By D.J. Pendleton

There has been a lot of media commentary about recent opinions from the Supreme Court of the United States. But there is one opinion, in particular, the manufactured housing industry should be aware of and start  tracking for its potential impact.

Full disclosure: this article is probably only interesting to my fellow uber-legal nerds out there. We are talking about federal administrative law, which understandably gets a pronounced eyeroll from family members. That said, I am grateful for an outlet to delve into the nerdy minutia of federal administrative law and try to vividly imagine the world that changes as a result.

By now I’m sure you have read the opinion in Loper Bright, the case that overturned Chevron. Technically, it was a pair of cases in Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce, where the court overruled Chevron… but for those few who maybe haven’t gotten around to it, let’s hit the high points.

The Cases in Question

In 1984 there was a case — Chevron v. Natural Resources Defense Council — that created for the last 40 years the “Chevron doctrine.” Basically, the idea was that when a federal law wasn’t clear or was “ambiguous” the courts had to defer to the federal agencies’ interpretation so long as the bureaucracies’ interpretations were “reasonable.” To most, a reasonable standard (or burden) sounds, well, reasonable. But legally a reasonable threshold is, in fact, a very low bar to clear. It really can mean nearly any justification under the sun so long as the reasoning is not so blatantly shocking that a normal reasonable person would conclude, “that’s too far.”

Now before I get on with hyperbolic conjecture, I need to address the “no big deal” counterclaim. Full disclosure, Chevron deference hasn’t really been used in recent years. In fact, SCOTUS hasn’t relied on Chevron for the past eight years. More so in recent opinions the Court distinguished and clearly indicated a growing distance from Chevron. So much so Chief Justice Roberts wrote in his majority opinion that the Court’s recent “constant tinkering” of Chevron contributed to the doctrine being “unworkable”  and “misguided.”

Many federal administrative law practitioners, including some of the federal rule writing bureaucracies, will tell you that they haven’t used or relied on Chevron as any sore of rule writing safety net for a long time because they were able to read the tea leaves of the court anticipating Chevron’s eventual overturning.

More Than a ‘Nothing Burger’

Perhaps this article should end there. Perhaps, this is a bit of a “nothing burger” formality. But I don’t think so. During the 40-year span, Chevron has been cited in federal courts case more than 18,000 times. Clearly even if everyone now claims to have foreseen the eventual overturning by SCOTUS, and even steered clear of relying on it with prior administrative cases before SCOTUS, that doesn’t mean it wasn’t used in arguments and cited in briefs in lower federal courts. Plus, “a thing is a thing, until it isn’t a thing anymore,” … uncertain of the attribution on that quote, probably Yogi Berra, but the point is there is significant weight and importance when SCOTUS overturns any precedent. So, don’t let anyone convince you this isn’t impactful. My last point and evidence of the significance of the opinion is that Justice Elena Kagan announced her dissenting opinion along with reading a summary of her dissent from the bench. This is a bit of inside baseball, but for anyone who casually follows the court, most of the time dissenting opinions are merely filed. Only when a justice feels significantly impassioned, as they might in the movie “A Few Good Men” shouting “I strengously object” do they announce their dissent. She also wrote that the opinion “will cause a massive shock to the legal system.”

Vehement dissenting opinions aside, officially with the June 28 decision by the justices (6-3 vote) to overturn Chevron, the world of federal administrative law has forever changed. I won’t go into particulars of the case, only to say it had to with fishing regulations, so if that hook doesn’t grab you (had to do it), then you can read the cases on your own.

What Does This All Mean Now?

Well, like any pivotal opinion from the highest court in the land, it will take some time and more cases to follow to fully understand the impact. But fundamentally what it means is that federal judges will decide what a law means based  on the court’s own judgment. Part of the concept behind Chevron, and the claim by those who support Chevron, was that the people, experts, and career administrators have a greater depth of understanding and expertise in the subject they regulate, so deference should be afforded to their opinions when interpreting unclear or ambiguous laws passed by Congress. This changes all of that. There is no more “tie-goes-to-the-federal-agency” interpretation.

The majority opinion essentially says that courts and judges are more than capable of understanding complex cases, even those dealing with ambiguities in technical or scientific issues. A quick barrage from Chief Justice Roberts’ opinion on this line of analysis is as follows: “Chevron… demands that courts mechanically afford binding deference to agency interpretations, including those that have been inconsistent over time.” 

“A statutory ambiguity does not necessarily reflect a congressional intent that an agency, as opposed to a court, resolve the  resulting interpretive question.” “And when courts confront statutory ambiguities in cases that do not involve agency interpretations or delegations of authority, they are not somehow relieved of their obligation to independently interpret the statutes.”

“Chevron’s presumption is misguided because agencies have no special competence in resolving  statutory ambiguities. Courts do. “

“The Framers anticipated that courts would often confront statutory ambiguities and expected that courts would resolve them by exercising independent legal judgment.”

“Chevron’s broad rule of deference, though, ambiguities of all stripes trigger deference, even in cases having little to do with an agency’s technical subject matter expertise. And even when an ambiguity happens to implicate a technical matter, it does not follow that Congress has taken the power to authoritatively interpret the statute from the courts  and given it to the agency.”

“Congress expects courts to handle technical statutory questions, and courts did so without issue in  agency cases before Chevron.”

To answer the million-dollar (more like multi-million dollar) question of, “Ok, so what?” I can give you the legally  astute answer of, “We’ll see.” But from the cheap seats it appears that the decision opens the doors to more court challenges of federal agencies’ rules and interpretations.

We will see a lot more lawsuits in the coming years. When this materializes, federal court dockets will become even more strained, and litigation  will take even longer. Perhaps not as visible as formal court challenges, there will be a real impact caused by a “chilling effect” going forward for agencies now reticent to make legal interpretations, especially bold ones. The mere threat of a legal challenge without the safety net of Chevron will cause federal regulators to think twice before issuing regulations.

This can cut both ways.

Chevron’s Impact in Manufactured Housing

I think mostly this will have an industry benefit, but if there are interpretations by regulators you like but others don’t, then you dislike this.

Recall that Chevron originally came out of efforts from the conservative President Reagan Administration with his appointees and agency heads running the EPA, who interpreted the Clean Air Act to ease regulations from the previous President Carter Administration. For our manufactured housing industry, one of the many thoughts that came to mind was the limited interpretation, certainly hesitancy in practice, of HUD’s  interpretation of the 2000 Act: “Federal preemption under this subsection shall be broadly and liberally construed to ensure that disparate State or local requirements or standards do not affect the uniformity and comprehensiveness of the standards promulgated under this section nor the Federal superintendence of the manufactured housing industry as established by this title.”

For years, people in our industry have been asking for a HUD interpretation of federal preemption under the “broadly and liberally” mandate to encompass some degree of local zoning preemption. HUD has not done so, sticking only to elements of home construction preemption. And HUD’s silence on local zoning preemption, despite countless requests and prodding, in and of itself could infer their “reasonable” interpretation that Congress did not intend to play in the local zoning preemption sandbox.

In an alternative universe where HUD had interpreted the law to include local zoning preemption, then overturning Chevron would be a bad thing for us. But since that isn’t the case, perhaps a court can now more freely take on that role to decide the lengths of Congress’ intent nearly a quarter-century ago on just how far “broadly and liberally” should go. It would be logical to think that ambiguities in federal laws will diminish because of the ruling. That Congress will have to start drafting with greater specificity and clarity. Maybe.

Slowing Legislative Process

But ambiguity is sometimes what is needed for a bill to have a shot at ever passing to become a law in the first place. The more detailed, the lengthier, and the more specific provisions in a bill, the more targets the opposition can attack. This will make passing bills even more difficult. And even if ambiguity is not intentionally used in bill writing for political purposes, as the majority opinion points out, “[m]any or perhaps most statutory ambiguities may be unintentional.” 

Not as pithy or catchy as the more vulgar version of the bumper sticker, but I’m thinking of adorning the back of my car with, “Ambiguity Happens,” guaranteeing another series of eyerolls from the family.

Regardless of how or why ambiguities come to pass, a significant impact is that this ruling will necessitate more bills to pass into law. If the first version turns out to not be specific enough and a court decision is perceived to take longer than writing and passing a new bill in Congress, then new legislation will be needed. And this doesn’t just impact legislation going forward. The opinion changed the landscape that allows for interpretations of old laws long on the books as taking on new meaning through  new regulatory interpretations.

This route of modifying old laws to have new meanings through revised regulatory interpretations as time goes on has been the common route to, effectively, lash new regulatory sails to the masts of old law ships. No more. If you want a new regulation with a clear interpretation, you are going to have to go to Congress and have them build a brand-new boat.

Clearly the importance of crystal-clear bill drafting now comes at an even higher premium. And if the length and detail in bills explodes, then it becomes critical to have accomplished, skilled, and highly experienced people at the helm carefully reading every word and dissecting every angle.

And it’s probably time to beef up everyone’s expectations and budgets for litigation in the future.

The trickle-down impact of overturning Chevron at the state level will be another area to watch with focused interest. Granted the particulars of the case technically only apply to federal laws and agencies, but there is a chance some states, like Texas, will take queues from SCOTUS. And if we don’t overtly see a run of state litigation in this space, again, I expect there to be a chilling effect on a go-forward basis from state regulators when they consider issuing interpretations of state laws.

Challenging agencies (federal or state) in court has always been a tool in the toolbox. Case in point, the current litigation TMHA is involved in with MHI in federal court over the DOE energy standards. And going forward in a more crowded court docket, I think this will be a slow-moving tool.

That said, when needed I think the result of the recent SCOTUS decision is that perhaps it is slow moving, but it is now a much sharper tool when used.

D.J. Pendleton is the executive director for the Texas Manufactured Housing Association, and advocates at the national level for the manufactured housing industry. Pendleton earned a law degree from Baylor.