RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 Air Brake Systems v. Mineta, et al. No. 02-1682 ELECTRONIC CITATION: 2004 FED App. 0044P (6th Cir.) File Name: 04a0044p.06 Appellant. Peter R. Maier, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF: Daniel L. Pulter, David M. Lick, UNITED STATES COURT OF APPEALS LOOMIS, EWERT, PARSLEY, DAVIS & GOTTING, Lansing, Michigan, for Appellant. Peter R. Maier, Michael FOR THE SIXTH CIRCUIT Jay Singer, UNITED STATES DEPARTMENT OF _________________ JUSTICE, Washington, D.C., Lloyd Guerci, NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, for AIR BRAKE SYSTEMS, INC., X Appellee. Plaintiff-Appellant, - - _________________ - No. 02-1682 v. - OPINION > _________________ , NORMAN Y. MINETA , in his - capacity as Secretary of SUTTON, Circuit Judge. This case arises from a - longstanding dispute between the National Highway Traffic Transportation; NATIONAL - Safety Administration (NHTSA) and Air Brake Systems, Inc. HIGHWAY TRAFFIC SAFETY - (Air Brake). Air Brake manufactures a “non-electronic” ADMINISTRATION , - antilock brake system for trucks and trailers, which purports Defendants-Appellees. - to comply with Federal Motor Vehicle Safety Standard 121, - a NHTSA regulation concerning antilock brakes. When an N Air Brake customer asked NHTSA whether a vehicle with Air Appeal from the United States District Court Brake’s brake system—the only non-electronic antilock brake for the Eastern District of Michigan at Bay City. system on the market—would comply with Standard 121, No. 01-10308—David M. Lawson, District Judge. NHTSA’s Acting Chief Counsel issued two opinion letters stating that the brake system would not satisfy the standard. Argued: October 23, 2003 NHTSA posted the letters on its website (with negative consequences for Air Brake’s business), but it did not begin Decided and Filed: February 11, 2004 the statutory process for determining whether vehicles carrying such brakes were noncompliant or the statutory Before: KEITH, MARTIN, and SUTTON, Circuit Judges. process for ordering a recall of vehicles with these brakes.
_________________ Soon after NHTSA posted the first of these letters on its website, Air Brake filed this action challenging the Chief COUNSEL Counsel’s conclusion as well as the Chief Counsel’s authority to issue the letter. The district court granted summary ARGUED: Daniel L. Pulter, LOOMIS, EWERT, judgment in favor of NHTSA, reasoning that interpretive PARSLEY, DAVIS & GOTTING, Lansing, Michigan, for letters issued by NHTSA’s Acting Chief Counsel do not
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constitute “final agency action” subject to judicial review a portion of a service brake system that automatically under the Administrative Procedure Act. We agree that the controls the degree of rotational wheel slip during tentative conclusions reached in the letters, which are based braking by: in part on Air Brake’s representations about its antilock brake system and which NHTSA acknowledges are neither binding (1) Sensing the rate of angular rotation of the wheels; on the industry nor entitled to any administrative deference, do not constitute final agency action regarding the meaning of (2) Transmitting signals regarding the rate of wheel Standard 121 or Air Brake’s compliance with that standard. angular rotation to one or more controlling devices which At the same time, however, the letters do reflect final agency interpret those signals and generate responsive action with respect to the distinct question whether the Chief controlling output signals; and Counsel has authority to issue them, because the practice does not lend itself to further review at the agency level and has (3) Transmitting those controlling signals to one or legal consequences. Yet because the practice of permitting more modulators which adjust brake actuating forces in NHTSA’s Chief Counsel to issue advisory opinions in response to those signals. response to inquiries from the public does not exceed the Chief Counsel’s authority (and indeed has much to 49 C.F.R. § 571.121, S4. In accordance with this standard, recommend it), we affirm the district court’s judgment in antilock brakes also must have an electrical circuit capable of favor of the Government. signaling a malfunction in the brakes through an external warning light. See id. §§ 571.121, S5.1.6.2, 5.1.6.3, 5.2.3.2, I. 5.2.3.3. NHTSA enacted the 1995 amendment amid concerns that only electronic braking systems would satisfy this When Congress enacted the National Traffic and Motor provision. See Standard No. 121, 60 Fed. Reg. at 13,227. Vehicle Safety Act of 1966, 80 Stat. 718, 49 U.S.C. § 30101 et seq., it directed the Secretary of Transportation to prescribe One company concerned about the impact of the amended motor vehicle safety standards. 49 U.S.C. § 30111. The standard was Air Brake Systems, which manufactures braking Secretary in turn delegated this task to NHTSA. The first systems installed on trucks and trailers. After devoting ten Federal Motor Vehicle Safety Standard was promulgated in years to developing a pneumatic antilock brake system for 1967 and NHTSA has promulgated numerous other standards trucks and trailers, Air Brake patented its new brake since then, including Standard 121 (codified at 49 C.F.R. system—the “MSQR-5000”—in 1992. The MSQR-5000 is § 571.121), which covers the requirements for air brake a non-electronic brake or, in the words of Air Brake, is a systems used in heavy vehicles. “non-computerized antilock braking system which is a combination differential pressure regulator/quick release In 1995, NHTSA amended Standard 121 to require that valve that is installed at each braking axle into the service air trucks, buses and trailers equipped with air brakes have an lines centered between the brake chambers.” J.A. at 94. Air “antilock brake system.” See Standard No. 121, Air Brake Brake initially sold its non-electronic antilock brakes on the Systems, 60 Fed. Reg. 13,216 (Mar. 10, 1995). The standard retrofit after-market for used trucks and trailers (which is not defines “antilock brake system” as subject to Standard 121), but not on the original-equipment market for new trucks and trailers (which is subject to Standard 121). No. 02-1682 Air Brake Systems v. Mineta, et al. 5 6 Air Brake Systems v. Mineta, et al. No. 02-1682
After NHTSA amended Standard 121, William agency’s safety standards. During the meeting, NHTSA Washington, the current president of Air Brake, challenged requested that certain tests be performed on the product and the validity of the rule in federal court. Among other that Air Brake submit the test data to the agency. Air Brake contentions, he claimed that the standard improperly sought scheduled another meeting with NHTSA for this purpose on to exclude non-electronic antilock brakes from the market and June 12, 2001. improperly imposed design specifications rather than performance criteria, all in violation of NHTSA’s regulatory On June 4, 2001, eight days before the scheduled meeting, authority. The Tenth Circuit rejected Washington’s NHTSA’s Acting Chief Counsel, John Womack, sent a letter challenge. See Washington v. Dep’t of Transp., 84 F.3d 1222 to MAC Trailer in response to its earlier oral inquiry and a (10th Cir. 1996). In doing so, the court noted that a subsequent written inquiry as to whether the MSQR-5000 manufacturer “that has devised a new means of obtaining the satisfied Standard 121. In the letter, the Chief Counsel noted same or better safety performance” may seek an exemption that NHTSA does not pre-approve equipment, and that the from a safety standard’s requirements, and that “no special applicable statutes make the vehicle manufacturer, not the exemption would be necessary for a new device meeting [an] parts manufacturer, responsible for ensuring compliance with existing . . . standard[]” if the standard is “purely NHTSA’s safety standards. Nonetheless, based on NHTSA’s performative,” as opposed to one that requires “a particular review of Air Brake’s promotional materials and the type of equipment.” Id. at 1225 & n.3. Air Brake seized “principles involved in [the braking system’s] operation,” he upon this language and at some point began marketing its noted that “the installation of the MSQR-5000 alone would product as compliant with Standard 121, despite the not allow a vehicle to meet [Standard] 121’s [antilock brake acknowledged absence of a warning light. J.A. at 225 system] requirement.” J.A. at 172. The Chief Counsel (“Warning light excluded pursuant to: Tenth Circuit Court of expressed specific concern that (1) “the MSQR-5000 does not Appeals Case. No. 95-9513 (3/24/96)”). Air Brake seem to have any means of automatically controlling wheel represented in its Manufacturer’s Certification that “[t]he slip during braking by sensing, analyzing, and modulating the exclusion of a warning light” in its pneumatic antilock brake rate of angular rotation of the wheel,” and (2) “the MSQR- system “is permissible pursuant to Washington v. DOT.” J.A. 5000 also appears to lack any provision for illuminating a at 224. warning light providing notification of an [antilock brake system] malfunction.” J.A. at 173. NHTSA posted the letter In January 2001, Air Brake tried to sell the MSQR-5000 to on its website. MAC Trailer Manufacturing, a manufacturer of vehicles subject to Standard 121. Because Air Brake’s product was Air Brake met with NHTSA as planned on June 12th. At the only non-electronic antilock brake system on the market, the meeting NHTSA recommended that Air Brake perform MAC Trailer asked NHTSA (orally) whether the device met certain tests on the brakes. Air Brake conducted the tests and the requirements of Standard 121. NHTSA responded (also forwarded the results to NHTSA. At the same time, it asked orally) that it did not. NHTSA to post a letter from Air Brake’s counsel on its website so that Air Brake’s views about MSQR-5000 and A month later, William Washington and consultants hired specifically about the brake system’s compliance with by Air Brake met with NHTSA to explain the operation and Standard 121 could be seen by visitors to NHTSA’s website features of the MSQR-5000, in an apparent attempt to alongside the contrary opinion of NHTSA’s Chief Counsel. persuade NHTSA that the braking system complied with the NHTSA never posted the letter. No. 02-1682 Air Brake Systems v. Mineta, et al. 7 8 Air Brake Systems v. Mineta, et al. No. 02-1682
On August 29, 2001, Air Brake sued Secretary of Brake appealed the judgment, which we now review de novo. Transportation Norman Mineta and NHTSA (collectively, See Mich. Peat v. EPA, 175 F.3d 422, 427 (6th Cir. 1999). NHTSA), challenging the agency’s determination that the MSQR-5000 did not comply with Standard 121 and seeking II. to enjoin NHTSA from continuing to publish the offending letter on its website. The United States District Court for the Air Brake raises two essential challenges. It first Eastern District of Michigan denied Air Brake a temporary challenges the merits of “[t]he findings and conclusions restraining order, but took Air Brake’s motion for a contained in the [Chief Counsel’s] Letter,” including the preliminary injunction under consideration and ordered the Chief Counsel’s opinion that the MSQR-5000 does not parties to take the steps necessary for NHTSA to complete its comply with Standard 121. Compl. ¶¶ 83, 84, 96. It then review of Air Brake’s product. As a culmination of these challenges the Chief Counsel’s authority to issue opinions on steps and as requested by the district court, NHTSA’s Acting whether a product complies with NHTSA safety standards Chief Counsel issued a letter on December 10, 2001 to Air without following the recall process (see 49 U.S.C. § 30118) Brake containing his interpretation and application of set forth in the Safety Act. Compl. ¶¶ 83, 88–90, 95, 101. Standard 121 to Air Brake’s pneumatic brake system. The letter superceded the June 4th letter and essentially reaffirmed Before reaching the merits of either challenge, we must the Chief Counsel’s conclusion that the MSQR-5000 braking consider whether the federal courts have jurisdiction over system would not by itself bring a vehicle into compliance them under the right to review created by § 10 of the with Standard 121. Administrative Procedure Act (APA), 80 Stat. 392, as amended, 5 U.S.C. § 701 et seq. In accordance with that NHTSA then moved for summary judgment, which the provision, federal courts may review two types of agency district court granted on the ground that neither the June 4th actions: “[1] Agency action made reviewable by statute and letter nor the December 10th letter issued by the Chief [2] final agency action for which there is no other adequate Counsel constituted “final agency action.” Because “the remedy in a court.” 5 U.S.C. § 704. In contrast, “[a] letters contain the opinion of NHTSA’s acting chief preliminary, procedural, or intermediate agency action or counsel—a subordinate official—that the plaintiff’s product ruling [is] not directly reviewable” and may be examined by ‘alone’ will not permit a vehicle to comply with [Standard] a federal court only through “review of the final agency 121,” the court reasoned that they “represent[] the position the action” itself. Id. Because no specific statute creates a right Secretary is likely to take if and when proceedings are to review the agency actions in this case, as the parties agree, initiated,” not the final action by the Secretary. 202 F. Supp. the jurisdictional question here is one of statutory 2d at 712 (quotation and citation omitted). “More interpretation: Do the letters constitute “final” agency action importantly,” the court continued, “the Letters do not for which no other adequate judicial remedy exists? See Abbs determine ‘rights or obligations’ or cause ‘legal v. Sullivan, 963 F.2d 918, 925 (7th Cir. 1992) (Posner, J.) consequences’ to ‘flow’ [because] [t]he Letters are advisory (“Questions of jurisdiction to review the actions of in nature and have no legal effect.” Id. The district court also administrative agencies usually are discussed under such held that “there is ample authority permitting NHTSA’s murky rubrics as ripeness, prematurity, exhaustion, finality, response to MAC Trailer’s inquiry and issuance of the letters and standing. However, we can frame the issue in this case was not beyond the authority of the agency.” Id. at 714. Air (and perhaps not only this case, but generally, though that No. 02-1682 Air Brake Systems v. Mineta, et al. 9 10 Air Brake Systems v. Mineta, et al. No. 02-1682
remains to be seen) as a straightforward question of statutory 788, 797 (1992) (quoting Abbott Labs., 387 U.S. at 151); see interpretation.”). Bennett, 520 U.S. at 178 (a “tentative” action is not final). And agency letters based on hypothetical facts or facts “As a general matter,” the Supreme Court has instructed, submitted to the agency, as opposed to fact-findings made by “two conditions must be satisfied for agency action to be the agency, are classically non-final for this reason. See Nat’l ‘final’: First, the action must mark the consummation of the Res. Def. Council v. FAA, 292 F.3d 875, 882 (D.C. Cir. 2002) agency’s decisionmaking process . . . [and] must not be of a (holding that an opinion letter issued by the FAA “based on tentative or interlocutory nature. And second, the action must a hypothetical factual situation” presented to the agency by be one by which rights or obligations have been determined, the parties was “not appropriate for review”); Ass’n of Am. or from which legal consequences will flow.” Bennett v. Med. Colls. v. United States, 217 F.3d 770, 780–81 (9th Cir. Spear, 520 U.S. 154, 177–78 (1997) (quotations and citations 2000) (holding that a letter from the general counsel of the omitted); see Alaska Dep’t of Envtl. Conservation v. EPA, Department of Health and Human Services was not final No. 02-658, slip op. at 17 (U.S. Jan. 21, 2004) (stating that where facts remained to be developed). “to be final” under Bennett, “agency action [1] must mark the consummation of the agency’s decisionmaking process, and Both letters suffer from this defect. By their terms, they [2] must either determine rights or obligations or occasion state tentative conclusions based on limited information legal consequences”) (quotations omitted). The finality presented to the agency. For example, the June 4th letter inquiry, we are told, is a “flexible” and “pragmatic” one. states that it “represents our opinion based on the facts Abbott Labs. v. Gardner, 387 U.S. 136, 149–50 (1967). presented in [MAC Trailer’s] letter, the attachments provided with [MAC Trailer’s] letter and agency review of other data III. obtained from [Air Brake].” J.A. at 172. Later, the letter stresses that “NHTSA’s view” about the MSQR-5000 is Air Brake claims that we have jurisdiction to review three “based on a review of the promotional materials describing distinct actions by the agency: (1) the Chief Counsel’s the device and the principles involved in its operation.” J.A. statements (in each letter) that Air Brake’s product fails to at 172; see J.A. at 173 (“The MSQR-5000 appears to lack satisfy the general requirements of Standard 121; (2) the one or more features that an ABS must have to meet Chief Counsel’s legal interpretation (in each letter) of [Standard] 121. Based on the literature provided to us, the Standard 121’s warning-light requirement; and (3) the MSQR-5000 does not seem to have any means of authority of the Chief Counsel to issue the letters in the first automatically controlling wheel slip during braking by place. As each of these issues presents a distinct finality sensing, analyzing, and modulating the rate of angular question, we examine them separately. rotation of a wheel or wheels.”) (emphasis added); id. (“In addition, the MSQR-5000 also appears to lack any provision A. for illuminating a warning light providing notification of an ABS malfunction.”) (emphasis added). The December 10th The essential content of each letter, explaining why Air letter, too, relies on “materials received or obtained since June Brake’s product generally does not comply with Standard 4, as well as those that we had previously obtained,” J.A. at 121, is not final agency action under § 10 of the APA. First 192, and disclaims any intent to adjudicate factual issues. See and foremost, “[a]n agency action is not final if it is . . . J.A. at 194 (“[I]t is not the function of an interpretive letter to ‘tentative’” in nature. Franklin v. Massachusetts, 505 U.S. adjudicate factual issues . . . .”). In this respect, the second No. 02-1682 Air Brake Systems v. Mineta, et al. 11 12 Air Brake Systems v. Mineta, et al. No. 02-1682
letter also expresses an opinion based on “[t]he test data and compliance, the main body of each letter contains a related information provided by [Air Brake],” not based upon any flaw: “An agency action is not final if it is only ‘the ruling of factfinding by the agency. J.A. at 198. a subordinate official.’” Franklin, 505 U.S. at 797 (quoting Abbott Labs., 387 U.S. at 151). While NHTSA’s Chief By itself, the conditional nature of the Chief Counsel’s Counsel has considerable authority over purely legal advice—conditioned on the untested factual submissions of interpretations of pertinent statutes and regulations, the the parties—suggests that it is non-final and non-reviewable. Secretary has not delegated authority to the Chief Counsel to But the regulatory context in which the issue arises makes make final fact-bound determinations of compliance with that conclusion all the more appropriate. In the world of NHTSA’s safety standards. Compare 49 C.F.R. § 501.8(d)(5) vehicle safety requirements, fact-specific conclusions about (the authority to “[i]ssue authoritative interpretations of the whether a product complies with NHTSA’s regulations statutes administered by NHTSA and the regulations issued generally come at the end of a recall proceeding, not before by the agency” is “delegated” to the Chief Counsel), with id. the process for initiating a recall has begun. As the applicable § 501.7(a)(2) (the authority to “[m]ake final decisions statutes explain, the Secretary generally must follow a concerning alleged safety-related defects and noncompliance carefully-delineated process for reaching a conclusion of non- with Federal motor vehicle safety standards” is “reserved to compliance that has the force of law. The Secretary must the Administrator”). See Gov. Br. at 17 (“[T]he Chief make an “initial decision” that a product does not comply. Counsel [is] a subordinate agency official who may interpret See 49 U.S.C. § 30118(a) (requiring the Secretary to notify a the laws and regulations but may not initiate recalls or manufacturer “immediately after making an initial decision . determine that a motor vehicle fails to comply with an . . that [a] vehicle or equipment . . . does not comply with an applicable safety standard . . . .”). For this reason as well, the applicable motor vehicle safety standard”). After that, the letters do not constitute final agency action with respect to Secretary follows a specific process for making “a final their advice about whether Air Brake’s product complies with decision” about compliance. See id. § 30118(b)(1) Standard 121. (describing the process for making “a final decision that a motor vehicle or replacement equipment . . . does not comply B. with an applicable motor vehicle safety standard”). Then, if appropriate, the Secretary may order non-complying A different analysis, but a similar conclusion, applies to the manufacturers to remedy the problem through notice to the legal interpretation in each letter of Standard 121’s warning- vehicle owners and a recall (or other remedy). See id. § light requirement. While the letters in the main address fact- 30118(b)(2) (requiring the Secretary, upon making a final specific issues based upon the materials presented to the decision, to “order the manufacturer” to notify owners and agency by the parties requesting the opinion, they also appear remedy the noncompliance). This systematic method for to contain a statement of general applicability designed to making a fact-based determination whether a given product interpret the law—namely, that Standard 121 requires all satisfies the agency’s safety regulations is a far cry from the antilock brake systems, even non-electronic ones, to include informal answers provided by NHTSA’s Chief Counsel to a warning light. questions from Air Brake’s potential customer. One cannot lightly dismiss this legal interpretation of Besides being conditional and tentative and besides arising Standard 121 as either tentative or as the view of a outside of the customary setting for determining safety subordinate agency official. There is nothing provisional No. 02-1682 Air Brake Systems v. Mineta, et al. 13 14 Air Brake Systems v. Mineta, et al. No. 02-1682
about this interpretation of the standard: Either it requires a The harder question is whether the letters, while not warning light or it does not. And there is nothing directly binding on Air Brake, occasion sufficient “legal hypothetical or intricately fact dependent about the inquiry: consequences” to make them reviewable. One reliable Either Air Brake’s product has these features or it does not. indicator that an agency interpretation still has the requisite Neither are these the views of a subordinate official, at least legal consequence, we have held, is whether the agency may when it comes to this purely-legal interpretation. The claim Chevron deference for it. See Franklin Fed. Sav. Bank Secretary of Transportation has delegated to NHTSA’s Chief v. Dir., Office of Thrift Supervision, 927 F.2d 1332, 1337 (6th Counsel responsibility to “[i]ssue authoritative interpretations Cir. 1991) (“When an agency has acted so definitively that its of the statutes administered by NHTSA and the regulations actions are defended based on Chevron, we believe that its [i.e., Safety Standards] issued by the agency.” 49 C.F.R. action should be treated as final.”); id. (“As a general rule, § 501.8(d)(5). So unlike his general take on compliance, the final agency action includes ‘interpretive decisions that Chief Counsel’s views about purely legal questions—does, crystalize or modify private legal rights.’”) (quoting FTC v. for example, Standard 121 require a warning light?—may Standard Oil of Cal., 449 U.S. 232, 247 (1980) (Stevens, J., constitute the final word within the agency. Bolstering the concurring)); see also Isle Royale Boaters Ass’n v. Norton, point, NHTSA’s website states that the Chief Counsel’s legal 330 F.3d 777, 786 & n.2 (6th Cir. 2003) (noting that letters interpretation letters “represent the definitive view of the from the Park Service to park visitors containing an agency on the question addressed and may be relied upon.” interpretation of the statute the Park Service was charged with In view of the Secretary’s delegation of authority to the Chief administering did not constitute “final rulings of the agency” Counsel over legal issues and in view of NHTSA’s public use because they would be entitled only to respect by the courts, of that authority through its website, an interpretive letter like not Chevron deference); cf. Chevron U.S.A. Inc. v. Natural this one (or at least partially like this one) may indeed Res. Def. Council, Inc., 467 U.S. 837, 842–43 (1984) (holding represent the “consummation” of the agency’s process as to that a court must uphold an agency’s reasonable interpretation purely legal questions. of a statute that it administers unless “the intent of Congress is clear” as to the “precise question at issue” or the agency’s To say that a legal interpretation is final because it is not interpretation is “unreasonable”). subject to further review within the agency, however, is not to say that it is “final” in the sense that § 10 of the APA Decisions from other courts also have looked to the requires it to be. If the interpretation nonetheless (1) does not eligibility for administrative deference as a sufficient legal “determine rights or obligations” or (2) does not have “legal consequence for finality purposes. See Ciba-Geigy Corp. v. consequences,” it remains non-final for purposes of review EPA, 801 F.2d 430, 437 (D.C. Cir. 1986) (“EPA’s under the APA. See Bennett, 520 U.S. at 178. Neither interpretation of FIFRA has a significant legal effect on Ciba- measure of finality is availing to Air Brake here. An agency’s Geigy. It is well settled that the authoritative interpretation of determination of “rights or obligations” generally stems from an executive official has the legal consequence, if it is an agency action that is directly binding on the party seeking reasonable and not inconsistent with ascertainable legislative review, such as an administrative adjudication (like a recall intent, of commanding deference from a court . . . .”) proceeding) or legislative rulemaking, both of which did not (quotation omitted); Nat’l Automatic Laundry & Cleaning happen here. Council v. Shultz, 443 F.2d 689, 702 (D.C. Cir. 1971) (“When a general, interpretative ruling [in the form of a letter] signed by the head of an agency has been crystallized following No. 02-1682 Air Brake Systems v. Mineta, et al. 15 16 Air Brake Systems v. Mineta, et al. No. 02-1682
reflective examination in the course of the agency’s as a class.”); compare Johnson City Med. Ctr. v. United interpretative process, and is accordingly entitled to deference States, 999 F.2d 973, 977 (6th Cir. 1993) (“[T]his Court not only as a matter of fact from staff and citizenry expected accords deference to Revenue Ruling 85-74 under the to conform but also a matter of law from a court reviewing standard set forth in Chevron.”), with Aeroquip-Vickers, Inc. the question, there coexist both multiple signposts of v. Comm’r, 347 F.3d 173, 181 (6th Cir. 2003) (“In light of the authoritative determination, finality and ripeness . . . .”). Supreme Court’s decisions in Christensen and Mead, we conclude that Revenue Ruling 82-20 should not be accorded This treatment of Chevron deference as a relevant “legal Chevron deference.”); compare Nat’l Automatic Laundry, 443 consequence” remains sound even though the test for F.2d at 702 (holding that an opinion letter by the obtaining Chevron deference has changed in recent years. In administrator of the Wage and Hour Division of the United States v. Mead Corporation, 533 U.S. 218 (2001), the Department of Labor interpreting the Fair Labor Standards Court held that only those administrative interpretations that Act was final agency action in part because it would be Congress and the agency intend to have the “force of law,” as “entitled to deference . . . as a matter of law from a court opposed to those merely characterized as “authoritative,” reviewing the question”), with Christensen, 529 U.S. at qualify for Chevron deference. See id. at 229; Christensen v. 586–87 (holding that an opinion letter by the administrator of Harris County, 529 U.S. 576, 587 (2000) (“Interpretations the Wage and Hour Division of the Department of Labor such as those in opinion letters—like interpretations interpreting the Fair Labor Standards Act was not entitled to contained in policy statements, agency manuals, and deference as a matter of law, but only “respect” to the extent enforcement guidelines, all of which lack the force of that it has the “power to persuade”). Correspondingly, cases law—do not warrant Chevron-style deference.”). Under will now arise involving agency action that we once might either test, the critical point is that federal courts must accept have considered “final” for APA-review purposes as a result reasonable agency interpretations of an ambiguous statute of Chevron’s legal effect but that we will no longer consider even if they would have construed the statute differently had final because Chevron does not apply. But this is a small they been given the chance in the first instance. Because it price to pay for adhering to the principle that justifies is the binding effect of agency interpretations eligible for factoring eligibility for deference into eligibility for federal- Chevron deference that establishes “legal consequences will court review in the first place—that the application of flow” from them, Bennett, 520 U.S. at 178–79 (quotation Chevron indicates agency interpretations will have “legal omitted), Mead’s changes to the test for determining when consequences”—an approach we have taken before in this Chevron applies (whether large or small) do not alter the Circuit, see Franklin Fed. Sav. Bank, 927 F.2d at 1337, and relevance of this inquiry. an approach we stand by today. If the Supreme Court’s recent decisions concerning Air Brake, however, cannot rely upon this principle because administrative deference signal any change, it is that less the Chief Counsel’s legal interpretations have no claim to agency action will qualify for Chevron deference and less deference of any sort. For one reason, they are too informal. agency action accordingly may qualify for federal-court Congress does not generally expect agencies to make law review. Cases will arise involving informal agency actions through general counsel opinion letters. See Christensen, 529 that once received, but no longer receive, Chevron deference U.S. at 587 (“opinion letters . . . lack the force of law”); in the aftermath of Mead and Christensen. See Mead, 533 Heimmermann v. First Union Mortgage Corp., 305 F.3d U.S. at 232 (“[I]nterpretive rules . . . enjoy no Chevron status 1257, 1262 (11th Cir. 2002) (“[L]etters from HUD’s general No. 02-1682 Air Brake Systems v. Mineta, et al. 17 18 Air Brake Systems v. Mineta, et al. No. 02-1682
counsel to members of Congress . . . are the kinds of informal agency’s expertise and ability to persuade, not its ability to policy positions that lack the force of law and are unentitled speak with legal effect. Put another way, Chevron allows the to Chevron deference.”), cert. denied, 123 S. Ct. 2641 (2003); agency to make law, which is what gives the agency’s views Am. Express Co. v. United States, 262 F.3d 1376, 1382 (Fed. “legal consequences,” while courts still determine the Cir. 2001) (“[An] interpretation . . . contained in [a] General meaning of a law under Skidmore. Skidmore thus permits an Counsel Memorandum . . . [that] is not reflected in a agency to earn the weight given to it by the courts, while regulation adopted after notice and comment [] probably Chevron gives reasonable agency interpretations controlling would not be entitled to Chevron deference.”); cf. Hosp. weight as a matter of right. See Thomas W. Merrill & Kristin Corp. of Am., v. Comm’r, 348 F.3d 136, 144 (6th Cir. 2003) E. Hickman, Chevron’s Domain, 89 Geo. L.J. 833, 855–56 (“In Mead Corporation, the Court found that Congress had (2001). The result is that “legal consequences” do not flow not implicitly delegated law-interpreting authority through the from the Skidmore doctrine, and accordingly its application 10,000 to 15,000 tariff rulings made each year by forty-six does not assist a court in determining that an agency’s action different Customs offices without notice and comment is final under the APA. procedures.”). The better candidate for finding the requisite “legal For another reason, the letters interpret a regulation consequences” is still another administrative-law (Standard 121), not the statute that the agency is charged with doctrine—Seminole Rock deference—the “controlling enforcing (the Safety Act). Chevron does not apply in this weight” that federal courts generally give an agency’s setting. See Christensen, 529 U.S. at 587–88 (distinguishing interpretation of its own ambiguous regulation. See Bowles Chevron deference—the deference accorded an agency’s v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945) (an interpretation of a statute—from the deference accorded an agency’s interpretation of its own regulation is entitled to agency’s interpretation of its own regulation); Am. Express “controlling weight unless it is plainly erroneous or Co., 262 F.3d at 1382–83 (“[W]e are not dealing with an inconsistent with the regulation”); see also United States v. agency’s interpretation of a statute and issues of Chevron Cleveland Indians Baseball Co., 532 U.S. 200, 220 (2001) deference, but with the IRS’s interpretation of an ambiguous (granting Seminole Rock deference to the IRS’s “longstanding term in its own Revenue Procedure.”). interpretation of its own regulations”); Jean v. Nelson, 472 U.S. 846, 865 (1985) (noting the “similar[ity]” between the Other administrative-law doctrines do not advance Air Chevron and the Seminole Rock “presumptions”). Brake’s cause either. Under Skidmore v. Swift & Co., 323 Seminole Rock deference appears to have survived Mead. See U.S. 134 (1944), federal courts give respectful consideration Mead, 533 U.S. at 246 (Scalia, J., dissenting) (“[T]he court to authoritative interpretations that lack the force of law, but leaves untouched today [] [the principle] that judges must that nonetheless have the “power to persuade.” Id. at 140; see defer to reasonable agency interpretations of their own Mead, 533 U.S. at 234 (“Chevron did nothing to eliminate regulations.”); United States v. Cinemark USA, Inc., 348 F.3d Skidmore[]” and an informal interpretation “may therefore at 569, 578 (6th Cir. 2003) (post-Mead decision invoking the least seek a respect proportional to its power to persuade.”) doctrine); A.D. Transport Express, Inc. v. United States, 290 (quotation omitted). Unlike Chevron deference, however, F.3d 761, 766 (6th Cir. 2002) (same); Am. Express, 262 F.3d Skidmore respect is not the kind of “legal consequence[]” that at 1382–83 (holding that Mead did nothing to alter Seminole may make an interpretation final for purposes of direct Rock). The controlling nature of Seminole Rock deference, review: Skidmore permits courts to give consideration to an moreover, would seem to have the requisite legal No. 02-1682 Air Brake Systems v. Mineta, et al. 19 20 Air Brake Systems v. Mineta, et al. No. 02-1682
consequences for APA finality purposes. Cf. John F. consequences. Having no direct, binding effect on Air Brake Manning, Constitutional Structure and Judicial Deference to and having no legal consequences for Air Brake by virtue of Agency Interpretations of Agency Rules, 96 Colum. L. Rev. the deference courts might give to them, the Chief Counsel’s 612, 615 (1996) (“Because agency rules that comply with letters are not “final” agency action under the APA. specified procedural formalities bind with the force of statutes, Seminole Rock has a significant impact on the C. public’s legal rights and obligations.”) (footnote omitted). Air Brake offers several arguments in favor of reviewing Nonetheless, the doctrine does not apply here. In this case, the compliance and legal interpretations in the letters, all the Department of Justice emphatically denies that the unpersuasive. It first contends that a decision not to review opinion letters issued by NHTSA’s Chief Counsel are the letters fails to heed Abbott Laboratories’ admonition to authoritative views entitled to any deference. While that apply the finality requirement in a “flexible” and “pragmatic” position is supported by dicta from at least one case from this way. 387 U.S. at 149–50. Most pragmatically, Air Brake court, see Fisher v. Ford Motor Co., 224 F.3d 570, 575 (6th urges, the views expressed in the letters have devastated its Cir. 2000) (“[T]he General Counsel [of NHTSA’s] opinion business, effectively foreclosing it from selling the MSQR- [interpreting Standard 208] is not legally binding on the 5000 to vehicle manufacturers regulated by NHTSA, none of courts.”), cases from other circuits (dealing with general which appears willing to run the risk of a government-ordered counsel letters from different agencies) appear to reach a recall. While this may be so, adverse economic effects different conclusion, see, e.g., Am. Express Co., 262 F.3d at accompany many forms of indisputably non-final government 1382 (granting Seminole Rock deference to an interpretation action. Initiating an enforcement proceeding against a contained in an opinion letter by the general counsel of the company, for example, may have a devastating effect on the IRS); Gavey Prop./762 v. First Fin. Sav. & Loan Ass’n, 845 company’s business, but that does not make the agency’s F.2d 519, 521 (5th Cir. 1988) (holding that a published action final. See FTC v. Standard Oil Co., 449 U.S. 232, 243 advisory letter from the general counsel of the Federal Home (1980) (holding that an administrative complaint is not a final Loan Bank Board is entitled to deference as a matter of law); agency action because a complaint “ha[s] no legal force or cf. Espinoza v. Farah Mfg. Co., Inc., 414 U.S. 86, 94 (1973) practical effect upon [] daily business other than the (noting that an opinion letter from the general counsel of the disruptions that accompany any major litigation”); Greater EEOC expressed the interpretation of the commission). Detroit Res. Recovery Auth. v. EPA, 916 F.2d 317, 322 (6th Either way, as this case suggests, it is one thing for an Cir. 1990) (holding that a letter “convey[ing] the intent of the agency’s general counsel to have authority to issue definitive EPA to commence proceedings to investigate the revocation interpretations on behalf of the agency; it is another for the of the permit” was not final agency action); Aerosource, Inc. general counsel to invoke that authority. See Mead, 533 U.S. v. Slater, 142 F.3d 572, 581 (3d Cir. 1998) (holding that at 232 (recognizing that while Customs has “general advisory warnings issued by the FAA to Aerosource and rulemaking power” to promulgate rules with “the force of letters issued by the FAA refusing to rescind the warnings law,” it does not exercise that power when it issues were not reviewable because, despite their “severe adverse classification rulings). We accept the Government’s impact” on Aerosource’s business, the actions had no legal acknowledgment that the opinion letters here are not entitled consequences); Ind. Safety Equip. Ass’n v. EPA, 837 F.2d to any deference in the federal courts—whether under 1115, 1121 (D.C. Cir. 1988) (holding that an EPA report Chevron or Seminole Rock—and thus do not have legal recommending against using the plaintiff’s respirators was No. 02-1682 Air Brake Systems v. Mineta, et al. 21 22 Air Brake Systems v. Mineta, et al. No. 02-1682
not final despite economic harm to plaintiff’s business, modification of a rule is a final agency action subject to because the effects were “indirect and arise from the reactions judicial review.”). and choices of industry customers”); Air Cal. v. Dep’t of Transp., 654 F.2d 616, 621–22 (9th Cir. 1981) (holding that Nor is it true that the agency is trying to have it both a legal interpretation contained in a letter from the general ways—by simultaneously claiming (1) that the letters counsel of the FAA to a local airport was non-final despite the represent “the definitive view of the agency” on their website serious indirect effects on Air California’s business). and (2) that the letters may not be reviewed because they are non-final for APA purposes. For one, the website contains Contrary to Air Brake’s assertion, moreover, this approach “A Word of Caution” to readers indicating the conditional does not place the company in a “Catch-22” position. Reply nature of the letters. “[P]lease be aware,” it says, “that [these Br. at 1. In Air Brake’s view, no manufacturer will ever put interpretations] represent the views of the Chief Counsel the MSQR-5000 on its new vehicles given the risks of a based on the facts of individual cases at the time the letter was recall. No recall, as a result, will ever occur, making written.” For another, the website makes it clear that the NHTSA’s views about Air Brake’s product (and, worse, the Chief Counsel has authority to “interpret[] the statutes that the Chief Counsel’s views on the subject) effectively agency administers and the regulations that it promulgates,” unreviewable—because only the results of a recall proceeding not to find facts or apply the agency’s regulations to disputed would be final and reviewable. Even if this were true, which facts. For still another reason, the agency has now disclaimed it turns out it is not, this development would stem from the that the letters are the definitive view of the agency, no matter market’s weighing of the costs (one of which is the possibility what the website says. Having acknowledged that the Chief of government action) and benefits of purchasing Air Brake’s Counsel’s letters in this instance are not binding on Air Brake product, not the government’s tentative response to an inquiry and are not entitled to any deference in any respect, whether posed by a potential Air Brake customer. under Chevron or Seminole Rock, the agency has made clear that the letters are simply advisory opinions about a set of In all events, Air Brake errs in suggesting it has no other facts presented to the Chief Counsel. In the final analysis, options. The company remains free to show the market its these letters do not constitute “final” agency action subject to confidence in the product by agreeing to indemnify a review under the APA. prospective manufacturer against the costs of defending any potential NHTSA action. And more importantly (and perhaps D. more realistically for smaller companies), the company remains free to petition NHTSA to alter Standard 121 under Although the letters do not constitute final agency action the agency’s rulemaking powers. 49 C.F.R. § 552.3(a) (“Any with respect to the opinions expressed in them, they do interested party may file with the Administrator a petition represent final agency action in another respect—namely, as requesting him . . . [t]o commence a proceeding respecting the to whether the Chief Counsel has authority to issue advisory issuance, amendment or revocation of a motor vehicle safety opinions in the first instance. In contrast to the contents of standard.”). The denial of such a petition, notably, would be the letters, all of the finality factors point to the conclusion a final reviewable order. See Fox Television Stations, Inc. v. that the agency’s view regarding the Chief Counsel’s FCC, 280 F.3d 1027, 1037 (D.C. Cir. 2002) (“[A]n agency’s authority to issue them is “final” agency action under the denial of a petition to initiate a rulemaking for the repeal or APA. No. 02-1682 Air Brake Systems v. Mineta, et al. 23 24 Air Brake Systems v. Mineta, et al. No. 02-1682
First, there is nothing tentative or fact dependent about the labeling changes and use restrictions on a registered product authority to issue the letters. The Secretary has delegated this without affording the procedures mandated by . . . FIFRA,” power to the Chief Counsel in concrete and unconditional namely notice and a formal hearing. Id. at 433. The district terms, and the issue is purely a legal one. See 49 C.F.R. court dismissed the complaint for lack of finality, holding that § 501.8(d)(5) (“The Chief Counsel is delegated authority to the EPA “‘ha[d] neither issued a final order directed to the . . . [i]ssue authoritative interpretations of the statutes plaintiff Ciba-Geigy nor taken any other final action which is administered by NHTSA and the regulations issued by the reviewable by the Court.’” Id. at 434 (quoting Ciba-Geigy agency.”). Second, as the head of the Department of Corp. v. EPA, 607 F. Supp. 1467, 1468 (D.D.C. 1985)). Transportation, the Secretary is anything but a subordinate official for these purposes. Third, this decision would receive On appeal, the D.C. Circuit reversed, holding that the EPA deference from the federal courts as an interpretation of the pronouncements about what procedures it may use to require agency’s regulations under Seminole Rock, and (in contrast to labeling changes constituted final agency action within the the letters) the agency has not disclaimed deference regarding meaning of the APA and were ripe for review. Id. at 434–39. this position. See Martin v. Occupations Safety & Health It first concluded that the case presented a “purely legal Review Comm’n, 499 U.S. 144, 150 (1991) (“It is well issue.” Id. at 435. The only question was “whether EPA established ‘that an agency’s construction of its own properly construed FIFRA to allow it to impose labeling regulations is entitled to substantial deference.’”) (quoting changes on registered pesticides without following the Lyng v. Payne, 476 U.S. 926, 939 (1986)). And that cancellation process prescribed [under FIFRA],” a question of deference is particularly appropriate here since the Chief “statutory interpretation” that would not be “facilitated by Counsel began issuing interpretive letters in 1967, within further factual development.” Id. It then noted that “EPA’s months of the passage of the Safety Act in 1966, and has Director of Pesticide Programs unequivocally stated EPA’s continuously done so since. See Cleveland Indians Baseball position on the question whether registrants were entitled to Co., 523 U.S. at 220 (“We do not resist according such a cancellation hearing before labeling changes could be deference in reviewing an agency’s steady interpretation of its required.” Id. at 436. “[T]he statement,” the court added, own 61-year-old regulation implementing a 62-year-old “gave no indication that it was subject to further agency statute.”). consideration or possible modification,” id. at 437, and the court had “no reason to believe that the EPA Director of Case law points to the same conclusion. In Ciba-Geigy, the Pesticide Programs lacks authority to speak for EPA on this EPA issued a series of pronouncements (letters and issue or that his statement of the agency’s position was only mailgrams) suggesting two things: (1) if Ciba-Geigy did not the ruling of a subordinate official that could be appealed to change the label of its pesticide from “general use” to a higher level of EPA’s hierarchy.” Id. Next, the court “restricted use,” its product would be in violation of the reasoned, “EPA’s interpretation of FIFRA ha[d] significant Federal Insecticide, Fungicide and Rodenticide Act (FIFRA); ‘legal . . . effect[s]’ on Ciba-Geigy,” id. at 437, because of the and (2) FIFRA’s requirement that the agency conduct a deference it would have received under Chevron (as the formal hearing before cancelling a pesticide’s registration or courts then applied the Chevron doctrine). “We can divine no changing its classification was not the only means by which reason why the letter from the head of EPA’s Pesticide the EPA may require changes to the product’s labeling. 801 Division, speaking for the agency charged with administering F.2d at 432–33. Ciba-Geigy filed suit challenging the second FIFRA, would not be entitled to deference from the least determination and seeking to enjoin the EPA from “imposing dangerous branch.” Id. Finally, it noted that Ciba-Geigy No. 02-1682 Air Brake Systems v. Mineta, et al. 25 26 Air Brake Systems v. Mineta, et al. No. 02-1682
would suffer financial hardship if review were postponed. Id. compliance with statutes and regulations.” Small Business at 438. See also Bennett, 520 U.S. at 178 (holding that, for Regulatory Enforcement Fairness Act of 1996, § 213(a), 110 purposes of a lawsuit by several third parties against the Fish Stat. 858–59, 5 U.S.C. § 601 note. That is exactly—and quite and Wildlife Service, a “biological opinion” issued by the sensibly—what happened here. MAC Trailer indeed is Fish and Wildlife Service to the Bureau of Reclamation precisely the kind of business that this law was designed to constituted final agency action, because it represented the benefit. Finally, the Secretary has delegated this authority to consummation of the Service’s decisionmaking process and the Chief Counsel by issuing a regulation allowing the Chief it “alter[ed] the legal regime to which the [the Bureau] [wa]s Counsel to “[i]ssue authoritative interpretations” of NHTSA’s subject, authorizing [the Bureau] to take the endangered safety regulations, 49 C.F.R. § 501.8(d)(5), a reasonable species if (but only if) it complies with the prescribed interpretation of which contemplates not just purely legal conditions”). pronouncements, but advisory opinions tied to real facts presented by real parties. IV. Attempting to rebut these sources of authority, Air Brake Because we have jurisdiction to review the Chief Counsel’s contends that opinion letters conflict with § 30118’s notice- authority to issue these letters, we must decide whether this and-hearing requirements, which describe the process by was a permissible exercise of power. Like the district court which the agency may determine that a vehicle is defective before us, we conclude that it was. Congress, to begin with, and may order its recall. By issuing a “compliance has delegated lawmaking power to the Secretary, 49 U.S.C. determination . . . in the guise of [] opinion letters,” § 30111(a) (“The Secretary of Transportation shall prescribe Appellant’s Br. at 13, 17, Airbrake claims, the Chief Counsel motor vehicle safety standards.”), and a “component of the has seized “unfettered power to solely decide which agency’s delegated lawmaking powers” is “the power automotive equipment enters the stream of commerce.” We authoritatively to interpret its own regulations,” Martin, 499 disagree. The practice of issuing advisory opinions on U.S. at 151. See also 5 U.S.C. § 301 (“The head of an matters of compliance does not conflict with this statutory executive department . . . may prescribe regulations for the process because the two endeavors serve different functions: government of his department, the conduct of its employees, Advisory opinions advise, while final orders bind and compel. [and] the distribution and performance of its business . . . .”). Only the most inefficient, strange and unworkable of Congress also has instructed the Secretary to promote administrative schemes would require the Secretary and his regulatory compliance and further highway safety, 49 U.S.C. delegates to remain tight-lipped about all matters of § 30101, and to “consult . . . with . . . interested persons” in compliance unless and until the Secretary ordered a doing so, id. § 301(8), two directives that fairly encompass manufacturer to recall its product. That Congress not only the authority of the Secretary and subordinate officials to delegated rulemaking authority to the Secretary (including the communicate with manufacturers like MAC Trailer in a implicit power to interpret the agency’s own safety variety of formal and informal ways, not just through recall regulations), but also required him to “consult” with the orders or formal petitions for review. industry and “answer inquiries by small entities concerning . . . advice about and compliance with” NHTSA’s regulations, No less importantly, Congress separately requires all proves that Congress did not contemplate the kind of passive- federal agencies, including NHTSA, “to answer inquiries by aggressive, to say nothing of suspense-filled, administrative small entities concerning information on, and advice about, behavior that Air Brake’s position would require. No. 02-1682 Air Brake Systems v. Mineta, et al. 27
In our view, moreover, manufacturers like MAC Trailer and suppliers like Air Brake ultimately have much to gain from the availability of advisory opinions. Section 30118’s process for determining that a vehicle “does not comply with an applicable motor vehicle safety standard” requires a vehicle that has already been built, and says nothing about how the agency might inform curious manufacturers and suppliers about what hypothetically would not comply with NHTSA’s safety regulations. The ability to receive NHTSA input early in the process (however tentative and however non-binding it may be) before investing resources in manufacturing and selling a product surely offers as much benefit to suppliers like Air Brake as it provides to the companies that build the vehicles and the consumers who buy them. See Nat’l Automatic Laundry, 443 F.2d at 699 (“[T]he concerns of businessmen engaged in forward planning may rightly call for hypothetical or advisory consultation with cognizant government officials, in order to obtain informal predictions needed to permit optimum allocation of resources in the light of careful assessments of the alternatives.”). V. For the foregoing reasons, we affirm the judgment of the district court.