Garland v. Cargill-Comments on Briefs and Oral Argument (2/29/24)

Yesterday, the Supreme Court held oral argument in Garland v. Cargill (No. 22-976 docket here, oral argument audio here, and transcript of oral argument here). The ultimate issue is whether “bump stock” devices are within the definition of “machinegun” in the National Firearms Act of 1934, as amended, and the Gun Control Act of 1968. Bump stocks were not devised when the statute was enacted and there is no definitive interpretation of the statutory term “machinegun” that includes or excludes bump stocks. Hence, the job of the regulator or the court in interpreting or applying the term is to determine whether, within the fair bounds of interpretation, the term includes or excludes bump stocks.

At first glance, this issue might call for the application of Chevron deference. Recall that Chevron deference requires two steps—

• Step One where the Court determines whether, on the text alone using proper tools of statutory interpretation, the text resolves the issue. If the text does, the interpreted text applies and there is no deference. If the text does not resolve the interpretive issue and the text is said to be ambiguous.
• Step Two, reached only if Step One does not resolve the interpretive issue, where the court determines whether the agency interpretation is reasonable (also called permissible). If so, the agency interpretation will prevail. Note that I said “prevail” rather than that the agency interpretation receives deference which is the standard Chevron Step Two formulation. Deference is only meaningful when the agency interpretation is not the best interpretation. If, within the zone of ambiguity in the statutory text, the agency interpretation is the better interpretation or even in equipoise as to the best interpretation, applying the agency interpretation is not deference.  See e.g., What is the Best Interpretation for Purposes of Determining a Not Best Interpretation for Chevron Deference? (Federal Tax Procedure Blog 10/21/22; 11/8/22), here.

In the facts of Cargill, the agency interpretation of “machinegun” to include bump stocks was made in the Trump administration in a notice and comment regulation adopting an “interpretive” rule. (I will address the interpretive characterization for the regulation below.) In adopting the regulation, the agency relied on Chevron. In the litigation culminating in Cargill in the Supreme Court, the agency did not rely on Chevron but rather asserted that the interpretation was the best interpretation. (Conceptually, the best interpretation can be determined at Step One or at Step Two (if the agency interpretation is the best in the zone of ambiguity); so it is unclear which Step the government’s reliance on the best interpretation applies.)

At oral argument, apparently because the government was not relying on deference or perhaps the uncertain future of Chevron deference, Chevron or deference was not mentioned. The argument simply addressed whether the text “machinegun” resolved the issue.

As I mentioned, and all readers of this blog or even good newspapers know, the future of Chevron deference is uncertain. So, I will not dwell further on Chevron and deference in this blog. I will mention certain related issues that were addressed in the parties’ briefs (excluding the amicus briefs) or in oral argument.

1. There has been a long-running issue of whether the category of “interpretive” regulation adopted with notice and comment still exists. For my longer, perhaps rambling, discussion of that issue, see The Report of the Death of the Interpretive Regulation Is an Exaggeration (last revised 4/8/22), posted on SSRN, here. Both in oral argument and in the briefs that interpretive characterization came up:

• Gov’t Merits Opening Brief here at p. 43 (bold-face supplied by JAT): 

First, this case presents a pure question of statutory interpretation: Whether bump stocks satisfy the definition of “machinegun” in 26 U.S.C. 5845(b). See Pet. I. ATF has set forth its position on that question in an interpretive rule, but the government does not contend that the rule has the force and effect of law or that ATF’s interpretation is entitled to deference. See Pet. 30. Accordingly, neither ATF’s changes in position nor any asserted defects in its explanation for those changes have any bearing on the Court’s resolution of the question presented. 

• Cargill’s Merits Answering Brief here (bold-face supplied by JAT):

The canon of constitutional avoidance should also lead this Court to reject ATF’s interpretive rule because it purports to declare what 26 U.S.C. § 5845(b) has always meant. ATF’s construction retroactively makes felons out of the hundreds of thousands of Americans who possessed or transferred bump stocks before the final rule had declared them “machineguns,” even though ATF had repeatedly declared these devices lawful for more than a decade and issued at least 15 classification letters to that effect. See supra at 7–8 & note 6. Allowing an agency to retroactively expand the scope of a criminal statute in these circumstances would (at the very least) [*50] present serious constitutional questions under the due process clause. See Bouie v. City of Columbia, 378 U.S. 347, 353 (1964). So ATF’s construction of 26 U.S.C. § 5845(b) should be rejected even if the Court finds it textually permissible. See Edward J. DeBartolo Corp. v. Fla. Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575 (1988) (constitutional-avoidance canon prevails over agency-deference doctrines) 

• Gov't Merits Reply Brief here (at p. 20, bold-face supplied by JAT):

4. Respondent next argues (Br. 48-50) that this Court does not owe deference to ATF’s interpretation under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). But as the government has explained (Br. 43), it does not seek any such deference here because ATF’s regulation is not a legislative rule carrying the force and effect of law; instead, it is simply an interpretive rule announcing ATF’s understanding of the statute. That should be the end of the matter. See HollyFrontier Cheyenne Refining v. Renewable Fuels Ass’n, 141 S. Ct. 2172, 2180 (2021) (“‘[T]he government is not invoking Chevron.’ * * * We therefore decline to consider whether any deference might be due its regulation.”) (citation omitted). 

• Oral Argument here, pp. 19-22 (bold-face supplied by JAT; Mr. Fletcher is the lawyer from the Solicitor General's office).

JUSTICE GORSUCH: Mr. Fletcher, on -- on that score, can we just step back a minute?  I can certainly understand why these items should be made illegal, but we're dealing with a statute that was enacted in the 1930s, and through many administrations, the government took the position that these bump stocks are not machineguns.

And then you -- you adopted an interpretive rule, not even a legislative rule, saying otherwise that would render between a quarter of a million and a half million people federal felons and not even through an APA [*20] process they could challenge, subject to 10 years in federal prison, and the only way they can challenge it is if they're prosecuted, and they may well wind up dispossessed of guns, all guns in the future, as well as a lot of other  civil rights, including the right to vote. 

MR. FLETCHER: * * *

After the Las Vegas shooting, the deadliest shooting in our nation's history, I [*21] think it would have been irresponsible for the ATF not to take another closer look at this  prior interpretation, which was reflected in a  handful of classification letters, and to look at the problem more carefully.

And having done that, I think it would have been irresponsible if the ATF concluded, as it did, that these devices are prohibited under the best reading of the statute for the ATF not to fix its errors.

JUSTICE GORSUCH: Then why not do a legislative rule properly and in which -- I -- I know you did notice and comment, but it was an interpretive rule, and an interpretive rule you can more or less just issue and you don't even have to put it in the Federal Register. I mean, maybe you do in some circumstances, but not all. 

 JUSTICE GORSUCH: Well, I understand that, but in your reply brief, you say, oh,  don't touch that because that's not before us. That's not part of the QP. And in an interpretive rule, you don't get an APA challenge. You get -- you get a criminal prosecution against you is what you get.

MR. FLETCHER: So I -- I guess I disagree with that on a number of levels. First, I would think it would be better for those who are concerned about administrative power that we acknowledge this is an interpretive rule..

2. At one point, Justice Gorsuch chides the Mr. Fletcher because ATF adopted the rule as an interpretive rule rather than a legislative rule. Thus, in oral argument p. 19, Justice Gorsuch says "you adopted an interpretive rule, not even a legislative rule," And again on p. 20, Justice Gorsuch says "Then why not do a legislative rule properly." Of course, the reason is that Congress had not given ATF the authority to adopt a legislative rule.

3. In Cargill’s Merits Brief, the following is said (p. 49, bold-face added by JAT and footnote omitted):  

ATF’s interpretation of 26 U.S.C. § 5845(b) turns on legislative history rather than “text, structure, history and purpose,” and the rule of lenity should trump consideration of legislative history whenever agencies or courts construe a statute with criminal consequences. Ordinary citizens do not have access to the 1934 testimony of a gun lobbyist, and if ATF can use legislative history of that sort to resolve the meaning of a criminal statute then the rule of lenity will no longer ensure that citizens receive fair notice before being subjected to criminal punishment.

What caught my eye was the bold-faced text referring to some legislative history (“testimony of a gun lobbyist”). This type of “secret” legislative history exists and apparently was used by the Government in Cargill.

When I was with DOJ Tax Appellate in the early 1970s, I handled Kansas Sand and Concrete, Inc. v. Commissioner, 462 F. 2d 805 (10^th Cir. 1972), here. My reviewer on the case was Ernest J. Brown, a giant in the tax law, formerly Harvard Law Professor for many years. I will recount an anecdote of that briefing below, but for now want to point out that, in our brief here p. 16 we referred to (pp. 15-16):

9 Confidential Senate Hearings before the Committee on Finance, 74th Cong., 2d Sess., on the Revenue Act of 1936, pp. 11 (line 27 to bottom of page), and 41-43 (line 40, p. 41 to line 17, p. 43) n4
   n4 These hearings have not been released. The Justice Department has, however, obtained permission from the Senate Finance Committee  to cite from the hearings. For the convenience of the Court and opposing·  counsel, the cited portions are reproduced in the appendix, infra. [the cited portions are reproduced at pp. 33-36]

The Kansas Sand opinion does not cite the confidential hearings.

The point is that for this type of confidential legislative history, the government may know about it but the taxpayer (citizen) may not. Apparently, citing it and including the relevant part in the Appendix made little difference, because the court did not cite it. (But, maybe it did make an unstated marginal difference.)

An interesting (to me) anecdote is from Professor Brown’s review of my draft brief here. A significant part of the argument in the draft brief was based on Kenneth J. Seplow, Acquisition of Assets of a Subsidiary: Liquidation or Reorganization?, 73 Harv. L. Rev. 484 (1960). In that article, in the opening footnote, Seplow says “The author wishes to acknowledge his gratitude to Professor Ernest J. Brown of the Harvard Law School for his encouragement and advice in the preparation of the article.”

So, when Professor Brown was assigned to review my Kansas Sand brief, I was encouraged. But, Professor Brown’s review did not go as I expected. He started out early by dismissing Seplow’s arguments, saying “I never agreed with Seplow’s arguments.” (I think that is verbatim because it was short and memorable.) With that ego deflation, he then sent me off on multiple quests to locate things from the mid-1930s legislative history that his prodigious memory told him was there. After multiple tries, I could not find most of what he thought he remembered from the legislative history. In the end, we made basically the same argument—a subsidiary-into-parent state-law merger was a liquidation for tax purposes, but for different reasons. Professor Brown did let me get the Seplow article into footnote  3 (spanning pp. 12-13).