Kisor v. Wilkie and the Next Chapter in Administrative Deference

By John Grimm & Guest Contributor Mark Davis

The Supreme Court recently decided Kisor v. Wilkie,[1] a case that addresses when courts are required to defer to agencies’ interpretations of their own rules.  The general rule that courts defer to an agency’s reasonable interpretation of its own regulations when they are ambiguous was articulated in the case Auer v. Robbins[2] and is referred to as Auer deference.  Auer deference has been subject to criticisms that it allows agencies to issue what amount to new regulations without going through the rulemaking process and that it is an abdication of the judicial role of interpreting the law.

In Kisor, the Court was invited to overturn Auer.  A divided Court ultimately held that Auer deference should remain in place, but the Court, in an opinion by Justice Kagan,[3] purported to articulate a number of conditions and limitations on Auer deference.  This led Justice Gorsuch, in a concurrence, to characterize the majority decision as a “stay of execution” that imposes “so many new and nebulous qualifications and limitations on Auer that The Chief Justice claims to see little practical difference between keeping it on life support in this way and overruling it entirely.”[4]  If the lower courts take seriously the limitations the Court identified, judges may have a more active role in interpreting agency regulations, and agencies may be limited in their ability to announce binding interpretations of their rules in some situations.  But it remains to be seen how much bite the limitations will have in practice.

 

The Auer Analysis

The Kisor decision clarified that Auer applies only in limited circumstances and that courts must be active in analyzing whether an agency is entitled to deference.  In the first instance, the court must examine the regulation to determine if it is truly ambiguous.  If it is, the court must decide whether the agency’s interpretation is reasonable.  Finally, the court must examine the agency’s interpretation to determine if it is the kind that is entitled to deference.

Is the Regulation Genuinely Ambiguous?

The Court stressed that Auer deference only applies to a regulation that is “genuinely ambiguous.”[5]  If the regulation’s meaning is clear, courts must give effect to that plain meaning.[6]  And in order to determine whether a regulation is ambiguous, courts must employ “traditional tools of construction.”[7]  Importantly, courts cannot simply declare a regulation ambiguous because it is confusing or because it might have multiple plausible interpretations; courts must analyze the regulation as if there were no agency interpretation to rely on, considering its text, structure, history, and purpose.[8]  The Court suggested that in many instances, this analysis will yield the regulation’s meaning without the need to resort to deference principles.  Only after exhausting traditional interpretive techniques can a court declare a regulation truly ambiguous and proceed to determine whether the agency’s interpretation receives deference.

Is the Agency’s Interpretation Reasonable?

Once a court determines that a regulation is ambiguous, it still may only defer to an agency’s interpretation if that interpretation is reasonable.[9]  Even after concluding that a regulation is ambiguous, courts must use traditional tools of construction—such as examining the text, structure, and history of the regulation—to determine the boundaries of a reasonable interpretation.[10]

Is the Agency’s Interpretation Entitled to Deference?

Even after a court has determined that a regulation is ambiguous and that an agency’s proffered interpretation is reasonable, it must conduct an “independent inquiry”[11] to determine whether the “character and context”[12] of the interpretation entitle it to deference.  In other words, courts should not automatically defer to all reasonable interpretations an agency asserts for an ambiguous statute—they must examine whether deference is appropriate under the circumstances, according to several guidelines.

First, deference is only appropriate for an agency’s “authoritative or official position,”[13] not for ad hoc statements that do not reflect the agency’s official views.  Although the interpretation need not necessarily come from the head of the agency, it must at least “emanate” from the agency head using established procedures for making authoritative policies.[14]  Thus, for example, official staff-level pronouncements might receive deference, but casual statements such as informal memoranda might not.  The Court did not, however, provide exhaustive examples of how courts should draw the line between official and unofficial positions.

Second, to receive deference, an agency’s interpretation must implicate the agency’s substantive expertise.[15]  Again, the Court did not exhaustively explain what interpretations will and will not implicate the agency’s substantive expertise, but it noted that questions that “fall more naturally into a judge’s bailiwick,” such as one “requiring the elucidation of a simple common-law property term,” would not be entitled to deference,  nor would agency interpretations in an area where the agency has “no comparative expertise in resolving a regulatory ambiguity.”[16]

Finally, an agency interpretation does not receive deference unless it reflects a “fair and considered judgment.”[17]  Specifically, after-the-fact rationalizations and positions adopted in litigation are not generally entitled to deference.[18]  Since newly enacted regulations are frequently challenged in court, this language in Kisor could limit agencies’ ability to defeat litigation by adopting binding interpretations in their briefs.[19]  Likewise, judges may not defer to new interpretations that create an “unfair surprise to regulated parties.”[20]

 

The Effects and Uncertainty of the Kisor Decision

While the Kisor opinion purports to impose important limitations on Auer deference, it is less clear how significantly it will limit Auer deference in practice.  That will depend, in large part, on just how quick the lower courts are to declare a regulation ambiguous.  In the majority opinion, Justice Kagan writes that “only when that legal toolkit is empty and the interpretive question still has no single right answer” is Auer deference appropriate.[21]  But Justice Gorsuch suggests that this rarely if ever happens.  “In the real world,” Justice Gorsuch says, “the judge uses his traditional interpretive toolkit, full of canons and tiebreaking rules, to reach a decision about the best and fairest reading of the law.”[22]   Thus, future litigation will likely center on just how unclear a regulation must be to qualify for deference.  There may also be interesting questions about what interpretive tools are part of the “legal toolkit” that must be exhausted before applying Auer.  For example, is it permissible for judges to consider policy factors when deciding between competing interpretations of an ambiguous regulation as they routinely do in other contexts?[23]

The question of when agencies’ litigation positions will be entitled to deference is one of the Kisor decision’s significant uncertainties.  Another is whether, in practice, Auer deference will essentially allow agencies to make binding changes to their rules without following the public notice-and-comment requirements of the Administrative Procedure Act (“APA”).  Although the APA generally requires agencies to go through a rigorous public comment process before passing new regulations,[24] agencies can issue non-binding interpretations of their rules without seeking public comment.[25]  A frequent criticism of Auer deference is that it transforms these non-binding interpretive statements into binding rules.  The Court rejected that concern, noting that “interpretive rules, even when given Auer deference, do not have the force of law.”[26]  Nevertheless, the Court appeared to recognize that even under the framework it had spelled out, a court would ultimately defer to agencies’ interpretive statements if it determined that the rule being interpreted was ambiguous and that the agency’s interpretation was reasonable.[27]

As the Kisor opinion points out, many courts have been reflexively deferring to agencies whenever the meaning of a regulation was at issue.[28]  Indeed, the lower appellate court in Kisor deferred to an agency’s interpretation of its regulations simply because both sides’ interpretations seemed reasonable.[29]  Moreover, by underscoring the kinds of circumstances when agencies should not receive deference, Kisor may restrict agencies’ ability to advance expedient interpretations of regulations.  Ultimately, Kisor raises long-term questions about the scope of Auer deference, but it seems likely that Kisor will, at least to some degree, reinvigorate the judicial role in construing regulations and provide fodder for future debates about agency deference.

 

 

[1]              139 S. Ct. 2400 (2019).

[2]              519 U.S. 452 (1997). For a prior post covering the Auer deference, see : https://mdappblog.com/2016/10/12/regulatory-deference-not-restrooms-at-issue-in-high-profile-petition/

[3]              Other portions of Justice Kagan’s opinion were not joined by a majority of the Court.

[4]              Kisor, 139 S. Ct. at 2425.

[5]              Id. at 2415.

[6]              Id.

[7]              Id. (internal quotation marks omitted).

[8]              Id. at 2416.

[9]              Id.at 2415.The interpretation “must come within the zone of ambiguity the court has identified after employing all its interpretive tools.”  Id. at 2416.

[10]             Additionally, the Court corrected a misconception and clarified that agencies do not receive greater deference when interpreting their own rules than they do when interpreting statutes.  Id.

[11]             Id..

[12]             Id.

[13]             Id. (internal quotation marks omitted).

[14]             Id.

[15]             Id. at 2417.

[16]             Id.

[17]             Id. (internal quotation marks omitted).

[18]             Id.

[19]             However, the Court did not shut the door on deferring to agencies’ litigation positions altogether, noting that it had “not entirely foreclosed th[e] practice” of “giv[ing] deference to agency interpretations advanced for the first time in [their] legal briefs.”  Id. at n.6.

[20]             Id. at 2418. (internal quotation marks omitted).

[21]             Id. at 2415.

[22]             Id. at 2430.

[23]             See Antonin Scalia, Judicial Deference to Administrative Interpretations of Law, 1989 Duke L.J. 511, 520 (1989).

[24]             5 U.S.C. § 553(b), (c).

[25]             Id. § 553(b)(A).

[26]             Kisor, 139 S. Ct. at 2420 (emphasis in original).

[27]             See id. (“[T]he meaning of a legislative rule remains in the hands of courts, even if they sometimes divine that meaning by looking to the agency’s interpretation.”).

[28]             Id. at 2414-15 (noting that Supreme Court has at times “given Auer deference without careful attention to the nature and context of the interpretation” and that some formulations of Auer “may suggest a caricature . . . in which deference is ‘reflexive’); see also id. at 2429 (Gorsuch, J., concurring) (“[C]ourts have in recent years mechanically applied and reflexively treated” Auer deference “as a constraint upon the careful inquiry that one might ordinarily expect of courts engaged in textual analysis.”) (internal quotation marks and citations omitted).

[29]             Id. at 2423.