When public policies undergo significant changes due to shifts in the surrounding economic or social context, policymakers may fail to update their policies even if they recognize alternative options. This is because judges have more power over regulatory matters thanks to Loper Bright’s pro-drift stance, which allows them to decide whether new regulations will be implemented or not.
For instance, the regulation proposed by the Fed, the FDIC, and the Comptroller to bring U.S. banks in compliance with an international agreement known as Basel III is a prime example of this. The banking industry opposes these requirements as they would impact profits, but they have managed to sway Fed Chair Jerome Powell into promising changes before the rule is finalized. A legal challenge is likely to follow, further delaying implementation of the regulation.
The influence of Loper Bright 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. The influence of intense minority interests and political actors can further exacerbate these challenges faced by policymakers in updating regulations that reflect the current environment.