The Thunder Basin Trap
A few weeks ago, the Supreme Court decided McLaughlin Chiropractic Associates, Inc. v. McKesson Corp., where it held that the Hobbs Act’s grant of exclusive review in the courts of appeals to determine the validity of agency orders does not preclude district courts from determining the meaning of the law under Loper Bright. Importantly, the Court explained that, unless a review statute expressly strips district courts of jurisdiction, it cannot override the presumption favoring judicial review in agency enforcement proceedings, which is codified in § 703 of the Administrative Procedure Act.
McLaughlin emphasized the right of Americans to challenge agency action before an impartial judge. But that right is still unfortunately held hostage because of the existence of Thunder Basin Coal Co. v. Reich.
For the past 31 years, the Supreme Court’s flawed opinion in Thunder Basin has prevented people from vindicating constitutional rights violated by administrative agencies. Instead of looking to 28 U.S.C. §1331’s grant of jurisdiction to courts to hear constitutional claims, Thunder Basin manufactured a test that district courts instinctively reach for in deciding whether they have subject matter jurisdiction to hear constitutional claims arising in the context of administrative adjudication, or whether specific review statutes, such as Section 78y of the Securities Exchange Act, divest them of jurisdiction.
Rather than determining the plain text of statutes, Thunder Basin says that court must divine whether it was “fairly discernible” that Congress “intended” to preclude jurisdiction over the claims at issue. To do so, courts must examine whether preclusion would foreclose all meaningful judicial review, whether the claim is wholly collateral, and whether the claim is outside of the agency’s competence and expertise.
The judge-made Thunder Basin test is confusing, unworkable, and unreliable. District courts have applied it in a variety of different ways; some treating each of its three questions only as factors to weigh, others treating them as separate elements that must each be met. But the results of the Thunder Basin project have been consistent: targets of agency enforcement actions that have sought to vindicate their constitutional rights have instead been forced through years (sometimes decades) of expensive agency proceedings before ever being able to have their constitutional claims heard in the correct court (granted their cases didn’t settle before then).
Almost fifteen years after Thunder Basin, the Court decided Free Enterprise Fund v. PCAOB, which provided some hope to those facing unconstitutional agency adjudications. In Free Enterprise Fund, the Court held that the district court had jurisdiction to hear a challenge to the PCAOB’s structure independently from the agency adjudication process. The Court also reiterated the important principle that, for the third Thunder Basin factor, an agency must have both competence and expertise to hear the claim – the former of which is often left out by district courts when applying the Thunder Basin test.
Then came Axon v. FTC and SEC v. Cochran, where the Court held that targets of agency enforcement actions have a right to bring structural constitutional challenges directly in district court before undergoing an administrative adjudication. This case was certainly a massive victory for people, like NCLA’s client Michelle Cochran, who were forced to go through years of serial administrative adjudications at significant financial and human costs before ever having the opportunity to challenge the constitutionality of their very own proceedings. Yet the Court’s opinion fell short of overruling Thunder Basin – and the consequences of this have proven to be disastrous.
Justice Gorsuch, concurring in the judgment in Axon/Cochran, criticized the majority’s ignoring of the plain text of §1331, and emphasized the importance of statutory interpretation. He explained that district courts must independently ascertain the meaning of judicial review statutes to figure out if they actually do carve out an exception to § 1331, rather than resorting to the judge-made Thunder Basin test. He stated that: “At bottom, Thunder Basin rests on a view that it is sometimes more important to allow agencies to work without the bother of having to answer suits against them than it is to allow individuals their day in court.”
Because Axon/Cochran did not explicitly overrule Thunder Basin, district courts are still using it to decide upon their own jurisdiction instead of determining the best meaning of judicial review statutes. And because it did not overrule Thunder Basin, Axon/Cochran has been applied narrowly by both agencies and the Courts. Many district courts have viewed Axon/ Cochran and Free Enterprise Fund as applying only to challenges to an agency’s structure – that is, that Axon/Cochran apply only to claims that only either (1) contend that the structure of an agency or agency tribunal is unconstitutional, and (2) do not challenge a final agency order – and not challenges that raise structural, separation of powers claims more generally.
Take, for example, a flurry of recent post-Jarkesy district court cases that have sought to enjoin administrative enforcement proceedings on the grounds that they violate the Seventh Amendment, including NCLA’s case Lemelson v. SEC. There, NCLA sought to enjoin the SEC’s unconstitutional administrative follow-on prosecution of plaintiff Rev. Father Emmanuel Lemelson, arguing, among other things, that the proceeding violated his Seventh Amendment right to a jury trial. Yet the district court applied the Thunder Basin test to Lemelson’s Seventh Amendment claim and found that it lacked jurisdiction. That opinion cites multiple other recent cases that came to the same conclusion on Thunder Basin grounds.
In 2020, a former NCLA Summer Law Clerk opined on whether Thunder Basin is inescapable. Since then, the Supreme Court has significantly clawed back the administrative state’s overreach. Loper Bright/ Relentless reminds that it is federal courts, not administrative agencies, that have the independent duty to say what the law is. The Supreme Court’s recent decision in McLaughlin underscores this principle. Yet, Thunder Basin is still being used as a way to give agencies the upper hand in litigation and shield them from constitutional challenges, even after Axon/Cochran and Free Enterprise Fund. It seems that, until the Supreme Court finally overrules TB, it remains inescapable.
July 25, 2025