The U.S. Supreme Court recently issued two important opinions for any entity regulated by a federal agency, such as FDA and USDA.
1. Loper Bright Enterprises v. Raimondo, slip op. 22-451, (June 28, 2024) (Loper Bright): For 40 years, Chevron USA, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) required courts to defer to a regulatory agency’s reasonable interpretation when a statute is silent or ambiguous as to a specific issue (commonly known as “Chevron deference”). In Loper Bright, the Court eliminated the judicial deference courts had given to federal agency interpretations of statutes in these circumstances. Agency decisions that pose mixed questions of law and facts, (e.g., whether an ingredient “induces” cancer or is “safe”) may be examined by judges with potentially no deference required to be given to these agency determinations.
2. Corner Post, Inc. v. Board of Governors of the Federal Reserve System, slip op. 22-1008, (July 1, 2024) (Corner Post): This case followed three days after the Loper Bright decision and offered new grounds for FDA and USDA-regulated businesses and third-party advocates to challenge longstanding agency regulations. The Court ruled that an injured party may sue for rescission of an agency rule or determination up to 6 years from when the injury occurred, rather than from the date of the regulation’s issuance. This allows challenges to any agency determination, regardless of age, provided the injury occurred within the past 6 years. Corner Post allows parties to challenge very old regulations under the new Loper Bright framework that gives no deference to a regulatory agency’s interpretation when a statute is silent or ambiguous as to a specific issue.
While the elimination of Chevron deference creates opportunities for companies to challenge rules that are unfavorable and burdensome, FDA, USDA, and the companies they regulate are likely to face several years of upheaval, uncertainty, and litigation, with the combined effects of Loper Bright and Corner Post. Specifically, agency actions that pose solely legal or mixed questions of law and scientific/technical facts may be re-examined by judges with no deference required to be given to an agency’s interpretations. However, factual determinations may be “informative” for the court.
Examples of mixed questions of law and scientific/technical facts that come before FDA and USDA could include whether an ingredient “induces” cancer; and whether an applicant has provided “full reports of investigations” concerning the safety of a food additive or drug; and whether a food product is “adulterated” under the law.
While it will take some time to determine how Loper Bright and Corner Post will alter the legal requirements that FDA and USDA-regulated businesses must comply with, in general, we believe regulated businesses could see the following:
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- Agencies may rely less on general authorities in rulemaking and more on clear and specific instructions from Congress as to the matter to be regulated.
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- Agencies may slow or abandon rulemaking, with heightened scrutiny to lessen the risk of legal challenges when they do issue rules.
- A surge in litigation is likely as regulated entities and other stakeholders seek judicial review of previous agency rules and determinations (including those that are very old) under the new, less deferential framework
- As federal requirements fall, States may seek to impose new requirements to fill the gaps.
- Agencies may use tools other than regulation such as guidance documents and enforcement discretion to accomplish their regulatory goals.
Some specific examples of agency rules and determinations that could be vulnerable under Loper Bright and Corner Post include:
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- Classification and approval of FDA-regulated products and substances, including already approved products and ingredients;
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- Front-of-pack food labeling;
- Delaney clause determinations that a substance does or does not induce cancer;
- Declaration of E. coli O157:H7 as an adulterant in ground beef;
- Packers and Stockyards (P&S) Act interpretation of “Unfair Practices;”
- Drug Supply Chain Security Act (DSCSA) preemption in the wholesale distributor and 3PL licensure rule; and
- Marijuana rescheduling.
Please contact Tish Pahl (tpahl@ofwlaw.com) or Kyla Kaplan (kkaplan@ofwlaw.com) if you have additional questions or would like to discuss how Loper Bright and Corner Post may impact your business.
