Yale Notice & Comment: Administrative Deference in Ohio

July 13, 2022 | By JOHN KERKHOFF

Administrative law in Ohio has courts and practitioners flummoxed. Less than two years ago on this Blog, Ohio Supreme Court Justice Pat DeWine explained why. The state’s Chevron-like doctrine—which says courts must defer to agency constructions of ambiguous statutes—is in disarray. As Justice DeWine wrote then, not even he could “articulate Ohio’s doctrine on administrative law deference.” That’s because, as Justice DeWine rightly observed, the Ohio Supreme Court has “never systematically outlined what deference looks like in Ohio.” And since there is “not really a doctrine at all,” DeWine openly asked for “a case that presents [an] opportunity” to clarify.

Such a case has arrived. The Court heard arguments on Tuesday in TWISM Enterprises v. State Board of Registration for Professional Engineers and Surveyors, which asks whether (and if so when) judges should defer to an agency’s legal interpretations.

The background: A state statute requires TWISM, a small engineering firm, to “designate one or more full-time partners, managers, members, officers, or directors as being responsible for and in responsible charge of the . . . engineering . . . activities and decisions.” RC 4733.16(D). A Board regulation says the designated person must be “in control of, accountable for and in either direct or indirect supervision of the engineering . . . activities of the business enterprise.” Ohio Adm. Code 4733-39-02(A). The regulation defines “full time” as “working more than thirty hours per week or working substantially all the engineering . . . hours for a . . . limited liability company.” Ohio Adm. Code 4733-39-02(B).

TWISM designated a licensed engineer to perform the firm’s engineering work. But since the engineer is an independent contractor—not a W-2 employee—the Board said that TWISM did not satisfy the statute.

The statute doesn’t say anything about an “employee.” Nor does the regulation. So from the get-go, the Board asked courts to defer its interpretation that “full time” meant TWISM must designate a W-2 employee.

A Board Hearing Officer agreed, as did the full Board. It denied TWISM’s application, so TWISM appealed. A magistrate judge rejected the Board’s position, writing that the agency had “not pointed to any statute or rule whereby either the General Assembly or the Board has even arguably imposed such a requirement.” The district judge upheld the magistrate, holding that a W-2 employee requirement was “not mandated by the plain text” of the statute.

The Court of Appeals reversed. It held that the statute and regulation were ambiguous as to what “full time” meant, so it “must defer to the Board’s interpretation” that TWISM designate W-2 employees.

Which takes us to the Ohio Supreme Court. TWISM asked the Justices to review whether courts must defer to agency legal interpretations—and, if so, when. In response, the state Attorney General’s Office argued that “an administrative agency is entitled to deference in its interpretation of an ambiguous statutory term so long as the agency’s interpretation is reasonable.” On its view, the case presented no reason for the Court to intervene.

Yet, the Court accepted review, and TWISM filed its merits brief arguing that Ohio’s separation of powers and due course of law guarantees require the judicial branch to interpret the law. As TWISM explained, mandatory deference violated these state constitutional commands by allowing the Engineering Board (a party to the case) to ultimately decide the meaning of the law.

Something unusual happened next. Ben Flowers, the state’s Solicitor General, filed an amicus brief in support of neither party, but he largely agreed with TWISM that the Court should rule against deference. Since Flowers—who would typically argue for the State at the Supreme Court—sided with TWISM on deference, the Attorney General’s Office picked a different lawyer to represent the Board. This week, Flowers split argument time with Oliver Dunford of Pacific Legal Foundation, who argued the case for TWISM, asking the Court to rule that Chevron-style deference violates Ohio’s separation of powers.

In its brief and at oral argument, the Board bent over backwards to avoid the deference issue. It dropped its original argument that courts must defer to its interpretation of “full time.” Instead, the Board raised brand new arguments why the statute requires an employee—invoking language in the law that had never been at issue during three years of litigation. And even so, the Board still asks for deference, though it says that dispute over Chevron-like mandatory deference need not be resolved.

If the Court accepts the Board’s invitation to ignore deference, it will likely only tighten the Gordian Knot confounding lower courts. After all, as Justice DeWine previously explained, Ohio has no deference “doctrine.” It has a hodgepodge of ad hoc approaches leading to widespread uncertainty.

Examples demonstrate the problem. At various times, Ohio courts apply:

  • De novo review to legal questions. Ceccarelli v. Levin, 127 Ohio St. 3d 231 (2010).
  • Deference only after finding ambiguity in a statute. Cleveland Clinic Found. v. Cleveland Bd. of Zoning Appeals, 141 Ohio St. 3d 318 (2014).
  • Deference without considering ambiguity. State ex rel. Lucas Cnty. Republican Party Exec. Comm. v. Brunner, 125 Ohio ST. 3d 427 (2010).
  • De novo review while also referring to “due deference” to the agency view. Bernard v. Unemp. Comp. Rev. Comm’n, 136 Ohio ST. 3d 264 (2013).
  • Deference to “long-standing” practice or interpretation unless judicial construction makes it “imperative” to disregard. UBS Fin. Servs., Inc. v. Levin, 119 Ohio St. 3d 286 (2008).
  • No deference but upholding agency interpretation so long as the interpretation is not unreasonable. State ex rel. Clark v. Great Lakes Constr. Co., 99 Ohio St. 3d 320 (2003)

One cannot reconcile the case law. Some cases involve mandamus. Others address “public rights.” And sometimes the Court makes no attempt to say why it defers or when. A deep-dive into early Ohio decisions reveals that courts never intended to employ mandatory Chevron-_style deference to agency constructions. Case after case said the same thing: Courts can _consider an agency’s interpretation—especially if the construction was “long continued” or “contemporaneous” with the statute’s passage. Today’s practice sits leaps and bounds from those humble beginnings.

TWISM comes at a unique time. The U.S. Supreme Court ignored Chevron this term (even though the issue was raised in several cases), suggesting the Court may be silently weakening the doctrine. That would mesh with several state high courts that have, in recent years, either overturned deference or limited it.

Ohio could be next. And it should be. After all, deference in Ohio is a mess. The Justices in TWISM can clean things up and ensure that the same rule of law applies to all cases in lower courts. As Justice DeWine put it: “it is past time that we revisit our caselaw on deference to an agency interpretation of a statute and take a systematic look at the doctrine.” That time is now.

This op-ed was originally published by Yale Journal on Regulation Notice & Comment on July 13 2022.