Agency Deference Rollback Looms Large in Family Planning Case

The recent US Supreme Court decision rolling back agency deference was a boon to Tennessee at oral arguments Thursday in its bid to get back millions in family planning grant money that was rescinded because it refused to comply with an abortion-related condition placed on the award.

Judge Raymond M. Kethledge strongly suggested that the US Court of Appeals for the Sixth Circuit can decide in the first instance whether the US Department of Health and Human Services had authority to impose a funding condition known as the abortion referral and counseling rule. The court previously decided that question in the agency’s favor in 2023’s Ohio v. Becerra.

Kethledge, who dominated the arguments, said it’s “no longer true” that the Sixth Circuit is bound by Rust v. Sullivan, a 1991 Supreme Court ruling on which it based its 2023 decision. In Rust, the top court said that Section 1008 of Title X of the Public Health Service Act was ambiguous, then deferred to HHS’ interpretation of the statute as required by the Chevron doctrine. Section 1008 says that grant funds can’t be used in programs where abortion is a method of family planning.

The Supreme Court said in Loper Bright Enterps. v. Raimondo on June 28 that an agency’s interpretation of an ambiguous statute is no longer entitled to deference. Instead, courts must decide for themselves if the agency’s rule is supported by the statute. That fundamentally changed the game while Tennessee’s appeal was pending on the denial of its motion to compel HHS to restore the money before trial, Kethledge said.

Overruling Rust?

Courtney Dixon, arguing for HHS, disagreed with Kethledge as to whether Rust is still relevant. Only the Supreme Court can overrule its decisions, and it hasn’t overruled that decision, she said. Dixon is with the US Department of Justice.

Loper Bright was decided after this case was fully briefed, and the parties haven’t had a chance to fully address the question, she said. The Sixth Circuit should decide the preliminary injunction issue based on the suit’s posture at the district court, she said.

In addressing the state’s claim that it didn’t have clear notice of the referral rule, as required by the US Constitution’s spending clause, Dixon said that the rule was “indisputably in place when Tennessee applied for and received the funding.”

But Whitney Hermandorfer, of the Tennessee Attorney General’s Office, said Loper Bright gave the state a chance at a de novo ruling on whether Section 1008 precluded the agency from adopting the abortion referral rule. She disputed the argument that the justices foreclosed disturbing prior rulings that relied on Chevron, such as Ohio and Rust.

Loper Bright closed off collateral attacks on agency regulations approved by the high court—and the rule at issue here is different from the one considered in Rust, Hermandorfer said. Kethledge agreed that stare decisis principles don’t work the same way in appeals courts as they do in the Supreme Court, meaning the panel didn’t have to follow Ohio or Rust after Loper Bright.

There’s no prior agency action that the top court found lawful at issue here, Kethledge said. The decision overruling Chevron means the panel “must decide” if the referral rule is a valid interpretation of Section 1008, he said.

Kethledge also suggested that requiring providers to refer patients for abortions if asked would compel them to use abortion as a “method” of family planning, contrary to Section 1008. It’s a “concrete step” towards abortion, he said.

Dixon disagreed, saying the rule requires providers to give only neutral, factual information. In fact, HHS proposed that Tennessee could satisfy its obligation by having providers give patients a 1-800 number to call where they could obtain the names, addresses, and phone numbers of counselors, she said.

The judge backed off his argument slightly during Hermandorfer’s rebuttal, saying that “it’s easy to say in the abstract” that referrals would constitute a method of family planning.

Grant Terminated

HHS terminated Tennessee’s Title X grant after the state said it wouldn’t comply with the referral rule because abortion is mostly illegal in the state. Tennessee sued, arguing that the agency acted unlawfully under the spending clause and the Administrative Procedure Act. It sought payment of its 2024 grant—about $7.1 million—for purposes of this appeal, but is trying to get the full $35 million it expected to receive over five years.

A lower court denied Tennessee’s request for the injunction, and HHS agreed to keep about $7.1 million in reserve pending the outcome at the Sixth Circuit.

The Sixth Circuit previously agreed to issue its decision by the end of August, and the judges assured the attorneys that it will do so.

Judges Julia Smith Gibbons and Stephanie Dawkins Davis also participated in the arguments.

The case is Tennessee v. Becerra, 6th Cir., No. 24-5220, oral arguments 7/18/24.