Ohio Supreme Court Rejects Deference to Agency Statutory Interpretations

A new opinion concludes Ohio courts need not defer to agency interpretations. The justices are not unanimous, but no justice writes in favor of deference.

Today the Ohio Supreme Court held, in TWISM Ents., L.L.C. v. State Bd. of Registration for Professional Engineers & Surveyors , that Ohio courts need not defer to state agency interpretations of ambiguous statutes. In other words, the Court held that there is no Chevron deference in Ohio.

Justice Patrick DeWine wrote the opinion for the Court, joined by three of his colleagues: Justices Fischer, Donnelly, and soon(-to-be-Chief) Kennedy. Chief Justice O'Connor and Justices Brunner and Stewart concurred in the judgement only, but none wrote separately to defend deference to agency interpretations. The 4-3 split is also interesting because the justices did not divide along partisan lines.

Justice DeWine begins his opinion this way:

This case involves a dispute about a statute that sets forth the requirements a firm must meet to provide engineering services in Ohio. Specifically, the firm must "designate one or more full-time partners, managers, members, officers, or directors" as in "responsible charge" of its engineering activities. R.C. 4733.16(D). The state agency in charge of administering the statute contends that to be a full-time manager, one must be an employee and cannot be an independent contractor. The court of appeals determined that it was required to defer to the agency's reasonable interpretation of an ambiguous statute and, on this basis, held that the statute precluded an independent contractor from fulfilling the role of full-time manager.

To resolve the dispute, we must answer two questions. The predicate question is: What deference, if any, should a court give to an administrative agency's interpretation of a statute? Second, once we have sorted out the deference issue: What does the statute mean?

We reaffirm today that it is the role of the judiciary, not administrative agencies, to make the ultimate determination about what the law means. Thus, the judicial branch is never required to defer to an agency's interpretation of the law. As we explain, an agency interpretation is simply one consideration a court may sometimes take into account in rendering the court's own independent judgment as to what the law is.

Applying our independent judgment here, we find nothing in the statutory language to preclude an independent contractor from serving as a fulltime manager of an engineering firm. We reverse the contrary judgment of the court of appeals.

While there were prior decisions in which courts had deferred to agencies, Justice DeWine explains that there was never a "deference doctrine" in Ohio equivalent to Chevron. Among other things, this would mean that deference to state agencies could not be based upon the assumption that the state legislature enacts statutes against a background of presumed deference to agency resolutions of statutory ambiguities.

More from Justice DeWine's opinion:

Administrative deference is a frequent topic in the federal courts. Most practitioners are familiar with the framework established by the United States Supreme Court in Chevron, 467 U.S. at 865-866, 104 S.Ct. 2778, 81 L.Ed.2d 694, under which a court is required to defer to an administrative agency's reasonable interpretation of an ambiguous statute. And few topics are more often discussed in legal circles than the efficacy of the Chevron regime. . . .

Ohio's approach to deference is much harder to categorize. Prior to Chevron, on only a couple occasions did this court directly address deference to an agency's legal determinations, and both dealt with deference to a federal agency's interpretation of federal law. . . .

In a few earlier cases, we suggested that a long-standing administrative practice carries weight in the interpretive process. . . . But neither case can fairly be read as setting forth a general rule of deference to agency interpretations. Rather, the principle set forth in those cases is in line with the long-held idea that "certain executive interpretations of legal text should receive 'respect' " because "an ambiguous legal text should be given its contemporaneous and customary meaning." Aditya Bamzai, The Origins of Judicial Deference to Executive Interpretation, 126 Yale L.J. 908, 941 (2017). . . .

It was not until after the 1984 Chevron decision that deference language began to appear in our cases on a regular basis. See, e.g., West Virginia v. Ohio Hazardous Waste Facility Approval Bd., 28 Ohio St.3d 83, 85, 502 N.E.2d 625 (1986). But such instances seemed more a matter of tossing in a few lines here and there to support a particular result than any application of an established doctrine. Fair to say, there is no "Chevron moment" in this court's history. There has never been a case to systematically explain the contours of our deference doctrine, its theoretical justification, and its application in particular cases. . To the contrary, if one parses our caselaw, one can find at least three different—and irreconcilable—formulations by this court of deference standards. . . .

The confused state of our caselaw and our failure to articulate any justification or consistent standard for agency deference suggests that we should take a step back and examine the matter in light of first principles. As we will explain, Ohio's system of separation of powers precludes any sort of mandatory deference to agency interpretations. Furthermore, the principal justification for mandatory deference that has been set forth in the federal courts—that deference is appropriate because the legislature has delegated policy-making authority to an administrative agency—cannot be reconciled with Ohio law.

The relatively brief opinion cites extensively from the relevant academic literature, referencing quite a few folks who are likely familiar to VC readers.

Another interesting tidbit: The Ohio Attorney General's office filed two briefs in the case. One, by Ohio Solicitor General Ben Flowers on behalf of Attorney General Dave Yost, argued against deference. The other, by Michael Hendershot of the AG's office, defended the agency's interpretation (but did not rely upon deference for the argument).