Bowles v. Seminole Rock & Sand Co.
325 U.S. 410, 65 S.Ct. 1215, 89 L.Ed. 1700 (1945)
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Rule of Law:
An administrative agency's interpretation of its own regulation is of controlling weight unless it is plainly erroneous or inconsistent with the regulation.
Facts:
- In October 1941, Seminole Rock & Sand Co. (Seminole) contracted to sell crushed stone to Seaboard Air Line Railway (Seaboard) for 60 cents per ton.
- In January 1942, Seminole contracted to sell crushed stone to V.P. Loftis Co. (Loftis), a government contractor, for $1.50 per ton.
- During March 1942, the base period for the price regulation, Seminole delivered the stone to Seaboard at the agreed-upon 60 cents per ton price.
- Seminole made no deliveries of crushed stone to Loftis during March 1942.
- After the price regulation became effective, Seminole made new contracts to sell the same type of crushed stone to Seaboard at 85 cents and $1.00 per ton.
- The Administrator of the Office of Price Administration contended that Seminole's highest lawful price was 60 cents per ton, based on the March 1942 deliveries to Seaboard.
Procedural Posture:
- The Administrator of the Office of Price Administration, Bowles, filed an action in the U.S. District Court seeking to enjoin Seminole Rock & Sand Co. from violating Maximum Price Regulation No. 188.
- The District Court dismissed the action, ruling in favor of Seminole Rock by finding its ceiling price was $1.50 per ton.
- The Administrator (appellant) appealed the dismissal to the U.S. Circuit Court of Appeals for the Fifth Circuit.
- The Circuit Court of Appeals affirmed the District Court's judgment.
- The Administrator (petitioner) was granted a writ of certiorari by the Supreme Court of the United States.
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Issue:
Does Maximum Price Regulation No. 188's phrase 'highest price which the seller charged...for delivery...during March, 1942' set the ceiling price based on the price of goods actually delivered in March, regardless of when the underlying contract for sale was made?
Opinions:
Majority - Justice Murphy
Yes. The regulation sets the ceiling price based on the highest price charged for an article actually delivered during March 1942, irrespective of when the contract of sale was made. The regulation's plain language establishes a three-tiered test, with the first and controlling tier (§ 1499.163(a)(2)(i)) triggered by an actual delivery during the base period. The phrase 'charged... for delivery... during March' links the price to the delivery event, not the contract date. This interpretation is reinforced by the second tier, which only applies if 'the seller made no such delivery during March, 1942,' making delivery the determinative factor. Furthermore, the Administrator's consistent administrative interpretation of the regulation, as evidenced by official bulletins and reports, clarifies that actual delivery is the controlling element. The Court must give this administrative interpretation controlling weight because it is not plainly erroneous or inconsistent with the regulation.
Dissenting - Justice Roberts
No. Justice Roberts would have affirmed the judgment of the Circuit Court of Appeals for the reasons stated in its opinion, which had found the ceiling price to be $1.50 per ton.
Analysis:
This case is foundational in administrative law, establishing what is now known as 'Seminole Rock deference' or 'Auer deference.' The decision grants significant power to administrative agencies by requiring courts to defer to an agency's interpretation of its own ambiguous regulations. This deference is justified on the grounds that the agency possesses unique expertise and insight into the purpose and structure of its regulatory scheme. The ruling means that as long as an agency's interpretation is reasonable and not in direct conflict with the regulation's text, it will be upheld, even if a court might have interpreted the regulation differently.
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