Interpreting Administrative Regulations–Part TwoPosted: April 24, 2014 Filed under: Appellate Law | Tags: 1-2z, administrative agencies, chevron deference, seminole rock deference 1 Comment
In Part One of my two-part series on interpreting administrative regulations, I discussed my disagreement with the Connecticut Supreme Court’s position, set forth in Sarrazin v. Coastal, Inc., that General Statutes section 1-2z applies to administrative regulations–given that the plain language of 1-2z refers only to “statutes.” In this post I discuss my disagreement with the Court’s position that an administrative agency’s interpretation of its own regulation is not entitled to any deference unless it is “time-tested, reasonable or the result of formal rule-making procedures.”
Let’s start with some basics. The administrative state exploded after the New Deal. Congress and state legislatures across the country created zillions of federal and state administrative agencies that operate within the executive branch of their respective governments and are empowered by “enabling” statutes to issue regulations. Some of those regulations constitute the administrative agency’s interpretation of a federal or state statute, often a statute that the legislature has charged the agency to enforce.
Under federal law, the general rule since 1984 has been that an administrative agency’s reasonable interpretation of an ambiguous statute that it is charged with administering is entitled to so-called “Chevron deference.” See Chevron U.S.A. v. v. NRDC, 467 U.S. 837 1984). Here is the Chevron deference test:
(1) First, always, is the question whether Congress has spoken directly to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court as well as the agency must give effect to the unambiguously expressed intent of Congress.
If the Court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction of the statute . . . Rather,
(2) [I]f the statute is silent or ambiguous with respect to the specific question, the issue for the court is whether the agency’s answer is based on a permissible construction of the statute.
The Connecticut Supreme Court has never expressly adopted Chevron deference for state agency interpretations of state statutes, but it has held that agency interpretations of statutes are entitled to deference under certain circumstances. In Longley v. State Employees Retirement Comm’n, 284 Conn. 149 (2007) (in which I represented the defendant in the Supreme Court), the Court clarified confusion in its case law and used its opinion as an “opportunity to reaffirm the principle that courts should accord deference to an agency’s formally articulated interpretation of a statute when that interpretation is both time-tested and reasonable.” (My emphasis.)
OK. That’s my very, very quick introduction to the law of judicial deference to agency interpretations of statutes. Now, what deference, if any, does a court owe to an administrative agency’s interpretation of its own regulations? The answer under federal law since 1945 has been “Seminole Rock deference.” See Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945). The general rule, subject to certain exceptions that have evolved over the years, is that a court must accept an agency’s interpretation of its own regulations unless the interpretation is “plainly erroneous.”
I can’t find a single Connecticut case that cites Seminole Rock, but Connecticut law–at least before the Sarrazin decision–expressly called for judicial deference to agency interpretations of their own regulations. For example, in Griffin Hospital v. Comm’n on Hospitals and Health Care, 200 Conn. 489, 497 (1986), the Court stated, “it is the well established practice of this court to accord great deference to the construction given a statute by the agency charged with its enforcement. This principle applies with even greater force to an agency’s interpretation of its own duly adopted regulations.” (My emphasis again.)
Fifteen years later, in MacDermaid, Inc. v. Dept. of Environmental Protection, 257 Conn. 128 (2001), the Court reaffirmed that position, quoting the above statement from Griffin Hospital.
So, as far as I can tell, the law in Connecticut until last week was that an administrative agency’s interpretation of its own regulation was entitled not just to deference, but to extra super special deference. (This is a long post. Some levity is required.) Suddenly, in Sarrazin, the Court changed course. Relegating MacDermaid to a mere footnote (n.19) in its opinion, the Court decided that an agency’s interpretation of its own regulation is only entitled to deference if it is “time-tested, reasonable or the result of formal rule-making procedures.”
Citing Longley, the Court first observed that an agency’s interpretation of a statute is accorded deference if the interpretation has been formally articulated, applied for an extended period of time and is reasonable. So far, so good. But the Court then stated that “these principles apply as equally to regulations as they do to statutes.”
Whoa! Where did that come from? According to the Court, three cases supported that proposition. The first is Wood v. Zoning Bd. of Appeals, 258 Conn. 691 (2001). Wood discuss the rules of deference to agency interpretations of statutes, cites a few cases, and then says “these principles apply equally to regulations as well as statutes.” For that proposition the Court cited two of its earlier cases: Fullerton v. Dept. of Revenue Services, 245 Conn. 601 (1998) and Real Estate Listing Service, Inc. v. Real Estate Comm’n, 179 Conn. 128 (1979), which also happen to be the second and third cases cited in Sarrazin for the proposition that I’m challenging in this post.
To be sure, Fullerton says that the rules of statutory construction apply to administrative regulations. But the “rules” to which Fullerton refers are the normal rules of statutory interpretation, like interpreting statutory text according to its plain meaning and other customary canons of statutory interpretation, not the rules concerning judicial deference to administrative agency interpretations of statutes or regulations.
If there is any doubt about this, take a look at Town of Preston v. Dept. of Environmental Protection, 218 Conn. 821 (1991), which the Court cites in Fullerton to support its position that the rules of statutory construction apply to regulations. Town of Preston says that the usual and customary rules for interpreting statutes (like the plain meaning rule, etc.) apply to regulations. It does not include among those “rules” the law concerning judicial deference to administrative interpretations of statutes and regulations. Indeed, Town of Preston expressly cites to MacDermaid for the proposition that agency interpretations of their own regulations are entitled to extra super special deference.
Here is my point: the usual and customary rules of statutory construction, i.e., the traditional canons of construction, and the rules of deference to agency interpretations of statutes and regulations are different animals.
The third case cited in Sarrazin–Real Estate Listing Service–involved a challenge to an administrative agency’s interpretation of a regulation on the ground that the interpretation conflicted with the federal constitution. I don’t see anything in that decision which supports the proposition for which the Court cited it in Sarrazin.
To sum up, I think the Supreme Court made a mistake in Wood v. Zoning Bd. of Appeals; it misinterpreted its earlier decision in Fullerton and improperly conflated the usual and customary rules of statutory construction with the rules concerning judicial deference to agency interpretations of statutes and regulations. The Court then imported the mistake it made in Wood into Sarrazin. The result, in my humble opinion, is an incorrect statement of the law concerning judicial deference to administrative agency interpretations of their own regulations. The proper statement of the law on this issue is set forth in Griffin Hospital and MacDermaid. I respectfully urge the Court to revisit this issue in a future case.
One last point concerning the Court’s application of its new deference standard to the facts of the case. (Non-employment lawyers may want to stop here. The discussion gets even drier.) In addition to rejecting the Department of Labor’s (“DOL”) interpretation of its own regulation because that interpretation had not been time-tested and was not the product of formal rule-making procedures, the Court also said the agency’s interpretation was not reasonable. The DOL based its interpretation of its regulation on a 1995 opinion letter of the United States Department of Labor concerning travel time under the federal Portal-to-Portal Act of 1947. The DOL expressly referenced that letter in written guide it published, “A Guide to Wage and Workplace Standards.” (The link is to the 2014 revision, which appears to contain the same relevant text (see p. 38) at issue in Sarrazin.) The Court noted that Congress had rejected that position (on policy grounds) in 1996, “yet the department’s handbook inexplicably fails to acknowledge the questionable history of the 1995 opinion letter. . . .” This, according to the Court, is what made the DOL’s interpretation of its own regulation unreasonable.
I fail to see why the DOL’s statement that it interpreted its own regulation in accord with the 1995 opinion letter means that its interpretation is “unreasonable.” It seems to me that the question of reasonableness turns on the “fit” between the 1995 opinion letter and the text of the regulation, not on whether Congress, as a policy matter, disagreed with the 1995 opinion letter. Congress’s intentions are certainly relevant to federal law, but not to the reasonableness of the DOL’s interpretation of its own regulation.
Employment lawyers, what say you?
A reader asked me to comment on footnote 19 in the Sarrazin case, in which the Court mentions MacDermaid. The Court says, “although this court has accorded deference to an agency’s reasonable interpretation of its own regulation,” citing MacDermaid, it adds that “such deference is only afforded to an interpretation that has been adopted pursuant to formal rule-making or adjudicatory procedures” (my emphasis), citing several cases in which the Court has afforded deference in such circumstances.
My problem with this footnote is with the word “only.” Yes, the Court showed deference to the agency’s interpretation of its own regulations in those cases. No, those cases do not state that deference is only appropriate in those circumstances. Again, I respectfully suggest that the Court has misread its own precedents.
I draw attention to the “or” in the test for deference “time-tested, reasonable or the result of formal rule-making procedures.” If the “or” sets up three disjunctive tests, then to merit deference, the administrative interpretation of its own regulation need not be reasonable as long as it is either time-tested or the result of formal rule-making procedures.