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Congress to limit powers of SEC, CFTC, and IRS

Most Popular Jan 04, 2017 02:22PM ET
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© Reuters. So-called 'Chevron Deference' doctrine being repealed. -- Congressional Republicans are moving forward with a landmark regulatory reform that would strip federal government agencies of their most powerful tool -- the power to broadly interpret federal laws. The new U.S. Congress was sworn in yesterday afternoon, a few weeks before President-elect Donald Trump takes power.

Though repeal of Obamacare has grabbed the headlines in most media, reform of another policy may have an even greater impact on finance in the U.S., experts are telling

A more than 30-year-old U.S. Supreme Court case set the standard for administrative agency power in America. Lawyers call the power " Chevron (NYSE:CVX) deference," in response to the case law, granting the exeucutive branch agencies nearly unfettered interpretive power over federal statutes they manage.

Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 US 837 (1984), was a landmark case in which the Supreme Court set the legal test for determining how to grant deference to a government agency's interpretation of a statute which it administers.

Agencies such as the Securities and Exchange Commission (SEC), Commodities Futures Exchange Commission (CFTC), and the Internal Revenue Service (IRS) have used -- and critics say abused -- the deference doctrine to interpret cases in ways favorable to the federal government.

Chevron was the Court's clearest affirmation of the doctrine of "administrative deference," based on the idea that those who work on a daily basis with a law, government lawyers and bureaucrats, know it best.

But scholarly law reform groups such as the Federalist Society, which calls for strict adherence to the U.S. Constitution, have railed against the doctrine for decades, arguing that it gave unelected bureaucrats in the executive branch of government sometimes unlimited power.

Those close to Associate Justice Antonin Scalia, who died last year, founded the society at the start of the Reagan era.

One lawyer, who worked for the Reagan administration, told that passage of a reform bill on Chevron deference would "mark a substantial return to the rule of law in the U.S."

Congress to limit powers of SEC, CFTC, and IRS

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