As the United States Supreme Court closed out its 2024 term, the Court issued its much-awaited decision in Loper Bright Enterprises Et Al. v. Raimondo, Secretary of Commerce, Et Al, a case that challenged the extent to which federal agencies can interpret rules and laws without judicial or congressional input.

In its 6-3 decision, the Court said that the Courts, not federal agencies, overruled a 1984 decision establishing the so-called Chevron doctrine, granting Federal agencies wide latitude in interpreting rules and regulations.

What is the Chevron doctrine?

The Chevron doctrine refers to a legal principle stemming from the U.S. Supreme Court’s 1984 decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. It established that courts should defer to federal agencies’ interpretations of ambiguous statutes they administer unless the interpretation is unreasonable. This deference allowed agencies to interpret laws within their expertise, giving them significant latitude in rulemaking and enforcement. This deference has been central to the regulatory state for decades, shaping U.S. policy across all sectors.

In recent years, the doctrine has faced growing criticism, particularly from conservative legal scholars and judges, who argue that it grants too much power to unelected bureaucrats at the expense of judicial authority and the separation of powers. Opponents contend that courts should not abdicate their role in interpreting the law, especially when agencies take positions that expand their own regulatory powers.

What was this case about?

Loper Bright Enterprises, a family-owned fishing company from New Jersey, operates in the waters off New England. The company estimated that complying with federal monitoring requirements cost them around $700 each day. In February 2020, Loper took legal action by filing a lawsuit in the U.S. District Court. The case argued that the National Marine Fisheries Service, which manages marine resources, lacked the authority under the Magnuson-Stevens Act to compel the fishing industry to cover the costs of its monitoring.

This legal dispute revolved around the Chevron doctrine, a Supreme Court ruling from 1984 that instructs courts to defer to a federal agency’s interpretation of a law it enforces if the law is unclear, and the agency’s interpretation is deemed reasonable.

How will this impact the housing industry?

While the case was about fisheries, the ruling in Loper extends to all federal regulations. Critics of the Chevron doctrine have often expressed worries that permitting agencies to interpret the laws they implement can lead to “regulatory creep” and constantly shifting rules and regulations. Although the decision was only recently issued, the Loper ruling will curtail federal agencies’ ability to enforce new regulations that Congress hasn’t explicitly or clearly approved.