Episode Transcript
[00:00:00] So if you are in business, if you own a business, or if you're a consumer, which all of us are consumers, just expect that there will be fewer and fewer regulations and enforcement actions that come out of federal agencies. Those agencies that ensure clean water, clean air, safe food, safe medicines, crime prevention, home health care, AIDS, anti money laundering, all of these agencies of the federal government, they are all going to be a lot more cautious going forward.
[00:00:48] Okay, everybody, today I am coming to you. Good morning. Good afternoon, good evening. Whenever you happen to be listening or watching us today, just want to weigh in real quick on something that I've been getting some questions about over the past week, since the Supreme Court came down with its decision.
[00:01:09] And, no, it's not that case. I am talking about the loper bright case. And it sort of got lost in the muddle. The court came down with the decision, got some, got some real press, and then after the press died down and it got overshadowed by the debate, it got overshadowed the presidential debate, it got overshadowed by the immunity case and everything else. But the loper bright case will, for a minimum, the next 40 day, 40 years.
[00:01:47] So pretty much for everyone who might be listening to this for at least the rest of their careers, will affect the way they work in the United States, the way their companies function, and to what extent any control the federal government may exert over that, their businesses. So I want to talk about it.
[00:02:17] The lipper bright case. But first, let me give you some background on what the case was about. It was a case brought by a fisherman, commercial fishermen.
[00:02:28] The federal agency. A federal agency had made a determination that Congress had passed a law, and it said that each fishing boat had to have of this type of fishing vessel, had to have a federal monitor on the boat to ensure that the quotas were not exceeded by the fishermen and other rules and regulations were followed by the fishing boat.
[00:02:59] But Congress did not state who had to pay for this monitor to be on the boat. So the federal agency went ahead and made the determination that the fishermen who owned the fishing boat were the ones who would have to pay for this monitor to be physically on their boat at all times. And it made its way up through the courts, and there was a case from 1984, and it's called the Chevron case, and under that case, a unanimous court at that time, all nine justices in 1984 sat down and came up with a test, and they said, look, Congress passes laws.
[00:03:50] The executive branch enforces them. The executive branch has all of these agencies underneath it. It has health and human services. It has EPA Department of Transportation, Department of Treasury, it has all these federal agencies underneath. And those agencies are all staffed by political. Not political, but subject matter experts in their field. They are not political. They are supposedly, they are scientists, they are engineers, they are economists. They are people who have devoted their lives to the study of the subject matter that they are regulating through that federal agency. So if there is any ambiguity, meaning there is some difference of opinion as to how the law that Congress passed should be interpreted, we will defer to that federal agency. The experts in that federal agency, under the Chevron doctrine, we will defer to their decision. So long as it's not totally off the wall and crazy, it makes no sense whatsoever. So if Congress passes a law that says that there shall be no more than 200 parts per billion of nitrogen, something in wastewater, once it's distributed out of the wastewater treatment plant, Congress just made that, that law. But the agency will then be the ones to determine what does it mean for 200 parts per billion? What does it mean to be dispersed from the facility? What does it mean? You know, all these different little details. And when the agencies come up with these rules of how they are going to interpret and enforce the laws that Congress has passed, it typically takes a long time. I mean, we've seen that happen recently with the FinCEN beneficial ownership reports.
[00:06:09] So they typically will say, okay, here's what we think the rules should be. They put it out there into the universe.
[00:06:18] They request a comment, period, and other experts in the industries and consumers and anyone else is allowed to submit their comments. Once they get their comments, they may have hearings, they tweak it, they think about it, they give it a lot of consideration. And usually after a year or two, if they're going to pass a rule and promulgate a rule, they promulgate the rule. Once the rule is promulgated, then it goes to the courts. And the courts typically go, well, we don't see anything unreasonable here, so we're going to defer to what those experts said.
[00:06:54] That was until last week when loper bright came down.
[00:06:59] Now, one little point I want to point out here is Chevron, in 19, 84, 40 years ago, came down again. It was unanimous. Now, at the time it came down, it was the Chevron case, because it arose from an interpretation of the law by the EPA.
[00:07:21] Now, the EPA at the time happened to be under the control. The director of the EPA, she had been appointed by Ronald Reagan, and her name was. She was a corporate lawyer, and her name was Ann Gorsuch.
[00:07:37] The name may sound familiar because she is Justice Gorsuch's mother.
[00:07:44] Well, Ann Gorsuch had a pretty tumultuous ride at the EPA, and at the time, it had a high amount of turnover. The scuttlebutt was that she really just wanted to destroy the agency. She didn't want it to exist. She saw no need for it to exist. And 40 years ago, she had packed it with her people of her ideology, her scientists, her engineers, to interpret these federal laws. So 40 years ago, the Supreme Court, at the time, it was Ann Gorsuch's scientists who were making these interpretations. So if someone did not like the rules, then of course, the court was fine at that time, was saying, okay, fine. The EPA and scientists will make the decision, and it's usually going to fall on the ideological side that we prefer anyway. So, great, we will. This unanimously is what will be the standard of review, that whenever we are looking at an agency's interpretation of any law that the Congress has ever passed. So that's chevron.
[00:09:02] Then here comes loper bright, and loper bright again, these fishermen. There's a question of who has to pay for these monitors to be on their boat, because it's like $700 a day to have this monitor on your boat. It gets expensive. So I understand it's completely legitimate question. And, you know, Department of Interior, whoever it was who came up with this rule, they get angry that this agency has said, well, you have to pay for it because Congress didn't say so. Our interpretation is, and it's not unreasonable, it's a reasonable interpretation to say that the fishermen have to pay for this.
[00:09:45] So, you know, it goes through the courts, it gets up to Supreme Court, and then this Supreme Court says, you know what? In a six to three decision, it's not unanimous this time, a six to three decision, they go, we were completely wrong 40 years ago, and for the past 40 years, every decision we have ever made, we should not have made that decision to defer to the federal agencies, to the experts in their subject matter area. We had no rights to just let them make that interpretation of what Congress intended.
[00:10:28] Only courts are equipped and educated enough to interpret what Congress intended when. When they passed this law.
[00:10:42] And I'm sure you're sitting there going, okay, well, that's a great history lesson, Joe. That's really nice. What does it mean for me?
[00:10:50] Well, what it means for you. And if you are in business, you may not realize how much a federal regulation interpretation of a Congress passed law affects you day to day and how the enforcement of that law by a federal agency affects you day to day.
[00:11:14] However, one, just one rule that we've seen in the past year that affects anyone who has an LLC or corporation in this country. They have to at least consider whether they are subject to this rule or not, and if they are, whether they need to comply with it or not, and how they will comply with it. And that is the rule for business owner identification under FinCEN, the Financial Crimes Enforcement Network, which is a sub office under US Department of Treasury.
[00:11:53] So what happened was in that case, Congress passed a law, the Corporate Transparency act. And they said, now us Treasury, Department of Treasury is empowered to now go and make rules to implement this law that Congress has made, because Congress does not have time or expertise to sit down and figure out every fine detail of how this rule, how this law will be implemented on a day to day basis and how it will affect consumers and how it will affect the industry, how it will affect our entire financial system worldwide.
[00:12:34] Instead, they go, okay, now us treasury and we have experts inside FinCEN who deal with money laundering and terrorism and funding of terrorism and crimes networks around the world.
[00:12:48] They are now empowered by us as Congress to go and figure out how to enforce this law. FinCEn then started, they promulgate a rule. It took them a year or two to come up with a rule.
[00:12:59] Then they published it. It got a lot of blowback and feedback and hearings and tweaks and changes and amendments, and finally it came out as a rule. It took another year for it to finally be implemented. And on January 1 of this year, 2024, it went into effect. The new rule went into effect to enforce the corporate Transparency act. And this is how FincEN said, well, this is one way we will help enforce what Congress wanted to do. We will require every entity in the United States that has to file with a state office to be created to exist. We will require them to register with us as well, to let us know, to identify who the true human beings are, who control and own that entity.
[00:13:59] It's already gone to the courts. Northern District of Alabama judged there a couple months ago, held that, well, I think it's unconstitutional because it invades privacy of people too much, too many citizens. It requires citizens who are not even being investigated for any crime are now being required to completely identify themselves and give up their private information to the crimes enforcement network of the US Department of Treasury, FinCEN.
[00:14:37] So that if you read my newsletter, you already saw that my take on that now copycat cases have come along. So that will now make its way up through the courts of appeals, trial courts around the country, and ultimately maybe even make it to the Supreme Court. And the Supreme Court, when they review this, will no longer be able to say, well, we will assume that the, the bureaucrats, and I'm not using that term pejoratively. I'm using that term completely descriptively. True bureaucrats are apolitical. They are not partisan. They simply do their jobs for their country the best way they know how, based on the education and experience they have received over the years.
[00:15:30] We will no longer defer to what they said. We will no longer automatically assume anything about what those people at FinCEN came up with. Instead, we, the Supreme Court, or we, the court of appeals, wherever it may be, will have free reign to completely reinterpret the statute that Congress passed and determine whether this rule fits with that statute at all. So judges, who are also supposed to not be partisan, not be political, but we've all seen, especially in the federal system, have become extremely political over the past few years because you can tell who, what president appointed or nominated for appointment, which judge. At this point, you can tell their ideology based and their politics based on which way they're falling down, which is, as a lawyer, it's disheartening to me. Judges are supposed to just call balls and strikes. They are not supposed to walk in there with their political ideology, their partisanship.
[00:16:47] But we are seeing that that is gone, and it's really eroded, I believe, the public's faith in the complete judicial branch of the United States federal government at this point. So things like this FinCEN BOI registration rule will very likely be tied up in courts for years to come and not, and may come down and be a finally approved or not, you just never know anymore.
[00:17:20] So let me just go through some of the rules and regulations that have been passed recently under the current administration, under the current presidential administration and their agencies, under their cabinet officers, what some of those rules and regulations are. Of course, I just talked about the FinCEN BOI reports, llcs, and they're also coming out with a new rule right now that's being commented upon about requiring any non human, any entity, trust anything that purchases real estate inside the United States, anywhere in the United States, and does not get a bank loan to do that, would have to report the ownership of the purchasers and the sellers to FinCEN. So that would sweep in land trusts and anything else, also personal trusts. So if you had a revocable living trust and you wanted to go ahead and just convey your property out of yourself, and into your revocable living trust, your rental home. You would have to register that with Fincen, that you did that, because that's considered a transfer of property without a bank loan to a non human, and it would have to be registered with Vincennes. So that is making its way through the rulemaking process. Now. I have a feeling it's either going to be tweaked greatly or it's going to be killed, because at this point, Fincen goes, well, now we're going to be dragged through the courts for years to come, and it's really going to depend on what judges we get as to whether they're going to think that we were reasonable or not. And we have seen that the people challenging these laws, they typically pick, they forum shop, they pick courts where they know that they're probably going to win. Nine times out of ten they go to a court in Texas where there is a judge that they know they will always win and there's only one judge, and that judge hears every case and he will always fall down on the farthest on the right, ideologically side of any issue that they can possibly get. And so they will always take it there and start there, and then they go to the Fifth Circuit Court of Appeals and make their way up to the Supreme Court that way.
[00:19:43] Overtime pay for salaried employees Department of Labor came out with a rule that said that if you are a salaried employee, even if you are salaried, if you are salaried now at less than $59,000 a a year, you can, you are to be paid overtime, compensated for your overtime, anything over 40 hours a week. Department of labor did this in an attempt to increase pay, because a lot of people are classified as exempt employees. They are classified as salaried, meaning they are not hourly, which means that you can, as a, as a business owner, you can work them for 60, 78 hours a week as an, as a w two employee, and you don't ever have to pay them overtime, you just keep working them to the bone. But Department of Labor said no.
[00:20:34] They interpreted congressional rules on overtime to say that if you make less than $59,000 a year, and this adjusts by inflation every year, then you are entitled to receive overtime if you work over 40 hours a week. That is already being challenged. And at this point, now under Loper Brighten, the courts will no longer be able to presume that the Department of Labor was reasonable in their interpretation and rulemaking regarding the enforcement of this overtime law. And they could completely, depending on which judge they get and how the Supreme Court feels that day, that rule can go away completely.
[00:21:15] So there's very little consistency that can be relied upon. Non compete agreements Department of Labor has made a rule that non compete agreements are unenforceable nationwide. That, of course, is going to go up through all the way to the Supreme Court and very likely under the current makeup of the Supreme Court, would be struck down, meaning that corporations can continue to tie their employees to non compete agreements.
[00:21:49] Some other rules. If you are in the nursing home business, or if you have parents or relatives who are in nursing homes, you may have seen lately that there's some shorting, a shortage of staffing in those nursing homes. The Human Health and Human Resources Human Health Services department of the federal government just came out with a rule that requires that if a nursing home or nursing facility receives Medicare or Medicaid funds from the federal government, they have minimum staffing requirements per number of patients. They can't have one, you know, one nurse per a whole nursing home. They have to have so many per patient as part of that, too. They have also required that if you are a home health care company that provides, you know, CNAs and home healthcare aides to patients at home, and you are a company that receives Medicaid funds to provide those services, then any federal funds that you receive, you have to use at least 80% of those funds for. You have to spend that on wages for your workers. You can't spend it on overhead. No more than that. No more than 20% can go to overhead out of those Medicaid funds that you receive. This will very likely be challenged through the courts. And depending on the politics of the judge that they get to, it can be struck down, meaning that there will be no requirement that the home health care agencies or nursing homes actually spend the federal tax dollars that they receive providing care to their patients. Instead, it would go to overhead, which means to the C suite and the executives in the company as pay. So those are just some of the rules that I found just in the past, since May, some of the big rules that have been made by the federal agencies that are very likely now going to be tied up in the courts for years. So if you are in business, if you own a business, or if you're a consumer, which all of us are consumers, just expect that there will be fewer and fewer regulations and enforcement actions that come out of federal agencies.
[00:24:20] Those agencies that ensure clean water, clean air, safe food, safe medicines, crime prevention, home health care, AIDS, anti money laundering, all of these agencies of the federal government. This also sweeps in Department of Justice. So the us attorney's offices, the FBI, secret service, counterfeiting enforcement, anything like that. These are all federal agencies that make rules day in and day out. And they are all going to be a lot more cautious going forward in what rules they pass, because it no longer matters whether they are reasonable in what rules they pass.
[00:25:16] The courts will look at any rule they come up with with fresh eyes and a justice, a judge who is typically a lawyer, not an engineer, not a law enforcement officer, not a scientist, not a social worker, not someone who has a PhD or a master's degree in any of those subject areas like that. Just off the top of my head that I can think of, NASA, procurement contracts, anything like that. A judge who is a lawyer will determine whether that rule actually fits within what Congress's intent was when they passed the law.
[00:26:05] So just be prepared that probably for the next 40 years we will see a great loosening of regulations on industries.
[00:26:20] If you are a consumer, it will be a lot more of buyer beware.
[00:26:26] If you are a lawyer representing consumers, whenever you go to sue someone based on a violation of a rule or regulation for OSHA, an OSHA violation where a worker has been injured, anything like that, expect that they will try to pull that case out to federal court and challenge the rule itself that you are suing under. Whether they're not, they're no longer going to have to challenge whether the rule was violated at this point. They will challenge whether the rule should have existed in the first place under the law. And it will take years and years to litigate. And the federal court system is not staffed large enough. There are not enough judges. Only nine justices on the Supreme Court. They proved this late last session that this last term of the Supreme Court, they proved they do not have enough justices to handle the workload that they are taking on. And they have now created even more work for themselves to interpret thousands and thousands of minute detail in rules and regulations promulgated every day across the federal government.
[00:27:50] And there are only nine justices that are going to be there to do that work day in, day out. So the Supreme Court is way too small to handle the work that they just bid off for themselves.
[00:28:03] And I just see federal agencies will grind down to a very slow running. They will not have the ability to operate because they will be in litigation all over the country all the time. And the courts will simply be clogged up with all of these challenges to every single rule that is being sued upon as being violated first and foremost. So just be prepared that if you are in business, if you ever have a federal regulation, number one, if you are ever charged with a violation of that regulation, your first step is going to be, well, I'm going to challenge the rule itself. Lately we've even seen them challenging the constitutionality of the division or the department. In the case of CFPB, Consumer Financial Protection Bureau, we've seen a ton of cases where they have been challenged as being unconstitutional in their existence. So they're not even allowed to exist. So now that that has been found, okay, well, they should exist constitutionally, they're fine. Now. Every single rule that CFPB ever passes will be litigated to death to try to say that the rule does not accurately reflect congressional intent whenever they passed the law that now the CFPB is trying to enforce on the ground day to day. So that's my thoughts on loper Bright and chevron. By the way, Angorsuch, who as head of the EPA started the Chevron deference precedent back in 1984. Her son, Neil Gorsuche gleefully wrote the concurring opinion in Loper bright, happily saying that chevron was a Goliath that needed to be slayed and was a horrible, horrible law. So he basically said that a law that was created by a unanimous court 40 years ago, less than many of our listeners have even been alive by his mother's actions, was wrong and needed to go away. And he happily voted to make it go away. So that just brings it full circle. Chevron to loper bright. Hope this helps. I know it's sort of getting in the weeds, but I am a lawyer and a lawyer for small businesses, medium businesses, entrepreneurs, solopreneurs. And I know that we're constantly talking about federal regulations and how they affect us day to day. And I wanted to get this out there while it was fresh on my mind and also let you guys start thinking about the larger ramifications of these very odd cases where the court is overturning precedent one after the other, which is also odd for the court to constantly be going back and saying, well, this was past 40 years ago, this was past 50 years ago, this past 30 years ago, and we are going to completely overrule it now.
[00:31:26] This has not happened in history this quickly.
[00:31:31] We have not seen a Supreme Court overrule its own precedent as often in one term as this court did this last term. And I think it's going to really shake the foundations of precedent where people have said, well, this is the law, and we can rely on it. And it has to be something very big and bad for the court to overrule it. We have now seen it does not take something big and bad for the court to overrule their own precedent. When it comes down to whether a fisherman pays for a monitor to stand on their boat each day or nothing. That is the straw that broke the camel's back in this case. And the Supreme Court said enough's enough. We will never do this again and make that go away.
[00:32:22] As a lawyer, it just seems like they're really grasping at straws to ideologically shift everything, the balance of power very heavily toward corporations and the welfare of corporations and away from consumers and away from taxpayers and the voters.
[00:32:47] I know corporations pay taxes, but that's another story for another day. But just be prepared how this is the shift that we are seeing in the law, where it is heading, and just understand that it will affect you day to day in small ways and big ways, and just be prepared for it and trust this as what we have to look forward to.
[00:33:17] Thanks for listening to this edition of trust this. If you got something out of it, please press like and subscribe and give us a five star review to help us reach others who can benefit from this series. Until next time, keep aspiring to a better life.
