WASHINGTON–It remains uncertain just what the Supreme Court decision to overturn the Chevron doctrine will mean for credit unions and regulations, but it’s very likely regulations won’t be proposed and enacted as quickly as they have in the past, according to one person.
As CUToday.info reported, the Supreme Court decision to turn back a 40-year precedent in which courts generally deferred to regulatory agency’s interpretation of rules in which there is ambiguity has led to predictions the courts are going to be clogged with challenges to countless regulations, and that could include lawsuits filed by credit unions or their trade groups.
Process to Get ‘Longer’
“I think with the reduction in deference to agencies (that) the rule making process will tend to be longer,” said Carrie Hunt, chief advocacy officer with America’s Credit Unions. “As a reminder there are different mechanisms that agencies can use relative to the formal rulemaking process. I think that process could be much longer and agencies will use all…mechanisms to try to make sure they do as much as possible to protect themselves from litigation.”
Hunt said in some cases for credit unions the new environment will be beneficial, especially in cases where credit unions support a new rule.
“But if credit unions don't like the rule, then not so much if it’s something that we think needs to happen for credit unions to be successful on the operations side.”
Hunt noted agencies often issue interim rules, often in “emergency type situations,” and that’s “another area where you know we could see some challenges.”
A New Decision Factor
As a trade association, Hunt said ACU assesses whether to file litigation against NCUA, the CFPB or any other agency based on an obvious criteria—can it win? But the Supreme Court decision has changed the factors it weighs in making that key decision.
“With the Chevron doctrine in place and knowing that agencies get tremendous deference under the law, that was always a huge impediment (to pursuing litigation),” Hunt said. “So, I certainly think there could be times in the future where we will make a decision to litigate an issue as opposed to sitting in the stands, because the likelihood of prevailing… But litigation is expensive, and it is never the first choice.”
Might Individual CUs File Suit?
In response to a question from CUToday.info over whether individual credit unions might file lawsuits over regulations, Hunt said that would likely depend on the rule and whether it affected an individual credit union or the industry as a whole.
“Certain credit union boards are supportive of credit unions suing,” Hunt said. “For instance, when credit unions were faced with the whole slew of cases regarding the American Disabilities Act and websites certain credit unions (filed) lawsuits and that was incredibly helpful to the industry. So, I think it's really whether or not a credit union has an appetite to be the one taking the shots for the rest of the industry."
A New Round of Litigation'
One legal expert is certainly expecting the court dockets to fill.
“Any doubt as to the importance of the Supreme Court's recent decision in Loper Bright Enterprises v. Raimondo in which it did away with so-called Chevron deference has been quickly dispelled by the rapidity with which it has been cited in recent rulings analyzing some of the most critical administrative cases currently being decided," said attorney Henry C. Meier. "The seven cases already citing Raimondo include a case seeking an injunction against the FTC's ban on noncompete agreements, and a lawsuit by the state of Texas challenging the Department of Labor's authority to raise the salary threshold for exempt employees under their Fair Labor Standards Act. In fact, it's safe to say the Supreme Court's ruling has started a new round of litigation in which courts must determine the limits of their expanded power to police administrative activity. Banking regulators, including the CFPB and the NCUA, will not be immune to this increased scrutiny."
Additional Analysis Available
CUToday.info has a lengthy review of various viewpoints on what the Supreme Court decision will mean moving forward here.