Let's look at the next five sightings of Kisor v. Wilkie, 137 S. Ct. 2400 (2019) in lower-court decisions, shall we?
East Bay Sanctuary Covenant v. Barr, 385 F. Supp. 3d 922 (N.D. Cal. July 24, 2019)
This is a super-important case but not for reasons relevant to its invocation of Kisor. I'll dispense with the usual introductory discussion of the case's background because William Yeatman has covered it well at Yale Jounral on Regulation's Notice & Comment blog here and because this isn't really a Kisor case. What we have here is instead yet another lower-court decision relying on Kisor to support its rejection of Chevron deference at step one:
I've said it before, and I'll say it again: Chevron and Kisor are different frameworks that implicate different issues, so while there's nothing technically wrong with this trendy practice, I don't like it (as Raffi Melkonian says, "Get off my lawn").
Winding Creek Solar LLC v. California Public Utilities Commission, 932 F.3d 861 (9th Cir. 2019)*
Winding Creek Solar, the owner and developer of a planned solar power facility in California, sued the California Public Utilities Commission (CPUC), alleging that the Public Utility Regulatory Policies Act (PURPA) preempted certain CPUC orders governing the wholesale price of energy bought from small facilities like the one Winding Creek plans to develop. 16 U.S.C. 2601 et seq. The Ninth Circuit held that the CPUC orders violated PURPA, rejecting CPUC's request that the court defer to a FERC declaratory ruling holding otherwise. See Winding Creek Solar LLC, 151 FERC ¶ 61103, 2015 WL 2151303 (May 8, 2015).
PURPA requires electric utilities to buy all the power produced by alternative energy generators known as Qualifying Cogeneration Facilities (“QFs”). 18 C.F.R. § 292.303(a). And it requires these utilities to pay the same rate they would have if they had obtained that energy from a source other than the QFs. 18 C.F.R. § 292.304. QFs are guaranteed their choice of this “avoided cost” rate as calculated either at the time of contracting or the time of delivery. 18 C.F.R. § 292.304(d)(2). Winding Creek is a QF that wants to develop a 1 MW solar generating facility in California. To regulate the terms under which electric utilities purchase power from QFs, the CPUC established the Renewable Market Adjusting Tariff (Re-MAT) program.
The Ninth Circuit held Re-MAT violates PURPA’s requirements, because it caps the amount of energy utilities are required to purchase from QFs and because it sets a market-based rate, rather than one based on the utilities’ avoided cost. In a 2015 declaratory ruling, FERC had concluded that Re-Mat didn't violate PURPA because California offered another PURPA program, the Standard Contract, as an alternative to Re-MAT. See Winding Creek Solar LLC, 153 FERC ¶ 61027, 2015 WL 6083932 (Oct. 15, 2015). As FERC explained, "The Commission has held that, as long as a state provides QFs the opportunity to enter into long-term legally enforceable obligations at avoided cost rates, a state may also have alternative programs that QFs and electric utilities may agree to participate in; such alternative programs may limit how many QFs, or the total capacity of QFs, that may participate in the program." Id. According to FERC, "[t]he Re-MAT program is such an alternative program." Id.
Invoking that declaratory ruling, CPUC urged the Ninth Circuit to defer to FERC's interpretation of its regulations. Emphasizing that "[t]he Supreme Court has recently reiterated when courts must defer to agencies’ interpretations of their own regulations. Kisor v. Wilkie, 139 S.Ct. 2400, 2413-19 (2019)," the Court held that it "need not decide if FERC’s regulatory interpretation is due deference under [Kisor], because, either way, the result is the same." "Even under FERC's interpretation," the Court reasoned, "the Standard Contract cannot save Re-MAT because the Standard Contract also violates PURPA." The Court's explanation is worth quoting in full:
PURPA mandates that QFs be given a choice between calculating the avoided-cost rate at the time of contracting or at the time of delivery. 18 C.F.R. § 292.304(d)(2). The Standard Contract provides only one formula for calculating avoided cost, and that formula relies on variables that are unknown at the time of contracting. The Standard Contract violates PURPA because it fails to give QFs the option to calculate avoided cost at the time of contracting. This infirmity is plain from the face of the regulations, so we do not defer to FERC’s unreasoned conclusion to the contrary. See Kisor, 139 S.Ct. at 2415, 2417 (holding that Auer deference is only appropriate if the regulation being interpreted is “genuinely ambiguous” and the agency’s interpretation “reflect[s] fair and considered judgment” (internal quotation marks omitted)).
The bottom line is that two wrongs don’t make a right. Because neither option offered by the CPUC is PURPA-compliant, California’s regulatory scheme is preempted by federal law.
The Ninth Circuit's discussion of Kisor is interesting for a couple of reasons. First, despite claiming to have no occasion to decide whether FERC's interpretation is due deference because "either way, the result is the same," the Court does just that in the very next paragraph of the opinion. Specifically, the Court proceeds to explain that because the infirmity of FERC's interpretation of its regulations "is plain from the face of the regulations, we do not defer to FERC's unreasoned conclusion to the contrary." The Court adds that "Auer deference is only appropriate if the regulation being interpreted is 'genuinely ambiguous' and the agency’s interpretation 'reflect[s] fair and considered judgment.'" (quoting Kisor). In other words, the Court does decide the deference question after all.
Second, given that the Court concludes that the plain language of the regulation forecloses FERC's interpretation, it makes no difference whether the agency's interpretation "reflect[s] the fair and considered judgment" of the Commission. In Kisor, the Supreme Court held that whether an "agency's reading of a rule ... reflect[s] its 'fair and considered judgment,'" only matters after the court has concluded, after exhausting all traditional tools of construction, that the regulation is "genuinely ambiguous" and reasonable. 139 S. Ct. at 2417 (discussing "fair and considered judgment" analysis as one of several considerations that proves the point that "not every reasonable agency reading of a genuinely ambiguous rule should receive Auer deference").
Third, for similar reasons, to the extent the Ninth Circuit refused to defer to FERC's interpretation because that interpretation was, as the Court put it, "unreasoned," it also seems to depart from the framework mandated by the Supreme Court in Kisor. Kisor held that the Court must first determine whether the regulation is genuinely ambiguous by bringing to bear all "traditional tools of construction." If it is not genuinely ambiguous, deference is out of the question. Next, Kisor explains, "[i]f genuine ambiguity remains ... the agency's reading must still be 'reasonable.'" Id. at 2415 (quotes omitted). Because the Ninth Circuit concluded that the "plain" language of the regulation at issue foreclosed the agency's interpretation, whether that interpretation was "unreasoned" is beside the point.
Am I being picky? You bet I am, but for what I believe to be a very healthy reason. I'm not saying anything the Ninth Circuit did here was "wrong," and I'm certainly not saying it reached the wrong (or right) conclusion. I'm being picky because these little nuances matter. It's like a horrible game of telephone among the federal courts: The Supreme Court says one thing; then the 9th Circuit applies it in a slightly different--though perhaps not technically incorrect--manner; next the lower courts start taking their cues from the Ninth Circuit's (or some other appellate court's) slightly different approach; and pretty soon Kisor looks nothing at all like what the standard the Supreme Court prescribed.
One final point to notice: FERC wasn't a party to this case, so we don't know whether it would have continued to adhere to the interpretation embodied in its 2015 declaratory ruling.
Bates v. Schwarzenegger, 2019 WL 3425922 (E.D. Cal. 2019)
Quotes Kisor for the importance of stare decisis. Case has nothing to do with judicial deference to agency interpretations of regulations.
American Tunaboat Association v. Ross, 391 F. Supp. 3d 98 (D.D.C. 2019)*
This case is very interesting from a Kisor perspective, but because it is currently pending on appeal before the D.C. Circuit, I'm going to hold most of my fire until we see what the appellate court has to say. For now, I'll just emphasize one particularly interesting point. But first, the facts. The American Tunaboat Association sued the National Marine Fisheries Service when the Service denied the Association's request for "applicant status" under the Endangered Species Act.
The Act provides certain rights for applicants to participate in an important consultation process that federal agencies must undertake with the Service before taking an action that may adversely affect an endangered species or its critical habitat. See 16 U.S.C. 1536. The Act defines the term "permit or license applicant," id. 1532(12), but it doesn't define "applicant," so the Service promulgated a regulatory definition of "applicant." According to 50 C.F.R. 402.02, "applicant" means "any person, as defined in section 3(13) of the Act, who requires formal approval or authorization from a Federal agency as a prerequisite to conducting the action." The same regulation also defines "action" to mean "all activities or programs of any kind authorized, funded, or carried out, in whole or in part, by Federal agencies in the United States or upon the high seas." Id.
The Service rejected the Association's request for "applicant" status because "it saw “a distinction between individuals participating as Applicants on specific licenses, permits, or authorizations, and individuals or fishing organizations participating during the broad programmatic review of programs that conserve and manage fishery resources.” According to the Service, the Association was not an “applicant” under the regulatory definition because the consulted-upon action was “the continued operation” of the entire Fishery. In the Service's view, “applicant status is limited to persons seeking a specific permit that is the subject of the consultation, not a consultation on a regulatory or management program.” In response, the Association argued that the Service's “interpretation of ‘applicant’ is wholly disconnected from and inconsistent with its regulations.” It insisted that its members are persons who require “formal approval or authorization”—permits—“from a Federal agency as a prerequisite for conducting the action”—fishing.
The Court ultimately concludes that the regulatory definition of "applicant" is "genuinely ambiguous" and that the agency's interpretation of it is reasonable. As I said at the beginning of this summary, the opinion is very interesting. If the case weren't pending on appeal, I'd have a lot more to say about it. For now, though, I'll limit myself to one specific point in the district court's opinion:
In Hawaii Longline Association v. National Marine Fisheries Service (HLA), another court in this District concluded that the Service's interpretation of “applicant” was “a post-hoc rationalization” because it found no evidence that the issue was considered before the litigation. 2002 WL 732363, at *6 (D.D.C. 2002). Naturally, the Association placed heavy reliance on HLA in its arguments that deference to the Service's interpretation was inappropriate under Kisor. In a passage worth reading in full, however, the district court rejected those arguments:
Throughout its briefing, the Association urges the Court to follow HLA. Pl.'s Br. at 32–33. But as discussed above, the HLA court found that the Service had proffered a post-hoc rationalization and, as such, its interpretation of “applicant” was entitled to less deference. 2002 WL 732363, at *7. Not so here. The Court has determined that the Service's interpretation reflects its “fair and considered judgment.” See Kisor, 139 S. Ct. at 2417. More, the Court disagrees with the HLA court's reading of the timber sale example in the Service's Handbook for the reasons discussed above. In any event, that unpublished magistrate judge opinion is not binding here.
Still, the Association contends that the Service's denial decision was arbitrary and capricious because “this Court” already settled the issue in HLA. See Pl.'s Br. at 37. Not really. In its denial decision, the Service acknowledged HLA but—like the Court now—declined to extend it to these facts. See A.R. 3.
It is not arbitrary for the Service to continue to grant the Hawaii Longline Association applicant status given the decision in HLA or to adhere to its preferred view of applicant status in other cases. Cf. Nat'l Cable & Telecom. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 982–83, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005) (“Only a judicial precedent holding that the statute unambiguously forecloses the agency's interpretation, and therefore contains no gap for the agency to fill, displaces a conflicting agency construction.”); see also In re Exec. Office of the President, 215 F.3d 20, 24 (D.C. Cir. 2000) (“District Court decisions do not establish the law of the circuit, nor, indeed, do they even establish the law of the district.” (cleaned up)).
Even without the invocation of Brand X that would be an interesting line of reasoning. I can't wait to see what the D.C. Circuit has to say.
Center for Biological Diversity v. U.S. Fish and Wildlife Service, 2019 WL 3503330 (D. Ariz. 2019)
The Court cites Kisor in its discussion of the standard of review but does not discuss it (or Auer or deference of any kind) at any other point in the opinion.