Deep Dive Episode 40 – Kisor v. Wilkie

This Deep Dive episode brings you the recording of a teleforum co-sponsored with the Federalist Society’s Administrative Law and Regulation practice group.

In this episode, Stephen Vaden moderates a discussion between Karen Harned and Andrew Varcoe on Kisor v. Wilkie, a case which has broad and significant implications for issues surrounding judicial deference to agency interpretation of regulations.

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TRANSCRIPT

Operator:  This is Free Lunch, the podcast of The Federalist Society’s Regulatory Transparency Project. All expressions of opinion on this podcast are those of the speakers. On March 27, the Supreme Court heard oral argument in Kisor v. Wilkie. The Supreme Court granted certiorari in this case to decide whether to overrule the important administrative law cases Bowles v. Seminole Rock and Auer v. Robbins. These cases are often cited for the proposition that when an administrative agency promulgates a regulation and the regulation is ambiguous, a reviewing court must give “controlling weight” to the agency’s interpretation of the regulation unless the interpretation is plainly erroneous or is inconsistent with the regulation.

Today we bring you the teleforum call discussion of the oral argument which RTP co-sponsored with The Federalist Society’s Administrative Law & Regulation Practice Group. Our moderator was Stephen Vaden, who is General Counsel at the United States Department of Agriculture, and he was joined by two attorneys who attended the argument, Karen Harned, who is the Executive Director for NFIB Small Business Legal Center and Andrew Varcoe, who is a Partner at Boyden Gray & Associates. We hope you enjoy it.

Dean Reuter:  Welcome to the Federalist Society’s Courthouse Steps teleforum conference call as, today, we discuss the oral argument in Kisor v. Wilkie. I’m Dean Reuter, General Counsel, Vice President and Director of Practice Groups here at the Federalist Society.

As always, please note that all expressions of opinion are those of the expert on today’s call — the experts, I should say. Also, this call is being recorded, so please make a note of that.

Today we’re very pleased to have with us a handful of return guests to teleforum conference call, and, today we’re going to be proceeding with a moderator for our call.

We’re very pleased to have join us Stephen Vaden. He’s General Counsel at the U.S. Department of Agriculture and a long-time friend of the Federalist Society. He’s going to moderate the call from this point forward, but, as always, we’ll be looking to the audience for questions. So please have those in mind for when we get to that portion of the program. But with that, to our moderator. Stephen Vaden, the floor is yours.

Stephen Vaden:  Well, thank you, Dean, and it’s an honor to be asked back to serving moderator of this teleforum. Before we begin, I’d just like to say at the outset that, although I do serve as General Counsel of the Department of Agriculture, I am involved in this call solely in my personal capacity. And any views or statements I may make during this teleforum reflect only my own views and do not reflect the views either of the Department of Agriculture or any other part of the federal government. Indeed, as the people who are looking in on our call know, it is the Solicitor General who sets the official litigation position for the federal government in cases before the Supreme Court, in cases before the other federal appellate courts.

Some of our listeners may find it of interest to know that in carrying out his role, the Solicitor General will frequently solicit the opinions of general counsels of federal agencies and departments so that he may know those agencies’ and departments’ views on particular cases before the Supreme Court. And he does take all of those opinions into account. However, he does have the legal duty himself to set the litigation position of the United States in cases argued before the Supreme Court. And he is not required to adhere to even overwhelming advice from the general counsels and others who proctor it. It is Mr. Francisco’s decision alone.

And so with that background on how this process works, I have the honor of introducing our two members who will be taking us through what we certainly believe is one of the most important cases the Supreme Court will decide this turn, certainly if you are a practitioner of administrative law. First, let me introduce Ms. Karen Harned. Karen, who received her undergraduate degree from the University of Oklahoma and her law degree here in Washington, D.C., from the George Washington University School of Law, serves with the National Federation of Independent Businesses Small Business Legal Center, where she is the Executive Director. The Small Business Legal Center represents America’s small businesses in litigation before federal and state courts and the U.S. Supreme Court. Notable for our teleforum today, Ms. Harned and her Small Business Legal Center filed an amicus brief in the Kisor case, urging the Supreme Court to overturn Auer deference in Kisor.

Also joining us today is Mr. Andrew Varcoe, and it’s important for me to note that Andrew is an alumnus of the General Counsel’s Office at the Department of Agriculture. Although he and I did not serve together simultaneously, we’re always happy to see former attorneys from here go on to great things afterward. And Andrew has certainly done so. He is a partner at Boyden Gray & Associates here in Washington, D.C. He has extensive experience with litigation, environmental, energy, natural resources, and administrative law matters. He holds an undergraduate degree from the University of Chicago and a law degree from Harvard. Welcome to you both and thank you for joining us here this afternoon.

I would like to begin out, for those of us who are on the call and who may have a vague idea of what this case is about but may not know the particulars. This case is Kisor v. Wilkie, and I’d like to start out with just — Karen, I think you’d be good to handle this. What are the general particulars of the case that evolved before the Supreme Court? There’s been a lot of talk about Auer and Seminole Rock, not so much about Mr. Kisor. What is Mr. Kisor’s claim and why are we discussing Auer in the context of it?

Karen Harned:  Correct. So as a reminder, Auer deference is the practice of judges deferring to the interpretation an agency has of their own rules and when they see an ambiguity in that regulation, when there’s an argument that there’s an ambiguity in that regulation. In the case of Mr. Kisor, he’s a Vietnam veteran who served in the Marine Corps. And in ’82, he filed a claim for disability benefits with the VA, and he said that he suffered from post-traumatic stress disorder as a result of that service in Vietnam. And in 1983, the VA denied his claim for disability benefits, but he went ahead in 2006, fast-forward now over two decades, in taking advantage of VA Regulation 3.156(c)(1) that allows veterans to ask for a denial of disability benefits to be reconsidered if the agency receives information associated with that claim that’s relevant and existed at the time that the claim had been denied.

So Mr. Kisor provided records in 2006 of his service in this Operation Harvest Moon, where 13 of his fellow soldiers were killed and he experienced significant mortar rounds and sniper fire. These records were available when he first filed his disability claim, and it was denied in 1983. But they were not part of the documents that were reviewed by the VA denying his claim. The VA looked at this evidence, but they ultimately did grant disability relief. But they did it under sub-section (a), which allows for a claim to be reopened. And the reason Mr. Kisor didn’t like that — and the reason he didn’t like that is because, if you get a claim reopened as opposed to reconsidered, the benefits only start flowing from when the reopened decision was made. So that would be 2006.

However, if he prevailed on a reconsideration claim, then the benefits would have been running from 1983 on. And so the board’s denial was based on a determination that the combat records were not, quote/unquote, “relevant” under the regulations process for reconsideration because they weren’t “outcome determinative.” So that is what they decided. It went up to the appeals court, which is the Federal Circuit, and they agreed with the board. And they decided that the term “relevant” was ambiguous, and they applied Auer deference specifically. And they quoted Auer, saying an agency’s interpretation of its own regulations is controlling unless plainly erroneous or inconsistent with the regulations being interpreted.

So the court found the regulation ambiguous and went with the agency interpretation. And so then when Supreme Court was asked to take this case, the Auer question was one of two that was presented, and they ultimately took the case in December just on the question of whether or not Auer deference should be overruled. And that’s where we are today.

Stephen Vaden:  Thank you, Karen. I think there are two things to note there. First, what we’re talking about here for Mr. Kisor is the potential for 23 years of back benefits that he may be due, which would obviously come to a large sum of money, particularly for an individual who has served his country. So he clearly has standing because he does have an alleged harm in that he has been denied these 23 years’ worth of benefits not because of the text of a regulation but because of guidance, which, theoretically, is not supposed to have the force of law, that has been issued by the Veterans Affairs Department.

The second point that I’d point out is that, you know — to show our listeners how the bureaucratic process works, there’s something else that began in 1982, namely, me. So this case and this matter has been kicking around the Veterans Affairs Department for quite literally as long as I have been alive. So one can certainly feel some sympathy for Mr. Kisor, however this case comes out, that it is taking, at this point, 37 years for him to be able to get a final answer of whether he is due benefits and, if so, in what amount. That may be, perhaps, the subject of a future teleforum about the efficiency of the bureaucratic process, but that’s not our purpose here today. You laid out why Auer is — what Auer holds.

Karen and Andrew, could you tell our listeners a little bit about this case didn’t just bubble up out of nowhere. Auer and its predecessor, known as Seminole Rock, which is a World War II era case that held the same thing regarding agency deference, these issues had been bubbling about at the Supreme Court for the past several years. And they have also resulted in some interesting concurring opinions from some of the current justices. Andrew, would you like to say a little bit about why this time appeared ripe for someone to bring such a challenge to the Court?

Andrew Varcoe:  Right. Well, as you know, Seminole Rock was a decision from the 1940s. And then, as the parties recount in their briefs, the doctrine has sort of grown up over the years and gotten more embedded and entrenched until Auer, in which the Supreme Court gave Seminole Rock deference to a brief that was filed in the litigation itself, an amicus brief, agency amicus brief. And in recent years, a number of members of the Court, including Justice Scalia, now deceased, have either criticized Auer or suggested that, at minimum, it needs to be reconsidered. So for the past several years, I think, among those who have been following this issue, there’s been a growing expectation that, at some point, the Court would take up this question of whether Auer was rightly decided.

Stephen Vaden: And it’s particularly notable, I think, Andrew, that Justice Scalia had second thoughts about it late in his tenure on the Court because Justice Scalia, for anybody who’s gone back and looked at the case law here, was the author of Auer. So Justice Scalia was having second thoughts about an opinion that he wrote, which, although not unheard of in the tenure of Supreme Court justices, is not exactly common.

Andrew, I know you took interest, like I did, in the brief filed by the Solicitor General, setting out in writing for the Supreme Court what the official position of the United States government was with regard to Auer deference. So I want to turn next to that before we bring both of you in on the argument that took place today.

And in particular, I think from some members of the practitioner community who had seen some of the more aggressive postures that had been taken by the Justice Department in other cases, like the Lucia case where the Solicitor General successfully argued that the long-standing process for appointing administrative law judges was unconstitutional  — here, the Solicitor General took a more moderate stance on that. So I think many people — well, perhaps I’m being presumptuous. I think many people who are Federalist Society members may have hoped that the Solicitor General would say Auer is a very bad idea and should, therefore, go away. But that’s not what he ended up saying, is it, Andrew?

Andrew Varcoe:  Not quite. It is — I guess to preface my remarks, it is an excellent brief, like just about any brief that comes out of that office. But one might joke, or half-joke, that it’s almost two briefs in one, aside from the concluding section which argues the judgement should be affirmed because the agency’s interpretation of the case is the only reasonable interpretation and, thus, that the Court doesn’t need even to get into the Seminole Rock issue to decide the case. Aside from Part III, there are two main parts of the brief. Part I is about how bad Seminole Rock is, and Part II is about how Seminole Rock — and when I say Seminole Rock, I mean Auer; when I say Auer, I mean Seminole Rock, both cases — how those cases should not be overruled.

In Part I, the SG says that the cases have come to stand for a degree of deference to agencies that lacks a clear historical basis and it raises significant concerns under the Administrative Procedure Act, the APA. And that in light of those concerns, the Court should reimpose and reinforce limits on Seminole Rock deference to cabin the excesses of the doctrine. On the historical basis point, the SG noted that the Supreme Court has not articulated a consistent rationale for Seminole Rock, which actually predates the Administrative Procedure Act. The Court has sometimes suggested that Seminole Rock deference is based on the agency’s superior insight into the intention behind its regulations. And the SG noted that rationale seems questionable for interpretations that are issued long after the fact.

The SG also notes that it’s not clear that the rationale for Chevron deference about agency interpretations of statutes justifies Seminole Rock, which is about agency interpretations of regulations. Because under the Chevron doctrine, when a statute contains an ambiguity, that ambiguity is regarded as an implicit delegation of authority from Congress to an agency to make a policy judgement, to fill in the gaps, as it were. But when you have a regulation, there’s no delegation from Congress because it’s the agency that’s written the regulation. It’s odd to think of an agency delegating authority to itself to interpret its own regulations. The SG, on the APA side of the issue, suggests that Seminole Rock deference is in tension with the APA, which distinguishes between so-called legislative rules and interpretive rules.

Legislative rules are issued after notice-and-comment rulemaking and have the force and effect of law. Interpretive rules, which don’t go through that rulemaking process, a more formal process, don’t have the force and effect of law. But under the current Seminole Rock doctrine, deference is given even to interpretive rules, which seems to give force and effect of law to agency interpretations that haven’t gone through that notice-and-comment process. And the SG, in the same vein, notes that it’s odd that interpretive rules get no Chevron deference when they interpret statutes, but they get Seminole Rock deference when they interpret regulations. The SG even notes that Seminole Rock deference can have harmful practical consequences by discouraging notice-and-comment rulemaking, creating uncertainty and costs for regulating parties, and leading courts to dispense with careful scrutiny of the text of a regulation.

To deal with these concerns, these major concerns I think it’s fair to say, the SG proposes narrowing and cabining Seminole Rock deference and allowing it only if certain requirements have been met. As discussed in the oral argument, that was described as a six-part test. The agency interpretation must be reasonable. That’s one. And then, two, the interpretation gets deference only if the regulation in question is truly ambiguous. And in determining whether there’s ambiguity, the Court has to exhaust all the traditional tools of interpretation using the same standard for determining ambiguity or reasonableness. I think that’s true of both, as in Chevron. Third, the interpretation has to be consistent with prior interpretations. Fourth, regulated parties have to have fair notice of the interpretation. Fifth, the interpretation has to be grounded in the agency’s expertise. And sixth, the interpretation has to represent the views of the agency itself, not merely the views of low-level employees.

And the SG suggests that when those requirements aren’t met, those six requirements, the agency interpretation only gets Skidmore deference under a separate doctrine typically associated with statutory interpretation, which is a little curious and confusing, as a couple members of the Court noted during oral argument today because Skidmore says that this kind of deference is given to an interpretation only to the extent that it has power to persuade. And that’s, in the statutory interpretation context, when the interpretation doesn’t qualify for Chevron, usually because it’s not gone through enough formalities to merit the more deferential Chevron deference.

So that’s the criticism of Seminole Rock and Auer from the SG, plus a proposed way to mitigate the problems that give rise to the criticism. Part II argues that Seminole Rock and Auer should not be overruled, assuming they’re limited appropriately. There’s language in the brief that says the decision should not be overruled in their entirety, which seems to imply that the SG is actually arguing for overruling these decisions in part, just not altogether.

And the SG relies on stare decisis considerations. It makes a lot of the kinds of arguments that one would typically see in a stare decisis brief. The SG notes that Congress could change the doctrine if it wanted to at any time, suggests that overruling the doctrine would upset significant private reliance interest. Though, I think if one looks closely at the brief, there’s a little bit of uncertainty.

In some places, there’s more confidence that there are actually significant and private reliance interests. In other places, the brief seems a little more tentative about whether there really are these interests. The SG suggests that overruling the doctrine would eliminate significant practical benefits, political accountability, national uniformity, predictability, and respecting agency expertise. There’s also the point that, at a general matter, stare decisis requires that there be a special justification before overruling a precedent. A mere error isn’t enough, and the SG says there’s no such special justification here. And then near the end of this section of the brief, the SG squarely addresses a point that some of the justices who’ve criticized Auer/Seminole Rock have made — in a point that’s made somewhat briefly in the petitioner’s brief, and that is that Seminole Rock deference is inconsistent with separation of powers because it puts law-making and law-interpreting functions in the same branch.

The SG suggests that Seminole Rock deference doesn’t cause any constitutional problems. It doesn’t mix legislative and judicial functions in the constitutional sense, that executive agencies aren’t exercising legislative powers when they exercise statutory rulemaking authority. And that, if the petitioner’s separation of powers argument were taking seriously, it would have implications that go far beyond undermining Seminole Rock deference. It would call into question agencies that interpret rules they’ve made in adjudications, and agencies where rulemaking enforcement and adjudicative functions are combined. So I think that’s the summary. And one or more commentators have suggested the brief is somewhat schizophrenic. I don’t know if I would go so far as to say that, but there are certainly tensions.

Stephen Vaden:  Well, you’re very diplomatic, Andrew, and thank you for that excellent summary. Just a couple of points to highlight for our listeners. Number one, if you have not read the Solicitor General’s brief, I encourage you to do so. It is important to note that all of those criticisms of Seminole Rock and Auer — that it is unprincipled, it is in severe tension with a statute actually passed by Congress, the Administrative Procedure Act, and that it is of questionable value in terms of whether or not the agency actually has the expertise, which is supposedly the doctrine’s foundation — to bring on the question, many years after a statute has passed, are found in the Solicitor General’s brief defending the doctrine. And I think that is why some people have used words like schizophrenic in order to determine it because — in order to describe the Solicitor General’s brief. Because usually, when one is seeking to defend something, you don’t begin with 20 pages of attack on it, and, yet, that is how the brief begins.

Second point that I’ll note is that the doctrine, the suggestion of separation of powers question that Andrew mentioned. For callers who are interested in reading more about that, you may want to read some of Justice Thomas’s concurring opinions in recent administrative law cases where he very eloquently, and at some length, explained why he believes that there is separation of powers concern with Auer. And it basically boils down to, with Chevron, Congress has an institutional prerogative to limit delegations, and it can control the limiting of delegations by writing statues more exactly. So if it wants to make the decisions itself, it can always right a more specific statute. There is no such tension in play with Auer deference because it is the agency writing the regulation and then the agency that is getting deference in interpreting the regulation. So that you could find, if an agency were not acting in good faith, that there might be an incentive for an agency to write an ambiguous regulation so that it might have greater deference down the road.

Exactly the opposite of what you find with Congress where it should have, institutionally, a desire to write a more exact statute so that it, rather than the competing Executive Branch, gets to make the decision. But that’s a nice set up for where we’re going next, and that’s to Karen. Karen, the Solicitor General has obviously made an interesting argument. He said that Auer has problems, but a six-factor, multi-factor balancing test will help save it. How did the Court react today to that?

Karen Harned:  Right. Well, it was interesting because, actually, one of the first comments on all of this was from Justice Kagan, who noted that — she wasn’t convinced there was really anybody before the Court, because actually there wasn’t, that was truly defending the status quo and truly defending Auer. I think that when you look at the breakup of the Court, it was pretty clear that Gorsuch is very much in the camp of Auer needs to be overruled, and he was pretty clear of that throughout. And in fact, there was one great exchange with the Solicitor General in which he said, you know, basically, that Auer is disserving — is not servicing well the very least powerful in our country and goes through all of the groups, which there are many on both sides of the political aisle that said that Auer needs to be overturned.

And he said, obviously, the veterans, because of this case having that direct impact, the farmers—they were on the brief that we filed—even the unions. It was really a broad swath of people that he said because there wasn’t as much accountability, and, basically — he didn’t say it this way but the fox is in charge of the henhouse, with regards to the agencies writing the very rules that they’re set and reinterpreting them, that they’re set to enforce.

But then, as far as the other members of the Court, I mean, presumably, we know were Thomas is, and Alito was equally, I think, skeptical of Auer publicly. Kavanaugh, not surprisingly, focused a lot on what Mr. Hughes raised in his primary critique of Auer, which is that it really incentivizes the agencies to not engage in notice-and-comment and that, really, the answer is more notice-and-comment, right, and not more guidance and more ways — and that rules need to be written clearer and that sort of thing.

So he focused a lot on that. And, really, you know, probably not surprising to this group is really where is Chief Justice Roberts after all of this is over? And actually, our attorney—I did a debrief with him after the argument—Evan Young from Baker Botts, made an interesting comment. When he was looking at the government’s brief, he thought that maybe that was the, quote/unquote, “splitting the baby”, if you will, type of thing that might really resonate with Chief Justice Roberts, but only time will tell. It’s just — it’s very clear, for example, that Breyer and Ginsburg, and then we’re getting to Kagan and Sotomayor — that there’s a good chance that this could be yet another 5-4 decision.

Does Roberts want to do that? Does he want to do that, overruling a longstanding doctrine? These are all questions that, obviously, we are not going to know the answer to until decision day but are probably going to be weighing in a lot as they are writing their opinion. And the stare decisis issue, and then I’ll turn it over to Andy, was one that raised prominently throughout — Kagan raised that. I thought that Hughes had a good answer for it, which was this was a judicially created doctrine. This thing is not tethered to any statute. In fact, the APA might not really even be embracing it, with the notice-and-comment rulemaking and other things. So that is definitely going to be an obstacle. How big of one and how they handle it is to be determined.

Stephen Vaden:  And for our listeners, I just want to clarify that, when Karen refers to Mr. Hughes, she is referring to Paul Hughes, who is counselor for the petitioner, Kisor, in this case. And that is the person who was making the full-throated argument for overturning Auer on behalf of his client. So Andy, how did you see the oral argument? And in particular, what did you think — how do you think the Chief Justice is leaning? Are stare decisis concerns going to be important for him, or are some of the more academic or theoretical concerns that had been raised by Justice Gorsuch and Justice Thomas going to carry the day?

 

Andrew Varcoe:  It was hard for me to read his questions, and there’s always the caveat that you’re reading tea leaves when you’re assessing what Justices say or what questions they ask in an oral argument. He seemed something of an equal opportunity hard questioner. He seemed attentive to various practical concerns and what real impact a decision overruling or narrowing would have. At one point, he expressed or echoed a point that Justice Kavanaugh made when he said to the Solicitor General — as a practical matter, one of two things happens. A) The judge gets deeply into a question before him or her and does the work, comes up with something that looks like the right answer, and, once you’ve done that work, everything else looks pretty unreasonable. Or B) the judge just starts looking at the problem and flipping through it, as it were, cursorily examining the problems. He said, “Boy, there’s a wide range of potential interpretations here.” — I’m paraphrasing. — It could be this, could be that. You defer to the agency. So which rule should I adopt?

Stephen Vaden:  It appears that there’s kind of dichotomy here that the Court’s considering. The Solicitor General argued that, if Auer helps to bring national consistency to the interpretation of regulations, and Justice Gorsuch questioned him rather intently about that. On the other hand, Justice Kavanaugh, perhaps joined by Chief Justice Roberts, wondered, “Okay. If we overrule Auer, what comes next? What do courts do with these regulations without the Auer rule? Are they entitled to any deference at all? Is it Skidmore? Is it something else? Is it de novo?” What did the Solicitor General and Paul Hughes have to say about that?

Karen Harned:  I would say that, yeah, for the government, that was, I think — they latched onto that, right? That was their ticket out, is that, yeah, that is the issue. That’s why you should go with their approach and their factor test. Paul Hughes did argue for Kisor, if I remember right, and Andy, correct me if I’m wrong, for truthfully, more of a Skidmore deference where the Court is really looking at whether or not — almost de novo I guess, is what you would say. And that was part of the tension because even Kavanaugh said in there, “Do we even really know to this day what Skidmore deference is?” That was very much a question as to what world we are throwing that in. Am I characterizing that correctly, Andy?

Andrew Varcoe:  I think so. I think Justice Kavanaugh suggested Skidmore deference, in practice, doesn’t mean much, if anything. And then Chief Justice Roberts suggested, “Well, I just don’t know what Skidmore deference means.” I think Paul Hughes argued vigorously that, even with Skidmore, it would be appropriate for courts to give deference to certain agency technical and scientific determinations. Justice Breyer, referring to a point that the SG had made in his brief, said, “Well, for example, there’s an FDA regulation that has to do with whether a “particular compound should be treated as a single new active moiety,” where it “consists of a previously approved moiety joined by a non-ester covalent bond to a lysine group.”

And Justice Breyer was, I would say, more vigorous and maybe one even might say emotional in this argument than I think I’ve really seen him. It was a very active bench, by the way. I think all the Justices, except Justice Thomas, were quite engaged. And Justice Breyer said, “Well, of course, we judges have no idea what that means, and here you are saying that, instead of letting experts decide these sorts of issues, that judges should decide them.” He said, “This sounds like the greatest judicial power grab versus Marbury v. Madison.” Of course, I say that was correctly decided. But he was rather adamant that this was a very, very unwise possibility. And as a former admin law professor, he’s thought about these questions quite a bit.

Karen Harned:  Yeah. And I would just add, though, that that was interesting because, you know, that’s where Breyer always went, was to the expertise. But as others pointed out, I think it might have been Alito. I can’t remember who. Who’s better at determining whether something is, quote/unquote, relevant, the FDA, or some agency, VA, or a judge? And I think it was Justice Gorsuch that said, “Well, I’d rather, basically, a judge say this.” So I guess that was interesting because, yes, there’s a lot of cases that are technical and scientific where the agency expertise comes into play. But there was also an appreciation through the argument that not all cases are like that. Sometimes, it’s just interpreting the English language, as in this case, what does relevant mean?

Andrew Varcoe:  Yes. And something that Justice Sotomayor said seemed to imply that she thought that this kind of problem could be dealt with under Auer as it is, or maybe Auer as it’s limited by the SG. I think there was a little bit of ambiguity in some of the statements and questions by the Justices about which regime they’re talking about. Is it sort of old Auer, or is it a somewhat modified Auer or Auer as limited by the SG?

Stephen Vaden:  Well, Karen, I know your Small Business Legal Center filed an amicus brief. And so, obviously, you have a partisan opinion when it comes to why you think the overruling of Auer is good and what would come after that. And that appears to have been a major focus of the Justices as to what difference would it make and, if so, what degree of difference is it if Auer is overruled. What was the Small Business Legal Center’s take on what the difference would be between an Auer and a post-Auer world? And did the Small Business Legal Center, or does it have a feeling about new Auer, as I think Andrew aptly called it, the Solicitor General’s version of Auer with our six-factor balancing test to limit its application?

Karen Harned:  Right. Well, I’d say, on the last one, we have not taken a position on that. I mean, we — the focus of our brief was just to encourage them to overrule Auer. We focused a lot on the separation of powers issue that was mentioned earlier, that Justice Thomas has spoken of. And also, our brief really was meant to point out — we had numerous examples of how Auer deference really has given regulated entities whiplash where they didn’t know what was coming next. And we have examples of it costing millions of dollars to regulated entities because of a regulatory change and really just focused a lot of the fact that, like Chevron — though, I don’t know that we really referenced Chevron much in our brief, if at all. But as people describe Chevron, it’s one more chance for the agencies to have a thumb on the scale. And it, as a result, creates uncertainty because the regulated entities don’t know what’s coming.

So I can just say, from my personal opinion, if they were go with more the Solicitor’s approach, things like the fair notice part of his test — many of the tests that were — that the entire test has, that would definitely be better than the status quo, from our members’ perspective, I would say. But we would much rather just have us be able to, as regulated entities, go in with an equal chance here for a judge to decide whether or not an interpretation of a regulation was appropriate or not. And we think, ultimately, that leads to more accountability. It will lead to better rulemaking, better rule writing, more notice-and-comment. All of those things are very important, especially for the small business owners I represent who do not have a hand in this process.

One exchange, before I turn it over to Andy, that I thought was really interesting and also kind of surprising was when the Solicitor General said that, “Well, when the agency makes a change in policy in an amicus brief at the Supreme Court, that’s something that’s very public, that everybody will know about.” And Gorsuch pushed back hard on that, and I was glad to see it because that is absolutely not accurate. I mean, there’s no way the dry cleaner working in wherever is following the Supreme Court docket and doing refresh on SCOTUS blog to see what latest amicus filings are coming out of the administration, I mean, to know what they can and cannot do. So I thought that was really interesting, and, quite frankly, again, I was really surprised that the Solicitor made that point.

Stephen Vaden:  I think, Karen, if our listeners want an example of one recent Supreme Court case that showed how agencies can whiplash back and forth, some of our listeners, particularly administrative law practitioners, may remember Perez v. Mortgage Bankers Association from a couple of years ago, which followed a lengthy history as to whether or not certain employees who sell mortgages should or should not be exempted from the minimum wage and maximum hour requirements that are found in labor statutes and how different administrations issue different guidance that was diametrically opposed to one another. So that’s a recent Supreme Court example.

Well, before we turn things over to questioners, it would be unfair to our listeners for me not to ask this last question, and that is it seems like we have at least three potential outcomes in this case. We have keep Auer the way it is, adopt new Auer from the Solicitor General’s brief, or perhaps some other standard the Court comes up with to limit it, or overrule it all together. I’ll start with Karen and then move to Andrew. How do you think the Supreme Court’s going to rule?

Karen Harned:  I wish I knew. I mean, I really am encouraged that I think we’re going to get better than the status quo. I really think that, at a minimum, we’ve got five votes to narrow and maybe even — there might be a shot at even another one, depending on how they do it. But, you know, I still am hopeful that there’s a chance it will be overruled, but I definitely think, at the end of the day, we’re going to get better than the status quo, which would be a significant narrowing of Auer.

Andrew Varcoe:  I’m also uncertain. Also, there’s another option there’s a non-trivial chance that some way or other, perhaps because the Justices are divided and perhaps because the Chief Justice would prefer more consensus, that maybe there’s some way to dodge the main question. It is interesting, in that regard, that near the end of the argument, the Solicitor General conceded that the VA decision, the administrative decision at issue in this case, fails the six-part test. At least, that’s how I read what he had to say, that because of the nature of the somewhat informal ex parte administrative decision at issue, that the decision doesn’t actually represent the considered judgement of the agency. And perhaps in light of that concession, or other factors, perhaps the case could be kicked back to the Federal Circuit.

Now, that said, the Court did grant cert on this question of whether to overrule Auer and did not grant cert on a question that would have allowed the Court, perhaps, to avoid the big question. So that consideration, perhaps, weighs in factor of concluding that the Court is actually going to decide the main question. I suppose, if I had to guess — it’s really guessing. It’s probably not too different from what Karen. It’s that at least it will be narrowed in some significant way that’s new or potentially overruled altogether.

Stephen Vaden:  Well, Dean, it sounds like our two panelists think that it’ll be incremental change rather than revolutionary change at the Supreme Court, and I guess that is the way of Washington, D.C. I’ve asked all my questions. I think it’s time for our listeners to have their say.

Dean Reuters:  Terrific. Well, this is a terrific discussion. Let me ask a quick question. I think this can be answered yes or no but maybe with some elaboration. And that’s is this a decision that’s going to wait until the final day of the term, or at least the final week of the term, given its significance perhaps and also given its lateness, sort of, to get on the calendar to get argued?

Karen Harned:  I mean, I have to think so. I just don’t think this is going to be an easy one. But I don’t know. What do you think, Andy?

Andrew Varcoe:  My thought is, yes, probably. I think there may well be some separate writings. If there is sort of a narrowing, then one can easily imagine one or two or more Justices will say we should go farther here.

Dean Reuters:  Interesting. Well, we’ve got two questions pending now. About 15 minutes left, so let’s turn to our audience for the first question of the day.

Mike Daugherty:  Well, good afternoon. Mike Daugherty here. Of course, you’re not shocked that I’m on the line after my fun with the LabMD case. I’m very curious about this. I’m going to just fire a couple quick observations/questions and then just go on mute and listen. But this whole concept of expert, technical and scientific, within agencies — someone that’s from medicine, I find hilarious that they self-appoint themselves as experts. And correct me if I’m wrong, wasn’t Auer a unanimous decision and Scalia wrote the opinion?

And what type of change do you think has happened within the court since that was passed over 20 years ago? Because I think there was a — now, I would look back as a blind trust and naiveté in agencies because there’s such a power grab. And lastly, in my oral argument, the FTC was arguing the Eleventh Circuit about Bell Atlantic and Chenery, where they get to rule make — they don’t need to rule make. They can do these things during the adjudication, which, you know, the court kind of chuckled and went right at them for. So did any of that come up? And I’ve enjoyed your guys’ comments very much. Thanks.

Karen Harned:  Andy, do you want to start?

Andrew Varcoe:  Auer was unanimously decided, and Justice Scalia did write the opinion. Maybe some of the aggressive actions agencies have been taking in the years since 1997 have lead justices, like Justice Scalia, and judges to be more skeptical with what’s more experience. Maybe that’s one reason why jurists, like Justice Scalia, have reconsidered their views. There was some discussion in the argument of adjudication, suggesting that some of the things that concerned petitioners aren’t really big problems because they happen all the time in adjudications. I think that’s something like what Justice Sotomayor may have said at some point.

Karen Harned:  Yeah. And I would agree with Andy. I just think it’s just the state of play. I just think of the state — administrative state has grown and they’ve seen how agencies behave. That has, truthfully, come back to haunt them and raise the profile of this. The only thing I would say on the technical expertise — I mean, that is really what everybody falls back on. There was a brief filed by the administrative law professors. That was when the agencies were first created, why they were created. And whether it’s true or not, that is very much what they all still will cite to as to the reason for deference.

Dean Reuter:  Second caller of the day.

Nico Rakowski (sp):  Hey, Nico Rakowski here. This question is for both Karen and Andy. I’m just kind of curious. Have you guys considered at all the possibility of a plurality opinion and what that would mean? Like would that confuse the issue further? Would that be helpful? Would it do nothing?

Karen Harned:  Goodness. I hope they don’t do that. I mean, I guess it’s possible, but I’d like to think that even those — let’s say they don’t go the whole way, which, honestly, is probably more likely than not just based on what it seemed like today. But even if they don’t go the whole way, I would think that those that are looking to overrule Auer would at least hop on to an opinion that had, again, a significant narrowing in some way where they could see a path towards elimination. You know what I mean? I just have to think that’s more of a reality than a plurality, but maybe Andy has a different opinion.

Andrew Varcoe:  Yes. I think it’s theoretically possible there could be a plurality opinion. It might be the controlling opinion. If you imagine, let’s say, two or three Justices say overrule Auer, and then two or three say keep Auer, and then a couple in the middle say, “Well, we’ll overrule it in part,” that could be the controlling opinion. That is one possibility.

The other questioner, by the way, asked about technical expertise. And one case I think about when I think about deference to agency decision making and technical areas is a somewhat separate line of cases — separate doctrine, probably. It’s this case called Marsh v. Oregon Natural Resources Council from 1989, 490 U.S. 360, which in turn relies on Baltimore Gas and Electric Co. v. NRDC from 1983.

And the Baltimore Gas case is reviewing an agency situation where the agency is “making predictions, within its area of special expertise, the frontiers of science. When examining this kind of scientific determination, as opposed to simple findings of fact, a reviewing court must generally be at its most deferential.” That is a reminder that there are deference doctrines that apply not only to how agencies decide questions of law but also to agency fact-finding. And often the line between fact-finding and law determining can be a bit fuzzy. But to the extent that the Supreme Court, or lower courts, are narrowing or eliminating deference doctrines, such as Auer or Chevron, you can expect government litigators to be thinking more carefully about how they can defend their decisions based on the remaining deference doctrines.

Dean Reuter:  Here’s one more question. So let’s spend a few minutes here with this final caller. Go ahead, caller.

Paul Larkin:  Hi, this is Paul Larkin from the Heritage Foundation. If you could assume that a majority of the Court throws out or no longer decides to follow Seminole Rock and Auer, what would the effect be on Chevron?

Andrew Varcoe:  It’s a great question. There were very few mentions of Chevron at the argument, and nothing, so far as I could hear or recall from just scanning the transcript a few minutes ago, nothing calling Chevron into question in any way. And quite a few of the briefs — I think, actually, both parties’ briefs and a lot of amicus briefs filed at the merits stage argue that, whether Auer/Seminole Rock survives or not, that does not affect the validity of Chevron, that Chevron stands on different foundations. Now, as we know, there are some jurists, including Justice Gorsuch, who are very critical of or skeptical about Chevron. One could imagine an opinion that’s written like some of those briefs that at least says that we aren’t calling Chevron into question, even as we narrow or eliminate Auer. One would think the Court would not say anything that would tip its hand or foreclose its freedom of action in future cases. That’s what I would say.

Karen Harned:  Yeah. And then another thing that we’ve discussed a little bit is what if they did something with what does it mean to be ambiguous — for a statute or a regulation to be ambiguous. I guess in this instance a regulation. Because that is something — and Paul, you’ll recall this from the story lecture that Kavanaugh gave at Heritage where he talked very much about that, about the fact that “I might call 60/40 clear, not ambiguous and a colleague sitting down from me is going to say 40/60 is ambiguous.” So you know, if they were to do a decision that started looking at what it means for something to be ambiguous, that you could see having a thread that would carry over into Chevron.

Andrew Varcoe:  And that issue did come up at the argument, where Justice Kavanaugh noted that judges disagree all the time on the threshold question of whether something’s ambiguous to begin with. And that creates a whole sideshow here, he said, when the SG said, “I take your point that judges can come to a different conclusion as to what’s ambiguous and what’s not ambiguous.” Justice Kavanaugh said, “It happens all the time – all the time.” The SG then said, “That’s not a problem that Seminole Rock creates or a problem that Seminole Rock can solve. It’s something that’s just endemic to this process.”

Stephen Vaden:  And I would just say that — I would agree with our two panelists that I think that the question of Auer and Chevron can be separated. They are not of necessity linked. A lot of it would have to do, if the Court went all the way and struck down Auer, as to under what rationale it did so. If it took a separation of powers rationale for reasons discussed earlier, there is not as great a separation of powers concern with Chevron as there is with Auer because Congress, an independent branch of government, can keep the Executive Branch from having any deference whatsoever by making all the decisions in the statutory language and leaving it very little to nothing to interpret. So if it went down a separation of powers grounds, I think the Chevron issue would be live and not necessarily effective — affected, rather.

If it chose another ground which cast a broader doubt about the whole theory of deference, as opposed to on what grounds one is granting deference, then Chevron could be implicated. I think it would have to be — you’d have to read the opinion and see whether they chose a more narrow ground for overruling it or they had broader theoretical problems with the idea of deference overall as to whether or not Chevron is implicated.

Dean Reuters:  This has been a fascinating discussion. I’m afraid we’re just about out of time, but maybe we have 60 seconds for — I want to give each of our two speakers a chance to express a final thought and then turn to Stephen Vaden for any final thoughts he has. And then, I’ll close out the call. But Karen Harned, anything by way of wrapping up?

Karen Harned:  I’d just say that I was — it was a very interesting argument, very lively, and it’s just so refreshing that the Court is really starting to at least talk about these issues that have really been, I think, a problem for quite some time. And they’re taking them head-on. And it was just so encouraging, to me and the members I represent, that they even took this case, so we’re just hopeful now they’ll do the right thing and kill this doctrine altogether.

Dean Reuter:  Andy Varcoe, final thoughts?

Andrew Varcoe:  I would say that if you’re interested in this issue, it’s probably worth your time to look at the briefs. It was very well-argued on both sides and even to listen to the argument tape when it’s released soon. The transcript is fine, but sometimes there are errors and nuances that are missed that you pick up in listening to the actual recording.

Dean Reuter:  Stephen Vaden, on substance, I’ll give you the final word, if you’d like it.

Stephen Vaden:  Well, thank you, Dean. I think win, lose, or draw for Mr. Kisor, this is going to be a fascinating case which is going to tell us quite a lot about the direction of the new Roberts Court and what the addition of Justice Kavanaugh and the deletion of Justice Kennedy has to say about whether the Roberts Court will go in a more adventurous direction with regard to jurisprudence or whether it’s going to skew toward what it’s done in more recent terms, which is try to make incremental change rather than monumental change.

And on the final issue of agencies and the public’s interaction with them, I would just like to end by saying, regardless of whether it’s notice-and-comment or it’s an interpretive rule, I hope that the public, regardless of how something is categorized by an agency, will take the opportunity to interact with the Executive Branch in the regulatory process. Because if it’s done honestly, and in certainly most instances it is — the exceptions are few and far between — it is that public input which truly does make for a better rule, make for a better regulation, and make for a functioning program. The Executive Branch cannot do it without public input, and public input should be encouraged. And if you’ve got a thought, an agency should want to hear it.

Dean Reuter:  Very good. Well, this is Dean Reuter again. In closing, I want to thank all three of our guests: Karen Harned, Andrew Varcoe, and our moderator, Stephen Vaden. This case argued remains pending, so I would suspect you might get a call back from us when this decision comes out to gauge your level of interest in participating in another teleforum conference call. But I also want to thank our audience as well for dialing in and for your thoughtful questions. A reminder to our audience to check in with the Federalist Society’s website and monitor your emails for upcoming calls. But until that next teleforum conference call, we are adjourned. Thank you very much, everyone.

Karen Harned

Executive Director

National Federation of Independent Business Small Business Legal Center


Andrew Varcoe

Partner

Boyden Gray & Associates PLLC


Stephen Vaden

General Counsel

U.S. Department of Agriculture


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