Supreme Court Upholds, Narrows Deference To Agency Interpretations Of Regulations

Kisor v. Wilkie, No. 18-15

In a 5-4 decision, the Supreme Court decided not to overrule the doctrine of Auer deference, which requires courts to defer to agency interpretations of their own ambiguous regulations. Instead of jettisoning Auer entirely, the Court emphasized the preconditions that must be satisfied before deference plays its tie-breaking role.

Background: Petitioner James Kisor sought disability benefits from the Department of Veterans Affairs (VA) for posttraumatic stress disorder (PTSD). When Kisor first sought benefits in 1982, the VA denied his claim, based on a psychiatric evaluation that did not diagnose PTSD. After Kisor moved to reopen his claim in 2006, a new psychiatric evaluation made a diagnosis of PTSD and the VA determined that Kisor was eligible for benefits.

Kisor sought benefits retroactive to 1982.  VA regulations authorize such benefits if the VA “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.” Kisor identified new service records, but the VA concluded that the records were not “relevant” because they addressed whether Kisor had participated in combat operations—and not whether he had PTSD.

On appeal, the U.S. Court of Appeals for the Federal Circuit sided with the VA.  The court held that the term “relevant” in the VA’s regulations was ambiguous but that Auer required the court to defer to the VA’s interpretation that service records are “relevant” only if they counter the basis for the previous denial of benefits.

Issue: Whether the Supreme Court should overrule precedents requiring courts to defer to agency interpretations of their own ambiguous regulations.

Court’s Holding: In an opinion written by Justice Kagan and joined by the Chief Justice and Justices Ginsburg, Breyer, and Sotomayor, the Court declined to overrule Auer. The Court held that deference remains proper if: (1) the regulation is genuinely ambiguous, after a court has employed the traditional tools of construction; (2) the agency’s interpretation “come[s] within the zone of ambiguity the court has identified after employing all its interpretive tools;” and (3) “the character and context of the agency interpretation entitles it to controlling weight,” which is to say that the agency’s interpretation is authoritative, implicates its substantive expertise, and reflects the agency’s fair and considered judgment.

The Court grounded its validation of Auer in stare decisis, reasoning that there was no special justification for overruling Auer, especially in the face of the instability that would result from the contrary outcome. The Court nevertheless vacated the judgment and remanded the case to the Federal Circuit, finding that the court had been too casual in resorting to Auer, without following the process identified above.

In portions of the opinion that were joined only by Justices Ginsburg, Breyer, and Sotomayor (and not by the Chief Justice), Justice Kagan went beyond stare decisis to argue that Auer is affirmatively desirable and reflects Congress’s presumed preference for agencies to play the primary role in resolving regulatory ambiguities.

Justice Gorsuch filed a dissenting opinion, which was joined by Justices Thomas, Alito, and Kavanaugh.  In his view, the Court was paying lip service to stare decisis and was instead “reshaping [its] precedent in new and experimental ways.” He would have found Auer to be inconsistent with the Administrative Procedure Act, in tension with the Constitution, and unsustainable as a matter of stare decisis. In its place, Justice Gorsuch would have required courts to interpret agency regulations based on their independent judgment, following agencies only to the extent their views were persuasive.

The Chief Justice and Justice Kavanaugh wrote separately, as well, to suggest that the majority and the dissent were not as divided as their bottom-line conclusions otherwise indicated. Both of their opinions also underscored that Auer’s deference to agency interpretations of ambiguous regulations implicates distinct issues from Chevron, which addresses deference to agency interpretations of ambiguous statutes.

Note: Mayer Brown represented the petitioner in the Supreme Court.