AuthorFerrara, Lacey

CONTENTS INTRODUCTION I. IDAHO'S FOUR-PRONG TEST II. COMPARING SIMPLOT AND CHEVRON A. Prong One: Is the agency entrusted with the authority to administer the statute? B. Prong Two: Is the agency's construction a reasonable interpretation of the statute? C. Prong Three: Does the text answer the precise question at issue? D. Prong Four: Do the rationales traditionally justifying deference weigh in favor of deference? III. FITTING INTO THE DEFERENCE PUZZLE A. Skidmore v. Swift & Co B. Auer v. Robbins C. National Cable and Telecommunications Association v. Brand X Internet Services IV. IMPROVING THE TEST CONCLUSION INTRODUCTION

Nearly four decades have passed since the Supreme Court established the well-known two-step test for judicial deference to agency interpretations of law in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. [1] According to the Chevron Court, an agency's interpretation of a statute that the agency is charged with administering receives "considerable weight" if Congress has not addressed the precise question at issue and the agency's interpretation is a permissible construction of the statute. (2) Chevron now faces an uncertain future and mounting criticism, including three Justices openly challenging the doctrine. (3) In fact, Congress recently made multiple attempts to replace Chevron deference with de novo review. (4) And some suggest that while judicial deference serves a critical function, federal courts' application of the doctrine requires clarification or reform. (5)

If the Court ultimately rejects Chevron, as some critics advocate, (6) it must still identify how federal courts should approach agency interpretations that have the force of law as well as those that do not. (7) Justifications for abandoning Chevron, or "great-weight" deference, include challenges to its constitutionality, allegations of systematic judicial bias, and its inconsistent application. (8) Some challenges to Chevron call for de novo review of all agency interpretations, restoring the judiciary to its constitutionally mandated position of independent judicial review under Article III. (9)

But even before Chevron, courts deferred to agencies to some extent. (10) In the nineteenth century, the judiciary was more concerned with courts engaging in "executive" and "administrative" decisions than it was with agencies encroaching on courts' Article III powers. (11) The growth of the administrative state gave rise to what became known as the appellate-review model, under which federal courts reviewed agency decisions just as they would review a trial court's decisions. (12) De novo review "failed to achieve a differentiation of functions, produced delay, and was duplicative and wasteful." (13) Courts also recognized that agencies often had knowledge and expertise superior to their own. (14) Rejecting Chevron in favor of de novo review rejects an entire history of why courts deferred to agencies in the first place. But the options are not only Chevron deference or de novo review. For nearly thirty years, Idaho courts have experimented with a unique four-prong test for reviewing agencies' statutory interpretations. This Note analyzes that test and envisions its hypothetical application in the federal court system as Chevron's potential replacement.

When one thinks of Idaho, one likely thinks of its potato fields or its vast stretches of forest. What does not likely come to mind is the judicial-deference test of this mountainous, northwestern state. No scholarship in the last decade has engaged Idaho's deference doctrine, (15) and the recent spotlight has been on states abandoning deference for de novo review. (16) Most states afford either some form of "great-weight" deference or no deference at all to agency interpretations. (17) But the trend of the last two decades has been for states to abandon great-weight-deference regimes in favor of de novo review for some of the same reasons critics challenge Chevron. (18) Idaho, on the other hand, rejects such all-or-nothing approaches, instead employing a pragmatic, four-prong test that balances the complexity of the administrative state with the judiciary's independent-review responsibility. (19)

In formulating its four-prong test, the Idaho Supreme Court consulted its own case history, the deference principles of the other forty-nine states, and Chevron itself. (20) In surveying its own history of judicial deference, the court summarized its initial respect for agency expertise and long-standing agency constructions, its increasing reliance on judicial deference, and its eventual rejection of great-weight deference. (21) While federal administrative law may be undergoing a similar transition, (22) Idaho is one step ahead. After briefly abandoning its deference doctrine for no deference at all the Idaho judiciary returned to its well-established justifications for judicial deference, settling on an intermediate doctrine that it has consistently employed for nearly thirty years. (23)

This Note explores Idaho's intermediate approach in four parts. Part I explains the background and substance of Idaho's four-prong test. Part II analyzes how Idaho courts apply each prong, comparing each prong to its closest Chevron counterpart. Part III briefly addresses how the four-prong test would fit into the federal deference regime, specifically addressing the deference doctrines of Skidmore v. Swift & Co., (24) Auer v. Robbins, (25) and National Cable and Telecommunications Association v. Brand X Internet Services. (26) In Skidmore, the Court held that courts should afford deference to agency interpretations to the extent that, "lacking [the] power to control," the interpretation has the "power to persuade." (27) After Chevron, courts came to apply Skidmore to agency interpretations that lack the force of law. (28) In Auer, the Court held that an agency's interpretation of its own regulation should control unless the regulation is unambiguous. (29) And under Brand X, an agency's construction of a statute trumps a court's prior interpretation unless the statute is unambiguous. (30) Part III anticipates how Idaho's four-prong test could either incorporate or render obsolete these federal doctrines. And Part IV suggests an improvement to Idaho's test, specifically arguing that courts should apply each prong in a particular order.


    Idaho's four-prong test arose out of the same situation that Chevron faces today. In Idaho Fair Share v. Idaho Public Utilities Commission, (31) the Idaho Supreme Court abandoned a deference regime of "great weight" in favor of one of "free review" (i.e., de novo review). (32) Despite "myriad cases stat[ing] that the construction given a statute by an administrative agency is entitled to great weight," the court found "cogent reasons for straying from the Commission's reading of the statute and recognizing that the construction of a statute is [a] matter of law for the judiciary." (33) The court then proceeded to apply the free-review standard. (34) The Fair Share court did not broadly declare that it was abandoning great-weight deference generally; rather, it found "cogent reasons" to "apply the standard of free review to the Commission's interpretation." (35)

    Three years later, in J.R. Simplot Co. v. Idaho State Tax Commission, (36) the Idaho Supreme Court read Fair Share as a complete departure from great-weight deference. (37) At issue in Simplot was whether the income of Simplot's foreign subsidiaries could be combined with that of its domestic subsidiaries for the purpose of computing its "Idaho taxable income." (38) Simplot's foreign subsidiaries had no taxable income as defined by the Idaho Tax Code. The Tax Commission, however, argued that the Idaho tax law did not answer "whether foreign source income [could] be included in the 'preapportionment tax base' of a multinational corporation." (39) Specifically, it argued that it could use the foreign-source income to calculate the amount of income apportionable to Idaho even if it did not consider the foreign-source income as "taxable." (40) The Commission further argued that the provision controlling the apportionment calculation was a specific statutory provision and, therefore, it should outweigh the more general provision defining "taxable income." (41)

    The district court initially favored Simplot's construction of the law, calling the Commission's interpretation "a strained and harsh interpretation on a series of statutes that otherwise have a plain, obvious, and rational meaning." (42) The Idaho legislature, however, had previously passed a law that allowed corporations with foreign subsidiaries to choose whether they wanted to exclude their foreign-source income from the apportionment process. (43) The district court found that Simplot's position--that its foreign-source income was, by definition, not "taxable income"--would render the new law superfluous. The district court denied Simplot relief on this basis. (44)

    Simplot appealed the district court's decision to the Idaho Supreme Court. (45) The supreme court rejected the district court's legal theory, noting that the legislature is not required to make significant changes when it enacts legislation. (46) Nevertheless, the court noted that it was still free to affirm the district court's judgment if it could be supported by some other correct legal theory. (47) The court began its analysis with the Commission's interpretation of the Idaho Income Tax Act, noting that Idaho had "long followed" great-weight deference until Fair Share, when the court "substantially limited this rule." (48) The court suggested that the free-review standard undermined its precedent of affording deference to agencies' statutory interpretations. (49) As the Simplot court saw it, free review allowed the court to ignore an agency's interpretation whenever the court disagreed with it. (50) Seeking to resolve Idaho's...

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