May 7, 2013

Will the supreme court take up the Decker challenge soon?

By Anthony L. Francois Senior Attorney

My PLF colleague Daniel Himebaugh has posted extensively about the victory in Decker v. Northwest Environmental Defense Center, in which the Supreme Court upheld a US EPA policy under which water run-off from logging roads is not considered “industrial” stormwater subject to permitting under the federal Clean Water Act.  The Court’s decision is an important victory for reasonable regulation and prevents a wave of citizen suit actions against property owners across the nation.  The Court emphasized the significance of state programs to prevent water pollution, the main point raised in PLF’s amicus brief in Decker.  However, the Court also upheld EPA’s policy in part under a judicial doctrine of deference to an agency’s interpretation of its own regulations, commonly known as Auer deference after a 1997 Supreme Court case applying the doctrine.

While a majority of the Court partly relied on Auer deference to uphold US EPA’s policy, Justice Scalia filed a strong dissent, criticizing Auer based on separation of powers.  It is one thing, he argued, to defer to an agency’s interpretation of a statute enacted by Congress, but when the agency interprets of its own regulations, it is acting as both legislature and judge.  Justice Scalia concluded that the courts should not defer to executive agencies in this context, and should interpret agency regulations de novo.  Chief Justice Roberts, joined by Justice Alito, separately concurred that Justice Scalia made a forceful argument, but that the issue had not been squarely raised or briefed in Decker.  While he and Justice Alito joined the majority in Decker in using Auer deference, the Chief Justice issued an invitation to bring a case to the Court that squarely raises the issue.

Chief Justice Robert’s invitation may have been accepted today.

The Second Circuit Court of Appeals issued a decision today in the case of Berlin v. Renaissance Rental Partners, LLC.  The case is simple.  The plaintiffs pre-purchased a 16th  floor condominium in the Ritz-Carlton in White Plains, New York.  After the real estate market crash in 2008, they sought to cancel the purchase, on a technicality under federal law that is only applicable to purchases of ‘lots’ in uncompleted housing developments.  The plaintiffs argued that a condominium is a ‘lot’ under federal regulations, thus entitling them to various disclosures under federal law, which the seller did not provide.  The defendant sellers argued that the 16th floor luxury condo cannot possibly be a ‘lot’ (i.e. a lot of vacant land), that the federal disclosure requirements do not apply, and that the Berlins should honor their agreement and buy the condo.

A majority of the panel, employing Auer, upheld the federal Department of Housing and Urban Development’s interpretation of its regulatory definition of the word “lot” as including condominiums.  A dissenting opinion in the case took Justice Scalia’s view of Auer, declined to defer to the HUD’s interpretation, and argued that HUD’s interpretation of its regulation is not correct.  Both opinions in the case cite Decker on the deference issue.

The result is that a federal statute intended to protect the unwary from imprudent purchases of vacant lots in distant vacation paradises (as advertised on late night television) is also there to enable the well-heeled to back out of their commitments to buy million dollar 16th floor luxury condos.  Occupy Wall Street indeed!

It remains to be seen whether the defendants in Berlin will petition the US Supreme Court to take up the case, but the Decker decision suggests that the Court might be game.

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