Aaron Chastain Quoted in Law360 on Post-Chevron Financial Regulation Impact

Bradley attorney Aaron Chastain was quoted in Law360 on the impact of post-Chevron financial regulation.

The U.S. Supreme Court overturned a decade-old precedent set by Chevron v. Natural Resource Defense Council in its recent decisions in Loper Bright v. Raimondo and Relentless v. Department of Commerce. As a result, courts will no longer defer to federal agencies’ interpretations of law in rulemaking. Experts note that regarding the overturn, financial regulators may have a harder time defending aggressive rules and guidance and may lean more heavily on their supervisory and enforcement authorities.

One possible ramification to the financial regulatory space is pending and future actions could be modified as litigation risk climbs. Chastain said, “I do think this will crystallize what has already been a changing mindset for the banking regulators. They’re going to be more cognizant that they will have challenges based on their statutory interpretations and will have to work [harder] to justify them once they’re in front of a judge.”

However, attorneys stressed that despite the Supreme Court’s decision to overturn the Chevron deference, financial industry litigants are not being handed an infallible method for dismissing rules they don’t find agreeable. Chastain noted that in some areas of financial law, Congress gave the agencies significant discretion to determine how technical regulatory details should be filled in. Under Loper Bright, courts are still supposed to “respect” that discretion and can consider agencies’ expertise when reviewing their legal interpretations.

Bank capital requirements are one of those areas where lawmakers built in a lot of rulemaking flexibility, Chastain explained. As a result, if such requirements were to be challenged, courts would probably still “tend to be pretty deferential,” he said.

 “I doubt there’s going to be a lot of appetite for a very searching judicial review of those sorts of rulemakings,” Chastain concluded. “As much as the industry is worried about Basel III, I think it would be hard to look at it and say Loper Bright provides a rifle-shot argument as to why the rules would need to be discarded or set aside. I think you would see a stronger challenge that’s based on [other grounds].”

The full article, “6 Things To Know About The Post-Chevron Finreg Impact,” was published by Law360 on July 3, 2024. (login required)