In two upcoming decisions, the Supreme Court could strike a blow against excessive deference to regulatory agencies.
In two upcoming decisions, the Supreme Court could strike a blow against excessive deference to regulatory agencies.
I n the coming months, the Supreme Court will issue decisions in two cases that could begin to shift the balance of power away from the so-called administrative state and back to the judicial branch. Two cases currently pending before the Court — Becerra v. Empire Health Foundation and American Hospital Association v. Becerra — present important questions about judicial deference to federal administrative agencies.
As a result of the Court’s decision in Chevron v. NRDC (1984), courts ordinarily “defer” to an administrative agency’s interpretation of an ambiguous federal law, so long as that interpretation is reasonable. Conservatives have criticized this regime of deference, arguing that it violates the separation of powers, erodes the rule of law, and encourages the worst excesses of the regulatory state.
To be sure, Chevron has been around for a while, and ending the practice of deferring to administrative agencies’ interpretations of ambiguous laws would be a seismic shift. Many judges have grown used to “Chevron deference” over the years, because deferring to the government’s interpretation of a complex law is easier than weeding through the law oneself to ascertain its true meaning. But as Professor Philip Hamburger has pointed out, this practice confers a systemic advantage upon the federal government when private citizens challenge regulatory action.
Now, thanks to the confirmation of Justice Amy Coney Barrett in 2020, the Court may finally be poised to do something about the practice. Empire Health and American Hospital Association may not overturn Chevron outright, but they will likely at least begin the process of chipping away at it.
Empire Health concerns the U.S. Department of Health and Human Services’ (HHS) interpretation of the Medicare Act — in particular, the law’s formula for calculating payments to certain hospitals that serve a high percentage of low-income patients. Meanwhile, a key issue in American Hospital Association is whether HHS’ interpretation of the Medicare statute’s instructions for certain hospital reimbursements is entitled to Chevron deference.
The federal statutory provisions underlying these cases are complex. At oral argument in Empire Health, Justice Stephen Breyer — one of the nation’s foremost scholars of administrative law prior to taking the bench — admitted that even he was “baffled” by the Medicare provision at issue in the case. Nevertheless, it is a bedrock principle of American law that “it is emphatically the province and duty of the judicial department to say what the law is.”
At oral argument in Empire Health, Justice Neil Gorsuch floated the idea of according less deference to the government’s interpretation when that interpretation favors the government’s “pecuniary” interest — its financial bottom line. With respect to the Medicare statute, the government can save some money if it interprets the law to mean that it does not need to spend as much on reimbursements. Perhaps, Justice Gorsuch seemed to be suggesting, that is an inappropriate situation in which to defer to the government’s interpretation. Damonta Morgan analyzed the upshot of this inquiry and recently wrote that “importing a pecuniary interest inquiry — even a narrow one — is likely to have qualitatively significant effects on the rates at which courts apply (and grant) Chevron deference. Perhaps unsurprisingly, the addition of such an inquiry would go far in serving the goals of conservative critiques of Chevron.”
Other possibilities include tinkering with Chevron’s applicability in cases dealing with congressional appropriations, summarizing and clarifying the current limits on when courts should apply Chevron (sometimes called “Chevron Step Zero”), or simply setting up Chevron’s overruling by declaring it a mere canon of statutory interpretation (which would ordinarily be entitled to less stare decisis weight than would an ordinary decision of the Court). The Court could also, of course, just go ahead and overturn Chevron altogether.
But whether they limit Chevron deference or get rid of it entirely, the Court’s decisions in Empire Health and American Hospital Association will likely mark a break from the deferential approach that has dominated administrative law for nearly 40 years. Though we cannot yet know exactly what the Court will do in these cases, a new era of administrative law is undoubtedly upon us. And for those concerned about the expansive power of the administrative state, that’s terrific news.