Upcoming Regulatory Cases within the Supreme Court
Two pending cases could lead to big cuts to agency powers
Three weeks from today, the Supreme Court starts its 2023 Term. There are two blockbuster cases on the docket. In a single case, the problem is whether or not to overrule the Chevron case, which has been foundational to administrative law for the past 4 many years. In the opposite, the problem is agency power to sanction violations of the law. Given the Court’s conservative supermajority, there’s an actual threat to the facility of agencies like EPA to issue regulations and implement the law
The Threat to Agency Regulatory Power
The Chevron case gives agencies leeway in interpreting the law when issuing regulations. Under Chevron, if a statute is ambiguous or has a niche, courts defer to reasonable interpretations of the statute by agencies. The Court assumed that Congress wants agencies to have primary responsibility for interpreting the laws that they implement — something that has now been confirmed by empirical evidence. The Court also emphasized that agencies are democratically accountable in a way that judges should not. Aside from regulation of monetary markets, agency heads report back to the President, so in effect Chevron expanded President’s power to pursue their regulatory agendas.
Chevron was fervently embraced by conservatives like Justices Scalia and Thomas — until Barack Obama took office, after they began having second thoughts.  With a conservative super-majority entrenched by Trump, the Court agreed to listen to Loper Shiny Enterprises v. Raimondo specifically to make your mind up whether to overrule Chevron. This case may very well be yet another milestone within the Court’s anti-regulatory campaign.
Loper Shiny involved a federal fisheries law, under which the federal government can require fishing boats to hold independent monitor to ensure they’re comply with fishing limits. The law doesn’t specify who pays for the monitors. NOAA, the agency in control of enforcing the law, issued a regulation requiring fishing corporations to pay, just as they might need to pay for any electronic monitoring equipment they were required to hold. (Actually, although NOAA approved the regulation, it was actually written by the local fishing council.) The lower court said that the regulation was reasonable and upheld it under Chevron. The federal government doesn’t really have the cash to pay monitors, so a win for the fishing company would likely give it free rein to violate fishing limits.
I’ll write more about this case after we catch up with to oral argument, which hasn’t yet been scheduled. For now, it’s enough to say that the Court is once more likely to offer settled law a tough knock if to not upend it entirely.
The Threat to Agency Enforcement Power
A second case, SEC v. Jarkesy, challenges the long-established power of administrative agencies to issue civil penalties. The case involves the securities laws, but these enforcement powers are also a very important tool for EPA in enforcing pollution laws. An administrative law judge had found Jarkesy and others guilty of a series of misrepresentations aimed to fleecing investors. The SEC ordered Jarkesy and the others to pay a $300,000 civil penalty for violating the law. The court of appeals — not surprisingly, the rightwing Fifth Circuit — held that civil penalties can only be assessed through a jury trial.
In one other ruling within the case, which I find really off the wall, the Fifth Circuit said that Congress had unconstitutionally delegated power to the agency by giving it the alternative between using administrative enforcement or a civil case to go after violators. That is the type of procedural alternative that enforcement officials make on a regular basis.  As an example, the Justice Department can file criminal charges against antitrust violators (requiring a jury trial) or file suit for an injunction (no jury trial).  It will probably resolve to get evidence through a search warrant or through a grand jury subpoena. Each of those decisions involves just as much discretion because the alternative between agency and civil enforcement.
I should mention yet another issue within the case, even though it may not apply to EPA. Congress has given civil service status to administrative law judges (agency hearing officers) in order that they will resolve cases free from political influence. Jarkesy can be difficult the penalty on the bottom that this protection for administrative law judges is unconstitutional. If the Court rule on broad grounds, EPA could impacted, but there’s a narrower argument within the case that applies only to a subset of agencies — those agencies whose heads are themselves protected against presidential approval. EPA doesn’t fall in that category. A broad rule, nonetheless, would open hearing officers to greater political influence in all agencies, including EPA. Sarcastically, a victory on this issue by Jarkesy can be more prone to harm the targets of agency enforcement actions than help them.
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To various degrees, all of the members of the conservative supermajority are uncomfortable with the trendy regulatory state, rising to open antipathy on the a part of the ultra-conservatives like Thomas. This Supreme Court term will provide further evidence of how strongly the Court is devoted to a return to the pre-Recent Deal world.
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