Chase Bank USA, N. A. v. McCoy

(Slip Opinion) OCTOBER TERM, 2010 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
CHASE BANK USA, N. A. v. MCCOY, INDIVIDUALLY AND
ON BEHALF OF ALL OTHERS SIMILARLY SITUATED
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE NINTH CIRCUIT
No. 09–329. Argued December 8, 2010—Decided January 24, 2011
Regulation Z—promulgated by the Federal Reserve Board (Board) pur
suant to its authority under the Truth in Lending Act—requires
credit card issuers to disclose certain information to cardholders. The
version of the regulation in effect at the time this dispute arose
obliges issuers to provide to cardholders an “[i]nitial disclosure
statement,” 12 CFR §226.6, specifying “each periodic rate that may
be used to compute the finance charge,” §226.6(a)(2). It also imposes
“[s]ubsequent disclosure requirements,” §226.9, including notice to
cardholders “[w]henever any term required to be disclosed under
§226.6 is changed,” §226.9(c)(1). When “a periodic rate or other fi
nance charge is increased because of the consumer’s delinquency or
default,” notice must be given “before the effective date of the
change.” Ibid.
At the time respondent McCoy filed suit, he was the holder of a
credit card issued by petitioner Chase Bank. The cardholder agree
ment provided, in relevant part, that McCoy was eligible for “Pre
ferred rates” as long as he met certain conditions. If any of those
conditions were not met, Chase reserved the right to raise the rate,
up to a pre-set maximum, and to apply the change to both existing
and new balances. McCoy alleges that Chase increased his interest
rate due to his delinquency or default and applied that increase ret
roactively, and that this action violated Regulation Z because Chase
did not notify him of the increase until after it had taken effect. The
District Court dismissed his complaint, holding that because the in
crease did not constitute a “change in terms” under §226.9(c), Chase
was not required to notify him of the increase before implementing it.
The Ninth Circuit reversed in relevant part, holding that Regulation
2 CHASE BANK USA, N. A. v. MCCOY
Syllabus
Z requires issuers to provide notice of an interest-rate increase prior
to its effective date.
Held: At the time of the transactions at issue, Regulation Z did not re
quire Chase to provide McCoy with a change-in-terms notice before
implementing the agreement term allowing it to raise his interest
rate, up to a pre-set maximum, following delinquency or default.
Pp. 7–19.
(a) This case requires the Court to determine the meaning of a
regulation promulgated by the Board under its statutory authority.
However, Regulation Z’s text is unclear with respect to the crucial in
terpretive question at issue: whether a change to an interest rate,
pursuant to previously-disclosed contractual provision, constitutes a
change to a “term required to be disclosed under §226.6” requiring a
subsequent disclosure under §226.9(c)(1). Because of this ambiguity,
the Court must look to the Board’s own interpretation of the regula
tion for guidance in deciding this case. Pp. 7–12.
(b) The Board has made clear in its amicus brief to this Court that,
in its view, Chase was not required to give McCoy notice of the inter
est rate increase under the applicable version of Regulation Z. This
Court defers to an agency’s interpretation of its own regulation, ad
vanced in a legal brief, unless that interpretation is “plainly errone
ous or inconsistent with the regulation.” Auer v. Robbins, 519 U. S.
452, 461 (internal quotation marks omitted). In Auer, the Court de
ferred to the Secretary of Labor’s interpretation of his own regula
tion, presented in an amicus brief submitted by the agency at the
Court’s invitation. The Court held that the fact that the interpreta
tion came in a legal brief did not, “in the circumstances of th[at] case,
make it unworthy of deference.” Id., at 462. The interpretation was
“in no sense a post hoc rationalization advanced by an agency seeking
to defend past agency action against attack,” ibid. (internal quotation
marks and alteration omitted), and there was “no reason to suspect
that the interpretation [did] not reflect the agency’s fair and consid
ered judgment on the matter in question,” ibid. The brief submitted
by the Board here, at the Court’s invitation, is no different. As in
Auer, there is no reason to believe that the Board’s interpretation is a
“post hoc rationalization” taken as a litigation position, for the Board
is not a party to this case. And its interpretation is neither “plainly
erroneous” nor “inconsistent with” the indeterminate text of Regula
tion Z. Thus, there is no reason to suspect that the Board’s position
in its amicus brief reflects anything other than its fair and considered
judgment as to what the regulation required at the time this dispute
arose. That Congress and the Board may currently hold a different
view does not mean that deference is not warranted to the Board’s
understanding of what the applicable version of Regulation Z re
Cite as: 562 U. S. ____ (2011) 3
Syllabus
quired. Under Auer, therefore, it is clear that deference to the inter
pretation in the agency amicus brief is warranted. Pp. 12–16.
(c) McCoy errs in arguing that deference to a legal brief is inappro
priate because the interpretation of Regulation Z in the Official Staff
Commentary commands a different result. While Commentary
promulgated by the Board as an interpretation of Regulation Z may
warrant deference as a general matter, the Commentary explaining
the requirements at issue in this case largely replicates the ambigu
ity present in the regulatory text, and therefore offers no reason to
disregard the interpretation advanced in the Board’s amicus brief.
Pp. 16–19.
559 F. 3d 963, reversed and remanded.
SOTOMAYOR, J., delivered the opinion for a unanimous Court.
Cite as: 562 U. S. ____ (2011) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash­
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that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 09–329
_________________
CHASE BANK USA, N. A., PETITIONER v. JAMES A.
MCCOY, INDIVIDUALLY AND ON BEHALF OF ALL
OTHERS SIMILARLY SITUATED
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT
[January 24, 2011]
JUSTICE SOTOMAYOR delivered the opinion of the Court.
As applicable to this case, Regulation Z—promulgated
by the Board of Governors of the Federal Reserve System
(Board) pursuant to its authority under the Truth in
Lending Act (TILA), 82 Stat. 146, 15 U. S. C. §1601 et
seq.—requires that issuers of credit cards provide card­
holders with an “[i]nitial disclosure statement” specifying,
inter alia, “each periodic rate” associated with the account.
12 CFR §226.6(a)(2) (2008). The regulation also imposes
“[s]ubsequent disclosure requirements,” including notice to
cardholders “[w]henever any term required to be disclosed
under §226.6 is changed.” §226.9(c)(1). This case presents
the question whether Regulation Z requires an issuer to
notify a cardholder of an interest-rate increase instituted
pursuant to a provision of the cardholder agreement giv­
ing the issuer discretion to increase the rate, up to a
stated maximum, in the event of the cardholder’s delin­
quency or default. We conclude that the version of Reg-
ulation Z applicable in this case does not require such
notice.
2 CHASE BANK USA, N. A. v. MCCOY
Opinion of the Court
I
A
Congress passed TILA to promote consumers’ “informed
use of credit” by requiring “meaningful disclosure of credit
terms,” 15 U. S. C. §1601(a), and granted the Board the
authority to issue regulations to achieve TILA’s purposes,
§1604(a). Pursuant to this authority, the Board promul­
gated Regulation Z, which requires credit card issuers to
disclose certain information to consumers.1 Two provi­
sions of Regulation Z are at issue in this case. The first,
12 CFR §226.6, explains what information credit card
issuers are obliged to provide to cardholders in the
“[i]nitial disclosure statement,” including “each periodic
rate that may be used to compute the finance charge.”
§226.6(a)(2). The second, §226.9, imposes upon issuers
certain “[s]ubsequent disclosure requirements,” including
a requirement to provide notice “[w]henever any term
required to be disclosed under §226.6 is changed.”
§226.9(c)(1). As a general matter, notice of a change in
terms has to be provided 15 days in advance of the effec­
tive date of the change. Ibid. When “a periodic rate or
other finance charge is increased because of the con­
sumer’s delinquency or default,” however, notice only need
be given “before the effective date of the change.” Ibid.
Regulation Z also explains that no notice is required under
§226.9 when the change in terms “results from . . . the
consumer’s default or delinquency (other than an increase
in the periodic rate or other finance charge).” §226.9(c)(2).
The official interpretation of Regulation Z (Official Staff
Commentary or Commentary) promulgated by the Board
——————
1 As discussed more fully below, see infra, at 4–5, in 2009 the Board
amended Regulation Z, such that the provisions discussed in this
opinion are no longer in effect. However, because the pre-2009 provi­
sions are the ones applicable to the case before us, we will refer to them
in the present tense.
Cite as: 562 U. S. ____ (2011) 3
Opinion of the Court
explains these requirements further: Section 226.9(c)(1)’s
notice-of-change requirement does not apply “if the spe­
cific change is set forth initially, such as . . . an increase
that occurs when the consumer has been under an agree­
ment to maintain a certain balance in a savings account in
order to keep a particular rate and the account balance
falls below the specified minimum.” 12 CFR pt. 226, Supp.
I, Comment 9(c)–1, p. 506 (2008) (hereinafter Comment
9(c)–1). On the other hand, the Commentary explains,
“notice must be given if the contract allows the creditor to
increase the rate at its discretion but does not include
specific terms for an increase (for example, when an in­
crease may occur under the creditor’s contract reservation
right to increase the periodic rate).” Ibid. As to the timing
requirements, the Commentary states: “[A] notice of
change in terms is required, but it may be mailed or deliv­
ered as late as the effective date of the change . . . [i]f
there is an increased periodic rate or any other finance
charge attributable to the consumer’s delinquency or
default.” Id., Comment 9(c)(1)–3, at 507 (hereinafter
Comment 9(c)(1)–3).
At least as early as 2004, the Board began considering
revisions to Regulation Z. The new regulations the Board
eventually issued do not apply to the present case, but the
details of their promulgation provides useful background
in considering the parties’ arguments with respect to the
version of Regulation Z we address here. In 2004 the
Board issued an advance notice of proposed rulemaking
announcing its intent to consider revisions. 69 Fed. Reg.
70925 (2004). In so doing, the Board described how it
understood the notice requirements to function at that
time:
“[A]dvance notice is not required in all cases. For ex­
ample, if the interest rate or other finance charge in­
creases due to a consumer’s default or delinquency,
4 CHASE BANK USA, N. A. v. MCCOY
Opinion of the Court
notice is required, but need not be given in advance.
12 CFR 226.9(c)(1); comment 9(c)(1)–3. And no
change-in-terms notice is required if the creditor
specifies in advance the circumstances under which
an increase to the finance charge or an annual fee will
occur. Comment 9(c)–1. For example, some credit
card account agreements permit the card issuer to in­
crease the interest rate if the consumer pays late . . . .
Under Regulation Z, because the circumstances are
specified in advance in the account agreement, the
creditor need not provide a change-in-terms notice 15
days in advance of the increase; the new rate will ap­
pear on the periodic statement for the cycle in which
the increase occurs.” Id., at 70931–70932.
The Board asked for public comment on whether these
“existing disclosure rules” were “adequate to enable con­
sumers to make timely decisions about how to manage
their accounts.” Id., at 70932.
Subsequently, in 2007, the Board published proposed
amendments to Regulation Z and the Commentary. 72
Fed. Reg. 32948. One amendment would have required 45
days’ advance written notice when “(i) [a] rate is increased
due to the consumer’s delinquency or default; or (ii) [a]
rate is increased as a penalty for one or more events spec­
ified in the account agreement, such as making a late
payment or obtaining an extension of credit that exceeds
the credit limit.” Id., at 33058 (proposed 12 CFR
§226.9(g)). The Board explained that, under the amend­
ments, “creditors would no longer be permitted to provide
for the immediate application of penalty pricing upon the
occurrence of certain events specified in the contract.” 72
Fed. Reg. 33012.
In January 2009, the Board promulgated a final rule
implementing many of the proposed changes, scheduled to
be effective July 1, 2010. 74 Fed. Reg. 5244. Most sali­
Cite as: 562 U. S. ____ (2011) 5
Opinion of the Court
ently, the Board included a new provision, §226.9(g),
which requires 45 days’ advance notice of increases in
rates due to cardholder delinquency or default, or as a
penalty, including penalties for “events specified in the
account agreement, such as making a late payment . . . .”
12 CFR §226.9(g)(1)(2010). In May 2009, Congress en­
acted the Credit Card Accountability Responsibility and
Disclosure Act (Credit CARD Act or Act), 123 Stat. 1734.
The Act amended TILA, in relevant part, to require 45
days’ advance notice of most increases in credit card an­
nual percentage rates. 15 U. S. C. §1637(i) (2006 ed.,
Supp. III). Because the Credit CARD Act’s notice re­
quirements with respect to interest-rate increases largely
mirror the requirements in the new version of the regu-
lation, the Board changed the effective date of those
requirements to August 20, 2009, to coincide with the
statutory schedule. See 74 Fed. Reg. 36077–36079. The
transactions giving rise to the dispute at issue in this case,
however, arose prior to enactment of the Act and the
promulgation of the new regulatory provisions.
B
Respondent James A. McCoy brought this action in the
Superior Court of Orange County, California on behalf of
himself and others similarly situated against petitioner
Chase Bank USA, N. A.; Chase removed the action to the
United States District Court for the Central District of
California under 28 U. S. C. §1441. At the time of the
transactions at issue, McCoy was the holder of a credit
card issued by Chase. The cardholder agreement between
the parties (Agreement) provides, in relevant part, that
McCoy is eligible for “Preferred rates,” but that to keep
such rates he has to meet certain conditions, including
making “at least the required minimum payments when
due on [his] Account and on all other loans or accounts
with [Chase] and [his] other creditors.” Brief for Respon­
6 CHASE BANK USA, N. A. v. MCCOY
Opinion of the Court
dent 8, n. 2; see also 559 F. 3d 963, 972, n. 1 (CA9 2009)
(Cudahy, J., dissenting). If any of the conditions in the
Agreement are not met, Chase reserves the right to
“change [McCoy’s] interest rate and impose a Non-
Preferred rate up to the maximum Non-Preferred rate
described in the Pricing Schedule” and to apply any
changes “to existing as well as new balances . . . effective
with the billing cycle ending on the review date.” Brief for
Respondent 8, n. 2.
McCoy’s complaint alleges that Chase increased his
interest rate due to his delinquency or default, and applied
that increase retroactively. McCoy asserts that the rate
increase violates Regulation Z because, pursuant to the
Agreement, Chase did not notify him of the increase until
after it had taken effect.2 The District Court dismissed
McCoy’s complaint, holding that because the increase did
not constitute a “change in terms” as contemplated by
§226.9(c), Chase was not required to notify him of the
increase before implementing it. See App. to Pet. for Cert.
37a–47a.
A divided panel of the United States Court of Appeals
for the Ninth Circuit reversed in relevant part, holding
that Regulation Z requires issuers to provide notice of an
interest-rate increase prior to its effective date. See 559
F. 3d, at 969. Concluding that the text of Regulation Z is
ambiguous and that the agency commentary accompany­
ing the 2004 request for comments and the 2007 proposed
amendments favors neither party’s interpretation, the
court relied primarily on the Official Staff Commentary; in
particular, the court noted that Comment 9(c)–1 requires
no notice of a change in terms if the “specific change” at
——————
2 McCoy also asserted various state-law claims that are not before us.
We note that McCoy’s complaint provides little detail regarding the
transactions at issue in this case. The parties, however, are in agree­
ment as to the essential facts alleged.
Cite as: 562 U. S. ____ (2011) 7
Opinion of the Court
issue is set forth in the initial agreement. See id., at 965–
967. The court found, however, that because the Agree­
ment vests Chase with discretion to impose any Non-
Preferred rate it chooses (up to the specified maximum)
upon McCoy’s default, the Agreement “provides McCoy
with no basis for predicting in advance what retroactive
interest rate Chase will choose to charge him if he de­
faults.” Id., at 967. Accordingly, the court held that be­
cause the Agreement does not alert McCoy to the “specific
change” that will occur if he defaults, Chase was obliged to
give notice of that change prior to its effective date. Ibid.Relying primarily on the 2004 notice of proposed rulemak­
ing and the 2007 proposed amendments, the dissenting
judge concluded that Regulation Z does not require notice
of an interest-rate increase in the circumstances of this
case. See id., at 972–979 (opinion of Cudahy, J.).
After the Ninth Circuit’s ruling, the United States Court
of Appeals for the First Circuit decided the same question
in Chase’s favor. See Shaner v. Chase Bank USA, N. A.,
587 F. 3d 488 (2009). The First Circuit relied in part on
an amicus brief submitted by the Board at the court’s
request, in which the agency advanced the same interpre­
tation of Regulation Z that it now does before this Court.
Id., at 493. We granted certiorari to resolve this division
in authority.3 561 U. S. ___ (2010).
II
In order to decide this case, we must determine whether
an interest-rate increase constitutes a “change in terms”
under Regulation Z, when the change is made pursuant to
a provision in the cardholder agreement allowing the
——————
3 The United States Court of Appeals for the Seventh Circuit has also
rejected the reasoning of the Ninth Circuit, though on a different
question than the one presented in this case. See Swanson v. Bank of
America, N. A., 559 F. 3d 653, reh’g denied, 563 F. 3d 634 (2009)
(disagreeing with the Ninth Circuit’s interpretation of Regulation Z).
8 CHASE BANK USA, N. A. v. MCCOY
Opinion of the Court
issuer to increase the rate, up to a stated maximum, in the
event of the cardholder’s delinquency or default. Accord­
ingly, this case calls upon us to determine the meaning of
a regulation promulgated by the Board under its statutory
authority. The parties dispute the proper interpretation of
the regulation itself, as well as whether we should accord
deference to the Board’s interpretation of its regulation.
As explained below, we conclude that the text of the regu­
lation is ambiguous, and that deference is warranted to
the interpretation of that text advanced by the Board in
its amicus brief.
A
Our analysis begins with the text of Regulation Z in
effect at the time this dispute arose. First, §226.6 requires
an “[i]nitial disclosure statement”:
“The creditor shall disclose to the consumer, in ter­
minology consistent with that to be used on the peri­
odic statement, each of the following items, to the
extent applicable:
“(a) Finance charge. The circumstances under
which a finance charge will be imposed and an expla­
nation of how it will be determined, as follows:
. . . . .
“(2) A disclosure of each periodic rate that may be
used to compute the finance charge, the range of bal­
ances to which it is applicable, and the corresponding
annual percentage rate. When different periodic rates
apply to different types of transactions, the types of
transactions to which the periodic rates apply shall
also be disclosed.” (Footnotes omitted.)
Second, §226.9(c) requires certain “[s]ubsequent disclosure
requirements”:
“Change in terms—(1) Written notice required.
Whenever any term required to be disclosed under
Cite as: 562 U. S. ____ (2011) 9
Opinion of the Court
§226.6 is changed or the required minimum periodic
payment is increased, the creditor shall mail or de­
liver written notice of the change to each consumer
who may be affected. The notice shall be mailed or
delivered at least 15 days prior to the effective date of
the change. The 15-day timing requirement does not
apply if the change has been agreed to by the con­
sumer, or if a periodic rate or other finance charge is
increased because of the consumer’s delinquency or
default; the notice shall be given, however, before the
effective date of the change.
“(2) Notice not required. No notice under this sec­
tion is required when the change . . . results from . . .
the consumer’s default or delinquency (other than an
increase in the periodic rate or other finance charge).”
The question is whether the increase in McCoy’s inter­
est rate constitutes a change to a “term required to be
disclosed under §226.6,” requiring a subsequent disclosure
under §226.9(c)(1). One of the initial terms that must be
disclosed under §226.6 is “each periodic rate that may be
used to compute the finance charge . . . and the corre­
sponding annual percentage rate.” §226.6(a)(2). McCoy
argues that, because an increase in the interest rate in­
creases the “periodic rate” applicable to his account, such
an increase constitutes a change in terms within the
meaning of §226.9(c)(1). As further support, McCoy points
to two provisions in §226.9(c): first, that notice of an in­
crease in the interest rate must be provided “before the
effective date of the change” when the increase is due to
“the consumer’s delinquency or default,” §226.9(c)(1); and
second, that no notice is required of a change resulting
“from the consumer’s default or delinquency (other than
an increase in the periodic rate or other finance charge),”
§226.9(c)(2). Accordingly, because §226.9(c) includes
interest-rate increases due to delinquency or default,
10 CHASE BANK USA, N. A. v. MCCOY
Opinion of the Court
McCoy argues that the plain text of the regulation indi­
cates that a change in the periodic rate due to such default
is a “change in terms” requiring notice under §226.9(c)(1).
We recognize that McCoy’s argument has some force;
read in isolation, the language quoted above certainly
suggests that credit card issuers must provide notice of an
interest-rate increase imposed pursuant to cardholder
delinquency or default. But McCoy’s analysis begs the key
question: whether the increase actually changed a “term”
of the Agreement that was “required to be disclosed under
§226.6.” If not, §226.9(c)’s subsequent notice requirement
with respect to a “change in terms” does not apply. Chase
argues precisely this: The increase did not change a term
in the Agreement, but merely implemented one that had
been initially disclosed, as required. This interpretation,
though not commanded by the text of the regulation, is
reasonable. Section 226.6(a)(2) requires initial disclosure
of “each periodic rate that may be used to compute the
finance charge.” The Agreement itself discloses both the
initial rate (Preferred rate) and the maximum rate to be
imposed in the event of default (Non-Preferred rate). See
Brief for Respondent 8, n. 2; Brief for Petitioner 13–14.4
Accordingly, it is plausible to understand the Agreement
to initially disclose “each periodic rate” to be applied to the
account, and Chase arguably did not “change” those rates
as a result of McCoy’s default. Instead, Chase merely
implemented the previously disclosed term specifying the
Non-Preferred rate.5
——————
4 The Pricing Schedule referred to in the Agreement is not contained
in the case record, nor are its contents apparent from the parties’ briefs,
but neither side disputes that it specified a maximum Non-Preferred
rate applicable to the Agreement.
5 We are not persuaded by McCoy’s argument that, although Chase
did not change a “contract term” when it raised his interest rate pursu­
ant to the terms of the Agreement, it changed a “credit term,” thereby
triggering §226.9(c)’s notice requirement. The relevant text of Regula­
Cite as: 562 U. S. ____ (2011) 11
Opinion of the Court
This reading still leaves the question why §226.9(c)(1)
refers to interest-rate increases resulting from delin­
quency or default if such increases do not constitute a
“change in terms.” One reasonable explanation Chase
offers is that §226.9(c)(1) refers to interest-rate increases
that were not specifically outlined in the agreement’s
initial terms (unlike those in the present Agreement). For
example, credit card agreements routinely include a “res­
ervation of rights” provision giving the issuer discretion to
change the terms of the contract, often as a means of
responding to events that raise doubts about the card­
holder’s creditworthiness. An issuer may exercise this
general contract-modification authority and raise the
interest rate applicable to the account to address any
heightened risk. See Brief for Petitioner 6. In such a case,
§226.9(c)(1) is best read to require that notice must be
given prior to the effective date of the increase, because
the unilateral increase instituted by the issuer actually
changed a term—the interest rate—in a manner not spe­
cifically contemplated by the agreement.6 See Comment
9(c)–1 (providing that notice is required if the agreement
“does not include specific terms for an increase (for exam­
——————
tion Z does not refer to, let alone distinguish between, “contract terms”
and “credit terms,” and McCoy’s repeated citations to TILA’s broad
policy statement do not convince us that such a distinction is war­
ranted. See 15 U. S. C. §1601(a) (“It is the purpose of this subchapter
to assure a meaningful disclosure of credit terms so that the consumer
will be able to compare more readily the various credit terms available
to him and avoid the uninformed use of credit”).
6 The Government offers an alternative example. Assume that the
agreement is similar to the one at issue here, with a specified maxi­
mum level to which the interest rate can be increased if the cardholder
defaults. If default occurs but the issuer raises the rate above the
contractual maximum, notice must be given prior to the effective date
because the issuer actually changed the term of the contract initially
specifying the maximum rate possible. See Brief for United States as
Amicus Curiae 14–15.
12 CHASE BANK USA, N. A. v. MCCOY
Opinion of the Court
ple, when an increase may occur under the creditor’s
contract reservation right to increase the periodic rate)”).
In short, Regulation Z is unclear with respect to the
crucial interpretive question: whether the interest-rate
increase at issue in this case constitutes a “change in
terms” requiring notice. We need not decide which party’s
interpretation is more persuasive, however; both are
plausible, and the text alone does not permit a more de­
finitive reading. Accordingly, we find Regulation Z to be
ambiguous as to the question presented, and must there­
fore look to the Board’s own interpretation of the regula­
tion for guidance in deciding this case. See Coeur Alaska,
Inc. v. Southeast Alaska Conservation Council, 557 U. S.
___, ___ (2009) (slip op., at 14) (stating that when an
agency’s regulations construing a statute “are ambiguous
. . . we next turn to the agencies’ subsequent interpreta­
tion of those regulations” for guidance); Ford Motor Credit
Co. v. Milhollin, 444 U. S. 555, 560 (1980) (stating that
when the question presented “is not governed by clear
expression in the . . . regulation . . . it is appropriate to
defer to the Federal Reserve Board and staff in determin­
ing what resolution of that issue” is appropriate).
B
The Board has made clear in the amicus brief it has
submitted to this Court that, in the Board’s view, Chase
was not required to give McCoy notice of the interest rate
increase under the version of Regulation Z applicable at
the time. Under Auer v. Robbins, 519 U. S. 452 (1997), we
defer to an agency’s interpretation of its own regulation,
advanced in a legal brief, unless that interpretation is
“plainly erroneous or inconsistent with the regulation.”
Id., at 461 (internal quotation marks omitted). Because
the interpretation the Board presents in its brief is consis­
tent with the regulatory text, we need look no further in
Cite as: 562 U. S. ____ (2011) 13
Opinion of the Court
deciding this case.7
In its brief to this Court, the Board explains that the
Ninth Circuit “erred in concluding that, at the time of
the transactions at issue in this case, Regulation Z required
credit card issuers to provide a change-in-terms notice be­
fore implementing a contractual default-rate provision.”
See Brief for United States as Amicus Curiae 11; see also
ibid. (stating that when a term of an agreement author­
ized the credit provider “to increase a consumer’s interest
rate if the consumer failed to make timely payments . . .
any resulting rate increase did not represent a ‘change in
terms,’ but rather the implementation of terms already set
forth in the initial disclosure statement”); id., at 15–16
(stating that “[w]hen a cardholder agreement identifies a
contingency that triggers a rate increase, and the maxi­
mum possible rate that the issuer may charge if that
contingency occurs,” then “no change-in-terms notice is
required” under Regulation Z).8 Under the principles set
forth in Auer, we give deference to this interpretation.
In Auer we deferred to the Secretary of Labor’s interpre­
tation of his own regulation, presented in an amicus brief
submitted by the agency at our invitation. 519 U. S., at
——————
7 We note that, in reaching its decision, the Ninth Circuit did not
have the benefit of briefing from the Board. The Ninth Circuit appar­
ently did not solicit the views of the Board in the proceedings below, see
Brief for Petitioner 16, and the First Circuit did not solicit the Board’s
views in Shaner v. Chase Bank USA, N. A., 587 F. 3d 488 (2009), until
after the Ninth Circuit issued its opinion in this case, see Order in No.
09–1157 (CA1, Aug. 4, 2009).
8 This is consistent with the view the Board advanced in its amicus
brief to the First Circuit, in which the Board noted that it “has in­
terpreted the applicable provisions of Regulation Z not to require a
pre-effective date change-in-terms notice for an increase in annual per­
centage rate when the contingency that will trigger a rate increase and
the specific consequences for the consumer’s rate are set forth in the
initial card member agreement.” App. to Brief for United States as
Amicus Curiae 2a.
14 CHASE BANK USA, N. A. v. MCCOY
Opinion of the Court
461–462. Responding to the petitioners’ objection that the
agency’s interpretation came in a legal brief, we held that
this fact did not, “in the circumstances of this case, make
it unworthy of deference.” Id., at 462. We observed that
“[t]he Secretary’s position is in no sense a ‘post hoc ration­
alizatio[n]’ advanced by an agency seeking to defend past
agency action against attack.” Ibid. (quoting Bowen v.
Georgetown Univ. Hospital, 488 U. S. 204, 212 (1988)). We
added: “There is simply no reason to suspect that the
interpretation does not reflect the agency’s fair and con­
sidered judgment on the matter in question.” Auer, 519
U. S., at 462.
The brief submitted by the Board in the present case, at
our invitation, is no different. As in Auer, there is no
reason to believe that the interpretation advanced by the
Board is a “post hoc rationalization” taken as a litigation
position. The Board is not a party to this case. And as is
evident from our discussion of Regulation Z itself, see Part
II–A, supra, the Board’s interpretation is neither “plainly
erroneous” nor “inconsistent with” the indeterminate text
of the regulation. In short, there is no reason to suspect
that the position the Board takes in its amicus brief re­
flects anything other than the agency’s fair and considered
judgment as to what the regulation required at the time
this dispute arose.
McCoy may well be correct in asserting that it is better
policy to oblige credit-card issuers to give advance notice
of a rate increase; after all, both Congress and the Board
have recently indicated that such a requirement is war­
ranted. See Credit CARD Act, §101(a)(1), 123 Stat. 1735–
1736; 12 CFR §226.9(g) (2009). That Congress and the
Board may currently hold such views does not mean,
however, that deference is not warranted to the Board’s
different understanding of what the pre-2009 version of
Regulation Z required. To the contrary, the interpretation
the Board advances in its amicus brief is entirely consis­
Cite as: 562 U. S. ____ (2011) 15
Opinion of the Court
tent with its past views. The 2004 notice of rulemaking
and the 2007 proposed amendments to Regulation Z make
clear that, prior to 2009, the Board’s fair and considered
judgment was that “no change-in-terms notice is required
if the creditor specifies in advance the circumstances
under which an increase . . . will occur,” 69 Fed. Reg.
70931, and “immediate application of penalty pricing upon
the occurrence of certain events specified in the contract”
was permissible, 72 Fed. Reg. 33012.
Under Auer, therefore, it is clear that deference to the
interpretation in the Board’s amicus brief is warranted.
The cases McCoy cites in which we declined to apply Auer
do not suggest that deference is unwarranted here. In
Gonzales v. Oregon, 546 U. S. 243 (2006), we declined to
defer because—in sharp contrast to the present case—
the regulation in question did “little more than restate the
terms of the statute” pursuant to which the regulation was
promulgated. Id., at 257. Accordingly, no deference was
warranted to an agency interpretation of what were, in
fact, Congress’ words. Ibid. In contrast, at the time of the
transactions in this case, TILA itself included no require­
ments with respect to the disclosure of a change in credit
terms. In Christensen v. Harris County, 529 U. S. 576(2000), we declined to apply Auer deference because the
regulation in question was unambiguous, and adopting the
agency’s contrary interpretation would “permit the agency,
under the guise of interpreting a regulation, to create de
facto a new regulation.” 529 U. S., at 588. In light of
Regulation Z’s ambiguity, there is no such danger here.
And our statement in Christensen that “deference is war­
ranted only when the language of the regulation is am­
biguous,” ibid., is perfectly consonant with Auer itself; if
the text of a regulation is unambiguous, a conflicting
agency interpretation advanced in an amicus brief will
necessarily be “plainly erroneous or inconsistent with the
regulation” in question. Auer, 519 U. S., at 461 (internal
16 CHASE BANK USA, N. A. v. MCCOY
Opinion of the Court
quotation marks omitted). Accordingly, under our prece­
dent deference to the Board’s interpretation of its own
regulation, as presented in the agency’s amicus brief, is
wholly appropriate.
C
McCoy further argues that deference to a legal brief is
inappropriate because the interpretation of Regulation Z
in the Official Staff Commentary commands a different
result. To be sure, the Official Staff Commentary promul­
gated by the Board as an interpretation of Regulation Z
may warrant deference as a general matter. See Anderson
Bros. Ford v. Valencia, 452 U. S. 205, 219 (1981) (holding
that “the Board’s interpretation of its own regulation”
should generally “be accepted by the courts”); Milhollin,
444 U. S., at 565 (“Unless demonstrably irrational, Fed­
eral Reserve Board staff opinions construing [TILA] or
Regulation [Z] should be dispositive”). We find, however,
that the Commentary at issue here 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.9 Cf. Smith v. City
——————
9 We are not persuaded by McCoy’s argument that the Board’s own
regulations make the Official Staff Commentary “the exclusive source of
authorized staff opinion.” Brief for Respondent 36 (emphasis added).
In the regulations McCoy cites the Board has indicated only that the
central purpose of the Commentary is to present agency interpretations
that, if relied upon, provide the basis for invoking the good-faith de­
fense to liability under TILA. See 15 U. S. C. §1640(f) (precluding
liability for “any act done or omitted in good faith in conformity . . .
with any interpretation . . . by an official or employee . . . duly author­
ized by the Board to issue such interpretations . . . under such proce­
dures as the Board may prescribe”); 12 CFR pt. 226, App. C (2008)
(“[O]fficial staff interpretations of this regulation . . . provide the
protection afforded under [§1640(f)]”); id., Supp. I, Introduction ¶1, p.
451 (same); 46 Fed. Reg. 50288 (1981) (same). McCoy cites no authority
indicating that, in promulgating the Commentary and establishing
certain statutory safe harbors, the Board intended to limit its ability to
Cite as: 562 U. S. ____ (2011) 17
Opinion of the Court
of Jackson, 544 U. S. 228, 248 (2005) (O’Connor, J., con­
curring in judgment) (noting that deference is not war­
ranted when “there is no reasoned agency reading of the
text to which we might defer”).
The Ninth Circuit relied primarily on Comment 9(c)(1)–
3, which states in relevant part that “a notice of change in
terms is required, but it may be mailed or delivered as late
as the effective date of the change . . . [i]f there is an
increased periodic rate or any other finance charge attri­
butable to the consumer’s delinquency or default.” This
exposition of the regulation does not add any clarity to the
regulatory text, which expresses the same requirement.
See §226.9(c)(1) (2008) (“[I]f a periodic rate or other fi­
nance charge is increased because of the consumer’s delin­
quency or default . . . notice shall be given . . . before the
effective date of the change”). And like §226.9(c), Com­
ment 9(c) is entitled “Change in terms.” Accordingly,
Chase’s plausible interpretation of §226.9(c)(1) is equally
applicable to Comment 9(c)(1)–3: On Chase’s view, be­
cause the interest-rate increase at issue in this case did
not constitute a “change in terms,” the disclosure require­
ments in the regulation and Commentary simply do not
come into play. See supra, at 10–11.
Comment 9(c)–1 is also ambiguous, though the most
plausible reading supports Chase’s position more than it
does McCoy’s. The Comment begins: “No notice of a
change in terms need be given if the specific change is set
forth initially” in the agreement. We do not find that the
Comment’s addition of the modifier “specific” to the word
“change” enables us to determine, any more than we could
in light of the text of the regulation, see supra, at 12,
whether the interest-rate increase at issue in this case
was a “change in terms” requiring notice. According to
Chase, as long as the agreement explains that delinquency
——————
issue authoritative interpretations for other purposes.
18 CHASE BANK USA, N. A. v. MCCOY
Opinion of the Court
or default might trigger an increased interest rate and
states the maximum level to which the rate could be in­
creased, the “specific change” that ensues upon default has
been set forth initially and no additional notice is required
before implementation. McCoy argues to the contrary:
Under Comment 9(c)–1, any new rate imposed after delin­
quency or default must be disclosed prior to the effective
date, if the particular rate (rather than the maximum
rate) was not specifically mentioned in the agreement. On
the whole, then, the Official Staff Commentary’s explana­
tion of Regulation Z does not resolve the uncertainty in the
regulatory text, and offers us no reason to disregard
the interpretation advanced in the Board’s amicus brief.10
——————
10 In concluding otherwise, the Ninth Circuit focused on the examples
Comment 9(c)–1 provides of changes that, if set forth initially, require
no further disclosure when put into effect:
“No notice of a change in terms need be given if the specific change is
set forth initially, such as: Rate increases under a properly disclosed
variable-rate plan, a rate increase that occurs when an employee has
been under a preferential rate agreement and terminates employment,
or an increase that occurs when the consumer has been under an
agreement to maintain a certain balance in a savings account in order
to keep a particular rate and the account balance falls below the
specified minimum.”
The Ninth Circuit concluded that, in contrast to each of these three
examples, “the increase here occurs at Chase’s discretion.” 559 F. 3d
963, 966 (2009). That is, once the triggering event—McCoy’s default—
occurred, Chase had the latitude to increase the interest rate as it saw
fit (up to the limit specified in the Pricing Schedule).
We are not persuaded by the Ninth Circuit’s reasoning. Certainly,
under a “variable-rate” plan the interest rate fluctuates according to an
external variable easily discernable by the cardholder (like the Federal
Prime rate), and the issuer has no discretion. See ibid. But the Com­
ment’s second and third examples do not appear to be significantly
different from this case: The agreement contains a preset rate, but it
also provides that, on the occurrence of a predefined event (terminating
employment or a low account balance), the rate will increase.
Moreover, Comment 9(c)–1 further states that notice is needed “if the
contract allows the creditor to increase the rate at its discretion but
does not include specific terms for an increase”—for example, “when an
Cite as: 562 U. S. ____ (2011) 19
Opinion of the Court
McCoy further contends that our reliance here on an
agency interpretation presented outside the four corners of
the Official Staff Commentary will require future liti­
gants, as well as the Board, to expend time and resources
“to comb through . . . correspondence, publications, and
the agency’s website to determine the agency’s position.”
Brief for Respondent 37–38. We are not convinced.
McCoy may be correct that the Board established the
Official Staff Commentary so as to centralize its opinion­
making process and avoid “overburdening the industry
with excessive detail and multiple research sources.” 46
Fed. Reg. 50288. But his suggestion that, if we accord
deference to an amicus brief, all other “unofficial” sources
will be fair game is of no moment. Today we decide only
that the amicus brief submitted by the Board is entitled to
deference in light of “the circumstances of this case.”
Auer, 519 U. S., at 462.
Accordingly, we conclude that, at the time of the trans­
actions at issue in this case, Regulation Z did not require
Chase to provide McCoy with a change-in-terms notice
before it implemented the Agreement term allowing it to
raise his interest rate following delinquency or default.
* * *
For the foregoing reasons, the judgment of the United
States Court of Appeals for the Ninth Circuit is reversed,
and the case is remanded for further proceedings consis­
tent with this opinion.
It is so ordered.
——————
increase may occur under the creditor’s contract reservation right to
increase the periodic rate.” It would seem that the narrower latitude
Chase had under the Agreement to set the precise new rate within a
specified range after McCoy defaulted is not the kind of “discretion” the
last example of Comment 9(c)–1 contemplates. In short, analogizing to
the Comment’s examples suggests that Chase’s action in setting a new
rate was most likely a “specific change” that the Agreement itself
contemplated, and subsequent disclosure was not clearly required.