Chevron Deference Demise Reaches Arizona State Courts

An Era of Independent Judgment: The End of Chevron Deference in Federal and Arizona Courts

The legal landscape is undergoing a dramatic shift. The once unassailable doctrine of Chevron Deference, a cornerstone in administrative law that historically favored agency interpretations over industry challenges, is now facing a decisive setback. Recent changes not only at the federal level, as evidenced by the U.S. Supreme Court’s ruling in Loper Bright Enterprises v. Raimondo, but also in Arizona state courts, signal a new era where companies are better positioned to contest agency decisions.

This editorial examines the implications of these changes for industries, the twists and turns of judicial decision-making, and offers guidance on how regulated parties can prepare for the evolving legal environment. In what follows, we will get into the key developments and offer an in-depth opinion on how these legal shifts may reshape the regulatory landscape.

Reassessing Administrative Authority: The Federal Shift Away from Chevron

For decades, the federal judiciary has relied on the principle of Chevron Deference to give considerable weight to an agency’s interpretation of a statute it administers. This approach, established in 1984 through Chevron USA v. Natural Resources Defense Council, enabled agencies to essentially set the tone for regulatory interpretations. In practice, if Congress had not directly addressed a specific issue, the courts simply asked whether the agency’s explanation was a reasonable interpretation of the statute.

Historically, this meant that agencies, armed with extensive expertise, were almost never second-guessed by the courts. However, this deference came with its own set of problematic, tangled issues. By automatically accepting agency interpretations—even those that might seem off in light of the statute’s language—federal courts often limited the ability of regulated industries to challenge interpretations that could have significant financial and operational impacts.

Key Elements of the Chevron Decision

Reliance on Historical Agency Positions – Courts would defer to long-standing interpretations without deep scrutiny.
Heavy Presumption in Agency’s Favor – The doctrine introduced a bias towards accepting agency expertise, even in cases where the law was ambiguous.
Limiting Judicial Oversight – By deferring to agencies, courts effectively ceded their role in ensuring that agencies stayed within their statutory bounds.

Despite these advantages, it became clear over time that rigid reliance on Chevron deference led to an atmosphere where industry challengers often found themselves facing an uphill, nerve-racking battle in court. The ruling in Chevron v. NRDC left many legal practitioners feeling that the scales of fairness were tipped in favor of administrative bodies, even if their interpretations sometimes strayed from logical readings of the law.

The Supreme Court’s Landmark Decision: Loper Bright Enterprises v. Raimondo

In June 2024, the U.S. Supreme Court dramatically altered the course of administrative law by overturning Chevron deference in the decision Loper Bright Enterprises v. Raimondo. This case signaled that federal judges must exercise independent judgment rather than automatically deferring to agency opinions. The ruling clearly stated that, even when confronted with an ambiguous statute, the courts should not merely lean on an agency’s longstanding interpretations.

This decision introduces a more balanced approach, requiring courts to separately evaluate the legal logic and statutory fidelity of both agency and industry positions. For regulated parties, this offers a pathway to articulate and defend their own interpretations of ambiguous rules. Rather than being forced into a defensive posture, companies can now proactively build cases that rely on a logical, evidence-based reading of the language in question.

Implications of the Loper Bright Decision

Before Loper Bright	After Loper Bright
Automatic deference to agency interpretations Limited room for alternative interpretations Industries were at a disadvantage	Court’s independent review of agency decisions Greater scope for industry evidence-based challenges Court considers the logical reading of the statute

This table highlights the stark contrast between the old framework and the emerging approach. With the Supreme Court’s decision, judicial review now relies more on legal reasoning rather than merely deferring to administrative wisdom.

Arizona’s Bold Legislative Change: Moving Away from State-Level Deference

In tandem with federal changes, Arizona has also taken significant steps to limit agency deference. The state legislature revised Arizona Revised Statute § 12-910(F) in amendments made in 2018 and 2021, with the most recent update reinforcing that courts should not grant deference to an agency’s interpretation in regulated-party proceedings. Arizona courts are now mandated to decide legal questions independently, without leaning on any previous determinations by administrative bodies.

This legislative development represents a critical turning point for industries operating within Arizona. In earlier decisions, such as Marlar v. State from 1983, Arizona appellate courts had historically extended considerable deference to agency interpretations. However, with the new statutory language, the courts are expected to carefully weigh the administrative record on its own merits.

What the New Arizona Statute Means for Regulated Parties

Independent Judicial Review: Courts will now assess agency decisions based on the evidence in the record and the statutory text without undue influence from prior interpretations.
Proactive Record Building: Industries must now be more tactical in assembling a robust administrative record that supports a logical interpretation of rules and permit terms.
Shift in Legal Strategies: Rather than relying on established agency positions, companies must be prepared to articulate and defend their own interpretations in judicial challenges.

The recent cases of S. Arizona Home Bldg. Assoc. v. Town of Marana and Simms v. Simms illustrate this changing legal balance, curtailing the automatic deference that agencies once enjoyed. In Simms, the Arizona appellate court explicitly stated that, in regulated-party cases, the judicial review process does not involve deference to agency legal interpretations, even if they have been long held.

Industry Implications: Strategies for Challenging Administrative Interpretations

The demise of the Chevron and Arizona state deference opens the door for companies to better contest agency overreach. For industries, this regulatory pivot provides an opportunity to challenge aggressive or objectionable interpretations that could adversely affect business operations and bottom lines.

However, the shift also introduces new challenges. Companies must now be prepared to engage in a more detailed and methodical approach to building an administrative record. This involves identifying the tricky parts of agency interpretations that are likely to be challenged in judicial review and compiling logical, evidence-backed arguments to support their positions.

Steps for Building a Robust Administrative Record

Identify Affected Interpretations: Categorize which agency interpretations have twisted interpretations that might not align with a logical reading of the language.
Document Evidence: Gather all relevant data, including historical interpretations, regulatory impacts, and expert opinions.
Prepare Legal Arguments: Draft a series of arguments that challenge the agency’s interpretation by highlighting small distinctions and subtle details that favor a more reasoned interpretation.
Monitor Legislative Changes: Keep a close eye on state and federal legislative initiatives that may introduce further changes to administrative law.

Regulated parties should also consider engaging in public commentary during rulemaking processes. By taking an active role in the administrative process, companies can influence the development of rules and ensure that their perspectives are represented in the official record.

Understanding Skidmore Deference: A Residual Guiding Principle

While the era of Chevron deference is drawing to a close, not all deferential approaches have been eliminated. The legal doctrine known as Skidmore deference, originating from Skidmore v. Swift & Company in 1944, remains as a guiding principle in certain contexts. Under Skidmore, even though an agency’s previous rulings or interpretations do not control judicial outcomes, they may still serve as experienced and informed judgments that provide guidance.

This more moderate approach allows courts to consider agency expertise without automatically deferring to it. In essence, Skidmore deference provides a bridge between complete judicial independence and meaningful consideration of an agency’s specialized knowledge. Arizona courts, for instance, have indicated that while legal determinations should be made independently, there remains room to respect the agency’s discretion on technical matters where expertise is required.

When and How Is Skidmore Applied?

Situation	Skidmore Application
Ambiguous Statutory Language	Court may consider the logical reasoning behind an agency’s interpretation without fully deferring.
Agency Discretion in Technical Decisions	Court might defer on issues that require specialized expertise as long as legal questions can be independently assessed.
Historical Agency Guidance	Court acknowledges previous agency determinations as a point of reference rather than binding precedent.

Understanding and effectively navigating the principles behind Skidmore deference is key for legal practitioners. It requires a careful balance between respecting valuable agency expertise and asserting the court’s duty to independently interpret the law. For regulated industries, knowing when an agency’s judgment can merely serve as guidance—and when it must be robustly challenged—is more essential than ever.

Preparing for the Future: Proactive Industry Measures

The evolving judicial approach highlights a critical need for industries to reassess their legal strategies. The era of automatic deference to agency interpretations is over; companies now need to be more proactive in managing their legal risks. This means engaging in a systematic review of current regulatory interpretations and identifying problematic areas that could later be subject to judicial review.

Companies should ask themselves: What are the nerve-racking issues in existing agency interpretations? What are the fine points in administrative rulings that could be reinterpreted in a more favorable light? By answering these questions, industries can not only challenge potential misinterpretations but also defend their preferred positions more effectively.

Action Plan for Regulated Industries

Review Existing Permits and Rules: Identify any agency interpretations that have been long established but might now be open to challenge.
Engage in Pre-Litigation Analysis: Work with legal experts to analyze and document which parts of the administrative record may be vulnerable to a more logic-based judicial review.
Contribute to Public and Regulatory Discourse: Actively participate in public comment periods and engage in dialogue with regulatory bodies to bolster your case.
Build a Stronger Evidentiary Record: Collect data, expert opinions, and historical records that support a coherent and legal interpretation of the rules in question.
Monitor Emerging Case Law: Stay informed about state and federal decisions that elaborate on the boundaries of judicial deference, especially in contentious regulatory areas.

By following these steps, industries can better manage their way through the tricky parts of regulatory enforcement and administrative rulemaking. The proactive approach not only minimizes legal risks but also creates a solid foundation for defending against potential agency overreach in court.

Balancing Judicial Independence and Agency Expertise

There is no denying that agencies bring considerable expertise to the table when it comes to interpreting technical rules and complex regulations. The challenge lies in striking a balance between allowing judicial independence and acknowledging the specialized knowledge that agencies contribute. With the demise of automatic deference, it will now be up to the courts to carefully weigh each case on its individual merits, considering both the logical reading of the statute and the practical realities of agency expertise.

This shift may initially feel overwhelming for legal practitioners accustomed to the old paradigm. However, it also presents an opportunity for more balanced judicial oversight. Courts can now explicitly state when an agency’s interpretation is justified by its technical know-how, while still asserting their primary responsibility to interpret the law based solely on its language and legislative intent.

Points of Consideration for Courts

Independence in Legal Interpretation: Courts must assert their role as the ultimate deciders of legal questions, carefully reviewing the administrative record without defaulting to agency assertions.
Selective Acknowledgment of Agency Expertise: While expertise is important, it should serve only as background guidance rather than a determining factor in legal interpretations.
Transparency in Judicial Decisions: Courts are encouraged to provide clear, reasoned opinions that explain why a particular interpretation is either accepted or rejected, drawing on both the textual merits and any relevant administrative insights.

These considerations ensure that, even as agencies contribute invaluable technical insights, the final interpretation of law remains free from undue deference. In practice, this means that both regulated industries and administrative bodies must adapt their legal strategies to reflect this evolving balance.

Legal Uncertainties: What Remains on the Horizon?

Although the landscape is clearly shifting, a degree of legal uncertainty remains. The extent to which courts will allow agency expertise to influence decisions—beyond the limited guidance afforded by Skidmore deference—is still an open question. Some in the legal community expect a gradual, cautious approach where courts carefully circumscribe the boundaries of deference, while others believe this may spark a wave of new litigation that further refines these principles.

In Arizona, recent state court decisions signal that there is little appetite for revisiting past deference when it comes to regulated-party proceedings. Nonetheless, industry participants must stay alert. Future legislative amendments or judicial opinions, especially in cases where agency decisions involve technical matters, could yet redefine how much weight is afforded to agency expertise. For now, the trend seems to be moving decisively toward independent judicial review.

Key Unresolved Questions

Scope of Skidmore Application: To what extent will Arizona and federal courts rely on Skidmore deference for matters involving technical expertise?
Future Legislative Adjustments: Could further changes in state or federal law modify the current approach to judicial deference?
Impact on Regulatory Certainty: Will industries face greater unpredictability in how agencies interpret rules over time, given the increased judicial oversight?

These unresolved questions illustrate that while significant progress has been made, the legal system remains in a state of transition. The answers will likely develop from ongoing case law and legislative refinements, making it crucial for industries to remain engaged with both the judicial process and regulatory discourse.

Charting a New Course: The Future of Administrative Law

As we step into this new era, it is essential for legal practitioners and regulated industries alike to not only understand the ongoing changes but also to become active participants in shaping the future of administrative law. The end of Chevron deference at both federal and Arizona state levels invites a more balanced, independent review of agency actions. This shift, while introducing a host of new challenges, also empowers industries to stand up against potentially overreaching administrative interpretations.

The future of administrative law will likely involve a series of recalibrations where judicial independence is front and center. Courts are now tasked with the significant responsibility of interpreting statutes on their own terms, analyzing the evidence with fresh eyes, and ensuring that agency expertise is only considered as part of a broader legal argument. For regulated parties, this means that every twist and turn in the administrative process is an opportunity to advocate for a more logical and fair interpretation of the law.

Anticipated Developments and Strategies

Issue	Anticipated Development	Industry Strategy
Judicial Independence	Increased reliance on logical interpretation of statutes	Develop comprehensive legal arguments based on statutory text and historical evidence
Agency Expertise	Selective acknowledgment for technical matters only	Identify points where agency expertise is critical and support with independent technical assessments
Regulatory Certainty	Potential for varied interpretations across jurisdictions	Engage proactively in rulemaking and public commentary to shape consistent regulatory standards

This strategic table serves as a roadmap for industries as they figure a path through the current legal terrain. By preparing for anticipated developments and taking steps to bolster their administrative record, companies can better position themselves in an era where judicial deference to agencies is no longer guaranteed.

Practical Guidance for Legal Practitioners and Regulated Industries

Given the significant changes in both federal and Arizona state legal approaches, legal practitioners and regulated industries have much to consider. The following practical recommendations focus on turning challenges into opportunities:

Proactive Legal Preparation

Assess Existing Interpretations: Conduct a thorough review of agency interpretations affecting your operations. Identify the confusing bits and complicated pieces that have historically been accepted without question.
Build a Detailed Administrative Record: Gather data, expert testimony, and historical examples that support a logical interpretation of the relevant statutes and regulations.
Engage in Early Dialogue: Work with legal counsel to explore potential challenges during permit renewals or modifications. Early engagement can help shape the administrative record in your favor.

Monitoring and Participation in Rulemaking

Stay Informed: Regularly track both state and federal administrative law developments. Updates in case law and legislative amendments can have super important implications for your business.
Public Comment Opportunities: Take advantage of public commentary periods to voice concerns about agency interpretations that could negatively impact operations. This not only influences the rule-making process but also adds to the evidentiary record in any subsequent litigation.
Collaborate with Industry Groups: Engage with peers and industry associations to share insights and coordinate legal challenges. A collaborative approach often results in a more robust challenge to unfavorable agency actions.

Strategic Litigation Planning

Legal Research: Dive in to review recent cases such as Simms v. Simms and S. Arizona Home Bldg. Assoc. v. Town of Marana. Understanding the reasoning in these cases will be key to formulating successful challenges.
Case Documentation: Keep a comprehensive record of all regulatory actions, communications, and assessments that highlight any twisted or off-putting interpretations imposed by agencies.
Expert Support: When necessary, recruit technical experts who can provide an independent analysis of the contested regulations. Their insights can make a significant difference when courts consider the weight of agency expertise.

The above guidelines serve as a checklist for those navigating the new reality of administrative law. Whether you are a seasoned legal professional or a business leader directly affected by changes in administrative practice, taking these steps now can significantly influence future outcomes in court.

Conclusion: Embracing a New Judicial Paradigm

The death knell for Chevron deference at both the federal and Arizona state levels marks a fundamental transformation in the intersection of regulatory law and judicial review. No longer are agencies granted an almost automatic pass simply because they have interpreted statutes in a particular fashion for decades. Instead, courts are now empowered—and indeed obligated—to exercise independent judgment when assessing agency action.

The shift away from deference means that regulated parties have a unique opportunity to reshape the administrative legal landscape. By identifying the tricky and intimidating aspects of agency interpretations and building a detailed, logical administrative record in advance, industries can position themselves for a more level playing field when legal challenges arise. The emerging trend of independent judicial review calls for both caution and proactive legal planning. It is a change that holds the promise of more balanced outcomes while inviting all stakeholders to play a larger role in shaping the rules that govern them.

As legal practitioners and industry leaders adjust to this new paradigm, the importance of staying engaged cannot be overstated. The blending of judicial independence, selective acknowledgment of agency expertise via Skidmore deference, and proactive administrative record building represents a path forward for ensuring that rules and regulations are interpreted in a manner that is both logical and fair. In this new era, courts are not simply rubber stamps for agency decisions but are active arbiters of legal interpretation, bringing clarity and balance to a system that was previously dominated by automatic deference.

For industries operating under these conditions, the future may appear full of challenges and twisting regulatory turns. Yet, with careful preparation and thoughtful engagement, this legal transformation presents a stark opportunity to ensure that administrative decisions are reflected and scrutinized based on their true legal merits. The change is not merely procedural—it represents a shift in the very philosophy of judicial review, one that places independent reasoning at the forefront.

In summary, the demise of Chevron deference at both the federal and Arizona state levels invites legal practitioners and regulated industries alike to reexamine their strategies, build stronger cases, and actively participate in the rulemaking process. The success of this new approach will depend on our collective ability to steer through the challenging bits of the administrative record and to advocate for decisions that represent the true, logical spirit of the law. By working together and remaining vigilant, we can help shape a future in which administrative law is more balanced, reasoned, and just.

As we stand at this crossroads, the call to action is clear: engage deeply with the evolving legal landscape, be proactive in shaping the rules that govern your operations, and be prepared to challenge any interpretation that fails to stand up to rigorous judicial analysis. This is the moment to not only adapt but also to lead the charge in ensuring that our legal system remains fair, transparent, and just for all stakeholders involved.

Originally Post From https://www.clarkhill.com/news-events/news/the-demise-of-chevron-deference-on-the-federal-level-has-also-arrived-in-the-arizona-state-courts/