By T. Daniel Logan and Rebecca Bermudez
On June 28, 2024, the Supreme Court handed down its decision in Loper Bright Enterprises v. Raimondo, No. 22-1219, 2024 WL 3208360 (U.S. June 28, 2024), striking down Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984).
This decision is undoubtedly a watershed moment, but the reasons for its importance are abstruse. Although we have previously opined on this case and prognosticated the future,[1] we attempt to shed some light on why this decision may change the way the American government – and particularly the Food and Drug Administration (FDA) – operates.
Why is Chevron significant?
At the most basic level, the authorities granted to Federal Executive Branch agencies flow from legislation passed by Congress and codified in the form of statutes. However, for better or for worse, statutory language is not always precise. This imprecision may be intentional or unintentional on the part of Congressional drafters, and there are many reasons why Congress may intend to leave some ambiguity in the statute. For instance, Congress may not anticipate all of the potential requirements or situations necessary to implement a directive; or it may believe that an Executive Branch agency’s technical expertise is necessary to fill in statutory gaps. Accordingly, the statutory text may not precisely spell out the manner in which the agency is to carry out a particular action. This becomes a problem when the agency is required to interpret a statute in promulgating a regulation pursuant to the Administrative Procedure Act (“APA”), such as to implement a Congressional mandate or achieve a policy directive. Such interpretations often serve as the foundation for part of or the whole of a regulatory scheme.
Under Chevron, if such an interpretation was challenged, it would have been entitled to deference if the reviewing court found that the text of the statute was “ambiguous” and that the agency’s interpretation of the statute was permissible. In effect, this meant that reviewing courts would typically uphold an agency’s interpretation of a statute – to the benefit of the agency in the litigation.
The FDA has had important interpretations upheld on the basis of Chevron deference, including well-known cases such as Pharmanex v. Shalala, 221 F.3d 1151 (10th Cir. 2000) and Teva Pharms. USA, Inc. v. United States Food & Drug Admin., 514 F. Supp. 3d 66 (D.D.C. 2020).
What is changing with Loper Bright Enterprises?
In a 6-3 decision, the Court held that the Chevron decision is expressly overruled; courts may not defer to agency interpretations of statutes under the APA. Rather, “[c]ourts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority…” Loper Bright Enterprises, 2024 WL 3208360at *22.
Moving forward, reasonable agency interpretations of statutes set forth by regulation will no longer be granted an automatic pass if the statutory language being interpreted is found to be ambiguous. Instead, a reviewing court should “independently interpret the statute and effectuate the will of Congress subject to constitutional limits.” Id. at *14. If a court’s interpretation of a statute conflicts with the agency’s, under Loper, the former must prevail, irrespective of any regulatory structures that are premised on the agency’s interpretation.
Notably, the Court did suggest that while reviewing courts should no longer defer to an agency’s interpretation of a statute, courts may still “seek aid from the interpretations of those responsible for implementing particular statutes.” Id. at *13 (citing Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)). A reviewing court may thus find an agency’s interpretation persuasive, but not controlling, when conducting its own independent analysis of a statute.
Further, courts may give weight to instances in which the agency has issued an interpretation contemporaneous with the passage of the statute and has consistently maintained such interpretation. Id. at *10 (citing United States v. Am. Trucking Ass’ns, 310 U.S. 534, 549 (1940)).
What are the implications of the decision for the FDA?
At the outset, it is important to note that the Court drew a line in the sand for all would-be challengers: Loper does not call into question prior cases that relied on the Chevron framework. “The holdings of those cases… are still subject to statutory stare decisis,” the Court says. Id. at *21. It will be interesting to see, however, the strength of stare decisis when a new litigant challenges an agency rule that had previously been upheld based on Chevron deference. If the new litigant can convince a judge that the agency’s rule was inconsistent with the law, a judge will have a hard time choosing between stare decisis and the law stated in Loper.
Ultimately, the effect of this decision is that it will be significantly easier for FDA actions (primarily regulations) predicated on an interpretation of a statute to be challenged and overturned. Particularly vulnerable will be interpretations of the Federal Food, Drug, and Cosmetic Act (FFDCA) and other statutes administered by the FDA that amount to novel assertions of the agency’s authority, as well as FDA definitions for otherwise undefined statutory terms.
For instance, some FDA interpretations that may be ripe for challenge include:
- The definition of “dietary supplement” to exclude certain active drug ingredients in addition to finished drug products (as litigated in Pharmanex);
- The assertion of authority to regulate laboratory-developed tests (LDTs) as medical devices (already under challenge);
- Market exclusivity determinations (e.g., orphan drugs, generic drugs, etc.);
- The narrow interpretation of the clinical decision support software exclusion from the medical device definition amended by the 21st Century Cures Act;
- The statutory definition of “new dietary ingredient” and how it is decided whether to accept or reject a new dietary ingredient notification; and
- The Generally Recognized as Safe (GRAS) notification process, as litigated in Ctr. for Food Safety v. Becerra, 565 F. Supp. 3d 519 (S.D.N.Y. 2021).
Separately, it is unlikely that fact-specific scientific determinations that are within the expertise of the FDA, such as determinations that a product meets applicable approval standards or whether a product is unsafe or adulterated, will be overturned. See Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42-43 (1983). However, such determinations could become increasingly vulnerable to the extent that such decisions can successfully be characterized as an interpretation of the statute.
From a pragmatic standpoint, we believe that there are several key takeaways, set forth below.
- Moving forward, FDA will need to devote a greater portion of its resources to defending its past interpretations, particularly given the Supreme Court’s recent holding that the 6-year statute of limitations to challenge a final agency action (namely, a regulation) only begins running from the date of plaintiff’s injury. Corner Post, Inc. v. Bd. of Governors of Fed. Rsrv. Sys., No. 22-1008, 2024 WL 3237691 (U.S. July 1, 2024).
- The rulemaking process at FDA is likely to slow down to ensure that any position is thoroughly vetted, assessed, and documented, given the increased likelihood of challenge. An ancillary benefit may be that FDA will be incentivized to provide a more fulsome legal rationale for its interpretative decisions in regulatory preambles.
- Rulemaking attempted by FDA will be less ambitious, particularly with regard to assertions of FDA authority beyond what is specifically outlined by the statute. The agency may also be inclined to rely on other tools in its toolbox, such as guidance documents or enforcement discretion policies.
- Reviewing courts may reach different conclusions about the “correct” interpretation of a statute, which could lead to a greater likelihood of success by plaintiffs in specific jurisdictions and forum shopping as a result.
- FDA will likely seek even more involvement in legislative drafting to ensure that statutory language is sufficiently clear and comprehensive to permit appropriate regulation by the agency.
We will continue to monitor and provide updates. For further questions, please do not hesitate to contact us.
[1] Justine E. Lenehan & T. Daniel Logan, Relentless, Inc. v. Dep’t of Commerce, FDLI Top Food and Drug Cases 2023 & Cases to Watch 2024 (2024) (available at https://www.fdli.org/2024/05/relentless-inc-v-dept-of-commerce/)