Postcards: The End of the Chevron Doctrine

This doesn't mean that it's just a cakewalk moving forward. The 1984 case creates a bit of a double edged sword - but the good news is that regulatory conditions should get more predictable. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: The End of the Chevron Doctrine]( This doesn't mean that it's just a cakewalk moving forward. The 1984 case creates a bit of a double edged sword - but the good news is that regulatory conditions should get more predictable. [Garrett {NAME}](floridarepublic) Jun 28 floridarepublic   [READ IN APP](   Market Update: Sending a second piece today because of the news at the Court. S&P 500 and the Nasdaq 100 are Green, but the Russell 2000 remains under pressure. Once again it’s the Big Cap tech driving the bus. --------------------------------------------------------------- Dear Fellow Expat, The Supreme Court has just overruled the Chevron Doctrine, a 40-year-old precedent that allowed judges to defer to a federal agency’s “reasonable interpretation” of ambiguous statutes. This relic of judicial modesty has finally been sent to the ash heap, and about time too. The media is having a collective freakout. Business Insider says that it threatens “Biden’s Climate Policies…” and the New York Times worries that it will sink an array of federal regulations. This is from People magazine: “The "Chevron deference" has long been the backbone of how corporations are regulated. The new ruling strips federal agencies of their power to determine what's best for Americans.” That last line is something. “What’s best…” What’s best according to these people changes every single day. Each administration and their federal agencies is like a “new dad” who mom marries, and you’re about to find out what you’re gonna get this time. Is he a cool Dad who will let me smoke cigarettes and leave me alone, or is he the dad who is going to make me use a mop to soak up his tomato garden with my shirts so that we grow the same sized fruit. Who knows… let’s roll the dice every four years!!! The reality… all this does is require Congress to write actual laws that people can understand and interpret… and follow. That said… don’t sit here and think that this is somehow a victory for all Americans. There’s more to this story… Revisiting the Clean Air Act So, how does this work? The Chevron doctrine, established by the Supreme Court in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. (1984), says a court can defer to any executive agency’s reasonable interpretation of an ambiguous statute that the agency administers. So… rather than kick the can over to the agency… the judge has to do some actual work. Let’s look at an example of how this worked before today’s ruling. Take, for instance, the Clean Air Act and the bureaucratic acrobatics around “air pollutants.” The Act demanded that the Environmental Protection Agency (EPA) set rules for "any air pollutant" that could endanger public health or welfare. The trouble, as always, was in the details—or the lack thereof. Does “any air pollutant" include greenhouse gases like carbon dioxide (CO2)? The EPA, in its wisdom, claimed ambiguity and sought refuge under Chevron. But in Massachusetts v. EPA (2007), the Supreme Court ruled that greenhouse gases fit within the Act's broad definition of "air pollutants," thereby compelling the EPA to regulate them. The Court's decision forced the EPA to rethink its stance and eventually led to the regulation of greenhouse gas emissions from vehicles and other sources. But with Chevron deference now gone, future courts may no longer bow to the EPA's interpretation of the Clean Air Act on carbon emissions. Instead, courts will interpret the statute on their own, without giving weight to the agency’s so-called expertise. Naturally the media that loves the bureaucratic, autocratic state full of unelected officials to decide the rules based on their “expertise” is upset. How on earth will the Emperor now force through changes at the executive level through the agencies without this deference? It’s All About the Courts Now Behold the majesty of the judiciary and the ideological forces now at play. Courts will no longer defer to an agency's interpretation of ambiguous statutes, leading to more rigorous judicial scrutiny of regulatory decisions. Judges, those unlovable arbiters of truth and justice, will now have more authority to interpret statutes. That’s a lot of responsibility. But they get to do the interpreting… And as we know, judges today as just as political as the agencies we’ve empowered. This will lead to more varied interpretations of laws depending on the judges' perspectives. Without Chevron deference, we can expect more frequent legal challenges to agency regulations, creating a delightful mess of unpredictability. There is a silver lining: this should put a dent in the "sue and settle" shenanigans of recent years. [Settlements resulting from these cozy agreements would likely face rigorous judicial scrutiny.]( If courts are more actively involved in interpreting statutes, there might be more opportunities to challenge "sue and settle" agreements in court. Parties opposed to the regulations imposed through these settlements might find it easier to argue that the agency overstepped its statutory authority. [I am of agreement that this could produce chaos]( - but not because fuel efficiency standards are going away or some factory in Alabama is going to start polluting the water. Because it’s going to force America to actually hire experts in their fields. And we’re bad at this. Different Sectors Will See Different Results Some industries might enjoy a more stable regulatory environment as agencies tread more cautiously. What’s good is that the laws won’t change based on bureaucratic whims and interpretations that have bounced back and forth for roughly 30 years between administrations. The last 30 years alone of Greenhouse Gas Emissions Regulations has rotated entirely around who is in charge of the Presidency, and has swung back like an insane pendulum on four or eight year periods. The same goes for Title IX, thge Waters of the United States (WOTUS) rule under the Clean Water Act, Net Neutrality, the Joint Employer Standard by the NLRB, Asylum and Refugee Policies, and Title VII Protections by the EEOC. However, we can also expect a surge in legal battles over existing and new regulations. Advocacy groups on both sides of the aisle may find more opportunities to challenge regulations they disagree with, leading to increased litigation and a potentially altered balance of regulatory protections. So, we’ll probably see a lot of lawsuits now… In the end, it should require Congress to do its damn job: to write clearer statutes to limit ambiguity and reduce judicial interpretation, shifting some power back to the legislative branch. In addition, agencies will need to be more accountable and transparent in their actions. But we know better, don't we? These lawmakers, in their infinite wisdom and chronic ineptitude, rarely know what they’re doing. Congress now has a chance to redeem itself. Judicial appointments will be under the spotlight, and the balance of the Supreme Court and state courts will become more crucial than ever. This should slow the expansion of the regulatory state, but it will also fuel more litigation over regulations. In the end, the lawyers win. But maybe—just maybe—people will start to pay closer attention to the ones writing the laws, rather than interpreting them through a swamp of unelected officials. A man can dream. Stay positive, Garrett {NAME} Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. 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