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Supreme Court grants review in Kisor

On Dec. 10, 2018, the Supreme Court of the United States granted review in Kisor v. Wilkie, specifically agreeing to consider the issue of whether to overrule Auer v. Robbins, 519 U.S. 452 (1997) and Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945). Those are the two main Supreme Court cases directing courts to give binding deference to a federal agency’s interpretation of its own regulations – generally called Auer deference or Seminole Rock deference.

The Auer/Seminole Rock deference doctrine has been followed by courts in giving power to agencies to interpret their own regulations for more than seven decades since Seminole Rock (1945). The Auer/Seminole Rock deference gives agencies the highest level of deference by giving their interpretation “controlling weight unless it is plainly erroneous or inconsistent with the regulation.”

For this reason, perhaps the Auer deference has been one of the most controversial topics in the area of administrative law. Defenders of Auer deference argue that agencies have the expertise in their fields and therefore are in the best position to interpret their own regulations. However, the Auer deference has been criticized by various legal scholars, conservatives, business groups, and judges, including the late Justice Antonin Scalia, who actually authored the Auer opinion and then later became one of the fiercest critics, questioning the Auer deference doctrine’s place in administrative law.

In his dissent in Decker v. Northwest Environmental Defense Center (NEDC), 133 S. Ct. 1326 (2013), Justice Scalia attacked Auer because it effectively places “the power to write a law and the power to interpret it in the same hands” and thus violates the Constitution’s separation of powers. Justice Scalia also expressed concern that the Auer deference incentivizes agencies to promulgate ambiguous regulations. He pointed out that “the power to prescribe is augmented by the power to interpret; and the incentive is to speak vaguely and broadly, so as to retain a ‘flexibility’ that will enable ‘clarification’ with retroactive effect.”

The pending U.S. Supreme Court case, Kisor vs. Wilkie, brings the exact same question before the Court – the interpretation of its own regulations by a federal executive agency, in this case, the U.S. Department of Veterans Affairs. In Kisor, a Vietnam veteran who had developed post-traumatic stress disorder (PTSD) from his service submitted a claim for disability benefits in 1982. Initially, the agency rejected the claim, disputing his PTSD diagnosis. The case was reopened in 2006 with additional documentation, and this time the Board of Veterans’ Appeals granted benefits but starting from 2006, rather than 1982.

The meaning of the term “relevant” in the applicable regulation (38 C.F.R.§ 3.156(c)(1)) became the key issue in this case because, according to the agency’s interpretation, the additional documents submitted in 2006 were not “relevant” to the original claim in 1982. On appeal, despite acknowledging the ambiguity of the regulation, the U.S. Court of Appeals for the Federal Circuit deferred to the VA’s interpretation, applying the Auer deference, and affirmed the agency’s decision.

The Supreme Court’s decision in this case – if it indeed overrules Auer and Seminole Rock – can lead to significant changes in the landscape of administrative law. Inevitably, it will affect every case regarding regulatory actions where the meaning of a certain agency’s regulations is at issue. Further, it can have an impact on the torts cases where federal agencies – such as the Food and Drug Administration (FDA) for pharmaceutical drug and medical device cases, and the Environmental Protection Agency (EPA) for toxic torts cases – and their related regulations play a significant role in finding liabilities.

Some could see the Kisor endeavor as another step toward deregulation in a broader meaning as it essentially affects agencies’ power to enforce the rules as they are drafted and interpreted. Others may foresee some significant damages toward special interest groups or companies that have been trying to influence and pressure agencies to interpret regulations the way that would favor them. If the Supreme Court overrules Auer and thus agencies have taken away their existing judicial deference, the regulated agencies and companies will have to put more time and money much earlier in the regulation-drafting process than later to promulgate the rules in a way to have more details and clarity to avoid any subsequent unwanted interpretations by courts.

According to the recently issued argument calendar, the Supreme Court will hear this case on March 27 and will decide whether to preserve the Auer deference. In the aforementioned Decker case, Chief Justice Roberts and Justice Alito, concurring in part with Justice Scalia, also expressed their willingness to reconsider the Auer doctrine. Other conservative Justices such as Justice Thomas and Justice Gorsuch have also expressed their concerns about the Auer deference in their earlier cases.

With the recent appointment of Justice Kavanaugh to the Supreme Court, who has already shown his skepticism on the Auer deference and is known as more conservative than Justice Gorsuch, it will be interesting to see how the future of the Auer deference will turn. If you need more information, contact Soo Seok Yang, a lawyer in our Mass Torts Section, at 800-898-2034.

National Law Review
Competitive Enterprise Institute
Yale Law & Policy Review
Lewis & Clark Environmental Law Review
The Regulatory Review
The Federalist Society
The Economist
Columbia Law Review


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