The House of Representatives recently sent to the Senate its bill (H.R.5) that combines six previous regulatory reform bills, including, as Title II of the bill, the “Separation of Powers Restoration Act.” Section 202 of the bill effectively removes the option for courts to apply Chevron deference to agency rulemaking and interpretations. Thus, rather than deciding whether a regulation is permissible as reasonably related to the purposes of the enabling legislation, by amending 5 U.S.C. § 706, the bill will require a reviewing court to “decide de novo all relevant questions of law, including the interpretation of constitutional and statutory provisions, and rules made by agencies.” To eliminate any doubt about its intent, the amendment specifically states that the court shall not interpret any gap or ambiguity in a statue or regulatory provision as an implicit delegation of legislative rulemaking authority to an agency, and the court shall not defer to an agency’s interpretation on a question of law. As a result, rather than simply deciding whether an agency’s construction of silent or ambiguous statutory provisions are permissible as a matter of statutory interpretation, the reviewing court must make its own, independent interpretation. The change in the statute would mean that prior court approvals of agency rules, applying Chevron deference, will not dictate the outcome of future challenges under the doctrine of stare decisis.
In the USPTO context, the change in the standard of review could bring about new challenges to USPTO rulemaking following the America Invents Act, for example. Recall that in Cuozzo Speed Technologies, Inc., v. Lee, summarized here, the Supreme Court applied Chevron deference and upheld the PTAB’s use of the Broadest Reasonable Interpretation standard for claim construction in AIA trails, rather than the Phillips standard applied in district court proceedings. See Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc). If the bill is signed into law, Judge Newman could get her desired opportunity for de novo review of PTAB practices regarding institution of IPRs on only a subset of challenged claims (SAS Instit., Inc. v. Complementsoft, LLC and Synopsys, Inc. v. Mentor Graphphics Corp., discussed here) and on a subset of grounds (Harmonic Inc. v. Avid Tech., Inc., discussed here).
The bill could also have implications on the newly-promulgated FDA rules implementing additional provisions of the 2003 Medicare Modernization Act, as well as prior FDA interpretations of statutes and rules.
Recall that the dispute in Schering Corp. v. FDA, 51 F.3d 390 (3d Cir. 1995) centered on FDA rules governing the bioequivalence requirement for generic drugs under the abbreviated new drug application (ANDA) procedure. Schering alleged that the FDA rules impermissibly broadened the statutory definition of bioequivalence. Specifically, Schering argued that the statute referred to the “rate and extent of absorption” for bioequivalence, while the regulation defined bioequivalence in terms of rate and extent to which the active ingredient or active moiety becomes available at the site of drug action. The reviewing court applied Chevron deference, in holding that FDA’s interpretation was a permissible construction of the act. Although the MMA explicitly revised § 355(j) to add guidance for drugs that are not intended to be absorbed into the bloodstream (as in Schering), the current regulations provide similar opportunities for dispute and, if the Separation of Powers Restoration Act is made law, then de novo judicial review.