We need to rein in agency deference

What does it mean that a record is "relevant" to a determination? More importantly, who should decide that question? That is the issue before the U.S. Supreme Court in Kisor v. Wilke, argued on March 27. The case concerns a regulation governing payment of retroactive VA benefits. The regulation states that retroactive benefits are payable when a "relevant" record that had not been previously considered is discovered and associated with the file.

When the case was before the U.S. Court of Appeals for the Federal Circuit, the VA argued that "relevant" meant dispositive -- the record is only "relevant" if it is "outcome determinative." The veteran, however, argued that relevant means, as it does in any evidence context, that the evidence makes the existence of a material fact more or less probable. The Federal Circuit found both interpretations "reasonable" and concluded that the regulation was therefore ambiguous. Because of this ambiguity, the court concluded that it was required to defer to the VA's interpretation of its own regulation under the authority of Auer v. Robins, 519 U.S. 452 (1997) and Bowles v. Seminole Rock, 325 U.S. 410 (1945). The Supreme Court granted review on the question of whether the deference doctrine of Auer and Seminole Rock ought to overruled.

Deference to an agency's interpretation of its own ambiguous regulation creates a host of problems. Under the Administrative Procedures Act, an agency must proceed by way of notice and comment in order to promulgate a regulation with the force of law. The agency is free to issue "interpretive" rules without going through this procedure -- but those rules do not carry the force of law and are not binding on either the regulated community or the judiciary. By deferring to an agency "interpretation" of its own regulation, however, the agency is free to adopt a new legal norm under the guise of "interpreting" an ambiguous regulation. The agency can therefore create a new binding legal rule without going through the trouble of notice and comment rulemaking.

The more fundamental problem, however, is that deference to the agency is an assault on the separation of powers -- the structure that lies at the foundation of the Constitution. The issue in this case is not whether an agency can adopt a rule with the force of law. Once it has done so, however, the rule is a legal text like any other and should be subject to interpretation by the judiciary. Interpretation of legal texts is, after all, the primary job of the judiciary. Deferring to the agency's interpretation is an abdication of the judiciary's role in our constitutional structure.

The issue of separation of powers in the federal Constitution was the focus of much debate during the ratification conventions. Nobody disputed the basic premise that we needed to separate powers. The battle was over whether the powers were separated enough. Justice Clarence Thomas, in his concurring opinion in Perez v. Mortgage Bankers Association, 135 S. Ct. 1199, 1215 (2015), noted that nearly everybody in the founding generation agreed with the proposition that the power to make the law and the power to judge the law had to be divided between different authorities. Put those two powers in the same hands and the system of law is replaced by arbitrary power. Deference to an agency's interpretation of its own regulation, however, puts the power to make law and the power to judge the law in the hands of the agency.

The idea that this combination of power will lead to arbitrary rule is no mere political theory. In the nearly 75 years since the Supreme Court decided Seminole Rock, the court has had to create exceptions to the doctrine of deference in order to rein in abuses by administrative agencies and executive branch officials. The Supreme Court in Christopher v. SmithKline Beecham Corp., 567 U.S. 142, 155 (2012) cataloged several situations where it has declined to defer to the agency including where: The regulation merely parrots the words the of statute, the interpretation is a post hoc rationalization to defend the agency's action in litigation, the interpretation is "nothing more than a 'convenient litigating position,'" the interpretation conflicts with a prior interpretation, or the interpretation is simply inconsistent with the actual text of the regulation. The abuses are real. But the rationale for the doctrine of deference remains a mystery.

Why should the courts defer to an administrative agency over the meaning of an agency regulation -- a legal text? While the agency may well have a stake in the ultimate interpretation, that is no reason to tilt the scales of justice toward one party. Few would argue that courts ought to defer to the other branches when a question of interpretation arises. If the issue is the meaning of an act of Congress, would anyone seriously suggest that the Supreme Court to simply defer to a congressional interpretation found in a joint resolution or an amicus brief filed by a few senators or representatives? Of course not! Congress has no more authority to displace the power of the courts to interpret the law than does the president (or administrative agencies within the executive branch).

Separation of powers is woven through the structure of the Constitution as a means to protect liberty. It creates a system of government that often times is messy and inefficient. Indeed, this was the intent of those that ratified the Constitution. A decision that overrules the deference doctrine of Seminole Rock and Auer will help preserve that structure.

Mr. Caso filed a brief on behalf of Claremont Institute's Center for Constitutional Jurisprudence arguing that Auer and Seminole Rock should be overruled.