Spencer S. Fritts
40 Campbell L. Rev. 173 (2018)
Consider a statute that reads “no dogs allowed in federal parks.” Clearly, this statute authorizes the National Parks Service to enforce the terms of this statute by banning all dogs, but what about all other types of animals? Does the fact that the statute is “silent” about other animals, in the sense that only dogs are listed, give the Parks Service the authority to ban those animals not specifically listed in the statute? Unless some other provision grants the Parks Service the power to expand the scope of the statute, this statute alone cannot serve as a source of authority to ban certain things it does not cover. The reason is simple but fundamental: “Agencies exercise whatever powers they possess because—and only because—such powers have been delegated to them by Congress.”1 This illustration exemplifies the fundamental error of the Ninth Circuit’s decision in Oregon Restaurant & Lodging Ass’n v. Perez (Perez II),2 which upheld the Department of Labor’s (DOL’s) interpretation of § 203(m) of the Fair Labor Standards Act (FLSA).3
Section 203(m) limits how an employer may use an employee’s tips when taking a tip credit.4 Under the FLSA, an employer can pay its tip-earning employees less than minimum wage and use the employees’ tips to make up the difference.5 When an employer uses this payment scheme, § 203(m) proscribes the employer from requiring the tip-earning employees to share their tips with other employees who do not ordinarily receive tips.6
The Perez II court addressed the validity of a DOL regulation that expanded the scope of § 203(m) in a similar manner to the Parks Department hypothetical above.7 Where the restriction contained in § 203(m) only applies to one group of employers, the DOL’s challenged regulation expanded the scope of this section’s restriction to all employers.8 The Perez II court upheld the DOL’s interpretation of the statute under an administrative law doctrine which dictates that reviewing courts give deference to an agency’s interpretation of a statute that it administers.9 This doctrine, called Chevron deference, gives controlling weight to an agency’s interpretation when the statute is ambiguous or silent and the interpretation is reasonable.10 The Perez II court reasoned that § 203(m)’s silence, in that its restriction only applied to one group of employers, afforded the DOL’s new rule deference under Chevron.11 This new rule meant § 203(m)’s restriction applied to all employers.12 To frame it differently, the Ninth Circuit applied Chevron deference to the DOL’s interpretation regarding its “jurisdiction,” or the scope of its power under the FLSA.
Until recently, courts and commentators disagreed over whether courts must defer (apply Chevron) to an agency’s own interpretation of a statutory ambiguity that concerns the scope of an agency’s authority (that is, its jurisdiction).13 In City of Arlington v. FCC,14 the Supreme Court purported to resolve this debate by holding that Chevron deference is applicable to an agency’s interpretation of its jurisdiction.15 This Comment, however, argues that the Supreme Court should modify this bright-line rule with another bright-line rule: Chevron deference is not applicable to jurisdictional questions in which the underlying assertion of power comes from this Perez II type of “statutory silence.” Such a rule is necessary for two reasons. First, this rule would ensure that congressional intent is the benchmark for Chevron analysis by requiring an agency to locate an affirmative statutory grant of authority before deference is accorded. The fact that a statute is silent, in the sense that it neither grants nor denies a specific power, suggests a congressional intent not to speak about that power. Second, this rule would prevent the biggest problem facing this type of jurisdictional question: agency aggrandizement.16 As the Perez II decision illustrates, deference on this type of jurisdictional question results in agencies asserting power ex nihilo to regulate groups that Congress never intended to regulate.
Part I of this Comment details the cases that form the Chevron doctrine, traces the debate over jurisdictional questions, and considers how courts have treated cases where the claim of jurisdiction comes from a statutory silence. Part II discusses the pre-Perez regulatory and statutory background, the lower court decision of Perez, the Ninth Circuit’s analysis in the Perez II decision, and the need for the Supreme Court to revisit the question of agency jurisdiction. Part III offers a no-deference rule for jurisdictional questions arising out of statutory silences. Part III also discusses how this rule finds support in Chevron’s background presumption of congressional intent and prevents agencies from exceeding the scope of their authority.