Chevron Deference Demise Reaches Arizona State Courts ~ The Lawyers Clock

Federal Shifts in Administrative Procedures and Their Impact on Regulated Industries

The recent transformation in legal standards at both the federal and state levels has caused significant ripples throughout the regulatory landscape. Changes in precedent, once defined by the doctrine known as Chevron Deference, now mean that businesses and agencies alike must figure a path through a maze of new judicial guidelines. This opinion editorial offers a detailed look at the shifting terrain and explores the potential impact on industries and legal teams alike, using a neutral tone and relatable language.

Historically, Chevron Deference provided administrative agencies with considerable leeway in interpreting ambiguous statutory language. Courts routinely leaned on prior agency views without challenging underlying assumptions, allowing agencies to operate with what many believed were untouchable interpretations. Today, however, both federal and Arizona state courts have begun to tilt the playing field toward more balanced judicial review, where courts are now more willing to critically engage with agency interpretations rather than accept them wholesale.

Arizona’s New Legal Landscape: Dropping Agency Favoritism

In recent state-level developments, Arizona courts have shown a decisive move away from the traditional deference given to state agencies. With legislative amendments to Arizona Revised Statute § 12-910(F) in 2018 and 2021, the once-familiar practice of automatically deferring to agencies on both complicated pieces of legal interpretation and factual decisions has undergone substantial change.

The revised statute compels courts to look at questions of law and fact independently, without considering an agency’s long-standing positions as the final word. This means that companies must proactively identify, analyze, and gather the administrative record to support an alternative interpretation, rather than relying on past agency rulings. In regulated-party cases, the judicial branch no longer takes a back seat to agency expertise on legal questions, fundamentally altering how challenges and defenses are constructed in court.

Supreme Court Overhaul: The Demise of Chevron Deference at the Federal Level

In June 2024, a landmark decision by the U.S. Supreme Court in Loper Bright Enterprises v. Raimondo radically altered the federal judicial approach. The Court ruled that judicial review under the Administrative Procedures Act (APA) must include independent judgment without the traditional leaning on agency interpretations—even when confronting statutory ambiguity. This overriding mandate requires judges to examine issues directly and establish whether the agency's actions fall within their statutory authority.

This federal shift has significant implications for administrative law. The logic behind the ruling suggests that agencies cannot solely rely on past decisions as definitive guidance. Instead, each case must be approached with a fresh perspective, and judges now have clearly demarcated authority to question and reinterpret established agency stances.

Challenges Facing Legal Teams: Breaking Free from Long-Held Precedents

One of the more challenging aspects of these changes is the need for legal teams to sift through the tangled issues of past agency interpretations and craft robust arguments in support of alternative interpretations. Now, every party involved in regulated matters must get into the existing administrative record with careful attention, preparing a case that goes beyond deference. This means that before engaging in litigation, regulatory parties would do well to compile an exhaustive administrative record that underpins a logical and favorable interpretation.

Legal professionals are now faced with the task of adapting to an environment where judicial review is less about simply following agency expertise and more about constructing independent legal arguments. Instead of just accepting an agency’s position as given, attorneys must prepare to defend a finely constructed interpretation that addresses the subtle parts of the law in a way that appeals to a court’s independent analysis.

Legislative Revisions and Their Ripple Effects on Administrative Interpretation

Arizona’s legislative adjustments underpin much of the current debate surrounding agency decision-making capture. The changes in A.R.S. § 12-910(F) essentially eliminate Chevron-like deference in regulated-party proceedings, stipulating that any judicial review must be undertaken with fresh eyes. This statutory framework not only affects ongoing cases but also sets a precedent for how future appeals will be managed regarding agency actions.

In practice, this means that regulatory agencies can no longer lean on historical interpretations—even if these interpretations had stood unchallenged for decades. A judiciary that is now free to “take the wheel” in interpreting both facts and law will lead to more rigorous scrutiny of agency actions. With Arizona courts explicitly stating that they must decide “all” legal questions without deferring on prior agency determinations, the legal playing field for regulated parties has noticeably leveled.

Strategies for Compiling a Persuasive Administrative Record

Given these seismic shifts in administrative law, regulated industries need to focus on gathering a robust administrative record as a key point of defense. The revised standards emphasize the need for effective documentation and advance preparation, making it essential to create a comprehensive trail that supports a logical interpretation of relevant statutes, rules, and permit terms.

Here are some actionable steps that legal teams should consider:

Conduct a Thorough Record Review: Begin by sorting through all available documents and communications related to the agency’s actions to identify any unusual or objectionable interpretations.
Analyze Past Agency Decisions: Compare historical agency interpretations with current statutory language to pinpoint where shifts in interpretation may have occurred.
Engage Expert Testimony: Utilize industry experts to offer insights into the fine points and subtle parts of the regulatory framework. Their testimony can help pivot the court’s view away from longstanding agency positions.
Draft Clear and Logical Arguments: Develop well-structured legal arguments that challenge agency interpretations on both legal and factual grounds.
Prepare for Aggressive Litigation: Understand that future cases may require a proactive defense that not only identifies problematic agency actions but also argues for newly established interpretations based on the updated legal framework.

These steps can guide regulated industries through the overwhelming process of preparing for judicial scrutiny, ensuring that each case is backed by thorough, logically constructed administrative evidence.

Comparing Federal and Arizona State Approaches in a Post-Chevron Era

While the federal overhaul of Chevron Deference commands significant attention, it is important to recognize that state-level changes, such as those in Arizona, share similar themes but also present unique challenges. The U.S. Supreme Court’s decision in Loper Bright has created an environment where federal judges must independently assess agency actions without defaulting to an executive agency’s experience or expertise.

In contrast, Arizona’s statutory revisions explicitly remove deference by legislative fiat. This means that while federal courts are guided by a broader principle of independent judgment, Arizona courts are legally mandated to evaluate every contested point without the benefit—or bias—of previous agency interpretations.

The following table highlights key differences between the federal and Arizona state approaches:

Aspect	Federal Approach (Post-Loper Bright)	Arizona State Approach
Judicial Review Standard	Independent judgment required; less reliance on agency expertise.	Explicit statutory requirement to decide all legal and factual questions without deference.
Role of Historical Agency Interpretations	Reviewed as a body of informed judgment but not binding.	Not given any deference regardless of prior agency determinations.
Preparation for Challenges	Litigants must prepare to challenge agency actions on logical grounds.	Regulated parties are expected to build a compelling administrative record in advance.

This comparison underscores the importance for legal teams to adapt their strategies depending on whether they are operating under federal or state jurisdiction.

Lessons Learned from Recent Arizona Case Law

The recent decisions in cases such as S. Arizona Home Bldg. Assoc. v. Town of Marana and Simms v. Simms have provided further clarity on how the courts are expected to approach agency decisions. In these cases, the courts have unambiguously stated that deference is no longer a default position in regulated-party proceedings. Courts now insist on making independent decisions on legal questions, even if an agency’s interpretation has longstanding historical support.

For example, in Simms, the appellate court declared that questions of law should be decided solely by the judge, regardless of any previous agency determinations. The court’s ruling emphasized that while agency expertise might still influence decisions in areas involving discretionary or technical matters, it does not extend to fundamental interpretations of statutes or regulations. This scenario illustrates the working through of a legal approach where the judge’s independent judgment is paramount, forcing litigants to re-examine every aspect of an agency's decision-making process.

Building a Future Strategy: What Regulated Industries Must Do Now

In this new era, regulated industries are not without recourse, though the path forward may seem intimidating. The elimination of unwavering deference to agency interpretations means that companies now have a better opportunity to contest unfavorable interpretations or, conversely, prepare a defense against potential enforcement actions. However, this is easier said than done, and industries must invest time and resources to manage their way through these changes.

Key strategic considerations include:

Active Legal Monitoring: Stay up to date with both federal and state legal decisions that may impact ongoing interpretations of administrative law. Regularly review updates and adjust your strategies accordingly.
Engagement in the Rulemaking Process: Participate in legislative and regulatory comment periods. By voicing concerns and providing logical arguments during the drafting phase, regulated entities can influence the formation of more balanced rules.
Comprehensive Record-Building: Create and maintain a detailed administrative record that documents every stage of regulatory interaction. This proactive measure will serve as a critical resource should disputes arise in the future.
Legal Preparedness: Invest in training and strategic planning within your legal team to ensure that everyone involved understands the subtle details of the changed landscape and can effectively argue for a logical interpretation without agency deference.
Collaboration with Industry Peers: Work with other regulated entities to share insights and best practices. Collective voices can lead to a stronger push for clear, fair, and logical regulatory frameworks.

Thus, the new judicial emphasis on independent judgment demands that legal teams and regulated industries refocus their efforts on proactive record-building and independent legal reasoning. By preparing in advance, companies can shift the balance of power slightly in their favor, mitigating the risk of punitive enforcement actions.

Understanding Skidmore’s Continued Relevance in Agency Review

While Chevron Deference has been largely cast aside, the legal community is not starting from scratch. Instead of strict deference, the courts can fall back on what is known as Skidmore deference, a doctrine stemming from the 1944 decision in Skidmore v. Swift & Company. Under Skidmore, an agency’s interpretations, though not binding, may be given weight based on the thoroughness and persuasiveness of its reasoning.

This approach introduces a balanced perspective. Although Skidmore deference does not require a court to accept an agency’s interpretation outright, it acknowledges the utility of viewing agency expertise as a guide, especially in cases where technical expertise plays a crucial role. Here, the court may “figure a path” that incorporates elements of agency judgment in areas where the agency’s technical experience remains relevant, even if the overall legal interpretation is ultimately set aside.

Legal teams should therefore take note of how Skidmore may continue to influence judicial reasoning in cases where expert interpretation is essential. Courts may still consider an agency’s past rulings and the associated expertise, but these factors will no longer hold the decisive weight they once did under Chevron Deference.

Dealing With the Intimidating Bits of New Judicial Strategies

For many regulated parties, the sheer volume of changes in judicial review practices can be off-putting at first glance. The daunting task of reassessing every historical agency interpretation in light of new legal expectations calls for a methodical and well-organized approach. One of the best ways to cope with this shift is to break the process down into manageable components.

Here are a few practical tips for addressing these tricky parts:

Identify Key Agency Rulings: Make a list of the most critical agency decisions that have direct implications for your business operations. Scrutinize these decisions for any subtle details that might now be subject to independent judicial scrutiny.
Conduct a Legal Audit: Evaluate the entire spectrum of agency interpretations affecting your operations. This audit should include an assessment of potential vulnerabilities in permit renewals, modifications, and enforcement actions.
Develop a Contingency Plan: Prepare for potential legal challenges by establishing a clear process for documenting and defending against agency interpretations that may be considered out of step with the current legal environment.
Consult with Experts: Engage legal and industry experts to help interpret the fine points of recent case law. These professionals can provide an external perspective on how best to compile a persuasive administrative record.

By breaking down the process into smaller, more tangible steps, companies can more confidently manage their way through the legal twists and turns that now characterize agency review processes.

Anticipating Future Trends in Administrative Law

Looking ahead, it is clear that the fall of strict Chevron and state deference is just the beginning of an evolving regulatory environment. The current landscape suggests a judicial trend toward more critical evaluations of agency actions. As courts increasingly insist on making their own determinations on both the legal and factual aspects of disputes, the legal community must be prepared for additional shifts and challenges.

The following points encapsulate what may lie ahead:

Enhanced Judicial Scrutiny: Courts are expected to more rigorously analyze administrative records, leaving little or no room for an agency’s interpretive shortcuts.
Greater Legal Uncertainty: As judges adjust to these new standards, there may be a period of uncertainty where outcomes are less predictable, necessitating heightened vigilance by all parties involved.
Ongoing Legislative Reforms: Future amendments to state or federal laws could either further limit or redefine the contours of agency deference, thereby influencing how agencies operate and how courts review their decisions.
Increased Emphasis on Pre-Litigation Preparation: Given that agencies may no longer enjoy automatic deference, companies will need to be more proactive in creating administrative records that underscore logical interpretations of rules and permit terms.

Industry representatives and legal professionals need to dig into these emerging trends with a dedicated focus on how legislative and judicial environments are evolving. Staying informed and adaptive will be key to successfully steering through these ongoing legal transformations.

Practical Steps for Legal Teams in a Post-Deference Era

In light of the significant changes outlined above, legal teams must consider revising their standard operating procedures to remain competitive and effective. The responsibility now falls more squarely on litigants to argue their positions based on clear, logical interpretations of law and an exhaustive administrative record rather than relying on procedural shortcuts.

Some practical steps that legal teams should consider include:

Revise Litigation Strategies: Reevaluate current litigation practices to ensure that every case file underscores a systematic and logical interpretation of the relevant law, rather than merely deferring to an agency’s established views.
Invest in Record Management: Develop robust systems for tracking and compiling all documentation related to agency actions. This investment in record-keeping will pay off when building a persuasive case that withstands fresh judicial scrutiny.
Enhance Continuing Legal Education: Regularly update your legal team on recent court decisions and legislative developments. Workshops, seminars, and targeted training sessions can help ensure that your team is well-versed in the latest judicial expectations.
Collaborate with Industry Experts: Form alliances with consultants and industry experts whose in-depth knowledge of the regulatory environment can provide a competitive edge in formulating legally sound and practically feasible arguments.
Monitor Legislative Changes: Stay alert to any new legislative proposals that could affect agency deference or administrative procedures. Early involvement in the legislative process can sometimes influence outcomes in favor of regulated industries.

By adopting these measures, legal teams can not only address the immediate challenges posed by the demise of Chevron and state deference but also position themselves strongly for future disputes that rely on independent judicial assessments.

Concluding Thoughts: Adjusting to a New Era of Judicial Review

The seismic shifts in administrative law—both at the federal level following Loper Bright Enterprises v. Raimondo and at the state level in Arizona—signal a new era in judicial review. As courts move away from the once predictable deference to agency interpretations, regulated industries and their legal representatives must prepare to construct their cases with sharper, more independently drawn reasoning.

This transformation is not merely a transient adjustment but rather a fundamental change in how legal disputes are adjudicated. With the judiciary now empowered to independently assess both legal rules and factual determinations, companies can challenge agency actions with a renewed sense of optimism and strategy. However, navigating the new legal terrain will require a concerted effort to compile robust administrative records, overhaul litigation strategies, and maintain proactive engagement in legislative processes.

While these changes present numerous challenges—from the overwhelming task of reassessing historical interpretations to the intimidating prospect of new judicial standards—they also open the door to a fairer and more balanced judicial system. In a post-deference era, legal outcomes will hinge on the strength of logical arguments and diligently prepared administrative records, rather than merely deferring to longstanding agency practices.

Ultimately, the responsibility falls on every regulated party to adapt quickly. By getting into the fine points of recent case law and preparing comprehensively for future challenges, companies can mitigate risks and turn what might seem like a nerve-racking shift into an opportunity for substantive legal progress. This evolving landscape requires that legal professionals, industry leaders, and regulatory agencies alike work together to figure a path toward clarity and fairness in administrative law.

In conclusion, the fall of Chevron and similar deference standards marks a turning point in administrative review, one that demands renewed focus on logical interpretation, dedicated record-building, and strategic legal engagement. With these tools, businesses and legal teams are well-equipped to survive—and even thrive—in this new judicial environment, where courts have reclaimed the authority to decide in their own right, ensuring that the scales of justice remain balanced and impartial.

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/