American Honda Motor Co. v. Walther: A State Court Win Against Agency Deference

On October 29, 2020, the Arkansas Supreme Court issued an opinion limiting the power of administrative agencies to interpret statutory law in American Honda Motor Co. v. Walther. Following up on their April 2020 opinion in Myers v. Yamato Kogyo Co., the court rejected the state agency’s interpretation of “business income,” stating that “Simply put, we will determine what the statute means by construing it just as it reads, giving the words their ordinary and usually accepted meaning in common language.”

This decision is a welcomed one, as our state and federal governments have become overly deferential to administrative agencies to decide what the law says. Although American Honda is a tax case, the principle that the legislature makes the laws and the judiciary interprets those laws is important to rein in the scourge of overcriminalization. Agencies should not be able to manipulate statutory text to punish businesses or individuals for violating the agency’s extra-legal interpretations.

Agency deference is the same principle that was at issue in the WellCare case of Todd Farha. In that case, the court deferred to the agency’s interpretation of what the law required, resulting in unjust prosecutions and convictions. Thankfully, current Department of Justice policy bars such a prosecution from going forward today, but the discretion remains a policy matter that can be changed by future administrations without changing the underlying law.

A tip of the hat to the New Civil Liberties Alliance, which filed an amicus brief in the case.