In the recently released decision in Perez v. Mortgage Bankers Association (MBA), 575 U.S. ____, 135 S.Ct. 1199 (2015), Supreme Court Justices Scalia and Thomas expressed their discontent with agency deference under the “Auer doctrine.”

Another Seyfarth blog, the Wage & Hour Litigation Blog, discusses the major holding in MBA: to reject the reasoning used by the D.C. Circuit that held notice and comment rulemaking pursuant to the Administrative Procedure Act (APA) must take place when an agency issues a new interpretation at odds with a prior interpretation. The focus of this blog is on an issue that MBA did not address, but which is creating friction for the courts. Specifically, what deference, if any, should courts give to an agency interpretation that has not gone through APA notice and comment rulemaking?

Historically, courts have struggled with the extent of deference to give an agency’s interpretations of its own regulations. Under the APA § 553(b)(A), agency interpretive rules and general statements of policy are exempt from notice and comment rulemaking because interpretative rules are non-substantive, and the APA only requires substantive interpretations, having the force of law, to go through notice and comment rulemaking. However, the “Auer doctrine,” from Auer v. Robbins, 519 U.S. 452, 117 S.Ct. 905 (1997), accords substantial deference to an Agency’s interpretation of its own regulations, even if presented in an unofficial manner such as in an amicus brief.

In separate concurrences in MBA, Justices Scalia and Thomas both call into question whether any judicial deference to agency interpretations of regulations is appropriate.

In his analysis, Justice Scalia cites § 556 of the APA for the proposition that only the courts may interpret agency actions, not the agencies themselves. Justice Scalia opines that the purpose of the § 553(b)(A) exemption was to allow agencies to advise the public on the impact of a complex regulation without binding the public to that interpretation.

However, Justice Scalia believes Auer deference allows agencies to both advise and bind the public because the agency can draft the regulation to be broad and vague and then interpret it in a manner that would not have been evident to the public when the regulation was originally proposed for notice and comment. Further, under Auer, a reviewing court is beholden to an agency interpretation unless its interpretation is unreasonable, and the public is thus bound by the agency’s interpretation with the force of law. Justice Scalia calls for abandoning Auer in a future decision, when the question is properly before the Court.

Justice Scalia distinguishes Auer deference and deference to an agency’s interpretation of its governing statute, also known as “Chevron deference,” from Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Under Chevron, if a statutory term is ambiguous, then the agency has authority to construe that term and interpret its meaning within the statutory scheme by promulgating regulations following APA notice and comment procedures. This is arguably permissible because Congress explicitly granted agencies the ability to interpret their governing statutes, and APA rulemaking procedures are followed in establishing the interpretation via regulations. Justice Scalia points out that Auer is unlike Chevron because, under the Auer doctrine, an agency does not use APA notice and comment procedures and Congress has not explicitly granted agencies the ability to interpret their regulations. This difference is enough for Justice Scalia to call for the end of Auer.

Justice Thomas takes a different route when calling Auer into question, looking instead to the separation of powers and checks and balances put in place by the U.S. Constitution. In his concurrence, Justice Thomas refers to the cases dealing with deference to agency interpretations of regulations, beginning with Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 65 S.Ct. 1215 (1945), and calls into question the constitutionality of the entire line of cases, including Auer.

Justice Thomas believes any deference to administrative interpretations of regulations constitutes a transfer of judicial power to the executive, contrary to the language of the Constitution. Because Seminole Rock and Auer erode the judicial obligation to serve as a check on the other branches and muddle the separation between the Judicial and the Executive Branches, Justice Thomas calls for reconsideration of the entire Seminole Rock line of cases, including Auer, at the appropriate moment.

In addition, in a joint concurrence to a prior case, Decker v. Northwest Environmental Defense Center, 568 U.S. ___, 133 S.Ct. 1326 (2013), Chief Justice Roberts and Justice Alito indicated that reconsideration of Auer may be appropriate when the issue is properly before the Court. The issue of Auer deference was not before the Court in MBA or in Decker, but with at least four Justices questioning the continued validity of the doctrine, it is possible the question of judicial deference to agency interpretive rules will be reconsidered in the near future.

Such a reconsideration of Auer could have significant impact upon administrative law. Judicial review of agency action provides important protection against arbitrary or unfair agency action. However, that review is significantly restricted under Auer¸ because a court must defer to an agency interpretation simply because it is issued by the agency, with little check on the reasonableness of the interpretation. Allowing courts to consider but not defer to agency interpretations would compel agencies to be more exacting (and perhaps more forthcoming) when engaging in rulemaking. Rulemaking, while perhaps a tedious process for the agency, required notice to the public, an opportunity for the public to comment, and an opportunity for judicial review, all to ensure that the agency action is consistent with law and not arbitrary or capricious.