By Brian J. Slipakoff and Joseph J. Pangaro
As Justice Neil Gorsuch’s confirmation hearings progressed in the early part of 2017, one of the most commonly discussed aspects of his legal background was his opposition to administrative deference. The legal profession will surely be watching to see whether the Supreme Court’s long standing position “that considerable weight should be accorded to an executive department’s construction of a statutory scheme it is entrusted to administer” will remain intact. Chevron, U.S.A., Inc. v. Nat. Resources Def. Council, Inc., 467 U.S. 837 (1984). However, administrative deference is not simply a federal issue, and Pennsylvania’s view of the question is closely tied to the federal regime.
Pennsylvania’s Approach to Chevron’s Two-Step Review Process
Chevron adopted what has come to be known as a two-step process of reviewing agency regulations (more on the difference between promulgated regulations and non-promulgated “interpretive rules” in a moment). Step One asks whether the statute is either silent or ambiguous on the point in question. If so, the court proceeds to Step Two and asks whether the agency’s answer is based on a permissible construction of the statute.
Pennsylvania has never expressly adopted Chevron, Seeton v. Pa. Game Comm’n, 937 A.2d 1028 (Pa. 2007), but Pennsylvania courts’ view of deference largely track federal precedent. Indeed, the Supreme Court has recently noted “the ongoing transformation of the rules and/or standards concerning deference as they continue to evolve in the United States Supreme Court” and directed “the Commonwealth Court—as the intermediate court with specialized expertise in the administrative-law field—[to] remain abreast of the federal-law developments and analyze their merits relative to the Pennsylvania scheme in appropriate circumstances and in due course.” Northwestern Youth Servs. v. Commonwealth, Dep’t of Pub. Welfare, 66 A.3d 301 (Pa. 2013).
As is true under Chevron Step One, before questions of administrative deference even come into play, the reviewing court must determine whether the statute is ambiguous. If it is not, the agency’s interpretation is accorded no deference at all. SugarHouse HSP Gaming, LP v. Pa. Gaming Control Bd., 136 A.3d 457 (Pa. 2016); Seeton v. Pa. Game Comm’n, 937 A.2d 1028 (Pa. 2007).
Assuming ambiguity is found, the appropriate level of deference is tied to the type of administrative pronouncement under review. A decade before Chevron was decided, in Pennsylvania Human Relations Comm’n v. Uniontown Area School Dist., 313 A.2d 156 (Pa. 1973), the Pennsylvania Supreme Court explained the difference “between the authority of a rule adopted by an agency pursuant to what is denominated by the textwriters as legislative rule-making power and the authority of a rule adopted pursuant to interpretative rule-making power.”
For the former type of rules, courts are required to defer to the agency where the regulation is (a) within the granted power, (b) issued pursuant to proper procedure, and (c) reasonable. In making this decision, courts can only disregard the regulation if it is clearly erroneous, i.e., “so entirely at odds with fundamental principles . . . as to be the expression of a whim rather than an exercise of judgment.” This standard is generally consistent with Chevron Step Two, under which the rule must be upheld “unless it is arbitrary or capricious in substance, or manifestly contrary to the statute.” Northwestern Youth Servs. v. Commonwealth, Dep’t of Pub. Welfare, 66 A.3d 301 (Pa. 2013).
An interpretative rule on the other hand depends for its validity not upon a law-making grant of power, but rather upon the willingness of a reviewing court to say that it in fact tracks the meaning of the statute it interprets. Because the meaning of a statute is essentially a question of law for the court, to be viable, an interpretive rule must genuinely track the meaning of the underlying statute, rather than establish an extrinsic substantive standard. Borough of Pottstown v. Pa. Mun. Ret. Bd., 712 A.2d 741 (Pa. 1998). The deference owed under this standard is based upon its “power to persuade,” a standard adopted from the United States Supreme Court’s decision in Skidmore v. Swift & Co., 323 U.S. 134 (1944). Wirth v. Commonwealth, 95 A.3d 822 (Pa. 2014). This is a more stringent review than Chevron Step Two, as the reviewing court may reject the interpretation if it finds that the interpretation is imprudent or inconsistent with legislative intent.
Recent Pennsylvania Jurisprudence on Administrative Deference
In late March, the Commonwealth Court had occasion to return to many of these issues in Snyder Brothers, Inc. v. Pennsylvania Public Utility Commission, No. 1043 C.D. 2015 (Pa. Cmwlth. Mar. 29, 2017) (en banc). There, the Court addressed a challenge by an oil and gas producer to the Public Utility Commission’s interpretation of the word “any” in Section 2302(f) of Act 13 of 2012. The produced argued that “any” meant one; the Commission, relying upon its prior implementation orders, argued that “any” was ambiguous and, therefore, the Commission properly interpreted the word as meaning “every.”
Applying the rule in Seeton, the Court first concluded that the statute was unambiguous and that, in context, the word “any” plainly meant one; as a result, the Court held that the Commission was entitled to no deference whatsoever. The Court went on to address whether, assuming the statute was ambiguous, the Commission would nonetheless prevail based upon deference to its interpretation. Because the Commission’s position had not previously been articulated in an official rule and regulation, the Court applied the less-deferential standard applied to interpretive rules, and asked whether the Commission’s interpretation had the power to persuade. In deciding this question, the Court noted that the other factors of statutory construction weighed against the Commission’s interpretation, that the Commission had not offered a convincing rationale why its interpretation was as reasonable as the petitioners’ and that the Commission’s interpretation of “any” appears to have conflicted with other Commission interpretations of the same phrase. Based on these factors, the Court declined to accord the Commission’s interpretation any deference.
Even before Justice Gorsuch’s ascension to the United States Supreme Court, the Pennsylvania Supreme Court noted that there was an “ongoing transformation of the rules and/or standards concerning deference” in federal jurisprudence. If the commentary following his nomination is any indication, Justice Gorsuch may well accelerate the speed and scope of this “transformation.” In light of the close link between federal and Pennsylvania law concerning deference, Pennsylvania appellate advocates can expect the issue of administrative deference to receive regular attention in the years to come, both in interpreting the impact of new decisions on federal law, and whether and how those new decisions will apply to Pennsylvania’s administrative regime.