Oral arguments are to be held today (March 27, 2019) on a U.S. Supreme Court case that may dramatically reduce federal agency power.

The case, Kisor v. Wilkie, asks the Supreme Court to overturn longstanding precedent which established that an agency’s interpretation of its own regulation deserves deference so long as it is reasonable. If the Supreme Court overturns this precedent, it could change the balance of power—in favor of government contractors—in certain disputes with agencies.

This deference, known as Auer deference from the 1997 case Auer v. Robbins, has given agencies broad power. For example, say a person challenges an agency’s decision and who is right or wrong comes down to the meaning of a word in an regulation. Even if the person’s interpretation is the more credible of the two, so long as the agency’s interpretation is reasonable, the agency wins.

That’s basically what happened in Kisor, as there a veteran challenged the Department of Veterans Affairs’ decision to deny his request for disability benefits. The decision at the district court and the appeals court turned on the definition of the word “relevant” in the VA’s regulations.

Kisor asks the Supreme Court to overturn Auer and 1945’s Bowles v. Seminole Rock & Sand Co. You might think that such a request stands no chance, but as we have written previously, there’s reason to suspect that a good number of justices will be open to this argument.

If the Supreme Court overturns Auer, it could have a significant impact on some legal battles between agencies and contractors, making it more likely that contractors will prevail when the meaning of a regulation is in doubt. For instance, a case like Veterans Contracting Group, Inc. v. United States—in which the Court of Federal Claims held that the SBA’s interpretation of its own regulation was “draconian and perverse,” but nonetheless within the SBA’s authority—could go the other way.

We’ll keep you posted.

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