Fifth Circuit Affirms Agency Best Interpretation of Statute, thus Not Applying Chevron (12/20/21; 12/15/22)

On 12/21/21 and 12/15/22, significant additions by adding paragraphs 3, 4 and 5 to JAT Notes below.

In Cargill v. Garland, 20 F.4th 1004 (5th Cir. 12/14/21), CA 5 here and GS here,  the Fifth Circuit panel sustained the ATF regulations interpretation of the statutory term “machinegun” to include bump stocks.  Judge Higginson for the unanimous panel reasoned that the interpretation was the “best” interpretation.  On that holding, Chevron deference was irrelevant, for as the panel noted (p. 1009 n. 4):

   n. 4 Cargill also argues that if the statute is ambiguous, the Bump Stock Rule is not entitled to deference under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), reasoning primarily that Chevron does not apply to cases involving criminal statutes and that ATF explicitly waived Chevron in the district court. Because we conclude that bump stocks are "machinegun[s]" under the best interpretation of the statute, we do not address whether the Rule is entitled to deference. See Edelman v. Lynchburg Coll., 535 U.S. 106, 114 (2002) (explaining that "there is no occasion to defer and no point in asking what kind of deference, or how much" would apply in cases where an agency has adopted "the position we would adopt even if there were no formal rule and we were interpreting the statute from scratch")

In my recent update to the article titled The Report of the Death of the Interpretive Regulation Is an Exaggeration (see SSRN here), I presented this phenomenon as a category (which I call Category 3) where courts do not defer to the agency interpretation. I presented this category with others to show the limited application of Chevron deference.  That discussion in the article is presented in the Postscript to the article at pp. 118–124, which starts here; the Postscript only may be viewed and downloaded here.

The panel noted the state of play on the bump stock rule at the time of the decision as (p. 1006 n. 2):

   n2 Three other circuits have also rejected challenges to the Bump Stock Rule. In April 2019, the D.C. Circuit denied a motion for a preliminary injunction against the Rule, concluding that the statutory definition of "machinegun" is ambiguous and that the Rule is entitled to Chevron deference. Guedes v. Bureau of Alcohol, Tobacco, Firearms & Explosives, 920 F.3d 1 (D.C. Cir. 2019) (per curiam). One judge dissented, arguing that the Rule contradicts the statute's plain language. Id. at 35 (Henderson, J., dissenting). The Supreme Court denied certiorari, 140 S. Ct. 789 (2020), though Justice Gorsuch issued a statement arguing that the Rule is not entitled to Chevron deference. Id. at 789-91 (Gorsuch, J., statement regarding denial of certiorari). In May 2020, the Tenth Circuit denied another motion to preliminarily enjoin the Rule, for similar reasons as the D.C. Circuit. Aposhian v. Barr, 958 F.3d 969 (10th Cir. 2020). Four months later, the Tenth Circuit vacated that opinion and granted a rehearing en banc, 973 F.3d 1151 (10th Cir. 2020) (en banc), but it subsequently reversed course, vacating the order granting rehearing en banc and reinstating the original panel opinion. Aposhian v. Wilkinson, 989 F.3d 890 (10th Cir. 2021) (en banc). Five judges dissented from the decision to vacate the en banc order. Id. at 891 (Tymkovich, C.J. dissenting, joined by Hartz, Holmes, Eid, and Carson, JJ.). The plaintiff in that case has filed a petition for certiorari in the Supreme Court. Petition for Writ of Certiorari, Aposhian v. Garland, No. 21-159 (U.S. Aug. 4, 2021). Finally, in March 2021, a Sixth Circuit panel granted a preliminary injunction against the Rule, holding that the Rule is not entitled to Chevron deference and is not the best interpretation of the NFA. Gun Owners of Am., Inc. v. Garland, 992 F.3d 446, 450 (6th Cir. 2021). However, the Sixth Circuit vacated that decision, 2 F.4th 576 (6th Cir. 2021) (en banc), and an evenly divided en banc court affirmed the district court's judgment upholding the Rule. No. 19-1298, ___ F.4th ____, 2021 WL 5755300 (6th Cir. Dec. 3, 2021) (en banc); see Gun Owners of Am. v. Barr, 363 F. Supp. 3d 823, 826 (W.D. Mich. 2019).

The Court also held (pp. 1013-1014) that, since its best interpretation of the term “machinegun” did not present an ambiguity, the rule of lenity did not apply.

JAT Notes:

1. The panel invokes a process to notify Congress of the potential need for legislation.  On p. 1014 n. 11, the Court says:

   n11 Though we conclude that the Bump Stock Rule offers the best interpretation of the NFA's definition of "machinegun," Congress may wish to further clarify whether various novel devices qualify as machine guns for purposes of federal law. In accordance with the statutory opinion transmission project, our Opinion Clerk will notify Congress that this opinion "bears on technical matters of statutory construction." See Robert A. Katzmann & Russell R. Wheeler, A Mechanism for "Statutory Housekeeping": Appellate Courts Working with Congress, 9 J. App. Prac. & Process 131 (2007) (describing the history and purpose of the statutory opinion transmission project); Marin K. Levy & Tejas N. Narechania, Interbranch Information Sharing: Examining the Statutory Opinion Transmission Project, 108 Cal. L. Rev. 917, 921 (2020) (encouraging "federal appellate judges to send more opinions to Congress").

I link the articles and highly recommend them to readers of this blog interested in process.  See also Project on Statutory Construction Promotes Inter-Branch Communications (U.S. Courts 9/10/15),here (with a table of law categories submissions).

2.  As I noted in my FTPB entry on the publication of the article in SSRN, the SSRN publication would be the final one.  See Final Update of Article on APA, Legislative and Interpretive Regulations, and Chevron (12/16/21), here.  I have not lost interest in the subject, however, so I have decided that I would post on the FTPB items of interest that update the presentations in the article and will use the tag Interp Reg Article Update for such updates.  This blog is such an update.  I update fn 463 on p. 118 (carrying over to p. 119) so that as updated it should read as follows (with changes in red):

   n463 E..g., Edelman v. Lynchburg Coll., 535 U.S. 106, 114 (2002) (explaining that "there is no occasion to defer and no point in asking what kind of deference, or how much" would apply in cases where an agency has adopted "the position we would adopt even if there were no formal rule and we were interpreting the statute from scratch"); Cargill v. Garland, ___ F.4th ___, 2021 U.S. App. LEXIS 36905 at Slip Op. 4 n.11 (5th Cir. 12/14/21); Frank’s Landing Indian Community v. National Indian Gaming Comm’n, 918 F.3d 610, 615 (9th Cir. 2019)(determining deference is not needed because court reaches the same  interpretation when considered de novo,); and American Hospital Ass’n v. Azar, 983 F.3d 528,230 (D.C. Cir. 2020) (“best reading of [the statute] permits the Secretary to adopt the challenged rule”). The Assistant Attorney to the Solicitor General, Christopher G. Michel, made essentially this point to the Supreme Court in American Hospital Ass’n v. Becerra (Sup. Ct. No. 20-1114 Oral Argument on 1/30/21,Transcript p. 62 (“[O]ur principal submission here is that  you don't need to apply Chevron deference because we have the better reading of the statute.).

3. Added 12/21/21 3:30 pm.  Back to the main issue presented – i.e., whether the “best interpretation” pre-empts Chevron review as a Category 3 situation under my typology in the Postscript to the article.  Upon further reflection, Cargill could involve potentially two of my categories.  They are:

• Category 1.  The statutory text is not ambiguous.  Through a process of rigorous interpretation, a Court determines that the statutory text is not ambiguous, meaning that the case is resolved as a Category 1 case (essentially without getting to Chevron because there is no ambiguity within the scope of the agency interpretation and thus that the agency interpretation is irrelevant).  In Chevron lingo, the process does not get past Chevron Step One with the Court applying the best interpretation regardless of the agency interpretation.  (Note, depending on how Chevron is interpreted, it might not get to Chevron if the agency interpretation is not within the scope of any statutory ambiguity or it does not get past Chevron Step One.)
• Category 3.  The statute is ambiguous but the agency interpretation is the best interpretation among other lesser interpretations.  The Court would undertake the same rigorous interpretive process to determine the best interpretation but could find that there are other lesser interpretations that should be considered.  If the Court then resolves the case on the best interpretation (which is also the agency determination), it has not deferred to the agency interpretation.  In Chevron lingo, this would get past Chevron Step One, but no deference is given at Step Two because the Court is deciding the case without deference on the basis of the best interpretation rather than the agency determination.

As I reflect, Cargill could be either Category 1 or 3.  On my first reading, it read to me like a Category 3 case, but as I reflected today, Cargill might be Category 1 because of the lenity holding.  

If lenity ambiguity and interpretive ambiguity (a la Chevron) are the same, then the Cargill Court’s holding later in the opinion that the statutory text was not ambiguous for lenity would necessarily mean that the Cargill would be Category 1.  In Chevron lingo, it would be a case that does not get past Step One.  In either event, there is no deference to an agency interpretation.  The only reasonable interpretation applies regardless of the agency interpretation.

If, however, lenity ambiguity and Chevron interpretive ambiguity are not the same, then Cargill could be a Category 3 case that, in Chevron lingo, might get past Chevron Step One.  In the article, I discuss some of the more esoteric concerns about ambiguity with the dual application of lenity and Chevron.  See discussion beginning on p.  107, here.

In all events, whatever, the potential relationship between lenity ambiguity and Chevron ambiguity, if the Court applies the best interpretation, it does not defer to the agency interpretation which is the point of Categories 1 and 3. 

4. Added 12/21/21 6:00 pm.  Following through on the theme in paragraph 3 above, in McCutchen v. United States, 14 F. 4th 1355 (Fed. Cir. 2021) (CA FC, here and GS here, the plaintiffs filed a class action suit against the United States under Tucker Act, 28 U.S.C. § 1491.  The claim was that the ATF’s Bump Stock Rule “effected a taking for public use of their bump-stock-type devices by requiring the devices' destruction or surrender to ATF,” thereby entitling plaintiffs to “seek just compensation under the Fifth Amendment's Takings Clause.”

I don’t propose to get into the law of takings under the Fifth Amendment except to note that the claim related to ATF’s interpretation of the statutory term “machinegun.”  That interpretive issue was presented in the other Bump Stock cases noted in Cargill but not in a takings setting  One key question in McCutcheon was whether the plaintiffs alleged a “property interest” to support the takings claim.  The plaintiffs alleged that the interpretations of “machinegun” prior to the Bump Stock Rule gave them a property interest  in the Bump Stocks that the Bump Stock Rule took away from them.

The Court held that the interpretations prior to the Bump Stock Rule conferred no property rights in the plaintiffs.  The reason is that the ATF interpretation of the term “machinegun” was the best interpretation thus making Chevron irrelevant and, even if the statutory term were ambiguous, it was sufficiently ambiguous from the original enactment of the prohibition to own machinegun to give the agency interpretive leeway from the beginning, so that, in effect, the agency (ATF) had the authority to adopt that interpretation in the Bump Stock Rule.  In effect, as to its Chevron holding, the Court held that the interpretation adopted in the Bump Stock Rule was within the scope of the statutory term machinegun.  A key quote from the opinion is (F.4^th at 1367-1368, cleaned up):

We cannot say that plaintiffs had "an established right of private property," in the possibility that the agency would adopt one rather than another of the limited range of interpretations (both reasonable, by assumption) relevant here.

The actual opinion is more nuanced than that, but I think that is the critical point I want to make – that a later interpretation and even reinterpretation a la Brand X within the scope of original ambiguity within the statutory text – is permitted under the takings clause just as it is under Chevron.

Justice Kennedy made the same point in United States v. Home Concrete & Supply, LLC, 566 U.S. 478, (2012) (dissenting) (cleaned up):

The Department’s clarification of an ambiguous statute, applicable to these taxpayers, did not upset legitimate settled expectations. Given the statutory changes described above, taxpayers had reason to question whether Colony’s holding extended to the revised § 6501(e)(1). Having worked no change in the law, and instead having interpreted a statutory provision without an established  meaning, the Department’s regulation does not have an impermissible retroactive effect. It controls in this case.

See my discussion in the article, pp. 50-52, here      It is important to note that Justice Kennedy and the majority did not disagree as to the point of law that, if the statutory text were ambiguous, the interpretation applied retroactively and allowed no settled expectations in taxpayers.  Justice Kennedy and the majority disagreed about whether the statutory text was ambiguous in light of the prior Supreme Court opinion in Colony.

5. Added 12/15/22 12:00pm: I have been re-reading McCutchen v. United States, 14 F.4th 1355 (Fed. Cir. 2021), GS here.  I thought it might be helpful to readers to discuss the case a bit more and then go a bit further into the issue Skidmore respect.

In McCutchen, the issue was whether the DOJ’s “Bump-Stock” rule interpreting the statutory term “machinegun” to include bump stocks constituted a “taking for public use of their bump-stock-type devices by requiring the devices' destruction or surrender to ATF,” thus permitting “plaintiffs seek just compensation under the Fifth Amendment's Takings Clause.” 14 F.4th at 1357. Bottom line, the Court held that, because DOJ’s interpretation of the statutory term “machinegun” to include bump stocks was the best interpretation within the scope of the term since the enactment of the statute, the plaintiffs purchased their bump stocks subject to that best interpretation, so that merely promulgating a rule after those purchases was not a taking.  14 F.4th at 1365 (“the government does not take a property interest when it merely asserts a `pre-existing limitation upon the [property] owner's title,” citing Cedar Point Nursery v. Hassid, ___ U.S. ___, 141 S. Ct. 2063, 2079 (2021). In other words, even though bump stocks were not in existence at the time the statutory term “machinegun” was enacted, the machinegun’s key features applied to bump stocks, thus fitting within the best interpretation of the term “machinegun.” This interpretation thus easily fits within an originalist interpretation. In other words, the mere given that the drafters of the statutory text may not have specifically contemplated bump stocks, does not mean that they did not give enough statutory guides to fit bump stocks in the definition,

In my mind this raises again the question of best interpretations that, as in McCutchen and Cargill, avoid the issue of Chevron.  Deference is not needed for the [or even a] best interpretation – being the interpretation a  court would apply if required to without deference (but with Skidmore respect if the agency interpretation is persuasive in determining the best interpretation).  See e.g., the following from McCutcheon (14 F.4th at 1366-1467) (cleaned up): 

If Chevron is inapplicable, validity entails that the Final Rule's interpretation is the "best interpretation" of 18 U.S.C. § 922(o), with its incorporated "machinegun" term, as defined in 26 U.S.C. § 5845(b). Where the Chevron framework is inapplicable, we determine the best interpretation of the statute for ourselves, while giving the agency's position such weight as warranted under Skidmore v. Swift & Co., 323 U.S. 134, 139-40.

Under the McCutchen analysis, this drill can occur (i) before even Chevron Step 1 to avoid the Chevron framework altogether or (ii) at Chevron Step 1 to determine the agency interpretation is the best interpretation thus allowing no ambiguity in the statutory text.  Although McCutcheon clearly treats (i) and (ii) as different, I am not sure they are because they both reach the same result for an agency interpretation that is the best interpretation (with Skidmore respect if appropriate) not requiring any deference to the agency interpretation.