Amicus Curiae Brief — Kisor v. Wilkie, 139 S. Ct. 657 (2018) (No. 18-15)

No. 18-15

—_—_—_—_—_—_——<——_—_—£_———>

In THE

Supreme Court of the United States

JAMES L. KISOR,

Petitioner,

Vv.

PETER O’ ROURKE,

ACTING SECRETARY OF VETERANS AFFAIRS,

Respondent.

On Petition for Writ of Certiorari

to the United States Court of Appeals

for the Federal Circuit

BRIEF OF AMICI CURIAE NATIONAL

MEGAN BERGE EVAN A. YOUNG

Amy CHAI

THOMAS J. WARD

NATIONAL ASSOCIATION

AMANDA ASPATORE

KATIE SWEENEY

NATIONAL MINING

ASSOCLATION

101 Constitution Ave. NW,

Scott YAGER

NATIONAL CATTLEMEN'S

BEEF ASSOCIATION

1275 Pennsylvania Ave., NW,

Ste 801

Washington, D.C. 20004

(202) 347-0228

Counsel for Amicus Curiae

National Cattlemen's Beef

DANIELLE

AMERICAN FARM BUREAU

PETER C. TOLSDORF

TABLE OF CONTENTS

Table of Authorities

Interest of Amici Curiae

Summary of Argument

Argument

I. Past Judicial Decisions Show That Auer

Significantly Harms Businesses And I[n-

ividuals

A. Auer promotes judicial abdication

and can generate crippling economic

consequences

B. Auer rewards agencies for promul-

gating ambiguous regulations ..............

D. Auer undermines the APA

Il. Auer’s Hidden Harms Are No Less Real ...

Conclusion

(i)

TABLE OF AUTHORITIES

Page(s)

CASES

Auer v. Robbins,

519 U.S. 462 (1997) passim

Belle Co. v. U.S. Army Corps of Eng’rs.

761 F.3d 383 (5th Cir. 2014)............ 17

Bowles v. Seminole Rock & Sand Co.,

325 U.S. 410 (1945) 2, 6,7, 10

Cape Hatteras Access Pres. All. vy. U.S.

Dep't of Interior,

344 F. Supp. 2d 108 (D.D.C. 2004) 20... ccccccccccccseeeneee 9, 10

Christopher v. SmithKline Beecham Corp.,

567 U.S. 142 (2012) 14, 16

Clark vy. United States Dep't. of Agric.,

537 F.3d 984 (8th Cir. 2008) .0..........cccccceceeseeeeeeeneeenveevee 15

Decker v. Nw. Envtl. Def. Ctr.,

BOB U.S. GOT (2018) 2..22.00cecceccorerserserees 6, 7, 8, 10

Kisai, Ine. vy. U.S. Food & Drug

dministrats

134 F. Supp. 3d 384 (D.D.C. 2015) .0......cccccceoceceneeeeeenees i)

Foster v. Vilsack,

F 3d eee el Get nccnernsenrvs-rassssssnntienansenesars 15

(ii)

iii

Foster v. Vilsack,

No. CIV. 13-4060-KES, 2014 WL

5512905 (D.S.D. Oct. 31, 2014)

Garco Const., Inc. v. Speer,

138 S. Ct. 1052 (2018)

Gutierrez-Brizuela v. Lamch,

834 F.3d 1142 (10th Cir. 2016)

Home Builders Ass’n of N. Cal. v. US.

Fish & Wildlife Serv.,

616 F.3d (9th Cir. 2010)

Marbury v. Madison,

5 U.S. (1 Cranch) 137 (1808)

New Hope Power Co. v. U.S. Army Corps

of Eng’rs,

746 F. Supp. 2d 1272 (S.D. Fla. 2010)

17

New Mezico Cattle Growers Ass'n v. U.S.

Fish & Wildlife Serv.,

248 F.3d 1277 (10th Cir. 2001)

11

Perez v. Mortgage Bankers Ass'n,

135 S. Ct. 1199 (2015)

16

Rapanos v. United States,

547 U.S. 715 (2006)

Rivera v. Peri & Sons Farms, Inc.,

735 F.3d 892 (9th Cir. 2013)

Rivera v. Peri & Sons Farms, Inc.,

No. 3:11-cv-00118-RCJ-VPC (D. Nev.

Dec. 15, 2015), EFC 182

15, 16

--- 16

iv

Rodriguez de Quiyas v.

Shearson/American Express, Inc.,

490 U.S. 477 (1989)

Talk Am., Inc. v. Mich. Bell Tel. Co.,

564 U.S. 68 (2011)

Thomas Jefferson Univ. v. Shalala,

512 U.S. 504 (1994)

United States v. Deaton,

332 F.3d 698 (4th Cir. 2008)

STATUTES

5 U.S.C. § 702

33 U.S.C § 1344(f)(1)(A)

REGULATORY AUTHORITIES

7 C.F.R. § 12.31(b)(2)i)

33 C.F.R. § 323.4(a)(1)

33 C.F.R. § 328.3(b)(2)

58 Fed. Reg. 45,008, 45,033-45,034 (Aug. 25,

1993)

70 Fed. Reg. 46,924, 46,943 (Aug. 11, 2005)

U.S. Army Corps of Engineers, Kohley

Farm Jurisdictional Determination,

13

U.S. Army Corps of Engineers, Van Noble

Farms Jurisdictional Determination,

13

v

U.S. Department of Labor, Field Assis-

tance Bulletin 2009-2, Travel and Visa

Expenses of H-2B Workers Under the

FLSA (2009)

OTHER AUTHORITIES

Brett M. Kavanaugh, Fixing Statutory

Interpretation, 129 Harv. L. Rev. 2118

15

(2016)

The Federalist No. 47 (James Madison)

IN THE

Supreme Court of the Anited States

No. 18-15

JAMES L. KISOR,

Petitioner,

Vv

PETER O’ ROURKE,

ACTING SECRETARY OF VETERANS AFFAIRS,

Respondent.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Federal Circuit

BRIEF OF AMICI CURIAE

NATIONAL ASSOCIATION OF HOME BUILDERS

ET AL. SUPPORTING PETITIONER

INTEREST OF AMICI CURIAE

Amici Curiae are a group of unrelated business asso-

ciations whose members are regularly affected by the

doctrine of Auer deference.' They are the National As-

sociation of Home Builders, American Farm Bureau

Federation, the National Association of Manufacturers,

' Pursuant to this Court’s Rule 37.6, amici affirm that no counsel for

a party authored this brief in whole or in part, that no such counsel

or party made a monetary contribution intended to fund the prepa-

ration or submission of this brief, and that no person or persons oth-

er than amici and their counsel made such a monetary contribution.

Amici affirm that counsel of record for all parties were timely noti-

fied of, and granted consent for, the filing of this brief.

2

National Cattlemen’s Beef Association, and the National

Mining Association.

Across the United States, the individuals and compa-

nies who form the membership of each of the amici find

themselves regulated by multiple federal agencies. Amz-

ci therefore have a substantial interest in ensuring that

agencies regulate only in a direct, clear, fair, and lawful

manner—and that courts do not defer to agencies when

deference is not due. This case presents an opportunity

for this Court to reconsider whether, or to what extent,

so-called “Auer deference” appropriately reflects the

comparative responsibility of agencies and the judiciary.

Auer deference has become an increasingly common

tool for agencies to alter their authority over a host of

subjects, ranging from the veteran’s benefits issues here

to every major regulatory category. Amici’s members

frequently have been affected when an agency reinter-

prets its regulations in a manner that fundamentally

changes settled understandings—and does so without

using the mechanisms that the Administrative Procedure

Act (APA) required for enacting those regulations in the

first place. While the comparatively rigorous standards

of notice-and-comment rulemaking do not eliminate the

risk of regulatory overreach, they do foster a meaningful

check on agency power by requiring public participation

and the development of an administrative record that fa-

cilitates judicial scrutiny of agency action.

But the principles of deference articulated in Bowles v.

Seminole Rock & Sand Co., 325 U.S. 410 (1945), and ex-

tended in Auer v. Robbins, 519 U.S. 452 (1997), provide

no such assurances. Those cases have enabled—and tac-

itly encouwraged—erosion of the judiciary’s role in as-

sessing executive assertions of authority. Amici respect-

fully urge the Court to grant the petition to reevaluate

the legitimacy of this doctrine.

3

1. The National Association of Home Builders

(NAHB) is a Washington, D.C.-based trade association

whose mission is to enhance the climate for housing and

the building industry. Chief among NAHB’s goals are

providing and expanding opportunities for all people to

have safe, decent, and affordable housing. Founded in

1942, NAHB is a federation of more than 700 state and

local associations. About one-third of NAHB’s approxi-

mately 140,000 members are home builders or remodel-

ers, and its builder members construct about 80 percent

of all new homes built each year in the United States.

The remaining members are associates working in close-

ly related fields within the housing industry, such as

mortgage finance and building products and services.

NAHB frequently participates as a party litigant and

amicus curiae to safeguard the constitutional and statu-

tory rights and economic interests of its members and

those similarly situated.

2. The American Farm Bureau Federation (AFBF),

headquartered in Washington, D.C., was formed in 1919

and is the largest nonprofit general farm organization in

the United States. Representing about six million mem-

ber families in all fifty states and Puerto Rico, AFBF’s

members grow and raise every type of agricultural crop

and commodity produced in the United States. Its mis-

sion is to protect, promote, and represent the business,

economic, social, and educational interests of American

farmers and ranchers. To that end, the AFBF regularly

participates in litigation, including as amicus curiae in

this and other courts, to give voice to its members.

3. The National Association of Manufacturers

(NAM), based in Washington, D.C., is the largest manu-

facturing association in the United States, representing

small and large manufacturers in every industrial sector

and in all fifty states. Manufacturing employs more than

twelve million men and women, contributes $2.25 trillion

4

to the U.S. economy annually, has the largest economic

impact of any major sector, and accounts for more than

three-quarters of all private-sector research and devel-

opment in the nation. The NAM is the voice of the manu-

facturing community and the leading advocate for a poli-

cy agenda that helps manufacturers compete in the glob-

al economy and create jobs across the United States.

4. The National Cattlemen’s Beef Association

(NCBA), based in Centennial, Colorado, is the largest

and oldest national trade association representing Amer-

ican cattle producers. Through state affiliates, NCBA

represents more than 175,000 of America’s farmers and

ranchers, who provide a significant portion of the nation’s

supply of food. NCBA works to advance the economic,

political, and social interests of the U.S. cattle business

and to be an advocate for the cattle industry’s policy posi-

tions and economic interests.

5. The National Mining Association (NMA), based in

Washington, D.C., is a national trade association whose

members include the producers of most of America’s

coal, metals, and industrial and agricultural minerals; the

manufacturers of mining and mineral-processing ma-

chinery, equipment, and supplies; and engineering and

consulting firms, financial institutions, and other firms

serving the mining industry. NMA often participates in

litigation raising issues of concern to the mining commu-

nity.

Amici echo petitioner's arguments that the Court

should grant the petition and definitively resolve the lin-

gering doubt about Awer’s continuing viability by either

abandoning or significantly narrowing the doctrine. The

concrete examples of Auer’s seen and unseen harms pro-

vided below do not replace the legal analysis undertaken

by petitioners and many others—they serve to illustrate

why that analysis justifies action.

5

SUMMARY OF ARGUMENT

The Court is well acquainted with the jurisprudential

arguments contesting Auer’s legitimacy, which alone jus-

tify further review. Amici, however, focus on Auer’s re-

al-world consequences, which remain largely hidden from

view despite deeply affecting millions of Americans.

Auer’s legitimacy is more than a theoretical debate.

When an agency invokes Awer—whether by name or

not—it claims the power to interpret the words of its own

regulations, regardless of prior positions or the public’s

prior understanding. The potential impacts of Auer’s

continued application are significant. Judicial decisions

memorialize a host of examples where casual reliance on

Auer determines enormous stakes. But reported cases

reflect only a fraction of Auer’s consequences, spanning

criminal liability, monetary costs, civil rights, a lawful

immigrant’s right to remain in the United States, or, in

petitioner’s case, a Vietnam veteran’s receipt of benefits.

Auer’s reach is felt most deeply during routine inter-

actions between the regulated community and federal

agencies. Those facing an agency’s questionable inter-

pretation of an arguably ambiguous regulation know (or

soon will learn) that Auer looms. They are quickly left

with little practical choice but to capitulate. Courts rein-

force that defensive posture by frequently illustrating

that challenges to an agency’s interpretation of its rules

are almost futile. Auwer’s greatest power lies not in judi-

cial decisions, therefore, but in dissuading individuals and

business from ever turning to the courts for relief.

The Court should grant the petition and definitively

resolve the lingering doubt about Auer’s continuing via-

bility by either abandoning or significantly narrowing it.

ARGUMENT

The Awer doctrine has long permitted federal agencies

to expand the scope of their regulatory and enforcement

6

power with little or no notice to (much less comment

from) the individuals and businesses most affected. Un-

der this doctrine, the Court defers to an agency’s inter-

pretation of its own regulations unless that interpretation

is plainly erroneous or flatly inconsistent with a regula-

tion’s text. Decker v. Nw. Envtl. Def. Ctr., 568 U.S. 597,

613 (2013). Stated differently, an agency’s interpretation

of its regulation will almost always prevail, even when it

is not the most obvious or most rational legal interpreta-

tion, if the agency can find any ambiguity in its original

language.” This means that the regulated community

cannot safely rely on the application of the obvious or

most legally sound interpretation in making significant

decisions that will affect their livelihoods.

Under Seminole Rock, this doctrine applied “exclu-

sively in the price control context and only to official

agency interpretations,” but as Awer exemplifies, the

Court “expanded it to many contexts and to informal in-

terpretations.” Garco Const. Inc. v. Speer, 138 8. Ct.

1052, 1052 (2018) (Thomas, J., dissenting from denial of

certiorari) (internal quotation marks and citation omit-

ted). Auer’s increasing grasp has engendered substan-

ee

tionable doctrinal foundation. Members of this Court,

like judges and scholars across the nation, accordingly

have expressed serious doubts about Auer’s continuing

legitimacy. Jd. at 1053 (“By all accounts, Seminole Rock

deference is ‘on its last gasp.’ Several Members of this

* A judge’s threshold determination about clarity versus ambigui-

ty whether in a statute or a reguiation—_can therefore have signifi-

cant consequences for individuals and businesses. See Brett M. Ka-

vanaugh, Fizing Statutory Interpretation, 129 Harv. L. Rev. 2118,

2158 (2016) (acknowledging in the Chevron context that “[the] simple

threshold determination of clarity versus ambiguity may affect bil-

lions of dollars, the individual rights of millions of citizens, and the

fate of clean air rules, securities regulations, labor laws, or the like”).

7

Court have said that it merits reconsideration in an ap-

propriate case.”) (citations omitted); Decker, 568 U.S. at

615 (Roberts, C.J., joined by Alito, J., concurring) (rec-

ognizing the “serious questions about the principle set

forth in [Seminole Rock and Auer|” and stating that “[i)t

may be appropriate to reconsider that principle in an ap-

propriate case”).

This skepticism is well justified. As illustrated in the

examples below—in many of which amici here partici-

pated—A ver is an experiment whose time has passed.

I. Past JUDICIAL DECISIONS SHOW THAT AUER SIGNI-

FICANTLY HARMS BUSINESSES AND INDIVIDUALS

Businesses and individuals routinely make decisions in

the face of uncertainty flowing from market forces, third-

party decisionmaking, and other variables. The Auer

doctrine has added an additional, unjustifiable, and espe-

cially problematic layer of uncertainty to this calculus for

those regulated by federal agencies. Because Auer not

only allows those agencies to alter their prior regulatory

interpretations without public notice or comment, but al-

so to retroactively enforce novel positions, its risks are

always attendant.

some risk, even hiring “an army of perfumed lawyers”

cannot eliminate the potential for fluctuating regulatory

interpretations or retroactive administrative adjudica-

tions that are dictated by “the shift of political winds.”

Gutierrez-Brizuela v. Lamch, 834 F.3d 1142, 1152 (10th

Cir. 2016) (Gorsuch, J., concurring). Those unable to re-

tain counsel are left in an even more precarious state.

This present reality is untenable and unfair. As aptly

stated by the late Justice Scalia, the very author of Auer

who came to see its flaws: “Enough is enough.” Decker,

568 U.S. at 616 (Scalia, J., concurring in part and dissent-

ing in part).

8

A. Auer promotes judicial abdication and can gen-

erate crippling economic consequences

The central critique of the Auer doctrine is its concen-

tration of power to both make and interpret the law into a

single branch of government. Talk Am., Inc. v. Mich.

Bell Tel. Co., 564 U.S. 68 (2011) (Scalia, J., concurring)

interpret it as well.”) (internal citations omitted); see also

Gutierrez-Brizuela, 834 F.3d at 1155 (Gorsuch, J.) (quot-

ing The Federalist No. 47: “The accumulation of all pow-

tyranny.”). This concentration of power invades what has

for over two centuries been “emphatically the province

and duty of the judicial department{:] to say what the law

is.” Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177

(1808); see also Decker, 568 U.S. at 616 (Scalia, J., con-

curring in part and dissenting in part) (“For decades, and

for no good reason, we have been giving agencies the au-

thority to say what their rules mean.”).

By merging these powers, Auer can result in the im-

position of serious economic harms on regulated entities,

if not at an agency’s whim, at least without an agency’s

careful or transparent analysis. And Auer allows for

such consequences to flow not from a court’s scrutiny of

the text of regulations to ensure consistent application

and the protection of reliance interests, but instead from

the judiciary yielding to novel interpretations by the

rules’ own drafters

The present case is notable because the panel below

was quite open about Auer being decisive. See Pet. App.

17a (maj. op.), 47a-48a (dissenting op.). Another case

9

that was comparably candid was Hisai, Inc. v. U.S. Food

& Drug Administration, 134 F. Supp. 3d 384 (D.D.C.

2015). The loss of potentially hundreds of millions of dol-

lars that would come from exclusive rights over a phar-

maceutical at issue in Eisai turned on the court’s conclu-

sion that strong arguments were “insufficient to compe!

the Court to cast aside the high level of deference that

Auer” requires, which it is “bound to follow ... until the

Supreme Court modifies the relevant standard.” /d. at

394 n.2, 395. Because the court detected some regulatory

ambiguity, id. at 394, it felt bound by Auer to disregard

arguments that the court itself credited as “substantial,”

“not without merit,” and otherwise probative, id. at 395-

397.

As Fisai illustrates, Awer can lead courts to suspend

meaningful scrutiny of agency action even when the

regulated community has the better argument and

stands to lose a great deal by virtue of the new agency

“interpretation” of its own regulation. Auer can also lead

to a related form of judicial abdication, where deference

to an agency’s interpretation of its regulation is essential-

ly a foregone conclusion.

For example, in Cape Hatteras, a district court applied

Auer and upheld the U.S. Fish and Wildlife Service’s des-

ignation of 126 linear miles of shoreline in North Carolina

as critical habitat for wintering piping plovers over chal-

lenges filed by two North Carolina counties. Cape Hat-

teras Access Pres. All. v. U.S. Dep't of Interior, 344 F.

Supp. 2d 108, 115-116 (D.D.C. 2004). The coastal coun-

ties, which depended on the combined annual revenue of

$386 million from tourism, sued the Service to preclude

the possibility of beach closures, expensive and time-

consuming consultation under the Endangered Species

* Piping plovers spend 10 months each year on migratory routes and

wintering grounds. Cape Hatteras, 344 F . Supp. 2d at 115.

10

Act, and adverse impacts on land use and recreational

and commercial uses of the designated areas. /d. at 116.

Plaintiffs contended that the Service’s adoption of

mean lower water lines and vegetation lines as bounda-

ries violated the agency’s regulations prohibiting the use

of “[e]phemeral reference points” (¢.g., trees and sand

bars) to define critical habitat for the plovers. /d. at 125-

126. The Service argued that the lines were not ephem-

eral because “though they may shift over time, they will

always exist.” /d at 126. Deeming “ephemeral” to be

ambiguous, the district court invoked Auer and ruled in

favor of the agency within the span of a single para-

graph."

Cases that apply Auer to the detriment of regulated

entities are not uncommon. As Chief Justice Roberts ex-

plained, “(questions of Seminole Rock and Auer defer-

ence arise as a matter of course on a regular basis.”

Decker, 568 U.S. at 616. This includes, of course, not just

blockbuster cases, but also “smaller” ones that affect in-

dividual livelihoods. For instance, the real-world implica-

tions of agency interpretations involving critical habitat

designations can be severe for cattlemen, who are forced

to fence off rivers—at great personal expense and incon-

* See also Home Builders Ass'n of N. Cal v. U.S. Fish & Wildlife

Serv., 616 F.3d 983, 991 (9th Cir. 2010). In 2002, the Service desig-

nated half a million acres in California and Oregon as a critica) habi-

tat for vernal pond crustaceans. /d at 991. In designating the criti-

cal habitat for vernal pond crustaceans, the Service described the

area, but vaguely stated “[a}ny such structures inadvertently left

inside critical habitat boundaries are not considered part of the unit.”

70 Fed. Reg. 46,924, 46,943 (Aug. 11, 2005). The designation was

confusing and affected land prices within the designated area, which

at first-glance would have appeared to be covered. Plaintiffs chal-

lenged the designation for being imprecise and failing to delineate a

“specific area,” as called for by the regulation. The Ninth Circuit

deferred to the agency, citing Auer. Jd. at 993.

11

venience—to prevent livestock from wading into critical

habitats. See New Mexico Cattle Growers Ass’n v. U.S.

Fish & Wildlife Serv., 248 F.3d 1277, 1284 n.3 (10th Cir.

2001) (“Due to the fencing, [a rancher] has been forced to

reduce the size of his herd . . . ,and] the fencing limits his

access to river water which causes his significant incon-

venience and financial harm.”). Similarly, home builders

working in critical habitat are often required to set aside

large percentages of their property to protect species—

property that could be developed into useable home lots.

The reluctance of judges to closely scrutinize agency

interpretations due to Auer, perhaps in fear of reversal,

has led to certainty of only one kind: a determined agen-

cy can likely get away with what it wants. Indeed, cases

rejecting claims of Auer deference are blue-moon cases

at best, signaling to the regulated public that there is not

much to be gained by trying.

B. Auer rewards agencies for promulgating am-

biguous regulations

A second well-known critique of the Auer doctrine is

that it creates perverse incentives:

[D]eferring to an agency’s interpretation of

its own rule encourages the agency to enact

vague rules which give it the power, in fu-

ture adjudications, to do what it pleases.

This frustrates the notice and predictability

purposes of rulemaking, and promotes ar-

bitrary government.

Talk Am., 564 U.S. at 69 (Scalia, J., concurring). In a

prior dissent joined by Justices Ginsburg, O’Connor, and

Stevens, Justice Thomas highlighted this problem with

respect to regulations promulgated by the U.S. Depart-

ment of Health and Human Services:

[The Secretary has merely replaced statu-

tory ambiguity with regulatory ambiguity.

12

It is perfectly understandable, of course,

for an agency to issue vague regulations,

because to do so maximizes agency power

and allows the agency greater latitude to

make law through adjudication rather than

through the more cumbersome rulemaking

process. Nonetheless, agency rules should

be clear and definite so that affected par-

ties will have adequate notice concerning

the agency’s understanding of the law.

Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 525

(1994) (54) (Thomas, J., dissenting). What agency

wouldn’t prefer the guarantee of flexibility tomorrow that

flows from studiously inserting ambiguity today?

Some agencies indeed have promulgated ambiguous

regulations with the purpose of expanding their jurisdic-

tion and with the practicai effect of imposing additional

costs and burdens on the individuals and businesses that

they regulate. See, eg., Talk Am., 564 U.S. at 69 (Scalia,

J., concurring) (noting that the Federal Communications

Commission “has repeatedly been rebuked in its at-

tempts to expand the [Telecommunications Act of 1996]

beyond its text, and has repeatedly sought new means to

the same ends.”). The U.S. Army Corps of Engineers

(Corps), too, has a long history of promulgating broad

and ambiguous regulations having the effect of expand-

ing its jurisdiction when not bound by the rigors of no-

tice-and-comment rulemaking. See Rapanos v. United

States, 547 U.S. 715, 725 (2006) (plurality op.).

The Fourth Circuit, for example, relied on Auer to af-

firm a district court’s remediation order requiring home-

owners who violated the Clean Water Act (CWA) to fill in

a ditch that they dug on their property and to restore it

to pre-violation conditions. United States v. Deaton, 332

F.3d 698, 701-702 (4th Cir. 2003). The homeowners had

dug the drainage ditch to obtain a sewage-disposal per-

13

mit for the construction of a residential subdivision,

which had previously been denied precisely because of

the “poorly drained” condition of the property. /d at

702. The homeowners deposited excavated dirt alongside

the ditch in regulated wetlands on their property. Jbid.

The government sued the homeowners for failing to ob-

tain a permit to discharge fill materials into “navigable

waters” under Section 404(a) of the CWA. /d at 704.

The government claimed jurisdiction because the home-

owners’ wetlands drained into a roadside ditch, which it

deemed to be a “tributary” over which it had control be-

cause the roadside ditch eventually flowed into the navi-

gable waters of the Wicomico River and Chesapeaxe Bay.

Id. at 708. The homeowners, on the other hand, contend-

ed that the term “tributary” in the regulation referred

not to a ditch, but only to a branch of water that empties

“directly into a navigable waterway.” Jd. at 710. Alt-

hough the Court acknowledged that the regulation in

question was ambiguous due to several possible reasona-

ble interpretations of the word “tributary,” it did not de-'

termine what the best or most rational reading of the

regulation was. Instead, it held for the government simp-

ly by applying Auer deference. Jd. at 711.°

° As a further example of how Auer leads to capricious outcomes, in

November 2016, two Corps districts completed jurisdictional deter-

minations related to two agricultural operations—one in New York

and the other in Illinois. Although each farm has isolated waterbod-

ies and wetlands approximately one mile from the nearest traditional

navigable water, the Buffalo District found no significant nexus, and

thus no jurisdiction, whereas the Chicago District found a significant

nexus. See Van Noble Farms Jurisdictional Determination, availa-

ble at https//www_irb.usace.army.mil/Portals/45/docs/regulatory/

JDForms/2016-11-Nov/JD-LRB-2016-01 169NY_.pdf?ver=2016-1 1-22-

101257-237; Kohley Farm Jurisdictional Determination, available at

https://www.lre.usace army .mil/Portals/36/docs/regulatory/jd/2016/

LRC-2016-833jd_pdf.

14

Reconsideration of Awer would allow the Court to rec-

tify this problem.

C. Auer causes unfair surprise and frustrates le-

gitimate reliance interests

Auer also lends itself to agency practices that threaten

to undermine principles of due process by causing “unfair

surprise” or otherwise “seriously undermin|ing] the prin-

ciple that agencies should provide regulated parties ‘fair

warning of the conduct [a regulation] prohibits or re-

quires.’” Christopher v. SmithKline Beecham Corp., 567

U.S. 142, 156 (2012) (citation omitted). To be sure, this

back the Awer doctrine in certain circumstances “when

there is reason to suspect that the agency’s interpreta-

tion does not reflect the agency’s fair and considered

judgment on the matter in question,” such as when an

interpretation “conflicts with a prior interpretation,” or

the interpretation is merely a “convenient litigating posi-

tion” or a “post hoc rationalization ... to defend past

agency action against attack.” Jd. at 155 (internal quota-

tions marks and citations omitted). In SmithKline, for

example, this Court refused to afford Auer deference to a

U.S. Department of Labor (DOL) interpretation of its

regulations that would “impose potentially massive liabil-

ity ... for conduct that occurred well before that inter-

pretation was announced.” /d. at 155-156.

Despite these novel safeguards, agencies have still

been able to shift interpretations and offer post hoc ra-

tionalizations under Auer to defend agency conduct to

the detriment of individuals and businesses. For in-

stance, in Foster v. Vilsack, the Eighth Circuit upheld the

U.S. Department of Agriculture’s (USDA’s) interpreta-

tion of its regulations classifying a 0.8-acre portion of Ar-

len and Cindy Foster’s farmland as wetland, which signif-

15

icantly affected the Fosters’ livelihood.© In making the

wetlands determination, the USDA examined a compari-

son site “in the local area” pursuant to 7 C.F.R.

§ 12.31(b)(2)\(ii) because the Fosters had altered or re-

moved vegetation by tilling. The agency’s local compari-

son site was a tract of land over 30 miles away. The Fos-

ters argued that “local area” meant adjacent or in close

proximity, but the district court deferred to agency

staff’s post hoc testimony interpreting “local area” to

mean anywhere within the 10,835 square-mile major land

resource area (larger than the Commonwealth of Massa-

chusetts) in which the Fosters’ farm was located. See

Foster v. Vilsack, No. CIV. 13-4060-KES, 2014 WL

5512905, at *11 (D.S.D. Oct. 31, 2014). The Eighth Cir-

cuit affirmed the district court’s decision. See Foster v.

Vilsack, 820 F.3d 330, 332-333, 335 (8th Cir. 2016).

Similarly, in Rivera v. Peri & Sons Farms, Inc., 735

F.3d 892 (9th Cir. 2013), the Ninth Circuit allowed a Fair

Labor Standards Act (FLSA) class action suit to proceed

against an employer for conduct that had been acceptable

to DOL just one year earlier. For decades, employers

were not required to reimburse temporary guest workers

for travel expenses until after their work was completed.

In 2009, under a new administration, the Department is-

sued contrary guidance that required employers to reim-

burse workers hired for the H-2B Program within the

first week of work. DOL, Field Assistance Bulletin 2009-

2, Travel and Visa Expenses of H-2B Workers Under the

FLSA 1 (2009). When Peri & Sons, relying on well-

established industry practice, failed to pay their workers

within the first week, they became the subject of a class

action suit.

* Persons determined to have manipulated wetlands into a “convert-

ed wetland” may be ineligible to receive farm program payments.

Clark v. United States Dep*t. of Agric., 537 F 3d 984, 985 (8th Cir. 2008).

16

At the Ninth Circuit, DOL filed an amicus brief argu-

ing that Peri & Sons was liable under the agency’s new

interpretation, even for expenses incurred before March

2009. Br. for Sec’y of Labor as Amicus Curiae in Supp.

of Plaintiffs-Appellants, Rivera v. Peri & Sons Farms,

Inc., T35 F.3d 892 (9th Cir. 2013) (No. 11-17365), EFC 13.

The Department reasoned that its new interpretation

“dlid] not create retroactivity concerns” because it “simp-

ly clarifie[d] what the law has always meant ....” /d. at

25. Rather than applying an impartial interpretation of

the DOL regulation, the Ninth Circuit deferred to the

Department’s “clarification.” See Rivera, 735 F.3d at

899. After this Court denied Peri & Sons’ petition for a

writ of certiorari, the company settled the class action

suit for $2.8 million. Rivera v. Peri & Sons Farms, Inc.,

No. 3:11-cv-00118-RCJ-VPC (D. Nev. Dec. 15, 2015),

EFC 182 ({Proposed] Order Granting Final Approval and

Collective Action Settlement).

This Court has sought to avoid such “convenient liti-

gating positions” and “post hoc rationalization|s|.”

SmithKline, 567 U.S. at 155. Yet the practice persists.

Granting this petition would allow the Court to reex-

amine the Auer doctrine and abandon or further limit it

to eliminate these improper practices.

D. Auer undermines the APA

Finally, Awer demonstrably offers an end-run around

the APA: it allows agencies to resolve ambiguity by rein-

terpreting regulations instead of using the APA’s notice-

and-comment requirements to alter them. See Perez v.

Mortgage Bankers Ass’n, 135 S. Ct. 1199, 1212 (2015)

(Sealia, J., concurring) (“By giving [regulations] Awer

deference, we do more than allow the agency to make

binding regulations without notice and comment. Be-

cause the agency (not Congress) drafts the substantive

rules that are the object of those interpretations, giving

17

them deference allows the agency to control the extent of

its notice-and-comment-free domain.”).

In one case, a sugarcane grower and renewable-ener-

gy company challenged Corps guidance on Prior Con-

verted Cropland (PCC). New Hope Power Co. v. U.S.

Army Corps of Eng’rs, 746 F. Supp. 2d 1272, 1284 (S.D.

Fla. 2010). Joint regulations of the Corps and EPA pro-

vide that PCC will not be regulated as among the “waters

of the United States” under the CWA. 33 C.F.R.

§ 328.3(b)(2). In the final rule promulgating the PCC

regulations, the agencies specifically stated that land will

retain its PCC status regardless of use, unless aban-

doned. 58 Fed. Reg. 45,008, 45,033-45,034 (Aug. 25,

1993). A Florida field office of the Corps, however, circu-

lated guidance providing that shifting PCC to a non-

agricultural use would immediately result in the land los-

ing PCC status. New Hope, 746 F. Supp. 2d at 1284.

Through that guidance, the Corps substantially expanded

the scope of land and water features deemed to be “wa-

ters of the U.S.,” and thereby its jurisdiction, without

complying with the APA’s notice-and-comment process.

New Hope challenged the guidance, and a district court

set aside the guidance because it constituted a substan-

tive rule issued without following required procedures

under the APA. [bid.

Despite this opinion from the New Hope district court,

the Corps continues to issue jurisdictional wetland de-

terminations on PCC lands that are used for non-

agricultural purposes, forcing landowners to accept those

determinations or file suit. See, eg., Belle Co. v. U.S.

Army Corps of Eng’rs, 761 F.3d 383, 397 (5th Cir. 2014)

(distinguishing New Hope and finding the jurisdictional

determination non-reviewable). In these circumstances,

owners of PCC lands must either accept the Corps’ juris-

dictional determination or expend significant resources to

litigate the same issue in a different forum.

18

Overcoming litigation fatigue in the face of such agen-

cy tenacity requires no small effort, and Auer paves the

way for agencies, if they so choose, to push beyond the

scope of their authorized power and insulate their actions

from judicial scrutiny.

Il. AUER’S HIDDEN HARMS ARE NO LESS REAL

The reported cases discussed above illustrate how Au-

er can unsettle expectations and shift power from the ju-

diciary to agencies. But these harms are the tip of the

iceberg and ignore the distinct harms to the regulated

community imposed by Auer’s chilling effect. In many of

the cases employing Auer deference, judges expressly

acknowledge Auer’s dubious foundation, but then sur-

render, as they must, to this Court’s precedent. See, e.g.,

Rodriguez de Quijas v. Shearson/American Express,

Inc., 490 U.S. 477, 484 (1989) (“the Court of Appeals

should follow the case which directly controls, leaving to

this Court the prerogative of overruling its own deci-

sions”).

Even when a regulated entity may have a powerful ar-

gument that Auer should not apply, dislodging the com-

mon judicial predisposition to simply defer under Auer is

a formidable challenge. Indeed, due to this hurdle, busi-

nesses often will not even explore the possibility of liti-

gating whether the agency’s interpretation of its own

regulation is plainly erroneous. By forestalling legiti-

mate challenges to agency action, Auer eliminates a cru-

cial check on administrative overreach, eroding the

APA’s clear intent that anyone “suffering legal wrong

because of agency action, or adversely affected or ag-

grieved by agency action within the meaning of a rele-

vant statute, is entitled to judicial relief thereof.” 5

U.S.C. § 702. It likewise erodes the judiciary’s role in

maintaining the separation of powers.

Amic7’s members are routinely subjected to an ever-

19

changing web of regulatory interpretations strewn

throughout the Federal Register, policy directives,

guidelines, memoranda of understanding, circulars,

handbooks, and informal statements from agency staff.

This has produced substantial uncertainty within the

regulated community as agencies continue to promulgate

regulations that they can interpret (or re-interpret) later.

And this has forced amici’s members to take risks that

should not be required.

For example, even though there is a statutory exemp-

tion for certain farming and ranching activities that is

reflected in CWA regulations, many of amici’s members

are forced to obtain permits under Section 404 of the

“WA to discharge dredge or fill materials into waters of

the U.S. while engaging in such activities or face the risk

of significant legal and financial consequences.’ Mem-

bers of this Court have recognized that the burden asso-

" The statute exempts “normal” farming or ranching activities,

“such as plowing . . . [or] cultivating ....” 33 U.S.C § 1344(f)(1)(A);

33 C.F.R. §§ 323.4(a)(1)(ii)(A) (“Cultivating means physical methods

of soil treatment employed within established farming [or] ranch-

ing . .. .”); 323.4(a)\(1)Gi)(D) (“Plowing means all forms of primary

tillage ... for the breaking up, cutting, turning over, or stirring of

soil to prepare it for the planting of crops.”). The term “normal” is

not defined, but for something to qualify as “normal” farming, silvi-

culture and ranching activity, it must be part of an “established (i.e.

on-going)” operation and cannot bring an area into a new “use.” 33

C.F.R. § 323.4(aX(1Xii).

To this day, federal regulations are unclear about what constitutes

an “established (i.e. on-going)” operation and on how far back in time

the operation must be “established.” As a result, farmers and ranch-

ers continue to face enforcement actions and hefty civil fines if they

fail to obtain a CWA Section 404 permit. Many do not know if they

are required to do so. And if the Corps decides to pursue an en-

forcement action, many farmers and ranchers are likely to seek

quick settlements rather than resist because their economic liveli-

hood depends on a successful grazing or growing season.

20

ciated with obtaining these permits “is not trivial,” as the

“Corps of Engineers |] exercises the discretion of an en-

lightened despot” and the “average applicant for an indi-

vidual permit spends 788 days and $271,596 in completing

the process.” Rapanos, 547 U.S. at 721."

Over the years, EPA and the Corps have interpreted

what qualifies as “normal” or a “new use” not by giving a

clear (if multifaceted) definition after careful analysis and

public comment, but through a series of regional manu-

als, circulars, and—troublingly—enforcement actions.

The agencies have been threatening farmers and ranch-

ers with potentially ruinous civil and criminal penalties

for plowing their own lands and switching between

ranching and farming activitirs.

The same is true across the business world, where

time-is-money and profit margins can be razor thin.

Challenges are almost certainly doomed to fail, so it is

hardly surprising that most entities simply opt not to

fight. A perceived willingness to rigorously apply Auer

communicates that courts are unwilling to ensure that

laws are applied as written. This Court should reconsid-

er Auer, direct lower courts to refuse deference when an

agency seeks to exploit its own regulations’ vagueness,

and require agencies to adhere to the written law unless

and until a proper and rigorous new regulation is adopted

under the APA.

CONCLUSION

The petition for a writ of certiorari should be granted.

* In Rapanos, regulators informed the plaintiff that the wetlands he

backfilled were “waters of the United States,” and that his action

required a permit. Twelve years of criminal and civil litigation en-

sued—“for backfilling his own wet fields, Mr. Rapanos faced 63

months in prison and hundreds of thousands of dollars in criminal

and civil fines.” Rapanos, 547 U.S. at 721.

MEGAN BERGE EVAN A. YOUNG

JARED WIGGINTON Counsel of Record

ADAM DEC BAKER Borts L.L.P

BAKER Borrts L.L.P 98 San Jacinto Blvd., Ste 1500

1299 Ave, NW = Austin, TX 78701-4078

Wi D.C. 20004-2400 = (512) 322-2500

(202) T7700 evan. young@bakerbotts.com

Counsel for Amici Curiae

Amy CHAI Scott YAGER

THOMAS J. WARD NATIONAL CATTLEMEN’S

NATIONAL ASSOCIATION OF BEEF ASSOCIATION

HOME BUILDERS 1275 Pennsylvania Ave, NW,

1201 15th St. NW Ste 801

}+—— 1) pile Wi D.C. 20004

(202) 347-0228

Counsel for the National As- Counsel for the National

sociation of Home Builders Cattlemen's Beef Association

AMANDA ASPATORE DANIELLE QUIST

KATIE SWEENEY AMERICAN FARM BUREAU

NATIONAL MINING FEDERATION

ASSOCIATION 600 Maryland Ave., SW, Ste

August 1, 2018

PETER C. TOLSDORF

NATIONAL ASSOCIATION OF

MANUFACTURERS CENTER

FOR LEGAL ACTION

733 10 St., NW, Ste 700

Ww D.C. 20001

(202) 637-3133

Counsel for the National As-

sociation of Manufacturers