WEBVTT - Chevron Doctrine’s Demise and Industry Risk 0:00:15.960 --> 0:00:19.080 Hello, and welcome to the Votes in Verdicts podcast hosted 0:00:19.079 --> 0:00:24.239 by Bloomberg Intelligence, Bloomberg LP's investment research platform. In this 0:00:24.320 --> 0:00:27.440 podcast series, we talk about the intersection of business policy 0:00:27.480 --> 0:00:30.360 and law. My name is Matt Shettenhelm. I'm an analyst 0:00:30.360 --> 0:00:33.720 with BI covering litigation and policy in the TMT space. 0:00:34.680 --> 0:00:38.840 The Supreme Court on June twenty eighth overturned the Chevron doctrine. 0:00:39.040 --> 0:00:42.599 Over a month before that ruling, my Bloomberg Intelligence colleagues 0:00:42.640 --> 0:00:46.239 Elliott Stein, Justin Toreesie, Dwayne Wright and I put out 0:00:46.240 --> 0:00:50.360 a detailed report anticipating the ruling and explaining the larger 0:00:50.400 --> 0:00:54.080 demise of deference to regulators. And then days after the ruling, 0:00:54.120 --> 0:00:56.680 on July second, we held this call to discuss our 0:00:56.720 --> 0:01:00.440 report and to explain what this critical legal development means 0:01:00.440 --> 0:01:06.040 for industries and businesses. Please enjoy. Okay, good afternoon, everyone, 0:01:06.280 --> 0:01:10.399 and welcome to the Bloomberg Intelligence webinar the demise of 0:01:10.480 --> 0:01:14.600 the Chevron Doctrine. A couple housekeeping notes before we begin. 0:01:14.920 --> 0:01:19.480 Today's presentation will be recorded and available for playback. You 0:01:19.520 --> 0:01:22.240 can ask a question to us by submitting one in 0:01:22.280 --> 0:01:24.440 the Q and a box you see at the bottom 0:01:24.440 --> 0:01:28.759 of your screen, and after the webinar, we're all available 0:01:28.800 --> 0:01:33.640 to answer further questions on this topic. A brief note 0:01:33.720 --> 0:01:40.480 about Bloomberg Intelligence. BI Research delivers independent perspective, interactive data 0:01:40.600 --> 0:01:45.840 and investment research on companies, industries, and global markets. Our 0:01:45.920 --> 0:01:48.880 team of three hundred and fifty professionals helps our clients 0:01:48.920 --> 0:01:52.680 make informed decisions. We cover companies, industries, markets from the 0:01:52.720 --> 0:01:59.320 perspective of strategy, equity, credit, ESG, government, and litigation. My 0:01:59.440 --> 0:02:02.600 name is at Shuttinghelm. I'm a litigation and policy analyst 0:02:02.680 --> 0:02:06.520 with Bloomberg Intelligence focused on the TMT sector, and I'm 0:02:06.560 --> 0:02:10.120 joined today by my fellow Bloomberg Intelligence analyst, Dwayne Wright, 0:02:10.320 --> 0:02:14.320 who's focused on healthcare, and Justin TREESI focused on industrials 0:02:14.360 --> 0:02:19.079 and antitrust. Unfortunately, Elliott Stein isn't able to join us 0:02:19.080 --> 0:02:21.400 today due to a death in his family, but he 0:02:21.520 --> 0:02:24.480 shared some thoughts on the impacts on the financial sector 0:02:24.520 --> 0:02:27.320 and we'll get to that in a little bit. Dwayne, 0:02:27.360 --> 0:02:29.040 do you want to tell us more about the deep 0:02:29.160 --> 0:02:30.320 dive report we did. 0:02:30.160 --> 0:02:32.079 On this Yeah, thanks, Matt. 0:02:32.240 --> 0:02:35.360 So we wanted to hold this webinar to highlight a 0:02:35.400 --> 0:02:38.239 recent deep dive report we put out about the demise 0:02:38.280 --> 0:02:42.840 of deference to regulators. We put out a bive report 0:02:43.480 --> 0:02:47.400 on May seventeenth, anticipating that the Supreme Court would curtail 0:02:48.160 --> 0:02:51.800 the Chevron doctrine and explaining what it would mean. After 0:02:51.840 --> 0:02:54.920 the court's decision, on ju twenty eighth, we updated our report. 0:02:55.880 --> 0:02:57.399 If you want to look for it, you can find 0:02:57.440 --> 0:02:59.519 it on a terminal ATBI. 0:02:59.360 --> 0:03:03.400 Deepdep all New. 0:03:03.480 --> 0:03:06.520 You can also find some of our other deep Dye reports, 0:03:06.960 --> 0:03:10.600 especially one that the team put together on the Inflation 0:03:10.720 --> 0:03:13.840 Reduction Act and how the US selection outcome would affect 0:03:14.280 --> 0:03:17.639 or could affect things like the drug negotiation process e. 0:03:17.760 --> 0:03:21.640 The text credits clean out energy and other components of 0:03:21.680 --> 0:03:26.919 the IRA. Again it's DIDEP. And with that, justin, would 0:03:26.960 --> 0:03:29.240 you like to talk talk about how we're going to 0:03:29.240 --> 0:03:30.240 structure the call today? 0:03:30.639 --> 0:03:32.840 Sure, thanks Drayne. So here's the plan for how we're 0:03:32.840 --> 0:03:35.480 going to roll this out. First, we'll give an overview 0:03:35.520 --> 0:03:37.520 of what we're planning to talk about what the court 0:03:37.560 --> 0:03:40.240 decided and what that means going forward. And we're going 0:03:40.280 --> 0:03:41.880 to do that as much as the cannon's in pretty 0:03:41.920 --> 0:03:44.320 simple plain English. Try to leave the legally as to 0:03:44.320 --> 0:03:47.720 others and really focus on what the ruling means as 0:03:47.760 --> 0:03:50.480 a practical matter. Then we're going to discuss how the 0:03:50.480 --> 0:03:54.720 demise of defference could impact particular sectors most immediately. And 0:03:54.800 --> 0:03:57.120 it's not intended to be a comprehensive report. There are 0:03:57.200 --> 0:04:00.480 fifty three titles of US Code, there's dozen of different 0:04:00.480 --> 0:04:04.600 federal regulatory agencies in Washington, d C. So obviously impossible 0:04:04.680 --> 0:04:07.560 to really get to the far reaches of where Chevron 0:04:08.080 --> 0:04:10.720 the impact of the Chevron demise is really going to touch. 0:04:11.080 --> 0:04:14.160 But we each bring expertise in some specific areas to 0:04:14.200 --> 0:04:17.080 the conversation, and with that we really want to highlight 0:04:17.160 --> 0:04:20.160 how the development impacts those areas that we know best. 0:04:20.680 --> 0:04:22.760 So let's get into it. Matt, if you could give 0:04:22.800 --> 0:04:25.640 us an overview of what we're talking about and why 0:04:25.680 --> 0:04:28.760 any of this really matters going forward from this point. 0:04:28.560 --> 0:04:31.880 Here, Yeah, thanks, justin so trying to keep it in 0:04:32.400 --> 0:04:36.920 simple plane English, plain English. This really goes to the 0:04:36.960 --> 0:04:40.560 heart of how federal regulation has worked for the past 0:04:40.680 --> 0:04:46.040 forty years. Congress passes federal laws, but Congress leaves gaps. 0:04:46.240 --> 0:04:50.080 It doesn't answer all the questions about what federal law 0:04:50.279 --> 0:04:54.800 applies to or how far it reaches, and so for 0:04:54.800 --> 0:04:59.560 forty years, the Chevron doctrine has explained how those gaps 0:05:00.080 --> 0:05:03.320 it filled, how those questions in federal law get answered, 0:05:03.839 --> 0:05:07.520 And the doctrine says it's the regulators themselves, the SEC, 0:05:07.880 --> 0:05:11.280 the FDA, the FCC who get to fill those gaps, 0:05:11.320 --> 0:05:16.040 who to get to determine how far far federal law reaches. 0:05:16.720 --> 0:05:20.279 And of course, virtually every time a federal agency does 0:05:20.400 --> 0:05:24.320 that it expands or contracts federal law, they get sued. 0:05:24.680 --> 0:05:28.360 And Chevron is the test that applies in courts when 0:05:28.520 --> 0:05:32.800 judges look at did the agency do this properly? And 0:05:32.880 --> 0:05:35.680 in those lawsuits, the Chevron doctrine has said that as 0:05:35.839 --> 0:05:39.359 long as the regulator's view of the federal law passes 0:05:39.400 --> 0:05:43.720 a very light touch, reasonable test, the court must accept it. 0:05:44.320 --> 0:05:47.360 And that's true even if the court itself thinks it 0:05:47.480 --> 0:05:50.040 has a better view of the law. The idea here 0:05:50.120 --> 0:05:54.599 is that judges aren't experts in this stuff. The regulators are. 0:05:55.120 --> 0:05:58.920 So there's always been a check from the courts on agencies. 0:05:58.960 --> 0:06:03.320 It's always been very light touch, very deferential. The regulators 0:06:03.360 --> 0:06:07.800 themselves get great discretion to interpret federal law by making 0:06:07.960 --> 0:06:11.080 policy calls that are specific to the areas that they 0:06:11.160 --> 0:06:12.880 know based on their expertise. 0:06:13.200 --> 0:06:16.320 So that's really how deference has operated so far. But 0:06:16.360 --> 0:06:18.599 it's going away. How can you explain exactly how it's 0:06:18.640 --> 0:06:19.119 going away? 0:06:19.560 --> 0:06:23.520 Yes, So it's really happened in three steps. So First, 0:06:23.920 --> 0:06:28.919 as the courts have become increasingly led by Republican appointed judges, 0:06:28.920 --> 0:06:35.120 they become more skeptical of regulator's overreach. And increasingly courts 0:06:35.160 --> 0:06:40.080 have been deciding these agency cases without even mentioning Chevron. 0:06:40.160 --> 0:06:44.480 Deference Chevron even before it died last week, it's been 0:06:44.760 --> 0:06:49.880 quietly disappearing slowly over the last decade. Number two, In 0:06:49.920 --> 0:06:53.560 a twenty twenty two case involving the EPA, the Supreme 0:06:53.600 --> 0:06:58.200 Court announced what's known as the Major Questions doctrine, and 0:06:58.320 --> 0:07:01.480 in a nutshell, the Court said that anytime a regulator 0:07:01.560 --> 0:07:05.640 tries to answer a major question about what federal law means, 0:07:05.960 --> 0:07:09.760 it can't do so unless Congress granted it that power clearly. 0:07:10.440 --> 0:07:14.680 In other words, only Congress can answer the major questions 0:07:14.720 --> 0:07:18.320 about federal law. The regulators themselves can't. And then the 0:07:18.360 --> 0:07:20.800 third step came at the end of last week, the 0:07:20.840 --> 0:07:25.440 Loper Right decision. After that twenty twenty two EPA Major 0:07:25.520 --> 0:07:29.440 Questions decision, no one really knew which questions were major 0:07:29.720 --> 0:07:32.680 and which ones weren't. And in theory, agencies still got 0:07:32.800 --> 0:07:37.840 deference on the non major ones and so but the 0:07:37.920 --> 0:07:42.640 loper Right decision kills everything. It's no longer there's no 0:07:42.680 --> 0:07:46.640 longer a situation where courts must defer to the regulatory 0:07:46.720 --> 0:07:50.960 agency even on non major questions. The courts themselves get 0:07:50.960 --> 0:07:54.160 to decide how far federal law reaches. The regulators don't, 0:07:54.800 --> 0:07:57.720 and they can try to persuade the courts, but it's 0:07:57.760 --> 0:08:01.240 the courts, and ultimately the courts are guided by the 0:08:01.360 --> 0:08:05.720 US Supreme Court that will determine what federal law means. 0:08:05.760 --> 0:08:08.520 And the US Supreme Court, of course is very business 0:08:08.560 --> 0:08:12.160 friendly friendly, very skeptical of aggressive regulation. 0:08:13.240 --> 0:08:15.600 So here comes the big question, And well, Congress is 0:08:15.600 --> 0:08:18.800 basically set an interest resolved as now by giving regulators 0:08:18.800 --> 0:08:19.400 more power. 0:08:20.360 --> 0:08:22.200 Yeah, in theory, Congress could. 0:08:22.400 --> 0:08:25.960 In theory, Corress could restore Chevron Defronce or on every 0:08:25.960 --> 0:08:28.720 one of these issues where agencies are expanding their power, 0:08:29.720 --> 0:08:32.920 Congress could step in and give the agencies the power 0:08:32.960 --> 0:08:37.240 that they might seek under Chevron. But it's extremely unlikely 0:08:37.320 --> 0:08:41.720 to happen. Congress struggles to reach consensus on just about everything, 0:08:42.360 --> 0:08:45.160 and there's going to be a very limited appetite to 0:08:45.280 --> 0:08:50.000 expand regulate regulator's power. And so in my view, this 0:08:50.160 --> 0:08:55.240 development will be very good news for many industries that 0:08:55.360 --> 0:08:59.280 prefer an environment of light touch federal regulation. 0:09:00.280 --> 0:09:02.920 Great, thanks, Matt. That's a great overview. And with that, 0:09:03.120 --> 0:09:05.320 I think it's probably a good time to transition into 0:09:05.360 --> 0:09:09.560 how this development impacts specific sectors moving forward. And Elliott Stein, 0:09:09.600 --> 0:09:12.520 as you said, covers financial litigation, couldn't be here with 0:09:12.600 --> 0:09:14.520 us today, but I know he sent you a series 0:09:14.559 --> 0:09:16.280 of comments that he wanted to share with the group. 0:09:17.120 --> 0:09:19.360 Yeah, yeah, let me let me dive into what Elliott 0:09:19.360 --> 0:09:20.280 Elliott sent us. 0:09:20.280 --> 0:09:24.680 So Elliott's thoughts were basically this so so he said. 0:09:24.600 --> 0:09:27.960 As an initial matter, the overruling of Chevron deference is 0:09:28.280 --> 0:09:34.559 indicative of a larger trend this the demise of judicial 0:09:34.559 --> 0:09:38.880 deference to administrative agencies. The Major Questions doctrine is of 0:09:38.920 --> 0:09:41.600 course another example of that trend. And to put a 0:09:41.640 --> 0:09:45.040 finer point on it, when the Fifth Circuit on June 0:09:45.120 --> 0:09:49.520 fifth struck down the SEC's private funds rule, the court 0:09:49.640 --> 0:09:53.599 cited neither Chevron nor the Major Questions doctrine. Instead, the 0:09:53.640 --> 0:09:57.000 Court determined that the relevant statutes Dodd Frank and the 0:09:57.000 --> 0:09:59.959 Investment Advisors Act in that case were clear on their 0:10:00.880 --> 0:10:02.959 and that the SEC had exceeded its. 0:10:02.800 --> 0:10:04.200 Authority in issuing the rule. 0:10:04.280 --> 0:10:08.679 So, even without Chevron or the Major Questions doctrine, we've 0:10:08.679 --> 0:10:11.559 been noting for some time that the conservative shift of 0:10:11.600 --> 0:10:17.400 the federal judiciary has imperiled President Biden's financial regulation agenda, 0:10:17.960 --> 0:10:22.040 and the overruling of Chevron just reinforces that trend. Now 0:10:22.040 --> 0:10:24.760 there are a large number of financial regulations issued by 0:10:24.800 --> 0:10:28.280 the Biden administration that are currently being challenged in court. 0:10:28.480 --> 0:10:31.480 We expect many of those challenges to succeed. For example, 0:10:31.880 --> 0:10:34.960 we expect the CFPB's credit card late fee rule to 0:10:34.960 --> 0:10:37.520 be struck down in the courts. That rule seeks to 0:10:37.520 --> 0:10:40.800 cap credit card late fees, which would eliminate about ten 0:10:40.840 --> 0:10:44.480 billion dollars in fees that quarity card issuers like JP, Morgan, 0:10:44.600 --> 0:10:48.560 Bank of America, Capital One, and American Express collect. Indeed, 0:10:48.600 --> 0:10:50.960 the rule is already put on hold by a federal 0:10:50.960 --> 0:10:54.000 District court judge in Texas who found compelling the arguments 0:10:54.040 --> 0:10:57.440 made by the US Chamber of Commerce and other bank 0:10:57.480 --> 0:11:00.959 trade groups that the CFP had CFP had exceeded its 0:11:00.960 --> 0:11:03.559 authority under the Dodd Frank and the Credit Card Accountability, 0:11:03.600 --> 0:11:06.840 Responsibility and Disclosure Act, better known as the Card Act. 0:11:07.320 --> 0:11:10.199 We also expect the SEC's climate disclosure rule to be 0:11:10.240 --> 0:11:12.559 struck down in court, in part due to the major 0:11:12.640 --> 0:11:15.800 questions doctrine, since there's a strong argument that the rule 0:11:15.840 --> 0:11:20.080 is a pretext for emissions regulations, which Congress has delegated 0:11:20.120 --> 0:11:25.040 the EPA, not the SEC. Other lawsuits Elliott's watching concern 0:11:25.320 --> 0:11:30.000 SEC rules over proxy advisors, short sales, and securities lending, 0:11:30.520 --> 0:11:35.240 the definition of government securities dealers, and the consolidated Consolidated 0:11:35.320 --> 0:11:40.800 Audit trail. Also watching lawsuits challenging CFPB rules over small 0:11:40.840 --> 0:11:45.439 business lending and the agency's examination manual, and a lawsuit 0:11:45.440 --> 0:11:49.280 against the fbiic FED and OCC over changes to the 0:11:49.280 --> 0:11:52.760 Community Reinvestment Act. And finally, we think this trend of 0:11:52.760 --> 0:11:56.440 court's deferring less to federal regulators will help coinbase and 0:11:56.520 --> 0:12:01.520 other crypto companies in their defenses against see enforcement actions. 0:12:02.160 --> 0:12:05.800 These cases concern the meeting of the term investment contract 0:12:05.880 --> 0:12:08.960 in the federal securities laws. We expect the issue to 0:12:09.040 --> 0:12:13.480 eventually reach the Supreme Court, which we anticipate will revisit 0:12:13.640 --> 0:12:17.040 its seminal how we decision and narrow the Howie test 0:12:17.120 --> 0:12:20.040 in a way that is favorable to coinbase so that 0:12:20.160 --> 0:12:23.280 secondary transactions of digital assets are less likely to be 0:12:23.360 --> 0:12:27.360 deemed securities that fall under the purview of the SEC. 0:12:28.280 --> 0:12:30.760 If you would like to discuss any of these cases 0:12:30.760 --> 0:12:33.520 and in more detail, please don't hesitate to reach out 0:12:33.520 --> 0:12:34.000 to Elliott. 0:12:34.040 --> 0:12:35.760 I know he wanted to be here today. 0:12:35.480 --> 0:12:38.800 But again apologize he couldn't be here, and I think 0:12:38.800 --> 0:12:39.720 we'll leave it at that. 0:12:39.880 --> 0:12:43.200 On the financial side, great, thanks Betan, I'll that go 0:12:43.240 --> 0:12:45.199 with that as well. Definitely reach out to Elliott's sign 0:12:45.240 --> 0:12:48.160 if there's any questions moving forward on the financial regulations 0:12:48.200 --> 0:12:50.720 we discussed here, So Matt, let's search the impacts in 0:12:50.760 --> 0:12:53.199 the TMT sector. Think you said this at a kind 0:12:53.200 --> 0:12:56.080 of a major impact on broadband regulation at the FCC. 0:12:56.920 --> 0:12:59.400 Yeah, I think this should lead to a major victory 0:12:59.400 --> 0:13:02.880 for broadmand companies like AT and T, Charter, Comcast, TE, 0:13:03.520 --> 0:13:07.400 T Mobile, and Verizon. The question is whether these companies' 0:13:07.520 --> 0:13:11.800 most important products, wired and wireless broadband, should be subject 0:13:11.840 --> 0:13:15.320 to federal regulation at all. The courts have struggled for 0:13:15.400 --> 0:13:19.320 this for two decades, but here's what's critical to know 0:13:19.360 --> 0:13:22.840 about that litigation. Chevron deference has been at the heart 0:13:23.240 --> 0:13:28.480 of that litigation. When the Obama era FCC restored federal 0:13:28.520 --> 0:13:33.000 broadband regulation, it only won in court because of Chevron deference. 0:13:33.200 --> 0:13:36.040 The courts had to defer to the FCC. It's just 0:13:36.080 --> 0:13:39.280 not going to happen anymore. And in the second quarter 0:13:39.320 --> 0:13:42.080 of this year, the Biden era FCC tried to restore 0:13:42.160 --> 0:13:47.000 again aggressive federal broadband regulation under the Communications Act. And 0:13:47.080 --> 0:13:49.600 the case is now in the Sixth Circuit Court of Appeals. 0:13:50.000 --> 0:13:53.880 And although the FCC won the last round of this litigation, 0:13:54.320 --> 0:13:56.760 it's going to lose this one. It won't win this, 0:13:56.880 --> 0:14:00.560 I don't think without deference, and so the result is 0:14:00.760 --> 0:14:04.320 very likely going to be no or minimal regulation of 0:14:04.360 --> 0:14:08.320 these companies most important product at the federal level. How 0:14:08.320 --> 0:14:13.600 about Internet regulation, Yeah, that's in trouble too. So Congress 0:14:13.640 --> 0:14:17.160 has struggled to reach consensus on a data privacy build 0:14:17.200 --> 0:14:22.840 that goes after Google and Meta's data privacy practices, and 0:14:22.920 --> 0:14:26.120 so the Federal Trade Commission has started a process to 0:14:26.200 --> 0:14:30.680 make rules that would regulate the digital ad business what's 0:14:30.720 --> 0:14:33.960 really at the heart of their business model? And FTC 0:14:34.200 --> 0:14:39.360 chair Lena Kahan has she calls it surveillance advertising, and has, 0:14:39.440 --> 0:14:44.200 you know, threatened to propose pretty aggressive rules using the 0:14:44.320 --> 0:14:49.320 FTC's power over unfair or deceptive practices. So her idea 0:14:49.320 --> 0:14:53.240 is to expand that term in federal law unfair deceptive 0:14:53.680 --> 0:14:57.480 to take aim at the digital ad business model. And 0:14:58.440 --> 0:15:00.920 again here what we can say is that effort is 0:15:01.720 --> 0:15:06.200 likely to run directly into this regulatory wall. So if 0:15:06.240 --> 0:15:09.800 the FDC is aggressive with its digital ad regulations, which 0:15:09.800 --> 0:15:12.800 I think it planned to be, at least, the courts 0:15:12.840 --> 0:15:16.760 are almost certain to strike that down definitely. 0:15:16.800 --> 0:15:19.200 And I know you you've also written about the FDC's 0:15:19.280 --> 0:15:21.760 efforts to regulate a lot of areas more broad. 0:15:22.040 --> 0:15:24.360 Can you address that a bit more? Yeah, So it 0:15:24.400 --> 0:15:26.520 goes really beyond tech. 0:15:27.160 --> 0:15:31.120 The FDC is claiming a relatively novel power to make 0:15:31.320 --> 0:15:35.960 competition unfair competition rules, and it's first try at using 0:15:36.000 --> 0:15:39.400 that new power, it's discovered, is to strike down non 0:15:39.440 --> 0:15:43.360 compete clause agreements thirty million contracts that it's it's it 0:15:43.400 --> 0:15:47.080 claims are now illegal using its new rule making power. 0:15:47.880 --> 0:15:51.680 That's just not going to work anymore. Expanding stretching your 0:15:51.720 --> 0:15:55.520 powers under federal law in novel ways, the courts are 0:15:55.520 --> 0:15:57.360 going to strike that down. In fact, we could see 0:15:57.400 --> 0:16:02.960 a stay of that non compete clause UH decision this week. 0:16:04.560 --> 0:16:07.720 Any industry impacted by that sort of rule making, or 0:16:07.800 --> 0:16:12.200 any M and A impacted by unfair competition rules that 0:16:12.200 --> 0:16:16.040 that the FDC might try to develop, that they're going 0:16:16.080 --> 0:16:19.240 to escape that sort of regulation. In my view, the 0:16:19.280 --> 0:16:22.840 FDC is picking about the worst possible time to try 0:16:22.880 --> 0:16:26.120 to expand its rulemaking powers in novel ways. 0:16:26.160 --> 0:16:27.360 It's just not going to fly. 0:16:28.200 --> 0:16:31.520 And and with that, justin I, let's let's transition to 0:16:31.760 --> 0:16:35.160 two areas. You know, well, I know you looked at 0:16:35.160 --> 0:16:38.120 some EPA rules that that might be at risk. 0:16:38.160 --> 0:16:41.160 Can you tell us more about that? Sure, thanks, Matt. 0:16:41.200 --> 0:16:43.960 So so really I think important when we kind of 0:16:44.000 --> 0:16:45.840 take a turn here and look at the EPA is 0:16:45.880 --> 0:16:49.040 to really acknowledge the labyrinth and the degree of statute 0:16:49.320 --> 0:16:52.400 that the EPA really has under its jurisdiction, so many 0:16:52.400 --> 0:16:55.640 different areas of environmental policies, so many different areas of life, 0:16:55.680 --> 0:16:58.680 if you will, so just providing these two particular recent 0:16:58.800 --> 0:17:03.000 rules rule finalizations as examples for the kinds of things 0:17:03.000 --> 0:17:05.800 that might be susceptible in some ways to a change 0:17:05.800 --> 0:17:08.840 and chevron deference here, the first being both relate to 0:17:09.200 --> 0:17:11.800 p fas or forever chemicals, as they're being referred to 0:17:11.960 --> 0:17:14.200 right now and kind of the mainstream media, if you will. 0:17:14.440 --> 0:17:18.080 Long story short, p fast chemicals come with particularly unpleasant 0:17:18.119 --> 0:17:20.240 health effects for humans when they build up in the 0:17:20.280 --> 0:17:22.560 human body, right So we're talking about the particular cancers, 0:17:22.560 --> 0:17:25.639 hormonal issues, things like that. But with kind of that 0:17:25.680 --> 0:17:29.080 as the base for moving forward. This spring, the EPA 0:17:29.160 --> 0:17:32.200 finalize a rule that have under the Safe Drinking Water 0:17:32.280 --> 0:17:35.720 Act that involves tapping the level of allowable p fas 0:17:35.760 --> 0:17:39.520 in people's drinking water. So authorities nationwide now have to 0:17:39.560 --> 0:17:42.359 measure and remediate for the presence of p fas and 0:17:42.440 --> 0:17:45.560 drinking water that are beyond a particular allowable limit under 0:17:45.560 --> 0:17:49.879 the final rule, what they also did when they promulgated 0:17:49.920 --> 0:17:52.879 that regulation is they issued something called the hazard Index, 0:17:52.880 --> 0:17:55.320 And what they did is they required authorities to not 0:17:55.359 --> 0:17:59.360 only measure for particular substances, but also mixtures of those 0:17:59.359 --> 0:18:02.480 substances in drinking water. So that's the first kind of 0:18:02.520 --> 0:18:05.959 rule that came out in April, and something for us 0:18:05.960 --> 0:18:08.760 to note here. The second involves the designation of p 0:18:08.920 --> 0:18:12.800 FAS chemicals, two of them anyway, as hazardous substances under 0:18:13.040 --> 0:18:15.159 the CIRCLA or what's better known to folks as a 0:18:15.160 --> 0:18:18.359 super fun law, opening the door to kind of designating 0:18:18.359 --> 0:18:22.400 physical sites for cleanup and remediation efforts if those particular 0:18:22.440 --> 0:18:24.679 p FAS chemicals are present in those sites at a 0:18:24.720 --> 0:18:29.680 particularly unpleasant amount. So what's important here is the billions 0:18:29.680 --> 0:18:31.800 of dollars involved with both of these rules that are 0:18:31.840 --> 0:18:35.800 anticipated in terms in the order for responsible parties to 0:18:35.880 --> 0:18:39.320 become compliant with both of them. And you know, both 0:18:39.359 --> 0:18:42.120 have their wrinkles here with regard to Chevron, and we'll 0:18:42.119 --> 0:18:45.120 get into that a bit later, but you know, particularly 0:18:45.160 --> 0:18:47.760 interesting wrinkle with the way the EPA operates too, is 0:18:47.760 --> 0:18:49.640 that on the one hand, here you have the folks 0:18:49.640 --> 0:18:52.200 who made these chemicals in the first place, the three m's, 0:18:52.240 --> 0:18:54.919 two ponds and Camors of the world, who you know, 0:18:55.000 --> 0:18:57.040 might see a shift in liabilities for any of these 0:18:57.080 --> 0:19:00.280 cleanup efforts because of any changes here now under the 0:19:00.359 --> 0:19:03.439 Chevron deference. And again this applies to all areas of 0:19:03.480 --> 0:19:05.760 e p A regulation. But on the other side of 0:19:05.800 --> 0:19:08.480 the coin, there is this whole green economy and companies 0:19:08.520 --> 0:19:11.880 that stand a benefit from things like remediation costs and 0:19:11.880 --> 0:19:14.679 and you know, putting out you know, green technologies, you 0:19:14.680 --> 0:19:18.240 know green a whole wide range of spaces, which we'll 0:19:18.280 --> 0:19:20.919 talk about too. So so there is this kind of 0:19:21.119 --> 0:19:23.280 before and after effect here with with with these e 0:19:23.400 --> 0:19:26.240 p A regulations and will industries you know, traditionally might 0:19:26.280 --> 0:19:29.240 benefit from a roll back of Chevron, there's also the 0:19:29.320 --> 0:19:31.720 possibility that they could be in some way harmed by that, 0:19:31.760 --> 0:19:33.600 depending on what the nature of their business is over 0:19:33.640 --> 0:19:34.120 at e PA. 0:19:35.200 --> 0:19:36.199 Got it? Got it? 0:19:36.240 --> 0:19:37.840 So that I mean that that's a good overview of 0:19:37.840 --> 0:19:42.399 the rules. Is there already litigation litigation challenges coming to 0:19:42.440 --> 0:19:46.040 these rules and and how does how does overruling Chevron 0:19:46.359 --> 0:19:47.960 change that that landscape? 0:19:48.240 --> 0:19:50.320 Yeah, definitely, And you know again I think you know 0:19:50.359 --> 0:19:52.080 the e p A, you know, these rules seem to 0:19:52.080 --> 0:19:54.680 be unfairly strong footing. You peoput a lot of time, 0:19:55.040 --> 0:19:57.320 and I think, you know, justification into both rules. But 0:19:57.359 --> 0:19:59.359 when they were ruled out, you know, I think the 0:19:59.680 --> 0:20:02.080 challenge just petitions for review I've already been filed in 0:20:02.080 --> 0:20:05.879 the DC circuit. We're expecting those, and you know, we 0:20:06.320 --> 0:20:09.880 haven't been anticipating challenges based on the EPA's reported failure 0:20:10.000 --> 0:20:12.560 to take costs of the rules into account or to 0:20:12.600 --> 0:20:14.879 take public comments. It's a bit in relation to the 0:20:14.960 --> 0:20:17.080 rules into account and the way that they were supposed to. 0:20:17.480 --> 0:20:20.119 How Chevron kind of enters the fray here is that 0:20:20.160 --> 0:20:22.359 you know, well, you know, it's not questionable really, and 0:20:22.440 --> 0:20:25.240 it's well settled that things like capping the level of 0:20:25.280 --> 0:20:28.960 substances and drinking water is good law and something that 0:20:29.040 --> 0:20:31.280 EPA has the authority to do. You'll look kind of 0:20:31.400 --> 0:20:33.080 zone in a little bit, a little bit zooming a 0:20:33.119 --> 0:20:35.239 little further on that particular rule, and you look at 0:20:35.240 --> 0:20:37.400 their use of this hazard in dex I mentioned whether 0:20:37.800 --> 0:20:41.479 they're requiring from measuring mixtures of chemicals. Well, the statute 0:20:41.520 --> 0:20:45.199 doesn't address this question of mixtures, So did EPA in 0:20:45.200 --> 0:20:48.040 some way it surpass its authority when it decided to 0:20:48.080 --> 0:20:50.640 do that. And from the standpoint of the Superfund law, 0:20:51.040 --> 0:20:53.840 EPA is looking to other statutes and how substances were 0:20:53.880 --> 0:20:57.119 designated under other statutes, But it remains the case that 0:20:57.200 --> 0:20:59.639 as far as their actual Superfund law is concerned, this 0:20:59.680 --> 0:21:02.840 is the very first time the APA has actually designated 0:21:02.920 --> 0:21:06.120 new hazardous substances under that loss. There's not this existing 0:21:06.160 --> 0:21:09.160 case law that already exists out there, kind of discussing 0:21:09.200 --> 0:21:11.760 what the authority is to do that under the law itself. 0:21:11.880 --> 0:21:15.399 So where there's some ambiguity where Chevron deference might have 0:21:15.440 --> 0:21:17.560 been helpful in the past, now it's not there to 0:21:17.600 --> 0:21:18.440 really protect them. 0:21:18.920 --> 0:21:21.359 Yeah, and one of those things that also plays a 0:21:21.440 --> 0:21:25.359 role for agencies. It's sometimes not even ambiguity, but silence 0:21:26.520 --> 0:21:30.160 in the statute has been enough for agencies to you know, 0:21:30.560 --> 0:21:33.880 claim power to make rules, and so all of that 0:21:33.920 --> 0:21:36.399 basically goes away now and it's in the hands of 0:21:36.480 --> 0:21:38.639 the courts. But how much do you think the APA 0:21:38.720 --> 0:21:43.159 accounted for the possibility of Chevron going away as it 0:21:43.240 --> 0:21:44.359 finalized these rules. 0:21:44.640 --> 0:21:47.159 Sure, so you know we saw delay after delay with 0:21:47.200 --> 0:21:49.680 the finalization of the rules. I think in many ways 0:21:49.720 --> 0:21:52.800 it really was this practice of the EPA of really 0:21:52.800 --> 0:21:55.240 trying to shore up the justification behind them as much 0:21:55.240 --> 0:21:58.960 as they could from every standpoint, not just an agency 0:21:58.960 --> 0:22:01.520 power standpoint, but all so the standpoint of you know, 0:22:01.560 --> 0:22:05.160 cost benefits analysis and things like that that I also mentioned. 0:22:05.320 --> 0:22:07.720 But there's no question that even the administration referred to 0:22:07.760 --> 0:22:10.520 both of these these rules as historic and historic because 0:22:10.520 --> 0:22:12.040 it really is the first time that a lot of 0:22:12.040 --> 0:22:15.280 this action was taken with regard to forever chemicals, and 0:22:15.400 --> 0:22:17.520 especially in the case of the super fun laws. So 0:22:17.960 --> 0:22:20.960 this is something to really take into account here from 0:22:20.960 --> 0:22:23.680 the standpoint of deference. You know, I think EPA did 0:22:23.720 --> 0:22:26.320 what it could. But also an important wrinkle to kind 0:22:26.320 --> 0:22:29.080 of mention here too is that, you know, for whatever reason, 0:22:29.440 --> 0:22:31.000 if you know, I'm sure this is true for other 0:22:31.040 --> 0:22:34.040 agencies as well, but forever whatever reason, if these rules 0:22:34.160 --> 0:22:37.160 didn't go forward, you know, this is opening the door 0:22:37.160 --> 0:22:39.720 to a situation where we see things like states continuing 0:22:39.720 --> 0:22:43.080 that march forward. Before this this drinking cap or drinking 0:22:43.080 --> 0:22:46.080 water cap was finalized by e PA, for example, ten 0:22:46.119 --> 0:22:49.080 states already had a similar cap in place through through 0:22:49.119 --> 0:22:52.240 their own regulatory scheme. So keeping that in mind too, 0:22:52.560 --> 0:22:54.280 there's this all the other wrinkle here, where in the 0:22:54.320 --> 0:22:57.640