[J-12-2020] [MO: Dougherty, J.]
IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE DISTRICT
MICHAEL WILLIAM WOODFORD AND : No. 65 MAP 2019
OPTIONS INSURANCE AGENCY, :
: Appeal from the Order of the
Appellants : Commonwealth Court at No. 1005
: CD 2018 dated January 4, 2019,
: Reconsideration Denied February
v. : 15, 2019, Affirming in Part and
: Reversing in Part the Decision of the
: PA Insurance Department at No.
COMMONWEALTH OF PENNSYLVANIA : SC16-11-001 dated June 21, 2018
INSURANCE DEPARTMENT, :
: ARGUED: March 11, 2020
Appellee :
CONCURRING OPINION
JUSTICE DONOHUE DECIDED: December 22, 2020
A section of the Insurance Department Act (“Act”), 40 P.S. §§ 1-326.7,1 permits
insurance producers like Appellants to charge a fee in addition to a commission “for the
sale, solicitation or negotiation of a contract of insurance for commercial business.” 40
P.S. § 310.74(a).2 I concur in the result reached by the Majority and join Justice Wecht’s
concurring opinion that the plain text unambiguously precludes Appellants from charging
a fee to private consumers. I write separately, however, because neither the Majority nor
Justice Wecht address the first question on which we granted review, namely, whether
1 40 P.S. §§ 1-326.7, Act of May 17, 1921, P.L. 789.
2 This part of the Act was added by Act of December 6, 2002, P.L. 1183, and is codified
as Section 674-A within the Act.
the Commonwealth Court erred by deferring to the agency’s legal analysis of the meaning
of 40 P.S. § 310.74(a).3
We granted review to address whether the Commonwealth Court erred “when it
afforded deference to the Insurance Department's interpretation of an ambiguous statute
3 The Majority contends that this discussion is unwarranted and “decline[s] to issue an
advisory opinion on a non-dispositive question.” Majority Op. at 26 n.17. Respectfully,
the deference issue is non-dispositive only because the Majority has assiduously avoided
discussing the process by which the Commonwealth Court analyzed the statutory
language.
The Majority finds support in GE Energy Power Conversion France SAS, Corp. v.
Outokumpu Stainless Steel USA, LLC, __ U.S. __, 140 S.Ct. 1637, 1647 (2020) (citing
Edelman v. Lynchburg Coll., 535 U.S. 106, 114-15 n.8 (2002)). According to the Majority,
these “precedents make clear” that discussing deference is unnecessary. Id.
I respectfully disagree. In the GE Energy Power case, the Court examined the plain
language meaning of a treaty, and observed that “We have never provided a full
explanation of the basis for our practice of giving weight to the Executive's interpretation
of a treaty.” 140 S. Ct. at 1647. Here, we are not dealing with deference to the executive
branch. And in Edelman, the United States Supreme Court granted review to determine
whether an agency’s interpretation of a statute contradicted the plain text. Notably, the
intermediate appellate court, unlike the Commonwealth Court here, properly examined
the plain language for itself. See Edelman v. Lynchburg Coll., 228 F.3d 503, 508 (4th Cir.
2000), rev'd, 535 U.S. 106 (2002) (“Having concluded that application of the … regulation
in this case contravenes Congress's intent, as expressed through the plain language of
the statute, we need not proceed further. Step two of the Chevron analysis does not
come into play, and we do not apply the … regulation.”). The High Court disagreed with
the Court of Appeals regarding the plain language analysis, and the Edelman footnote
cited by the Majority was appended to its observation that the agency’s position was one
“we would adopt even if there were no formal rule and we were interpreting the statute
from scratch. Because we so clearly agree with the [agency], there is no occasion to
defer and no point in asking what kind of deference, or how much.” Edelman v. Lynchburg
Coll., 535 U.S. at 114 (2002) (footnote omitted).
Edelman therefore offers no support for the Majority’s avoiding the issue on which we
granted review. Unlike the Commonwealth Court here, the intermediate appellate court
in Edelman properly analyzed the plain language before deference was even considered.
The language cited by the Majority simply reflected that any deference owed to the
underlying agency view became irrelevant in light of its plain language analysis. In
contrast, we accepted review to ask whether the Commonwealth Court erred in
deferring to the agency.
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that was penal in nature instead of strictly construing the statute against the Insurance
Department, as required by Pennsylvania law?” Woodford v. Pennsylvania Ins. Dep't,
217 A.3d 192 (Pa. 2019). In lieu of addressing whether the panel appropriately deferred
to the agency’s interpretation, the Majority leaves for another day whether a court may
afford “special deference,” Majority Op. at 26, to a non-judicial body’s interpretation of a
statute.
In my view, the primary reason for this Court’s grant of discretionary review was to
address the Commonwealth Court’s mode of analysis, which involves a broader question
of law that extends beyond the instant dispute of what the plain text of 40 P.S. § 310.74(a)
means. While the statutory issue of first impression we have resolved is among the
reasons warranting discretionary review, absent the additional layer of whether the
Commonwealth Court erred in its deferential approach I question whether our intervention
would otherwise have been warranted. As to the broader issue, the Commonwealth
Court, when faced with whether and when deference to an agency interpretation is
appropriate in a future case, will surely continue to follow its law on that point. I would
address that issue as contemplated by our allocatur grant and conclude that the
Commonwealth Court’s methodology is incompatible with foundational Pennsylvania law
on determining the meaning of an enactment of our General Assembly.
I.
Reviewing courts cannot defer to an agency’s view that a statute is ambiguous
To begin, the Commonwealth Court’s error goes beyond the question of whether
a court must afford “special deference” to an agency’s view of what a statute means as a
matter of law. Here, the Commonwealth Court deferred to the agency’s determination
that the statute was ambiguous.
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The notion of “special deference” is taken from the United States Supreme Court’s
decision in Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984).
The Chevron Court established a two-step approach when courts review statutory
interpretations conducted by federal agencies.
First, always, is the question whether Congress has directly
spoken to the precise question at issue. If the intent of
Congress is clear, that is the end of the matter; for the court,
as well as the agency, must give effect to the unambiguously
expressed intent of Congress. If, however, the court
determines Congress has not directly addressed the precise
question at issue, the court does not simply impose its own
construction on the statute, as would be necessary in the
absence of an administrative interpretation. Rather, if the
statute is silent or ambiguous with respect to the specific
issue, the question for the court is whether the agency's
answer is based on a permissible construction of the statute.
Id. at 842–43 (footnotes omitted).
Whether deference to an administrative agency is warranted when a statute is
ambiguous has generated significant disagreement amongst members of the Court, as
later discussed. Notwithstanding, an analysis of the Commonwealth Court’s opinion
illustrates that its approach in these matters is even more deferential than Chevron
because it merged the two steps. That is, the panel did not first examine the statutory
language to determine if there is an actual ambiguity. Instead, the court deferred to the
agency’s view that an ambiguity existed.4
4 I therefore respectfully disagree with Justice Wecht’s conclusion that the
Commonwealth Court’s deference to the Department is “entirely moot.” Concurring Op.
at 5. The Commonwealth Court did not analyze whether an ambiguity existed and, absent
correction from this Court, will continue to apply a standard of review that I submit is
contrary to law.
[J-12-2020] [MO: Dougherty, J.] - 4
As indicated by the Commonwealth Court’s opinion, individuals within the agency
initially found that the statutory language unambiguously precluded producers like
appellant from charging fees to private consumers. “The Department takes the position
that the specific authorization of fees for commercial business implicitly but clearly
precludes such fees for consumers.” Woodford, 201 A.3d at 904. However, the
Commissioner, the head of the Department, disagreed with the Department’s position.
Id. The Commissioner reached this result by applying statutory construction principles.
“Applying rules of statutory construction, the Commissioner determined the Act did not
clearly prohibit charging fees to consumers in addition to commissions[.]” Id. at 904.
Notwithstanding, the Commissioner ultimately opted to resolve this conflict by deferring
to the views of the agency staff that the statute was unambiguous. Id. (explaining that
the Commissioner “accord[ed] deference to the Department's construction of the Act”).
The Commonwealth Court, in turn, deferred to that view as a reasonable interpretation
of the statutory text, in part because the Commissioner declined to penalize Appellants
for their past practices. “Instead, the Commissioner directed only that [Appellants] cease
imposing such fees in the future. This limited directive was reasonable in addressing an
issue of first impression. …” Id. at 904-05.
A court cannot defer to an agency’s view that a statute is ambiguous, and by doing
so it abdicates the judiciary’s duty to say what the law is. Obviously, an agency could
circumvent otherwise clear statutory language by simply declaring that an ambiguity
existed, expecting a reviewing court to reflexively adopt the same view. It is for the court,
and not for the agency, to decide in the first instance if the relevant language is actually
ambiguous. The Commonwealth Court’s failure to examine the language contradicted
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the teaching of Chevron itself, as the panel did not engage in any analysis whatsoever to
determine whether the term “commercial business” was ambiguous. What the
Commonwealth Court found was that the term was ambiguous because the agency
thought it was ambiguous (despite the internal division within the agency on that point).
No such deference is permitted by Chevron.
The judiciary is the final authority on issues of statutory
construction and must reject administrative constructions
which are contrary to clear congressional intent. If a court,
employing traditional tools of statutory construction,
ascertains that Congress had an intention on the precise
question at issue, that intention is the law and must be given
effect.
Chevron, 467 U.S. at 843 n.9.
The Commonwealth Court could not accept the agency’s interpretation, no matter
how reasonable, if that interpretation conflicted with clear legislative intent. In fact, this
principle is not limited to agency interpretations of a statute but extends to an agency’s
reading of its own regulations. See Kisor v. Wilkie, ___ U.S. ___, 139 S. Ct. 2400, 2415
(2019) (plurality) (“But if the law gives an answer—if there is only one reasonable
construction of a regulation—then a court has no business deferring to any other reading,
no matter how much the agency insists it would make more sense.”). Then, and only
then, does a court proceed to determine whether the agency’s determination is worthy of
deference. Id. (“If genuine ambiguity remains, moreover, the agency’s reading must
still be ‘reasonable’.”) (emphasis added). It is therefore clear that the Commonwealth
Court erred by failing to address the question of whether an ambiguity actually existed.
See also Harmon v. Unemployment Comp. Bd. of Review, 207 A.3d 292 (Pa. 2019) (first
determining that the statute “is thus obviously susceptible to two or more reasonable
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interpretations and as such it is ambiguous” before discussing agency deference)
(quotation marks and citation omitted).
The only discernible justification for applying a broad level of deference comes
from the Commonwealth Court’s recitation of the standard of review. The panel stated,
“In addition, in a case involving a complex statutory scheme, courts exercise greater
caution in substituting their discretion for the expertise of the Commissioner, acting as the
agency head of the Department. Statutory and regulatory interpretations of a regulatory
agency are accorded great deference.” Id. at 902 n.3 (citing Grimaud v. Pa. Ins. Dep't,
995 A.2d 391 (Pa. Commw. 2010)). In Grimaud, the Commonwealth Court similarly
observed in a footnote that “because this case involves a statutory scheme that is
complex, we must exercise greater caution in substituting our discretion for the expertise
of the Commissioner, acting as the agency head of the Pennsylvania Insurance
Department. Grimaud, 995 A.2d at 400 n.8 (citing Graduate Health Sys., Inc. v.
Pennsylvania Ins. Dep't, 674 A.2d 367, 370 (Pa. Commw. 1996)). These cited cases
make clear that the Commonwealth Court believes that it should generally defer to an
agency when the statutory scheme is complex, without accounting for the various
permutations in which said deference can occur. A couple of examples will suffice. For
instance, the Graduate Health case cited Carlson Mining Company v. Department of
Environmental Resources, 639 A.2d 1332 (Pa. Commw. 1994), for the proposition that
“[s]tatutory and regulatory interpretations of a regulatory agency should be accorded great
deference.” Graduate Health also cited Nationwide Mutual Insurance Co. v. Foster, 599
A.2d 267 (Pa. Commw. 1991), for the point of law that “[w]here the statutory scheme is
complex, the reviewing court must be even more cautious in substituting its discretion for
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the expertise of an administrative agency.” Foster, meanwhile, said that “[a]n agency's
interpretation is entitled to great judicial deference. Also, where the statutory scheme is
complex a reviewing court must be even more cautious in substituting its discretion for
the expertise of the administrative agency.” 599 A.2d at 270 (citing SmithKline Beckman
Corporation v. Commonwealth, 482 A.2d 1344, 1353 (Pa. Commw. 1984)). These cases
suggest that a complex statutory scheme requires deference beyond “great judicial
deference.”
Moreover, an agency’s interpretation of a statute is quite different from its
interpretation of its regulations.5 “Issues surrounding judicial deference to agency
interpretations of their own regulations are distinct from those raised in connection with
judicial deference to agency interpretations of statutes enacted by Congress.” Kisor v.
Wilkie, ___ U.S. ___, 139 S. Ct. 2400, 2425 (2019) (Roberts, C.J., concurring in part).
The Commonwealth Court’s cited standard of review suggests that judicial deference
takes only one guise, at least when the statutory scheme is complex.
Its failure to independently examine the text for any ambiguity is all the more
problematic given that the Commonwealth Court’s basis for deferring to the agency is that
the Commissioner deserves deference because she is acting as the head of the agency
and applying her expertise. Yet we know that the Commissioner here disagreed with
agency staff, as she thought that the statutory language was ambiguous. It is unclear
5 These issues can be further subdivided. For example, the standards applied for
reviewing interpretations of agency material depends on the precise material at issue.
See Harmon v. Unemployment Comp. Bd. of Review, 207 A.3d 292, 299 (Pa. 2019)
(explaining that there are “two types of agency interpretations which are accorded
different levels of deference,” i.e. published rules and regulations versus “guidance
documents” like manuals, policy statements, and advisories). The Commonwealth
Court’s cited standard of review glosses over these issues.
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which view actually represents the Department’s “official” position, as the Commissioner
ultimately adopted the very views that her expertise should have overruled.
Taken together, the Commonwealth Court erroneously cited a broad standard of
review that required deference to the agency’s conclusion on ambiguity and nebulously
suggests that the court was permitted, or even required, to simply accept an agency’s
view without any legal analysis of its own regardless of the particular issue involved.
II.
An agency’s interpretation of an ambiguous statute is limited to persuasive value
The foregoing analysis addresses the Commonwealth Court’s error in merging
Chevron’s first two steps. As to the second step, in my view, the Commonwealth Court’s
decision to defer, as a matter of law, to the Commissioner’s interpretation of the statute
is unsupported by Pennsylvania law. And while the Majority declines to address whether
we must defer to the agency’s view, our grant of allowance of appeal anticipated a general
consideration of the Commonwealth Court’s announced standard of review.
This issue has generated significant disagreement amongst members of the Court,
as demonstrated by our recent decision in Harmon v. Unemployment Comp. Bd. of
Review, 207 A.3d 292 (Pa. 2019). See id. at 300 (observing that precedent permits
granting “some measure of value to [agency] interpretations under certain
circumstances”) (Dougherty, J., joined by Baer and Todd, JJ.); id. at 308 (Saylor, C.J.,
concurring) (“A pervading question in this field, of course, is how much deference is due
in any given context.”); id. at 310 (Donohue, J., concurring) (“I reject any rule of
construction that would require courts to abdicate our judicial role to administrative
agencies.”); id. (Wecht, J., concurring) (“I do not agree that reviewing courts should afford
what often amounts to unqualified deference—i.e., Chevron deference—to an executive-
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branch agency's interpretation of an ambiguous statute.”) (footnote omitted); id. at 313
(Mundy, J., dissenting) (“As noted by Chief Justice Saylor in his concurring opinion, some
deference is due[.]”). See also Com., Dep't of Educ. v. Empowerment Bd. of Control of
Chester-Upland Sch. Dist., 938 A.2d 1000, 1014 (Pa. 2007) (Baer, J., concurring) (“While
I agree that the Secretary enjoys a great deal of latitude in administering the Code, I do
not believe that . . . administrative interpretations forwarded for the first time in connection
with adversarial litigation, are entitled to any more weight than any other litigant's
argument[.]”)
When a reviewing court finds that a statute is ambiguous, in my view an agency’s
interpretation is entitled to deference only in the sense of a recognition that the agency’s
view should be considered for its persuasive value. This position is distinct from deferring
to the agency’s view as a matter of law. Kisor, 139 S. Ct. at 2424 (“[T]here is a difference
between holding that a court ought to be persuaded by an agency's interpretation and
holding that it should defer to that interpretation under certain conditions.”) (Roberts, C.J.,
concurring in part). Pennsylvania law materially differs from federal law on this point.
While we both seek to ascertain legislative intent and use various maxims and canons of
statutory construction to do so, our General Assembly has specifically addressed, through
its enactment of the Statutory Construction Act, 1 Pa.C.S. §§ 1501-1991, the impact of
administrative interpretations when reviewing ambiguous statutes. “When the words of
the statute are not explicit, the intention of the General Assembly may be ascertained by
considering, among other matters . . . . [l]egislative and administrative
interpretations of such statute.” 1 Pa.C.S. § 1921(c)(8) (emphases added). This point
is significant insofar as the Chevron doctrine is
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rooted in a background presumption of congressional intent:
namely, “that Congress, when it left ambiguity in a statute”
administered by an agency, “understood that the ambiguity
would be resolved, first and foremost, by the agency, and
desired the agency (rather than the courts) to possess
whatever degree of discretion the ambiguity allows.” Smiley v.
Citibank (South Dakota), N. A., 517 U.S. 735, 740–741, 116
S.Ct. 1730, 135 L.Ed.2d 25 (1996). Chevron thus provides a
stable background rule against which Congress can legislate:
Statutory ambiguities will be resolved, within the bounds of
reasonable interpretation, not by the courts but by the
administering agency. See Iowa Utilities Bd., 525 U.S., at 397,
119 S.Ct. 721. Congress knows to speak in plain terms when
it wishes to circumscribe, and in capacious terms when it
wishes to enlarge, agency discretion.
City of Arlington, Tex. v. F.C.C., 569 U.S. 290, 296 (2013). The existence of Section
1921(c)(8) of the Statutory Construction Act establishes that our General Assembly
legislates against a different backdrop. If a court finds that a statute is ambiguous, the
General Assembly has dictated that the ambiguity will be resolved by the courts, with the
agency’s interpretation as one of eight non-exclusive factors to be considered. Thus, our
General Assembly, unlike Congress, has spoken in plain terms. See Nicole B. v. Sch.
Dist. of Philadelphia, ___ A.3d ___, 2020 WL 5542091, at *5 (Pa. Sept. 16, 2020) (“Our
General Assembly, unlike our federal counterpart, has dictated explicit considerations via
the Act regarding how to discern its statutory intent.”). As I have previously stated, “the
Act conspicuously and correctly does not instruct courts to defer to agency interpretations
(or to any other factor listed in section 1921(c)) when engaging in an interpretative
analysis.” Harmon, 207 A.3d at 309 (Donohue, J., concurring). We cannot give “special
deference” to an agency’s interpretation of an ambiguous statute, and suggestions to the
contrary rest on grander statements, like those relied upon by the Commonwealth Court
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in this case, than our law actually permits. Per the Statutory Construction Act, we may
consider, but not defer to, agency interpretations of statutes.
Nothing in our Administrative Agency Law suggests that the role of statutory
construction was otherwise delegated to agencies, assuming arguendo that the judicial
power to say what the law is could be transferred. The subchapter dictating judicial review
of Commonwealth agency decisions states:
The court shall hear the appeal without a jury on the record
certified by the Commonwealth agency. After hearing, the
court shall affirm the adjudication unless it shall find that the
adjudication is in violation of the constitutional rights of the
appellant, or is not in accordance with law, or that the
provisions of Subchapter A of Chapter 5 (relating to practice
and procedure of Commonwealth agencies) have been
violated in the proceedings before the agency, or that any
finding of fact made by the agency and necessary to support
its adjudication is not supported by substantial evidence. If the
adjudication is not affirmed, the court may enter any order
authorized by 42 Pa.C.S. § 706 (relating to disposition of
appeals).
2 Pa.C.S. § 704 (emphasis added). The “in accordance with law” language naturally
encompasses an appellate court applying the Statutory Construction Act, which, in turn,
explicitly states that the agency’s interpretation is entitled only to consideration.
Relatedly, Chevron itself did not cite the federal Administrative Procedures Act
(“APA”), which instructs a court as follows: “To the extent necessary to decision and when
presented, the reviewing court shall decide all relevant questions of law, interpret
constitutional and statutory provisions, and determine the meaning or applicability of the
terms of an agency action.” 5 U.S.C.A. § 706. There is a question of “whether Chevron
was faithful to the text of the [APA], which it did not even bother to cite.” United States v.
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Mead Corp., 533 U.S. 218, 241 (2001) (Scalia, J., dissenting).6 See also Baldwin v.
United States, ___ U.S. ___, 140 S. Ct. 690, 691 (2020) (Thomas, J., dissenting from
denial of writ of certiorari) (“[Chevron] rests on the fiction that silent or ambiguous statutes
are an implicit delegation from Congress to agencies. Chevron is in serious tension with
the Constitution, the APA, and over 100 years of judicial decisions.”) (citation omitted).
But we need not address those criticisms of Chevron; we need only recognize that the
Statutory Construction Act provides clear direction from the General Assembly that the
judicial branch is responsible for ascertaining the meaning of an ambiguous statute, with
an agency’s interpretation merely one of many factors warranting consideration. Our
courts cannot recognize a Chevron-like “implicit delegation” to agencies to determine the
meaning of an ambiguous statute without ignoring the Statutory Construction Act.
Conclusion
Absent from the Commonwealth Court’s opinion is any statutory analysis of the
phrase “commercial business” in Section 674-A of the Act. We should take this
opportunity to correct the Commonwealth Court’s error and hold that the nebulous
standard of review employed in this case was contrary to our judicial duty to say what the
law is. While I adhere to my view that a court can consider, but not defer to, an agency’s
interpretation of an ambiguous statute, there should be no doubt that a court must first
determine for itself whether an ambiguity actually exists.
6 Justice Scalia noted that it “could be argued . . . that the legal presumption identified by
Chevron left as the only ‘questio[n] of law’ whether the agency's interpretation had gone
beyond the scope of discretion that the statutory ambiguity conferred.” United States v.
Mead Corp., 533 U.S. 218, 241 n.2 (2001) (Scalia, J. dissenting).
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