Exelon Generation Co v. Local 15, I

In the

United States Court of Appeals

For the Seventh Circuit

No. 11-2423

E XELON G ENERATION C OMPANY, LLC,

Plaintiff/Counter-Defendant-Appellee,

v.

L OCAL 15, INTERNATIONAL B ROTHERHOOD OF

E LECTRICAL W ORKERS, AFL-CIO,

Defendant/Counter-Plaintiff-Appellant.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 1:10-cv-4846—Robert W. Gettleman, Judge.

A RGUED JANUARY 19, 2012—D ECIDED M ARCH 29, 2012

Before K ANNE, S YKES, and H AMILTON, Circuit Judges.

H AMILTON, Circuit Judge. To work at one of the

nation’s privately-owned nuclear power plants, many

employees must receive a security clearance with “unes-

corted access” privileges. When such access is denied or

revoked, the Nuclear Regulatory Commission requires

owner-licensees of nuclear facilities to provide the ag-

2 No. 11-2423

grieved worker with a review procedure. For plants

whose employees are unionized, a longstanding issue

has been whether labor arbitrators deciding grievances

under collective bargaining agreements can review

access denial decisions and order unescorted access as

a remedy for a wrongful denial. From 1991 to 2009,

the Commission took the unequivocal position that

labor arbitrators have that power, and courts agreed.

In 2009, the Commission completed a comprehen-

sive post-9/11 overhaul of nuclear power plant security

requirements. Although it modified some of the reg-

ulatory provisions dealing with review of unescorted

access denials, the new language was at best ambiguous

as to whether the Commission had changed its policy

to prohibit arbitral review. A close look at the text and

the rulemaking record shows that it did not. Among

other factors we consider, neither the Commission nor

any other participant suggested in the notice-and-com-

ment process that the new language would modify, let

alone overturn, the Commission’s established policy

permitting arbitral review.

Nevertheless, plaintiff-appellee Exelon Generation

Company maintains that the amended regulation

quietly overruled the Commission’s prior position. In

the district court, Exelon sought and won a declaratory

judgment that the 2009 amendments prohibit arbitration

of access denial decisions. Exelon Generation Co. v. Local 15,

Int’l B’hood of Elec. Workers, No. 10 C 4846, 2011 WL 2149624

(N.D. Ill. May 25, 2011). We reverse. The Commission

did not flip-flop on an important, longstanding, and

No. 11-2423 3

controversial policy without clearly indicating either in

the text of the rule or at any point in the rulemaking

history that it was doing so.

I. Factual and Regulatory Background

Pursuant to its statutory mandate under the Atomic

Energy Act, 42 U.S.C. § 2011 et seq., the Commission

requires all licensees operating nuclear generators to

implement access authorization programs in their facili-

ties. 10 C.F.R. § 73.56(a). Licensees’ programs must

provide “high assurance” that individuals with unes-

corted access privileges “are trustworthy and reliable,

such that they do not constitute an unreasonable risk

to public health and safety or the common defense and

security.” 10 C.F.R. § 73.56(c). The Commission first

promulgated these regulations in 1991 and amended

them in 2009, each time via the notice-and-comment

rulemaking procedures of the Administrative Proce-

dure Act, 5 U.S.C. § 553.

Two separate provisions of section 73.56 are disputed

here. The first is paragraph (a)(4), which allows a “contrac-

tor or vendor” of the licensee “to satisfy appropriate

elements of the licensee’s access authorization program.”

10 C.F.R. § 73.56(a)(4). Although it allows licensees to

delegate some responsibilities over access programs

to contractors and vendors, the provision also says:

“Only a licensee shall grant an individual unescorted

access.” The second is subsection (l), which specifically

addresses the review procedures that licensees must

provide to employees whose unescorted access privileges

4 No. 11-2423

are denied or revoked.1 The rule requires the licensee

to give the aggrieved employee notice of “the grounds

for the denial,” “an opportunity to provide additional

relevant information,” and “an opportunity for an objec-

tive review of the information upon which the denial . . .

was based.” 10 C.F.R. § 73.56(l). The new 2009 version

of subsection (l) also states: “The procedure must provide

for an impartial and independent internal management

review.” Id. The 1991 version had provided: “The proce-

dure may be an impartial and independent internal man-

agement review.” 56 Fed. Reg. 18997, 19008 (empha-

sis added).

In May 2009, after the Commission issued the final

amended regulation, a private consortium of nuclear

power operators called the Nuclear Energy Institute

(NEI) updated a set of “standard industry criteria” for

implementing the amended regulation. The document,

called “NEI 03-01 (Revision 3),” asserted: “the licensee

internal management review process is final, shall be

the exclusive means by which [unescorted access] deci-

sions may be reviewed, and may not be reviewed or

overturned by any third party.” App. 58. In July 2009

the Commission staff reviewed NEI 03-01 (Revision 3)

in “Regulatory Guide 5.66.” The staff found NEI 03-01

(Revision 3) to “meet the intent and substance of”

the amended access regulations. App. 382. Regulatory

1

The 1991 version of this “Review procedures” provision was

codified as subsection 73.56(e), while the current version is

subsection 73.56(l). For simplicity we refer to both versions

as “subsection (l).”

No. 11-2423 5

Guide 5.66 stated that the “NRC staff considers confor-

mance with the provisions of NEI 03-01 to be an ac-

ceptable approach to meet the requirements of 10 C.F.R.

§ 73.56.” App. 385. The guide also cautioned: “Regulatory

guides are not substitutes for regulations and com-

pliance with them is not required.” App. 383.

Plaintiff Exelon is a licensee that owns and operates

nuclear generating facilities in Pennsylvania, New Jersey,

and Illinois. IBEW Local Union 15 (“Local 15”) represents

1,600 employees at Exelon’s six Illinois plants. Since at

least 2001, Exelon and Local 15’s collective bargaining

agreements have provided for a grievance procedure

culminating in arbitration with respect to “any dis-

pute” over “working conditions.” App. 126. Pursuant to

the access regulations, Exelon maintains a program

for granting and denying current and prospective em-

ployees unescorted access privileges in its facilities.

Exelon did not collectively bargain with Local 15 over

its unescorted access program. In an earlier lawsuit

between these parties, however, District Judge Lefkow

ruled that access denials were grievable under the col-

lective bargaining agreement and that the 1991 access

regulations then in force did not preclude arbitral re-

view. Exelon Generation Co. v. Local 15, Int’l B’hood of

Elec. Workers, No. 06 CV 6961, 2008 WL 4442608 (N.D. Ill.

Sept. 29, 2008). There was no appeal, and Exelon does

not challenge either holding here.

Instead, Exelon filed a new action in the district court

(assigned to Judge Gettleman) seeking a declaratory

judgment that the 2009 amendments to the access reg-

6 No. 11-2423

ulations changed the Commission’s policy to prohibit

third-party review of a licensee’s denial of unescorted

access. The case was prompted by Exelon’s termination

of the unescorted access privileges and employment of

several Local 15 members. Local 15 counterclaimed

to compel arbitration of those decisions. On cross-

motions for summary judgment, the district court

found for Exelon.

II. Discussion

We review de novo the district court’s resolution of cross-

motions for summary judgment. E.g., Clarendon Nat’l

Ins. Co. v. Medina, 645 F.3d 928, 933 (7th Cir. 2011). This

case involves a single question of federal law: whether

the 2009 amendments to section 73.56 prohibit arbitra-

tion of unescorted access denials and revocations. The

same rules of construction apply to administrative rules

as to statutes. E.g., Alabama Tissue Ctr. v. Sullivan, 975

F.2d 373, 379 (7th Cir. 1992). In either case, we begin by

asking “whether the language at issue has a plain and

unambiguous meaning with regard to the particular

dispute in the case.” Ioffe v. Skokie Motor Sales, Inc., 414

F.3d 708, 710 (7th Cir. 2005), quoting Robinson v. Shell

Oil Co., 519 U.S. 337, 340 (1997). A regulation is “ambigu-

ous” as applied to a particular dispute or circumstance

when more than one interpretation is “plausible” and “the

text alone does not permit a more definitive reading.”

Chase Bank USA, N.A. v. McCoy, 131 S. Ct. 871, 880 (2011).

If the meaning of the regulatory text is clear, the task is

complete. See Christensen v. Harris County, 529 U.S. 576,

No. 11-2423 7

588 (2000). When it is ambiguous, however, it is neces-

sary to resort to other interpretive methods, such as

analysis of the rulemaking record. See, e.g., Wyeth v.

Levine, 555 U.S. 555, 570-73, 576-81 (2009) (analyzing

rulemaking history to determine a regulation’s preemp-

tive scope). Where an agency has authoritatively inter-

preted its own rule, courts generally defer to that

reading unless it is “plainly erroneous or inconsistent

with the regulation.” E.g., Auer v. Robbins, 519 U.S. 452,

461 (1997).

A. Subsection (l)

We begin with subsection (l) because that provision

deals directly with review of unescorted access denials.

It is plain that the text does not prohibit arbitral review:

Review procedures. Each licensee and applicant

shall include a procedure for the notification of indi-

viduals who are denied unescorted access . . . . Addi-

tionally, procedures must include provisions for

the review, at the request of the affected individual,

of a denial . . . of unescorted access . . . that may

adversely affect employment. The procedure must

contain a provision to ensure the individual is in-

formed of the grounds for the denial . . . and allow the

individual an opportunity to provide additional

relevant information and an opportunity for an ob-

jective review of the information upon which the

denial . . . was based. The procedure must provide for

an impartial and independent internal management review.

8 No. 11-2423

10 C.F.R. § 73.56(l) (emphasis added). Exelon argues, and

the district court found, that because the italicized sen-

tence replaced the 1991 regulation’s “may be” with

“must provide,” (1) internal management review is man-

datory instead of optional, and (2) internal manage-

ment review is the only permissible form of review.

The first conclusion is obvious. Subsection (l) expressly

says that a licensee “must provide for an impartial

and independent internal management review.” The

word “may” is precatory and “customarily connotes

discretion,” Jama v. Immigration & Customs Enforcement, 543

U.S. 335, 346 (2005), while “must,” like “shall,” is manda-

tory and generally forecloses discretion. E.g., Mallard

v. U.S. District Court, 490 U.S. 296, 301-02 (1989).

The second conclusion is mistaken. The inference that

the requirement of an internal management review

means that only this form of review is permitted rests

implicitly on the much-derided maxim of expressio unius

est exclusio alterius — the expression of one thing

suggests the exclusion of others. For two reasons, this

beleaguered canon does not apply here. First, “expressio

unius . . . has reduced force in the context of inter-

preting agency administered regulations.” Whetsel v.

Network Property Services, LLC, 246 F.3d 897, 902 (7th

Cir. 2001); see also Cheney R.R. Co. v. ICC, 902 F.2d 66, 69

(D.C. Cir. 1990) (calling expressio unius “an especially

feeble helper in an administrative setting”). Second, and

more specifically, “the canon . . . has force only when

the items expressed are members of an ‘associated

group or series,’ justifying the inference that items not

No. 11-2423 9

mentioned were excluded by deliberate choice, not inad-

vertence.” Barnhart v. Peabody Coal Co., 537 U.S. 149,

168 (2003), quoting United States v. Vonn, 535 U.S. 55, 65

(2002). Here, nothing in the text suggests that subsec-

tion (l)’s requirement of “an impartial and independent

internal management review” is exhaustive. Quite the

opposite, the wording — requiring licensees to “provide

for” an internal review — indicates that the internal

management review is inclusive rather than exclusive.

The original 1991 version stated that the review pro-

cedure “may be” an internal management review. The

2009 switch to “must provide” (as opposed, for instance,

to “must be” or “must constitute”) implies that while

an internal management review must be among the

procedures provided, the licensee may also provide

others. Nothing in the language suggests the opposite

view.

Exelon’s reading of section 73.56 mistakenly assumes

that the Commission wrote the 2009 revision to roll

back workers’ rights. The text of amended subsection (l)

reveals the opposite purpose — to enhance rather than

erode procedural protections. Subsection (l) provides

baseline rights to employees challenging adverse ac-

cess determinations: to receive notice, to be heard, and

to have an objective decision-maker. The 1991 version

permitted licensees to provide for management-

level review but did not explicitly require it. Nothing in

the 1991 text prevented a licensee from, for example,

giving review authority to the same person who issued

the initial denial or to a non-managerial employee who

was supervised by the initial decision-maker. The

change in 2009 from “may be” to “must provide”

10 No. 11-2423

clarified that the internal management review is a

required procedural floor of protection for employees.

We see no basis for inferring that the internal review

was also a procedural ceiling. Subsection (l) does not

bar arbitral review of unescorted access denials.

B. Paragraph (a)(4)

Turning to paragraph (a)(4), which does not specifically

address review procedures at all, we find its language

susceptible to more than one interpretation on the avail-

ability of arbitral review. The paragraph states in its

entirety:

The licensee or applicant may accept, in part or whole,

an access authorization program implemented by

a contractor or vendor to satisfy appropriate ele-

ments of the licensee’s access authorization program

in accordance with the requirements of this section.

Only a licensee shall grant an individual unescorted ac-

cess. Licensees and applicants shall certify individuals’

unescorted access authorization and are responsible

to maintain, deny, terminate, or withdraw unescorted

access authorization.

10 C.F.R. § 73.56(a)(4) (emphasis added). Exelon argues

that the italicized second sentence means that a

licensee’s decision cannot be reviewed by an arbitrator

or even a court.2

2

Exelon has not relied on the final sentence of paragraph (a)(4)

to support its position. The sentence is materially unchanged

(continued...)

No. 11-2423 11

Taken in isolation, that italicized sentence might

support Exelon’s reading. In regulatory and statutory

construction, however, context is critical. E.g., FDA v.

Brown & Williamson Tobacco Corp., 529 U.S. 120, 133

(2000) (“[A] reviewing court should not confine itself to

examining a particular statutory provision in isolation.

The meaning — or ambiguity — of certain words or

phrases may only become evident when placed in con-

text.”).

The relevant context of the disputed sentence in para-

graph (a)(4) is its placement in an introductory paragraph

about the relationship between a licensee and its con-

tractors and vendors. The amended access regulations

permit a licensee to rely on contractors and vendors

in implementing its access authorization program. Para-

graph (a)(4)’s manifest function is to clarify the respec-

tive responsibilities of these different categories of regu-

lated parties. The first sentence allows a licensee to dele-

gate some authority to contractors and vendors in im-

plementing its access authorization program. That rela-

tionship is elaborated in greater detail in later provi-

sions. The disputed second sentence provides a corollary

to this delegation. While a licensee “may accept” steps

performed by “a contractor or vendor” to implement its

access authorization program: “Only a licensee shall grant

2

(...continued)

from the 1991 version of paragraph (a)(4), and the Commission

itself has taken the position that the 1991 regulations did not

bar arbitral review of access denials. The minor changes in

wording in the 2009 version of the last sentence therefore do

not indicate any intent to change that position.

12 No. 11-2423

an individual unescorted access.” This sentence’s role is

thus to caution that, notwithstanding the parts that con-

tractors and vendors may play in program implementa-

tion, the ultimate responsibility for granting unescorted

access belongs to the licensee. Exelon’s reading loses

sight of the context of paragraph (a)(4) and, if taken to its

logical conclusion, would lead to the improbable result

of preventing courts — and perhaps even the Commis-

sion itself — from granting unescorted access.3

To reconcile its position with the contractor-vendor

context of paragraph (a)(4), Exelon offers the imaginative

theory that arbitrators actually are vendors under the

regulations because they are “performing an ‘element[ ]

of the licensee’s access authorization program.’ ” The

Commission has not defined “contractor” or “vendor”

in the relevant regulations. See 10 C.F.R. § 73.2 (defini-

tions section). The regulations provide, however, that a

vendor’s employees must themselves satisfy the

program requirements to obtain unescorted access to

nuclear facilities. See 10 C.F.R. § 73.56(b)(2) (“employees

3

During oral argument, Exelon embraced this very position.

Asked whether a court in a race discrimination case, for exam-

ple, could order access privileges restored to an employee

after a licensee had revoked them in violation of Title VII of

the Civil Rights Act of 1964, counsel said no. No authority

was cited to support this view, which would present serious

separation-of-powers issues and in any event conflicts with

the Commission’s clear position that, in a case of a mistaken

access denial, “an aggrieved individual could commence

an action in a State or a Federal court.” 56 Fed. Reg. 18997,

19002 (1991).

No. 11-2423 13

of a contractor or a vendor who are designated in

access authorization program procedures, are subject to

an access authorization program that meets the require-

ments of this section”). During oral argument, Exelon

conceded that arbitrators have never been subject to

unescorted access program requirements. In other

words, neither the nuclear industry nor the Commission

has ever treated labor arbitrators as vendors under

the access regulations. In the face of Exelon’s im-

provised and creative argument, we give this long-

standing practice “considerable weight.” See Davis v.

United States, 495 U.S. 472, 484 (1990). We find no

support for Exelon’s expansive conception of vendor.

In light of its context in allocating responsibility for

access programs between licensees and their vendors

and contractors, the disputed sentence of subsec-

tion (a)(4) — “Only a licensee shall grant an individual

unescorted access”— is at best ambiguous on the availa-

bility of arbitral review. We therefore turn to the

rulemaking record of the 2009 amended access regula-

tions for evidence of the Commission’s intent. The

lessons from that record are clear.

As noted, the Commission policy since 1991 has been

that labor arbitrators may review denials and revoca-

tions of unescorted access. Nothing in the rulemaking

record for the 2009 amendments indicates any intent to

change that policy. The Commission’s own analyses of

amended paragraph (a)(4) — both as proposed and as

adopted — overwhelmingly support Local 15’s limited,

context-based reading over Exelon’s expansive one. In

14 No. 11-2423

its proposed rulemaking notice, the Commission empha-

sized that the changes to paragraph (a)(4) were intended

to “convey more clearly” that contractors and vendors

were “accountable” not only to licensees but also to

the Commission itself and that contractors and vendors

“may be directly subject to NRC inspection and enforce-

ment actions.” 71 Fed. Reg. 62664, 62734-35 (2006). Like-

wise, in its statement accompanying the final rule, the

Commission stated that it revised paragraph (a)(4) in

the final rule “to define and to provide clarification

and specification on the roles and responsibilities of

licensees, applicants, and contractors or vendors.” 74

Fed. Reg. 13926, 13947 (2009).

More telling, the Commission repeatedly stated that

amended paragraph (a)(4) “retains the intent” of the

original version. See 71 Fed. Reg. at 62734-75 (Proposed

paragraph (a)(4) “would . . . retain the intent of the

current requirement that only licensees and applicants

have the authority to grant or permit an individual to

maintain unescorted access to nuclear power plant pro-

tected and vital areas.”) (emphasis added); 74 Fed. Reg. at

13962 (Final subsection 73.56(a) “retains the intent of

the preexisting requirements that licensees have the

authority to grant or deny an individual unescorted

access authorization, or permit an individual to maintain

or terminate unescorted access.”) (emphasis added). The

rulemaking history of paragraph (a)(4) shows that its

purpose was to underscore the authority of licensees

for program implementation as distinct from contractors

and vendors. This record belies the notion that the Com-

mission revised paragraph (a)(4) to impose a backdoor

prohibition on any third-party review of access denials.

No. 11-2423 15

Most important, though, is the utter silence in the

rulemaking record on the issue of arbitral review of

access denials. There is simply nothing from the entire

process — from the notice of proposed rulemaking to

the public comments to the Commission’s own re-

sponse and final rulemaking analysis — that suggests

the Commission intended to change its established

policy permitting arbitrators to review access decisions.

The Commission’s analysis of proposed subsection (l)

(the part of the regulations that actually addresses

review procedures) again emphasized policy continuity

rather than change: “Proposed § 73.56(l) would retain

the meaning of current [provision] but update some of

the terms used in the provision.” 71 Fed. Reg. at 62784

(emphasis added).

This policy continuity is especially important in

the context of subsection (l), for there is no doubt that

its 1991 version permitted arbitral review of access

denials. The issue of arbitral review was a significant

controversy when the 1991 rule was issued. Some

licensees objected to any requirement for a review

process, while organized labor representatives raised

questions about the implications for workers’ grievance

rights. In its published analysis of the final 1991 rule,

the Commission assured union leaders and everyone

else in the industry that it “never intended that any

review procedure that already exists in a bargaining

agreement be abandoned.” 56 Fed. Reg. at 19002. The

Commission spelled out that the review proceedings set

forth in subsection (l) could be conducted by a neutral

arbitrator: “if procedures under collective bargaining

16 No. 11-2423

agreements” so provide, “the rule would allow the

use of a grievance procedure for review of denials or

revocations of access authorizations.” Id. In assuaging

the industry’s concerns about third parties like arbi-

trators deciding disputes over access, the Commis-

sion made clear that such review was permissible: “if

the evidence indicates a proper application of relevant

criteria in excluding an employee, the review proce-

dure . . . should result in a decision vindicating the man-

agement action.” Id. at 19003. In short, the Commission’s

unequivocal and reasoned position in 1991 was that

what is now subsection (l) established a procedural

floor that could be exceeded by providing for arbitral

review of access decisions.4

4

Federal courts have also taken this view of the 1991 version of

the regulation. See Tennessee Valley Auth. v. Tennessee Valley

Trades & Labor Council, 184 F.3d 510, 518-19 (6th Cir. 1999)

(holding that arbitrator’s decision to reinstate nuclear

employee after licensee revoked his unescorted access and

then fired him was “not contrary to federal law or regulation”

and that “the arbitrator was acting within the scope of the

authority granted to him by the [collective bargaining] Agree-

ment”); Public Service Elec. & Gas Co. v. Local 94 Int’l B’hood

of Elec. Workers, 140 F. Supp. 2d 384, 392 (D.N.J. 2001) (“the

Court finds the historical record persuasive that the NRC’s

intent was to permit an arbitration provision to be utilized as

the appeal process for revocation or denial of site access

authorization when appropriate, especially in consideration

of the NRC’s response that it was not its intent to ‘ex-

clude from consideration or to require consideration of

(continued...)

No. 11-2423 17

Nothing in the text of the amended regulation or the

rulemaking history suggests the Commission came to a

different conclusion in 2009. Yet Exelon contends that

the Commission sought to upend its settled policy

even though the text of the amended regulation

does not support such an intent, and even though

neither the Commission nor any other participant in

the notice-and-comment process gave any indication

that the amendments would have this effect.

We will not so lightly accuse the Commission of making

a significant policy decision by such indirect tactics.

We may safely assume that if the Commission had

wanted to depart from its clear policy allowing arbitra-

tion of access denials and revocations, it would have

said so — at least in its commentaries on the proposed

and final rules if not in the text of the amended rule

itself. “Congress does not alter the fundamental details

of a regulatory scheme in vague terms or ancillary provi-

sions — it does not, one might say, hide elephants

in mouseholes.” Whitman v. American Trucking Ass’ns,

531 U.S. 457, 468 (2001). The same is true, or at least

should be true, of agencies subject to the Administrative

Procedure Act.

The silent rulemaking record is a valuable clue. After

a famous racehorse was stolen from a stable in the

4

(...continued)

access authorization issues in the collective bargaining pro-

cess’ ”), quoting 56 Fed. Reg. 19006, aff’d, 27 F. App’x 127 (3d

Cir. 2002).

18 No. 11-2423

middle of the night, Sherlock Holmes famously deduced

that if the thief had been a stranger, the watchdog

would have barked. See Arthur Conan Doyle, “Silver

Blaze,” in The Memoirs of Sherlock Holmes 7, 32 (Julian

Symons ed., 1950). In this case, the failure of the Com-

mission or even a single public comment to mention

the controversial issue of arbitral review in the 2009

rulemaking process “can be likened to the dog that did

not bark.” See Chisom v. Roemer, 501 U.S. 380, 396 n.23

(1991); see also Harrison v. PPG Industries, Inc., 446 U.S.

578, 602 (1980) (Rehnquist, J., dissenting) (“In a case

where the construction of legislative language such as

this makes so sweeping and so relatively unorthodox

a change as that made here, I think judges as well as

detectives may take into consideration the fact that a

watchdog did not bark in the night.”).

Whether one’s preferred metaphor features dogs and

horses or elephants and mice, the point remains the

same: when an agency intends to reverse a significant

and longstanding policy, courts can reasonably expect

it to say something about it. Here, the Commission

said nothing, and that says a lot. The regulation’s text is

at best ambiguous on the question of arbitral review,

and the rulemaking record demonstrates that the

amended version of section 73.56 does not bar third-

party review of unescorted access denial decisions.

No. 11-2423 19

C. Auer-Seminole Rock Deference and the Industry Interpre-

tation

As a final reason for barring arbitral review under the

amended regulation, Exelon relies on the industry docu-

ment, NEI 03-01 (Revision 3), and the Commission

staff’s approval of it. NEI 03-01 (Revision 3) is crystal-

clear in asserting that the amended regulation prohibits

arbitral or third-party review of access denials. Exelon

contends that the Commission adopted the NEI’s inter-

pretation as its own, so that the industry’s view is

entitled to strong deference under Bowles v. Seminole

Rock & Sand Co., 325 U.S. 410 (1945), and Auer v. Robbins,

519 U.S. 452 (1997). Under Auer-Seminole Rock deference,

an agency’s interpretation of its own validly issued reg-

ulation is “controlling . . . unless it is plainly erroneous

or inconsistent with the regulation.” Auer, 519 U.S. at 461.5

5

The Supreme Court’s application of Auer-Seminole Rock

deference has been “sporadic.” William N. Eskridge, Jr. &

Lauren E. Baer, The Contiuum of Deference: Supreme Court

Treatment of Agency Statutory Interpretations from Chevron to

Hamdan, 96 Geo. L.J. 1083, 1103-04 (2008) (finding that between

1984 and 2006, “Seminole Rock was employed in a mere 7.1%

of eligible cases” by the Supreme Court). Even so, the doctrine

has survived various attempts to inter it. Compare Talk

America, Inc. v. Michigan Bell Telephone Co., 131 S. Ct. 2254, 2266

(2011) (Scalia, J., concurring) (criticizing Auer-Seminole Rock

deference based on separation-of-power concerns), quoting

Montesquieu’s Spirit of the Laws and citing John F. Manning,

Constitutional Structure and Judicial Deference to Agency Inter-

pretations of Agency Rules, 96 Colum. L. Rev. 612 (1996), and

(continued...)

20 No. 11-2423

For three independently sufficient reasons, we conclude

that Auer-Seminole Rock deference does not apply here.

First, Auer-Seminole Rock deference is not appropriate

when there is “reason to suspect that the interpreta-

tion does not reflect the agency’s fair and considered

judgment on the matter in question.” Talk America, Inc.,

131 S. Ct. at 2261, quoting Auer, 519 U.S. at 462. Without

the agency’s own considered answer to the interpretive

question, nothing could deserve deference. See Chase

Bank, 131 S. Ct. at 882, citing Smith v. City of Jackson, 544

U.S. 228, 248 (2005) (O’Connor, J., concurring in judg-

ment) (noting that deference is not warranted when

“there is no reasoned agency reading of the text to which

5

(...continued)

Thomas Jefferson Univ., 512 U.S. at 525 (Thomas, J., dissenting,

joined by Stevens, O’Connor, and Ginsburg, JJ.) (criticizing

Auer on the ground that it rewards agencies that “issue

vague regulations”), with Talk America, 131 S. Ct. at 2260, 2262-

63 (majority opinion) (applying Auer), and Chase Bank USA,

N.A. v. McCoy, 131 S. Ct. 871, 880 (2011) (same). This court

previously commented that “[p]robably there is little left of

Auer.” Keys v. Barnhart, 347 F.3d 990, 993 (7th Cir. 2003).

While the doctrine raises serious separation-of-powers and

administrative law concerns, that pronouncement was either

an exaggeration or premature. Justice Scalia is willing to

“reconsider” Auer-Seminole Rock deference, Talk America, 131

S. Ct. at 2266 (Scalia, J., concurring), and the Court may soon

have an opportunity to do so. See Christopher v. SmithKline

Beecham Corp., 635 F.3d 383 (9th Cir. 2011) (rejecting Auer-

Seminole Rock deference to agency interpretation), cert. granted,

132 S. Ct. 760 (Nov. 28, 2011).

No. 11-2423 21

we might defer”). That is the case here, for Regulatory

Guide 5.66 says nothing about the availability of arbitral

review.

Nor did the Commission staff incorporate by reference

the NEI’s position merely by describing the industry

guidance as “an acceptable approach” that “meet[s] the

intent and substance of 10 C.F.R. § 73.56.” That boiler-

plate statement of tepid approval for the industry stan-

dards is too vague to qualify as the Commission’s own

authoritative interpretation for Auer-Seminole Rock pur-

poses. It is a long way even from a case in which the

agency has submitted an amicus brief that addresses

the interpretive question decisively. In Chase Bank, for

example, the Supreme Court gave Auer-Seminole Rock

deference to the Solicitor General’s interpretation

of a Federal Reserve Board regulation, even though

the Board’s staff seemed to have interpreted the reg-

ulation differently. 131 S. Ct. at 882. A unanimous

Court refused to give deference to the “Official Staff Com-

mentary” because it “largely replicates the ambiguity

present in the regulatory text, and therefore it offers

us nothing to which we can defer with respect to the

precise interpretive question before us.” Id. Similarly

here, the Commission staff’s regulatory guide does not

address “the ambiguity present in the regulatory text”

on the issue of arbitral review. Regulatory Guide 5.66

therefore “offers us nothing to which we can defer with

respect to the precise interpretive question before us.”

Id. Because the NEI’s interpretation — no arbitral re-

view — contradicts the Commission’s last clear state-

ment on the issue in its analysis of the 1991 final rule,

22 No. 11-2423

we have “reason to suspect that the interpretation does

not reflect the agency’s fair and considered judgment on

the matter in question.” See Auer, 519 U.S. at 462 (em-

phasis added).

Second, the Commission itself has disclaimed the use

of regulatory guides as authoritative or binding inter-

pretations of its own rules. Regulatory Guide 5.66 it-

self states that “guides are not substitutes for regulations

and compliance with them is not required” and that the

“NRC staff does not expect any existing licensee to use

or commit to using the guidance in this regulatory

guide.” U.S. Nuclear Regulatory Commission, Regulatory

Guide 5.66 (Revision 2) at 4 (Oct. 2011), available at

http://www.nrc.gov/read ing-rm /d oc-collections/reg-

guides/. Moreover, in the same chapter as the amended

access regulations, the Commission has provided: “Except

as specifically authorized by the Commission in writing,

no interpretations of the meaning of the regulations in

this part by any officer or employee of the Commis-

sion other than a written interpretation by the General

Counsel will be recognized as binding upon the Com-

mission.” 10 C.F.R. § 73.3. In other words, through both

the disclaimer and its formal regulations, the Commis-

sion itself has told the courts that the Regulatory Guide

does not deserve Auer-Seminole Rock deference. Because

Regulatory Guide 5.66 did not offer “authoritative

glosses” on the amended access regulation, it cannot

deserve Auer-Seminole Rock deference. Cf. United States

v. Raupp, No. 11-2215, 2012 WL 752389, at *3 (7th Cir.

Mar. 9, 2012) (treating Sentencing Commission’s applica-

No. 11-2423 23

tion notes as authoritative interpretations of Sentencing

Guidelines deserving deference).

Finally, Auer-Seminole Rock deference would not be

appropriate even if the staff had actually endorsed the

NEI’s interpretation. The APA does not permit the Com-

mission staff to contradict a prior interpretation

of the Commission itself. To promulgate a “legislative

rule,” an agency subject to the APA must comply

with the notice-and-comment rulemaking procedures

of 5 U.S.C. § 553. These procedural requirements do not

apply to “interpretive rules” or “general statements of

policy.” 5 U.S.C. § 553(b)(A). However, all “interpreta-

tions of general applicability” and “statements of gen-

eral policy” must be published in the Federal Register.

5 U.S.C. § 552(a)(1)(D). When the Commission con-

cluded that the 1991 access regulations permitted arbitral

review, it properly published this generally applicable

position in the Federal Register. To reverse this position

and prohibit arbitral review, perhaps the Commission

could have done so in the same manner — by announcing

the change in a “reasoned analysis” published in

the Federal Register. See Motor Vehicle Manufacturers

Ass’n v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 42

(1983) (“an agency changing its course by rescinding a

rule is obligated to supply a reasoned analysis for the

change beyond that which may be required when an

agency does not act in the first instance.”). Then again,

such a change might also be deemed significant enough

to constitute a substantive rule requiring full notice-and-

comment procedures. See Appalachian Power Co. v. E.P.A.,

208 F.3d 1015, 1024 (D.C. Cir. 2000) (“It is well-established

24 No. 11-2423

that an agency may not escape the notice and comment

requirements . . . by labeling a major substantive legal

addition to a rule a mere interpretation.”).

What the Commission clearly could not do was over-

rule its prior policy by having its staff issue an unpub-

lished guidance statement without any reasoned explana-

tion for the change. Such stealth rulemaking, which we

do not believe actually occurred here, would under-

mine democratic transparency and upset the settled

expectations of regulated parties. It would certainly be

unworthy of Auer-Seminole Rock deference, and it might

well flunk the “arbitrary-and-capricious” standard of

review under the APA. See FCC v. Fox Television Stations,

Inc., 556 U.S. 502, ___, 129 S. Ct. 1800, 1811 (2009) (“To be

sure, the requirement that an agency provide reasoned

explanation for its action would ordinarily demand

that it display awareness that it is changing position.

An agency may not, for example, depart from a prior

policy sub silentio or simply disregard rules that are still

on the books. And of course the agency must show

that there are good reasons for the new policy. . . .”)

(internal citation omitted); Wyeth v. Levine, 555 U.S.

555, 577 (2009) (declining to give deference to FDA’s

preamble to a final rule in part because it “reverses the

FDA’s own longstanding position without providing a

reasoned explanation”).

Because the Commission has not offered its own au-

thoritative view, Exelon is effectively arguing that we

give Auer-Seminole Rock deference to the industry’s inter-

pretation. For obvious reasons, we decline to do so.

No. 11-2423 25

Congress may delegate lawmaking authority to agencies.

There is room to debate the extent to which courts

should defer when agencies have delegated some inter-

pretive responsibility to their staffs.6 But agency staffs

certainly may not delegate responsibility to the parties

they regulate. See Gerber v. Norton, 294 F.3d 173, 185-86

(D.C. Cir. 2002) (“Nor may the agency delegate its re-

sponsibility to the regulated party.”). Of course, there is

no evidence that the Commission staff did so here, for,

as we have said, Regulatory Guide 5.66 does not

embrace the NEI’s interpretation as the Commission’s

own and comes with strong disclaimers. Auer-Seminole

Rock deference does not apply to NEI 03-01 (Revision 3)

or Regulatory Guide 5.66.

6

See Keys v. Barnhart, 347 F.3d 990, 993-94 (7th Cir. 2003) (“It is

odd to think of agencies as making law by means of state-

ments made in briefs, since agency briefs, at least below the

Supreme Court level, normally are not reviewed by the mem-

bers of the agency itself; and it is odd to think of Congress

delegating lawmaking power to unreviewed staff decisions.”).

In the context of an agency’s interpretation of a statute, now-

Justice Kagan has argued that courts should give Chevron

deference only when the “congressional delegatee” (generally,

the agency head) “takes personal responsibility for the deci-

sion.” See David J. Barron & Elena Kagan, Chevron’s

Nondelegation Doctrine, 2001 Sup. Ct. Rev. 201, 204. Applying

this limitation to Auer-Seminole Rock deference would ad-

vance the same values of administrative “accountability and

discipline in decision making.” Id. See also note 4, supra.

26 No. 11-2423

III. Conclusion

We R EVERSE the judgment of the district court and

R EMAND the case with instructions to enter summary

judgment in favor of Local 15.

3-29-12