December 01, 2021

How Much Ambiguity Is Enough? The Supreme Court's Latest Case on Agency Deference

3 min

It may be time for federal agencies—and everyone else who litigates administrative law cases—to brush up on their statutory interpretation skills.

This week, the U.S. Supreme Court heard arguments in American Hospital Association v. Becerra, an arcane dispute over Medicare payments for prescription drugs. The Court granted review to decide how much leeway so-called Chevron deference gave the Department of Health and Human Services in interpreting the Medicare statute. The answer may be: Not much.

When it recently faced a similar question in Kisor v. Wilkie, the Court emphasized that it would not defer to an agency's interpretation of its own rules unless those rules were "genuinely ambiguous." And when are rules genuinely ambiguous? Only when the reviewing court has first "exhaust[ed] all the traditional tools of construction" and its "legal toolkit is empty." Kisor, 139 S. Ct. 2400, 2415 (2019). Proper use of those tools, the Court explained, means that even "hard interpretive conundrums . . . can often be solved." Id.

But according to the petitioner in AHA v. Becerra, lower courts still find enough ambiguity to trigger agency deference 70% of the time. That statistic hardly jibes with the Supreme Court's questioning in the case. The Justices dove into the minutiae of the Medicare statute, asking about various interpretive canons in an apparent quest for the best reading. Some seemed ready to reverse Chevron. Others just seemed to be emptying their legal toolkit. Either way, the Court was focused on the meaning of the statute, not agency deference.

No matter how the Court decides AHA v. Becerra, litigants who regularly deal with agencies should realize that things are changing. As the Supreme Court promotes the use of traditional interpretative tools in administrative law cases, agencies will have less room to maneuver. Canons of construction will take center stage.

What does all this mean for private litigants? If you're a project proponent defending an agency's decision in court, don't rest on deference to the agency's reading of the relevant statute or rule. Offer your own interpretation. If you're challenging agency action, don't concede ambiguity; use interpretative tools to explain why a statute or rule isn't genuinely ambiguous and in fact requires the result you want.

Toward the end of the argument in AHA v. Becerra, Justice Gorsuch asked, "how much ambiguity is enough?" to warrant Chevron deference. The precise answer is almost irrelevant. The lesson for litigants is that ambiguity means more than a good argument on each side. If you can make a better interpretive argument than your opponent, deference may never come into play.