The Supreme Court heard oral arguments today in two cases of significant importance to NAHB members because the ultimate outcome of each case could sharply curtail the way a court reviews a federal agency’s interpretation of a statute.

Plaintiffs in the two cases, Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce, are seeking to overturn a previous Supreme Court decision made decades ago that gives the government an unfair advantage when someone challenges a regulation in court.

In 1984, the Supreme Court issued an opinion in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. That opinion created “Chevron Deference,” 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 regulations.

In the oral arguments today, both cases (Loper Bright and Relentless) involve a National Marine Fisheries Service (NMFS) 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 ships, it is silent on whether the fishermen must pay their salaries. Based on Chevron Deference, the lower courts deferred to NMFS’s interpretation of the law that required the fishermen to pay for the observers because it was “reasonable.”

Justices Question Chevron Deference

The attorney for Loper Bright and Relentless argued that Chevron must be overruled. As a replacement for Chevron, he argued that courts should give “weight” to an agency’s interpretation of a statute, but not defer to it. To support his argument, he highlighted that both the Constitution and the Administrative Procedure Act provide that courts (not agencies) have the authority to interpret statutes.

The Solicitor General, arguing for the government, explained that Chevron is a bedrock principle of administrative law, and that overturning such precedent requires an extraordinary justification that does not exist in this case.

One of the arguments that the Solicitor General made was that Chevron adds stability to the law. Some of the justices pushed back on this argument, explaining that because of Chevron, agencies can change the law with every change in administration.

NAHB Has a Long History on This Issue

NAHB has a long history of fighting against Chevron Deference, and we have fought this battle in numerous cases, including issuing a friend-of-the-court brief in the Loper Bright case.

Over the past 40 years, numerous problems have been uncovered because of Chevron.

First, it clearly is biased toward federal agencies by granting them broad leeway to interpret and implement regulations.

Second, Chevron puts too much power in the hands of the unelected agencies. As part of the executive branch, the federal agencies must enforce the laws. However, because Congress also delegates its authority to write the regulations, the agencies both create and enforce many laws. Chevron adds to that problem by putting a “thumb on the scale” in court. Thus, the power of the legislature, executive and judicial branches are merged in the hands of unelected bureaucrats.

Finally, Chevron gives Congress an incentive to write ambiguous laws. Lawmakers want to get statutes passed. Chevron, however, allows Congress to forgo doing the difficult work of drafting clear laws by letting it pass the work off to the agencies. The agencies can then continuously change the law — and the intent of Congress — by implementing their own interpretation as long as they are “reasonable.”

The Supreme Court is expected to reach a decision in the two cases between April and June.