Deference and the Rule of Lenity

In a recent American case, Carter v. Welles-Bowen Realty, Inc, the question arose whether the rule that ambiguous penal statutes are to be construed in favour of defendants (the "rule of lenity") could 'trump' the rule that courts are to defer to administrative interpretations of ambiguous statutes (Chevron deference).

At issue was a regulatory provision preventing the payment by title agencies of referral fees to real estate agents. Some entities are exempt. According to the plaintiffs in this case, the defendants were not exempt, because they failed to comply with a policy statement issued by the Department of Housing and Urban Development. Failure could have both civil and criminal consequences.

Judge Sutton, in a concurring opinion, considered how the rule of lenity interacted with Chevron deference. Judge Sutton actually wrote the opinion of the Court of Appeals for the Sixth Circuit as well, but was able to deal briefly and narrowly with the deference argument; he wrote a concurring opinion due to the importance of the issue.

Judge Sutton concluded that the rule of lenity should trump Chevron. First, it would be inappropriate to defer to prosecutors about the interpretation of criminal statutes. I recognize the power of this argument in the purely criminal context, but I doubt it applies with equal force to regulatory matters. Administrative decision-makers are experts in applying their constitutive statutes to complex areas of regulation, a task entrusted to them by the legislature. Many regulatory statutes create hybrid offences, impose stringent conditions, or allow for large penalties. Categorizing some or all of these as 'criminal' and not requiring a reviewing court to accord deference has the potential to permit more intrusive judicial review than would ordinarily be expected.

Second:

If an interpretive principle resolves a statutory doubt in one direction, an agency may not reasonably resolve it in the opposite direction....But the broader point, the critical one, transcends debates about the mechanics of Chevron: Rules of interpretation bind all interpreters, administrative agencies included. That means an agency, no less than a court, must interpret a doubtful criminal statute in favor of the defendant (slip op., pp. 13-14).

This point would doubtless find favour with current Canadian judges. The prevailing view here is that reviewing courts must apply the principles of statutory interpretation in order to set the range of reasonable outcomes to which an administrative decision-maker can come.

One strange result is that although deference is paid to administrative decision-makers' application of common-law concepts (such as estoppel: Nor-Man) none is paid to their application of the principles of statutory interpretation (such as the presumption against tautology: Mowat). Yet if an administrative decision-maker is expert in applying a common-law concept such as estoppel in a complex area of regulation, surely it is as expert in applying interpretive principles, such as the rule of lenity in the context of a particular area of regulation.

Third, Judge Sutton considers at great length how to harmonize the policies underpinning Chevron deference and the rule of lenity. I think this is actually relatively simple. As long as the administrative decision-maker has given a reasoned explanation of why a general principle of the common law or of statutory interpretation does not apply with full force or at all in a particular area, the reviewing court should not intervene. An administrative decision-maker can hardly ignore the consequences of, say, imposing criminal liability in respect of an ambiguous provision, but if it can offer a cogent explanation for its position intervention would be inappropriate.

Fourth, Judge Sutton notes that it is often difficult to know whether deference will be accorded by a reviewing court and, if so, how much (Americans have been wrestling with Chevron Step Zero and Skidmore deference since the Mead decision). But this objection, I fear, proves too much. If it is a forceful objection, it is forceful regardless of whether the conduct at issue is 'criminal'. Not knowing whether a power plant has to have a particular technology is just as important to its owners, employees and shareholders as the scope of a 'criminal' provision is to real estate agents. That is not to diminish the general force of the criticism, just to note that it does not provide a unique argument for why the rule of lenity should trump the rules of deference.