In recent years, the federal court’s judicial doctrines requiring deference to agency interpretations have come under increasing criticism. Indeed, the most recent issue of Natural Resources & Environment included an article discussing the potential future of Chevron deference. Thomas J. Grever, Chevron Deference: Ambiguous Future, or All Clear?, 31 Nat. Res. & Env’t, no. 3, Winter 2017 at 48. In his article, Mr. Grever discussed D.C. Circuit Judge Bret J. Kavanaugh’s take on what the future of Chevron deference should be. According to Judge Kavanaugh, Chevron—which to practitioners is a well-known two-step analysis from the Supreme Court’s decision in Chevron v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844 (1984), that asks first if the statute is ambiguous and, second, if ambiguous, directs the court to defer to an agency’s plausible interpretation—ought to largely be abandoned. Judge Kavanaugh maintains that statutory interpretation instead should be guided primarily by the principle that “judges should strive to find the best reading of the statute. They should not be diverted by an arbitrary initial inquiry into whether the statute can be characterized as clear or ambiguous.” Bret J. Kavanaugh, Fixing Statutory Interpretation, 129 Harv. L. Rev. 2118, 2144 (2016). In that article, Judge Kavanaugh went on to state that “[f]irst, courts could determine the best reading of the text of the statute by interpreting the words of the statute, taking account of the context of the whole statute, and apply any other appropriate semantic cannons of construction. Second, once judges have arrived at the best reading of the text, they can apply—openly and honestly—any substantive cannons (such as plain statement rules or the absurdity doctrine) that may justify departure from the text.” Id.
Environmental practitioners curious about how Judge Kavanaugh’s theory would work in the real world already have a jurisdiction to turn to that has recently adopted an approach somewhat similar to the one he has suggested. Shortly after the publication of Judge Kavanaugh’s article, the Utah Supreme Court issued an opinion that put into practice in the court’s review of agency interpretations of regulations and orders a number of the fundamental principles and ideas identified in Fixing Statutory Interpretation. That case is Ellis-Hall Consultants v. Public Service Commission of Utah, 379 P.3d 1270 (Utah 2016). The Ellis-Hall Consultants decision does not reference Judge Kavanaugh’s article, however, and the decision is drawn exclusively from Utah law.
To set the stage for Utah’s analysis, one first must understand that the Utah Supreme Court has issued a series of cases in recent years that attempted, at the very least, to clarify the standard of review that the court will apply when it reviews agency interpretations and determinations. In these cases, the court stated that it had created tension within Utah law by articulating several different ways it would conduct a review of agency actions; in some instances the court had recognized that the agency was due deference and in other instances the court rejected any deference to the agency interpretation. See 379 P.3d at 1273. Ultimately, the court appears to have landed on the position that the threshold question for its review was not based on ambiguity—as Chevron deference contemplates—but should be based on what type of question was presented for review. See id. at 1273–74. In other words, to decide the amount of deference to be applied, the court had to determine first if the agency decision being reviewed was either a question of law, question of fact, or a mixed question. Id. at 1274.
The category that the agency action fell into was critical because, according to the Utah court, pure questions of law ought to be subject to nondeferential review for correctness. See, e.g., Hughes Gen. Contractors, Inc. v. Utah Labor Comm’n, 322 P.3d 712, 717–18 (Utah 2014). The reason the court could apply nondeferential review to statutory interpretations was because it believed “questions of law have a single right answer.” Id. at 717, n.4. So instead of finding the “best” answer, the Utah Supreme Court is of the mind that there is only one “right” answer when it comes to statutory interpretation. Fast-forward two years to the Ellis-Hall Consultants decision, in which the court explains that its recent analysis had “openly repudiated” the application of Chevron deference to its review of agency determinations under Utah law. 379 P.3d at 1274. By doing so, the court stated that it “retained for the courts the de novo prerogative of interpreting the law, unencumbered by any standard of agency deference.” Id. (internal quotation marks omitted).
But what of agency interpretations of their own regulations and orders? The federal courts routinely apply Auer or Seminal Rock deference when presented with questions surrounding an agency’s regulation or orders. Unlike Chevron deference, Auer deference does not hinge on textual ambiguity. Rather, this federal doctrine recognizes that an agency’s interpretation of its own regulations is controlling “unless plainly erroneous or inconsistent with the regulation.” Auer v. Robbins, 519 U.S. 452, 461 (1997). By applying this standard, the federal courts will generally defer to an agency’s interpretations of its own regulations. See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (stating that the court “must give substantial deference to an agency’s interpretations of its own regulations” and that the court’s role is “not to decide which among several competing interpretations best serves the regulatory purpose”). Like Chevron, Auer deference has come under increasing scrutiny in recent years. For instance, in deciding Perez v. Mortgage Bankers Association, Justices Alito, Scalia, and Thomas all wrote separate concurrences that questioned the continued viability of Auer deference. Indeed, Justice Thomas wrote that “[b]ecause this doctrine effects a transfer of the judicial power to an executive agency, it raises constitutional concerns. This line of precedents undermines our obligation to provide a judicial check on the other branches, and it subjects regulated parties to precisely the abuses that the Framers sought to prevent.” 135 S. Ct. 1199, 1213 (2015). Likewise, he further opined: “This accumulation of governmental powers allows agencies to change the meaning of regulations at their discretion and without any advance notice to the parties. . . . When courts give ‘controlling weight’ to an administrative interpretation of a regulation—instead of to the best interpretation of it—they effectively give the interpretation—and not the regulation—the force and effect of law. To regulated parties, the new interpretation might as well be a new regulation.” Id. at 1221.
The Utah Supreme Court’s Ellis-Hall Consultants decision takes up this issue as well. The court found that Auer and the doctrine’s “principle of deference” was “irreconcilable” with the court’s recent determinations that pure questions of law would be reviewed without affording any deference to the agency’s interpretation. Consequently, agency interpretations of regulations that qualified as questions of law would be reviewed without deference as well. “We reiterate that agency decisions premised on pure questions of law are subject to non-deferential review for correctness. In so holding, we repudiate our prior decisions calling for deference to an agency’s interpretation of its own orders or regulatory enactments. And we hold that the Commission is not entitled to deference as to its interpretation of” the orders at issue in the appeal. Ellis-Hall Consultants, 379 P.3d at 1274.
Moreover, the Ellis-Hall Consultants court appears to take the position that the deference created through the application of Auer vests the agency with the authority to revise its regulations through interpretation. Speaking specifically to the order underlying its determination in Ellis-Hall Consultants, the court stated:
Schedule 38 is law. So are the orders issued by the Commission. They are accordingly binding on interested parties like Ellis-Hall. And such parties have a right to read and rely on the terms of these regulations. Because the words in the Commission’s orders have the force of law, the Commission has no right to revise them by later “interpretation.” It is the Commission’s orders and tariffs that have the force of law, not its privately held intentions. So an agency has no authority to override the terms of an issued order by vindicating the agency’s “true” intent. Agencies make law by issuing orders or promulgating regulations. Privately held intentions that contradict such rules are not law.
Id. at 1274–75. Ultimately, the court added that “We are in as good a position as the agency to interpret the text of a regulation that carries the force of law.” Id. at 1275.
The Ellis-Hall Consultants decision should not be last word on judicial deference to agency interpretations under Utah law, as it does not answer the myriad nuanced questions that have the potential to arise when the judiciary reviews an agency’s actions. But it does provide insight into a court experimenting with the standard of review while rejecting the federal court’s Chevron and Auer doctrines.