End of the Chevron Doctrine: Long-Needed Correction or Unmitigated Disaster?

On June 2024, the US Supreme Court overturned a 1984 ruling referred to as the Chevron Doctrine, which instructed lower courts to defer to federal agencies when federal statutes were either silent or ambiguous on the issue in controversy.  Deference was encouraged even if the lower court judge thought that the agency was wrong. 

The recent decision in Loper Bright Enterprises v Raimondo reviewed the validity of the National Marine Fisheries Service’s imposition of a requirement that fishing vessels carry observers and require the vessels’ owners to pay the costs incurred for engaging the observers, which were estimated at $710 per day.  The statute relied upon by the agency created a discretionary authority to require fishing vessels to carry observers to study the overfishing problem.  There was no specific legislative authority to require fishing vessels to cover that cost. 

In the 6-3 decision to strike down the regulation, Chief Justice John Roberts rejected the Chevron Doctrine, calling it “fundamentally misguided.”  He explained that the Doctrine was inconsistent with the federal Administrative Procedure Act (APA), which establishes procedures federal agencies must follow (e.g., in promulgating regulations) as well as instructions for courts to review actions by those agencies.  Roberts noted that the APA directs courts to “decide legal questions by applying their own judgment.”  He said that “agency interpretations of statutes – like agency interpretations of the Constitution – are not entitled to deference”, concluding that it is “the responsibility of the court to decide whether the law means what the agency says.”    Roberts added that even if deference is no longer required, the courts can still consider agency interpretation of an ambiguous statute. 

Justice Thomas concurred with the majority opinion, adding that the Chevron Doctrine was inconsistent with the Constitution’s division of power among the three branches of government.  The Doctrine required judges to give up their constitutional authority to exercise their independent judgement, and allowed the executive branch to “exercise powers not given to it.” 

Justice Elena Kagan dissented predicting that this decision would “cause a massive shock to the legal system.”  This opinion was joined by Justices Sotomayor and Jackson.  The dissent expresses concern over danger of ignoring agency expertise on complex technical and scientific matters.  An individual judge with no experience on the matter benefits from agency interpretation.  Further, if the same issue is considered by multiple courts in the US, there will likely be conflicting decisions, which will create confusion.  The dissenters expressed concern that the overturning of Chevron would call into question many decisions that had relied upon it, and that long-approved agency actions and regulations would be challenged once again to test whether a court’s independent judgement would invalidate agency action.  Kagan called the majority opinion a “judicial power grab” that would open the floodgates of litigation. 

Ironically, the agency action upheld in the 1984 Chevron case had been that of Justice Gorsuch’s mother, Anne Gorsuch, when she headed up the Environmental Protection Administration. 

Commentators observe that recent presidential administrations have had to rely on federal regulation to implement policy change, because close divisions in Congress have made legislation infeasible.  Loss of the Chevron Doctrine may make aggressive executive regulation infeasible as well.  The Biden Administration, for example, has relied on issuing new regulations on emissions from power plants and vehicle tailpipes, as well as student loan forgiveness, overtime pay and affordable housing. 

Other legal experts argue that federal agencies rarely promulgate regulations with as little statutory authority or support as prompted the decision in Loper Bright.  Chief Justice Roberts said at oral argument that the Supreme Court had not relied on the Chevron Doctrine for fourteen years.  Of course, that does not mean the lower court decisions ignored Chevron.  One source said that Chevron had been cited 18,000 times.  The Court noted that Congress often calls on federal agencies to fill in the details of a broad statutory schemes, in which case Loper Bright will support “reasoned decision making.” 

Within the health care industry, there is concern that the Food and Drug Administration’s process for drug approval will be subject to challenge, since the relevant statutes can be very vague.  For example, new drug approvals are supposed to be based on “substantial evidence” grounded in “adequate and well-controlled investigations”.  Medicare and Medicaid regulations could also be subject to challenge, since CMS regularly presents novel interpretations of the law to establish new managed care standards, fine-tune Medicare drug negotiations and craft the Medicaid drug rebate program. 

On the very day the Loper Bright decision was published, a complaint was filed in the federal District Court for the District of Columbia, by Hackensack Meridian Health, questioning CMS’s formula for calculating enhanced rates for disproportionate share hospitals caring for a high volume of low-income patients.  The Plaintiff asked the court to weigh in on Congress’s statutory intent, hoping for a departure from CMS’s interpretation of the relevant Medicare statute.  It seems that the effect of Loper Bright is soon to be felt.