In a significant decision released on December 29, 2022, the Supreme Court of Ohio rejected the doctrine that the state’s courts must defer to an administrative agency’s interpretation of an ambiguous statute. See TWISM Enters. v. State Bd. of Registration for Professional Engineers & Surveyors, 2022-Ohio-4677. The Court held that this doctrine—commonly called “Chevron deference”—“cannot be reconciled with Ohio law.”
The lawsuit concerned R.C. 4733.16(D), which provides the requirements that engineering firms must meet to operate in Ohio. The statute required that an engineering firm “designate one or more full-time partners, managers, members, officers, or directors” as being “in responsible charge” of the firm’s engineering activities. The state Board tasked with administering the statute interpreted it to require that a full-time manager be an employee, instead of an independent contractor. Finding that the appellant engineering firm failed to designate a W-2 employee as the qualifying manager, the Board denied the firm’s application to operate in Ohio.
The court of appeals affirmed the Board’s decision. The appeals court reasoned that the statute was ambiguous, requiring it to defer to the Board’s interpretation, so long as that interpretation was reasonable.
The Supreme Court of Ohio reversed, reasoning that “Ohio’s system of separation of powers precludes any sort of mandatory deference to agency interpretation.” It ruled that:
- The judicial branch is never required to defer to an administrative agency’s interpretation of law;
- A court may consider an administrative agency’s interpretation of a statute only where the statute is ambiguous; and
- The weight that a court assigns to that interpretation should be based on the persuasive power of the agency’s reasoning and not on the mere fact that it is being offered by an administrative agency.
The Court noted that its decision aligned Ohio with roughly half of American states that do not require agency deference.
As for the specific dispute before it, the Court held that nothing in R.C. 4733.16(D) required that a full-time manager in responsible charge of the firm’s engineering activities be a W-2 employee, instead of an independent contractor.
This decision is sure to have ramifications for Ohio agencies tasked with administering the State’s oil and gas and environmental laws. We will keep you updated as courts grapple with its implications.