The U.S. Supreme Court (SCOTUS) overturned a landmark ruling, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., on June 28 , reversing a 40-year-old precedent known as the “Chevron doctrine” or “Chevron deference.” A fundamental principle in administrative law, the Chevron doctrine established a legal framework where courts had to defer to a federal agency’s reasonable interpretation of the agency’s own ambiguous laws. Overturning this decision places more regulatory power into the court’s hands and will have widespread industry implications from all spokes of the federal government with which housing providers interact.
Background
Two recent cases thrust this issue back into the spotlight: Loper Bright Enterprises et. al. v. Gina Raimondo, Secretary et al., and Relentless, Inc. v. Department of Commerce. Both cases were brought by companies operating in the Atlantic herring fishery seeking to challenge the National Marine Fisheries Service’s (NMFS) interpretation of a law requiring industry-funded monitoring of herring fisheries. The lower courts in both cases (the Court of Appeals for the District of Columbia Circuit and the Court of Appeals for the First Circuit) deferred to NMFS’s interpretation of the regulatory rule based on the Chevron doctrine. Plaintiffs’ petitioned SCOTUS to overrule, or at least clarify Chevron, stating they believed the federal agency overstepped its statutory authority when it promulgated the final rule implementing industry-funded monitoring for the Atlantic herring fishery.
SCOTUS Overturns Chevron: 'An Impediment Rather than an Aid'
In a 6-3 ruling, SCOTUS ruled federal agencies no longer have deference in interpreting laws pertaining to matters they administer simply because a statute is ambiguous. Chief Justice Roberts wrote, “The APA [Administrative Procedure Act] specifies that courts, not agencies, will decide all relevant questions of law arising on review of agency action… even those involving ambiguous laws.” Chief Justice Roberts added, “…by directing courts to ‘interpret constitutional and statutory provisions’ without differentiating between the two, Section 706 [of the APA] makes clear that agency interpretations of statutes—like agency interpretations of the Constitution—are not entitled to deference.” The court pointed back to historical House and Senate Reports on the APA’s legislation, noting that Section 706 provide[d] that questions of law are for courts rather than agencies to decide in the last analysis.”
It was emphasized that courts must be able to exercise their independent judgment when reviewing an agency’s statutory power. Chief Justice Roberts highlighted that Chevron “prevents judges from judging.” Thus, Chevron was overruled, and the decisions in Loper Bright and Relentless, Inc. were vacated and remanded back to their respective lower courts.
The court noted some of the ongoing challenges with Chevron, stating it was an impediment, rather than an aid, forcing the court “to clarify the doctrine again and again,” only adding to the doctrine’s unworkability. The court noted that difficult threshold questions continue to be an issue for the doctrine, and if Chevron were to be retained, those questions would only be further complicated. After not relying on Chevron for the past eight years, the court decided it was time to “leave Chevron behind.”
In his concurring opinion, Justice Clarence Thomas wrote that Chevron also violated the Constitution’s separation of powers in two ways: “It curbs the judicial power afforded to courts, and simultaneously expands agencies’ executive power beyond constitutional limits.”
What Does This Mean for Previous Cases Decided Under the Chevron Doctrine?
The court noted that its ruling does not call into question prior cases that relied on the Chevron framework, stating those cases are still “lawful… and subject to statutory stare decisis” despite the change in its “interpretive methodology.”
Impact on the Rental Housing Industry and Legislation
From the Department of Housing and Urban Development (HUD) to the Consumer Financial Protection Bureau (CFPB), the Chevron doctrine has allowed agencies to interpret regulations that impact owners, operators, and developers of rental housing such as the Fair Housing Act, the Violence Against Women’s Act and the Equal Credit Opportunity Act. Chevron has required courts to consistently give “binding deference” to agency interpretations, even if those interpretations have varied over time, and even if there is existing case law that gives a statute a different meaning.
Many say the high court’s ruling shifts power away from the federal government to the judicial branch, making it easier for federal regulations to be challenged in courts. All regulated industries, including the rental housing industry, could potentially see a rise in litigation as federal agencies have now lost their home-field advantage.
“Loper Bright is a powerful re-affirmation of the basic rule-of-law principle that ‘[i]n the business of statutory interpretation, if it is not the best, it is not permissible.’” says Michael Huston, an experienced Supreme Court and appellate lawyer, former Law Clerk to Chief Justice John Roberts and Partner & Firmwide Appellate Practice Co-Chair at Perkins Coie LLP. “Going forward, courts will be required to interpret statutes affecting regulated entities by discerning the best meaning of the text, without deferring to the views of unelected agency bureaucrats. In particular, Chevron’s demise will likely make it more difficult for agencies to seek to expand their authority by invoking older statutes as a basis for regulating new issues,” says Huston.
Jonathan Y. Ellis, a Supreme Court and appellate lawyer, and co-chair of the Appeals and Issues Team at McGuireWoods, LLP, also shared his insights with NAA stating, "[t]he Supreme Court’s decision in Loper Bright affects a momentous change in judicial review of federal regulations and other actions taken by federal agencies."
When asked about potential impacts to the industry, Ellis stated "[t]he decision will make it more difficult for agencies to defend their regulations affecting the rental housing industry, beginning with the FCC’s new digital-discrimination rule. And when combined with the Court’s decision in Corner Post, the Court has opened the door for challenges to even longstanding regulations by new entrants in the rental housing market."
Citing a 2013 Stanford Law Review Study where congressional counsels responsible for drafting legislation indicated that, “Chevron function[ed] as a reminder about the consequences of ambiguity and as an incentive to think about the level of detail in a statute,” experts say Congress will need to be more intentional when drafting legislation, and will need to pay more attention to the details and specifics that will assist with enforcement and implementation of new regulations with Chevron no longer at play.
NAA’s Legal Affairs team will continue to track the aftermath of the high court’s decision and the final outcome of Loper Bright and Relentless, Inc., as these two cases will now be reviewed without deference to NMFS’s interpretations.
Read the Supreme Court’s full opinion.
Ayeisha Beverly is NAA's General Counsel. Briana Anderson is a Paralegal with NAA's Legal Affairs department.
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