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.

More on United States v. Boler (8/25/24)

Yesterday, I wrote a blog entry on United States v. Boler, 115 F.4th 316 (4th Cir. 2024). 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. (The blog entry was cross-posted on my Federal Tax Crimes Blog, here.) I think there is more that can and should be said about Boler. This post will be more of a “notice” post (like the fabled notice pleading lawyers at least of my generation learned about early in our law school careers).

1. The structure of the Federal Sentencing Guidelines. The 2023 version of the U.S. Sentencing Guidelines is here. The Guidelines (with accompanying Commentary and Policy Statements) are promulgated by the U.S. Sentencing Commission which is “a bipartisan, independent agency located in the judicial branch of government, was created by Congress in 1984 to reduce sentencing disparities and promote transparency and proportionality in sentencing.” See website here. So, we know at the outset that it is a strange creature in our constitutional framework—the only agency located in the judicial branch. 

JAT Side Note: Readers of this blog will surely have some passing acquaintance with the difficulty going back to the 1940s of determining precisely what the Tax Court was, even though the statute said since its earliest days (then the Board of Tax Appeals) that the Tax Court was an independent agency in the Executive Branch. As I have noted, the nature of the Tax Court was an issue was much discussed with more heat than light in the 1940s, including in the consideration of the APA; the Supreme Court in Dobson v. Commissioner, 320 U.S. 489 (1943), reh. den., 321 U.S. 231 (1944), a unanimous opinion authored by Justice Jackson, the most tax procedure savvy Justice ever, held that the Tax Court was an agency rather than a court and applied Chevron-like deference to its statutory interpretations. I cover these issues in John A. Townsend, The Tax Contribution to Deference and APA § 706 (SSRN December 14, 2023), pp. 5-23)   https://ssrn.com/abstract=4665227.

2. Guidelines treated as Legislative Rules; Commentary Treated as Interpretive Rules. As an agency, albeit a Judicial Branch agency, the issue underlying Boler was the authority of the Guidelines and the Policy Statements and Commentary. In Stinson v. United States, 408 U.S., 36 (1993), GS here, the Court treated the Guidelines as analogous to legislative rules which make law pursuant to Congress’ delegation and treated Commentary as an interpretive rule interpreting the law (the law being the Guidelines). The Court said (p. 44-45, cleaned up to omit most case citations):

Although the analogy is not precise because Congress has a role in promulgating the guidelines, we think the Government is correct in suggesting that the commentary be treated as an agency's interpretation of its own legislative rule. The Sentencing Commission promulgates the guidelines by virtue of an express congressional delegation of authority for rulemaking, and through the informal rulemaking procedures in 5 U. S. C. § 553, see 28 U. S. C. § 994(x). Thus, the guidelines are the equivalent of legislative rules adopted by federal agencies. The functional purpose of commentary (of the kind at issue here) is to assist in the interpretation and application of those rules, which are within the Commission's particular area of concern and expertise and which the Commission itself has the first responsibility to formulate and announce. In these respects this type of commentary is akin to an agency's interpretation of its own legislative rules. As we have often stated, provided an agency's interpretation of its own regulations does not violate the Constitution or a federal statute, it must be given "controlling weight unless it is plainly erroneous or inconsistent with the regulation." Bowles v. Seminole Rock & Sand Co., 325 U. S. 410, 414 (1945). 

Bowles v. Seminole Rock is the predicate for Auer deference which I now call Auer/Kisor deference because of the authoritative treatment of Auer deference in Kisor v. Wilkie, 588 U.S. 558 (2019). As I discussed in yesterday’s blog on Boler, the issue was the application of Auer deference to Guidelines’ Commentary (Application Note) defining the Guidelines term “loss” to include “intended loss.”

3. Did Auer/Kisor Deference Survive the Demise of Chevron. One of the issues I presented in yesterday’s blog was whether Auer/Kisor deference survived the demise of Chevron deference. I just want to make a few bullet points about that issue.

Chevron Step Two Reasonableness and Agency Best Interpretations in Courts of Appeals (2/9/23)

Many observers have noted that the Supreme Court has avoided Chevron deference in recent years. E.g., Isaiah McKinney, The Chevron Ball Ended at Midnight, but the Circuits are Still Two-Stepping by Themselves (Notice & Comment 12/18/22), here. The Supreme Court has affirmed so-called Auer deference for agency subregulatory interpretations of ambiguous regulations. Kisor v. Wilkie, 588 U.S. ___, 139 S.Ct. 2400 (2019). (Auer deference is now sometimes called Auer/Kisor deference.) But the Supreme Court has not deployed core Chevron deference recently, although one prominent scholar has said that Kisor was an affirmation of Chevron deference. Cass R. Sunstein, Zombie Chevron: A Celebration, 82 Ohio St. L.J. 565, 570-571 (2021) (“If Kisor was right, it would be easy to conclude that Chevron was also right, and for exactly the reasons given by the Court in that case.”) Still, I suspect that the Supreme Court’s Chevron avoidance is to avoid reflexive deference and more rigorously apply the tools of construction to find no ambiguity at Chevron Step One (without mentioning Chevron).  See e.g., Isaiah McKinney, At the Supreme Court, Chevron Deference Has Morphed into the Application of the Tools of Construction (Notice & Comment 2/9/23), here.

Not all Justices avoid Chevron. Justice Gorsuch has lamented Chevron in dissenting opinions. E.g., Buffington v. McDonough, 143 S. Ct. 14 (2022), here, discussed at Justice Gorsuch's Newest Rant on Chevron and the Administrative State (Federal Tax Procedure Blog 11/7/22; 11/8/22), here. This ranting is just a continuation of his famous claim on the 10^th Circuit that Chevron was the “elephant in the room * * * [permitting] executive bureaucracies to swallow huge amounts of core judicial and legislative power and concentrate federal power in a way that seems more than a little difficult to square with the Constitution of the framers' design.” Gutierrez-Brizuela v. Lynch, 834 F.3d 1142, 1153 (10th Cir. 2016) (concurring to his own majority opinion apparently because he could not get the other judges on the panel to join his rant).

With Chevron falling  into desuetude on the Supreme Court, others have noted that the Chevron action is in the lower courts, noting particularly the Courts of Appeals. Chevron is Supreme Court authority that has not been overruled; logically, Chevron should be used by Courts of Appeals in appropriate cases.

I recently tested a one-year dataset of possible Chevron applications in the Courts of Appeals. Is Chevron on Life Support; Does It Matter? (Federal Tax Procedure Blog 4/2/22; 4/3/22), here. That data set included no Court of Appeals opinion where the Court said it was deferring to a less persuasive agency interpretation. In each instance where a Court of Appeals invoked Chevron in outcome determinative way, it simply declared the agency interpretation reasonable at Chevron Step Two. Of course, agency interpretations that are the best interpretations are reasonable. So, when a court stops at merely declaring the agency interpretation reasonable, it has not determined that the agency interpretation was not the best interpretation and was deferring anyway.

Justices Discuss Limited Ambiguity Role for Lenity and by Analogy Chevron Deference (3/11/22)

Ambiguity in statutory text can invoke two interpretive regimes.  Ambiguity in a criminal statute invokes the rule of lenity that says that if a criminal statute is ambiguous (or, sometimes, grievously ambiguous) the statutory ambiguity must be interpreted in the criminal defendant’s favor.  Ambiguity in a statute potentially subject to Chevron deference to an agency interpretation is interpreted consistent with the Chevron-entitled agency interpretation if it is reasonable (permissible).  Both interpretive regimes turn on ambiguous statutory text.

The question I address in this blog is what ambiguity means for both lenity and Chevron deference.  The only thing that I am sure of is that ambiguity in either context has no litmus test, thus is itself ambiguous.  As I note in The Report of the Death of the Interpretive Regulation Is an Exaggeration 75 n. 296 (SSRN December 14, 2021), here.

   n. 296 The word ambiguous in deference jurisprudence may be ambiguous. E.g., Aditya Bamzai, Delegation and Interpretive Discretion: Gundy, Kisor and the  Formation of Future Administrative Law, 133 Harvard L. Rev. 164, 187 n. 140 (2019) (“The question of how to identify ‘ambiguity’ is a long-running one in both administrative law and elsewhere,” citing scholarly discussions); Brett M. Kavanaugh, Book Review: Fixing Statutory Interpretation, 119 Harv. L. Rev. 2118, 2118-2119 (2016) (“judges often cannot make that initial clarity versus ambiguity decision in a settled, principled, or evenhanded way”); and Ryan D. Doerfler, The “Ambiguity” Fallacy, 88 Geo. Wash. L. Rev. 1110 (2020) (“‘ambiguity,’ is critically ambiguous.”)

Ambiguity in the ambiguity concept also infects lenity.  In Wooden v. United States, 595 U. S. ____ 2022 U.S. LEXIS 1421 (3/7/22), S.Ct. here and GS here, Justices Kavanaugh and Gorsuch, in concurring opinions, weighed in on the issue in ways that evoke the ambiguity discussion for Chevron deference and may offer some guidance in Chevron deference.

I start with Justice Gorsuch’s discussion on p. 9 of his concurring opinion which starts here.  Justice Gorsuch starts with a complaint about the gloss sometimes added to the lenity discussion that the ambiguity must not only be ambiguous but also must be “grievously ambiguous.”  I think he does a pretty good job in demolishing the spurious notion that there are two categories of ambiguity for lenity purpose – grievous in which lenity applies and non-grievous in which lenity does not apply.  Lenity applies where there is ambiguity, period.

This still does not help in determining what ambiguity is.  Is it just that the judge knows it when he or she sees it.  Justice Kavanaugh discusses that issue in his concurring opinion starting here.  Basically, Justice Kavanaugh argues that ambiguity in statutory interpretation for lenity purposes is a rare phenomenon.  Evoking the Chevron / Auer concepts hinging on ambiguity, Justice Kavanaugh says (p. 2 of concurring opinion):

Updated Article: The Report of the Death of the Interpretive Regulation Is an Exaggeration (8/24/20)

I have updated my prior posting on SSRN of my article titled:  The Report of the Death of the Interpretive Regulation Is an Exaggeration.  I did make some significant changes.  The citation and the link in SSRN recommended format is

Townsend, John A., The Report of the Death of the Interpretive Regulation Is an Exaggeration (August 23, 2020). Available at SSRN: https://ssrn.com/abstract=3400489. 

The significant revisions are:

• I provide more discussion to refute the notion that APA § 706 requires de novo review without  deference to agency interpretations.  (See pp. 74-76.)  APA § 706 provides:  “To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions,”
• I add some more discussion on the anomaly of the spurious notion that when agencies interpret ambiguous statutory text they are legislating but when courts interpret ambiguous statutory text they are not legislating.  (See pp. 59-60.)
• I significantly revised the opening discussion of the myth of tax exceptionalism.  (See pp. 8-11; see also p. 110.)  The argument is the same, but stated in a more logical way (I think).

I have made numerous other changes that I hope improve the article but the ones identified above are the significant changes.

Updated Article on APA Interpretive Regulations (1/28/20)

In June, I posted an a blog on article on the APA issue of the continued viability of the interpretive regulation.  Article on the Continued Viability of the APA Category of Interpretive Regulations (6/21/19), here.  I have now posted a substantial update of the article at the same URL on SSRN.

The SSRN cite for the revised article is:  Townsend, John A., The Report of the Death of the Interpretive Regulation Is an Exaggeration (January 25, 2020). Available at SSRN: https://ssrn.com/abstract=3400489.

The revised abstract is:

There is a claim about in the scholarly administrative law community that the APA category of interpretive regulations, including tax regulations under IRC § 7805(a), are no longer a viable category under the Administrative Procedure Act ("APA). Instead, so the claim goes, regulations that have historically been considered interpretive because all they do is reasonably interpret ambiguous statutory text are now legislative regulations under the APA thus subject to the APAs legislative regulations’ requirements for Notice and Comment and Prospectivity. 

In the article, I quote, with permission, a noted scholar who claims:  

• "regulations promulgated under 7805(a) are legislative rules as that term is understood for purposes of the Administrative Procedure Act;"
• "Administrative law doctrine says that legislative rules are those that carry the force of law, while interpretative rules do not. Although the force of law concept is blurry at the margins, I do not see any possible way that one could conclude that 7805(a) regulations do not carry the force of law;"
• "In summary, there are no Treasury regulations that are interpretative rules as that term is understood for purposes of the Administrative Procedure Act -- irrespective of the terminology embraced by the tax community."  

If that claim is true for § 7805(a) regulations, it is true for all agency regulations interpreting the statute under similar agency grants (either express or implied).
My limited anecdotal polling from talking with administrative law professors is that the claim is a mainstream scholarly position. And courts noise around with the concept, although usually without nuance. 

By contrast, in the recent oral argument in Kisor v. Wilkie (Sup. Ct. No. 18-15), transcript p. 10), Justice Breyer, an administrative law scholar (taught administrative law at Harvard Law School), said “there are hundreds of thousands, possibly millions of interpretive regulations.” And courts regularly refer to interpretive regulations as if they were a viable APA category. 

So which is it? Are interpretive regulations generally and Treasury interpretive regulations specifically a viable APA category? 

Altera Corp. Petition for Rehearing Denied (11/12/19)

I have written before about the cause célèbre that is the Altera case.  Altera Corp. v. Commissioner, 145 T.C. 91 (2015), here, rev'd 926 F.3d 1061 (2019), here.  Today, the Ninth Circuit denied the petition for rehearing en banc.  See here.

The denial of the petition for rehearing is cursory, as usually the case with denials of petitions for rehearing en banc.

My prediction is that Altera will seek certiorari.  There is no direct conflict.  Altera will urge, I presume, the importance of the issue and conflict in principle with Supreme Court authority regarding interpretation and application of the arbitrary and capricious/State Farm (Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) standard).

There is a significant dissent by Judge Milan Smith (see Wikipedia, here), joined by Judges Callahan and Bade.  Judge Smith does not offer much new there that had not been said by the Tax Court and the Ninth Circuit panel (panel opinion and dissenting opinion).  Basically, Judge Smith claims that the Treasury Regulations failed procedural regularity under the § 706(2)(A) arbitrary and capricious standard, also called the State Farm standard.  The key for Judge Smith is that, in his view, the IRS justified the regulations on the arm's length standard alone rather than the commensurate with income standard and failed to adequately consider the comments in making the final decisions.

I have dealt with this genre of argument in discussing the panel opinions, so I just point to those discussions:  Ninth Circuit Reverses Unanimous Tax Court in Altera (Federal Tax Procedure Blog 6/7/19; 6/20/19; 7/2/19), here.

Chief Counsel Advice to IRS Attorneys on Treasury and IRS Policy Statement on Tax Regulatory Process (9/25/19)

I have written before on this blog and in a recent article on the subject of the continuing viability of IRS interpretive regulations under the Administrative Procedure Act ("APA").  See e.g., Article on the Continued Viability of the APA Category of Interpretive Regulations (Federal Tax Procedure Blog 6/21/19), here; and see generally all blog entries on the subject sorted by relevance (but can be sorted by date), here.

In one of the blog entries I discuss the Treasury and IRS Policy Statement on the Tax Regulatory Process.  See, Treasury and IRS Policy Statement on Tax Regulatory Process (Federal Tax Procedure Blog 3/17/19), here.  The Policy Statement is here.

IRS Chief Counsel has issued a memorandum on the Policy Statement:  CC-2019-006 (9/17/19) re Policy Statement on the Tax Regulatory Process, here.  The purpose of the memorandum is to inform Chief Counsel attorneys of the general requirements of the Policy Statement.

As relevant to the issue I have spent significant time on recently--the issue of the continuing viability of IRS interpretive regulations qua the interpretive regulations category under the APA, CC-2019-006 says:  "the policy statement provides that Treasury and the IRS will continue to adhere to their longstanding practice of using the notice-and-comment process for interpretative tax rules published in the Code of Federal Regulations."

JAT Comments:

1.  Exactly.  For those wanting my views on that subject, see the article:  Townsend, John A., The Report of the Death of the Interpretive Regulation Is an Exaggeration (June 6, 2019). Available at SSRN: https://ssrn.com/abstract=3400489.

2.  Also, CC-2019-006 repeats the commitment in the Policy Statement not to assert Auer deference for subregulatory advice.  The Policy Statement was issued before the Supreme Court sustained Auer in limited application in Kisor v. Wilkie, ___ F.3d ___, 139 S.Ct. 2400 (2019), here.  Hence, the Policy Statement apparently surrenders some Auer authority for subregulatory guidance, and CC-2019-006 confirms that.   In this regard, Auer involves deferring to agency subregulatory interpretations of ambiguous regulations' text.  But, the Policy Statement says that the IRS will not do assert Auer deference.  Presumably, DOJ Tax will not either, but I have seen no announcement to that effect.  I  have written on this issue:  Auer Deference and Treasury and IRS Policy Statement on the Tax Regulatory Process (7/6/19), here.

District Court Invalidates Interpretive Regulation at Chevron Step One (8/8/19; 3/11/19)

In Mayo Clinic v. United States (D. Minn. No. 16-cv-03113 Opinion and Order dated 8/6/19), here, the Court invalidated an IRS "interpretive" regulation which interprets the statutory text "educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on."

As an interpretation of the statutory text (an interpretive regulation), the Court applied the Chevron framework.  As I understand the Court's reasoning, it stopped at Chevron Step One, finding that, based upon statutory interpretation in the statutory text in question, the regulations interpretation was not within the scope of ambiguity in the statutory text.

The Court stopped the Chevron inquiry at Step one because Congress "intended not to include' the regulations tests--"primary-function" and "merely-incidental"--in the scope of the statutory text. (Slip Op. 2.)   On that interpretation, the statutory text was not "silent or ambiguous."

Basically, as I understand the reasoning, the Court discerned some intent of Congress (certainly not a stated intent) because it inferred that Congress knew how to articulate in the statute a test such as the regulations' tests and did not do so.  Therefore, the Court reasoned, Congress must have intended that the tests not apply.  Of course, the Court has discussion of other statutes, some related, where Congress in the statutory text specifically articulated some such tests.  The Court found those persuasive that, if Congress meant that Treasury was to have interpretive authority of that nature, Congress would have put it in the statutory text or at least put some ambiguity in the statutory.  Its absence in the statutory text means that the tests were not intended by Congress to be within the scope of ambiguity of the statutory text and therefore the interpretation fails at Chevron Step One.  The Court never reaches Chevron Step Two to determine whether the interpretation was reasonable.  (I guess one could say that an interpretation is not reasonable if it is not within the scope of the ambiguity in the statutory text.)

I don't think the Court's reasoning is compelling.  The conclusion may be right.  I just don't think the reasoning articulated by the Court compels the conclusion that the statutory text does not offer sufficient ambiguity to permit the interpretation adopted by the IRS.

I suspect that there will be an appeal to the Eighth Circuit Court of Appeals.  I won't try to predict an outcome there.

Auer Deference and Treasury and IRS Policy Statement on the Tax Regulatory Process (7/6/19)

In the  revised working draft for my Federal Tax Procedure editions (Student and Practitioner) which I will publish in final in August 2019, I have revised the section titled "Deference to Subregulatory Interpretations."  This is generally called Auer deference, after Auer v. Robbins, 519 U.S. 452 (1997).  (Auer deference seems to overlap what was formerly called Seminole Rock deference, after Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945).)

Auer deference may be stated as deference to agency interpretations of agency regulations.  As I analyze it, the agency regulations being interpreted may be legislative regulations which are the law but, like statutes, can be ambiguous and thus subject to reasonable agency interpretation.  The agency regulations more commonly may be Chevron-entitled interpretive regulations that are ambiguous and thus subject to agency interpretation.  In either event, the agency interpretation appears in subregulatory guidance not entitled to Chevron deference.

Kisor v. Wilkie, 588 U.S. ___, 139 S.Ct. 2400 (2019) [Sup Ct Slip Op here; Google Scholar with S.Ct. pagination here], approved a restricted version of Auer deference.  The plurality opinion written by Justice Kagan (concurred in by Justices Ginsburg, Breyer and Sotomayor), had a robust support for Auer deference as restricted.  See e.g., Cass R. Sunstein, Justice Kagan’s Powerful Defense of the Administrative State (BloombergOpinion 6/28/19).  Keep in mind that the plurality portion was written and concurred in by the two administrative law experts on the Court (Justices Kagan and Breyer).  [For earlier discussion on Kisor, see Supreme Court Yet Again Weighs In At the Edges on Legislative and Interpretive Rules (Federal Tax Procedure Blog 6/26/19; 7/2/19), here.]

Kisor approved Auer deference to subregulatory interpretations of regulations but reined in its application.  Under Kisor, Auer deference for subregulatory interpretations (or more generally interpretations not entitled to Chevron deference) may draw deference and thus be the law.

In a tax context, however, the recent Treasury and IRS Policy Statement on the Tax Regulatory Process (3/5/19), here, informed the public that, as a policy matter, regardless of whether subregulatory interpretations might qualify for Chevron or Auer deference, the Treasury and the IRS (and presumable DOJ Tax) would not assert either Chevron or Auer deference for subregulatory interpretations.

This is odd.  Can Treasury and the IRS do that in light of the Supreme Court approval of Auer?  Well, of course, in one sense Treasury and the IRS certainly can avoid asserting deference.  The question is whether, if Chevron deference or Auer deference is otherwise applicable, a court can ignore either form of deference?

Here is the relevant portion of my current working draft on that issue (footnotes omitted):

A Strong Defense of Auer Deference (10/30/18)

A lot of judicial and commentator angst has surfaced in recent years about so-called Auer deference.  Auer deference is accorded to sub-regulatory interpretations of ambiguous regulations text.  It is analogous to Chevron deference regulations interpretations of ambiguous statutory text.  It basically says that reasonable agency subregulatory interpretations of ambiguous regulations will be respected.  Auer deference is named for the case, Auer v. Robbins, 519 U.S. 452 (1997), but it is also referred to as Seminole Rock deference named for an earlier case, Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945).  In a nutshell, arguments against Auer deference are that (i) conservatives don't like agencies to have much power (I am not sure this is a legal argument rather than an ideological one to limit the big state); (ii) Chevron deference is one thing, but allowing the agency the power to promulgate ambiguous regulations that it can then manipulate by subregulatory power is just too much, and (iii) some subthemes within these themes.

In United States v. Havis, ___ F.3d ___, 2018 U.S. App. LEXIS 29628 (6th Cir. 2018), here, Judge Stranch in concurrence has a short and robust argument for Auer deference.  Since I am an Auer (and Chevron) fan (because I believe that Auer like Chevron is reasonably constrained), I offer here Judge Stranch's argument (cleaned up):

I write separately to explain why Auer deference presents no constitutional problem. See Auer v. Robbins, 519 U.S. 452, 461 (1997). As we note here (Lead Op. at 4, 5), Mistretta made clear that the Sentencing Commission is not at odds with the principle of separation of powers because Congress may delegate complex matters to coordinate Branches as long as it clearly delineates the general policy, the agency to apply it, and sets the boundaries of this delegated authority" Mistretta v. United States, 488 U.S. 361 (1989). We also reference Stinson v. United States, 508 U.S. 36 (1993), which established that commentary promulgated by the Sentencing Commission is authoritative unless it violates the Constitution or a federal statute, or is inconsistent with, or a plainly erroneous reading of, that guideline. Supreme Court authority thus established the boundaries of deference. Violation of these boundaries resulted in our acknowledgement that the Sentencing Commission may not escape its statutory mandate, which requires that new Guidelines be adopted through notice and comment rulemaking, subject to Congressional review.  

It is true that the Government asked us to defer to Commission commentary instead, but its request is not evidence that Auer, Mistretta, and Stinson create some irreparable problem. We can hardly fault the Government for advancing an argument that seeks to enhance its position. That is the job of attorneys who represent parties in litigation. Instead of creating a constitutional problem, the Government's argument mobilized a constitutional principle that Auer deference anticipates: regardless of what interpretation the Government proposes, it is the court that ultimately decides whether a given regulation means what the agency says. 

Nor does it appear to me that immense power has been granted to agencies pursuant to Auer. Agencies do not get to decide within a vacuum: they operate within a complex system of checks and balances. To begin with, agency power is derivative of the statutory grant that creates the entity and defines the scope of its power. Our deference doctrines are thus an application of the authority that the legislature chose to grant in particular circumstances. And while the scope of the granted authority may be broad, it operates within specified limits. An agency's rulemaking must comply with the statute, and the agency's interpretation must comply with the rule. It is the courts that ultimately determine whether the agency has acted within the scope of its statutory grant. Perez also reminds us that not only do agency statutes often contain their own safe-harbor or other limiting provisions, but the APA itself contains a variety of constraints on agency decisionmaking—the arbitrary and capricious standard being among the most notable. 

Finally, I am perplexed by the argument that Auer has led agencies to regulate in a way that is broad and vague with, apparently, the goal of creating maximum leeway to define the meaning of a regulation somewhere down the road. That claim assumes a world of political continuity and agency longevity that we would be hard pressed to find today. It also ignores multiple incentives and constraints. Consider the internal pressures within the agency and throughout the governing executive branch to implement the agency's program and the external pressures from those regulated and their lobbyists to obtain predictability, both of which encourage clear regulations. These stakeholders are focused on bringing their own expertise to bear on highly complex, policy-driven issues that play out on a very practical level. This argument relies on one more dubious assumption—that agency action is driven by the views of the courts on Auer deference. It seems to me that the immediate pressures listed above are far more salient. Research supports this conclusion. One recent study showed that barely half of agency drafters responding to a survey even knew what Auer was, and even fewer considered it when drafting rules.  

Since the 1930s, courts have recognized that in our increasingly complex society, replete with ever changing and more technical problems, Congress must be able to delegate power according to common sense and the inherent necessities of the government co-ordination. The Supreme Court has long recognized the need for some level of judicial deference to the agencies that, guided by empirical research and experience, focus on mastery of a particular set of complex issues. The current arguments for curtailing agency deference risk dismissing a system that Congress created out of a need to employ the significant expertise held by agencies and their stakeholders in complex areas of the law and instead substituting courts that are ill-equipped for the task. Our carefully developed doctrines of deference strike the proper balance among our three branches by respecting both the exercise of legislative authority and the judiciary's right to make the ultimate decision whether a given regulation means what the agency says.

By the way, the argument is also an argument for Chevron deference.

Judge Stranch is an Obama nominee.  See Wikipedia, here.

SSRN Posting of Article on IRS Guidance -- Rulemaking and Deference (8/2/18)

SSRN has posted for review and download my article on IRS Guidance.  titled IRS Guidance – Rulemaking and Deference to IRS Statutory Interpretation. Townsend, John A., IRS Guidance – Rulemaking and Deference to IRS Statutory Interpretation (July 27, 2018). Available at SSRN: https://ssrn.com/abstract=3212060`.

The Abstract is:

This article deals with one of the key intersections of federal tax law and administrative law: IRS rulemaking. The IRS makes rules that affect the public through regulations and subregulatory guidance. I first discuss the IRS process for issuing such guidance and the principal forms the IRS uses. I then discuss the administrative law concept of deference to agency statutory interpretations. In administrative law, the two key regimes for deference are Chevron deference and Skidmore deference. Chevron deference requires the court to defer to an agency interpretation in formal guidance when the statutory text being interpreted is ambiguous and the agency interpretation is a reasonable interpretation even though the court believes there is a more reasonable interpretation. In the IRS context, Chevron deference applies to Treasury Regulations. Skidmore deference requires the court to defer to an agency interpretation in subregulatory guidance to the extent that the interpretation is persuasive. (That Skidmore formulation may sound a bit odd, but I get into that in the article.)  

The nonmainstream discussion in the article has two interrelated components: First, Chevron does not apply to legislative regulations. Legislative regulations are regulations, exemplified in the tax area by the consolidated return regulations under § 1502, where Congress delegated to the IRS the power to make the law. Second, Chevron does apply to interpretive regulations--regulations which interpret the statutory text. Some authors assert that, if Chevron deference applies to give the interpretation the force of law, then the regulation is a legislative regulation with the APA requirements for legislative regulations--promulgation in the Federal Register and prospective application only. The same argument, presumably, would apply if Skidmore or any other deference is given to an IRS interpretation in subregulatory guidance, because by conferring deference the interpretation has the force of law. I disagree with those authors. I assert that a court adopting--deferring to, if you will--an agency interpretation of ambiguous statutory text does not transform interpretation into legislative rulemaking under the APA. Hence, for such agency interpretations promulgation in the Federal Register is not required and the interpretations can apply retroactively. The IRS usually does issue its formal interpretations in regulations subject to notice and comment, so that is not a key difference. But, IRS interpretive regulations can and often do have retroactive effect.

Additional Notes:

1.  This article started with the related discussion in the 2017 Editions of the Federal Tax Procedure Book.  It was too long for the intended audience of that book, so I excerpted that discussion and shortened the discussion of the topics for the book.  The more summary discussion in the Book is at pp. 37-69 of the Student Edition and pp. 53-94 of the Practitioner Edition.  Readers interested in the subject might first want to review the more summary discussion, particularly in the Practitioner Edition with footnotes.

2.  I substantially revised the longer discussion which I excerpted from the 2017 Book and, hopefully improved on it as I made it even longer.  Those interested in more detail than offered in the Book will find it here.

3.  I do discuss toward the end of the article the current political climate where Chevron deference has become a scapegoat for all the perceived ills of the administrative state.  My own view is that Chevron deference and its related deference forms (Auer and Skidmore) may not be perfect but offer a better framework for dealing with interpretations of complex statutory systems Congress expects agencies to administer.  Nonetheless, as I conclude the article, "But with these cross-currents of politics, repeal of Chevron may be a bad idea whose time has come."

Here is the Table of Contents for the Article:

Is the Traditional Formulation of Seminole Rock and Auer Deference in Play? (3/28/13)

The Supreme Court's decision in Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984) has been the most important administrative decision in modern times.  Through deference, it cedes to an administrative agency -- the IRS included -- great power, through regulation, to control how courts must apply the statutes the agency administers.  In effect, the agency can determine what the law is, so long as the statute has some ambiguity requiring interpretation and the agency's interpretation in the regulation is not unreasonable (i.e. arbitrary, capricious and manifestly contrary to the statute's text (and presumably intent)).  But the regulation itself may have some ambiguity requiring further interpretation.  When the ambiguity is recognized, the agency can amend the regulation to make the clarification.  But, the agency will often attempt the clarification by some lesser form of agency pronouncement (in the case of the IRS, by such a pronouncement as a Revenue Ruling or Notice).  Indeed, the IRS may attempt to state its interpretation of the regulation in a brief in litigation.  The question is what authority such interpretations of the regulations should be accorded.  This is obviously a hot-button issue in the tax law and well as in other areas of the law administered by federal agencies.

The standard holding of the Supreme Court has been that such interpretations are entitled to deference.  Justice Kennedy states the standard holding in the majority opinion in Decker v. Northwest Environmental Defense Center, ___ U.S. ___, 2013 U.S. LEXIS 2373 (3/20/13), here, a nontax case, as follows:

It is well established that an agency’s interpretation need not be the only possible reading of a regulation—or even the best one—to prevail. When an agency interprets its own regulation, the Court, as a general rule, defers to it “unless that interpretation is ‘plainly erroneous or inconsistent with the regulation.’” 

This deference is commonly referred to as "Seminole Rock" or "Auer" deference." See Bowles v. Seminole Rock & Sand Co., 325 U. S. 410 (1945); and Auer v. Robbins, 519 U. S. 452 (1997).

This broad deference to agency interpretations is not without its critics, even on the Supreme Court.  In Decker, the issue surfaced again.  Justice Scalia took the opportunity to swipe at it in detail in a dissent, and Chief Justice Roberts, with Justice Alito joining, in a concurring opinion, suggested that the issue might be reconsidered in another case.  I first cover Chief Justice Roberts' short discussion and then cover Justice Scalia's full-throated -- is there any of way with Justice Scalia? -- criticism.