Supreme Court Backs Federal Agencies’ Power to Interpret Their Own Rules

By Mark Walsh — June 26, 2019 5 min read
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In a surprise outcome, the U.S. Supreme Court on Wednesday reaffirmed a longstanding precedent that requires courts to defer to federal agencies’ reasonable interpretations of their ambiguous regulations, an issue that has arisen in education over such issues as transgender student rights and racial disparities in student discipline.

Justice Elena Kagan wrote a plurality opinion for four justices in Kisor v. Wilkie (No. 18-15), and Chief Justice John G. Roberts Jr. provided the fifth vote to retain what is known as Auer deference, based on a 1997 decision known as Auer v. Robbins, which built on a 1945 decision, Bowles v. Seminole Rock & Sand Co. Both decisions say courts should defer to agencies’ interpretation of their own ambiguous rules as long as the interpretation is reasonable.

“The only question presented here is whether we should overrule those decisions, discarding the deference they give to agencies,” Kagan wrote. “We answer that question no. Auer deference retains an important role in construing agency regulations.”

Her opinion was joined by Justices Ruth Bader Ginsburg, Stephen G. Breyer, and Sonia Sotomayor. Roberts wrote a concurring opinion that joined parts of Kagan’s opinion, saying he agreed “that overruling those precedents is not warranted” and agreeing with Kagan’s efforts clarify just when courts should defer to federal agencies on such matters.

Justice Neil M. Gorsuch wrote a dissent, joined by Justices Clarence Thomas and in parts by Samuel A. Alito Jr. and Brett M. Kavanaugh, which said Auer has been criticized in many quarters and should have been overruled.

“It should have been easy for the court to say goodbye” to Auer, Gorsuch wrote. “This court invented it, almost by accident and without any meaningful effort to reconcile it with the Administrative Procedure Act or the Constitution.”

Auer ‘Invites Dramatic Shifts’

A decision to overruled Auer would have had a wide impact as agencies including the U.S. Department of Education have increasingly exerted administrative power through informal guidance documents, which don’t require cumbersome notice-and-comment periods as regulations promulgated under the Administrative Procedure Act do.

The National School Boards Association joined a friend-of-the-court brief along with other local government groups that had called on the high court to overrule Auer.

The deference rule “invites dramatic shifts in federal policy with each new administration—and tends to result in policies that lack the clarity and wisdom that public participation can engender,” said the NSBA brief.

The Obama administration issued informal guidance in 2016 that asserted that discrimination and harassment based on gender identity and sex stereotypes were covered by Title IX of the Education Amendments of 1972, which bars discrimination “based on sex” in federally funded schools. A federal appeals court ruled that the interpretation merited deference under Auer in the high-profile case of Gavin Grimm, a transgender high school student whose Virginia school board had enacted rules requiring students to use restrooms that corresponded to their birth gender.

The Supreme Court granted review of that decision, but when the newly elected administration of President Donald Trump withdrew the guidance in 2017, the high court sent the Grimm case back to lower courts.

The NSBA brief also cited the Obama administration’s 2014 guidance stating that the Education Department would investigate racial disparities in school discipline, as well as the Trump administration’s 2018 decision to rescind that guidance.

“It is not clear whether any states or localities were consulted before either the 2014 or 2018 guidance was issued,” the NSBA brief said.

The Kisor case decided by the justices on June 26 involved a military veteran’s challenge to a Department of Veterans Affairs interpretation of its regulations on benefits. James L. Kisor, who served as a Marine in the Vietnam War, sought benefits for post-traumatic stress disorder going back to 1983. The VA denied his claim based on its interpretation of the term “relevant” in one of its regulations, and a federal appeals court held that the interpretation deserved deference under Auer.

All nine justices agreed that Kisor’s case should be sent back to the U.S. Court of Appeals for the Federal Circuit, in Washington, for that court to reconsider whether the VA regulation to which it deferred was in fact genuinely ambiguous.

Kagan, in a part of her opinion joined by the chief justice, said that going forward courts should only apply Auer deference to agency interpretations when certain conditions are met. One is that the interpretation must be made by the agency, and not an “ad hoc statement” that doesn’t truly reflect the agency’s views. (Some legal experts viewed one of the Education Department’s statements about transgender rights under President Obama, contained in one official’s letter in the Grimm case, to be just such an ad hoc statement.)

Next, the agency’s interpretation must in some way implicate its substantive expertise, Kagan said.

“Generally, agencies have a nuanced understanding of the regulations they administer,” she said, quoting the brief filed by the Trump administration in the case, which had argued basically for the outcome the court adopted—keep Auer deference but clarify it.

Finally, an agency’s reading of a rule must reflect “fair and considered judgment” to receive Auer deference, Kagan said.

“That means, we have stated, that a court should decline to defer to a merely convenient litigating position or post hoc rationalization advanced to defend past agency action against attack,” she wrote.

In both her written opinion and her statement from the bench, Kagan emphasized the importance of stare decisis—letting settled decisions stand. The principle “is an important one for stability and evenhandedness in the law,” Kagan said from the bench, likely with other recent decisions that overruled precedents in mind.

Gorsuch, in his dissent, said the court’s decision to retain Auer deference was “more a stay of execution than a pardon.”

“The court cannot muster even five votes to say that Auer is lawful or wise,” he wrote. “Instead, a majority retains Auer only because of stare decisis” and imposes “many new and nebulous qualifications and limitations on Auer.”

“So the doctrine emerges maimed and enfeebled—in truth, zombified,” Gorsuch wrote.

A version of this news article first appeared in The School Law Blog.