Seyfarth Synopsis: On April 11, 2018, Arizona Governor Doug Ducey signed into law HB 2238, which amended the state’s administrative procedure laws to remove “Chevron Deference,” so that for disputes involving state administrative law, courts will not be required to defer to an agency’s interpretation of an ambiguous statutory provision.

The legal doctrine—named for the 1984 Supreme Court decision in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-844 (1984)—has been criticized by various judges, including U.S. Supreme Court Justice Neil Gorsuch (then sitting on the Tenth Circuit). The U.S. Senate has also unsuccessfully attempted to repeal the doctrine.

Under Chevron, if a statutory term is ambiguous, the agency has authority to construe that term and interpret its meaning within the statutory scheme by promulgating regulations following Administrative Procedure Act (APA) notice and comment procedures. In such instances, the court must defer to that interpretation. This is arguably permissible because Congress explicitly granted agencies the ability to interpret their governing statutes, if APA rulemaking procedures are followed in establishing the agency’s interpretation of regulations.

State courts have largely followed or deferred to Chevron when evaluating an interpretation of a state statute by the state agency charged with implementing that statute’s mandates.

HB 2239 amended Arizona Revised Statutes §12-910, regarding the scope of judicial review of administrative decisions. The new law added language to subsection E, and created subsections F and G. The new statute reads as follows:

  1. . . . In a proceeding brought by or against the regulated party, the court shall decide all questions of law, including the interpretation of a constitutional or statutory provision or a rule adopted by an agency, without deference to any previous determination that may have been made on the question by the agency. Notwithstanding any other law, this subsection applies in any action for judicial review of any agency action that is authorized by law.
  2. Notwithstanding subsection E of this section, if the action arises out of Title 20, Chapter 15, Article 2, the court shall affirm the agency action unless after reviewing the administrative record and supplementing evidence presented at the evidentiary hearing the court concludes that the action is not supported by substantial evidence, is contrary to law, is arbitrary and capricious or is an abuse of discretion.
  3. This section does not apply to any agency action by an agency that is created pursuant to Article XV, Constitution of Arizona.

The Arizona law is believed to be the first state law of its kind. Interestingly, it appears to mandate that no deference at all be provided to a state agency’s interpretation, perhaps meaning that the court cannot even evaluate or weigh the reasonableness of the agency interpretation. The law, however, continues the trend toward scaling back agency autonomy and power.