Supreme Court Ruling Reaffirms Power of Federal Regulators

The Supreme Court today narrowly decided to uphold, with significant limits, a doctrine that has plagued the regulated community for years. The case, Kisor v. Wilkie, addressed the issue of whether courts should defer to an agency’s interpretation of its own regulations, known also as Auer deference.  

NAHB supported the petitioner with amicus briefs on behalf of an industry coalition organized by the association. NAHB has long been concerned with this type of judicial deference because it can create incentives for agencies to avoid formal rulemaking processes, or create vague regulations that they can interpret and re-interpret at a later date. Either tactic prevents the regulated community from participating in the development of the rules that govern their activities.

Auer deference has harmed NAHB’s interest in a number of cases, including a Clean Water Act case where the court relied on Auer to affirm the finding of a violation against property owners who had constructed a ditch to build a residential subdivision.

In a fractured opinion written by Justice Elena Kagan, the Supreme Court declined to overrule its precedent establishing this deference doctrine, and instead identified a series of factors that courts should use when determining whether Auer deference is appropriate. The court stressed that, under this new formulation, the situations where Auer will be applied will be far fewer than is currently the case.

It remains to be seen whether the limitations recommended by the court will address the many problems that NAHB and others in the regulated community have raised.

NAHB will vigilantly monitor the application of this re-imagined Auer deference in the lower courts, and engage in opportunities to ensure that the newly-outlined limitations are broadly applied.