On June 28, 2024, the Supreme Court issued a decision in Loper Bright Enterprises v. Raimondo that overturned the Chevron Doctrine, which requires courts to defer to agency interpretations of ambiguous statutes, thereby upending decades of judicial precedent and putting the future of countless regulations into question.

Background

The Supreme Court established the “Chevron Doctrine” in the 1984 case Chevron v. Natural Resources Defense Council. Under Chevron, if a statute was “silent or ambiguous with respect to a specific issue[,]” courts would defer to how government agencies interpret the statute. Chevron v. Natural Res. Def. Council, 467 U.S. 837, 843 (1984). So long as an agency offered “a permissible construction of the statute. . . a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency.” Id. at 843–844.

Chevron strongly favored the statutory interpretation of agencies by forcing parties challenging regulations to prove not just that their interpretation of the statute was better, but that the agency’s interpretation was actively unreasonable. In a survey of U.S. Courts of Appeals cases involving Chevron, 70.0% of cases made it to the second step of review, whether an agency’s interpretation is reasonable. Benjamin M. Barczewski, Cong. Rsch. Serv., LSB10976, Chevron Deference in Courts of Appeals 3 (2023)(citing Kent Barnett and Christopher J. Walker, Chevron in Circuit Courts, 116 Mi. L. Rev. 1, 33 (2017)). Of those cases that made it to the second step of review, the agency prevailed 93.8% of the time. Id.

Despite Chevron’s significance, and despite decades of precedent applying Chevron, the case has been a source of controversy. Supporters of Chevron argue that deference to administrative agencies is vital “because Congress, in enacting a law, can rarely if ever predict every situation that might arise in applying or enforcing it. So [Congress] must leave details for administrators to fill in.” Laurence H. Tribe and Dennis Aftergut, Opinion: If the Supreme Court kills the Chevron doctrine, corporations will have even more power, L.A. Times (May 2, 2023), available here. In contrast, critics of Chevron argue that “[a]gencies aren’t impartial participants in these cases but have an interest in interpreting the law in ways that expand their powers.” Richard A. Epstein and Mario Loyola, The Supreme Court’s Chance to Rein in the Regulatory State, Wall St. J. (Dec. 7, 2021), available here.

The Issue in Loper Bright Enterprises v. Raimondo

The underlying issue in Loper Bright focused on the National Marine Fisheries Service’s (NMFS) enforcement of the Magnusson-Stevens Fishery Conservation and Management Act (MSA), but Loper’s repercussions reach to virtually every corner of administrative law. Plaintiffs challenged the NMFS’s mandate that fishing vessels pay for observers to monitor fisheries’ sustainability. See Loper Bright Enterprises v. Raimondo, No. 22–451 at *12–13 (2024). Both the D.C. Circuit Court of Appeals and the First Circuit Court of Appeals affirmed the NMFS’s mandate based on an application of Chevron, which Plaintiffs believe to be improper. See id. at 5–6.

The Supreme Court’s Decision

Chief Justice Roberts drafted the majority opinion for the Court. In his opinion, Justice Roberts wrote that even though the Court was often deferential to regulatory agencies in the wake of the New Deal during the 1930s and 1940s, it was still “the traditional understanding that courts must ‘decide all relevant questions of law.’” Id. at *12–13 (quoting 5 U.S.C. § 706). He further wrote that the 1946 passage of the Administrative Procedure Act (APA) codified “the unremarkable yet elemental proposition. . . that courts decide legal questions by applying their own judgement.” Id. at *14.

Chief Justice Roberts, writing for a majority of six justices, determined that “Chevron defies 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.’” Id. at *21 (quoting 5 U.S.C. § 706). He goes on to clarify that while Congress can explicitly grant agencies discretionary authority, courts must “independently identify and respect such delegations of authority, police the outer statutory boundaries of those delegations, and ensure that agencies exercise their discretion consistent with the APA.” Id. at *26.

In summary, the Court determined that the level of deference Chevron required was incompatible with the APA. See id. at *18. Even stare decisis did not save Chevron because, in the eyes of the Court, Chevron was “fundamentally misguided” from the beginning. See id. at *29. Further the Court determined that over the past four decades Chevron became “an impediment, rather than an aid,” for judicial interpretation. See id. at 32 (quoting Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177 (1803)).

Conclusion

The effects of the overturning of Chevron will reverberate, for better or for worse, for decades. In the healthcare space alone, multiple regulations and policies that lower courts previously affirmed as being “permissible” interpretations of a statute under Chevron Step II may be reexamined to determine whether that interpretation is actually the best interpretation of the statute. While the Court stated that cases decided on Chevron would still constitute binding precedent, there remain strategies that experienced counsel can employ to hold CMS accountable to prove that those policies, too, constitute the best reading of the statute.

The Supreme Court’s full decision can be found here.