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A Watershed Supreme Court Term Will Not Drown The Administrative State

Mark Chenoweth
President and Chief Legal Officer

June 6, 2024

Administrative statists have floated a false narrative about the many indisputably important administrative law cases pending at the U.S. Supreme Court this term. With at least half a dozen such cases still awaiting decision by month’s end, it promises to be a watershed year. Greater freedom and constitutional restoration appear to be in the offing, which may explain the liberal meltdown that has already begun. Before the Supreme Court (erroneously) upheld the Consumer Financial Protection Bureau’s funding mechanism last month, some commentators on the left were proclaiming that a decision leaving Congress to appropriate annual funds to the CFPB would trigger a second Great Depression. Similarly absurd claims have abounded about the remaining undecided cases, so it is time to set the record straight lest bureaucratic caterwauling lead the Court further astray.

The space of this column only permits a brief review of five pending cases, but even that much will suffice to show that nothing wicked this way comes—at least not if the government loses all five cases, as court cognoscenti predict will happen. The five remaining decisions to which this column refers are (1) SEC v. Jarkesy; (2) Relentless v. Department of CommerceLoper Bright v. Raimondo; (3) Corner Post v. Board of Governors of the Federal Reserve; (4) Garland v. Cargill; and (5) Starbucks v. McKinney. Let’s consider them in the order in which they were argued to glean why there is nothing to fear here.

SEC v. Jarkesy

First up is SEC v. Jarkesy, which is pronounced “Jark” (rhymes with ‘shark’) -esy (like the end of Tennessee). George Jarkesy is a Texan who has endured over a decade fighting an agency enforcement proceeding before what the Fifth Circuit below deemed an unconstitutional tribunal. Mr. Jarkesy had tried to raise his constitutional objections before the proceeding commenced, but the D.C. Circuit wrongly shot him down (as the unanimous decision in last term’s Axon/Cochran case demonstrates). Now he is back to raise his constitutional objections after the fact.

Jarkesy presents three issues for the Court’s consideration. First, the case asks whether the lack of a jury trial in SEC in-house proceedings violates the Seventh Amendment right to a jury trial in cases over $20. Far more than that sum is at issue for Mr. Jarkesy, and his case falls neither in admiralty nor equity, so indeed his constitutional rights have been grossly abused. If the Court so holds, it will preclude administrative agencies from continuing their half-century-long practice of denying jury trial rights, but the country ran just fine back when agencies had to bring cases in federal court to get their man. A 1977 decision called Atlas Roofing held that jury trials are not required when the sovereign sues a citizen over a statutory violation that Congress had the power to enact. Jarkesy could be the case where that sweeping denial of fundamental jury rights is rethought and reversed.

Second, the case asks whether it violates the nondelegation doctrine to give the SEC (but not the enforcement target) an unconstrained choice of whether to bring such cases in federal court or in its own in-house tribunal. Since there are only juries in federal court, this question may not get answered if the first one decides juries are required. But forcing Congress to give agencies more direction about when they can—and cannot—bring matters before in-house tribunals would hardly cripple the Administrative State.

Finally, the case asks whether administrative law judges (ALJs) are insulated from removal by too many layers of protection? Based on the Court’s precedent in Free Enterprise Fund, and dicta in the Lucia and Cochran cases, and the lack of interest in this question at oral argument, the answer appears to be a clear yes. Only one layer of protection is allowed, ALJs have at least two, so the Court may blue pencil one of those layers or, if it thinks Congress must decide which layer must go, it may just refuse to uphold the enforcement action against Jarkesy. It makes sense that the President can fire federal officers in the executive branch directly, so cleaning up this discrepancy is structurally important. But ALJs are hardly independent adjudicators now, so this change will not alter that.

Relentless v. Department of Commerce / Loper Bright v. Raimondo

The Relentless/Loper Bright cases promise to overturn Chevron deference. That judge-made doctrine holds that when a statute is ambiguous, courts must defer to an agency’s reasonable interpretation of the ambiguity, even if the government’s interpretation is less plausible than the opposing party’s. This 1984 case (despite its dystopian features, that just means it’s literally from the year 1984) has tilted the playing field in the government’s favor on administrative law cases for four decades. It is the second-most-cited case in American legal history. So, its demise will be monumental. But a positive result in Relentless will give courts—not agencies—the final say over the meaning of disputed legal terms in statutes. It will not wipe out all the cases that relied on Chevron. Prior decisions will still enjoy the benefit of stare decisis. Although overturning Chevron will unquestionably reduce the power of administrative agencies to exceed the scope of the powers Congress has conferred on them, that will strengthen democracy and self-governance. It will not prevent a single agency from passing a single regulation that Congress has directed it to issue. That hardly spells doom for the Administrative State.

Corner Post v. Board of Governors of the Federal Reserve System

Corner Post is the next case that defenders of the Administrative State have pegged as a problem. It raises a fascinating statute of limitations issue (an unusual sentence even for lawyer nerds). Namely, does the six-year limit on one’s ability to sue over a regulation start running from the moment the regulation is issued, or from the moment the regulation harms a regulated party (thus first creating its standing to sue)? Because the law’s text connotes that it is a statute of limitations, and not a statute of repose, the six-year limit should not start running against a particular party until it affects that party. In the case at bar, Corner Post did not exist when the regulation issued, so its standing to sue did not emerge until it was formed and went into business several years later (after the six years had already run on everyone who was in existence when the regulation first issued).

Understandably, federal agencies want people’s ability to sue them over their regulations to be cut off forever after six years (even though agencies themselves can reinterpret their rules after that point under current law), but that is not what Congress said in the Administrative Procedure Act. Even now it is possible to challenge a bad regulation by violating it and raising statutory or constitutional defects in the rule as a defense. By upholding the law Congress wrote, which allows Corner Post to bring suit without violating the rule, administrative statists fear that all formerly approved regulations will be newly up for grabs, particularly assuming Chevron deference also disappears. But, again, statutory stare decisis will apply to those cases. And, if there are a handful of cases that successfully thread the needle of overcoming stare decisis factors, it will be because a rule is harming someone with standing and the rule violates a law Congress passed or the federal Constitution in some profound way. Such regulations should not survive scrutiny, and they should not persist merely because no one who was harmed by them sooner was willing to sue.

Garland v. Cargill

The fourth case that administrative statists have warned about is Garland v. Cargill. At issue there is whether the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) can re-interpret an old statute to prohibit machine guns when the words of that statute do not naturally encompass such a ban. If the Court decides ATF can increase the scope of a criminal ban retroactively, that will jeopardize liberty interests of law-abiding citizens. On the other hand, if ATF must go back to Congress to outlaw bump stocks, as the late Senator Dianne Feinstein insisted, that will merely keep responsibility for criminal lawmaking with Congress, the body the Constitution entrusted with that awesome duty.

Starbucks v. McKinney

The final case that concerns administrative statists is Starbucks v. McKinney. The question presented in this case is whether the National Labor Relations Board gets to keep enjoying a court-created special exemption from the rule for obtaining preliminary injunctions that the rest of the legal world—including every other federal agency—has to follow. Whereas private litigants and other federal agencies must satisfy a four-part test, which includes showing irreparable harm absent the injunction and that the party seeking the injunction has a likelihood of success on the merits, NLRB under current law, does not have to make either of these crucial showings.

Instead, the Board need only show that its claims are not frivolous (even if they are most likely meritless) and that an injunction would serve the agency’s remedial powers (even if it inflicts a disproportionate burden on an employer that has not yet been shown to have violated the law). It doesn’t even have to show that an injunction serves the public interest! The National Labor Relations Act offers no statutory support to this abhorrent practice, and it defies the Fifth Amendment’s requirement for due process of law. If oral argument offers any clue, this case should end the special status that has enabled NLRB to obtain punitive injunctions for a song. Forcing this agency to obey the same injunction rules that already apply to all other agencies is not going to bring the Administrative State to its knees.

So, to recap the supposed kneecapping that is afoot, the five decisions that have deep state denizens distraught might hold that: 1) agencies have to convince a jury before taking away someone’s livelihood or fining them substantial sums of money; 2) courts, not agencies, will have the final say over the meaning of laws passed by Congress; 3) parties can challenge rules without violating them if they were not around when the rule was first passed; 4) agencies cannot reinterpret old statutes to expand the scope of criminal law; and 5) NLRB has to follow the same preliminary injunction standard as everyone else.

Each of these cases represents a step-change in reducing the power of administrative agencies. And a Relentless/Loper Bright decision could truly restore a level playing field for citizens’ battles against the Administrative State. But even if all five cases discussed here turn out the way administrative statists fear, it will not spell the end of administrative power and its abuse. It will mark a turning point in the Court’s noticing and containing the fourth branch’s unconstitutional antics. This term then surely promises to be a watershed, but it will not be the Administrative State’s Waterloo.

NB: The New Civil Liberties Alliance represents clients in the Relentless and Cargill cases and filed amicus briefs in the other cases mentioned.

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Originally Published in Forbes