WASHINGTON (CN) – Though it opted not to take up the case, the Supreme Court issued a statement Monday about its interest in eschewing agency deference from contract law.
Laying out the entanglement in a statement respecting the denial of certiorari, Justice Neil Gorsuch explained that the circuits are divided over the concept 33 years after publication of the landmark case Chevron USA Inc. v. Natural Resources Defense Council.
Though that case formalized the practice of courts deferring to a government agency’s interpretations of statutory law, Gorsuch notes that its holding has crept into “the tested and pretty ancient rules of contract construction.”
In resolving contract disputes, Gorsuch noted, courts often resolve ambiguities against the party that “wrote the agreement, in part on the theory that the drafter might have avoided the dispute by picking clearer terms.”
“But in relatively recent times some courts have sought to displace familiar rules like these in favor of a new one, suggesting that an administrative agency’s interpretation of an ambiguous contractual term should always prevail — at least so long as the agency’s interpretation falls within a (generously defined) zone of ‘reasonableness,’” Gorsuch added.
Gorsuch questioned the logic, however, of displacing “the traditional rules of contract” with Chevron and its progeny.
Scenic America Inc., which at loggerheads with the Department of Transportation on a government contract, had offered up its case as the vehicle for the Supreme Court to resolve this issue.
Joined by Chief Justice John Roberts and Justice Samuel Alito, Gorsuch noted that the case had promise but ultimately does not make the cut because of its implication of “some rather less significant and considerably more factbound questions.”
“Questions that would, I fear, only complicate our effort to reach the heart of the matter, for these attendant questions include ‘difficult and close’ jurisdictional issues that would have to be settled first,” Gorsuch wrote. “In this light, I am persuaded that the proper course is to deny certiorari in this particular case even though the issues lying at its core are surely worthy of consideration in a case burdened with fewer antecedent and factbound questions.”