In PT, we have discussed the relationship between broader administrative law principles and tax procedure. One of the important administrative law principles is so-called Auer deference, which provides that agencies are entitled to have the say on interpreting ambiguous regulations. Auer has been in the cross-hairs of those who believe it gives the executive branch too much power, with the late Justice Scalia being one of its more vocal critics. In today’s post, Carl Smith describes the Supreme Court’s decision to not grant certiorari in United Student Aid Funds v Bible, a case that would have given the Court a chance to revisit the doctrine. For those who want more on the issue in the tax context, we discuss it in rewritten SaltzBook IRS Practice and Procedure Chapter 3.02; for those who want a broader context in support of Auer deference Keith’s Harvard colleague Cass Sunstein has an excellent Bloomberg View op ed piece called The Government Just Got More Powerful (And That’s a Good Thing.), and SCOTUS blog links the case below and many other goodies from the case itself. Les
On May 16, 2016, the Supreme Court declined to grant certiorari in a case that could have been a vehicle for it to reconsider what is known as Auer deference, United Student Aid Funds, Inc. v. Bible, Docket No. 15-861. The doctrine of Auer deference derives from two Supreme Court opinions, Auer v. Robbins, 519 U.S. 452 (1997), and Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945). Auer deference requires courts to defer to an agency’s interpretation of its own regulations unless that interpretation is plainly erroneous or inconsistent with the regulations. Auer deference even applies to an interpretation of the regulations made for the first time in an agency’s court brief.
The IRS, in recent years, has sought Auer deference to its interpretations of Treasury regulations in high-profile Tax Court cases such as National Education Assn. of the U.S. v. Commissioner, 137 T.C. 100, 112 (2011), Intermountain Ins. Serv. of Vail, LLC v. Commissioner, 134 T.C. 211, 219 (2010), rev’d and remanded 650 F.3d 691, 708-709 (D.C. Cir. 2011), vacated and remanded 132 S. Ct. 2120 (2012), and Rand v. Commissioner, 141 T.C. 376, 380-381, 394 (2013).
However, Auer deference has also, in recent years, been criticized by several conservative Justices of the Supreme Court, who have been looking for an appropriate case in which to reconsider Auer. With the death of Justice Scalia (who was one of those Justices), there apparently were not four votes to grant certiorari in United Student Aid Funds. But, Justice Thomas, who, with Justice Scalia, was one of the principal Justices who sought to overrule Auer, would not let the refusal to grant certiorari go without writing a dissent.
Because Justice Thomas’ dissent from the failure to grant certiorari is short and does a good job of framing the issue, I quote it here in full:
This petition asks the Court to overrule Auer v. Robbins, 519 U. S. 452 (1997), and Bowles v. Seminole Rock & Sand Co., 325 U. S. 410 (1945). For the reasons set forth in my opinion concurring in the judgment in Perez v. Mortgage Bankers Assn., 575 U. S. ___, ___ (2015), that question is worthy of review.
The doctrine of Seminole Rock deference (or, as it is sometimes called, Auer deference) permits courts to defer to an agency’s interpretation of its own regulation “unless that interpretation is plainly erroneous or inconsistent with the regulation.” Decker v. Northwest Environmental Defense Center, 568 U. S. ___, ___ (2013) (slip op., at 14) (internal quotation marks omitted). Courts will defer even when the agency’s interpretation is not “the only possible reading of a regulation—or even the best one.” Ibid.
Any reader of this Court’s opinions should think that the doctrine is on its last gasp. Members of this Court have repeatedly called for its reconsideration in an appropriate case. See Mortgage Bankers, 575 U. S., at ___–___ (ALITO, J., concurring) (slip op., at 1–2); id., at ___ (Scalia, J., concurring in judgment) (slip op., at 5); id., at ___ (THOMAS, J., concurring in judgment) (slip op., at 1–2); Decker, 568 U. S., at ___–___ (ROBERTS, C. J., concurring) (slip op., at 1–2); id., at ___–___ (Scalia, J., concurring in part and dissenting in part) (slip op., at 2–7); Talk America, Inc. v. Michigan Bell Telephone Co., 564 U. S. 50, 68– 69 (2011) (Scalia, J., concurring); see also Christopher v. SmithKline Beecham Corp., 567 U. S. ___, ___–___ (2012) (slip op., at 10–14) (refusing to defer under Auer). And rightly so. The doctrine has metastasized, see Knudsen & Wildermuth, Unearthing the Lost History of Seminole Rock, 65 Emory L. J. 47, 54–68 (2015) (discussing Seminole Rock’s humble origins), and today “amounts to a transfer of the judge’s exercise of interpretive judgment to the agency,” Mortgage Bankers, supra, at ___ (slip op., at13) (opinion of THOMAS, J.). “Enough is enough.” Decker, supra, at ___ (opinion of Scalia, J.) (slip op., at 1).
This case is emblematic of the failings of Seminole Rock deference. Here, the Court of Appeals for the Seventh Circuit deferred to the Department of Education’s interpretation of the regulatory scheme it enforces—an interpretation set forth in an amicus brief that the Department filed at the invitation of the Seventh Circuit. For the reasons stated in Judge Manion’s partial dissent, 799 F. 3d 633, 663–676 (2015), the Department’s interpretation is not only at odds with the regulatory scheme but also defies ordinary English. More broadly, by deferring to an agency’s litigating position under the guise of Seminole Rock, courts force regulated entities like petitioner here to “divine the agency’s interpretations in advance,” lest they “be held liable when the agency announces its interpretations for the first time” in litigation. Christopher, supra, at ___ (slip op., at 14). By enabling an agency to enact “vague rules” and then to invoke Seminole Rock to “do what it pleases” in later litigation, the agency (with the judicial branch as its co-conspirator) “frustrates the notice and predictability purposes of rulemaking, and promotes arbitrary government.” Talk America, Inc., supra, at 69 (Scalia, J., concurring).
This is the appropriate case in which to reevaluate Seminole Rock and Auer. But the Court chooses to sit idly by, content to let “[h]e who writes a law” also “adjudge its violation.” Decker, supra, at ___ (opinion of Scalia, J.) (slip op., at 7). I respectfully dissent from the denial of certiorari.
Well, as Yoda said, “There is another.” We will all have to wait to hear a future case in which Auer deference is reconsidered by the Justices – perhaps one named Return of the Jedi v. Commissioner.