Supreme Court agrees to hear additional case which could erode or erase ‘deference’ to agencies like FDA and EPA
On October 13th, the Supreme Court agreed to hear a second case during its next term focused on a foundation of modern administrative law known as Chevron deference – the idea that regulators may reasonably determine how to apply statutory authority they have been granted in the absence of specific instruction from Congress. In granting certiorari in the case, the court has set the stage for a titanic argument over what level of deference a regulatory agency should be granted, with significant implications for how regulatory agencies like the EPA and FDA may be able to regulate in the future.
What is Chevron deference?
- Chevron deference, named for the titular case, Chevron U.S.A. Inc. v. Natural Resources Defense Council, has provided agency level decisions with a significant level of deference when those decisions have been challenged in court. The Chevron case itself stemmed from a Clean Air Act dispute involving the Environmental Protection Agency (EPA), which had promulgated a regulation that defined a “stationary source” for pollution. In the definition, the EPA allowed for a facility to construct new pollution-emitting structures, as long as the facility as a whole did not increase its pollution emissions. The Natural Resources Defense Council (NRDC) filed for review of this regulation, arguing that the EPA had overstepped its authority, and that the text of the Clean Air Act required a different standard for sources of pollution.
- The Supreme Court unanimously upheld the EPA’s regulation, explaining that the agency’s definition of a stationary source was a “permissible construction of the statute.” The Court then articulated arguably the most important passage for agency regulation in U.S. history, stating that when determining whether an agency has interpreted a statute correctly requires the court to answer two questions. The first question is whether Congress has directly spoken to the precise question at issue. If Congressional intent is clear, then the agency must “give effect to the unambiguously expressed intent of Congress.” If Congress has not directly addressed the precise question, then courts must move to the second question: if the statute is silent or ambiguous with respect to the specific issue, is the agency’s regulation a permissible construction of the statute?
- The Court’s decision led to a greater deference to agency interpretations of regulations in the ensuing years. In the same case, the Court also provided three reasons for additional deference to agency interpretations of ambiguous statutes. First, the Court held that when Congress explicitly leaves a gap for an agency to fill, there is an “express delegation” from Congress to the agency to interpret that provision. Second, the Court noted that agencies may have a greater institutional competency as compared to courts, especially regarding superior subject matter expertise. The third and final reason rested on a general concern about the separation of powers, and that judges should not be in the business of reconciling competing political interests.
- In the nearly four decades since Chevron was decided in 1984, the case has become one of the canons of administrative law and expanding agency power. Chevron itself has been cited countless times and stands as a monolith within the arsenal of each federal agency to assert why its interpretation of a regulation is proper. However, Chevron has begun to fall out of favor with the Supreme Court, with multiple conservative justices citing issues with the case. Justice Samuel Alito wrote that Chevron had become an “ increasingly maligned precedent” in 2018, and in 2022 Justice Neil Gorsuch argued that Chevron should be provided with a “ tombstone no one can miss.” The Supreme Court has also not cited Chevron since 2016, choosing to sidestep the issue or analyze agency interpretive authority without the Chevron framework.
Now the Supreme Court is set to hear two new cases focused on Chevron, with significant implications for regulatory agencies. Here’s what you need to know about the cases:
- In 2023, the Supreme Court granted review of two cases that directly attacked the Chevron framework, Loper Bright Enterprises v. Raimondo (Loper Bright) and Relentless, Inc. v. Department of Commerce (Relentless). Both cases covered Chevron as well as the Magnuson-Stevens Act, but were cut down to the bare question of whether Chevron should be overruled. Under the Magnuson-Stevens Act, fishing vessels may be required to carry federal observers to enforce fishing regulations. In certain circumstances, the Act goes further and requires that those vessels pay the salaries of those federal observes (but with caps of 2-3% of the value of the fish in the haul). In reality, the Magnuson-Stevens Act matters little on the course of either case, as both serve as chimeras to advance greater questions about Chevron to the Supreme Court.
- In Loper Bright, the plaintiffs argued to the lower courts that the vessel owners should not be forced to pay these salaries, and that Congress would not have granted such a broad power to the agency. The U.S. Circuit Court for the District of Columbia Circuit (D.C. Circuit) disagreed in a divided panel, finding that the Department of Commerce (Commerce) and the National Marine Fisheries Service (NMFS) had adopted a reasonable interpretation of the statute, and that the agency had properly engaged with the public during its required notice and comment period for the rule. In their petition for certiorari, the plaintiffs presented a question requesting the court to determine whether it should overrule Chevron or cut down the definition by clarifying that “statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency” (in addition to a question on the Magnuson-Stevens Act).
- In Relentless, the United States Court of Appeals for the First Circuit (First Circuit) met a similar question about the Magnuson-Stevens Act, coming to the same conclusion that the agency’s interpretation was a permissible exercise of agency authority. In the Relentless petition for certiorari, the plaintiffs asserted both a Magnuson-Stevens Act question as well as another question regarding whether the Court should similarly overrule Chevron, or at least cut down on the ability of agencies to give themselves “controversial powers” in the face of silence from Congress on a specific issue.
- The Court granted review of Loper Bright on May 1, 2023. The court did not set a date for argument in any of the normal release dates that it would until, in an unexpected move, granted the petition to review Relentless on October 13, 2023. In the docket entry for granting Relentless, the Court stated that the briefing schedule for the case be set so that it would allow the case to be argued in tandem with Loper Bright during the January 2024 argument session.
- The inclusion of Relentless may have a relatively simple explanation: the court wanted to include Justice Ketanji Brown Jackson in its decision. Justice Jackson was on the D.C. Circuit when Loper Bright was at the Circuit and took no part in the decisions on Loper Bright at the Supreme Court level. However, with the addition of Relentless, Justice Jackson is now able to consider the questions alongside the rest of the court, adding an important voice for an issue which could have significant implications for the regulatory state.
Potential implications from a pro-Chevron ruling
- A completely pro-Chevron opinion is unlikely from the Court. The conservative lean of the court, combined with at least two justices who have served up fiery critiques of the case in the past five years, greatly lessens the chances of Chevron emerging unscathed. However, it is possible that the Court could merely pare back the layers of Chevron deference, leaving the case wounded, but partially intact. This hybrid format would leave certain parts of Chevron intact but would most likely reduce the power of agencies to interpret their empowering statutes when Congress was silent on issues within those statutes. As the court has begun to provide less and less deference to agencies, this may mean that the Court would restrict the ability of agencies to regulate over larger swathes of industries or areas than they were traditionally able to.
Potential implications from an anti-Chevron ruling
- Based on the makeup of the court, it seems more likely that the court could reverse – in whole or in part – Chevron. The court may impute its own form of deference to agency interpretations in reversing Chevron, but any amount of deference would likely be over small, agency-specific issues that do not have a broad impact. Like in West Virginia v. EPA, the Court will likely summarily dispose of many of the issues surrounding agency deference, and hone in on an interpretation of the judicial canons that if Congress does not expressly give a power to an agency or leaves open room for interpretation, agencies will receive no deference from the courts when those regulations are challenged.
- The potential impacts of a reversal of Chevron and a reduced amount of agency deference are government wide, the true scope of which would likely not be understood for years after the ruling is released. Many agencies operate on a crop of archaic statutes that have not been significantly updated for decades and have been structured around the idea of agency deference. The EPA’s interpretations of the Clean Air and Clean Water Acts, each more than 50 years old, have faced constant scrutiny but have not received many significant updates via statute. The statutes contain broad pronouncements, and were meant to cover breadth, rather than depth in many instances, with agency regulations left to fill those gaps. In the absence of Chevron, the lack of a specific grant of powers to the EPA could then indicate that the agency does not have the power to regulate over that specific area, and that any programs in that area are illegal (even if they are decades old).
- Congress would also likely have a significant additional burden in a post-Chevron world. In an age of reduced agency deference, the onus would be on Congress to explain in each of its empowering statutes how it would delegate power down to a far more granular level than what is currently required. This could lead to bloated statutes, as legislation writers would need to not only account for what authority is required in the statute itself, but to also account for potential future and past regulatory authority for agencies. In emergencies, this could also limit the ability of regulators to move more quickly than legislators can author new, explicit statutory authority – a significant risk given the current scope and extent of Congressional gridlock on many issues.
- A post-Chevron world would also remove some of the regulatory “backstops” that the federal government has leaned on for decades. Congress currently relies on agencies to make a wide variety of scientifically intensive decisions that are not easily condensed into a single court filing. These may include emissions rules from the EPA, which are generally built from a wide set of data that must be slowly filtered down from hundreds of studies to a rule that may comparatively stretch a relatively “short” several hundred pages. In a Chevron-less world, agencies would likely need to be able to better summarize these rules and provide more cogent arguments beyond “the statute allows us to interpret this provision this way.” From an FDA perspective, it also makes it more difficult for the agency to regulate new types of products that are similar to other, existing products but for a key difference. Examples of how the FDA has stretched its existing regulations to oversee product safety and efficacy include stem cells, diagnostic products (such as Laboratory Developed Tests), and certain digital health products.
- Ultimately, this may remove a significant amount of the nuance in federal regulations that make them so effective. A post-Chevron world will likely include a reckoning by not only agencies, but Congress, the courts, and litigants over what, if any, deference to agencies is required for a functioning country.
What to look for in the future
- Arguments in the cases will be set at some point in January 2024. The Justices generally take these opportunities to poke and prod at both sides arguing a case, trying to find holes or inconsistencies within arguments. In addition, although Loper Bright has attracted significant amicus curiae briefing already, Relentless will likely also receive a significant amount of briefing (albeit with likely similar arguments) in the next two months. The Court may release its opinion in June, but with a wide range of cases across the court’s docket, their opinion releases could stretch into July 2024.