By Matthew J. Booth and Michael J. Booth
With a nod to George Lucas and Stars Wars, one of the more vexing tasks we face as lawyers is trying to counsel clients on the meaning of federal regulations promulgated by federal administrative agencies like the U.S. Patent & Trademark Office, the EPA, and the Army Corps of Engineers. When the regulation was published and well written, this is an easy task. Other times it is more difficult because the regulation is either vague and/or ambiguous in one or more areas.
The U.S. Supreme Court has a case on its docket that will hopefully bring a little more clarity to this often-confusing area of the law in Kisor v. Wilkie, 18-15 (U.S.) Link. The Kisor case is about a Vietnam veteran who tried to get PTSD benefits from the Veterans Administration. Kisor first applied for these benefits in 1983 and was denied. He later re-applied for benefits in 2006 and the benefits were granted. The argument is under what sub-section of a regulation did the granting of the benefits occur. Under one sub-section, the benefits start as of the date of the 2006 proceeding. In another sub-section, the benefits begin retroactively back to the 1983 proceeding. With the possibility of 23 years’ worth of back benefits at stake, you can see why this case is before the Supreme Court. In the case below, the Federal Circuit found that this section of the VA’s regulations was ambiguous and that both Kisor and the VA had offered reasonable interpretations for two different sub-sections at issue in the case. But the Federal Circuit found that it was bound under an Auer deference to accept the VA’s interpretation of its regulation even though the first time the VA set out its understanding (of the vague regulation) was in its reply brief in the lower court.
In Administrative Law, there are several different types of judicial deference where the courts will defer to the Administrative Agency over a definitional interpretation. In the Kisor case, the kind of deference used by the Federal Circuit was an Auer deference which is a rule of judicial procedure wherein federal courts defer to an administrative agency in its interpretation of its own rules. This deference comes from two main cases by the Supreme Court in this area, Auer v. Robbins, 519 U.S. 452 (1997) Link, and Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945) Link.
Well-known problems of an Auer deference are that it does not necessarily depend on a public statement of an agency’s views. An Auer deference stands in stark contrast to the very open process for administrative rulemaking that starts with Congress enacting a law by statute that gives authority to an administrative agency to carry out the instructions mandated by Congress. The respective federal administrative agency then (should) follow the process outlined by the Federal Administrative Procedures Act (APA) for notice and public comment rulemaking through the Federal Register before promulgating a regulation. See generally 5 U.S.C. § 500 et seq.
In prior cases, the Supreme Court previously deferred to an agency’s interpretation in cases where that interpretation occurred in an internal memorandum, private letters, and internal litigation briefs. There are many other lower court examples where those courts seem to rely on an ad hoc, not so public, or private interpretation of their rules by various agencies.
One of the main problems of an Auer deference, however, is that its underlying legal foundation is historically not well grounded in either statutory or constitutional law. Instead, the Supreme Court came up with this type of deference in the first case, Seminole Rock, which occurred one year before the enactment of the APA and begged the question as to whether the case is valid given that Auer was silent on this issue.
In the Kisor case, Kisor is asking the Supreme Court to overrule Auer and Seminole Rock. The U.S. Solicitor General took the unusual position and agreed that there is a fundamental problem with an Auer deference because it lacks an apparent statutory or constitutional foundation. The Solicitor General recommends that the Supreme Court limit an Auer deference to a lighter version of an Auer deference, proposing a multistep analysis that seems to restate what a reviewing court is already doing. The fallback position by the Solicitor General is that the Supreme Court should not overrule Auer because of stare decisis due to all of the cases that rely on this type of deference. This may not be a good fallback position because the Supreme Court recently chose not to follow stare decisis and overturned 40 years of court jurisprudence in another case. See Franchise Tax Board of California v Hyatt, 17–1299 (U.S. 05/13/2019) Link.
The bottom line is that there is a good chance something is going to happen with the Auer deference. Hopefully, the Court, at a minimum, will require more notice to the regulated community and public.
The case is Kisor v. Wilkie, 18-15 (U.S.) Link
Matthew J. Booth is an Intellectual Property attorney in Austin, Texas.
Michael J. Booth is a Water and Environmental attorney in Austin, Texas.