Sunday, December 16, 2018

Auer, Executive Agencies, and the Supreme Court

by Curtis Herbert

The Supreme Court recently accepted a very important cert petition, and it will now decide whether to overrule two administrative law precedents: Auer and Seminole Rock. But what is the significance of these cases?

Auer deference, generally speaking, is the practice of deferring to agencies when they interpret their own ambiguous regulations. Seminole Rock does roughly the same thing. When you hear the word “deference” in a legal context, it is often preceded by “Chevron.” But that is not the case here, and it’s important to distinguish between the two. What Auer does is expand upon Chevron deference, adding to the power of agencies. The central holding of Chevron was that courts ought to defer to agencies’ judgements about Congressional statutes. Auer deference goes one step further, directing courts to defer to agencies’ interpretation of their own regulations. These cases join Chevron and Brand X to form what some consider the dreaded triumvirate of administrative deference.

The argument against Auer deference, as set forth by the petitioner, goes something like this:

1: Auer deference is simply a judicial policy, and a faulty one at that. It has no underlying constitutional reasoning.

2: Auer deference raises serious separation of powers questions

3: It is also incompatible with due process and fair notice.

These are all interesting claims. They also relate to a case I wrote about very recently, Sessions v. Dimaya, which I will revisit in the context of this case.

The first claim is not only a challenge to the constitutional basis of Auer, but to its practical application. It seems relatively clear (at least to me) that nothing in the Constitution mandates judicial deference to administrative agencies, which did not exist at the time of the founding. In fact, as the petitioners will argue, separation of powers concerns may counsel against Auer deference.

After concluding that there is no constitutional basis for this policy, petitioners then proceed to question its wisdom. Their argument is quite simple, and I’ll summarize it by paraphrasing Richard Epstein on a recent First Mondays podcast: “The relative advantage of the judiciary is statutory construction, while the relative advantage of agencies is fact-finding.” What on earth does this mean? It means that, generally speaking, judges are better at interpreting statutes and regulations, and agencies are better at fact-finding and policy-making. Judges have legal training and experience, while agencies have more resources and expertise in the areas they are tasked with overseeing. Why, the argument goes, are we throwing away the intelligence and capabilities of judges who specialize in interpretation? This line of reasoning advocates for deference to agencies when they make factual determinations, but not when they make interpretive ones.

The ensuing portion of the argument focuses on perceived separation of powers issues with Auer. Here is an excerpt from the cert petition: “The court of appeals wholly abdicated its constitutional mandate to exercise independent judgment; it effectively delegated to the VA its authority to interpret legal texts.” (Petition for a writ of certiorari, Kisor v. O’Rourke.) The agency is interpreting its own regulations, and, under this theory, it is the obligation of the judiciary to step in and ensure fairness. But, as the petition explains, this does not happen at all under Auer:

“the sole basis of [the] decision articulated by the court of appeals was that the presence of two competing, reasonable constructions of the regulation obligated the court to declare the regulation “ambiguous.” . . . That is all it takes for Auer to apply: a “regulation is ambiguous on its face” whenever “competing definitions for a disputed term seem reasonable.”

Petitioners noted that because the lower court could find a reasonable reason for its interpretation, the rule was ambiguous, and so Auer deference was in effect. What this does is import a test akin to modern-day rational basis scrutiny into administrative law. So long as the agency can make an argument, regardless of whether it is correct or not, that means there is some ambiguity. And because there is ambiguity, the agency wins under Auer. Therefore, virtually any argument an agency can make will be upheld under Auer. And in the world of Auer, there are no suspect classes. There are no fundamental rights. It’s rational basis scrutiny all the way. The courts are doing precisely the opposite of what they are supposed to do, and as a result are violating separation of powers principles. Agencies are given free reign, which brings us to the third assertion: Auer conflicts with due process.

The specter of agency regulations and the future of the administrative state were fresh on the justices’ minds last year in Sessions v. Dimaya. When Justice Gorsuch wrote his concurrence, he was worried about excessively vague laws in civil as well as criminal contexts. He wanted the Court to treat vague laws the same in both contexts. Perhaps it is now even more evident why the plurality in that case declined to extend that standard of review: it might endanger some of the modern administrative state.

Here’s why this is relevant: what Auer does is incentivise vague and unclear regulations. If you run an agency, why make clear and unambiguous rules when you know that you can interpret vague ones however you want, and the courts will go along with it? What Auer does is make the amount of deference dependent on the amount of ambiguity. As the ambiguity increases, so does the range of interpretations, as well as the likelihood of the interpretation being upheld. When perverse incentives are created, the end result is usually perverse actions. The reason that vague regulations and laws are so dangerous, and teeter on the brink of unconstitutionality, is explained in part in my earlier article, but for a more thorough explanation I suggest Justice Gorsuch’s opinion. Succinctly put, it is essential to the rule of law that citizens be able to know what the law is. That element of the rule of law is not being done any favors by Auer deference.

That’s the short version of the argument against Auer. Feel free to take it or stick your pencil through it. I, for one, am looking forward to a fiesty oral argument and some blistering opinions. We can be pretty certain Gorsuch, Alito, and Thomas will vote to get rid of Auer. What position the Chief Justice and Justice Kavanaugh endorse remains yet to be seen. For now, eager anticipation will have to suffice.


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