Scholars have described the Supreme Court’s 1984 decision Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.1 as an “accidental landmark,”2 “the most important administrative law decision in the [nation’s] history,”3 and a “phoenix.”4 Others have described it as a “complete and total failure,”5 a “dead” doctrine,6 and “the Frankenstein’s monster of administrative law: a hideous ‘behemoth’ that has escaped its restraints and is wreaking havoc on its creator, the courts, the Constitution, and the American public.”7 The famous decision instructs courts, when reviewing an agency’s interpretation of an allegedly ambiguous statute, to defer to that interpretation if (1) the statute is ambiguous and (2) the agency has reasonably interpreted the statute.8
Recently, in American Hospital Ass’n v. Becerra9 (AHA), the Supreme Court faced its latest opportunity to reconsider the thirty-eight-year-old doctrine. The Court granted certiorari on a Chevron question;10 the parties briefed AHA as a Chevron case;11 and Chevron occupied much of oral argument.12 Yet the Court’s unanimous opinion, authored by Justice Kavanaugh, did not once mention Chevron. It eschewed a host of Chevronian buzzwords, treating the decision not like Frankenstein’s monster or a phoenix, but instead like a different literary figure: Harry Potter’s Lord Voldemort — the case-that-must-not-be-named.13 Though AHA did not upset existing precedent, it portends a shift in doctrine that could redefine the contours of administrative law.
On November 13, 2017, the Department of Health and Human Services (HHS) promulgated a regulation concerning, in relevant part, HHS’s 2018 reimbursement rates to hospitals for Medicare-beneficiary outpatient services.14 The Medicare Act15 affords HHS two options when setting these rates: Under option one, if HHS surveys drug-acquisition costs, it may use that data to “vary [reimbursement rates] by hospital group.”16 Alternatively, under option two, “if hospital acquisition cost data are not available,” HHS must reimburse “the average price for the drug . . . as calculated and adjusted by the [agency].”17
Prior to 2020, HHS had never conducted an option-one survey; it had therefore long relied upon option two.18 Nonetheless, invoking the word “adjusted” in option two, HHS — without conducting a survey — varied its 2018 rates for a specific group of hospitals: “Section 340B hospitals, which generally serve low-income or rural communities.”19 Federal law sets a ceiling on the drug prices that manufacturers can charge 340B hospitals.20 Consequently, 340B hospitals often pay below-market prices for drugs but can secure Medicare reimbursements at average market rates under option two. Seeking to eliminate this perceived windfall, HHS reduced 340B hospitals’ reimbursement rates.21
The American Hospital Association (AHA) and similarly situated parties challenged the 340B reimbursement reduction in the U.S. District Court for the District of Columbia.22 They accused HHS of violating the Medicare Act by varying rates by hospital group without surveying costs, and they moved to enjoin the reduction.23 Siding with AHA, the court permanently enjoined the rule in relevant part24 and later held that the rule violated the Act, remanding it to HHS for reconsideration.25 The court rejected HHS’s threshold arguments that the plaintiffs needed to exhaust their administrative remedies before suing and that 42 U.S.C. § 1395l(t)(12) — another Medicare provision — barred judicial review of their claims.26 On the merits, the court reasoned that HHS’s option-two power to “adjust” rates does not include an option-one-like power to vary rates by group.27 HHS therefore exceeded its authority by reducing rates for 340B hospitals without cost survey data.28 The court refused HHS’s request to proceed under Chevron, concluding that, because the “rate reduction is unsupported by the statute’s unambiguous text, the Court need not address whether [HHS] is entitled to deference under Chevron.”29
The Trump Administration appealed to the U.S. Court of Appeals for the D.C. Circuit, which reversed the district court’s decision. Writing for a divided panel, Chief Judge Srinivasan30 agreed with the district court that the plaintiffs’ claims were reviewable31 but disagreed with the lower court on the merits. Applying Chevron step one, he asked whether “Congress has directly spoken to the precise question at issue.”32 Answering in the negative, he labeled the relevant provision ambiguous before proceeding to Chevron step two and concluding that HHS reasonably interpreted the provision.33 Judge Pillard dissented.34 Like the majority, Judge Pillard applied Chevron, but she concluded at Chevron step one that the provision lacked ambiguity and that HHS’s regulation conflicted with the provision’s unambiguous meaning.35
AHA filed a petition for a writ of certiorari to the U.S. Supreme Court,36 which granted review of the question “whether Chevron deference permits HHS to set reimbursement rates based on acquisition cost and vary such rates by hospital group if it has not collected adequate hospital acquisition cost survey data.”37 The Court also instructed the parties to brief whether § 1395l(t)(12) precluded judicial review.38
On June 15, 2022, the Supreme Court unanimously reversed the D.C. Circuit’s judgment.39 Writing for the Court, Justice Kavanaugh first agreed with the lower courts that § 1395l(t)(12) did not preclude judicial review of the suit, concluding that the provision governs rate setting “for other Medicare outpatient services,” but not for the drug reimbursement rates at issue.40 Second, Justice Kavanaugh, echoing Judge Pillard, held that “the text and structure of the statute” foreclosed HHS’s interpretation.41 Justice Kavanaugh emphasized that option one allows HHS to vary rates by hospital group only if HHS first conducts a drug-cost survey.42 Per the Court, HHS cannot sidestep this requirement by invoking option two’s “adjust” language — to do so “would render irrelevant [option one’s] survey prerequisite.”43 “In short,” the Court concluded, option two “allows HHS to set reimbursement rates based on average price and affords the agency discretion to ‘adjust’ the price up or down,” but not to “vary the reimbursement rates by hospital group.”44
Though the Court’s reasoning mirrored that of Judge Pillard’s dissent, the two opinions diverged in one key way: Judge Pillard framed her opinion within the Chevron framework, labeling the statute unambiguous at step one.45 Justice Kavanaugh, by contrast, eschewed Chevron altogether, instead describing the case as a “straightforward” matter of statutory interpretation.46 In so doing, the Court did not formally upset existing doctrine. But its conscientious avoidance of the Chevron framework forebodes a doctrinal shift that could see Chevron formally overruled, relegated to the lower courts, or perhaps, one day, resurrected.
Justice Kavanaugh’s opinion began by disinfecting the question presented of any direct reference to Chevron.47 This sterilization continued throughout his Taboo game of a decision, which refused to defer under Chevron to HHS’s interpretation of an allegedly ambiguous statute — without once using the words “defer,” “deference,” “ambiguous,” “ambiguity,” “unambiguous,” or “Chevron.” The case-that-must-not-be-named lurked behind every word of Justice Kavanaugh’s opinion, forcing readers into a sort of doublethink: Chevron is so irrelevant that the Court need not invoke it, yet it looms so large that the Court must contort its lexicon lest readers interpret this as a Chevron case.
Ahead of the Court’s decision, some scholars prophesized that AHA might mark the end of Chevron,48 but the Court instead issued a decision leaving its long-standing precedent formally untouched. Consequently, some scholars have attempted to minimize the opinion’s significance. For example, responding to the question, “What should we make of [the Court’s decision to eschew Chevron]?,” Professor Christopher Walker answers, “Probably not much.”49 Walker positions AHA within a long line of cases in which Chevron deference did “not have much of an effect on agency outcomes at the Court,” citing a study by Professor William Eskridge and Lauren Baer purporting to show “that the Court only applie[s] the Chevron deference framework in about one in four cases in which it should.”50 In a similar vein, some in the media labeled AHA a “bust” for those who wanted to see Chevron overturned.51
But these commentators downplay AHA’s strangeness. Between 2005 and 2020, the Roberts Court granted certiorari on seven questions specifically referencing Chevron.52 The Court explicitly applied Chevron’s framework to resolve five of those questions.53 It resolved the other two questions on non-Chevron grounds, but both majority opinions referenced Chevron, as did concurring or dissenting opinions in both cases.54 Of course, issues of judicial deference to agencies often arise in response to questions that do not directly reference Chevron.55 Scholars have worn through many quills trying to sort cases that call for the Chevron framework from those that do not.56 And the Supreme Court has not shown an agency Chevron deference since 2016.57 But AHA stands alone in the Roberts Court’s seventeen-year history: when explicitly presented with a Chevron question, the Court had never before failed to produce an opinion referencing that landmark decision.
A review of AHA’s oral argument further highlights the oddness of the Court’s Chevron-less opinion. The Justices and oral advocates referenced Chevron by name a total of forty-nine times.58 Justices Thomas, Breyer, Alito, Gorsuch, Kavanaugh, and Barrett all referenced Chevron by name, and both advocates discussed the case.59
Further, the Court’s Chevron avoidance last Term extended beyond just AHA. A case decided a week after AHA, Becerra v. Empire Health Foundation,60 asked the Court to resolve a different interpretive question concerning Medicare reimbursements.61 Though Empire Health’s question presented did not reference Chevron, the case nevertheless fell comfortably within Chevron’s traditional purview.62 Yet neither Justice Kagan’s majority opinion nor Justice Kavanaugh’s dissent referenced the seminal case.63 Even last Term’s marquee administrative law dispute, West Virginia v. EPA,64 largely shunned Chevron — it appeared only in Justice Kagan’s dissent, which referenced Chevron three times while explaining the holding of an earlier case.65 Not every creeping shadow connotes intrigue, but the consistency with which the Court dodged Chevron last Term suggests that something mysterious is afoot.
Some have posited that AHA’s Chevron-shaped hole speaks to a Supreme Court ready to abandon the doctrine, albeit gradually. Professor Jonathan Adler, for example, describes the case as “further evidence the Court is more likely to let Chevron fade away than it is to directly overrule it.”66 SCOTUSblog editor James Romoser, meanwhile, theorizes that AHA may “portend the future of Chevron . . . . Rather than a single, decisive blow or a continued death by a thousand cuts, the [C]ourt might simply snuff out Chevron with the silent treatment.”67
These arguments are compelling, but they leave unanswered a key question: What should onlookers make of the fact that no one on the Court — in the majority or in concurrence — said anything about Chevron? The Justices do not typically shy away from opining on the famous case. As recently as 2019, Justice Thomas cited Chevron while “emphasiz[ing] the need to reconsider” the “assumption underl[ying] . . . precedents requiring judicial deference to certain agency interpretations.”68 And in 2018, Justice Breyer endorsed Chevron “as a rule of thumb, guiding courts in an effort to respect that leeway which Congress intended the agencies to have.”69 These Justices’ silence in AHA illuminates a Court not yet ready to rock the doctrinal ship. Cases like AHA and Empire Health contain a Schrödinger’s Chevron — they leave the doctrine technically untouched while simultaneously treating it as dead and forgotten. So what does this mean for administrative law doctrine going forward? Several possibilities present themselves.
First, as Adler and Romoser argue, AHA may portend Chevron’s gradual eradication. The Supreme Court in 1984 made Chevron the doctrinal rule. It spent the next few decades minting exceptions to the rule. Professor Cass Sunstein groups these exceptions into two threshold “Chevron Step Zero” inquiries: First, under United States v. Mead Corp.70 and related cases, “when agencies have not exercised delegated power to act with the force of law, a case-by-case analysis of several factors . . . determine[s] whether Chevron provides the governing framework.”71 Second, under the major questions doctrine, Chevron may not apply when “a fundamental issue is involved, one that goes to the heart of the regulatory scheme at issue.”72 These two versions of Chevron step zero can remove an inquiry from the Chevron framework entirely.73 In recent years, the Supreme Court has only expanded step zero, most notably in last Term’s “major questions quartet” of cases.74 AHA may foreshadow another expansion, albeit one unprecedented in scope: By performing an analysis using the traditional tools of statutory interpretation without reference to Chevron step one, the Court may have presaged a doctrinal shift that will relocate the traditional-tools analysis outside the Chevron framework.75 Such a shift, by swallowing Chevron step one, may prevent courts from even citing the landmark decision, thus easing the path to its eventual overruling.
Another case decided last Term, Kennedy v. Bremerton School District,76 blueprints how the Court may later invoke AHA and its brethren to enshrine Chevron’s demise in doctrine. In Kennedy, the Court reviewed a holding grounded in the Court’s 1971 decision in Lemon v. Kurtzman,77 which instructed courts to consider “a law’s purposes, effects, and potential for entanglement with religion” in Establishment Clause cases.78 In the decades following Lemon, the Court rarely applied its eponymous test, and scholars debated whether it remained good law.79 Kennedy laid those debates to rest. Writing for a six-Justice majority, Justice Gorsuch asserted that the “Court long ago abandoned Lemon,” favorably citing lower court cases that “recognized Lemon’s demise.”80 Invoking this alleged abandonment to “overrule” Lemon,81 the majority hid behind its reading of case law and, in doing so, shirked responsibility for the doctrinal shift.82
This retrospective rationale — formally overruling a decision by reference to its desuetude — could find a new victim in Chevron. Like Lemon, Chevron has fallen into disfavor with the Court. Like the Lemon test, Chevron deference has seen itself doctrinally overshadowed — by the major questions doctrine, the Mead version of step zero, and now a traditional-tools analysis wholly removed from Chevron step one. And like Lemon, Chevron has repeatedly attracted censorious opinions from Justices writing in concurrence or dissent.83 The two cases retain differences — most importantly, “unlike Chevron, the Lemon test . . . never really bec[a]me a fixture of the relevant Supreme Court jurisprudence.”84 But with each subsequent AHA-like decision, Chevron’s detractors gain ever more ammunition to make a Lemon out of Chevron.
Alternatively, AHA may herald the development of a two-track Chevron system, one for the Supreme Court and one for lower federal courts. To some extent, such a system exists already: Walker and Professor Kent Barnett observe that Chevron affects decisions at the circuit level far more often than at the Supreme Court, coining the terms “Chevron Regular” and “Chevron Supreme” to express this trend.85 If the Supreme Court keeps avoiding Chevron, while leaving untouched its Chevron-friendly precedent,86 perhaps Chevron Regular will survive while Chevron Supreme quietly fades.
And a two-track system may make sense — after all, Chevron can help reduce inconsistency among courts by limiting judges’ ability to impose their own interpretations on ambiguous statutes.87 Professors Michael Coenen and Seth Davis advance a similar point regarding the major questions doctrine, contending that it “should exist as a tool for the Supreme Court and only the Supreme Court to use.”88 They reason that lower courts, without adequate guidance, may struggle to “define what makes a question ‘major’” and may thus incur “unnecessary costs” by incorrectly applying the doctrine.89 Professor Aaron-Andrew Bruhl notes a related argument in the Chevron context: the Justices’ “relatively favorable decision-making environment — their advantages in resources, time, perceived expertise, and so forth” — may “make deference less necessary for them than for their . . . colleagues in the lower courts.”90 Of course, a two-track system may lose its efficacy if — as seems likely — many lower court judges emulate the Supreme Court and stop citing Chevron. But if others — like Chief Judge Srinivasan and Judge Pillard in AHA — continue invoking Chevron unless and until the Court overrules it, then Chevron Regular may still help reduce intra- and inter-circuit splits.
Finally, AHA leaves room for a future Supreme Court to revive Chevron. In the short term, the Court may continue applying what substantively amounts to a robust form of Chevron step one — the traditional-tools analysis — without citing the landmark case. Though decisions like AHA and Empire Health do not doctrinally conform to Chevron’s framework, they resemble decisions in which the Court rejected or accepted an agency’s reading of a statute after rigorously applying Chevron, as in Michigan v. EPA91 and Cuozzo Speed Technologies, LLC v. Lee.92 In the longer term, a future Supreme Court may rely upon the current Court’s doctrinal ambiguity to resurrect Chevron — after all, Chevron technically remains good law, and future Justices could read the Court’s silence as constituting a holding pattern rather than a termination.93
Amid a Term overflowing with doctrinal tsunamis — on abortion, gun control, the environment, religion — AHA stands out for what it does not do. A Chevron case through and through — except not a Chevron case at all. As the Supreme Court continues to grapple with the case-that-must-not-be-named in the years ahead, it will almost certainly delve into the doctrine at some point. And when that day arrives — when the Supreme Court finally decides to label Chevron a Frankenstein’s monster, a phoenix, or some other beast entirely — AHA may retroactively reveal itself as the canary in the coal mine: the harbinger of some kind of doctrinal change to come.