By Andrew H. Perellis, Joshua M. Henderson, Patrick D. Joyce, and Craig B. Simonsen

Seyfarth Synopsis:  The U.S. Supreme Court upheld this week a key component of administrative law that tells judges to defer to an executive agency’s interpretation of its own ambiguous regulation.  Kisor v. Secretary of Veterans Affairs, No. 18-15 (US June 26, 2019).  The case challenged so-called “Auer” or “Seminole Rock” deference.  Auer deference has recently been criticized by conservative justices on the court.

The specific question considered was whether the Court should overrule Auer v. Robbins, 519 U.S. 452 (1997) and Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945).  In context, the specific question being considered was: what deference, if any, should courts give to an executive agency’s interpretation of its own regulation, an interpretation that has not gone through Administrative Procedure Act (APA) notice and comment rulemaking?

We have blogged frequently on Auer deference and its impact on case law, precedent, and regulatory and agency authority — and ultimately on business and employers.  These cases run the gamut of legal issues across various agencies.  See for instance Ninth Circuit Issues En Banc Decision Upholding DOL’s 20% Tip Credit Rule; Ball is Now in DOL’s Court, Supreme Court to Rule on Case Addressing Bathroom Access Based on Gender Identity, Fourth Circuit Holds that “Sex” Under Title IX Incorporates Gender Identity, Texas District Court Enjoins Federal Gender Identity Protection Of Students, Judicial Deference to Informal Agency Interpretations: Could this be the Beginning of the End for Auer?, and Eighth Circuit Rejects OSHA’s Attempt to Expand the Scope of its Machine Guarding Standard.

Historically, courts have struggled with the extent of deference to give an agency’s interpretations of its own regulations.  Under the APA § 553(b)(A), only substantive interpretations, having the force of law, require notice and comment rulemaking.  Agency interpretive rules and general statements of policy are exempt from notice and comment rulemaking because interpretative rules are non-substantive.  The Auer doctrine, however, accords substantial deference to an Agency’s allegedly non-substantive interpretation of its own regulations, even if presented in an unofficial manner such as in an amicus brief.

In its decision, the Court announced that “the only question presented here is whether we should overrule those decisions, discarding the deference they give to agencies.  We answer that question no.  Auer deference retains an important role in construing agency regulations.  But even as we uphold it, we reinforce its limits.  Auer deference is sometimes appropriate and sometimes not.  Whether to apply it depends on a range of considerations that we have noted now and again, but compile and further develop today.  The deference doctrine we describe is potent in its place, but cabined in its scope.”

While affirming the Auer doctrine, the Majority decision elaborated on when deference should be accorded.  Based on its articulation, going forward, expect close scrutiny of the initial question of whether the agency regulation is in fact ambiguous, using its toolkit of rules for statutory and regulatory construction.  Absent ambiguity, there is “no plausible reason for deference.”  Even if ambiguous, a court must assure itself that the agency interpretation is “reasonable,” based on the text, structure and history of the statute and underlying regulation. But more: not all reasonable interpretations are entitled to deference.  The interpretation must be within that realm that Congress intended the agency to resolve; it must be the agency’s “authoritative” or “official position,” and not an ad hoc statement (informal memoranda and litigation positions probably do not qualify); the interpretation must implicate the agency’s substantive expertise; and, the interpretation must reflect the agency’s “fair and considered judgment,” rather than a post hoc rationalization or a “new” interpretation that creates “unfair surprise” to regulated parties.

It remains to be seen how the lower courts and agencies will apply the new “Kisor Doctrine.”  At a minimum, the agency can no longer presume that a court will ipso facto defer to an agency’s interpretation, but instead must provide the interpretation within a context that compels the court to conclude that the agency interpretation is well-founded and persuasive.

As a final note, both Chief Justice Roberts and Justice Kavanaugh made a special point of stating that the Kisor decision does not touch upon the issue of Chevron deference – the doctrine of judicial deference to an agency’s interpretation (by promulgated regulation) of statutes enacted by Congress.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Seyfarth Workplace Safety and Health (OSHA/MSHA) or Environmental Compliance, Enforcement & Permitting Teams.