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INSIGHT: Life After Auer—A Framework for Determining Agency Deference

Oct. 18, 2019, 8:00 AM

In Kisor v. Wilkie, the U.S. Supreme Court announced a new framework for determining when (and how) courts should apply Auer deference—that is, deference to federal agencies in interpreting their own regulations.

A five-justice majority rejected the challenger’s invitation to expressly overrule the court’s highly contentious administrative law precedents Auer v. Robbins and Bowles v. Seminole Rock & Sand Co.

However, the majority decision largely answers the solicitor general’s request that the court “clarify and narrow” Auer deference in response to concerns that federal courts were reflexively giving agencies carte blanche to interpret their own regulations.

The end result: A narrowed scope of deference that could prove useful to regulated entities seeking to challenge agency action—not only under the framework of Auer, but potentially also, under Chevron.

A New(ish) Framework for Determining Agency Deference

The Kisor majority outlined a multi-step approach for determining when and how to apply Auer deference.

Genuine Ambiguity. “First and foremost,” no Auer deference should be given unless a court determines the regulation at issue is “genuinely ambiguous,” even after resorting to the standard tools of interpretation, including considerations of a regulation’s language, purpose, context, and history, as well as judicial interpretive canons. This is not meant to be an easy test to pass; the majority predicted that it “will resolve many seeming ambiguities without resort to Auer deference.”

Reasonableness. If there is genuine ambiguity, courts must ask whether the agency’s reading of its regulation is “reasonable.” The court clarified that “reasonable” means that the agency’s reading must come within the zone of ambiguity the court identified. This test has teeth: As the majority put it, “[L]et there be no mistake: [This] is a requirement an agency can fail.”

Character and Context. Even if a regulation is genuinely ambiguous, and an agency puts forth a reasonable interpretation, courts must inquire whether “the character and context of the agency interpretation entitles it to controlling weight.”

The majority left some “especially important markers” for identifying when Auer deference is or is not appropriate:

  • First, an interpretation “must be one actually made by the agency,” meaning that it reflects the agency’s “authoritative” or “official” position rather than a “more ad hoc statement not reflecting the agency’s views.”
  • The agency’s interpretation must “in some way implicate its substantive expertise.” Deference ebbs when the subject matter of the dispute is “distant” from the agency’s ordinary duties or “falls within the scope of another agency’s authority.” The same is true where an agency’s rule “parrots the statutory text” or when “interpretative issues may fall more naturally into a judge’s bailiwick.” The logic behind these exceptions is simple: “When the agency has no comparative expertise in resolving a regulatory ambiguity, Congress presumably would not grant it that authority.”
  • Finally, an agency’s interpretation must reflect the “fair and considered judgment” of the agency. That means that the interpretation is neither a “post hoc rationalization” advanced merely to justify the action’s actions or a “convenient litigating position.” Nor may a court defer to a new interpretation that creates “unfair surprise” for regulated entities, whether because it conflicts with a prior interpretation or because it upends reliance interests.

Implications for Chevron? Although Kisor was, on its face, a moratorium on Auer deference, the decision also could have important implications for the Chevron doctrine, which addresses the scope of deference due an agency’s interpretation of its governing statute.

The Kisor majority left some breadcrumbs suggesting that the key limiting principles applicable to Auer may equally be applicable to Chevron. Several of the cases cited in clarifying the scope of Auer were actually Chevron cases. And in articulating the “genuinely ambiguous” standard critical to triggering Auer deference, the majority cited no less than Chevron itself, noting that it had adopted “the same approach for ambiguous statutes.”

Consequences for Agencies, Regulated Entities

This comprehensive framing should narrow, potentially substantially, the universe of cases that will trigger Auer deference.

That has already started to play out in lower court decisions. For example, in Laturner v. United States (Aug. 13, 2019), the Federal Circuit cited Kisor as a basis for withholding Auer deference to Treasury interpretations of its disputed regulations, noting the absence of a “genuine ambiguity” about what the regulations meant.

Similarly, in Winding Creek Solar LLC v. Peterman (July 29, 2019), a preemption case, the Ninth Circuit refused to apply Auer deference to a FERC interpretation of its regulations where the interpretation suffered an “infirmity” that was “plain from the face of the regulations.”

And in Braeburn v. FDA (July 22, 2019), the U.S. District Court for the District of Columbia cited aspects of Kisor in rejecting FDA’s interpretation of its governing statute under Chevron step two. Before rebuffing the interpretation on the grounds that the agency failed to explain how the interpretation “serves the statute,” the court cited Kisor (twice) for the principle that “[t]his is a requirement an agency can fail.”

It remains to be seen how far Kisor narrows Auer. But at the very least, the government can no longer reflexively invoke deference to agencies’ interpretations of their own regulations.

And the Kisor ruling provides a useful roadmap for challengers seeking to cabin agencies’ discretion: The government must now meet each part of the new multi-layered standard to warrant deference

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Susan Cook is a partner in the Washington, D.C., office Hogan Lovells and co-heads the firm’s Administrative Procedure Act and False Advertising Litigation groups.

Cate Stetson is a partner in the Washington, D.C., office of Hogan Lovells and is co-director of the firm’s Appellate Practice Group. She has argued nearly 100 appeals, including before the U.S. Supreme Court.
Jessica Ellsworth is a partner in the Washington, D.C., office of Hogan Lovells and focuses on appellate matters before the Supreme Court and federal and state courts of appeals.

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