The Supreme Court today hears argument in a case concerning many politicians’ and lawyers’ favorite pinata, the Chevron doctrine. It would likely be naïve to believe that the case won’t at least further restrain agency authority and discretion, although whether the case will be the vehicle for complete abrogation of the doctrine is beyond my tarot card reading powers. Robert Steyer addresses what this development likely means for the retirement industry and ERISA governed entities in an excellent article in Pensions & Investments, titled “Industry Eyes High Court on Chevron Deference.”
As I discussed in my comments in the article, my own view is that, for the most part, the retirement industry is best served – as are most of its participants – by the maintenance of a reasonable status quo from a regulatory perspective. For a whole host of reasons, big regulatory swings in either direction aren’t generally in the best interest of any member of the ecosystem, whether that is in the form of new initiatives or the presumptive eventual elimination, as a result of the demise of Chevron, of existing ones. To be fair, of course, there are circumstances in which regulatory initiative or change is valuable – for example, it is hard to have a new asset class offered in retirement plans if you don’t create a regulatory regime for doing so. But overall, consistency counts and an undercutting of agency power, if it were to lead to churn in the regulatory environment for retirement plans, isn’t likely in anyone’s best interest.
But time will tell. And unlike some of the other commentators quoted in the article, I would not be sanguine that, if the Supreme Court eliminates Chevron deference or even just significantly cuts back on agency authority, it won’t, at least over time, have the effect of altering the regulatory and investigatory environment in which ERISA lawyers and their clients operate.