Employment Law Daily Justices contemplate whether to retire—or just narrow—Auer deference
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Friday, March 29, 2019

Justices contemplate whether to retire—or just narrow—Auer deference

By Pamela Wolf, J.D.

The Court heard oral arguments on the Seminole-Auer agency deference doctrine, with both parties pushing back against the current standard and one arguing for its entire demise.

On March 27, the Justices heard oral argument on the question of whether “Auer” deference should be no more. Specifically, the question the Court will determine is whether it should overrule its earlier Bowles v. Seminole Rock & Sand Co. (1945) and Auer v. Robbins (1997) decisions, requiring courts to defer to a federal agency’s interpretations of the agency’s own ambiguous regulations.

Doctrine on the chopping block. Interestingly, neither party wants to see this agency deference doctrine survive in whole. The marine veteran who was denied retroactive benefits for his service-related post-traumatic stress disorder (PTSD) because a regulation was ambiguous as to the meaning of the word “relevant,” permitting the Department of Veterans Affairs’ interpretation to prevail in the face of competing, but equally reasonable interpretations, would like the Justices to altogether retire Seminole-Auer deference.

Among other things, the petitioner has argued that Seminole-Auer deference “is a rule of judicial decisionmaking,” the effect of which “is to vest administrative agencies with expansive lawmaking authority.” Where a regulation has more than one reasonable reading, “an agency may make a policy judgment about which interpretation it prefers, rather than a judgment about the best legal interpretation of the regulation,” according to the petitioner. “Because of Auer deference, that agency judgment has the force of law.”

But how much should be chopped off? The federal government, defending the Department of Veterans Affairs in this case, also has pushed back against the agency deference doctrine, arguing that it should be “clarified and narrowed.” Solicitor General Noel Francisco says the doctrine “raises significant concerns,” noting first that its basis is unclear, it’s not well grounded historically, the Court has failed to articulate “a consistent rationale” for it, and that it is “more difficult to justify on the basis of implicit congressional intent” than the High Court’s ruling in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. (1984).

As to Chevron, the Court has said the framework rests on a presumption that “a statute’s ambiguity constitutes an implicit delegation from Congress to the agency to fill in the statutory gaps,” the Solicitor General observed. He also pointed out that when an agency “fails to use the procedures Congress intended the agency to use to resolve a statutory ambiguity, Chevron deference generally does not apply.”

Interpretive vs. legislative rules. Second, Francisco pointed out, “Seminole Rock deference” is in tension with the Administrative Procedures Act’s distinction between legislative and interpretive rules. “Interpretive rules, unlike legislative rules, do not carry the force and effect of law and are exempt from notice-and-comment procedures,” he noted. “When a reviewing court gives controlling weight to an interpretive rule under Seminole Rock, it arguably treats the interpretive rule as though it were a legislative rule.”

Auer deference invoked below. Below, the veteran had sought disability benefits for PTSD, and after appealing VA determinations (but not perfecting the appeal of the initial agency decision), he was only able to obtain a 70-percent disability rating that was not retroactive to the initial date of his application.

The Department of Veterans Affairs agreed that he suffered from service-related PTSD, but it would not award him retroactive benefits based on its interpretation of the meaning of the term “relevant” as used in 38 C.F.R. § 3.156(c)(1), under which the VA will reconsider a claim if the agency “receives or associates with the claims file relevant official service department records that existed and had not been associated with the claims file when VA first decided the claim.” (Emphasis added).

The Federal Circuit Appeals Court found that both the veteran and the VA had offered reasonable constructions of the term “relevant.” According to the petition, on that basis alone, the court held that the regulation is ambiguous, and therefore invoked Auer to defer to the VA’s interpretation of its own ambiguous regulation.

Some deference to agency expertise necessary. Speaking to Paul Hughes (Mayer Brown LLP) on behalf of the veteran, Justice Breyer held up an example from the federal government’s brief to illustrate the need for at least some form of Auer deference. The court in the example “deferred to the understanding of the FDA that a particular compound should be treated as a single new active moiety, which consists of a previously approved moiety, joined by a non-ester covalent bond to a lysine group,” the Justice noted. “Do you know how much I know about that?” he said, drawing laughter.

The Justice noted that it took the FDA seven years to accomplish the first rulemaking, referencing Hughes’ contention earlier that notice and comment is the proper route when an agency wants its regulations to have the force of law, as opposed to merely creating precedent for future agency decisions, and that Auer deference should go out the window.

“But what you’re doing is saying, instead of paying attention to people who know about that, but rejecting it if it’s unreasonable, the judges should decide,” Justice Breyer suggested. “I mean, I want to parody it, but, I mean, this sounds like the greatest judicial power grab since Marbury versus Madison, which I would say was correctly decided,” the Justice said, once again prompting laughter.

If Auer goes, would there be no deference? Queried Justice Alito: “If Auer were overruled, would an agency’s interpretation, particularly in areas requiring a great deal of scientific or technical knowledge, be entitled to no deference by a court?”

Hughes said, no, that the High Court’s 1944 ruling in Skidmore v. Swift & Co. would apply.

Unconvinced, Justice Kavanaugh called Skidmore “really no deference because … it applies only when it’s persuasive, which is true of any argument.”

How about a tune-up? For his part, Solicitor General Francisco observed that while Seminole deference raises some problems in some applications, it has been on the books for decades, it has significant practical benefits, and its “practical problems can be addressed by reinforcing reasonable limitations on the doctrine.”

Referring to his understanding of how Francisco would narrow the deference standard, Justice Gorsuch said: “[A]s I understand it, there are six elements of your test. We have to decide whether the … regulation is ambiguous, whether the interpretation is reasonable, whether it’s consistent, whether it was made by someone at a high level, whether there was fair notice, and whether it was made by somebody with expertise. Is that a … recipe for stability and predictability in the law, or is that a recipe for the opposite?”

“No, I absolutely think it is and it’s a workable standard, Your Honor,” Francisco said.

It’s still all in the mind of the beholder. In response, Justice Gorsuch pointed out that people fight over what ambiguity means, what reasonable means, how consistent is consistent, and “for the life of me, I don’t know how high a level a person has to be before we’re going to defer to him, or how much notice is fair, or how much expertise counts.”

Under Francisco’s proposed rule, for example, “every agency could define relevant evidence differently,” according to Justice Gorsuch.

You could look at it this way. Speaking to the “best” interpretation of a regulation, or the “best” solution to the Seminole-Auer deference dilemma, and noting that the word “best” had come up “about 50 times,” Justice Breyer made an observation about which is “best”: “We know that democratically speaking, agencies aren’t very democratic, but there is some responsibility, and there [is] one group of people who are still less democratic, and they’re called judges.

“So if, in fact, you believe that the best solution—where there’s real ambiguity, and you just don’t know, the best solution is, in our country, a democratic solution, well, maybe the agency is the institution that’s closer to it.”

The case is No. 18-15.

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