Justices Appear Split in Regulatory Fight

claim for benefits. But it's really about a broad issue whether courts should defer to federal agency's interpretations of their own regulations, making it one of the top business cases of the term. Joining me is Stephen Vladdock, professor at the University of Texas School of Law. Steve explained the

precedent and ruling that's in question here Hidgens. So the short version is this kissing about an older Supreme courtsition called our au e er an Hour is a lesser known cousin of perhaps better known Chevron case, both of which are about when federal courts will defer to reasonable interpretations of ambiguous language by the government. So Chevron, the sort of better known cases about when a statute is ambiguous and the agency tasked with enforcing the statute says,

we think the ambiguity should be resolved this way. Hour is about regulations. Hour is a step past Chevron, where if there's a dispute over the meaning of an ambiguous term in a government regulation, courts will generally side with reasonable interpretations of that ambiguity by the agency. That's what

happens here. The Veterans Affairs Department had interpreted its own regulations in a way that precluded the benefits that Mr Kaiswar was seeking, and he's challenging it not on the ground that they acted incorrectly, but that that interpretation was not entitled to deference. Now, the our case was written by a conservative icon, the late Justice antonin Scalia, and yet it's under attacked by conservatives, and all five of the conservative justices have question the our ruling in the past.

Why so, Yeah, I mean, we've seen a real shift June in the last five ten years where what really used to not necessarily be an ideological divide over these difference doctrines has turned into one and where the conservative justices we heard this from you know, then Judge Canalla's confirmation here I am have talked about what they view as a democratic accountability gap, that it's given far too much power to unelected, unrepresentative bureaucrats and government agencies to

defer to these kinds of interpretations. I think the tricky part, June,

is the alternative isn't any more democratic. I mean, if you get rid of these difference doctrines, that's not creating a more room for Congress or for the president to actually created more for courts, and so I think the question is, you know, who do we better want resolving these ambiguities, agencies that are taffed with enforcing of these statutes and rules on a daily basis, or federal judges who may have their own reasons for wanting to resolve

the ambiguities one way or the other. Liberal Justice Steven Bryer said that overturning Hour would amount to the greatest judicial power grabs since Marbury versus Madison? Is he going a little far in that that may be a little colorful on Justice Briar's part. I do think though, that it's an important point that gets lost. You know, there's there's so much discussion, there's so many sound bites about

how difference doctrines are bad for democracy. You know, Briar's point is that the alternative is not any more democratic, right, It's just about which unelected, unaccountable decision maker, you know, we trust to get it right. Do we trust the agency which is dealing with these often june very complicated, intricate regulations and statutes, or would we prefer you know, federal judges who, for better or for worse, aren't experts

in the field. I think reasonable folks can disagree. I think part of the problem with the conversation that's been happening in public about this doctrine is the assumption that the alternative to these difference doctrines is greater accountability. I think justus is Briar's right. The alternatives greater judicial power. And you know, some folks will see as a future, but others will as a bug. Greg's Store was at the arguments and he said that it appears the court

will divide along ideological lines in the case. Is it more likely that they'll completely overturn the precedent or scale it back? So you know, it's interesting. I was a little surprised by the position that the Trump administration took.

The Solicitor General, you know, who's the putitive defendant in this case, took the position the court actually shouldn't overrule Hour, that it should just be a little bit tighter and when Hour is appropriate, that is to say, narrow the circumstances in which courts will defer to reasonable interpretations of regulations by the agency that promulgated them. I think that's probably the position that's most likely to carry the day.

But we've been seeing, especially from the conservative justices Hins dropping left and right in opinion after opinion, that this is not just about the our doctrine um. This is actually also about the Chevron doctrin, which June is a much bigger deal and ultimately, I think a much more important referendum on the role of courts versus agencies when it comes to these highly technical, highly complex federal statutes and rules. Business groups have been urging that our be overturned,

especially in this case. Explain why, well, I mean, I think it's a bit of a simplification, but you know, for the most part, the power that agencies have in a world in which there's our deference is a power that is often used to regulate private entities, to regulate banks, if you are you know, the financial regulation agencies, to regulate you know, industrial concerns, if you are like the

Environmental Protection Agency. And so I think the big corporations worry that the sort of the regulatory powers of agencies are most often directed at them. They won't necessarily win all of these cases if instead these decisions are being made by judges. But I think, you know, especially looking at who's been appointing judges over the last two years, you know, these kinds of corporations are making a strategic decision that they'd rather take their chance is with these

judges than with these agencies. But Steve might have hurt the Trump administration's attempt to roll back Obama era rules, for example, like those protecting the environment, if it's up to judges instead of the agency. So I mean, in one sense, June, I think it will it will make it harder. Anything that gives agencies less power is obviously bad for the current president because it gives the current

president less flexibility. On the other hand, I mean, I think if you are the Trump administration and you know, one of your big pushes in judicial confirmations has been judges who share your concerns about overregulation or about deregulation.

Maybe you're actually not that worried about the judges making those moves now, and you're more worried about the next president who may not share your views about deregulation, and that this is a sort of long term game or a long term strategy to generally weaken the authority of agencies, even if the cost is short term weakening of this administration. We have to leave it there, Steve, this is a fascinating topic, though. We'll have you back what the decision

is made. That's Stephen Vladdock. He's a professor at the University of Texas School of Law. Thanks for listening to the Bloomberg Law Podcast. You can subscribe and listen to the show on Apple Podcasts, SoundCloud, and on Bloomberg dot com slash podcast. I'm June Grosso. This is Bloomberg