Supreme Court Reins in Federal Agencies – But Just a Little Bit

Date: July 08, 2019

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Small business certainty rises as Justices narrow deference to vague regulations

Unclear federal rules and uncertain enforcement can make it difficult for many small businesses to plan ahead effectively. The Supreme Court of the United States had the perfect opportunity to put a stop to “Auer deference” – a legal doctrine used by judges to tip the scales in favor of unelected bureaucrats in Washington when determining what a rule requires. Instead of jettisoning this counterproductive standard outright, the high court last week decided in the case Kisor v. Wilkie to scale back its application.

NFIB has called for limiting courts’ use of Auer deference because it encourages federal agencies to draft ambiguous regulations. After all, if judges must defer to an agency’s interpretation of an unclear regulation, bureaucrats have more of a free hand to change the meaning of what a regulation requires after the fact. When the rules are deliberately unclear and the enforcement arbitrary, small business owners have a hard time knowing what they’re supposed to do.

NFIB’s legal team filed a friend of the court brief asking the Court to use the Kisor case to put a stop to this unfortunate state of affairs (you can read it here), and Karen Harned, Executive Director of the NFIB Small Business Legal Center, made a powerful case for dumping Auer deference in a Bloomberg Law Insight article on the eve of the Court’s decision. Read it here.

The good news is that, even though the high Court did not overrule Auer as we requested in our amicus brief, the courts’ deference to bureaucrats has been significantly narrowed. Before deferring to an agency’s interpretation of its own rules, among other things, a judge will have to conclude that a regulation truly is ambiguous and the agency’s reading of it is “reasonable.” In many of the worst possible cases that may be a significant hurdle.

As Justice Neil Gorsuch put it in his concurring opinion, “today’s decision is more a stay of execution than a pardon…. So the doctrine emerges maimed and enfeebled — in truth, zombified.” NFIB will continue to fight for more accountable and transparent rulemaking so small business owners have the clarity they need to run and grow their business.

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