Podcast - Legislative Implications of Loper Bright and Corner Post Decisions

Rich Gold: Thank you all for joining today. This is Rich Gold and welcome to another episode of our Eyes on Washington podcast. Today we're going to be covering the legislative aspects of the Loper Bright and Corner Post decisions, how they're going to impact Congress and in particular the Senate, where we have a special guest today, and talk a little bit about what it means for advocates before Congress as well as congressional staff and agencies providing technical assistance in the legislative process moving forward. So should be a fascinating 20 minutes here. Thanks very much for joining us. Again, I'm Rich Gold, and I'm head of the public policy group here at Holland & Knight working on environment, energy, transportation and all sorts of policy. Let me kick it off to our special guest today, Arjun Mody, who's joined us from the Senate. And I'll let Arjun introduce himself.

Arjun Mody: Thanks, Rich. Thanks, Dimitri. Pleasure to be on. My name is Arjun Mody, as Rich said, I'm the staff director to the Senate Republican Conference under the chairmanship of Senator John Barrasso of Wyoming. 20-year Washington veteran, worked in previous administrations on the executive side, worked in the advocacy space where Rich and Dimitri work, and then also worked for numerous senators on numerous committees. Senator Barrasso is also the ranking member on Energy Committee, and worked for Senator Hutchison previously, who was the ranker on Commerce and then Senator Dole on the Armed Services Committee. So a wide span of Senate activity, never spent a day in the House.

Rich Gold: OK. And finally, Dimitri Karakitsos.

Dimitri Karakitsos: Yeah. Thanks, Rich. Dimitri Karakitsos here with Holland & Knight. I've been with the firm coming up on eight years now. I do a lot of energy, environment and all sorts of policy work with Rich. Prior to that, spent about eight years in the Senate on the Environment and Public Works Committee, worked on a few major pieces of legislation like the TSCA Reform Bill, the Lautenberg act, which was a major environmental law rewrite we got done on a divided Washington, D.C., worked on a couple of highway bills and other pieces of legislation that made their way through the process.

Rich Gold: OK. Well, thanks, guys. We'll launch right in here. So for those of you who regularly listen to this podcast, you'll know that we had a prequel on the Chevron decision and where we thought it was going to go, and I think did a pretty good job of predicting how the court would come out. And then sort of an after view in July where we kind of looked at the decision and what implications may be. There hasn't been a lot out there in terms of how the legislative process itself is going to be impacted and how Congress, the Senate in particular, may change as a result of that, and that's really our topic for today. So let me start out by just kind of asking, Arjun, whether you kind of experienced anything so far, whether there are plans underway or big thoughts happening about what this means and what it means for committees going forward, what it means for staff going forward, and obviously the legislative process.

Arjun Mody: Yeah, great question. To date, there has not been a ton of work in the space on the Senate side. There has been a bill introduced and some working groups that are trying to form and figure out the pathway forward. And so it's obviously something that we know is a runaway train coming to, to the Senate and to the Congress in general. But, you know, as you know and as many of your people listening here know, the focus is on the ways that Congress has recently done legislation is through budget reconciliation. And that, you know, doesn't take into account a lot of the stuff that we're talking about in policy and other things. The budget reconciliations are usually just moving numbers around and priorities that way. And that's sort of been the focus right now as people prepare and get ready for a next Congress. The budget reconciliation will likely be the first thing out of the gate. But as we talk about these policy issues, you know, the first thing that comes to mind here in the Senate is the massive disadvantage on manpower. The executive branch has about 2 million employees, over 2 million employees. Congress in total, Senate and House, has about 20,000 employees. So you could just see the sheer number of just man hours that we're going to try have to grapple with. And that's going to be a huge, that's the biggest item to tackle. And how do we get — we have very smart people, capable people that work on committees and in Senate offices. But as you get deeper into actually writing the rules of the road in legislation and don't just do the deference thing to the agencies and saying, you know, shall promulgate a rule or shall a rule that does this, we're going have to do that here ourselves. And that's the number one issue, of how we do it. You know, there's a lot of conversation about, you know, dismantling the administrative state and the Supreme Court, you know, put the, you know, the pathway to do that. But we got to make up for that. And if we're going to, you know, have some attrition in staff and the executive side, you know, there's got to be some way that we make that up in the in the Senate side.

Dimitri Karakitsos: So, you know, to Arjun's point I mean, I think that there's, it's, it's not uncommon for Congress to kick the can a little bit and, and leave some kind of open-ended deference to agencies. When you have contentious issues sometimes and you can't find a path forward of agreement, it's easier to kind of, you know, be vague and be, you know, live to fight another day with, you know, whatever administration is kind of implementing that. And that creates kind of a real danger and creates some uncertainty if you're kicking that can now. So how do you find the manpower, right, to actually be able to make sure that, one, you have the knowledge needed to put that specific language into place, but two, how much more difficult does that make compromise now, right. I mean, we're having trouble compromising on big picture policies. Now if we have to get into, you know, really granular details in Congress, it's just more discussion to have and more things to fight over and, you know, could make a lot of legislative process more difficult.

Arjun Mody: Yeah, I was talking to office just yesterday about a bill that they are pushing and they're trying to comfort, saying, hey, a lot of issues that one side may have with this bill can be taken away because a different administration will be implementing it, you know, a chance a different administration could be implementing it. So to your point where, you know, a lot of stuff is "all right, well, I'll cave on this because I know this president's in charge or this agency is in charge, so I won't pick that fight because I have confidence that, you know, Secretary So-and-So will, will, do the right thing." Here now, you can't, to your point Dimitri, you can't kick the can down the road. You can't just say, hey, this agency will do it this way. You actually have to get into the nitty gritty and develop what the intent is and then beyond just the intent, you know, congressional intent is, was talked about a lot previously. That's kind of gone out the door. People don't really — there's less and less attention to committee reports and what Congress intended, and the agencies are kind of just running the bills the way they see best fit, you know, despite congressional intent. There's some agencies that are exception. You know, I worked in the Armed Services Committee, as I mentioned. You know, the Pentagon does take what the committee reports and what the annual defense bill says really, you know, to the letter of the law. And there are some agencies that, you know, kind of, you know, look at it and then implement the way they think. But, you know, that's one of the benefits of doing an annual bill. And I know there's plenty of bills in the environment space and other spaces that could get put up for reauthorization. That's going to probably have to be part of the process as well. So you can always go back and fine tune things or, you know, specify if you need to. So, you know, that's, you know, that's one way of solving for a process. Instead of giving a five-year authorization, you got a two-year thing and see where you need to come back and fix things. But there's just no way you can just kick that can down the road, and again, just going back to your original point, Dimitri, it's going to make these staff-level conversations incredibly important. It's going to make technical assistance from agency — that's that technical assistance expertise that agencies provide to Congress as they write bills — it's going to make that part of it very crucial because that's essentially the last chance the agency has to really say what how they want to implement the bill. So it'll be — technical assistance is supposed to be nonpartisan. It's not policy. It's just kind of how you would do something. But I could see that taking a form of, you know, a little bit more a grain of salt, more advocacy than traditionally. So when, you know, right now when we get technical assistance from agency, you know, it's just, well, if you're going to put this program in place, this is how you'd have to do it. And then you obviously have a legislative affairs office agencies that would say, well, this is what the secretary would like to do. So you have to kind of mesh those two things together and make sure that you're getting not only a technical assistance, but, you know, whether you believe or don't believe what the agency's position is from a political level. So you got take all that in as a Republican/Democrat staff on a committee as they're writing a bill. And then obviously there's stakeholder input. But then you got to actually sit down and write all that. And as you know, if anybody's gone through the regulatory process, it's a cumbersome process. It's a, you know, there's an initial regulation that takes many, many months, if not years to promulgate. And then you got a comment period and then you got to address those comments and then finalize a rule. Here, it's going to be essentially one shot. Congress is going to write the bill. It could get many on the floor but, you know, that's around the margins. Then it gets passed. And then you got to implement what Congress passed. There's no more well, the agency can tinker around the edges here, so it makes the legislative process all that more important. There's going to be very little agency recourse.

Rich Gold: It feels to me there's sort of two concepts I've been thinking about on this. One, we are dealing — and I'm just going to pick an incredibly complex issue to make the point, but we are dealing with such complex issues legislatively today — and we can just start off by talking about artificial intelligence, where if the Congress is going to protect the American public and make sure AI isn't misused going forward and, you know, in the best of times with some, you know, easier delegation of authority to the relevant agencies, that is going to be a hard bill to draft. It feels like under Loper Bright, it's exponentially more difficult, you know, because you have to be crystal clear. Obviously, it is an incredibly complex technical issue, and members of Congress and senators kind of getting into the nitty gritty and trying to detail at a granular level so that the delegation of authority is clear and the agency will be upheld if it's challenged, seems to be just almost a Herculean challenge for Congress to do.

Arjun Mody: Yeah. You know, the best example that I can think of off the top of my head is the appropriations process where an administration takes over a year. Anybody who's working the executive branch, the executive branch starts working on their next year's budget the year before, so, and they go through a review period with the different agencies and get a final review by their own director and then the president and then submit a budget to Congress. So they've done a lot of legwork, and then they get sent to our appropriations committees. We have hearings and markups and subcommittee and finally develop a funding bill for the government for the year, agency by agency. But that process of having all that legwork done and then giving it to the Appropriations Committee, who's got limited staff, right, each subcommittee has got, you know, five or eight people on it, and writing that entire bill for multiple agencies and funding them. I think you're going to have to go through and have some of that, right. While OMB does kind of the — obviously, OMB, the keeper of regulations at OIRA — but while they can interpret a little bit around the edges about what Appropriations Committee sends them, largely if the Congress says we're going to spend $5 million or $5 billion on this department and this agency, you can't really fudge that, right, because Congress has set it. So you're going to have to, you know — again, I think part of the reason why that works is because there's so much work and so many binders and tables are sent to the Appropriations Committee to do this work. You're going to have to rely on like the Department of Commerce and other agencies involved in AI, to say, hey, this is what we think that you should do. And then Congress could take that base case of work and then develop the bill, too, if you want deal with AI-based off that.

Dimitri Karakitsos: Yeah, I think Arjun's point earlier was a really good one, that you may just have to start authorizing things for a limited and smaller period of time, right. And AI may be a good example of that, where maybe we don't know what we don't know yet and we may have to write some language based on what we know today and re-up that in two years or three years. And that, you know, adds significantly to the workload of Congress, you know, the more things that they have to continually authorize and, you know, again, it adds new complexities because you will have new members, new staff, you'll have new chairman and ranking members of committees and everything like that.

Rich Gold: It seems to me that another part of the process that's sort of been a relic or a vestigial tail lately, committee reports and conference reports is, as you've mentioned, Arjun, you know, really are kind of the coin of the realm under Loper Bright now, right. Congressional intent is going to be laid out in obviously black letter law, legislative drafting. But, you know, we have operated for a long time in a space where we haven't had a conference on a major authorizing bill where we've appointed conferees, gone to conference, you know, in quite some time. It used to be the norm, and now it's by far the exception. So it seems to me that going back to that era of considering legislation more carefully, putting, you know, committee reports together from the various committees of jurisdiction, when something is reported out, obviously reconciling differences between the House and Senate, coming up with a statement of the managers about what the legislation means, all of that, which, you know, for me is the way I operated when I was in the Senate in the early '90s. And I know when your career started, we were still kind of in that space. We're going to be time traveling back to, you know, those things becoming very important again, which of course requires a lot of staff work and, you know, more time to get legislation done. There's no — I like to joke about the fact that, you know, the Inflation Reduction Act in many ways had no committee report structure to it, no conference report. You know, it was — and again, it was a spending bill, so a little bit different, but basically the compromise was put together on a napkin and passed in six weeks. That's not how things are going to work going forward.

Arjun Mody: No, that's exactly right. To your point, writing these committee reports, getting the committee signoff on them in a current state in the pre-Loper Bright world, was already hard and cumbersome. As you noted, it has gotten away because of how hard it was. Now you're adding in this presently post world starting next year, could do all that work, but with more detail, more granularity, more and less nuance and less kicking the can down the road as Dimitri alluded to earlier. You know it, I can't understate that point that Dimitri made in that hard issues kind of said, all right, we're going to, we're going to kick the can down the road and we're just going to say that the, the agency shall produce a report that will in nine days, and then we'll look at it and, you know, just kind of deal with it that way. So, you know, I think in one way it probably gives…The other trend, Rich, as you noted, is a lot of legislation comes from the leadership offices these days and less and less from committees. You're going to have to push that balance back towards the committees. The committees are actually going to have to do work. You can't write bills at this specificity in the leader's office. You have to have the committees do their work, and that's where the expertise lies. You know, not nearly enough, as I alluded to, the 2 million in manpower versus 20,000 manpower. But you're going to have to get into detail, and that committee is going to have to dig down, negotiate the bill and write these reports that then, as these agencies implement the laws, are going to have to refer to those as sort of a, for lack of a better term, as their Bible, right. Like they can't just do what they think the law does. They have to actually follow what the committee report does. And the question then comes in, what if that committee report is vague? What if that legislation is sufficiently vague? What's the recourse at that point? And does that get handled? You know, I'm dealing with a current issue with the Department of Justice right now where they've interpreted one statute one way and now they're telling Congress that they need to pass another law to actually do what we originally intended. But DOJ has the ability currently to interpret that statute the way they feel, and there's no real recourse. Now that's going to be flipped. We're going to say something, and they got to figure out what Congress meant, not what they think it meant. So, doing the work is important, but then also having an agency to be able to read it and digest it and actually execute on it is going to be equally important.

Dimitri Karakitsos: Yeah. And I think, you know, in working on bills, we used to kind of scoff at the idea of importance of findings and policy intent provisions, right. You could definitely see those becoming more important. To your question, Rich, on, you know, the congressional record and all that, I mean, I think you can look at Loper Bright, right? The justices there, Justice Roberts quotes the congressional record and a number of members of Congress who were a part of the APA lawmaking process. So it's already started.

Rich Gold: I come from a time where I have drafted floor colloquies to create legislative intent. I know people listening to this are now like googling colloquy. A time before the internet where that was important.

Dimitri Karakitsos: Right, and I'll say too, you know, it's tough even with the committee reports, right. Or, you know, manager statements on the floor, because on TSCA, for example, I mean, you often have minority and majority views. So how does a court view that when you have a report saying two different things or there were statements on the record by, you know, the Democratic members who worked on the bill and statements from the Republican members. So you don't always have the consistency in those trying to negotiate that committee, you know, record or in a conference, a report is another step. It's more resources, it's more effort, and it's more stuff to negotiate and argue about.

Rich Gold: Yeah, it's interesting that during oral argument, one of the justices in the form of a question suggested that, you know, by removing Chevron deference, it's restoring the power to the people and the people's house in creating these laws and sort of was hopeful that this would create more bipartisan spirit. And when I was listening to that part of the oral argument, I had to chuckle because only a Supreme Court justice that didn't have to deal with Congress was ever going to say, well, yeah, this, this will make more bipartisanship happen. But I will, you know, kind of note for the record here what Arjun just said, you know, this is going to be sort of it takes a village legislating in terms of folks downtown, you know, agencies, congressional staff, everybody in helping to bring the expertise to the table to get stuff done. And what that means from a downtown perspective is you need to be advocating everywhere. It's famously been reported that there are many provisions or several provisions in the Inflation Reduction Act, including straight authorizing language that just Senator Manchin and Senator Schumer drafted and negotiated. You know, those days are gone. You're not going to have that kind of loose delegation of authority going forward, and you are going to be able to, as an advocate, you are going to have to cover the people at the agency giving their opinion. The people in Congress, as everybody has said, not just the leadership anymore, but the committee staff and the members who are sponsoring the bill need to be addressed and need to be persuaded. So it's a much broader field of advocacy and persuasion that will be required in order to achieve policy goals, in particularly major authorizing legislation going forward.

Arjun Mody: Yeah. I'll just add to that, Rich. You know, on the Inflation Reduction Act, is a bill that Joe Manchin essentially authored, or key author of, with a friendly administration, and he's having to write letters to that administration saying, no, that's not what I meant. Like I wrote the bill, this is what it meant. Now, you know, we alluded to earlier, like, there's some deference if you believe the administration is going to be friendly to your cause, and you might give a little bit on not being as specific in your bill, but this is a case that even in the best of scenarios where everything lines up for the same administration party and they authored a bill and there's still daylight about what that actually meant. It does count still. For the stuff that you mentioned, I remember working on things like colloquies and census of the Senate and other things. Just, bill, we couldn't get a bill, but we wanted the congressional intent to be part of it and saying, well, when you know, we're not going to amend the bill, but we're going have a colloquy with the chairman and a member of the committee on the floor saying we're going to work together with the administration to make sure that this provision is enacted in a certain way. And that kind of got put in the record, and if it was ever litigated, that was something that you can refer to. Well, when we passed this bill, you know, Senator So-and-So, Senator and the chairman agreed that this is how I should be. One of the bills that is out there in Congress is one by Senator Schmitt of Missouri, the former Attorney General of Missouri, the Separation of Powers Restoration Act. And in that bill, one of the things that bill does is it gives the party that's subject to the regulation equal standing as the executive branch, right. Right now, when someone is in violation of a regulation or contesting a regulation, you know, the courts generally say, well, they're the party that's implementing the regulation, they kind of know what they're doing, and you really have to show some real wrongdoing in order to correct their regulation or change it. The separations of powers act makes it all equal and say, hey, like, you're not the regulators, you're not the experts anymore. Everybody's got equal standing, equal weight when they go to the court contesting what the intention, what Congress did was. So, you know, that's a part we haven't touched as much on. But the judicial branch is going to play an important role here in the first few cases of kind of saying how this is all going to work.

Dimitri Karakitsos: And Rich, you mentioned, you know, industry and downtown and all that. I mean, I think there will certainly be some new challenges, but also some real new opportunities there. If Congress, you know, a lot of people, you know, committee staff are considered experts, right. A lot of people don't come on to committee staff experts. I mean, you know, Arjun would have to be in school until he was 80 to able to, you know, to be an expert on all the different committees that he's worked on at this point, right. So you get a lot of that help from, from talking to outside experts, and I think that that importance kind of grows now that we've got, you got to get more specific. You have to, you know, get more into the weeds in the details, and I think that that presents an opportunity for downtown and, you know, advocates on the outside of Congress to play an important role, or a growing import role. I think it's been important, right. But I think it grows in importance.

Arjun Mody: Yeah. I'd say, you know, one of things that you all do well is obviously bringing in stakeholders, but experts in that field, right? So there's you know, people listening to this podcast right now, there's, you know, there's government relations people who are kind of well known about they know about the company or the industry or the issues pretty well. But then there's, you know, the guy, a headquarter guy or gal at headquarters actually, you know, lives and breathes the specific issue. And those type of people are going to be more important for Congress to hear from as well. So developing that relationship and then also having that that person who's just the specialist in, you know, whatever it is saying, hey, this is how it actually works in the real field, this is how it works in our industry and this is kind of things you need to take into consideration.

Rich Gold: Yeah. Having worked on a lot of regulations for the last few years, particularly coming to mind, the Biden Administration regulations that are all subject of judicial review post-Loper Bright, so will be subject to the new standard here. It's clear, kind of the era of respect for that technical capability within companies, within trade associations and nonprofits from the executive branch has eroded over time, and to a great extent, you know, sort of executive branch rule makers seem to come into the room now knowing what they want to do and, you know, just having to listen to the technical expert — perhaps to figure out how to do what they want to do anyway — but act like they listened. And I think going back to an era where we're writing regulations to stick and actually not be overturned and find a middle ground because not all regulation is bad regulation. No one's saying that. AI is a good example of that, we need to do something. But we need to find a middle ground that will allow, you know, American technology companies to, to do what they need to do here and make us the greatest country on AI and at the same time make sure we're protecting consumers and financial institutions, etc. So it's that balance, and I think that's what the court was really getting at here. And obviously, Congress will follow and try and get at the balance between, you know, listening to the stakeholders and finding a middle ground.

Arjun Mody: No, that's exactly right. Taking what you say a little bit further, you know, a concern for a lot of people in my conference center, Republicans, is the weight of government versus the little guy, right. Like when, when an agency promulgates a regulation that hurts, you know, where a small business, individual landowner, farm or whatever it may be, you know, Dimitri and I worked on something called Warriors of the U.S. where, you know, the farmers were you know, were dealing with the way the EPA had enormous fines and if they didn't comply, and they weren't quite sure how to get in compliance because they had a lot of land and what's a pond, what's a stream and what's a water of the United States. So, when you kind of give the little guy equal standing with the powerful government agency, that's what kind of the Senate Republicans look as kind of, you know, pushing the administrative state back in a box. And one of the reasons why Chevron was so important to many people on my side.

Dimitri Karakitsos: Well and there was a really kind of noble goal — or I don't know if it was a goal, but it was certainly espoused in the in the opinion, right — of the, the whipsaw back and forth between different administrations. And we certainly hear on the outside that there's a lot of folks who will take regulations that they don't view that favorably if they can be consistent and they can know how they're going to be regulated for 10 years so they can make investments and decisions, right. It's this idea that we have every four years, you know, potentially some major swing. And, you know, the court definitely was hoping that this takes away some of that and when Congress speaks, it's a little more clear, a little more authoritative, and everybody has to follow that, you know, administration to administration.

Arjun Mody: The one point — I started with this and I can't emphasize enough because it is such an important point — on the manpower issue. Congress is perfectly capable of implementing what the court had decided in this case and trying to get to a place where they can have clear rules for agencies and for the American people on different bills and the regulations that would come out of those bills, but there is this manpower issue. It's not easily solved or is not just throwing more money at it. There's a pragmatic real estate problem. If anybody has ever been up to the Hill, many staff work in small, small spaces, you know, three or four people to a room. And, you know, there just isn't large, large staffs here in the Congress. So — and then each so-called expert committee also has a basket of issues, they're not just an expert on nuclear energy, they're probably an expert on nuclear energy and natural gas and something else. So, solving for the manpower issue is one of the largest things that Congress is going to have to figure out, and that's not going to be overnight. Like I said, there's some just logistical issues you got to deal with. And, you know, we also — Congress is an agency where you kind of hire someone who wants to get into government and public service. It doesn't matter if they're Democrat or Republican, independent. Agencies can hire based on merit. Where in the Congress, you know, a lot of these staff are in one party or the other. So it is like there's a little bit of ideological that you have to also maneuver for here in Congress as, as committees hire staff and places. So there's some real challenges for sure. And how this all plays itself out over the course of the next six or nine months, but those are just some kind of pragmatic limitations that we have.

Rich Gold: So that's a good place, I think, to put a period on it. And I do want to just finish up by saying I think we've been talking to people in our previous podcasts about because the court standard is sort of, you know, vague at best, it's going to be further developed by the circuits. And obviously we have more Republican-leaning circuits and more Democratic-leaning circuits, so issues will likely go back to the Supreme Court as well, and, and getting the standard right here is probably going to take a good part of the next decade. I suspect that's the case in Congress. I suspect it's going to take some time to figure out what the new normal is. It's not coming next year. It's probably several years out. And obviously, Congress will need to adjust to, you know, Supreme Court and circuit court decisions on laws we pass in the next Congress. And because we're all kind of guessing what the courts will tell us about how we draft things until we get an OK on it.

Arjun Mody: Yeah. I think that's great insight. We're gonna have to do a postmortem here in the next two or three years and see how this all worked out.

Rich Gold: Well, we'll have you back, Arjun, and see if we were right or wrong. Mostly right. Whatever. Thanks very much for joining us today. Thanks to my colleague, Dimitri Karakitsos, and we will see you next time on the Eyes on Washington podcast.