Ninth Circuit: No More Chevron Deference for the Director’s Litigating Position

On September 4, 2012, the Ninth Circuit issued a rare en banc Longshore decision.  In Price v. Stevedoring Services of America, the court determined that it would no longer give Chevron deference to the Director of the Office of Workers’ Compensation Program’s litigating positions, and that employers and carriers must pay compound interest (instead of simple interest) if interest is owed pursuant to Section 14 of the Longshore and Harbor Workers’ Compensation Act.

Agency deference is an important consideration in every case—but there are different levels of deference to consider.  “Chevron deference” comes from Chevron, U.S.A., Inc. v. National Resources Defense Council, Inc., 467 U.S. 837, 843-44 (1984).  There, the Supreme Court stated that when Congress has “explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation;” and “[s]uch legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute.”  So, agency deference, especially Chevron deference is a powerful tool that agencies can use to curtail court consideration.  But Chevron deference will not be afforded to the Director for litigation positions any longer.  As explained by the Ninth Circuit (with internal citations omitted):

The Director’s construction of the Longshore Act advanced through his litigating position falls even further “beyond the Chevron pale,” and evinces even less of a “lawmaking pretense,” than did the ruling letters in Mead.  The Director does not adopt his litigating positions through any “relatively formal administrative procedure,” but through internal decision-making not open to public comment or determination.  Nor are there any other indicia that Congress intended the Director’s litigating positions to “carry the force of law.”  Quite the contrary.  In adjudications under the Longshore Act, it is the [Benefits Review Board’s] decision, rather than the Director’s litigating position, that binds the parties in any given case and provides guidance to other claimants and employers.

In practice as well as theory, it is the BRB’s published decisions–and not the Director’s litigating positions–that are precedential and determine the rights of future parties.  Any claimants or employers who ignore a Board precedent and rely instead on the Director’s contrary litigating position–assuming there is one–do so at their own peril.

One of the main reasons why the Ninth Circuit withdrew Chevron deference to the Director’s litigating positions was because the “rigors of rulemaking” was not followed.  One of the main reasons why agencies are afforded deference is because it presumably used its “expertise and experience” to promulgate rules and regulations.  These rules are regulations are borne from a deliberative decision-making process that is often open to the public for comment.   When a litigating position is not based on a previously-stated formal policy that followed the “rigors of rulemaking,” it is difficult to determine whether the agency actually took into account “the interests of the public or the parties with adequate fairness.”  Indicia of inadequate consideration include “conflicts between the agency’s current and previous interpretations; signs that the agency’s interpretation amounts to no more than a ‘convenient litigating position;” or an appearance that the agency’s interpretation is no more than a ‘post hoc rationalization advanced by an agency seeking to defend past agency action against attack.”  Id. (internal citation omitted).  When such indicia is not present, there is no justification for giving the agency’s interpretation the “force of law,” which is essential to Chevron deference.

But what about Skidmore deference?  While Skidmore deference is not as powerful and controlling as Chevron deference, Skidmore deference is still persuasive–provided the agency’s interpretation has certain characteristics.  Pursuant to Skidmore v. Swift & Co., 323 U.S. 134, 139-140 (1944), the weight given to an agency’s interpretation of a statute depends on “the degree of the agency’s care, its consistency, formality, and relative expertness, and to the persuasiveness of the agency’s position.”  The Ninth Circuit will give the Director Skidmore deference, but the Director still has to prove the persuasiveness of the advanced interpretation.

What does Price’s agency deference decision mean for future Longshore litigants?  It means that they will get to keep the Director honest with respect to his litigating positions.  If the Director lodges conflicting arguments, it is done at his own peril–and perhaps even the peril of the Longshore program.  Conflicting arguments will diminish the persuasiveness of the Director’s interpretation.  (For an example of the Director’s inconsistent arguments, read this post on the Director’s differing interpretations of Section 28(b).)

Finally, Price dealt with more than just deference.  For cases in the Ninth Circuit, there is now a new way to calculate interest due on past benefits.  Instead of simple interest, courts can now award claimants whose claims arise in the Ninth Circuit compound interest.  Time will tell whether the Benefits Review Board will extend this new compound interest determination to claims arising in other jurisdictions.  As for now, interest payments on past due benefits will based on the one-ear constant maturity Treasury yield, compounded annually.

Price v. Stevedoring Servs. of America, Inc., — F.3d —-, 2012 WL 3799775 (9th Cir. 2012) (en banc).