Rebalancing Chevron “Step Therapy” for the Administrative State: Part I 

Last week’s oral argument at the Supreme Court in two cases challenging the current application of so-called Chevron judicial review of administrative agency actions reflected different perspectives on what to fear most. The two main dividing lines are fear of politically unaccountable judges versus fear of unelected (and increasingly unaccountable) executive branch officials. Choosing one’s poison potion, in turn, seems tied to whether one is more predisposed to seek and excuse further regulatory “refinements” of private action or remain more hesitant to do so without much clearer evidence of legal authority first granted by Congress (even though the broader problems of regulatory policy are more systemic).

More than three hours of argument, following exhaustive legal briefing, in Loper Bright Enterprises, Inc. v Raimondo and Relentless, Inc. v Department of Commerce might not find a sustainable resolution, but we will know the outlines of the latest legal patch by next June.

On one side, several justices (Kagan, Sotomayor, Jackson) remained more solicitous of the prerogatives of an expansive administrative state and its imaginative gap-filling assertions in interpreting the incomplete and occasional work of Congress. After all, a regulator’s work is never done but it always promises to get it right “next time.” One enhanced justification voiced for this sectoral bias in limiting judicial review in the administrative law space involves greater anxiety about unleashing politically motivated judges (at least those with the wrong brand of politics…) who might slow or reverse the executive branch’s need to get desired things done. For those who have a long list of unfinished action items to improve American society through governmental means, keeping recent cohorts of Trump-appointed judges (and some other Republican-appointed holdovers)  from riding roughshod over past practices and arrangements is an imperative.

On the other side were at least four justices, most notably Gorsuch and Kavanaugh, as well as Thomas and Alioto to lesser degrees, predisposed to remain more concerned about the diminished role of Congress and various legal limits on agency powers, as enabled by later evolutions of  the 1984-initiated Chevron approach to the statutory interpretations shaping them.

Another dividing line across the broader political universe might be how much some prefer to exalt rule by experts, or instead defer to the messier byproducts of either congressional politics or imperfect markets. (Consider checking the crosstabs for education level, metropolitan vs. rural, or secular vs. religious when choosing one’s brand of regulatory policy disorder.)  

Ironically, the Supreme Court has already attempted various modifications of judicial review of agency actions within the last decade. Yet thus far it has kept stopping short of fully reversing direction, or even substantially curbing the habits of lower federal court judges to keep applying Chevron-style review even as the High Court no longer did.

The Court has Increased resort to an expanding major questions doctrine bypass, considering rolling back Auer deference for an agency’s revisions of its own interpretations (but stopping somewhere between tamed and zombified, short of fully overturning Auer, in Kisor v. Wilkie), and entertaining the question of a Chevron overturn in the current two cases. All these moves were signs of more dissatisfaction with the current state of the law in this realm by a narrow majority, if not more, at Supreme Court of the United States (SCOTUS).

In the health law and policy space I frequent, King v. Burwell (2015) was a mixed bag. It pulled an implicit statutory rewrite away from the IRS via Chevron and then accomplished it as a Court-concocted major question ruling based mostly on the overall statutory scheme of the Affordable Care Act (ACA). At least the appropriate branch of government got to make that final mistake!

On the other hand, amid the many mutations of administrative implementation and revision of that health statute, Chevron-style review has facilitated multiple bungee jumps in regulatory rules, notably for the treatment of short-term limited duration (STLD) insurance plans. The latter history illustrates the destabilizing role of Chevron permissiveness and its disregard of reliance interests, as we await the next set of election returns to determine the latest slate of ACA rules and practices. More broadly, the remaining presence, or absence, of the Chevron review call option certainly will shape the dimensions and nature of the window for the next administration’s regulatory revision or expansion agenda. 

There are countless better examples of Chevron review misincentives (flip flopping, agency overreach,  nonuniformity, judicial punting) in other non-health-policy spheres of regulatory policy. They are buttressed by broader criticisms and dissections across the legal scholarship community. Nevertheless, the worst fears and strongest hopes of the current Chevron interpretive doctrine’s defenders and critics, remain unlikely to unfold in this June’s likely Supreme Court ruling. In part II, I will suggest why (let’s rename that “step 1” of Chevron therapy) but outline some other difficult remedies instead (“step 2”).