In litigation challenging the actions of any federal agency, the level of deference a court must show to the agency often dictates the outcome. This is especially true in cases challenging an agency's interpretation of its own regulations. In practice, it is extremely difficult to convince a court to reject an agency's regulatory interpretation. Earlier today, however, the Supreme Court of the United States heard oral argument in a case that asks whether the Court should overrule its existing precedent and establish a new deference standard that might, in effect, give private parties more of a fighting chance when challenging an agency's interpretation of its own regulations. Based on the tenor of today's oral argument, it appears that a majority of the Court may be willing to significantly refine the regulatory deference standard without officially overruling past precedent.
The case currently before the Supreme Court (Kisor v. Wilkie, No. 18-15) involves the Department of Veterans Affairs (VA) and its interpretation of a regulation governing disability benefits. Under the so-called Seminole Rock / Auer standard—so named because of Supreme Court decisions issued in 1945 and 1997, respectively—a court generally defers to an agency's interpretation of its own regulation unless the interpretation is "plainly erroneous or inconsistent with the regulation." That is a tough standard for a private litigant to meet. Moreover, a private party may not even have advance notice of what the agency's regulatory interpretation is. In Auer, for example, the Supreme Court granted deference to a regulatory interpretation asserted for the first time in an amicus brief filed by an agency at the request of the Supreme Court.
In a surprising twist, the Solicitor General of the United States (SG) in Kisor filed a merits brief on behalf of the VA agreeing that the Supreme Court should clarify and narrow the deference standard applied to agency regulatory interpretations. Among other things, the SG argued that courts must first determine that a regulation is ambiguous before deciding whether the agency's interpretation of the regulation is reasonable and therefore entitled to deference. Some readers will recognize that such a two-part standard echoes the deference standard applied to agency statutory interpretations contained in codified regulations (so-called Chevron deference). Importantly, the SG also argued that courts should defer to the agency's regulatory interpretation "only if the interpretation was issued with fair notice to regulated parties; is not inconsistent with the agency's prior views; rests on the agency's expertise; and represents the agency's considered view, as distinct from the views of mere field officials or other low-level employees."
The questions asked by the Justices during today's oral argument reflected a range of concerns, including that principles of stare decisis and the fact that Congress has not deemed it necessary to alter the Seminole Rock / Auer standard counseled against the Court overruling either decision. At the same time, a number of Justices—particularly Justices Alito, Gorsuch, and Kavanaugh—expressed skepticism regarding the actual underpinnings of the Seminole Rock / Auer standard and the practical ability of courts to apply the SG's proposed clarification of that standard. It has been argued, for example, that there is no statutory basis for the Seminole Rock / Auer standard and that it conflicts with the judicial-review provision of the Administrative Procedure Act, which was enacted one year after Seminole Rock was decided.
Predicting the outcome of a Supreme Court case based on the events of oral argument is often a fool's errand. This case is no different. However, it is safe to say that with the SG advocating a clarification and narrowing of the Seminole Rock / Auer standard, there is a material possibility that a majority of the Supreme Court will agree to do so even if there are insufficient votes to overrule Seminole Rock and Auer altogether. A decision is expected before the Court recesses in June.
This article is presented for informational purposes only and is not intended to constitute legal advice.