When public policies undergo significant changes due to shifts in the surrounding economic or social context, policymakers may fail to update them despite recognizing alternatives. This is a common issue faced by regulators who find themselves powerless in the face of intense minority interests and political actors.
One example of this is the regulation proposed by the Fed, FDIC, and Comptroller to bring U.S. banks into compliance with an international agreement known as Basel III. While this agreement aims to strengthen banks by requiring them to increase capital reserves, take on less debt, and be more responsive to market conditions, it has been met with opposition from the banking industry. Despite this opposition, Fed Chair Jerome Powell has promised changes before the rule is finalized, potentially leading to a legal challenge from those who oppose the regulation.
Loper Bright’s influence on litigation surrounding such regulations is expected to be significant. Legal challenges based on the Administrative Procedures Act and doctrines like “major questions” and “nondelegation” are likely to be strengthened. This could impact challenges to anti-money laundering regulations and potential regulations on cryptocurrency by the Securities and Exchange Commission.
In essence, Loper Bright’s pro-drift stance gives judges more power over regulatory matters, potentially hindering necessary updates to policies in response to changing economic or social conditions. It is important for policymakers to recognize this influence and work towards finding ways to overcome these challenges in order to ensure that policies reflect the current environment effectively.