New Bill Clarifies Standard Of Review For Decisions Made By Administrative Agencies In Arizona

On April 11, 2018, Arizona Governor Doug Ducey signed into law HB 2238. The Bill clarifies the appellate landscape for individuals and businesses challenging administrative decisions made by state agencies. In our blog post from May 7, 2017, we foreshadowed the legislation: https://blog.lrrc.com/energy/2017/05/07/chevron-deference-arizona/

To recap, under federal law, if a statute or statutory term is ambiguous, an agency has plenary authority to interpret and construe the term, and the courts are to defer to such interpretation. This is known as "Chevron Deference," emanating from the seminal case Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-844 (1984), The Chevron standard has been subject of significant criticism of late. Indeed, the United States Senate tried, unsuccessfully, to repeal the doctrine through legislation of its own (see Separation of Powers Restoration Act of 2016).

Arizona courts have followed Chevron to some extent, citing the case, holding that "considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer." Arizona Water Co. v. Arizona Department of Water Resources, 208 Ariz. 147 at ¶ 30 (2004). However, the Arizona Supreme Court has also reiterated that the courts must review questions of law de novo (i.e., without reference to the legal conclusions made by an agency).

For its part, the Legislature had (up until April 11, 2018) mandated that a court reviewing an agency decision:

"shall affirm the agency action unless the court concludes that the agency's action is contrary to law, is not supported by substantial evidence, is arbitrary and capricious or is an abuse of discretion."

A.R.S. § 12-910(E). Arguably, this standard presumes that an agency's decision is valid unless a narrow exception applies.

On April 11, 2018, the Arizona Legislature accomplished what the U.S. Senate did not, and settled any debate with respect to Arizona's appellate review of an administrative decision. Through HB 2238, the Legislature amended A.R.S. § 12-910, to be sure that Chevron Deference is not the appellate standard in Arizona. In particular, HB 2238 amended sub-section E of the statute, quoted above. Under the amended provision...