Has Auer Time Passed? (8/20/24)

A question raised by the demise of deference pronounced in Loper Bright Enterprises v. Raimondo, 603 U. S. ____, 144 S. Ct. 2244 (2024) is the continuing viability or application of Auer/Kisor deference. Recall that Auer/Kisor deference applied Chevron-type deference framework to agency subregulatory guidance interpreting ambiguity in agency regulations. Loper Bright did not speak to the continuing viability of Auer/Kisor deference. The Loper Bright opinion of the Court cited Kisor for other propositions, but did not speak to whether Auer/Kisor was viable after Loper Bright.

Although Loper Bright did not speak directly to the continuing viability of Auer/Kisor deference, I think that the inevitable logic of Loper Bright pronounces the demise of Auer/Kisor deference. Of course, because the Supreme Court did not expressly overrule Auer/Kisor deference, some pundits and courts may still pay homage to it until and unless the Supreme Court speaks to its continuing viability. See e.g., Fourth Circuit Applies Auer/Kisor Deference to Include in Guidelines "Loss" the Commentary Inclusion of "Intended Loss" (Federal Tax Procedure Blog 8/24/24), here; and More on United States v. Boler (Federal Tax Procedure Blog 8/25/24), here.

However, a confident lower court reading Loper Bright as I do might be willing to step out on that issue by holding that Loper Bright is inconsistent with Auer/Kisor deference. Or, alternatively, as happened in Coplan, a Court of Appeals might signal in an opinion that there is a major conceptual problem that the Supreme Court should address. See Is It Too Much to Ask that the Defraud Conspiracy Crime Require Fraud? (Federal Tax Crimes Blog 8/3/24; 8/6/24), discussing United States v. Coplan, 703 F.3d 46 (2d Cir. 2012), cert. den. 571 U.S. 819 (2013).

Now, I will state why I think Auer/Kisor deference is not consistent with the demise of Chevron deference pronounced in Loper Bright.

First, to clarify, I think Auer/Kisor deference applies—more properly under my reading, applied--only to subregulatory guidance interpretation of a legislative regulation. By legislative regulation, I mean a legislative regulation in its traditional sense—a regulation promulgated pursuant to a specific statutory grant of authority to make law (rather than just authority to interpret statutory text). Legislative regulations are like statutes. The classic tax example of a legislative regulation is the consolidated return regulations promulgated under § 1502 conferring upon Treasury the authority to make law (as opposed to just the authority to interpret ambiguous text in § 1502).

A legislative regulation is thus comparable to a statute which was the predicate for Chevron and pre-Chevron deference. Both the statute and the legislative regulation are the law; both forms of law can be ambiguous; and both can be subject to interpretation. Probably the key difference is that Chevron and pre-Chevron deference generally required interpretation in a notice and comment regulation. By contrast, Auer/Kisor deference applied to subregulatory guidance (such as, in a tax context, Revenue Rulings and Revenue Procedures).

Caveat: the government has committed not to assert deference for such subregulatory guidance. Auer Deference and Treasury and IRS Policy Statement on the Tax Regulatory Process (Federal Tax Procedure Blog 7/6/19), here)

Focus for now on my claim that Auer/Kisor deference required a legislative regulation as the subject of the subregulatory interpretation. Logically, that requirement makes sense because legislative regulation is statute-equivalent which was the subject of traditional Chevron and pre-Chevron deference, thus offering a logical framework to apply Auer/Kisor deference.

Consider what would happen if Auer/Kisor deference did not require a legislative regulation. If an interpretive regulation could suffice, that regulation interpretation would have to be ambiguous for it to be further interpreted in subregulatory guidance—an interpretation of an interpretation which is not analogous to traditional deference requiring an interpretation of the law, not an interpretation of an interpretation. Furthermore, Loper Bright says that an interpretive regulation cannot control or apply; rather, the best interpretation controls. It would be strange indeed if an agency could conjure Auer/Kisor deference by promulgating an ambiguous interpretive regulation and then issuing subregulatory guidance interpreting a noncontrolling interpretive regulation.

In short, as a matter of logic (which may not always or often apply in the Supreme Court), Auer/Kisor deference is not consistent with Loper Bright.

Back to the issue of whether Auer/Kisor deference requires (perhaps required) a legislative regulation, I could not find definitive authority. I provide below some of the authority I found with less than definitive research. Given my view that Loper Bright is inconsistent with Auer/Kisor deference and that logically Auer/Kisor deference requires a legislative regulation, I thought that spending further of my limited time resources on that issue was not required.

• Ronald A. Cass, Auer Deference: Doubling Down on Delegation's Defects, 87 Fordham L. Rev. 531, 561 (2018) (“logically Auer’s rule applies only to legislative-type rules”)
• Jonathan H. Adler, Symposium: Challenging Administrative Power, Geo. J. Law & Public Pol. 1, 18 (2018) (quoting others “[A]n agency confronted with a statutory ambiguity might try to bootstrap its way into the equivalent of Chevron deference by promulgating a legislative rule that preserves or restates the statutory ambiguity, and then issuing an interpretive rule that purports to interpret not the statute, but the regulation.”);
• Daniel E. Walters, The Self-Delegation False Alarm: Analyzing Auer Deference’s Effects on Agency Rules, 119 Colum. L. Rev. 85, 87 at n. 7 and 97 (2019) (noting the possibility of Auer deference permitting deliberate ambiguity in a legislative regulation which would then permit agency interpretation in subregulatory guidance and quoting Jennifer Nou, Regulatory Textualism, 65 Duke L.J. 81, 102 (2015); “[A]fter an agency promulgates a legislative rule through notice and comment, it can then continuously revise its interpretations without meaningful notice to regulated entities and with little judicial accountability;. “and “When Auer comes up in litigation, it is most often because an agency has issued a guidance, policy statement, advisory letter, or manual—that is, a nonlegislative rule—that clarifies a legislative rule40 previously  promulgated through notice-and-comment rulemaking under section 553 of the APA.”)
• Cass R. Sunstein and Adrian Vermeule, The Unbearable Rightness of Auer, 84 U. Chi. L. Rev. 297, 300 n. 11 and 301 (2017) (stating Auer deference in terms of a legislative regulation)