Alson and Pashos: Judicial deference to administrative agencies in 2024

Perhaps, unlike us, you do not practice before administrative agencies, or administrative law was not among your favorite law school classes. In that case, keep in mind Justice Antonin Scalia’s admonition: “Administrative law is not for sissies — so you should lean back, clutch the sides of your chairs, and steel yourselves for a pretty dull lecture.” (“Judicial Deference to Administrative Interpretations of Law,” Duke Law Journal, Vol. 1989 (June), No. 3, at 511.)

In his remarks at Duke University, Justice Scalia focused on Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984). In Chevron, the U.S. Supreme Court held that courts must accept a federal agency’s reasonable interpretation of the ambiguous terms of a statute that the agency administers. As Justice John Paul Stevens put it in Chevron, writing for a unanimous Court: “First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines that Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.” Chevron, at 842-43 (footnotes omitted).

In the four decades since Chevron was decided, it has been cited in more than 18,000 cases. Today, however, the future of the “Chevron deference” is uncertain. Last month, the U.S. Supreme Court heard oral argument in two related cases challenging the principle of Chevron deference. At issue in Relentless, Inc. v. Department of Commerce and Loper Bright Enterprises, Inc. v. Secretary of Commerce is an interpretation of federal law by the National Marine Fisheries Service, a federal agency that adopted a rule requiring fishing vessels to pay the salaries of federal observers who enforce the agency’s regulations under the Magnuson-Stevens Act (MSA). The petitioners in both cases argued the rule was not the best interpretation of the MSA, with NMFS exceeding its statutory authority. Nevertheless, the First and D.C. Circuits, applying Chevron, deferred to the agency’s reasonable interpretation and upheld the salary payment rule. During oral argument, much of the debate concerned separation of powers and whether agencies or courts should decide what ambiguous statutes mean. In other words, should judges defer to technical experts in such situations, or should judges decide without deferring to such experts? Also, to what extent is stare decisis implicated? The Supreme Court is expected to rule on these cases later this year, with some court experts predicting a major change to, or even a discard of, Chevron deference.

Contemporaneously, at the state level, the Indiana General Assembly has been considering several bills that could alter the contours of judicial deference to administrative agencies. Under existing law, Indiana appellate courts generally apply three levels of review to an administrative agency ruling. First, the court upholds findings of fact supported by substantial evidence, which the court does not reweigh. Second, the court reviews the conclusions of ultimate facts, or mixed questions of fact and law, for their reasonableness, with greater deference to matters within the agency’s expertise. Third, the court determines whether the agency’s decision is contrary to law. This is a pure legal question for which the court owes the agency no deference, with the reviewing court examining whether the agency stayed within its jurisdiction and conformed to the relevant statutory standards and legal principles. In sum, under current Indiana law, there is substantial deference given to an agency’s factual findings; there is little to no deference given to an agency’s legal conclusions (unless the statute is ambiguous); and there is deference to an agency’s reasonable interpretation of an ambiguous statute. See Noblesville, Ind. Bd. of Zoning Appeals v. FMG Indianapolis, LLC, 217 N.E.3d 510, 513 (Ind. 2023) and Ind. BMV v. McClung, 138 N.E.3d 303, 308 (Ind. Ct. App. 2019) (with respect to the interpretation of ambiguous statutes, Indiana courts will defer to an agency’s legal conclusion so long as the conclusion is reasonable).

At issue in the current Indiana General Assembly session are proposals to amend the Indiana Administrative Orders and Procedures Act (AOPA) to limit judicial deference to an agency’s interpretation of ambiguous statutes and regulations, as well as to limit judicial deference to an agency’s factual findings. Many of Indiana’s administrative agencies fall under the purview of AOPA and would be impacted by these bills if they become law.

House Bill 1003, which has passed out of the House, proposes that appellate courts shall decide all questions of law, including any interpretation of federal or state constitutional provision, state statute or agency rule, without deference to any previous interpretation made by an agency covered by AOPA. Senate Bill 296 similarly proposes that appellate courts shall decide all questions of fact de novo based on the record, and shall decide all questions of law de novo, including any interpretation of federal or state constitutional provisions, state statutes and agency rules, without deference to any previous interpretation made by the agency.

Stay tuned, because activity at the federal and state levels may have significant impacts on the contours of judicial deference to administrative agencies — even if you consider yourself an administrative law sissy.•

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Mark Alson and Kay Pashos are partners in Taft’s Energy group. Reach them at [email protected] and [email protected]. Opinions expressed are those of the authors.