WEBVTT - Eugene Scalia on Beating Regulators in Court 0:00:13.160 --> 0:00:16.840 Hello, and welcome to the Votes and Verdicts podcast, hosted 0:00:16.880 --> 0:00:20.600 by the litigation and policy team at Bloomberg Intelligence, the 0:00:20.600 --> 0:00:25.800 investment research platform of Bloomberg LP. This podcast series examines 0:00:25.840 --> 0:00:30.120 the intersection of business policy and Law'm Elliott Stein and 0:00:30.280 --> 0:00:33.440 analysts with Bloomberg Intelligence covering financials litigation. 0:00:34.159 --> 0:00:35.960 And my name is Nathan Dean, and I'm an analyst 0:00:36.000 --> 0:00:38.199 with Bloomberg Intelligence covering financials policy. 0:00:39.280 --> 0:00:42.120 So our topic for today is how to beat the 0:00:42.240 --> 0:00:46.120 US government in court, and we're delighted to have with 0:00:46.240 --> 0:00:50.520 us the perfect guest for this topic, Eugene Scalia, partner 0:00:50.560 --> 0:00:53.240 in the Washington, d c. Office of Gibson, Dunn and 0:00:53.280 --> 0:00:57.160 Crutcher and co chair of the firm's Administrative Law and 0:00:57.280 --> 0:01:01.640 Regulatory Practice Group. Two thousand and two to two thousand 0:01:01.680 --> 0:01:05.640 and three, Secretary Scalia served as Solicitor of the US 0:01:05.640 --> 0:01:09.679 Department of Labor, and from twenty nineteen to twenty twenty 0:01:09.680 --> 0:01:13.399 one he served as US Secretary of Labor, making him 0:01:13.400 --> 0:01:16.800 the only person ever to have served as both solicitor 0:01:16.840 --> 0:01:21.600 and Secretary of Labor. Secretary Scalia is the go to 0:01:21.720 --> 0:01:26.520 lawyer for challenging federal regulatory actions and has successfully challenged 0:01:26.600 --> 0:01:31.040 rules like the SEC's Proxy Access Rule, the CFTC's position 0:01:31.200 --> 0:01:35.080 limits rule, met Life's designation as too big to Fail 0:01:35.360 --> 0:01:40.160 by the Financial Stability Oversight Council, the Labor Department's fiduciary rule, 0:01:40.560 --> 0:01:45.880 and OSHA's Cooperative Compliance program. And if that's not impressive enough, 0:01:45.880 --> 0:01:50.400 he's currently involved in litigation challenging the SEC's Private Funds Rule, 0:01:51.000 --> 0:01:56.040 California's climate disclosure law, New York City Pension Fund's decision 0:01:56.160 --> 0:01:59.880 to divest from fossil fuel companies, and he has been 0:02:00.120 --> 0:02:04.680 retained to represent banking industry groups to fight proposed rules 0:02:04.680 --> 0:02:09.360 that would increase capital requirements for banks. I would be 0:02:09.440 --> 0:02:12.960 remiss if I didn't also mention that Secretary Scolia is 0:02:13.000 --> 0:02:16.480 a son of the late Supreme Court Justice Antonin Scalia. 0:02:17.280 --> 0:02:19.679 And on a personal note, I should add that many 0:02:19.760 --> 0:02:22.040 years ago I played on the same fifth grade soccer 0:02:22.080 --> 0:02:25.919 team as one of Secretary Scolia's brothers, though I doubt 0:02:25.960 --> 0:02:29.600 anyone other than me remembers that. So with all that, 0:02:29.720 --> 0:02:32.920 Secretary Scolia, welcome to the Votes and Verdicts podcast. 0:02:33.600 --> 0:02:36.400 Thank you, Elliott, good to join you. If you didn't 0:02:36.400 --> 0:02:37.919 say it, we should also add that I'm with the 0:02:37.960 --> 0:02:39.680 Gibson un and Cruncher Law Firm. 0:02:40.440 --> 0:02:44.080 That's exactly right, and we are so excited to have 0:02:44.160 --> 0:02:47.040 you on today's show because we really can't think of 0:02:47.120 --> 0:02:50.640 anyone better than you to talk to us about challenging 0:02:50.680 --> 0:02:54.840 government regulations in court. I think I listed most of, 0:02:54.919 --> 0:02:56.840 not all, of the cases where you've done that, and 0:02:56.960 --> 0:02:59.720 I believe you are seven and zero in going up 0:02:59.760 --> 0:03:04.120 again and government rules and regulations. And of course there 0:03:04.160 --> 0:03:08.000 are several high profile cases going on right now where 0:03:08.040 --> 0:03:12.560 you're also challenging government laws or initiatives. Well, of course, 0:03:12.600 --> 0:03:15.919 get into more detail about some of those, but before 0:03:16.000 --> 0:03:19.400 we do, we like to ask our guests a little 0:03:19.400 --> 0:03:22.079 bit about their background. So maybe we can start by 0:03:22.120 --> 0:03:23.960 having you tell us a little bit more about your 0:03:24.000 --> 0:03:27.560 legal career, about your stints at the Labor Department, and 0:03:27.600 --> 0:03:29.680 about your current practice at Gibson Done. 0:03:30.200 --> 0:03:32.799 Sure, we please too. I should, by the way, clarify 0:03:32.840 --> 0:03:37.520 that I'm seven to zero in suing the SEC to 0:03:37.720 --> 0:03:43.320 challenge its rules. I've won more if you count other 0:03:43.360 --> 0:03:45.880 agencies as well, although there are a couple there that 0:03:46.080 --> 0:03:47.520 where the court got it wrong and I didn't win. 0:03:47.880 --> 0:03:52.320 I went to University of Chicago Law School after a 0:03:52.360 --> 0:03:55.400 couple of years actually working in the Reagan administration as 0:03:55.440 --> 0:03:59.560 a speechwriter, and then join my current firm, Gibson, Done 0:03:59.560 --> 0:04:03.040 and Crutcher in Los Angeles, where I had a labored 0:04:03.040 --> 0:04:07.600 employment law practice and a litigation practice. But I moved 0:04:07.640 --> 0:04:11.440 back to Washington in nineteen ninety two to work for 0:04:11.480 --> 0:04:14.400 the Attorney General as a special assistant. It was actually 0:04:14.400 --> 0:04:18.039 Bill Barr, his first time as Attorney General. I worked 0:04:18.040 --> 0:04:21.080 there for a year. The American people voted us out 0:04:21.400 --> 0:04:24.760 in nineteen ninety two, and so I rejoined my firm, 0:04:24.800 --> 0:04:29.880 Gibson Done, became partner here, started our what we call 0:04:29.920 --> 0:04:35.320 administrative law and regulatory practice group. It's really a practice 0:04:35.320 --> 0:04:40.720 that focuses on representing clients who are in contentious proceedings 0:04:40.760 --> 0:04:44.120 with agencies where they think they may well ultimately need 0:04:44.160 --> 0:04:46.640 to go to court to vindicate their rights. And so 0:04:47.440 --> 0:04:49.960 that's the heart of that practice. But I've also maintained 0:04:50.000 --> 0:04:53.200 a labor employment practice for many years, co chaired or 0:04:53.279 --> 0:04:58.400 labor employment practice while also sharing our administra of law practice. 0:04:58.520 --> 0:05:00.919 As you mentioned, I went to work in the George W. 0:05:01.000 --> 0:05:04.920 Bush administration as the so called solicitor, the general counsel 0:05:04.920 --> 0:05:07.880 of the Labor Department, then return to my firm when 0:05:07.880 --> 0:05:11.040 that was done, and then rejoined the Labor Department as 0:05:11.080 --> 0:05:17.080 secretary for President Trump in twenty nineteen, and came back 0:05:17.120 --> 0:05:22.040 here in the spring of twenty twenty one. 0:05:23.200 --> 0:05:25.400 Great, Well, I'd like to kick things off a little 0:05:25.440 --> 0:05:27.919 bit by talking about just what is it like to 0:05:27.920 --> 0:05:31.000 see a regulator. It feels like we're in this perfect 0:05:31.040 --> 0:05:34.839 storm for litigating challenges challenging regulations because on one hand, 0:05:35.200 --> 0:05:37.599 you have the Biden administration, which is, I would argue, 0:05:37.760 --> 0:05:40.880 fairly aggressive in promligating rules and regulations. And then on 0:05:40.920 --> 0:05:43.640 the other hand, you have a federal judiciary, particularly at 0:05:43.680 --> 0:05:47.080 the Supreme Court and the Circuit court levels, that's concerned 0:05:47.080 --> 0:05:49.760 with government overreached. So I was wondering, if could you 0:05:49.839 --> 0:05:51.960 place this moment of time in terms of a horse 0:05:52.440 --> 0:05:55.840 historical context. Are there other times that you can recall 0:05:55.920 --> 0:05:58.640 with there's so many lawsuits challenging government regulations. 0:05:59.120 --> 0:06:01.520 It really isn't on you usual time. And I think 0:06:01.560 --> 0:06:03.760 that's for a couple of different reasons, which you've already 0:06:03.760 --> 0:06:08.839 touched on. One is that you do have a Supreme 0:06:08.880 --> 0:06:15.800 Court right now that is very focused on re examining 0:06:16.600 --> 0:06:22.640 the limits that exist on the powers of federal regulatory 0:06:22.640 --> 0:06:25.479 agencies and the powers that they may be given by 0:06:25.920 --> 0:06:32.400 Congress while still remaining consistent with constitutional requirements. I think 0:06:32.480 --> 0:06:37.080 that this question of the powers and limits of powers 0:06:37.160 --> 0:06:41.960 on federal ministry of agencies and associated questions about how 0:06:41.960 --> 0:06:44.880 they can exercise those powers may end up being the 0:06:44.960 --> 0:06:51.560 defining issue for the Roberts Court. I point out to 0:06:51.600 --> 0:06:56.200 people that if you look at the three justices that 0:06:56.320 --> 0:07:00.000 President Trump added to the Supreme Court during his tenure, 0:07:00.760 --> 0:07:03.760 very arguably each one of those three is more interested 0:07:04.560 --> 0:07:08.960 than the person he or she replaced in identifying and 0:07:09.160 --> 0:07:13.840 enforcing limits on the power of federal regulatory agencies. So 0:07:14.880 --> 0:07:20.000 Justice Barrett more so than Justice Ginsberg, Justice Kavanaugh, I think, 0:07:20.040 --> 0:07:24.000 more so than Justice Kennedy, and even Justice Gorsuch more 0:07:24.080 --> 0:07:27.120 so than my father, Justice Scalia. And in fact, that 0:07:27.320 --> 0:07:29.120 change in the seat in the Court is a very 0:07:29.120 --> 0:07:32.320 good example because on two issues that are getting a 0:07:32.320 --> 0:07:35.360 lot of attention right now, my father had a position 0:07:35.400 --> 0:07:39.360 that was somewhat favorable toward regulatory agencies for much of 0:07:39.400 --> 0:07:43.000 his career. He was a real proponent of so called 0:07:43.280 --> 0:07:48.200 Chevron deference. That's the idea that when statutes are ambiguous 0:07:48.280 --> 0:07:54.080 that courts should defer to agencies reasonable interpretations of those statutes. 0:07:54.840 --> 0:07:58.560 And then secondly, my father was skeptical Justice Scalia was 0:07:59.320 --> 0:08:04.040 of whether the courts could effectively administer what's known as 0:08:04.040 --> 0:08:07.680 the non delegation doctrine. It's the idea that Congress can't 0:08:07.680 --> 0:08:13.120 delegate its legislative job wholesale lock stock and barrel to 0:08:13.320 --> 0:08:18.560 regulatory agencies. Justice Gorsuch, on the other hand, has been 0:08:18.600 --> 0:08:21.960 a very harsh critic of Chevron and has been a 0:08:21.960 --> 0:08:26.000 real proponent of reinvigorating that so called non delegation doctrine. 0:08:26.040 --> 0:08:29.840 So he parts company with my father on both of 0:08:29.840 --> 0:08:33.640 those important issues. Although I should add that very late 0:08:33.679 --> 0:08:38.520 in his career, my father justically was becoming skeptical of 0:08:38.760 --> 0:08:42.200 deference doctrines, including I think Chevron difference. So his views 0:08:42.240 --> 0:08:45.000 themselves were changing. So that's part of what is going on. 0:08:45.040 --> 0:08:50.000 You've got a Supreme Court really focused on limits on 0:08:50.040 --> 0:08:56.559 agency power, on preventing Congress from intruding on the president authority, 0:08:57.440 --> 0:09:02.880 preventing agencies from adopting authorities that belong to Congress the president. 0:09:03.640 --> 0:09:08.400 And then the other trend that's happening is you do 0:09:08.480 --> 0:09:12.680 have an administration that's using regulatory agencies in a quite 0:09:13.760 --> 0:09:18.120 aggressive and expansive way. Now, this is also not entirely new, 0:09:19.120 --> 0:09:23.720 because presidents have found it increasingly difficult to enact their 0:09:25.160 --> 0:09:30.240 agenda legislatively through Congress, they you know, naturally cast about 0:09:30.280 --> 0:09:35.080 for other ways to get things done, and using agencies, 0:09:35.280 --> 0:09:41.160 using their executive administrative powers is a natural place to look. 0:09:41.800 --> 0:09:45.880 And so you have seen just generally more energetic use 0:09:45.960 --> 0:09:50.480 by presidents and recent administrations of their agencies. But I 0:09:50.480 --> 0:09:56.360 think some Biden agencies have been on overdrive. The President 0:09:56.400 --> 0:10:00.480 Biden has been encouraged by some to view himself as 0:10:00.520 --> 0:10:04.000 a new Franklin Dellan Roosevelt in sort of the ambition 0:10:04.080 --> 0:10:06.959 and sweep of the programs that he puts in place. 0:10:07.480 --> 0:10:11.600 The problem is that President Roosevelt had enormous legislative majorities 0:10:11.640 --> 0:10:15.400 and Biden doesn't. So how does he get there? Well, again, 0:10:15.480 --> 0:10:23.880 it's through aggressive, adventurous use of agencies. Examples would include 0:10:24.120 --> 0:10:31.840 the cancelation of student loan debt, the so called eviction 0:10:32.000 --> 0:10:36.599 moratorium that was put in place in originally the Trump administration, 0:10:36.640 --> 0:10:39.160 but extended a couple of times by President Biden, ultimately 0:10:39.200 --> 0:10:43.680 struck down by the Supreme Court the Osha vaccine mandate 0:10:43.840 --> 0:10:46.240 that the President adopted late in twenty twenty one, also 0:10:46.280 --> 0:10:49.679 struck down by the Supreme Court. And there are a 0:10:49.760 --> 0:10:53.760 number of rules out there that are in litigation or 0:10:53.800 --> 0:10:55.920 are in the verge of being proposed, like the Federal 0:10:55.920 --> 0:11:00.240 Trade Commission's proposal to outlaw noncompete agreements that again are 0:11:00.440 --> 0:11:05.319 very aggressive, uh attempts to use regulatory power. So one 0:11:05.360 --> 0:11:07.760 of the same time that you've got the court looking 0:11:07.760 --> 0:11:13.520 for agency overreach and abuse, you've got the bidy administration saying, hey, 0:11:13.840 --> 0:11:16.720 look over here, we've got some for you. And it's uh, 0:11:16.960 --> 0:11:19.440 it's it's it's resulting in a lot of litigation. 0:11:20.880 --> 0:11:24.240 You know, it's funny because I I came to Washington 0:11:24.240 --> 0:11:26.920 fourteen years ago. Funny enough, also from the University of Chicago, 0:11:27.040 --> 0:11:29.640 though I was on the business school side asposed to 0:11:29.679 --> 0:11:32.920 law school. So we can definitely talk Hyde Park Restaurant someday, but. 0:11:33.040 --> 0:11:33.880 Help me at. 0:11:35.120 --> 0:11:38.240 Exactly. But when I look back at your career, I 0:11:38.280 --> 0:11:40.679 see all these core cases that I had to, you know, 0:11:40.720 --> 0:11:43.320 respond to, as you know, either in government affairs or 0:11:43.640 --> 0:11:45.600 here at Bloomberg. You know, we're talking about the met 0:11:45.600 --> 0:11:49.000 Life SAPY designation, the CFDC position limits rule, and I 0:11:49.000 --> 0:11:51.560 would love to know how do you approach these cases, like, 0:11:51.800 --> 0:11:55.040 is there when you come into this, you know, is 0:11:55.040 --> 0:11:58.040 there a concern that a company further upsets its regulator 0:11:58.040 --> 0:12:00.720 by suing it? Because I know for my own experience, 0:12:00.760 --> 0:12:03.559 we would never suggest ever suing your own regulator unless 0:12:03.559 --> 0:12:04.520 there's a really good reason. 0:12:04.840 --> 0:12:08.240 It's a great question. And let me say that in 0:12:08.280 --> 0:12:15.160 some circles there's this narrative whereby corporations and trade associations 0:12:15.160 --> 0:12:20.480 are incessantly looking for fights to pick with the government 0:12:20.520 --> 0:12:25.880 and lawsuits to bring, and even when those cases may 0:12:25.920 --> 0:12:31.760 not be particularly meritorious. The truth is actually very much 0:12:31.760 --> 0:12:36.560 the opposite. My corporate clients really are not eager to 0:12:36.640 --> 0:12:41.679 get in litigation with the government. Trade associations generally also 0:12:41.920 --> 0:12:47.520 would rather reach a consensus compromise not be driven to litigation. 0:12:48.280 --> 0:12:52.240 I've had conversations many a time with clients where I've said, 0:12:52.280 --> 0:12:54.760 you know, you've got a really pretty good case to 0:12:54.800 --> 0:12:58.760 bring here. I think you're likely to win if you're 0:12:58.800 --> 0:13:01.920 willing to bring it, and the clients have said, you 0:13:01.920 --> 0:13:04.880 know what, we hear you. We're very bothered by what 0:13:05.000 --> 0:13:07.480 was done, but we just at the end of the day, 0:13:08.280 --> 0:13:10.480 have other fish to fry with the agency right now, 0:13:10.480 --> 0:13:13.199 we'd rather not sue. I've had that conversation a number 0:13:13.200 --> 0:13:18.079 of times in my career. Never have I had a 0:13:18.120 --> 0:13:23.240 corporation or trade association say you know, yeah, I'm probably 0:13:23.280 --> 0:13:24.800 not gonna win. I hear you, but I want to 0:13:24.800 --> 0:13:28.840 assue them anyway. And so there's a natural hesitancy. There's 0:13:28.840 --> 0:13:31.880 a respect for the government. There's a desire to find compromise. 0:13:31.920 --> 0:13:37.400 There's a desire to have a regulatory environment that's predictable, 0:13:37.520 --> 0:13:44.120 that's manageable. But there certainly are times where clients feel 0:13:44.200 --> 0:13:47.800 that they have no choice but to proceed with litigation. 0:13:50.679 --> 0:13:51.000 Now. 0:13:52.240 --> 0:13:55.920 I first sued the Securious Exchange Commission back in about 0:13:56.559 --> 0:14:01.000 two thousand and five, and that was a rule where 0:14:01.240 --> 0:14:03.800 when I looked at the work they'd done, when I 0:14:03.840 --> 0:14:07.880 looked at the rule making file, I was surprised at 0:14:08.280 --> 0:14:13.920 how unsophisticated the SEC's work was, and frankly, some of 0:14:13.960 --> 0:14:15.960 the most of the comments that were submitted also were 0:14:17.640 --> 0:14:20.200 comments submitted to the agency by the public about what 0:14:20.200 --> 0:14:23.320 the rules should say, were very short and really didn't 0:14:23.320 --> 0:14:26.120 offer very much. When I sued the SEC back then 0:14:26.200 --> 0:14:28.880 in two thousand and five or so. They were just indignant. 0:14:29.800 --> 0:14:32.840 They were not used to this. My client was the 0:14:32.960 --> 0:14:38.520 US Chamber of Commerce, and the SEC just couldn't understand 0:14:38.560 --> 0:14:41.360 what business the Chamber of Commerce had suing them over 0:14:41.400 --> 0:14:48.520 one of their rules. They raised very non meritorious arguments 0:14:48.600 --> 0:14:52.640 challenging the Chambers standing and the like. I actually gave 0:14:52.680 --> 0:14:57.440 a talk after that first lawsuit where a staff member 0:14:57.440 --> 0:15:03.280 of the SEC insisted on showing up and getting equal 0:15:03.360 --> 0:15:08.400 time and castigating my client's in me for bringing this lawsuit. 0:15:09.360 --> 0:15:11.000 He was still so worked up about it even though 0:15:11.000 --> 0:15:14.880 we had won the case, and actually his point was 0:15:15.000 --> 0:15:19.040 kind of interesting. His point was that my client and 0:15:19.080 --> 0:15:24.200 I were trying to use procedural rules, in his mind, 0:15:24.280 --> 0:15:28.280 tricks to prevent the agency from doing the right thing 0:15:28.400 --> 0:15:31.640 that the agency's policy goals he believed were really important, 0:15:32.600 --> 0:15:37.240 and we were just trying to use procedural tiki taki 0:15:37.360 --> 0:15:39.400 requirements to prevent them from doing it. And you know, 0:15:39.480 --> 0:15:44.640 my answer was, a procedure is what the Administrative Procedure 0:15:44.640 --> 0:15:47.400 Act is all about. The Administraive Procedure Act, the APA 0:15:47.560 --> 0:15:50.840 is the law under which agencies are most frequently sued, 0:15:51.680 --> 0:15:55.320 and that law requires agencies to proceed in a way 0:15:55.400 --> 0:15:59.280 that's fair, it's open minded, that gives the public a 0:15:59.360 --> 0:16:02.560 chance to comm meant and a process where after the 0:16:02.560 --> 0:16:05.000 public has commented, the agency listens carefully to what they've 0:16:05.040 --> 0:16:08.840 said and reconsiders its course of action. And and so 0:16:11.520 --> 0:16:15.680 you know that that is the process that Congress has established. 0:16:16.040 --> 0:16:19.640 It's one that the agencies are governed by. And what 0:16:19.720 --> 0:16:22.960 I found with the SEC was that over time they 0:16:23.080 --> 0:16:26.000 you know, they've become a little more accustomed to getting sued. 0:16:27.840 --> 0:16:29.720 People who in the past might have been hesitant about 0:16:29.760 --> 0:16:32.800 doing it now recognized that it's just part of dealing 0:16:32.800 --> 0:16:36.880 with a regulator and the agent. The SEC, for its part, 0:16:36.960 --> 0:16:39.760 has particularly in the last couple of years, gotten much 0:16:39.800 --> 0:16:46.360 more aggressive, which again is prompted more lawsuits. So again 0:16:46.480 --> 0:16:49.320 I think most companies and trade associations would would rather 0:16:49.440 --> 0:16:54.560 find agreeable ground. But they've come to realize, particularly in 0:16:54.600 --> 0:16:57.440 recent years, is that court has begun to supervise this 0:16:57.480 --> 0:17:01.240 area a little bit more, that when the agency overreaches, 0:17:01.280 --> 0:17:03.000 they have a chance to be heard and to win 0:17:03.040 --> 0:17:06.080 in court. And they're they're taking those opportunities in those 0:17:06.080 --> 0:17:08.280 circumstances where agencies are overreaching. 0:17:09.680 --> 0:17:12.600 And I would say that it seems like agencies now 0:17:12.840 --> 0:17:16.840 anticipate in litigation coming after the rule is finalized, and 0:17:16.880 --> 0:17:20.760 we're seeing that, for example, with the SEC Climate Disclosure rule, 0:17:21.520 --> 0:17:24.520 which we expect to be finalized in a couple of days. 0:17:24.680 --> 0:17:27.960 I should add that we are recording this on March fourth, 0:17:28.760 --> 0:17:32.919 twenty twenty four, and that SEC rule is expected to 0:17:32.960 --> 0:17:36.440 be finalized on March sixth, and we'll talk a little 0:17:36.440 --> 0:17:41.920 bit about California's climate rule in particular in a little bit. 0:17:42.000 --> 0:17:44.760 But before we turn to that, I just want to 0:17:44.800 --> 0:17:49.040 go back to Chevron, since we were talking about that before. 0:17:50.119 --> 0:17:52.440 As I'm sure you know most listeners know, there were 0:17:52.480 --> 0:17:56.359 a pair of cases argued in the Supreme Court in 0:17:56.480 --> 0:18:00.439 January seeking to get rid of Chevron deference. And I 0:18:00.440 --> 0:18:05.000 think the consensus view, certainly ours, is that the High 0:18:05.000 --> 0:18:09.400 Court will overrule Chevron and articulate a new standard requiring 0:18:09.440 --> 0:18:13.479 courts to determine the best interpretation of the statute at issue, 0:18:13.560 --> 0:18:18.359 rather than defering to agency interpretations. But Secretary School, I'd 0:18:18.440 --> 0:18:22.840 just love to get your thoughts on those cases, the argument, 0:18:22.880 --> 0:18:24.840 and how you think that the Supreme Court might rule 0:18:24.840 --> 0:18:25.160 on it. 0:18:25.760 --> 0:18:30.439 Sure, well, this is an important pair of cases argued 0:18:30.480 --> 0:18:36.080 before the Court in I believe in February concerning again 0:18:36.200 --> 0:18:41.320 this so called Chevron doctrine. Chevron is a nineteen eighty 0:18:41.320 --> 0:18:43.720 four Supreme Court case, where as I mentioned, the Court 0:18:43.800 --> 0:18:49.600 said that when an agency has authority given by Congress 0:18:49.640 --> 0:18:55.399 to regulate in a particular area, and where the statute 0:18:55.440 --> 0:19:01.840 is ambiguous, courts should defer to the agency's interpretation of 0:19:01.880 --> 0:19:06.320 that statute so long as the interpretation is reasonable. That's 0:19:06.359 --> 0:19:10.399 the Chevron doctrine. It's one of the most frequently cited 0:19:10.440 --> 0:19:17.359 Supreme Court cases ever. It's been seen by its supporters 0:19:18.320 --> 0:19:25.160 as a way of giving the federal government some latitude 0:19:25.280 --> 0:19:30.560 to craft sensible rules that provide predictability to the regulated community, 0:19:31.760 --> 0:19:36.479 and without being overridden by judges who might happen to 0:19:36.720 --> 0:19:40.080 disagree with the policy or have a slightly different interpretation 0:19:40.119 --> 0:19:43.200 of a statute that's ambiguous. It's critics, though, have said 0:19:43.240 --> 0:19:50.080 that it's really empowered agencies to expand their jurisdiction to 0:19:50.880 --> 0:19:56.440 supersede courts in interpreting the law. Obviously, a central role 0:19:56.480 --> 0:20:00.880 of courts is determining what the law is, and Chevron's 0:20:00.880 --> 0:20:03.760 critics say you should never have given that responsibility to 0:20:03.800 --> 0:20:08.040 the agencies in any way. There's been a question for 0:20:08.119 --> 0:20:11.920 a while whether the Supreme Court might overrule that old 0:20:12.000 --> 0:20:16.800 Chevron case. In recent years, the Court itself has not 0:20:17.880 --> 0:20:23.439 used Chevron to defer to an agency. It has begun 0:20:23.480 --> 0:20:28.200 to develop some principles by which it doesn't even reach Chevron. 0:20:28.760 --> 0:20:31.399 These include the so called major question doctrine, which we 0:20:31.400 --> 0:20:35.359 can talk about if you'd like. But this term, the 0:20:35.400 --> 0:20:37.480 Court did agree to hear the question whether it should 0:20:37.480 --> 0:20:40.840 just do away with Chevron deference. Always hard to know 0:20:41.720 --> 0:20:44.680 just based on oral argument, what the Court ultimately will do, 0:20:45.760 --> 0:20:48.480 And for people following Chevron, it's important to remember that 0:20:48.520 --> 0:20:53.840 there was a case called Kaiser a few terms ago 0:20:54.200 --> 0:20:59.119 that concerned the related question of whether courts should defer 0:20:59.200 --> 0:21:05.199 to agencies reasonable interpretations of their own regulations when the 0:21:05.200 --> 0:21:11.600 agency's own regulations are ambiguous, and some scholars had believed 0:21:11.640 --> 0:21:14.239 that there was actually a stronger case for getting rid 0:21:14.280 --> 0:21:17.879 of that difference doctrine than there was for getting rid 0:21:17.920 --> 0:21:21.760 of the Chevron difference doctrine. But when the rubber hit 0:21:21.800 --> 0:21:25.320 the road in that Kaiser case, the Court kept Kaiser deference, 0:21:25.920 --> 0:21:29.000 but it cut it back and narrowed it. I think 0:21:29.040 --> 0:21:33.119 that it's safe bet based on the argument in the 0:21:33.240 --> 0:21:37.720 cases in the Court this term about Chevron, it's safe 0:21:37.720 --> 0:21:41.120 to bet that the Court will cut back on Chevron. 0:21:41.200 --> 0:21:42.800 I think a lot of people believe it will be 0:21:43.280 --> 0:21:47.879 fully done away with. Whether or not that happens, I 0:21:47.920 --> 0:21:51.320 think it's likely that we will have a much narrower 0:21:51.440 --> 0:21:55.160 Chevron going forward, and there's already been some hand ringing 0:21:55.160 --> 0:21:58.480 about what that might mean for agencies in the courts 0:21:58.480 --> 0:21:59.359 in the years ahead. 0:22:00.960 --> 0:22:02.879 Do you think there's any chance that they know if 0:22:02.880 --> 0:22:05.639 they do scale it back, that it applies retroactively. That 0:22:05.720 --> 0:22:07.320 seems like it would be pretty extreme. 0:22:08.480 --> 0:22:12.760 Well, that was one question that the justices asked about 0:22:12.760 --> 0:22:17.320 it an argument. You know, for example, if there was 0:22:17.359 --> 0:22:20.040 a case a few years ago was litigated in the 0:22:20.080 --> 0:22:24.399 Court of Appeals and the court said, well, the statute's ambiguous, 0:22:24.440 --> 0:22:26.880 the agency's interpretation is reasonable, so we're leaving the rule 0:22:26.920 --> 0:22:31.159 in place. Can that now be challenged again remains to 0:22:31.200 --> 0:22:36.200 be seen. I think I'd be shocked if it weren't retroactive. 0:22:36.240 --> 0:22:38.920 In the following way, if the Court over rules Chevron 0:22:39.680 --> 0:22:44.639 regulation adopted a year ago is not still going to 0:22:44.680 --> 0:22:46.840 be entitled to Chevron difference because it was adopted a 0:22:46.920 --> 0:22:51.960 year ago, they would apply this new rule prospectively, so 0:22:51.960 --> 0:22:54.960 it wouldn't be retrospective in that effect in that sense, 0:22:55.280 --> 0:22:58.920 but I fully expect that whatever rule they announce will 0:22:59.000 --> 0:23:02.600 largely apply in cases going forward, even if the rules 0:23:02.600 --> 0:23:05.080 were adopted a year ago or more. 0:23:07.359 --> 0:23:11.359 And you mentioned major questions Major Questions doctrine, how do 0:23:11.359 --> 0:23:14.200 you think about the interplay between the Major Questions doctrine 0:23:14.280 --> 0:23:19.119 and Chevron deference. You know, the Major Questions doctrine was 0:23:19.160 --> 0:23:23.480 only recently articulated by the Supreme Court, and you know, 0:23:24.000 --> 0:23:26.320 for those who don't know, it essentially says that if 0:23:26.359 --> 0:23:30.080 an agency seeks to decide an issue of major national 0:23:30.320 --> 0:23:33.840 or economics significance, its action must be supported by a 0:23:33.880 --> 0:23:39.600 clear congressional authorization. But you know, a question I have 0:23:39.760 --> 0:23:44.359 is did that largely replace Chevron accept on issues that 0:23:44.480 --> 0:23:48.879 aren't of major national or economic importance, or you know, 0:23:48.880 --> 0:23:52.440 maybe stated differently, what work is Chevron still doing now 0:23:52.440 --> 0:23:54.240 that we have the Major Questions doctrine. 0:23:54.320 --> 0:23:55.920 Well, first of all, I think that was a good 0:23:55.960 --> 0:23:59.520 description of the Major Questions doctrine sort of how it 0:23:59.640 --> 0:24:04.640 has been stated and operates, and in a way, the 0:24:04.680 --> 0:24:07.000 Major Questions doctrine could be thought of as a sort 0:24:07.000 --> 0:24:11.760 of reverse Chevron, you know, as I was describing Chevron 0:24:11.880 --> 0:24:17.280 roughly described says that when it's unclear whether an agency 0:24:17.280 --> 0:24:22.639 has the power it does, and the Major Questions doctrine says, 0:24:24.160 --> 0:24:26.800 if it's unclear whether an agency has a really big, 0:24:26.880 --> 0:24:31.760 major power, then it doesn't. It needs clear authority. So 0:24:31.760 --> 0:24:35.440 that's one way to look at it. That the Major 0:24:35.520 --> 0:24:40.280 Question doctrine flips Chevron on its head in circumstances where 0:24:40.320 --> 0:24:44.760 the power to be exercised by the agency is especially consequential. 0:24:45.680 --> 0:24:49.080 Of course, there's something odd in the notion that when 0:24:49.119 --> 0:24:52.639 it's unclear whether the government has power it does, you know, 0:24:52.720 --> 0:24:58.040 we still would think that we're a government, a nation 0:24:58.080 --> 0:25:02.200 of limited government. We got a Congress of enumerated powers, 0:25:03.040 --> 0:25:05.960 the powers not granted or to Congress, or powers it 0:25:05.960 --> 0:25:09.040 doesn't have. In that context, it's a little counterintuitive that 0:25:09.200 --> 0:25:12.080 the government might have whatever the federal agencies might have 0:25:12.119 --> 0:25:16.920 whatever powers that Congress didn't withhold from them. And that's 0:25:16.920 --> 0:25:19.199 one of the complaints is brought against Chevron, you know. 0:25:19.640 --> 0:25:21.600 But differently, a lot of people would say that, look, 0:25:21.640 --> 0:25:23.960 when in doubt whether the government has power over the individual, 0:25:24.040 --> 0:25:30.119 it doesn't. Right now, before the pending cases involving Chevron 0:25:30.160 --> 0:25:34.359 are decided, there's still a large number of cases where 0:25:34.359 --> 0:25:39.600 people would agree the issue presented is not a major question. 0:25:39.720 --> 0:25:43.600 It's important to the parties before it, but doesn't meet 0:25:43.840 --> 0:25:47.359 the relatively high threshold the Supreme Court has set for 0:25:47.400 --> 0:25:51.280 a major question case. And right now, in that world 0:25:51.359 --> 0:25:55.440 of non major question cases, at least in the lower courts, 0:25:55.840 --> 0:25:58.080 Chevron is still the law. As I said, the Supreme 0:25:58.119 --> 0:26:01.200 Court itself has not really been you using Chevron much 0:26:01.960 --> 0:26:07.199 in recent years. It's been studiously avoiding it. But the 0:26:07.240 --> 0:26:11.560 lower courts are still bound by Chevron, and they've they've 0:26:11.560 --> 0:26:14.960 been continuing to use it, and so it's still got 0:26:15.000 --> 0:26:18.320 life in the lower courts outside of major question doctument cases. 0:26:20.480 --> 0:26:22.800 Great, So I'd like to take us to the what's 0:26:22.840 --> 0:26:25.240 known as the Buzzle three Endgame. And for the listeners 0:26:25.400 --> 0:26:27.720 you know who aren't familiar, this is the one of 0:26:27.760 --> 0:26:31.320 the last remaining pieces of the Bozle three Accords, hence 0:26:31.320 --> 0:26:35.000 the name endgame. But you know, this proposal comes from 0:26:35.000 --> 0:26:37.439 the Federal Reserve, the FDIC and the Office of the 0:26:37.440 --> 0:26:40.879 Controller Currency, and you know, is a recalibration of with 0:26:41.160 --> 0:26:43.960 risk weighting of assets, which for the biggest banks could 0:26:44.080 --> 0:26:47.639 lead to around nineteen percent in higher capital requirements. And 0:26:47.680 --> 0:26:49.879 for the smaller banks this is applicable to banks that 0:26:49.880 --> 0:26:52.159