Declining to Overrule a Long-Standing Agency Deference Doctrine, the Supreme Court Nonetheless Cautions That its Limitations Provide a Meaningful Check on Federal Agencies' Power to Regulate Business Activities

K&L Gates LLP
Contact

K&L Gates LLP

Federal agencies issue hundreds of significant rules each year, affecting virtually all aspects of U.S. economic activity. For decades, businesses, consumers, environmental and labor groups, and others have challenged these regulations and their interpretations in court as going “too far” or “not far enough.” A key question in these challenges is often the degree to which a reviewing court must defer to the agency’s interpretation of its rules. In the closely watched case of Kisor v. Wilkie, the U.S. Supreme Court declined to overrule a doctrine known as Seminole Rock or Auer deference, under which a court reviewing an agency’s interpretation of its own regulation gives that interpretation “controlling weight unless it is plainly erroneous or inconsistent with the regulation.”[1]

A controlling portion of the Kisor opinion cautions, however, that the Court “has cabined Auer’s scope in varied and critical ways,” and thus “maintained a strong judicial role in interpreting rules.”[2]  Before giving deference, a court must make a searching inquiry into whether the regulation is genuinely ambiguous, whether the result is reasonable, and whether the agency has fairly considered the matter.[3]  While the opinion does not purport to change the Court’s understanding of how to apply deference, it should serve as a strong signal that application of Auer should not be, and was never intended to be, reflexive. Moreover, three justices, including the Chief Justice who was the deciding vote in Kisor, expressly noted that the future of the related doctrine of Chevron deference, which governs the deference given to an agency in the review of its statutory interpretations,[4] remains very much an open question.

The Federal Circuit’s Misapplication of Auer/Seminole Rock Deference

Kisor came to the Court on the petition of a military veteran whose claim for disability benefits was initially denied in 1982, but then granted after he reopened it by submitting a new medical report in 2006. The agency interpreted one of its regulations to require that the benefits begin on the date of the veteran’s motion to reopen his claim, rather than the date of his initial application. The Federal Circuit deferred to the agency’s interpretation on the basis that “[b]oth parties insist that the plain regulatory language supports their case, and neither party’s position strikes us as unreasonable,” which it stated made the regulation ambiguous and required deferring to the agency.[5]

Justice Kagan’s lead opinion in Kisor sets forth numerous reasons supporting the principle of Auer deference, but also makes clear that the Federal Circuit’s superficial approach to applying it will not do. The question is not simply whether a reasonable-sounding argument can be made in favor of the agency’s reading, but whether a rigorous three-part test for application of Auer has been met.

First, a court must find the regulation is “genuinely ambiguous,” even after exhausting all tools of statutory construction. A regulation is not ambiguous just because its true meaning may be hard to figure out, since “hard interpretive conundrums, even relating to complex rules, can often be solved.”[6]

Second, even if a court finds ambiguity, the agency’s interpretation must be reasonable, that is, “within the zone of ambiguity the court has identified after employing all its interpretative tools.” The test is no looser than what an agency must meet in interpreting a statute, and it is “a requirement an agency can fail.”[7]

Third, the reviewing court must examine “whether the character and context of the agency interpretation entitles it to controlling weight.” This requires examination of whether the agency’s interpretation (1) was made through an official position, such as formal memos or opinions of agency heads or staff, rather than informal communications; (2) comes from its own subject-matter expertise; and (3) is based on consistent precedent, rather than being a convenient litigation view or a new position that upsets settled expectations through “unfair surprise.”[8]

Having articulated the proper framework for Auer deference, Justice Kagan, writing for four justices, found no good reason to “doubt Auer deference.”[9]  Chief Justice Roberts declined to join the portions of her opinion reaffirming the wisdom of Auer, but joined the discussion of the limitations on Auer, and in the opinion’s holding that the doctrine should be maintained under the principle of stare decisis, the “special care we take to preserve our precedents.” Since no “special justification” had been presented to overrule a “‘long line of precedents’ -- each one reaffirming the rest and going back 75 years or more,” stare decisis would justify the rule even if it might have been incorrectly adopted in 1945.[10]

The majority concluded by disapproving of the Federal Circuit’s application of Auer deferring to the VA’s interpretation of its regulations, first because the court “jumped the gun in declaring the . . . regulation ambiguous before bringing all its interpretive tools to bear on the question,” and second because it “assumed too fast that Auer deference should apply in the event of genuine ambiguity.”[11]  Four justices concurred in this result, but dissented on the matter of preserving Auer.

Implications for Challenges to Agency Interpretations of Regulations

The majority’s assertion that the limitations it states as to the application of Auer do not materially change existing law appears accurate. All of those limitations appear in prior decisions, many of which are cited in Justice Kagan’s opinion.[12]  As the Federal Circuit’s decision in Kisor itself reflects, however, courts have not always been scrupulous in applying these limitations. By reminding courts that they cannot simply rubber stamp an agency’s interpretation, but must undertake a careful and multi-pronged inquiry before upholding an agency’s regulatory interpretation, the decision may work a change in practice, even if not in doctrine. The message is that courts must do their job, and that if they do the number of cases that actually turn on deference may prove to be small.[13]

Implications for Chevron

The Kisor decision is noteworthy for what it both says and implies about the Chevron doctrine governing the deference to be given to an agency’s construction of the statutes it is charged to administer. Chief Justice Roberts took pains in his concurrence to say that his acceptance of Auer deference does not imply the same result in a challenge to Chevron, as the issues surrounding Auer are “distinct” from those raised by Chevron, and that he did not “regard the Court’s decision today to touch upon” Chevron. Justice Kavanaugh, joined by Justice Alito, expressly endorsed these statements. Moreover, by voting to uphold Auer only on stare decisis grounds, the Chief Justice will not be bound by any of Justice Kagan’s reasoning affirming the wisdom of Auer should the Court, as many expect, accept a case to reconsider Chevron in the next term or two.

The limitations confirmed in Kisor on the application of Auer also track in large part the rules courts have adopted in applying Chevron. For example, the Court’s most recent reaffirmation of Chevron, Justice Scalia’s opinion in City of Arlington v. Federal Communications Commission, noted that the way to keep agencies within their proper bounds was not to apply artificial exceptions to Chevron deference but to “apply[] rigorously, in all cases, statutory limits on agencies’ authority.”[14]  Kisor similarly seeks not to eliminate deference but to be rigorous in its application.

Justice Scalia is no longer on the Court, and Justice Roberts dissented forcefully in Arlington, leading Justice Scalia to observe “the ultimate target here is Chevron itself.”[15]  If in fact there are now enough votes on the Court to overturn Chevron, the Court may nonetheless seek middle ground there, as the Chief Justice did in voting to preserve Auer. Maintaining Auer was said by several of the justices to be of relatively little moment as long as rigorous rules of its application are applied. The same may ultimately be said if Chevron is overturned -- deference is of less importance when courts are rigorous in determining the bounds of legitimate statutory interpretation, and if they defer to agencies only when they act consistently and with the requisite care and level of formality.

Implications for the regulatory process

The Kisor decision will also be important in the development stage of agency regulations and interpretations. Challenges to agency actions are almost always based on the “record” of information and comments presented to the agency. Kisor allows regulated parties to remind agencies as they develop and apply regulations that they face meaningful judicial limitations. Parties need also to be aware that limitations on agency deference, while useful in cabining agency power, can also reduce the certainty that agency decisions will be upheld in court. This can be significant to parties that, for example, structure their businesses around agency regulatory approvals. Careful attention to all aspects of the regulatory process is thus necessary.

[1] Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945). This formulation was followed in Auer v. Robbins, 519 U.S. 452, 461 (1997) (which itself quoted the same language in Robertson v. Methow Valley Citizens Council, 490 U. S. 332, 359 (1989)).

[2] See Kisor v. Wilkie, No. 18-15, slip op. at 18–19 (U.S. June 26, 2019).

[3] Id. at 11–19.

[4] The doctrine is named for the seminal case of Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984), which announced a two step approach under which the court first determines if the statute unambiguously forecloses the agency’s interpretation, and, if not, upholds the interpretation if it is reasonable.

[5] Id. at 3.

[6] Id. at 13–14.

[7] Id. at 14.

[8] Id. at 15–18.

[9] Id. at 19-25.

[10] Id. at 19, 25-28.

[11] Id. at 28-29.

[12] See also Conor Clarke, The Uneasy Case Against Auer and Seminole Rock, 33 YALE L. & POL’Y REV. 175, 189 (2014) (collecting cases that set out all of limitations that appear in Justice Kagan’s opinion).

[13] As Justice Kavanaugh put it in his dissent, at 1, “If a reviewing court employs all of the traditional tools of construction, the court will almost always reach a conclusion about the best interpretation of the regulation at issue. After doing so, the court then will have no need to adopt or defer to an agency’s contrary interpretation.”

[14] 569 U.S. 290, 307 (2013).

[15] Id. at 304.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© K&L Gates LLP | Attorney Advertising

Written by:

K&L Gates LLP
Contact
more
less

K&L Gates LLP on:

Readers' Choice 2017
Reporters on Deadline

Related Case Law

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.