House Dodd-Frank Replacement Proposal Would Repeal Court Deference to Agencies

Executive Pay Legislation and Regulation

In a speech before the Economic Club of New York this week, House Financial Services Chairman Jeb Hensarling (R-TX) announced he would soon be introducing the Financial CHOICE Act, the GOP's Dodd-Frank replacement bill, noting that it would "repeal the Chevron doctrine requiring the judiciary to give deference to financial regulatory agencies' interpretation of the law."  The proposed repeal of the 30-year-old "Chevron deference" doctrine, which Hensarling characterized as "unfair and an affront to due process and justice," appears to apply to all agencies, not just financial agencies.  The bill would make it easier to challenge aggressive agency interpretations of statutory requirements or those rulemakings which might fail to satisfy a legitimate cost-benefit analysis.  Currently, courts which are adjudicating a challenge of an agency's enforcement of a statutory requirement or a congressionally-mandated rulemaking must defer to the judgment of the agency, so long as it is deemed reasonable.  The only way around Chevron deference is to prove the agency acted in an "arbitrary or capricious" manner, which is a difficult standard to prove.  The full text of the bill, which would also repeal "non-material specialized disclosures," will be made public in the coming weeks.