SCOTUS Puts ‘Tombstone’ on Chevron Doctrine, Upending How Federal Agencies Work

A Supreme Court decision released Friday morning could change how federal agencies operate, giving nursing home operators and other businesses a basis to challenge agency decisions.

The court issued its ruling by a majority vote of 6-3. Loper Bright Enterprises v. Raimondo overturn the Chevron Doctrine, which stated that U.S. courts should show considerable deference to the decisions of federal agencies. This decision affects almost every U.S. agency, including the Department of Labor and its Wage and Hour Division, as well as the Occupational Safety & Health Administration, the U.S. Equal Employment Opportunity Commission, the National Labor Relations Board and the Centers for Medicare & Medicaid Services, which have issued several regulations regarding service providers for seniors.

The Chevron Doctrine was named after a landmark 1984 ruling involving an oil and gas company. The doctrine required courts to defer to an agency’s “reasonable” interpretation of ambiguous regulations passed by Congress, but critics argued that it gave federal agencies too much authority to draft regulations. But supporters warned that taking down Chevron would threaten the agency’s ability to develop regulations in areas such as the workplace, health care, the environment and nuclear energy, making it more difficult to implement laws passed by Congress.

This ruling gives the courts much greater powers. “In the future, if an agency’s action is challenged in court, courts will continue to respect the agency’s authority when it has been properly delegated by statute. However, if the law is ambiguous, courts will now decide whether the agency acted within its statutory authority, rather than deferring to the agency,” Fisher Phillips argues.

The law firm said it expects to see attacks in the “coming months and years” on the Department of Labor’s overtime and independent contractor regulations, the Equal Employment Opportunity Commission’s Age Discrimination in Employment Act and the Americans with Disabilities Act, the National Labor Relations Board’s joint employer regulations and a range of union-related regulations, the Federal Trade Commission’s ban on noncompete agreements, OSHA’s walk-though rule and the Department of Homeland Security’s immigration regulations, among other issues.

‘Significant impact’ expected

The U.S. Chamber of Commerce welcomed the decision as “an important course correction that will help create a more predictable and stable regulatory environment” for businesses.

“The Supreme Court’s previous rule of obedience allowed each new presidential administration to promote its policy agendas through variable rules and did not provide a consistent rule of conduct for companies to navigate, plan for, and invest in the future,” the organization’s president and CEO, Suzanne, said in a statement P. Clark.

Jonathan Lips, vice president of legal affairs at LeadingAge, said: The Life of Senior McKnight that “although the specific effects will depend on many factors, the court’s decision today will have a significant impact for years to come.” He said the decision “will have a broad impact on federal regulations and legislation, including statutes and policies governing health care, affordable housing, and services for the elderly.”

Lips said the ruling could impact how federal agencies interpret the laws governing the programs they administer and the content of the regulations they issue. It could also, in some cases, affect how members of Congress draft bills, requiring them to include more specific requirements or definitions or specify what authority or powers are delegated to the federal agency responsible for implementing the statutory provision.

He added that the decision could also result in additional litigation from parties seeking to challenge some of the federal regulations and the interpretation of the statutes underlying those rules.

Argentum noted that the ruling applies only to federal agencies and does not invalidate Chevron deference policies adopted by some states, but may give states additional impetus to challenge such deference policies.

“While some states have adopted Chevron’s deference framework for state regulators to interpret ambiguous statutes, other states do not have this policy, and several states have begun to erode deference to regulators through state statutes, court decisions, and state constitutional amendments,” the association wrote in blog post and shared in a statement Senior McKnight’s LifeAs Argentum noted, several states filed amicus curiae briefs supporting the plaintiffs in a recent Supreme Court case.

The American Health Care Association/National Center for Assisted Living praised the decision and its implications for the outcome of a lawsuit challenging the Centers for Medicare & Medicaid Services’ authority to issue a minimum staffing mandate for nursing homes. While the mandate directly applies only to nursing homes, advocates for assisted living services have raised concerns about how it could impact them, given that they “use the same pool” of workers as nursing homes.

“This decision reinforces and validates our concern that government agencies are overreaching their authority by implementing broad staffing mandates that cover the entire nursing home profession,” said Mark Parkinson, president and CEO of AHCA/NCAL. Senior McKnight’s Life“Our position has always been that this staffing order should never have been finalized, and in light of these developments, we urge the administration to rescind the rule and work with providers and stakeholders to develop more meaningful solutions to improve care for older adults.”

It comes from fishing boats

This Loper Bright Enterprises v. Raimondo The case began with a challenge to a regulation that required commercial fishing boats to cover the costs of hiring an observer to monitor compliance with the regulations.

In the majority opinion, Chief Justice John Roberts called Chevron’s presumption that statutory ambiguities are implicit delegations of authority by Congress to federal agencies “erroneous.” Federal agencies, he said, “have no special authority to resolve statutory ambiguities. The courts have them.”

Justice Neil Gorsuch, in his accompanying opinion, said the court had placed “a tombstone on Chevron that no one should miss.” The decision “restores to judges the interpretive principles that have guided federal courts since the country’s founding,” he said.

“Large-scale disruption” coming?

In a dissenting opinion, Justice Sonia Sotomayor said Chevron relies on the idea that “Congress knows that it does not — in fact, cannot — write wholly complete regulatory statutes.” She said the decision to reject the Chevron doctrine “is likely to result in large-scale disruption.”

“The parties to the dispute demanding the further dismantling of the ‘administrative state’ have reason to rejoice over today’s victory, but we who value the rule of law have no reason to celebrate,” she said.

Sotomayer accused the court’s conservative members of a “power grab,” undermining the country’s traditional practice of giving regulatory agencies broad authority to make laws.

“Changing views about the value of regulatory entities and the work they do do not justify a fundamental overhaul of the cornerstone of administrative law,” Justice Elena Kagan said in her dissenting opinion. She called the decision “one more example of the Court’s determination to roll back the agency’s authority despite congressional guidance to the contrary.”

“In one fell swoop, the majority today gives itself exclusive authority over every open issue – no matter how expert-based or policy-laden – including the importance of regulatory law.”

Jarkesy the case also applies to federal agencies

The decision came a day after the Supreme Court restricted federal agencies from using administrative law judges. In a similar 6-3 decision, the justices ruled that people accused of fraud by the Securities and Exchange Commission have a right to a jury trial in federal court. The ruling found that the SEC’s handling of some civil fraud complaints violates the Constitution.

The Securities and Exchange Commission vs. Jarkesy As SCOTUSblog predicts, the decision “will have far-reaching implications for dozens of federal administrative agencies that use similar processes.”