June ended up being an extremely eventful month for state deference. In addition to the Mississippi Supreme Court’s long expected decision to abandon Auer like deference, the Colorado Supreme Court also issued a major decision rejecting both Brand X and Chevron like deference.
Previously, while the court had not has expressly voiced its skepticism or disquiet with deference, its decisions had put serious caveats or limitations on agency deference. For instance, in BP Am. Prod. Co., the Court listed a lengthy list of caveats to deference such as not deferring if an interpretation has not been uniform, or not promulgated through formal rulemaking. BP Am. Prod. Co. v. Colorado Dep’t of Revenue, 2016 CO 23, 369 P.3d 281, 285; see also See Dep’t of Revenue v. Agilent Techs., Inc., 2019 CO 41, ¶ 16, 441 P.3d 1012, 1016–17. Interpretations also had to be within an “agency’s special expertise.” Huddleston v. Grand Cty. Bd. of Equalization, 913 P.2d 15, 17 (Colo. 1996). Similarly, the Court suggested that a variety of substantive canons of construction will apply rather than deference, such as the canon that “courts will construe all doubts regarding interpretation of language in a tax statute in favor of the taxpayer.” Id. Nevertheless, the Court had continued to apply something approximating Chevron even as recently as 2020. Destination Maternity v. Burren, 463 P.3d 266, 274 (Colo. 2020).
But in Nieto v. Clark’s Mark, Inc., the Colorado Supreme Court stepped away from deference. Nieto v. Clark’s Mkt., Inc., 2021 CO 48, ¶ 38. In this case, the Colorado Court of Appeals had issued a decision with a particular interpretation of the Colorado Wage Claim Act. After the decision came out, the agency promulgated a new rule adopting the opposite interpretation. The Colorado Supreme Court therefore considered whether it would defer to an agency’s interpretation of a statute when that interpretation contradicted an existing Court decision, so called Brand X style deference. The Colorado Supreme Court refused to extend Brand X deference to state administrative procedure statutes.
But the Court also went further than that. It declared that it was “unwilling to adopt a rigid approach to agency deference that would require courts to defer to a reasonable agency interpretation of an ambiguous statute even if a better interpretation is available.” The Court noted that it had “at times, appeared to embrace Chevron-style deference for purposes of the Colorado Administrative Procedure Act,” but that in other cases it had made it clear that such interpretations “should be given due consideration” but were not binding. The Court ultimately agreed with the agency’s interpretation but noted that it would merely “consider this agency interpretation further persuasive evidence” that the interpretation the Court preferred was correct.
Daniel Ortner is an attorney with the Pacific Legal Foundation.