November 2, 2022
Partner, Gibson, Dunn & Crutcher
Partner, Sullivan & Cromwell LLC
Executive Vice President, Chief Policy Officer, and Head of Strategic Advocacy, U.S. Chamber of Commerce
The business community has dealt with its fair share of federal government overreach throughout history. However, the regulatory environment is a growing concern for some businesses, as they worry about the government’s overreach going too far with certain policies.
At the U.S. Chamber of Commerce’s Institute of Legal Reform Summit 2022, Neil Bradley of the U.S. Chamber led a discussion with legal experts. These leaders in law shared their views on the anticipated overreach of the federal government and the impact this could have in the future.
The Current Landscape of Federal Government Overreach Is Fairly Normal
Looking at the current landscape of over-regulation and excessive federal government overreach, Scalia believes it's par for the course.
“It's a highly regulatory environment right now [which] will … get more regulatory in the next few months to a year,” said Gene Scalia, Partner at Gibson, Dunn & Crutcher. “We're … still in the rule-preparing and proposing stage versus actually having final rules in place that companies feel the brunt of.”
Scalia explained that each new administration seems to turn to its agencies to implement policies increasingly. This is primarily due to challenges within Congress and because the courts have encouraged it through the Chevron deference.
However, he noted that President Biden as president is more progressive than he was as a candidate, which is having an impact on the regulatory agenda.
“The intensity and how aggressive some of the regulatory actions are is new,” Scalia said.
Some Core Assumptions Could Be Redefined by New Regulations
Further discussing the regulatory agenda, David Ogden, Partner at WilmerHale, shared his perspective on litigating over-regulation, along with the regulatory state of affairs we’re seeing in 2022.
“I think we've got a classic clash between an administration that's intent on pursuing a regulatory agenda,” Ogden said. “That's why we have elections to establish policy and a court system that is taking a hard look at Chevron and other core principles of the administrative state.”
However, there is some skepticism throughout traditional areas of existing laws and regulations on enforcement in the courts.
“I actually think we're headed towards … a very active period when these regulations — as they mature and come through the rule-making process — get finalized of litigation under the APA (Administrative Procedure Act), which may redefine a lot of core assumptions in the space,” Ogden said.
The SEC’s Ambitious Regulatory Agenda Has Caused Some Concerns
Turning the focus towards the U.S. Securities and Exchange Commission (SEC), Julia Malkina, Partner at Sullivan & Cromwell LLP, explained its current direction versus what it has previously done.
“By any standard, the SEC's regulatory agenda has been ambitious,” Malkina said. “Since the start of the President Biden administration, we've seen, proposed, or enacted rules on … subjects ranging from climate-related disclosures to board diversity disclosures to ESG fund names and ESG fund disclosures.”
The ambitious agenda has received lots of attention from the business community — particularly the climate-related disclosure regulation.
“The climate-related disclosure regulation has received the most comments in history during the notice and comment period,” Malkina said. “We've seen attention both to specific provisions of the regulation and their scope and application in practice, as well as their consistency with regulations coming from other places in the world.”
These regulations are especially concerning for multinational companies subject to both U.S. and European regulations, she noted.