Auer, Now and Forever, by Cass R. Sunstein & Adrian Vermeule
(This post is adapted from The Unbearable Rightness of Auer, U. Chi. L Rev. forthcoming)
For more than seventy years, courts have deferred to reasonable agency interpretations of ambiguous regulations. The Auer principle, as is it is now called, has attracted academic criticism and some skepticism within the Supreme Court – although we will see the tide of skepticism appears to have receded recently. In any event the principle is entirely correct. In the absence of clear congressional instructions, courts should assume that because of agencies’ specialized competence, greater accountability, and discretion over the choice between more or less formal modes of proceeding, agencies are in the best position to decide on the meaning of ambiguous terms – whether through binding rulemaking or nonbinding guidance and interpretation. The recent challenges to the Auer principle rest on fragile foundations, including an anachronistic understanding of the nature of interpretation, an overheated argument about the separation of powers, and an empirically unfounded and logically weak argument about agency incentives, which exemplifies what we call “the sign fallacy.”
In a forthcoming paper, from which this post is taken, we identify three reasons why a strand of the contemporary legal culture finds Auer jarring, in a sense even unbearable. The first involves anachronistic but influential understandings of what interpretation actually entails. Even in the aftermath of legal realism, some people believe that the interpretation of ambiguities always or generally calls for purely legal skills – as it plainly does not. Here we follow Justice Scalia, Auer’s author, who insisted – at least until very late in his career – that in many cases, interpretation necessarily includes consideration of policy consequences, and of the institutional roles that best serve to allocate responsibility for policy consequences.
The second reason is that the separation-of-powers critiques of Auer are applied in a context in which they do not belong, and without regard to their far larger implications. The constitutional critique of Auer rests on generalities about the separation of lawmaking from law-execution and law-interpretation. If those generalities were applied consistently, however, they would require declaring unconstitutional dozens of major federal agencies exercising combined functions. The theory of the administrative state, for better or for worse, is that so long as separation of powers operates at the top level (Congress, Presidency, Judiciary), there is no general problem if the top-level institutions decide to create lower-level agencies that combine functions. And in any event, the whole frame for the constitutional critique is misguided, for it is quite clear that agencies do not actually mingle or combine constitutional powers at all. So long as they act within and under a legislative grant of statutory authority, everything they do amounts to an exercise of “executive” power, including both the making and interpreting of rules — as that radical New Dealer, Justice Scalia, emphasized for the Court as recently as 2013. In some ways, then, the issue of Auer deference appears to be a stalking-horse for much larger game – namely a wholesale critique of the administrative state. Whatever the appeal of Auer, there is certainly no appetite on the Court for such a sweeping retrenchment, with the possible exception of Justice Thomas.
It seems arbitrary, even bizarre, to attack Auer by reference to grand (and in our view implausible) constitutional artillery that the Court would not invoke in other contexts. Though the Court often sees Auer in settings that provoke concerns about broadening of agency authority, the real force of the ruling is in the mundane cases, where an agency is interpreting some technical term (like “diagnosis”), responding to a request for clarification from the regulated class, or giving people assurance that it will not overreach under some ambiguous provisions in a regulation. Auer is frequently an engine of predictability and in a sense of deregulation – though the Supreme Court, and even academic commentators, are not likely to see that. In these circumstances, overruling Auer would produce chaos.
The third reason, underscored by Ron Levin and Aaron Nielson, is that Auer is essentially a corollary of agency discretion over the choice between legislative rulemaking and other modes of interpretation, including adjudication and nonbinding guidance. At any given time, the agency’s choice is to allocate its authority between more general rulemaking now and more specific interpretation or adjudication later. The more content the agency supplies through legislative rulemaking now, the less content it will have to supply (or indeed be able to supply, so long as the legislative rule stands) through issue-specific interpretation or case-specific adjudication later. The law’s approach to this tradeoff – at least since Chenery II in 1947, and continuing throughout the modern era – has been that agency discretion to make such choices is extremely broad. Auer merely recognizes and implements that approach.
The fourth and last reason involves the sign fallacy — an intuitively appealing, but wildly unrealistic, understanding of the incentive effects of Auer. The critics worry that strategic agencies will exploit Auer deference by opting more often for nonbinding guidances than they otherwise would. But even if this is possible, there is no systematic evidence, or even much unsystematic evidence beyond say-so, that the possibility is real or important. As Chris Walker has discovered, many agency drafters don’t even know about Auer. And there is a cross-cutting incentive as well: agencies who want to bind their own successors, perhaps because a change of administration looms, are better off creating a binding rule, repealable only through the same relatively costly process.
What is Auer’s future? In this context especially, we have low confidence in Supreme Court prognostication, either by ourselves or by others. It is possible that Auer is still under a cloud – in part because much will depend on who the next Justice may be, in part because one can imagine future cases in which a majority of the Court would balk at agency overreaching that leverages Auer (the recent transgender guidance might be an example).
However, as a matter of evidence currently on the public record, here is what can be said with confidence: the assault on Auer has failed, at least for now. In Perez v. Mortgage Bankers in 2015, six Justices — including the Chief Justice and Justice Kennedy — joined the opinion for the Court and its note 4. That note clearly contemplates and endorses a regime in which Auer deference is the ordinary baseline, subject to various safeguards and qualifications, most importantly the ability of judges to determine whether the underlying agency regulation does or does not clearly contradict the agency’s interpretation. Further evidence that the assault seems to have failed is supplied by United Student Aid Funds v. Bible, (No. 15-861) (May 16, 2016), a certiorari petition that asked the Court to overturn Auer, but that was denied by a 7-1 vote, with Justice Thomas the lone dissenter. Anything else anyone says about Auer’s future is essentially speculative. For now, at least, the center holds.
Adrian Vermeule is the Ralph S. Tyler, Jr. Professor of Constitutional Law at Harvard Law School. Cass R. Sunstein is the Robert Walmsley University Professor at Harvard.
This post is part of an online symposium entitled Reflections on Seminole Rock: The Past, Present, and Future of Deference to Agency Regulatory Interpretations. You can read the entire series here.