SCOTUS Case Sets Limits On Agency Deference

In a much-anticipated opinion, on June 26, 2019, the United States Supreme Court held that, in appropriate circumstances, federal courts should continue to defer to the reasonable interpretations that administrative agencies give to their own ambiguous regulations.1

In doing so, the Court declined to overrule so-called Auer deference, a doctrine rooted in the 1997 decision Auer v. Robbins, 519 U.S. 452 (1997) and a World War II-era predecessor, Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945).

The decision is notable for at least two different reasons.

First, it is clear that the effect of the decision will be to narrow significantly the circumstances in which agency interpretations will be entitled to deference to those which relate to the agency's own expertise (rather than general legal principles), are within the zone of the ambiguity, are reasonable, and were officially adopted in circumstances that make it reliable evidence of the agency's original intent.

Second, concurring opinions by Chief Justice Roberts, Justice Gorsuch (joined by Justice Thomas and joined in part by Justice Kavanaugh and Justice Alito), and Justice Kavanaugh (joined by Justice Alito) continue to signal the Court's interest in reviewing the separate question of whether agencies' interpretations of statutes should continue to receive deference under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), and make clear that this decision does not address that issue.

1. Overview of Auer Deference

   In Auer, the Supreme Court considered whether sergeants and a lieutenant employed by the St. Louis Police Department were salaried "exempt" employees under the Fair Labor Standards Act.2 To resolve that dispute, the Court was asked to interpret regulations promulgated by the Secretary of Labor concerning when employees are "exempt" from overtime rules, and in particular whether they can be exempt if their pay is "subject to" disciplinary deductions.3 Finding the Secretary of Labor's regulations on the matter to be ambiguous, the Court invited the Secretary himself to offer a view by way of an amicus curiae brief, which he did and which explained that the Department of Labor's view was that an employee was denied "exempt" status if his or her pay was subject to deductions "as a practical matter."4

   Writing for a unanimous Supreme Court, Justice Antonin Scalia explained that "[b]ecause the salary-basis test is a creature of the Secretary's own regulations, his interpretation of it is, under our jurisprudence, controlling unless plainly erroneous or inconsistent with the regulation."5 The Court went on to hold that "[t]hat deferential standard is easily met here."6

   And with that, Auer deference was born.

   Although formally announced in 1997, Auer deference was not new at that time. Indeed, in support of deferring to the Secretary of Labor's views in Auer, Justice Scalia relied on Seminole Rock, a case concerning World War II price controls on crushed stone. In Seminole Rock - which notably pre-dated the Administrative Procedure Act ("APA") by a year - the Court explained that, when interpreting an administrative regulation, "if the meaning of the words used is in doubt," then "[t]he intention of Congress or the principles of the Constitution may be relevant . . . But the ultimate criterion is the administrative interpretation, which becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation."7

   That the doctrine came to be known by reference to the Auer decision a half-century later is perhaps due to its more frequent invocation following the unanimous 1997 ruling. While the doctrine has often been relied on by administrative agencies to bolster their litigation positions, it has also been limited by later Supreme Court holdings. In particular, in Christensen v. Harris County, 529 U.S. 576 (2000), again construing regulations from the Department of Labor, the Supreme Court declined to apply Auer deference to an interpretive letter issued by the Acting Administrator of the Department's Wage and Hour Division. In doing so, the Court re-affirmed that "an agency's interpretation of its regulation is entitled to deference" but cautioned that:

   Auer deference is warranted only when the language of the regulation is ambiguous. The regulation in this case, however, is not ambiguous - it is plainly permissive. To defer to the agency's position would be to permit the agency, under the guise of interpreting a regulation, to create de facto a new regulation.8

   The Court went on to hold that the regulation in question was "not ambiguous" and therefore "Auer deference is unwarranted."9

   In the years since Christensen, members of the Court have increasingly voiced unease with a doctrine that permits administrative agencies to issue authoritative interpretations of their own regulations outside of the notice-and-comment rulemaking procedure sanctioned by the APA. For example, concurring in Decker v. Northwest Environmental Defense Center, 568 U.S. 597 (2013), Chief Justice Roberts, joined by Justice Alito, observed that "[i]t may be appropriate to reconsider [Auer] in an appropriate case."10 Last year, Justices Thomas and Gorsuch did the same, dissenting...