A New Dawn For Challenges To FDA Actions? Kisor And The Tenuous Vitality Of Administrative Deference

In Kisor v. Wilkie1—a closely watched case decided in a closely divided opinion towards the end of the Supreme Court's last term—the Court upheld the doctrine of Auer deference, much to the surprise of many given the Court's new conservative majority. Although technically a win for the government, the decision recast Auer deference in a manner likely to have the practical effect of eroding the ability of administrative agencies to rely upon the doctrine as a complete defense to legal challenges.

This article examines the Kisor opinion and its potential impact on firms regulated by the U.S. Food and Drug Administration (“FDA”) and other agencies that rely heavily on scientific and technical expertise. While Kisor does not represent a fatal blow to administrative agencies seeking to invoke deference, the opinion provides heavily regulated entities with more ammunition to push back on arguments for deference, particularly when bringing certain kinds of Administrative Procedure Act (“APA”) claims. The case also provides additional cover for judges conceptually uncomfortable with Auer to examine agency actions more closely. Future cases citing Kisor may continue to undermine the jurisprudence FDA and other agencies have long relied upon to insulate their actions from substantive judicial scrutiny. That said, Kisor and related cases also highlight the types of circumstances in which courts are likely to continue to rely on Auer, notwithstanding the directional shift.

How We Got Here

Auer Deference

Auer deference, taking its name from the 1997 Supreme Court decision in Auer v. Robbins,2 calls for judges “to defer to agencies when they interpret their own ambiguous rules.”3 Auer deference is premised on a number of principles, including that (1) the agency that “wrote the regulation” is best positioned to interpret it;4 (2) agencies possess particular expertise in administering a “complex and highly technical regulatory program” in which policy decisions must be made;5 and (3) a uniform agency interpretation imparts “predictability to the administrative process.”6 Under Auer, courts generally defer to agency interpretations of their regulations unless those interpretations are “plainly erroneous or inconsistent with the regulation.”7

In recent years, critics have increasingly called the Auer decision into question as unwise and potentially unconstitutional. For example, Justice Scalia asserted that Auer deference has the pernicious effect of giving agencies “the incentive [] to speak vaguely and broadly, so as to retain a 'flexibility' that will enable 'clarification' with retroactive effect.” He also questioned the doctrine's constitutional validity, arguing that Auer deference “contravenes one of the great rules of separation of powers: He who writes a law must not adjudge its violation.”8 As a practical matter, Auer has stood as a significant obstacle to attempts to challenge administrative agency action through litigation.

Kisor's Challenge

James Kisor, a Vietnam War veteran, challenged a determination of the Board of Veterans Appeals within the Department of Veterans Affairs (collectively, the “VA”), that he was not entitled to benefits for post-traumatic stress disorder pursuant to the VA's interpretation of the relevant regulation. The Court of Appeals for the Federal Circuit ultimately affirmed the VA's finding, based on its view that the relevant regulation was “ambiguous” and that Auer deference to the VA's interpretation was thus warranted.9

Kisor then sought review in the Supreme Court, teeing up a frontal challenge to Auer that incorporated many of the critiques of Auer deference made by Justice Scalia and others. The petition for certiorari argued that “Auer incentivizes agencies to promulgate vague and broad regulations,” that “Auer deference provides agencies an end-run around the notice-and-comment procedures required by the” APA, and further, that Auer raises separation of powers concerns because it limits the authority of the courts.10

The decision by the Supreme Court on December 10, 2018 to grant Kisor's petition was viewed by many as likely to portend a major shift in administrative law. Anti-Auer commenters predicted that the grant meant Auer was indeed “on its last gasp,”11 and pro-Auer commenters fretted that the “Roberts Court, with its newly cemented conservative majority, [could seek to dismantle] the administrative state.”12

The Decision

In a surprise to many, and much to the consternation of Auer's critics, the opinion—authored by Justice Kagan for the Court as to Parts I, II-B, III-B, and IV—affirmed Auer, at least as a technical matter. In so doing, however, the Court described important limits on the application of Auer, thereby raising questions about its future application. According to the Kisor majority, in order for Auer deference to apply, the following conditions must be met:

First, becausea court should not afford Auer deference unless the regulation is genuinely ambiguous, before determining that a regulation is genuinely ambiguous,a court must exhaust all the 'traditional tools' of construction. The Court emphasized that where a regulation is unambiguous,a court has no business deferring to any other reading, no matter how much the agency insists it would make more sense.14 Second, the agency's readingmust still be 'reasonable,'15 meaning that the agency interpretation mustfall 'within the bounds of reasonable interpretation.'16 The Court clarified that thisis a requirement an agency can fail.17 Third, before applying Auer deference,a court must make an independent inquiry into whether the character and context of the agency interpretation entitles it to controlling weight, assessing whether the policy and other justifications animating Auer are applicable in a particular circumstance.18 Factors that should be considered include whether the agency interpretation isthe agency's authoritative or official position, whether theagency's interpretation [] in some way implicate[s] its substantive [e.g., technical- or policy-based] expertise, whether theagency's reading of a rule . . . reflect[s] fair and considered judgment, and whether the agency's interpretation creates alack of fair warning to regulated parties.19 Justice Gorsuch, joined by Justice Thomas and in part by Justices Alito and Kavanaugh, published a concurring...