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CALIFORNIA CORPORATE & SECURITIES LAW

Standard Of Review Is Clear For Administrative Interpretations Of Statutes And Rules

A few days ago, I noted the Court of Appeal’s opinion in Davis Test Only Smog Testing v. Dept. of Consumer Affairs, 2017 Cal. App. LEXIS 855.  That post concerned the Court’s holding that the plaintiffs’ due process rights had not been violated by lay representation at an administrative hearing.  Not discussed in the post was the Court’s handling of the contention that the trial court had applied the wrong standard of review to the administrative decisions.

At the federal level, there has been much speculation that with the appointment of Justice Gorsuch the U.S. Supreme Court is poised to abandon it deferential standard of review known as “Chevron Deference”.  Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984).  Marching to its own drummer, California does not follow Chevron; it follows Yamaha:

An agency interpretation of the meaning and legal effect of a statute is entitled to consideration and respect by the courts; however, unlike quasi-legislative regulations adopted by an agency to which the Legislature has confided the power to “make law,” and which, if authorized by the enabling legislation, bind this and other courts as firmly as statutes themselves, the binding power of an agency’s interpretation of a statute or regulation is contextual: Its power to persuade is both circumstantial and dependent on the presence or absence of factors that support the merit of the interpretation.

Yamaha Corp. of America v. State Bd. of Equalization, 19 Cal. 4th 1, 7 (1998).

Davis Test Only Smog Testing concerned a petition for writ of administrative mandate filed in the Superior Court seeking review of an agency’s decision to sanction a smog testing firm and its employee for passing an “unpassable vehicle”.  Citing Yamaha, the Court of Appeal held that the Superior Court had applied the proper standard of review to the agency’s interpretations of statutes and rules – the de novo or independent judgment standard.

If your recollection of administrative mandate is a bit hazy, see Giving A Hand To Mandamus.

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