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  • Writer's pictureRealFacts Editorial Team

Time to Leave it Behind: Supreme Court Axes Chevron Doctrine

In a 6-3 ruling, SCOTUS decided that federal agencies would no longer have deference in interpreting laws simply because a statute is ambiguous. Chief Justice Roberts stated, “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.” He emphasized that courts must be able to exercise their independent judgment, noting that Chevron “prevents judges from judging.” As a result, Chevron was overruled, and the decisions in Loper Bright and Relentless, Inc. were vacated and remanded.

The court highlighted ongoing challenges with Chevron, describing it as an impediment that forced repeated clarifications, thereby complicating its application. Justice Clarence Thomas, in his concurring opinion, argued that Chevron violated the Constitution’s separation of powers by curbing judicial power and expanding executive power beyond constitutional limits.

Implications for Real Estate Investors

The overturning of Chevron shifts regulatory power away from federal agencies to the judicial branch, significantly impacting industries regulated by these agencies, including real estate. Agencies such as the Department of Housing and Urban Development (HUD) and the Consumer Financial Protection Bureau (CFPB) have relied on Chevron's deference to interpret regulations affecting rental housing, such as the Fair Housing Act and the Equal Credit Opportunity Act. Without Chevron, courts will no longer defer to these agencies' interpretations, potentially leading to more legal challenges against federal regulations.

For real estate investors, this ruling means that federal regulations are now more vulnerable to judicial review and challenge. Michael Huston, a Supreme Court and appellate lawyer, stated, “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.” This change could make it more difficult for agencies to expand their authority using older statutes, potentially reducing regulatory burdens on real estate investors.

Jonathan Y. Ellis, co-chair of the Appeals and Issues Team at McGuireWoods, LLP, noted that the decision would make it more difficult for agencies to defend their regulations affecting the rental housing industry. This could lead to challenges against existing regulations, offering a new avenue for real estate investors to contest unfavorable rules.

Looking Ahead

The Supreme Court's decision does not retroactively affect prior cases decided under the Chevron framework, but it sets a new precedent for future regulatory interpretations. Congress will need to draft legislation with greater specificity to ensure clear guidelines for enforcement, as ambiguity will no longer be resolved through agency interpretation.

The NAA’s Legal Affairs team will continue to monitor the fallout from this landmark decision, particularly the outcomes of the Loper Bright and Relentless, Inc. cases, which will now be reviewed without deference to NMFS’s interpretations.


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