The Potential Jeopardy with the Demise of the Chevron Deference

Let’s start with some history because it’s the only way to make sense of why I’m writing about U.S. Supreme Court cases related to commercial fishing today. Congress makes bills. The president signs these bills into law. These laws often specify only broad goals and have inherent ambiguity. Executive agencies are then charged with developing operational regulations consistent with the statutes.

So, where does Chevron come in? In 1984, the Supreme Court decided Chevron v. Natural Resources Defense Council, Inc. It’s an important case. It has been cited nearly 20,000 times by courts and nearly 100,000 times in briefs. The central question in the suit was what the limitations of agency interpretation of statutes were. The case has been crucial to the efficient functioning of executive agencies for 40 years. The decision has also allowed Congress to draft intentionally broad legislation so details can be left to agencies. In short, the decision, based on resolving ambiguous legislation, has encouraged 40 years of more ambiguous legislation.

At issue is a deceptively simple question, and that is who gets to interpret the law when a statute is ambiguous? “Chevron deference” imposes a two-part test. First, a court must determine if a law is ambiguous. If it is unambiguous, then the court must follow it. If the law is ambiguous, then the court determines whether the agency interpretation is “reasonable” or “permissible.” Under Chevron, a court must accept a reasonable interpretation. But courts may reject unreasonable agency interpretation of ambiguous statutes.

The Chevron doctrine arose because judges seemed to be partisan in interpreting regulations. This resulted in widely disparate interpretations across various courts. Without Chevron, the courts are essentially the policymakers. One might legitimately ask: what’s the difference between a politically appointed judge making a policy decision and a politically appointed agency employee? The main difference is that administrative agencies use highly trained experts to interpret and carry out federal laws. A judge? Well, he or she is just a lawyer without billable hours.

In 2000, the Major Questions Doctrine, which I’ve reported on before, added an additional limitation to agency authority. The doctrine requires that courts presume that Congress does not delegate issues of major political or economic significance unless the delegation is explicit.

So, what happens if the current Supreme Court overturns Chevron?

First, there’s 40 years of ambiguous legislation that would be subject to litigation. A prime example is inpatient care. Nothing in healthcare is more ambiguous than the definition of an inpatient. The current operational definition belongs to the Centers for Medicare & Medicaid Services (CMS), not the Social Security Act, and everyone seems to hate it. Without Chevron, it’s subject to litigation.

Second, there may be wide disparity in District Court outcomes.

Consider a very real possibility that the Two-Midnight Rule could be accepted, rejected, or modified in different jurisdictions. Consider the possibility that every hospital that refunded money in a U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) or Department of Justice (DOJ) investigation now wants remediation of a potentially unnecessary refund.

Based on oral arguments, it seems that Chevron will be changed. We have the possibility that monolithic federal regulations could be reduced to regulatory rubble.