By Andrew H. Perellis, Patrick D. Joyce, and Craig B. Simonsen

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.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of Seyfarth’s Workplace Safety and Health (OSHA/MSHA) or Environmental Compliance, Enforcement & Permitting Teams.

By Andrew H. Perellis, Patrick D. Joyce, and Craig B. Simonsen

US Supreme Court Capitol Hill Daytime Washington DCSeyfarth Synopsis: The Supreme Court decided that Army Corps’ jurisdictional determinations are judicially reviewable. This decision leaves open the question of whether other types of administrative decisions are immediately judicially reviewable.

In a significant victory for owners of private property, the Supreme Court of the United States (SCOTUS) decided this week that an Army Corps of Engineers (Corps) jurisdictional determination (JD) is a final agency action judicially reviewable under the Administrative Procedure Act (APA).  U.S. Army Corps of Engineers v. Hawkes Co., Inc., et al., No. 15-290, 578 U.S. ____ (May 31, 2016).

The issue presented was whether a so-called “approved” jurisdictional determination — the government’s determination that a wetland is regulated under the Clean Water Act (CWA) thereby requiring a permit to dredge or fill — is immediately reviewable. The Hawkes decision builds on the holding of Sackett v. EPA, 132 S. Ct. 1367 (2012) (see our earlier blog on the Sackett decision) where SCOTUS concluded that an EPA compliance order issued under the CWA requiring that a developer cease its filling activity of an allegedly regulated wetland was judicially reviewable. SCOTUS rejected the Government’s contention that the landowner has to await EPA’s judicial enforcement of that order.

Following Sackett, the Circuit Courts of Appeal have split as to whether a landowner receiving a JD finding the wetland to be CWA-regulated is final and reviewable — with the Eighth Circuit holding yes, and the Fifth Circuit holding no.

In Hawkes, the plaintiffs sought to mine peat from wetland property. The Corps upset that plan when it issued an approved JD that the property constituted “waters of the United States” (WOTUS), requiring the plaintiffs to obtain a permit to discharge dredged or fill materials into these “navigable waters.” Approved JDs present a definitive statement that waters of the United States are, or are not, present. The Corps also issues “preliminary” JDs that only tell a landowner that waters of the United States “may” be present. Preliminary JDs were not at issue in this case. An approved JD is binding upon the Corps and EPA. For example, where the JD concludes that a CWA-regulated wetland is not involved, it provides the landowner with a “safe-harbor” for five years, under which it is free to develop its property without need to obtain a permit. For this reason, SCOTUS concluded that the JD affects the plaintiffs’ rights and obligations and has legal consequences, making it reviewable.

This SCOTUS determination could have heightened importance in the context of the EPA’s and the Corps’ recent release of the Final Clean Water Rule: Definition of “Waters of the United States.” We blogged about this new rule when it was published. The new WOTUS rule will substantially increase the number of potential wetlands, making a challenge to the Corps’ Jurisdictional Determinations more likely now that SCOTUS has decided that they are judicially reviewable.

The Hawkes decision also leaves open questions of whether other types of administrative decisions are immediately judicially reviewable. In a related Law360 Expert Analysis (Water Case Shows Justices Warm To Review Of Fed. Agencies), Andy Perellis notes that “there is potentially a universe of agency actions such as guidance documents or opinion letters that in the past have evaded judicial review that may be reviewable because those agency determinations have immediate consequences.”