The term Chevron deference stems from a longstanding case that instructed courts to defer interpretation of ambiguous statutes to federal agencies. The US Supreme Court overturned that decision in June 2024, leaving the regulatory landscape for the laboratory industry in disoriented limbo.
The move by the Supreme Court, combined with an incoming presidential administration that looks to cut back on regulations, will decrease the power of US federal agencies. That could be good news or bad news for labs, depending on what field they operate in and which agency they deal with.
What was the Chevron doctrine and how will things change?
Since the case, Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., was decided in 1984, Congress has relied upon subject matter experts in federal agencies to untangle ambiguity in regulations. Christine Bump, principal and founder of Penn Avenue Law & Policy, summarized the Chevron deference process as including the following steps:
- When presented with an agency’s interpretation of a statute, a court first determined whether the statute spoke directly to the exact issue.
- If so, Congress’ intent was clear and had to be applied. A court could not defer to any agency interpretation that was different than Congress’ clear intent.
- If, however, the statute was ambiguous or silent on the exact issue, the court deferred to the agency’s interpretation, if it was reasonable.
The Chevron deference allowed the interpretation of ambiguous statutes to be delegated to the authority of federal agencies. As such, unless Congress had spoken specifically on the matter, the Chevron doctrine gave federal agencies significant authority to interpret and implement regulations.
That changed on June 28, 2024, when, in a 6-3 decision, the Supreme Court of the United States overturned the Chevron deference in their decision in Loper Bright Enterprises v. Raimondo, Secretary Of Commerce, limiting the rule-making and interpretation authority that federal agencies will have moving forward. Instead, courts will independently evaluate actions taken by federal agencies under the Administrative Procedure Act (APA), which governs the process for developing and issuing regulations.
The changing dynamics of agency rule-making and statute interpretation
The Food and Drug Administration (FDA) has immediately found itself in the center of a Loper Bright controversy that involves clinical laboratories.
Bump believes that Chevron being overturned has weakened the FDA stance on its authority to regulate laboratory developed tests (LDTs) as medical devices. The FDA’s new LDT rule, which is widely unpopular among medical labs, sets various stages for compliance beginning in spring 2025. Given the ongoing discussion about the FDA’s regulation of LDTs, the Loper Bright decision may affect clinical laboratories more expeditiously than others.
However, labs in other industries regulated by the U.S. government would also be wise to stay apprised of the events that unfold. Bump expects changes to be made by Congress, federal agencies, and federal courts.
Power shift: from administrative agencies to courts
While federal agencies “have lost the ‘power’ that came from automatic deference to their interpretations of ambiguous statutes,” Bump points out that Loper Bright did not reject that agencies have specialized expertise. Rather, an agency’s interpretation may still be considered valid and upheld by a federal court; the agency simply needs to prove that their interpretation should be upheld.
Lawsuits filed by the American Clinical Laboratory Association (ACLA) and Association for Molecular Pathology (AMP) against the FDA reference their beliefs that the FDA has exceeded its authority with the LDT rule. Bump expounds, “[t]he loss of Chevron deference increases the likelihood that the district court will vacate the final rule, declare that FDA is not authorized to regulate LDTs as medical devices, and/or enjoin [the] FDA from enforcing the rule. All parties relied on case law beyond Loper Bright to support their points.” Both suits urge the court to utilize its independent judgment without deference to the FDA, as per Loper Bright.
Short-term uncertainties and long-term impacts for labs
Lab owners and managers should know that Loper Bright does not overturn any cases previously decided based on the Chevron doctrine, Bump says. Prior court decisions that upheld an agency’s interpretation of an ambiguous statute remain valid law. As a result, there is not an immediate upheaval to existing case law that would directly impact laboratories, and day-to-day operations should not be affected.
What is uncertain is whether existing regulations will be challenged. The decisions yet to be made in the ACLA and AMP cases may also prompt new legislation. Something Bump definitely expects: any future grant of authority to the FDA or other agency with regard to regulating diagnostics, generally, or LDTs, more specifically, will be “well-defined and unambiguous.”
Given the potential for agencies like the Environmental Protection Agency (EPA) to have their authority challenged, there may be longer-term implications for laboratories involved in environmental testing. Bump says that, generally, environmental labs can expect to have no immediate short-term impacts but will need to stay abreast of challenges to agencies’ authority and future legislation.
Shifts to the interpretation of environmental statutes, in particular, may have downstream effects. Among concerns is the ability to meet compliance requirements, which are currently set forth by the EPA’s Good Laboratory Practice Standards (GLPS) compliance monitoring program. Eliminating the EPA’s ability to regulate compliance standards for environmental laboratories may incite unclear requirements, making it more challenging for them to navigate.
Along the same vein, the Loper Bright decision may affect the Occupational Safety and Health Administration’s (OSHA) ability to implement and enforce laboratory safety standards. Joe Lennerz, MD, PhD, chief scientific officer of BostonGene, wrote in a LinkedIn post that it may be a struggle for OSHA “to implement workplace safety regulations if judicial oversight becomes more stringent.” Lab owners who feel they are overregulated by OSHA may be glad about this prospect, while lab safety advocates likely have qualms.
Bump emphasizes that Loper Bright applies to and has the potential to affect all regulatory and federal agency actions and that all types of labs are in the same boat of uncertainty right now given the implications of such.
Does this mean more legal disputes?
Due to the reduced deference to federal agencies, there is an expectation of increased legal disputes over regulatory interpretations. Laboratory leaders can develop a legal strategy to prepare for the increase in industry challenges, as they will need to remain informed to update the strategy to align with new court determinations. This additional support, while necessary, may lead to increased legal costs to maintain regulatory compliance.
Even if more legal disputes are a near certainty, historically inconsistent court interpretations may prevent labs from planning too far into the future. Haydar Celik, PhD, is the founder and principal of Blue Tulip Solutions, a consulting firm serving in vitro diagnostics manufacturers and clinical labs offering LDTs. He wrote in a July 2024 blog post that he expects federal agencies to adjust their rule-making processes. He encourages labs to stay informed for both compliance reasons and to advocate for needed changes. He predicts that, without legislative solutions, it may get “messy” in the courts: with inconsistent rulings, there may be more ambiguity than is solved, initially. He hopes Congress will clarify agency authority.
While uncertainty may continue for some time, remaining “informed and adaptable” is what Celik advises. The consensus from regulatory experts is that, while there is potential for the Loper Bright ruling to impact the FDA’s rule on regulating LDTs, the rule itself is unlikely to be completely rolled-back. Clinical laboratories offering LDTs should therefore continue preparing for the rule’s phased-out implementation.
Staying informed of regulatory changes
To remain in-the-know about legislative and regulatory changes, Bump advocates for joining appropriate groups. “Several trade associations and coalitions have legal, regulatory, and government affairs experts and professionals on staff. Entities like the ACLA, AMP, [and] the Coalition for 21st Century Medicine [among others] track legislation, regulation, and litigation, and have teams who meet with Congress and other government representatives.”
Becoming part of an organization like one of these can help in staying up-to-date and informed of bills, laws, regulations, and legal actions. It may also allow for advocacy efforts more far-reaching than an individual can accomplish alone. She notes that these organizations’ websites often provide public updates, even to those who are not members, and encourages using them as a resource to stay informed.
Lacking in-house counsel does not mean that you can’t stay abreast of regulatory changes. However, it is important to build relationships with regulatory experts, especially those specializing in regulatory law. Networking on LinkedIn and/or following regulatory expert blogs, like Celik’s Blue Tulip Journal, are zero-cost ways to remain up-to-speed on current developments.