Supreme Court Upholds Deference to Agency Interpretation of Regulations

 In

In a case with widespread impact across all legal areas, including labor and employment, the U.S. Supreme Court upheld the Auer doctrine, under which courts give deference to an agency’s reasonable reading of its own ambiguous regulations.

Background of the Case. In Kisor v. Wilkie, a Vietnam war vet first sought disability benefits in 1982, but was denied. He moved to reopen his claim in 2006. This time, he was granted benefits, but only from the date of his motion to reopen. The Board of Veterans’ Appeals affirmed the retroactivity decision based on its interpretation of a regulation governing such claims. On appeal, the decision was affirmed by a federal court applying the Auer doctrine. The vet appealed, asking the Supreme Court to overturn the doctrine in its entirety.

The Court’s Decision. The Supreme Court declined to overturn the Auer doctrine, observing that it is “rooted in a presumption … that Congress would generally want the agency to play the primary role in resolving regulatory ambiguities.” In so holding, the Supreme Court articulated a number of principles that apply to the use of the Auer doctrine.

First, Auer deference is not afforded until a court has exhausted all the “traditional tools” of construction and still found the regulation to be ambiguous. These tools include the text, structure, history and purpose of a regulation. Then, if genuine ambiguity remains, “the agency’s reading must fall within the bounds of reasonable interpretation.” (Internal quotations omitted).

Next, the “court must make an independent inquiry into whether the character and context of the agency interpretation entitles it to controlling weight.” Of relevance to this determination are certain “markers” for assessing when Auer deference is appropriate.

  • The agency’s interpretation must be an authoritative or official position, and not some ad hoc
  • The agency’s interpretation must implicate its substantive expertise, within its ordinary duties and not within the scope of another agency’s authority.
  • The agency’s interpretation must reflect “fair and considered judgment.” This is more than a merely “convenient litigating position” or a “post hoc rationalization[n]” of the agency’s past actions. It also cannot be a new interpretation that creates “unfair surprise” to the parties – such as when an agency’s new interpretation conflicts with a prior one.

In this specific case, however, the Supreme Court remanded the case back to the federal circuit court for two reasons. First, the federal circuit court failed to apply the traditional tools of construction before declaring the regulation to be ambiguous. Then it further assumed that Auer deference applies in the event of genuine ambiguity, rather than assessing whether the interpretation is of the type that Congress wanted to receive deference.

Lessons Learned. This case is significant in that it reinforces the fact that deference may continue to be given to an agency’s interpretation of its own ambiguous regulations. Of particular importance, it also sets forth the steps by which a court should analyze whether Auer deference should be accorded to an agency’s regulation.