Supreme Court Ruling Reins In Federal Bureaucrats

Contacts: Thomas Ward
VP, Legal Advocacy
(202) 266-8230

Jeff Augello
AVP, Association Counsel
(202) 266-8490

In a major victory for NAHB and the housing community, the U.S. Supreme Court has issued a ruling to reform the nation’s broken regulatory rulemaking process by ensuring that federal courts interpret federal statutes and no longer defer to the interpretations of federal bureaucrats. 

“Today’s Supreme Court ruling is an important step forward to advance meaningful regulatory reform because it means that federal agencies can no longer continuously change the law — and the intent of Congress — by implementing their own interpretation of statutes as long as those interpretations are viewed as being ‘reasonable,’” said NAHB Chairman Carl Harris.

The case may prove to be a game-changer for builders and developers who must interact with any part of the federal government. For home building, this means that every federal agency that builders and developers must deal with — from the U.S. Department of Housing and Urban Development to the Environmental Protection Agency, the Department of Labor, the Occupational Safety and Health Administration and more — will have less discretion to impose new regulations that Congress did not clearly authorize.

The Supreme Court verdict was made in two cases — Relentless v. Dept. of Commerce and Loper Bright Enterprises v. Raimondo — where the plaintiffs sought to overturn a previous decision made by the nation’s highest court 40 years ago that gave the government an unfair advantage when someone challenges a regulation in court. NAHB filed a friend-of-the-court brief on behalf of both plaintiffs.

In 1984, the Supreme Court issued an opinion that created the “Chevron deference” doctrine, which requires courts to abide by a statute if it is “clear,” but also requires courts to defer to a federal agency’s interpretation of an unclear statute if the interpretation is “reasonable,” even if it is not the best interpretation. In other words, Chevron gives federal agencies wide latitude to interpret the scope of the nation’s laws.

Ruling in the 6-3 majority opinion to overturn Chevron (the two cases were decided together and the decision in the Loper-Bright case was 6-2 because Justice Ketanji Brown Jackson was recused), Chief Justice John Roberts said the presumption that statutory ambiguities are implicit delegations of authority by Congress to federal agencies “is misguided,” because “agencies have no special competence in resolving statutory ambiguities. Courts do.”

He further explained that “‘[A]mbiguity’ is a term that may have different meanings for different judges. One judge might see ambiguity everywhere; another might never encounter it. A rule of law that is so wholly in the eye of the beholder invites different results in like cases and is therefore arbitrary in practice. Such an impressionistic and malleable concept cannot stand as an every-day test for allocating interpretive authority between courts and agencies.”

The cases of Relentless v. Dept. of Commerce and Loper Bright Enterprises v. Raimondo involved a National Marine Fisheries Service regulation that requires fishermen to pay for federal observers to board their ships and observe their fishing practices. While the governing statute says the agency can require federal observers on the ships, it is silent on whether the fishermen must pay their salaries. The lower courts upheld the regulation based on Chevron deference.

NAHB has a long history of fighting against Chevron deference because it allows federal agencies to write the laws, enforce the laws and interpret the laws. It invites Congress to draft vague legislation and empower federal agencies that are less politically accountable. Chevron deference also inhibits courts from exercising their constitutional power to interpret the law. Taken together, this results in an ever-growing number of burdensome regulations that Congress did not authorize and the courts do not check.

As a result of today’s landmark ruling, the power of the legislature, executive and judicial branches will no longer be merged in the hands of unelected bureaucrats.

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