Seyfarth Synopsis: The U.S. Supreme Court agreed this week to reconsider a key precedent of administrative law that tells judges to defer to an agency's interpretation of its own ambiguous regulation, taking up a challenge to the so-called "Auer" or "Seminole Rock" deference. The Auer deference has been criticized by conservative justices on the court. Kisor v. Sectretary of Veterans Affairs, No. 18-15 (US Dec. 10, 2018).

The specific question being considered is whether the Court should overrule Auer and Seminole Rock. In context, the specific question being considered is: what deference, if any, should courts give to an agency interpretation of its own regulation that has not gone through Administrative Procedure Act (APA) notice and comment rulemaking?

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), agency interpretive rules and general statements of policy are exempt from notice and comment rulemaking because interpretative rules are non-substantive, and the APA only requires substantive interpretations, having the force of law, to go through notice and comment rulemaking. However, the "Auer doctrine," from Auer v. Robbins, 519 U.S. 452, 117 S.Ct. 905 (1997), 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.

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 scope of topical law and issues. 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.

In in Perez v. Mortgage Bankers Association (MBA), 575 U.S. ____, 135 S.Ct. 1199 (2015), Supreme Court Justices Scalia and Thomas expressed their discontent with agency deference under the "Auer doctrine."

In his analysis, Justice Scalia cited to § 556 of the APA for the proposition that only the courts may interpret agency actions, not the agencies themselves. Justice Scalia opined that the purpose of the § 553(b)(A) exemption was to allow agencies to advise the public on the impact of a complex regulation without binding the public to that interpretation.

However, Justice Scalia believed Auer deference acts to allow agencies to both advise and bind the public because the agency can draft the regulation to be broad and vague and then interpret it in a manner that would not have been evident to the public when the regulation was originally proposed for notice and comment. Further, under Auer, a reviewing court is beholden to an agency interpretation unless its interpretation is unreasonable, and the public is thus bound by the agency's interpretation with the force of law. Justice Scalia called for abandoning Auer in a future decision, when the question was properly before the Court.

Justice Scalia distinguished Auer deference and deference to an agency's interpretation of its governing statute, also known as "Chevron deference," from Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Under Chevron, if a statutory term is ambiguous, then the agency has authority to construe that term and interpret its meaning within the statutory scheme by promulgating regulations following APA notice and comment procedures. This is arguably permissible because Congress explicitly granted agencies the ability to interpret their governing statutes, and APA rulemaking procedures are followed in establishing the interpretation via regulations. Justice Scalia pointed out that Auer is unlike Chevron because, under the Auer doctrine, an agency does not use APA notice and comment procedures and Congress has not explicitly granted agencies the ability to interpret their regulations. This difference was enough for Justice Scalia to call for the end of Auer.

Justice Thomas takes a different route when calling Auer into question, looking instead to the separation of powers and checks and balances put in place by the U.S. Constitution. In his concurrence in MBA, Justice Thomas referred to the cases dealing with deference to agency interpretations of regulations, beginning with Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 65 S.Ct. 1215 (1945), and calls into question the constitutionality of the entire line of cases, including Auer.

Justice Thomas believed that any deference to administrative interpretations of regulations constitutes a transfer of judicial power to the executive, contrary to the language of the Constitution. Because Seminole Rock and Auer erode the judicial obligation to serve as a check on the other branches and muddle the separation between the Judicial and the Executive Branches, Justice Thomas called for reconsideration of the entire Seminole Rock line of cases, including Auer, at the appropriate moment.

In addition, in a joint concurrence to a prior case, Decker v. Northwest Environmental Defense Center, 568 U.S. ___, 133 S.Ct. 1326 (2013), Chief Justice Roberts and Justice Alito indicated that reconsideration of Auer may be appropriate when the issue is properly before the Court. The issue of Auer deference was not before the Court in MBA or Decker, but with at least four Justices questioning the continued validity of the doctrine, it is possible the question of judicial deference to agency interpretive rules will be reconsidered under in Kisor.

Such a reconsideration of Auer would have significant impact upon administrative law. Judicial review of agency action provides important protection against arbitrary or unfair agency action. However, that review is significantly restricted under Auer¸ because a court must defer to an agency interpretation simply because it is issued by the agency, with little check on the reasonableness of the interpretation. Allowing courts to consider but not defer to agency interpretations would compel agencies to be more exacting (and perhaps more forthcoming) when engaging in rulemaking and interpreting regulations. Rulemaking, while perhaps a tedious process for the agency, required notice to the public, an opportunity for the public to comment, and an opportunity for judicial review, all to ensure that the agency action is consistent with law and not arbitrary or capricious.

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