The Rollback of Agency Deference

Written by D. Nathan Smith

In King v. Miss. Military Dept., 245 So.3d 404 (Miss. 2018), the Mississippi Supreme Court, in one fell swoop, stated “we abandon the old standard of review giving deference to agency interpretations of statutes.”  The Court reasoned that it previously applied a double-standard to agency review, “[i]n addition to the contradiction inherent in de novo but deferential review,” writing on the one hand that we give great deference to agency interpretations of statutes and, then, with the next strike of the computer keyboard, writing that no deference will be given if the agency’s interpretation contradicts the best reading of the statute, creates a confusing and vague standard.  The same can be said of claiming to give deference while simultaneously claiming that the Court bears the ultimate responsibility to interpret statutes.  The Court, citing Miss. Methodist Hosp. v. Miss. Div. of Medicaid, 21 So.3d 600 (Miss. 2009)defined this “old standard” as a duty of deference, which derives from the realization that the everyday experience of the administrative agency gives the agency familiarity with the “particularities and nuances” of the problems committed to its care “which no court could hope to replicate.”  (emphasis added).

There’s a lot to process in this pronouncement.  The overruled case, Miss. Methodist Hosp., speaks to the decision of an administrative agency.  This decision is reached by an application of law to facts by the agency.  Thus, the agency performs dual roles of interpreting law and facts. Agencies’ interpretation of laws, of course, are reflected in the regulations promulgated by the agencies.  According to the King court, these regulations are entitled to no deference, and are essentially reviewed de novo anytime an appeal is made beyond the agency.  Or are they? What about an agency’s interpretation of its own regulations which it promulgated to interpret statutes?

While the Court was united in issuing the King decision, it splintered when it issued a decision on another Medicaid reimbursement agency appeal in Central Miss. Medical Center v. Miss. Div. of Medicaid 294 So.3d 1121 (Miss. 2020).  The five-Justice majority in Central Miss. held that “an agency’s interpretation of a rule governing the agency’s operation is a matter of law that is reviewed de novo, but with great deference to the agency’s interpretation.”  Two Justices concurred in result, but opined that no judicial deference should be extended to “an executive agency’s interpretation of its rules and regulations.”  Two dissents were also issued, each of which were joined by various of the remaining Justices.  Justice Coleman opined, or rather lamented, that “inconsistency and self-contradiction mark the history of deference by courts to executive-branch agency regulatory interpretation.”

Thus, it appears that under King, no deference is given to an agency’s interpretation of statutes.  However, under Central Miss., an agency’s interpretation of its own regulations which interpret a statute is given “great deference.”  But we are not completely finished yet.

Several months after Central Miss., the Mississippi Supreme Court issued a decision in HWCC-Tunica, Inc. v. Miss. Dep’t. of Revenue, 296 So.3d 668 (Miss. 2020). The appellant in HWCC-Tunica argued that Miss. Code Ann. Section 27-77-7(5), which statutorily imposed a standard of review, was unconstitutional.  In question was that portion of the statute which provides “[a]t trial of any action brought under this section, the chancery court shall give no deference to the decision of the Board of Tax Appeals, the Board of Review or the Department of Revenue, but shall give deference to the department’s interpretation and application of the statutes as reflected in duly enacted regulations and other officially adopted publications.”  The court found “no difference between this case and King.”  The statute was found unconstitutional because, in essence, the legislative branch had told the judicial branch what it could or could not do.  (This raises an interesting question about the Court’s deference to fact-finding.  Mississippi Code Ann. Section 77-7-7(5) also provided that a chancery court would try the facts of an appeal from the Board of Tax Appeals de novo. With that provision invalidated, are the BTA’s factual findings now given deference?  They almost certainly would be if the decision was coming from the Workers’ Compensation Commission).  Separation of powers!  But what about Central Miss.? Central Miss. found that deference to an agency’s interpretation of its regulations is given deference.  How is that different from an agency’s “interpretation and application of the statutes ‘as reflected in duly enacted regulations?’”  In any case, the holdings appear to confirm that there is no deference given to an agency’s interpretation of statute (King); most likely no deference is given to an agency’s written interpretation of a statute (King and HWCC); and great deference will possibly be given to an agency’s interpretation of its written interpretation of a statute (Central Miss. majority).

What about workers’ compensation?  Does the rollback of agency deference have any bearing on Professor Larson’s historical bargain between employer and employee?  Interestingly enough, the Court conducted a de novo review of a Workers’ Compensation Commission decision in Total Transp., Inc. of Miss. v. Shores, 968 So.2d 400 (Miss. 2007) back in 2007.  In that case the Court reviewed both law and fact in reversing a decision of the Commission.  More recently though, in Seals v. Pearl River Resort 301 So.3d 585 (Miss. 2020) the Mississippi Supreme Court overruled the Court of Appeals in fully deferring to the findings of the Commission.  The Court found that (1) in worker’s compensation cases this Court reviews the decision of the Commission (as opposed to the findings of the administrative judge, although the Commission can adopt the findings of the AJ as its own.); (2) the Commission’s decision will be affirmed unless it “lacks the support of substantial evidence, is arbitrary or capricious, is beyond the commission’s scope or its power, or violates constitutional or statutory rights,” and (3) if a decision is supported by substantial evidence, it will almost necessarily not be arbitrary or capricious.  This is consistent with years of caselaw that have given deference to findings of the Commission.

If there is one thing we can glean from this line of cases, it is that the Mississippi Supreme Court intends to afford little to no deference to an agency’s interpretation of a statute.  It may take more cases to find out exactly how this will play out with respect to agency rulemaking.  It also appears that there will be some inconsistency of treatment, depending on which agency is involved, or the specific facts of a case.  However, the Court has openly recognized its historic inconsistency in reviews of agency decisions, and is vocally seeking to resolve it.