The U.S. Supreme Court on Wednesday refused to overturn a key precedent that has been the target of business groups and conservatives who want to sap the power of federal regulators.

The court rejected requests to overrule Auer v. Robbins, a 1997 decision that directs courts to defer to an agency's “reasonable interpretation” of its own ambiguous regulations. The majority also was asked to overturn a related 1945 precedent, Bowles v. Seminole Rock & Sand.

Justice Elena Kagan, writing for the court, said, “The only question presented here is whether we should overrule those decisions, discarding the deference they give to agencies. We answer that question no. Auer deference retains an important role in construing agency regulations. But even as we uphold it, we reinforce its limits.”

She added, “The deference doctrine we describe is potent in its place, but cabined in its scope.  On remand, the Court of Appeals should decide whether it applies to the agency interpretation at issue.”

No justice dissented in the decision, but four justices wrote separately to establish that they did not agree with the entire majority opinion. Justice Neil Gorsuch, concurring in the judgment, said he looked forward to the day Auer is overturned.

“A legion of academics, lower court judges, and members of this court—even Auer's author—has called on us to abandon Auer. Yet today a bare majority flinches, and Auer lives on,” Gorsuch wrote.

He continued: “Today's opinion is more of a stay of execution than a pardon. The court cannot muster even five votes to say that Auer is lawful or wise. Instead, a majority retains Auer only because of stare decisis.” Gorsuch added: “The doctrine emerges maimed and enfeebled—in truth, zombified.”

Judge Neil Gorsuch testifies before the Senate Judiciary Committee on March 21, 2017. (Photo: Diego M. Radzinschi / ALM)

Gorsuch predicted that the “many new and ambiguous limitations” in the plurality ruling “all but guarantees we will have to pass this way again. When that day comes, I hope this court will find the nerve it lacks today and inter Auer at last.” He said Wednesday's decision “has transformed Auer into a paper tiger.”

Kavanaugh said he agreed with Gorsuch “that the Auer deference doctrine should be formally retired.” He said the ruling still reaches the solicitor general's call to narrow how much deference courts give to agencies' interpretation of their rules. “[C]courts will have no reason or basis to put a thumb on the scale in favor of an agency when courts interpret agency regulations,” Kavanaugh wrote Tuesday.

He continued: “Formally rejecting Auer would have been a more direct approach, but rigorously applying footnote 9 should lead in most cases to the same general destination. Umpires in games at Wrigley Field do not defer to the Cubs manager's in-game interpretation of Wrigley's ground rules. So too here.”

The ruling does not seem to preclude the court's future interest in reviewing the better-known Chevron doctrine, which called for judicial deference to agency interpretations, also a nemesis for conservatives.

Critics of Auer hoped that the Kisor decision would be the third time this term in which the court overruled a precedent. In Franchise Tax Board of California v. Hyatt, a state sovereignty case, the court on May 13 explicitly overturned a 40-year-old decision, Nevada v. Hall. In dissent, Justice Stephen Breyer expressed concern that the reversal could portend instability and a greater willingness to overturn other precedents. “Today's decision can only cause one to wonder which cases the court will overrule next,” Breyer wrote.

On June 21, the court in Knick v. Township of Scott scrapped a 1985 takings precedent, Williamson County Regional Planning Comm'n v. Hamilton Bank of Johnson City. In a dissent, Justice Elena Kagan cited Breyer's dissent and said, “Well, that didn't take long.”

In the Kisor case, Kagan pushed back at the trend toward overturning precedent. “Stare decisis cuts strongly against Kisor's position,” she wrote. “This Court alone has applied Auer or Seminole Rock in dozens of cases, and lower courts have done so thousands of times.  Deference to reasonable agency interpretations of ambiguous rules pervades the whole corpus of administrative law. … Because that is so, abandoning Auer deference would cast doubt on many settled constructions of rules.”

McDermott Will & Emery partner Paul Hughes, formerly with Mayer Brown, argued in favor of overturning Auer. “Ultimately, the Court should abandon Auer. And this case is a suitable vehicle for doing so,” Hughes wrote in his petition.

Chief Justice John Roberts Jr., Justices Clarence Thomas, Samuel Alito Jr., the late Justice Antonin Scalia and retired Justice Anthony Kennedy have all suggested a second look at the Auer doctrine. Gorsuch expressed similar views in a decision he wrote as a judge on the U.S. Court of Appeals for the Tenth Circuit.

In the case before the court, Marine veteran James Kisor sought disability benefits for his post-traumatic stress disorder. The Department of Veterans Affairs agreed that he suffers from the disorder but refused to award him retroactive benefits, based on its interpretation of the pertinent regulation.

In his brief on the merits, U.S. Solicitor General Noel Francisco defended the Veterans Affairs action in Kisor's case, but said the Auer and Seminole Rock precedents “should be clarified and narrowed.” He added that “As appropriately limited, however, stare decisis counsels against overturning Seminole Rock and Auer in their entirety.”

The court's opinion is posted below: