Exelon Generation Co v. Local 15, I ( 2012 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 11-2423
E XELON G ENERATION C OMPANY, LLC,
Plaintiff/Counter-Defendant-Appellee,
v.
L OCAL 15, INTERNATIONAL B ROTHERHOOD OF
E LECTRICAL W ORKERS, AFL-CIO,
Defendant/Counter-Plaintiff-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 1:10-cv-4846—Robert W. Gettleman, Judge.
A RGUED JANUARY 19, 2012—D ECIDED M ARCH 29, 2012
Before K ANNE, S YKES, and H AMILTON, Circuit Judges.
H AMILTON, Circuit Judge. To work at one of the
nation’s privately-owned nuclear power plants, many
employees must receive a security clearance with “unes-
corted access” privileges. When such access is denied or
revoked, the Nuclear Regulatory Commission requires
owner-licensees of nuclear facilities to provide the ag-
2 No. 11-2423
grieved worker with a review procedure. For plants
whose employees are unionized, a longstanding issue
has been whether labor arbitrators deciding grievances
under collective bargaining agreements can review
access denial decisions and order unescorted access as
a remedy for a wrongful denial. From 1991 to 2009,
the Commission took the unequivocal position that
labor arbitrators have that power, and courts agreed.
In 2009, the Commission completed a comprehen-
sive post-9/11 overhaul of nuclear power plant security
requirements. Although it modified some of the reg-
ulatory provisions dealing with review of unescorted
access denials, the new language was at best ambiguous
as to whether the Commission had changed its policy
to prohibit arbitral review. A close look at the text and
the rulemaking record shows that it did not. Among
other factors we consider, neither the Commission nor
any other participant suggested in the notice-and-com-
ment process that the new language would modify, let
alone overturn, the Commission’s established policy
permitting arbitral review.
Nevertheless, plaintiff-appellee Exelon Generation
Company maintains that the amended regulation
quietly overruled the Commission’s prior position. In
the district court, Exelon sought and won a declaratory
judgment that the 2009 amendments prohibit arbitration
of access denial decisions. Exelon Generation Co. v. Local 15,
Int’l B’hood of Elec. Workers, No. 10 C 4846, 2011 WL 2149624(N.D. Ill. May 25, 2011). We reverse. The Commission
did not flip-flop on an important, longstanding, and
No. 11-2423 3
controversial policy without clearly indicating either in
the text of the rule or at any point in the rulemaking
history that it was doing so.
I. Factual and Regulatory Background
Pursuant to its statutory mandate under the Atomic
Energy Act, 42 U.S.C. § 2011 et seq., the Commission
requires all licensees operating nuclear generators to
implement access authorization programs in their facili-
ties. 10 C.F.R. § 73.56(a). Licensees’ programs must
provide “high assurance” that individuals with unes-
corted access privileges “are trustworthy and reliable,
such that they do not constitute an unreasonable risk
to public health and safety or the common defense and
security.” 10 C.F.R. § 73.56(c). The Commission first
promulgated these regulations in 1991 and amended
them in 2009, each time via the notice-and-comment
rulemaking procedures of the Administrative Proce-
dure Act, 5 U.S.C. § 553.
Two separate provisions of section 73.56 are disputed
here. The first is paragraph (a)(4), which allows a “contrac-
tor or vendor” of the licensee “to satisfy appropriate
elements of the licensee’s access authorization program.”
10 C.F.R. § 73.56(a)(4). Although it allows licensees to
delegate some responsibilities over access programs
to contractors and vendors, the provision also says:
“Only a licensee shall grant an individual unescorted
access.” The second is subsection (l), which specifically
addresses the review procedures that licensees must
provide to employees whose unescorted access privileges
4 No. 11-2423
are denied or revoked.1 The rule requires the licensee
to give the aggrieved employee notice of “the grounds
for the denial,” “an opportunity to provide additional
relevant information,” and “an opportunity for an objec-
tive review of the information upon which the denial . . .
was based.” 10 C.F.R. § 73.56(l). The new 2009 version
of subsection (l) also states: “The procedure must provide
for an impartial and independent internal management
review.” Id. The 1991 version had provided: “The proce-
dure may be an impartial and independent internal man-
agement review.” 56 Fed. Reg. 18997, 19008 (empha-
sis added).
In May 2009, after the Commission issued the final
amended regulation, a private consortium of nuclear
power operators called the Nuclear Energy Institute
(NEI) updated a set of “standard industry criteria” for
implementing the amended regulation. The document,
called “NEI 03-01 (Revision 3),” asserted: “the licensee
internal management review process is final, shall be
the exclusive means by which [unescorted access] deci-
sions may be reviewed, and may not be reviewed or
overturned by any third party.” App. 58. In July 2009
the Commission staff reviewed NEI 03-01 (Revision 3)
in “Regulatory Guide 5.66.” The staff found NEI 03-01
(Revision 3) to “meet the intent and substance of”
the amended access regulations. App. 382. Regulatory
1
The 1991 version of this “Review procedures” provision was
codified as subsection 73.56(e), while the current version is
subsection 73.56(l). For simplicity we refer to both versions
as “subsection (l).”
No. 11-2423 5
Guide 5.66 stated that the “NRC staff considers confor-
mance with the provisions of NEI 03-01 to be an ac-
ceptable approach to meet the requirements of 10 C.F.R.
§ 73.56.” App. 385. The guide also cautioned: “Regulatory
guides are not substitutes for regulations and com-
pliance with them is not required.” App. 383.
Plaintiff Exelon is a licensee that owns and operates
nuclear generating facilities in Pennsylvania, New Jersey,
and Illinois. IBEW Local Union 15 (“Local 15”) represents
1,600 employees at Exelon’s six Illinois plants. Since at
least 2001, Exelon and Local 15’s collective bargaining
agreements have provided for a grievance procedure
culminating in arbitration with respect to “any dis-
pute” over “working conditions.” App. 126. Pursuant to
the access regulations, Exelon maintains a program
for granting and denying current and prospective em-
ployees unescorted access privileges in its facilities.
Exelon did not collectively bargain with Local 15 over
its unescorted access program. In an earlier lawsuit
between these parties, however, District Judge Lefkow
ruled that access denials were grievable under the col-
lective bargaining agreement and that the 1991 access
regulations then in force did not preclude arbitral re-
view. Exelon Generation Co. v. Local 15, Int’l B’hood of
Elec. Workers, No. 06 CV 6961, 2008 WL 4442608 (N.D. Ill.
Sept. 29, 2008). There was no appeal, and Exelon does
not challenge either holding here.
Instead, Exelon filed a new action in the district court
(assigned to Judge Gettleman) seeking a declaratory
judgment that the 2009 amendments to the access reg-
6 No. 11-2423
ulations changed the Commission’s policy to prohibit
third-party review of a licensee’s denial of unescorted
access. The case was prompted by Exelon’s termination
of the unescorted access privileges and employment of
several Local 15 members. Local 15 counterclaimed
to compel arbitration of those decisions. On cross-
motions for summary judgment, the district court
found for Exelon.
II. Discussion
We review de novo the district court’s resolution of cross-
motions for summary judgment. E.g., Clarendon Nat’l
Ins. Co. v. Medina, 645 F.3d 928, 933 (7th Cir. 2011). This
case involves a single question of federal law: whether
the 2009 amendments to section 73.56 prohibit arbitra-
tion of unescorted access denials and revocations. The
same rules of construction apply to administrative rules
as to statutes. E.g., Alabama Tissue Ctr. v. Sullivan, 975
F.2d 373, 379 (7th Cir. 1992). In either case, we begin by
asking “whether the language at issue has a plain and
unambiguous meaning with regard to the particular
dispute in the case.” Ioffe v. Skokie Motor Sales, Inc., 414
F.3d 708, 710 (7th Cir. 2005), quoting Robinson v. Shell
Oil Co., 519 U.S. 337, 340 (1997). A regulation is “ambigu-
ous” as applied to a particular dispute or circumstance
when more than one interpretation is “plausible” and “the
text alone does not permit a more definitive reading.”
Chase Bank USA, N.A. v. McCoy, 131 S. Ct. 871, 880 (2011).
If the meaning of the regulatory text is clear, the task is
complete. See Christensen v. Harris County, 529 U.S. 576,
No. 11-2423 7
588 (2000). When it is ambiguous, however, it is neces-
sary to resort to other interpretive methods, such as
analysis of the rulemaking record. See, e.g., Wyeth v.
Levine, 555 U.S. 555, 570-73, 576-81 (2009) (analyzing
rulemaking history to determine a regulation’s preemp-
tive scope). Where an agency has authoritatively inter-
preted its own rule, courts generally defer to that
reading unless it is “plainly erroneous or inconsistent
with the regulation.” E.g., Auer v. Robbins, 519 U.S. 452,
461 (1997).
A. Subsection (l)
We begin with subsection (l) because that provision
deals directly with review of unescorted access denials.
It is plain that the text does not prohibit arbitral review:
Review procedures. Each licensee and applicant
shall include a procedure for the notification of indi-
viduals who are denied unescorted access . . . . Addi-
tionally, procedures must include provisions for
the review, at the request of the affected individual,
of a denial . . . of unescorted access . . . that may
adversely affect employment. The procedure must
contain a provision to ensure the individual is in-
formed of the grounds for the denial . . . and allow the
individual an opportunity to provide additional
relevant information and an opportunity for an ob-
jective review of the information upon which the
denial . . . was based. The procedure must provide for
an impartial and independent internal management review.
8 No. 11-2423
10 C.F.R. § 73.56(l) (emphasis added). Exelon argues, and
the district court found, that because the italicized sen-
tence replaced the 1991 regulation’s “may be” with
“must provide,” (1) internal management review is man-
datory instead of optional, and (2) internal manage-
ment review is the only permissible form of review.
The first conclusion is obvious. Subsection (l) expressly
says that a licensee “must provide for an impartial
and independent internal management review.” The
word “may” is precatory and “customarily connotes
discretion,” Jama v. Immigration & Customs Enforcement, 543
U.S. 335, 346 (2005), while “must,” like “shall,” is manda-
tory and generally forecloses discretion. E.g., Mallard
v. U.S. District Court, 490 U.S. 296, 301-02 (1989).
The second conclusion is mistaken. The inference that
the requirement of an internal management review
means that only this form of review is permitted rests
implicitly on the much-derided maxim of expressio unius
est exclusio alterius — the expression of one thing
suggests the exclusion of others. For two reasons, this
beleaguered canon does not apply here. First, “expressio
unius . . . has reduced force in the context of inter-
preting agency administered regulations.” Whetsel v.
Network Property Services, LLC, 246 F.3d 897, 902 (7th
Cir. 2001); see also Cheney R.R. Co. v. ICC, 902 F.2d 66, 69
(D.C. Cir. 1990) (calling expressio unius “an especially
feeble helper in an administrative setting”). Second, and
more specifically, “the canon . . . has force only when
the items expressed are members of an ‘associated
group or series,’ justifying the inference that items not
No. 11-2423 9
mentioned were excluded by deliberate choice, not inad-
vertence.” Barnhart v. Peabody Coal Co., 537 U.S. 149,
168 (2003), quoting United States v. Vonn, 535 U.S. 55, 65
(2002). Here, nothing in the text suggests that subsec-
tion (l)’s requirement of “an impartial and independent
internal management review” is exhaustive. Quite the
opposite, the wording — requiring licensees to “provide
for” an internal review — indicates that the internal
management review is inclusive rather than exclusive.
The original 1991 version stated that the review pro-
cedure “may be” an internal management review. The
2009 switch to “must provide” (as opposed, for instance,
to “must be” or “must constitute”) implies that while
an internal management review must be among the
procedures provided, the licensee may also provide
others. Nothing in the language suggests the opposite
view.
Exelon’s reading of section 73.56 mistakenly assumes
that the Commission wrote the 2009 revision to roll
back workers’ rights. The text of amended subsection (l)
reveals the opposite purpose — to enhance rather than
erode procedural protections. Subsection (l) provides
baseline rights to employees challenging adverse ac-
cess determinations: to receive notice, to be heard, and
to have an objective decision-maker. The 1991 version
permitted licensees to provide for management-
level review but did not explicitly require it. Nothing in
the 1991 text prevented a licensee from, for example,
giving review authority to the same person who issued
the initial denial or to a non-managerial employee who
was supervised by the initial decision-maker. The
change in 2009 from “may be” to “must provide”
10 No. 11-2423
clarified that the internal management review is a
required procedural floor of protection for employees.
We see no basis for inferring that the internal review
was also a procedural ceiling. Subsection (l) does not
bar arbitral review of unescorted access denials.
B. Paragraph (a)(4)
Turning to paragraph (a)(4), which does not specifically
address review procedures at all, we find its language
susceptible to more than one interpretation on the avail-
ability of arbitral review. The paragraph states in its
entirety:
The licensee or applicant may accept, in part or whole,
an access authorization program implemented by
a contractor or vendor to satisfy appropriate ele-
ments of the licensee’s access authorization program
in accordance with the requirements of this section.
Only a licensee shall grant an individual unescorted ac-
cess. Licensees and applicants shall certify individuals’
unescorted access authorization and are responsible
to maintain, deny, terminate, or withdraw unescorted
access authorization.
10 C.F.R. § 73.56(a)(4) (emphasis added). Exelon argues
that the italicized second sentence means that a
licensee’s decision cannot be reviewed by an arbitrator
or even a court.2
2
Exelon has not relied on the final sentence of paragraph (a)(4)
to support its position. The sentence is materially unchanged
(continued...)
No. 11-2423 11
Taken in isolation, that italicized sentence might
support Exelon’s reading. In regulatory and statutory
construction, however, context is critical. E.g., FDA v.
Brown & Williamson Tobacco Corp., 529 U.S. 120, 133
(2000) (“[A] reviewing court should not confine itself to
examining a particular statutory provision in isolation.
The meaning — or ambiguity — of certain words or
phrases may only become evident when placed in con-
text.”).
The relevant context of the disputed sentence in para-
graph (a)(4) is its placement in an introductory paragraph
about the relationship between a licensee and its con-
tractors and vendors. The amended access regulations
permit a licensee to rely on contractors and vendors
in implementing its access authorization program. Para-
graph (a)(4)’s manifest function is to clarify the respec-
tive responsibilities of these different categories of regu-
lated parties. The first sentence allows a licensee to dele-
gate some authority to contractors and vendors in im-
plementing its access authorization program. That rela-
tionship is elaborated in greater detail in later provi-
sions. The disputed second sentence provides a corollary
to this delegation. While a licensee “may accept” steps
performed by “a contractor or vendor” to implement its
access authorization program: “Only a licensee shall grant
2
(...continued)
from the 1991 version of paragraph (a)(4), and the Commission
itself has taken the position that the 1991 regulations did not
bar arbitral review of access denials. The minor changes in
wording in the 2009 version of the last sentence therefore do
not indicate any intent to change that position.
12 No. 11-2423
an individual unescorted access.” This sentence’s role is
thus to caution that, notwithstanding the parts that con-
tractors and vendors may play in program implementa-
tion, the ultimate responsibility for granting unescorted
access belongs to the licensee. Exelon’s reading loses
sight of the context of paragraph (a)(4) and, if taken to its
logical conclusion, would lead to the improbable result
of preventing courts — and perhaps even the Commis-
sion itself — from granting unescorted access.3
To reconcile its position with the contractor-vendor
context of paragraph (a)(4), Exelon offers the imaginative
theory that arbitrators actually are vendors under the
regulations because they are “performing an ‘element[ ]
of the licensee’s access authorization program.’ ” The
Commission has not defined “contractor” or “vendor”
in the relevant regulations. See 10 C.F.R. § 73.2 (defini-
tions section). The regulations provide, however, that a
vendor’s employees must themselves satisfy the
program requirements to obtain unescorted access to
nuclear facilities. See 10 C.F.R. § 73.56(b)(2) (“employees
3
During oral argument, Exelon embraced this very position.
Asked whether a court in a race discrimination case, for exam-
ple, could order access privileges restored to an employee
after a licensee had revoked them in violation of Title VII of
the Civil Rights Act of 1964, counsel said no. No authority
was cited to support this view, which would present serious
separation-of-powers issues and in any event conflicts with
the Commission’s clear position that, in a case of a mistaken
access denial, “an aggrieved individual could commence
an action in a State or a Federal court.” 56 Fed. Reg. 18997,
19002 (1991).
No. 11-2423 13
of a contractor or a vendor who are designated in
access authorization program procedures, are subject to
an access authorization program that meets the require-
ments of this section”). During oral argument, Exelon
conceded that arbitrators have never been subject to
unescorted access program requirements. In other
words, neither the nuclear industry nor the Commission
has ever treated labor arbitrators as vendors under
the access regulations. In the face of Exelon’s im-
provised and creative argument, we give this long-
standing practice “considerable weight.” See Davis v.
United States, 495 U.S. 472, 484 (1990). We find no
support for Exelon’s expansive conception of vendor.
In light of its context in allocating responsibility for
access programs between licensees and their vendors
and contractors, the disputed sentence of subsec-
tion (a)(4) — “Only a licensee shall grant an individual
unescorted access”— is at best ambiguous on the availa-
bility of arbitral review. We therefore turn to the
rulemaking record of the 2009 amended access regula-
tions for evidence of the Commission’s intent. The
lessons from that record are clear.
As noted, the Commission policy since 1991 has been
that labor arbitrators may review denials and revoca-
tions of unescorted access. Nothing in the rulemaking
record for the 2009 amendments indicates any intent to
change that policy. The Commission’s own analyses of
amended paragraph (a)(4) — both as proposed and as
adopted — overwhelmingly support Local 15’s limited,
context-based reading over Exelon’s expansive one. In
14 No. 11-2423
its proposed rulemaking notice, the Commission empha-
sized that the changes to paragraph (a)(4) were intended
to “convey more clearly” that contractors and vendors
were “accountable” not only to licensees but also to
the Commission itself and that contractors and vendors
“may be directly subject to NRC inspection and enforce-
ment actions.” 71 Fed. Reg. 62664, 62734-35 (2006). Like-
wise, in its statement accompanying the final rule, the
Commission stated that it revised paragraph (a)(4) in
the final rule “to define and to provide clarification
and specification on the roles and responsibilities of
licensees, applicants, and contractors or vendors.” 74
Fed. Reg. 13926, 13947 (2009).
More telling, the Commission repeatedly stated that
amended paragraph (a)(4) “retains the intent” of the
original version. See 71 Fed. Reg. at 62734-75 (Proposed
paragraph (a)(4) “would . . . retain the intent of the
current requirement that only licensees and applicants
have the authority to grant or permit an individual to
maintain unescorted access to nuclear power plant pro-
tected and vital areas.”) (emphasis added); 74 Fed. Reg. at
13962 (Final subsection 73.56(a) “retains the intent of
the preexisting requirements that licensees have the
authority to grant or deny an individual unescorted
access authorization, or permit an individual to maintain
or terminate unescorted access.”) (emphasis added). The
rulemaking history of paragraph (a)(4) shows that its
purpose was to underscore the authority of licensees
for program implementation as distinct from contractors
and vendors. This record belies the notion that the Com-
mission revised paragraph (a)(4) to impose a backdoor
prohibition on any third-party review of access denials.
No. 11-2423 15
Most important, though, is the utter silence in the
rulemaking record on the issue of arbitral review of
access denials. There is simply nothing from the entire
process — from the notice of proposed rulemaking to
the public comments to the Commission’s own re-
sponse and final rulemaking analysis — that suggests
the Commission intended to change its established
policy permitting arbitrators to review access decisions.
The Commission’s analysis of proposed subsection (l)
(the part of the regulations that actually addresses
review procedures) again emphasized policy continuity
rather than change: “Proposed § 73.56(l) would retain
the meaning of current [provision] but update some of
the terms used in the provision.” 71 Fed. Reg. at 62784
(emphasis added).
This policy continuity is especially important in
the context of subsection (l), for there is no doubt that
its 1991 version permitted arbitral review of access
denials. The issue of arbitral review was a significant
controversy when the 1991 rule was issued. Some
licensees objected to any requirement for a review
process, while organized labor representatives raised
questions about the implications for workers’ grievance
rights. In its published analysis of the final 1991 rule,
the Commission assured union leaders and everyone
else in the industry that it “never intended that any
review procedure that already exists in a bargaining
agreement be abandoned.” 56 Fed. Reg. at 19002. The
Commission spelled out that the review proceedings set
forth in subsection (l) could be conducted by a neutral
arbitrator: “if procedures under collective bargaining
16 No. 11-2423
agreements” so provide, “the rule would allow the
use of a grievance procedure for review of denials or
revocations of access authorizations.” Id. In assuaging
the industry’s concerns about third parties like arbi-
trators deciding disputes over access, the Commis-
sion made clear that such review was permissible: “if
the evidence indicates a proper application of relevant
criteria in excluding an employee, the review proce-
dure . . . should result in a decision vindicating the man-
agement action.” Id. at 19003. In short, the Commission’s
unequivocal and reasoned position in 1991 was that
what is now subsection (l) established a procedural
floor that could be exceeded by providing for arbitral
review of access decisions.4
4
Federal courts have also taken this view of the 1991 version of
the regulation. See Tennessee Valley Auth. v. Tennessee Valley
Trades & Labor Council, 184 F.3d 510, 518-19 (6th Cir. 1999)
(holding that arbitrator’s decision to reinstate nuclear
employee after licensee revoked his unescorted access and
then fired him was “not contrary to federal law or regulation”
and that “the arbitrator was acting within the scope of the
authority granted to him by the [collective bargaining] Agree-
ment”); Public Service Elec. & Gas Co. v. Local 94 Int’l B’hood
of Elec. Workers, 140 F. Supp. 2d 384, 392 (D.N.J. 2001) (“the
Court finds the historical record persuasive that the NRC’s
intent was to permit an arbitration provision to be utilized as
the appeal process for revocation or denial of site access
authorization when appropriate, especially in consideration
of the NRC’s response that it was not its intent to ‘ex-
clude from consideration or to require consideration of
(continued...)
No. 11-2423 17
Nothing in the text of the amended regulation or the
rulemaking history suggests the Commission came to a
different conclusion in 2009. Yet Exelon contends that
the Commission sought to upend its settled policy
even though the text of the amended regulation
does not support such an intent, and even though
neither the Commission nor any other participant in
the notice-and-comment process gave any indication
that the amendments would have this effect.
We will not so lightly accuse the Commission of making
a significant policy decision by such indirect tactics.
We may safely assume that if the Commission had
wanted to depart from its clear policy allowing arbitra-
tion of access denials and revocations, it would have
said so — at least in its commentaries on the proposed
and final rules if not in the text of the amended rule
itself. “Congress does not alter the fundamental details
of a regulatory scheme in vague terms or ancillary provi-
sions — it does not, one might say, hide elephants
in mouseholes.” Whitman v. American Trucking Ass’ns,
531 U.S. 457, 468 (2001). The same is true, or at least
should be true, of agencies subject to the Administrative
Procedure Act.
The silent rulemaking record is a valuable clue. After
a famous racehorse was stolen from a stable in the
4
(...continued)
access authorization issues in the collective bargaining pro-
cess’ ”), quoting 56 Fed. Reg. 19006, aff’d, 27 F. App’x 127 (3d
Cir. 2002).
18 No. 11-2423
middle of the night, Sherlock Holmes famously deduced
that if the thief had been a stranger, the watchdog
would have barked. See Arthur Conan Doyle, “Silver
Blaze,” in The Memoirs of Sherlock Holmes 7, 32 (Julian
Symons ed., 1950). In this case, the failure of the Com-
mission or even a single public comment to mention
the controversial issue of arbitral review in the 2009
rulemaking process “can be likened to the dog that did
not bark.” See Chisom v. Roemer, 501 U.S. 380, 396 n.23
(1991); see also Harrison v. PPG Industries, Inc., 446 U.S.
578, 602 (1980) (Rehnquist, J., dissenting) (“In a case
where the construction of legislative language such as
this makes so sweeping and so relatively unorthodox
a change as that made here, I think judges as well as
detectives may take into consideration the fact that a
watchdog did not bark in the night.”).
Whether one’s preferred metaphor features dogs and
horses or elephants and mice, the point remains the
same: when an agency intends to reverse a significant
and longstanding policy, courts can reasonably expect
it to say something about it. Here, the Commission
said nothing, and that says a lot. The regulation’s text is
at best ambiguous on the question of arbitral review,
and the rulemaking record demonstrates that the
amended version of section 73.56 does not bar third-
party review of unescorted access denial decisions.
No. 11-2423 19
C. Auer-Seminole Rock Deference and the Industry Interpre-
tation
As a final reason for barring arbitral review under the
amended regulation, Exelon relies on the industry docu-
ment, NEI 03-01 (Revision 3), and the Commission
staff’s approval of it. NEI 03-01 (Revision 3) is crystal-
clear in asserting that the amended regulation prohibits
arbitral or third-party review of access denials. Exelon
contends that the Commission adopted the NEI’s inter-
pretation as its own, so that the industry’s view is
entitled to strong deference under Bowles v. Seminole
Rock & Sand Co., 325 U.S. 410 (1945), and Auer v. Robbins,
519 U.S. 452 (1997). Under Auer-Seminole Rock deference,
an agency’s interpretation of its own validly issued reg-
ulation is “controlling . . . unless it is plainly erroneous
or inconsistent with the regulation.” Auer, 519 U.S. at 461.5
5
The Supreme Court’s application of Auer-Seminole Rock
deference has been “sporadic.” William N. Eskridge, Jr. &
Lauren E. Baer, The Contiuum of Deference: Supreme Court
Treatment of Agency Statutory Interpretations from Chevron to
Hamdan, 96 Geo. L.J. 1083, 1103-04 (2008) (finding that between
1984 and 2006, “Seminole Rock was employed in a mere 7.1%
of eligible cases” by the Supreme Court). Even so, the doctrine
has survived various attempts to inter it. Compare Talk
America, Inc. v. Michigan Bell Telephone Co., 131 S. Ct. 2254, 2266
(2011) (Scalia, J., concurring) (criticizing Auer-Seminole Rock
deference based on separation-of-power concerns), quoting
Montesquieu’s Spirit of the Laws and citing John F. Manning,
Constitutional Structure and Judicial Deference to Agency Inter-
pretations of Agency Rules, 96 Colum. L. Rev. 612 (1996), and
(continued...)
20 No. 11-2423
For three independently sufficient reasons, we conclude
that Auer-Seminole Rock deference does not apply here.
First, Auer-Seminole Rock deference is not appropriate
when there is “reason to suspect that the interpreta-
tion does not reflect the agency’s fair and considered
judgment on the matter in question.” Talk America, Inc.,
131 S. Ct. at 2261, quoting Auer, 519 U.S. at 462. Without
the agency’s own considered answer to the interpretive
question, nothing could deserve deference. See Chase
Bank, 131 S. Ct. at 882, citing Smith v. City of Jackson, 544
U.S. 228, 248 (2005) (O’Connor, J., concurring in judg-
ment) (noting that deference is not warranted when
“there is no reasoned agency reading of the text to which
5
(...continued)
Thomas Jefferson Univ., 512 U.S. at 525 (Thomas, J., dissenting,
joined by Stevens, O’Connor, and Ginsburg, JJ.) (criticizing
Auer on the ground that it rewards agencies that “issue
vague regulations”), with Talk America, 131 S. Ct. at 2260, 2262-
63 (majority opinion) (applying Auer), and Chase Bank USA,
N.A. v. McCoy, 131 S. Ct. 871, 880 (2011) (same). This court
previously commented that “[p]robably there is little left of
Auer.” Keys v. Barnhart, 347 F.3d 990, 993 (7th Cir. 2003).
While the doctrine raises serious separation-of-powers and
administrative law concerns, that pronouncement was either
an exaggeration or premature. Justice Scalia is willing to
“reconsider” Auer-Seminole Rock deference, Talk America, 131
S. Ct. at 2266 (Scalia, J., concurring), and the Court may soon
have an opportunity to do so. See Christopher v. SmithKline
Beecham Corp., 635 F.3d 383 (9th Cir. 2011) (rejecting Auer-
Seminole Rock deference to agency interpretation), cert. granted,
132 S. Ct. 760 (Nov. 28, 2011).
No. 11-2423 21
we might defer”). That is the case here, for Regulatory
Guide 5.66 says nothing about the availability of arbitral
review.
Nor did the Commission staff incorporate by reference
the NEI’s position merely by describing the industry
guidance as “an acceptable approach” that “meet[s] the
intent and substance of 10 C.F.R. § 73.56.” That boiler-
plate statement of tepid approval for the industry stan-
dards is too vague to qualify as the Commission’s own
authoritative interpretation for Auer-Seminole Rock pur-
poses. It is a long way even from a case in which the
agency has submitted an amicus brief that addresses
the interpretive question decisively. In Chase Bank, for
example, the Supreme Court gave Auer-Seminole Rock
deference to the Solicitor General’s interpretation
of a Federal Reserve Board regulation, even though
the Board’s staff seemed to have interpreted the reg-
ulation differently. 131 S. Ct. at 882. A unanimous
Court refused to give deference to the “Official Staff Com-
mentary” because it “largely replicates the ambiguity
present in the regulatory text, and therefore it offers
us nothing to which we can defer with respect to the
precise interpretive question before us.” Id. Similarly
here, the Commission staff’s regulatory guide does not
address “the ambiguity present in the regulatory text”
on the issue of arbitral review. Regulatory Guide 5.66
therefore “offers us nothing to which we can defer with
respect to the precise interpretive question before us.”
Id. Because the NEI’s interpretation — no arbitral re-
view — contradicts the Commission’s last clear state-
ment on the issue in its analysis of the 1991 final rule,
22 No. 11-2423
we have “reason to suspect that the interpretation does
not reflect the agency’s fair and considered judgment on
the matter in question.” See Auer, 519 U.S. at 462 (em-
phasis added).
Second, the Commission itself has disclaimed the use
of regulatory guides as authoritative or binding inter-
pretations of its own rules. Regulatory Guide 5.66 it-
self states that “guides are not substitutes for regulations
and compliance with them is not required” and that the
“NRC staff does not expect any existing licensee to use
or commit to using the guidance in this regulatory
guide.” U.S. Nuclear Regulatory Commission, Regulatory
Guide 5.66 (Revision 2) at 4 (Oct. 2011), available at
http://www.nrc.gov/read ing-rm /d oc-collections/reg-
guides/. Moreover, in the same chapter as the amended
access regulations, the Commission has provided: “Except
as specifically authorized by the Commission in writing,
no interpretations of the meaning of the regulations in
this part by any officer or employee of the Commis-
sion other than a written interpretation by the General
Counsel will be recognized as binding upon the Com-
mission.” 10 C.F.R. § 73.3. In other words, through both
the disclaimer and its formal regulations, the Commis-
sion itself has told the courts that the Regulatory Guide
does not deserve Auer-Seminole Rock deference. Because
Regulatory Guide 5.66 did not offer “authoritative
glosses” on the amended access regulation, it cannot
deserve Auer-Seminole Rock deference. Cf. United States
v. Raupp, No. 11-2215, 2012 WL 752389, at *3 (7th Cir.
Mar. 9, 2012) (treating Sentencing Commission’s applica-
No. 11-2423 23
tion notes as authoritative interpretations of Sentencing
Guidelines deserving deference).
Finally, Auer-Seminole Rock deference would not be
appropriate even if the staff had actually endorsed the
NEI’s interpretation. The APA does not permit the Com-
mission staff to contradict a prior interpretation
of the Commission itself. To promulgate a “legislative
rule,” an agency subject to the APA must comply
with the notice-and-comment rulemaking procedures
of 5 U.S.C. § 553. These procedural requirements do not
apply to “interpretive rules” or “general statements of
policy.” 5 U.S.C. § 553(b)(A). However, all “interpreta-
tions of general applicability” and “statements of gen-
eral policy” must be published in the Federal Register.
5 U.S.C. § 552(a)(1)(D). When the Commission con-
cluded that the 1991 access regulations permitted arbitral
review, it properly published this generally applicable
position in the Federal Register. To reverse this position
and prohibit arbitral review, perhaps the Commission
could have done so in the same manner — by announcing
the change in a “reasoned analysis” published in
the Federal Register. See Motor Vehicle Manufacturers
Ass’n v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 42
(1983) (“an agency changing its course by rescinding a
rule is obligated to supply a reasoned analysis for the
change beyond that which may be required when an
agency does not act in the first instance.”). Then again,
such a change might also be deemed significant enough
to constitute a substantive rule requiring full notice-and-
comment procedures. See Appalachian Power Co. v. E.P.A.,
208 F.3d 1015, 1024 (D.C. Cir. 2000) (“It is well-established
24 No. 11-2423
that an agency may not escape the notice and comment
requirements . . . by labeling a major substantive legal
addition to a rule a mere interpretation.”).
What the Commission clearly could not do was over-
rule its prior policy by having its staff issue an unpub-
lished guidance statement without any reasoned explana-
tion for the change. Such stealth rulemaking, which we
do not believe actually occurred here, would under-
mine democratic transparency and upset the settled
expectations of regulated parties. It would certainly be
unworthy of Auer-Seminole Rock deference, and it might
well flunk the “arbitrary-and-capricious” standard of
review under the APA. See FCC v. Fox Television Stations,
Inc., 556 U.S. 502, ___, 129 S. Ct. 1800, 1811 (2009) (“To be
sure, the requirement that an agency provide reasoned
explanation for its action would ordinarily demand
that it display awareness that it is changing position.
An agency may not, for example, depart from a prior
policy sub silentio or simply disregard rules that are still
on the books. And of course the agency must show
that there are good reasons for the new policy. . . .”)
(internal citation omitted); Wyeth v. Levine, 555 U.S.
555, 577 (2009) (declining to give deference to FDA’s
preamble to a final rule in part because it “reverses the
FDA’s own longstanding position without providing a
reasoned explanation”).
Because the Commission has not offered its own au-
thoritative view, Exelon is effectively arguing that we
give Auer-Seminole Rock deference to the industry’s inter-
pretation. For obvious reasons, we decline to do so.
No. 11-2423 25
Congress may delegate lawmaking authority to agencies.
There is room to debate the extent to which courts
should defer when agencies have delegated some inter-
pretive responsibility to their staffs.6 But agency staffs
certainly may not delegate responsibility to the parties
they regulate. See Gerber v. Norton, 294 F.3d 173, 185-86
(D.C. Cir. 2002) (“Nor may the agency delegate its re-
sponsibility to the regulated party.”). Of course, there is
no evidence that the Commission staff did so here, for,
as we have said, Regulatory Guide 5.66 does not
embrace the NEI’s interpretation as the Commission’s
own and comes with strong disclaimers. Auer-Seminole
Rock deference does not apply to NEI 03-01 (Revision 3)
or Regulatory Guide 5.66.
6
See Keys v. Barnhart, 347 F.3d 990, 993-94 (7th Cir. 2003) (“It is
odd to think of agencies as making law by means of state-
ments made in briefs, since agency briefs, at least below the
Supreme Court level, normally are not reviewed by the mem-
bers of the agency itself; and it is odd to think of Congress
delegating lawmaking power to unreviewed staff decisions.”).
In the context of an agency’s interpretation of a statute, now-
Justice Kagan has argued that courts should give Chevron
deference only when the “congressional delegatee” (generally,
the agency head) “takes personal responsibility for the deci-
sion.” See David J. Barron & Elena Kagan, Chevron’s
Nondelegation Doctrine, 2001 Sup. Ct. Rev. 201, 204. Applying
this limitation to Auer-Seminole Rock deference would ad-
vance the same values of administrative “accountability and
discipline in decision making.” Id. See also note 4, supra.26 No. 11-2423
III. Conclusion
We R EVERSE the judgment of the district court and
R EMAND the case with instructions to enter summary
judgment in favor of Local 15.
3-29-12