Supreme Court News

by Professor William Funk
Lewis and Clark Law School
Editor, Administrative and Regulatory Law News

Bank One, Chicago v. Midwest Bank & Trust Co., 116 S.Ct. ---- (1996), involved a question of federal court jurisdiction over a suit between two banks under the Expedited Funds Availability Act, 12 U.S.C. .. 4001-4010, but the essential issue in the case was whether that Act had established the Federal Reserve Board not only as the rule-writer for its provisions but also the adjudicator for claims of liability under it. One bank sued another under the Act when a check was not honored because of insufficient funds. The district court held that the dishonoring bank had acted without ordinary care, giving judgement to the plaintiff, and the defendant appealed. The Seventh Circuit Court of Appeals on its own motion raised an issue of federal court jurisdiction. It read the Act to provide for federal court jurisdiction only when a dispute was between a depositor and a bank, because "depositors have rights, enforceable in court, while the banks have obligations, which the Federal Reserve Board may establish by regulation and enforce in administrative proceedings." 30 F.3d 64, 65. Accordingly, it dismissed the case. The Supreme Court reversed. Without any consideration of the Federal Reserve Board's position on the issue (the Board did not interpret the statute to provide for it to adjudicate cases of liability), the Court indicated that it has "not been quick to infer agency authority of adjudicate private claims." Citing to Coit Independence Joint Venture v. FSLIC, 489 U.S. 561 (1989), and more recently American Airlines, Inc. v. Wolens, 115 S.Ct. 817 (1995), the Court suggested that only a "secure signal" of an intent to create such an adjudicatory framework would justify such a finding and contrasted the explicit creation of adjudicatory authority in the Board under the Bank Holding Company Act. Justices Stevens and Scalia wrote concurring opinions arguing for several pages over the appropriate use of legislative history to discern congressional intent, which the majority addressed in one paragraph.

In Lechmere, Inc. v. NLRB, 502 U.S. 527 (1992), and Maislin Industries, U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116 (1990), the Supreme Court carved out an exception to the Chevron v. NRDC doctrine of deference to an agency's interpretation of an ambiguous statute, where the Court had made a previous interpretation of the statute. In Neal v. United States, 116 S.Ct. ---- (1996), the Court followed these cases and elaborated on their theory in a case involving an interpretation of the term "mixture or substance" in the Anti-Drug Abuse Act of 1986, under which penalties for trafficking in narcotics were established. Earlier, in Chapman v. United States, 500 U.S. 453 (1991), the Court had interpreted that term as applied to LSD in blotter paper, to determine whether the weight of "the mixture or substance," upon which sentences are based, included the paper as well as the actual LSD. The Court held that it did. In 1993, however, the United States Sentencing Commission departed from its previous approach of considering the weight of the paper; instead, it provided in its authoritative "Guidelines" that courts were to use a dose-based system, where the weight of the "mixture or substance" would be based upon the number of doses, not on the actual weight of the paper. Neal, sentenced on the basis of the weight of the paper and not the number of doses, appealed the sentence, arguing that the courts should defer to the Commission pursuant to the Chevron doctrine. The Court rejected his argument, conceding that "there may be little in logic to defend" its interpretation of the statute, but unlike the Commission, which "within its sphere to make policy judgments ... may abandon its old methods in favor of what it has deemed a more desirable approach' to calculating LSD quantities," the Court does "not have the same latitude to forsake prior interpretations of a statute." The Court explained that the doctrine of stare decisis commanded it to follow its prior decisions absent intervening developments in the law that remove or weaken the conceptual underpinnings of the prior decision, or "where later law has rendered the decision irreconcilable with competing legal doctrines or policies." Moreover, the Court said, the reluctance to overturn precedents stems in part from "institutional concerns about the relationship of the judiciary to Congress." When the Court interprets a statute, Congress may overturn it by amending the law, and were the Court "to alter [its] statutory interpretations from case to case, Congress would have less reason to exercise its responsibility to correct statutes that are thought to be unwise or unfair."

Unfortunately, no more than Lechmere or Maislin did, Neal does not adequately justify this exception to Chevron. The underlying justification for deference in Chevron was a presumed Congressional delegation to the agency in question to make law. In Neal there was a legitimate argument that Congress had not delegated to the Commission the authority to define "mixture or substance," whether or not the Court had interpreted it first, but the Court did not rely on this argument. If the Commission had in effect been delegated authority to make law defining "mixture or substance," then court "deference" to the Commission's definition would not be altering its interpretation of the statute "from case to case," but would at the least be the equivalent of changing a decision in light of intervening new law. Moreover, analogizing to the Court's own reference to proper institutional roles, where Congress has not delegated authority to an agency to make law, then it is up to Congress to change the law if it does not like the Court's interpretation, but where Congress has in effect delegated the authority to make law to an agency, then by the same token the agency should be allowed to change the law if it does not like the Court's interpretation.

Perhaps the Court was confusing Chevron deference with general notions of deference, a confusion it, other courts, and many others have made. At one point the Court states that "the Commission's expertise ... may be of potential weight and relevance in other contexts," but it does not suffice to alter the Court's view of the law. Here, however, it sounds like the Court is referring more to what many would call Skidmore deference, after Skidmore v. Swift & Co.., 323 U.S. 134 (1944), in which the Court addressed what sort of deference to afford the Administrator of the Wage and Hour Division, who was not authorized to make law. The Court said that his interpretations, "while not controlling upon the courts by reason of their authority, do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance." But this is not Chevron deference, where reasonable agency interpretations are controlling upon the courts. Were only Skidmore deference appropriate for the Commission's interpretation of "mixture or substance," the Court's insistence on stare decisis and requiring Congress to alter the Court's interpretation would be entirely appropriate.

Two other recent cases involved an agency changing its interpretation of the law. In one, Brotherhood of Locomotive Engineers v. Atchison, Topeka & Santa Fe RR. Co., 116 S.Ct. 595 (1996), Chevron was notable by its absence. The case involved whether to treat the time spent by railroad crews waiting for transportation from their duty site as "on duty time," "off duty time," or "limbo time." The distinctions are important because the Hours of Service Act prohibits train crews from serving more than 12 consecutive hours "on duty" and requires them to have at least 10 consecutive hours "off duty" before they serve again. "Limbo time" counts neither against the "on duty time" limits nor against the hours the crews must remain "off duty." The Hours of Service Act is explicit that the time spent being transported by the railroad to the duty site is "on duty time" and that the time spent being transported from the duty site is "limbo time." Everyone was agreed that time spent waiting at the railroad for transportation to the duty site was "on duty time," but there was disagreement over the treatment of the time spent waiting at the railroad for transportation from the duty site. Predictably, the railroads wanted the time treated as "off duty," or at worst "limbo time," while workers wanted the time treated as "on duty." The Federal Railroad Administration, the agency charged with enforcing these requirements, interpreted the time in question as "limbo time." The Ninth Circuit ruled to the contrary in 1992, applying Chevron but determining that the FRA's interpretation was unreasonable in light of a line of cases at the turn of the century that interpreted waiting time as on duty time. Although the act had been amended in relevant part in 1969, the court found that the amendments did not intend to change that outcome. See United Transportation Union v. Skinner, 975 F.2d 1421. In order to assure national uniformity, the FRA formally announced that it would adopt the Ninth Circuit's interpretation. This in turn was challenged by railroads in the Seventh Circuit. That court rejected the Ninth Circuit's interpretation and refused to defer to the FRA's new interpretation because it was nothing more than an adoption of the Ninth Circuit's interpretation. To defer to the FRA's new interpretation, the court indicated, would merely be a backhand way of having one circuit's decision bind other circuits. The Supreme Court granted certiorari to resolve the circuit split.

Although both circuit courts had cited and applied or distinguished Chevron and the litigants both briefed it, the Supreme Court ignored it altogether. Without mentioning deference once, the Court simply concluded that the "text, structure, and purposes of the statute persuade us that Congress intended [the time to] be limbo time." Not only did the Court ignore Chevron, it seemed deliberately to flout the principles that underlie that decision. The Court did not conclude that the statute was unambiguous, saying only that travel time "can be read" to include the time waiting for the transportation, but instead went on to discern the "purpose" of the Act. In Chevron, it was precisely the D.C. Circuit's attempt to give effect to its view of the purpose of the Clean Air Act, lacking definitive text, that the Supreme Court found was its error. It is, however, doubtful that Locomotive Engineers sounds the deathknell for Chevron in the Supreme Court or elsewhere. Absent from the Court's opinion is the fact that after the Seventh Circuit decision, the FRA again changed its interpretation of the Act, reverting back to its original interpretation. This waffling, especially in the course of the same lawsuit, probably confused the issue of deference sufficiently that the Court believed it best left alone.

The other case involving an agency change of position was Lawrence v. Chater, 116 S.Ct. 604 (1996)(per curiam). Under the Social Security Act, an unmarried minor "child" of a deceased insured individual may receive survivors' benefits if she was dependent upon him at his death. The Commissioner of Social Security is to determine whether a person is a "child" of the insured by applying the law of the insured's state applicable to devolution of intestate personal property. North Carolina law would defeat Lawrence's claim because of procedural requirements imposed for establishing paternity, which she cannot satisfy. She, however, maintains that the North Carolina requirements are unconstitutional, and the Commissioner, therefore, cannot rely upon them to deny her claim. In a 1983 case the Eleventh Circuit had made such a ruling, see Handley v. Schweiker, 697 F.2d 999, but the Fourth Circuit rejected the Handley approach and adopted the Commissioner's position that he need not consider the constitutionality of a state's paternity laws before applying them to applicants. When Lawrence petitioned for certiorari, the Solicitor General responded by saying that the Commissioner reconsidered his position and "now interprets the Social Security Act as requir[ing] a determination, at least in some circumstances, of whether the state intestacy statute is constitutional.'" Although not conceding that Lawrence in fact would qualify for benefits, the Solicitor General asked the Court to grant certiorari and vacate and remand the case back to the Fourth Circuit. This the Court did. Justices Thomas and Scalia, however, took issue with this exercise of the Court's "GVR" authority (the authority to grant certiorari, vacate, and remand a case without a determination of error). This occasioned a long discussion of this issue in the per curiam decision, as well as in concurrences by Justices Stevens and Rehnquist. For administrative law purposes, part of this discussion related to whether deference would be granted to the Commissioner's new interpretation of the Act. If so, then the new interpretation could be seen as intervening new law, a justification for exercising GVR authority. Justice Scalia, however, indicated his belief that "even if we allow deference to an agency view first expressed in pending litigation ... , surely a decent concern for those litigating against the Government and for our lower court judges should induce us to disregard, for Chevron purposes, a litigating position first expressed at the certiorari stage." The majority was unwilling to decide what kind of deference should be afforded this new and late interpretation and left that decision in the first issue to the court on remand.

Deference and Chevron issues are also the subject of one of the cases to which the Supreme Court has granted certiorari. In Colorado Republican Federal Campaign Committee v. FEC, 59 F.3d 1015 (10th Cir. 1995), the court of appeals upheld the FEC's enforcement action against the campaign committee by invoking Chevron deference with respect to a term interpreted by the FEC in an advisory opinion. In its petition for certiorari, the campaign committee specifically raised two issues regarding that deference, arguing that Chevron deference was not appropriate with regard to advisory opinions when the Federal Election Campaign Act requires the FEC make any "rule of aw" pursuant to rulemaking procedures, and arguing here that the advisory opinion to which the court deferred differed from an earlier opinion without explaining the change in position.