Administrative deference reaches its zero Auer

The bête-noir of conservative jurisprudence is the "administrative state," fueled by judicial doctrines affording various degrees of deference to administrative regulations, interpretive guidelines and pronouncements. Last week's Supreme Court decision in Kisor v. Wilkie, 2019 DJDAR 8754 (June 26, 2019), dramatically rewrote the rules for deference, retaining so-called Auer deference in name only.

Over the past century, the Supreme Court has established three levels of deference to administrative agencies:

Chevron deference

The highest level of deference applies to an agency's interpretation of a statute administered by that agency where the statute is silent or ambiguous regarding the issue in question. Chevron USA, Inc. v. Nat'l Res. Def. Council, 467 U.S. 837 (1984). It applies only where Congress delegated authority to the agency to make rules carrying the force of law, and the interpretation is made pursuant to that authority -- e.g., by engaging in notice-and-comment rulemaking or by formal adjudication. When Chevron deference applies, an agency interpretation is considered controlling and binding in judicial proceedings "unless procedurally defective, arbitrary or capricious in substance, or manifestly contrary to the statute." United States v. Mead Corp., 533 U.S. 218, 227 (2001).

Auer deference

An intermediate level of deference applies where an agency is interpreting its own regulation. Auer v. Robbins, 519 U.S. 452 (1997). See also Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945). Auer deference is owed only when the regulation at issue is ambiguous and the interpretation reflects the agency's "fair and considered judgment on the matter in question" and is not "plainly erroneous or inconsistent with the regulation" or simply a "'post hoc rationalizatio[n]' advanced by an agency seeking to defend past agency action against attack."

Skidmore deference

The lowest level of deference is owed to other types of agency interpretations, such an opinion letters, operating manuals and enforcement guidelines. Skidmore v. Swift & Co., 323 U.S. 134 (1944). These types of interpretations are "'entitled to respect' ... only to the extent that those interpretations have the 'power to persuade.'" Christensen v. Harris Cnty., 529 U.S. 576, 587 (2000). The level of Skidmore deference given to an agency interpretation is assessed by looking at numerous factors enumerated by the Supreme Court, including "the thoroughness evident in its consideration, the validity of its reasoning, [and] its consistency with earlier and later pronouncements." Mead Corp., 533 U.S. at 228.

Kisor took straight aim at Auer deference. The Supreme Court granted cert one only one question: "Whether the Court should overrule Auer and Seminole Rock." But narrow majority declined to overrule in form, but did so in substance.

Chief Justice John Roberts joined the four liberal justices (Stephen Breyer, Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor) to clarify the requirements for Auer deference, establishing five strict requirements that must be met:

The Genuine Ambiguity Requirement

This the foundation of Auer deference and the most critical of the new requirements. "[W]e presume that Congress intended for courts to defer to agencies when they interpret their own ambiguous rules." Accordingly, "the possibility of deference can arise only if a regulation is genuinely ambiguous." This requirement is no mere formality -- it has real teeth. "If uncertainty does not exist, there is no plausible reason for deference. The regulation then just means what it means -- and the court must give it effect, as the court would any law." In that case, "a court has no business deferring to any other reading, no matter how much the agency insists it would make more sense."

"And before concluding that a rule is genuinely ambiguous, a court must exhaust all the 'traditional tools' of construction." "[A] court cannot wave the ambiguity flag just because it found the regulation impenetrable on first read." "To make that effort, a court must "carefully consider[ ]" the text, structure, history, and purpose of a regulation, in all the ways it would if it had no agency to fall back on. [Citation omitted.] Doing so will resolve many seeming ambiguities out of the box, without resort to Auer deference." An examination of the rule or regulation in question through the "traditional" or "standard" tools of construction is vital not only to a finding of genuine ambiguity, but also to the next requirement:

The Reasonableness Requirement

"If genuine ambiguity remains, moreover, the agency's reading must still be 'reasonable.' [Citation omitted.] In other words, it must come within the zone of ambiguity the court has identified after employing all its interpretive tools."

The Substantive Expertise Requirement

Because "[a]dministrative knowledge and experience largely 'account [for] the presumption that Congress delegates interpretive lawmaking power to the agency,'" "the agency's interpretation must in some way implicate its substantive expertise." "[T]he basis for deference ebbs when '[t]he subject matter of the [dispute is] distan[t] from the agency's ordinary' duties or 'fall[s] within the scope of another agency's authority.'"

Requirement of an Official Agency Position

"[T]he regulatory interpretation must be one actually made by the agency. In other words, it must be the agency's 'authoritative' or 'official position,' rather than any more ad hoc statement not reflecting the agency's views. ... Of course, the requirement of 'authoritative' action must recognize a reality of bureaucratic life: Not everything the agency does comes from, or is even in the name of, the Secretary or his chief advisers. ... But there are limits. The interpretation must at the least emanate from those actors, using those vehicles, understood to make authoritative policy in the relevant context."

In so holding, the majority cited with approval a 7th U.S. Circuit Court of Appeals decision -- Exelon Generation Co. v. Local 15, Int'l Brotherhood of Elec. Workers, AFL-CIO, 676 F.3d 566 (7th Cir. 2012) -- that "declin[ed] deference when the agency had itself 'disclaimed the use of the regulatory guides as authoritative.'" This requirement will eliminate Auer deference for agency standards that expressly disclaim binding or interpretive effect, like the Nuclear Regulatory Commission guidelines at issue in Exelon or the Department of Labor's Field Operations Handbook, whose Foreword states it "is not used as a device for establishing interpretative policy."

The Fair and Considered Judgment Requiremen

"Finally, an agency's reading of a rule must reflect 'fair and considered judgment' to receive Auer deference. [Citation omitted.] That means, we have stated, that a court should decline to defer to a merely 'convenient litigating position' or 'post hoc rationalizatio[n] advanced' to 'defend past agency action against attack.' [Citations omitted.] And a court may not defer to a new interpretation, whether or not introduced in litigation, that creates 'unfair surprise' to regulated parties."

In particular, noted the majority, deference should not be given "to agency interpretations advanced for the first time in legal briefs. [Citation omitted.] But we have not entirely foreclosed that practice. Auer itself deferred to a new regulatory interpretation presented in an amicus curiae brief in this Court." Because, as noted above, we can now expect longstanding internal agency guidances -- like the Field Operations Handbook -- fail to satisfy the official agency position requirement, there will likely be an increase in agency amicus participation to present on an ad hoc basis guidance positions as the considered judgment of the agency.

The majority wrote that it "has cabined Auer's scope in varied and critical ways," so that "[w]hat emerges is a deference doctrine not quite so tame as some might hope, but not nearly so menacing as they might fear." Chief Justice Roberts joined them in so doing, and in their defense of Auer on stare decisis grounds. He did not join them in their defense of Auer against the constitution- and policy-based attack authored by Justice Gorsuch, joined by Justices Clarence Thomas, Brett Kavanaugh and (sometimes) Samuel Alito. Nor did Roberts join the conservatives. He remained neutral on the substantive critique of Auer deference, apparently playing the Kennedyesque role of the intuitionalist steering a middle ground.

The "grand bargain" brokered by the chief justice kept Auer deference in name only, and converted it to Skidmore deference in fact. He wrote in a separate concurrence that "the distance between the [majority and minority] is not as great as it may initially appear," and that "the cases in which Auer deference is warranted largely overlap with the cases in which it would be unreasonable for a court not to be persuaded by an agency's interpretation of its own regulation" (and hence apply Skidmore deference). Justice Kavanaugh, joined by Justice Alito in a separate concurrence in the judgment, agreed with the first point, and went a little farther with the second, writing that "[i]f a reviewing court employs all of the traditional tools of construction, the court will almost always reach a conclusion about the best interpretation of the regulation at issue. After doing so, the court then will have no need to adopt or defer to an agency's contrary interpretation." Even Justice Neil Gorsuch's sometimes-snarky (right up to the edge of intemperate) concurrence grudgingly conceded that "The majority leaves Auer so riddled with holes that, when all is said and done, courts may find that it does not constrain their independent judgment any more than Skidmore. ... [T]hey will rarely, if ever, have to defer to an agency regulatory interpretation that differs from what they believe is the best and fairest reading." 