The Supreme Court is undermining the authority of regulators across the government

FThe long-standing authority of federal agencies to regulate industrial activity was significantly weakened by a Supreme Court decision on Friday.

The 6-3 majority decision, while stemming from a fishing regulation case, will impact government agencies that have broadly interpreted the authority Congress has granted them since the 1984 decision known as Chevron. So called Chevron The doctrine held that when issuing regulations, courts should generally defer to federal agencies’ reasonable interpretations of their authority.

In practice, this meant that the courts stayed away restrictive broad rules from agencies such as Medicare, Medicaid and the Food and Drug Administration about how hospitals, biopharmaceutical companies and other industry players operate. Public health and labor agencies have also introduced broad regulations in response to Covid-19 that can be tested against new precedents.

For decades, courts have subjected agencies to these rules “erroneously because agencies have no special authority to resolve statutory ambiguities. The courts have them,” Chief Justice John Roberts wrote in the decision.

“Today, the Court places a tombstone on Chevron that no one can miss,” Justice Neil Gorsuch wrote in a concurring opinion. “In doing so, the Court returns the justices to the interpretive principles that have guided the federal courts since the founding of the Nation.”

The ruling could breathe new life into numerous legal challenges from drug companies opposing Medicare’s drug price negotiation program and is sure to spark new lawsuits in the hospital and insurance industries, experts say.

“We’re going to have a lot of lawsuits coming up soon,” said Jamie Gregorian, a lawyer at DLA Piper who previously was a lobbyist for biotech companies and orthopedic surgeons.

“If I were a pharmaceutical company and there were restrictions on reimbursement for my drugs, or if I were a hospital and I didn’t get the same reimbursement from (Medicare), I would take legal action that I would not have taken before because the entire situation is no longer against me.” he said.

Critics of the Chevron doctrine have long argued that it is unlawful for regulators to make major decisions — those that have “enormous economic or political significance” — that are not subject to change. without the consent of Congress. This so-called “main questions” doctrine has come up repeatedly, especially since the Covid-19 pandemic and lawsuits over vaccination requirements.

“In the after-Chevron “There is more pressure globally on the agency to demonstrate when rulemaking that it has chosen a regulation that is not only reasonable but also appropriate and related to the statutory text,” said Samantha Chaifetz, a lawyer at DLA Piper who worked for more than 15 years at the Department of Justice and dealt with administrative law.

Three Democratic-appointed judges dissented. Judge Ketanji Brown Jackson recused herself from part of the proceedings because she was trying a case in a lower court.

Friday’s decision is “likely to cause wide-scale disruption,” Justice Elena Kagan wrote in her dissenting opinion.

“In one fell swoop, the majority today gives itself exclusive authority over every open issue – no matter how expertise-based or policy-laden – related to the importance of regulatory law,” Kagan said. “As if they didn’t have enough on their plate, most turn into the country’s administrative tsar.”