DC Circuit Denies Petition for Rehearing in Case Involving the Best Interpretation, Meaning no Deference (5/9/23)

The D.C. Circuit denied the petition for rehearing en banc in Guedes v. ATF, 45 F.4th 306 (D.C. Cir. 8/9/22), DCCir here and GS here, pet. reh. den. ___ F4th ___ (D.C. Cir. 5/2/23), DCCir here and GS here. In the panel decision (45 F.4^th 306), the question was “whether the Bureau [ATF] had the statutory authority to interpret ‘machine gun’ to include bump stocks;” the Court’s answer was: “Employing the traditional tools of statutory interpretation, we find that the disputed rule is consistent with the best interpretation of “machine gun” under the governing statutes.” In other words, the panel appears to have resolved the case at Chevron Step One where there is no deference, not even getting to Step Two (although it could have potentially been resolved at Step Two by applying the agency best interpretation, where there is also no deference).

On the petition for rehearing en banc, the Court denied the petition without explanation by the full panel. Judge Wilkins wrote an opinion, joined by Judge Millett, concurring in denial of the petition. Judges Henderson and Walker wrote separate dissenting opinions. Judge Henderson’s opinion referred to her concurring in part and dissenting in part in the panel opinion. Judge Walker wrote a political screed with ample conservative/libertarian rhetoric but without, in my mind, serious consideration of how the country should interpret laws where the language of the statute, whatever it's original meaning, if sufficiently copious to cover the situation within the purpose of the statute. (There are huge debates about all of this, but I use examples in two contexts: (1) When the Declaration of Independence declared that all men are created equal, are or should we be locked into meaning of free white men with property?; or (2) when the Bible says eye for an eye, are we now locked into that concept as justice?)

Looking to a larger issue not directly addressed by the opinions concurring and dissenting from denial of the petition, I have addressed the key point that a best interpretation of statutory text is not in need of deference. Of course, if that best interpretation is determined at Chevron Step One, the interpretation is applied because there is no ambiguity in the statute that could permit deference, required to proceed to Step Two. Further, if that best interpretation is the agency interpretation determined at Step Two when competing interpretation(s) are considered, the agency interpretation is the best interpretation and not subject to real deference. Only where, at Step Two, the agency interpretation is the less persuasive interpretation to another interpretation is there any possibility of deference and then only when the Court applies the agency interpretation even though it thinks there is a better interpretation.

So, to put this in the expanded Chevron Steps where there is no deference to agency interpretations:

Step Zero – Determine that the Chevron Framework does not apply because of the Major Questions Doctrine. There is no deference at Step Zero.

Step One – Vigorous application of the Tools of Statutory Construction, the Court to determine that there is no ambiguity in the statute to permit proceeding to Step Two. There is no deference at Step One.

Step Two –

1. Determine that, among the reasonable interpretations proffered within the scope of the statutory ambiguity, the agency interpretation is reasonable and the best among other reasonable interpretations. The Court applies the agency interpretation. There is no deference here. (Recognizing this phenomenon of citing Chevron to apply to an agency interpretation that is reasonable and also the best is critical in determining how often courts really defer to agency reasonable regulations; my research suggests that many, probably most, times a Court applies an agency reasonable interpretation at Step Two it is actually applying the interpretation it thinks the best, whether it says so or not.)
2. Determine that the agency interpretation is unreasonable. The Court does not apply the agency interpretation. There is no deference here.
3. Determine that the Court is in equipoise as to whether the agency interpretation is the best interpretation. A Court might flip a coin (or have some other tie-breaker) or, more likely, apply the agency interpretation. There is no deference here because the Court is not deferring to a less persuasive agency interpretation. (Many good judges such as Scalia and Gorsuch deny that equipoise really occurs in statutory interpretation.)
4. Determine that the agency interpretation is less persuasive than some other reasonable interpretation. The Court applies the reasonable agency interpretation. There is deference here. (The problem is that my analysis of two one-year data sets prepared by others of Courts of Appeals appearing to apply Chevron indicates not one instance where Courts of Appeals articulated real deference—actually applying an agency regulation when it found another better interpretation.

If you listen to conservative / libertarian pundits (including  those in robes, like Judge Walker in the dissenting opinion on denial of the petition for rehearing in Guedes), you would think that in every opinion where Chevron is mentioned or even could have been mentioned there is real deference (Step Two #4). The truth is that, for most cases involving agency regulations’ interpretation of statutes (yes those are interpretive regulations), a real issue (ambiguity / reasonable agency interpretation) does not even get close to real deference in Step Two #4 above. We see Chevron issues often in politically charged interpretations where the right or left think the administrators set about to foist an interpretation on the regulated community that is not the best interpretation when they knew it was not the best interpretation. By not the best, they knew based on their own expertise as administrators of the regulatory scheme conferred by Congress was not the best interpretation. Implicit in the latter statement is that they knew and deliberately set about to screw the members of the regulated community. The claim is more political than real designed to stir their respective political communities which includes some judges and Justices. The claim of agency skullduggery is just wrong.

That is not how agency actors interpret statutes. They are smart, ethical, work hard to get it right based on applying all their expertise and experience which Skidmore, which is not deference, requires courts to consider at Step One and Step Two. Agency Actors may get it wrong but not often; and they certainly rarely have political motivations in by far the overwhelming majority of statutory interpretations in regulations.

I personally know that is true with Treasury regulations. It is also true with IRS subregulatory guidance which is not claimed and probably does not qualify for Chevron deference. Focusing on Treasury regulations, those who have worked in this area know that Treasury regulations interpreting statutes are many, many thousands of pages long (assuming they are in hard copy format). By far the major part of these regulations would stop at least by Chevron Step One with approval of the agency interpretation. Only a relative few would even get to Step Two and even when they do, rarely is the agency interpretation actually deferred to in Step Two #4 above. 

Further on these issues framed by the Guedes panel decision and the denial of the petition for rehearing (in reverse chronological order)

• Chevron Deference: Much Ado About Not Much (Federal Tax Procedure Blog 8/15/21), here.
• § 7805(b) Time Limits Do Not Apply to Agency Best Interpretations of the Statute (Federal Tax Procedure Blog 8/11/22), here.
• Important DC Circuit Opinion That Chevron Deference is Irrelevant if Agency Interpretation is Best Interpretation (Federal Tax Procedure Blog 8/9/22; 8/15/22), here.