In our prior coverage of Kisor v. Wilkie, we predicted that the Court would impose “greater scrutiny” on “administrative agencies’ . . . interpretation of their regulations.”  And the Court did.  The Court’s decision will affect every aspect of the federal government’s regulation of environmental, safety, and health.

At the end of its term, the US Supreme Court issued its opinion in Kisor v. Wilkie—upholding but limiting Auer deference.  Auer instructs that courts must defer to an agency’s construction of its own regulation unless that interpretation is “plainly erroneous or inconsistent with the regulation.”  (Indeed, under Auer (before Kisor), the US Supreme Court upheld regulations even when the interpretation was not “the best one.”) Auer deference, however, will work much differently going forward.

The Court narrows Auer’s application, recasting old precedent in a stricter light

Writing for a plurality, (with the Chief Justice concurring in the judgment and the “bounds of Auer deference”), Justice Kagan emphasized three existing limits on a reviewing court’s deference to an agency’s interpretation of its own regulations.  The Court’s recasting of the following limits means less deference to agencies’ interpretation of their own regulations:

  • Genuine ambiguity. The Court emphasized, for instance, that a court should not defer to an agency’s interpretation unless a regulation is “genuinely ambiguous” after the court “has resorted to all the standard tools of interpretation.”  This restatement of Auer deference means less deference to an agency’s interpretation of its regulation; the Court previously allowed an agency interpretation unless “plainly contrary” to the regulation’s text.
  • Appropriate source. The Court reiterated that Auer deference should not extend to the “speech of a mid-level official” because those sorts of officials are not tasked with making “authoritative policy in the relevant context.”  This language may significantly curtail Auer deference—particularly for politically sensitive issues where a change in the President’s party means an about-face on mid-level guidance.  (For instance, consider the political flip-flops defining “Waters of the United States.”  Or, as another example, consider the recent back-and-forth over guidelines surrounding Title IX’s application based on gender identity.)
  • Litigation rationale. Repeating a principle that the Court has selectively enforced in the past, the Kisor Court held that courts should not defer to “agency interpretations advanced for the first time in legal briefs.”  That practice, the Court explained, failed to defer to an “agency’s fair and considered judgment on the matter in question.”  Going forward, agencies will need to develop their litigation rationale before they walk into court.

In practice, these limits mean that courts will defer less often to an agency’s interpretation of its own regulation.  Lawyers challenging agency action should test these limits—applying each argument in the appropriate context.  Kisor’s recasting of Auer deference provides a powerful backstop to an agency’s discretion interpreting its own regulations.

The Court adds a critical new limit—no deference for issues that fall in a “judge’s bailiwick”

In addition to restating the existing limits, the Kisor Court added a fourth limit: Auer deference applies only to “agency-type” decisions.  “Some interpretive issues may fall more naturally into a judge’s bailiwick. . . . When the agency has no comparative expertise in resolving a regulatory ambiguity, Congress presumably would not grant it that authority.”

Applied liberally, this new limit may drastically narrow the scope of Auer deference.  The Court provided little guidance about which decisions involve “agency-type” decisions and which do not.  And, since Kisor reflects a significant paradigm shift for Auer deference, existing precedent also offers little guidance about which “expertise” deserves deference.

Justice Gorsuch, concurring in the judgment, claimed that Kisor’s new guideposts leave Auer deference “maimed and enfeebled—in truth, zombified.”  He also warned that keeping Auer deference intact (however enfeebled) sits “uneasily with the Constitution.”  Litigants should expect that lower court judges—particularly those who share Justice Gorsuch’s concerns about Auer’s constitutionality—may use Kisor’s guideposts to further restrict agency discretion in interpreting agency regulations.

What does this mean for Chevron deference?

With Auer deference zombified, the Court may soon address its intellectual cousin, Chevron deference.  (That rule, as we’ve mentioned before, requires courts to accept an agency’s reasonable interpretation of the ambiguous terms of a statute that the agency administers.)

The opinion in Kisor suggests, however, that the Court lacks five votes to overturn Chevron deference. First, Chief Justice Roberts joined the majority in preserving Auer deference.  Second, in his concurrence, Chief Justice Roberts explained that he did not understand Kisor to “touch upon” Chevron deference.  Finally, in prior writings, (for instance, his dissent in the 2013 City of Arlington v. FCC decision), the Chief Justice described Chevron as an important “guard[] against the Judiciary arrogating to itself policymaking properly left, under the separation of powers, to the Executive.”  So Kisor does not necessarily portend Chevron’s demise, but it hardly suggests a full-throated endorsement either.

Squire Patton Boggs will continue to monitor developments in this area and provide updates.