A Matter of Deference

It’s Hard to See How Auer Deference Can Survive Loper Bright

In 2024, the Supreme Court decided Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024), which overruled the Chevron doctrine, as announced in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), and held that federal courts may not defer to agency interpretations of ambiguous federal statutes. Writing for the Loper Bright majority, Chief Justice Roberts said that “Chevron is overruled” because it violated Article III of the Constitution, section 706 of the Administrative Procedure Act (APA), and Marbury v. Madison, because it took from the federal judiciary its “solemn duty” to “say what the law is.” Loper Bright, 144 S. Ct. at 2273. The Loper Bright majority did not address the Court’s prior opinions requiring deference by federal courts to agency interpretations of agency regulations or rules, as confirmed in the 1997 decision of Auer v. Robbins, 519 U.S. 452 (1997). “Before the doctrine was called Auer deference, it was called Seminole Rock deference” for the 1945 decision in which the Court first declared that an agency’s interpretation of a regulation whose “‘meaning is in doubt’ ‘becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation.’” Kisor v. Wilkie, 588 U.S. 558 (2019) (quoting Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945)).

Justice Kagan dissented in Loper Bright, citing the 2019 decision of Kisor v. Wilkie, 588 U.S. 558 (2019), which upheld judicial deference to agency interpretations of their own regulations under Auer. Justice Kagan wrote in Loper Bright that “the case against overruling Chevron is at least as strong” as the case against overruling Auer. And, according to Justice Kagan, because the Court saved Auer regulatory deference in Kisor, so too should it save Chevron statutory deference in Loper Bright. Chief Justice Roberts remained silent in the Loper Bright majority about how Chevron deference—or its demise—affected Auer deference, but he has commented on Auer deference in prior opinions.

Five years earlier, in Kisor v. Wilkie, the Supreme Court upheld the constitutionality of Auer deference—judicial deference to an agency’s interpretation of its own rules—in part relying on the Chevron doctrine. Writing for the Kisor majority in 2019, Justice Kagan relied on Chevron and its philosophy in ruling that Auer deference comports with section 706 of the APA. Kisor, 588 U.S. at 581–82. Justice Kagan agreed that the APA was enacted in 1946 “to serve as ‘the fundamental charter of the administrative state.’” Id. at 580. Section 706 of the APA reads in relevant part that reviewing courts “shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.” 5 U.S.C. § 706 (emphasis added). Justice Kagan also agreed that the duty of federal courts to interpret “the terms of an agency action” under section 706 “include[s] a regulation.” Kisor, 588 U.S. at 581–82.

Justice Gorsuch wrote separately in Kisor to argue that the Court should have overruled Auer because it violates the Constitution and the APA, and he wrote that there are “serious questions” about Chevron as well. Id. at 628 n.14 (Gorsuch, J., concurring in the judgment). Interestingly, Justice Gorsuch agreed with Justice Kagan’s seminal point that a federal court’s duty under the APA “to ‘determine the meaning’ of any relevant ‘agency action’ include[es] any rule issued by the agency.” Id. at 604. Justice Gorsuch’s separate opinion in Kisor would be the rationale of the majority in Loper Bright five years later in overruling Chevron.

Interestingly, Chief Justice Roberts—who would write the Loper Bright majority—wrote a concurring opinion in Kisor that agreed to uphold Auer deference but said Chevron deference is different:

Issues surrounding judicial deference to agency interpretations of their own regulations are distinct from those raised in connection with judicial deference to agency interpretations of statutes enacted by Congress [citing Chevron]. I do not regard the Court’s decision today to touch upon the latter question.

Kisor, 588 U.S. at 591 (Roberts, C.J., concurring) (citing Chevron).

But Justice Roberts did not explain the basis for this distinction, either in Kisor or in Loper Bright. And it is hard to find a principled basis when even Justice Kagan agreed in Kisor that section 706 of the APA means that “reviewing courts shall ‘determine the meaning or applicability of the terms of agency action’ (including a regulation).’” Kisor, 588 U.S. at 581 (quoting section 706 of the APA) (emphasis added). Justice Gorsuch recognized the very same thing in his Kisor concurrence. Id. at 604 (Gorsuch, J., concurring in the judgment). And this was the premise of Chief Justice Roberts in the Loper Bright opinion overruling Chevron. In Kisor, Justice Kagan justified upholding Auer regulatory deference as consistent with section 706 of the APA by pointing to a prior Court opinion in which Justice Roberts wrote that “Chevron deference comports with Section 706,” which Justice Kagan interpreted to mean that “Section 706 and Auer thus go hand in hand.” Id. (citing City of Arlington v. FCC, 569 U.S. 290, 317 (2013) (Roberts, C.J., dissenting)).

It stands to reason, then, that if Loper Bright means Chevron violates section 706 of the APA and Article III of the Constitution, so must Kisor and Auer. But with Chief Justice Roberts’s one-sentence declaration in Kisor that Chevron and Auer are different, there is an argument that Auer deference to agency regulatory interpretations remains. Twelve years ago, however, Chief Justice Roberts seemed to further indicate he would overrule Auer deference if the right case came along.

Chief Justice Roberts’s 2013 Concurrence Provided a Clear Harbinger That Auer’s Days May Be Numbered

In Decker v. Northwest Environmental Defense Center, 568 U.S. 597 (2013), the Supreme Court relied on Auer to defer to the Environmental Protection Agency’s (EPA’s) interpretation of its own regulation implementing a provision of the Clean Water Act. Justice Roberts wrote a concurring opinion noting that Justice Scalia’s dissent “raises serious questions about the principle” of agency deference set forth in Auer. Id. at 615 (Roberts, C.J., concurring). Chief Justice Roberts said that it “may be appropriate to reconsider that principle in an appropriate case. But this case is not that case.” Id. Chief Justice Roberts said the issue was not sufficiently raised below in Decker given that the respondent said in a single footnote that the Court should reconsider Auer, and the petitioners responded in a single footnote saying the Court should not revisit Auer. In a quote likely to find its way into a future cert petition, Justice Roberts said:

The issue is a basic one going to the heart of administrative law. Questions of Seminal Rock and Auer deference arise as a matter of course on a regular basis. The bar is now aware that there is some interest in reconsidering those cases, and has available to it a concise statement of the arguments on one side of the issue. I would await a case in which the issue is properly raised and argued. . . .

Id. at 616 (emphasis added).

The late Justice Scalia said that in practice “Auer deference is Chevron deference applied to regulations rather than statutes.” Id. at 617 (concurring in part and dissenting in part). Justice Scalia then made the point that Auer deference was even more pernicious and unconstitutional than Chevron deference in that it requires courts reviewing an agency rule to defer to the interpretation of the same agency that wrote the rule. Allowing this, he wrote, “would violate a fundamental principle of separation of powers—that the power to write a law and the power to interpret it cannot rest in the same hands.” Id. at 619.

Justice Scalia wrote that Auer deference gives agencies an incentive to write broad and vague regulation, with the knowledge that, if challenged, the agency can simply provide an interpretation the courts must defer to, all while avoiding the notice-and-comment process under the APA:

Auer deference encourages agencies to be “vague in framing regulations, with the plan of issuing ‘interpretations’ to create the intended new law without observance of notice and comment procedures.” Auer is not a logical corollary to Chevron but a dangerous permission slip for the arrogation of power.”

Id. at 620 (Scalia, J., concurring).

It was this reasoning that caused Chief Justice Roberts to concede in Decker that there are “serious questions” about the continued viability of Auer deference. It does not seem plausible that Auer deference will survive a Supreme Court challenge after Loper Bright.

Loper Bright Overruled Chevron by Rejecting a Fundamental Presumption of Auer Deference: That Ambiguity Implies Congressional Delegation of Law-Interpreting Power

Writing for the majority in Kisor in 2019, Justice Kagan justified deference to an agency’s legal interpretations of its own rules based on a presumption that “Congress would want” courts to defer to agency interpretations of law given that Congress gave agencies power to administer the law.

We have adopted the presumption . . . that “the power authoritatively to interpret its own regulations is a component of the agency’s delegated lawmaking powers.” Or otherwise said, we have thought that when granting rulemaking power to agencies, Congress usually intends to give them, too, considerable latitude to interpret the ambiguous rules they issue.

Kisor, 588 U.S. at 569–70.

Justice Kagan made the same point in support of Chevron in her dissent in Loper Bright, which was directly rejected by Chief Justice Roberts writing for the Loper Bright majority:

Chevron cannot be reconciled with the APA, as . . . the dissent contend[s], by presuming that statutory ambiguities are implicit delegations to agencies. Presumptions have their place in statutory interpretation, but only to the extent that they approximate reality. Chevron’s presumption does not, because “an ambiguity is simply not a delegation of law-interpreting power. Chevron confuses the two.”

Loper Bright, 144 S. Ct. at 2265–66.

If the position of the Supreme Court in Loper Bright is that a statutory ambiguity does not imply delegation of law-interpreting power, it is hard to find an argument supporting the continued validity of the Kisor position that regulatory ambiguities imply delegation of rule-interpreting power. This is especially so considering the separate opinions of Chief Justice Roberts and Justice Scalia in Decker, discussed above.

After Loper Bright, Agencies Are Incentivized to Couch Impermissible Legal Statutory Interpretation as Permissible Fact-Finding and Policymaking

The Loper Bright Court was clear that “Section 706 does mandate judicial review of agency policymaking and fact-finding be deferential.” Loper Bright, 144 S. Ct. at 2261 (emphasis added). Because courts must defer to an agency’s findings of fact and policy, it’s not hard to imagine an agency interpreting a federal statute “as applied” to the facts of the case or matter before it, or opining that a version of the statute as interpreted is consistent with a policy the agency was tasked to implement. Indeed, one of the primary reasons the Kisor Court upheld Auer deference to agency rule interpretations in 2019 “stems from the awareness that resolving genuine regulatory ambiguities often ‘entails the exercise of judgment grounded in policy concerns.’” Kisor, 588 U.S. at 570–71. And the Kisor opinion discusses several different examples of specific agency rule interpretations based on specific fact scenarios and findings. Id. at 566–68.

If Auer Deference Does Survive, Will Agencies Rely on Their Own Rules, Not Federal Statutes, or Retreat to Vagueness?

This was the prospect raised by Justice Scalia in Decker to support his argument that Auer must be overruled. Justice Scalia said Auer deference violates “a fundamental principle of separation of powers—that the power to write a law and the power to interpret it cannot rest in the same hands.” Decker, 568 U.S. at 619 (Scalia, J., concurring). He said Auer deference creates “the incentive . . . to speak vaguely and broadly, so as to retain a ‘flexibility’ that will enable ‘clarification’ with retroactive effect. ‘It is perfectly understandable’ for an agency to ‘issue vague regulations’ if doing so will ‘maximize agency power.’” Id. at 620.

Consider the interplay of the securities fraud statute, section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j, and the U.S. Securities and Exchange Commission’s Rule 10b-5, 17 C.F.R. § 240.10b-5, which implements section 10(b). Section 10(b) prohibits only two types of “devices” in connection with the purchase or sale of securities: (1) deceptions and (2) manipulations. Rule 10b-5 prohibits three categories of fraud: (1) “any device, scheme, or artifice to defraud”; (2) a misstatement or omission of a material fact; and (3) any conduct that “operates as a fraud or deceit upon any person.” Liability under Rule 10b-5 cannot extend beyond conduct described by Congress in Section 10(b). See Sante Fe Indus. v. Green, 430 U.S. 462, 472–73 (1977) (cited for the same holding by United States v. O’Hagan, 521 U.S. 642, 651 (1997); Cent. Bank v. First Interstate Bank, 511 U.S. 164, 173 (1994)). In dispositive motions and jury instructions, the Securities and Exchange Commission and securities fraud defendants often hotly dispute which provisions of section 10(b) and Rule 10b-5 are in play and what role the commission’s prior  interpretive rulings play in resolving these disputes. After Loper Bright, and if Auer deference still exists, will the Securities and Exchange Commission rest more of its interpretive rulings and arguments solely on Rule 10b-5 rather than section 10(b), or point to commission interpretations of Rule 10b-5 as dispositive on the court?

Conclusion

After the U.S. Supreme Court overruled Chevron statutory deference in Loper Bright, it does not appear there is much analytical support remaining for regulatory deference under the Auer doctrine. And if a lower federal court finds that there is, such a ruling will be ripe for review by the Supreme Court based on the authority discussed above.