On June 26, 2019, the US Supreme Court issued a decision in Kisor v. Wilkie. The question presented in Kisor was whether to overrule the Court’s prior decisions in Auer v. Robbins, 519 U.S. 452 (1997), and Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945), holding that courts generally should defer to an agency’s reasonable interpretation of an ambiguous regulation it administers. Deference to agency interpretations of their own regulations—known as “Auer deference”—has come to be an important doctrine of administrative law that parallels in some respects Chevron deference to agency interpretations of statutes that they administer. In recent years, however, questions had been raised about the continuing vitality of Auer deference. In Kisor, a closely divided Court declined to overrule Auer and Seminole Rock but reaffirmed a number of limitations on the applicability of Auer deference.
Background
The case at issue arose from a dispute between James Kisor, a Vietnam War veteran, and the Department of Veterans Affairs (VA) over Kisor’s eligibility for disability benefits. The VA denied Kisor’s benefits claim in 1982, finding that he did not suffer from post-traumatic stress disorder. In 2006, the VA reopened Kisor’s claim based on a new psychological report and awarded him benefits. But applying an agency regulation, the VA denied Kisor retroactive benefits on the grounds that he had not pointed to “relevant official service department records” that the VA had initially failed to consider. The Board of Veterans’ Appeals (Board) interpreted the term “relevant official service department records” to mean records relevant to the VA’s reason for the original denial. The Court of Appeals for Veterans Claims affirmed, as did the US Court of Appeals for the Federal Circuit, which deferred to the Board’s interpretation of the regulation. Kisor successfully petitioned the Supreme Court for certiorari on the continuing viability of Auer.
The Various Opinions
The justices all agreed that the judgment of the Federal Circuit should be reversed, but they were sharply divided over whether to overrule Auer and Seminole Rock. The dispute among the justices resulted in a number of separate opinions. As explained in more detail below, a five-justice majority declined to overrule Auer and Seminole Rock on narrow stare decisis grounds while emphasizing the restrictions on the applicability of Auer deference. That position was set forth in an opinion for the Court authored by Justice Kagan, joined in full by Justices Ginsburg, Breyer and Sotomayor, and joined in part by Chief Justice Roberts. Justices Kagan, Ginsburg, Breyer and Sotomayor would have ruled more broadly and upheld Auer and Seminole Rock without regard to principles of stare decisis. The portions of Justice Kagan’s opinion not joined by Chief Justice Roberts set forth this position. Chief Justice Roberts wrote a short, separate concurring opinion explaining that he believes there is, in fact, not a significant practical difference between the position taken by the majority and the position staked out by the justices who would have overruled Auer and Seminole Rock. Justice Gorsuch wrote a concurring opinion—joined, to varying degrees, by Justices Thomas, Alito and Kavanaugh—that explained at length why he believes Auer and Seminole Rock should have been overruled. Finally, Justice Kavanaugh wrote a short concurring opinion joined by Justice Alito.
The Majority Opinion
Following a discussion of the background of the case, Justice Kagan’s opinion on behalf of the Court first set forth (in Section II.B) the criteria for determining when an agency interpretation warrants deference under Auer. The regulation at issue must be “genuinely ambiguous.” Slip Op. at 13. In order to reach that conclusion, moreover, courts must first exhaust all the traditional tools of interpretation, including reference to the text, structure, history and purpose of the regulation. See id. at 14. If the regulation is in fact ambiguous, the agency’s interpretation must also be “reasonable.” Id. “That is a requirement an agency can fail.” Id. Only interpretations that fall within the “zone of ambiguity”—as identified by the court based on its various interpretive tools—qualify as reasonable. Id. This two-step process mirrors the inquiry for deference to agency interpretations of statutes under Chevron, and indeed the Court made clear that agencies should not receive greater deference in interpreting regulations than in interpreting statutes. See id.
Next, the Court explained that an agency interpretation must represent the authoritative or official position of the agency to warrant deference; it must “emanate from those actors, using those vehicles, understood to make authoritative policy in the relevant context.” Slip Op. at 16. The agency must also have brought its expertise to bear in promulgating the regulation. For highly technical or policy-driven regulations, deference is appropriate. But where the agency has no comparative expertise advantage, such as in interpreting a common legal term or a regulation that tracks statutory language, it is not. See id. at 16-17 & n.5. Finally, the interpretation must reflect the agency’s “fair and considered judgment.” Id. at 17 (internal quotation marks omitted). Post hoc rationalizations or convenient litigation positions will not suffice. See id. Nor will new interpretations that create “unfair surprise” for regulated entities. Id. at 18.
Having set forth the limitation on Auer deference, the majority then went on (in Section III.B) to consider whether to retain the doctrine. The Court noted that a “special justification” is required to overrule prior precedent. Slip Op. at 26 (internal quotation marks omitted). There must be more than “an argument that the precedent was wrongly decided.” Id. (internal quotation marks omitted). In this case, the Court concluded that the petitioner had shown no such justification. The Court first pointed to the long line of Supreme Court and lower court cases applying Auer deference for over 75 years. It also explained that overruling Auer would cast doubt on many now-settled interpretations of regulations, requiring the re-litigation of any case where Auer deference might have made a difference in the decision. See id. at 26. Further, the Court noted that stare decisis is particularly appropriate here since Auer deference rests on “a presumption about Congressional intent”; it is not constitutionally mandated. Id. at 27. As a result, Congress could reject Auer deference at any time, but it has not done so. Finally, the Court concluded that the petitioner had failed to show that Auer deference had become “unworkable” or was a “doctrinal dinosaur.” Id. at 27-28 (internal quotation marks omitted).
The Court then turned to the decision of the Federal Circuit. Applying the limits it had set forth above, the Court vacated the Federal Circuit’s judgment. First, it held that the Court of Appeals had prematurely declared the regulation at issue ambiguous without bringing all the traditional tools of interpretation to bear. Slip Op. at 29. Second, the Court had failed to consider whether the agency interpretation in question was eligible for Auer deference. The interpretation had been set forth by a single Board judge, who was just one of “100 or so” members of the VA Board. Id. The Board member’s opinion, moreover, had no precedential value. The Court instructed the Federal Circuit to consider these issues on remand.
The Plurality Opinion
As noted above, certain portions of Justice Kagan’s opinion were joined only by Justices Ginsburg, Breyer and Sotomayor. In one of those sections (II.A), Justice Kagan explained that the Auer doctrine is based on a presumption that Congress would prefer that agencies, rather than courts, resolve regulatory ambiguities. This is so, the plurality explained, for a number of reasons, including agency expertise, deference to policymakers and a desire for uniformity. See Slip Op. at 7-11. A separate section of the plurality opinion (III.A) would have upheld Auer deference on the merits without regard to stare decisis. In this portion of the opinion, Justice Kagan rejected arguments that Auer is contrary to the Administrative Procedure Act (APA) and the separation of powers, and that it creates incentives for agencies to write deliberately vague regulations. See id. at 19-25.
The Concurring Opinions
In a short concurrence, Chief Justice Roberts noted that in light of the limitations on the application of Auer deference recognized by the majority, there is not much “distance” between the majority and the concurring justices. Specifically, he explained that the cases in which Auer deference applies largely overlap with the situations in which courts would adopt the agency’s interpretation as persuasive under the doctrine of Skidmore deference. Finally, and perhaps importantly, Chief Justice Roberts noted that the Court’s holding with respect to Auer deference has no bearing on the continuing viability of Chevron.
Justice Gorsuch—joined in full by Justice Thomas, in large measure by Justice Kavanaugh and in part by Justice Alito—concurred only in the judgment, arguing at length that Auer should have been overruled. According to this concurrence, Auer is inconsistent with the APA and “sits uneasily” with the separation of powers. In sections of his opinion joined only by Justices Thomas and Kavanaugh, Justice Gorsuch also criticized Justice Kagan’s policy arguments in favor of Auer and the majority’s application of stare decisis. Justices Gorsuch and Thomas would have replaced Auer with Skidmore deference.
Finally, in a separate opinion concurring in the judgment, Justice Kavanaugh, joined by Justice Alito, observed that rigorous application of the majority’s requirement that courts exhaust the traditional tools of interpretation before declaring a regulation ambiguous “should lead most cases to the same general destination” as rejecting Auer outright would have. Justice Kavanaugh also agreed with Chief Justice Roberts that the Court’s decision to retain Auer deference does not “touch upon” whether courts should defer to agencies’ interpretations of statutes under Chevron.
Implications of the Kisor Decision
The Court’s narrow decision to retain Auer deference in theory leaves existing doctrine largely intact. In practice, however, the majority’s emphasis on the limits of Auer deference will likely cause litigants and lower courts to closely question the applicability of the doctrine in many cases. In the words of Justice Gorsuch, the decision is likely to lead to “much litigation.” There will be threshold questions about whether the agency action at issue in a case is the kind of action to which courts should defer under Auer. Much as the Supreme Court’s decision in United States v. Mead Corp., 533 U.S. 218 (2001), spawned litigation regarding the applicability of Chevron deference in particular cases, the Court’s decision in Kisor is expected to lead to litigation about the applicability of Auer deference. There is likely to be greater focus on applying traditional tools of statutory interpretation before concluding that a regulation is “ambiguous.” There may also be closer scrutiny of whether the agency interpretation at issue in a case is reasonable. All of this may provide openings for courts to depart from agency interpretations of regulations with greater frequency. Only time will tell whether and to what extent the Court’s decision in Kisor will narrow the scope of Auer deference as a practical matter, but it is certain that the decision will open up new fronts in a wide range of agency litigation.
