Dead at 40: Supreme Court Finally Ends Legal Deference to Regulators

Ending 40 years of judicial deference to administrative agencies’ interpretations of ambiguous statutes governing them, the Supreme Court of the United States finally pulled the plug on this experiment that, just five years earlier, it had placed on “life support.” Overruling Chevron v. Natural Resources Defense Council, the Court held that courts should no longer defer to an agency’s interpretation of an ambiguous statute. Instead, according to the Supreme Court in its recent opinion in Loper Bright Enterprises, Inc. v. Raimondo, judges must interpret statutes independently, as it is the province of the courts to determine the law.

The petitioners in Loper, small fishing companies, challenged a rule that required them to pay for monitors to accompany their fishing boats. Lower courts upheld the rule under the Chevron doctrine, which required a two-step framework: (1) if a court finds a statute ambiguous, then (2) the court must defer to the agency’s reasonable interpretation, rather than discerning for itself the correct interpretation of Congress’s language. Because it overruled Chevron, however, the Supreme Court sent the case back down to the lower courts to consider the rule without giving the agency any deference.

Penning the Supreme Court’s majority opinion, Chief Justice Roberts began with a constitutional and historical survey of the province of the judiciary. Article III of the U.S. Constitution assigns the power to adjudicate disputes to the federal judiciary, and the Framers structured the Constitution to allow judges to do so independent from political branches’ influence. The Supreme Court long ago declared that “[i]t is emphatically the province and duty of the judicial department to say what the law is.”

Chief Justice Roberts also reviewed the Administrative Procedure Act (“APA”), which prescribes procedures for agency action and delineates the basic contours of judicial review of such action, directing that “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.” But the APA prescribes no standard for courts to employ in answering those legal questions, even those involving ambiguous laws. Courts fulfill their role by ensuring that agencies engage in reasoned decision-making within the boundaries of their delegated authority.

Thus, the deference that Chevron required of courts reviewing agency action — that is, to defer to the agency if it offers a permissible construction of an ambiguous statute — cannot be squared with the APA. Chevron defied the command of the APA that “the reviewing court” — not the agency whose action it reviews — is to “decide all relevant questions of law [and] interpret . . . statutory provisions.” Instead, it forbade the court from exercising its independent judgment to determine what Congress’ language means by demanding deference to agency interpretations, even where they have been inconsistent, and even where judicial precedent holds that an ambiguous statute means something else.

In overruling Chevron, Loper marks the end of an era in administrative law. Now, the public, including healthcare providers, will enjoy a more level playing field when challenging government actions. Chevron had sometimes insulated agency rulemaking from judicial scrutiny, even where the agency relied on a new interpretation of an unchanged statute to implement policy that departed from the historical interpretation and application of the statute. Loper will make it more difficult for an agency to change its legal interpretations of statutes in response to changes in political leadership because the judiciary, not the agency, will determine what the statute means. At the same time, the decision gives some weight to the agencies’ statutory interpretations. While Loper clearly instructs courts to exercise independent judgment and not defer to agency rulemaking, the agency’s statutory interpretation may still be considered persuasive based on factors such as whether the agency’s interpretation was adopted contemporaneously with the statute’s enactment and the consistency of the agency’s interpretation over time.

Moreover, this shift in the balance of power between the judiciary and executive branches of government brought on by Loper could be even further accelerated by the Supreme Court’s opinion in Jarkesy, issued the day before Loper.

As discussed in AGG’s companion article, the Jarkesy Court held that, under the Seventh Amendment, defendants enjoy a right to a jury trial (as opposed to an administrative hearing) when the government seeks monetary relief, such as penalties.

For more information on this case and its implications, please contact AGG Healthcare Litigation attorneys Jason Bring, Brian Stimson, or Lisa Churvis.