The Supreme Court’s recent decisions knocking back the powers of federal regulators have sparked unease across the government about what the future of policing corporate behavior will look like. SEC Commissioner Mark Uyeda has a different take on the rulings: It’s about time. Uyeda, a Republican who has long been critical of the so-called administrative state, told MM that Chevron deference — the legal doctrine that gave agencies broad latitude in the courts until its death last month — allowed regulators to operate with “limitless boundaries,” sometimes leading them to create rules outside their own authority. Now, the fall of Chevron, coupled with several other administrative law rulings from the high court, is forging a new legal landscape that Uyeda says is better off for both regulators and the regulated. SEC Chair Gary Gensler and others have argued that the court’s decisions are no cause for panic. But Uyeda’s comments offer a glimpse into how GOP financial regulators are reading the court’s historic decisions just months before some may find themselves in new positions of authority should Donald Trump win in November. Uyeda won’t say whether he would be interested in heading the SEC in that scenario. But he said there’s “strong optimism” that a second Trump administration would mark a “return to a lot more thoughtful approach in financial regulation.” “We need to go back and make sure that we in fact are doing data-driven rulemaking and policymaking and move away from an approach that seems to be based on ‘This seems to be the right thing to do,’” he said. The following are highlights from the conversation, edited for length and clarity. We’ve seen a shift in the last decade where questions of agency authority have become more common, capped off by these recent Supreme Court decisions. How do you think about what agencies and regulators are facing in the courts today? These decisions are bringing back the notion of accountability on regulators and administrative agencies. Congress cannot generally give administrative agencies broad law-making ability. So when we do have to interpret the law we need to show our work. We need to demonstrate that our actions are consistent with the laws, they are supported legally and that we do the appropriate analysis to back those views up, and we make that transparent in some public fashion. It’s like being a student turning in your fourth-grade algebra assignment, you need to show your work. Do you think the fall of Chevron will hit some of the current lawsuits that are pending against the agency? It removes the argument … that the commission receives automatic deference to its view by the courts. That does mean that when we do new rulemaking, we’re going to need to be more thoughtful to make sure that we have the authority [and] that any interpretation that we have is consistent with law. We’ll need to put more work into our rulemaking and into any other legal positions we put before the courts, whether it’s in the context of an enforcement action or an amicus brief. In my view, that’s a good thing. We need there to be scrutiny of our work. Otherwise, we’re going to be too tempted to take shortcuts, and when administrative agencies take shortcuts, especially to meet a preordained outcome, that’s when we run into trouble. Do you worry about Congress’s ability to craft legislation on something as highly specialized and technical as the securities laws? It works best when the agencies work with Congress to make sure we understand the concerns that gave rise to the legislation. I think that’s what the American public expects. What we have done in some areas is take laws that Congress had written and try to extend that far beyond what the intent behind those laws was — for instance, the climate rule we adopted on disclosures. We are taking a provision in law that suggests we have rulemaking authority as long as it’s in the public interest and the protection of investors. We have exerted that authority means we can disclose anything we want, irrespective of financial materiality, as long as we can make the claim that it’s in the public interest and protection of investors. In essence, we can use that to adopt backdoor rules to regulate behavior through disclosures. When Congress passes a law, we shouldn’t be… trying to be very creative in how to read this in the broadest possible way to achieve things that were never contemplated by Congress. IT’S WEDNESDAY — And, given the way this week has gone, Liz Lemon would be passed out by now. Want to talk SEC in a Trump 2.0 admin? Give me a shout: dharty@politico.com. And as always, Sam can be found at ssutton@politico.com.
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