The State and Local Legal Center (SLLC) has made history and ICMA has been a part of it. For the first time ever, the SLLC has asked the Supreme Court to accept and decide a case. ICMA joined the SLLC brief. The SLLC is asking the Court to hear United Student Aid Funds v. Bible and overturn Auer deference to federal agencies.
In Auer v. Robbins (1997), the Supreme Court reaffirmed its holding in Bowles v. Seminole Rock & Sand Co. (1945) that courts must defer to an agency’s interpretation of its own regulations (even if that interpretation is articulated for the first time in an amicus brief during litigation).
SLLC members decided to take the rare step and ask the Court to decide whether to overturn Auer deference for a number of reasons. First, Auer deference negatively affects state and local governments because they are regulated by federal agencies and regulate in the same space as federal agencies. Second, Auer deference gives agencies a lot of authority in every area in which any agency regulates. Finally, the Court may be ready to reconsider Auer deference. Notably in Perez v. Mortgage Bankers Association (2015) “three Justices (including Auer’s author [Justice Scalia]) expressed deep reservations about deferring to the position an agency adopts through means other than rulemaking.”
The SLLC amicus brief argues that Auer deference should be overturned because it creates incentives for agencies to promulgate vague regulations that they can then interpret as they like outside of the notice-and-comment process. More specific to state and local governments, Auer deference “curtails their ability to participate fully in cooperative federalism schemes; complicates and disrupts their statutory and regulatory regimes that incorporate federal guidance; and intensifies the risk to federalism posed by the ever-expanding scope of federal agency authority.”
Here is what happened in this case: Per the Higher Education Act, a borrower who has defaulted on student loans is required to pay “reasonable collection costs.” Department of Education (DOE) regulations state that if a first-time borrower defaults but enters into and complies with a “repayment” agreement, assessing collections cost is unreasonable. DOE filed an amicus brief in this case interpreting its regulations to mean it would be unreasonable to assess collection costs against someone who entered into a “rehabilitation” agreement.
The following organizations joined the brief: National Governors Association, National Conference of State Legislatures, International Municipal Lawyers Association, National Association of Counties, National League of Cities, United States Conference of Mayors, International City/County Management Association, Government Finance Officers Association, and National School Boards Association.