High court's Kisor ruling: only a scene in a larger drama

The death of federal court deference to agency interpretations of ambiguous regulations, commonly known as Auer doctrine, has been widely predicted since the confirmation of Justices Neil Gorsuch and Brett Kavanaugh. In a surprise, the U.S. Supreme Court declined to write the expected obituary of Auer in the case of Kisor v. Wilkie, 2019 DJDAR 5784 (June 26, 2019).

The court's ruling has the practical effect of narrowing Auer. All of the judges appear to agree that the practical difference between the majority and the minority is not great.

The philosophical difference, on the other hand, is gaping. The minority sees deference to unelected agencies as nothing less than an abdication of the judiciary's duty to say what the law is, as first articulated in Marbury v. Madison. Justice Elena Kagan's four-justice plurality is perfectly comfortable with judicial deference to agencies and would likely give agencies wider berth if there was a fifth vote for Kagan's robust justification of Auer.

For practitioners and lower courts, the good news is that the court agreed 9-0 that the U.S. Court of Appeals for the Federal Circuit's handling of the Auer deference issue was wrong, providing one clear example of what not to do. Unfortunately, that was where the court's clarity ended.

Depending on which of the multiple opinions of the U.S. Supreme Court one believes, the deference of courts to an agency's interpretation of its own ambiguous regulations is either alive and well (and not a problem), almost dead (and should be dead), or a minor issue. While claiming to leave Auer intact, the majority provided a long list of ways that courts could avoid deferring to an agency's interpretation of its own ambiguous rules.

That list raises as many questions as it solves, leaves lower courts and practitioners with vague, know-it-when-we-see-it style guidelines for dealing with complex rule interpretations, and leaves the main problem with Auer -- agencies' getting to be the judges of their own rules -- unaddressed.

Kisor was an unusual case to address the continued viability of Auer. It lacked the technical issues and matters of special expertise often found in administrative law cases. Plaintiff Kisor served in Vietnam and, in 1982, sought benefits for post-traumatic stress disorder arising from his combat service. He was found not to have PTSD and denied benefits in 1983.

In 2006, he sought to reopen his claim based on a new psychiatrist's opinion that he did suffer from PTSD. The Department of Veterans Affairs granted him benefits going forward, but denied retroactive benefits.

VA regulations allowed for the grant of retroactive benefits if "relevant official service department records" had not been considered in the VA's initial denial. Kisor provided records of his combat service that had not been before the VA in considering his 1982 claim.

Kisor contended that these records were "relevant" to his 1982 claim and therefore allowed the VA to consider whether to grant him retroactive benefits back to 1982. The VA determined that these records were not "relevant" under the regulation because there was no dispute about his combat service when his 1982 claim was denied. It denied retroactive benefits.

The Federal Circuit found that the term "relevant" was ambiguous, as Kisor's and the VA's interpretations of the word "relevant" were both reasonable. But because the VA's interpretation was not obviously wrong, it prevailed because the Federal Circuit believed that it was supposed to defer to the agency's reasonable interpretation under Auer.

The Federal Circuit lapsed into the problem identified by Auer critics: being too quick to defer to an agency interpretation of an ambiguous regulation. The entire Supreme Court agreed that the circuit court's first resort to Auer deference, instead of last resort, was incorrect.

The majority saved Auer by recasting the problem of court deference to agencies as one of improper implementation of Auer by courts rather than, as the minority believed, a problem with Auer itself.

Justice Kagan catalogued a host of technical regulatory questions where there would be no obvious benefit to having a court not defer to an agency's judgment, writing, "If you are a judge, you probably have no idea of what the FDA's ["active moiety"] rule means, or whether its policy is implicated when a previously approved moiety is connected to lysine through a non-ester covalent bond."

Chief Justice John Roberts, the fifth vote, did not join in her hearty defense of Auer. Instead, he joined that part of Justice Kagan's opinion that catalogued all of the "traditional tools" of interpretation that a court must exhaust before simply deferring to the agency. While Justice Kagan asserted that these tools have always been part of the Auer doctrine and the court's opinion in Kisor changes nothing, in practice lower courts have consistently neglected these tools and deferred to easily to agencies.

Kisor will reset the balance. Now, Auer should only apply where "the regulation is genuinely ambiguous." That conclusion can only come after what can be a "taxing inquiry," much more than coming up with a facially plausible interpretation. Considering "the text, structure, history, and purpose of a regulation" will often resolve ambiguities without resort to Auer deference.

The court also cautioned against deferring to agencies whenever there is an ambiguous regulation. It limited deference to interpretations that are "authoritative" or an agency's "official position," rather than an ad hoc ruling or a litigating position shoehorned into the Auer paradigm. It also stated that deference should only apply when "the interpretation is of the sort that Congress would want to receive deference," such as interpretations involving an agency's substantive or technical expertise.

Unfortunately, this portion of the opinion does not come with a 24/7 hotline number to call Justice Kagan's chambers to obtain guidance on what Justice Gorsuch called "cryptic 'markers'." How a lower court is supposed to determine when an agency interpretation is "authoritative" or whether or not Congress would have wanted an agency's interpretation to receive deference is anyone's guess.

The takeaway for lower courts and practitioners is likely to be that courts should not defer to an agency's interpretation of its own ambiguous rules so much. As far as figuring out how much to defer and when to defer, lower courts are going to have to navigate among a myriad of admonitions, data points, and balancing tests that provide little clarity or principle.

Chief Justice Roberts and Justice Kavanaugh came out on different sides of Kisor but agreed on its meaning. The chief justice noted that the practical difference between Justice Kagan's approach and the minority's rejection of Auer was not great, stating, "[T]he 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."

Justice Gorsuch, writing for the four justice minority, explained the continuing problems and contradictions of Auer. Gorsuch noted the irony of effectively allowing agencies to provide explanations for their own ambiguities:

"[W]hen we interpret an ambiguous statute, we never ask what current members of Congress think it means; in fact, we've held unanimously that legislators' post-enactment views about a statute's meaning are not even a 'legitimate tool of statutory interpretation.' Affording 'controlling weight' to regulators' post-promulgation views about the meaning of an ambiguous regulation is hard to square with these usual judicial practices."

This points to the larger conundrum of judicial review of agency actions. Deference to agencies means uniformity, coherence, and the primacy of expertise. It comes at the cost of the regulated not getting an independent court to give an impartial hearing but one where the party that created the ambiguity gets to win by default.

Kisor is only a scene in the larger drama over whether the Supreme Court is going to police firm limits on the separation of legislative, executive and judicial powers. The Kisor minority sees a robust judicial role in overseeing executive agencies. Justice Kagan's plurality does not.

While the practical difference between the philosophical positions of Kagan and Gorsuch in Kisor are small, the difference between which of those positions prevails in future cases on bigger issues is profound. Eventually, the Supreme Court will decide whether the judiciary should continue to defer to agency interpretations of ambiguous statutes under Chevron or provide a meaningful check. It may also decide whether courts should revive the non-delegation doctrine to provide limits on the transfer of law-making powers to executive agencies.

The path chosen by the court will be determined by whether Chief Justice Roberts thinks that some secretary or commissioner should have the power to say what the law is or whether he and his brethren should have that power. 