effectively empowers one party to a lawsuit--a federal agency--to decide a legal issue in any case where the federal government is a party. (18) By so doing, the Seminole Rock decision trespasses on the principles underlying those maxims. If, as the Supreme Court has often held, notice of the issues to be resolved in a dispute is essential to the proper functioning of the adversarial process, (19) so too is a party's ability to persuade the judge that he is correct on the law. Empowering an adversary to decide a case renders notice useless. All that notice does is tell a party how it will lose.

   To date, the Supreme Court has never recognized the existence of the conflict between Seminole Rock and Anglo-American legal tradition, let alone attempted to resolve it. The result is that Seminole Rock, on the one hand, and Marbury v. Madison and Dr. Bonham's Case, on the other, resemble a pair of overhead steam pipes running in infinitely parallel contrariety, oblivious to each other. (20)

   Recently, however, there has been considerable pushback against the growth of the administrative state. (21) All three branches of the federal government, as well as the academy, the bar, and the public, have vigorously debated the issue of whether the Supreme Court has excessively delegated law-interpreting power to unelected and unknown officials at administrative agencies. (22) The legitimacy of the Seminole RockAuer rule, along with its companion Chevron rule affording deference to an agency's interpretation of an ambiguous statute, (23) has been a central aspect of that debate. (24) Most importantly, a number of current Supreme Court justices have expressed concerns about the problems with an interpretive rule permitting agencies to combine legislative, executive, and judicial functions. (25) Some of them have expressed interest in reconsidering the Seminole Rock-Auer rule, but have said that the Court should wait for a case that squarely poses the issue whether to reconsider those decisions. (26)

   That case has arrived.

2. KISOR V. WILKIE

   In 1982, James Kisor filed a claim with the Veterans Administration (now the Department of Veterans Affairs (DVA)) seeking disability benefits for post-traumatic stress disorder resulting from a combat operation that took the lives of thirteen other Marines. (27) The DVA denied his claim the following year. (28) In 2006, Kisor asked the DVA to reopen his claim, (29) arguing that it failed to consider relevant records discussing his combat history during its initial review. (30) The DVA concluded that the identified records were not "relevant" under the pertinent agency regulations (31) because they were not "outcome determinative." (32) On appeal to the U.S. Court of Appeals for the Federal Circuit, Kisor argued that the DVA misread its rule because records are "relevant" if they have any tendency to prove or disprove a relevant fact, even if they are not "dispositive." (33) Finding the term "relevant" to be ambiguous, (34) the Circuit Court deferred to the DVA's reading because it was not clearly mistaken or inconsistent with the rule's text. (35) Kisor sought review in the Supreme Court, which granted certiorari limited to the question whether to overrule Seminole Rock and Auer. (36)

   Kisor v. Wilkie squarely poses the question whether to jettison Seminole Rock. (37) It therefore makes sense to examine Seminole Rock carefully.

3. BOWLES V. SEMINOLE ROCK & SAND CO.

   Seminole Rock involved a dispute over the interpretation of a rule issued by a World War II-era agency, the Office of Price Administration (OPA). (38) Created shortly after the attack on Pearl Harbor to avoid wartime inflation, the OPA Administrator imposed price controls on virtually all goods, capping their price to whatever a company had charged during March 1942. (39) The specific issue in Seminole Rock involved determining, for purposes of the cap, what price Seminole Rock & Sand Co. had charged for crushed stone during that month: the price agreed in the crushed stone contract, which predated March 1942 (Seminole Rock's position) or the capped price when the product was later delivered (the Administrator's position). (40) When framing the relevant legal analysis, the Court wrote that, because "an interpretation of an administrative regulation" was at issue, "a court must necessarily look to the administrative construction of the regulation if the meaning of the words used is in doubt." (41) When so doing, the Court wrote, "[t]he intention of Congress or the principles of the Constitution in some situations may be relevant in the first instance in choosing between various constructions" of an agency rule. (42)

   Had the Court stopped there, the Seminole Rock case might have disposed of numerous similar contractual disputes, but it would not have produced a severe change in the law. The decision would have come to stand only for the limited and obvious proposition that a court should consider one party's construction of a relevant legal rule. Nevertheless, in the next sentence, the Court went on to make clear that an agency's interpretation of a rule is far more than merely "relevant." "[T]he ultimate criterion is the administrative interpretation, which becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation." (43) To make clear that the agency effectively possessed law-interpreting authority, the Court went on to specify precisely what was relevant to the disposition of the case. "Our only tools, therefore, are the plain words of the regulation and any relevant interpretations of the Administrator." (44) Using only those guides, the Court went on to accept the OPA's position. (45)

   Consider what the Court wrote. A factor that "may be relevant" suddenly transformed into the "ultimate criterion" and took on "controlling weight" in less than thirty-five words, all without a shred of logical or legal support. (46) The Court cited no provision of the Constitution, no statute, and no precedent justifying the proposition that a court must defer to one party's interpretation of the critical issue in a lawsuit. (47) To be sure, if an agency's interpretation of a rule conflicted with the rule's text, a...