Supreme Court Strikes Executive Branch Power in Trio of Rulings
The U.S. Supreme Court curbed the power of federal agencies in a slew of decisions at the end of its most recent term.
Three major cases, Loper Bright Enterprises v. Raimondo, SEC v. Jarkesy, and Corner Post v. Board of Governors of the Federal Reserve System, all served to curtail various aspects of federal agency power, dealing a blow to the administrative state. In each case, the six conservative justices found on the side of limiting federal power, with the three liberal justices dissenting.
Loper Bright Enterprises v. Raimondo
In a 6-2 decision in Loper Bright Enterprises v. Raimondo, the court abolished the so-called Chevron doctrine, a precedent set in the 1984 case Chevron v. National Resources Defense Council. The decision could lead to fewer regulations handing a victory to business interests.
Chevron required a reviewing court to defer to a “federal agency’s reasonable interpretation of ambiguity in a statute administrated by the agency – a standard that led lower federal courts to rule for the government in the majority of challenges to agency rules and regulations.” In other words, the federal government could fill in the details “when laws aren’t crystal clear.”
The precedent made it easier for the federal government to regulate the environment, public health, workplace safety and consumer protections, among other areas.
Opponents of the decision argued that it gave power that should be wielded by courts to federal agencies.
The case was brought by two herring fishermen who were upset that the in National Marine Fisheries Service required them to pay for government monitors.
In an analysis, FEDmanager case law update author and Shaw, Bransford & Roth Attorney Conor Dirks, wrote, “The doctrine of deference to agencies was based on the Court’s view, in 1984, that agency expertise had a role to play in resolving ambiguity in statutory language, given the specialized and often scientific or technical issues at play that fall within the agency’s ambit. But in his opinion in Loper Bright Enterprises, Chief Justice John Roberts rejected that framework, holding that Congress expected the courts, not the executive branch, to handle technical questions about statutory language, with the benefit of briefing from the parties to the dispute.”
In her dissent, Justice Elena Kagan wrote that Loper Bright could cause a “shock to the legal system” noting that thousands of cases have been decided under the Chevron precedent. Justice Kagan also noted that agencies typically have technical and scientific expertise to make such decisions.
The case was the conservative-dominated court’s clearest and boldest repudiation yet of what critics of regulation call the administrative state.
Federal agencies and the Justice Department had already begun reducing their reliance on the Chevron decision in crafting and defending new regulations, as it had not been cited by the Supreme Court itself since 2016.
Securities and Exchange Commission (SEC) v. Jarkesy
In SEC v. Jarkesy, the court ruled that the defendant in a securities fraud suit has the right to be tried by a jury in an Article III court, instead of before an agency tribunal. That means that “Moving forward, defendants facing SEC enforcement actions seeking civil penalties are entitled to have their cases heard by juries.”
The 6-3 decision effectively strips the SEC of a key enforcement tool, and more broadly reverses the capacity of federal agencies to adjudicate and enforce federal laws within internal tribunals.
The suit was brought by George Jarkesy, who was fined $300,000 by the SEC for violating various securities laws.
In a concurring opinion, Justice Neil Gorsuch noted that Seventh Amendment, Article III, and the due process clause collectively “require a jury trial and conventional civil litigation before the government can deprive a citizen of money.”
In a blog post on the ruling, Wiley notes Jarkesy could have a “profound impact” noting that at federal agencies “future targets of enforcement actions seeking civil penalties will likely argue that the Constitution entitles them to a judicial forum and jury trial.”
Wiley noted that Jarkesy could also spur congressional and agency reform and that “lobbying efforts could persuade Congress that it needs to provide particular agencies with an avenue to seek penalties directly.”
In a dissent, Justice Sonia Sotomayor said that Jarkesy is “a devastating blow to the manner in which our government functions.”
Corner Post v. Board of Governors of the Federal Reserve System
The Supreme Court decision in Corner Post v. Board of Governors of the Federal Reserve System gives businesses more time to challenge federal regulations.
In a 6-3 decision, the court moved the goalposts on the challenging a claim under the Administrative Procedure Act (the “APA”), ruling the six-year time limit to challenge ta regulation starts when an injury or harm occurs, not when the regulation is promulgated.
The decision potentially allows decades-old regulations to be challenged.
The case was filed by a North Dakota truck stop named Corner Post that was upset with Federal Reserve fees charged for debit cards.
In a majority opinion, Justice Amy Coney Barrett wrote, “A claim accrues when the plaintiff has the right to assert it in court — and in the case of the APA, that is when the plaintiff is injured by final agency action.”
In a dissent, Justice Ketanji Brown Jackson wrote that the decision could have a “staggering” impact, noting that “It is utterly inconceivable that §2401(a)’s statute of limitations was meant to permit fresh attacks on settled regulations from all newcomers forever. Yet, that is what the majority holds today.”
For more on the evolving landscape surrounding federal power, check out the FEDtalk podcast season “Federal Government in Flux.”
