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Auer Declined – 9th Circuit Grants No Deference to DOL Interpretation of Ambiguous Regulations, but Persuaded Anyway

Posted in Judicial Process, Judicial Review & Remedies

The United States Court of Appeals for the Ninth Circuit declined to grant the Department of Labor (DOL) deference as to its interpretation of its own rules in Independent Training and Internship Program v. California Department of Industrial Relations.  Although this decision has very limited applicability to California, the core focuses on the National Apprenticeship Act of 1937 (aka Fitzgerald Act), which gives DOL authority to encourage apprenticeship programs, and, somehow not apparent from the court’s decision, promulgate regulations.  DOL’s regulations define ambiguously public works projects qualifying as “Federal purposes.”  Asking DOL’s opinion may not have garnered the court what it expected.

To make a long, complicated story short, the panel of the Ninth Circuit invited DOL to express its views on the appropriate understanding of its “Federal purposes” regulatory term in the context of this case because it raised a question of first impression.  DOL’s amicus brief advised that DOL had recently disavowed two 2004 opinion letter interpretations of the term as “overbroad” with little explanation and that DOL may issue new guidance, but did not.  Instead, the amicus brief offered DOL’s new, narrow interpretation.  DOL’s amicus curiae brief interpretation was, the court advises, “nearly as difficult to decipher as the underlying regulation” but DOL claimed that its view was owed “controlling deference” under the principle laid down by the United States Supreme Court (SCOTUS) in Auer v. Robbins.

Under Auer, SCOTUS has told the courts to defer to an agency’s interpretation of its own ambiguous regulation, even in an amicus brief, unless

  • that interpretation is plainly erroneous or inconsistent with the regulation, or
  • there is reason to suspect that the interpretation does not reflect the agency’s fair and considered judgment on the subject.

The court reiterated the details of the second “fair and considered judgment” test:

  • unexplained conflicting interpretation by the agency;
  • a new interpretation that is no more than a convenient litigating position; or
  • a new interpretation that is no more than a post hoc rationalization to defend agency action.

Critical here is the newest limitation:  SCOTUS’s decision not to afford deference in Christopher v. SmithKline Beecham when deference would “seriously undermine the principle that agencies should provide regulated parties fair warning of the conduct a regulation prohibits or requires.”

The court found both inconsistency and lack of fair warning, but all four factors may be present given that the court and parties did not know of the newest position until the brief was filed.

The court declined to afford controlling deference to the DOL’s new interpretation of its own regulations under Auer, but nevertheless adopted DOL’s interpretation as the most persuasive construction of the regulation at issue.  This much less deferential position is another striking loss occasioned by DOL’s familiar pattern of shifting non-regulatory interpretation of ambiguous regulations.  Whether the court was correct about the specific outcome, it was correct to decide the issue on the basis of persuasive value alone.

This convoluted case is likely to rest in such peace as it may find in the Ninth Circuit – the lack of Auer deference voids most of this case’s “certworthiness” – that quality of conflict and importance that SCOTUS seeks in petitions for certiorari.  While the Ninth Circuit has followed suit on a small limitation on Auer, the decision unfortunately does little to end this unfair parochial practice.