Regulatory Reform

Deferring to Agencies: Recent Supreme Court Decision Highlights Red Flags in the Administrative State

            “The accumulation of all powers, legislative, executive, and judiciary, in the same hands… may justly be pronounced the very definition of tyranny.” – James Madison, Federalist 47

If Madison lived today he would be horrified to discover that the administrative state has added both rulemaking (legislative) and interpretative (judicial) powers to its enforcement (executive) power. A recent Supreme Court decision largely reaffirms the surrender of these powers to executive agencies. 

In Kisor v. Wilkie, the Supreme Court squanders a prime opportunity to take back its job to interpret the law by upholding the Auer deference while also recognizing some of the concerns excessive deference presents. Auer holds that federal courts must yield to an agency’s interpretation of ambiguous regulations produced by that agency when all other tools of interpretation have been exhausted. 

The request to overturn Auer came from James Kisor, a veteran of the Vietnam War, who asked for benefits from the Department of Veteran’s Affairs in 1982 for PTSD. The VA denied him. When he reopened his claim in 2006, they declared him eligible from 2006 onward but not for benefits going back to 1982. Kisor appealed to the courts who, leaning on the Auer deference, sided with the VA as the authoritative interpreter of its own rules. In late 2018, the Supreme Court issued Cert. releasing their opinion on June 26, 2019. 

In the majority opinion, Kagan argues that Auer is grounded in Congress’s desire for agencies to have the primary role in resolving regulatory ambiguity. Rulemaking power necessitates or begets interpretive authority. She writes, “Want to know what a rule means? Ask its author.” Moreover, in her view, regulatory agencies are better equipped than the courts to make prudential judgments about how to apply and interpret their own rules. Also, she argues there is a need for uniformity in interpretation and this can only be achieved by the agencies themselves. Finally, citing stare decisis, she notes that the minority wants to overturn a long line of workable precedents which have become baked into how the government operates. 

Even while upholding Auer, she re-emphasizes its limits. Namely, the court must only employ Auer when it has exhausted all traditional tools, the regulation is actually ambiguous, and the court has made a thorough study of the text, history, and purpose of the regulation. The Court of Appeals failed to exhaust all these traditional tools before appealing to Auer so Kagan orders them to reexamine the case. Near the end of her opinion, Kagan emphasizes that if Congress does not like the Court upholding Auer they can pass legislation limiting administrative deference.   

Gorsuch, writing for the minority, agrees that the Court of Appeals must reexamine, but strongly argues that Auer should be overturned by the Court not by Congress. He claims that the majority is abdicating their duty to independently interpret the law by outsourcing it to agencies. While admitting that an agency’s interpretation should be used as evidence and even strong evidence for ambiguous regulations, he holds that it should not be deferred to. He concludes, “If the court agrees that the agency’s reading is the best one, Auer does no real work; the doctrine matters only when a court would conclude that the agency’s interpretation is not the best or fairest reading of the regulation.” 

Much to Gorsuch’s chagrin the court refused to overturn the problematic Auer doctrine, but not all hope is lost. The states, many of whom have also suffered from excessive judicial deference, have begun to roll back their deference doctrines. In 2018, Arizona passed legislation as Kagan would have recommended requiring Arizona courts to decide all questions of law without deference to agencies. 

States looking to follow Arizona should consider ALEC’s Administrative Procedures Act. A provision in this model policy would overturn Auer (and Chevron) making state courts review agency rules (and legislation) without deference to agency interpretation. Additionally, the APA would tighten notice-and comment procedures to ensure agencies give public notice when issuing, amending, or newly interpreting legally binding regulations. Such reform is key to resisting the regulation creep that transpires when agencies secretly reinterpret vague statutes to expand regulations on unknowing businesses and citizens working in good faith. Importantly, the APA gives legislatures a more robust role in regulatory development. Higher involvement from legislatures should yield less ambiguity and more uniformity in interpretation because the rules will be debated in the legislature, an inherently clarifying process. 

By limiting deference to agencies, state legislatures could begin a return to the Madisonian principle of separation of powers which prevent one branch from tyrannically accumulating all powers to itself. The APA only remedies this problem at the state level, but Congress could learn a thing or two from its little siblings and pass similar legislation thus ensuring the separation of powers at all levels of government.

Be sure to check out educational workshop How to Make Policy Reforms Last: Reform the Regulatory State at the ALEC Annual Meeting to learn more about administrative overreach.

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