Last week, the Supreme Court overruled the 40-year-old Chevron doctrine in Loper Bright Enterprises v. Raimondo, declaring that courts can no longer defer to agency interpretations of law simply because the statute is ambiguous and the interpretation is reasonable. Rather, courts must use their own “independent judgment” to determine the “best” reading of a statute. That best reading, the Court explained, could be that the statute has clearly delegated discretionary authority to an agency. But it could also be that the statute has not. In such cases, only a court’s construction of the statutory language is permissible, and the agency’s construction gets no automatic deference. In the wake of Loper Bright, lawyers and academics have begun to question what the decision portends for administrative law more broadly, including its effect on a distinct but related doctrine known as Auer (or sometimes Seminole Rock) deference. That doctrine, which the Court recently reaffirmed, states that a court should defer to reasonable agency interpretations of their own ambiguous regulations under certain conditions.
The same arguments the Loper Bright majority advanced for overruling Chevron appear to apply just as readily to Auer. But when the Court was presented with those arguments only five years ago in Kisor v. Wilkie, it rejected the invitation to overrule Auer, instead emphasizing stare decisis considerations and imposing new conditions on Auer’s use to “reiterate its limits.” Notably, a core part of Kisor’s stare decisis analysis focused on the uniquely destabilizing effect that the majority believed would come from overturning a deference doctrine that formed the backbone of thousands of precedents — but this concern did not dissuade the Court in Loper Bright.
Even though Loper Bright’s stare decisis analysis appears to undermine Auer, Loper Bright’s logic supports preserving that doctrine in some form. This is so because when a statute actually empowers an agency to interpret a particular provision, the statute necessarily also authorizes the agency to exercise a subsidiary power: to interpret its own pronouncements about the statute’s meaning. An agency’s interpretive authority is not boundless, however. The APA still requires that the agency’s actions not be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Loper Bright seems to contemplate this limit by emphasizing that even when interpretive discretion has been validly delegated, the agency’s actions must still reflect “reasoned decisionmaking.” For Auer to be sustainable under Loper Bright on a “subsidiary power” theory, it, too, would have to take account of this limit. As we explain below, the Kisor decision does just that, offering a useful framework for how to impose the limitations of arbitrary-and-capricious review within the context of Auer deference. Thus, Auer may not need stare decisis to save it after all.
Kisor and Loper Bright confronted nearly identical questions: did the stare decisis factors weigh in favor of overruling decades-old deference doctrines that have formed the basis of countless lower-court decisions and are important parts of the fabric of administrative law? But faced with the same basic arguments, the Kisor and Loper Bright Courts came to opposing conclusions. In Loper Bright, Chief Justice Roberts, writing for a 6–3 Court, argued that three stare decisis factors — the quality of the reasoning, the workability of the doctrine, and reliance interests — weighed in favor of overruling Chevron.
Consider the quality of the reasoning. The Chief Justice emphasized that Chevron had “sustained a cottage industry” of scholars trying to determine its meaning, and that even its earliest proponents, such as Justice Scalia, had come to doubt its validity as time went by. Moreover, the Court “continually limit[ed]” Chevron’s application, creating new conditions for agencies to be eligible for deference. Finally, Chevron and its progeny failed to grapple with what appeared to be the plain text of the APA’s judicial review provision, 5 U.S.C. § 706, which mandates that reviewing courts, not agencies, decide “all relevant questions of law.” But these arguments were rejected in Kisor, though they apply identically to Auer deference. As with Chevon, some of Auer’s biggest proponents, such as Justice Scalia, came to question its merit. Additionally, various cases, including Kisor itself, limited Auer’s use. Finally, like Chevron, Auer and Seminole Rock failed to wrestle with how Auer deference squared with the demands of § 706. Nonetheless, four Justices writing for a plurality in Kisor concluded that § 706 posed no barrier to Auer deference because the APA does not specify a de novo standard of review for “determin[ing] the meaning or applicability of the terms of an agency action.”
Next, consider workability. In Loper Bright, the majority argued that Chevron’s core inquiry, which hinged on an “identification of statutory ambiguity,” raised more questions than it answered because “ambiguity” is an “impressionistic and malleable” concept that is “wholly in the eye of the beholder.” Presumably, the exact same issue applies to Auer deference, which is similarly premised on the existence of some regulatory ambiguity. True, the Kisor Court attempted to resolve this issue by emphasizing that a judge should exhaust all “traditional tools of construction” before concluding that a regulation was ambiguous. But apparently, the Loper Bright Court did not think that this kind of cautionary language was sufficient to resolve the workability concerns it had with Chevron. Rather, it found the prospect of that kind of warning itself to be unworkably ambiguous.
Third, consider reliance interests. The Loper Bright majority roundly rejected the idea that Chevron produced the kind of “stable background rule” that fostered reliance. The Court had limited Chevron’s domain through a series of precedents that declined to apply the doctrine to, inter alia, pronouncements made without a sufficient degree of procedural formality and questions of “vast economic and political significance.” Likewise, Chevron afforded agencies the discretion to alter their interpretations over time. Consequently, the Court found it “hard to see how anyone” could expect Chevron deference in any given case. Of course, the same arguments might ring true for Auer deference as well. In Kisor itself, the Court drastically cabined Auer’s reach, instructing courts to withhold deference, for example, where an agency’s interpretation was not the “authoritative” or “official position” of the agency or the product of the agency’s “substantive expertise.”
Tellingly, the Loper Bright majority rejected the argument that Chevron should be preserved because decades of opinions and agency rules were predicated on it. That argument featured prominently in Kisor, which emphasized that overruling Auer would destabilize decades of opinions that “pervade[] the whole corpus of administrative law” and call the validity of countless agency interpretations into question. It is significant that these concerns, which could have been cited just as readily to preserve Chevron, did not stand in the Loper Bright majority’s way. Instead, it purported not to disturb prior Chevron cases deferring to various agency rules, emphasizing that these decisions were entitled to statutory stare decisis notwithstanding the Court’s “change in interpretive methodology.”
Even though it appears that Loper Bright’s stare decisis analysis significantly undercuts Auer, that doctrine might be justifiable under Loper Bright itself. Specifically, Loper Bright preserved the idea that statutes can validly delegate agencies discretion to interpret vague or standard-driven statutory language. That holding provides an independent basis for the notion that courts should defer to agency interpretations of their own rules — so long as such interpretations are the product of “reasoned decisionmaking.”
In overruling Chevron, Loper Bright focused on what it perceived as an unjustified legal fiction underpinning that doctrine: the notion that statutory ambiguity in an agency’s organic statute constitutes an implicit congressional delegation of interpretive authority to the agency to resolve the ambiguity. But Loper Bright emphasized that Congress can still delegate this sort of interpretive authority to agencies, so long as the existence of such a delegation is clear from the text. A statute could, for instance, expressly direct an agency to “define” the meaning of a statutory term. It could “empower” an agency to “fill up the details” of a regulatory regime. And it could authorize an agency to “regulate subject to the limits imposed” by a vague term, like “appropriate” or “reasonable,” that “leaves agencies with flexibility.”
To be sure, Kisor justified Auer deference on the same grounds that Loper Bright found to be logically flawed: the idea that “Congress intended for courts to defer to agencies when they interpret their own ambiguous rules.” But under Loper Bright, if a court has determined that a statute validly confers discretion to an agency to implement a statutory regime, a court does not need to assume the existence of a fictive congressional delegation. The delegation exists because Congress explicitly said so. And because an agency can exercise that discretion initially (say, by way of a notice-and-comment rule), it can also exercise that discretion by later clarifying what it first meant (say, in a formal adjudication applying that rule). The greater power, in other words, includes the lesser.
Consider, for example, a statute that authorizes an agency to “determine” the meaning of “unemployment” “in accordance with standards prescribed” by the agency. That express delegation gives the agency the authority to give meaning to that statutory term — not only in the first instance, when it promulgates its initial rule defining “unemployment,” but also in the second instance, when it later clarifies the confines of that interpretation.
Importantly, however, the APA does not contemplate that interpretive discretion is boundless. Rather, § 706 prohibits agency action that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” In other words, an agency’s exercise of validly delegated discretion — whether exercised in the first instance or in the second — must occur within certain boundaries. It must be “reasonably” apparent to a court that the agency has acted within the “range” of discretion granted to it by Congress. The agency cannot “entirely” fail to consider “an important aspect of the problem.” Its decision must be supported by the evidence before it. Its decision also cannot be “so implausible that it could not be ascribed to a difference in view or the product of agency expertise.” And if the agency was departing from a prior interpretation, it must have displayed an “awareness” of that change and articulated “good reasons for the new policy.”
Both Loper Bright and Kisor articulate conditions on agencies’ exercise of validly delegated discretion that evoke various features of arbitrary-and-capricious review. Under Loper Bright, a court is obligated to respect an agency’s interpretation of duly delegated authority, but only if the agency has engaged in “reasoned decisionmaking” within the bounds of its statutory authorization. The Court tellingly cites Motor Vehicles Manufacturers Ass’n v. State Farm — a canonical arbitrary-and-capricious case — for that proposition, suggesting that the Loper Bright majority might intend for this limit to be effectuated using a form of arbitrary-and-capricious review. It is of course true that administrative law courses teach arbitrary-and-capricious review as applying to an agency’s policy decisions. But scholars have long observed that arbitrary-and-capricious review overlaps significantly with review-of-law doctrine (specifically, the second step of Chevron, which focused on “reasonableness”). This makes sense: § 706 not only covers actions that are arbitrary and capricious but also those which are “otherwise not in accordance with law.”
Kisor likewise imposes restrictions on agency interpretations of their own pronouncements that echo arbitrary-and-capricious review. The agency’s gloss on the rule must be “reasonable”: that is, it must be within the “outer bounds of permissible interpretation” (language that mirrors the review-of-law component of arbitrary-and-capricious review). But that’s not all. The agency’s statement must be “authoritative,” rather than “ad hoc,” and it must be the product of the agency’s “substantive expertise” (which recalls the manner in which courts applying arbitrary-and-capricious review scrutinize the evidence and decisionmaking process underlying an agency action). Finally, the interpretation must reflect the agency’s “fair and considered judgment.” Thus, if an agency “substitutes one view of a rule for another,” that decision will be treated with skepticism unless the agency provides a compelling justification for the flip-flop. (This, of course, recalls the component of arbitrary-and-capricious review set forth in FCC v. Fox Television Stations, Inc. that considers whether an agency has reversed a prior position). What these similarities mean is that if an agency’s interpretation of its own regulation fails under Kisor, then ipso facto, the agency has failed to engage in “reasoned decisionmaking” within the boundaries of the statute that granted it discretion. That is precisely what Loper Bright prohibits.
In the coming months, Loper Bright will likely usher in new calls to overturn Auer deference. Indeed, because much of the majority’s stare decisis analysis advances arguments that likely apply as readily to Auer as they did to Chevron, litigants may think they stand on firm footing calling for Auer’s demise. But they should think again. Loper Bright expressly preserved Congress’s ability to give agencies the discretion to issue pronouncements giving meaning to particular statutory terms, so long as the agency has engaged in “reasoned decisionmaking” within the statute’s bounds. Under the logic of Loper Bright, if an agency can exercise that discretion in the first instance to interpret a statute, it should be able to do so in the second instance, too — to clarify what it meant, so long as that clarification reflects the “reasoned decisionmaking” required of it. Auer, read in this way, will live to fight another day.
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